EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of March 15, 2002
by and between
TRITON NETWORK SYSTEMS, INC.
(as Seller)
and
CARRIERCOMM, INC.
(as Purchaser)
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience only.
Page
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ARTICLE I DEFINITIONS........................................................................1
Section 1.01 Definitions and Construction.........................................1
ARTICLE II PURCHASE AND SALE OF ASSETS AND CLOSING..........................................10
Section 2.01 Purchased Assets....................................................10
Section 2.02 Liabilities.........................................................12
Section 2.03 Purchase Price; Allocation; Adjustment..............................13
Section 2.04 Closing.............................................................13
Section 2.05 Determination and Payment of Contingent Consideration...............15
Section 2.06 Further Assurances; Post-Closing Cooperation........................16
Section 2.07 Third Party Consents................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................................17
Section 3.01 Organization, Standing and Power....................................18
Section 3.02 Authority...........................................................18
Section 3.03 No Conflicts........................................................18
Section 3.04 No Governmental Consents............................................19
Section 3.05 Title to Purchased Assets; Absence of Encumbrances..................19
Section 3.06 Certificate of Dissolution..........................................20
Section 3.07 Absence of Certain Changes..........................................20
Section 3.08 Absence of Undisclosed Liabilities..................................20
Section 3.09 Inventory...........................................................21
Section 3.10 Litigation..........................................................21
Section 3.11 Warranties; Product Liability Claims................................21
Section 3.12 Business Contracts..................................................21
Section 3.13 Intellectual Property...............................................22
Section 3.14 Environmental Matters...............................................26
Section 3.15 Compliance With Laws; Governmental Authorizations...................26
Section 3.16 Employee Matters....................................................26
Section 3.17 Books and Records...................................................27
Section 3.18 Board Approval......................................................28
Section 3.19 Access to Information...............................................28
Section 3.20 Taxes...............................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................29
Section 4.01 Organization and Qualification; Subsidiaries........................29
Section 4.02 Authority Relative to this Agreement................................29
Section 4.03 No Conflict; Required Filings and Consents..........................30
Section 4.04 Litigation..........................................................30
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Section 4.05 No Other Representations or Warranties..............................30
ARTICLE V COVENANTS.........................................................................30
Section 5.01 [Intentionally omitted.]............................................30
Section 5.02 Notice of Certain Events............................................30
Section 5.03 Access to Information; Confidentiality..............................31
Section 5.04 Non-Competition.....................................................31
Section 5.05 Further Action; Consents; Filings...................................32
Section 5.06 Employment Matters..................................................32
Section 5.07 Public Announcements................................................33
ARTICLE VI ADDITIONAL AGREEMENTS............................................................33
Section 6.01 Assistance and Cooperation..........................................33
Section 6.02 FIRPTA Certificate..................................................34
Section 6.03 Bulk Sales Act......................................................34
Section 6.04 [Intentionally omitted.]............................................34
Section 6.05 Warranty Obligations................................................34
Section 6.06 Transfer Taxes and Other Tax Matters................................34
ARTICLE VII CONDITIONS TO CLOSING...........................................................35
Section 7.01 Conditions to the Obligations of Each Party to Consummate the
Transaction.........................................................35
Section 7.02 Additional Conditions to the Obligations of Seller..................35
Section 7.03 Additional Conditions to the Obligations of Purchaser...............36
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................................37
Section 8.01 Termination.........................................................37
Section 8.02 Effect of Termination...............................................38
Section 8.03 Expenses............................................................38
ARTICLE IX SURVIVAL AND INDEMNIFICATION.....................................................38
Section 9.01 Survival of Representations and Warranties..........................38
Section 9.02 Indemnification.....................................................39
Section 9.03 Limits on Indemnification...........................................40
Section 9.04 Indemnification Period..............................................40
Section 9.05 Resolution of Conflicts; Arbitration................................40
Section 9.06 Third Party Claims..................................................41
ARTICLE X GENERAL PROVISIONS................................................................42
Section 10.01 Notices.............................................................42
Section 10.02 Amendment...........................................................42
Section 10.03 Waiver; Rights and Remedies Cumulative..............................43
Section 10.04 Severability........................................................43
Section 10.05 Assignment; Binding Effect; Benefit.................................43
Section 10.06 Governing Law.......................................................43
Section 10.07 Waiver of Jury Trial................................................44
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Section 10.08 Headings; Interpretation............................................44
Section 10.09 Counterparts........................................................44
Section 10.10 Entire Agreement....................................................44
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EXHIBITS AND SCHEDULES
Exhibit A General Assignment
Exhibit B IP Xxxx of Sale
Exhibit C Opinion of Counsel to Seller
Exhibit D Assignment of the IBM Agreement
Exhibit E Employment Agreement
Schedule 2.01(a)(i) Real Property Sublease
Schedule 2.01(a)(ii) Inventory
Schedule 2.01(a)(iii) Accounts Receivable
Schedule 2.01(a)(iv)(A) Business Intellectual Property
Schedule 2.01(a)(v) Tangible Personal Property
Schedule 2.01(a)(vi) Personal Property Leases
Schedule 2.01(a)(vii) Business Contracts
Schedule 2.01(a)(viii) Business Permits
Schedule 2.02(a)(i) Real Property Sublease Liabilities
Schedule 2.02(a)(ii) Personal Property Lease Liabilities
Schedule 2.02(a)(iii) Liabilities under Business Contracts and Business Permits
Schedule 2.02(a)(iv) Severance Obligations
Schedule 5.06 Transferred Employees
Schedule 7.03(f) Key Employees
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of March 15, 2002 by and between Triton Network Systems, Inc., a
Delaware corporation ("Seller"), and Carriercomm, Inc., a Delaware corporation
("Purchaser"). Capitalized terms not otherwise defined herein have the meanings
set forth in Article I.
RECITALS
Seller has, prior to the filing of a Certificate of Dissolution
with the Secretary of State of Delaware on January 31, 2002 (the "Dissolution
Filing Date"), engaged in the worldwide business of developing, manufacturing
and selling ASIC modem chips, board level solutions utilizing these and other
ASICs and providing ASIC engineering services worldwide to customers and other
businesses (the "Business"). Seller originally acquired the Business from IBM
pursuant to an Acquisition and License Agreement dated as of February 28, 2000
(the "IBM Agreement") by and between Seller and IBM. Seller desires to sell to
Purchaser, and Purchaser desires to purchase and acquire from Seller, all Assets
and Properties of Seller used or held for use primarily in, or necessary for,
the conduct of the Business, or generated through the conduct of the Business
and still held by Seller, or produced using any Intellectual Property (including
the Business Intellectual Property and the Other Intellectual Property)
(together with the Other Intellectual Property as defined in Section
2.01(a)(iv)(B) and the Other Inventory as defined in Section 2.01(a)(ii), the
"Purchased Assets"), all on the terms and subject to the conditions set forth in
this Agreement. The boards of directors of Purchaser and Seller have determined
that this Agreement and the transactions contemplated hereby are in the
respective best interests of Purchaser and Seller and in the best interests of
their respective stockholders.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions and Construction.
(a) Certain Defined Terms. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below. All other
capitalized terms, when used in this Agreement, shall have the respective
meanings in this Agreement as they first appear and are defined in this
Agreement below.
"Accounts Receivable" has the meaning ascribed to it in Section
2.01(a)(iii).
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"Action or Proceeding" means any action, suit, litigation,
proceeding, mediation, arbitration or Governmental Entity investigation or
audit.
"Affiliate" means, with respect to any Person, any other Person
that controls, is controlled by or is under common control with the first
Person.
"Allocation" has the meaning ascribed to it in Section 2.03.
"Ancillary Agreements" means, collectively, the General
Assignment and the other Assignment Instruments, the non-competition agreements,
the non-solicitation agreement and any support or other agreements to be entered
into in connection with the transactions contemplated by this Agreement.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, licenses, Contracts, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation
or other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in Section
2.02(a).
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition (financial or other), results of operations and Assets and Properties
of such Person, including financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, Contracts, Permits, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans.
"Business Books and Records" has the meaning ascribed to it in
Section 2.01(a)(x).
"Business Contracts" has the meaning ascribed to it in Section
2.01(a)(vii).
"Business Day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in the State of
California.
"Business Intellectual Property" has the meaning ascribed to it
in Section 2.01(a)(iv).
"Business Inventory" has the meaning ascribed to it in Section
2.01(a)(ii).
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"Business Permits" has the meaning ascribed to it in Section
2.01(a)(viii).
"Claims" has the meaning ascribed to it in Section 2.01(a)(ix).
"Closing" has the meaning ascribed to it in Section 2.04(a).
"Closing Date" has the meaning ascribed to it in Section 2.04(a).
"COBRA Coverage" has the meaning ascribed to it in Section
5.06(c).
"Confidential Information" has the meaning ascribed to it in
Section 3.13(k).
"Confidentiality Agreement" means the Mutual Nondisclosure
Agreement dated as of January 25, 2002 between Purchaser and Seller.
"Contingent Consideration" has the meaning ascribed to it in
Section 2.03.
"Contingent Consideration Notice" has the meaning ascribed to it
in Section 2.05(b).
"Contract" means any agreement, lease, license, note, bond or
other evidence of Indebtedness, mortgage, indenture, security agreement or other
contract (whether written or oral).
"CPA Firm" has the meaning ascribed to it in Section 2.05(b).
"Damages" has the meaning ascribed to it in Section 9.02.
"Demand for Review" has the meaning ascribed to it in Section
2.05(b).
"DGCL" has the meaning ascribed to it in Section 3.06(a).
"Dissolution Filing Date" has the meaning ascribed to it in the
Recitals.
"Dollars" and "$" mean United States Dollars.
"Effective Time" has the meaning ascribed to it in Section
2.02(a).
"Eligible Profit", in connection with the determination of the
Contingent Consideration, means the product of Eligible Revenues received by
Purchaser under the Kestrel Agreement, multiplied by Purchaser's gross margin,
in each case determined in accordance with GAAP, during the period beginning on
the Closing Date and ending on the second anniversary of the Closing Date.
"Eligible Revenue" means all revenues in excess of seven hundred
fifty thousand dollars ($750,000) received by Purchaser under the Kestrel
Agreement during the period beginning on the Closing Date and ending on the
second anniversary of the Closing Date.
"Encumbrance" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance or
restriction of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing.
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"Environmental Claim" means, with respect to Seller, the Business
and/or any other business of Seller by any written or oral notice, claim, demand
or other communication, Person alleging or asserting liability for investigatory
costs, cleanup costs, Governmental Entity response costs, damages to natural
resources or other property, personal injuries, fines or penalties arising out
of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law or any Liability under any Environmental
Law. The term "Environmental Claim" shall include any claim by any Governmental
Entity for enforcement, cleanup, removal, response, remedial or other action or
damages pursuant to any applicable Environmental Law, and any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Law" means any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Material, as in effect as of the date hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder, as in
effect from time to time.
"Expenses" means, with respect to any party hereto, all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) reasonably incurred by such party or on its behalf in connection
with or related to the negotiation, authorization, preparation, execution and
performance of its obligations pursuant to this Agreement, the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby, the preparation and filing of any required HSR Act notice and any
required response to any request for additional information in connection
therewith, and all other matters and proceedings related to this Agreement, the
Ancillary Agreements, the transactions contemplated hereby and thereby and the
closing of such transactions.
"Final Intellectual Property Schedule" has the meaning ascribed
to it in Section 2.04(c).
"GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified period and in the
immediately preceding comparable period.
"General Assignment" has the meaning ascribed to it in Section
2.04(a)(ii).
"Governmental Entity" means any United States federal, state or
local or foreign governmental, regulatory or administrative authority, agency,
commission, court, tribunal or arbitral body, arbitrator or mediator.
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"Hazardous Material" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder, as in effect from time to time.
"IBM" means International Business Machines Corporation.
"IBM Agreement" has the meaning ascribed to it in the Recitals.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money whether or not evidenced by notes, bonds, debentures or
similar instruments, (ii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iii) under capital leases, and (iv) in the nature of guarantees of
the obligations described in clauses (i) through (iii) above of any other
Person.
"Indemnification Period" has the meaning ascribed to it in
Section 9.04.
"Indemnified Persons" has the meaning ascribed to it in Section
9.02(a).
"Intellectual Property" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
foreign and international patents and patent rights (including all patents,
patent applications, and any and all divisions, continuations,
continuations-in-part, reissues, re-examinations and extensions thereof, and all
invention registrations and invention disclosures); (ii) all trademarks and
trademark rights, service marks and service xxxx rights, trade names and trade
name rights, service names and service name rights, designs, trade dress, brand
names, business and product names, Internet domain names, logos and slogans
(including all goodwill, common law rights and governmental or other
registrations or applications for registration pertaining thereto); (iii) all
copyrights and copyright rights (including all common law rights and
governmental or other registrations or applications for registration pertaining
thereto, and renewal rights therefor); (iv) all sui generis database rights,
ideas, inventions, (whether patentable or not), invention disclosures,
improvements, technology, know-how, show-how, trade secrets, formulas, systems,
processes, designs, methodologies, industrial models, works of authorship,
databases, content, graphics, technical drawings, statistical models,
algorithms, modules, computer programs, technical documentation, business
methods, work product, intellectual and industrial property licenses,
proprietary information, customer lists, and documentation relating to any of
the foregoing; (v) all mask works, mask work registrations and applications
therefor; (vi) all industrial designs and any registrations and applications
therefor throughout the world; (vii) all computer software including all source
code, object code, firmware, development tools, files, records and data, all
media on which any of the foregoing is recorded, all Web addresses, sites and
domain names, (viii) all similar, corresponding or equivalent rights to any of
the foregoing and (ix) all documentation related to any of the foregoing.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
5
"Inventory" has the meaning ascribed to it in Section
2.01(a)(ii).
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by Seller (other
than trade receivables generated in the ordinary course of business of Seller).
"IP Xxxx of Sale" has the meaning ascribed to it in Section
2.04(a)(ii).
"IRS" means the United States Internal Revenue Service.
"Kestrel Agreement" means the Volume Purchase Agreement dated as
of July 13, 1998 between CommQuest Technologies, Inc., a California corporation,
and Kestrel Solutions, Inc., a California corporation, and related purchase
orders.
"Law" means any U.S. federal, state, or local, and any foreign,
statute, law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law, as in effect from time to time, including the
Foreign Corrupt Practices Act.
"Legal Expenses" of an Indemnified Person means any and all
reasonable out-of-pocket fees, costs and expenses of any kind incurred by such
Indemnified Person and its counsel in investigating, preparing for, defending
against or providing evidence, responding to subpoenas, producing documents or
taking other reasonable action with respect to any threatened or asserted claim
of a third party or Governmental Entity, including expenses of investigation,
court costs, and fees and expenses of attorneys, accountants and experts.
"Letter of Intent" means the Letter of Intent dated as of
February 5, 2002 between Purchaser and Seller.
"Liability" and "Liabilities" means any Indebtedness, obligation
or other liability of a Person (whether absolute, accrued, contingent, fixed or
otherwise, matured or unmatured, determined or undetermined, or whether due or
to become due).
"Liabilities under Business Contracts and Business Permits" has
the meaning ascribed to it in Section 2.02(a)(iii).
"Material Adverse Effect" with respect to the specified Person or
to the Business means any change, effect, event, occurrence, state of facts or
development that, individually or in the aggregate (taking into account all
other such changes, effects, events, occurrences, states of fact and
developments), is, or is reasonably likely to be, materially adverse to the
business, assets, Liabilities, financial condition, operations, results of
operations or prospects of the specified Person or, in the case of the Business,
materially adverse to the Business, the Purchased Assets or the Assumed
Liabilities, or the financial condition, operations, results of operation or
prospects of the Business; provided, that none of the following shall be deemed
in itself to constitute a Material Adverse Effect: changes, effects, events,
occurrences, states of facts or developments (A) occurring as a result of
general economic or financial conditions or (B) which are not unique to such
Person or to the Business but also affect other Persons who participate or are
engaged in the business of the Business
6
or in the lines of business in which such Person participates or is engaged,
unless such changes, events, occurrences, states of fact or developments have a
disproportionate effect on the Business or such Person.
"Memorandum of Resolution" has the meaning ascribed to it in
Section 2.05(b).
"Notice of Objection" has the meaning ascribed to it in Section
2.05(b).
"Officer's Certificate" has the meaning ascribed to it in Section
9.02(b).
"Order" means any writ, judgment, decree, stipulation,
determination, injunction or similar order or award of any Governmental Entity
(in each such case whether preliminary or final).
"Other Intellectual Property" has the meaning ascribed to it in
Section 2.01(a)(iv).
"Other Inventory" has the meaning ascribed to it in Section
2.01(a)(ii).
"Permit" means any license, permit, certificate of authority,
authorization, approval, registration, franchise, concession and similar consent
granted or issued by any Governmental Entity.
"Permitted Encumbrance" means (i) any Encumbrance for Taxes not
yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Encumbrance arising in the ordinary course of business
by operation of Law with respect to a Liability that is not yet due or
delinquent and does not materially impair the value of the property subject to
such Encumbrance or the use of such property in the conduct of the Business.
"Person" means an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association, entity or Governmental Entity.
"Personal Property Lease Liabilities" has the meaning ascribed to
it in Section 2.02(a)(ii).
"Personal Property Leases" has the meaning ascribed to it in
Section 2.01(a)(vi).
"Plan of Liquidation" has the meaning ascribed to it in Section
3.06(a).
"Post-Closing Period" has the meaning ascribed to it in Section
6.06(b).
"Pre-Closing Period" has the meaning ascribed to it in Section
6.06(b).
"PTO" means the United States Patent and Trademark Office.
"Purchase Price" has the meaning ascribed to it in Section 2.03.
"Purchased Assets" has the meaning ascribed to it in the
Recitals.
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"Purchaser Disclosure Schedule" has the meaning ascribed to it in
the forepart of Article IV.
"Real Property Sublease Liabilities" has the meaning ascribed to
it in Section 2.02(a)(i).
"Real Property Sublease" has the meaning ascribed to it in
Section 2.01(a)(i).
"Registered Business Intellectual Property" has the meaning
ascribed to it in Section 3.13(f).
"Registered Other Intellectual Property" has the meaning ascribed
to it in Section 3.13(f).
"Registered Seller Intellectual Property" has the meaning
ascribed to it in Section 3.13(f).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
"Representatives" has the meaning ascribed to it in Section
5.03(a).
"Retained Liabilities" has the meaning ascribed to it in Section
2.02(b).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder, as in effect
from time to time.
"Seller Authorizations" has the meaning ascribed to it in Section
3.15.
"Seller Disclosure Schedule" has the meaning ascribed to it in
the forepart of Article III.
"Seller Intellectual Property" means the Business Intellectual
Property and the Other Intellectual Property.
"Seller Warranty Obligations" has the meaning ascribed to it in
Section 6.05.
"Severance Obligations" has the meaning ascribed to it in Section
2.02(a)(iv)
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity, a majority of the stock or
other equity interests or voting power of which is owned by such Person (either
alone or through or together with any other subsidiary of such Person).
"Tangible Personal Property" has the meaning ascribed to it in
Section 2.01(a)(v).
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"Tax" means (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or Taxing Authority, including taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value-added or gains taxes, Permit, registration and documentation
fees, and customs' duties, tariffs and similar charges; (ii) any liability for
the payment of any amounts of the type described in clause (i) as a result of
being a member of an affiliated, combined, consolidated or unitary group for any
taxable period; and (iii) any liability for the payment of amounts of the type
described in clause (i) or clause (ii) as a result of being a transferee of, or
a successor in interest to, any Person or as a result of an express or implied
obligation to indemnify any Person.
"Tax Return" means any return, statement, report or form
(including any estimated tax reports and returns, withholding tax reports and
returns and information reports and returns) required to be filed with respect
to any Tax.
"Taxing Authority" means any Governmental Entity or taxing
authority responsible for the assessment, collection or administration of any
Tax.
"Third Party Claim" has the meaning ascribed to it in Section
9.06(a).
"Third Party Intellectual Property Right" has the meaning
ascribed to it in Section 3.13(d).
"Transfer Taxes" means any and all excise, value added,
registration, stamp, property, documentary, transfer, sales, use and similar
Taxes, levies, charges and fees (including all real estate transfer taxes)
incurred, or that may be payable to any Taxing Authority, in connection with the
transactions contemplated by this Agreement.
"Transferred Employees" has the meaning ascribed to it in Section
5.06(a).
(b) Construction. Unless the context of this Agreement otherwise
clearly requires, (i) words of any gender include each other gender and the
neuter; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby,"
"hereto" and derivative or similar words refer to this entire Agreement as a
whole and not to any particular Article, Section or other subdivision; (iv) the
terms "Article" or "Section" or other subdivision refer to the specified
Article, Section or other subdivision of the body of this Agreement; (v) the
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation" except when preceded by a negative predicate;
(vi) when a reference is made in this Agreement to a schedule or exhibit, such
reference shall be to a Schedule or Exhibit to this Agreement unless otherwise
indicated; and (vii) the phrase "materiality limitation" means all
qualifications, limitations, thresholds and exceptions based on the concept of
materiality, whether expressed by the word "material", "materially",
"materiality", "material adverse change" or "Material Adverse Effect". All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. The term "party" or "parties" (but not the
term
9
"third party") when used herein refer to Purchaser, on the one hand, and Seller,
on the other hand. When used herein, the phrase "to the knowledge of" any
Person, "to the best knowledge of" any Person, "known to" any Person or any
similar phrase, means, in the case of Purchaser, the actual knowledge of the
directors and officers of Purchaser, and, in the case of Seller, the actual
knowledge of the directors and officers of Seller, the managers of the Business
and the Transferred Employees listed on Schedule 7.03(f), and, in each case, the
knowledge that such Persons would have obtained of the matter represented after
reasonable due and diligent inquiry of those employees of such party whom such
officers, directors, managers and employees reasonably believe would have actual
knowledge of the matters represented. In this Agreement, any reference to a
party conducting its business or other affairs or taking any action in the
"ordinary course of business" and "ordinary course of business consistent with
past practice" refer to the business and practice of the Business, as heretofore
conducted to the extent: (a) such action is consistent with such party's past
practices and is taken in the ordinary course of such party's normal day to day
operations; (b) such action is taken in accordance with sound and prudent
business practices; (c) such action is not required to be authorized by such
party's stockholders, such party's board of directors or any committee of such
party's board of directors and does not require any other separate or special
authorization of any nature; and (d) such action is similar in nature and
magnitude to actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal day to day operations of
other Persons that are engaged in businesses similar to such party's business.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND CLOSING
Section 2.01 Purchased Assets.
(a) Purchased Assets Transferred. On the terms and subject to the
conditions set forth in this Agreement, Seller shall (and, effective as of March
15, 2002, does hereby) sell, transfer, convey, assign and (subject, in the case
of the Other Inventory, to Section 2.04(a)(iii)) deliver to Purchaser, free and
clear of all Encumbrances, and Purchaser shall purchase and pay for, at the
Closing, all of Seller's right, title and interest in, to and under all of the
Purchased Assets, including:
(i) Real Property Sublease: the sublease of real property
described in Schedule 2.01(a)(i) as to which Seller is the lessee or sublessee,
together with any options to purchase the underlying property and leasehold
improvements thereon, and in each case all other rights, subleases, licenses,
permits and profits appurtenant to or related to such leases and subleases (the
"Real Property Sublease");
(ii) Inventory: all inventories of raw materials, work in
process, finished goods, products under research and development and
demonstration equipment and other accessories listed in Schedule 2.01(a)(ii)
(the "Business Inventory") and one hundred twenty four (124) digital microwave
radios (the "Other Inventory") (the Business Inventory and the Other Inventory
collectively, the "Inventory");
(iii) Accounts Receivable: all accounts receivable
described in Schedule 2.01(a)(iii) (the "Accounts Receivable");
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(iv) Intellectual Property: Subject to the provisions of
Section 2.01(c), (A) all right, title and interest in, to and under all
Intellectual Property owned by or licensed to Seller (or in, to or under which
Seller otherwise has any right, title or interest) that is used primarily in, or
necessary for, the conduct of the Business, including: (1) all Intellectual
Property rights acquired by Seller from IBM under the IBM Agreement, and all
Intellectual Property in any derivative thereof, owned by Seller; (2) all of
Seller's rights in, to and under and associated with the licenses of the
technologies granted to Seller by IBM under the IBM Agreement; and (3) all other
Intellectual Property rights held by Seller associated with (I) ASIC modem chip
designs and board level solutions based upon or utilizing such designs, (II)
modem board products, (III) NIC board products, (IV) modem/NIC combination board
products or and (V) all embedded and network management software, including the
items listed or referred to in Schedule 2.01(a)(iv)(A) (collectively, the
"Business Intellectual Property"); and (B) all right, title and interest in, to
and under all Intellectual Property owned by or licensed to Seller (or in, to or
under which Seller otherwise has any right, title or interest) other than the
Business Intellectual Property (the "Other Intellectual Property");
(v) Tangible Personal Property: all fixed assets and
plant, property, machinery and equipment, furniture, fixtures, and other
tangible personal property listed in Schedule 2.01(a)(v) (the "Tangible Personal
Property");
(vi) Personal Property Leases. the leases and subleases of
Tangible Personal Property described in Schedule 2.01(a)(vi) as to which Seller
is the lessee or sublessee, together with any options to purchase the underlying
property (the "Personal Property Leases");
(vii) Business Contracts. the Contracts (other than the
Real Property Sublease, the Personal Property Leases, the Accounts Receivable
and the Seller Intellectual Property) described in Schedule 2.01(a)(vii) as to
which Seller is a party and which relate to the Business, including Contracts
related to suppliers, sales representatives, distributors, purchase orders,
license agreements, marketing arrangements and manufacturing arrangements (the
"Business Contracts");
(viii) Business Permits. all Permits (including
applications therefor) used or held for use in or necessary for the conduct of
the Business, including the Permits listed in Schedule 2.01(a)(viii) (the
"Business Permits");
(ix) Claims. all of Seller's rights, claims, causes of
action, choses in action, rights of recovery and rights of set-off of any kind
against any third party (including rights to insurance proceeds and rights under
and pursuant to all warranties, representations and guarantees made by suppliers
of products, materials or equipment, or components thereof) relating to the
Purchased Assets, properties, business or operations of the Business arising out
of transactions occurring prior the Closing Date (the "Claims"); and
(x) Books and Records. all Books and Records used or held
for use in or necessary for the conduct of the Business or otherwise related to
the Purchased Assets, other than the minute books, stock transfer books and
corporate seal of Seller (the "Business Books and Records").
(b)Post-Closing Use of Seller Intellectual Property by Seller. In
consideration of the transfer and assignment of the Seller Intellectual Property
to Purchaser pursuant to Section
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2.01(a)(iv), Purchaser hereby grants to Seller (and to a successor in interest
to Seller's customer support obligations) a fully paid-up worldwide license to
use such Seller Intellectual Property solely to the extent (and for such period
of time) that such Seller Intellectual Property is required to be used by Seller
(or a successor in interest to Seller's customer support obligations) in order
to (i) comply with Seller's support obligations to customers of Seller with
respect to products of Seller shipped to such customers prior to the Closing,
and (ii) sell or offer to sell inventories existing as of the Closing (but not
to make or have made any additional products), consistent with the liquidation
and winding up of Seller in accordance with Seller's Plan of Liquidation. Such
license shall be non-transferable and non-sublicensable (except to the extent
expressly provided herein) and shall be irrevocable for all uses permitted in
this Section 2.01(b).
Section 2.02 Liabilities.
(a) Assumed Liabilities. In connection with the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, and subject to the provisions of Section 2.04(d), Purchaser,
effective as of the Effective Time (as hereinafter defined), shall and does
hereby assume and agree to pay, perform and discharge when due the following
obligations of Seller as set forth in Schedule 2.02(a) arising in connection
with the operation of the Business, as the same shall exist at and as of the
Closing (or, if the Purchased Assets associated with such Assumed Liability
cannot be or has not been sold, assigned, transferred, conveyed and delivered to
Purchaser, at and as such later time as such Purchased Asset is actually sold,
assigned, transferred, conveyed and delivered to Purchaser) (the later of the
Closing or such later time, the "Effective Time") and no others (the "Assumed
Liabilities"):
(i) Real Property Sublease Liabilities: all obligations of
Seller under the Real Property Sublease as set forth in Schedule 2.02(a)(i)
arising and to be performed on or after the Closing Date, except, in each case,
to the extent such obligations, but for a breach or default by Seller, would
have been paid, performed or otherwise discharged on or prior to the Closing
Date or to the extent the same arise out of any such breach or default (the
"Real Property Sublease Liabilities");
(ii) Personal Property Lease Liabilities: all obligations
of Seller under the Personal Property Leases as set forth in Schedule
2.02(a)(ii) arising and to be performed on or after the Closing Date, except, in
each case, to the extent such obligations, but for a breach or default by
Seller, would have been paid, performed or otherwise discharged on or prior to
the Closing Date or to the extent the same arise out of any such breach or
default (the "Personal Property Lease Liabilities");
(iii) Liabilities under Business Contracts and Business
Permits: all obligations of Seller under the Business Contracts and Business
Permits as set forth in Schedule 2.02(a)(iii) arising and to be performed on or
after the Closing Date, except, in each case, to the extent such obligations,
but for a breach or default by Seller, would have been paid, performed or
otherwise discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default (the "Liabilities under Business
Contracts and Business Permits"); and
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(iv) Severance Obligations: the severance obligations
assumed by Purchaser pursuant to Section 5.06(b) of this Agreement, subject to
the limitations set forth therein (the "Severance Obligations").
(b) Retained Liabilities. Except for the Assumed Liabilities,
Purchaser shall not assume by virtue of this Agreement or any of the Ancillary
Agreements or any of the transactions contemplated hereby or thereby, and shall
have no liability for, any Liability of Seller of any kind, character or
description whatsoever (collectively, the "Retained Liabilities"). Seller shall
discharge in a timely manner or shall make adequate provision for all of the
Retained Liabilities related to the Purchased Assets, the Assumed Liabilities or
the Business.
Section 2.03 Purchase Price; Allocation; Adjustment. The aggregate
purchase price for the Purchased Assets and for the covenant of Seller not to
compete contained in Section 5.04 shall be the sum of (i) two hundred three
thousand dollars ($203,000), of which (A) one hundred three thousand dollars
($103,000) shall be paid and delivered by Purchaser at the Closing and (B) one
hundred thousand dollars ($100,000) shall be paid and delivered by Purchaser
upon delivery by Seller to Purchaser of the Final Intellectual Property Schedule
(subject to the provisions of Section 2.04(d)), plus (ii) fifty percent (50%) of
the amount (if any) of Eligible Profits (the "Contingent Consideration") ((i)
and (ii) collectively the "Purchase Price"). The sum of one dollar ($1) is
allocable to, and deemed to be in consideration of, the covenant of Seller not
to compete contained in Section 5.04, and the remainder of the Purchase Price is
allocable to, and deemed to be in consideration of, the Purchased Assets. The
Purchase Price shall be allocated by Purchaser among the Purchased Assets
(together with any Liability of Seller assumed by Purchaser) (the "Allocation")
and such Allocation shall be consistent with the asset valuation prepared by
Purchaser's independent auditors and shall be approved by Seller, which approval
shall not be unreasonably withheld. The Allocation shall be conclusive and
binding upon Purchaser and Seller for all purposes, and each of Purchaser and
Seller agrees that all returns and reports (including IRS Form 8594) and all
financial statements shall be prepared in a manner consistent with (and neither
Purchaser nor Seller shall otherwise file a tax return position inconsistent
with) the Allocation unless required by the IRS or any other applicable Taxing
Authority. If such Allocation is disputed by any Governmental Entity, the party
receiving notice of such dispute shall promptly notify the other party hereto of
the existence thereof, and shall cooperate with the other party in resolving
such dispute.
Section 2.04 Closing.
(a) Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned in accordance with
Section 8.01, the closing of the purchase and sale of the Purchased Assets (the
"Closing") shall take place on March 15, 2002 or at such other date as the
parties hereto agree, but only after the satisfaction or waiver of each of the
conditions set forth in Article VII (the "Closing Date"). The Closing shall take
place at the Palo Alto office of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two
Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000. At the Closing:
(i) Seller shall deliver to Purchaser and Purchaser shall
deliver to Seller fully executed originals of the opinions, certificates,
contracts, documents and instruments required by Article VII.
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(ii) Seller shall assign and transfer to Purchaser good
and valid title in and to the Purchased Assets, free and clear of all
Encumbrances other than Permitted Encumbrances, by delivery of (A) a General
Assignment and Xxxx of Sale in substantially the form of Exhibit A hereto (the
"General Assignment"), duly executed by Seller, (B) instruments of assignment of
the Seller Intellectual Property, duly executed by Seller and in substantially
the form of Exhibit B hereto (the "IP Xxxx of Sale"), (C) such other good and
sufficient instruments of conveyance, assignment and transfer, duly executed by
Seller and in form and substance reasonably acceptable to Purchaser and its
legal counsel, as shall be effective to vest in Purchaser good title to the
Purchased Assets, and (D) the FIRPTA certificate as provided by Section 6.02 and
any other certifications which may be required under applicable Law stating that
no Taxes are due to any Taxing Authority for which Purchaser could have
liability. Except for the Other Inventory, physical possession of which shall be
delivered to Purchaser upon payment by Purchaser of the amount required by
Section 2.03(i)(B) (title to which having been transferred to Purchaser at the
Closing by delivery of the General Assignment), Seller shall deliver to
Purchaser on the Closing Date, at the Closing or at the locations at which the
Business is conducted, physical possession of the Purchased Assets, and if at
any time after the Closing Seller discovers in its possession or under its
control any other Purchased Assets, it shall forthwith deliver such Purchased
Assets to Purchaser.
(iii) Simultaneously with the deliveries contemplated by
Section 2.04(a)(ii), Purchaser shall assume from Seller the due payment,
performance and discharge of the Assumed Liabilities.
(b)The Purchase Price shall be paid in part at the Closing and in
part after the Closing, as set forth in Section 2.03, Section 2.04(c) and
Section 2.05.
(c) A complete final itemized schedule listing all of the
Intellectual Property which, to the best of Seller's knowledge comprises the
Seller Intellectual Property (the "Final Intellectual Property Schedule") shall
be delivered by Seller to Purchaser no later than thirty (30) days after the
Closing Date, and upon such delivery Purchaser shall pay to Seller the sum of
one hundred thousand dollars ($100,000); provided, however, that the Final
Intellectual Property Schedule shall not be construed as a limitation on the
definition of the Seller Intellectual Property, the Business Intellectual
Property or the Other Intellectual Property, or on the scope of the Seller
Intellectual Property, the Business Intellectual Property or the Other
Intellectual Property transferred to Purchaser pursuant to this Agreement; and
provided, further, that if, after the delivery of the Final Intellectual
Property Schedule, any Intellectual Property within the scope of the Seller
Intellectual Property, the Business Intellectual Property or the Other
Intellectual Property comes to the attention of Seller which is not listed in
the Final Intellectual Property Schedule, Seller shall so notify Purchaser and
such notification shall be deemed a supplement to the Final Intellectual
Property Schedule.
(d)Purchaser shall have the right, exercisable in its sole
discretion at any time on or before 6 p.m. California time or the sixtieth
(60th) day after the Closing (or, if such day is not a Business Day, the next
following Business Day) to cancel the purchase of the Other Inventory and the
Other Intellectual Property, by delivery of written notice of cancellation to
Seller in accordance with Section 10.01, whereupon: (i) Seller shall forthwith
repay to Purchaser the sum of one hundred thousand dollars ($100,000) by wire
transfer of immediately available funds to such account as Purchaser shall
direct; (ii) Purchaser shall return and redeliver to Seller the Other Inventory
(in
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materially the same condition as delivered to Purchaser) and instruments
sufficient to transfer title to the Other Intellectual Property back to Seller;
and (iii) Purchaser shall assume and shall have no liability or obligation to
Seller or any other person with respect to the Other Inventory or the Other
Intellectual Property.
Section 2.05 Determination and Payment of Contingent Consideration.
(a) Estimated interim payments of Contingent Consideration shall
be paid by Purchaser to Seller monthly. Such payments shall be made not more
than twenty (20) Business Days after the end of each calendar month, and shall
be subject to final adjustment after the determination of Contingent
Consideration shall have become final and binding on all parties in accordance
with the provisions of Section 2.05(b).
(b) Promptly following the second anniversary of the Closing
Date, Purchaser shall deliver to Seller, in accordance with Section 10.01, a
statement setting forth Purchaser's calculation of the amount of Eligible
Revenues, Eligible Profit and Contingent Consideration (the "Contingent
Consideration Notice"). If Seller disagrees with Purchaser's calculation of
Eligible Revenues, Eligible Profit or Contingent Consideration, Seller shall
have until 5 p.m. Pacific Time on the tenth (10th) day after the day of delivery
of the Contingent Consideration Notice to deliver to Purchaser, in accordance
with Section 10.01, a statement in writing objecting to Purchaser's calculation
of the amount of Eligible Revenues, Eligible Profit or Contingent Consideration
(the "Notice of Objection"). If Seller does not timely deliver a Notice of
Objection, Purchaser's determination of the amount of Eligible Revenues,
Eligible Profit and Consideration shall become final and binding on all parties
upon expiration of the time for delivery of a Notice of Objection, and the
amount of Eligible Revenues, Eligible Profit and Contingent Consideration shall
be as set forth in the Contingent Consideration Notice. If Seller timely
delivers a Notice of Objection, Purchaser and Seller shall seek in good faith to
resolve their differences with respect to the amount of Eligible Revenues,
Eligible Profit and Contingent Consideration. If Purchaser and Seller resolve
their differences with respect to the amount of Eligible Revenues, Eligible
Profit and Contingent Consideration, they shall set forth such resolution in a
written memorandum (the "Memorandum of Resolution"), and the amount of Eligible
Revenues, Eligible Profit and Contingent Consideration shall be as set forth in
the Memorandum of Resolution, which upon execution and delivery by both parties
shall be final and binding on all parties. If Purchaser and Seller are unable to
agree upon the amount of Eligible Revenues, Eligible Profit or Contingent
Consideration, Seller shall have until 5 p.m. Pacific Time on the sixtieth
(60th) day after the day of delivery of the Notice of Objection to deliver to
Purchaser, in accordance with Section 10.01, a demand in writing that the
calculation of Eligible Revenues, Eligible Profit and Contingent Consideration
be submitted to an independent auditing firm (the "CPA Firm") for review (the
"Demand for Review"). If Seller does not timely deliver a Demand for Review,
Purchaser's calculation of Eligible Revenues, Eligible Profit or Contingent
Consideration shall become final and binding on all parties upon expiration of
the time for delivery of a Demand for Review, and the amount of Eligible
Revenues, Eligible Profit and Contingent Consideration shall be as set forth in
the Contingent Consideration Notice. If Seller timely delivers a Demand for
Review, the CPA Firm shall review Purchaser's calculation of Eligible Revenues,
Eligible Profit and Contingent Consideration and, acting as experts and not as
arbitrators, shall determine, but only as to the remaining differences so
submitted, whether Purchaser's calculation is in accordance with GAAP and, if
not, what if any adjustment to Purchaser's calculation is warranted. The CPA
Firm shall render and deliver its written determination to all
15
parties within sixty (60) days after such referral, and such determination shall
be final and binding on all parties, and the amount of Eligible Revenues,
Eligible Profit and Contingent Consideration shall be as set forth in such
determination. The costs and expenses of the CPA Firm shall be borne by fifty
percent (50%) by Purchaser and fifty percent (50%) by Seller.
Section 2.06 Further Assurances; Post-Closing Cooperation.
(a) If at any xxxx Xxxxxx receives any payment pursuant to the
Kestrel Agreement or any of the other Business Contracts, Seller shall
immediately forward such payment to Purchaser. At any time or from time to time
after the Closing, at Purchaser's request and without further consideration,
Seller shall execute and deliver to Purchaser such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions as Purchaser may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to Purchaser, and to confirm Purchaser's right, title and interest in, to and
under all of the Purchased Assets, and, to the full extent permitted by Law, to
put Purchaser in actual possession and operating control of the Business and the
Purchased Assets and to assist Purchaser in exercising all rights with respect
thereto, and otherwise to cause Seller to fulfill its obligations under this
Agreement and the Ancillary Agreements. Following the Closing, Seller and
Purchaser shall cooperate in good faith with each other and with any Taxing
Authority in connection with, and for purposes of, the procurement of any tax
clearance certificate from such Taxing Authority which certificate absolves
either party from any duty to withhold an amount from the Purchase Price, or
otherwise to pay any Taxes, as a result of the purchase or transfer of the
Purchased Assets.
(b) Effective on the Closing Date, Seller shall constitute and
appoint Purchaser and its corporate parent the true and lawful attorneys of
Seller, with full power of substitution, in the name of Seller, Purchaser or its
corporate parent, but on behalf of and for the benefit of Purchaser and/or its
corporate parent: (i) to demand and receive from time to time any and all of the
Purchased Assets and to make endorsements and give receipts and releases for and
in respect of the same and any part thereof; (ii) to institute, prosecute,
compromise and settle any and all Actions or Proceedings that Purchaser and/or
its corporate parent may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Purchased Assets; (iii) to defend
or compromise any or all Actions or Proceedings in respect of any of the
Purchased Assets; and (iv) to do all such acts and things in relation to the
matters set forth in the preceding clauses (i) through (iii) as Purchaser and/or
its corporate parent shall deem desirable. Seller hereby acknowledges that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are not and shall not be revocable by it in any manner or for any
reason. Purchaser shall indemnify and hold harmless Seller from any and all
Damages caused by or arising out of any breach of Law by Purchaser in its
exercise of such power of attorney.
(c) Following the Closing, each party shall afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the Books and Records relating to the Business in its possession with
respect to periods prior to the Closing and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably required by
the requesting party in connection with (i) the preparation of Tax Returns, (ii)
the determination or enforcement of rights and obligations under this Agreement,
(iii) compliance with the requirements of any Governmental Entity, (iv) the
determination or enforcement of the rights and obligations of any Indemnified
Person or (v) in connection with any actual or threatened Action or Proceeding.
16
Furthermore, each party agrees for a period extending three (3) years after the
Closing Date not to destroy or otherwise dispose of any such Books and Records
unless such party shall first offer in writing to surrender such Books and
Records to the other party and such other party shall not agree in writing to
take possession thereof during the twenty (20) day period after such offer is
made.
(d) Notwithstanding anything to the contrary contained in this
Section 2.06, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with Sections 2.06(b) and 2.06(c) shall be subject to applicable rules relating
to discovery.
Section 2.07 Third Party Consents. To the extent that any Business
Contract or Business Permit, or any license, sublicense or other agreement to
which Seller or any of its Subsidiaries is a party and pursuant to which Seller
or any of its Subsidiaries is authorized to use any third-party Intellectual
Property (including generally available "shrink wrap" licenses) relating to the
Business or to the Purchased Assets, is not assignable without the consent,
waiver, approval or other action of a third party or notice to a third party,
this Agreement shall not constitute an assignment or an attempted assignment
thereof if such consent, waiver, approval or other action has not been obtained
and delivered to Purchaser or if such notice has not been given or such
assignment or attempted assignment would otherwise constitute a breach thereof.
Seller shall use its commercially reasonable best efforts to obtain such
consent, waiver of such third party approval or other action or to give such
notice as to permit or effect the assignment of any such Business Contract,
Business Permit, license, sublicense or other agreement to Purchaser in all
cases in which such consent, waiver, approval, other action or notice is or may
be required for such assignment. If any such consent, waiver, approval or other
action shall not be obtained or such notice cannot be given, Seller shall
cooperate with Purchaser in any reasonable arrangement designated by Purchaser
designed to provide for Purchaser the benefits intended to be assigned to
Purchaser under the affected Business Contract, Business Permit, license,
sublicense or other agreement including permission for use of premises or
enforcement at the cost and for the account of Purchaser of any and all rights
of Seller against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. If and to the extent that
such assignment or arrangement cannot be made, Purchaser shall have no
obligation pursuant to any provision of this Agreement with respect to any such
Business Contract, Business Permit, license, sublicense or other agreement. The
provisions of this Section 2.07 shall not affect the right of Purchaser not to
consummate the purchase of Purchased Assets contemplated by this Agreement if
any of the conditions to Purchaser's obligation to purchase the Purchased
Assets, as set forth in Article VII, has not been satisfied.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants (and, by his signature on
the signature page of this Agreement on behalf of Seller, the chief executive
officer and chief financial officer of Seller hereby certifies, on behalf of
Seller) to Purchaser that, subject to the exceptions specifically disclosed in
writing in a schedule delivered by Seller to Purchaser prior to (or
contemporaneously with) the signing of this Agreement (the "Seller Disclosure
Schedule") (or, solely in the case of items required by and exceptions to the
representations and warranties set forth in Section 3.13
17
relating to the Other Inventory or the Other Intellectual Property, in the Final
Intellectual Property Schedule), the statements set forth in this Article III
are true and correct. The Seller Disclosure Schedule (and in the case of items
required by and exceptions, if any, to the representations and warranties set
forth in Section 3.13 relating to the Other Intellectual Property or the Other
Inventory, in the Final Intellectual Property Schedule) shall be arranged in
sections and subsections corresponding to the numbered sections and lettered
subsections of this Agreement, and all exceptions shall reference to a specific
representation set forth in this Article III and shall apply only to such
numbered section and lettered subsection; provided, that any information
disclosed in one section or subsection of the Seller Disclosure Schedule shall
be deemed to be disclosed in other sections and subsections of the Seller
Disclosure Schedule, and information disclosed in one section or subsection of
the Final Intellectual Property Schedule shall be deemed to be disclosed in
other sections and subsections of the Final Intellectual Property Schedule, if
Seller has made good faith efforts to provide express cross-references and
(notwithstanding the absence of express cross-reference) if it is clear from a
reading of the disclosure, without any additional or independent knowledge on
the part of the reader, that such disclosure is applicable to such other section
or subsection.
Section 3.01 Organization, Standing and Power. Seller is a corporation
duly organized, validly existing and in good standing under the Laws of the
state of its incorporation. Seller has the corporate power to own, use, license
and lease the Purchased Assets and to carry on its business as now being
conducted and as currently proposed to be conducted and is duly qualified,
licensed or admitted to do business and is in good standing in each jurisdiction
in which the ownership, use, licensing or leasing of its Assets and Properties,
or the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified or licensed and
in good standing that could not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the ability of Seller to perform
its obligations under this Agreement.
Section 3.02 Authority. Seller has all requisite corporate power and
authority to enter into, execute and deliver this Agreement and the Ancillary
Agreements, and to consummate the transactions contemplated hereby and thereby,
including the execution and delivery of this Agreement, and to perform its
obligation hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate and stockholder action on the part of Seller. This Agreement and the
Ancillary Agreements have been duly executed and delivered by Seller and
constitute the legal, valid and binding obligation of Seller enforceable against
Seller in accordance with their terms, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
Section 3.03 No Conflicts. The execution and delivery of this Agreement
and the Ancillary Agreements by Seller does not, and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(a) conflict with, or result in any violation or breach of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right or breach of termination, cancellation or acceleration of any
obligation or loss of any benefit under (i) any provision of the Certificate of
Incorporation, bylaws or other charter or organizational documents of Seller, as
presently in effect,
18
or (ii) the Real Property Sublease or any of the Business Contracts, Business
Permits, Personal Property Leases or any other material mortgage, indenture,
lease, Contract, or other instrument, Permit, Order or Law applicable to Seller,
the Business or any of the Purchased Assets;
(b) conflict with or result in a violation or breach of any Law
or Order applicable to Seller (except where such conflicts, violations or
breaches do not and would not reasonably be expected to have a Material Adverse
Effect on Seller or to impair the ability of Seller to consummate the
transactions contemplated by this Agreement) or any of the Purchased Assets; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default) under, (iii) require Seller to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of; (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, or (vi) result in the imposition of any Encumbrance on any of
the Purchased Assets or the loss of any material benefit under, any of the
terms, conditions or provisions of any Business Contract, Business Permit or
Third Party Intellectual Property Right.
Section 3.04 No Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Seller or any of the Purchased Assets
in connection with the execution and delivery of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby, except for consents, authorizations, filings, approvals and
registrations the absence of which would not prevent, alter or delay any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements.
Section 3.05 Title to Purchased Assets; Absence of Encumbrances.
(a) Except for the Seller Intellectual Property (which is
addressed in Section 3.13), Seller has good and valid title to all of the
Purchased Assets free and clear of any Encumbrances except for Permitted
Encumbrances and Seller has full right and power to sell, convey, assign,
transfer and deliver to Purchaser good and valid title to all of the Purchased
Assets, free and clear of any and all Encumbrances. The Purchased Assets are not
subject to any preemptive right, right of first refusal or other right or
restriction.
(b) The Real Property Sublease and all of the Personal Property
Leases are legal, valid, binding and enforceable on Seller in accordance with
their terms, and, to the knowledge of Seller, are enforceable against the other
party or parties thereto in accordance with their terms. Seller is not in
material default under any such lease and there has not occurred any event that,
either alone or with the giving of notice or lapse of time or both, would
constitute a material default under the lease. To the knowledge of Seller, there
is no current default by any other party to any such lease and no event has
occurred that, either alone or with the giving of notice or lapse of time or
both, would constitute a default by such party under any such lease.
(c) The sale, transfer and assignment of the Purchased Assets as
contemplated by this Agreement will give Purchaser possession of, and the right
to use, all of the Assets and Properties
19
required for the conduct of the Business as presently conducted. After the
Closing Date, Purchaser will be entitled to the continued possession and use of
the real property covered by the Real Property Sublease and the Tangible
Personal Property covered by the Personal Property Leases for the terms
specified in such leases and for the purposes consistent with the past practices
of Seller. Except for the Purchased Assets, there are no other Assets or
Properties of Seller that will be required by Purchaser after the Closing in
order to conduct the Business in the manner conducted by Seller on and as of the
date of this Agreement.
Section 3.06 Certificate of Dissolution.
(a) Seller filed a Certificate of Dissolution with the Secretary
of State of Delaware on January 31, 2002. Seller has caused, or will cause,
written notice of the commencement of the proceedings for voluntary winding up
to be given by mail to all known creditors and claimants whose addresses appear
on the records of Seller, as required by Sections 280 and 281 of the Delaware
General Corporation Law (the "DGCL"). Seller (i) has filed, or will file, a
final tax return with the Delaware Franchise Tax Board and United States
Internal Revenue Service, and any other necessary federal, state or local tax
returns or filings, (ii) has paid, or will pay, any and all federal, state or
local taxes due from Seller, and (iii) has paid or will pay, or has made or will
make adequate provision for payment of, all claims made against Seller relating
to any of the Purchased Assets or Assumed Liabilities or the Business, including
all expenses of the sale of the Assets and Properties of Seller and of the
liquidation and dissolution provided for by the Plan of Complete Liquidation and
Dissolution (the "Plan of Liquidation") approved by Seller's stockholders on
October 29, 2001, other than those Liabilities set forth in Section 3.06(a) of
the Seller Disclosure Schedule. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Seller. Seller has provided to Purchaser a true, correct and
complete copy of a report of Seller's management to Seller's board of directors
setting forth (i) the facts and circumstances of Seller's efforts to sell
Seller's Assets and Properties and (ii) the procedures used by Seller for
establishing the value of Seller's Assets and Properties, and the nature and
value of Seller's Liabilities. Seller has reviewed the market for the Purchased
Assets and the Business to be transferred pursuant to this Agreement and
believes that the consideration to be received under the Agreement reflects the
best price obtainable. The Agreement is the result of arm's length negotiations
between Seller and Purchaser.
(b) None of the statements, representations or warranties
contained in the Seller Disclosure Schedule or the report of Seller's management
referred to in Section 3.06(a) contains or will contain at the Closing Date any
untrue statement of a material fact, or omits or will omit at the Closing Date
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
Section 3.07 Absence of Certain Changes. Since the Dissolution Filing
Date, Seller has not engaged in any business activities except to the extent
necessary to carry out the Plan of Liquidation, wind up its business affairs,
and distribute its Assets and Properties, all in accordance with the Plan of
Liquidation.
Section 3.08 Absence of Undisclosed Liabilities. There are no
Liabilities arising from or relating to any of the Business Contracts listed in
Schedule 2.01(a)(vii) as to which Purchaser will be
20
liable or responsible to any party financially or otherwise, except the
"Liabilities under Business Contracts and Business Permits" as defined in
Section 2.02(a)(iii).
Section 3.09 Inventory.
(a) Schedule 2.01(a)(ii) contains a true and complete list of the
entire inventory of the Business, other than unusable or obsolete items.
(b) All items required to be listed on Schedule 2.01(a)(ii) are
the property of Seller free and clear of any Encumbrance, have not been pledged
as collateral, are not held by Seller on consignment from others and conform in
all respects to all standards applicable to such Inventory or its use or sale
imposed by any Governmental Entity.
Section 3.10 Litigation. Except as set forth in Section 3.10 of the
Seller Disclosure Schedule, there is no private or governmental Action or
Proceeding pending, or, to the knowledge of Seller, threatened by or against
Seller, involving any of the Purchased Assets or Assumed Liabilities or the
operation of the Business. There is no judgment, decree or Order applicable to
Seller or any of the Purchased Assets that could prevent, enjoin, alter or delay
any of the transactions contemplated by this Agreement or the Ancillary
Agreements, or that could reasonably be expected to have a Material Adverse
Effect on the Business or the Purchased Assets.
Section 3.11 Warranties; Product Liability Claims. Section 3.11 of the
Seller Disclosure Schedule sets forth the standard terms of all product
warranties issued for products of the Business since March 31, 2000. Except as
set forth in Section 3.11 of the Seller Disclosure Schedule, there is no claim
against or Liability of Seller (or, to Seller's knowledge, any predecessor of
Seller) on account of any product warranty, epidemic failure of any product or
with respect to the manufacture, sale, distribution or license of defective
products related to the Business, and, to Seller's knowledge, there is no basis
for any such claim. Neither Seller nor, to the knowledge of Seller, any of
Seller's predecessors in interest, has been subject to any product liability
claim relating to any of the products of the Business or operation of the
Business and, to the knowledge of Seller, no such claim is threatened and no
circumstance or condition exists that would reasonably be expected to give rise
to such a claim.
Section 3.12 Business Contracts.
(a) Section 3.12(a) of the Seller Disclosure Schedule contains a
true and complete list of each of the Business Contracts (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been delivered to Purchaser prior to the execution of
this Agreement (other than employee offer letters).
(b) Seller has performed in all material respects all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not in default, and is not alleged to be in default, in respect of
any Business Contract in any material respect. Each of the Business Contracts is
in full force and effect, unamended, and there exists no default or event of
default or event, occurrence, condition or act, with respect to Seller or to
Seller's knowledge with respect to the other contracting party, which, with the
giving of notice, the lapse of time or the happening of any other
21
event or conditions, would become a default or event of default under any
material provision of any Business Contract.
(c) Section 3.12(c) of the Seller Disclosure Schedule lists (a)
all Business Contracts that require a novation or consent to assignment, as the
case may be, prior to the Closing Date so that Purchaser shall be made a party
in place of Seller, or as assignee and (b) every Business Contract which, if no
novation occurs to make Purchaser a party thereto or if no consent to assignment
is obtained, would materially interfere with Purchaser's ability to operate the
Business in the same manner as the Business was operated by Seller prior to the
Closing Date.
Section 3.13 Intellectual Property.
(a) Except as set forth in Section 3.13(a) of the Seller
Disclosure Schedule (or, in the case of exceptions relating to the Other
Intellectual Property, in the Final Intellectual Property Schedule), Seller has
exclusive ownership (free and clear of all Encumbrances) of all right, title and
interest in, to and under all of the Business Intellectual Property and, to the
knowledge of Seller, the Other Intellectual Property, and no Action or
Proceeding or claim to the contrary or any challenge by any other Person to
Seller's right, title or interest in, to or under the Business Intellectual
Property or, to the knowledge of Seller, the Other Intellectual Property is
pending or, to the knowledge of Seller, threatened. Except as set forth in
Section 3.13(a) of the Seller Disclosure Schedule (or, in the case of exceptions
relating to the Other Intellectual Property, in the Final Intellectual Property
Schedule), Seller has not transferred or licensed any of the Business
Intellectual Property or, to the knowledge of Seller, the Other Intellectual
Property, to any third party; provided, however, that under two escrow
agreements with Seller two entities have the non-exclusive and
non-sublicensable right to possess, use, make, have made, modify, prepare
derivative works based upon, and/or develop the items of Seller Intellectual
Property subject to such escrow agreements (including in source-code form),
which items are described in Schedule 3.13(x), for the sole purposes of
supporting and continuing such parties' own (or its permitted assignee's) use of
products (including software) of Seller shipped to such parties prior to the
Closing and no other purpose, and that the licensed rights under such escrow
agreements are non-assignable, except: (a) to the licensee's affiliates, (b) to
the surviving entity in a reorganization, merger, consolidation, or other form
of corporate transaction or series of transactions by the licensee, and/or (c)
to the purchaser (that is not a direct competitor of Seller) of all or
substantially all the assets of the licensee's business, the assets of licensee,
or equity of licensee. There is no outstanding offer by Seller to sell, assign,
transfer and/or license to any third party (other than Purchaser pursuant to
this Agreement) any of the Business Intellectual Property (including the
Business Intellectual Property originally acquired by Seller from IBM or derived
therefrom) or, to the knowledge of Seller, the Other Intellectual Property, and
any such offer heretofore made by Seller (including Seller's offer to sell to
IBM all of Seller's ownership interest in and to Seller's statutory patent
rights acquired from IBM in the patent applications and any issued patents,
resulting from the Invention Disclosures to the IBM Agreement, as required by
Section 8.8 of the IBM Agreement) has been declined or rejected (by IBM and/or
each of other applicable offerees) or has expired or been revoked or withdrawn
and is no longer capable of being accepted.
(b) [Intentionally omitted.]
22
(c) No Action or Proceeding or claim relating to any of the
Business Intellectual Property or, to the knowledge of Seller, the Other
Intellectual Property, is pending or, to the knowledge of Seller, threatened
against Seller or any of its officers or directors.
(d) Section 3.13(d) of the Seller Disclosure Schedule lists (and,
in the case of the third-party Intellectual Property relating to the Other
Inventory, the Final Intellectual Property Schedule, will list) all material
inbound license agreements and other agreements in which Seller is authorized to
use a third party Intellectual Property ("Third Party Intellectual Property
Right") (other than generally available "shrink wrap" licenses) relating to the
Business or the Purchased Assets (other than the Other Inventory) or, to the
knowledge of Seller, the Other Inventory or the Other Intellectual Property).
Each agreement listed in Section 3.13(d) of the Seller Disclosure Schedule (or,
in the case of agreements relating to the Other Inventory, in the Final
Intellectual Property Schedule) is in effect, and Seller has not taken or failed
to take any action and, to the knowledge of Seller, no event has occurred that
could subject such license agreement to termination or otherwise cause any such
license agreement not to be in effect in the foreseeable future. Seller has paid
all royalties due and performed all obligations under all such license agreement
relating to the Business or, the Purchased Assets (other than the Other
Inventory) or, to the knowledge of Seller, the Other Inventory or the Other
Intellectual Property). Seller is not presently in default and has received no
notice of default under any such license agreement.
(e) Except as set forth in Section 3.13(e) of the Seller
Disclosure Schedule (or, in the case of exceptions relating to the Other
Intellectual Property, in the Final Intellectual Property Schedule), Seller has
received no request for indemnification or contribution from any third party
relating to the Business or any of the Purchased Assets (other than the Other
Inventory and the Other Intellectual Property) or, to the knowledge of Seller,
relating to the Other Intellectual Property.
(f) Section 3.13(f) of the Seller Disclosure Schedule lists (and,
in the case of the Other Intellectual Property, the Final Intellectual Property
Schedule will list) all patents and patent applications, all registered
trademarks, trade names and service marks, applications to register trademarks,
trade names and service marks, registered copyrights, applications for copyright
registration, registered domain names, and registered mask works, included in
the Business Intellectual Property (the "Registered Business Intellectual
Property") or, to the knowledge of Seller, in the Other Intellectual Property
(the "Registered Other Intellectual Property" and, collectively with the
Registered Business Intellectual Property, the "Registered Seller Intellectual
Property"), the jurisdictions in which such Business Intellectual Property (and,
to the knowledge of Seller, such Registered Other Intellectual Property) has
been issued or registered or in which any application for such issuance and
registration has been filed.
(g) To the knowledge of Seller, there is no unauthorized use,
disclosure, infringement or misappropriation of any Business Intellectual
Property, or any Third Party Intellectual Property Right or, to the knowledge of
Seller, any Other Intellectual Property, by any third party, including any
employee or former employee of Seller. Except for the agreements listed in
Section 3.13(g) of the Seller Disclosure Schedule, Seller has not entered into
any agreement to indemnify any other person against any third-party claim or
charge of infringement or misappropriation of Intellectual Property arising out
of or relating to the Purchased Assets (other than the Other Inventory) or the
Business Intellectual Property or, to the knowledge of Seller, arising out of or
relating to the Other Inventory or the Other Intellectual Property.
23
(h) Except as set forth in Section 3.13(h) of the Seller
Disclosure Schedule (or, in the case of exceptions relating to the Other
Intellectual Property or the Other Inventory, in the Final Intellectual Property
Schedule), no Business Intellectual Property, no product, technology or service
of the Business and, to the knowledge of Seller, no Other Inventory and no Other
Intellectual Property is subject to any Order, Action or Proceeding or
third-party right that is reasonably expected to restrict in any manner, the
use, transfer or licensing of any Seller Intellectual Property or that may
affect the use or enforceability of any Seller Intellectual Property, the
validity of any Seller Intellectual Property (other than patents) or, to the
knowledge of Seller, the validity of any patents within the Seller Intellectual
Property.
(i) Each item of Registered Business Intellectual Property (other
than patents) (and, to the knowledge of Seller, the Registered Other
Intellectual Property and each patent within the Registered Business
Intellectual Property) is valid and subsisting, and, except with respect to
abandoned patent applications, all necessary registration, maintenance, renewal
and annuity fees and Taxes in connection with the Registered Business
Intellectual Property (and, to the knowledge of Seller, the Registered Other
Intellectual Property) have been paid and all necessary documents and
certificates in connection with the Registered Business Intellectual Property
(and, to the knowledge of Seller, the Registered Other Intellectual Property)
have been filed with all relevant patent, copyright, trademark or other
authorities in all applicable jurisdictions, for the purposes of maintaining
such Business Intellectual Property and, to the knowledge of Seller, such Other
Intellectual Property. Except as set forth in Section 3.13(i) of the Seller
Disclosure Schedule (or, in the case of exceptions relating to the Other
Intellectual Property or the Other Inventory, in the Final Intellectual Property
Schedule), Seller (i) has not been named or involved in any Action or Proceeding
which involves a claim of infringement of any Business Intellectual Property or
any Intellectual Property of any third party, or to the knowledge of Seller, any
Other Intellectual Property; (ii) has no knowledge that the manufacturing,
marketing, licensing, sale or offer of sale of any product of the Business, or,
to the knowledge of Seller, any Other Inventory, including software, infringes
or misappropriates any Intellectual Property of any third party; and (iii) has
not brought any Action or Proceeding for infringement of any of the Seller
Intellectual Property or breach of any license or agreement involving any of the
Seller Intellectual Property against any third party.
(j) Seller has secured valid and enforceable written agreements
with all consultants, independent contractors, employees, and other Persons who
developed, created, or contributed to the development or creation of the
Business Intellectual Property, or to the knowledge of Seller, any Other
Intellectual Property and has either (i) obtained ownership of, and is the
exclusive owner of, all of the Business Intellectual Property and, to the
knowledge of Seller, the Other Intellectual Property by operation of Law or by
valid assignment of any such rights or (ii) has obtained a license under or to
the Business Intellectual Property and, to the knowledge of Seller, the Other
Intellectual Property that Seller does not already own by operation of Law.
(k) Seller has taken all commercially reasonable steps to protect
and preserve the confidentiality of all trade secrets and other proprietary
information relating to the Business Intellectual Property or, to the knowledge
of Seller, any Other Intellectual Property, including trade secrets and
proprietary information regarding or relating to the Business or Purchased
Assets (other than the Other Inventory) or, to the knowledge of Seller, the
Other Inventory, not otherwise protected by issued patents or copyrights of
Seller ("Confidential Information"). Seller (i) has secured valid and
enforceable written assignments from all employees, consultants, independent
24
contractors and any other Person who contributed to the creation or development
of Confidential Information and (ii) has, and enforces, a policy requiring each
employee, consultant and independent contractor to execute proprietary
information, confidentiality and invention and copyright assignment agreements
substantially in the form attached to Section 3.13(k) of the Seller Disclosure
Schedule, and all current and former employees, consultants and independent
contractors of Seller have executed such an agreement, and copies of all such
agreements have been provided to Purchaser or made available to Purchaser or
Purchaser's counsel for review. All use, disclosure or appropriation by or to a
third party of trade secret information within the Business Intellectual
Property and, to the knowledge of Seller, the Other Intellectual Property, owned
by Seller has been pursuant to the terms of a written agreement between Seller
and such third party adequately protecting the confidentiality of and limiting
the use of the Business Intellectual Property and, to the knowledge of Seller,
the Other Intellectual Property. All use, disclosure or appropriation by Seller
of confidential and proprietary information owned by third parties and relating
to the Business or any of the Purchased Assets (other than the Other Inventory)
or, to the knowledge of Seller, to the Other Inventory, has been pursuant to the
terms of a written agreement permitting such use, disclosure or appropriation
between Seller, as the case may be, and the owner of such confidential and
proprietary information, or is otherwise lawful.
(l) All products of the Business comply and, to the knowledge of
Seller, the Other Inventory, at the time of its manufacture, complied in all
material respects with all applicable U.S. federal, state and local, foreign and
industry standards and with the feature specifications and performance standards
set forth in Seller's product data sheets. There are no outstanding claims (or
facts that may reasonably lead to a claim) for breach of warranty by or against
Seller relating to products of the Business or, to the knowledge of Seller, the
Other Inventory. All product performance presentations heretofore furnished by
Seller to its customers or Purchaser are accurate as of the dates so furnished.
(m) There are no actions that must be taken by Seller that, if
not taken, will result in the loss of any Business Intellectual Property or, to
the knowledge of Seller, any Other Intellectual Property, including the payment
of any registration, maintenance or renewal fees, annuity fees and taxes (for
which, except as set forth in Section 3.13(m) of the Seller Disclosure Schedule,
Seller is and shall remain solely responsible if they arose during the
Pre-Closing Period and Purchaser shall be solely responsible if they arose
during the Post-Closing Period) or the filing of any responses, documents,
applications, affidavits or certificates for the purposes of obtaining,
maintaining, perfecting or preserving or renewing any such Business Intellectual
Property, or, to the knowledge of Seller, any such Other Intellectual Property.
In each case in which Seller has acquired from any Person ownership of any
Seller Intellectual Property, Seller has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in such Business
Intellectual Property and, to the knowledge of Seller, such Other Intellectual
Property (including the right to seek past and future damages with respect to
such Business Intellectual Property and, to the knowledge of Seller, such Other
Intellectual Property) to Seller and, to the maximum extent provided for by and
required to protect Seller's ownership rights in and to such Seller Intellectual
Property in accordance with applicable Laws, Seller has recorded each such
assignment of Business Intellectual Property and, to the knowledge of Seller,
such Other Intellectual Property with the relevant Governmental Entity,
including the PTO, the U.S. Copyright Office, or comparable authorities in any
relevant foreign jurisdiction, as the case may be.
25
(n) Neither the execution and delivery of this Agreement and the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby and thereby will result in Seller granting any rights or licenses with
respect to the Business Intellectual Property or, to the knowledge of Seller,
the Other Intellectual Property, to any Person. All of the rights and interests
possessed by Seller in the Business Intellectual Property and, to the knowledge
of Seller, the Other Intellectual Property, are fully and completely
transferable to Purchaser in connection with the transactions contemplated
hereby, without the consent or approval of any Governmental Entity or other
third party.
Section 3.14 Environmental Matters.
(a) Seller has not: (i) operated any underground storage tanks
at, on, in, above, or under any site or facility covered by the Real Property
Sublease, or (ii) illegally released any amount of any Hazardous Material (other
than office and janitorial supplies properly and safely maintained at, on, in,
above or under any such site or facility). No Hazardous Materials (other than
such office and janitorial supplies) are present at, on, in, above or under any
such site or facility.
(b) No Environmental Claim relating to any of the Purchased
Assets and no Action or Proceeding is pending, or to the knowledge of Seller,
threatened, relating to any of the Purchased Assets. Seller has no knowledge of
any fact or circumstance which is reasonably likely to involve Seller in any
environmental litigation or to impose upon Seller any environmental Liability.
Section 3.15 Compliance With Laws; Governmental Authorizations.
Seller has complied with, is not in violation of, and has not received any
notice of violation in any material respect of any Law related to the conduct of
the Business or the ownership or operation of the Purchased Assets. Seller has
obtained each material Permit (i) pursuant to which Seller currently operates or
holds any interest in any of the Purchased Assets or (ii) that is required for
the operation of the Business or the holding of any such interest ((i) and (ii)
herein collectively called the "Seller Authorizations"), and all of the Seller
Authorizations are in full force and effect. Each of the Seller Authorizations
is assignable or otherwise transferable to Purchaser in connection with the
transactions contemplated hereby, without the consent or approval of any
Governmental Entity or other third party. There is no agreement or Order binding
upon Seller which has or could reasonably be expected to have the effect of
prohibiting or impairing the conduct of the Business by Purchaser after the
Closing in the manner currently conducted by Seller.
Section 3.16 Employee Matters.
(a) Since March 31, 2000, (i) there has been no federal or state
claim based on sex, sexual or other harassment, age, disability, race or other
discrimination or common law claim, including claims of wrongful termination, by
any Transferred Employee, and there is no fact or circumstance known to Seller
that could reasonably be expected to give rise to such a complaint or claim; and
(ii) Seller has not received any notice of any claim that it has not complied in
any respect with any Law relating to the employment of the Transferred
Employees, including any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination, the WARN Act, employee safety, or that
it is liable for any arrearage of wages or any Tax or penalty for noncompliance
with any of the foregoing.
26
(b) Seller has paid all amounts due to be paid to each
Transferred Employee. There are no outstanding, pending or, to the knowledge of
Seller, threatened: (i) claims, disputes or other controversies between Seller
and any of its respective employees who are engaged in the conduct of the
Business; (ii) unfair labor practice complaints or other complaint or grievances
against Seller in connection with its operation of the Business; (iii) labor
strike, slow down or stoppage against Seller affecting the operation of the
Business; or (iv) inspection or prosecution orders against the Business under
any labor, employment or occupational health and safety legislation, and, to
Seller's knowledge, there is no basis for any such action.
(c) Each Transferred Employee is employed at will. To Seller's
knowledge, no Transferred Employee is in violation of any term of any employment
contract, patent disclosure agreement, enforceable non-competition agreement, or
any enforceable restrictive covenant to a former employer relating to the right
of any such employee to be employed by Seller, as the case may be, because of
the nature of the Business to the use of trade secrets or proprietary
information of others. No Transferred Employee has given notice to Seller, nor
is Seller otherwise aware, that any such employee intends to terminate his or
her employment with Seller. All employment relationships, whether written or
oral, between Seller and its employees who are engaged in the Business are "at
will." Section 3.16(c) of the Seller Disclosure Schedule lists each employee of
Seller engaged in the Business, under the heading "Employees," and each
consultant to and independent contractor of Seller engaged in the conduct of the
Business, under the heading "Consultants and Independent Contractors," and each
such Person's applicable position, and annual compensation as of the date hereof
and the Closing Date.
(d) To Seller's knowledge, no Transferred Employee and no
consultant to or independent contractor of Seller who is engaged in the Business
is obligated under any Contract or other agreement or subject to any Order or
Law that would interfere with the conduct of the Business as currently
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Business as presently conducted nor any activity of such
employees, independent contractors or consultants in connection with the conduct
of the Business as presently conducted, will conflict with or result in a breach
of the terms, conditions or provisions of, constitute a default under, or
trigger a condition precedent to any rights under any Contract or other
agreement under which any of such employees, independent contractors or
consultants is now bound.
(e) Neither the execution and delivery of this Agreement and the
Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any Transferred Employee or any independent contractor or consultant of Seller
engaged in the conduct of the Business, (ii) increase any benefits otherwise
payable by Seller to any Transferred Employee or any independent contractor or
consultant engaged in the conduct of the Business, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits of any
Transferred Employee or any independent contractor or consultant engaged in the
Business.
Section 3.17 Books and Records. The Business Books and Records have been
made available to Purchaser or its counsel, and such Books and Records are
complete and correct in all material respects and have been maintained in
accordance with sound business practices. Such minute books contain a complete
and accurate summary of all meetings of directors and stockholders
27
or actions by written consent that relate to the Business or any of the
Purchased Assets through the date of this Agreement, and reflect all
transactions involving the Purchased Assets referred to in such minutes
accurately in all material respects. Prior to the execution of this Agreement,
Seller has delivered to Purchaser true copies of its certificate of
incorporation and bylaws, both as amended through the date of this Agreement,
and the Plan of Liquidation.
Section 3.18 Board Approval. The board of directors of Seller has (i)
approved this Agreement, the Ancillary Agreements, and the transactions
contemplated hereby and thereby and (ii) determined that the transaction is in
the best interests of Seller and its stockholders and is on terms that are fair
to Seller, its stockholders and creditors.
Section 3.19 Access to Information. To the knowledge of Seller, Seller
has provided Purchaser all material information concerning the Business, the
Purchased Assets and the Assumed Liabilities in the possession, control or
custody of Seller, including all Contracts and Permits requested in writing on
behalf of Purchaser. To the knowledge of Seller, Seller has delivered to
Purchaser true and complete copies of each document that has been requested by
Purchaser or its counsel in connection with their legal and accounting review of
the Business, the Purchased Assets, the Assumed Liabilities and the transactions
contemplated by this Agreement.
Section 3.20 Taxes.
(a) With respect to any Tax (if any) that is not a Retained
Liability and any Tax that, by operation of Law, could become a Liability of
Purchaser or result in an Encumbrance against any of the Purchased Assets:
Seller has properly completed and timely filed all Tax Returns required to be
filed by it and has paid all Taxes that relate to any of the Purchased Assets or
the Business through the date of this Agreement and will properly complete and
timely file all Tax Returns and pay all Taxes that relate to any of the
Purchased Assets or the Business for periods through the Closing Date. There is
and, at Closing, there will be (i) no claim for any Tax that is a lien against
any of the Purchased Assets or that is being asserted against Seller that relate
to any of the Purchased Assets or the Business, (ii) no audit of any Tax Return
relating to any of the Purchased Assets or the Business being conducted by any
Taxing Authority and (iii) no extension of any statute of limitations on the
assessment of any Tax with respect to any of the Purchased Assets or the
Business granted by Seller and in effect.
(b) Seller has withheld all amounts required to be withheld by
Law in connection with compensation paid to the Transferred Employees. Seller
has timely paid to the appropriate Taxing Authority all amounts so withheld or
otherwise due in connection with the employment by Seller of such employees, and
has timely filed all requisite returns with the Taxing Authorities with respect
to such Taxes. Seller is not a party to any Tax proceeding with respect to the
withholding of Taxes in respect of any of the Transferred Employees and/or
payment to the Taxing Authorities of withholding taxes or other dues with
respect to their employment with Seller. To the knowledge of Seller, no
investigation is being conducted against Seller by any Taxing Authority with
respect to any such withholding, payment, filing or any other obligations.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants (and, by his signature
on the signature page of this Agreement on behalf of Purchaser, the president
and chief executive officer of Purchaser hereby certifies, on behalf of
Purchaser) to Seller, that, subject to the exceptions specifically disclosed in
writing in a schedule delivered by Purchaser to Seller prior to (or
contemporaneously with) the signing of this Agreement (the "Purchaser Disclosure
Schedule"), that the statements set forth in this Article IV are true and
correct. The Purchaser Disclosure Schedule shall be arranged in sections and
subsections corresponding to the numbered section and lettered subsections of
this Agreement, and all exceptions shall reference to a specific representation
set forth in this Article IV and shall apply only to such numbered section and
lettered subsection; provided, that any information disclosed in one section or
subsection of the Purchaser Disclosure Schedule shall be deemed to be disclosed
in other sections and subsections of the Purchaser Disclosure Schedule if
Purchaser has made good faith efforts to provide express cross-references and
(notwithstanding the absence of express cross-reference) if it is clear from a
reading of the disclosure, without any additional or independent knowledge on
the part of the reader, that such disclosure is applicable to such other section
or subsection.
Section 4.01 Organization and Qualification; Subsidiaries. Purchaser has
been duly organized and is validly existing and in good standing under the Laws
of its jurisdiction of incorporation and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Purchaser is duly qualified or licensed to do
business, and 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 such failures to be
so qualified or licensed and in good standing that could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the ability of Purchaser to perform its obligations under this Agreement.
Section 4.02 Authority Relative to this Agreement. Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement
and the other Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Purchaser of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation by Purchaser of the transactions contemplated hereby and thereby,
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Purchaser are necessary to authorize
this Agreement or the other Ancillary Agreements to which it is a party or to
consummate such transactions. This Agreement has been, and the other Ancillary
Agreements to which Purchaser is a party will be, duly executed and delivered by
Purchaser. This Agreement constitutes, and the other Ancillary Agreements to
which Purchaser is a party, when executed and delivered as contemplated by this
Agreement, will constitute, assuming the due authorization, execution and
delivery by each of the other parties hereto and thereto, legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with their respective terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
29
Section 4.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Ancillary Agreements by Purchaser do not, and the performance by Purchaser of
their respective obligations hereunder and/or thereunder, as the case may be,
and the consummation by Purchaser of the transactions contemplated by this
Agreement and the Ancillary Agreements will not, (i) conflict with or violate
any provision of the Certificate of Incorporation or Bylaws of Purchaser, (ii)
conflict with or violate in any material respect any Law applicable to Purchaser
or by which any of the Assets and Properties of Purchaser is bound or affected
or (iii) result in any breach of or constitute a default (or an event which with
the giving of notice or lapse of time or both could reasonably be expected to
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, any material Contract, Permit, or other
instrument or obligation.
(b) Assuming the accuracy of the representations and warranties
of Seller set forth in Article III, except for such conflicts, violations,
breaches or defaults which would not have a material adverse effect on the
ability of Purchaser to perform its obligations under this Agreement, the
execution and delivery of this Agreement by Purchaser do not, and the execution
and delivery of the other Ancillary Agreements by Purchaser will not, and the
performance by Purchaser of its obligations hereunder and the consummation of
the transactions contemplated by this Agreement will not, require any consent,
approval, authorization or permit of, or filing by Purchaser with or
notification by Purchaser to, any Governmental Entity.
Section 4.04 Litigation. Except as disclosed in the Section 4.04 of the
Purchaser Disclosure Schedule, there is no Action or Proceeding pending, and, to
the knowledge of Purchaser, no person has threatened to commence any Action or
Proceeding that challenges, or would reasonably be expected to have the effect
of preventing, delaying, making illegal or otherwise interfering with, the
transactions contemplated by this Agreement or any of the Ancillary Agreements.
Section 4.05 No Other Representations or Warranties. Notwithstanding
anything to the contrary contained in this Agreement, it is the explicit intent
of each party hereto that Purchaser is making no representation or warranty
whatsoever, express or implied, except those representations and warranties set
forth in this Article IV and in any certificate delivered pursuant to this
Agreement.
ARTICLE V
COVENANTS
Section 5.01 [Intentionally omitted.]
Section 5.02 Notice of Certain Events. Each of Purchaser and Seller
shall give prompt notice to the other of (i) any notice or other communication
from any Person alleging that any consent, waiver or approval of such Person is
or may be required in connection with any of the transactions contemplated by
this Agreement; (ii) any notice or other communication from any Governmental
Entity in connection with any of the transactions contemplated by this Agreement
or the Ancillary Agreements; and (iii) any Action or Proceeding commenced or, to
its knowledge, threatened against, relating to or involving or otherwise
affecting Purchaser or Seller that relates to
30
the Business or may affect the consummation of any of the transactions
contemplated by this Agreement or the Ancillary Agreements.
Section 5.03 Access to Information; Confidentiality.
(a) Between the date of this Agreement and, if the Closing Date
occurs on a date after the date hereof, the Closing Date, Purchaser and Seller
shall (i) provide to the other (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "Representatives")) access at reasonable times upon prior notice
to its officers, employees, agents, properties, offices and other facilities and
to the Books and Records thereof, and (ii) furnish promptly such information
concerning its business, properties, contracts, Purchased Assets, liabilities
and personnel as the other party or its Representatives may reasonably request.
No investigation conducted pursuant to this Section 5.03(a) shall affect or be
deemed to modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to the information disclosed
pursuant to Section 5.03(a) or pursuant to the Confidentiality Agreement. If the
purchase and sale of the Purchased Assets contemplated by this Agreement is
consummated, then from and after the Closing: (i) all provisions of the
Confidentiality Agreement providing for the ownership by Seller, or limiting or
prescribing the use, disclosure, care, return and treatment by Purchaser and its
Representatives, of Confidential Information shall terminate and cease and shall
be of no further force or effect insofar as they relate to the Business, the
Purchased Assets and the Assumed Liabilities; (ii) Purchaser shall be treated as
the "disclosing party" and owner of all Confidential Information relating to the
Business, the Purchased Assets and the Assumed Liabilities, and Seller shall be
treated as the "receiving party" with respect to such Confidential Information;
and (iii) all provisions of the Confidentiality Agreement providing for the
ownership by Seller, or limiting or prescribing the use, disclosure, care,
return and treatment by Purchaser and its Representatives, of Confidential
Information shall remain in full force and effect insofar as they relate to
businesses of Seller other than the Business and Retained Liabilities. Except as
amended or modified by this Section 5.03(b), all other terms and provisions of
the Confidentiality Agreement and the parties' obligations thereunder shall
remain in full force and effect.
Section 5.04 Non-Competition.
(a) Seller shall (and shall cause each of its Subsidiaries to),
for a period of three (3) years from and after the Closing Date, refrain from,
either alone or in conjunction with any other Person, anywhere in the world: (i)
employing, engaging or seeking to employ or engage any Person who at any time
since six (6) months prior to the date of this Agreement was or is had been an
employee of Purchaser or any of its Affiliates engaged in the Business, unless
such employee (A) resigns voluntarily (without any solicitation from Seller or
any of its Subsidiaries) or (B) is terminated by Purchaser or any of its
Affiliates after the Closing Date; (ii) causing or attempting to cause (A) any
client, customer or supplier of the Business to terminate or materially reduce
its business with Purchaser or any of its Affiliates or (B) any officer,
employee, independent consultant of or consultant to Purchaser or any of its
Affiliates engaged in the Business to resign or sever a relationship with
Purchaser or any of its Affiliates; (iii) disclosing (unless compelled by
judicial or administrative process) or using any confidential or secret
information relating to the Business or
31
any client, customer or supplier of the Business; or (iv) participating or
engaging in (other than through the ownership of one percent (1%) or less of any
class of securities registered under the Exchange Act).
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 5.04. It is the intention of the parties that the provisions of this
Section 5.04 be enforced to the fullest extent permissible under the Laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section 5.04 shall not render unenforceable, or impair,
the remainder of the provisions of this Section 5.04. Accordingly, if any
provision of this Section 5.04 shall be determined to be invalid or
unenforceable, such invalidity or unenforceability shall be deemed to apply only
with respect to the operation of such provision in the particular jurisdiction
in which such determination is made and not with respect to any other provision
or jurisdiction.
(c) The parties hereto acknowledge that while the Purchased
Assets and employees engaged in the conduct of the Business are currently
located in San Diego, California and Encinitas, California, the relevant market
for the Business is national, international and worldwide in scope, and that
there exists intense national, international and worldwide competition for the
products and services of the Business.
(d) The parties hereto further acknowledge and agree (i) that the
restrictions contained in this Section 5.04 are reasonable and necessary in
order to protect the value of the Purchased Assets and the goodwill of the
Business, and (ii) that any remedy at Law for any breach of the provisions of
this Section 5.04 would be inadequate, and Seller hereby consents to the
granting by any court of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved, in order that the breach or
threatened breach of such provisions may be effectively restrained.
Section 5.05 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all requisite commercially reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the transactions contemplated hereby,
(ii) obtain from all applicable Governmental Entities all Permits, waivers, or
orders required to be obtained or made by Purchaser or Seller in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and (iii) make all necessary filings,
and thereafter make any other required or appropriate submissions, with respect
to this Agreement and the transactions contemplated hereby required under any
applicable Laws.
(b) Seller shall give any notices to third Persons, and use
reasonable efforts to obtain any consents from third persons necessary, proper
or advisable to consummate the transactions contemplated by this Agreement.
Section 5.06 Employment Matters.
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(a) On the Closing Date, Purchaser shall offer employment, at
will, to all of the employees listed in Schedule 5.06 (who Seller represents and
warrants constitute substantially all of the employees of Seller engaged
principally in the conduct of the Business as of the date hereof) on terms and
conditions substantially similar to the terms and conditions under which they
are currently employed by Seller. All such employees who accept offers of and
actually commence and enter into employment with Purchaser (the "Transferred
Employees") will, upon such acceptance, be employees of Purchaser and not
employees of Seller.
(b) Seller shall use its commercially reasonable best efforts to
persuade each of the employees of Seller listed on Schedule 5.06 to accept
offers of employment from Purchaser on the Closing Date and shall not (except as
required by law) offer such employees a choice between receiving severance and
an offer of employment with Purchaser. Seller shall notify all Transferred
Employees that upon Closing their employment with Seller will be terminated and
Purchaser will offer offers of employment. Purchaser shall assume and be
responsible for the payment of severance to Transferred Employees in the amount
set forth opposite each Transferred Employee's name on Schedule 2.02(a)(iv) if
(and only if) the Transferred Employee's employment with Purchaser is terminated
by Purchaser without cause within twelve (12) months after the Closing Date.
After such twelve (12) month period, severance payments to Transferred
Employees, if any, shall be provided in accordance with Purchaser's severance
policy as in effect at the applicable time.
(c) Seller shall be responsible for providing the continued
health coverage required under Internal Revenue Code Section 4980B ("COBRA
Coverage") with respect to (i) any Transferred Employees or their eligible
dependents who elect COBRA Coverage under Seller's group health plan in lieu of
enrollment in the Purchaser's health plan and (ii) any other terminated
employees of Seller (other than Transferred Employees who enroll in Purchaser's
health plan) and their eligible dependents. Purchaser shall be responsible for
providing COBRA Coverage for any Transferred Employees or their dependents who,
with respect to their coverage under the Purchaser's health plan, incur a
qualifying event under Internal Revenue Code Section 4980B at any time after the
Closing Date.
Section 5.07 Public Announcements. For a period of thirty (30) days from
and after the Closing Date, Purchaser and Seller shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to the Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement that is not
approved by the other party, except as may be required by Law or the rules of
the Nasdaq National Market, in which case the parties shall make reasonable
efforts to consult with each other prior to the making of such public statement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 Assistance and Cooperation. After the Closing Date, each of
Seller and Purchaser shall (and shall cause their respective Affiliates and
Representatives to): (a) assist the other party in preparing any Tax Returns
which such other party is responsible for preparing and filing related to the
Purchased Assets; (b) cooperate fully in preparing for any audits of, or
disputes
33
with any Taxing Authority regarding, any Tax Returns of Seller; (c) make
available to the other and to any Taxing Authority as reasonably requested all
information, records, and documents relating to Taxes of Seller; (d) provide
timely notice to the other in writing of any pending or threatened Tax audit or
assessments of Seller for taxable periods for which the other may have a
liability under this Agreement; and (e) furnish the other with copies of all
correspondence received from any Taxing Authority in connection with any Tax
audit with respect to any taxable period for which the other may have a
liability under this Agreement.
Section 6.02 FIRPTA Certificate. At or prior to the Closing, Seller
shall provide Purchaser with a certificate described in Treas. Reg. Section
1.1445-2(b)(2) to the effect that, as contemplated by such certificate, Seller
is not a foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury Regulations).
Section 6.03 Bulk Sales Act. Purchaser and Seller hereby waive
compliance with all bulk sales acts and other comparable statutory provisions of
each applicable jurisdiction that may apply to the purchase and sale of the
Purchased Assets contemplated by this Agreement.
Section 6.04 [Intentionally omitted.]
Section 6.05 Warranty Obligations. Seller is, and shall remain, solely
responsible for all warranty claims arising from any products sold by it prior
to the Closing (the "Seller Warranty Obligations"), and Purchaser shall be
responsible for all warranty claims arising from any products it sells on or
after the Closing. To the extent Seller is responsible for warranty claims,
Purchaser agrees to use its commercially reasonable efforts to fulfill, at
Seller's request, the Seller Warranty Obligations at cost plus three percent
(3%) or such other rates as Purchaser and Seller may agree. Purchaser shall
invoice Seller for the Seller Warranty Obligations fulfilled by it (if any) at
the end of each calendar month. Seller shall pay the amount due under each such
invoice presented to it within 30 days after the date of receipt of such
invoice.
Section 6.06 Transfer Taxes and Other Tax Matters.
(a) All Transfer Taxes (if any) imposed with respect to the
transfer of the Purchased Assets shall be paid by Seller. Seller shall defend,
indemnify and hold harmless Purchaser from and against any such liability for
which Seller is responsible under this Section 6.06. Seller and Purchaser shall
use all commercially reasonable efforts to cooperate in order to minimize the
Transfer Taxes.
(b) Seller is and shall remain solely responsible for all Taxes
attributable to the Purchased Assets and related businesses from its inception
through and including the Closing (the "Pre-Closing Period"). Seller shall
indemnify and hold harmless Purchaser from any liability for, or attributable
to, based upon, or relating to any Tax matter attributable to the Purchased
Assets and related businesses during the Pre-Closing Period. Purchaser shall be
solely responsible for all Taxes attributable to the Purchased Assets and
related businesses beginning after the Closing (the "Post-Closing Period").
Purchaser shall indemnify and hold harmless Seller from any liability for, or
attributable to, based upon, or relating to any Tax matter attributable to the
Purchased Assets and related businesses during the Post-Closing Period. Seller
and Purchaser shall cooperate concerning
34
all Tax matters relating to this division of responsibility, including, but not
limited to, the filing of Tax returns and other governmental filings associated
therewith.
(c) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing and ends after the Closing, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing shall be:
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) (other than the Transfer Taxes), deemed equal to the amount which
would be payable if the taxable year ended with the Closing; and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of Seller, any Purchased Assets or otherwise measured by
the level of any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis, the amount
of such Taxes for the immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the period ending on the
Closing and the denominator of which is the number of calendar days in the
entire period.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to the Obligations of Each Party to Consummate
the Transaction. The obligations of the parties hereto to consummate the
purchase and sale of the Purchased Assets and the other transactions which occur
at the Closing pursuant to Article II are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) No court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other Governmental Entity
shall have issued any order, which is then in effect and has the effect of
making the transaction contemplated hereby illegal or otherwise prohibiting the
consummation of the purchase and sale of the Purchased Assets and the other
transactions which occur at the Closing pursuant to Article II.
(b) All consents, approvals and authorizations legally required
to be obtained to consummate the purchase and sale of the Purchased Assets and
the other transactions which occur at the Closing pursuant to Article II shall
have been obtained from all Governmental Entities, and the waiting period under
the HSR Act (if applicable) shall have expired or early termination thereof
shall have been granted.
(c) All corporate and stockholder approvals required for the
lawful consummation of the transactions contemplated hereby shall have been
obtained by Purchaser (and/or any of its Affiliates, including its corporate
parent) and Seller (and/or any of its Affiliates), and shall be in full force
and effect.
Section 7.02 Additional Conditions to the Obligations of Seller. The
obligation of Seller to consummate the sale of the Purchased Assets to Purchaser
and the other transactions which occur at
35
the Closing pursuant to Article II is subject to the satisfaction or, if
permitted by applicable Law, waiver of each of the following further conditions:
(a) Each of the representations and warranties of Purchaser
contained in this Agreement, the Ancillary Agreements and the annexes, schedules
and exhibits hereto and thereto shall be true and correct in all material
respects (other than representations and warranties subject to materiality
limitations, which shall be true and correct in all respects) both as of the
date of this Agreement and at and as of the Closing Date as if made at and as of
the Closing Date (other than representations and warranties which address
matters only as of a specified other date, which shall be true and correct as of
such specified other date).
(b) Purchaser shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date and Seller shall have
received a certificate of an officer of Purchaser to such effect.
(c) As of the Closing Date, Seller shall have received from
Purchaser the following documents: (i) a certificate of existence and good
standing from the state of incorporation as to the corporate status of Purchaser
and its corporate parent; (ii) a true and complete copy of the resolutions,
certified by the Secretary of Purchaser and its corporate parent, adopted on
behalf of Purchaser, authorizing the execution, delivery and performance of this
Agreement and all transactions contemplated hereby; (iii) a certificate from the
Secretary of each of Purchaser and its corporate parent as to the incumbency and
signatures of their respective officers who will execute documents at the
Closing or who have executed this Agreement; and (iv) such other instruments and
documents as Seller may reasonably request.
Section 7.03 Additional Conditions to the Obligations of Purchaser. The
obligation of Purchaser to consummate the purchase of the Purchased Assets from
Seller and the other transactions which occur at the Closing pursuant to Article
II are subject to the satisfaction or waiver of each of the following further
conditions:
(a) Each of the representations and warranties of Seller
contained in this Agreement, the Ancillary Agreements and the annexes, schedules
and exhibits hereto and thereto shall be true and correct in all material
respects (other than representations and warranties subject to materiality
limitations, which shall be true and correct in all respects) both as of the
date of this Agreement and at and as of the Closing Date as if made at and as of
the Closing Date (other than representations and warranties which address
matters only as of a specified other date, which shall be true and correct as of
such specified other date).
(b) Seller shall have performed or complied in all material
respects with all covenants and agreements required by this Agreement, the
annexes, schedules and exhibits to this Agreement to be performed or complied
with by it on or prior to the Closing Date and Purchaser shall have received a
certificate of the chief executive officer and chief financial officer of Seller
to such effect.
(c) Purchaser shall have received a legal opinion from Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, PC, outside legal counsel to Seller, in substantially
the form of Exhibit C hereto.
36
(d) All consents and waivers of third parties and novations and
amendments to Contracts required in connection with the transactions
contemplated hereby shall have been obtained, including the Kestrel Agreement.
(e) Seller shall have assigned all of its rights under the IBM
Agreement to Purchaser pursuant to an assignment agreement, in substantially the
form of Exhibit D hereto.
(f) Each of the Transferred Employees shall have executed and
delivered to Purchaser Purchaser's customary forms of non-competition agreement,
proprietary inventions agreement and non-solicitation agreement. At least ninety
percent (90%) of the Transferred Employees shall have accepted offers of
employment with Purchaser and shall have become employees of Purchaser at
Closing and one hundred percent (100%) of the persons listed on Schedule 7.03(f)
shall have accepted offers of employment with Purchaser, become employees of
Purchaser at Closing and shall have signed and delivered to Purchaser employment
agreements in substantially the form of Exhibit E hereto.
(g) As of the Closing Date, Purchaser shall have received from
Seller the following documents: (i) a true and complete copy of the Certificate
of Incorporation of Seller and all amendments thereto certified by the state of
incorporation of Seller; (ii) a true and complete copy of the Bylaws of Seller
certified by the Secretary of Seller; (iii) a true and complete copy of the
resolutions, certified by the Secretary of Seller, adopted on behalf of Seller
authorizing the execution, delivery and performance of this Agreement and the
other Ancillary Agreements to which Seller is a party and all transactions
contemplated hereby and thereby; (iv) a certificate from the Secretary of Seller
that its Certificate of Incorporation has not been amended since the date of the
certificate described in subsection (i) above; (v) a certificate from Seller's
Secretary as to the incumbency and signatures of Seller's officers who will
execute documents at the Closing or who have executed this Agreement; and (vi)
such other documents and instruments as Purchaser may reasonably request.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date, notwithstanding any requisite adoption and approval of this
Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Purchaser and Seller;
(b) by either Purchaser or Seller, if the Closing shall not have
occurred on or before March 31, 2002; provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose action or failure to act has been the cause or resulted in the
failure of the transactions contemplated hereby to occur on or before such date
and such action or failure to act constitutes a breach of this Agreement;
37
(c) by either Purchaser or Seller, if any Order, writ, injunction
or decree preventing the consummation of the transactions contemplated hereby
shall have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Purchaser, upon a breach in any material respect of any
representation, warranty, covenant or agreement on the part of Seller set forth
in this Agreement, or if any representation or warranty of Seller shall have
become inaccurate in any material respect, in either case such that the
conditions set forth in Section 7.03 would not be satisfied; provided, however,
that if such breach or inaccuracy is curable by Seller through the exercise of
commercially reasonable efforts within five (5) days and Seller continues to
exercise such reasonable efforts during such period, Purchaser may not terminate
this Agreement under this Section 8.01(d); or
(e) by Seller, upon a breach in any material respect of any
representation, warranty, covenant or agreement on the part of Purchaser set
forth in this Agreement, or if any representation or warranty of Purchaser shall
have become inaccurate in any material respect, in either case such that the
conditions set forth in Section 7.02 would not be satisfied; provided, however,
that if such breach or inaccuracy is curable by Purchaser through the exercise
of commercially reasonable efforts within five (5) days and Purchaser continues
to exercise such reasonable efforts during such period, Seller may not terminate
this Agreement under this Section 8.01(e).
(f) The right of any party hereto to terminate this Agreement
pursuant to this Section 8.01 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution of
this Agreement.
Section 8.02 Effect of Termination. Except as provided in Section 8.03,
in the event of termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any of its Affiliates or any of its
or their officers or directors, and all rights and obligations of each party
hereto shall cease; provided, however, that nothing herein shall relieve any
party hereto from liability for the breach of any provisions of this Agreement
prior to its termination; and provided, further, that the provisions of Section
5.03, this Section 8.02, Section 8.03, Article IX and Article X shall remain in
full force and effect and survive any termination of this Agreement.
Section 8.03 Expenses. All expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the transactions contemplated hereby are
consummated.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.01 Survival of Representations and Warranties. Notwithstanding
any knowledge of facts determined or determinable by Purchaser pursuant to
investigation or right of investigation, the representations and warranties of
Purchaser and Seller contained in this Agreement and in any certificates
delivered pursuant to Sections 7.02 and 7.03 shall survive the Closing for a
period of two (2) years from and after the Closing Date, except the
representations and warranties contained in
38
Section 3.20 shall survive until sixty (60) days after the expiration of all
applicable statutes of limitations. Neither the period of survival nor the
liability of Seller with respect to Seller's representations and warranties
shall be reduced by any investigation made at any time by or on behalf of
Purchaser.
Section 9.02 Indemnification.
(a) Subject to the limitations set forth in this Article IX,
Seller shall indemnify, defend and hold harmless Purchaser and its officers,
directors, advisors, Affiliates, agents, employees, and each person, if any, who
controls or may control Purchaser within the meaning of the Securities Act
(hereinafter referred to individually as an "Indemnified Person" and
collectively as "Indemnified Persons") from and against, any and all losses
(including lost revenues and profits and diminution in value), damages, fines,
fees, Taxes, penalties, deficiencies, interest, judgments, settlements, claims,
demands, actions, causes of action, liabilities, costs and expenses (including
Legal Expenses) (collectively, "Damages") (less any insurance proceeds, if any,
actually received by Purchaser, without any adverse effect on the premiums paid
for such insurance, in respect to such Damages) arising out of, based upon or
resulting from:
(i) any inaccuracy in or breach of any of the
representations or warranties given or made by Seller in this Agreement, the
Seller Disclosure Schedule, the Final Intellectual Property Schedule, any
Schedule or Exhibit to this Agreement, or any certificate, instrument or
document delivered to Purchaser pursuant to any of the foregoing;
(ii) any breach or default in connection with any of the
covenants or agreements given or made by Seller in this Agreement, the Seller
Disclosure Schedule, the Final Intellectual Property Schedule, any Schedule or
Exhibit to this Agreement, or any certificate, instrument or document delivered
to Purchaser pursuant to any of the foregoing;
(iii) any of the Retained Liabilities;
(iv) the failure of Seller to comply (if required to
comply) with any applicable bulk sales law; or
(v) any claim, threatened claim or request for
indemnification or contribution by any third party, or any claim or threatened
claim for infringement or misappropriation of Third Party Intellectual Property
Rights, including any patent, copyright, trade secret and trademark, by a third
party related to the operation of the Business or the sale of any product prior
to the Closing Date or attributable to a product or inventory of Seller sold or
shipped, or any activity of or omission by Seller occurring on or prior to the
Closing Date.
(b) Purchaser must on or before the last day of the
Indemnification Period deliver to Seller a certificate signed by any officer of
Purchaser (an "Officer's Certificate") (i) stating that Damages exist and (ii)
specifying in reasonable detail the individual items of such Damages included in
the amount so stated, the date each such item was paid, accrued or arose, and
the basis (or bases) for indemnification. If Seller objects to any claims set
forth in such Officer's Certificate, Seller shall provide its written objections
to such claims to Purchaser no later than twenty-five (25) days after the
receipt of such Officer's Certificate. Such dispute, if any, shall be resolved
in accordance with the procedures set forth in Section 9.05. If Seller does not
deliver to Purchaser a written objection
39
(specifying in reasonable detail the basis for objection) within such
twenty-five (25) days period, then Seller shall be liable for the total amount
of such claim, such claim shall be deemed to be admitted by Seller and shall be
final, binding and enforceable against Seller, and the full amount of such claim
shall be immediately due and payable.
(c) Purchaser and Seller each acknowledges that the Damages, if
any, would relate to unresolved contingencies existing at the Closing Date,
which if resolved at the Closing Date would have led to a reduction in the
aggregate consideration that Purchaser would have paid, and a reduction in the
aggregate liabilities that Purchaser would have assumed, in connection with the
transactions contemplated hereby.
Section 9.03 Limits on Indemnification. Except for fraud or intentional
misrepresentation or willful or intentional breach by Seller, Seller's liability
for indemnification hereunder shall not exceed two hundred thousand dollars
($200,000) in the aggregate (plus actual reasonable fees and expenses of
enforcement and collection up to fifty thousand dollars ($50,000)).
Section 9.04 Indemnification Period. No claim for indemnification shall
be initiated more than two (2) years after the Closing Date (the
"Indemnification Period"). Nothing in this Section 9.04 shall be construed to
bar the pursuit or recovery of indemnification after the expiration of the
Indemnification Period with respect to claims for indemnification initiated
within the Indemnification Period.
Section 9.05 Resolution of Conflicts; Arbitration.
(a) If Seller shall timely object to any claim or claims for
indemnification hereunder in accordance with the provisions of Sections 9.02,
Purchaser shall have twenty-five (25) days after receipt by Purchaser of an
objection by Seller to respond in a written statement to Seller's objection. If
after Purchaser's response there remains a dispute as to any claims, Seller and
Purchaser shall attempt in good faith for thirty (30) days to agree upon the
rights of the respective parties with respect to each of such claims. If Seller
and Purchaser reach agreement, a memorandum setting forth such agreement shall
be prepared and signed by both parties and Seller shall promptly pay Purchaser
the agreed amount and in no event later than three (3) Business Days thereafter.
(b) If no such agreement can be reached after good faith
negotiation, either Purchaser or Seller may, by written notice to the other,
demand arbitration of the matter unless the amount of the damage or loss is at
issue in pending litigation with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by three arbitrators (except as provided below). Within fifteen (15)
days after such written notice is sent, Purchaser and Seller shall each select
one arbitrator, and the two arbitrators so selected shall select a third
arbitrator. If any party fails or refuses to timely designate an arbitrator, the
arbitration shall be conducted by a single arbitrator. The decision of the
arbitrator(s) as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this Agreement.
Any arbitration hereunder shall be held in Santa Xxxxxxx County in the State of
California under the commercial rules then in effect of the American Arbitration
Association. The non-prevailing party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of the American
Arbitration Association, and the expenses, including without limitation,
attorneys' fees
40
and costs, reasonably incurred by the other party to the arbitration. For
purposes of this Section 9.05, in any arbitration hereunder in which any claim
or the amount thereof stated in the Officer's Certificate is at issue, Purchaser
shall be deemed to be the non-prevailing party unless the arbitrators award
Purchaser more than one-half (1/2) of the amount in dispute; otherwise, Seller
shall be deemed to be the non-prevailing party.
(c) Suit on any uncontested, admitted or agreed amount that
remains unpaid for more than ten (10) days after becoming due may be instituted,
and judgment upon any arbitral award hereunder may be entered, in any court
having jurisdiction.
Section 9.06 Third Party Claims.
(a) In the event an Indemnified Person becomes aware of a
third-party lawsuit (or claim therein) which such Indemnified Person believes
may result in a claim for indemnification (a "Third Party Claim"), such
Indemnified Person shall give Seller notice of such Third Party Claim within
thirty (30) days after the receipt by such Indemnified Person of such notice;
provided, however, that the failure to provide such notice shall not release
Seller from any of its obligations under this Article IX except to the extent
Seller is materially prejudiced by such failure and shall not relieve Seller
from any other obligation or liability that it may have to such Indemnified
Person otherwise than under this Article IX. The Indemnified Person shall have
the right to conduct and control, through counsel of its choosing, the defense,
compromise or settlement of any Third Person Claim, action or suit against such
Indemnified Person as to which indemnification will be sought by any Indemnified
Person from Seller hereunder, and in any such case Seller shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnified Person in connection
therewith; provided, that Seller may participate, through counsel chosen by it
and at its own expense, in the defense of any such claim, demand, suit, action
or cause of action as to which the Indemnified Person has so elected to conduct
and control the defense thereof.
(b) With the consent of the applicable Indemnified Person (or
Indemnified Persons) Seller may, and at the request of the applicable
Indemnified Person (or Indemnified Persons) Seller shall, assume the defense of
a Third Party Claim with legal counsel reasonably acceptable to the applicable
Indemnified Person (or Indemnified Persons). In such event, the Indemnified
Person (or Indemnified Persons) shall be entitled to participate in the defense
of such action at the cost and expense of Seller; provided, however, that (i)
the Indemnified Person shall be entitled (at its own expense) to participate in
the defense of such claim and to employ counsel to assist in the handling of
such claim; (ii) Seller shall obtain the prior written approval of the
Indemnified Person before entering into any settlement of such claim or ceasing
to defend against such claim, if, pursuant to or as a result of such settlement
or cessation, injunctive or other equitable relief would be imposed against the
Indemnified Person or would otherwise restrict the future activity or conduct of
the Indemnified Person; and (iii) Seller shall not consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to each Indemnified Person
of a release from all liability in respect of such claim.
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ARTICLE X
GENERAL PROVISIONS
Section 10.01 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon confirmation of delivery) by delivery in
person, by telecopy or facsimile, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier service
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 10.01):
(a) if to Seller:
Triton Network Systems, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if to Purchaser:
Carriercomm, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Section 10.02 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time prior to the Closing
42
Date. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
Section 10.03 Waiver; Rights and Remedies Cumulative. At any time prior
to the Closing Date, any party hereto may (a) extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto, (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the covenants, agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the extending or waiving party or
parties. No delay on the part of either party in exercising any right, power or
privilege hereunder shall operate as a waiver hereof, nor shall any single or
partial waiver or exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. The rights and remedies provided herein are cumulative
and are not exclusive of any rights or remedies that either party may otherwise
have at law or in equity.
Section 10.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable Law in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
Section 10.05 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
other than Article IX, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
Section 10.06 Governing Law. This Agreement shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
State of California applicable to contracts made and to be performed entirely
within that state, and no effect shall be given to any conflict of laws
principles thereof directing the application of any law other than the laws of
the State of California. The United States District Court for the Central
District of California and the state courts of the State of California situated
within the County of Santa Xxxxxxx in the State of California shall have
exclusive jurisdiction over all disputes between the parties hereto arising out
of or relating to this agreement and the agreements, instruments and documents
contemplated hereby. The parties hereby consent to and agree to submit to the
exclusive jurisdiction of such courts. Each of the parties hereto waives, and
agrees not to assert in any such dispute, to the fullest extent permitted by
applicable law, any claim that (i) such party is not personally subject to the
jurisdiction of such
43
courts, (ii) such party and such party's property is immune from any legal
process issued by such courts or (iii) any litigation commenced in such courts
is brought in an inconvenient forum.
Section 10.07 Waiver of Jury Trial. Each party hereto hereby irrevocably
waives all right to trial by jury in any proceeding (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or any
transaction or agreement contemplated hereby or the actions of any party hereto
in the negotiation, administration, performance or enforcement hereof.
Section 10.08 Headings; Interpretation. The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
Section 10.09 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
Section 10.10 Entire Agreement. This Agreement (including the schedules
and exhibits to this Agreement), the Ancillary Agreements, the Seller Disclosure
Schedule and the Purchaser Disclosure Schedule, the Confidentiality Agreement
and the Letter of Intent constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
TRITON NETWORK SYSTEMS, INC.
/s/ XXX XXXXX
-------------------------------
Name: Xxx Xxxxx
Title: Chief Executive Officer and Chief
Financial Officer
CARRIERCOMM, INC.
/s/ XXXXX XXXXXXX
-------------------------------
Name: Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
45
