EXECUTION COPY
Exhibit 1
ACQUISITION AGREEMENT
dated as of October 7, 2002
between
NORTEL NETWORKS CORPORATION
and
BOOKHAM TECHNOLOGY PLC
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.........................................1
Section 1.02. Other Defined Terms..........................................13
Section 1.03. Terms Generally..............................................15
Section 1.04. Effectiveness of this Agreement..............................15
ARTICLE II
PURCHASE AND SALE OF THE ASSETS
Section 2.01. Purchase and Sale of Assets; Exclusion of Excluded Assets....16
Section 2.02. Assumption of Assumed Liabilities; Retention of Retained
Liabilities..................................................19
Section 2.03. Purchase Price; Allocation of Purchase Price;
Reimbursement of Expenses....................................22
Section 2.04. Inventory Adjustment.........................................23
Section 2.05. Closing......................................................25
Section 2.06. Closing Deliveries by the Seller.............................25
Section 2.07. Closing Deliveries by the Purchaser..........................25
Section 2.08. Accounting...................................................26
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 3.01. Organization and Good Standing; Solvency and Fraudulent
Conveyance...................................................26
Section 3.02. Authority....................................................27
Section 3.03. No Conflict; Consents and Approvals..........................27
Section 3.04. Financial Information; Accounting and Financial Matters......28
Section 3.05. Absence of Certain Changes or Events.........................28
Section 3.06. Absence of Litigation........................................28
Section 3.07. Compliance with Laws.........................................29
Section 3.08. Governmental Licenses and Permits............................29
Section 3.09. The Assets...................................................29
Section 3.10. Real Property................................................29
Section 3.11. Seller Employee Plans........................................32
Section 3.12. Employee Matters.............................................33
Section 3.13. Environmental Matters........................................35
Section 3.14. Seller Contracts.............................................36
Section 3.15. Brokers......................................................36
Section 3.16. Intellectual Property........................................37
Section 3.17. Residence....................................................38
Section 3.18. Tax Matters..................................................38
Section 3.19. Customers and Suppliers......................................39
Section 3.20. Securities Laws..............................................39
Section 3.21. EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES................39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01. Organization and Good Standing; Solvency and Fraudulent
Conveyance; Principal Purchaser Subsidiaries.................40
Section 4.02. Authority....................................................40
Section 4.03. No Conflict; Consents and Approvals..........................41
Section 4.04. Capitalization...............................................42
Section 4.05. Purchaser Reports; Undisclosed Liabilities...................42
Section 4.06. Absence of Certain Changes or Events.........................43
Section 4.07. Absence of Litigation........................................43
Section 4.08. [Reserved]...................................................43
Section 4.09. Compliance with Laws.........................................43
Section 4.10. Governmental Licenses and Permits............................43
Section 4.11. Purchaser Contracts..........................................44
Section 4.12. Brokers......................................................44
Section 4.13. Purchaser Employee Plans.....................................44
Section 4.14. Employee Matters.............................................45
Section 4.15. Accounting and Financial Matters.............................46
Section 4.16. Environmental Matters........................................47
Section 4.17. Intellectual Property........................................47
Section 4.18. Tax Matters..................................................48
Section 4.19. EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES................48
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business Prior to the Closing.....................48
Section 5.02. Access to Information........................................50
Section 5.03. Confidentiality..............................................51
Section 5.04. Regulatory and Other Authorizations; Consents................52
Section 5.05. Bulk Sales...................................................53
Section 5.06. Insurance....................................................53
Section 5.07. Certain Services and Benefits Provided by Affiliates.........53
Section 5.08. Further Action...............................................53
Section 5.09. Ancillary Agreements.........................................56
Section 5.10. Maintenance of Records.......................................56
Section 5.11. Obtaining Consents...........................................57
Section 5.12. Deletion of Non-Transferred Software.........................57
Section 5.13. Equipment Leases.............................................57
Section 5.14. Product Warranty.............................................58
Section 5.15. Agreement Restricting Transfer of Assets or Business to
Certain Persons..............................................58
Section 5.16. Notice of Certain Events.....................................59
Section 5.17. Lock-up......................................................59
Section 5.18. Standstill...................................................60
Section 5.19. Listing......................................................61
Section 5.20. Securities Laws..............................................61
Section 5.21. Shareholder Circular; Purchaser Shareholders' Meeting;
Board Recommendation of Purchaser Shareholder Resolutions....61
Section 5.22. Additional Intellectual Property Rights......................62
Section 5.23. Non-competition..............................................62
Section 5.24. Option Termination Notice....................................63
Section 5.25. Register of Members..........................................64
ARTICLE VI
EMPLOYEE MATTERS
Section 6.01. Transfers of Employees.......................................64
Section 6.02. Cooperation with respect to Transferring Employees...........65
Section 6.03. Communications with Employees................................65
Section 6.04. Updated Employee Information; Status of Information..........65
Section 6.05. Provisions Applicable to Certain Jurisdictions...............66
ARTICLE VII
TAX MATTERS
Section 7.01. Transfer Taxes...............................................66
Section 7.02. Elections and Exemptions.....................................67
Section 7.03. VAT..........................................................68
Section 7.04. Treatment of Indemnity Payments..............................70
Section 7.05. Tax Obligations..............................................70
Section 7.06. GST..........................................................71
Section 7.07. Cooperation; Access to Records...............................71
Section 7.08. Registration Numbers.........................................72
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of the Seller......................72
Section 8.02. Conditions to Obligations of the Purchaser...................73
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination..................................................74
Section 9.02. Effect of Termination........................................75
Section 9.03. Waiver.......................................................75
Section 9.04. Security Deposit.............................................75
ARTICLE X
INDEMNIFICATION
Section 10.01. Indemnification by the Purchaser.............................76
Section 10.02. Indemnification by the Seller................................76
Section 10.03. Limitations on Indemnification...............................77
Section 10.04. Notification of Claims.......................................78
Section 10.05. Exclusive Remedies...........................................78
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. Survival.....................................................79
Section 11.02. Expenses; Currency...........................................79
Section 11.03. Notices......................................................79
Section 11.04. Public Announcements.........................................80
Section 11.05. Headings.....................................................80
Section 11.06. Disclosure Schedules.........................................81
Section 11.07. Severability.................................................81
Section 11.08. Entire Agreement.............................................81
Section 11.09. Assignment...................................................81
Section 11.10. No Third-Party Beneficiaries.................................81
Section 11.11. Amendment....................................................81
Section 11.12. Governing Law................................................81
Section 11.13. Counterparts.................................................82
Section 11.14. No Presumption...............................................82
Exhibits
--------
Exhibit A...................Form of Assignment and Assumption Agreement
Exhibit B...................Form of Xxxx of Sale
Exhibit C...................Form of Employee Loan Agreement
Exhibit D...................Form of Intellectual Property License Agreement
Exhibit E...................Form of Joint Development Agreement
Exhibit F...................Form of Patent Assignment
Exhibit G...................Form of Purchaser Shareholder Resolutions
Exhibit H...................Forms of Real Estate Agreements and Assignments
Exhibit I...................Form of Registration Rights Agreement
Exhibit J...................Form of Relationship Deed
Exhibit K...................Form of U.S. Security Agreement
Exhibit L...................Form of Supply Agreement
Exhibit M...................Form of Trademark Assignment
Exhibit N...................Form of Trademark License Agreement
Exhibit O...................Form of Transition Services Agreement
Exhibit P...................Form of U.K. Supplementary Agreement
Exhibit Q...................Form of Warrant Instrument
Exhibit R...................Form of Series A Note
Exhibit S...................Form of Series B Note
Schedules
---------
Seller Disclosure Schedule
Employee Matters Schedule
Purchaser Disclosure Schedule
Sections of the Seller Disclosure Schedule
------------------------------------------
Section 1.01(a).............Knowledge of the Seller or Seller's Knowledge
Section 1.01(b).............Certain Permitted Liens
Section 1.01(c).............Products
Section 1.01(d).............Certain Restricted Patents
Section 1.01(e).............Certain Third Party Licenses
Section 1.01(f).............Transferred Other Intellectual Property
Section 1.01(g).............Transferred Passive Patents
Section 1.01(h).............Transferred Patents
Section 1.01(i).............Transferred Software
Section 2.01(a)(i)..........Owned Real Property
Section 2.01(a)(ii).........Real Property Leases
Section 2.01(a)(iii)........Owned Equipment
Section 2.01(a)(iv).........Equipment Leases and Related Buy-Out Values
Section 2.01(a)(vii)........Third Party Licenses Exclusive to the Business
Section 2.01(a)(viii).......Other Seller Contracts
Section 2.01(a)(ix).........Certain Rights Under Retained Contracts
Section 2.01(a)(x)..........Certain Governmental Permits
Section 2.01(a)(xi).........Licenses Relating to Business Software
Section 2.01(a)(xiv)........Other Seller IP Contracts
Section 2.01(a)(xv).........Certain Other Specified Assets
Section 2.01(b)(xiii).......Certain Other Specified Excluded Assets
Section 2.02(a)(i)..........Certain Liabilities in Respect of the Owned
Real Property and the Seller Contracts
Section 2.02(a)(ii).........Certain Liabilities Under Retained Contracts
Section 2.02(a)(vii)........Certain Other Specified Assumed Liabilities
Section 2.02(b)(i)..........Certain Liabilities in Respect of the Owned
Real Property and the Seller Contracts
Section 2.02(b)(xi).........Certain Other Specified Retained Liabilities
Section 2.03(c).............Allocation of Purchase Price and the Assumed
Liabilities
Section 2.04(a).............Post-Closing Inventory Statement
Section 3.03(a).............Certain Consents, Approvals and Waivers
Section 3.04................Seller Financial Statements and Related
Disclosures
Section 3.05................Certain Changes or Events Since June 30, 2002
Section 3.06................Certain Actions
Section 3.08................Licenses and Permits
Section 3.09(a).............Certain Disclosures Regarding the Assets
Section 3.09(b).............Title to and Validity of Interests in the
Assets
Section 3.10(a).............Certain Disclosures Regarding the Leased Real
Property
Section 3.10(b).............Certain Encumbrances Relating to the Owned Real
Property
Section 3.10(c).............Certain Disclosures Regarding the Owned Real
Property Located in the U.K.
Section 3.10(d).............Certain Disclosures Regarding the Owned Real
Property and the Real Property Leases
Section 3.11(a).............Seller Employee Plans
Section 3.11(b).............Audits and Investigations with Respect to
Seller Employee Plans
Section 3.11(c).............Commitments to Amend Seller Employee Plans
Section 3.11(d).............Notices of Claims under Seller Employee Plans
Section 3.11(e).............Certain Actions Relating to Seller Employee
Plans
Section 3.12(a).............Employee Information
Section 3.12(b).............Work Stoppages, Strikes, Picketings and
Slowdowns
Section 3.12(c).............Compliance with Employment Laws
Section 3.12(e).............Complaints, Proceedings, Levies
Section 3.12(f).............Collective Bargaining Agreements or
Understandings
Section 3.12(g).............U.K. Employees Notice Periods
Section 3.12(h).............Certain Employee Resignations and Terminations
Section 3.13................Environmental Matters
Section 3.14(a).............Certain Matters Relating to Seller Contracts
Section 3.14(b).............Seller Contracts Not Provided to the Purchaser
Section 3.16(a).............Title to Intellectual Property
Section 3.16(d).............Intellectual Property Claims
Section 3.16(g).............Third Party Infringement of Transferred
Intellectual Property
Section 3.18(e).............Certain Tax Matters
Section 3.19................Customers and Suppliers
Section 5.01(a).............Conduct of Business Prior to Closing
Section 5.09(f).............Provision of TIA Chips
Section 5.14................Product Warranty
Section 5.15(a).............Prohibited Transferees
Section 5.19(c).............Certain Information Provided for U.K. Listing
Particulars and Shareholder Circular
Section 6.01(b).............Certain Employees
Sections of the Purchaser Disclosure Schedule
---------------------------------------------
Section 1.01(a).............Knowledge of the Purchaser or the Purchaser's
Knowledge
Section 1.01(b).............Principal Purchaser Subsidiaries
Section 4.03(a).............Certain Consents, Approvals and Waivers
Section 4.03(b).............Certain Governmental Permits
Section 4.04................Capitalization
Section 4.06................Certain Changes or Events Since June 30, 2002
Section 4.07................Certain Actions
Section 4.11................Purchaser Contracts
Section 4.13(a).............Purchaser Employee Plans
Section 4.13(b).............Audits and Investigations Relating to Purchaser
Employee Plans
Section 4.13(c).............Non-Standard Form Employment Agreements
Section 4.13(d).............Commitments to Amend Purchaser Employee Plans
Section 4.13(e).............Notices of Claims under Purchaser Employee
Plans
Section 4.13(f).............Timely Payment of Contribution
Section 4.14(a).............Work Stoppages, Strikes, Picketings and
Slowdowns
Section 4.14(b).............Compliance with Employment Related Laws
Section 4.14(c).............Complaints, Proceedings, Levies
Section 4.14(d).............Collective Bargaining Agreements or
Understandings
Section 4.15................Off-Balance Sheet Special Purpose Entities and
Financial Arrangements
Section 4.16................Environmental Matters
Section 4.17(b).............Intellectual Property Claims
Section 4.17(d).............Infringements and Misappropriations
Section 5.01(b).............Conduct of Business Prior to Closing
Section 5.17................Prohibited Transferees
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT is dated as of October 7, 2002,
between Nortel Networks Corporation, a Canadian corporation (the "Seller"), and
Bookham Technology plc, a public limited company incorporated under the laws of
England and Wales (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller and the Selling Subsidiaries (as defined
below) own and operate the Business (as defined below);
WHEREAS, the Seller wishes to transfer (and wishes to cause
the Selling Subsidiaries to transfer) to the Purchaser and the Purchasing
Subsidiaries (as defined below), and the Purchaser wishes to purchase and assume
(and wishes to cause the Purchasing Subsidiaries to purchase and assume) the
Assets and the Assumed Liabilities (each as defined below), as the case may be,
from the Seller and the Selling Subsidiaries, all upon the terms and subject to
the conditions set forth herein; and
WHEREAS, certain principal shareholders of the Purchaser, who
or which collectively beneficially own shares of the Purchaser's share capital
representing in excess of 29% of the votes entitled to be cast at the Purchaser
Shareholders' Meeting (as defined herein), have entered into voting undertakings
dated as of the date hereof with the Seller pursuant to which such principal
shareholders have committed, inter alia, on the terms set forth in such
agreements, to vote their shares of capital stock of the Purchaser at the
Purchaser Shareholders' Meeting in favor of the adoption of the Purchaser
Shareholder Resolutions (as defined herein).
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained herein,
the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, litigation, action, suit,
originating application to an employment tribunal, arbitration, inquiry,
proceeding or investigation.
"Administrative Services" means any ancillary corporate
services currently being provided, or provided prior to the Closing Date, to or
in support of the Business (by the Seller, its Affiliates or any other Person),
including treasury services, legal services, information technology services,
tax services, human resources services, employee benefits services, risk
management services, finance services, group purchasing services, logistics
services, property management services, environmental support services and
customs and excise services, in each case including services relating to the
provision of access to design tools and databases, and any computer software
used in connection therewith.
"Affiliate" means, with respect to any specified Person, any
other Person who or that, directly or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common Control with such
specified Person.
"Agreement" means this Agreement, including the Seller
Disclosure Schedule, the Employee Matters Schedule, the Purchaser Disclosure
Schedule, all other Schedules hereto and all Exhibits hereto and thereto, and
all amendments hereto made in accordance with Section 11.12.
"Ancillary Agreements" means the Assignment and Assumption
Agreement, the Xxxx of Sale, the Employee Loan Agreement, the Intellectual
Property License Agreement, the Notes, the Patent Assignment, the Real Estate
Agreements and Assignments, the Registration Rights Agreement, the Relationship
Deed, the Joint Development Agreement, the Security Agreements, the Supply
Agreement, the Trademark Assignment, the Trademark License Agreement, the
Transition Services Agreement and the U.K. Supplementary Agreement.
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement to be executed by the parties thereto on the Closing Date,
in the form of Exhibit A.
"Bankruptcy Event" means, with respect to any Person, any of
the following events: (a) such Person commences a case or other proceeding under
any bankruptcy, reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar Law of any
jurisdiction; (b) the commencement against such Person of any such case or
proceeding that is not dismissed within 60 days after commencement; (c) the
adjudication of such Person as insolvent or bankrupt, or any order of relief or
other order approving any such case or proceeding is entered; (d) such Person
suffers any appointment of any custodian, receiver, receiver-manager or the like
for it or any substantial part of its property that is not discharged or stayed
within 60 days; (e) such Person makes a general assignment for the benefit of
creditors; (f) such Person fails to pay, or states that it is unable to pay or
is unable to pay, its debts generally as they become due; (g) such Person calls
a meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) such Person, by any act or failure to act,
indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting any of the
foregoing.
"Xxxx of Sale" means the xxxx of sale and conveyance to be
executed by the Seller and the Selling Subsidiaries on the Closing Date, in the
form of Exhibit B.
"Business" means the design, development, manufacture,
distribution, sales and support of the Products by the Seller and its
Subsidiaries, excluding, in all cases, any Administrative Services other than
Administrative Services performed by Transferred Employees solely with respect
to the design, development, manufacture, distribution, sales and support of the
Products, in which case they are included in the Business.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by Law to be closed in
New York, New York, USA or Xxxxxxx, Xxxxxxx, Xxxxxx.
"Contaminated Land" means contaminated land as defined under
Part IIA of the U.K. Environmental Protection Xxx 0000, as amended by the U.K.
Environmental Protection Xxx 0000, the Swiss environmental Law or any other
applicable analogous Law.
"Control" means, as to any Person, the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise. The term
"Controlled" shall have a correlative meaning.
"Change of Control" means any of the following with respect to
any entity (other than the transactions contemplated by this Agreement): any (i)
merger, consolidation, share exchange or other similar transaction, (ii) sale,
transfer, exchange or other disposition of all or substantially all of its
assets in a single transaction or series of related transactions, (iii)
consummation of a tender offer or exchange offer for a majority of the
outstanding voting securities of such entity or (iv) issuance of that number of
voting securities of such entity that would, after such issuance, constitute a
majority of the outstanding voting securities of such entity.
"Corporate Desktop Software" means the software licensed to
the Seller or any Selling Subsidiary under a transferable corporate license,
which software is, as of the Closing Date, installed on personal computers
forming part of the Owned Equipment.
"Debt" means any obligation in respect of (a) borrowed money,
(b) capitalized lease obligations, (c) obligations under interest rate
agreements and currency agreements, (d) guarantees of any obligation of any
third Person, (e) letters of credit and (f) indemnities or performance bonds.
"Effective Date" means, with respect to any Transferring
Employee, the Closing Date or such later time as such Transferring Employee
shall transfer hereunder pursuant to Section 1.04.
"Effective Time" means, with respect to any Transferring
Employee, 11:59 p.m. (in the time zone in which the Seller or the Selling
Subsidiary that employs such Transferring Employee is located on the applicable
Effective Date) on the applicable Effective Date.
"Employees" means the employees of the Seller or a Selling
Subsidiary who are listed on Section 3.12(a) of the Seller Disclosure Schedule,
as amended by the Interim Employee Information and the Updated Employee
Information.
"Employee Information" means the employee data relating to the
Employees listed or described in Section 3.12(a) to the Seller Disclosure
Schedule.
"Employee Loan Agreement" means the Employee Loan Agreement to
be executed by the parties thereto on the Closing Date and in the form of
Exhibit C.
"Employee Matters Schedule" means the Employee Matters
Schedule attached hereto and forming a part of this Agreement.
"Employment Transfer Date" means the date on which the
employment of a Transferring Employee (i) commences with the Purchaser or a
Purchasing Subsidiary pursuant to this Agreement or (ii) transfers to the
Purchaser or a Purchasing Subsidiary pursuant to this Agreement and in
accordance with applicable Law.
"Environmental Audit" means any assessment, report or audit
carried out by or on behalf of the Seller or any Selling Subsidiary within the
eighteen-month period prior to the date hereof relating to compliance with any
Environmental Permit or Environmental Law at the Owned Real Property or the
property demised under the Real Property Leases.
"Environmental Claim" means any (i) Liability for
investigation, monitoring, cleanup, remediation, removal or other response to a
Release or threatened Release, (ii) claim for personal injury, property damage,
or damage to natural resources, (iii) Liability incurred to enable the
Purchaser, as the case may by, to comply with any Environmental Law including,
any fines, penalties or environmental projects related thereto, or (iv)
proceeding by any Governmental Authority or any other third Person related to
the foregoing.
"Environmental Law" means any Law, circular or guidance note
relating to pollution or protection of the environment, health, safety or
natural resources, including to the generation, presence, use, handling,
transportation, treatment, storage, management, disposal, release, emission or
discharge of, or exposure to, Hazardous Materials.
"Environmental Liabilities" means Liabilities arising under
any Environmental Law.
"Environmental Permit" means any permit, approval,
identification number, license, certificate, consent or other authorization
required under or issued pursuant to any Environmental Law.
"Equipment" means computer hardware (including personal and
other computers), office furnishings and fixtures, and telecommunications,
robotic, manufacturing, testing, design and other equipment, excluding in all
cases any Intellectual Property covering, embodied in or connected to any of the
foregoing.
"Exchange Act" means the U.S. Securities Exchange Act of 1934
and the rules and regulations thereunder, each as amended from time to time.
"Governmental Authority" means any Canadian, U.S., U.K.,
Swiss, European Union or other national, federal, state, provincial or local
authority, quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization, or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Material" means any natural or artificial substance
(whether in the form of solid, gas, vapor or liquid alone or in combination with
any other substance), including petroleum, petroleum products, petroleum
by-products or breakdown products, Radioactive Materials, asbestos in any form
that is friable or polychlorinated biphenyls that is regulated as a pollutant,
contaminant or hazardous substance, material or waste under any Environmental
Law.
"Intellectual Property" means all proprietary and intellectual
property rights, in any jurisdiction, whether owned or held for use under
license, including such rights in and to: (i) trademarks, service marks, brand
names, distinguishing guises, trade dress, trade names, words, symbols, color
schemes, business names, internet domain names and other indications of origin
("Trademarks and Business Names"); (ii) patents and pending patent applications
(including all provisionals, divisionals, continuations, continuations-in-part,
re-examination and reissue patents), utility models, inventors' certificates and
invention disclosures ("Patents"); (iii) trade secrets and other confidential or
non-public business or technical information, including ideas, formulas,
compositions, program devices, compilations, patterns, discoveries and
improvements, know-how, show-how, manufacturing and production methods,
processes and techniques, and research and development information; drawings,
designs, specifications, plans, proposals and technical and system data;
analytical models, investment and lending strategies and records, financial and
other products; financial, marketing and business data, pricing and cost
information; business and marketing plans and customer and supplier lists and
information; in each case whether patentable, copyrightable or not; (iv)
computer programs and databases, including all object code, source code,
algorithms, subroutines, specifications, data and documentation and all
translations, compilations, arrangements, adaptations, and derivative works
thereof, in each case whether patentable, copyrightable or not, and all
documentation and embodiments thereof in all forms of media; (v) Network
Identifiers; (vi) writings and other works of authorship and product
documentation, including marketing materials, brochures, training materials,
including all copyrights and moral rights related to each of the foregoing;
(vii) mask works or integrated circuit topographies; (viii) industrial designs
and (ix) rights to limit the access, use or disclosure of confidential
information by any Person; in each case including all registrations of, and
applications to register, any of the foregoing with any Government Authority and
any renewals or extensions thereof; the goodwill associated with each of the
foregoing; and any claims or causes of action or defenses arising out of or
related to any of the foregoing.
"Intellectual Property License Agreement" means the
intellectual property license agreement to be executed by the parties thereto on
the Closing Date, in the form of Exhibit D.
"Inventory" means raw materials, work-in-process with respect
to tangible goods, finished goods, supplies, parts, spare parts and other
inventory (including in transit, or consignment or in the possession of a third
Person), to the extent dedicated to, embodied in or constituting the Products
held for use in the Business and owned by the Seller or any of the Selling
Subsidiaries.
"IRS" means the U.S. Internal Revenue Service.
"Joint Development Agreement" means the Joint Development
Agreement to be executed by the parties thereto on the Closing Date, in the form
of Exhibit E.
"Knowledge of the Purchaser" or "Purchaser's Knowledge" means
the actual knowledge of any of the individuals listed in Section 1.01(a) of the
Purchaser Disclosure Schedule, or the knowledge that any such Person would
reasonably be expected to have in light of his or her position with the
Purchaser or any of its Subsidiaries.
"Knowledge of the Seller" or "Seller's Knowledge" means the
actual knowledge of any of the individuals listed in Section 1.01(a) of the
Seller's Disclosure Schedule, or the knowledge that any such Person would
reasonably be expected to have in light of his or her position with the Seller
or any of its Subsidiaries.
"Law" means any Canadian, U.S., U.K., Swiss, European Union or
other national, federal, state, provincial or local law, statute, common law,
ordinance, regulation, rule, applicable directive, code or other requirement or
rule of law or stock exchange rule, including any Governmental Order or any
judicial or binding administrative interpretation thereof.
"Liabilities" means debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or undeterminable, including those arising under any Law or Action
and those arising under any contract, agreement, arrangement, commitment or
undertaking or otherwise (including Environmental Liabilities).
"Lien" means any mortgage, easement, tenancy, right-of-way,
restriction, deed or trust, pledge, hypothecation, security interest,
encumbrance, claim, lien, license, lease or charge of any kind.
"LSE" means the London Stock Exchange plc.
"Nasdaq" means Nasdaq National Market.
"Network Identifiers" means all internet protocol addresses
and networks, including DNS domain names, e-mail addresses, world wide web (www)
and http addresses, network names, network addresses (such as IPv4 and IPv6) and
services (such as mail or website) whether or not used or currently in service,
and including all registrations relating thereto in or with all registration
bodies or organizations.
"Patent Assignment" means the Patent Assignment to be executed
by the parties thereto on the Closing Date, in the form of Exhibit F.
"Patent Cross Licenses" means the reciprocal patent and patent
rights cross license agreements between the Seller or any of its Affiliates on
the one hand and third Persons on the other hand.
"Permitted Liens" means the following Liens: (a) Liens for
Taxes not yet due or that are being contested in good faith; (b) statutory Liens
of landlords and Liens of carriers, warehousemen, mechanics, materialmen and
other like Liens imposed by Law and arising in the ordinary course of business;
(c) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other types of
social security; (d) minor defects of title, easements, rights-of-way,
restrictions and other similar charges or encumbrances of record that
individually or in the aggregate, do not interfere and would not reasonably be
expected to interfere with the continued use and operation of the Asset to which
they relate in the ordinary course of business; (e) Liens not created by the
Seller or any of its Affiliates that affect any rights of the tenant under the
Real Property Leases or the fee interest in any of the Owned Real Property; (f)
non-exclusive licenses granted to third Persons in the ordinary course of
business under Transferred Intellectual Property and the Patent Cross Licenses,
(g) Liens incurred in the ordinary course of business securing Liabilities that
do not, individually or in the aggregate, materially impair, and would not
reasonably be expected to materially impair, the continued use and operation of
the Asset to which they relate in the conduct of the Business as presently
conducted; (h) Liens arising under any financing agreement to which the Seller
or any of its Affiliates is a party that will be released prior to or as of the
Closing, (i) those Liens disclosed in Section 1.01(b) of the Seller Disclosure
Schedule and (j) Liens arising under any of the Transaction Documents.
"Person" means any natural person, general or limited
partnership, corporation, limited liability company, firm, association or other
legal entity.
"Principal Purchaser Subsidiary" means any Subsidiary of the
Purchaser the assets of which have an aggregate fair market value equal to or
greater than $1,000,000.
"Products" means the products, as they exist at the Closing,
that are (a) included in the following product lines of the Seller and its
Subsidiaries: (i) optical amplifiers and pump modules and (ii) transmitters and
receivers, and (b) listed in Section 1.01(c) of the Seller Disclosure Schedule.
"Purchaser Contract" of the Purchaser or any of its
Subsidiaries means (i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) of any such Person, and (ii) any
non-competition agreement or any other agreement or obligation that purports to
limit in any material respect the manner in which, or the localities in which,
all or any material portion of the business of such Person and its Subsidiaries,
taken as a whole, has been, is or is proposed to be conducted.
"Purchaser Disclosure Schedule" means the Disclosure Schedule
delivered by the Purchaser to the Seller on the date hereof pursuant to this
Agreement and forming a part of this Agreement.
"Purchaser Employee Plan" means any pension plan, supplemental
pension plan, profit sharing plan, savings plan, retirement savings plan, bonus
plan, commission plan, incentive compensation plan, deferred compensation plan,
stock purchase plan, stock option plan, employee benefit plan, vacation plan,
leave of absence plan, employee assistance plan, automobile
leasing/subsidy/allowance plan, redundancy or severance plan, relocation plan,
family support plan, retirement plan, medical, health, hospitalization or life
insurance plan, disability plan, sick leave plan, retention plan, compensation
arrangement, including any base salary arrangement, overtime, on-call or call-in
policy, death benefit plan, or any other similar plan, program, arrangement or
policy that is maintained or otherwise contributed to, or required to be
contributed to, by or on behalf of the Purchaser or any of the Purchasing
Subsidiaries with respect to the Purchaser Employees as in effect at the
applicable Effective Time.
"Purchaser Employees" means the current or former employees,
officers, directors and independent contractors of the Purchaser and its
Subsidiaries.
"Purchaser Intellectual Property" means (i) the Purchaser
Owned Intellectual Property and (ii) the Purchaser Licensed Intellectual
Property.
"Purchaser Licensed Intellectual Property" means all
Intellectual Property that is used under license by the Purchaser or any of its
Subsidiaries as of the Closing Date.
"Purchaser Material Adverse Effect" means any long-term or
short-term effect that is or is reasonably likely to be materially adverse to
(i) the business, results of operations, assets, liabilities or condition
(financial or otherwise) of the Purchaser and its Subsidiaries, taken as a
whole, or (ii) the ability of the Purchaser to perform its obligations under
this Agreement and the Ancillary Agreements, but in each case shall not include
any effect arising out of or resulting from (A) a change in general economic or
financial conditions (provided that such changes do not affect the Purchaser and
its Subsidiaries, taken as a whole, in a materially disproportionate manner in
comparison to other companies engaged in the same industry), (B) a change,
condition or circumstance in the industry in which the Purchaser and its
Subsidiaries operate (provided that such changes do not affect the Purchaser and
its Subsidiaries, taken as a whole, in a materially disproportionate manner in
comparison to other companies engaged in the same industry) or (C) this
Agreement or the transactions contemplated hereby or any announcement hereof or
the transactions contemplated hereby; provided, however, that (1) any decrease
in the market price or trading volume of the Purchaser's securities or any
shareholder litigation resulting therefrom will not, in and of itself,
constitute a Purchaser Material Adverse Effect and (2) the failure of the
Purchaser to achieve internal or external financial forecasts or projections
will not, in and of itself, constitute a Purchaser Material Adverse Effect.
"Purchaser Options" means options granted by the Purchaser
pursuant to the Purchaser Share Schemes.
"Purchaser Owned Intellectual Property" means Intellectual
Property owned by the Purchaser or any of its Subsidiaries as of the Closing
Date.
"Purchaser Share Schemes" means the 2001 Approved Sharesave
Scheme, the 1998 Employee Share Option Scheme and the 1995 Employee Share Option
Scheme.
"Purchaser Shares" means the ordinary shares, one-third of a
xxxxx each in the capital of the Purchaser.
"Purchaser Shareholders' Meeting" means the extraordinary
general meeting of the shareholders of the Purchaser to be duly convened and
held for the purpose of adopting the Purchaser Shareholder Resolutions pursuant
to Section 5.21.
"Purchaser Shareholder Resolutions" means the resolutions to
be passed at the Purchaser Shareholders' Meeting approving, inter alia, the
execution, delivery and performance of the transactions contemplated by this
Agreement and the Ancillary Agreements, in the form of Exhibit G.
"Purchasing Subsidiaries" means Bookham Acquisition, Inc.,
Bookham, Inc. and a wholly-owned Swiss Subsidiary to be formed after the date
hereof but prior to the Closing.
"Radioactive Materials" means any material defined as
radioactive in the U.K. Radioactive Substances Xxx 0000.
"Real Estate Agreements and Assignments" means the Zurich
Lease Assignment Agreement, the Poughkeepsie Lease Assignment, the Harlow
Underlease Agreement, the Canadian Lease Agreement and the Canadian License
Agreement, each to be executed by the parties thereto on the Closing Date and in
the forms included in Exhibit H, and a Hong Kong license agreement to be
executed by the parties thereto on the Closing Date and having the terms set
forth in the term sheet therefor included in Exhibit H.
"Refundable Transfer Tax" means any Transfer Tax (or portion
thereof) incurred in connection with the transactions contemplated hereby which
is refundable to (or can be taken as a credit against other taxes owed by) the
Purchaser or any Purchasing Subsidiary. For the avoidance of doubt, value-added
and goods and services taxes shall be treated as Refundable Transfer Taxes and
stamp duty and stamp duty reserve taxes shall not be treated as Refundable
Transfer Taxes.
"Registration Rights Agreement" means the Registration Rights
Agreement to be executed by the parties thereto on the Closing Date, in the form
of Exhibit I.
"Relationship Deed" means the Relationship Deed to be executed
by the parties thereto on the Closing Date, in the form of Exhibit J.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, or other release of any Hazardous Material or noxious noise or odor,
at, in, on, into, or onto the environment, including the migration of any
Hazardous Material through or in the environment, or any release, emission or
discharge as those terms are defined in any applicable Environmental Law.
"Restricted Patents" means the Patents owned by the Seller and
the Selling Subsidiaries as of the Closing Date that are listed in Section
1.01(d) of the Seller Disclosure Schedule.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933 and the
rules and regulations thereunder, each as amended from time to time.
"Security Agreements" means (i) the U.S. Security Agreement to
be executed by the parties thereto on the Closing Date, in the form of Exhibit
K, (ii) security agreements for each of the jurisdictions in which the
collateral securing the Series B Notes is located, which agreements will be
substantially in the form of Exhibit K (but with such modifications as are
necessary or appropriate for such respective jurisdictions), each to be executed
by the Seller, the Purchaser and each of the Subsidiaries of the Purchaser and
(iii) any other agreements or instruments (including mortgages and leasehold
mortgages) as are required to be executed on the Closing Date pursuant to the
foregoing.
"Seller Contract" means any of the Real Property Leases,
Equipment Leases, Third Party Licenses Exclusive to the Business, Other Seller
Contracts and the license agreements that are listed or described in Section
2.01(a)(xi) of the Seller Disclosure Schedule.
"Seller Disclosure Schedule" means the Disclosure Schedule
delivered by the Seller to the Purchaser on the date hereof pursuant to this
Agreement and forming a part of this Agreement.
"Seller Employee Plan" means any pension plan, supplemental
pension plan, profit sharing plan, savings plan, retirement savings plan, bonus
plan, commission plan, incentive compensation plan, deferred compensation plan,
stock purchase plan, stock option plan, employee benefit plan, vacation plan,
leave of absence plan, employee assistance plan, automobile
leasing/subsidy/allowance plan, redundancy or severance plan, relocation plan,
family support plan, retirement plan, medical, health, hospitalization or life
insurance plan, disability plan, sick leave plan, retention plan, compensation
arrangement, including any base salary arrangement, overtime, on-call or call-in
policy, death benefit plan, or any other similar plan, program, arrangement or
policy that is maintained or otherwise contributed to, or required to be
contributed to, by or on behalf of the Seller or any of the Selling Subsidiaries
with respect to Employees as in effect at the applicable Effective Time.
"Seller Material Adverse Effect" means any long-term or
short-term effect that is or is reasonably likely to be materially adverse to
(i) the business, results of operations, assets, liabilities or the condition
(financial or otherwise) of the Business, taken as a whole, or (ii) the ability
of the Seller to perform its obligations under this Agreement and the Ancillary
Agreements, but in each case shall not include (1) any loss of Employees or (2)
any effect arising out of or resulting from (A) a change in general economic or
financial conditions (provided that such changes do not affect the Business or
the Assets in a materially disproportionate manner in comparison to other
companies engaged in the same industry), (B) a change, condition or circumstance
in the industry in which the Business operates (provided that such changes do
not affect the Business or the Assets in a materially disproportionate manner in
comparison to other companies engaged in the same industry), or (C) this
Agreement or the transactions contemplated hereby or any announcement hereof or
the identity of the Purchaser; provided, however, that the failure of the
Business to achieve internal or external financial forecasts or projections will
not, in and of itself, constitute a Seller Material Adverse Effect.
"Selling Subsidiaries" means Nortel Networks Inc., Nortel
Networks Limited, Nortel Networks Properties Limited, Nortel Networks Technology
Corporation, Nortel Networks (Asia) Limited, Nortel Networks Optical Components
(Switzerland) GmbH, Nortel Networks (U.K.) Limited, Nortel Networks Optical
Components Limited, Nortel Networks Optical Components Inc., Nortel Networks
HPOCS Inc., Nortel Networks Photonics Pty Ltd. and Nortel Networks Xxxxxxx
Limited.
"Single Use Desktop Software" means the software licensed to
the Seller or any Selling Subsidiary under a transferable, shrink-wrap or
click-wrap license agreement installed on a personal computer forming part of
the Owned Equipment.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock (or other equity
interest) having ordinary voting power to elect a majority of the board of
directors (or similar governing body) of such entity or (b) the interest in the
capital or profits of such entity is at the time directly or indirectly owned or
Controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Supply Agreement" means the Supply Agreement to be executed
by the parties thereto on the Closing Date, in the form of Exhibit L.
"Tax" or "Taxes" means any and all taxes, charges, fees,
levies, imposts, duties or other assessments of any kind whatsoever, imposed by
or payable to any federal, state, provincial, local, or foreign Tax authority,
including any gross income, net income, alternative or add-on minimum,
franchise, profits or excess profits, gross receipts, estimated, capital,
inheritance, goods, services, documentary, use, transfer, ad valorem, business
rates, value added, sales, customs, real or personal property, capital stock,
stamp duty, stamp duty reserve, license, payroll, withholding or back-up
withholding, employment, social security, national insurance, workers'
compensation, unemployment compensation, utility, severance, production, excise,
occupation, premium, windfall profits, occupancy, transfer, gains taxes and
other obligations of the same or similar nature to any of the foregoing,
together with any interest, penalties, additions to tax or additional amounts
imposed with respect thereto.
"Tax Returns" means all returns, reports (including elections,
declarations, disclosures, schedules, estimates and information returns) and
other information filed or required to be filed with any Tax authority relating
to Taxes.
"Third Party Licenses" means (a) the Third Party Licenses
Exclusive to the Business and (b) the licenses that are listed or described in
Section 1.01(e) of the Seller Disclosure Schedule.
"Trademark Assignment" means the Trademark Assignment to be
executed by the parties thereto on the Closing Date, in the form of Exhibit M.
"Trademark License Agreement" means the Trademark License
Agreement to be executed by the parties thereto on the Closing Date, in the form
of Exhibit N.
"Transaction Documents" means this Agreement, the Ancillary
Agreements and any certificate or other document delivered by any party hereto
or thereto in connection therewith.
"Transfer Taxes" means all goods, services, sales, use, real
or personal property, gross receipt, documentary, value-added, stamp duty, stamp
duty reserve and all other similar taxes or other like charges incurred in
connection with the transactions contemplated hereby. For the avoidance of
doubt, Transfers Taxes shall not include any Taxes which are payable by the
Seller or any of the Selling Subsidiaries on any income or gain arising from the
transfer, sale or disposal of any of the Assets, and Transfer Taxes shall not
include any stamp duty or stamp duty reserve tax arising in relation to the
Consideration Shares or the shares to which the Warrants relate as a result of
any action taken by the Seller or any of the Selling Subsidiaries on or after
the Closing (including any stamp duty reserve tax arising pursuant to Section 93
or stamp duty arising pursuant to Section 67 of the U.K. Finance Act 1986).
"Transferred Intellectual Property" means the Transferred
Patents, Transferred Software and the Transferred Other Intellectual Property.
"Transferred Other Intellectual Property" means the
Intellectual Property (excluding any Patents, Trademarks and Business Names,
Custom Intellectual Property (as defined in the Intellectual Property License
Agreement) and Network Identifiers) owned by the Seller and the Selling
Subsidiaries as of the Closing Date that is used exclusively in the Business as
of the Closing Date, as listed in Section 1.01(f) of the Seller Disclosure
Schedule, and including all claims, causes of action and rights against third
Persons arising thereunder. Notwithstanding anything to the contrary herein or
under Section 1.01(f) of the Seller Disclosure Schedule, the Transferred Other
Intellectual Property shall not include any rights in copyrights, trade secrets,
know-how, methods, processes, techniques, specifications, software or similar
materials or rights embodied in, or covering, Systems (as defined in the
Intellectual Property License Agreement), fiber xxxxx gratings, optical
attenuators, dispersion compensation, silicon planar waveguides, microelectronic
circuits or device designs, framers, compact reflective and high reliability
circulators, magneto-optoelectronic or photonic technology, dynamic gain
flattening filters, AWG multiplexers/demultiplexers, dielectric
multiplexers/demultiplexers, and/or timing and data recovery circuits.
"Transferred Passive Patents" means the Patents owned by the
Seller and the Selling Subsidiaries as of the Closing Date that are listed in
Section 1.01(g) of the Seller Disclosure Schedule, including all claims, causes
of action and rights against third Persons arising thereunder.
"Transferred Patents" means the Patents owned by the Seller
and the Selling Subsidiaries as of the Closing Date that are listed in Section
1.01(h) of the Seller Disclosure Schedule, and including all claims, causes of
action and rights against third Persons arising thereunder.
"Transferred Software" means any firmware or software (other
than firmware or software embodiments of Custom Intellectual Property (as
defined in the Intellectual Property License Agreement)) owned by the Seller and
the Selling Subsidiaries as of the Closing Date that are used or embodied in the
Products or in the testing of the Products during manufacture, as listed in
Section 1.01(i) of the Seller Disclosure Schedule, and including all claims,
causes of action and rights against third Persons arising thereunder.
"Transferring Employees" means any of the Canada Transferring
Employees, Europe Transferring Employees, Hong Kong Transferring Employees and
US Transferring Employees, each as defined in the Employee Matters Schedule.
"Transition Services Agreement" means the Transition Services
Agreement to be executed by the parties thereto on the Closing Date, in the form
of Exhibit O.
"U.K." means the United Kingdom of Great Britain and Northern
Ireland.
"U.K. Supplementary Agreement" means the U.K. Land Agreement,
together with all schedules and annexes thereto, to be executed by the parties
thereto on the Closing Date, all in the form of Exhibit P.
"UKLA" means the Financial Services Authority acting in its
capacity as the competent authority for listing in the U.K. under Part VI of the
U.K. Financial Services and Xxxxxxx Xxx 0000.
"U.S." means the United States of America including each of
the States therein, the District of Columbia, Puerto Rico, the United States
Virgin Islands and each of the other territories and possessions of the Unites
States of America.
"U.S. Code" means the U.S. Internal Revenue Code and the rules
and regulations thereunder, each as amended from time to time.
"U.S. GAAP" means generally accepted accounting principles in
the U.S.
"VAT" means value added tax as provided in (a) "VATA" the U.K.
Value Added Tax Xxx 0000 or (b) Swiss equivalent, as the context requires.
"Voting Securities" means, with respect to the Purchaser,
shares of any class of shares of the Purchaser that are entitled to vote at
general meetings of the Purchaser; provided that, for purposes of this
definition any securities that are convertible into or exchangeable or
exercisable for any class of shares of the Purchaser, including Purchaser
Shares, shall be treated as having been so converted, exchanged or exercised.
Section 1.02. Other Defined Terms. The following terms have
the meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Accounting Arbitrator 2.04(c)
Assets 2.01(a)
Assumed Liabilities 2.02(a)
Business Information 2.01(a)(v)
Business Software 2.01(a)(xi)
Expense Reimbursement 2.03(d)
Closing 2.05
Closing Date 2.05
Competitive Products 5.23(a)
Confidentiality Agreement 5.03
Consideration Shares 2.03(a)(i)
Employment Offer 6.01(c)(i)
Equipment Leases 2.01(a)(iv)
Excluded Assets 2.01(b)
Fab Employees 2.02(a)(iii)
GST 7.06(a)
GST Election 7.06(a)
GST Legislation 7.06(a)
Indemnified Party 10.04(a)
Indemnifying Party 10.04(a)
Interim Employee Information 6.04(a)
Invention Disclosures 5.08(g)
Inventory Adjustment 2.04(a)
Leave Employees 3.12(d)
Losses 10.01
Not Yet Transferred Contracts 5.11
Notes 2.03(a)(iii)
Other Seller Contracts 2.01(a)(viii)
Other Seller IP Contracts 2.01(a)(xiv)
Owned Equipment 2.01(a)(iii)
Owned Real Property 2.01(a)(i)
Patents 1.01 (Definition of
"Intellectual
Property")
Permitted Engagement 6.01(b)
Post-Closing Inventory Statement 2.04(a)
Prohibited Transferee 5.15(a)
Purchase Price 2.03(a)(iii)
Purchaser Preamble
Purchaser Indemnified Parties 10.02
Purchaser Reports 4.05
Purchaser Tax Obligor 7.01(c)
Real Property Leases 2.01(a)(ii)
Retained Contracts 2.01(b)(vi)
Retained Liabilities 2.02(b)
Security Deposit 9.04(a)
Seller Preamble
Seller Financial Statements 3.04(a)
Seller Indemnified Parties 10.01
Seller Share Options 5.24
Seller Tax Obligor 7.01(b)
Series A Notes 2.03(a)(iii)
Series B Notes 2.03(a)(iv)
Standard Employment Contracts 3.11(c)
System Confidential Information 5.03(b)(iii)
Termination Date 9.01(b)
Third Party Licenses Exclusive to 2.01(a)(vii)
the Business
Trademarks and Business Names 1.01 (Definition of
"Intellectual
Property")
Updated Employee Information 6.04(b)
Vacation Information 6.04(a)
VP OCO 6.04(a)
Warrants 2.03(a)(ii)
Section 1.03. Terms Generally. (a) Words in the singular shall
include the plural and vice versa, and words of one gender shall include the
other gender, in each case, as the context requires, (b) the term "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement and not to any particular
provision of this Agreement, and Article, Section, paragraph, Exhibit and
Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified and (c) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation" unless otherwise specified.
Section 1.04. Effectiveness of this Agreement. (a)
Notwithstanding the execution of this Agreement on the date hereof, but only to
the extent required by Law, none of the provisions of this Agreement relating
directly or indirectly to (i) the sale, conveyance or assignment, transfer or
delivery of the right, title and interest of Nortel Networks (U.K.) Limited,
Nortel Networks Optical Components Limited and Nortel Networks Optical
Components (Switzerland) GmbH (which are the Selling Subsidiaries that employ
Employees in any jurisdiction in which applicable Law requires an information
and/or consultation process prior to the transfer of any employees) in the
Assets, (ii) the granting of rights under the Ancillary Agreements by such
Selling Subsidiaries with respect to property or assets located in the
jurisdictions in which such Selling Subsidiaries are organized or (iii) the
transfer of the Employees employed by such Selling Subsidiaries shall be binding
or effective against the Seller or such Employees until and unless the
representatives of such Employees, as applicable, are provided with the
information required to be provided, and consulted by the Seller or the Selling
Subsidiaries, as applicable, pursuant to and in compliance with the Law in such
jurisdictions and all necessary approvals from applicable Governmental
Authorities with respect to the transfer of such Employees have been obtained,
and, instead, with respect to such (i) Assets, (ii) rights and (iii) transfers
of Employees, this Agreement shall constitute only an irrevocable binding offer
by the Purchaser to effect the transactions contemplated hereby, which offer
shall be deemed accepted (and the Seller shall not be capable of withdrawing its
acceptance), automatically and without further action on the part of any Person,
upon due completion of such consultation process and receipt of such approvals
and fulfillment of the conditions set out in this Agreement.
(b) For such purposes, and solely for the benefit of the
Employees located in such jurisdictions, the Seller shall cause the
applicable Selling Subsidiary or Selling Subsidiaries to initiate, conduct
and complete such information and consultation procedures with the
applicable employee representatives as soon as reasonably practicable,
provided that the applicable Selling Subsidiary or Selling Subsidiaries
shall not be required to conduct any such information and consultation
procedure in an unreasonable manner, and provided further that the
Purchaser and the applicable Purchasing Subsidiaries shall have provided
all information reasonably requested by the Seller and the Selling
Subsidiaries in accordance with this Section 1.04(b). The Purchaser shall
(and shall cause the applicable Purchasing Subsidiaries to) cooperate with
the Seller and the Selling Subsidiaries in respect of such consultations
and shall provide all information reasonably requested by the Seller or the
applicable works councils or employee representatives in connection with
such consultations. Upon completion of such consultation process to the
satisfaction of the Seller in each of such jurisdictions and receipt of
such approvals (or, in the case of any applicable Selling Subsidiary in the
U.K., after the consultation process has reached a stage that is
sufficiently advanced but not yet completed, in the Seller's sole
judgment), (i) the Seller shall deliver a written notice to the Purchaser
to confirm that the consultation process has been so completed (or, in the
case of any applicable Selling Subsidiary in the U.K., that the
consultation process has reached a stage that is sufficiently advanced but
not yet completed, in the Seller's sole judgment) and (ii) this Agreement
shall become binding and effective against the Seller with respect to such
(1) Assets, (2) rights and (3) transfers of Employees, and, subject to the
other applicable terms of this Agreement and the Ancillary Agreements, the
transactions contemplated by this Agreement may occur.
ARTICLE II
PURCHASE AND SALE OF THE ASSETS
Section 2.01. Purchase and Sale of Assets; Exclusion of
Excluded Assets. (a) On the terms and subject to the conditions set forth in
this Agreement and Section 2.04 of the Intellectual Property License Agreement
(with respect to the Transferred Intellectual Property), at the Closing the
Seller shall (or, as applicable, shall cause the Selling Subsidiaries to) sell,
transfer, convey and assign to the Purchaser (or, as applicable, the Purchasing
Subsidiaries designated by the Purchaser not less than ten (10) Business Days
prior to the Closing Date), and the Purchaser shall (or, as applicable, shall
cause the Purchasing Subsidiaries designated by the Purchaser not less than ten
(10) Business Days prior to the Closing Date to) purchase and accept from the
Seller (or, as applicable, the Selling Subsidiaries) all of the Seller's and the
Selling Subsidiaries' right, title and interest in and to each of the following
assets, in each case excluding the Excluded Assets (the "Assets"), free and
clear of all Liens other than Permitted Liens:
(i) the real property listed or described in Section
2.01(a)(i) of the Seller Disclosure Schedule (the "Owned Real
Property");
(ii) rights under the leases that are listed or described in
Section 2.01(a)(ii) of the Seller Disclosure Schedule (the "Real
Property Leases");
(iii) the Equipment listed or described in Section
2.01(a)(iii) of the Seller Disclosure Schedule (the "Owned Equipment");
(iv) rights under the leases that are listed or described in
Section 2.01(a)(iv) of the Seller Disclosure Schedule (the "Equipment
Leases");
(v) copies of all books, ledgers, records, files, invoices,
billing records and documents of the Seller and the Selling
Subsidiaries, in any form, to the extent they are used in or intended
for use in the Business or relating to the Assets, including sales and
promotional literature, customer and supplier lists, correspondence,
other distribution lists and other sales-related materials and records
relating to the Business or the Assets (the "Business Information");
(vi) the Transferred Intellectual Property and the Transferred
Passive Patents;
(vii) rights under the licenses that are listed or described
in Section 2.01(a)(vii) of the Seller Disclosure Schedule (the "Third
Party Licenses Exclusive to the Business");
(viii) rights under the contracts, agreements, arrangements,
commitments or undertakings that are listed or described in Section
2.01(a)(viii) of the Seller Disclosure Schedule, as such list may be
supplemented (but not reduced) by the Seller between the date hereof
and the Closing Date by written notice to the Purchaser (the "Other
Seller Contracts");
(ix) the rights that are listed or described in Section
2.01(a)(ix) of the Seller Disclosure Schedule under the Retained
Contracts;
(x) the franchises, certificates, permits, licenses,
agreements, waivers, approvals and authorizations from or with any
Governmental Authority that are that are listed or described in Section
2.01(a)(x) of the Seller Disclosure Schedule;
(xi) rights to the software (the "Business Software") under
the license agreements that are listed or described in Section
2.01(a)(xi) of the Seller Disclosure Schedule;
(xii) all Inventory;
(xiii) the Employee Information, the Updated Employee
Information and copies of all disciplinary warnings known to the
employee and labor relations or human resources specialists supporting
the Business that are in force immediately prior to the Closing Date
and relate to the Europe Transferring Employees (as defined in the
Employee Matters Schedule);
(xiv) rights under the contracts, agreements, arrangements,
commitments and undertakings that are listed or described in Section
2.01(a)(xiv) of the Seller Disclosure Schedule (the "Other Seller IP
Contracts"); and
(xv) the assets listed or described in Section 2.01(a)(xv) of
the Seller Disclosure Schedule.
(b) The Seller and the Selling Subsidiaries shall retain their
respective right, title and interest in and to, and the Purchaser and its
Affiliates shall have no rights with respect to, all of the respective
assets of the Seller and the Selling Subsidiaries, other than the Assets,
including the following (such assets, the "Excluded Assets"):
(i) any rights in any real property, whether owned or leased
of the Seller and its Affiliates (other than the Owned Real Property
and the rights under the Real Property Leases and any other rights in
real property granted to the Purchaser and the Purchasing Subsidiaries
under this Agreement and the Ancillary Agreements);
(ii) any Equipment of the Seller and its Affiliates (other
than Owned Equipment);
(iii) any minute books, stock ledgers and Tax records of the
Seller and its Affiliates and any other books, records and documents
relating to the Business (other than the Business Information);
(iv) any claims, causes of action or rights of the Seller or
any of its Affiliates against any third Person relating to any Retained
Liabilities or any claims, causes of action or rights relating to other
Liabilities for which the Seller or any of its Affiliates is otherwise
responsible (including rights of set-off, rights to refunds and rights
of recoupment from or against any such third Person);
(v) all rights of the Seller and the Selling Subsidiaries
under this Agreement and the Ancillary Agreements;
(vi) all rights (other than those rights that are listed or
described in Section 2.01(a)(ix) of the Seller Disclosure Schedule) of
the Seller and its Affiliates under any contract, agreement,
arrangement, commitment or undertaking that is not included among the
Seller Contracts (such contracts, agreements, arrangements, commitments
or undertakings, the "Retained Contracts");
(vii) any assets used primarily for the purpose of providing
and, other than as provided in the Transition Services Agreement, any
rights of the Business to receive from the Seller or any of its
Affiliates, any Administrative Services other than Administrative
Services included in the definition of the Business;
(viii) other than the license rights granted to the Purchaser
under the Intellectual Property License Agreement, any and all
Intellectual Property owned by or licensed by the Seller or any of its
Affiliates (and any tangible embodiments of any such property),
including (A) any rights of the Seller or any of its Affiliates under
the Patent Cross Licenses, (B) any and all Intellectual Property
acquired, relating to or arising from the acquisition of Photonics
Technologies by the Seller, (C) any and all Network Identifiers of the
Seller or any of its Affiliates and (D) all software and infrastructure
components of the Seller or any of its Affiliates (other than rights to
the Business Software that are assignable), such as software and
databases associated with Administrative Services as well as the
corporate information technology infrastructure of the Seller or any of
its Affiliates;
(ix) all raw materials, work-in-process with respect to
tangible goods, finished goods, supplies, parts, spare parts, other
inventory (including in transit, or consignment or in the possession of
a third Person) and Products not constituting Inventory (including all
raw materials, work-in-process with respect to tangible goods, finished
goods, supplies, parts, spare parts and other inventory (including in
transit, or consignment or in the possession of a third Person) held
for use by the Seller and its Affiliates in any of its businesses other
than the Business, such as the Seller's optical systems business);
(x) all cash and cash equivalents, accounts receivable and
other current assets of the Business (other than Inventory);
(xi) all stock or equity interests in any Person;
(xii) any and all employee data, including records pertaining
to Employees, other than the Employee Information, Updated Employee
Information and all disciplinary warnings known to the employee and
labor relations or human resources specialists supporting the Business
that are in force immediately prior to the Closing Date and relate to
the Europe Transferring Employees (as defined in the Employee Matters
Schedule); and
(xiii) the assets listed or described in Section 2.01(b)(xiii)
of the Seller Disclosure Schedule.
Section 2.02. Assumption of Assumed Liabilities; Retention of
Retained Liabilities. (a) On the terms and subject to the conditions set forth
in this Agreement, at the Closing, the Purchaser shall (or shall cause one or
more of the Purchasing Subsidiaries designated by the Purchaser not less than
ten (10) Business Days prior to the Closing Date to) assume and become obligated
to pay, perform and discharge when due, each of the following Liabilities,
excluding the Retained Liabilities (the "Assumed Liabilities"):
(i) all Liabilities (except as set forth in Section 2.02(a)(i)
of the Seller Disclosure Schedule) arising or which by their terms are
to be observed, paid, discharged or performed on or after the Closing
with respect to the Owned Real Property, the Seller Contracts (except
for the Liabilities described in Section 2.02(b)(ix)) and the Other
Seller IP Contracts);
(ii) the Liabilities that are listed or described in Section
2.02(a)(ii) of the Seller Disclosure Schedule under the Retained
Contracts;
(iii) except as otherwise expressly set forth in Article VI of
this Agreement, the Employee Matters Schedule and the Employee Loan
Agreement, all Liabilities relating to or arising from or in connection
with (A) the employment by the Purchaser or any Purchasing Subsidiary
of any Transferring Employee after the Applicable Effective Date for
such Transferring Employee, including acts and omissions of the
Purchaser or any Purchasing Subsidiary with respect to the employment
or termination of employment of any Transferring Employee; (B) any
failure of the Purchaser or any of the Purchasing Subsidiaries to
satisfy its obligations hereunder, including without limitation any
severance costs or other Liabilities arising as a result of or in
connection with Employment Offers that are not in accordance with the
Employee Matters Schedule and any failure of the Purchaser or any of
the Purchasing Subsidiaries to satisfy their obligations under the
Transfer Regulations in respect of the Employees; (C) the Purchaser
Employee Plans, including coverage for Employees as required by any
such Plans; (D) any proposed or actual change by the Purchaser or any
of the Purchasing Subsidiaries to the terms and conditions of
employment, pensions, compensation or other benefits after the
Effective Date that would result in such terms and conditions not being
substantially equivalent in value in the aggregate to the terms and
conditions that were applicable to the Employees immediately prior to
the applicable Effective Dates for such Employees; and (E) any
severance costs payable under Law or other Liabilities relating to or
arising in connection with (1) the Employment Offers to any Employee
who is allocated by the Seller to the fabrication facility of the
Business located in Ottawa, Canada (the "Fab Employees") and (2) any
Europe Employee who does not transfer into the employment of, or
terminates employment with, the Purchaser or any Purchasing Subsidiary
as a result of the Purchaser or any Purchasing Subsidiary not offering
a pension scheme or plan that is substantially equivalent in value to
the pension scheme or plan that was provided to such Europe Employee by
the Seller or any Selling Subsidiary;
(iv) the Liabilities of the Purchaser and its Affiliates
arising under this Agreement and the Ancillary Agreements;
(v) Liabilities for, or related to any obligation for, any Tax
that the Purchaser or any Purchasing Subsidiary bears under Article VII
of this Agreement;
(vi) all Liabilities (except as set forth in Section
2.02(a)(i) of the Seller Disclosure Schedule) that arise with respect
to the operation of the Business on or after the Closing, including
with respect to the ownership and operation of the Assets (including
any increases in any Environmental Liabilities resulting from any event
occurring, or circumstance arising, after the Closing Date, including
any change in Law or the enforcement thereof, or from any action or
omission of any Person other than the Seller or its Subsidiaries); and
(vii) the Liabilities listed or described in Section
2.02(a)(vii) of the Seller Disclosure Schedule.
(b) The Seller and the Selling Subsidiaries shall retain, and
shall be fully responsible for paying, performing and discharging when due,
and neither the Purchaser nor any of is Affiliates shall hereby assume or
have any responsibility for, any of the following Liabilities, in each case
except to the extent they may be specifically listed or described in
Section 2.02(a)(vii) of the Seller Disclosure Schedule (the "Retained
Liabilities"):
(i) all Liabilities (except as set forth in Section 2.02(b)(i)
of the Seller Disclosure Schedule) arising or which by their terms are
to be observed, paid, discharged or performed prior to the Closing Date
with respect to the Owned Real Property and the Seller Contracts;
(ii) all Liabilities (other than those listed or described in
Section 2.02(a)(ii) of the Seller Disclosure Schedule) of the Seller
and its Affiliates under the Retained Contracts;
(iii) except as otherwise expressly set forth in Article V of
this Agreement, the Employee Matters Schedule and the Employee Loan
Agreement, all Liabilities of the Seller or any Selling Subsidiary
relating to or arising from or in connection with: (A) the employment
by the Seller or any Selling Subsidiary of any Employee prior to the
applicable Effective Date of such Employee, including acts and
omissions of the Seller or any Selling Subsidiary with respect to
employment or termination of employment of any such Employee but
excluding any Liabilities arising from or in connection with (1) any
failure of the Purchaser or any Purchasing Subsidiary to fulfill their
obligations hereunder, including without limitation in connection with
the Employment Offers, or under the Transfer Regulations in respect of
the Employees or (2) any proposed or actual change by the Purchaser or
any of the Purchasing Subsidiaries to the terms and conditions of
employment, pensions, compensation or other benefits after the
Effective Date that would result in such terms and conditions not being
substantially equivalent in value in the aggregate to the terms and
conditions that were applicable to the Employees immediately prior to
the applicable Effective Dates for such Employees; (B) the Seller
Employee Plans, including coverage for Employees as required by any
such Plans; (C) the failure of the Seller to satisfy its obligations
with respect to the Transferring Employees as set out in Article VI of
this Agreement and the Employee Matters Schedule; and (D) any severance
costs payable under Law or other Liabilities relating to or arising in
connection with the rejection of Employment Offers that are made in
accordance with Article VI of this Agreement and the Employee Matters
Schedule other than any rejection by a Fab Employee or any refusal by
any Europe Employee to transfer into the employment of the Purchaser or
any Purchasing Subsidiary as a result of the Purchaser or any
Purchasing Subsidiary not offering a pension scheme or plan that is
substantially equivalent in value to the pension scheme or plan that
was provided to such Europe Employee by the Seller or any Selling
Subsidiary;
(iv) Liabilities for, or related to any obligation for, any
Tax that the Seller or any Selling Subsidiary bears under Article VII
of this Agreement;
(v) Liabilities of the Seller, the Selling Subsidiaries and
their Affiliates relating to indebtedness for borrowed money, accounts
payable and guarantees by the Seller or the Selling Subsidiaries and
their Affiliates of indebtedness for borrowed money;
(vi) all Liabilities (except as set forth in Section
2.02(b)(i) of the Seller Disclosure Schedule) that arise with respect
to the operation of the Business prior to the Closing, including with
respect to the ownership and operation of the Assets (excluding any
increases in any Environmental Liabilities resulting from any event
occurring, or circumstance arising, after the Closing Date, including
any change in Law or the enforcement thereof, or from any action or
omission of any Person other than the Seller or its Subsidiaries);
(vii) all Liabilities arising primarily out of the operation
or conduct by the Seller or any of its Affiliates of any business other
than the Business;
(viii) Liabilities to the extent relating primarily to, or
arising primarily out of, any Excluded Asset, or to the extent arising
out of the distribution to, or ownership by, the Seller or any of its
Affiliates of the Excluded Assets or the realization of the benefits of
any Excluded Asset;
(ix) Liabilities of the Seller and the Selling Subsidiaries
arising under this Agreement and the Ancillary Agreements;
(x) any amounts due and payable under the Cross License
Agreement dated as of January 1, 2001 between International Business
Machines Corporation and Nortel Networks Corporation; and
(xi) the Liabilities listed or described in Section
2.02(b)(xi) of the Seller Disclosure Schedule.
Section 2.03. Purchase Price; Allocation of Purchase Price;
Reimbursement of Expenses. (a) At the Closing:
(i) the Purchaser on its own behalf and, as applicable, as
agent for the relevant Purchasing Subsidiaries, shall issue and deliver
to the Seller, and the Seller shall receive on its own behalf and, as
applicable, as agent for the relevant Selling Subsidiaries, one or more
certificates representing 61,000,000 Purchaser Shares (the
"Consideration Shares");
(ii) the Purchaser on its own behalf and, as applicable, as
agent for the relevant Purchasing Subsidiaries, shall issue and deliver
to the Seller, and the Seller shall receive on its own behalf and, as
applicable, as agent for the relevant Selling Subsidiaries, one or more
certificates representing an aggregate of 9,000,000 Warrants, each in
the form of Exhibit Q (the "Warrants");
(iii) the Purchaser on its own behalf and, as applicable, as
agent for the relevant Purchasing Subsidiaries, shall issue and deliver
to the Seller, and the Seller shall receive on its own behalf and, as
applicable, as agent for the relevant Selling Subsidiaries, one or more
notes, each in the form of Exhibit R, evidencing indebtedness of the
Purchaser in an aggregate principal amount of $20,000,000
(collectively, the "Series A Notes"); and
(iv) the Purchaser on its own behalf and, as applicable, as
agent for the relevant Purchasing Subsidiaries, shall issue and deliver
to the Seller, and the Seller shall receive on its own behalf and, as
applicable, as agent for the relevant Selling Subsidiaries, one or more
notes, each in the form of Exhibit S, evidencing indebtedness of the
Purchaser in an aggregate principal amount of $30,000,000 secured in
accordance with the Security Agreements (collectively, the "Series B
Notes" and, together with the Series A Notes, the "Notes");
provided that the Consideration Shares, the Warrants and the Notes are
collectively referred to herein as the "Purchase Price," and the payment or
issuance and delivery, as applicable, of the foregoing by the Purchaser to the
Seller, as set forth herein, shall constitute payment in full by the Purchaser
and the Purchasing Subsidiaries for the Assets.
(b) If the Purchaser consolidates, subdivides or reorganizes
its share capital, declares any dividend or distribution or issues any
rights to acquire equity securities of the Purchaser to holders of equity
securities of the Purchaser during or by reference to any period after the
date of this Agreement but before issue to the Seller of the Consideration
Shares and the Warrants, the number of Consideration Shares and Warrants
(each as set forth above) shall be adjusted such that the number of
Consideration Shares and Warrants, respectively, represent the same
percentages of the Purchaser's share capital immediately after any such
consolidation, subdivision, reorganization, distribution or issuance as it
represented immediately prior to such consolidation, subdivision,
reorganization, distribution or issuance.
(c) The parties have allocated the sum of the Purchase Price
and the Assumed Liabilities among the Assets and the covenant contained in
Section 5.23, and the statutory jurisdictions in which the Assets reside,
on a preliminary basis as set forth in Section 2.03(c) of the Seller
Disclosure Schedule. Such allocation shall be finalized and set forth in
writing by the parties as soon as practicable after, but in no event later
than fifteen (15) days after, the finalization of the Inventory Adjustment
pursuant to Section 2.04. The Seller and the Purchaser must agree in
writing upon any subsequent change to such allocation; provided, however,
that, if either of the parties proposes any such change and a disagreement
arises with respect to such proposal, either party may submit such
disagreement for resolution to an Accounting Arbitrator, selected in the
manner specified in Section 2.04(c). The Purchaser shall (and shall cause
each Purchasing Subsidiary to) and the Seller shall (and shall cause each
Selling Subsidiary to) report the federal, state, provincial and local
income and other tax consequences of the transactions contemplated by this
Agreement in a manner consistent with such allocation. Except as otherwise
required by applicable Law, neither the Purchaser nor the Seller shall (and
neither shall permit any Purchasing Subsidiary or Selling Subsidiary, as
the case may be, to) take a position inconsistent with such allocations on
any Tax Return or filings (including any forms required to be filed
pursuant to Section 1060 of the U.S. Code), before any Governmental
Authority charged with the collection of any Tax, or in any judicial
proceeding. Each of the Seller and the Purchaser shall cooperate with the
other in preparing IRS Form 8594 or any equivalent statements required by
any Governmental Authority charged with the collection of any income Tax
for filing within a reasonable period before its filing due date.
(d) At the Closing, the Purchaser shall pay to the Seller
$10,000,000 (the "Expense Reimbursement") in immediately available funds to
one or more bank accounts designated by the Seller (or as the Seller may
direct) in order to reimburse the Seller for certain of the Seller's
expenses associated with the restructuring of the Business prior to the
Closing.
Section 2.04. Inventory Adjustment. (a) As soon as practicable
after the Closing Date, and in any event no later than thirty (30) days after
the Closing Date, the Seller shall deliver to the Purchaser a statement setting
forth its calculation of the amount, if any, by which (i) $263,000,000 exceeds
(ii) the gross book value (excluding any inventory reserve provisions), as
reflected in the books and records of the Seller, of the Inventory to be
transferred by the Seller and the Selling Subsidiaries to the Purchaser and the
Purchasing Subsidiaries at the Closing (the "Inventory Adjustment"), which
statement shall be presented in the form described in Section 2.04(a) of the
Seller Disclosure Schedule (the "Post-Closing Inventory Statement").
(b) The Purchaser shall have thirty (30) days after the
delivery of the Post-Closing Inventory Statement to disagree with the
Seller's calculation of the Inventory Adjustment. Within such thirty (30)
day period, the Purchaser shall have reasonable access to any documents,
schedules or workpapers to the extent used in or related to the preparation
of the Post-Closing Inventory Statement. If the Purchaser fails to deliver
a notice of disagreement within such thirty (30) day period, the Seller's
calculation of the Inventory Adjustment as reflected in the Post-Closing
Inventory Statement shall be deemed to be the final Inventory Adjustment
for purposes of this Section 2.04. If, within said thirty (30) day period,
the Purchaser notifies the Seller in writing that it disagrees with the
Seller's calculation of the Inventory Adjustment, specifically describing
in reasonable written detail the basis for such disagreement, the Purchaser
and the Seller shall use their reasonable efforts to reach agreement within
the forty-five (45) days following the delivery of the Purchaser's notice
of disagreement, or such longer period as may be agreed upon by the
Purchaser and the Seller, with respect to the item(s) subject to such
disagreement. If the Purchaser and the Seller resolve such disagreements,
the Inventory Adjustment with any modifications to which the Purchaser and
the Seller shall have agreed shall be deemed to be the final Inventory
Adjustment for purposes of this Section 2.04.
(c) If the Purchaser and the Seller are unable to resolve any
such disagreement as contemplated by Section 2.04(b) within the forty-five
(45)-day period referred to therein (or such longer period as may be agreed
to by the parties hereto), then the Purchaser and the Seller shall jointly
select a partner at KPMG LLP to resolve such disagreement (the person so
selected shall be referred to herein as the "Accounting Arbitrator"). The
Accounting Arbitrator shall have the authority to resolve only the specific
disagreements presented to such Accounting Arbitrator. The Purchaser and
the Seller shall use their respective reasonable efforts to cause the
Accounting Arbitrator to deliver to the parties, as promptly as
practicable, a written report setting forth the resolution of any such
disagreement determined in accordance with the terms of this Agreement.
Such report shall be final and binding upon the parties, and judgment on
such determination may be entered in any court of competent jurisdiction.
The fees, costs and expenses of the Accounting Arbitrator shall be borne
one-half by the Purchaser and one-half by the Seller; provided that, if the
Accounting Arbitrator determines that one party's position is substantially
correct, then such party shall pay none of the fees, costs and expenses of
the Accounting Arbitrator and the other party shall pay all such fees,
costs and expenses.
(d) The Seller shall pay to the Purchaser the amount, if any,
of the Inventory Adjustment as finally determined pursuant to this Section
2.04 by wire transfer of immediately available funds to an account
designated by the Purchaser within ten (10) Business Days after the
determination of the final Inventory Adjustment, plus interest on such
amount accrued from the Closing Date to the date of such payment at the
prime rate applicable from time to time as announced by Citibank, N.A.;
provided, however, that, at the election of the Seller, up to 50% of any
such payment, to the extent it exceeds $20,000,000, shall be made by
surrendering an equivalent portion of any amounts due in respect of Series
B Notes to the extent any Series B Notes are then outstanding and then by
surrendering an equivalent portion of any amounts due in respect of any
Series A Notes then outstanding.
(e) The Purchaser and the Seller agree that any payments made
pursuant to this Section 2.04 shall be allocated in a manner consistent
with the allocation set forth in Section 2.03(c).
Section 2.05. Closing. Subject to the terms and conditions of
this Agreement, the sale and purchase of the Assets, and the assumption of the
Assumed Liabilities pursuant to Section 2.02, as contemplated hereby shall take
place at a closing (the "Closing") to be held at 10:00 a.m., New York City time,
on the fifth (5th) Business Day following the satisfaction or waiver of all
other conditions to the obligations of the parties set forth in Article VIII
(other than conditions to be satisfied at the Closing), at the offices of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx located at One Liberty Plaza, New York, New
York, or at such other time or on such other date or at such other place as the
Seller and the Purchaser may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date").
Section 2.06. Closing Deliveries by the Seller. At the
Closing, the Seller shall deliver or cause to be delivered to the Purchaser:
(a) a counterpart of each of the Ancillary Agreements (other
than the Notes), executed by each of the Seller and its Subsidiaries that
is a party thereto;
(b) certified copies of the resolutions of the Boards of
Directors or other similar governing bodies of the Seller, Nortel Networks
Limited and Nortel Networks Optical Components Limited authorizing the
execution, delivery and performance of this Agreement and the Ancillary
Agreements;
(c) a receipt for the Purchase Price (prior to being adjusted
in accordance with Section 2.04); and
(d) any documents required to be delivered by the Seller at or
as a condition of the Closing pursuant to Article V.
Section 2.07. Closing Deliveries by the Purchaser. At the
Closing, the Purchaser shall deliver to the Seller:
(a) the Expense Reimbursement and any amounts due to the
Seller in accordance with Section 5.13(a), by wire transfer in immediately
available funds, to an account or accounts designated at least two (2) Business
Days prior to the Closing Date by the Seller in a written notice to the
Purchaser;
(b) one or more certificates representing the Consideration
Shares registered in the name of the Seller (or its designated wholly-owned
Affiliate, provided that the Seller has notified the Purchaser of such
designation not less than two (2) Business Days prior to the Closing Date);
(c) one or more certificates representing the Warrants
registered in the name of the Seller (or its designated wholly-owned
Affiliate, provided that the Seller has notified the Purchaser of such
designation not less than two (2) Business Days prior to the Closing Date);
(d) one or more Series A Notes and one or more Series B Notes
payable to the Seller (or its designated wholly-owned Affiliate, provided
that the Seller has notified the Purchaser of such designation not less
than two Business Days prior to the Closing Date), each executed by the
Purchaser, as issuer, and by each of the Principal Purchaser Subsidiaries,
as guarantors, along with a copy (certified as true and complete by a
director of the Purchaser) of the register of debentures of the Purchaser
showing such Notes as having been unconditionally allotted to the Seller or
its designated Affiliate (as applicable);
(e) a counterpart of each of the Ancillary Agreements (other
than the Xxxx of Sale and the Notes), executed by each of the Purchaser and
its Affiliates that is a party thereto;
(f) certified copies of the resolutions of the Boards of
Directors or other similar governing bodies of the Purchaser and the
Purchasing Subsidiaries authorizing the execution, delivery and performance
of this Agreement and the Ancillary Agreements and the creation and
allotment of the Consideration Shares, the Warrants and the Notes;
(g) a receipt for the Assets acknowledging the purchase of the
Assets pursuant to this Agreement;
(h) any documents to be delivered by the Purchaser at or as a
condition to the Closing required pursuant to Article V; and
(i) an original copy of the valuation of the consideration for
the allotment of the Consideration Shares prepared at the request of the
Purchaser in connection with the requirements of Section 103 of the U.K.
Companies Xxx 0000.
Section 2.08. Accounting. To the extent that, after the
Closing, (a) the Purchaser or any of its Affiliates receives any payment that is
for the account of the Seller or any of its Subsidiaries according to the terms
of this Agreement, the Purchaser shall promptly deliver such amount to the
Seller, and (b) the Seller or any of its Subsidiaries receives any payment that
is for the account of the Purchaser or any of its Affiliates according to the
terms of this Agreement, the Seller shall promptly deliver such amount to the
Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as otherwise set forth in the Seller Disclosure
Schedule, the Seller represents and warrants to the Purchaser as follows:
Section 3.01. Organization and Good Standing; Solvency and
Fraudulent Conveyance. (a) Each of the Seller and the Selling Subsidiaries is a
corporation duly organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Each of the Seller and the Selling Subsidiaries is
duly licensed or qualified to do business in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not adversely affect its ability to carry out
its obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements.
(b) As at the date hereof, the Seller is not the subject of
any proceedings under any law relating to bankruptcy, insolvency, or
reorganization, winding up, composition or adjustment in respect of debts.
As at the date hereof, the Seller reasonably believes that: (i) it has
property reasonably sufficient in relation to its business; (ii) the
realizable value of its assets are not less than the aggregate of its
liabilities and stated capital of all classes; (iii) it is not unable to
pay its liabilities as they become due in accordance with trade practices;
and (iv) it is not an "insolvent debtor" under the Bankruptcy and
Insolvency Act (Canada).
Section 3.02. Authority. Each of the Seller and the Selling
Subsidiaries has full corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is or will be a signatory,
and to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by each of the Seller and the Selling Subsidiaries of
this Agreement and each Ancillary Agreement to which it is or will be a
signatory has been duly authorized by all requisite corporate action on the part
of the Seller or such Selling Subsidiary, as the case may be. This Agreement has
been, and upon execution each other Ancillary Agreement will be, duly executed
and delivered by the Seller or the Selling Subsidiary that is a party thereto,
and (assuming due authorization, execution and delivery by the Purchaser) this
Agreement constitutes, and each other Ancillary Agreement to which the Seller or
any Selling Subsidiary is to be a party, when so executed and delivered, will
constitute, legal, valid and binding obligations of the Seller or such Selling
Subsidiary that is a party thereto, enforceable against the Seller or such
Selling Subsidiary in accordance with their terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization and similar
Laws affecting generally the enforcement of the rights of contracting parties
and subject to a court's discretionary authority with respect to the granting of
a decree ordering specific performance or other equitable remedies, and further
subject to the Currency Act (Canada) precluding a court in Canada from awarding
a judgment for an amount expressed in a currency other than Canadian dollars.
Section 3.03. No Conflict; Consents and Approvals. (a) Subject
to receipt of the consents, approvals and waivers referred to in Section 3.03(a)
of the Seller Disclosure Schedule, neither the execution and delivery by the
Seller or any of the Selling Subsidiaries of this Agreement and the Ancillary
Agreements to which it is or will be party, nor the consummation of the
transactions contemplated thereby or the compliance by the Seller or any of the
Selling Subsidiaries with any of the provisions thereof will: (i) conflict with,
violate or result in the breach of, any provision of the certificate of
incorporation or by-laws or other organizational documents of the Seller or any
of the Selling Subsidiaries; (ii) conflict with, violate, or result in the
breach by the Seller or any of the Selling Subsidiaries of any applicable Law
(assuming satisfaction of the condition in Section 8.01(b)); (iii) conflict
with, violate, result in the breach or termination of, or constitute a default
or give rise to any right of termination or acceleration or right to increase
the obligations or otherwise modify the terms under any Seller Contract; or (iv)
result in the creation of any Lien (other than any Permitted Lien and any Lien
in favor of the Purchaser) upon any of the Assets, in each case, with respect to
the foregoing clauses (ii), (iii) and (iv), except for such conflicts,
violations, breaches, terminations, defaults, rights or Liens that have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Seller Material Adverse Effect.
(b) Except for such consents to assign as are required under
the Seller Contracts, no consent, approval or authorization of, permit
from, or declaration, filing or registration with, any Governmental
Authority or any other Person is required to be made or obtained by the
Seller or any of the Selling Subsidiaries in connection with the execution,
delivery and performance of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby,
except where the failure to obtain such consent, approval, authorization or
permit, or to make such declaration, filing or registration, has not had
and would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.
Section 3.04. Financial Information; Accounting and Financial
Matters. (a) Section 3.04 of the Seller Disclosure Schedule sets forth (a) the
unaudited management statements of assets and liabilities of the Business as of
June 30, 2002 and as of December 31, 2001 and (b) the unaudited management
statements of results of operations of the Business for the six-month period
ended June 30, 2002 and for the year ended December 31, 2001 (collectively, the
"Seller Financial Statements"). Except as shown or provided for in the Financial
Statements or as otherwise described in Section 3.04 of the Seller Disclosure
Schedule, such Seller Financial Statements (i) have been prepared from the books
and records of the Seller and the Selling Subsidiaries relating to the Business
in accordance with U.S. GAAP applied on a consistent basis and on a basis
consistent with past practice and (ii) present fairly, in all material respects,
the financial position or the results of operations, as the case may be, of the
Business as of the dates or for the periods indicated.
(b) Since December 31, 2001, the Seller has not received
written notice from the SEC or any other Governmental Authority, including
any Canadian provincial securities commission, that any of the accounting
policies or practices that relate in any material respect to the Seller
Financial Statements are or may be the subject of any review, inquiry,
investigation or challenge by the SEC or any such other Governmental
Authority, which review, inquiry, investigation or challenge has required
or would reasonably be expected to require a material alteration to such
accounting policies or practices. Since December 31, 2001, the Seller's
independent public accounting firm has not informed the Seller that it has
any questions, challenges or disagreements regarding or pertaining to the
Seller's accounting policies or practices that relate in any material
respect to the Seller Financial Statements and that would require
disclosure by the Seller under the Securities Act or the Exchange Act.
Section 3.05. Absence of Certain Changes or Events. From June
30, 2002 to the date of this Agreement, except as reflected in the Seller
Financial Statements or the notes thereto, described in Section 3.05 of the
Seller Disclosure Schedule or contemplated by this Agreement and the Ancillary
Agreements, no Seller Material Adverse Effect has occurred, and no transaction
by the Business outside the ordinary course of business has occurred.
Section 3.06. Absence of Litigation. Except as set forth in
Section 3.06 of the Seller Disclosure Schedule and as relates to the Transferred
Intellectual Property or the Restricted Patents (with respect to which no
warranty is made under this Section 3.06), there are no Actions existing or
pending or, to the Knowledge of the Seller, threatened, against the Business or
to which any of the Assets are subject that, individually or in the aggregate,
have had or would reasonably be expected to have a Seller Material Adverse
Effect.
Section 3.07. Compliance with Laws. None of the Seller and the
Selling Subsidiaries is in violation of any Law applicable to the Business or
any Asset, except where such violation has not had and would not reasonably be
expected to have, individually or in the aggregate, a Seller Material Adverse
Effect.
Section 3.08. Governmental Licenses and Permits. Section 3.08
of the Seller Disclosure Schedule lists each of the licenses and permits issued
by any Governmental Authority that are material to the operation of the
Business. The Seller and the Selling Subsidiaries, in the aggregate, hold all
licenses and permits necessary for the operation of the Business as currently
operated and are in compliance with the terms of such licenses, except where
failure to have such license or the failure to so comply has not had and would
not reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect.
Section 3.09. The Assets. (a) Except as described in Section
3.09(a) of the Seller Disclosure Schedule, the Assets, together with the rights
of the Purchaser under this Agreement and the Ancillary Agreements, include all
rights and property necessary and sufficient to operate the Business in the
manner and to the extent conducted by the Seller and its Subsidiaries as of June
30, 2002.
(b) Except as described in Section 3.09(b) of the Seller
Disclosure Schedule, the Seller and the Selling Subsidiaries, in the
aggregate, hold good title to or have valid leasehold interests in all of
the Assets free and clear of any and all Liens, except for (i) Permitted
Liens and (ii) Liens created by or through the Purchaser or any of its
Affiliates.
(c) Notwithstanding anything to the contrary herein, no
representation or warranty is made under this Section 3.09 with respect to
any matter relating to Intellectual Property, the representations and
warranties with respect to which are solely set forth in Section 3.16.
Section 3.10. Real Property. (a) Each parcel of real property
leased pursuant to the Real Property Leases is leased by the Seller or a Selling
Subsidiary, free and clear of all Liens, except (i) Permitted Liens and (ii)
Liens created by or through the Purchaser or any of its Affiliates. Except as
set forth in Section 3.10(a) of the Seller Disclosure Schedule, the real
property leased pursuant to the Real Property Leases constitutes all of the
leased real property that is primarily used in or held for use by the Business.
To the Knowledge of the Seller, except as disclosed in Section 3.10(a) of the
Seller Disclosure Schedule, the Seller's possession of the real property leased
pursuant to the Real Property Leases has not been disturbed in any material
respect by the landlord thereof or any party acting through such landlord, nor
has any material claim been asserted against the Seller adverse to its rights in
such leasehold estates, and such leases, subleases or other occupancy agreements
are valid and in full force and effect, and none of the Seller and the Selling
Subsidiaries has received or provided any written notice of material default
thereunder, and no event has occurred which, with the giving of notice or the
passage of time, or both, would constitute a material default thereunder. Each
such lease or agreement pursuant to which the Seller leases any leased real
property may not be assigned to the Purchaser without consent or other approval,
which consent or approval has been obtained, or will be obtained as of the
Closing Date, except as disclosed in Section 3.03(a) of the Seller Disclosure
Schedule.
(b) Except as disclosed in Section 3.10(b) of the Seller
Disclosure Schedule, the Seller represents and warrants to the Purchaser as
of the date hereof with respect to the Owned Real Property that:
(i) None of the Seller and its Affiliates has made any other
agreement to lease, sell, mortgage or otherwise encumber the Owned Real
Property (or any portion thereof) or given any Person an option to purchase
or rights of first refusal over the Owned Real Property (or any portion
thereof); and
(ii) The Seller and the Selling Subsidiaries have good title
to the Owned Real Property and none of the Owned Real Property is subject
to any Lien, except (i) Permitted Liens and (ii) Liens created by or
through the Purchaser or any of its Affiliates.
(c) The Seller represents and warrants to the Purchaser with
respect to the Owned Real Property that:
(i) Nortel Networks Properties Limited is registered at U.K.
H.M. Land Registry as proprietor of such Owned Real Property with title
absolute under title numbers DN219373 and DN225407 and is entitled to be
registered as proprietor of the land comprised in title number DN74870, and
there is no other property owned by Nortel Networks Properties Limited that
is required for the existing use of such Owned Real Property.
(ii) Any rights and covenants under a right of preemption in
favor of AVX Limited contained in an Agreement dated 15 June 1987 and
referred to in entry 7 of the Charges Register of U.K. H.M. Land Registry
title number DN225407 have been or will be released and discharged.
(iii) To the Knowledge of the Seller, except as disclosed in
Section 3.10(c) of the Seller Disclosure Schedule, no overriding interests
as referred to in section 70 of the U.K. Land Registration Act 1925 exist
in respect of the such Owned Real Property or are claimed to exist by a
third Person.
(iv) To the Knowledge of the Seller, except as disclosed in
Section 3.10(c) the Seller Disclosure Schedule, such Owned Real Property is
not subject to any agreement, obligation or undertaking under the
provisions of section 52 of the U.K. Town and Country Planning Xxx 0000,
section 106 U.K. Town and Country Planning Xxx 0000, sections 38 and 278 of
the U.K. Xxxxxxxx Xxx 0000, section 104 of the U.K. Water Industry Xxx
0000, section 18 of the U.K. Public Health Xxx 0000, section 33 of the U.K.
Local Government (Miscellaneous Provisions ) Xxx 0000 or under any other
similar or earlier legislation of the same nature and none are contemplated
by the Seller or any of the Selling Subsidiaries nor is the Seller or any
of the Selling Subsidiaries required to enter into any such agreement,
obligation or undertaking.
(d) The Seller represents and warrants to the Purchaser with
respect to the Owned Real Property and Real Property Leases that:
(i) Except as disclosed in the Section 3.10(d) of the Seller
Disclosure Schedule, the Seller or the Selling Subsidiaries are in
exclusive and actual occupation of the Owned Real Property and the property
demised under the Real Property Leases.
(ii) To the Knowledge of the Seller, no third Person has
claimed in writing to have any material estate, interest, right to
possession, occupation or use of or interest in the Owned Real Property
that would materially impair the continued use and operation of such
property, except (i) Permitted Liens and (ii) Liens created by or through
the Purchaser or any of its Affiliates.
(iii) The Owned Real Property and the property demised under
the Real Property Leases are not subject to any agreement for sale or other
disposal or commitment to dispose of or grant any interest, lease, tenancy,
license or other right in or over the Owned Real Property and the property
demised under the Real Property Leases except as disclosed in Section
3.10(d) of the Seller Disclosure Schedule.
(iv) Except as disclosed in Section 3.10(d) of the Seller
Disclosure Schedule, there are no agreements for sale, estate contracts,
options, rights of pre-emption or similar matters affecting the Owned Real
Property or the Real Property Leases, the provisions of which remain to be
observed or performed, except (i) Permitted Liens and (ii) Liens created by
or through the Purchaser or any of its Affiliates.
(v) To the Knowledge of the Seller, each of the Seller and the
Selling Subsidiaries has complied in all material respects with all
material covenants, restrictions, burdens, stipulations, agreements and
declarations affecting the Owned Real Property or the Real Property Leases,
and none of them has received written notice of, nor is any of them aware
of, any material breach of any such material covenant, restriction, burden,
stipulation, agreement or declaration that would materially impair the
continued use and operation of such property.
(vi) To the Knowledge of the Seller, there are no actual or
threatened material Actions regarding the existing use and occupation of
the Owned Real Property or the Real Property Leases, and no written notices
relating to any such Action that affects any such property has been
received by the Seller or any Selling Subsidiary.
(vii) To the Knowledge of the Seller, no development carried
out in relation to the Owned Real Property is unlawful or has been carried
out without the necessary planning permissions and consents being obtained,
and no enforcement proceedings under the applicable building Law have been
commenced. To the Knowledge of the Seller, the existing uses of the Owned
Real Property and the property demised under the Real Property Leases are
permitted uses under applicable building Law and are in compliance with
zoning regulations.
Section 3.11. Seller Employee Plans. (a) Section 3.11(a) of
the Seller Disclosure Schedule contains an accurate and complete list of all
Seller Employee Plans. The Seller has provided the Purchaser with a true and
complete copy of the plan document or summary plan description of each of the
Seller Employee Plans or if such plan document or summary plan description does
not exist, an accurate written summary of such Seller Employee Plans.
(b) With respect to each Seller Employee Plan, the Seller and
the Selling Subsidiaries have, to the Seller's Knowledge, complied with all
applicable Laws and each Seller Employee Plan has at all times been
properly administered in all material respects in accordance with its
terms, in each case, except where any such non-compliance has not had and
would not reasonably be expected to have, individually or in the aggregate,
a Seller Material Adverse Effect. Except as disclosed in Section 3.11(b) of
the Seller Disclosure Schedule, there is no audit or, to the Seller's
Knowledge, any investigation pending (other than routine qualification or
registration determination filings) with respect to any Seller Employee
Plan before any Government Authority and, to the Seller's Knowledge, no
such audit or investigation has been threatened in writing that,
individually or in the aggregate, has had or would reasonably be expected
to have a Seller Material Adverse Effect.
(c) The Seller has provided the Purchaser with a copy of the
standard forms of written employment agreements utilized by the Seller with
respect to the Employees (the "Standard Employment Contracts"). Except as
set forth in Section 3.11(c) of the Seller Disclosure Schedule, neither the
Seller nor any Selling Subsidiary is a party to any written employment
agreement with any Employee that varies in any material respects from such
Standard Employment Contracts (it being understood that variations in the
amount of compensation, which are set forth in Section 3.12(a) of the
Seller Disclosure Schedule, and level of benefit participation within the
scope of the Seller Employee Plans is not considered a material variance
from the terms provided in the Standard Employment Contracts, but any
compensation, allowances, bonuses, commission, benefits, termination or
notice provisions which are not in accordance with the Standard Employment
Contracts or set forth in Section 3.12(a) of the Seller Disclosure Schedule
or within the scope of the Seller Employee Plans will be regarded as a
material variance from the terms provided in the Standard Employment
Contracts).
(d) No promises or commitments have been made by the Seller or
any of the Selling Subsidiaries to the Employees to materially amend or
terminate any Seller Employee Plan, to increase or decrease the
compensation or benefits thereunder or otherwise due in respect of any
Seller Employee Plans or to amend or vary any terms of any Standard
Employment Contract or to establish any new Seller Employee Plans or
Standard Employment Contracts, except as (i) required by applicable Law,
(ii) specified in the copies or written summaries of the Seller Employee
Plans provided to the Purchaser pursuant to Section 3.11(a) or disclosed in
Section 3.12(a) of the Seller Disclosure Schedule, (iii) disclosed in
Section 3.11(d) of the Seller Disclosure Schedule or (iv) that have not had
and would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.
(e) Except as set forth in Section 3.11(e) of the Seller
Disclosure Schedule and other than applications by Employees for benefits
received in the ordinary course under the Seller Employee Plans, to the
Seller's Knowledge, there are no existing Actions relating to or arising
from a Seller's Employee Plan and neither the Seller nor the Selling
Subsidiaries have received written notice of any pending or threatened
Action under a Seller Employee Plan made by any Employee that, individually
or in the aggregate, have had or would reasonably be expected to have a
Seller Material Adverse Effect and, to the Seller's Knowledge, there are no
circumstances which may give rise to such Actions, save for any such
Actions which individually or in the aggregate would not reasonably be
expected to have a Seller Material Adverse Effect.
Section 3.12. Employee Matters. (a) Section 3.12(a) of the
Seller Disclosure Schedule sets forth a list of Employees (including, with
respect to each Employee and to the extent permitted by applicable Law: (1)
name, (2) global identification number (3) credited service date, (4) position,
(5) annual base salary, (6) work location, (7) the information required pursuant
to Section 3.12(d), if applicable, (8) target incentive compensation (other than
incentive compensation payable to the Swiss JDS Employees (as defined in the
Employee Matters Schedule) that is disclosed on Exhibit 2.2(k) to the Employee
Matters Schedule and the incentive compensation payable to the US JDS Employees
(as defined in the Employee Matters Schedule)), (9) any other compensation, (10)
visa or work permit status and (11) headcount classification (e.g., regular
full-time, regular part-time, etc.)), which information is accurate and complete
in all material respects as of the date provided. Each Employee listed on
Section 3.12(a) of the Seller Disclosure Schedule spends at least 50% of his or
her working time performing services for the Business. The Updated Employee
Information shall be accurate and complete in all material respects as of the
date provided.
(b) Except as set forth in Section 3.12(b) of the Seller
Disclosure Schedule, there has not been for a period of twelve (12)
consecutive months prior to the date hereof, nor is there existent or, to
the Seller's Knowledge, threatened, any strike, slowdown, labor dispute,
picketing or work stoppage or other industrial action by Employees.
(c) Except as set forth in Section 3.12(c) of the Seller
Disclosure Schedule, the Seller and each of the Selling Subsidiaries is, to
the Seller's Knowledge, in compliance in all respects with all Laws
applicable to the employment of the Employees, other than any failure to
comply that has not had and would not reasonably be expected to have a
Seller Material Adverse Effect.
(d) All Employees who, as of the date hereof, are on a Seller
leave, including parental, maternity or pregnancy leave, personal leave,
military leave, or leave for sickness (including any leave related to
receipt of short-term or long-term disability benefits or workers'
compensation or work insurance benefits), are identified in the Employee
Information, along with the type of leave, date the leave commenced and
their expected date of return to work. All such Employees who, as of the
applicable Effective Date, are on such types of leave will be identified in
the Updated Employee Information (such Employees, "Leave Employees").
(e) Except as set forth in Section 3.12(e) of the Seller
Disclosure Schedule and other than any such complaints, proceedings,
orders, charges, levies, assessments and penalties that have not had and
would not reasonably be expected to have a Seller Material Adverse Effect,
(i) to the Seller's Knowledge, no notice has been received by the Seller or
any Selling Subsidiary of any pending or threatened complaint filed by any
Employee against the Seller or any Selling Subsidiary claiming that the
Seller has violated employment standards, labor relations laws, pay equity,
employment discrimination or human rights Laws or of any complaints or
proceedings of any kind involving the Seller or any Selling Subsidiary
before any Governmental Authority or other adjudicative entity designated
pursuant to a collective bargaining agreement or written employment
agreement with respect to Employees, (ii) there are no outstanding orders
or charges against the Seller or any Selling Subsidiary under occupational
and health legislation with respect to Employees and (iii) all levies,
assessments and penalties made against the Seller or any Selling Subsidiary
pursuant to workers' compensation or workplace safety insurance that were
required to be paid prior to the date hereof with respect to Employees have
been paid and neither the Seller nor any Selling Subsidiary has been
reassessed under any such legislation with respect to Employees during the
twelve months prior to the date hereof.
(f) Except as set forth in Section 3.12(f) of the Seller
Disclosure Schedule, (i) none of the Employees are covered by any
collective bargaining agreements or recognition agreements and no formal
request for recognition has been received from, and no petition has been
filed or proceedings instituted by, a union, collective bargaining agent,
employee or group of employees with any Governmental Authority seeking
recognition of a bargaining representative with respect to any Employees,
(ii) there is no duty to bargain with any labor organization with respect
to any Employee, (iii) to the Seller's Knowledge, there are no current
attempts to organize or proposal to establish any union or employee
association with respect to any of the Employees and (iv) to the Seller's
Knowledge, there is no pending or threatened charge or complaint against
the Seller and/or the Selling Subsidiaries by the National Labor Relations
Board or any comparable governmental entity.
(g) Except as set forth in Section 3.12(g) of the Seller
Disclosure Schedule, no UK Employee has a notice period of more than three
(3) months.
(h) To the Seller's Knowledge, each Employee who is not a
citizen of the country in which such Employee is employed currently has the
appropriate visa or work permit under applicable immigration Laws to work
for the Seller or the applicable Selling Subsidiary in such country. Each
Canada Employee is legally permitted to be employed in Canada to the extent
required by applicable Law. Except as set forth on Section 3.12(h) of the
Seller Disclosure Schedule, the Seller has not received any written notice
of resignation from, and the Seller has not provided any written notice of
termination to, any Employee who is material to the conduct of the
Business.
(i) To the Seller's Knowledge, the Seller has not received
written notice that any Employee is in violation of any term of any
employment contract, patent disclosure agreement, noncompetition agreement
or any restrictive covenant to a former employer relating to the right of
any such Employee to be employed by the Purchaser or the Purchasing
Subsidiary in the Business or relating to the use of trade secrets or
proprietary information of any third party.
(j) The Seller and/or the Selling Subsidiaries have paid in
full and on the due date all contributions due on and before the Closing
Date to all pension plans applicable in respect of the employees of the
Seller and/or the Selling Subsidiaries (including the Employees) who were
employed, prior to the Closing, in Switzerland in accordance with the
applicable pension plan rules and applicable Law, and such plans do not
have any accumulated funding deficiencies.
(k) Neither the outstanding options held by the Transferring
Employees to purchase shares of the Seller's capital stock nor the plans or
arrangements under which those options were granted contain any provision
or undertaking that would require the Purchaser to assume those options or
to convert them into rights to acquire shares of the Purchaser's capital
stock.
Section 3.13. Environmental Matters. (a) Except as described
in Section 3.13 of the Seller Disclosure Schedule, the Business is in compliance
with Environmental Laws and has obtained and is in compliance with all
Environmental Permits, except where the failure to comply with the Environmental
Laws or to obtain and comply with Environmental Permits has not had and would
not reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect.
(b) Except as described in Section 3.13 of the Seller
Disclosure Schedule, the Seller has received no written claims or notices
pursuant to any Environmental Law with respect to the Business or the Owned
Real Property or the property demised under the Real Property Leases and,
to the Seller's Knowledge, no such claim or notice relating to the Business
or the Assets is threatened, except for those claims or notices that have
not had and would not reasonably be expected to have, individually or in
the aggregate, a Seller Material Adverse Effect.
(c) Section 3.13 of the Seller Disclosure Schedule sets forth
a list of all Environmental Permits held by the Business, true and complete
copies of which have been made available to the Purchaser and details of
any outstanding or pending variations to any Environmental Permit.
(d) The Seller has made available to the Buyer copies of all
Environmental Audits for each of the parcels of Owned Real Property that
are material to the Business.
(e) Except as described in Section 3.13 of the Seller
Disclosure Schedule, no material Environmental Liabilities exist against
the Seller or any of its Subsidiaries with respect to the Business or the
Assets and no Action is pending or, to the Seller's Knowledge, threatened
that could result in the suspension or revocation of any Environmental
Permit material to the conduct of the Business as now conducted.
(f) Except as described in Section 3.13 of the Seller
Disclosure Schedule, there has been no spill, leakage, discharge, emission,
escape, release or deposit (whether to water, land, sewage systems, or air
or combination of these and whether from the Owned Real Property or the
property demised under the Real Property Leases) of any Hazardous Material
other than those as permitted under the Environmental Permits or
Environmental Law.
(g) Except as described in Section 3.13 of the Seller
Disclosure Schedule, no underground storage tanks or vessels owned or
operated by the Seller exist at the Owned Real Property or the property
demised under the Real Property Leases.
(h) Except as described in Section 3.13 of the Seller
Disclosure Schedule, no Owned Real Property or property demised under the
Real Property Leases is classified as Contaminated Land.
Section 3.14. Seller Contracts. (a) Except as specified in
Section 3.14(a) of the Seller Disclosure Schedule, and in each case other than
any such failure, breach, default, or waiver, as applicable, that, individually
or in the aggregate, has not had and would not reasonably be expected to have a
Seller Material Adverse Effect, (a) to the Knowledge of the Seller, each of the
Seller Contracts is valid, binding, in full force and effect, and enforceable by
the Seller or the Selling Subsidiaries party thereto, as the case may be, in
accordance with its terms (subject to bankruptcy, insolvency, reorganization and
other Laws affecting generally the enforcement of the rights of contracting
parties and subject to a court's discretionary authority with respect to the
granting of a decree ordering specific performance or other equitable remedies);
(b) neither the Seller nor any Selling Subsidiary, as the case may be, has
received any written notice that it is in breach or default in any material
respect under any of the Seller Contracts; (c) neither the Seller nor any
Selling Subsidiary, as the case may be, has waived any of its material rights
under any of the Seller Contracts or modified any of the material terms thereof;
and (d) to the Knowledge of the Seller, no other party to any Seller Contract is
in breach or default in any respect thereunder; provided, however, that no
representation or warranty is made under this Section 3.14 with respect to the
infringement, misuse or misappropriation of the Transferred Intellectual
Property or the Restricted Patents by third Persons or by the Seller or any
Selling Subsidiary. There is no purchase order constituting a Seller Contract
that contains any non-competition or similar agreement or commitment that would
restrict the scope of the conduct of the Business by the Purchaser and its
Subsidiaries.
(b) Except as specified in Section 3.14(b) of the Seller
Disclosure Schedule, the Seller has provided the Purchaser with a true and
correct copy of each Seller Contract.
Section 3.15. Brokers. Except for fees and commissions that
will be paid by the Seller to Credit Suisse First Boston Corporation, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
and the Ancillary Agreements based upon arrangements made by or on behalf of the
Seller or any of its Affiliates.
Section 3.16. Intellectual Property. (a) Except as set forth
in Section 3.16(a) of the Seller Disclosure Schedule and other than Permitted
Liens, the Seller or its Selling Subsidiaries have good title to the Transferred
Intellectual Property and the Restricted Patents free and clear of all Liens,
except where the failure to have such good title has not had and would not
reasonably be expected to have a Seller Material Adverse Effect, and provided
that, for the avoidance of doubt, no representation or warranty is made under
this Section 3.16(a) with respect to the non-infringement or misappropriation of
the Intellectual Property of any third Person, the sole representations and
warranties with respect to which are made in Section 3.16(d). (b) The Seller and
the Selling Subsidiaries have corporate policies relating to the protection of
intellectual property, copies of which have been provided to the Purchaser.
(c) Except as set forth in Section 3.16(c) of the Seller
Disclosure Schedule, the Seller or the Selling Subsidiaries have paid all
applicable registration, maintenance and renewal fees required to be paid
as of the Closing Date with respect to the registrations and applications
of the Transferred Intellectual Property and the Restricted Patents, except
where the failure to pay such fees has not had and would not reasonably be
expected to have a Seller Material Adverse Effect.
(d) Except as set forth in Section 3.16(d) of the Seller
Disclosure Schedule and except for Patent prosecutions conducted in the
ordinary course in the United States Patent and Trademark Office and
similar foreign Governmental Authorities, neither the Seller nor any of the
Selling Subsidiaries has received any notice in writing during the two (2)
years prior to October 1, 2002, of claims or allegations that: (i) assert
the Business infringes the Intellectual Property of any third Person or
(ii) challenges the ownership, validity or enforceability of the
Transferred Intellectual Property or the Restricted Patents, and, to the
Seller's Knowledge, there are no valid grounds for any allegation or claim
asserting that the Business infringes the Intellectual Property of any
third Person. Except as set forth in Section 3.16(d) of the Seller
Disclosure Schedule and except for Patent prosecutions conducted in the
ordinary course in the United States Patent and Trademark Office and
similar foreign Governmental Authorities, there are no Actions existing or
pending, or to the Knowledge of Seller, threatened, where the Transferred
Intellectual Property or the Restricted Patents are the subject matter of
such Action.
(e) Except as set forth in Section 3.16(e) of the Seller
Disclosure Schedule, to the Seller's Knowledge, the Transferred
Intellectual Property, the Licensed Intellectual Property and all other
Intellectual Property that is transferred or licensed to Purchaser and its
Purchasing Subsidiaries pursuant to this Agreement and the Ancillary
Agreements constitute all of the Intellectual Property owned or licensed by
the Seller and the Selling Subsidiaries, other than Patent Cross Licenses,
that is necessary and sufficient to operate the Business in the manner and
to the extent presently conducted by the Seller and the Selling
Subsidiaries immediately prior to the Closing Date, provided that
Trademarks and Business Names and rights under licenses to third party
software which are commercially or freely available are not applicable for
the purposes of this Section 3.16(e). For the avoidance of doubt, no
representation is made under this Section 3.16(e) with respect to the
non-infringement or misappropriation of the Intellectual Property of any
third Person, the sole representations and warranties with respect to which
are made in Section 3.16(d).
(f) The Seller and the Selling Subsidiaries have in place
policies to implement reasonable security measures to safeguard the secrecy
and confidentiality of their respective trade secrets and other
confidential information, in accordance with protection procedures
customarily used in the industry to protect rights of like importance.
(g) Except as set forth in Section 3.16(g) of the Seller
Disclosure Schedule, to the Seller's Knowledge, there are no infringements
or misappropriations by any third Person of the Transferred Intellectual
Property or Restricted Patents.
(h) Subject to the events disclosed in Section 3.16(h) of the
Seller Disclosure Schedule, the Seller has nonexclusive rights to use and
manufacture the "E2 Tool" for its internal use pursuant to Section 2.3 and
Section 2.12 of the Technology License Agreement dated March 10, 1997,
which agreement is identified as a Third Party License under this Agreement
and a copy of which has been provided to Purchaser.
(i) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, SELLER
MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, ORAL OR WRITTEN, REGARDING THE TRANSFERRED PASSIVE PATENTS.
Section 3.17. Residence. None of the Seller, Nortel Networks
Limited and Nortel Networks Technology Corporation is, and as of the Closing
Date, none of them will be, a non-resident of Canada for the purpose of the
Income Tax Act (Canada).
Section 3.18. Tax Matters. (a) The Seller is registered for
purposes of the GST Legislation with registration number 868210725-RT001. Nortel
Networks Limited is registered for purposes of the GST Legislation with
registration number 119409258-RT0001 (GST) and the PST Legislation with
registration number 7947-0009 (Ontario). Nortel Networks Technology Corporation
is registered for purposes of the GST Legislation with registration number
118802974-RT0001 and for purposes of the PST Legislation with registration
number 0274-3442 (Ontario). Nortel Networks (U.K.) Limited, Nortel Networks
Properties Limited and Nortel Networks Optical Components Limited are registered
for VAT in the U.K. with a group registration number GB 229 5608 45. Nortel
Networks Optical Components (Switzerland) GmbH is registered for VAT in
Switzerland with registration number 525877.
(b) None of the Assumed Liabilities is or embodies a contract,
agreement, plan or arrangement that, individually or together with other of
the Assumed Liabilities, would be reasonably expected to give rise to the
payment of any amount that would not be deductible pursuant to Section 280G
or Section 162(m) of the U.S. Code (other than the temporary disallowance
of a deduction under the U.S. Code) or that would require the Purchaser or
any Purchasing Subsidiary to compensate any individual for excise taxes
paid pursuant to Section 4999 of the U.S. Code.
(c) None of the Assets owned or leased by the Seller and the
Selling Subsidiaries other than Nortel Networks Inc., Nortel Networks
Optical Components Inc. or Nortel Networks HPOCS Inc. are "United States
real property interests" within the meaning of Section 897(c)(1) of the
U.S. Code. None of Nortel Networks Inc., Nortel Networks OC Inc. and Nortel
Networks HPOCS Inc. is a "foreign person" within the meaning of Section
1445(f)(3) of the U.S. Code.
(d) All legal documents (other than those that have ceased to
have legal effect and other than those that relate to transactions
contemplated hereby, including this Agreement) to which the Seller or any
Selling Subsidiary or any other Affiliate of the Seller is a party and that
are material to the title to the Assets have been duly stamped with U.K.
stamp duty to the extent necessary to prove title to such Assets for the
purposes of any court, arbitration, administrative or other similar
proceedings in the U.K.
(e) Except as set forth in Section 3.18(e) of the Seller
Disclosure Schedule, all VAT payable upon the importation of goods, and all
excise duties payable to U.K. H.M. Customs and Excise that are payable in
respect of the Assets (including the Inventory), have been paid in full,
and none of the Assets is liable to confiscation, forfeiture or distress.
(f) An election has been made pursuant to paragraph 2 of
Schedule 10 to the U.K. Value Added Tax Xxx 0000 in relation to all of the
Owned Real Property and Real Property Leases and each part of any of them.
Section 3.19. Customers and Suppliers. Section 3.19 of the
Seller Disclosure Schedule sets forth a list of (a) each of the ten (10) largest
customers and suppliers of the Seller and the Selling Subsidiaries taken as a
whole with respect to the Business in terms of sales or purchases, as the case
may be, during the fiscal year ended December 31, 2001, and (b) each of the ten
(10) largest customers and suppliers of the Seller and the Selling Subsidiaries
taken as whole with respect to the Business in terms of sales or purchases, as
the case may be, during the six-month period ended June 30, 2002, showing the
approximate total sales of the Business to each such customer during such
periods and the approximate total purchases of the Business from each such
supplier during such periods.
Section 3.20. Securities Laws. The Seller (and, if applicable,
one or more Selling Subsidiaries) will acquire the Consideration Shares, the
Warrants, the Purchaser Shares underlying the Warrants and the Notes pursuant to
this Agreement as partial consideration for the Assets, and each is an
"accredited investor" within the meaning of Rule 45-501 under the Securities Act
(Ontario).
Section 3.21. EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES.
THE ASSETS ARE TRANSFERRED "AS IS," "WHERE IS" AND, SUBJECT TO THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III, WITHOUT ANY OTHER
REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER, EXPRESS OR IMPLIED,
ORAL OR WRITTEN, AND IN PARTICULAR, WITHOUT ANY IMPLIED WARRANTY OR IMPLIED
REPRESENTATION AS TO CONDITION, VALUE, MERCHANTABILITY, NONINFRINGEMENT,
VALIDITY, COMPLETENESS OR FITNESS OR SUITABILITY FOR ANY SPECIFIC PURPOSE AS TO
ANY OF THE ASSETS OR BUSINESS OF THE SELLER AND THE SELLING SUBSIDIARIES. THE
SELLER AND ITS AFFILIATES HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE
PURCHASER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF
ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR
OTHER SUPPLEMENTAL DATA).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as otherwise set forth in the Purchaser Disclosure
Schedule, the Purchaser represents and warrants to the Seller as follows:
Section 4.01. Organization and Good Standing; Solvency and
Fraudulent Conveyance; Principal Purchaser Subsidiaries. (a) Each of the
Purchaser, the Purchasing Subsidiaries and the Principal Purchaser Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. Each of the Purchaser, the Purchasing
Subsidiaries and the Principal Purchaser Subsidiaries is duly licensed or
qualified to do business in each jurisdiction in which the properties owned or
leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified would not adversely affect its ability to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Ancillary Agreements. The Purchaser has made available to the Seller a
complete and correct copy of the memorandum and articles of association or other
constitutional documents of the Purchaser and each of the Purchasing
Subsidiaries and the Principal Purchaser Subsidiaries, as amended to date, each
of which is in full force and effect.
(b) As at the date hereof, the Purchaser is not the subject of
any proceedings under any law relating to bankruptcy, insolvency, or
reorganization, winding up, composition or adjustment in respect of debts.
As at the date hereof, the Purchaser reasonably believes that: (i) it has
property reasonably sufficient in relation to its business; (ii) the
realizable value of its assets are not less than the aggregate of its
liabilities and stated capital of all classes; (iii) it is not unable to
pay its liabilities as they become due in accordance with trade practices;
and (iv) it is not in administration or receivership.
(c) Section 1.01(b) of the Purchaser Disclosure Schedule sets
forth a true, correct and complete list of each Principal Purchaser
Subsidiary, including for each, its full legal name and jurisdiction of
organization.
Section 4.02. Authority. Each of the Purchaser, the Purchasing
Subsidiaries and the Principal Purchaser Subsidiaries has full corporate power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which it is or will be a signatory, and to perform fully its obligations
hereunder and thereunder. The execution, delivery and performance by each of the
Purchaser, the Purchasing Subsidiaries and the Principal Purchaser Subsidiaries
of this Agreement and each Ancillary Agreement to which it is or will be a
signatory has been duly authorized by all requisite corporate action on the part
of the Purchaser, such Purchasing Subsidiary or such Principal Purchaser
Subsidiary, as the case may be. This Agreement has been, and upon execution each
other Ancillary Agreement will be, duly executed and delivered by the Purchaser,
Purchasing Subsidiary or Principal Purchaser Subsidiary that is a party thereto,
and (assuming due authorization, execution and delivery by the Seller) this
Agreement constitutes, and each other Ancillary Agreement to which the
Purchaser, any Purchasing Subsidiary or any Principal Purchasing Subsidiary is
to be a party, when so executed and delivered, will constitute, legal, valid and
binding obligations of the Purchaser, such Purchasing Subsidiary or such
Principal Purchaser Subsidiary that is a party thereto, enforceable against the
Purchaser, such Purchasing Subsidiary or such Principal Purchaser Subsidiary in
accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization and similar Laws affecting
generally the enforcement of the rights of contracting parties and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies, and further subject
to the Currency Act (Canada) precluding a court in Canada from awarding a
judgment for an amount expressed in a currency other than Canadian dollars.
Section 4.03. No Conflict; Consents and Approvals. (a) Subject
to receipt of the consents, approvals and waivers referred to in Section 4.03(a)
of the Purchaser Disclosure Schedule, neither the execution and delivery by the
Purchaser, any of the Purchasing Subsidiaries or any of the Principal Purchaser
Subsidiaries of this Agreement and the Ancillary Agreements to which it is or
will be party, nor the consummation of the transactions contemplated thereby or
the compliance by the Purchaser, any of the Purchasing Subsidiaries or any of
the Principal Purchaser Subsidiaries with any of the provisions thereof will:
(i) conflict with, violate or result in the breach of, any provision of the
certificate of incorporation or by-laws or other organizational documents of the
Purchaser, any of the Purchasing Subsidiaries or any of the Principal Purchaser
Subsidiaries; (ii) conflict with, violate, or result in the breach by the
Purchaser, any of the Purchasing Subsidiaries or any of the Principal Purchaser
Subsidiaries of any applicable Law (assuming satisfaction of the condition in
Section 8.02(b)); (iii) conflict with, violate, result in the breach or
termination of, or constitute a default or give rise to any right of termination
or acceleration or right to increase the obligations or otherwise modify the
terms under any Purchaser Contract; or (iv) result in the creation of any Lien
upon any assets of the Purchaser and its Subsidiaries, in each case, with
respect to the foregoing clauses (ii), (iii) and (iv), except for such
conflicts, violations, breaches, terminations, defaults, rights or Liens that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Purchaser Material Adverse Effect.
(b) Except for as set forth on Section 4.03(b) of the
Purchaser Disclosure Schedule, no consent, approval or authorization of,
permit from, or declaration, filing or registration with, any Governmental
Authority or any other Person is required to be made or obtained by the
Purchaser or any of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby,
except where the failure to obtain such consent, approval, authorization or
permit, or to make such declaration, filing or registration has not had and
would not reasonably be expected to have, individually or in the aggregate,
a Purchaser Material Adverse Effect.
Section 4.04. Capitalization. The authorized share capital of
the Purchaser is (pound)667,000, comprised of 200,100,000 Purchaser Shares, of
which 143,851,805 were issued as of the close of business on September 30, 2002
and 19,146,929 were issuable on September 30, 2002 upon the exercise of
Purchaser Options. All of the issued Purchaser Shares are duly authorized,
validly issued and fully paid. Neither the Purchaser nor any of its Subsidiaries
has any commitments to issue or deliver Purchaser Shares other than pursuant to
Purchaser Options and this Agreement. All of the issued share capital or other
equity securities of each of the Subsidiaries of the Purchaser are duly
authorized, validly issued, fully paid and, if applicable, nonassessable and
owned by the Purchaser or by a Subsidiary of the Purchaser, free and clear of
any Lien. Except as set forth above or as set forth in Section 4.04 of the
Purchaser Disclosure Schedule, and except for changes since June 30, 2002
resulting from the exercise of Purchaser Options, there are no (i) shares of
capital stock or other voting securities of the Purchaser or any of its
Subsidiaries reserved, issued or outstanding, (ii) preemptive or other
outstanding rights, subscriptions, options, warrants, stock appreciation rights,
redemption rights, repurchase rights, convertible securities or other
agreements, arrangements or commitments of any character granted by the
Purchaser or any of its Subsidiaries relating to, or the value of which is
determined by reference to, the issued or unissued share capital or other
ownership interest of the Purchaser or any of its Subsidiaries or (iii) any
other securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire, any securities of
the Purchaser or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. Neither the
Purchaser nor any of its Subsidiaries has outstanding any bonds, debentures,
notes or other obligations, the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the shareholders of the Purchaser or any such Subsidiary on any matter. All
Purchaser Shares to be issued in connection with the transactions contemplated
by this Agreement will, when issued in accordance with the terms hereof, have
been duly authorized, validly issued and fully paid and free and clear of all
Liens. As of the date hereof, there are no stockholder agreements, voting trusts
or other agreements or understandings to which the Purchaser is a party or by
which it is bound relating to the voting of any shares of the capital stock of
the Purchaser.
Section 4.05. Purchaser Reports; Undisclosed Liabilities. (a)
The Purchaser has timely filed all forms, reports, statements and documents
required to be filed by it with the SEC, Nasdaq, the UKLA and the LSE since
April 4, 2000 (collectively, together with any such forms, reports, statements
and documents the Purchaser may file subsequent to the date hereof until the
Closing, the "Purchaser Reports"). Each Purchaser Report (i) was prepared in
accordance with the requirements of the Securities Act, the Exchange Act or the
rules and regulations of Nasdaq, the UKLA or the LSE, as applicable, and (ii)
did not at the time it was filed (or, with respect to any registration statement
filed under the Securities Act, at the time of effectiveness) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Purchaser Reports was
prepared in accordance with U.K. GAAP (except, in the case of unaudited
financial statements, for the absence of footnotes and subject to normal
year-end adjustments) applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and, to the
extent applicable and required by the Securities Act or Exchange Act,
reconciled to U.S. GAAP as noted therein during the periods involved,
except as noted therein or in the notes thereto, and each presented fairly
the consolidated financial position of the Purchaser as at the respective
dates thereof, and their consolidated results of operations, stockholders'
equity and cash flows for the respective periods indicated therein, except
as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against
on the most recent consolidated balance sheet of the Purchaser as reported
in the Purchaser Reports, including the notes thereto, the Purchaser has no
Liabilities that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with U.K. GAAP, except for Liabilities
incurred in the ordinary course of business consistent with past practice
since June 30, 2002 or Liabilities that have not had and would not
reasonably be expected to have, individually or in the aggregate, a
Purchaser Material Adverse Effect.
Section 4.06. Absence of Certain Changes or Events. From June
30, 2002 to the date of this Agreement, except as reflected in the Purchaser
Reports, described in Section 4.06 of the Purchaser Disclosure Schedule or
contemplated by this Agreement and the Ancillary Agreements, no Purchaser
Material Adverse Effect has occurred or would reasonably be expected to occur.
Section 4.07. Absence of Litigation. Except as disclosed in
the Purchaser Reports or set forth in Section 4.07 of the Purchaser Disclosure
Schedule, there are no Actions existing or pending or, to the Knowledge of the
Purchaser, threatened, against the Purchaser or any of its Subsidiaries or to
which any of their assets are subject that, individually or in the aggregate,
have had or would reasonably be expected to have a Purchaser Material Adverse
Effect.
Section 4.08. [Reserved].
Section 4.09. Compliance with Laws. None of the Purchaser and
its Subsidiaries is in violation of any Law applicable to the business of the
Purchaser or any of its Subsidiaries or any of their respective assets, except
where such violation has not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.
Section 4.10. Governmental Licenses and Permits. The Purchaser
and its Subsidiaries, in the aggregate, hold all licenses and permits necessary
for the operation of their businesses as currently operated and are in
compliance with the terms of such licenses, except where failure to have such
license or the failure to so comply has not had and would not reasonably be
expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect.
Section 4.11. Purchaser Contracts. Except as disclosed in the
Purchaser Reports or set forth in Section 4.11 of the Purchaser Disclosure
Schedule, and in each case other than any such failure, breach, default, or
waiver, as applicable, that, individually or in the aggregate, has not had and
would not reasonably be expected to have a Purchaser Material Adverse Effect,
(a) to the Knowledge of the Purchaser, each of the Purchaser Contracts (a
complete and correct list of which is set forth in Section 4.11 of the Purchaser
Disclosure Schedule) is valid, binding, in full force and effect, and
enforceable by the Purchaser or the Subsidiary of the Purchaser that is party
thereto, as the case may be, in accordance with its terms (subject to
bankruptcy, insolvency, reorganization and other Laws affecting generally the
enforcement of the rights of contracting parties and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies); (b) neither the Purchasers
nor any such Subsidiary, as the case may be, has received any written notice
that it is in breach or default in any material respect under any of the
Purchaser Contracts; (c) neither the Seller nor any such Subsidiary, as the case
may be, has waived any of its rights under any of the Purchaser Contracts or
modified any of the material terms thereof; and (d) to the Knowledge of the
Purchaser, no other party to any of the Purchaser Contracts is in breach or
default in any material respect thereunder.
Section 4.12. Brokers. Except for fees or commissions that
will be paid by the Purchaser to Xxxxxx Xxxxxxx, no Broker, finder or investment
banker is entitled to a fee or commission in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements based upon
arrangements made by or on behalf of the Purchaser or any of its Affiliates.
Section 4.13. Purchaser Employee Plans. (a) Section 4.13(a) of
the Purchaser Disclosure Schedule contains an accurate and complete list of all
Purchaser Employee Plans. The Purchaser has provided the Seller with a true and
complete copy of the plan document or summary plan description of each of the
Purchaser Employee Plans or if such plan document or summary plan description
does not exist, an accurate written summary of such Purchaser Employee Plans.
(b) With respect to each Purchaser Employee Plan, the
Purchaser and the Purchasing Subsidiaries have, to the Purchaser's
Knowledge, complied with all applicable Laws and each Purchaser Employee
Plan has at all times been properly administered in all material respects
in accordance with its terms, in each case, except where such
non-compliance has not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.
Except as disclosed in Section 4.13(b) of the Purchaser Disclosure
Schedule, there is no audit or, to the Purchaser's Knowledge, any
investigation pending (other than routine qualification or registration
determination filings) with respect to any Purchaser Employee Plan before
any Government Authority and, to the Purchaser's Knowledge, no such audit
or investigation has been threatened in writing that, individually or in
the aggregate, has had or would reasonably be expected to have a Purchaser
Material Adverse Effect.
(c) The Purchaser has provided the Seller with a copy of the
standard forms of written employment agreements utilized by the Purchaser
with respect to Purchaser Employees. Except as set forth in Section 4.13(c)
of the Purchaser Disclosure Schedule, neither the Purchaser nor any
Subsidiary of the Purchaser is a party to any written employment agreement
with any Purchaser Employee that varies in any material respect from such
standard forms.
(d) No promises or commitments have been made by the Purchaser
or any of the Purchasing Subsidiaries to any Purchaser Employee to
materially amend or terminate any Purchaser Employee Plan, to increase or
decrease the compensation or benefits thereunder or otherwise due in
respect of any Purchaser Employee Plans or to establish any new Purchaser
Employee Plans, except as (i) required by applicable Law, (ii) specified in
the copies or written summaries of the Purchaser Employee Plans provided to
the Seller pursuant to Section 4.13(a), (iii) disclosed in Section 4.13(d)
of the Purchaser Disclosure Schedule or (iv) that have not had and would
not reasonably be expected to have, individually or in the aggregate, a
Purchaser Material Adverse Effect.
(e) Except as set forth in Section 4.13(e) of the Purchaser
Disclosure Schedule, and other than applications by Purchaser Employees for
benefits received in the ordinary course of business under the Purchaser
Employee Plans, none of the Purchaser and the Purchasing Subsidiaries has
received written notice of any material pending or threatened Action under
a Purchaser Employee Plan made by any Purchaser Employee that, individually
or in the aggregate, has had or would reasonably be expected to have a
Purchaser Material Adverse Effect.
(f) Except as set forth in Section 4.13(f) of the Purchaser
Disclosure Schedule, the Purchaser and the Purchasing Subsidiaries have
timely paid all contributions, premiums and expenses payable to or in
respect of any and all Purchaser Employee Plans under the terms thereof and
in accordance with all applicable Law and, to the extent any such
contributions, premiums or expenses are not yet due, the liability
therefore has been properly and adequately accrued on the financial
statements of the Purchaser in accordance with local generally accepted
accounting principles applied on a consistent basis.
Section 4.14. Employee Matters. (a) Except as set forth in
Section 4.14(a) of the Purchaser Disclosure Schedule, there has not been for a
period of twelve (12) consecutive months prior to the date hereof, nor is there
existent or, to the Purchaser's Knowledge, threatened, any strike, slowdown,
labor dispute, picketing or work stoppage or other industrial action by
Purchaser Employees.
(b) Except as set forth in Section 4.14(b) of the Purchaser
Disclosure Schedule, the Purchaser and each of the Purchasing Subsidiaries
is, to the Purchaser's Knowledge, in compliance in all material respects
with all Laws applicable to the employment of the Purchaser Employees,
other than any failure to comply that has not had and would not reasonably
be expected to have a Purchaser Material Adverse Effect.
(c) Except as set forth in Section 4.14(c) of the Purchaser
Disclosure Schedule and other than any such complaints, proceedings,
orders, charges, levies, assessments and penalties that have not had and
would not reasonably be expected to have a Purchaser Material Adverse
Effect, (i) to the Purchaser's Knowledge, no notice has been received by
the Purchaser or any Purchasing Subsidiary of any pending or threatened
complaint filed by any Purchaser Employee against the Purchaser or any
Purchasing Subsidiary claiming that the Purchaser has violated employment
standards, labor relations laws, pay equity, employment discrimination or
human rights Laws or of any complaints or proceedings of any kind involving
the Purchaser or any Purchasing Subsidiary before any Governmental
Authority or other entity designated pursuant to a collective bargaining
agreement or other written contract, (ii) there are no outstanding orders
or charges against the Purchaser or any Purchasing Subsidiary under
occupational and health legislation with respect to Purchaser Employees
that are material and (iii) all levies, assessments and penalties made
against the Purchaser or any Purchasing Subsidiary pursuant to workers'
compensation or workplace safety insurance that were required to be paid
prior to the date hereof with respect to Purchaser Employees have been paid
and neither the Purchaser nor any Purchasing Subsidiary has been reassessed
under any such legislation with respect to Purchaser Employees during the
twelve months prior to the date hereof.
(d) Except as set forth in Section 4.14(d) of the Purchaser
Disclosure Schedule, (i) none of the Purchaser Employees are covered by any
collective bargaining agreements or recognition agreements and no formal
request for recognition has been received from, and no petition has been
filed or proceedings instituted by, a union, collective bargaining agent,
employee or group of employees with any Governmental Authority seeking
recognition of a bargaining representative with respect to any Purchaser
Employees, (ii) there is no duty to bargain with any labor organization
with respect to any Purchaser Employee, (iii) to the Purchaser's Knowledge,
there are no current attempts to organize or proposal to establish any
union or employee association with respect to any of the Purchaser
Employees and (iv) to the Purchaser's Knowledge, there is no pending or
threatened charge or complaint against the Purchaser and/or the Purchasing
Subsidiaries by the National Labor Relations Board or any comparable
governmental entity.
Section 4.15. Accounting and Financial Matters. Since December
31, 2001, the Purchaser has not received written notice from the SEC or any
other Governmental Authority that any of its accounting policies or practices
are or may be the subject of any review, inquiry, investigation or challenge by
the SEC or other Governmental Authority, which review, inquiry, investigation or
challenge has required or would reasonably be expected to require a material
alteration to such accounting policies or practices. Since December 31, 2001,
the Purchaser's independent public accounting firm has not informed the
Purchaser that it has any material questions, challenges or disagreements
regarding or pertaining to the Purchaser's accounting policies or practices that
require disclosure under the Securities Act or the Exchange Act. Since December
31, 2001, no officer or director of the Purchaser has received, or is entitled
to receive, any material compensation from any entity that has engaged in or is
engaging in any material transaction with the Purchaser or any of its
Subsidiaries. Set forth in Section 4.15 of the Purchaser Disclosure Schedule is
a list of all off-balance sheet special purpose entities and financing
arrangements of the Purchaser and its Subsidiaries.
Section 4.16. Environmental Matters. Except as described in
Section 4.16 of the Purchaser Disclosure Schedule:
(a) (i) The Purchaser is in compliance with all applicable
Environmental Laws, including all Environmental Permits, except where the
failure to comply has not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect; and
(ii) there is no Environmental Claim pending or, to the Knowledge of the
Purchaser, threatened against the Purchaser, except for those Environmental
Claims that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.
(b) There have been no Releases by the Purchaser that were
required to be reported to any Governmental Authority and to the Knowledge
of the Purchaser, there have been no Releases at or affecting the premises
currently or formerly owned or operated by the Purchaser that are
reasonably likely to result in an Environmental Claim against the
Purchaser.
Section 4.17. Intellectual Property. (a) The Purchaser and the
Subsidiaries own or license or otherwise possess legally enforceable rights to
use all Intellectual Property that is used or held for use by the Purchaser and
its Subsidiaries in the business of the Purchaser as currently conducted, and
all such Intellectual Property is in full force and effect and the Purchaser is
in compliance with any agreements or arrangements relating to such Intellectual
Property, except to the extent that the failure to have any such rights has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Purchaser Material Adverse Effect.
(b) Except as disclosed in the Purchaser Reports or set forth
in Section 4.17(b) of the Purchaser Disclosure Schedule, the Purchaser or
its Subsidiaries have not received notice in writing during the two (2)
years prior to October 1, 2002 of claims or allegations that: (i) assert
that the business of the Purchaser infringes the Intellectual Property of
any third Person or (ii) challenges the ownership, validity or
enforceability of the Purchaser Owned Intellectual Property, and to the
Purchaser's Knowledge there are no valid grounds for any allegation or
claim asserting that business of the Purchaser infringes the Intellectual
Property of any third Person.
(c) To the Purchaser's Knowledge, the Purchaser Intellectual
Property constitutes all of the Intellectual Property that is necessary and
sufficient, in all material respects, for the conduct of the business of
the Purchaser as conducted by the Purchaser and its Subsidiaries
immediately prior to the Closing Date; provided that, for purposes of this
Section 4.17(c), "business of the Purchaser" shall mean the manufacture,
distribution, sales and support of the products manufactured and sold, and
the services provided, by the Purchaser and its Subsidiaries immediately
prior to the Closing Date. For the avoidance of doubt, no representation is
made under this Section 4.17(c) with respect to the non-infringement or
misappropriation of the Intellectual Property of any third Person, the sole
representations and warranties with respect to which are made in Section
4.17(b).
(d) Except as disclosed in the Purchaser Reports or set forth
in Section 4.17(d) of the Purchaser Disclosure Schedule, to the Purchaser's
Knowledge, there are no infringements or misappropriations by any third
Person of the Purchaser Intellectual Property.
Section 4.18. Tax Matters. The VAT Registration Number for the
Purchaser is GB 501 9137 76.
Section 4.19. EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES.
THE PURCHASER AND ITS AFFILIATES HEREBY DISCLAIM ANY OTHER OR IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE
SELLER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER
SUPPLEMENTAL DATA), AND THE SELLER ACKNOWLEDGES THAT THE PURCHASER HAS NOT MADE
ANY REPRESENTATION OR WARRANTY THAT HAS CAUSED THE SELLER TO ACCEPT THE
CONSIDERATION SHARES OR ON WHICH THE SELLER HAS PLACED ANY RELIANCE IN AGREEING
TO ACCEPT THE CONSIDERATION SHARES, EXCEPT AS SET OUT IN THIS ARTICLE IV.
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business Prior to the Closing. (a)
Unless the Purchaser otherwise agrees in writing, and except (1) as otherwise
set forth in this Agreement, (2) to the extent relating to Excluded Assets or
Retained Liabilities, (3) as set forth in Section 5.01(a) of the Seller
Disclosure Schedule or (4) as required by applicable Law, between the date
hereof and the Closing Date, the Seller shall (and shall cause the Selling
Subsidiaries to) conduct the Business, including its relations with customers
and suppliers, only in the ordinary course of business, consistent with past
practice. By way of amplification and not limitation, except (v) as otherwise
set forth in this Agreement, (w) to the extent relating to Excluded Assets or
Retained Liabilities, (x) as disclosed in Section 5.01(a) of the Seller
Disclosure Schedule, (y) as is in the ordinary course of business or (z) as
required by applicable Law, between the date hereof and the Closing Date, the
Seller shall not (and shall cause the Selling Subsidiaries not to) do any of the
following without the prior written consent of the Purchaser:
(i) make any material change in the conduct of the Business;
(ii) acquire on behalf of the Business a substantial portion
of the assets of, or by any other manner, any business or any Person or
division thereof or acquire a material amount of assets;
(iii) distribute, sell, assign, transfer, lease, abandon or
otherwise dispose of any interest in any of the Assets or the Restricted
Patents that are material, individually or in the aggregate, to the
Business taken as a whole;
(iv) grant any Lien (other than a Permitted Lien) on any Asset
(whether tangible or intangible) or on any of the Restricted Patents;
(v) increase the rate of, or add or introduce, cash
compensation or other fringe, incentive, equity incentive, pension, Seller
Employee Plan, welfare or other employee benefits payable to the Employees,
other than as required by contract or agreement in existence as of the date
hereof or increases, additions or introductions that apply to substantially
all employees (including the Employees) of the Seller or one or more of its
Subsidiaries but do not increase the value in the aggregate of the terms
and conditions applicable to any Employee and, provided that no such change
shall be limited to the Employees;
(vi) terminate the employment of any Employee, other than for
willful gross misconduct, gross negligence or on account of a permanent
disability;
(vii) modify, amend or terminate any Seller Contract that is
material to the Business or waive, release, cancel or assign any material
rights or claims thereunder; or
(viii) authorize, agree or commit to do any of the foregoing
actions.
(b) Unless the Seller otherwise agrees in writing (which
agreement shall not be unreasonably withheld or delayed), and except (1) as
otherwise set forth in this Agreement, (2) as disclosed in the Purchaser
Reports or set forth in Section 5.01(b) of the Purchaser Disclosure
Schedule, (3) as is in the ordinary course of business or (4) as required
by applicable Law, between the date hereof and the Closing Date, the
Purchaser shall not (and shall cause its Subsidiaries not to) do any of the
following without the prior written consent of the Seller (which consent
shall not be unreasonably withheld or delayed):
(i) make any material change in the conduct of its business;
(ii) amend in a manner that is adverse to the Seller its
memorandum and articles of association or other constitutional documents;
(iii) declare or pay any dividend or make any other
distribution to the holders of its share capital whether or not upon or in
respect of any shares of its share capital;
(iv) redeem or otherwise acquire any of its share capital or
issue any of its share capital or options to purchase any such share
capital, warrant or right relating thereto or any securities convertible
into or exercisable or exchangeable for any of its share capital;
(v) acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any
business or any Person or division thereof involving consideration with a
value in excess of $25,000,000;
(vi) distribute, sell, assign, transfer, lease or otherwise
dispose of any interests in its assets that are material, individually or
in the aggregate, to the businesses of the Purchaser and its Subsidiaries
taken as a whole, other than such distributions, sales, assignments,
transfers, leases or dispositions with a value not exceeding $25,000,000 in
the aggregate;
(vii) grant any material Lien, other than a Lien in favor of a
commercial bank, equipment finance company or other financial institution
granted in connection with a commercial lending transaction, on any of its
assets that are material, individually or in the aggregate, to the
businesses of the Purchaser and its Subsidiaries taken as a whole;
(viii) incur or assume any Debt, other than (y) Debt incurred
to a commercial bank, equipment finance company or other financial
institution granted in connection with a commercial lending transaction and
(z) indemnities and performance bonds in the ordinary course of business
and consistent with past practice;
(ix) enter into any transaction with any Affiliate (other than
the Purchaser and its wholly-owned Subsidiaries) that is not on
arm's-length terms; or
(x) authorize, agree or commit to do any of the foregoing
actions.
Section 5.02. Access to Information. (a) From the date hereof
until the Closing (upon reasonable advance notice to the other party) during
normal business hours, the Seller and the Purchaser shall (and the Seller shall
cause the Selling Subsidiaries and the Purchaser shall cause its Subsidiaries
to) (i) afford the officers, employees, auditors, counsel and other authorized
agents and representatives of the other party reasonable access, during normal
business hours, to the offices, properties, books and records of the Business or
the Purchaser and its Subsidiaries, as the case may be, (ii) furnish to the
officers, employees, auditors, counsel and other authorized agents and
representatives of the other party such available additional financial and
operating data and other information regarding the Business or the Purchaser and
its Subsidiaries, as the case may be, as the Purchaser or the Seller, as the
case may be, may from time to time reasonably request and (iii) instruct its
officers, employees, auditors, counsel and other authorized agents and
representatives to cooperate with the other party in its investigation of the
Business or the Purchaser and its Subsidiaries, as the case may be; provided,
however, that neither party shall be required to provide (or cause to be
provided) any such information or access to the extent that such information or
access would cause such party or any of its Subsidiaries to be in breach of any
confidentiality restrictions applicable to it or any information that would be
in violation of applicable Law.
(b) Upon reasonable advance notice to the other party, during
normal business hours, each of the Purchaser and the Seller shall (and each
shall cause the Purchasing Subsidiaries, the Principal Purchaser
Subsidiaries and their employees, auditors and agents or the Selling
Subsidiaries and their employees, auditors and agents, as the case may be,
to) afford the officers, employees, auditors, counsel and other authorized
agents and representatives of the other party reasonable access, during
normal business hours, to its offices, properties, books and records for
the purposes of assisting the other party in (1) investigating or defending
any Action involving the other party or any of its Affiliates or (2) any
matter arising in connection with the operation of the Business prior to
the Closing; provided, however, that neither party shall be required to
provide (or cause to be provided) any such information or access to the
extent that such information or access would cause it or any of its
Subsidiaries to be in breach of any confidentiality restrictions applicable
to it or any information that would be in violation of applicable Law.
Section 5.03. Confidentiality. (a) The terms of the letter
agreement, dated as of April 24, 2002, between the Seller and the Purchaser (the
"Confidentiality Agreement") is hereby incorporated herein by reference and
shall continue in full force and effect and survive the Closing, except that the
non-disclosure and non-use obligations of the Purchaser under the
Confidentiality Agreement in respect of Business Information and Transferred
Intellectual Property and the non-solicitation obligations of the parties under
the Confidentiality Agreement shall terminate at the Closing. If this Agreement
is, for any reason, terminated prior to the Closing, the Confidentiality
Agreement shall nonetheless continue in full force and effect in all respects.
(b) (i) The Purchaser shall maintain, and shall cause each of
its Affiliates to maintain, in strict confidence, all System Confidential
Information, and shall not disclose or provide, and shall cause its
Affiliates not to disclose or provide, the System Confidential Information
to any Person. The Purchaser shall not use, and shall not permit its
Affiliates to use, any System Confidential Information for any purpose
whatsoever, except to the extent expressly provided otherwise in the
Ancillary Agreements. In maintaining the confidentiality of the System
Confidential Information, the Purchaser shall exercise, and shall cause its
Affiliates to exercise, the same degree of care that it exercises with its
own confidential information, and in no event less than a reasonable degree
of care. Without limitation of the foregoing. except to the extent
expressly authorized under the Ancillary Agreements and to the extent that
System Confidential Information cannot reasonably be removed from any
Inventory, Equipment or non-documentary tangible material without
essentially destroying the same, promptly after the Closing Date, the
Purchaser shall use its commercially reasonable efforts to delete or
destroy, and shall cause its Affiliates to delete or destroy, all the
System Confidential Information. The Purchaser shall not be in breach of
this Section 5.03(b) if, after exercising such commercially reasonable
efforts, it discovers System Confidential Information that was not deleted
or destroyed but only if it promptly thereafter deletes or destroys such
newly discovered System Confidential Information.
(ii) The Purchaser acknowledges and confirms that the System
Confidential Information constitutes the valuable property of the Seller,
and that the unauthorized use, loss or disclosure of the System
Confidential Information will cause irreparable injury to the Seller. The
Purchaser acknowledges that monetary damages may not be a sufficient remedy
for the misappropriation or unauthorized use or disclosure of the System
Confidential Information and that the Seller shall be entitled, without
waiving other rights or remedies and without the posting of bond, to such
injunctive relief as may be necessary or appropriate to enjoin, prevent or
curtail such misappropriation or unauthorized use or disclosure.
(iii) For the purposes of this Agreement, "System Confidential
Information" shall mean any and all confidential or proprietary information
of the Seller and the Selling Subsidiaries that relates to or is used in
connection with the design, development, manufacture, maintenance or
support of the Seller's or the Selling Subsidiaries' Systems and to which
the Purchaser or any of its Affiliates has access, or which the Purchaser
or any of its Affiliates otherwise possesses, as a result of the
transactions contemplated by this Agreement, including business, technical,
scientific and know-how information, methods, algorithms, processing
procedures, research and development information, computer software, data
files, source and object codes, interfaces, manuals, specifications,
designs, architectures and documentation, in each case including all
materials that incorporate or are prepared using or based on any such
confidential or proprietary information or any portion thereof.
Notwithstanding the foregoing, System Confidential Information shall not
include: (x) the Transferred Intellectual Property, or (y) information that
the Purchaser can demonstrate (A) has entered the public domain other than
as a result of a breach of Section 5.03(b) or any other confidentiality
obligation of the Purchaser; (B) was rightfully known to the Purchaser
prior to the date hereof, free from any obligation to keep such information
confidential; (C) received by the Purchaser on an unrestricted basis from a
source unrelated to the Purchaser and not under a duty of confidentiality
to the Seller or the Selling Subsidiaries; or (D) independently developed
by the Purchaser without reference to any System Confidential Information.
(iv) This Section 5.03(b), and the Purchaser's obligations
thereunder, shall survive any expiration or termination of this Agreement
in perpetuity.
Section 5.04. Regulatory and Other Authorizations; Consents.
(a) Each party shall use its reasonable best efforts (including by making
divestitures, granting licenses and taking other actions required by applicable
regulatory bodies or officials) to obtain all authorizations, consents, orders
and approvals of all Governmental Authorities, including any required
consultation with works counsels or workers' representatives, that may be or
become necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and the Ancillary Agreements and will
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. The parties will not take any
action that would have the effect of delaying, impairing or impeding the receipt
of any required approvals or the satisfaction of any condition in Article VIII.
(b) Each of the Purchaser and the Seller agrees to make all
filings or applications required under all applicable Laws with respect to
the transactions contemplated hereby as soon as practicable after the date
hereof (and in any event, in the case of filings and applications with
respect to antitrust and competition matters, within five (5) Business Days
after the date hereof) and to supply promptly any additional information
and documentary material that may be requested pursuant to any such Laws,
except in each case as the parties may otherwise agree. Each of the
Purchaser and the Seller shall furnish to the other such necessary
information and reasonable assistance as the other may request in
connection with its preparation of any such filing or application.
(c) Each party agrees to use its reasonable best efforts to
obtain and to cooperate in obtaining any other consents and approvals that
may be required in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements.
Section 5.05. Bulk Sales. The Purchaser hereby waives
compliance by the Seller and the Selling Subsidiaries with any applicable bulk
sale or bulk transfer Laws of any jurisdiction in connection with the sale of
the Business to the Purchaser. The Seller shall indemnify and hold harmless the
Purchaser against any and all Liabilities that may be asserted by third Persons
against the Purchaser as a result of noncompliance by the Seller or any Selling
Subsidiary with any such bulk transfer Law.
Section 5.06. Insurance. (a) Effective 3:01 p.m. (London Time)
on the Closing Date, the Business shall cease to be insured by the insurance
policies of the Seller and the Selling Subsidiaries. With respect to events or
circumstances covered by insurance coverage written on an "occurrence basis,"
the Seller and the Selling Subsidiaries shall have no Liability for occurrences
that take place on and after 3:01 p.m. (London time) on the Closing Date. With
respect to insurance coverage written on a "claims made basis," the Seller and
the Selling Subsidiaries shall have no Liability under such insurance coverage
for claims made after 3:01 p.m. (London time) on the Closing Date.
Section 5.07. Certain Services and Benefits Provided by
Affiliates. The Purchaser acknowledges that the Business currently receives from
other business units of the Seller, its Affiliates and other third Persons
certain Administrative Services. The Purchaser further acknowledges that, except
as otherwise expressly provided in the Transition Services Agreement, all such
services and benefits shall cease, and any agreement in respect thereof shall
terminate, as of the Closing Date.
Section 5.08. Further Action. (a) Until the Closing, the
parties shall use their reasonable best efforts to cause and facilitate the
prompt satisfaction of all conditions in Article VI.
(b) From and after the Closing Date, each of the parties shall
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions of this
Agreement and the Ancillary Agreements and give effect to the transactions
contemplated hereby and thereby, including the execution and delivery of
such assignments, deeds and other documents as may be necessary to transfer
any Owned Real Property or any rights and obligations under the Real
Property Leases as provided in this Agreement. Without limiting the
foregoing, from and after the Closing (i) the Seller shall (and shall cause
the Selling Subsidiaries to) do all things reasonably necessary, proper or
advisable under applicable Law as requested by the Purchaser (A) to put the
Purchaser in effective possession, ownership and control of the Assets and
the Purchaser shall cooperate with the Seller for such purpose and (B) to
assure that the Seller and the Selling Subsidiaries, rather than the
Purchaser or any Purchasing Subsidiary, is the obligor in respect of all
Retained Liabilities, and the Purchaser shall cooperate with the Seller for
such purposes and (ii) the Purchaser shall do all things reasonably
necessary, proper and advisable under applicable Law as requested by the
Seller (A) to put the Seller (or such other Person as the Seller shall
indicate) in effective possession, ownership and control of all assets not
included within the Assets and (B) to assure that the Purchaser, rather
than the Seller or any Selling Subsidiary, is the obligor in respect of all
Assumed Liabilities, and the Seller shall cooperate with the Purchaser for
such purposes. The Purchaser shall, upon the request of the Seller, and at
no cost to the Seller (other than reimbursement of out-of-pocket expenses),
use reasonable efforts to make the Transferring Employees available to and
cooperate in all reasonable respects with the Seller and its Subsidiaries
in the preparation for, and defense of, any lawsuit, arbitration or other
Action (whether disclosed or not disclosed in the Seller Disclosure
Schedule) filed or claimed against the Seller, its Affiliates, agents,
directors, officers and employees, whether currently pending or asserted in
the future, concerning the operation or conduct of the Business prior to
the Closing Date (including by making Transferring Employees available to
provide information and discovery documentation, take depositions and
testify); provided, however, that the Seller gives the Purchaser reasonable
advance notice and that such assistance does not interfere in any material
respect with the operation of the Business as then conducted by the
Purchaser and its Subsidiaries.
(c) Promptly following the Closing Date, the Purchaser shall
remove or cause to be removed from any facilities or properties of the
Seller and the Selling Subsidiaries (if the Purchaser or the applicable
Purchasing Subsidiary has not been granted a right, under this Agreement or
any of the Ancillary Agreements, to occupy such facilities or properties)
any items of personal property that have been transferred (or the rights of
possession with respect to which have been transferred) pursuant to this
Agreement and the Ancillary Agreements. The Purchaser shall be responsible
for the costs of any such removal and shall reimburse the Seller for any
costs or Liabilities incurred as a result thereof, including any damage or
destruction of property of the Seller or the applicable Selling
Subsidiaries resulting therefrom. Such removal shall take place only upon
reasonable advance notice to, and with the consent of, the Seller during
normal business hours, so that an uninterrupted and efficient transfer of
the Business may be accomplished.
(d) From and after the Closing Date, the Seller shall, from
time to time upon request of the Purchaser, and at no cost to the Purchaser
(other than reimbursement of reasonable out-of-pocket expenses), use
reasonable efforts to make its relevant employees and agents available
during the Seller's regular business hours to, and cooperate in all
material respects with, the Purchaser and the Purchasing Subsidiaries in
filing and prosecuting the Transferred Patents (including reviewing and
executing applications, assignments and such other documents reasonably
necessary, proper or advisable under applicable Law and making all rightful
oaths and doing all other things necessary as reasonably requested by the
Purchaser to perfect the Purchaser's and the Purchasing Subsidiaries'
rights in and to the Transferred Patents). From and after the Closing Date,
the Purchaser shall, from time to time upon request of the Seller, and at
no cost to the Seller (other than reimbursement of reasonable out-of-pocket
expenses), use reasonable efforts to make relevant Transferred Employees
and its agents available during the Purchaser's regular business hours to,
and cooperate in all material respects with, the Seller and the Selling
Subsidiaries in filing and prosecuting the Patents referred to in the
Licensed Patent Claims and other Patents owned by Seller (including
reviewing and executing applications, assignments and such other documents
and making all rightful oaths and doing all other things necessary as
reasonably necessary, proper or advisable under applicable Law as requested
by the Seller to perfect the Seller's and the Selling Subsidiaries' rights
in and to such Intellectual Property).
(e) Within thirty (30) days of the date of this Agreement, the
Seller shall use its commercially reasonable efforts to provide, at no cost
to the Purchaser (other than reimbursement of reasonable out-of-pocket
expenses), a schedule in electronic form that lists the Transferred Patents
and contains with respect to each Transferred Patent the following
information in reasonable detail: (i) patent and/or patent application
number for all countries and jurisdictions; (ii) title; (iii) names of
inventors; (iv) status including any fees, obligations or bar dates coming
due within the next three (3) months, to the extent such information is
tracked in the ordinary course by the Business; and (v) identity and
contact information of the attorney or agent responsible for securing or
defending the Transferred Patent. For the invention disclosures included in
the Transferred Patents, the Seller shall, or shall cause its Selling
Subsidiary to, provide to the Purchaser and its Purchasing Subsidiaries a
hard or electronic copy of each invention disclosure in the form existing
as of the Closing Date, as soon as reasonably practicable after the Closing
Date, but in no event more than thirty (30) days after the Closing Date.
(f) The Seller shall, or shall cause its Subsidiaries, to
provide certain "TIA" chips to the Purchaser on the terms specified in
Section 5.09(f) of the Seller Disclosure Schedule.
(g) The Seller and the Purchaser agree to meet through their
designated representatives five (5) Business Days prior to the Closing Date
to identify and review those invention disclosures (the "Invention
Disclosures") owned by the Seller or its Subsidiaries that have been
submitted by the Business between October 4, 2002 and such fifth Business
Day prior to the Closing Date to the Seller's invention committee, and to
discuss the assignment or license of such Invention Disclosures by the
Seller or its Subsidiaries to the Purchaser based on similar criteria used
by the parties with respect to the Transferred Patents and Licensed Patent
Claims (as defined under the Intellectual Property License Agreement). The
decision to assign any of such Invention Disclosures as a Transferred
Patent pursuant to this Agreement as of the Closing Date or to license any
of the Invention Disclosures pursuant to the Intellectual Property License
Agreement as of the Closing Date shall be made in consultation with the
Purchaser's designated representative but is at the Seller's discretion.
(h) Between the date of this Agreement and the Closing Date,
the Purchaser and the Seller shall review the Seller's SAP, PWC and other
purchasing systems used in the Business and determine which of the purchase
orders contained in these systems are to be assigned to the Purchaser as
"Seller Contracts" under and for all purposes of this Agreement. The
Purchaser agrees that all purchase orders that (i) are issued in the
ordinary course of business of the Business (including purchase orders
issued for non-recurring engineering expenditures (NRE)), (ii) are for the
benefit of the Business and (iii) will be outstanding, in whole or in part,
on or after the Closing Date will be assumed by the Purchaser on the
conditions that
(A) each such purchase order has been confirmed, to the
reasonable satisfaction of the Purchaser, as being correct;
(B) any purchase order (1) for the purchase of capital
equipment or (2) with a term extending beyond one (1) year following the
Closing Date has, in either case (1) or (2) , been previously approved in
writing by any current or prior senior member of the management team of the
Business; and
(C) the parties agree prior to the Closing Date on the
division of obligations under any purchase orders that cover the provision
of goods or services both for the Business and for businesses of the Seller
and the Selling Subsidiaries other than the Business.
The Seller will cooperate (and will cause its Subsidiaries to cooperate)
with the Purchaser, to the extent reasonably requested by the Purchaser, in
canceling existing purchase orders of the Seller and the Selling
Subsidiaries and replacing them (to the extent of the remaining obligations
and to the extent this cancellation can be accomplished without creating
any liability for the Seller or its Subsidiaries) with purchase orders
issued in the name of the Purchaser or the applicable Purchasing
Subsidiary.
Section 5.09. Ancillary Agreements. (a) On the Closing Date,
the parties to the Ancillary Agreements shall execute and deliver (and cause
their respective Subsidiaries that are parties or signatories thereto to execute
and deliver) each of the Ancillary Agreements.
(b) The Purchaser shall bear the reasonable fees (including
legal fees) and expenses, not to exceed $100,000 in the aggregate, incurred
by the Seller in connection with the preparation of the Security Agreements
and any other documents required pursuant thereto and any filing,
publication, recording or other action required pursuant to or in
connection with any of the foregoing. At the Closing, the Purchaser shall
pay the Seller in immediately available funds to one or more bank accounts
designated by the Seller (or as the Seller may direct) an amount sufficient
to reimburse the Seller for such fees and expenses incurred through the
Closing Date.
Section 5.10. Maintenance of Records. (a) Without prejudice to
the scope of the Assets, the Seller shall (and shall cause each Selling
Subsidiary to) (i) for a period of at least seven (7) years (or such longer
period as may be required by applicable Law) from the Closing Date, retain, at
the Seller's sole expense, all records and documents relating to the Business or
the Assets that have not been transferred at the Closing to the Purchaser and
the Purchasing Subsidiaries, (ii) notify the Purchaser before disposing of any
such records and (iii) make available to the Purchaser, at the Purchaser's
expense, at reasonable times and upon request therefor, all such records to the
extent not so disposed of.
(b) The Purchaser shall (i) for a period of at least seven (7)
years (or such longer period as may be required by applicable Law) from the
Closing Date, retain, at the Purchaser's sole expense, all records and
documents relating to the Business or the Assets transferred at the Closing
to the Purchaser and the Purchasing Subsidiaries, (ii) notify the Seller
before disposing of any such records and (iii) make available to the
Seller, at the Seller's expense, at reasonable times and upon request
therefor, all such records to the extent not disposed of.
Section 5.11. Obtaining Consents. Before, at and after the
Closing, the Seller shall use its reasonable best efforts to obtain, as soon as
practicable, the consent of each Person that is required to transfer to the
Purchaser and the Purchasing Subsidiaries the rights and obligations under each
Seller Contract and each other contract, permit and license of the Business to
the extent it embodies an Asset or Assumed Liability, as the case may be, and
the Purchaser shall reasonably cooperate in such efforts; provided, however,
that the Seller shall be under no obligation to compromise any right, asset or
benefit or to expend any amount or incur any Liability in seeking such consents
and the failure to obtain any or all of such consents shall not entitle the
Purchaser to terminate this Agreement or not to complete the transactions
contemplated hereby. At least five (5) Business Days before the Closing, the
Seller shall deliver a written notice to the Purchaser setting forth a complete
list of such Seller Contracts, Other Seller IP Contracts and other contracts,
permits and licenses that, notwithstanding such reasonable best efforts, will
not be fully transferred at the Closing (such contracts, permits and licenses,
the "Not Yet Transferred Contracts"). The delivery of such notice shall not
relieve either party of its obligations under the first sentence of this Section
5.11. The Seller and the Purchaser shall cooperate in any lawful arrangement to
provide that the Purchaser and the Purchasing Subsidiaries shall receive all
benefits and be responsible for all Liabilities under each Not Yet Transferred
Contract until all necessary consents are obtained and the full transfer thereof
is effective. The fact that the transfer of any Asset or the assumption of any
Assumed Liability requires the consent of a third Person shall in no way alter
the foregoing rights and responsibilities of the parties. Nothing in this
Agreement shall be construed as an attempt to transfer any contract, permit or
license that is by its terms non-transferable without the consent of another
party thereto.
Section 5.12. Deletion of Non-Transferred Software. The
Purchaser agrees that, following the Closing Date, the Purchaser shall not use
and shall cause each of its Affiliates not to use any items of Business Software
or other third-party software loaded on the Equipment as of the Closing Date if
such software is not included in the Assets or licensed to the Purchaser
pursuant to the Intellectual Property License Agreement. The Purchaser shall, as
soon as is reasonably practical, and in any event no later than forty-five (45)
days following the Closing, delete all such non-transferred software from any of
the Equipment on which it is installed.
Section 5.13. Equipment Leases. Subject to the receipt of any
required consent, the Seller and the Selling Subsidiaries shall assign and
transfer to the Purchaser or one or more of the Purchasing Subsidiaries the
Equipment Leases. If any such consent is not obtained for any Equipment Lease
prior to the Closing Date, the Seller shall, or shall cause the applicable
Selling Subsidiary to, buy out the Equipment Leases for which consents have not
been obtained and sell the Equipment covered by such Equipment Leases to the
Purchaser as indicated in Section 2.01(a)(iv) of the Seller Disclosure Schedule;
provided that (i) the Seller and the applicable Selling Subsidiary shall not be
required to incur costs in excess of $1,600,000 in the aggregate to fulfill such
obligations and (ii) the Purchaser shall be responsible for all costs in excess
of $1,600,000 that are required to buy out such Equipment Leases. At least five
(5) Business Days prior to the Closing, the Seller shall deliver a written
notice to the Purchaser setting forth a complete list of Equipment to be sold to
the Purchaser or the applicable Purchasing Subsidiary or Purchasing Subsidiaries
in accordance with the immediately preceding sentence.
Section 5.14. Product Warranty. The Purchaser shall service,
repair or replace all Products transferred prior to the Closing from the
Business to other businesses of the Seller and its Affiliates, in each case for
a period of twelve (12) months from the respective dates of transfer, in the
same manner as will apply to "Products" (as defined in the Supply Agreement)
under Section 12 of the Supply Agreement.
Section 5.15. Agreement Restricting Transfer of Assets or
Business to Certain Persons. (a) The Purchaser understands that the Seller and
its Affiliates are entitled to protect and preserve the value of their interests
against their competitors to the extent permitted by applicable Law and that the
Seller would not have entered into this Agreement absent the provisions of this
Section 5.15, and therefore, the Purchaser shall not (and shall cause its
Affiliates not to), at any time from the Closing Date and until the third
anniversary of the Closing Date (but if the Seller is required to make Share
Allocations (as that term is defined in the Supply Agreement) past the third
anniversary of the Closing Date, until the earlier of (i) such time as the
Seller's Share Allocation requirements are reduced below such level in existence
immediately prior to the third anniversary of the Closing Date and (ii) the
fifth anniversary of the Closing Date), sell, transfer, convey or assign any of
the Assets (other than (y) an insignificant portion thereof and (z) Inventory
sold in the ordinary course of business), to any of the Persons set forth in
Section 5.15(a) of the Seller Disclosure Schedule, their respective Affiliates
and any successors of any of the foregoing (each, a "Prohibited Transferee")
without the prior written consent of the Seller.
(b) Within one (1) Business Day following the receipt from any
Prohibited Transferee by the Purchaser or any of its Subsidiaries of any
written offer, proposal, letter of intent, term sheet or agreement (or the
discussion at any meeting of the Purchaser's Board of Directors of any oral
offer or proposal by or agreement with a Prohibited Transferee) for any
transaction involving a Change of Control of the Purchaser or any of its
Subsidiaries that hold any of the Assets, the Purchaser shall deliver a
written notice to the Seller setting forth the material terms of such
inquiry, offer or proposal.
(c) The Purchaser shall not (and shall cause its Subsidiaries
and its and their respective directors, officers, employees and
representatives not to) solicit from, or initiate with, any Prohibited
Transferee any inquiries, discussions or negotiations, or the making of any
proposal or offer that constitutes or would constitute a Change of Control
of the Purchaser unless and until the Purchaser provides the Seller with
ten (10) Business Days advance notice of its intent to make such
solicitation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser agrees that the Seller shall be entitled to
equitable relief in the form of preliminary and permanent injunctive relief
requiring specific performance by the Purchaser of its obligations under
this Section 5.15 without the necessity of proving actual damages or the
posting of a bond, and the Purchaser consents to the entry thereof.
(e) Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser shall not (and shall cause its Subsidiaries not
to) sell, transfer, convey or assign any of the Assets (other than (i) an
insignificant portion thereof and (ii) Inventory sold in the ordinary
course of business) unless the transferee agrees in writing to be bound by
the restrictions set forth in this Section 5.15.
Section 5.16. Notice of Certain Events. Until the Closing,
each party shall promptly notify the other party in writing of any fact, change,
condition, circumstance or occurrence or nonoccurrence of any event of which it
is aware that will or is reasonably likely to result in any of the conditions
set forth in Article VIII becoming incapable of being satisfied.
Section 5.17. Lock-up. (a) The Seller shall not (and shall
cause its Subsidiaries not to), during the six-month period following the
Closing Date, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the Consideration Shares, the Warrants or the Purchaser
Shares underlying the Warrants or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any such securities (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Purchaser
Shares, or such other securities, in cash or otherwise), without the prior
written consent of the Purchaser; provided, however, that such consent shall not
be required for (A) transactions between or among the Seller and its
wholly-owned Subsidiaries, (B) sales in privately negotiated transactions not
involving a public offering of such securities (other than sales to the Persons
set forth in Section 5.17 of the Purchaser Disclosure Schedule) or (C) pledges
of any such securities for the benefit of Persons providing financing to the
Seller or any of the Selling Subsidiaries so long as the transferee in any such
transaction described in clause (A), (B) or (C) agrees to be bound by the
limitations in this Section 5.17. The Seller authorizes the Purchaser to cause
the transfer agent or the Purchaser's registrar to decline to transfer any such
securities for which the Seller, any Selling Subsidiary or any of their
respective Affiliates is the record holder and, in the case of any such
securities for which the Seller, any Selling Subsidiary or any of their
respective Affiliates is the beneficial but not the record holder, agrees to
cause the record holder to cause the transfer agent or the Purchaser's registrar
to decline to transfer such shares (except, in any of the foregoing cases, to
the extent that any such action would delay or impede the consummation of a
transaction between or among the Seller and its wholly-owned Subsidiaries).
(b) The Seller shall not (and shall cause its Subsidiaries not
to), from the expiration of the six-month period following the Closing Date
until the 18-month anniversary of the Closing Date, (x) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, more
than fifteen million (15,000,000) (subject to adjustment in the event the
Purchaser consolidates, subdivides or reorganizes its share capital,
declares any distribution of equity securities of the Purchaser or rights
to acquire equity securities of the Purchaser or issues any rights to
acquire equity securities of the Purchaser to holders of equity securities
of the Purchaser) of the aggregate number of Consideration Shares and
Purchaser Shares underlying the Warrants during any of the four consecutive
three-month periods following the expiration of the six-month period
following the Closing Date or (y) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated
with the ownership of more than fifteen million (15,000,000) (subject to
adjustment in the event the Purchaser consolidates, subdivides or
reorganizes its share capital, declares any distribution of equity
securities of the Purchaser or rights to acquire equity securities of the
Purchaser or issues any rights to acquire equity securities of the
Purchaser to holders of equity securities of the Purchaser) of the
aggregate number of Consideration Shares and Purchaser Shares underlying
the Warrants during any of the four consecutive three-month periods
following the expiration of the six-month period following the Closing Date
(regardless of whether any of the transactions described in clause (x) or
(y) is to be settled by the delivery of Purchaser Shares, or such other
securities, in cash or otherwise), without the prior written consent of the
Purchaser; provided, however, that such consent shall not be required for
(A) transactions between or among the Seller and its wholly-owned
Subsidiaries, (B) sales in privately negotiated transactions not involving
a public offering of such securities (other than sales to the Persons set
forth in Section 5.17 of the Purchaser Disclosure Schedule) or (C) pledges
of any such securities for the benefit of Persons providing financing to
the Seller or any of the Selling Subsidiaries so long as the transferee in
any such transaction described in clause (A), (B) or (C) agrees to be bound
by the limitations in this Section 5.17. For purposes of calculating the
fifteen million (15,000,000) share limitation set forth in this Section
5.17(b), sales by the Seller, its subsidiaries and such permitted
transferees shall be aggregated.
(c) Nothing in Sections 5.17 or 5.18 shall prevent or restrict
the Seller or any of its Subsidiaries or any of their respective officers
or directors from (i) accepting an offer (whether recommended by the board
of the Purchaser or not) for, or (ii) giving an irrevocable undertaking to
an offeror or potential offeror in relation to an offer or potential offer;
or (iii) selling any Purchaser Shares during an offer period, in each case
where the offer is for the entire issued and to be issued share capital of
the Purchaser. In this Section 5.17, the terms "offer," "offeror" and
"offer period" shall each have the meanings ascribed thereto in the U.K.
City Code on Takeovers and Mergers.
Section 5.18. Standstill. Subject to Section 5.17(c), the
Seller shall not (and shall cause its Subsidiaries not to), during the one-year
period following the Closing Date:
(a) acquire, offer to acquire or agree to acquire, directly or
indirectly, by purchase or otherwise, any Voting Securities of the
Purchaser or direct or indirect rights to acquire Voting Securities of the
Purchaser (excluding in all cases the acquisition of Purchaser Shares as a
result of the exercise of any of the Warrants);
(b) make, or in any way participate, directly or indirectly,
in any vote of Voting Securities of the Purchaser, or seek to advise or
influence any person or entity with respect to the voting of any Voting
Securities of the Purchaser;
(c) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions), any extraordinary
transaction involving the Purchaser or any of the Voting Securities of the
Purchaser (except as may be required by Law or applicable regulation or as
consented to in writing by the Purchaser);
(d) "act in concert" (as defined in the U.K. City Code on
Takeovers and Mergers) with any other Person or Persons in connection with
any of the foregoing (except as publicly disclosed prior to the date
hereof); or
(e) take any action that could reasonably be expected to
require the Purchaser to make a public announcement regarding the
possibility of any of the events described in clauses (a) through (c)
above.
Section 5.19. Listing. (a) The Purchaser has prepared and
submitted to the UKLA draft listing particulars (along with duly completed
checklists) in respect of the Consideration Shares and shall promptly prepare
and submit (i) all other documents required by the UKLA's listing rules (to the
extent that the UKLA does not grant derogation from such rules) to procure the
admission of the Consideration Shares to the Official List of the UKLA and (ii)
to the LSE, an application for admission to trading on the LSE in respect of the
Consideration Shares (together with such documentation as is required by the
rules and practices of the LSE in connection with the admission of securities to
trading on the LSE); and the Purchaser shall use its reasonable best efforts to
obtain the admission of the Consideration Shares to the Official List of the
UKLA and to trading on the LSE.
(b) The Purchaser shall, at its own expense, procure that a
report and valuation relating to the allotment of the Consideration Shares,
as required by Section 103 of the U.K. Companies Xxx 0000, is prepared and
shall deliver the same to the Seller prior to Closing.
(c) The Seller has furnished to the Purchaser the information
described in Section 5.19(c) of the Seller Disclosure Schedule for
inclusion in, or incorporation by reference into, the UKLA listing
particulars and the circular described in Section 5.21(c). To the Knowledge
of the Seller, such information does not contain any materially untrue
statement of a material fact or any omission of a material fact necessary
to make the statements contained therein not misleading. The Seller agrees
that, if it shall become aware prior to the Closing Date of any information
that would cause such information to contain any materially untrue
statement of a material fact or would cause such information to omit any
material fact necessary to make the statements contained therein not
misleading, it shall promptly inform the Purchaser and take necessary steps
to correct such information. No information furnished to the Purchaser by
the Seller pursuant to the previous sentence will contain any materially
untrue statement of a material fact or any omission of a material fact
necessary to make the statements contained therein not misleading.
Section 5.20. Securities Laws. The Seller shall not (and shall
not permit any of its Subsidiaries to) sell, transfer, assign or otherwise
dispose of any of the Consideration Shares, the Warrants or the Notes other than
in accordance with applicable securities Laws.
Section 5.21. Shareholder Circular; Purchaser Shareholders'
Meeting; Board Recommendation of Purchaser Shareholder Resolutions. (a) The
Purchaser has prepared a circular complying with the Rules of the UKLA, the City
Code on Takeovers and Mergers and the LSE for issuance within two (2) days of
the date hereof, describing the transactions that are the subject of this
Agreement and containing a notice convening the Purchaser Shareholders' Meeting
on November 5, 2002 and containing the Purchaser Shareholder Resolutions.
(b) The Purchaser shall take all action reasonably necessary
to convene the Purchaser Shareholders' Meeting on November 5, 2002 or,
failing that, as soon as possible thereafter.
(c) The Board of Directors of the Purchaser shall (i) in the
circular referred to in Section 5.21(a), recommend to the shareholders of
the Purchaser the approval of the Purchaser Shareholder Resolutions at the
Purchaser Shareholders' Meeting and (ii) not withdraw or modify in a manner
adverse to the Seller such recommendation.
(d) In the event that the Purchaser Shareholder Resolutions
are not approved on a show of hands at the Purchaser Shareholders' Meeting,
the Purchaser shall procure that a poll with respect to the Purchaser
Shareholder Resolutions is taken at the Purchaser Shareholders' Meeting.
Section 5.22. Additional Intellectual Property Rights. If,
within six (6) months after the Closing Date, Purchaser identifies any
Intellectual Property (other than Patents) that was owned by the Seller or any
of the Selling Subsidiaries as of the Closing Date that was used exclusively in
the Business as of the Closing and that was not listed in Section 1.01(f) or
Section 1.01(i) of the Seller Disclosure Schedule, the Seller shall, at the
request of the Purchaser, discuss with the Purchaser the potential transfer of
such Intellectual Property to the Purchaser, it being understood that any
determination to so transfer such Intellectual Property shall be at the
discretion of the Seller and none of the Seller and the Selling Subsidiaries
shall have any obligation to effect any such transfer.
Section 5.23. Non-competition. (a) (i) For a period of three
(3) years after the Closing Date, the Seller shall not (and shall not permit any
of its Subsidiaries to), directly or indirectly, produce or sell the Products or
natural evolutions or improvements to the Products, or any gallium arsenide
(GaAs) Xxxx-Xxxxxxx (optical) modulators (collectively, the "Competitive
Products"), in the United States, Canada, the U.K., Switzerland or any other
country in which the Business was conducted during the two (2) years prior to
the Closing Date; provided, however, that nothing in this Section 5.23 shall
prohibit the Seller or any of its Subsidiaries from:
(A) engaging in any activity in which the Seller or any of its
Subsidiaries was engaged on the Closing Date (other than the Business),
including (1) developing, designing, producing, marketing or selling
Tunable Products (as defined in the Intellectual Property License
Agreement) and (2) manufacturing or selling Systems (as defined in the
Intellectual Property License Agreement) in which Competitive Products are
incorporated so long as either (x) such Competitive Products were not
manufactured by the Seller or any of its Subsidiaries or (y) if such
Competitive Products were manufactured by the Seller or any of its
Subsidiaries, they were manufactured prior to the Closing Date for
incorporation into Systems;
(B) exercising its rights under Section 29 of the Supply
Agreement;
(C) affecting a Change of Control of the Seller or of any of
its Subsidiaries involving any other Person which is, or has previously
been, involved in developing, designing, producing, marketing or selling
optical component products;
(D) holding up to ten percent (10%) of the equity interests in
any Person;
(E) creating functionality within a System that could be
delivered by, or is inherent in, a Competitive Product, but which
functionality is not provided by a Competitive Product; or
(F) subject to the restrictions on the Seller and its
Subsidiaries, if any, in the Intellectual Property License Agreement,
assisting suppliers in connection with their provision of Competitive
Products to the Seller or any of its Subsidiaries.
(ii) The parties agree that the duration and geographic scope
of the non-competition provision set forth in subsection (i), above, are
reasonable.
(b) If any provision contained in this Section 5.23 shall for
any reason by held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Section, but this Section shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of the restrictions
or covenants contained herein is held to cover a geographic area or to be
for a length of time that is not permitted by applicable Law, or in any way
construed to be too broad or to any extent invalid, such provision shall
not be construed to be null, void and of no effect, but to the extent such
provision would be valid or enforceable under applicable Law, a court of
competent jurisdiction shall construe and interpret or reform this Section
to provide for a covenant having the maximum enforceable geographic area,
time period and other provisions (not greater than those contained herein)
as shall be valid and enforceable under such applicable Law. The Seller
acknowledges that the Purchaser would be irreparably harmed by any breach
of this Section 5.23 and that there would be no adequate remedy at law or
in damages to compensate the Purchaser for any such breach. Notwithstanding
anything to the contrary contained in this Agreement, the Seller agrees
that the Purchaser shall be entitled to equitable relief in the form of
preliminary and permanent injunctive relief requiring specific performance
by the Seller of its obligations under this Section 5.23 without the
necessity of proving actual damages or the posting of a bond, and the
Seller consents to the entry thereof.
Section 5.24. Option Termination Notice. The Seller shall, on
or before the Closing Date, provide written notice to each Transferring Employee
that (i) such Transferring Employee's outstanding options to acquire shares of
the capital stock of Seller ("Seller Share Options") shall continue to be
governed by the terms and conditions of the applicable Seller Employee Plan
under which such Seller Share Options were granted; (ii) the transfer of such
Transferring Employee's employment on the applicable Effective Date shall end
such Transferring Employee's employment with the Seller or Selling Subsidiary as
of such date; (iii) the Transferring Employee shall have the period specified in
the notice to exercise his or her Seller Share Options, after which such Seller
Share Options shall terminate and (iv) additional information about the Seller
Share Options held by a Transferring Employee may be obtained from the Seller
Stock Option Administration.
Section 5.25. Register of Members. Within ten (10) days of the
Closing, the Purchaser shall deliver to the Seller an extract (certified as true
and complete by a director of the Purchaser) from the register of members of the
Purchaser showing the Consideration Shares as having been unconditionally
allotted to the Seller and its designated Affiliates (as applicable).
ARTICLE VI
EMPLOYEE MATTERS
Section 6.01. Transfers of Employees. (a) The Purchaser shall
(and shall cause the Purchasing Subsidiaries to) comply with the provisions set
forth in this Article VI and the Employee Matters Schedule, with respect to the
transfer of employment of the Employees to the Purchaser or the applicable
Purchasing Subsidiary, and the treatment of the Employees and the Transferring
Employees by the Purchaser and the Purchasing Subsidiaries;
(b) The Seller shall not (and shall cause the Selling
Subsidiaries not to), without the prior written consent of the Purchaser,
(i) prior to the applicable Effective Date take any actions to offer any
alternative employment or engagement (other than any engagement through a
Person not Controlled by the Seller or the Employee engaged and that does
not arise from any solicitation of such Employee by the Purchaser (a
"Permitted Engagement")) to any Employee and (ii) for the eighteen (18)
month period following the applicable Effective Date, solicit for
employment or engagement, employ, engage other than through a Permitted
Engagement or hire any of the Employees, who do not accept the employment
offer of the Purchaser or the Purchasing Subsidiary, where applicable, or
who object to their transfer of employment to the Purchaser or the
Purchasing Subsidiary pursuant to this Agreement, or any Transferring
Employees who continue employment with or voluntarily terminate employment
with the Purchaser or any Purchasing Subsidiaries; provided, however, that
nothing in this Section 6.01(b) shall prevent the Seller or the Selling
Subsidiaries from (A) conducting generalized employment searches that are
not focused on such Employees or Transferring Employees or (B) hiring such
Employees or Transferring Employees identified through such employment
searches other than the Employees listed on Section 6.01(b) of the Seller
Disclosure Schedule who the Seller may not hire, employ or engage other
than through a Permitted Engagement pursuant to generalized employment
searches or otherwise; and
(c) The Purchaser shall not (and shall cause the Purchasing
Subsidiaries not to), without the prior written consent of the Seller, (i)
prior to the applicable Effective Date, take any actions to offer
employment to any Employee other than in connection with an employment
offer as expressly contemplated by this Agreement and the Employee Matters
Schedule (an "Employment Offer"), and (ii) for the eighteen (18) month
period following the applicable Effective Date, solicit for employment or
hire any employees who continue employment with or voluntarily terminate
employment with the Seller or the Selling Subsidiaries or any Employees who
have not accepted the Employment Offer of the Purchaser or Purchasing
Subsidiaries or objected to their transfer of employment to the Purchaser
or Purchasing Subsidiaries pursuant to this Agreement (it being understood
that the Purchaser may make additional or supplemental offers to certain
Employees who are material to the Business prior to the Effective Date for
such Employees); provided, however, that nothing in this Section 6.01(c)
shall prevent the Purchaser or the Purchasing Subsidiaries from (i)
conducting generalized employment searches that are not focused on such
employees or former employees of the Seller or the Selling Subsidiaries or
(ii) hiring such employees or former employees of the Seller or the Selling
Subsidiaries identified through such employment searches.
Section 6.02. Cooperation with respect to Transferring
Employees. The Purchaser and the Seller shall reasonably co-operate with each
other to provide for an orderly transition of the Transferring Employees to the
Purchaser or the Purchasing Subsidiaries, as applicable, and to minimize the
disruption to the respective businesses of the parties hereto resulting from the
transactions contemplated hereby.
Section 6.03. Communications with Employees. Prior to the
applicable Employment Transfer Date in respect of any Employee, the Purchaser
shall not (and shall cause its Affiliates not to) communicate with such
Employees or provide such Employees any written communications or literature
(including any Employment Offers) without previously notifying the Seller,
giving the Seller a reasonable opportunity to review and comment on any such
written communications or literature and obtaining the Seller's prior written
consent (which shall not be unreasonably withheld or delayed).
Section 6.04. Updated Employee Information; Status of
Information. (a) Within fifteen (15) Business Days of the date hereof, the
Seller shall reduce the number of Employees listed in Section 3.12(a) of the
Seller Disclosure Schedule with a work location in Canada from 358 to 266 and
shall reduce the number of Employees listed in Section 3.12(a) of the Seller
Disclosure Schedule with a work location in the United States from 16 to 12 (for
an aggregate reduction in the number of Employees listed on Section 3.12(a) of
the Seller Disclosure Schedule of 96). The Seller shall use its reasonable best
efforts to make such reductions in accordance with any written functional
specifications of the Purchaser that are provided by the Purchaser to the Seller
within ten (10) Business Days of the date hereof and any written specifications
of the vice president of optical components operations (the "VP OCO") that are
provided by the VP OCO to the Seller within ten (10) Business Days of the date
hereof, in each case to the extent such specifications are (i) consistent with
the Seller's customary and ordinary course practices with respect to reductions
in force and (ii) in compliance with all applicable Laws . Not later than
fifteen (15) Business Days after the date hereof, the Seller shall deliver to
the Purchaser a revised version of Section 3.12(a) of the Seller Disclosure
Schedule (such revised version, the "Interim Employee Information"), which
Interim Employee Information shall (i) reflect the reduction in the number of
Employees and (ii) shall set forth the vacation accrual rate and accrued and
unused vacation days due and owing to the Employees (the "Vacation
Information"). Except as expressly provided by this Section 6.04(a) with respect
to the reduction in the number of Employees and the disclosure of the Vacation
Information, none of the other information set forth on Section 3.12(a) of the
Seller Disclosure Schedule with respect to the Employees shall be updated on the
Interim Employee Information.
(b) Not later than five (5) Business Days prior to the
Effective Date and on the Effective Date, the Seller shall deliver to the
Purchaser a list of Employees, which shall include, for each such Employee,
updated information of the type set forth in Section 3.12(a) of the Seller
Disclosure Schedule and the Vacation Information (such updated information,
the "Updated Employee Information").
(c) The Purchaser agrees, with respect to the Employee
Information, the Interim Employee Information and the Updated Employee
Information that, prior to the Effective Date:
(i) such personal data shall be held in confidence;
(ii) the Purchaser shall restrict the disclosure of such
personal data to such of its employees and advisors as is necessary for
the purposes of complying with its obligations pursuant to this
Agreement;
(iii) such personal data shall not be disclosed to any other
person (including, for the avoidance of doubt, any other employee of
the Purchaser or any Purchasing Subsidiary or other affiliate or
subsidiary of the Purchaser) without the consent of the Seller, such
consent not unreasonably to be withheld; and
(iv) such personal data shall not be used except for the
purposes of complying with the Purchaser's obligations pursuant to this
Agreement, and shall be retained for no longer than reasonably
necessary.
Section 6.05. Provisions Applicable to Certain Jurisdictions.
Notwithstanding the foregoing provisions of this Article VI, the Employee
Matters Schedule shall apply to each jurisdiction stated therein. In each case,
the Employees listed in Section 3.12(a) of the Seller Disclosure Schedule under
the caption for each jurisdiction shall be referred to herein and in the
Employee Matters Schedule as such jurisdiction's Employees and, in each case,
the Employees of each jurisdiction who become Transferring Employees pursuant to
Section 2 of the Employee Matters Schedule shall be referred to herein and in
the Employee Matters Schedule as such jurisdiction's Transferring Employees.
ARTICLE VII
TAX MATTERS
Section 7.01. Transfer Taxes. (a) The Parties agree that the
Purchase Price is exclusive of any Transfer Taxes and that any Transfer Taxes
incurred in connection with the transactions contemplated hereby shall be
allocated among, and paid by, the Parties in accordance with this Section 7.01.
(b) All Refundable Transfer Taxes and Transfer Taxes due on
the issue of the Consideration Shares, Warrants or Notes, if any (which for
the avoidance of doubt shall not mean the 4% stamp duty tax which may be
payable on this Agreement or any of the Ancillary Agreements pursuant to
Part I of Schedule 13 to the UK Finance Xxx 0000 (conveyance or transfer of
sale), but instead shall mean any Transfer Taxes due solely to the nature
of the consideration paid by the Purchaser) shall be paid by the Purchaser
(on behalf of itself and the Purchasing Subsidiaries) directly to the
appropriate Tax authority, within the time specified therefor; provided
that, if any such Refundable Transfer Taxes or Transfer Taxes required to
be paid by the Purchaser pursuant to this Section 7.01(b) are required to
be collected, remitted or paid by the Seller or any Selling Subsidiary or
any agent thereof (as requested by the Seller or any Selling Subsidiary)
(collectively, a "Seller Tax Obligor"), the Purchaser shall (on behalf of
itself and the Purchasing Subsidiaries) pay such Refundable Transfer Taxes
or Transfer Taxes required to be paid by the Purchaser pursuant to this
Section 7.01(b) to the applicable Seller Tax Obligor in accordance with the
terms of Section 7.01(d) or, in respect of UK VAT to which the provisions
of Section 7.03 applies, in accordance with the terms of Section 7.03(b).
(c) All Transfer Taxes other than those paid or payable by the
Purchaser pursuant to Section 7.01(b) shall be allocated one-half to the
Purchaser (on behalf of itself and the Purchasing Subsidiaries) and
one-half to the Seller (on behalf of itself and the Selling Subsidiaries).
All such Transfer Taxes shall be paid by the Purchaser (on behalf of itself
and the Purchasing Subsidiaries) to the appropriate Tax authority, within
the time specified therefor, and the Seller shall remit payment to the
Purchaser or any Purchasing Subsidiary or any agent thereof (as requested
by the Purchaser or any Purchasing Subsidiary) (collectively, a "Purchaser
Tax Obligor") of its allocable share of such Transfer Taxes in accordance
with the terms of Section 7.01(d); provided, however, that if such Transfer
Taxes are required to be collected, remitted or paid by a Seller Tax
Obligor, the Purchaser shall (on behalf of itself and the Purchasing
Subsidiaries) pay its allocable share of such Transfer Taxes to the
applicable Seller Tax Obligor in accordance with the terms of Section
7.01(d).
(d) Any Refundable Transfer Taxes or Transfer Taxes required
to be remitted by the Purchaser (on behalf of itself and the Purchasing
Subsidiaries) to a Seller Tax Obligor or by the Seller or any Selling
Subsidiary to a Purchaser Tax Obligor shall be paid to the appropriate
party in immediately available funds on the Closing Date. The Parties
acknowledge and agree that the amounts paid on the Closing Date pursuant to
this Section 7.01(d) will be based upon estimates and that the amounts paid
at the Closing will be subsequently adjusted to take into account the final
purchase price allocation pursuant to Section 2.03(c) or after a Tax
authority has finally determined the amount of Tax to be paid. Any Tax
amounts due and owing in connection with the final purchase price
allocation or pursuant to the final determination of a Tax authority shall
be paid by the party owing such amounts promptly (and in any event within
fifteen (15) Business Days) following receipt of written notice from the
other party of the amount due, together with appropriate documentation
thereof.
Section 7.02. Elections and Exemptions. If the Purchaser or
any Purchasing Subsidiary wishes to make any election or to claim any exemption
relating to, or to apply for a reduced rate of, Transfer Taxes, in connection
with the transactions contemplated herein, (i) the Purchaser or any Purchasing
Subsidiary, as the case may be, shall be solely responsible for ensuring that
such exemption or election applies and, in that regard, shall provide the Seller
or any applicable Selling Subsidiary prior to Closing with its permit number,
GST, VAT or other similar registration numbers or any appropriate certificate of
exemption, election or other document or evidence to support the claimed
entitlement to such exemption by the Purchaser, or such Purchasing Subsidiary,
as the case may be, and (ii) the Seller and each Selling Subsidiary shall
provide the Purchaser and each applicable Purchasing Subsidiary with any
information reasonably requested by the Purchaser, and shall otherwise
reasonably cooperate with the Purchaser or such Purchasing Subsidiary, to
establish such claim for exemption or make such election. The Seller or any
applicable Selling Subsidiary and the Purchaser or any applicable Purchasing
Subsidiary, as required, shall prepare such elections or certificates in a form
that meets the legal requirements of the states, localities or other taxing
jurisdictions in which the applicable Assets are located.
Section 7.03. VAT. (a) The parties intend that section 49(1)
of the VATA and article 5 of the U.K. Value Added Tax (Special Provisions) Order
1995 shall apply to the transfer of the Assets and to that intent: (i) the
Seller and the Purchaser agree (and agree to cause the Selling Subsidiaries and
the Purchasing Subsidiaries, as the case may be) to use all reasonable
endeavours to secure that the transfer of the Assets under this Agreement is
treated as neither a supply of goods nor a supply of services pursuant to the
provisions of article 5 of the U.K. Value Added Tax (Special Provisions) Order
1995, (ii) the Purchaser undertakes and warrants that it and the Purchasing
Subsidiaries will continue to use the Assets in carrying on the Business with
effect from the Closing Date, (iii) the Seller warrants that it and the Selling
Subsidiaries has carried on the Business for the purposes of article 5 of the
U.K. Value Added Tax (Special Provisions) Order 1995 and (iv) the Purchaser and
the Seller agree that no application shall be made pursuant to Paragraph 6 of
the U.K. Value Added Tax Regulations 1995 for the registration numbers of any of
the Seller and the Selling Subsidiaries to be transferred to the Purchaser or
any of the Purchasing Subsidiaries.
(b) If the Seller or any of the Selling Subsidiaries discloses
all material facts relating to the transfer of the Assets under this
Agreement to U.K. H.M. Customs and Excise and U.K. H.M. Customs and Excise
confirms in writing that VAT is chargeable on the transfer under this
Agreement or on any part of it, the Purchaser agrees that the VAT will be
payable in addition to the Purchase Price and the Purchaser and the
Purchasing Subsidiaries will pay the amount of any such VAT together with
any interest and penalties (to the extent that such interest and penalties
are due as a result of any act or omission on the part of the Purchaser or
any of the Purchasing Subsidiaries) that may be payable on the Closing Date
or, if later, within five (5) Business Days before the last date upon which
the Seller and the Selling Subsidiaries will be required to account to U.K.
H.M. Customs and Excise for the VAT in question or, if later, upon delivery
by the Seller and the Selling Subsidiaries to the Purchaser and the
Purchasing Subsidiaries of an appropriate VAT invoice for the transfer of
the Assets and a copy of the confirmation from U.K. H.M. Customs and
Excise.
(c) Prior to sending any relevant letter to U.K. H.M. Customs
and Excise disclosing all material facts pursuant to Section 7.03(b), the
Seller shall (or shall cause the relevant Selling Subsidiary to) provide
the Purchaser with a copy of such letter and detailed information relating
to the subject matter thereof and allow the Purchaser a reasonable
opportunity to comment on such letter. The Seller shall (and shall cause
the Selling Subsidiaries to) consider in good faith any comments provided
by, or changes suggested by, the Purchaser and will use its reasonable
efforts to incorporate any such comments or changes reasonably requested by
the Purchaser; provided, however, that, subject to the Seller's obligations
set forth herein, the final form and content of any such letter shall be
determined by the Seller.
(d) If the Purchaser or any Purchasing Subsidiary pays the
Seller or any Selling Subsidiary an amount in respect of VAT under Section
7.03(b) and U.K. H.M. Customs and Excise finally determines that all or
part of such amount was not properly chargeable, the Seller or such Selling
Subsidiary shall repay the amount or relevant part of it to the Purchaser.
The Seller shall (or shall cause such Selling Subsidiary to) make the
repayment promptly after the ruling, unless it has already accounted to
U.K. H.M. Customs and Excise for the VAT, in which case, the Seller shall
(or shall cause such Selling Subsidiary to) apply for a refund of the VAT
(plus any interest payable by U.K. H.M. Customs and Excise), use reasonable
efforts to obtain it as quickly as practicable, and pay to the Purchaser
the amount of the refund and any interest when received from U.K. H.M.
Customs and Excise.
(e) The Parties shall use their reasonable efforts to avoid
the payment of VAT on the transfer of the Assets held by Nortel Networks
Optical Components (Switzerland) GmbH by using the notification procedure
pursuant to Art. 47 para. 3 of the Swiss Federal Law on Value Added Taxes.
If the notification procedure is not applicable, the Seller shall invoice
the VAT amount to the Purchaser according to Art. 37 of the Swiss Federal
Law on Value Added Taxes and the Purchaser undertakes to pay such invoices
to the Seller to the extent the VAT amount is being reimbursed by the
competent tax authorities as "input VAT" (Vorsteuer).
(f) The Seller and the Selling Subsidiaries have obtained
permission from U.K. H.M. Customs & Excise at the Closing Date to retain
the records referred to in section 49(1) of the VATA, and therefore, the
Seller and the Selling Subsidiaries agree to preserve such records for such
period as may be required by law, and the Seller and the Selling
Subsidiaries agree that the Purchaser and the Purchasing Subsidiaries (or
their duly appointed agents) may have reasonable access to such records, to
inspect or to make copies of them or the relevant portions thereof. Subject
to the permission of the Seller (such permission not be unreasonably
withheld), the Seller and the Selling Subsidiaries agree to provide such
reasonable assistance to the Purchaser and the Purchasing Subsidiaries (or
their agents, as the case may be) as they may request. The Purchaser and
the Purchasing Subsidiaries shall reimburse the Seller and the Selling
Subsidiaries for any reasonable third-party out-of-pocket expenses
reasonably incurred in providing such access to the records, inspection,
and making copies and in providing the assistance referred to in this
section; provided, however, that out-of-pocket expenses in excess of $500
shall be reimbursed hereunder only to the extent such expenses are incurred
with the prior written consent of the Purchaser. If the Purchaser does not
consent to reasonable third party out-of-pocket expenses that are
reasonably expected to be incurred in connection with any request pursuant
to this Section 7.03(f), the Seller and the Selling Subsidiaries shall have
no obligations hereunder with respect to the portion of such request to
which such expenses relate.
Section 7.04. Treatment of Indemnity Payments. The Seller (on
behalf of itself and the Selling Subsidiaries) and the Purchaser (on behalf of
itself and the Purchasing Subsidiaries) agree to treat all payments made either
to or for the benefit of the other under any indemnity provisions of this
Agreement and for any misrepresentations or breach of warranty or covenants as
adjustments to the Purchase Price for Tax purposes and that such treatment shall
govern for purposes hereof.
Section 7.05. Tax Obligations. (a) Subject to Sections 7.01
and 7.03, (i) the Seller and the Selling Subsidiaries, as the case may be, shall
bear all Taxes and prepare all Tax Returns of any kind relating to the Assets or
the conduct or operation of the Business for all Tax periods or portions thereof
ending on or before the Closing Date which, for the avoidance of doubt, shall
not mean any Taxes imposed on the Purchaser or Purchasing Subsidiaries that
arise as a result of issuing the Warrants, and (ii) the Purchaser and the
Purchasing Subsidiaries shall bear all Taxes and prepare all Tax Returns
relating to the Assets or the conduct or operation of the Business for all Tax
periods or portions thereof beginning after the Closing Date. In addition, the
Seller shall bear any Taxes relating to any stamp duty reserve tax or stamp duty
arising in relation to the Consideration Shares or the shares to which the
Warrants relate as a result of any action taken by the Seller or any of the
Selling Subsidiaries on or after the Closing Date pursuant to Section 93 or
Section 67 of the U.K. Finance Xxx 0000, respectively.
(b) For purposes of this Agreement and the Ancillary
Agreements, the Purchaser shall (or shall cause the applicable Purchasing
Subsidiary to) bear any real estate taxes or personal property taxes with
respect to the Assets to the extent that such taxes relate to periods
subsequent to the Closing Date (for the avoidance of doubt, such taxes for
the period that includes the Closing Date shall be allocated pro rata based
on the number of days that occur before and after the Closing Date, and the
Seller shall be liable for all such Taxes allocated to the period ending on
the Closing Date).
(c) Each Tax Return that (i) relates to a taxable period
including, but ending after, the Closing Date, (ii) is due after the
Closing Date and (iii) covers Taxes that are allocable between the Parties
in accordance with Section 7.05(b), shall be prepared by the party
obligated to file such return and such return (or the portion thereof or
information related thereto that is relevant to the Assets) shall be
provided to the other party for its review and comment at least fifteen
(15) days prior to the due date for such return, along with written notice
specifying the due date of the return and the deadline for comments in
accordance with the terms hereof. The preparing party shall consider in
good faith any comments provided by, or changes suggested by, the other
party to the extent such comments or changes are provided to the preparing
party at least five (5) days prior to the due date of the return and will
use its reasonable efforts to revise the return to incorporate any such
comments or changes reasonably requested by the other party; provided,
however, that, subject to the preparing party's obligations set forth
herein, the final form and content of any such return shall be determined
by the preparing party. The Taxes shown on any returns prepared pursuant to
this Section 7.05(c) shall be allocated among the Parties in accordance
with this Section 7.05. The Parties acknowledge that the time frames set
forth herein for delivery and review of returns may not be practical for
certain of the returns due hereunder and, if that is the case, the Parties
will work in good faith to establish mutually acceptable deadlines for
delivery and review of returns based upon the relevant facts and
circumstances.
Section 7.06. GST. (a) At the Purchaser's request, the Seller
shall cause Nortel Networks Limited and/or Nortel Networks Technology
Corporation, as the case may be, to jointly elect with Bookham Acquisition, Inc.
under subsection 167(1) of the Excise Tax Act (Canada) (the "GST Legislation")
in which case the Purchaser shall cause Bookham Acquisition, Inc. to provide to
the Seller no more than five (5) Business Days following the Closing a duly
completed Goods and Services Tax ("GST ") Form #GST 44, "Election Concerning the
Acquisition of a Business or Part of a Business" (the "GST Election") in the
prescribed form and containing the prescribed information, and Nortel Networks
Limited and/or Nortel Networks Technology Corporation, as the case may be, and
Bookham Acquisition, Inc. will execute such form.
(b) If the GST Election is executed by Nortel Networks Limited
and/or Nortel Networks Technology Corporation, as the case may be, and
Bookham Acquisition, Inc. no more than five (5) Business Days following the
Closing, Bookham Acquisition, Inc. shall file such joint elections with the
GST return required to be filed by Bookham Acquisition, Inc. under the GST
Legislation for Bookham Acquisition, Inc.'s reporting period in which the
sale is made, in compliance with the requirements of the GST Legislation.
Section 7.07. Cooperation; Access to Records. (a) The
Purchaser agrees from and after the Closing, upon the Seller's written request,
to timely provide the Seller with all information reasonably requested by the
Seller to allow the Seller to comply with all tax reporting requirements in
connection with or as a result of its investment in the Purchaser as set out
herein including, without restriction, to the extent required for the Seller to
satisfy its tax reporting obligations, financial statements of the Purchaser and
all Affiliates of the Purchaser, such determination of the Purchaser's income
taking into account and otherwise based upon the Income Tax Act (Canada) in
relation to investments by Canadian residents in "foreign affiliates" and
"foreign investment entities" as those terms are or may be defined, from time to
time, for purposes of such Act, and such statements of the business and
undertaking and property and liabilities of the Purchaser and such Affiliates as
may be required for such tax reporting.
(b) Upon reasonable advance notice, during normal business
hours, the Purchaser and the Seller shall (and shall cause the Purchasing
Subsidiaries and the Selling Subsidiaries, as the case may be, and their
employees, auditors and agents, to) cooperate fully with each other and
afford the other and its officers, employees, auditors, counsel and other
authorized agents and representatives reasonable access to its offices,
properties, books and records for the purposes of assisting the other party
in (i) preparing any Tax returns or other tax filings or prosecuting any
claims for refund and (ii) investigating or defending any Tax claims or
assessments.
(c) If the Purchaser, at its sole discretion, elects to enter
into an agreement with U.K. H.M. Customs & Excise which allows goods to be
imported under Customs Control/Customs Duty suspension regime, the
Purchaser shall advise the Seller of such fact at least fourteen (14) days
prior to the Closing Date. If the Purchaser enters into such arrangements,
the Purchaser and the Seller shall (and each shall cause the Purchasing
Subsidiaries and the Selling Subsidiaries, as the case may be, to) use
their respective reasonable efforts to cooperate in formulating a process
to minimize import VAT and Customs duties payable on items held on the
Closing Date; provided, however, that neither the Purchaser nor any of the
Purchasing Subsidiaries shall be required to incur any import VAT or
customs duties imposed in connection with such process or any penalties,
interest, or additions to tax or additional amounts imposed with respect
thereto.
(d) Any information or documents provided under this Section
7.07 shall be kept confidential by the party receiving the information or
documents, except as may otherwise be necessary in connection with the
filing of Tax Returns or in connection with any administrative or judicial
proceedings relating to Taxes. Neither party shall be required to provide
(or cause to be provided) any information or access to the extent that such
information or access would cause it or any of its Subsidiaries to be in
breach of any confidentiality restrictions applicable to it or any
information that would be in violation of applicable Law.
(e) In each case, the party requesting the cooperation
described herein shall reimburse the cooperating party for any reasonable
third-party out-of-pocket expenses incurred in providing such cooperation;
provided, however, that out-of-pocket expenses in excess of $500 shall be
reimbursed hereunder only to the extent such expenses are incurred with the
prior written consent of requesting party. If the requesting party does not
consent to out-of-pocket expenses that are reasonably expected to be
incurred in connection with any request for information or cooperation
pursuant to this Section 7.07, the other party shall have no obligations
hereunder with respect to the portion of such request to which such
expenses relate.
Section 7.08. Registration Numbers. The Purchaser shall, prior
to the Closing Date, provide the Seller with the GST and PST Registration
Numbers for Bookham Acquisition, Inc. and the VAT Registration Number for the
Purchasing Subsidiary to be formed in Switzerland by the Purchaser prior to the
Closing Date.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of the Seller. The
obligation of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Representations and Warranties; Covenants.
(i) Except for any inaccuracies that have not had and are not
reasonably likely to have, individually or in the aggregate, a Purchaser
Material Adverse Effect, the representations and warranties of the
Purchaser contained in Article IV (disregarding all references to
materiality and Purchaser Material Adverse Effect contained therein) shall
be true and correct (A) as of the Closing Date as restated on and as of
such date or (B) if made as of a date specified therein, as of such date,
and the Seller shall have received a certificate signed by a duly
authorized executive officer of the Purchaser to the foregoing effect.
(ii) The covenants, obligations, conditions and agreements
contained in this Agreement to be complied with by the Purchaser on or
before the Closing shall have been complied with in all material respects,
except that the Purchaser shall have complied in all respects with its
obligations under Article II hereof, and the Seller shall have received a
certificate signed by an authorized executive officer of the Purchaser to
such effect.
(b) Regulatory Matters. Any waiting period under applicable
Law relating to competition or antitrust in connection with the
transactions contemplated hereby shall have expired or shall have been
terminated. All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of other waiting periods
imposed by, any Governmental Authority (including the consultation
procedures contemplated by Section 1.04, but only as they relate to Nortel
Networks (U.K.) Limited, Nortel Networks Optical Components Limited, Nortel
Networks Optical Components (Switzerland) GmbH and the Employees employed
thereby) necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained or filed or shall have occurred.
(c) No Governmental Order. There shall be no Governmental
Order in existence that prohibits the transactions contemplated by this
Agreement or renders it unlawful to consummate such transactions.
(d) Ancillary Agreements. Each of the Purchaser and its
Affiliates shall have executed and delivered to the Seller each of the
Ancillary Agreements to which it is a party (it being understood that the
execution and delivery by any third Person of any such Ancillary Agreement
shall not be a condition to Closing).
(e) Purchaser Shareholder Resolutions. The Purchaser
Shareholder Resolutions shall have been approved at the Purchaser
Shareholders' Meeting.
(f) Allotment and Listing. The UKLA shall have agreed to admit
all of the Consideration Shares to the Official List of the UKLA, and the
LSE shall have agreed to admit all of the Consideration Shares to trading
on the LSE, and listing shall have become effective in accordance with
paragraph 7.1 of the UKLA's listing rules (subject only to allotment).
Section 8.02. Conditions to Obligations of the Purchaser. The
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Representations and Warranties, Covenants.
(i) Except for any inaccuracies that have not had and are not
reasonably likely to have, individually or in the aggregate, a Seller
Material Adverse Effect, the representations and warranties of the Seller
contained in Article III (disregarding all references to materiality and
Seller Material Adverse Effect contained therein) shall be true and correct
(A) as of the Closing Date as restated on and as of such date or (B) if
made as of a date specified therein, as of such date, and the Purchaser
shall have received a certificate signed by a duly authorized executive
officer of the Seller to the foregoing effect.
(ii) The covenants contained in this Agreement to be complied
with by the Seller on or before the Closing shall have been complied with
in all material respects, and the Purchaser shall have received a
certificate signed by an authorized executive officer of the Seller to the
foregoing effect.
(b) Regulatory Matters. Any waiting period under applicable
Law relating to competition or antitrust in connection with the
transactions contemplated hereby shall have expired or shall have been
terminated. All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of other waiting periods
imposed by, any Governmental Authority (including the consultation
procedures contemplated by Section 1.04, but only as they relate to Nortel
Networks (U.K.) Limited, Nortel Networks Optical Components Limited, Nortel
Networks Optical Components (Switzerland) GmbH and the Employees employed
thereby) necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained or filed or shall have occurred.
(c) No Governmental Order. There shall be no Governmental
Order in existence that prohibits the transactions contemplated by this
Agreement or renders it unlawful to consummate such transactions.
(d) Ancillary Agreements. Each of the Seller and the Selling
Subsidiaries shall have executed and delivered to the Purchaser each of the
Ancillary Agreements to which it is a party.
(e) Purchaser Shareholder Resolutions. The Purchaser
Shareholder Resolutions shall have been approved at the Purchaser
Shareholders' Meeting.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination. This Agreement may be terminated at
any time prior to the Closing (except as limited as to time in paragraph (b)
below):
(a) by the mutual written consent of the Seller and the
Purchaser;
(b) by the Seller or the Purchaser, if the Closing shall not
have occurred prior to March 31, 2002 (the "Termination Date") unless
extended by the mutual written agreement of parties; provided, however,
that the right to terminate this Agreement under this Section 9.01(b) shall
not be available to the party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date;
(c) by the Seller in the event a condition set forth in
Section 8.01 becomes incapable of being fulfilled;
(d) by the Purchaser in the event a condition set forth in
Section 8.02 becomes incapable of being fulfilled;
(e) by the Seller in the event that (i) the Board of Directors
of the Purchaser fails to comply with its obligations under Section 5.21 of
this Agreement, unless such failure to comply is the sole and direct result
of any failure of the Seller to comply with its obligations under Section
5.19(c), or (ii) the shareholders of the Purchaser do not approve the
Purchaser Shareholder Resolutions at the Purchaser Shareholders' Meeting;
(f) by the Purchaser in the event that the shareholders of the
Purchaser do not approve the Purchaser Shareholder Resolutions at the
Purchaser Shareholders' Meeting;
(g) by the Seller, if the Purchaser is subject to a Bankruptcy
Event; and
(h) by the Purchaser, if the Seller is subject to a Bankruptcy
Event;
provided that the party seeking termination pursuant to clause (b), (c), (d) or
(e) is not then in material breach of any of the representations, warranties,
covenants or agreements contained in this Agreement.
Section 9.02. Effect of Termination. In the event of the
termination of this Agreement as provided in Section 9.01, this Agreement shall
forthwith become void and there shall be no Liability on the part of either
party, except (i) as set forth in Section 5.03 and Section 11.02 and (ii)
nothing herein shall relieve either party from Liability for any breach hereof
or failure to perform hereunder.
Section 9.03. Waiver. At any time prior to the Closing, either
party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant to this
Agreement or (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby.
Section 9.04. Security Deposit. (a) The Purchaser has
deposited an amount equal to $1,200,000 (the "Security Deposit") in immediately
available funds to one or more bank accounts designated by the Seller (or as the
Seller may direct) on the date hereof as a deposit, which will either (i) be
retained by the Seller in the circumstances specified in Section 9.04(b) or (ii)
be refunded by the Seller to the Purchaser on the earlier of (A) the Closing
Date (unless credited against the Expense Reimbursement payable under Section
2.03(d)) and (B) the date on which this Agreement is terminated under Section
9.01 (except in the circumstances specified in Section 9.04(b)). At the Closing,
the Seller shall deliver the Security Deposit to the Purchaser by wire transfer
of immediately available funds to an account designated by the Purchaser.
(b) In the event that (i) the Purchaser terminates this
Agreement pursuant to Section 9.01(b) and, as of the date of such
termination, the Purchaser Shareholders' Meeting shall not have been held
or, if held, the vote on the Purchaser Shareholder Resolutions shall not
have been taken thereat, (ii) the Seller terminates this Agreement pursuant
to Section 9.01(e) or Section 9.01(g) or (iii) the Purchaser terminates
this Agreement pursuant to Section 9.01(f), in addition to all rights and
remedies available to the Seller under applicable Law, the Purchaser shall
forfeit the Security Deposit in full.
ARTICLE X
INDEMNIFICATION
Section 10.01. Indemnification by the Purchaser. After the
Closing, the Purchaser shall indemnify and hold harmless the Seller, its
Affiliates and their respective directors, officers, employees, consultants,
shareholders, agents and representatives of each of them, and all successors and
assigns of the foregoing (collectively, the "Seller Indemnified Parties") from
and against, and agrees to promptly defend any Seller Indemnified Party from and
reimburse any Seller Indemnified Party for, any and all losses, damages, costs,
expenses, Liabilities, obligations and claims of any kind (excluding any such
losses, damages, costs, expenses, Liabilities, obligations and claims in respect
of lost profits, consequential, special, indirect or punitive damages but
including any Action brought by any Governmental Authority or Person and
including reasonable attorneys' fees and other legal costs and expenses
reasonably incurred) (collectively, "Losses"), which such Seller Indemnified
Party may at any time suffer or incur, or become subject to, as a result of:
(a) the breach of any representation or warranty made by the
Purchaser in this Agreement, the Ancillary Agreements (other than the
Supply Agreement) or in the certificates delivered pursuant to Section
8.01(a);
(b) any failure by the Purchaser to carry out, perform,
satisfy and discharge any of its covenants, agreements, undertakings,
Liabilities or obligations under this Agreement or the Ancillary Agreements
(other than the Supply Agreement);
(c) any Assumed Liabilities; or
(d) any amounts for which the Purchaser is liable under
Article VII.
Section 10.02. Indemnification by the Seller. After the
Closing, the Seller shall indemnify and hold harmless the Purchaser, its
Affiliates and their respective directors, officers, employees, consultants,
shareholders, agents and representatives of each of them, and all successors and
assigns of the foregoing (collectively, the "Purchaser Indemnified Parties")
from and against, and agrees to promptly defend any Purchaser Indemnified Party
from and reimburse any Purchaser Indemnified Party for, any and all Losses which
such Purchaser Indemnified Party may at any time suffer or incur, or become
subject to, as a result of:
(a) the breach of any representation or warranty made by the
Seller in this Agreement, the Ancillary Agreements (other than the Supply
Agreement) or in the certificates delivered pursuant to Section 8.02(a);
provided, however, that all references to materiality and Seller Material
Adverse Effect shall be disregarded for purposes of determining whether
there has been any breach of Section 3.13 (Environmental Matters);
(b) any failure by the Seller to carry out, perform, satisfy
and discharge any of its covenants, agreements, undertakings, Liabilities
or obligations under this Agreement or the Ancillary Agreements (other than
the Supply Agreement);
(c) any Retained Liabilities; or
(d) any amounts for which the Seller is liable under Article
VII.
Section 10.03. Limitations on Indemnification. (a) At the
election of the Seller, all or any portion of any payment owing by the Seller
under Section 10.02(a), Section 10.02(b) and Section 10.02(d) shall be made by
surrendering an equivalent portion of any amounts due in respect of Series B
Notes to the extent any Series B Notes are then outstanding and then by
surrendering an equivalent portion of any amounts due in respect of any Series A
Notes then outstanding.
(b) Notwithstanding any other provision herein to the
contrary:
(i) the aggregate Liability of the Seller under Section
10.02(a) and Section 10.02(b) and under the Ancillary Agreements (other
than the Supply Agreement) shall not exceed $50,000,000; provided, however,
that any Liability in connection with any breach by the Seller of its
representations and warranties relating to title to the Assets shall not be
subject to the limitation contained in this Section 10.03(b)(i) but shall
not exceed the Purchase Price.
(ii) the Seller shall have no Liability (excluding any
Liability in respect of Taxes) under Section 10.02(a) and Section 10.02(b)
(A) in connection with any particular event, fact or development unless and
until (1) the aggregate Liability that the Seller would, but for this
Section 10.03(b)(ii), have under Section 10.02 in connection with such
particular event, fact or development exceeds an amount equal to $10,000
and (2) all such Liabilities under clause (1) exceed on a cumulative basis
an amount equal to $1,000,000, in which case the Purchaser shall be
entitled to be indemnified for all such Liabilities under clause (1) and
not merely the excess over $1,000,000 or (B) in respect of any breach by
the Seller of its representations, warranties or covenants in Section
5.19(c), except to the extent any such Liability specified in this clause
(B) results from any claim by any third Person brought under the U.K.
Financial Services and Xxxxxx Xxx 0000 or the Exchange Act.
(iii) the aggregate Liability of the Purchaser under Section
10.01(a) and Section 10.01(b) and under the Ancillary Agreements (other
than the Supply Agreement, the Notes and the Intellectual Property License
Agreement) shall not exceed $50,000,000; provided, however, that any
Liability in connection with any breach by the Purchaser of its
representations, warranties and covenants set forth in Section 4.01,
Section 4.04 and Section 5.03(b) shall not be subject to the limitation
contained in this Section 10.03(b)(iii).
(iv) the Purchaser shall have no Liability (excluding any
Liability in respect of Taxes) under Section 10.01(a) and Section 10.01(b)
in connection with any particular event, fact or development unless and
until (1) the aggregate Liability that the Purchaser would, but for this
Section 10.03(b)(iv), have under Section 10.02 in connection with such
particular event, fact or development exceeds an amount equal to $10,000
and (2) all (excluding those Liabilities that are not to be indemnified
pursuant to clause (1)), exceed on a cumulative basis an amount equal to
$1,000,000, in which case the Purchaser shall be entitled to be indemnified
for all such Liabilities and not merely the excess over $1,000,000.
(c) In the event that any Loss occurs as a result of both (i)
Section 10.02(a) or Section 10.02(b) and (ii) Section 10.02(c), then, for
purposes of determining whether any limitation contained in Section
10.02(b) applies, such Loss shall be deemed to occurred as a result of
Section 10.02(c).
Section 10.04. Notification of Claims. (a) A party entitled to
be indemnified pursuant to Section 10.01 or 10.02 (the "Indemnified Party")
shall promptly notify the party liable for such indemnification (the
"Indemnifying Party") in writing of any claim or demand that the Indemnified
Party has determined has given or could give rise to a right of indemnification
under this Agreement.
(b) The Indemnifying Party shall have the right to assume the
defense of any such claim or demand asserted against the Indemnified Party
and to employ counsel reasonably acceptable to the Indemnified Party to
defend any such claim; provided that such counsel has no conflict of
interest. The Indemnified Party shall have the right to participate in (but
not control) the defense of any such claim or demand at its own expense.
The Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible after the date of the notice of claim given by the
Indemnified Party to the Indemnifying Party under Section 10.04(a), of its
election to defend in good faith any such third-party claim or demand. The
Indemnified Party shall make available to the Indemnifying Party or its
agents, all records and other material in the Indemnified Party's
possession reasonably required by it for its use in contesting any
third-party claim or demand. The Indemnifying Party shall not settle or
compromise any such claim or demand unless the Indemnified Party consents,
unless the Indemnified Party is given a full and complete release of any
and all Liability by all relevant Persons relating thereto or the
settlement or compromise would only give rise to the payment of monetary
damages and such settlement or compromise includes no admission or
concession of culpability or wrongdoing by the Indemnified Party.
Section 10.05. Exclusive Remedies. From and after the Closing,
the indemnification provisions of Article X shall be the sole and exclusive
remedies of the Seller and the Purchaser, respectively, for the recovery of
money damages with respect to any breach of the representations or warranties
herein or nonperformance of any covenants and agreements herein; provided,
however, that nothing in this Agreement or any of the Ancillary Agreements shall
be deemed to limit (or adversely affect) in any manner any right or remedy of
any Indemnified Party regarding specific performance or non-monetary damages
under this Agreement or any of the Ancillary Agreements.
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. Survival. The representations and warranties of
the Seller and the Purchaser contained in or made pursuant to this Agreement and
the Ancillary Agreements or in any other Transaction Documents shall terminate
at the Closing, except that (i) the representations and warranties made in
Article III and Article IV shall survive in full force and effect for a period
of eighteen (18) months after the Closing Date and (ii) the representations and
warranties made in Article VII shall survive in full force and effect until the
expiration of any applicable statutory limitation period (giving effect to any
waiver, mitigation or extension thereof). The covenants, agreements,
undertakings, Liabilities and obligations of the Seller and the Purchaser
contained in or made pursuant to this Agreement and the Ancillary Agreements
shall terminate eighteen (18) months after the Closing Date, except that (ii)
any covenant, agreement, undertaking, Liability or obligation to be performed
after the Closing (other than those in Article VII) shall survive in full force
and effect for eighteen (18) months after the date as of which such covenant is
to be performed in full and (ii) any covenant, agreement, undertaking, Liability
or obligation in Article VII to be performed after the Closing shall survive in
full force and effect until the expiration of any applicable statutory
limitation period (giving effect to any waiver, mitigation or extension
thereof). Any claim for indemnification in respect of a breach of
representation, warranty or covenant hereunder must be made during the survival
period thereof.
Section 11.02. Expenses; Currency. (a) Except as otherwise
provided in this Agreement or the Ancillary Agreements, the parties shall bear
their respective direct and indirect expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
transaction contemplated hereby.
(b) Unless otherwise indicated, all dollar amounts stated in
this Agreement are stated in U.S. currency, and all payments required under
this Agreement shall be paid in U.S. currency. In the event it is required
to convert any lawful currency of a jurisdiction other than the U.S. into
U.S. Dollars for purposes of determining any amounts owed under, or due and
payable pursuant to, this Agreement, the parties hereby agree such currency
conversion shall be determined as of the applicable date by reference to
the New York foreign exchange mid-range rates published in The Wall Street
Journal (or such other internationally-recognized currency conversion
source as may be mutually agreed between the parties).
Section 11.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by overnight courier service, by cable, by facsimile, by
telegram, by telex or by registered or certified mail (postage prepaid, return
receipt requested) to the respective Persons 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 11.03):
(a) if to the Seller:
Nortel Networks Corporation
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Facsimile: (000) 000-0000
Attention: Secretary
with a copy, which does not constitute notice, to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx
(b) if to the Purchaser:
c/o Bookham Technology plc
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx X00, 0XX
Xxxxxx Xxxxxxx
Facsimile: 44 1235 837 210
Attention: Corporate Secretary
with a copy, which does not constitute notice, to:
Xxxxxxx, Xxxx and Xxxx
Xxxxx Castle
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile: 00 (0) 00 0000 0000
Attention: Xxxxxxx X. Xxxxx
Section 11.04. Public Announcements. Except as may be required
by applicable Law or stock exchange rules, neither party to this Agreement shall
make any public announcements in respect of this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or otherwise communicate with
any news media without prior notification to the other party, and the parties
shall cooperate as to the timing and contents of any such announcement.
Section 11.05. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.06. Disclosure Schedules. Any disclosure with
respect to a particular Section of this Agreement, the Seller Disclosure
Schedule or the Purchaser Disclosure Schedule, as the case may be, shall be
deemed to be disclosure for other Sections of this Agreement, the Seller
Disclosure Schedule or the Purchaser Disclosure Schedule, as the case may be, to
the extent that it is reasonably apparent from a reading of such disclosure item
that it would also qualify or apply to such other Section of this Agreement, the
Seller Disclosure Schedule, as the case may be.
Section 11.07. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
applicable 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
fundamentally changed. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties 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 in order that
the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.
Section 11.08. Entire Agreement. This Agreement, together with
the letter agreement, dated the date hereof, between the Purchaser and the
Seller, the Ancillary Agreements and the Confidentiality Agreement, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
between the Seller and the Purchaser with respect to the subject matter hereof.
Section 11.09. Assignment. Neither party may transfer any of
its rights or obligations hereunder, without the prior written consent of the
other party. Any transfer in violation of this Section 11.09 shall be null and
void.
Section 11.10. No Third-Party Beneficiaries. Except as
provided in Article X, this Agreement is for the sole benefit of the parties and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 11.11. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the parties.
Section 11.12. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of New York. This
Agreement was negotiated and executed in the State and County of New York. All
Actions arising out of or relating to this Agreement shall be heard and
determined exclusively in a New York state or federal court sitting in the
County of New York, and the parties hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
agree to the laying of venue in such courts and waive the defense of an
inconvenient forum to the maintenance of any such Action.
Section 11.13. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be as effective as delivery of a manually executed counterpart of this
Agreement.
Section 11.14. No Presumption. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
NORTEL NETWORKS CORPORATION
By:
--------------------------------
Name: Khush Dadyburjor
Title: Vice President, Mergers &
Acquisitions
BOOKHAM TECHNOLOGY PLC
By:
--------------------------------
Name: Xxxxxx X.X. Xxxxx
Title: Company Secretary
Index of Defined Terms
----------------------
A
Accounting Arbitrator.........................................................25
Action.........................................................................1
Administrative Services........................................................1
Affiliate......................................................................2
Agreement......................................................................2
Ancillary Agreements...........................................................2
Assets........................................................................17
Assignment and Assumption Agreement............................................2
Assumed Liabilities...........................................................20
B
Bankruptcy Event...............................................................2
Xxxx of Sale...................................................................2
Business.......................................................................2
Business Day...................................................................3
Business Information..........................................................17
Business Software.............................................................18
C
Change of Control..............................................................3
Closing.......................................................................26
Closing Date..................................................................26
Competitive Products..........................................................64
Confidentiality Agreement.....................................................52
Consideration Shares..........................................................23
Contaminated Land..............................................................3
Control........................................................................3
Corporate Desktop Software.....................................................3
D
Debt...........................................................................3
E
Effective Date.................................................................3
Effective Time.................................................................3
Employee Information...........................................................4
Employee Loan Agreement........................................................4
Employee Matters Schedule......................................................4
Employees......................................................................3
Employment Offer..............................................................66
Employment Transfer Date.......................................................4
Environmental Audit............................................................4
Environmental Claim............................................................4
Environmental Law..............................................................4
Environmental Liabilities......................................................4
Environmental Permit...........................................................4
Equipment......................................................................4
Equipment Leases..............................................................17
Exchange Act...................................................................5
Excluded Assets...............................................................18
F
Fab Employees.................................................................21
G
Governmental Authority.........................................................5
Governmental Order.............................................................5
GST...........................................................................72
GST Election..................................................................72
GST Legislation...............................................................72
H
Hazardous Material.............................................................5
I
Indemnified Party.............................................................79
Indemnifying Party............................................................79
Intellectual Property..........................................................5
Intellectual Property License Agreement........................................6
Interim Employee Information..................................................67
Invention Disclosures.........................................................56
Inventory......................................................................6
Inventory Adjustment..........................................................24
IRS............................................................................6
J
Joint Development Agreement....................................................6
K
Knowledge of the Purchaser.....................................................6
Knowledge of the Seller........................................................6
L
Law............................................................................6
Leave Employees...............................................................35
Liabilities....................................................................6
Lien...........................................................................6
Losses........................................................................77
LSE............................................................................6
N
Nasdaq.........................................................................6
Network Identifiers............................................................7
Not Yet Transferred Contracts.................................................58
Notes.........................................................................23
O
Other Seller Contracts........................................................18
Other Seller IP Contracts.....................................................18
Owned Equipment...............................................................17
Owned Real Property...........................................................17
P
Patent Assignment..............................................................7
Patent Cross Licenses..........................................................7
Permitted Engagement..........................................................65
Permitted Liens................................................................7
Person.........................................................................7
Post-Closing Inventory Statement..............................................24
Principal Purchaser Subsidiary.................................................7
Products.......................................................................7
Purchase Price................................................................23
Purchaser......................................................................1
Purchaser Contract.............................................................7
Purchaser Disclosure Schedule..................................................8
Purchaser Employee Plan........................................................8
Purchaser Employees............................................................8
Purchaser Indemnified Parties.................................................78
Purchaser Intellectual Property................................................8
Purchaser Licensed Intellectual Property.......................................8
Purchaser Material Adverse Effect..............................................8
Purchaser Options..............................................................9
Purchaser Owned Intellectual Property..........................................9
Purchaser Reports.............................................................44
Purchaser Share Schemes........................................................9
-----------------------
Purchaser Shareholder Resolutions..............................................9
Purchaser Shareholders' Meeting................................................9
Purchaser Shares...............................................................9
Purchaser's Knowledge..........................................................6
Purchasing Subsidiaries........................................................9
R
Radioactive Materials..........................................................9
Real Estate Agreements and Assignments.........................................9
Real Property Leases..........................................................17
Refundable Transfer Tax........................................................9
Registration Rights Agreement.................................................10
Relationship Deed.............................................................10
Release.......................................................................10
Restricted Patents............................................................10
Retained Contracts............................................................19
Retained Liabilities..........................................................21
S
SEC...........................................................................10
Securities Act................................................................10
Security Agreements...........................................................10
Security Deposit..............................................................77
Seller.........................................................................1
Seller Contract...............................................................10
Seller Disclosure Schedule....................................................10
Seller Employee Plan..........................................................10
Seller Financial Statements...................................................29
Seller Indemnified Parties....................................................77
Seller Material Adverse Effect................................................11
Seller Share Options..........................................................65
Seller's Knowledge.............................................................6
Selling Subsidiaries..........................................................11
Series A Notes................................................................23
Series B Notes................................................................23
Single Use Desktop Software...................................................11
Standard Employment Contracts.................................................33
Subsidiary....................................................................11
Supply Agreement..............................................................11
System Confidential Information...............................................53
T
Tax...........................................................................12
Tax Returns...................................................................12
Taxes.........................................................................12
Termination Date..............................................................76
Third Party Licenses..........................................................12
Third Party Licenses Exclusive to the Business................................18
Trademark Assignment..........................................................12
Trademark License Agreement...................................................12
Transaction Documents.........................................................12
Transfer Taxes................................................................12
Transferred Intellectual Property.............................................12
Transferred Other Intellectual Property.......................................13
Transferred Passive Patents...................................................13
Transferred Patents...........................................................13
Transferred Software..........................................................13
Transferring Employees........................................................13
Transition Services Agreement.................................................13
U
U.K...........................................................................13
U.K. Supplementary Agreement..................................................14
U.S...........................................................................14
U.S. Code.....................................................................14
U.S. GAAP.....................................................................14
UKLA..........................................................................14
Updated Employee Information..................................................67
V
Vacation Information..........................................................67
VAT...........................................................................14
Voting Securities.............................................................14
VP OCO........................................................................67
W
Warrants......................................................................23
