EXHIBIT 2.6
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AMENDMENT NO. 2
TO
PURCHASE AGREEMENT
BETWEEN
KONINKLIJKE PHILIPS ELECTRONICS N.V.
AND
SCANSOFT, INC.
DATED AS OF JANUARY 29, 2003
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AMENDMENT NO. 2 TO PURCHASE AGREEMENT (this "Amendment"), dated as of
January 29, 2003, between KONINKLIJKE PHILIPS ELECTRONICS N.V., a limited
liability company organized under the laws of The Netherlands ("Seller") and
ScanSoft, Inc., a Delaware corporation ("Purchaser") (each a "Party", and
collectively, "Parties").
W I T N E S S E T H:
WHEREAS, the Parties have entered into the Purchase Agreement, dated as
of October 7, 2002, as amended by Amendment No. 1, dated as of December 20, 2002
(the "Original Purchase Agreement");
WHEREAS, Parties desire to amend the Original Purchase Agreement to
memorialize their agreements as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
AMENDMENTS
Section 1.1 Defined Terms. Section 1.1 of the Original Purchase
Agreement is amended as follows:
(a) The defined term "Closing Time" is deleted.
(b) The following new defined terms are inserted:
"'German IP' shall have the same meaning as the term `IP' defined in
the German IP Transfer Agreement."
"'German IP Transfer Agreement' shall mean the Transfer Agreement
between the Transferred Subsidiary and ScanSoft Belgium BVBA, dated as of
January 30, 2003."
"'Initial Closing' shall have the meaning set forth in Section 2.2."
"'Subsequent Closing' shall have the meaning set forth in Section 2.2."
"'Taiwan Cash Allowance Amount' shall have the meaning set forth in
Section 2.4(h)."
"'Taiwan Cash Deficit Contribution Amount' shall have the meaning set
forth in Section 2.3(j)."
"'Taiwan Cash Deficit Contribution Statement' shall have the meaning
set forth in Section 2.3(j)."
"'Termination of Seller's Taiwan Obligations' shall have the meaning
set forth in Section 2.2."
Section 1.2 Two-stage Closing. Section 2.2 of the Original Purchase
Agreement is amended and restated in its entirety as follows:
"The closing of the Purchase provided for in Section 2.1 hereof (the
`Closing') shall occur in two stages. In the first stage of the Closing
(the `Initial Closing'), to occur at the offices of Xxxxxxxx & Xxxxxxxx
LLP at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 at 8 a.m. New York City
time on January 30, 2003, Seller shall cause the Transferred Subsidiary
to sell, transfer, assign, convey and deliver to the applicable Local
Purchaser, and Purchaser shall cause the applicable Local Purchaser to
purchase, all of the Transferred Subsidiary's right, title and interest
in and to the German IP, all as indicated and provided under the German
IP Transfer Agreement. The portion of the Purchase Price to be paid for
the German IP shall equal the value of such German IP as reflected in
the valuation of assets contemplated by Section 2.1(a) herein. In the
second stage of the Closing (the `Subsequent Closing'), to occur at the
offices of Xxxxxxxx & Xxxxxxxx LLP at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000 at 9 a.m. New York City time on January 30, 2003, Seller shall
sell, transfer, assign, convey and deliver to Purchaser (or the
applicable Local Purchaser), and Purchaser shall purchase, or cause the
applicable Local Purchaser to purchase, the Transferred Shares and each
Local Seller's right, title and interest in and to the Local Assets.
The remainder of the Purchase Price not allocated to the German IP
shall be deemed in consideration of such other Assets. The Initial
Closing and the Subsequent Closing are referred to collectively as the
`Closing', and the date on which both, the Initial Closing and the
Subsequent Closing, are completed is herein called the `Closing Date'."
Notwithstanding anything to the contrary in the German IP Transfer
Agreement, the German IP Transfer Agreement shall not be interpreted to
(nor shall it) (a) transfer any Proprietary Rights in addition to those
transferred pursuant to the Technology Transfer and License Agreement
or (b) change, expand or reduce any of the representations, warranties,
rights or obligations contained in the Original Purchase Agreement
(applicable to the Technology Transfer and License Agreement or
Proprietary Rights) or the rights or obligations of the parties under
the Technology Transfer and License Agreement. In case of any conflict
between the German IP Agreement and either the Technology Transfer and
License Agreement or the Original Purchase Agreement, each of Philips
and ScanSoft agrees on behalf of itself and its affiliates and their
respective successors and assigns that the Technology Transfer License
Agreement and the Original Purchase Agreement supercede the German IP
Agreement.
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Section 1.3 Certain Additional Changes to and Interpretations of the
Original Purchase Agreement.
(a) Section 4.24 is amended to replace the term "Closing Time" with
"Closing".
(b) The following text is added at the end of Section 5.17:
"For the avoidance of doubt and notwithstanding anything to the
contrary set forth in Section 5.4(e), (A) Purchaser shall reimburse
Seller for one-half of any Taxes actually paid by Seller resulting from
a reevaluation upwards of the contribution value of the German IP
contributed to the Transferred Subsidiary as of November 1, 2002, but
only to the extent that the additional value added does not exceed euro
2,700,000, and (B) Purchaser shall be solely responsible for and shall
pay all Taxes incurred by it or the Transferred Subsidiary as a result
of the Restructuring or the fact that the Closing will occur in two
stages."
(c) The following text is added at the end of Section 5.19:
"Seller further covenants that it (a) hereby assigns to Purchaser all
of its rights, title and interest in the URLs set forth on Exhibit L,
and will deliver to Purchaser all documents reasonably necessary for
Purchaser to be able to record and effect the transfer from Seller to
Purchaser of such URLs, and (b) for a period commencing on February 1,
2003 and ending on July 30, 2003, will use its commercially reasonable
efforts to automatically redirect the URLs set forth on Exhibit M to
the websites identified by Purchaser. Seller further agrees to discuss
in good faith with Purchaser the possibility of redirecting users
visiting the `xxx.xxxxxx.xxx' URL who are seeking information related
to the Business to the websites identified by Purchaser."
(d) Wherever the term "Trademark Transfer Agreement" is used in the
Original Purchase Agreement, it shall include one or more agreements providing
for transfer of trademarks and similar Proprietary Rights, including the one
agreement specifically for the transfer of certain international trademarks.
Section 1.4 Operation of Business in Taiwan. To implement the agreement
of the Parties that Seller will continue to operate the Business in Taiwan for a
certain period of time after the Closing for the risk and account of Purchaser,
the Original Purchase Agreement is amended as follows:
(a) The following sentence is added at the end of the amended and
restated Section 2.2 of the Original Purchase Agreement:
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"Notwithstanding the Closing, Seller will continue to operate the
Business in Taiwan for the risk and account of Purchaser until the
earlier of (x) such time as the assets and employees in Taiwan are
transferred to Purchaser or the relevant Local Purchaser, or (y) April
30, 2003 (the `Termination of Seller's Taiwan Obligations')."
(b) The following Section 2.3(j) is added immediately after Section
2.3(i):
"Promptly after the Termination of Seller's Taiwan Obligations Seller
shall deliver to Purchaser a statement (the `Taiwan Cash Deficit
Contribution Statement') setting forth the amount of cash contributed
to the operation of the Business in Taiwan between the Closing and the
Termination of Seller's Taiwan Obligations in order to keep the
Business in Taiwan operating in the ordinary course or as otherwise
requested by Purchaser (the `Taiwan Cash Deficit Contribution Amount'),
which statement shall bind the Parties in absence of error. Promptly
after Purchaser's receipt from Seller of the Taiwan Cash Deficit
Contribution Statement, (i) to the extent the Taiwan Cash Deficit
Contribution Amount exceeds the Taiwan Cash Allowance Amount, Purchaser
shall promptly pay Seller an amount equal to such excess, payable in
immediately available funds, or (ii) to the extent the Taiwan Cash
Deficit Contribution Amount is less than the Taiwan Cash Allowance
Amount, Seller shall promptly pay Purchaser an amount equal to such
difference, payable in immediately available funds."
(c) The following paragraph is added immediately after Section 2.4(g):
"In addition to the above, no later than February 3, 2003, Purchaser
shall deliver to Seller euro 300,000 in cash by wire transfer in
immediately available funds to an account designated by Seller in
writing representing the estimated net cash flow and cash generation of
the Business in Taiwan between the Closing and the Termination of
Seller's Taiwan Obligations (the `Taiwan Cash Allowance Amount')."
Section 1.5 Payroll Payments for the Month of January 2003. To
implement the agreement of the Parties that it is more administratively
convenient if Seller makes certain payroll payments for the month of January
2003 even if such payments have to be made after the Closing, the Original
Purchase Agreement is amended as follows:
(a) The following sentence is added at the end of Section 2.3(i):
"Notwithstanding the above, the Cash Deficit Contribution Amount shall
include all payroll payments for the month of January 2003 made by
Seller
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to the Transferred Employees regardless of whether such payroll
payments are made before or after the Closing."
Section 1.6 Severance Payments in the U.K. and France. The following
Section 5.9(o) is added immediately after Section 5.9(n):
"(o) Without limiting Purchaser's obligations and liabilities for
severance and other costs and expenses in countries other than the U.K.
and France, Purchaser shall be responsible for all liabilities and
obligations to provide severance to Xxxxx Xxxxxxx employed in the U.K.
and Xxxxxxx Xxxxxxxxx employed in France and for all costs and expenses
related to, arising out of, or incurred in connection with, providing
such employees with notice of termination of employment, regardless of
when such costs and expenses are incurred; provided, however, that the
amount of such liabilities, obligations, costs and expenses shall not
exceed (pound)43,000 for Xxxxx Xxxxxxx and an amount equal to the
four-month salary for Xxxxxxx Xxxxxxxxx (based on his average monthly
salary for the year 2002)."
Section 1.7 Aachen Lease. To implement the agreement of the Parties
with respect to the Aachen Lease, the Original Purchase Agreement is amended as
follows:
(a) The following text is added at the end of Section 5.18:
"If the Parties do not reach a mutually acceptable agreement with the
landlord of the Aachen facility before the Closing, Seller shall
sublease the Aachen facility to Purchaser for a period no longer than
the period specified in the agreement evidencing the subleasing
arrangement. Parties shall cooperate in good faith and shall use their
commercially reasonable efforts to reach an agreement with the landlord
of the Aachen facility to assign the lease to Purchaser and to release
Seller from its obligations under the Aachen Lease. In connection
therewith, Seller shall offer to, and if requested by the landlord,
guarantee to the landlord, for a period ending March 31, 2006,
Purchaser's performance under the Aachen Lease if the landlord accepts
assignment of the Aachen Lease to Purchaser. Seller's agreement to so
guarantee Purchaser's performance shall be conditioned on Purchaser's
obligation to indemnify and hold Seller harmless against all
liabilities, expenses and costs associated with Seller's guarantee of
Purchaser's performance under the Aachen Lease. In support of such
indemnification obligations of Purchaser, Purchaser shall place in
escrow an amount of cash equal to six months of rent payments under the
Aachen Lease. Such amounts shall be paid to Seller if Purchaser does
not promptly indemnify Seller, as provided above, in an amount equal to
such indemnification obligation, and shall be released from escrow in
such
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amounts and at such times so that no amounts remain in escrow in excess
of the aggregate remaining amounts due under the Aachen Lease. Seller's
obligations to so guarantee Purchaser's performance shall be
conditioned on Seller and Purchaser entering into an escrow agreement
reasonably acceptable to Seller and Purchaser to reflect the foregoing.
Any restructuring of the Aachen Lease during the period in which
Seller's guarantee is in effect shall require the prior written consent
of Seller, not to be unreasonably withheld, if such restructuring would
be reasonably likely to increase Seller's potential liability pursuant
to such guarantee or would be reasonably likely to have any other
adverse effect on Seller. In any event, Purchaser shall indemnify and
hold Seller harmless against all liabilities, expenses and costs
associated with the Aachen Lease to the extent such costs are not
German Indemnified Liabilities to be settled through the German
Liability Reserve Account regardless of whether the Aachen Lease is
assigned to Purchaser or not."
Section 1.8 Price Allocation Schedule. Schedule 2.1 setting forth
allocation of the Purchase Price among the assets of the Transferred Subsidiary
and the Local Assets (net of the Local Liabilities) is attached hereto as
Exhibit N.
Section 1.9 Non-Transferability of Note. The Promissory Note to be
issued by Purchaser (or an Affiliate thereof) to the Transferred Subsidiary in
consideration of the purchase of the German IP pursuant to the German IP
Transfer Agreement shall be non-transferable prior to the Subsequent Closing.
ARTICLE II
MISCELLANEOUS
Section 2.1 Definitions; Interpretations. All capitalized terms used
but not defined in this Amendment have the meaning ascribed to them in the
Original Purchase Agreement, and such terms are incorporated in this Amendment
by reference. All other definitional provisions and rules of interpretation set
forth in Article I of the Original Purchase Agreement shall apply to this
Amendment.
Section 2.2 Incorporation of Terms. The provisions of the Original
Purchase Agreement set forth in Sections 9.1 (Notices), 9.3 (Assignment), 9.6
(Fulfillment of Obligations), 9.7 (Parties in Interest; No Third Party
Beneficiaries), 9.8 (Public Disclosure), 9.10 (Expenses), 9.11 (Amounts Paid and
Calculated in Euro; Receivables and Payable Currency), 9.13 (Governing Law and
Venue; Waiver of Jury Trial), 9.14 (No Right to Dissolution Under Law; Textual
Interpretation of this Agreement to Control), 9.15 (Counterparts), 9.16
(Headings), and 9.17 (Severability), thereof, are incorporated by reference
herein as if fully set forth, except that references to "this Agreement" therein
shall be deemed to refer to this Amendment.
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IN WITNESS WHEREOF, the Parties have executed or caused this
Amendment to be executed as of the date first written above.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ X. Xxxxxxxx
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Name: X. Xxxxxxxx
Title: Authorized Signatory
SCANSOFT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President & COO
EXHIBIT L
URLS TO BE TRANSFERRED
xxx.xxxxxxxxxxxx.xxx
xxx.xxxxxxx.xxx
xxx.xxxxxxxx.xxx
xxx.xxxxxxx.xxxxxxxxxxxx.xxx
xxx.xxx.xxxxxxxxxxxx.xxx
EXHIBIT M
URLS TO BE REDIRECTED
xxx.xxxxxx.xxxxxxx.xxx/xxxxxxxxx
xxx.xxxxxx.xxxxxxx.xxx/xx
xx0.xxxxxxx.xxx.xx/xxx/
xxx.xxxxxxx.xx.xx/xxx/
EXHIBIT N
PURCHASE PRICE ALLOCATION
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USA 18,027,000
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Germany 14,900,000
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Taiwan 57,000
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Japan 16,000
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TOTAL 33,000,000
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