1
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Between
APPLIED DIGITAL ACCESS, INC.
and
NORTHERN TELECOM LIMITED
2
TABLE OF CONTENTS
1. INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation 4
1.3 Schedules 5
2. PURCHASE AND SALE 5
2.1 Purchase of Purchased Assets 5
2.2 Excluded Assets 5
2.3 Assumed Liabilities 6
2.4 No Assumption of Liabilities 6
2.5 Purchase Price 6
2.6 Manner of Payment 7
2.7 Issuance of Stock and Warrants; Registration Rights 7
2.8 Allocation of Purchase Price. 8
2.9 Expenses and Taxes 8
2.10 Title 8
2.11 Election 8
2.12 Contingent Payments 8
3. NORTEL'S REPRESENTATIONS AND WARRANTIES 10
3.1 Representations and Warranties 10
3.2 Purchased Assets "AS IS, WHERE IS" 12
3.3 Purchaser's Sole Remedy 12
3.4 Survival of Nortel's Representations and Covenants 12
3.5 Nortel's Liability 12
3.6 Conditions for Indemnification 13
3.7 Limitation of Nortel's Indemnification 13
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES 14
4.1 Representations and Warranties 14
4.2 Nortel's Sole Remedy 15
4.3 Survival of Purchaser's Representations and Covenants 15
4.4 Purchaser's Liability 15
4.5 Conditions for Indemnification 16
5. CONDITIONS TO CLOSING 16
5.1 Conditions for Purchaser's Benefit 16
5.2 Conditions for Nortel's Benefit 17
5.3 Non-Fulfillment of Conditions 17
5.4 No Prejudice to Other Rights 17
i
3
6. CLOSING 18
6.1 Time and Place of Closing 18
6.2 Nortel's Obligations on Closing 18
6.3 Purchaser's Obligations on Closing 18
7. POST-CLOSING MATTERS 19
7.1 Nortel to Provide Access and Facilities 19
7.2 Post-Closing Access to Books and Records 19
7.3 Accounts Receivable 19
8. CONFIDENTIAL INFORMATION 19
8.1 Confidentiality 19
8.2 Publicity 19
9. GENERAL PROVISIONS 20
9.1 Assignment 20
9.2 Counterparts; Facsimile 20
9.3 Conflict in Terms 20
9.4 Costs and Expenses 20
9.5 Entire Agreement 20
9.6 Finder's Fee 21
9.7 Further Assurances 21
9.8 Governing Law 21
9.9 Notice 21
9.10 No Consequential Losses 22
9.11 No Waiver 22
9.12 Severability 22
Schedule A - Purchased Assets
Schedule B - License Agreement
Schedule C - Assumed Liabilities
Schedule D - Registration Rights Agreement
Schedule E - Services Agreement
Schedule F - Stock and Warrant Purchase Agreement
Schedule G - Transition Plan
Schedule H - Warrants
Schedule I - Allocation of Purchase Price
Schedule J - [Intentionally Left Blank]
Schedule K - Xxxx of Sale
ii
4
ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated for reference the 27th day of June, 1997
BETWEEN:
APPLIED DIGITAL ACCESS, INC., a corporation duly incorporated
under the laws of the State of California and having an office
at 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx, X.X.X. 00000
(hereinafter referred to as "Purchaser")
OF THE FIRST PART
AND:
NORTHERN TELECOM LIMITED, a corporation duly incorporated
under the laws of Canada and having an office at 0000 Xxxxx
Xxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
(hereinafter referred to as "Nortel")
OF THE SECOND PART
WHEREAS:
Nortel is a company which provides advanced telecommunications systems
and products to telecommunications carriers, vendors and users;
Nortel's operations include its DSS II Business (as hereinafter
defined) which focuses on developing software-intensive communications
products for Nortel's Customers (as hereinafter defined);
Purchaser and Nortel have entered into a Letter of Intent (as
hereinafter defined) pursuant to which Purchaser has expressed an
interest in purchasing certain assets of the DSS II Business; and
Purchaser wishes to buy, and Nortel wishes to sell on the terms and
conditions set out in this Agreement, certain assets of the DSS II
Business;
NOW THEREFORE in consideration of the premises and covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1
5
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement (including the recitals, this
Article and each Schedule), unless there is something in the subject matter or
context inconsistent therewith or unless otherwise expressly provided, the
following words and expressions shall have the following meanings:
"ADA" means ADA Canada, Inc., a company incorporated pursuant to the
laws of The Yukon Territory;
"Affiliate" means any person or entity controlling, controlled by or
under common control with a party hereunder (with control, together
with its correlative meaning "controlled by," meaning the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of such person or entity whether through
ownership of voting securities by agreement or otherwise);
"Closing" means the completion of the sale to and the purchase by
Purchaser of the Purchased Assets in accordance with Article 2;
"Closing Date" means the date for the Closing as specified in Section
6.1;
"Closing Price" means the weighted average closing price of a share of
Purchaser Common Stock as reported on the Nasdaq National Market for
all of the trading days of a calendar quarter;
"Confidential Information" means any proprietary, scientific,
technical, planning, business, marketing, product or financial
information (including DSS II Information), formulas, patterns,
compilations, programs, devices, methods, techniques, processes, data,
trade secrets or know-how ("Information") of one of the parties hereto
or its Affiliates which is designated as confidential or similar
designation at the time of disclosure or that would be understood by
the party receiving such Information at the time of disclosure,
exercising reasonable business judgment, to be confidential;
"Contingent Payment" means the payments as specified in Section 2.12;
"Customers" means the DSS II Business' customers as of the Time of
Closing, with the exception ofAmeritech Communications Inc./Ameritech
Services, Inc., Energis Communications Limited, Xxxx Cablemedia
Management Limited, Avantel, S.A., Clear Communications Limited and
Netherlands Armed Forces Integrated Network/The Kingdom of the
Netherlands;
2
6
"DSS II Business" means the business unit of Nortel that designs,
develops, markets and licenses the DSS II Products;
"DSS II Information" means all design documentation, customer product
documentation (including training and operations), installation and
maintenance documentation, marketing materials developed for general
use, test specifications, Nortel proprietary utilities and tools,
command files for software development and testing, and everything
currently used by Nortel as of the Closing Date to develop, modify,
enhance and support the DDS II Products to the extent available in
accordance with Article 3 and 4 of the License Agreement (as
hereinafter defined);
"DSS II Intellectual Property" means any Nortel invention, patent,
utility model, copyright, industrial design, mask work or integrated
circuit topography right, or any Nortel right of whatsoever nature in
processes, techniques, improvements, modifications, computer software
and data, Confidential Information, trade secrets or know-how, or any
intangible right or privilege of a nature similar to any of the
foregoing which is incorporated in or infringed by the DSS II Software
or the DSS II Information;
"DSS II Products" means the DSS II products (including DSS II Software
and DSS II Information) which are comprised of software proprietary to
BC TEL, Microtel Limited and Nortel;
"DSS II Software" means all of the source code, object code and machine
code for the DSS II Products as of the Closing Date as described in
Schedule A to the License Agreement;
"Encumbrance" means a security interest, adverse claim (including right
of first purchase, option, first refusal or pre-emption), burden,
charge or other interest attaching to the Purchased Assets and created
by, through or under Nortel;
"Letter of Intent" means the Letter of Intent executed by Purchaser,
ADA and Nortel and dated April 15, 1997;
"License Agreement" means the License Agreement to be entered into by
Purchaser and Nortel pursuant to which rights and licenses are to be
granted to Purchaser to design, produce and market certain products or
software programs based upon DSS II Information and DSS II Software,
and attached hereto as Schedule B to this Agreement;
"Losses" means all actions, liabilities, fines, penalties, costs,
interest or damages suffered or incurred by a party, including
reasonable attorney's fees and disbursements;
3
7
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature;
"Purchased Assets" means the assets set out in Schedule A to this
Agreement, but excluding the Excluded Assets;
"Purchaser Common Stock" means the common stock of Purchaser, no par
value;
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into in connection with the issuance of shares of
Purchaser Common Stock and the Warrants as set forth in Section 2.5 of
this Agreement, a form of which is attached hereto as Schedule D;
"Services Agreement" means the Services Agreement to be entered into by
Purchaser and Nortel pursuant to which Nortel will provide to Purchaser
certain services related to the DSS II Business, and attached hereto as
Schedule E to this Agreement;
"Stock and Warrant Purchase Agreement" means the Stock and Warrant
Purchase Agreement to be entered into in connection with the partial
payment of the Purchase Price as set forth in Section 2.5 of this
Agreement, a form of which is attached hereto as Schedule F;
"Time of Closing" means the time on the Closing Date specified in
Section 6.1;
"Transaction Agreements" means the License Agreement, the Stock and
Warrant Purchase Agreement, the Registration Rights Agreement, the
Transaction Plan and the Services Agreement.
"Transition Period" means that 120 day period following the Closing
Date;
"Transaction Plan" means the document attached hereto as Schedule G;
and
"Warrants" means those warrants exercisable into 150,000 shares of
Purchaser Common Stock, in the form attached hereto as Schedule H.
1.2 INTERPRETATION. For purposes of this Agreement, except as otherwise
expressly provided:
a) "this Agreement" means this agreement, including the Schedules
hereto, as may from time to time be supplemented or amended and in
effect;
b) all references in this Agreement to a designated "Article,"
"Section," "Subsection" or other subdivision or to a Schedule are
to the designated
4
8
Article, Section, Subsection or other subdivision of, or Schedule
to, this Agreement;
c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section, Subsection or other subdivision or
Schedule;
d) the headings in this Agreement are for convenience only and do not
form a part of this Agreement and are not intended to interpret,
define or limit the scope, extent or intent of this Agreement or
any provision hereof;
e) unless expressed to be in some other currency, all references to
currency refer to lawful money of the United States of America.
The references to currency in the Schedules, excluding Schedule I,
refer to Canadian currency; and
f) words importing the masculine gender include the feminine or
neuter gender and words in the singular include the plural and
vice versa.
1.3 SCHEDULES. The following Schedules are attached to and form a part
of this Agreement:
a) Schedule A - Purchased Assets;
b) Schedule B - License Agreement
c) Schedule C - Assumed Liabilities
d) Schedule D - Registration Rights Agreement;
e) Schedule E - Services Agreement;
f) Schedule F - Stock and Warrant Purchase Agreement;
g) Schedule G - Transition Plan;
h) Schedule H - Warrants;
i) Schedule I - Allocation of Purchase Price;
j) Schedule J - [Intentionally Left Blank]; and
k) Schedule K - Xxxx of Sale
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE OF PURCHASED ASSETS. Upon the terms and subject to the
conditions herein contained, Nortel shall transfer, sell, assign and convey the
Purchased Assets to Purchaser or ADA as designated by Purchaser, and Purchaser
and ADA shall purchase and receive from Nortel all of Nortel's right, title and
interest in and to the Purchased Assets.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
in Section 2.1 above, the following shall not be included in the Purchased
Assets and shall not be sold by Nortel to Purchaser hereunder (the "Excluded
Assets"):
a) all cash and cash equivalents;
b) all accounts receivable;
5
9
c) all contracts and leases of equipment or other property not
assigned to and assumed by Purchaser as part of the Purchased
Assets or as otherwise contemplated by this Agreement;
d) all real estate and all leases of real property;
e) all prepaid expenses and deposits;
f) all causes of actions and litigation against third parties;
g) all tax returns of Nortel and all tax refunds due Nortel from any
governmental agency; and
h) any solvents or chemicals which are identified by Purchaser on or
before the Closing Date.
Purchaser shall have no control over, interest in or liability or
responsibility of any kind whatsoever for the Excluded Assets and/or Nortel's
use or possession of same, whether before or after the Time of Closing, except
as otherwise provided in the Services Agreement.
2.3 ASSUMED LIABILITIES. As of the Closing Date and subject to Section
2.4 below, Purchaser hereby agrees to assume, satisfy or perform when due those
liabilities and obligations of Nortel set forth in Schedule C attached hereto
(the "Assumed Liabilities"). Nortel acknowledges and agrees that all of the
Assumed Liabilities will be assumed by Purchaser as of the Closing Date.
2.4 NO ASSUMPTION OF LIABILITIES. Purchaser shall not assume and shall
not be liable for any liabilities of Nortel of whatever type or nature
whatsoever not specifically included in the Assumed Liabilities, including for
all employee accruals for unpaid vacation pay, premiums for unemployment
insurance, health premiums, Canada Pension Plan premiums, accrued wages,
salaries and commissions and employment benefit plan payments (collectively, the
"Retained Liabilities") and Nortel assumes full responsibility with respect to
all such employee accruals referred to in this subparagraph and all other
Retained Liabilities.
2.5 PURCHASE PRICE. In full consideration for the purchase by Purchaser
of the Purchased Assets and for the transactions contemplated in this Agreement,
Purchaser shall pay to Nortel the aggregate purchase price of US Three Million
Five Hundred Ninety-Nine Thousand Nine Hundred Ninety-Eight Dollars
(US$3,599,998) and the Warrants, as adjusted pursuant to Section 2.12 below (the
"Purchase Price"), in the following manner and subject to the following
conditions:
a) Purchaser shall pay to Nortel US One Million Dollars
(US$1,000,000) in cash at the Time of Closing;
b) Purchaser shall issue to Nortel the Warrants at the Time of
Closing;
c) Purchaser shall pay Nortel US Eight Hundred Sixty-Six Thousand Six
Hundred Sixty-Six Dollars (US$866,666) in shares of Purchaser
Common Stock, in cash or in a combination of cash and shares of
Purchaser Common Stock, at Purchaser's sole discretion, per
quarter, commencing
6
10
July 15, 1997 for a period of three (3) consecutive quarters, for
an aggregate payment of US Two Million Five Hundred Ninety-Nine
Thousand Nine Hundred Ninety-Eight Dollars (US$2,599,998). Such
payment shall be made as described in Section 2.6 below and shall
be subject to offset as described in Subsection 2.5(d) below; and
d) Purchaser may, in addition to and without in any way waiving its
other remedies under this Agreement or otherwise, withhold
installment payments of the Purchase Price as set out in
Subsection 2.5(c) to cover legal expenses reasonably incurred by
Purchaser in defending against infringement litigation and to
offset any payment of damages, settlements or royalties to third
parties in the event that sales of any of the DSS II Business
products that are acquired by Purchaser pursuant to this Agreement
are claimed to infringe patents or other intellectual property of
any third party and such claims become the subject of litigation.
It is a condition precedent to Purchaser's right to so withhold
payment and to so offset that, upon the filing of any such suit,
Purchaser and ADA shall cease to sell that portion of the DSS II
Business product or products which is the subject of such
litigation.
2.6 MANNER OF PAYMENT. In partial payment of the Purchase Price,
Purchaser and ADA, if designated by Purchaser, shall pay the sum set out in
Subsection 2.5(a) to Nortel at the Time of Closing by wire transfer in
immediately available funds to *. Any sums which Purchaser determines to pay, in
Purchaser's sole discretion, pursuant to Subsection 2.5(c) to Nortel in cash
shall be paid by wire transfer in immediately available funds to * in three
equal installments as follows: the first on or before July 15, 1997, the second
on or before October 15, 1997 and the third on or before January 15, 1998.
2.7 ISSUANCE OF STOCK AND WARRANTS; REGISTRATION RIGHTS. The issuance
of the Warrants and the shares of Purchaser Common Stock in partial payment of
the Purchase Price, if any, as set out in Subsections 2.5(b) and 2.5(c) shall be
governed by the Stock and Warrant Purchase Agreement. In the event that
Purchaser determines to pay, in Purchaser's sole discretion, pursuant to
Subsection 2.5(c) any sums in shares of Purchaser Common Stock, the number of
shares of Purchaser Common Stock, if any, to be issued to Nortel on the
following dates shall be equal to the amount of the payment to be made by
Purchaser in Purchaser Common Stock divided by the Closing Price for the quarter
ending immediately prior to the date of payment. Such shares issued to Nortel,
if any, shall be issued in three installments as follows: the first on or before
July 15, 1997, the second on or before October 15, 1997 and the third on or
before January 15, 1998. The shares of Purchaser Common Stock issuable upon
exercise of the Warrants and the shares of Purchaser Common Stock issued in
partial payment of the Purchase Price, if any, shall be entitled to those
certain rights to register the shares for resale in the United States public
market pursuant to the Registration Rights Agreement.
2.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
as set out in Schedule I.
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
7
11
2.9 EXPENSES AND TAXES. The parties to this Agreement shall be solely
responsible for their respective legal, accounting, taxes and other fees and
costs with respect to the transactions that are the subject of this Agreement.
Purchaser shall be liable for and pay all taxes, duties and like charges
properly payable upon and in connection with the conveyance of the Purchased
Assets and the grant of the license to the DSSII Products.
2.10 TITLE. Title to the Purchased Assets shall pass to Purchaser or
ADA as designated by Purchaser at the Time of Closing and the Purchased Assets
shall be at the risk of Nortel prior to Closing. Nortel and Purchaser
acknowledge that it is intended that Nortel shall be entitled to the benefit of
all revenues arising from the DSS II Business up to the Closing and shall be
responsible for all expenses incurred by the DSS II Business up to the Closing.
2.11 ELECTION. Nortel and the Purchaser shall elect jointly under
Subsection 167(1) of the Excise Tax Act (Canada), in the form prescribed for the
purposes of that subsection, in respect of the sale and transfer of the
Purchased Assets hereunder, and Nortel shall file such election in its GST
return for its reporting period that includes the Closing Date. Nortel
represents that its GST Registration Number is *.
2.12 CONTINGENT PAYMENTS. Nortel shall pay to Purchaser the following
payments (the "Contingent Payments") in order to establish a quality support
incentive for Purchaser and to allow Purchaser to resource customer service and
support functions to * the *, in the following manner, subject to the following
conditions and as adjusted pursuant to this Section 2.12:
a) On that date which is six months following the Closing, Nortel
shall pay to Purchaser US Five Hundred Thousand Dollars
(US$500,000) by certified cheque or bank draft drawn on the bank
of Nortel payable to or to the order of Purchaser or ADA, as
designated by Purchaser, in immediately available funds; and
b) On that date which is one (1) year following the Closing, Nortel
shall pay to Purchaser US Five Hundred Thousand Dollars
(US$500,000) by certified cheque or bank draft drawn on the bank
of Nortel payable to or to the order of Purchaser or ADA, as
designated by Purchaser, in immediately available funds.
The payment in Subsection 2.12(b) is conditional upon Purchaser * a * as of the
date which is one (1) year following the Closing as follows: (i) no * shall * an
* or * a * as a result of Purchaser's * under a purchase agreement; and (ii) no
* shall have been issued by * to the * or * in * to * of Nortel, at or above the
*, for Purchaser's * to * of the * of * as of the Closing Date. Nortel hereby
agrees that it shall * the terms and conditions of this provision.
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
8
12
Nortel agrees to use its best judgment in *, recognizing that some * of this
portion of this Agreement to * Purchaser's * or other aspects of a *. Nortel
acknowledges that Purchaser's * with * is *, and may not be * of * Purchaser. To
the extent that * of Purchaser results in a *, Nortel agrees to * in view of
this *. Notwithstanding the foregoing, Nortel's decision as to whether the
foregoing conditions have been satisfied shall be made in Nortel's sole
discretion, acting reasonably.
In the event the payment in Subsection 2.12(b) is required as set forth above,
such payment shall be reduced by the amount equal to the aggregate amounts
calculated as of each date of issuance of Purchaser Common Stock pursuant to
Subsection 2.5(c) as follows, up to a maximum reduction of US $500,000: the
product of (I) that amount that the reported closing price of a share of
Purchaser Common Stock on the Nasdaq National Market on the date which is one
day before the date which is one (1) year following the Closing is less than the
Closing Price on the date such Purchaser Common Stock was issued to Nortel
pursuant to Subsection 2.5(c) multiplied by (II) the number of shares of
Purchaser Common Stock issued on such date. For example, assume (A) shares of
Purchaser Common Stock are issued to Nortel pursuant to Subsection 2.5(c) only
on July 15, 1997, (B) that on the date which is one day before the date which is
one year following the Closing, the reported closing price of a share of
Purchaser Common Stock is US$10, (C) the Closing Price for the July 15, 1997
payment was US$5 and (D) 173,333 shares of Purchaser Common Stock are issued to
Nortel on July 15, 1997. No reduction in the payment due under Subsection
2.12(b) will be allowed. However, assume (W) shares of Purchaser Common Stock
are issued to Nortel pursuant to Subsection 2.5(c) only on July 15, 1997, (X)
that on the date which is one day before the date which is one year following
the Closing, the reported closing price of a share of Purchaser Common Stock is
US$4, (Y) the Closing Price for the July 15, 1997 payment was US$5 and (Z)
173,333 shares of Purchaser Common Stock are issued to Nortel on July 15, 1997.
The payment due under Subsection 2.12(b) would be reduced by US$173,333 and
Nortel would be required to pay to Purchaser US$326,667.
Nortel may, in addition to and without in any way waiving its other remedies
under this Agreement or otherwise, withhold the payment of any portion of the
Contingent Payment set forth in Section 2.12(b) above to offset against accrued
Losses incurred by Nortel in defending against litigation for breach of Nortel's
obligations to any Customers, which litigation arises directly from Purchaser's
performance of any such obligation, whether as a subcontractor or otherwise or
for any other litigation arising directly from Purchaser's performance of its
obligations under the Assumed Liabilities.
ARTICLE 3
NORTEL'S REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES. Nortel represents and warrants to
Purchaser, as warranties and representations that are true at the date hereof
and at the Time of Closing as if such warranties and representations were made
at such time that:
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
9
13
a) Nortel is a corporation duly organized and validly existing under
the laws of Canada, and has all requisite corporate power and
authority to carry on the business of the DSS II Business as now
conducted;
b) Nortel has all requisite corporate power and authority (i) to
execute, deliver and perform its obligations under the Transaction
Agreements and this Agreement, and (ii) to execute, deliver and
perform its obligations under all other agreements and instruments
executed and delivered by it pursuant to or in connection with
this Agreement. All proceedings or corporate action on the part of
Nortel, its officers, directors and shareholders required and
necessary for the authorization, execution and delivery of this
Agreement and the Transaction Agreements and the performance of
all obligations of Nortel hereunder and thereunder has been taken
or will be taken prior to the Closing, and each of this Agreement
and the Transaction Agreements constitutes valid and legally
binding obligations of Nortel, enforceable in accordance with
their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable
remedies;
c) the execution and delivery of this Agreement and the Transaction
Agreements by Nortel and the consummation of the transactions
herein and therein provided for will not, with or without the
giving of notice or the passage of time, or both, result in:
i) the breach or violation of any of the provisions of, or
constitute default under, or conflict with or cause the
acceleration of any obligation of Nortel under
A) any contract related to the Purchased Assets to which
Nortel is a party or by which it or the Purchased Assets
is or its properties are bound, including, without
limitation, the Services Agreement and the License
Agreement,
B) any provision of the constating documents or by-laws or
resolutions or articles of the board of directors or
shareholders of Nortel,
C) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over
Nortel,
D) any license, permit, approval, consent or authorization
held by Nortel and related to the Purchased Assets, or
E) any applicable, statute, ordinance, regulation or rule;
or
10
14
ii) the creation or imposition of any encumbrance on any of the
Purchased Assets;
which breach, violation or encumbrance would affect the Purchased
Assets or Purchaser's rights thereto or enjoyment thereof after
Closing;
d) no consent, authorization, order or approval of, or filing or
registration with, any governmental authority or other person or
entity is required for the execution and delivery by Nortel of
this Agreement or any Transaction Agreement and the consummation
by Nortel of the transactions contemplated by such agreements;
e) subject to the rights of third parties set out in Section 2 of
Schedule A, the Purchased Assets are owned by Nortel free and
clear of all liens and encumbrances;
f) Nortel's financial statements for the most recently completed
fiscal period present fairly the assets and liabilities of the DSS
II Business and its financial condition as of the dates of such
financial records and fairly present the results of operations of
the DSS II Business for the periods reflected in the financial
records in accordance with generally accepted accounting
principles consistently applied (except as may be indicated in the
notes thereto and subject to normal year-end adjustments in the
case of any interim financial statements);
g) there are no claims, proceedings, actions, or lawsuits in
existence, or, to the best of Nortel's knowledge, threatened or
asserted against or with respect to the Purchased Assets which
would have a material adverse effect on the Purchased Assets or
the value thereof;
h) there are no material agreements entered into by Nortel in respect
of the purchase of the DSS II Business or the Purchased Assets,
other than this Agreement and the Transaction Agreements; i) to
the best of Nortel's knowledge, Nortel has complied in all
material respects with all existing laws, rules, regulations and
orders and has obtained all permits and licenses required to
operate the DSS II Business, and the present use by Nortel of the
Purchased Assets in the operation of the DSS II Business does not
violate any laws, rules, regulations or orders;
j) to the best of Nortel's knowledge, there are no licenses, permit
registrations or governmental approvals, agreements or consents
applied for, pending by, issued or given to Nortel which would
have a material adverse effect on the DSS II Business, and no
agreements with governmental authorities (provincial, state, local
or foreign) entered into by Nortel which would have a material
adverse effect on the DSS II Business are in effect or have been
applied for or are pending.
3.2 AS IS WHERE IS. THE PURCHASED ASSETS ARE SOLD ON AN AS IS WHERE IS
BASIS IN THEIR CONDITION ON THE CLOSING DATE. EXCEPT AS
11
15
SET FORTH IN SECTION 3.1(c) ABOVE, THERE ARE NO OTHER WARRANTIES,
REPRESENTATIONS, CONDITIONS OR GUARANTEES OF ANY KIND WHATSOEVER, EITHER EXPRESS
OR IMPLIED, WHETHER ARISING BY STATUTE, CONTRACT, TORT, PRODUCT LIABILITY OR
OTHERWISE, REGARDING THE PURCHASED ASSETS, INCLUDING BUT NOT LIMITED TO,
WARRANTIES, REPRESENTATIONS, CONDITIONS AND GUARANTEES AS TO MERCHANTABILITY,
FITNESS FOR A SPECIFIC PURPOSE, DESIGN, CONDITION OR QUALITY OF THE PURCHASED
ASSETS.
3.3 PURCHASER'S SOLE REMEDY. PURCHASER'S SOLE REMEDY FOR BREACH OF THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 3 SHALL BE LIMITED TO
THE INDEMNITY SET OUT IN SECTION 3.5.
3.4 SURVIVAL OF NORTEL'S REPRESENTATIONS AND COVENANTS. Each
representation, warranty, covenant and agreement of Nortel contained herein
shall survive the execution and delivery of this Agreement and the Closing, and
shall expire * after the Closing Date unless, on or before such expiry date,
Purchaser has delivered to Nortel written notice of a claim relating to such
representation, warranty, covenant or agreement.
3.5 NORTEL'S LIABILITY. Subject to Section 3.4, and except as otherwise
expressly provided for in this Agreement, Nortel shall be liable to Purchaser
for, and shall indemnify and save harmless Purchaser from and against Losses
sustained or incurred by Purchaser which arise out of, are based on, or are the
result of:
a) any misrepresentation or breach of representation, breach of
warranty, nonfulfillment of covenant or agreement made by Nortel
herein or in any certificate or other document delivered by or on
behalf of Nortel pursuant hereto; or
b) any failure of Nortel to comply with, or any breach by Nortel of,
any of the covenants or agreements in this Agreement to be
performed by Nortel, excluding in any event (with respect to both
Sections 3.5(a) and 3.5(b))
(iii) anything for which Nortel is indemnified pursuant to
Section 4.4, and
(iv) anything for which liability is disclaimed pursuant to
Section 3.6;
excepting in each case any Losses to the extent that the same are caused by the
negligence or willful misconduct of Purchaser. No claim shall be made by
Purchaser hereunder unless written notice of such claim is delivered to Nortel
within the time stipulated in Section 3.4 and such claim, together with any
prior claims by Purchaser, exceeds *. In no event shall Nortel's cumulative
liability under this Section 3.5 exceed *. It is agreed that if a
misrepresentation or breach of warranty or covenant is discovered by Purchaser
after
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
12
16
Closing, Purchaser's remedy shall be limited to indemnification as set forth
herein and Purchaser shall not be entitled to rescission of this Agreement.
3.6 CONDITIONS FOR INDEMNIFICATION. The indemnity contained in Section
3.5 shall apply only where the following conditions are satisfied:
a) Nortel shall have sole conduct of all proceedings and negotiations
connected with such claims;
b) Purchaser (i) will promptly notify Nortel within twenty (20)
calendar days of its receipt of a written notice of any such
claims, (ii) will furnish Nortel within thirty (30) calendar days
of its receipt of such notice with copies of any pleadings,
correspondence or other documents relating to such claims that are
in Purchaser's possession, and (iii) will not make any admissions
regarding such claims;
c) Purchaser will provide Nortel with reasonable assistance and
authority in connection with such claims.
3.7 LIMITATION OF NORTEL'S INDEMNIFICATION. Notwithstanding anything to
the contrary contained in this Agreement, Nortel shall not be liable under the
indemnification provisions of this Agreement or otherwise have any liability for
any misrepresentation or breach of warranty or covenant to the extent that such
misrepresentation or breach of warranty or covenant by Nortel is disclosed in
any due diligence materials requested by and delivered to Purchaser prior to
Closing; provided, however, that any failure of Purchaser to discover such
misrepresentation or breach of warranty or covenant is not caused by the willful
misconduct of Nortel.
13
17
ARTICLE 4
PURCHASER'S REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES. Purchaser hereby represents and
warrants to Nortel, as warranties and representations that are true at the date
hereof and at the Time of Closing as if such warranties and representations were
made at such time, that:
a) Purchaser is a corporation duly organized and validly existing
under the laws of the State of California and has all requisite
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. Purchaser is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would be
reasonably expected to have a material adverse effect on the
business, operations, properties, assets, prospects or condition
(financial or otherwise) of Purchaser, taken as a whole. Except as
disclosed in Purchaser's filings with the United States Securities
and Exchange Commission, Purchaser has no subsidiaries;
b) Purchaser has all requisite corporate power and authority (i) to
execute, deliver and perform its obligations under this Agreement,
the Transaction Agreements and the Warrants and (ii) to execute,
deliver and perform its obligations under all other agreements and
instruments executed and delivered by it pursuant to or in
connection with this Agreement. All proceedings or corporate
action on the part of Purchaser, its officers, directors and
shareholders required and necessary for the authorization,
execution and delivery of this Agreement, the Transaction
Agreements and the Warrants and the performance of all obligations
of Purchaser hereunder and thereunder has been taken or will be
taken prior to the Closing, and each of this Agreement, the
Transaction Agreements and the Warrants constitutes valid and
legally binding obligations of Purchaser, enforceable in
accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditor's rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies;
c) the execution and delivery of this Agreement, the Transaction
Agreements, and the Warrants by Purchaser and the consummation of
the transactions contemplated herein and therein provided for will
not, with or without the giving of notice or passage of time, or
both, violate, nor be in conflict with, nor result in a breach or
violation of any of the provisions of, or constitute default
under, or cause the acceleration of any obligation of Purchaser
under the provisions of any agreement or instrument to which
Purchaser is a party or by which Purchaser is bound, or any
judgment, decree, order or award of any court, governmental body
or arbitrator having jurisdiction over
14
18
Purchaser, any applicable statute, ordinance, regulation or rule,
or any provision of Purchaser's by-laws, or resolutions or
articles of the board of directors or shareholders of Purchaser;
d) as of the date of this Agreement, Purchaser is able to pay the
cash portion of the Purchase Price in cash;
e) all shares of Purchaser Common Stock to be issued to Nortel in
partial payment of the Purchase Price, if any, and the Warrants
shall be issued in a private transaction under the terms and
conditions of the Stock and Warrant Purchase Agreement and
Nortel's rights thereunder shall be governed by the terms and
conditions of the Stock and Warrant Purchase Agreement;
f) the financial statements of Purchaser present fairly the assets
and liabilities of Purchaser and its financial condition as of the
dates of such financial statements and fairly present the results
of operations of Purchaser for the periods reflected in the
financial statements in accordance with generally accepted
accounting principles consistently applied (except as may be
indicated in the notes thereto and subject to normal year-end
adjustments in the case of any interim financial statements); and
g) Purchaser is an American-controlled entity within the meaning and
for the purposes of the Investment Canada Act, and will give
notice of its acquisition of the Purchased Assets to Investment
Canada in accordance with that Act.
4.2 NORTEL'S SOLE REMEDY. NORTEL'S SOLE REMEDY FOR BREACH OF THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 4 SHALL BE LIMITED TO
THE INDEMNITY SET OUT IN SECTION 4.4.
4.3 SURVIVAL OF PURCHASER'S REPRESENTATIONS AND COVENANTS. Each
representation, warranty, covenant and agreement of Purchaser contained herein
shall survive the execution and delivery of this Agreement and the Closing, and
shall expire * after the Closing Date unless, on or before such expiry date,
Nortel has delivered to Purchaser written notice of a claim relating to such
representation, warranty, covenant or agreement.
4.4 PURCHASER'S LIABILITY. Subject to Section 4.3 and except as
otherwise expressly provided for in this Agreement, Purchaser shall be liable to
Nortel for, and shall indemnify and save harmless Nortel from and against all
Losses sustained or incurred by Nortel which arise out of, are based on, or are
the result of:
a) any misrepresentation or breach of representation, breach of
warranty, nonfulfillment of covenant or agreement made by
Purchaser herein or in any certificate or other document delivered
by or on behalf of Purchaser pursuant hereto; or
b) any failure of Purchaser to comply with, or any breach by
Purchaser of, any of the covenants or agreements in this Agreement
to be performed by Purchaser; or
c) Purchaser's performance or non-performance of the Assumed
Liabilities;
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
15
19
excepting in each case any Losses to the extent that the same are caused by the
negligence or willful misconduct of Nortel. No claim shall be made by Nortel
hereunder unless written notice of such claim is delivered to Purchaser within
the time stipulated in Section 4.3 and such claim, together with any prior
claims by Nortel, exceeds *. In no event shall Purchaser's cumulative liability
under this Section 4.4 exceed *.
4.5 CONDITIONS FOR INDEMNIFICATION. The indemnity contained in Section
4.4 shall apply only where the following conditions are satisfied:
a) Purchaser shall have sole conduct of all proceedings and
negotiations connected with such claims;
b) Nortel (i) will promptly notify Purchaser within twenty (20)
calendar days of its receipt of a written notice of any such
claims, (ii) will furnish Purchaser within thirty (30) calendar
days of its receipt of such notice with copies of any pleadings,
correspondence or other documents relating to such claims that are
in Nortel's possession, and (iii) will not make any admissions
regarding such claims;
c) Nortel will provide Purchaser with reasonable assistance and
authority in connection with such claims.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 CONDITIONS FOR PURCHASER'S BENEFIT. The obligations of Purchaser
under this Agreement shall be subject to the satisfaction at or prior to the
Closing of the following conditions (each of which is for the exclusive benefit
of Purchaser and may be waived in writing by Purchaser):
a) all actions on the part of Nortel necessary to authorize the
execution, delivery and performance of this Agreement and the
other agreements provided for herein, and the consummation of the
transactions contemplated herein and therein, shall have been duly
and validly taken by Nortel;
b) all of Nortel's representations and warranties contained in this
Agreement and in the Transaction Agreements shall be true in all
material respects at and as of the Time of Closing and Nortel
shall have performed and satisfied in all respects all covenants
and agreements required by this Agreement to be performed and
satisfied by Nortel at or prior to the Closing;
c) Nortel shall have executed and delivered to Purchaser the Stock
and Warrant Purchase Agreement;
d) Nortel shall have executed and delivered to Purchaser the
Registration Rights Agreement;
* Certain confidential portions of this Exhibit were omitted by means of
blacking out the text (the "Xxxx"). This Exhibit has been filed separately
with the Secretary of the Commission without the Xxxx pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934.
16
20
e) Nortel shall have executed and delivered to Purchaser the Services
Agreement; and
f) Nortel shall have executed and delivered to Purchaser the License
Agreement.
5.2 CONDITIONS FOR NORTEL'S BENEFIT. The obligations of Nortel under
this Agreement shall be subject to the satisfaction at or prior to the Closing
of the following conditions (each of which is for the exclusive benefit of
Nortel and may be waived in writing by Nortel):
a) all actions on the part of Purchaser necessary to authorize the
execution, delivery and performance of this Agreement and the
other agreements provided for herein, and the consummation of the
transactions contemplated herein and therein, shall have been duly
and validly taken by Purchaser;
b) all representations and warranties of Purchaser contained in this
Agreement and in the Transaction Agreements shall be true in all
material respects at and as of the Time of Closing and Purchaser
shall have performed and satisfied in all respects all covenants
and agreements required by this Agreement to be performed and
satisfied by Purchaser at or prior to the Closing;
c) Purchaser shall have executed and delivered to Nortel the Stock
and Warrant Purchase Agreement;
d) Purchaser shall have executed and delivered to Nortel the
Registration Rights Agreement;
e) Purchaser shall have executed and delivered to Nortel the Services
Agreement;
f) Purchaser shall have executed and delivered to Nortel the License
Agreement.
5.3 NON-FULFILLMENT OF CONDITIONS. If any of the conditions referred to
in Sections 5.1 or 5.2 shall not be fully satisfied at or before the Closing,
then the party for whose benefit such condition has been included in this
Agreement may, at its option, either:
a) complete the transactions contemplated by this Agreement, in which
event such party shall be deemed to have waived such condition; or
b) elect not to complete the transactions contemplated by this
Agreement.
5.4 NO PREJUDICE TO OTHER RIGHTS. No waiver by either party of the
conditions set forth in Sections 5.1 or 5.2 in whole or in part shall in any way
prejudice +or limit the rights and remedies of either party to claim or recover
damages and compensation from the other party in respect of any inaccuracy in
any representation or warranty that is not the subject of the waiver, or in
respect of any breach or non-performance of any covenant or agreement of the
other party contained in this Agreement that is not the subject of such waiver.
No election by either party not to complete the transactions contemplated by
this Agreement as a result of any breach or non-performance by the other party
of any covenant or agreement contained in this Agreement, which breach or
non-performance has resulted in a condition set forth in
17
21
in Sections 5.1 or 5.2 failing to be satisfied at or before the Closing, shall
in any way prejudice or limit the rights of the party electing not to complete
in respect of such breach or non-performance by the other party.
ARTICLE 6
CLOSING
6.1 TIME AND PLACE OF CLOSING. The Closing shall take place by way of
courier or facsimile transmission commencing at 10:00 a.m. San Diego, California
time, on the 27th day of June, 1997, or by such other manner at such other time
as the parties may agree.
6.2 NORTEL'S OBLIGATIONS ON CLOSING. At the Closing, Nortel shall
deliver to Purchaser:
a) a xxxx of sale in respect of the Purchased Assets, in the form
attached hereto as Schedule K;
b) a copy of the Stock and Warrant Purchase Agreement, executed on
behalf of Nortel;
c) a copy of the Registration Rights Agreement, executed on behalf of
Nortel;
d) a copy of the License Agreement, executed on behalf of Nortel;
e) a copy of the Services Agreement, executed on behalf of Nortel;
f) the prescribed form electing to have Section 167 of the Excise Tax
Act (Canada) apply to the transfer of the Purchased Assets, duly
executed by each of Nortel and ADA; and
g) such other closing certificates as may be reasonably requested by
Purchaser.
6.3 PURCHASER'S OBLIGATIONS ON CLOSING. At the Closing, Purchaser shall
deliver to Nortel:
a) certified cheques or bank drafts payable to "Northern Telecom
Limited" in the amount of US One Million Dollars (US$1,000,000)
and any applicable taxes;
b) the Warrants in the name of "Northern Telecom Limited";
c) a certified copy of a resolution of the Boards of Directors of
Purchaser and ADA, if applicable, authorizing the purchase of the
Purchased Assets and the execution and delivery of this Agreement
and all agreements contemplated under this Agreement;
d) a copy of the Stock and Warrant Purchase Agreement, executed on
behalf of Purchaser;
e) a copy of the Registration Rights Agreement, executed on behalf of
Purchaser;
f) a copy of the License Agreement, executed on behalf of Purchaser;
g) a copy of the Services Agreement, executed on behalf of Purchaser;
18
22
h) the prescribed form electing to have Section 167 of the Excise Tax
Act (Canada) apply to the transfer of the Purchased Assets,
executed on behalf of Purchaser; and
i) such other closing certificates as may be reasonably requested by
Nortel.
ARTICLE 7
POST-CLOSING MATTERS
7.1 NORTEL TO PROVIDE ACCESS AND FACILITIES. After the Time of Closing
and until such time as Purchaser can move the Purchased Assets to the
Purchaser's premises, such move to be completed as soon as practicable but no
later than December 31, 1997, or such earlier date of which Purchaser gives
Nortel notice, Nortel shall provide access in accordance with the Transition
Plan.
7.2 POST-CLOSING ACCESS TO BOOKS AND RECORDS. Purchaser and Nortel
agree that, subsequent to the Closing Date, they will grant to each other and
each other's agents reasonable access during normal business hours to any books
and records then in their possession or in the possession of their respective
affiliates solely to the extent of information contained in such books and
records that relates to Nortel's operation of the DSS II Business prior to the
Closing Date and is shown to be needed for tax, accounting, operations or other
reasonable business purposes.
7.3 ACCOUNTS RECEIVABLE. Purchaser shall provide all reasonable
assistance to Nortel with respect to the collection from Customers by Nortel of
any accounts receivable which relate to the Purchased Assets and which accrued
prior to the Closing. If Purchaser receives payment of any such accounts
receivable, such payment shall be received in trust for Nortel and shall
forthwith be paid by Purchaser to Nortel. Purchaser shall provide Nortel with
reasonable details of any payment received by Purchaser and paid over to Nortel
pursuant to this Section, and, if requested by Nortel, a full accounting of all
such payments received by Purchaser.
ARTICLE 8
CONFIDENTIAL INFORMATION
8.1 CONFIDENTIALITY. Except as required by law, all information
provided to Purchaser in contemplation of and pursuant to this Agreement and the
terms and conditions of this Agreement shall be kept confidential by Purchaser
in accordance with the terms of the Non-Disclosure Agreement dated January 8,
1997 between Nortel and Purchaser.
8.2 PUBLICITY. No party to this Agreement shall make any public
disclosure or publicity release or disclose the existence of or the terms and
conditions of this Agreement to any other person without the prior written
consent of the other party, except
19
23
that either party may disclose the existence of this agreement to: (i) its
agents, representatives or others who will assist such party in conducting,
evaluating or facilitating each party's due diligence review; (ii) its lenders
or investors; and (iii) governmental agencies, where counsel deem such
disclosure necessary to comply with applicable laws; provided that the foregoing
shall not be deemed to prevent either Nortel or Purchaser from making any public
announcement which may be required by the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder or the rules and regulations
of any securities exchange upon which the securities of Nortel or Purchaser are
traded.
ARTICLE 9
GENERAL PROVISIONS
9.1 ASSIGNMENT. Purchaser may assign all or any part of this Agreement
to (i) an Affiliate, (ii) a non-Affiliate third party in connection with any
merger or acquisition activity to which Purchaser is a party and (iii) a
non-Affiliate third party subcontractor; provided, however, that Purchaser
cannot make such subcontractor assignment without the prior written consent of
Nortel and unless the duties assigned to such subcontractor will be performed
under the management and direction of Purchaser, and Purchaser shall remain
liable for the performance and obligations of such subcontractor assignee.
9.2 COUNTERPARTS; FACSIMILE. This Agreement may be executed in
counterparts with the same effect as if both parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same agreement. This Agreement may be executed by the parties and
transmitted by facsimile transmission and if so executed and transmitted, this
Agreement shall be for all purposes as effective as if the parties had delivered
an executed original Agreement.
9.3 CONFLICT IN TERMS. Wherever any provision of any Schedule to this
Agreement conflicts with any provision in the body of this Agreement, the
provisions of the body of this Agreement shall prevail. All documents executed
and delivered pursuant to this Agreement are subordinate to the provisions of
this Agreement and, except as otherwise expressly provided, the provisions of
this Agreement shall govern and prevail in the event of a conflict between the
provisions of any such document and the provisions of this Agreement.
9.4 COSTS AND EXPENSES. Each party shall be responsible for and shall
pay its own costs and expenses incidental to the preparation of and carrying out
of this Agreement and the documents and agreements contemplated hereunder.
9.5 ENTIRE AGREEMENT. This Agreement, including the Schedules thereto,
states and comprises the entire agreement between the parties and shall
supersede and replace any and all prior agreements between the parties and may
be amended only by written instrument signed by both parties.
20
24
9.6 FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finder's fee or commission to any broker, finder or any other
third party in connection with this transaction. Each party agrees to indemnify
and hold harmless the other from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the
indemnifying party or any of its officers, partners, employees or
representatives is responsible.
9.7 FURTHER ASSURANCES. At Closing and thereafter as may be necessary
or desirable, and without further consideration, each of the parties shall
execute, acknowledge and deliver such other documents, including, without
limitation, assignments of the DSS II Products included in the Purchased Assets
and shall take or refrain from taking such action as the other party may
reasonably require to evidence, carry out and give full effect to the terms,
conditions, intent and meaning of this Agreement and to assure the completion of
the transactions contemplated hereby.
9.8 GOVERNING LAW. This Agreement shall governed by and construed in
accordance with the laws of the Province of British Columbia, Canada and the
courts of the Province of British Columbia and appellate courts therefrom shall
have non-exclusive jurisdiction to determine all matters in dispute hereunder
and the parties hereby attorn to the non-exclusive jurisdiction of such courts.
9.9 NOTICE. Any notice, direction or other instrument required or
permitted to be given hereunder shall be in writing and may be given by
facsimile transmission or by delivery, addressed as follows:
To Nortel: Northern Telecom Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: ________________, _________
Telephone No.:(___) ___-____
Facsimile No.:(___) ___-____
With a copy to: Office of General Counsel
21
25
To Purchaser: Applied Digital Access, Inc.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx
X.X.X. 00000
Attention: President
Telephone No.:(000) 000-0000
Facsimile No.:(000) 000-0000
With a copy to: Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx
X.X.X. 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.:(000) 000-0000
Facsimile No.:(000) 000-0000
Either of the parties may from time to time change its address for service
herein by giving written notice to the other party. Any notice may be served by
personal service upon a party or by facsimile to the number for notice
hereunder. Any notice given by service upon a party and any notice given by
facsimile shall respectively be deemed to be given to and received by the
addressee on the day (except Saturdays, Sundays, and statutory holidays) of
service or the day of receipt.
9.10 NO CONSEQUENTIAL LOSSES. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY IN CONTRACT OR IN TORT OR UNDER ANY OTHER LEGAL THEORY FOR
DAMAGES FOR LOST PROFITS, LOST SAVINGS, OR INCIDENTAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTION
DOCUMENTS OR THE LICENSE AGREEMENT, EVEN IF CAUSED BY SUCH PARTY'S NEGLIGENCE
AND EVEN IF SUCH PARTY HAS KNOWLEDGE OF THE POSSIBILITY OF SUCH POTENTIAL LOSS
OR DAMAGE.
9.11 NO WAIVER. No failure on the part of either party to exercise any
right or remedy in respect of this Agreement shall operate as a waiver thereof,
unless it is in writing and signed by such party. Unless expressly provided for
therein, such waiver shall not limit or affect the rights of the party with
respect to any other or subsequent breach of the same or any other provision. No
single or partial exercise of any right or remedy in respect of this Agreement
shall preclude any other or further exercise thereof or the exercise of any
right or remedy at law or in equity or by statute or otherwise conferred.
22
26
9.12 SEVERABILITY. In the event that any particular provision or
provisions of this Agreement is or are determined to be invalid, illegal or
unenforceable in any respect, then the particular provision or provisions shall
be deemed to be severed from the remainder of this Agreement and the validity,
legality or enforceability of the remaining provisions contained in this
Agreement shall not in any way be affected or impaired, unless as a result of
any such determination this Agreement would fail in its essential purpose.
23
27
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
APPLIED DIGITAL ACCESS, INC.
by its authorized signatory:
Per:
--------------------------------
Name:
Title:
NORTHERN TELECOM LIMITED
by its authorized signatory:
Per:
--------------------------------
Name:
Title:
Per:
--------------------------------
Name:
Title:
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
24