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EXHIBIT 2.2
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*** Text Omitted and Filed Separately
Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
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ASSET PURCHASE AGREEMENT
AMONG
XXXXXXXX XXXXXXXXXXXX,
A DELAWARE CORPORATION,
KII ACQUISITION COMPANY,
A DELAWARE CORPORATION,
AND
KYOCERA INTERNATIONAL, INC.
A CALIFORNIA CORPORATION
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DATED DECEMBER 22, 1999
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................. 1
1.1 Certain Defined Terms...................................................... 1
1.2 Other Defined Terms........................................................ 9
1.3 Other Definitional Provisions.............................................. 11
ARTICLE 2 PURCHASE AND SALE....................................................... 11
2.1 Assets to Be Sold.......................................................... 11
2.2 Assumption and Exclusion of Liabilities.................................... 14
2.3 Purchase Price............................................................. 15
2.4 Closing.................................................................... 15
2.5 Closing Deliveries by the Seller........................................... 15
2.6 Closing Deliveries by the Purchaser........................................ 15
2.7 Post-Closing Adjustment of the Purchase Price.............................. 16
(a) September Statement of Net Assets................................... 16
(b) Closing Statement Of Net Assets..................................... 16
(c) Disputes............................................................ 17
(d) Purchase Price Adjustment........................................... 18
(e) Prorations.......................................................... 19
2.8 Allocation of the Purchase Price........................................... 19
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER............................ 19
3.1 Organization, Authority and Qualification of the Selling Party............. 19
3.2 No Conflict................................................................ 20
3.3 Governmental Consents and Approvals........................................ 20
3.4 Financial Information...................................................... 21
3.5 No Undisclosed Liabilities................................................. 21
3.6 Inventories................................................................ 21
3.7 Sales and Purchase Order Backlog........................................... 22
3.8 Customers.................................................................. 22
3.9 Suppliers.................................................................. 22
3.10 Products and Services...................................................... 22
3.11 Year 2000 Readiness........................................................ 23
3.12 Litigation................................................................. 23
3.13 Compliance with Laws....................................................... 23
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3.14 Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions................................................................. 24
3.15 Permits and Licenses....................................................... 25
3.16 Environmental Matters...................................................... 25
3.17 Material Contracts......................................................... 26
3.18 Intellectual Property...................................................... 27
3.19 Real Property.............................................................. 28
3.20 Tangible Personal Property................................................. 29
3.21 Right, Title and Interest in Tangible Personal Property.................... 29
3.22 Employee Benefit Matters................................................... 30
3.23 Labor Matters.............................................................. 32
3.24 Key Employees.............................................................. 33
3.25 Taxes...................................................................... 33
3.26 Insurance.................................................................. 33
3.27 Brokers.................................................................... 34
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE PARENT
CORPORATION............................................................. 34
4.1 Organization and Authority................................................. 34
4.2 No Conflict................................................................ 34
4.3 Governmental Consents and Approvals........................................ 35
4.4 Litigation................................................................. 35
4.5 Brokers.................................................................... 35
ARTICLE 5 ADDITIONAL AGREEMENTS................................................... 35
5.1 Conduct of Business Prior to the Closing................................... 35
5.2 Access to Information...................................................... 36
5.3 Confidentiality............................................................ 36
5.4 Regulatory and Other Authorizations; Notices and Consents.................. 38
5.5 Notice of Developments..................................................... 39
5.6 No Solicitation or Negotiation............................................. 39
5.7 Certain Matters Related to Intellectual Property........................... 40
5.8 Non-Competition and Non-Solicitation....................................... 43
5.9 Excluded Liabilities....................................................... 44
5.10 Bulk Transfer Laws......................................................... 44
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5.11 Tax Matters................................................................ 44
5.12 Letters of Credit; Lien Releases........................................... 45
5.13 Subscriber Business Receivables............................................ 46
5.14 Ancillary Agreements....................................................... 46
5.15 Further Action............................................................. 47
5.16 Selection of Tangible Personal Property; Spare Parts....................... 47
5.17 Relocation and Outsourcing................................................. 48
5.18 Catastrophic Occurrences................................................... 48
ARTICLE 6 EMPLOYEE MATTERS........................................................ 49
6.1 Employee Selection......................................................... 49
6.2 Hiring of Employees........................................................ 49
6.3 Employee Liabilities....................................................... 50
6.4 Service Credit............................................................. 50
6.5 Indemnity.................................................................. 50
6.6 Certain Other Employee-Related Costs....................................... 51
ARTICLE 7 CONDITIONS TO CLOSING................................................... 51
7.1 Conditions to Obligations of the Seller.................................... 51
7.2 Conditions to Obligations of the Purchaser................................. 52
ARTICLE 8 INDEMNIFICATION......................................................... 54
8.1 Survival of Representations and Warranties and Covenants................... 54
8.2 Indemnification by the Seller.............................................. 54
8.3 Indemnification by the Purchaser and the Parent Corporation................ 55
8.4 Indemnification Procedures................................................. 56
8.5 Tax Matters................................................................ 57
8.6 Knowledge of Breach........................................................ 57
8.7 Indemnification Exclusive Remedy........................................... 57
8.8 Subrogation................................................................ 57
ARTICLE 9 TERMINATION AND WAIVER.................................................. 58
9.1 Termination................................................................ 58
9.2 Effect of Termination...................................................... 58
9.3 Waiver..................................................................... 58
ARTICLE 10 GENERAL PROVISIONS...................................................... 59
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10.1 Expenses................................................................... 59
10.2 Notices.................................................................... 59
10.3 Public Announcements....................................................... 60
10.4 Headings................................................................... 60
10.5 Severability............................................................... 60
10.6 Entire Agreement........................................................... 60
10.7 Assignment................................................................. 60
10.8 No Third-Party Beneficiaries............................................... 60
10.9 Amendment.................................................................. 61
10.10 Governing Law.............................................................. 61
10.11 Attorneys' Fees............................................................ 61
10.12 Counterparts............................................................... 61
10.13 Specific Performance....................................................... 61
10.14 Guarantee of Parent Corporation............................................ 61
10.15 Knowledge.................................................................. 61
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is entered into on December 22, 1999, by
and among XXXXXXXX XXXXXXXXXXXX, a Delaware corporation ("Seller"), KII
ACQUISITION COMPANY, a Delaware corporation ("Purchaser"), and KYOCERA
INTERNATIONAL, INC., a California corporation ("Parent Corporation").
RECITALS
A. The Seller and those Affiliates of Seller set forth on Exhibit A (the
Seller and such Affiliates being referred to herein as the "Selling Parties")
desire to sell to Purchaser and Purchaser desires to purchase from the Selling
Parties, the Purchased Assets and in connection therewith Purchaser is willing
to assume certain liabilities of the Selling Parties related thereto, all upon
the terms and subject to the conditions set forth in this Agreement.
B. In connection with the closing of the transactions contemplated by
this Agreement, Seller and Purchaser intend to enter into certain other related
agreements.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and intending to be legally
bound hereby, the Purchaser and the Seller hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ACTION" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"AGREEMENT" or "THIS AGREEMENT" means this Asset Purchase Agreement,
dated December 22, 1999, by and among the Seller, the Purchaser and the Parent
Corporation (including the Exhibits hereto and the Disclosure Schedule) and all
amendments hereto made in accordance with the provisions of Section 10.9.
"ANCILLARY AGREEMENTS" means: the (a) Lease Agreements; (b) ASICs Supply
Agreement; (c) Transition Services Agreement; (d) Employee Matters Agreement;
(e) Trademark License Agreement; and (f) Retained Business Support Agreement.
"ANNUAL FINANCIAL STATEMENTS" means the audited consolidated balance
sheets of the Seller as of September 26, 1999, together with the related
statement of income and cash flows for
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the fiscal year then ended, included in the Seller's Annual Report on Form 10-K
for the fiscal year ended September 26, 1999.
"ASICS SUPPLY AGREEMENT" means the ASICS Supply Agreement to be entered
into between the Seller and the Purchaser at the Closing containing the
principal terms set forth on Exhibit B.
"ASSUMPTION AGREEMENTS" means the Assumption Agreements to be entered
into between the Seller and the Purchaser or Affiliates of the Purchaser at the
Closing substantially in the form of Exhibit C.
"BILLS OF SALE" means the Bills of Sale and Assignment to be executed by
the Seller at the Closing substantially in the form of Exhibit D.
"BUSINESS" means the business of the Selling Parties and Qualcomm
Personal Electronics as conducted as of the date hereof relating to designing,
developing, manufacturing, marketing, selling, distributing and servicing
subscriber products incorporating CDMA technology and related accessories for
use in mobile or fixed wireless terrestrial networks, and shall specifically
include the 7000 series wireless local loop terminal (but shall not include the
8000 series wireless local loop terminal); provided, however, that the Business
shall not include (a) application specific integrated circuits, chips or
chipsets which the Seller has developed or is developing for sale, nor the
component designs, mask sets and associated software and developmental hardware,
or (b) any of the Selling Parties' other businesses, such as, by way of example
and not by way of limitation, the following: (i) the design, development,
manufacture, marketing or sale of components and associated software for
incorporation in third parties' wireless telephones, user terminals,
infrastructure products or other equipment or devices, including but not limited
to ASICS, chipsets and modules; (ii) the design, development, manufacture,
marketing or sale of equipment, software or products relating to the Seller's
high data rate, global positioning system and/or net broadcast applications;
(iii) the design, development, manufacture, marketing or sale of terrestrial or
satellite based network infrastructure products; and (iv) the design,
development, manufacture, marketing or sale of (U) telephones for use in
satellite applications (such as Globalstar), (V) equipment, software or products
used to test or otherwise measure the performance of telephones or
infrastructure equipment, (X) telephones for sale to or use by governmental
entities (such as Condor) and high security applications, (Y) equipment,
software or products relating to Seller's OmniTracs (or any other tracking or
monitoring type activities), Eudora and Digital Cinema activities, or (Z)
modules.
"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 the City of
San Diego, California.
"BUSINESS EMPLOYEE" means any employee of any Selling Party who is
employed in the Business.
"CLOSING STATEMENT CREDITS" means, collectively, (a) the net book value
of the personal computers of those employees subject to the Employee Matters
Agreement, as such computers are specifically set forth on Section 2.1(b)(xiii)
of the Disclosure Schedule , which specified
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computers shall constitute Excluded Assets, (b) the net book value of those
items of Tangible Personal Property that the Purchaser does not elect to
purchase pursuant to Section 5.16, which non-selected items of Tangible Personal
Property shall constitute Excluded Assets, and (c) the net book value of those
spare parts that would otherwise constitute Purchased Inventory that the
Purchaser does not elect to purchase pursuant to Section 5.16, which
non-selected spare parts shall constitute Excluded Assets.
"CODE" means the Internal Revenue Code of 1986, as amended through the
date hereof.
"COMPETITIVE ACTIVITIES" means manufacturing, marketing, selling,
distributing and servicing commercial terrestrial-based wireless telephones
incorporating CDMA technology for use in mobile or fixed wireless terrestrial
networks, all as conducted or provided by the Selling Parties and their
Affiliates as of the Closing Date and which is encompassed by the Business.
Notwithstanding the foregoing, as examples and not by way of limitation, neither
the Seller nor any Affiliate of the Seller shall be considered to be engaged in
"Competitive Activities" (a) if the Seller or its Affiliates shall engage in any
activity contemplated by the preceding sentence that relates to the fulfillment
of the Seller's or its Affiliates' obligations under any Excluded Contracts or
Excluded Liabilities, (b) if the Seller or its Affiliates make loans to, or
otherwise assist in equipment financing for, any Competitive Entity, (c) if the
Seller or its Affiliates engage in any activity relating to the design,
development, manufacture, marketing or sale of components and associated
software for incorporation in third parties' wireless telephones or user
terminals, including but not limited to ASICS, chipsets and modules, (d) if the
Seller or its Affiliates grant licenses of its intellectual property (including
the provision of engineering and technical assistance) to any third party,
including any third party that engages in Competitive Activities, (e) if the
Seller or its Affiliates shall engage in any activity relating to the design,
development, manufacture, marketing or sale of equipment, software or products
relating to the Seller's high data rate, global positioning system and/or net
broadcast applications, (f) if the Seller or its Affiliates engage in any
activity relating to the design, development, manufacture, marketing or sale of
terrestrial or satellite based network infrastructure products, (g) if the
Seller or its Affiliates engage in any activity relating to the design or
development of terrestrial-based wireless telephones incorporating CDMA
technology for use in mobile or fixed wireless terrestrial networks, (h) if the
Seller or its Affiliates engage in any activity relating to the design,
development, manufacture, marketing or sale of non-commercial prototype
terrestrial-based wireless telephones incorporating CDMA technology for use in
mobile or fixed wireless terrestrial networks, and/or (i) if the Seller or its
Affiliates engage in any activity relating to the design, development,
manufacture, marketing or sale of (V) telephones for use in satellite
applications (such as Globalstar), (W) equipment, software or products used to
test or otherwise measure the performance of telephones, (X) telephones for sale
to or use by governmental entities (such as Condor) and high security
applications, (Y) equipment, software or products relating to Seller's OmniTracs
(or any other tracking or monitoring type activities), Eudora and Digital Cinema
activities, or (Z) modules.
"COMPETITIVE ENTITY" means any Person that is engaged in Competitive
Activities.
"CONFIDENTIALITY AGREEMENT" means the nondisclosure agreement, dated as
of October 1, 1999, between the Seller and Kyocera Corporation.
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"CONTROL" (including the terms "Controlled By" and "Under Common Control
With"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as of the date
hereof, delivered by the Seller to the Purchaser.
"EMPLOYEE MATTERS AGREEMENT" means the Employee Matters Agreement to be
entered into between Seller and Purchaser at the Closing containing the
principal terms set forth on Exhibit E.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien,
charge, encumbrance, adverse claim, preferential arrangement, or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, claims, liens, notices of non-compliance or
violation, investigations, proceedings, consent orders or consent agreements
relating in any way to any Environmental Law or any permit under any
Environmental Law (hereinafter "Claims"), including, without limitation, (a) any
and all Claims by Governmental Authorities for enforcement, cleanup or other
actions or damages pursuant to any applicable Environmental Law and (b) any and
all Claims by any Person seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
"ENVIRONMENTAL CONDITION" means a condition relating to or arising or
resulting from a failure to comply with any applicable Environmental Law or any
permit under any Environmental Law or a release or discharge of a Hazardous
Material into the environment.
"ENVIRONMENTAL LAW" means any Law, now or hereafter in effect and as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment, health, safety or Hazardous Materials.
"EXCLUDED INTELLECTUAL PROPERTY" means all right, title and interest of
each Selling Party and its Affiliate in or to (a) except as otherwise provided
by the Trademark License Agreement, the name "Qualcomm," and any variations
thereof or combinations with such name, (b) any and all Intellectual Property
described in clauses "(a)" and "(b)" of the definition of Intellectual Property,
(c) patent cross-license agreements and other intellectual property licenses
entered into as part of such cross-license agreements or related to such
cross-license agreements, (d) any and all Intellectual Property (whether such
Intellectual Property is Owned Intellectual Property or Shared Third Party
Intellectual Property) used both in the conduct of the Business and in the
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conduct of any business of any Selling Party or its Affiliates other than the
Business, and (e) any and all Intellectual Property (whether such Intellectual
Property is Owned Intellectual Property or licensed to a Selling Party or any of
its Affiliates by a third party) that is not used in the conduct of the
Business.
"EXISTING LICENSE AGREEMENT" means that certain Subscriber Unit License
Agreement, dated August 31, 1996, between the Seller and Kyocera Corporation, a
Japanese corporation, as amended.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or local
or any foreign government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas, (b) any other chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "toxic substances", "contaminants" or
"pollutants", or words of similar import, under any applicable Environmental
Law, and (c) any other chemical, material or substance exposure to which is
regulated by any Governmental Authority.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services, (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person as lessee under
leases that have been or should be, in accordance with U.S. GAAP, recorded as
capital leases, (f) all obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities, (g) all Indebtedness
of others referred to in clauses (a) through (f) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (iv) otherwise to assure a creditor against loss, and (h) all Indebtedness
referred to in clauses (a) through (f) above secured
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by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Encumbrance on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness.
"INTELLECTUAL PROPERTY" means the Selling Parties' and their Affiliates'
(a) inventions, ideas and conceptions of inventions, whether or not patentable,
whether or not reduced to practice, and whether or not yet made the subject of a
pending patent application or applications, (b) all United States, international
and foreign statutory invention registrations, patents, patent registrations and
patent applications (including, without limitation, all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations thereof) and
all rights therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each such registration, patent or
application, (c) trademarks, service marks, certification marks, collective
marks, trade dress, logos, domain names, product configurations, trade names,
business names, corporate names and other source identifiers, whether or not
registered and whether or not currently in use, including all common law rights,
and registrations and applications for registration thereof, including, but not
limited to, all marks registered in the United States Patent and Trademark
Office or in any office or agency of any State or Territory thereof or of any
foreign country, and all rights therein provided by international treaties or
conventions, and all reissues, extensions and renewals of any of the foregoing,
(d) copyrighted works, copyrights, whether or not registered, and registrations
and applications for registration thereof in the United States and any foreign
country, and all rights therein provided by international treaties or
conventions, (e) moral rights (including, without limitation, rights of
paternity and integrity), and waivers of such rights by others, (f) computer
software, including, without limitation, source code, object code, objects,
comments, screens, user interfaces, report formats, templates, menus, buttons
and icons, and all files, data, documentation and other materials related
thereto, (g) confidential and proprietary information, including know-how, trade
secrets, manufacturing and production processes and techniques, research and
development information, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans, and customer and
supplier lists and information, (h) copies and tangible embodiments of all the
foregoing, in whatever form or medium, (i) all rights to obtain and rights to
register trademarks and copyrights, and (j) all rights to xxx or recover and
retain damages and costs and attorneys' fees for past, present and future
infringement of any of the foregoing.
"INTELLECTUAL PROPERTY CONTRACTS" means the Subscriber Business IP
Licenses and each license or sublicense relating to any Shared Third Party
Intellectual Property other than shrink wrap license agreements.
"INVENTORIES" means all inventory (including, without limitation, parts,
field replacement units and accessories), merchandise, finished goods, works in
process, raw materials, packaging, supplies and other personal property intended
to be used in the Business, maintained, held or stored by or for the Selling
Parties on the Closing Date.
"IRS" means the Internal Revenue Service of the United States.
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"LAW" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order, requirement or rule of common law.
"LEASE AGREEMENTS" means (a) the Lease Agreements to be entered into
between the Seller and the Purchaser at the Closing containing the principal
terms set forth on Exhibit F and (b) the assignments and subleases of the leases
to be entered into pursuant to Section 2.1(a)(ii) as set forth on Exhibit F.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect
on, the Business that, individually or in the aggregate with any other
circumstances, changes in, or effects on, the Business is, or would reasonably
be expected to be, materially adverse to the Assets or Assumed Liabilities or
the operations, employee relationships, customer or supplier relationships,
results of operations or the condition (financial or otherwise) of the Business.
Notwithstanding the foregoing, in no event shall any of the following constitute
a Material Adverse Effect: (a) any circumstance, change or effect generally
affecting the industry in which the Selling Parties operate the Business or
arising from changes in general business or economic conditions, or (b) any
circumstance, change or effect (including, without limitation, delays in
customer orders, a reduction in sales, a disruption in supplier, distributor or
similar relationships or loss of employees) resulting from the fact that the
Purchaser (rather than another party) is the purchaser of the Business, or (c)
any circumstance, change or effect resulting from actions taken by the Selling
Parties that are required by the Selling Party Documents.
"OWNED INTELLECTUAL PROPERTY" means that Intellectual Property owned by
the Selling Parties or their Affiliates.
"PERMITTED ENCUMBRANCES" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by Law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than 30 days and (ii) are not in
excess of $250,000 in the case of a single property or $1,000,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
do not render title to the property encumbered thereby unmarketable and (ii) do
not, individually or in the aggregate, materially adversely affect the value of
such property or the use of such property for its present purposes.
"PERMITTED PERCENTAGE" means (a) [***] during the two-year period
following the Closing Date and (b) [***] for the remainder of the Restricted
Period.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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"PERSON" means any individual, partnership, limited liability company,
firm, corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PRE-CLOSING RECEIVABLES" means Subscriber Business Receivables which
exist as of 12:01 a.m. on the Closing Date and are owned by a Selling Party as
of such time.
"POST-CLOSING RECEIVABLES" means all Subscriber Business Receivables
other than Pre-Closing Receivables.
"PURCHASER'S ACCOUNTANTS" means PricewaterhouseCoopers LLP, independent
accountants of the Purchaser.
"PURCHASER DOCUMENTS" means this Agreement and any Ancillary Agreements
to which the Purchaser or the Parent Corporation is a party and all other
agreements, instruments and certificates to be executed and delivered by the
Purchaser or the Parent Corporation in connection with this Agreement.
"QUALCOMM'S INTELLECTUAL PROPERTY" means the Intellectual Property which
the Seller owns or has the right to license without the payment of royalties or
other consideration to any third party as it exists as of the Closing Date
(other than Subscriber Business Intellectual Property and Shared Third Party
Intellectual Property); provided, that the term "Qualcomm's Intellectual
Property" does not include (a) any Intellectual Property described in clauses
"(a)" or "(b)" of the definition of Intellectual Property, other than design
patents, (b) the name "Qualcomm" and any variations thereof or combinations with
such name, or (c) any Intellectual Property described in clause "(j)" of the
definition of Intellectual Property.
"RECEIVABLES" means any and all accounts receivable (including unbilled
receivables) and intercompany receivables reflecting indebtedness from Seller or
any Affiliate of Seller to any other Affiliate of Seller or to Seller arising
from the conduct of the Business before the Closing Date, whether or not in the
ordinary course, together with any unpaid financing charges accrued thereon.
"REGULATIONS" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"RETAINED BUSINESS SUPPORT AGREEMENT" means the Retained Business Support
Agreement to be entered into between Seller and Purchaser at the Closing
containing the principal terms contained on Exhibit G.
"SELLER'S ACCOUNTANTS" means PricewaterhouseCoopers LLP, independent
accountants of the Seller.
"SELLING PARTY DOCUMENTS" means this Agreement and any Ancillary
Agreements to which a Selling Party is a party and all other agreements,
instruments and certificates to be executed and delivered by any Selling Party
in connection with this Agreement.
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"SHARED THIRD PARTY INTELLECTUAL PROPERTY" means that Intellectual
Property that is licensed or sublicensed to each Selling Party or its Affiliates
by a third party and that is used both in the conduct of the Business and in the
conduct of any business of such Selling Party or its Affiliates other than the
Business.
"SPECIFIC ASSETS" of any Selling Party means the Assets which such
Selling Party directly or indirectly owns or to which it is directly or
indirectly entitled.
"SUBSCRIBER BUSINESS IP LICENSES" means those agreements and other
contracts pursuant to which a third party has licensed or sublicensed to the
Selling Parties or their Affiliates any trademarks, service marks, trade names,
copyrights and applications therefor or software used by the Selling Parties or
their Affiliates exclusively in the conduct of the Business.
"SUBSCRIBER BUSINESS RECEIVABLES" means, as of any time, all trade
accounts receivable (including unbilled receivables), together with any unpaid
financing charges accrued thereon, arising from the conduct of the Business
(whether or not in the ordinary course).
"TAX" OR "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs' duties, tariffs, and similar charges.
"TRADEMARK LICENSE AGREEMENT" means the Trademark License Agreement to be
entered into by Seller and Purchaser containing the principal terms set forth on
Exhibit H.
"TRANSITION SERVICES AGREEMENT" means the Transition Services Agreement
to be entered into between Seller and Purchaser at the Closing containing the
principal terms set forth on Exhibit I.
"U.S. GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently by the Seller
throughout the periods involved.
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections of this Agreement set forth below:
TERM SECTION
Accountant's Report 2.7(b)
Assets 2.1(a)
Assumed Contract 5.18
Assumed Liabilities 2.2(a)
Business Financial Statements 3.4
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Business Systems 3.11
Catastrophic Occurrence 5.18
Closing 2.4
Closing Date 2.4
Closing Net Book Value 2.7(a)
Closing Statement Credits 2.7(a)
Closing Statement of Net Assets 2.7(a)
Customer 5.18
Deferred Amounts 6.6
Dispute Threshold 2.7(c)(ii)
ERISA 3.22(a)
ERISA Affiliate 3.22(c)
Excluded Assets 2.1(b)
Excluded Contracts 2.1(b)(ii)
Excluded Liabilities 2.2(b)
Final Closing Net Book Value 2.7(d)
FMLA 6.2
Independent Accounting Firm 2.7(c)(ii)
Leased Real Property 3.19(b)
Leases 3.19(b)
Licensed Intellectual Property 5.7(a)
Loss 8.2(a)
Material Contracts 3.17(a)(i)
Material Intellectual Property 3.18(b)
Material Operations Contracts 3.17(a)(i)
Multiemployer Plan 3.22(b)
Omitted Tangible Personal Property 5.15(a)
Owned Real Property 3.19(a)
Permits 3.15
Plans 3.22(a)
Purchase Price. 2.3
Purchased Inventories 2.1(a)(iv)
Purchaser Preamble
Purchaser Indemnitees 8.2(a)
Purchaser Non-Solicit Period 5.8(c)
Restricted Period 5.8(a)
Real Property 3.19(b)
Selected Seller Employees 6.1
Selected QPE Employees 6.1
Seller Preamble
Seller Indemnitees 8.3(a)
Seller Non-Solicit Period 5.8(b)
September Net Book Value 2.7(a)
September Statement of Net Assets 2.7(a)
Subscriber Business Intellectual Property 2.1(a)(vi)
Supplier Systems 3.11
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Tangible Personal Property 3.20
Third Party Claims 8.4
Transferred Customer Contracts 2.1(a)(i)
Transferred Employees 6.3
WARN 3.22(f)
Year 2000 Plan. 3.11
Year 2000 Ready 3.11
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The terms "dollars" and "$" shall mean United States dollars.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural and vice versa.
ARTICLE 2
PURCHASE AND SALE
2.1 ASSETS TO BE SOLD.
(a) On the terms and subject to the conditions of this Agreement,
the Seller shall, on the Closing Date, sell, assign, transfer, convey and
deliver to the Purchaser, or cause to be sold, assigned, transferred, conveyed
and delivered to the Purchaser, and the Purchaser shall purchase from the
Selling Parties and their Affiliates, on the Closing Date, all their right,
title and interest as of the Closing Date in and to all of the assets,
properties, goodwill and business of every kind and description and wherever
located, whether tangible or intangible, real, personal or mixed, directly or
indirectly owned by the Selling Parties and their Affiliates or to which they
are directly or indirectly entitled and, in any case, primarily used or intended
to be primarily used in the Business as conducted as of the Closing Date, other
than the Excluded Assets (the assets to be purchased by the Purchaser being
referred to as the "Assets"), including, without limitation, the following:
(i) those agreements, contracts, purchase orders and
other instruments set forth in Section 2.1(a)(i) of the Disclosure Schedule and
subject to Section 5.1, those additional agreements, contracts, purchase orders
and other instruments (other than agreements, contracts or other instruments
which relate to or constitute Excluded Intellectual Property) entered into
between the date of this Agreement and the Closing Date which relate primarily
to the Business (collectively the "Transferred Customer Contracts") (which shall
not include rights or obligations related to the provision of network
infrastructure products, test and deployment products or modules);
(ii) leasehold interests in, to and under the Real
Property, identified in Section 2.1(a)(ii) of the Disclosure Schedule, upon the
terms set forth on Exhibit F;
(iii) all other contracts, agreements, leases,
commitments, and sales and purchase orders, and all commitments, bids and offers
(to the extent such offers are transferable)
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to the extent primarily used or intended to be primarily used in the Business,
including, without limitation, such items as are set forth on Section
2.1(a)(iii) of the Disclosure Schedule;
(iv) all Inventories primarily used or intended to be
primarily used in the Business (collectively, the "Purchased Inventories");
(v) all furniture, fixtures, equipment, machinery,
vehicles and other tangible personal property primarily used or held primarily
for use at the locations at which the Business is conducted, or otherwise owned
or held primarily for use in the conduct of the Business that is selected by
Purchaser from Section 3.20 of the Disclosure Schedule pursuant to the
procedures set forth in Section 5.16 (which shall exclude the personal computers
referenced in clause "(a)" of the definition of Closing Statement Credits) which
are selected by the Purchaser pursuant to Section 5.16 (with only those items
selected to be deemed to constitute Assets), other than such assets primarily
used or intended to be used in connection with the Excluded Contracts;
(vi) all Owned Intellectual Property, other than Excluded
Intellectual Property, used exclusively in the conduct of the Business, and all
Subscriber Business IP Licenses, subject to the provisions of Section 5.7(b)
(collectively, the "Subscriber Business Intellectual Property");
(vii) other than for experimental FCC licenses, all
municipal, state and federal franchises, permits, licenses, agreements, waivers
and authorizations primarily held or used in connection with the Business, to
the extent transferable;
(viii) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind (including rights to
insurance proceeds and rights under and pursuant to all warranties,
representations and guarantees made by suppliers of products, materials or
equipment, or components thereof), primarily pertaining to or primarily arising
out of the Business, except to the extent any of the foregoing relates to the
Excluded Assets or the Excluded Liabilities;
(ix) all books of account, general, financial, tax and
personnel records, invoices, shipping records, supplier lists, correspondence
and other documents, records and files and all computer software and programs
and any rights thereto primarily used in, or primarily relating to, the
Business;
(x) all sales and promotional literature, customer lists
and other sales-related materials designed for and intended to be used in the
Business;
(xi) the Business as a going concern and the goodwill
relating to the Business; and
(xii) all other assets, rights and claims of every kind
and nature primarily used or intended to be primarily used in the operation of
the Business.
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(b) The Assets shall exclude, and Purchaser shall not acquire any
interest in or any rights under, in or relating to, the following assets owned
by the Selling Parties and their Affiliates (the "Excluded Assets"):
(i) all items of Excluded Intellectual Property;
(ii) all rights in, to and under the contracts listed on
Section 2.1(b)(ii) of the Disclosure Schedule and all other contracts not
included in the Transferred Customer Contracts (the "Excluded Contracts");
(iii) all rights in, to and under the Transferred
Customer Contracts to the extent related to the provision of network
infrastructure products, test and deployment products or modules;
(iv) except as otherwise provided by the Lease
Agreements, all Owned Real Property;
(v) all cash, cash equivalents and bank accounts;
(vi) all Inventories not primarily used or intended to be
used in the Business and the spare parts Inventory not selected by the Purchaser
pursuant to Section 5.16;
(vii) all Receivables, whether or not related to the
Business, including all Pre-Closing Receivables;
(viii) the capital stock, notes and other securities of,
and all other interests in, any Person, including, without limitation, all
subsidiaries and all investments in other entities;
(ix) all federal, state and local income and franchise
tax credits and tax refund claims (and any foreign equivalents thereof) relating
to or arising out of the Business prior to the Closing;
(x) all rights under this Agreement and the Ancillary
Agreements;
(xi) any insurance policies and all rights of every
nature and description under or arising out of such insurance policies;
(xii) all right, title and interest on the Closing Date
in, to and under all other assets, properties, goodwill and business of every
kind, wherever located, whether tangible or intangible, real, personal or mixed,
not primarily used or intended to be primarily used in the operation of the
Business;
(xiii) all right, title and interest on the Closing Date
in, to and under all assets set forth on Section 2.1(b)(xiii) of the Disclosure
Schedule; and
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(xiv) the personal computers referenced in clause "(a)"
of the definition of Closing Statement Credits and those items of Tangible
Personal Property that the Purchaser does not elect to purchase pursuant to
Section 5.16.
2.2 ASSUMPTION AND EXCLUSION OF LIABILITIES.
(a) On the terms and subject to the conditions of this Agreement
(including, without limitation any contrary provisions which may be contained in
Section 2.2(b)), Purchaser shall, on the Closing Date, assume and shall pay,
perform and discharge when due only the following and no other Liabilities of
the Selling Parties as of the Closing Date (the "Assumed Liabilities"):
(i) Liabilities primarily arising out of or relating to
the Business to the extent such Liabilities are reflected on the Closing
Statement of Net Assets, as adjusted pursuant to Section 2.7, including all
accrued liabilities (other than liabilities for accrued payroll taxes, sales
taxes, salary, benefits and vacation and sick pay) to the extent reflected or
reserved for on the Closing Statement of Net Assets, as adjusted pursuant to
Section 2.7;
(ii) all Liabilities arising out of the Transferred
Customer Contracts, and other contracts, agreements, leases, commitments, sales
and purchase orders, bids and offers that are included in the Assets and which
are reflected on the Closing Statement of Net Assets or which accrue on or after
the Closing Date;
(iii) those employment related Liabilities, if any,
expressly assumed by the Purchaser pursuant to Article VI;
(iv) all Liabilities for accounts payable for goods and
services received or rendered on or after the Closing Date; and
(v) except as otherwise provided in Section 5.18, all
Liabilities with respect to product warranties and service obligations arising
out of or relating to the operations of the Subscriber Business or any products
manufactured, sold or distributed on behalf of the Subscriber Business.
(b) Notwithstanding anything to the contrary set forth in Section
2.2(a), the Seller shall retain, and shall be responsible for paying, performing
and discharging when due, and the Purchaser shall not assume or have any
responsibility for, all Liabilities of the Selling Parties, other than the
Assumed Liabilities (the "Excluded Liabilities"), including, without limitation:
(i) all Taxes now or hereafter owed by the Selling
Parties or any Affiliates of the Selling Parties, or attributable to the Assets
or the Business, relating to any period, or any portion of any period, ending
prior to the Closing Date, subject to Section 5.11(c);
(ii) all Liabilities to the extent relating to or arising
out of the Excluded Assets;
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(iii) all employment-related Liabilities other than those
expressly assumed by Purchaser, if any, pursuant to Article VI; and
(iv) all Liabilities for accounts payable for goods and
services received or rendered prior to the Closing Date.
2.3 PURCHASE PRICE. As partial consideration for the sale of the Assets,
at the Closing, Purchaser shall pay to Seller, by wire transfer of immediately
available funds, the sum of [***] subject to adjustment as contemplated by
Section 2.7 (the "Purchase Price").
2.4 CLOSING. Subject to the terms and conditions of this Agreement, the
sale and purchase of the Assets and the assumption of the Assumed Liabilities
contemplated by this Agreement shall take place at a closing (the "Closing") to
be held at the offices of Seller at 10:00 a.m. (Pacific Standard Time) on the
later to occur of (i) February 21, 2000 or (ii) the third Business Day following
the satisfaction or waiver of all conditions to the obligations of the parties
set forth in Article VII, or at such other place or at such other time or on
such other date as the Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the "Closing Date").
Notwithstanding anything contained in this Agreement to the contrary, for the
purposes of this Agreement, the Closing shall be deemed to have occurred as of
12:01 a.m., Pacific Standard Time, on the Closing Date.
2.5 CLOSING DELIVERIES BY THE SELLER. At the Closing, the Seller (and, to
the extent applicable, the Selling Parties) shall deliver or cause to be
delivered to the Purchaser:
(a) one or more Bills of Sale in the form of Exhibit D and such
other instruments, in form and substance reasonably satisfactory to the
Purchaser and the Seller, as may be reasonably requested by the Purchaser to
evidence such transfer of any Assets on the public records;
(b) an executed counterpart of the (i) ASICs Supply Agreement,
(ii) Transition Services Agreement, (iii) Employee Matters Agreement, (iv)
Trademark License Agreement, (v) Lease Agreements, and (vi) Retained Business
Support Agreement;
(c) a receipt for the Purchase Price; and
(d) the opinions, certificates and other documents required to be
delivered pursuant to Section 7.2.
2.6 CLOSING DELIVERIES BY THE PURCHASER. At the Closing, the Purchaser
shall deliver or cause to be delivered to the Seller:
(a) the Purchase Price, by wire transfer in immediately available
funds to a bank account in the United States to be designated by the Seller in a
written notice to the Purchaser at least two Business Days prior to the Closing;
(b) an executed counterpart of the (i) ASICs Supply Agreement,
(ii) Transition Services Agreement, (iii) Employee Matters Agreement, (iv)
Trademark License Agreement, (v) Lease Agreements, and (vi) Retained Business
Support Agreement;
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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(c) the Assumption Agreements, executed by the Purchaser; and
(d) the opinions, certificates and other documents required to be
delivered pursuant to Section 7.1.
2.7 POST-CLOSING ADJUSTMENT OF THE PURCHASE PRICE. The Purchase Price
shall be subject to adjustment after the Closing as specified in this Section
2.7.
(a) SEPTEMBER STATEMENT OF NET ASSETS. The Seller has prepared
and delivered to the Purchaser a schedule of specified assets and liabilities of
the Business as of the close of business on September 26, 1999 attached hereto
as Section 2.7 of the Disclosure Schedule (the "September Statement Of Net
Assets"), which the Seller represents was prepared in accordance with U.S. GAAP
applied on a basis consistent with the preparation of the Annual Financial
Statements, reflecting only the book value of the Assets and the Assumed
Liabilities (as the same shall exist as of September 26, 1999) and eliminating
the book value of the Excluded Assets and the Excluded Liabilities (as the same
shall exist as of September 26, 1999), except that the September Statement Of
Net Assets does not present the operating leases of the Business in accordance
with U.S. GAAP and includes the Excluded Assets described in subparagraphs (a),
(b) and (c) of the definition of "Closing Statement Credits." The specified net
assets of the Business as of September 26, 1999 (the "September Net Book Value")
shall be calculated as the excess of the book value of the Assets as of
September 26, 1999 over the book value of the Assumed Liabilities as of
September 26, 1999; provided, however, that notwithstanding the foregoing, the
parties agree that the book value of certain Assets will be reflected in the
September Net Book Value in accordance with the following methodologies:[***]
(b) CLOSING STATEMENT OF NET ASSETS. As promptly as practicable,
but in any event within 60 calendar days following the Closing Date, the Seller
shall at its expense prepare and deliver to the Purchaser a schedule of
specified assets and liabilities of the Business as of the close of business on
the day immediately preceding the Closing Date (the "Closing Statement Of Net
Assets") prepared in accordance with U.S. GAAP applied on a basis consistent
with the preparation of the September Statement of Net Assets (except that the
Closing Statement of Net Assets will not present the operating leases of the
Business in accordance with U.S. GAAP and will exclude the Excluded Assets
described in subparagraphs (a), (b) and (c) of the definition of Closing
Statement Credits), reflecting only the book value of the Assets and the Assumed
Liabilities (as the same shall exist as of the close of business on the day
immediately preceding the Closing Date) and eliminating the book value of the
Excluded Assets and the Excluded Liabilities (as the same shall exist as of the
close of business on the day immediately preceding the Closing Date), together
with (i) a report thereon of the Seller's Accountants stating that the Closing
Statement of Net Assets fairly presents the Assets and the Assumed Liabilities
at the Closing Date in accordance with U.S. GAAP (the "Accountant's Report"),
and (ii) a certification of the chief financial officer or chief accounting
officer of the Seller to the effect that the Closing Statement of Net Assets has
been prepared in compliance with the requirements
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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of this Section 2.7. The Purchaser and the Parent Corporation will use
reasonable commercial efforts to cooperate in any audit conducted by the
Seller's Accountants in connection with the preparation of the Accountant's
Report, including but not limited to providing to Seller's Accountants any
necessary engagement letters and management representation letters as are
customary and appropriate. The specified net assets of the Business as of the
close of business on the day immediately preceding the Closing Date (the
"Closing Net Book Value") shall be calculated as the excess of the book value of
the Assets reflected on the Closing Statement of Net Assets over the book value
of the Assumed Liabilities reflected on the Closing Statement of Net Assets;
provided, however, that notwithstanding the foregoing, the parties agree that
the book value of certain Assets will be reflected in the Closing Net Book Value
in accordance with the methodologies set forth in Section 2.7(a).
(c) DISPUTES.
(i) Subject to clause (ii) of this Section 2.7(c), the
Closing Statement of Net Assets delivered by the Seller to the Purchaser shall
be deemed to be and shall be final, binding and conclusive on the parties
hereto.
(ii) The Purchaser may dispute any amounts reflected on
the Closing Statement of Net Assets to the extent the net effect of such
disputed amounts in the aggregate would affect the Closing Net Book Value
reflected on the Closing Statement of Net Assets by more than [***] of the
Closing Net Book Value (the "Dispute Threshold"), but only on the basis that the
amounts reflected on the Closing Statement of Net Assets were not arrived at in
accordance with U.S. GAAP applied on a basis consistent with the preparation of
the September Statement of Net Assets (other than with respect to the treatment
of operating leases and other than with respect to those items described in the
definition of Closing Statement Credits) or that the amounts reflected thereon
do not properly adjust to include only the book value of the Assets and the
Assumed Liabilities and to eliminate the book value of the Excluded Assets and
the Excluded Liabilities; provided, however, that the Purchaser shall have
notified the Seller and the Seller's Accountants in writing of each disputed
item, specifying the amount thereof in dispute and setting forth, in reasonable
detail, the basis for such dispute, within twenty (20) Business Days of the
later of the Seller's delivery of the Closing Statement of Net Assets and the
Seller's delivery of the Accountant's Report to the Purchaser. In the event of
such a dispute, the Seller's Accountants and the Purchaser's Accountants shall
attempt to reconcile their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties hereto.
If any such resolutions by the Purchaser's Accountants and the Seller's
Accountants leaves in dispute amounts the net effect of which in the aggregate
would not affect the Closing Net Book Value reflected on the Closing Statement
of Net Assets by more than the Dispute Threshold, all such amounts remaining in
dispute shall then be deemed to have been resolved in favor of the Closing
Statement of Net Assets delivered by the Seller to the Purchaser. If the
Seller's Accountants and the Purchaser's Accountants are unable to reach a
resolution with respect to all amounts in dispute within ten Business Days after
receipt by the Purchaser and the Purchaser's Accountants of the Seller's written
notice of dispute, the Seller's Accountants and the Purchaser's Accountants
shall submit the items remaining in dispute for resolution to an independent
accounting firm of international reputation mutually acceptable to the Purchaser
and the Seller (the "Independent Accounting Firm"), which shall, within ten
Business Days after such submission, determine and report to the Purchaser and
the Seller upon
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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such remaining disputed items, and such report shall be final, binding and
conclusive on the Seller and the Purchaser.
(iii) In acting under this Agreement, the Purchaser's
Accountants, the Seller's Accountants and the Independent Accounting Firm shall
be entitled to the privileges and immunities of arbitrators.
(iv) Notwithstanding anything to the contrary set forth
in this Section 2.7(c), no adjustment to the Closing Net Book Value reflected on
the Closing Statement of Net Assets pursuant to this Section 2.7(c) shall be
made with respect to amounts disputed by the Purchaser pursuant to this Section
2.7(c), unless the net effect of the amounts successfully disputed by the
Purchaser (by resolution of the Seller's Accountants and the Purchaser's
Accountants and, if applicable, by determination of the Independent Accounting
Firm) in the aggregate is to decrease the Closing Net Book Value reflected on
the Closing Statement of Net Assets by at least the amount of the Dispute
Threshold, in which case such adjustment shall be made in the full amount of
such amounts successfully disputed by the Purchaser.
(v) The fees and disbursements of the Independent
Accounting Firm, if any, shall be borne by (A) the Purchaser, if the net effect
of the amounts successfully disputed by the Purchaser in the aggregate is to
decrease the Closing Net Book Value reflected on the Closing Statement of Net
Assets by less than the amount of the Dispute Threshold, and (B) by the Seller,
if the net effect of the amounts successfully disputed by the Purchaser in the
aggregate is to decrease the Closing Net Book Value reflected on the Closing
Statement of Net Assets by at least the amount of the Dispute Threshold.
(d) PURCHASE PRICE ADJUSTMENT. The Closing Net Book Value shall
be deemed final (the "Final Closing Net Book Value") for the purposes of this
Section 2.7 upon the earlier of (i) the failure of the Purchaser to notify the
Seller of a dispute within 20 Business Days of the later of the Seller's
delivery of the Closing Statement of Net Assets to the Purchaser and the
Seller's delivery of the Accountant's Report to the Purchaser, (ii) the
resolution of all disputes, pursuant to Section 2.7(c)(ii), by the Purchaser's
and the Seller's Accountants and (iii) the resolution of all disputes, pursuant
to Section 2.7(c)(ii), by the Independent Accounting Firm. Within three Business
Days of the Closing Statement of Net Assets being deemed final, a Purchase Price
adjustment shall be made as follows:
(i) in the event that the September Net Book Value
reflected on the September Statement of Net Assets exceeds the Final Closing Net
Book Value, then the Purchase Price shall be adjusted downward in an amount
equal to such excess, and the Seller shall, within three Business Days of such
determination, pay such amount, together with interest thereon, from the Closing
Date through the date of payment at the rate of interest publicly announced by
Citibank, N.A. or any successor thereto in New York, New York from time to time
as its reference rate from the Closing Date to the date of such payment, to the
Purchaser by wire transfer in immediately available funds; and
(ii) in the event that the Final Closing Net Book Value
exceeds the September Net Book Value reflected on the September Statement of Net
Assets, then the Purchase Price shall be adjusted upward in an amount equal to
such excess and the Purchaser
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shall, within three Business Days of such determination, pay the amount of such
excess together with interest thereon, from the Closing Date through the date of
payment at the rate of interest publicly announced by Citibank, N.A. or any
successor thereto in New York, New York from time to time as its reference rate
from the Closing Date to the date of such payment, to the Seller by wire
transfer in immediately available funds.
(e) PRORATIONS. Notwithstanding anything to the contrary set
forth in this Section 2.7, the parties agree that the following expenses shall
(to the extent not otherwise already reflected in the Closing Date Statement) be
prorated. All personal property taxes and assessments which are past due on the
Assets will be paid by the Seller on or before the Closing Date together with
any penalty or interest thereon. Utility fees, current personal property taxes,
classified telephone book advertising, real property taxes with respect to real
property leased pursuant to the Lease Agreements, and all other costs and
expenses paid by any Selling Party which relate directly to the day-to-day
operation of the Business after the Closing Date and which will materially
benefit the Purchaser in its day-to-day operation of the Business, will be
prorated and adjusted between the Purchaser and the Seller as of 12:01 a.m. on
the Closing Date on a due date basis. If current tax bills are unavailable on
the Closing Date, the prior year's tax bills will be used for proration purposes
and taxes will be re-prorated between the Purchaser and the Seller when the
current tax bills are received.
2.8 ALLOCATION OF THE PURCHASE PRICE. The sum of the Purchase Price (and
all other capitalized costs) shall be allocated among the Assets as agreed upon
between the Purchaser and the Seller prior to Closing. Any subsequent
adjustments to the sum of the Purchase Price and Assumed Liabilities shall be
reflected in the allocation hereunder in a manner consistent with Treasury
Regulation Section 1.1060-1T(f). For all purposes (including tax, financial and
accounting), the Purchaser and the Seller agree to report the transactions
contemplated in this Agreement in a manner consistent with the terms of this
Agreement and that neither of them will take any position inconsistent therewith
in any Tax return, in any refund claim, in any litigation, or otherwise without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the
Seller hereby represents and warrants to the Purchaser as follows as of the
Closing Date:
3.1 ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE SELLING PARTY. Each
Selling Party is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
all necessary corporate and authority to enter into the Selling Party Documents
to which it is a party, to carry out its obligations thereunder and to
consummate the transactions contemplated thereby. Each Selling Party is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the Assets owned or leased by it or the operation of the
Business makes such licensing or qualification necessary, except to the extent
that the failure to be so licensed or qualified would not materially adversely
affect (a) the ability of such Selling Party to carry out its obligations under,
and to consummate
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the transactions contemplated by, the Selling Party Documents to which it is a
party and (b) the ability of such Selling Party to conduct the Business as it is
currently being conducted. The execution and delivery of the Selling Party
Documents to which it is a party by each Selling Party, the performance by such
Selling Party of its obligations thereunder and the consummation by such Selling
Party of the transactions contemplated thereby have been duly authorized by all
requisite action on the part of such Selling Party. No approval of the
stockholders of any Selling Party is required in connection with the execution
and delivery of any Selling Party Documents by any Selling Party, the
performance by any Selling Party of its obligations thereunder or the
consummation by any Selling Party of the transactions contemplated thereby. This
Agreement has been duly executed and delivered by the Seller and (assuming due
authorization, execution and delivery by the Purchaser, this Agreement
constitutes the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, debtor relief or similar
laws affecting the rights of creditors generally and (b) general principles of
equity, including specific performance, injunctive relief and other equitable
remedies. The Selling Party Documents to which it is a party will be duly
executed and delivered by each Selling Party, and (assuming due authorization,
execution and delivery by the Purchaser) the Selling Party Documents to which it
is a party will constitute, legal, valid and binding obligations of such Selling
Party enforceable against such Selling Party in accordance with their respective
terms, except as enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of creditors
generally and (b) general principles of equity, including specific performance,
injunctive relief and other equitable remedies.
3.2 NO CONFLICT. Assuming that all consents, approvals, authorizations
and other actions described in Section 3.3 have been obtained and all filings
and notifications listed in Section 3.3 of the Disclosure Schedule have been
made, the execution, delivery and performance of the Selling Party Documents to
which it is a party by each Selling Party do not and will not (a) violate,
conflict with or result in the breach of any provision of the charter or by-laws
(or similar organizational documents) of such Selling Party, (b) conflict with
or violate (or cause an event which could have a Material Adverse Effect as a
result of) any Law or Governmental Order applicable to such Selling Party or the
Assets or the Business, or (c) except for the required consents described in
Section 3.2(c) of the Disclosure Schedule, conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Assets pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which such Selling Party is a party or by which any of the Assets
is bound or affected, except, in the case of clauses (b) and (c), as would not
have a Material Adverse Effect and would not prevent or materially delay
consummation by any Selling Party of the transactions contemplated by this
Agreement.
3.3 GOVERNMENTAL CONSENTS AND APPROVALS. The execution, delivery and
performance by each Selling Party of the Selling Party Documents to which it is
a party do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to, any Governmental
Authority, except (a) as described in Section 3.3 of the Disclosure Schedule,
(b) the notification requirements of the HSR Act and (c) where the failure
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to obtain such consent, approval, authorization or order would not have a
Material Adverse Effect and would not prevent or materially delay consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements.
3.4 FINANCIAL INFORMATION. Section 3.4 of the Disclosure Schedule
contains true and complete copies of (a) the unaudited statements of income of
the Business for the last three fiscal quarters in the fiscal year ended
September 27, 1998 and for the fiscal year ended September 26, 1999 (the
"Business Financial Statements") and (b) the September Statement of Net Assets.
The Business Financial Statements and the September Statement of Net Assets (a)
were prepared in accordance with the books of account and other financial
records of the Business, (b) present fairly the financial condition and results
of operations of the Business as of the dates thereof or for the periods covered
thereby, (c) have been prepared in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Business throughout the periods
involved (except that the unaudited financial statements may not contain
footnotes and except for the treatment of operating leases) and (d) include or
will include all adjustments (consisting only of normal recurring accruals) that
are necessary for a fair presentation of the financial condition of the Business
and the results of the operations of the Business as of the dates thereof or for
the periods covered thereby.
3.5 NO UNDISCLOSED LIABILITIES. As of the date hereof, there are no
Liabilities of any Selling Party related to the Business other than Liabilities
(a) reflected or reserved against on the September Statement of Net Assets, (b)
disclosed in Section 3.5 of the Disclosure Schedule, (c) incurred since
September 26, 1999 in the ordinary course of business, consistent with past
practice, of the Business and which do not (individually, or in the aggregate)
and would not reasonably be expected to have (individually, or in the aggregate)
a Material Adverse Effect, (d) arising in the ordinary course under contracts
assumed by the Purchaser under this Agreement or (e) which are Excluded
Liabilities. Reserves are reflected on the September Statement of Net Assets
against all Liabilities of each Selling Party related to the Business, other
than Liabilities relating to the Excluded Assets and Excluded Liabilities, in
amounts that have been established on a basis consistent with the past practices
of the Business and in accordance with U.S. GAAP.
3.6 INVENTORIES. Subject to amounts reserved therefor on the September
Statement of Net Assets, the values at which all Inventories are carried on the
September Statement of Net Assets reflect the historical inventory valuation
policy of the Business of stating such Inventories at the lower of cost
(determined on the first-in, first-out method) or market value. Each Selling
Party has good and valid title to the Inventories free and clear of all
Encumbrances except Permitted Encumbrances. The Inventories are in good and
merchantable condition in all material respects, are suitable and usable for the
purposes for which they are intended and are in a condition such that they can
be sold in the ordinary course of the Business consistent with past practice.
Except as set forth in Section 3.6 of the Disclosure Schedule, the Inventories
do not consist of, in any material amount, items that are obsolete, damaged or
slow-moving. Except as set forth on Section 3.6 of the Disclosure Schedule, the
Inventories do not consist of any items held on consignment. No Selling Party is
under any obligation or liability with respect to accepting returns of items of
Inventory or merchandise in the possession of its customers, except to the
extent consistent with past return policies or warranties of the Business. No
clearance or extraordinary sale of the Inventories has been conducted since the
date of the September Statement of Net Assets. Except as set forth in Section
3.6 of the Disclosure Schedule, no
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Selling Party has acquired or committed to acquire or manufacture Inventory for
sale which is not of a quality and quantity usable in the ordinary course of the
Business within a reasonable period of time and consistent with past practice
nor has any Selling Party changed the price of any Inventory except for (a)
reductions to reflect any reduction in the cost thereof to such Selling Party,
(b) reductions and increases responsive to normal competitive conditions and
consistent with the past sales practices of the Business, and (c) increases to
reflect any increase in the cost thereof to such Selling Party. Section 3.6 of
the Disclosure Schedule contains a complete list of the addresses of all
warehouses and other facilities in which any significant portion of the
Inventories are located.
3.7 SALES AND PURCHASE ORDER BACKLOG.
(a) As of December 15, 1999, the unshipped portion of open sales
orders accepted by all of the Selling Parties related to the Business totaled
[***] (as measured by standard cost). Section 3.7(a) of the Disclosure Schedule
lists all accepted open sales orders as of December 15, 1999 as to which the
unshipped portion exceeded $250,000.
(b) As of December 16, 1999, open purchase orders issued by the
Selling Parties related to the Business totaled [***] Section 3.7(b) of the
Disclosure Schedule lists all purchase orders relating to the Business exceeding
$250,000 per order, which have been issued by the Selling Party and which are
open as of December 15, 1999.
3.8 CUSTOMERS. Section 3.8 of the Disclosure Schedule lists the five most
significant customers (by revenue) of the Business for the twelve-month period
ended September 26, 1999 and the amount of such revenues from each such customer
during such period. Except as disclosed in Section 3.8 of the Disclosure
Schedule, as of the date hereof, no Selling Party has received any notice and
has any reason to believe that any significant customer of the Business has
ceased, or will cease, to use the products, equipment, goods or services of the
Business or has substantially reduced, or will substantially reduce, the use of
such products, equipment, goods or services. Except as set forth in Section 3.8
of the Disclosure Schedule, there are not pending, nor, to the best knowledge of
the Seller, threatened, any claims under or pursuant to any warranty which are
not fully reserved against in the September Statement of Net Assets or the
Closing Statement of Net Assets.
3.9 SUPPLIERS. Section 3.9 of the Disclosure Schedule lists the ten most
significant suppliers of raw materials, supplies, merchandise and other goods
for the Business for the twelve-month period ended September 26, 1999 and the
amount of such raw materials, supplies, merchandise and other goods received
from each such supplier related to the Business during such period. Except as
disclosed in Section 3.9 of the Disclosure Schedule, as of the date hereof, no
Selling Party has received any notice and has any reason to believe that any
such supplier will not sell raw materials, supplies, merchandise and other goods
to the Business at any time after the Closing Date on terms and conditions
similar to those imposed on current sales to the Business, subject only to
general and customary price increases.
3.10 PRODUCTS AND SERVICES. Except as described in Section 3.10 of the
Disclosure Schedule, there is no material defect in design, materials,
manufacture or otherwise in any products designed, manufactured, distributed or
sold by the Business, or any material defect in
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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repair to, or replacement of, any such products. Section 3.10 of the Disclosure
Schedule sets forth a true and complete list of all product families designed,
manufactured, marketed or sold by the Business that have been recalled or
withdrawn (whether voluntarily or otherwise) as of the date hereof. The
aggregate expense of all product recalls and withdrawals performed by the
Business has not exceeded [***] in any of the four fiscal quarters prior to the
date hereof. The September Statement of Net Assets includes, and the Closing
Statement of Net Assets will include, adequate reserves in accordance with U.S.
GAAP for all product warranty obligations of the Business.
3.11 YEAR 2000 READINESS. Each Selling Party has (a) undertaken an
assessment of all significant computer hardware, software, networks, systems and
equipment embedded within products of the Business and/or used in the conduct of
the Business as currently conducted ("Business Systems") that could be adversely
affected by a failure to accurately adapt, accommodate, process or respond to
the Year 2000 and thereafter ("Year 2000 Ready"), (b) developed a plan and time
line for rendering all significant Business Systems Year 2000 Compliant (the
"Year 2000 Plan"), and (c) to date, implemented such plan in accordance with
such timetable in all material respects. Assuming the Purchaser continues to
implement the Year 2000 Plan following the Closing in accordance with such
timetable, there are no Business Systems which will not be Year 2000 Ready in
all material respects. Each Selling Party has also (a) requested all significant
suppliers to the Business to provide to such Selling Party assessments of the
Year 2000 Readiness of all material computer hardware, software, networks,
systems and equipment of such suppliers used in providing products or services
to the Business ("Supplier Systems"), (b) is receiving assessments from all such
suppliers and (c) based on such assessments to date, has no reason to believe
that any material Supplier Systems will not be Year 2000 Ready in all material
respects.
3.12 LITIGATION. Except as described in Section 3.12 of the Disclosure
Schedule, there are no Actions by or against any Selling Party relating to the
Business, or affecting or that would reasonably be expected to affect any of the
Assets or the Business, pending before any Governmental Authority (or, to the
best knowledge of Seller, threatened in writing to be brought by or before any
Governmental Authority). None of the matters disclosed in Section 3.12 of the
Disclosure Schedule has had or could reasonably be expected to have a Material
Adverse Effect or could affect the legality, validity or enforceability of any
Selling Party Document or the consummation of the transactions contemplated
thereby. Except as set forth in Section 3.12 of the Disclosure Schedule, no
Selling Party is subject to any Governmental Order relating to the Business, or
affecting or that would reasonably be expected to affect any of the Assets or
the Business (nor, to the best knowledge of the Seller, are there any such
Governmental Orders threatened in writing to be imposed by any Governmental
Authority).
3.13 COMPLIANCE WITH LAWS. Each Selling Party has conducted and continues
to conduct the Business in all material respects in accordance with all Laws and
Governmental Orders applicable to such Selling Party, the Assets and the
Business (including, without limitation, the Foreign Corrupt Practices Act and
the anti-boycott laws and regulations promulgated under the Export
Administration Act of 1979), and such Selling Party is not in violation of any
such Law or Governmental Order in any material respect.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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3.14 CONDUCT IN THE ORDINARY COURSE; ABSENCE OF CERTAIN CHANGES, EVENTS
AND CONDITIONS. From the date of the September Statement of Net Assets, except
as disclosed in Section 3.14 of the Disclosure Schedule, the Business has been
conducted in the ordinary course and consistent with past practice. Except as
disclosed in Section 3.14 of the Disclosure Schedule, from the date of the
September Statement of Net Assets, no Selling Party has:
(i) made any material changes in the customary methods of
operations of the Business, including, without limitation, practices and
policies relating to manufacturing, purchasing, Inventories, marketing, selling
and pricing;
(ii) sold, transferred, leased or otherwise disposed of
any assets of the Business, other than the sale of Inventories or the
disposition of immaterial amounts of obsolete assets in the ordinary course of
the Business consistent with past practice;
(iii) acquired any material assets related to the
Business other than in the ordinary course of the Business consistent with past
practice;
(iv) permitted or allowed any of the assets of the
Business to be subjected to any Encumbrance, other than Permitted Encumbrances
and Encumbrances that will be released at or prior to the Closing;
(v) except in the ordinary course of the Business
consistent with past practice, discharged or otherwise obtained the release of
any Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the September Statement of Net Assets and
current liabilities incurred in the ordinary course of the Business consistent
with past practice since the date of the September Statement of Net Assets;
(vi) written down or written up (or failed to write down
or write up in accordance with U.S. GAAP consistent with past practice) the
value of any Inventories related to the Business or revalued any assets of the
Business other than in the ordinary course of the Business consistent with past
practice and in accordance with U.S. GAAP;
(vii) made any change in any method of accounting or
accounting practice or policy used by the Business, other than such changes
required by U.S. GAAP and disclosed in Section 3.14 of the Disclosure Schedule;
(viii) made any capital expenditure or commitment for any
capital expenditure related to the Business in excess of $250,000;
(ix) other than in the ordinary course of Business, (A)
granted any increase, or announced any increase, in the wages, salaries,
compensation, bonuses, incentives, pension or other benefits payable by such
Selling Party to any employees of the Business, including, without limitation,
any increase or change pursuant to any Plan, (B) established or increased or
promised to increase any benefits under any Plan, in either case except as
required by Law or any collective bargaining agreement and involving ordinary
increases consistent with the past practice of the Business, or (C) entered into
any agreement, arrangement or transaction with any employees of the Business;
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(x) terminated, discontinued, closed or disposed of any
plant, facility or other operation of the Business, or laid off any employees of
the Business or implemented any early retirement, separation or program
providing early retirement window benefits to employees of the Business within
the meaning of Section 1.401(a)-4 of the Regulations or announced or planned any
such action or program for the future;
(xi) suffered any material casualty loss or damage with
respect to any of the Assets;
(xii) amended, modified or consented to the termination
of any Material Contract or the Selling Party's rights thereunder;
(xiii) suffered any Material Adverse Effect; or
(xiv) agreed, whether in writing or otherwise, to take
any of the actions specified in this Section 3.14, except as expressly
contemplated by a Selling Party Document.
3.15 PERMITS AND LICENSES. Except as disclosed in Section 3.15 of the
Disclosure Schedule, each Selling Party currently holds all the health and
safety and other permits, licenses, authorizations, certificates, exemptions and
approvals of Governmental Authorities (collectively, "Permits") necessary or
proper for the current use, occupancy and operation of its specific Assets and
its conduct of the Business, except for such Permits the failure of which to
hold has not had and would not reasonably be expected to have a Material Adverse
Effect, and all such Permits are in full force and effect. No Selling Party has
received any written notice from any Governmental Authority revoking, canceling,
rescinding, materially modifying or refusing to renew any material Permit or
providing notice of material violations under any Law or Permit. Except as
disclosed in Section 3.15 of the Disclosure Schedule, each Selling Party is in
all material respects in compliance with its Permits. No Selling Party has
reason to believe that any consent of any Governmental Authority required in
order to transfer any of its Permits to the Purchaser in the event of the
consummation of the transactions contemplated by this Agreement will not be
obtained, or if not obtained that the Purchaser will not be able to obtain a
replacement or substitute Permit sufficient to conduct the Business as it is
currently conducted.
3.16 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Section 3.16(a) of the Disclosure
Schedule, (i) Hazardous Materials have not been generated, used, treated,
handled or stored on, or transported to or from, or released or discharged on
any Real Property; (ii) each Selling Party has disposed of all wastes in
compliance with all applicable Environmental Laws and permits required under
Environmental Laws; (iii) there are no past, pending or threatened Environmental
Claims against any Selling Party or any Real Property; (iv) no Real Property is
listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on the Comprehensive Environmental Response, Compensation and
Liability Information System or any analogous state list of sites requiring
investigation or cleanup; and (v) to the Selling Parties' knowledge, no Selling
Party has transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on the National
Priorities List under the Comprehensive
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Environmental Response, Compensation and Liability Act of 1980, as amended, or
on the Comprehensive Environmental Response, Compensation and Liability
Information System or any analogous state list or which is the subject of any
Environmental Claim.
(b) Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, to the Seller's knowledge, there are no circumstances with respect to
any Real Property or any Asset or the operation of the Business which would
reasonably be anticipated (i) to form the basis of an Environmental Claim
against any Selling Party or any Real Property or Asset or (ii) to cause such
Real Property or Asset to be subject to any restrictions on ownership,
occupancy, use or transferability under any applicable Environmental Law.
3.17 MATERIAL CONTRACTS.
(a) Section 3.17(a) of the Disclosure Schedule lists each of the
following contracts and agreements to which each Selling Party is a party that
relate to the Business and that are in effect as of the date hereof, other than
Excluded Contracts (such contracts and agreements, together with the Leases and
the Transferred Customer Contracts being "Material Contracts"):
(i) each contract, agreement, invoice, purchase order,
sales order and other arrangement, for the purchase or sale of Inventory or
other products or equipment to be used in the Business or for the furnishing of
services by or to the Business under the terms of which any Selling Party: (A)
is obligated to pay or is entitled to receive consideration of more than
$250,000 in the aggregate during the fiscal year ended September 30, 2000 or (B)
is obligated to pay or entitled to receive consideration of more than $250,000
in the aggregate over the remaining term of such contract (together with the
Transferred Customer Contracts, collectively, the "Material Operations
Contracts");
(ii) all material broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising contracts and agreements to which
any Selling Party is a party and which are primarily related to the Business;
(iii) all material contracts with independent contractors
or consultants (or similar arrangements) to which any Selling Party is a party
and which are primarily related to the Business;
(iv) all contracts and agreements that involve
Indebtedness of any Selling Party in excess of $500,000 and that are related to
the Business;
(v) all contracts and agreements with any Governmental
Authority to which any Selling Party is a party and which are primarily related
to the Business;
(vi) all contracts and agreements that limit or purport
to limit the ability of any Selling Party to engage in any Competitive Activity
in any geographic area or during any period of time;
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(vii) all contracts and agreements between or among any
Selling Party or any Affiliate of any Selling Party which are primarily related
to the Business;
(viii) each Material Operations Contract which contains a
performance guarantee on the part of any Selling Party to the extent equipment
is not delivered by scheduled delivery dates or systems fail to meet certain
performance criteria by such dates which performance guarantee may result in a
Liability in excess of $250,000.
(ix) all agreements and contracts pursuant to which any
Selling Party is granted a security interest to secure an obligation owing to
such Selling Party in connection with the Business, other than purchase money
security interests; and
(x) all other contracts and agreements, whether or not
made in the ordinary course of the Business, which are material to the conduct
of the Business, excluding, however, all contracts or licenses relating to
Shared Third Party Intellectual Property and all Subscriber Business IP
Licenses.
(b) The Seller has made available to the Purchaser true and
complete copies of all Material Contracts. The Material Contracts are all of the
material contracts necessary for the conduct of the Business as it is being
conducted as of the date of this Agreement. Each Material Contract to which each
Selling Party is a party (i) is a legal, valid and binding obligation of such
Selling Party, and to the Seller's knowledge, the other parties thereto, and is
in full force and effect, (ii) except as set forth in Section 3.17(b) of the
Disclosure Schedule, is freely and fully assignable to the Purchaser without
penalty or other adverse consequences, and (iii) upon consummation of the
transactions contemplated by the Selling Party Documents, except in any case to
the extent that any consents set forth in Section 3.2(c) of the Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other adverse consequence. Except as disclosed in Section 3.17(b) of
the Disclosure Schedule, no Selling Party is in breach of, or default under, any
Material Contract, and, to the best knowledge of the Seller, no event has
occurred that, with notice or lapse of time would constitute such a breach or
default or permit termination, modification or acceleration under any Material
Contract. Except as set forth in Section 3.17(b) of the Disclosure Schedule, no
Selling Party has received any written notice of uncured breach or default
under, or termination of, any Material Contract. Except as disclosed in Section
3.17(b) of the Disclosure Schedule, to the best knowledge of the Seller, no
other party to any Material Contract is in breach thereof or default thereunder.
3.18 INTELLECTUAL PROPERTY.
(a) Section 3.18(a) of the Disclosure Schedule sets forth a true
and complete list of all trademarks, service marks, trade names, registered
copyrights and applications therefor primarily used or intended to be primarily
used in the conduct of the Business as of the date hereof and which are owned by
any Selling Party or any Affiliate of a Selling Party or which are licensed or
sublicensed by any Selling Party from a third party, other than Excluded
Intellectual Property and commercially available, over-the-counter "shrink-wrap"
software.
(b) The Subscriber Business Intellectual Property, the
Intellectual Property licensed pursuant to the Existing License Agreement, the
Intellectual Property to be licensed or
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sublicensed to Purchaser pursuant to Section 5.7 and the Intellectual Property
to be licensed to the Purchaser pursuant to the Ancillary Agreements
(collectively, but with the exclusion of the Intellectual Property licensed
pursuant to the Existing License Agreement, the "Material Intellectual
Property") constitute all the material Intellectual Property primarily used or
intended to be used in, and all such material Intellectual Property necessary in
the conduct of, the Business as such Business is currently conducted, except as
set forth on Section 3.18(b) of the Disclosure Schedule.
(c) Except as disclosed in Section 3.2(c) of the Disclosure
Schedule, all rights of each Selling Party in each item of Material Intellectual
Property are either transferable or licensable to the Purchaser as contemplated
by this Agreement and the Ancillary Agreements. As a result of the transactions
contemplated by this Agreement (including the consents or alternate licenses
that may be necessary to be obtained pursuant to Section 5.7) and the Ancillary
Agreements, upon the Closing, the Purchaser shall own, or have adequate and
enforceable licenses, sublicenses or other rights to use, without payment of any
fee other than fees payable to third party licensors under such licenses or fees
disclosed in the subject license agreement or alternate license agreement (as
contemplated by Section 5.7), all Material Intellectual Property.
(d) Except as otherwise described in Section 3.18(d) of the
Disclosure Schedule, there are no contracts pursuant to which any Selling Party
licenses or sublicenses Owned Intellectual Property used exclusively in the
Business (other than Excluded Intellectual Property) or Intellectual Property
licensed pursuant to a Subscriber Business IP License to a third party, other
than Excluded Contracts and Transferred Customer Contracts.
(e) Except as otherwise described in Section 3.18(e) of the
Disclosure Schedule, to the best knowledge of the Seller, the rights of each
Selling Party and their Affiliates in or to the Material Intellectual Property
do not infringe on the rights of any other Person and no Selling Party or its
Affiliate has received any written notice from any Person to such effect. Except
as otherwise described in Section 3.18(e) of the Disclosure Schedule, no Actions
have been made or asserted or are pending (nor, to the best knowledge of the
Seller has any such Action been threatened in writing) against any Selling Party
either (i) based upon or challenging or seeking to deny or restrict the use by
any Selling Party or its Affiliate of any of the Material Intellectual Property
or (ii) alleging that any services provided, or products manufactured or sold by
the Business are being provided, manufactured or sold in violation of any
patents or trademarks, or any other rights of any Person. To the best knowledge
of the Seller, no Person is using any copyrights, trademarks, service marks,
trade names, trade secrets or similar property that infringe upon the Material
Intellectual Property or upon the rights of any Selling Party or its Affiliate
therein.
(f) Except as set forth in Section 3.18(f) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the Material
Intellectual Property.
3.19 REAL PROPERTY.
(a) Section 3.19(a) of the Disclosure Schedule lists the address
of each plant, office, warehouse and other parcels of real property at which
significant Assets are located or
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from which the Business is conducted and which are owned by any Selling Party or
Affiliates of any Selling Party (together with all buildings and other
structures, facilities or improvements located thereon and all fixtures attached
or appurtenant thereto, the "Owned Real Property") and the current use of each
such parcel of Owned Real Property.
(b) Section 3.19(b) of the Disclosure Schedule lists the address
of each plant, office, warehouse and other parcels of real property at which
significant Assets are located or from which the Business is conducted and which
are leased by any Selling Party or Affiliate of any Selling Party as tenant
(together with all buildings and other structures, facilities or improvements
located thereon and all fixtures attached or appurtenant thereto, the "Leased
Real Property", and, together with the Owned Real Property, the "Real Property")
and the current use of each such parcel of Leased Real Property and all
applicable lease agreements related thereto (collectively, the "Leases").
(c) There is no material violation of any Law relating to any of
the Real Property. Each Selling Party is in peaceful and undisturbed possession
of each parcel of Real Property occupied by it and there are no contractual or
legal restrictions that preclude or materially restrict the ability to use the
premises for the purposes for which they are currently being used. All existing
water, sewer, steam, gas, electricity, telephone and other utilities required
for the use, occupancy and operation of the Real Property are adequate for the
conduct of the Business as it has been and currently is conducted. Except as set
forth in Section 3.19(c) of the Disclosure Schedule, no Selling Party has leased
or subleased any parcel or any portion of any parcel of Real Property to any
other Person, nor has any Selling Party assigned its interest under any Lease to
any third party.
(d) As a result of the transactions contemplated by this
Agreement (including the obtaining of any necessary third party lessor consents)
and the Lease Agreements, upon the Closing, the Purchaser shall possess adequate
and enforceable leases or other rights to use, without payment of any fee other
than fees disclosed in the Lease Agreements, all the Real Property that is
subject to the Lease Agreements. To the best knowledge of the Seller, there are
no facts that would prevent the Real Property that is subject to the Lease
Agreements from being occupied by the Purchaser after the Closing in the same
manner as immediately prior to the Closing, other than the obtaining of any
necessary third party lessor consents.
3.20 TANGIBLE PERSONAL PROPERTY. Section 3.20 of the Disclosure Schedule
lists each item or distinct group of machinery, equipment, tools, supplies,
furniture, fixtures, personalty, vehicles and other tangible personal property
primarily used in the Business except for the personal computers referenced in
Section 2.1(b)(xiv) (the "Tangible Personal Property") as of November 21, 1999.
Prior to the Closing Date, the Seller will deliver to the Purchaser a revised
list of Tangible Personal Property, as contemplated by Section 5.16.
3.21 RIGHT, TITLE AND INTEREST IN TANGIBLE PERSONAL PROPERTY.
(a) Except as disclosed in Section 3.21(a) of the Disclosure
Schedule, each Selling Party owns, leases or has the legal right to use all its
Specific Assets and, with respect to rights under contracts included within the
Specific Assets, is a party to and enjoys the right to the benefits of all such
contracts, agreements and other arrangements. Each Selling Party has good
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and marketable title to, or, in the case of leased or subleased Assets, valid
and subsisting leasehold interests in, all its Specific Assets, free and clear
of all Encumbrances, except (i) as disclosed in the Disclosure Schedule and (ii)
Permitted Encumbrances.
(b) The items of Tangible Personal Property included within the
Assets and transferred to the Purchaser under this Agreement or made available
to the Purchaser under the Transition Services Agreement constitute all the
Tangible Personal Property primarily used or intended to be primarily used in,
and all (other than the Tangible Personal Property included in the Closing
Statement Credits or set forth in Section 2.1(b)(xiii) of the Disclosure
Schedule) such assets as are necessary in the conduct of the Business. All items
of Tangible Personal Property included within the Assets are in good operating
condition and repair (normal wear and tear excepted) and are suitable for the
purposes for which they are used and intended.
(c) Except as set forth in Section 3.21(c) of the Disclosure
Schedule, each Selling Party has the complete and unrestricted power and
unqualified right to sell, assign, transfer, convey and deliver its Specific
Assets to the Purchaser without penalty or other adverse consequences. Except as
contemplated by Section 5.7 and the obtaining of any third party lessor
consents, following the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements and the execution of the instruments of
transfer contemplated by this Agreement and the Ancillary Agreements, the
Purchaser will own, with good, valid and marketable title, or lease, under valid
and subsisting leases, or otherwise acquire the interests of each Selling Party
in its Specific Assets, free and clear of any Encumbrances, other than Permitted
Encumbrances, and without incurring any penalty or other adverse consequence,
including, without limitation, any increase in rentals, royalties, or license or
other fees imposed as a result of, or arising from, the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.
3.22 EMPLOYEE BENEFIT MATTERS.
(a) PLANS AND MATERIAL DOCUMENTS. Section 3.22(a) of the
Disclosure Schedule lists (i) all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements, whether legally enforceable or not, to which each Selling Party is a
party, with respect to which any Selling Party has any obligation or which are
maintained, contributed to or sponsored by any Selling Party for the benefit of
any of its current or former employees, officers or directors, (ii) each
employee benefit plan for which any Selling Party could incur liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated,
(iii) any plan in respect of which any Selling Party could incur liability under
Section 4212(c) of ERISA and (iv) any contracts, arrangements or understandings
between any Selling Party or any of its Affiliates and any employee of any
Selling Party including, without limitation, any contracts, arrangements or
understandings relating to a sale of the Business (collectively, the "Plans").
Each Plan is in writing and the Seller has furnished the Purchaser with a true
and complete copy of each Plan and a true and complete copy of each material
document prepared in connection with each such Plan as follows: (i) a copy of
each trust or other funding arrangement, (ii) each summary plan description and
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summary of material modifications, (iii) the most recently filed IRS Form 5500,
(iv) the most recently received IRS determination letter for each such Plan, and
(v) the most recently prepared actuarial report and financial statement in
connection with each such Plan. Except as disclosed on Section 3.22(a) of the
Disclosure Schedule, there are no other employee benefit plans, programs,
arrangements or agreements, whether formal or informal, whether in writing or
not, to which any Selling Party is a party, with respect to which any Selling
Party has any obligation or which are maintained, contributed to or sponsored by
any Selling Party for the benefit of any of its current or former employees,
officers or directors. No Selling Party has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause to exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide compensation or benefits
to any individual or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Code.
(b) ABSENCE OF CERTAIN TYPES OF PLANS. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan"). None of the Plans is subject to Title IV of ERISA.
None of the Plans provides for the payment of separation, severance, termination
or similar-type benefits to any Person or obligates any Selling Party to pay
separation, severance, termination or similar-type benefits (i) solely as a
result of any transaction contemplated by this Agreement and the Ancillary
Agreements or (ii) as a result of a "change in the ownership or effective
control" or a "change in the ownership of a substantial portion of the assets"
of any Selling Party, within the meaning of such term under Section 280G of the
Code. None of the Plans provides for or promises retiree medical, retiree
disability or retiree life insurance benefits to any current or former employee,
officer or director of any Selling Party. No Selling Party maintains or
contributes to a voluntary employees' beneficiary association which is intended
to be exempt from federal income taxation under Section 501(c)(9) of the Code.
Each of the Plans is subject only to the laws of the United States or a
political subdivision thereof.
(c) COMPLIANCE WITH APPLICABLE LAW. Each Plan is operated in all
material respects, in both form and operation, in accordance with the
requirements of all applicable Laws, including, without limitation, ERISA and
the Code. No Selling Party nor any ERISA Affiliate of a Selling Party (as
hereinafter defined) has incurred (nor has any event occurred or condition been
incurred or a claim been threatened which reasonably can be expected to result
in a Selling Party or an ERISA Affiliate of a Selling Party incurring) any
material obligation or liability in connection with any existing or previously
existing employee benefit plan which could become an obligation or liability of
Purchaser or give rise to a lien on any of the Assets. For purposes thereof, the
term "ERISA Affiliate" means a Person which, together with a Selling Party, are
treated as a single employer under Section 414 of the Code.
(d) QUALIFICATION OF CERTAIN PLANS. Each Plan which is intended
to be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that it is so qualified and, to the knowledge
of the Seller, no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status of
any such Plan (or the exempt status of any trust thereunder).
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(e) PLAN CONTRIBUTIONS AND FUNDING. All contributions, premiums
or payments required to be made with respect to any Plan have been made on or
before their due dates. All such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any Governmental Authority and, to the knowledge of the Seller, no fact or event
exists which could give rise to any such challenge or disallowance.
(f) WARN ACT. Each Selling Party is in compliance with the
requirements of the Worker Adjustment and Retraining Notification Act ("WARN")
and has no liabilities pursuant to WARN.
3.23 LABOR MATTERS. Except as set forth in Section 3.23 of the Disclosure
Schedule, (a) no Selling Party is a party to any collective bargaining agreement
or other labor union contract applicable to any Business Employee, and currently
there are no organizational campaigns, petitions or other unionization
activities seeking recognition of a collective bargaining unit; (b) there are no
controversies, strikes, slowdowns or work stoppages pending or, to the best
knowledge of the Seller, threatened between any Selling Party and any of the
Business Employees, and no Selling Party has experienced any such controversy,
strike, slowdown or work stoppage within the past three years; (c) no Selling
Party has breached or otherwise failed to comply with the provisions of any
collective bargaining or union contract covering Business Employees and there
are no grievances outstanding against any Selling Party under any such agreement
or contract; (d) there are no unfair labor practice complaints pending against
any Selling Party before the National Labor Relations Board or any other
Governmental Authority or any current union representation questions involving
Business Employees; (e) each Selling Party is currently in compliance with all
applicable Laws relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and has
withheld and paid to the appropriate Governmental Authority or is holding for
payment not yet due to such Governmental Authority all amounts required to be
withheld from Business Employees and is not liable for any arrears of wages,
taxes, penalties or other sums for failure to comply with any of the foregoing;
(f) each Selling Party has paid in full to all Business Employees or adequately
accrued for in accordance with U.S. GAAP consistently applied all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees; (g) there is no claim with respect to payment of
wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Authority with respect to any Persons
currently or formerly employed by any Selling Party in the Business; (h) no
Selling Party is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees of the Business or
employment practices; (i) there is no charge or proceeding with respect to a
violation of any occupational safety or health standards that has been asserted
or is now pending or threatened with respect to any Selling Party; (j) there is
no charge of discrimination in employment or employment practices, for any
reason, including, without limitation, age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or
threatened before the United States Equal Employment Opportunity Commission, or
any other Governmental Authority in any jurisdiction in which any Selling Party
has employed or currently employs any Person in the Business; (k) to the
knowledge of the Seller, each Selling Party has properly classified independent
contractors to the Business for federal income tax purposes; and (l) to the
knowledge of the Seller, no Business
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Employee is in violation of the terms of any employment contract, nondisclosure
agreement, noncompetition agreement or nonsolicitation agreement by which such
Business Employee is bound due to the activities in which such Business Employee
engages for any Selling Party.
3.24 KEY EMPLOYEES.
(a) Section 3.24(a) of the Disclosure Schedule lists the name,
the place of employment, the current annual salary rates, bonuses, deferred or
contingent compensation, pension, accrued vacation, "golden parachute" and other
like benefits paid or payable (in cash or otherwise), the date of employment and
job title of each current salaried employee, officer, director, consultant or
agent of the Business as of December 21, 1999.
(b) All Business Employees who are officers, management employees
or technical or professional employees are under written obligation to any
Selling Party to maintain in confidence all confidential or proprietary
information acquired by them in the course of their employment and to assign to
such Selling Party all inventions made by them within the scope of their
employment during such employment and for a reasonable period thereafter. All
such agreements are assignable by each Selling Party to the Purchaser without
the consent of any Business Employee.
3.25 TAXES.
(a) All returns and reports in respect of Taxes required to be
filed with respect to each Selling Party or the Business have been timely filed;
(b) all Taxes required to be shown on such returns and reports or otherwise due
have been timely paid; (c) all such returns and reports are true, correct and
complete in all material respects; (d) no adjustment relating to such returns
has been proposed formally or informally by any Tax authority; (e) there are no
pending or, to the best knowledge of the Seller, threatened Actions for the
assessment or collection of Taxes against any Selling Party or (insofar as
either relates to the activities or income of such Selling Party or the Business
or could result in liability of any Selling Party on the basis of joint and/or
several liability) any corporation that was includible in the filing of a return
with any Selling Party on a consolidated or combined basis; (f) no consent under
Section 341(f) of the Code has been filed with respect to any Selling Party; (g)
there are no Tax liens on any properties or assets of any Selling Party,
including, without limitation, the Assets and the Business; and (h) there are no
proposed reassessments of any property owned by any Selling Party that could
increase the amount of any Tax to which any Selling Party or the Business would
be subject.
3.26 INSURANCE. All material assets, properties and risks of the Business
and each Selling Party are, and for the past five years have been, covered by
valid and, except for policies that have expired under their terms in the
ordinary course, currently effective insurance policies or binders of insurance
(including, without limitation, general liability, property workers,
compensation, automobile liability, excess liability, fiduciary liability,
professional errors and omissions, directors and officers liability and fidelity
insurance) issued in favor of such Selling Party, in each case with responsible
insurance companies, in such types and amounts and covering such risks as are
consistent with customary practices and standards of companies engaged in
businesses and operations similar to those of such Selling Party.
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3.27 BROKERS. 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 or the Ancillary Agreements based
upon arrangements made by or on behalf of any Selling Party.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND THE PARENT CORPORATION
As an inducement to the Seller to enter into this Agreement, the
Purchaser and the Parent Corporation hereby jointly and severally represent and
warrant to the Seller as follows as of the Closing Date:
4.1 ORGANIZATION AND AUTHORITY. Each of the Purchaser and the Parent
Corporation is a corporation duly organized and validly existing under the laws
of its jurisdiction of organization and has all necessary corporate power and
authority to enter into the Purchaser Documents, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Purchaser Documents by each of the Purchaser and
the Parent Corporation, the performance by it of its obligations thereunder and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all requisite action on the part of the Purchaser and the Parent
Corporation. This Agreement has been, and upon their execution the other
Purchaser Documents will be, duly executed and delivered by each of the
Purchaser and the Parent Corporation, and (assuming due authorization, execution
and delivery by the Selling Parties) this Agreement constitutes, and upon their
execution the other Purchaser Documents will constitute, legal, valid and
binding obligations of each of the Purchaser and the Parent Corporation,
enforceable against the Purchaser and the Parent Corporation in accordance with
their respective terms, except as enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, debtor relief or similar laws affecting
the rights of creditors generally, and (b) general principles of equity,
including specific performance, injunctive relief and other equitable remedies.
4.2 NO CONFLICT. Assuming compliance with the notification requirements
of the HSR Act and the making and obtaining of all filings, notifications,
consents, approvals, authorizations and other actions referred to in Section
4.3, except as may result from any facts or circumstances relating solely to a
Selling Party, the execution, delivery and performance of the Purchaser
Documents by each of the Purchaser and the Parent Corporation do not and will
not (a) violate, conflict with or result in the breach of any provision of its
charter or by-laws (or other organizational documents), (b) conflict with or
violate any Law or Governmental Order applicable to it or (c) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any Encumbrance on any of its assets or properties pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which it is a
party or by which any of such assets or properties is bound or affected, except,
in the case of clauses (b) and
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(c), as would not prevent or materially delay consummation by it of the
transactions contemplated by this Agreement.
4.3 GOVERNMENTAL CONSENTS AND APPROVALS. The execution, delivery and
performance of the Purchaser Documents by each of the Purchaser and the Parent
Corporation do not and will not require any consent, approval, authorization or
other order of, action by, filing with, or notification to, any Governmental
Authority, except (a) the notification requirements of the HSR Act and (b) where
the failure to obtain such consent, approval, authorization or order would not
prevent or materially delay consummation of the transactions contemplated by the
Purchaser Documents.
4.4 LITIGATION. No Actions are pending or, to the best knowledge of the
Purchaser or the Parent Corporation, threatened in writing, which seeks to delay
or prevent the consummation of, or which would be reasonably likely to
materially adversely affect the Purchaser's or the Parent Corporation's ability
to consummate the transactions contemplated by any Purchaser Documents.
4.5 BROKERS. 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 based upon arrangements made by or
on behalf of the Purchaser or the Parent Corporation.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 CONDUCT OF BUSINESS PRIOR TO THE CLOSING. The Seller covenants and
agrees that, except (a) to the extent the Purchaser shall otherwise consent in
writing (which consent shall not be unreasonably withheld), (b) as permitted or
contemplated by this Agreement, (c) as may be necessary or appropriate to carry
out the transactions contemplated by this Agreement, or (d) as may be required
to facilitate compliance with any Laws, between the date hereof and the Closing,
the Seller shall not, and shall not suffer or permit conduct of the Business
other than in the ordinary course and consistent with the past practice of the
Business. Without limiting the generality of the foregoing, the Seller shall,
and shall cause its Affiliates and each other Selling Party to (a) continue its
advertising and promotional activities, and pricing and purchasing policies,
related to the Business in accordance with past practice; (b) not shorten or
lengthen the customary payment cycles for any of the payables or receivables of
the Business; (c) use its reasonable best efforts to (i) preserve intact the
Assets and the organization of the Business, (ii) use commercially reasonable
efforts to keep available to the Purchaser the services of the employees to be
designated in writing by the Purchaser to the Seller in writing pursuant to
Section 6.1 and (iii) preserve the Business' current relationships with its
customers, suppliers and other persons with which it has significant business
relationships; and (d) use commercially reasonable efforts to not engage in any
practice, take any action, fail to take any action or enter into any transaction
which would reasonably be expected to cause any representation or warranty of
the Seller to be untrue or result in a breach of any covenant made by the Seller
in this Agreement. The Seller covenants and agrees that, prior to the Closing,
without the prior written consent of the Purchaser, the Seller will not and will
not suffer or permit the occurrence of (a)
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any of the things enumerated in the second sentence of Section 3.14 or (b) the
entering into of any new Material Contract.
5.2 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable
notice, the Seller shall and shall cause each other Selling Party and each of
the Seller's and each Selling Party's officers, employees, agents, accountants
and counsel to: (i) afford the officers, employees and authorized agents,
accountants, counsel and representatives of the Purchaser reasonable access,
during normal business hours, to the offices, properties, plants, other
facilities, books and records of the Business and to those officers, employees,
agents, accountants and counsel of the Seller and any Selling Party who have any
knowledge relating to the Business, and (ii) furnish to the officers, employees
and authorized agents, accountants, counsel and representatives of the Purchaser
such additional financial and operating data and other information regarding the
Business as the Purchaser may from time to time reasonably request.
(b) In order to facilitate the resolution of any claims made
against or incurred by any Selling Party prior to or following the Closing, for
a period of seven years after the Closing, the Purchaser shall (i) retain the
books and records of each Selling Party which are transferred to the Purchaser
pursuant to this Agreement relating to periods prior to or following the Closing
in a manner reasonably consistent with the prior practices of each Selling
Party, and (ii) upon reasonable notice, afford the officers, employees,
authorized agents, accountants, counsel and representatives of any Selling Party
reasonable access (including the right to make photocopies at such Selling
Party's expense), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by
or against or incurred by the Purchaser after the Closing, for a period of seven
years following the Closing, the Seller shall (i) retain all books and records
of each Selling Party which are not transferred to the Purchaser pursuant to
this Agreement and which relate to the Business for periods prior to the Closing
and which shall not otherwise have been delivered to the Purchaser, and (ii)
upon reasonable notice, afford the officers, employees, authorized agents,
accountants, counsel and representatives of the Purchaser, reasonable access
(including the right to make photocopies at the Purchaser's expense), during
normal business hours, to such books and records.
5.3 CONFIDENTIALITY.
(a) The Seller agrees to, and shall cause each Selling Party, and
the respective agents, representatives, Affiliates, employees, officers and
directors of the Seller and each Selling Party to: (i) treat and hold as
confidential (and not disclose or provide access to any Person to) all
information relating to trade secrets, processes, patent or trademark
applications, product development, price, customer and supplier lists, pricing
and marketing plans, policies and strategies, operations methods, product
development techniques, business acquisition plans, new personnel acquisition
plans and any other confidential information with respect to the Business; (ii)
in the event that the Seller, any Selling Party or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide the Purchaser with prompt
written notice of such requirement so that the
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Purchaser may seek a protective order or other remedy or waive compliance with
this Section 5.3; (iii) in the event that such protective order or other remedy
is not obtained, or the Purchaser waives compliance with this Section 5.3,
furnish only that portion of such confidential information which is legally
required to be provided and exercise its reasonable best efforts to obtain
assurances that confidential treatment will be accorded such information; and
(iv) promptly furnish (prior to, at, or as soon as practicable following, the
Closing) to the Purchaser any and all copies (in whatever form or medium) of all
such confidential information then in the possession of the Seller or any
Selling Party or any of the agents, representatives, Affiliates, employees,
officers and directors or the Seller or any Selling Party and destroy any and
all additional copies then in the possession of such Persons of such information
and of any analyses, compilations, studies or other documents prepared, in whole
or in part, on the basis thereof; provided, however, that this sentence shall
not apply to any information that, at the time of disclosure, is available
publicly and was not disclosed in breach of this Agreement by the Seller, any
Selling Party, or the agents, representatives, Affiliates, employees, officers
or directors of the Seller or any Selling Party; provided, further, that
specific information shall not be deemed to be within the foregoing exception
merely because it is embraced in general disclosures in the public domain. In
addition, any combination of features shall not be deemed to be within the
foregoing exception merely because the individual features are in the public
domain unless the combination itself and its principle of operation are in the
public domain.
(b) The Purchaser agrees to, and shall cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat and
hold as confidential (and not disclose or provide access to any Person to) all
information relating to trade secrets, processes, patent or trademark
applications, product development, price, customer and supplier lists, pricing
and marketing plans, policies and strategies, operations methods, product
development techniques, business acquisition plans, new personnel acquisition
plans and any other confidential information obtained by the Purchaser pursuant
to the Confidentiality Agreement and not related to the Business; (ii) in the
event that the Purchaser or any such agent, representative, Affiliate, employee,
officer or director becomes legally compelled to disclose any such information,
provide the Seller with prompt written notice of such requirement so that the
Seller may seek a protective order or other remedy or waive compliance with this
Section 5.3; (iii) in the event that such protective order or other remedy is
not obtained, or the Seller waives compliance with this Section 5.3, furnish
only that portion of such confidential information which is legally required to
be provided and exercise its reasonable best efforts to obtain assurances that
confidential treatment will be accorded such information; and (iv) promptly
furnish (prior to, at, or as soon as practicable following, the Closing) to the
Seller any and all copies (in whatever form or medium) of all such confidential
information then in the possession of the Purchaser or any of its agents,
representatives, Affiliates, employees, officers and directors and destroy any
and all additional copies then in the possession of the Purchaser or any of its
agents, representatives, Affiliates, employees, officers and directors of such
information and of any analyses, compilations, studies or other documents
prepared, in whole or in part, on the basis thereof; provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by the Purchaser, its agents, representatives, Affiliates, employees,
officers or directors; provided, further, that specific information shall not be
deemed to be within the foregoing exception merely because it is embraced in
general disclosures in the public domain. In addition, any combination of
features shall not be deemed to be within the foregoing exception merely because
the individual features
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are in the public domain unless the combination itself and its principle of
operation are in the public domain.
(c) Each of the Seller and the Purchaser agrees and acknowledges
that remedies at Law for any breach of its obligations under this Section 5.3
are inadequate and that in addition thereto a party shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach, without the necessity of demonstrating the inadequacy of money
damages or the posting of any bond or similar security.
(d) Upon consummation of the Closing, the Confidentiality
Agreement shall terminate without any further action on the part of the
Purchaser or the Seller.
5.4 REGULATORY AND OTHER AUTHORIZATIONS; NOTICES AND CONSENTS.
(a) Each of the Seller and the Purchaser shall use its reasonable
best efforts to obtain all authorizations, consents, orders and approvals of all
Governmental Authorities and officials 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. Each party hereto agrees to make an appropriate filing, if
necessary, pursuant to the HSR Act with respect to the transactions contemplated
by this Agreement as promptly as practicable, but in any event within fifteen
(15) Business Days of the date hereof, and to supply as promptly as practicable
to the appropriate Governmental Authorities any additional information and
documentary material that may be requested pursuant to the HSR Act.
Notwithstanding the forgoing provisions of this Section 5.4(a), no party shall
be required to take any action in connection with obtaining any such
authorizations, consents, orders and approvals to the extent doing so would have
a material adverse effect on its business or the Business.
(b) The Seller shall give promptly such notices to third parties
and use its reasonable best efforts to obtain all such third party consents that
are necessary or desirable in connection with the transfer of the Material
Contracts. The Purchaser shall cooperate and use its reasonable best efforts to
assist the Seller in giving such notices and obtaining such consents; provided,
however, that the Purchaser shall have no obligation to give any guarantee or
other consideration of any nature in connection with any such notice or consent
or to consent to any change in the terms of any Material Contract which the
Purchaser in its sole discretion may deem adverse to the interests of the
Purchaser or the Business.
(c) The Seller and the Purchaser agree that, in the event any
consent, approval or authorization necessary or desirable to preserve for the
Business or the Purchaser any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement to which a Selling Party
is a party is not obtained prior to the Closing, the Seller will, and if
applicable, will cause a Selling Party to, subsequent to the Closing, cooperate
with the Purchaser in attempting to obtain such consent, approval or
authorization as promptly thereafter as practicable. If such consent, approval
or authorization cannot be obtained, the Seller will and if applicable, will
cause a Selling Party to, use its reasonable best efforts to provide the
Purchaser with the rights and benefits of the affected lease, license, contract,
commitment or other agreement or arrangement for the term of such lease,
license, contract or other agreement or
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arrangement (including remaining as a party thereto and passing the benefits
thereof to the Purchaser), and, if the Seller provides such rights and benefits,
the Purchaser shall assume the obligations and burdens thereunder.
(d) The Seller and the Purchaser agree to cooperate with each
other (i) in providing to the Purchaser, on commercially reasonable terms and
for purposes of conducting the Business, the benefit of any asset or right that
is currently used in the Business and that is not effectively transferred to the
Purchaser under this Agreement or the Ancillary Agreements and (ii) in providing
to the Seller, on commercially reasonable terms and for purposes of conducting
the businesses of the Seller as of the date hereof other than the Business, the
benefit of any asset or right that is currently used in such businesses and that
is transferred to the Purchaser under this Agreement or the Ancillary
Agreements.
(e) The Seller and the Purchaser shall cooperate in preparing a
comprehensive list prior to the Closing of all Permits that are non-transferable
or which will require the consent of any Governmental Authority in order to be
transferred to the Purchaser in the event of the consummation of the
transactions contemplated by this Agreement. Seller agrees that it will, and if
applicable, will cause a Selling Party to, reasonably cooperate with the
Purchaser in attempting to transfer those Permits which are transferable and to
reasonably cooperate to obtain such Permits which are not transferable, in each
case, as soon as practicable following the delivery of the foregoing list to the
Purchaser.
5.5 NOTICE OF DEVELOPMENTS.
(a) Prior to the Closing, the Seller shall promptly notify the
Purchaser in writing of (i) all events, circumstances, facts and occurrences
arising subsequent to the date of this Agreement which would reasonably be
expected to result in any material breach of a representation or warranty or
covenant of the Seller in this Agreement or which would reasonably be expected
to have the effect of making any representation or warranty of the Seller in
this Agreement untrue or incorrect in any material respect, and (ii) all other
material adverse developments affecting the Assets, Liabilities, business,
financial condition, operations, results of operations, customer or supplier
relations, employee relations, projections or prospects of the Seller or the
Business.
(b) Prior to the Closing, the Purchaser shall promptly notify the
Seller in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which would reasonably be expected to
result in any material breach of a representation or warranty or covenant of the
Purchaser in this Agreement or which would reasonably be expected to have the
effect of making any representation or warranty of the Purchaser in this
Agreement untrue or incorrect in any material respect.
5.6 NO SOLICITATION OR NEGOTIATION. The Seller agrees that between the
date of this Agreement and the earlier of (a) the Closing and (b) the
termination of this Agreement, neither the Seller nor any of its respective
Affiliates, officers, directors, representatives or agents will (a) solicit,
initiate, consider, encourage or accept any other proposals or offers from any
Person relating to any acquisition or purchase of all or any portion of the
Assets or the Business (other than (i) Inventory to be sold in the ordinary
course of the Business consistent with past practice
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and (ii) proposals or offers related to the acquisition of all or substantially
all of the assets or capital stock of the Seller in a transaction subject to the
prior rights of the Purchaser under this Agreement related to the acquisition of
the Assets and the Business), or (b) participate in any discussions,
conversations, negotiations or other communications regarding, or furnish to any
other Person any information with respect to, or otherwise cooperate in any way,
assist or participate in, facilitate or encourage any effort or attempt by any
other Person to seek to do any of the foregoing. The Seller immediately shall
cease and cause to be terminated all existing discussions, conversations,
negotiations and other communications with any Persons conducted heretofore with
respect to any of the foregoing. Subject to confidentiality agreements binding
upon the Seller as of the date hereof, the Seller shall notify the Purchaser
promptly if any such proposal or offer, or any inquiry or other contact with any
Person with respect thereto, is made and shall, in any such notice to the
Purchaser, indicate in reasonable detail the identity of the Person making such
proposal, offer, inquiry or contact and the material terms and conditions of
such proposal, offer, inquiry or other contact. The Seller agrees not to,
without the prior written consent of the Purchaser, release any Person from, or
waive any provision of, any confidentiality or standstill agreement to which the
Seller is a party and which is primarily related to a potential acquisition of
all or any portion of the Assets or the Business, and the Seller agrees to send,
promptly after the date of this Agreement, requests to all parties under such
agreements to return or destroy confidential information obtained from the
Seller thereunder related to the Assets or the Business.
5.7 CERTAIN MATTERS RELATED TO INTELLECTUAL PROPERTY.
(a) Effective as of the Closing, Seller grants, and shall cause
its Affiliates to grant, to the Purchaser a perpetual, nonexclusive,
nontransferable (except for sublicenses to Affiliates of Purchaser), world-wide,
royalty free license under all of Qualcomm's Intellectual Property that is
necessary to make, have made, use, sell, offer for sale, lease or otherwise
dispose of products of the Business (including all current product lines and
accessories manufactured by the Business) (hereafter the "Licensed Intellectual
Property").
(b) Seller shall, and shall cause its Affiliates to, use
commercially reasonable efforts to obtain all consents and provide all notices
required under the terms of any Subscriber Business IP License to be obtained or
provided in order to assign to Purchaser all of Seller's and its Affiliates'
right, title and interest in and to such Subscriber Business IP License. Seller
and Purchaser agree that, in the event a required consent to the assignment and
transfer to Purchaser of any Subscriber Business IP License is not obtained
prior to the Closing, then Seller shall use commercially reasonable efforts to
obtain such consent thereafter. If a consent under a Subscriber Business IP
License is not obtained, then Seller shall use commercially reasonable efforts
to provide Purchaser with the rights and benefits of such Subscriber Business IP
License and if Seller provides such rights and benefits, Purchaser shall assume
the obligations and burdens thereunder; provided, however, that the parties
acknowledge that Seller shall not be obligated to pay any consideration or agree
to any modification or amendment of any term of any agreement or contract in
connection with the obligations of Seller under this Section 5.7(b). Purchaser
shall use commercially reasonable efforts in cooperating and assisting Seller in
obtaining such consents, providing such notices and otherwise carrying out the
obligations of Seller under this Section 5.7(b).
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(c) Subject to the limitations contained in the next sentence of
this Section 5.7(c), effective as of the Closing, Seller grants, and shall cause
its Affiliates to grant, to Purchaser a nonexclusive sublicense to use all
Shared Third Party Intellectual Property in the conduct of the Business;
provided, that, to the extent Seller is obligated to make royalty or other
payments to any third party under any license or sublicense agreement covering
any Shared Third Party Intellectual Property which royalties or other payments
relate to or arise out of the use of such Shared Third Party Intellectual
Property by Purchaser in the conduct of the Business, such payment obligations
shall be passed through to Purchaser. In the event Seller or an Affiliate of
Seller is unable to provide a sublicense to Purchaser with respect to any Shared
Third Party Intellectual Property (whether because Seller or such Affiliate is
prohibited under the terms of any license or sublicense agreement or otherwise),
then Seller shall use commercially reasonable efforts to obtain for Purchaser,
and Purchaser shall cooperate with Seller in obtaining, a license or sublicense
in favor of Purchaser from the licensor of such Shared Third Party Intellectual
Property; provided, that, Purchaser acknowledges that any such license or
sublicense may be subject to negotiations between Purchaser and any such
licensor and may contain terms and conditions that are different than the terms
and conditions contained in any license or sublicense agreement between Seller
and the licensor of any such Shared Third Party Intellectual Property; provided,
further, that neither Seller nor any Affiliate of Seller shall be obligated to
agree to any modification or amendment of any term of any agreement or contract
granting to Seller or an Affiliate of Seller a license or sublicense to any
Shared Third Party Intellectual Property. In the event that Seller and Purchaser
are unable to obtain for Purchaser a license or sublicense to any Shared Third
Party Intellectual Property, then Seller shall use commercially reasonable
efforts to provide Purchaser with Seller's or its Affiliate's rights to and
benefits of such Shared Third Party Intellectual Property and if Purchaser
receives such rights and benefits, Purchaser shall assume the obligations and
burdens thereunder. Purchaser agrees to negotiate in good faith the terms and
conditions of any license or sublicense agreement to be entered into between
Purchaser and the licensor of any Shared Third Party Intellectual Property
pursuant to this Section 5.7(c) and to otherwise relieve Seller of its
obligations under this Section 5.7(c).
(d) Effective as of the Closing, Purchaser grants to Seller a
perpetual, royalty-free license (with the right to sublicense to any Affiliate
of Seller) to use the Owned Intellectual Property (and the right to grant
sublicenses to use which are deemed to be granted to purchasers of products and
licensees of associated software (whether or not embedded therein) of the Seller
or its Affiliates in connection with the use of the products purchased and
associated software licensed) and the customer lists (which rights to the
customer lists may not be sublicensed by Seller to any Person other than to
affiliates of Seller) being sold and transferred to Purchaser pursuant to
Section 2.1(a)(vi) and Section 2.1(a)(x), respectively, as each respectively
exists as of the Closing Date to commercially exploit the Excluded Assets, to
fulfill its obligations under all Excluded Liabilities (including any
obligations under any contracts or agreements to which Seller or its Affiliates
are a party as of the Closing Date), and otherwise in the conduct of any
business of Seller or its Affiliates other than the Business. Except as
contemplated by the foregoing sentence or as contemplated by the Ancillary
Agreements, from and after the Closing, Seller shall not use any of the Owned
Intellectual Property or customer lists being sold and transferred to Purchaser
pursuant to Section 2.1(a)(vi) (other than software not customized for the
Business) and Section 2.1(a)(x), respectively.
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(e) Subject to the limitations contained in the next sentence of
this Section 5.7(e), effective as of the Closing, Purchaser grants to Seller a
nonexclusive sublicense (with the right to sublicense to Affiliates of Seller)
to use all Intellectual Property covered by the Subscriber Business IP Licenses
to commercially exploit the Excluded Assets, to fulfill its obligations under
all Excluded Liabilities (including any obligations under any contracts or
agreements to which Seller or its Affiliates are a party as of the Closing
Date), and otherwise in the conduct of any business of Seller or its Affiliates
other than the Business; provided, that, to the extent Purchaser is obligated to
make royalty or other payments to any third party under any Subscriber Business
IP Licenses that are transferred to Purchaser which royalties or other payments
relate to or arise out of the use by Seller of any Intellectual Property covered
by such Subscriber Business IP License in the conduct of any business of Seller
other than the Business, such payment obligations shall be passed through to
Seller. In the event Purchaser is unable to provide a sublicense to Seller under
any Subscriber Business IP License that is transferred to Purchaser (whether
because Purchaser is prohibited under the terms of any license or sublicense
agreement or otherwise), then Purchaser shall use commercially reasonable
efforts to obtain for Seller, and Seller shall cooperate with Purchaser in
obtaining, a license or sublicense in favor of Seller from the licensor with
respect to the Intellectual Property covered by such Subscriber Business IP
License; provided, that, Seller acknowledges that any such license or sublicense
may be subject to negotiations between Seller and any such licensor and may
contain terms and conditions that are different than the terms and conditions
contained in any such Subscriber Business IP License transferred to Purchaser;
provided, further, that Purchaser shall not be obligated to agree to any
modification or amendment of any term of any Subscriber Business IP License
transferred to Purchaser. In the event that Seller and Purchaser are unable to
obtain for Seller a license or sublicense to any Intellectual Property covered
by any Subscriber Business IP License, then Purchaser shall use commercially
reasonable efforts to provide Seller with the rights to and benefits of such
Intellectual Property and if Seller receives such rights and benefits, Seller
shall assume the obligations and burdens thereunder. Seller agrees to negotiate
in good faith the terms and conditions of any license or sublicense agreement to
be entered into between Seller and the licensor of any Intellectual Property
covered by a Subscriber Business IP License that is transferred to Purchaser and
to otherwise relieve Purchaser of its obligations under this Section 5.7(e).
(f) Notwithstanding anything to the contrary set forth in this
Agreement, effective as of the Closing, the Licensed Intellectual Property
created or acquired by the Seller prior to July 3, 1995 shall be deemed
"Included Commercially Necessary IPR" as that term is defined in the Existing
License Agreement, and the use by the Purchaser and its Affiliates of such
Licensed Intellectual Property shall be governed by the terms and conditions of
the Existing License Agreement.
(g) Seller shall, not later than January 31, 2000, provide to
Purchaser a schedule of all contracts and agreements to which any Selling Party
is a party relating to (i) the Subscriber Business IP Licenses, (ii) the Shared
Third Party Intellectual Property, and (iii) all other software licensed or
sublicensed by a Selling Party from a third party, other than Excluded
Intellectual Property and commercially available, over-the-counter "shrink-wrap"
software.
(h) Notwithstanding anything to the contrary contained in this
Section 5.7 or in any other provision of this Agreement, no transfer of, or
grant of any license or other right to,
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any patents or patent applications are made or granted hereunder to Purchaser,
other than rights to design patents and design patent applications specifically
granted to Purchaser hereunder.
5.8 [***]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[***]
5.9 EXCLUDED LIABILITIES. The Seller shall pay and discharge the Excluded
Liabilities as and when the same become due and payable.
5.10 BULK TRANSFER LAWS. The Purchaser hereby acknowledges that no
Selling Party has taken, or intends to take, any action required to comply with
any applicable bulk sale or bulk transfer laws or similar laws, and the
Purchaser hereby waives compliance by any Selling Party with any applicable bulk
sale or bulk transfer laws of any jurisdiction in connection with the sale of
the Assets to the Purchaser (other than any obligations with respect to the
application of the proceeds herefrom). The Seller agrees to pay and discharge
when due all claims of creditors which are asserted against the Purchaser by
reason of such non-compliance. Pursuant to Article VIII, the Seller has agreed
to indemnify the Purchaser against any and all liabilities which may be asserted
by third parties (including with respect to Taxes) against the Purchaser as a
result of the noncompliance of any Selling Party with any such law.
5.11 TAX MATTERS.
(a) The Seller agrees to indemnify and hold harmless the
Purchaser against any loss, damage, liability or expense, including reasonable
fees for attorneys and other outside consultants, incurred in contesting or
otherwise in connection with Taxes imposed on any Selling Party or the Business
with respect to taxable periods or portions thereof ending on or before the
Closing Date and Taxes imposed on the Purchaser as a result of any breach of
warranty or misrepresentation under Section 3.25.
(b) Payment by the Seller of any amounts due under this Section
5.11 in respect of Taxes shall be made (i) at least three Business Days before
the due date of the applicable estimated or final tax return required to be
filed by the Purchaser on which is required to be reported income for a period
ending after the Closing Date for which the Seller is responsible under Section
5.11(a) without regard to whether the tax return shows overall net income or
loss for such period, and (ii) within three Business Days following an agreement
between the Seller and the Purchaser that an indemnity amount is payable, an
assessment of a Tax by a taxing authority, or a "determination" as defined in
Section 1313(a) of the Code. If liability under this Section 5.11 is in respect
of costs or expenses other than Taxes, payment by the Seller of any amounts due
under this Section 5.11 shall be made within five Business Days
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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after the date when the Seller has been notified by the Purchaser that the
Seller has a liability for a determinable amount under this Section 5.11 and is
provided with calculations or other materials supporting such liability.
(c) The Seller and the Purchaser shall share equally any real
property transfer or gains, sales, use, transfer, value added, stock transfer,
and stamp taxes, any transfer, recording, registration, and other fees, and any
similar Taxes which become payable in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements. The Seller, after
review and consent by the Purchaser, shall file such applications and documents
as shall permit any such Tax to be assessed and paid on or prior to the Closing
Date in accordance with any available pre-sale filing procedure. The Purchaser
shall execute and deliver all instruments and certificates necessary to enable
the Seller to comply with the foregoing. The Purchaser shall complete and
execute a resale or other exemption certificate with respect to the inventory
items sold hereunder, and shall provide the Seller with an executed copy
thereof. The Seller shall provide to the Purchaser such information regarding
the location of tangible property of the Business sufficient to support the
filing of complete and accurate Tax returns and reports by the Purchaser.
(d) At the request of the Purchaser, the Seller shall file with
all applicable Tax authorities any statements, certificates or forms provided
for under federal, state, local or foreign Tax laws to prevent the Purchaser
from being liable as a transferee for Taxes of the Seller.
(e) The Seller and the Purchaser agree to treat all payments made
by either to or for the benefit of the other under this Section 5.11 and any
other indemnity provisions of this Agreement and for any misrepresentations or
breach of warranties or covenants, as adjustments to the Purchase Price for Tax
purposes and that such treatment shall govern for purposes hereof except to the
extent that the laws of a particular jurisdiction provide otherwise, in which
case such payments shall be made in an amount sufficient to indemnify the
relevant party on an after-Tax basis.
(f) The Seller shall, on or before June 30, 2000, provide to the
Purchaser such information and substantiating documentation, as required under
Section 41(f)(3) of the Code, regarding "qualified research expense" and "gross
receipts" of the Business for purposes of computing the credit for increasing
research activities under Section 41 of the Code.
5.12 LETTERS OF CREDIT; LIEN RELEASES.
(a) Within 5 days prior to the Closing, the Seller shall deliver
to the Purchaser a true and complete list of all letters of credit, performance
bonds and similar obligations arising under any Transferred Customer Contracts
whether issued on behalf of or for the benefit of a Selling Party. The Purchaser
shall use all reasonable efforts to cause the Seller or any other Selling Party
to be released, as of or as promptly as practicable following the Closing, from
all such letters of credit, performance bond and similar obligations (whether
through the provision of a replacement letter of credit, guaranty or otherwise).
(b) The Seller shall use all reasonable efforts to cause the
Purchaser to receive the benefits following the Closing of all letters of
credit, performance bonds and similar
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obligations that have been issued in favor of or for the benefit of the Seller
under any Transferred Customer Contracts (whether through the assignment
thereof, the issuance of a replacement letter of credit, guaranty or otherwise).
(c) Seller shall, subsequent to the Closing, provide to Purchaser
evidence reasonably satisfactory to Purchaser that, with respect to assets
previously owned or held by QUALCOMM Personal Electronics which are included
within the Assets, (i) all liens on such Assets have been terminated and
released, and (ii) all equipment leases encumbering such Assets have been fully
paid and are no longer in force or effect.
5.13 SUBSCRIBER BUSINESS RECEIVABLES.
(a) Purchaser agrees to cooperate in good faith with Seller, at
the Seller's expense, in assisting Seller in the collection of the Pre-Closing
Receivables after the Closing, including among other things, providing Seller
with reasonable access during normal business hours to any records or other
information transferred to Purchaser in connection with the transactions
contemplated in this Agreement that may be useful in the collection of the
Pre-Closing Receivables. Further, Purchaser acknowledges that after the Closing,
Purchaser may receive payments in respect of Pre-Closing Receivables. In the
event that after the Closing Purchaser receives any payments with respect to the
Pre-Closing Receivables, Purchaser shall promptly upon receipt thereof remit
such payments to Seller. In order to assist the Purchaser in identifying
payments received which are attributable to Pre-Closing Receivables, as soon as
practicable following the Closing, the Seller shall deliver to the Purchaser a
list describing the Pre-Closing Receivables. The Seller shall reimburse the
Purchaser for all reasonable costs and expenses incurred by the Purchaser in
complying with the provisions of this Section 5.13(a).
(b) Seller agrees to cooperate in good faith with Purchaser, at
the Purchaser's expense, in assisting Purchaser in the collection of the
Post-Closing Receivables after the Closing, including among other things,
providing the Purchaser with reasonable access during normal business hours to
any records or other information relating to the Business retained by any
Selling Party in connection with the transactions contemplated in this Agreement
that may be useful in the collection of the Post-Closing Receivables. Further,
the Seller acknowledges that after the Closing, the Selling Parties may receive
payments in respect of Post-Closing Receivables. In the event that after the
Closing any Selling Party receives any payments with respect to the Post-Closing
Receivables, the Seller shall, and shall cause any other Selling Party to,
promptly upon receipt thereof remit such payments to the Purchaser. The
Purchaser shall reimburse the Seller for all reasonable costs and expenses
incurred by the Seller in complying with the provisions of this Section 5.13(b).
5.14 ANCILLARY AGREEMENTS. The parties shall cooperate in good faith to
prepare, negotiate and finalize the Ancillary Agreements as promptly as
practicable after the date hereof. Notwithstanding anything to the contrary
contained in this Agreement, in the event the parties cooperate in good faith
but are nevertheless unable to finalize any Ancillary Agreement by the time
otherwise scheduled for the Closing, the term sheet attached hereto which sets
forth the principal terms of such Ancillary Agreement shall be binding on the
parties and shall govern the relationship of the parties following the Closing
with respect to the matters covered thereby until such time as the parties shall
execute and deliver the applicable Ancillary Agreement.
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5.15 FURTHER ACTION.
(a) Each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all appropriate action, do or cause to be done
all things necessary, proper or advisable under applicable Laws, and execute and
deliver such documents and other papers, as may be required to carry out the
provisions of this Agreement and consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, delivering, or
causing to be delivered, the certificates, opinions and other documents to be
delivered to the other party as a condition to such other party's obligations
under Article VII of this Agreement. At any time and from time to time after the
Closing, at Purchaser's request and without further consideration, the Seller
shall, and shall cause any Selling Party to, at Purchaser's expense, (i) execute
and deliver such other instruments of sale, transfer, conveyance, assignment and
confirmation Purchaser may reasonably deem necessary or desirable in order more
effectively to convey to Purchaser, and to confirm Purchaser's title to, all of
the Assets, to put Purchaser in actual possession and operating control thereof
and to assist Purchaser in exercising all rights with respect thereto and (ii)
prosecute or otherwise enforce in its own name for the benefit of Purchaser any
claims, rights or benefits which are transferred to Purchaser under this
Agreement but which require prosecution or enforcement in the name of any
Selling Party. Without limiting the generality of the foregoing, if following
the Closing it is determined by the Purchaser and Seller, that Section 3.20 of
the Disclosure Schedule (as supplemented pursuant to Section 5.16) omitted any
machinery, equipment, tools, supplies, furniture, fixtures, personalty, vehicles
or other tangible personal property primarily used in the Business ("Omitted
Tangible Personal Property"), the Seller shall or shall promptly cause the
transfer of such Omitted Tangible Personal Property to the Purchaser upon the
payment by the Purchaser therefor of a purchase price equal to the net asset
book value thereof. Any Omitted Tangible Personal Property shall be deemed to
constitute Tangible Personal Property and Assets for all purposes of this
Agreement.
(b) CERTAIN INTELLECTUAL PROPERTY. The Purchaser acknowledges
that certain Subscriber Business Intellectual Property may not be identified
until after the Closing and therefore will not be physically delivered to the
Purchaser until after the Closing. Following the Closing, the Seller shall use
reasonable commercial efforts to identify any Subscriber Business Intellectual
Property not identified prior to the Closing, and upon the making of such
identification shall promptly thereafter transfer physically all such Subscriber
Business Intellectual Property.
5.16 SELECTION OF TANGIBLE PERSONAL PROPERTY; SPARE PARTS. Subject to the
Seller providing to the Purchaser a reasonably detailed list of Tangible
Personal Property on or prior to January 7, 2000, the Purchaser shall designate
in writing to the Seller on or before January 31, 2000, which items of Tangible
Personal Property the Purchaser desires to purchase pursuant to this Agreement
(the "Selected Tangible Personal Property"); provided however, the Seller shall
in any event provide the Purchaser with such list prior to February 14, 2000. In
the event that the Seller provides such list after January 7, 2000, the
Purchaser shall designate in writing to the Seller the Selected Tangible
Personal Property on the later of (i) February 14, 2000, and (ii) the earlier of
five days after the list is provided to the Purchaser or the Closing Date. The
Purchaser shall select sufficient items of Tangible Personal Property such that
the aggregate book value of the Selected Tangible Personal Property, as
reflected in the September Statement of Net Assets,
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shall equal at least [***] of the aggregate book value of all Tangible Personal
Property, as reflected in the September Statement of Net Assets. Those items of
Tangible Personal Property not so selected shall constitute Excluded Assets.
Subject to the Seller providing to the Purchaser a reasonably detailed list of
spare parts inventory (as to those spare parts not relating to 5GP and PDQ
phones and not otherwise expressly allocated to an outstanding purchase order)
on or prior to January 7, 2000, the Purchaser shall designate in writing to the
Seller on or before January 31, 2000 which items of such spare parts inventory
the Purchaser desires to purchase pursuant to this Agreement; provided however,
the Seller shall in any event provide the Purchaser with such list prior to
February 14, 2000. In the event that the Seller provides such list after January
7, 2000, the Purchaser shall designate in writing to the Seller the items of
such spare parts inventory the Purchaser wishes to purchase on the later of (i)
February 14, 2000, and (ii) the earlier of five days after the list is provided
to the Purchaser or the Closing Date. Those items of spare parts inventory so
selected shall be included in the Assets, and those items of spare parts
inventory not so selected shall constitute Excluded Assets.
5.17 RELOCATION AND OUTSOURCING. The Seller agrees to discuss in good
faith with the Purchaser the possibility of accomplishing the following prior to
the Closing relocating certain Assets and operations of the Business as between
Real Property to be leased to the Purchaser pursuant to the Lease Agreements. To
the extent the Seller and the Purchaser mutually agree to any such relocation or
outsourcing, the Seller shall use commercially reasonable efforts to accomplish
or significantly prepare for such relocation and outsourcing prior to the
Closing.
5.18 [***]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[***]
ARTICLE 6
EMPLOYEE MATTERS
6.1 EMPLOYEE SELECTION. On or prior to January 17, 2000, the Purchaser
shall deliver to the Seller a list setting forth the names of (a) those
employees of the Seller whom the Purchaser desires to provide services to the
Purchaser under the Employee Matters Agreement (the "Selected Seller
Employees"), and (b) those employee of Qualcomm Personal Electronics to whom the
Purchaser intends to extend an offer of employment (the "Selected QPE
Employees"). In connection with the Purchaser's selection of employees, from and
after the date hereof, the Seller shall upon reasonable notice permit the
Purchaser to interview any employees of the Business. The Seller shall use
reasonable commercial efforts to assist the Purchaser in such interviews. [***]
6.2 HIRING OF EMPLOYEES. On the Closing Date, the Purchaser shall offer
to employ on an "at-will" basis and subject to the Purchaser's standard terms,
conditions and policies of
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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employment (or if none, the standard terms, conditions and policies of the
Parent Corporation), each Selected QPE Employee as a "new hire" (full- or
part-time as such Selected QPE Employee was employed by Qualcomm Personal
Electronics immediately prior to the Closing Date); provided, however, that any
Selected QPE Employee who is on vacation at the Closing Date shall be offered
employment only if his or her return date is within 30 days of the Closing Date;
provided, further, however, that any Selected QPE Employee who is on short-term
disability or on an approved leave of absence shall be offered employment
hereunder upon the employee obtaining a medical release or other documentation
reasonably satisfactory to the Purchaser which evidences the employee's ability
to perform the essential functions of his regular work, with or without
reasonable accommodation, and the employee returns to active employment with the
Purchaser (a) if on short-term disability or on an approved leave of absence
under the Family Medical Leave Act of 1993, as amended ("FMLA"), no later than
the last day on which the employee may return to work under the provisions of
the applicable short-term disability plan of Qualcomm Personal Electronics or
FMLA, or (b) for all other approved leaves of absence, within 30 days of the
Closing Date. Those Selected QPE Employees who accept such offers prior to the
Closing Date shall become employees of the Purchaser as of the Closing Date, or,
for individuals on leave, as of their return from leave as described in the
previous sentence.
6.3 EMPLOYEE LIABILITIES. The Seller shall retain, and the Purchaser
shall not assume, any obligations relating to (a) any Selected QPE Employees who
do not become employees of the Purchaser, (b) any Selected QPE Employees who
actually become employees of the Purchaser (the "Transferred Employees") arising
on or prior to the Closing Date, or (c) any Seller Selected Employees or any
other employee of Seller. The Seller agrees that the Purchaser shall have no
responsibility to provide continuing group health benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
for any employees of the Business (whether or not a Transferred Employee) (and
their "qualified beneficiaries" as defined in COBRA).
6.4 SERVICE CREDIT. Transferred Employees shall receive credit for their
service with Qualcomm Personal Electronics for all purposes under Purchaser's
welfare benefit plans. For all other employee plans, programs and arrangements
of the Purchaser Transferred Employees shall receive credit for their service
with QUALCOMM Personal Electronics for purposes of eligibility and vesting only.
6.5 INDEMNITY. Without limiting in any way the scope of Article VIII or
the applicability of such Article to employment-related and benefit-related
matters, the Seller shall indemnify and hold harmless the Purchaser from any and
all claims (including reasonable attorneys' fees and expenses incurred in
defending such claims) against the Purchaser by Transferred Employees or other
Employees of the Business (including former employees of the Business) (a) that
arise from representations made by any Selling Party or Qualcomm Personal
Electronics to such employees regarding their future employment, (b) that
pertain to the payment of any bonus or other incentive compensation accrued or
earned by any Transferred Employee prior to the Closing Date or (c) that arise
from the termination of employment (through layoff or otherwise) of any employee
of the Business prior to the Closing Date. The Seller shall further indemnify
and hold harmless the Purchaser against any and all claims (including reasonable
attorneys' fees and expenses incurred in defending such claims) against the
Purchaser by any
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Selected QPE Employee who does not accept the Purchaser's offer of employment or
who otherwise fails to become a Transferred Employee.
6.6 CERTAIN OTHER EMPLOYEE-RELATED COSTS. On the Closing Date, the Seller
shall or shall cause the payment to each Transferred Employee of all amounts
payable to the Transferred Employees ("Employee Amounts") that relate to any
service by any Transferred Employee with Qualcomm Personal Electronics through
the Closing Date, including, without limitation, any salary or wages, any
accrued vacation, sick or personal days or any bonuses (collectively, "Accrued
Employee Benefits"); provided, however, that the Purchaser may elect to permit
each Transferred Employee to select either to be paid his or her accrued salary
or wages, vacation, sick or personal days ("Deferred Amounts") on the Closing
Date or, to the extent such payment is not required by applicable Law, to
request that the Purchaser assume his or her Deferred Amounts. To the extent the
Purchaser elects to permit the assumption of Deferred Amounts and certain
Transferred Employees elect to request assumption of such Deferred Amounts,
within five Business Days after the Closing Date, the Seller shall provide the
Purchaser with a complete and accurate statement of the Deferred Amounts
expected to be payable by the Purchaser following the Closing that relate to any
such Persons who have requested assumption of Deferred Amounts (the "Assumed
Employee Amounts"). The Seller shall retain liability for the Assumed Employee
Amounts and shall pay or cause to be paid an amount of cash to the Purchaser
equal to the Assumed Employee Amounts within ten Business Days after the Closing
Date.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations 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. The representations and
warranties of the Purchaser and the Parent Corporation contained in this
Agreement that are not qualified as to materiality shall be true and correct in
all material respects, and the representations and warranties of the Purchaser
and the Parent Corporation contained in this Agreement that are qualified as to
materiality shall be true and correct, as of the Closing Date as though made on
and as of the Closing Date, and the Seller shall have received a certificate
from the Purchaser to such effect signed by a duly authorized officer thereof;
(b) COVENANTS. The covenants 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, and the Seller shall have
received a certificate from the Purchaser to such effect signed by a duly
authorized officer thereof;
(c) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Assets contemplated by this
Agreement shall have expired or shall have been terminated;
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(d) NO LEGAL IMPEDIMENT. No statute, rule or regulation shall
have been promulgated, enacted, entered or enforced, and no other legally
binding, final and nonappealable action shall have been taken, by any
Governmental Authority or by any court or tribunal of competent jurisdiction,
domestic, foreign or supranational, that in any of the foregoing cases has the
effect of making illegal or prohibiting or to such extent that it has a Material
Adverse Effect, restraining or restricting the consummation of the transactions
contemplated by this Agreement;
(e) INCUMBENCY CERTIFICATE. The Seller shall have received a
certificate of the Secretary or an Assistant Secretary (or comparable officer)
of the Purchaser certifying the names and signatures of the officers of the
Purchaser authorized to sign this Agreement and the Ancillary Agreements to
which it is a party and the other documents to be delivered hereunder and
thereunder;
(f) LEGAL OPINION. The Seller shall have received from Loeb &
Loeb LLP legal opinions, addressed to the Seller and dated the Closing Date,
covering the matters set forth in Exhibit J; and
(g) ANCILLARY AGREEMENTS. The Purchaser shall have executed and
delivered to the Seller each of the Ancillary Agreements to which it is a party
and all Ancillary Agreements shall be in force and effect (or, in the event all
Ancillary Agreements have not been executed and delivered, the Purchaser shall
have complied with its obligations under Section 5.14).
7.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations 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. The representations and
warranties of the Seller contained in this Agreement shall be true and correct
as of the Closing Date as though made on and as of the Closing Date (in each
case determined without respect to any qualification as to "materiality,"
"Material Adverse Effect" or similar qualification), in all such respects as
would not, individually or in the aggregate, have a Material Adverse Effect, and
the Purchaser shall have received a certificate from the Seller to such effect
signed by a duly authorized officer thereof;
(b) COVENANTS. The covenants and agreements contained in this
Agreement to be complied with by the Seller on or before the Closing (other than
Section 5.1) shall have been complied with in all material respects, the
covenants and agreements contained in Section 5.1 shall have been complied with
in all respects as would not, individually or in the aggregate, have a Material
Adverse Effect, and the Purchaser shall have received a certificate from the
Purchaser to such effect signed by a duly authorized officer thereof;
(c) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Assets contemplated hereby shall
have expired or shall have been terminated;
(d) NO LEGAL IMPEDIMENT. No statute, rule or regulation shall
have been promulgated, enacted, entered or enforced, and no other legally
binding, final and nonappealable
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action shall have been taken, by any Governmental Authority or by any court or
tribunal of competent jurisdiction, domestic, foreign or supranational, that in
any of the foregoing cases requires the divestiture by the Purchaser of assets
or has the effect of making illegal or prohibiting or, to such an extent that it
has a Material Adverse Effect, restraining or restricting the consummation of
the transactions contemplated by this Agreement;
(e) RESOLUTIONS OF SELLING PARTIES. The Purchaser shall, with
respect to each Selling Party, have received a true and complete copy, certified
by the Secretary or an Assistant Secretary of such Selling Party, of the
resolutions duly and validly adopted by the Board of Directors of such Selling
Party evidencing its authorization of the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby;
(f) INCUMBENCY CERTIFICATE. The Purchaser shall, with respect to
each Selling Party, have received a certificate of the Secretary or an Assistant
Secretary of such Selling Party certifying the names and signatures of the
officers of such Selling Party authorized to sign this Agreement and the
Ancillary Agreements and the other documents to be delivered hereunder and
thereunder;
(g) LEGAL OPINION. The Purchaser shall have received from Cooley
Godward LLP a legal opinion, addressed to the Purchaser and dated the Closing
Date, covering the matters set forth in Exhibit K;
(h) CONSENTS AND APPROVALS. The Purchaser and the Seller shall
have received, all authorizations, consents, orders and approvals of all
Governmental Authorities and officials reasonably necessary for the consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements,
other than such authorizations, consents, orders, approvals or consents the
absence of which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (taking into account in any such
determination any rights or benefits conveyed on the Purchaser pursuant to
Section 5.4(c));
(i) ANCILLARY AGREEMENTS. Each Selling Party shall have executed
and delivered to the Purchaser each of the Ancillary Agreements to which it is a
party and all Ancillary Agreements shall be in force and effect (or, in the
event all Ancillary Agreements have not been executed and delivered, each
Selling Party shall have complied with its obligations under Section 5.14);
(j) NO MATERIAL ADVERSE EFFECT. No event, circumstance, change
in, or effect on the Business shall have occurred and be continuing which has a
Material Adverse Effect as of the Closing Date;
(k) CERTIFICATE OF NON-FOREIGN STATUS. The Purchaser shall have
received a certificate from each Selling Party (which complies with Section 1445
of the Code) of non-foreign status executed in accordance with the provisions of
the Foreign Investment in Real Property Tax Acts;
(l) TRANSFER AND TERMINATION OF EMPLOYEES. The Seller shall have
transferred the Selected Seller Employees to the Person providing services to
the Purchaser
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under the Employee Matters Agreement, the employment of all Selected QPE
Employees shall have been terminated on the Closing Date and unless otherwise
agreed to by the Purchaser pursuant to Section 6.6 all salaries, benefits and
all other amounts accruing or owing through and as of the Closing Date to the
Selected QPE Employees shall have been paid; and
(m) TRANSFER OF ASSETS. To the extent, as of the date hereof, any
of the Assets are not owned by any Selling Party, the Seller shall have caused
the transfer of such Assets to the Seller.
ARTICLE 8
INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
[***]
(b) Notwithstanding anything to the contrary contained in this
Agreement, no event, fact or circumstance which results in any actual payments
made pursuant to Section 2.7 shall result in or serve as the basis for any claim
for indemnification under this Section 8.1.
8.2 INDEMNIFICATION BY THE SELLER.
(a) Following the Closing, the Purchaser and its Affiliates,
officers, directors, employees, agents, successors and assigns (collectively,
the "Purchaser Indemnitees") shall be indemnified, defended and held harmless by
the Seller for any and all Liabilities, losses, damages, diminution in value,
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, attorneys' and consultants' fees and expenses)
actually
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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suffered or incurred by them (including, without limitation, any Action brought
or otherwise initiated by any of them) (hereinafter a "Loss"), arising out of or
resulting from:
(i) the breach of any representation or warranty made by
any Selling Party contained in any Selling Party Document (provided that solely
for purposes of this Article VIII, each such representation and warranty shall
be read as if all qualifications as to materiality, "Material Adverse Effect"
and similar qualifications were deleted therefrom); or
(ii) the breach of any covenant or agreement by any
Selling Party contained in any Selling Party Document; or
(iii) Liabilities of any Selling Party, whether arising
before or after the Closing Date, that are not expressly assumed by the
Purchaser pursuant to this Agreement, including, without limitation: (A)
Liabilities arising from or related to any failure to comply with laws relating
to bulk transfers or bulk sales with respect to the transactions contemplated by
this Agreement (notwithstanding the waiver contained in Section 5.10); and (B)
the Excluded Liabilities.
To the extent that the Seller's undertakings set forth in this Section
8.2 may be unenforceable, the Seller shall contribute the maximum amount that it
is permitted to contribute under applicable Law to the payment and satisfaction
of all Losses incurred by the Purchaser Indemnitees. (b) Notwithstanding
anything to the contrary contained in this Agreement except as provided in
Section 5.18(e), (i) the maximum aggregate amount of indemnifiable Losses which
may be recovered from the Seller arising out of or resulting from the causes
enumerated in Section 8.2(a)(i), or in Section 8.2(a)(ii), shall be an amount
equal to [***] and (ii) the Seller shall not be liable to indemnify the
Purchaser Indemnitees for any indemnifiable Losses otherwise payable thereunder
until such time as all such indemnifiable Losses shall aggregate to more [***]
(the "Indemnification Threshold"), after which time the Seller shall be liable
to indemnify the Purchaser Indemnitees for the entire amount of all Losses. The
limitations on indemnification contained in this Section 8.2(b) shall not apply
to claims for Losses based on fraud or other tortious conduct or the deliberate
failure of the Seller to perform any post-Closing obligations to be performed by
it hereunder.
8.3 INDEMNIFICATION BY THE PURCHASER AND THE PARENT CORPORATION.
(a) Following the Closing, the Seller and its Affiliates,
officers, directors, employees, agents, successors and assigns (the "Seller
Indemnitees") shall be indemnified, defended and held harmless by the Purchaser
and the Parent Corporation, jointly and severally, for any and all Losses,
arising out of or resulting from:
(i) the breach of any representation or warranty made by
the Purchaser or the Parent Corporation contained in any Purchaser Document
(provided that solely for purposes of this Article VIII, each such
representation and warranty shall be read as if all qualifications as to
materiality and similar qualifications were deleted therefrom); or
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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(ii) the breach of any covenant or agreement by the
Purchaser or the Parent Corporation contained in any Purchaser Document; or
(iii) the Assumed Liabilities.
To the extent that the undertakings of the Purchaser or the Parent
Corporation set forth in this Section 8.3 may be unenforceable, the Purchaser
and the Parent Corporation shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by the Seller Indemnitees.
(b) Notwithstanding anything to the contrary contained in this
Agreement, (i) the maximum aggregate amount of indemnifiable Losses which may be
recovered from the Purchaser and the Parent Corporation, collectively, arising
out of or resulting from the causes enumerated in Section 8.3(a)(i), or in
Section 8.3(a)(ii) shall be an amount equal to [***] and (ii) neither the
Purchaser nor the Parent Corporation shall be liable to indemnify the Seller
Indemnitees for any indemnifiable Losses otherwise payable thereunder until such
time as all such indemnifiable Losses shall aggregate to more than the
Indemnification Threshold, after which time the Purchaser and the Parent
Corporation, collectively, shall be liable to indemnify the Seller Indemnitees
for the entire amount of all Losses. The limitations on indemnification
contained in this Section 8.3(b) shall not apply to claims for Losses based on
fraud or other tortious conduct or the deliberate failure of the Purchaser or
the Parent Corporation to perform any of its respective post-Closing obligations
to be performed hereunder.
8.4 INDEMNIFICATION PROCEDURES. An indemnified party shall give the
indemnifying party notice of any matter which an indemnified party has
determined has given or could give rise to a right of indemnification under this
Agreement, within 60 days of such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises. The obligations and Liabilities of the indemnifying party
under this Article VIII with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article VIII
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an indemnified party shall receive notice of
any Third Party Claim, the indemnified party shall give the indemnifying party
notice of such Third Party Claim within 30 days of the receipt by the
indemnified party of such notice; provided, however, that the failure to provide
such notice shall not release the indemnifying party from any of its obligations
under this Article VIII except to the extent the indemnifying party is
materially prejudiced by such failure and shall not relieve the indemnifying
party from any other obligation or liability that it may have to any indemnified
party otherwise under this Article VIII. Upon receipt of notice of a Third Party
Claim, the indemnifying party shall assume and control the defense of such Third
Party Claim at its expense and through counsel of its choice reasonably
satisfactory to the indemnified party; provided, however, that if there exists
or is reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the indemnified party for the same counsel to
represent both the indemnified party and the indemnifying party, then the
indemnified party shall be entitled to retain its own counsel, in each
jurisdiction for which the indemnified party determines counsel is required, at
the expense of the indemnifying party; provided, further, that the indemnified
party may assume the defense of any Third Party Claim, at the expense of the
indemnifying party, if
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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the indemnifying party fails to assume the defense of a Third Party Claim within
15 days of receipt of a notice relating thereto. In the event the indemnifying
party undertakes any such defense against any such Third Party Claim as provided
above, the indemnified party shall cooperate with the indemnifying party in such
defense and make available to the indemnifying party, at the indemnifying
party's expense, all witnesses, pertinent records, materials and information in
the indemnified party's possession or under the indemnified party's control
relating thereto as is reasonably required by the indemnifying party. Similarly,
in the event the indemnified party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the indemnifying party shall
cooperate with the indemnified party in such defense and make available to the
indemnified party, at the indemnifying party's expense, all such witnesses,
records, materials and information in the indemnifying party's possession or
under the indemnifying party's control relating thereto as is reasonably
required by the indemnified party. No such Third Party Claim may be settled by
the indemnifying party without the written consent of the indemnified party,
unless such settlement only requires payment of money damages which will be
indemnified.
8.5 TAX MATTERS. Anything in this Article VIII (except for the specific
reference to Tax matters in Section 8.1) to the contrary notwithstanding, the
rights and obligations of the parties with respect to indemnification for any
and all Tax matters shall be governed by Section 5.11.
8.6 KNOWLEDGE OF BREACH. For purposes of this Article 8, (a) Seller shall
not be deemed to have breached any representation, warranty or covenant if
Purchaser or Parent Corporation had actual knowledge (as determined in
accordance with Section 10.15 and with respect to which the Seller shall bear
the burden of proving), on or prior to the Closing Date, of the breach of, or of
any facts or circumstances constituting or resulting in a breach of, such
representation, warranty or covenant, and (b) neither Purchaser nor Parent
Corporation shall be deemed to have breached any representation, warranty or
covenant if Seller had actual knowledge (as determined in accordance with
Section 10.15 and with respect to which the Purchaser shall bear the burden of
proving), on or prior to the Closing Date, of the breach of, or of any facts or
circumstances constituting or resulting in a breach of, such representation,
warranty or covenant.
8.7 INDEMNIFICATION EXCLUSIVE REMEDY. Except as provided for in Sections
2.7 and 5.18(e) and except for claims based on fraud or other tortious conduct
or a party's deliberate failure to perform post-Closing covenants to be
performed by it, the right of each party hereto to demand and receive
indemnification payments pursuant to this Article 8 shall be the sole and
exclusive right and remedy exercisable by such party with respect to any breach
of any representation or warranty of the other party contained in this Agreement
or in any certificate delivered pursuant hereto or noncompliance by the other
party with any covenant contained in this Agreement.
8.8 SUBROGATION. To the extent that either party hereto (the
"Indemnitor") makes or is required to make any indemnification payment to the
other party hereto (the "Indemnified Party"), the Indemnitor shall be entitled
to exercise, and shall be subrogated to, any rights and remedies (including
rights of indemnity, rights of contribution and other rights of recovery) that
the Indemnified Party or any of the Indemnified Party's Affiliates may have
against any other
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Person with respect to any Losses, circumstances or Action to which such
indemnification payment is directly or indirectly related. The Indemnified Party
shall permit the Indemnitor to use the name of the Indemnified Party and the
names of the Indemnified Party's Affiliates in any transaction or in any
proceeding or other Action involving any of such rights or remedies; and the
Indemnified Party shall take such actions as the Indemnitor may reasonably
request for the purpose of enabling the Indemnitor to perfect or exercise the
Indemnitor's right of subrogation hereunder.
ARTICLE 9
TERMINATION AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has resulted in
or that would reasonably be expected to result in a Material Adverse Effect; or
(ii) the Seller makes a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Seller seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its debts under
any Law relating to bankruptcy, insolvency or reorganization; or
(b) by either the Seller or the Purchaser if the Closing shall
not have occurred by 12:01 a.m. on March 27, 2000 , which date may be extended
by mutual written consent of the parties hereto; provided, however, that if a
request for additional information is received from the FTC or the DOJ pursuant
to the HSR Act, such date shall be extended to the fourteenth (14th) calendar
day following acknowledgment by the FTC or DOJ, as applicable, that the parties
have complied with such request, but in any event not later than 12:01 a.m. on
June 30, 2000; provided, further, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any 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 on or prior to such
date; or
(c) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable; or
(d) by the mutual written consent of the Seller and the
Purchaser.
9.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability on the part of either party hereto except (a) as set forth
in Section 5.3 and Article X and (b) that nothing herein shall relieve either
party from liability for any breach of this Agreement.
9.3 WAIVER. The Seller, on the one hand, and the Purchaser and the Parent
Corporation, on the other hand, may (a) extend the time for the performance of
any of the
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obligations or other acts of the other, (b) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, or (c) waive compliance with any of the
agreements or conditions of the other 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. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
ARTICLE 10
GENERAL PROVISIONS
10.1 EXPENSES. Except as otherwise specified in this Agreement, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
10.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be delivered personally, by FedEx or other nationally
recognized next-day courier, telecopied with confirmation of receipt, or mailed
first class, postage prepaid, by certified mail, return receipt requested, to
the parties at the addresses specified below (or at such other address for a
party as shall be specified by like notice; provided that notices of a change of
address shall be effective only upon receipt thereof) All notices, requests and
other communications shall be deemed given on the date of actual receipt or
delivery as evidenced by written receipt, acknowledgement or other evidence of
actual receipt or delivery to the address specified below. In case of service by
telecopy, a copy of such notice shall be personally delivered or sent by
certified mail, in the manner set forth above, within three (3) business days
thereafter:
(a) if to any Selling Party:
XXXXXXXX Xxxxxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000)000-0000
Attention:General Counsel
with a copy to:
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Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxx, Esq.
(b) if to the Purchaser or Parent Corporation:
Kyocera International, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: President
with copies to:
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
10.3 PUBLIC ANNOUNCEMENTS. No party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the other party (which
consent shall not be unreasonably withheld), and the parties shall cooperate as
to the timing and contents of any such press release or public announcement.
10.4 HEADINGS. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.5 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
10.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto 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, including, without
limitation, the Confidentiality Agreement.
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10.7 ASSIGNMENT. This Agreement may not be assigned by operation of Law
or otherwise without the express written consent of the Seller and the Purchaser
(which consent may be granted or withheld in the sole discretion of the Seller
and the Purchaser); provided, however, that the Seller may assign this
Agreement, in whole and not in part, to a Person who acquires all or
substantially all of the capital stock or assets and liabilities of the Seller,
without the consent of the Purchaser.
10.8 NO THIRD-PARTY BENEFICIARIES. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto, the Selling Parties, the
Purchaser Indemnitees, the Seller Indemnitees and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person, including, without limitation, any union or any employee or former
employee of the Seller, any legal or equitable right, benefit or remedy of any
nature whatsoever, including, without limitation, any rights of employment for
any specified period, under or by reason of this Agreement.
10.9 AMENDMENT. This Agreement may not be amended or modified except (a)
by an instrument in writing signed by, or on behalf of, the Seller, the
Purchaser and the Parent Corporation, or (b) by a waiver in accordance with
Section 9.3.
10.10 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, applicable to contracts
executed in and to be performed entirely within that state. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any California state or federal court sitting in the City of San
Diego, California.
10.11 ATTORNEYS' FEES. If any legal action or other proceeding is brought
for the enforcement of this Agreement, any Selling Party Document or any
Purchaser Document or because of any alleged dispute, breach, default or
misrepresentation in connection herewith or therewith, the successful or
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
10.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto 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.
10.13 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or equity, without the necessity of demonstrating the inadequacy
of money damages or the posting of any bond or similar security.
10.14 GUARANTEE OF PARENT CORPORATION. The Parent Corporation hereby
guarantees that Purchaser shall duly perform, satisfy and discharge on a timely
basis each of the covenants, obligations and liabilities of Purchaser under this
Agreement and the Ancillary Agreements, and the Parent Corporation shall be and
is jointly and severally liable with Purchaser for the due and
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timely performance and satisfaction of each of said covenants, obligations and
liabilities. Parent Corporation agrees that the liability of Purchaser for any
matter contained in this Agreement shall be the immediate, direct, and primary
obligation of Parent Corporation and shall not be contingent upon Seller's or
any Seller Indemnitee's exercise or enforcement of any remedy it may have
against Purchaser or any other person.
10.15 KNOWLEDGE. As used in this Agreement, the "knowledge" of a Party,
means (a) with respect to Seller, the actual knowledge of the Chief Executive
Officer, President, Chief Financial Officer or General Counsel of Seller or any
employee of the Business with the rank of Vice President or above, and (b) with
respect to Purchaser and Parent Corporation, the Chief Executive Officer,
President, Chief Financial Officer or General Counsel of Purchaser or Parent
Corporation, respectively.
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IN WITNESS WHEREOF, the Seller, the Purchaser and the Parent Corporation
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
XXXXXXXX XXXXXXXXXXXX KYOCERA INTERNATIONAL, INC.
By: By:
---------------------------- ---------------------------------
Name: Name:
-------------------------- -------------------------------
Title: Title:
------------------------- ------------------------------
WITNESS: KII ACQUISITION COMPANY
By:
------------------------------- ---------------------------------
Name:
-------------------------------
Title:
------------------------------
WITNESS:
------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
69
EXHIBITS
A Selling Parties
B Principal Terms of the ASICs Supply Agreement
C Assumption Agreement
D Xxxx of Sale
E Principal Terms of the Employee Matters Agreement
F Principal Terms of the Lease Agreements
G Principal Terms of the Retained Business Support Agreement
H Principal Terms of the Trademark License Agreement
I Principal Terms of the Transition Services Agreement
J Legal Opinion (Loeb)
K Legal Opinion (Cooley)
70
EXHIBIT A
SELLING PARTIES
XXXXXXXX Xxxxxxxxxxxx
Qualcomm do Brasil Ltda.
QUALCOMM (Australia) Pty Limited
71
EXHIBIT B
PRINCIPAL TERMS OF THE ASICS SUPPLY AGREEMENT
FORM OF AGREEMENT: Seller and Purchaser shall enter into an
ASICs supply agreement (the "Agreement")
which shall contain normal and customary
terms and conditions to be mutually agreed
to and not otherwise inconsistent with this
term sheet. The Agreement shall contain
warranty and indemnification provisions no
less favorable than those warranty and
indemnification provisions commonly offered
by Seller to similar situated third party
customers of Chipsets. Each party shall have
the right to assign its interest in the
Agreement to any respective successor in
interest to such party's respective subject
business unit.
VOLUME/REQUIREMENTS: [ *** ]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[ *** ]
TERM OF AGREEMENT: [ *** ]
PRICING OF CHIPSETS: [ *** ]
AFFILIATES: [ *** ]
GOVERNING LAW; VENUE: California; San Diego, California.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT C
FORM OF ASSUMPTION AGREEMENTS
ASSUMPTION AGREEMENT, dated as of [_______________], 2000 (this
"ASSUMPTION AGREEMENT"), between XXXXXXXX XXXXXXXXXXXX, a Delaware corporation
(the "SELLER"), and [_________________], a Delaware corporation (the
"PURCHASER").
WITNESSETH:
WHEREAS, the Seller, the Purchaser, and Kyocera International, Inc., a
California corporation and sole stockholder of the Purchaser ("PARENT") have
entered into an Asset Purchase Agreement, dated December 22, 1999 (the "ASSET
PURCHASE AGREEMENT"; unless otherwise defined herein, capitalized terms shall be
used herein as defined in the Asset Purchase Agreement);
WHEREAS, pursuant to the Asset Purchase Agreement, the Purchaser has
agreed to assume certain liabilities and obligations of the Seller with respect
to the Business; and
WHEREAS, the execution and delivery of this Assumption Agreement by the
Purchaser is a condition to the obligations of the Seller to consummate the
transactions contemplated by the Asset Purchase Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants set forth herein and in the Asset Purchase Agreement,
and intending to be legally bound hereby, the Purchaser and the Seller hereby
agree as follows:
1. ASSUMPTION OF LIABILITIES. Subject to Section 2 hereof, the Purchaser
hereby assumes and agrees to pay, perform and discharge when due only the
Assumed Liabilities and no other Liabilities of the Selling Parties.
2. EXCLUDED LIABILITIES. Notwithstanding the provisions of Section 1
hereof, the Seller shall retain, and shall be responsible for paying, performing
and discharging when due, and the Purchaser shall not assume or have any
responsibility for, all Excluded Liabilities.
3. NO THIRD PARTY BENEFICIARIES. This Assumption Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and the
Selling Parties and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever, under or by reason
of this Assumption Agreement.
4. ASSIGNMENT. This Assumption Agreement may not be assigned by
operation of Law or otherwise without the express written consent of the Seller
and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser).
5. COUNTERPARTS. This Assumption Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when
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executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
6. GOVERNING LAW. This Assumption Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, applicable to
contracts executed in and to be performed entirely within that state.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Assumption Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
XXXXXXXX XXXXXXXXXXXX
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
[______________________________]
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
2.
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EXHIBIT D
FORM OF BILLS OF SALE AND ASSIGNMENT
XXXX OF SALE AND ASSIGNMENT, dated as of [__________], 1999 (this "XXXX
OF SALE AND ASSIGNMENT"), from [XXXXXXXX XXXXXXXXXXXX, a Delaware corporation]
(the "SELLER"), to [__________], a Delaware corporation (the "PURCHASER").
WITNESSETH:
WHEREAS, the Seller, the Purchaser, and Kyocera International, Inc., a
California corporation and sole stockholder of the Purchaser ("PARENT") have
entered into an Asset Purchase Agreement, dated December 22,1999 (the "ASSET
PURCHASE AGREEMENT"; unless otherwise defined herein, capitalized terms shall be
used herein as defined in the Asset Purchase Agreement); and
WHEREAS, the execution and delivery of this Xxxx of Sale and Assignment
by the Seller is a condition to the obligations of the Purchaser to consummate
the transactions contemplated by the Asset Purchase Agreement.
NOW THEREFORE, for good and valuable consideration to the Seller, the
receipt and sufficiency of which is hereby acknowledged, and pursuant to the
Asset Purchase Agreement, the Seller, intending to be legally bound hereby, does
hereby agree as follows:
1. SALE AND ASSIGNMENT OF ASSETS AND PROPERTIES.
(a) The Seller does hereby sell, assign, transfer, convey, grant,
bargain, set over, release, deliver, vest and confirm unto the Purchaser, its
successors and assigns, forever, the entire right, title and interest of the
Seller in and to all the Assets. The Seller warrants that upon delivery to the
Purchaser of the Assets sold, assigned, transferred, conveyed, granted,
bargained, set over, released, delivered, vested and confirmed from the Seller
to the Purchaser pursuant to this Xxxx of Sale and Assignment, the Purchaser
will own, with good and marketable title, or lease, under valid and subsisting
leasehold interests, the Assets, free and clear of all Encumbrances, except as
expressly contemplated by the Asset Purchase Agreement, including, without
limitation, the Exhibits and the Disclosure Schedule that are a part thereof.
2. ASSETS AND PROPERTIES NOT SOLD AND ASSIGNED. The Assets shall exclude
the Excluded Assets.
3. POWER OF ATTORNEY. The Seller hereby constitutes and appoints the
Purchaser, its successors and assigns, the true and lawful attorney and
attorneys of the Seller, with full power of substitution, in the name of the
Purchaser or in the name and stead of the Seller, but on behalf of, for the
benefit and at the expense of the Purchaser, its successors and assigns: (i) to
collect, demand and receive any and all Assets hereby sold and assigned to the
Purchaser or intended so to be and to give receipts and releases for and in
respect ` of the same; ii to institute and prosecute any and all actions, suits
or proceedings, at law, in equity or otherwise, which the
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Purchaser may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Assets hereby sold and assigned to the
Purchaser or intended so to be, to defend or compromise any and all actions,
suits or proceedings in respect of any of the Assets, and to do all such acts
and things in relation thereto as the Purchaser shall deem advisable; (iii) to
take any and all other reasonable action designed to vest more fully in the
Purchaser the Assets hereby sold and assigned to the Purchaser or intended so to
be, and in order to provide for the Purchaser the benefit, use, enjoyment and
possession of such Assets; and (iv) to do all reasonable acts and things in
relation to the Assets hereby sold and assigned. The Seller acknowledges that
the foregoing powers are coupled with an interest and shall be irrevocable by it
or upon its subsequent dissolution or in any manner or for any reason. The
Purchaser shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest with
respect thereto. The Seller shall from time to time pay to the Purchaser, when
received, any amounts which shall be received directly or indirectly by the
Seller (including amounts received as interest) in respect of any Assets sold
and assigned to the Purchaser pursuant hereto.
4. OBLIGATIONS AND LIABILITIES NOT ASSUMED. Nothing expressed or implied
in this Xxxx of Sale and Assignment shall be deemed to be an assumption by the
Purchaser of any Liabilities of the Seller. The Purchaser does not by this Xxxx
of Sale and Assignment assume or agree to pay, perform or discharge any
Liabilities of the Seller of any nature, kind or description whatsoever. The
terms and provisions of the assumption of Liabilities by the Purchaser are set
forth in the Assumption Agreement dated as of the date hereof between the
Purchaser and the Seller.
5. NO THIRD PARTY BENEFICIARIES. This Xxxx of Sale and Assignment shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever, under or by reason of this Xxxx of Sale and
Assignment.
6. ASSIGNMENT. This Xxxx of Sale and Assignment may not be assigned by
operation of Law or otherwise without the express written consent of the Seller
and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser); provided, however, that the
Purchaser may assign this Xxxx of Sale and Assignment to an Affiliate of the
Purchaser without the consent of the Seller.
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7. GOVERNING LAW. This Xxxx of Sale and Assignment shall be governed by,
and construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the Seller has caused this Xxxx of Sale and
Assignment to be executed as of the date first written above by its officer
thereunto duly authorized.
XXXXXXXX XXXXXXXXXXXX
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT E
PRINCIPAL TERMS OF EMPLOYEE MATTERS AGREEMENT
1. Seller shall create a separate wholly owned subsidiary ("QCP"), which will
continue to employ those identified employees of the Business that are necessary
to the provision of certain enumerated services to Purchaser, including
engineering, product management, quality, sales and marketing, as well as
administrative and other services (e.g. information technology, human resources,
finance and operations) to be agreed by the parties (the "Selected Business
Employees"). Purchaser shall specifically identify such employees that Purchaser
desires to include in the group of Selected Business Employees on or before
January 17, 2000. Seller shall indemnify and hold harmless Purchaser with
respect to any and all claims brought by employees of the Business that are not
selected by Purchaser to be included in the group of Selected Business Employees
to the extent such claims against Purchaser relate in any way to stock options
in Seller held by employees not selected.
2. [ *** ] Notwithstanding the foregoing, except for normal and customary
increases consistent with past practices, QCP shall not increase (as a result of
increasing the level of benefits, salaries and the like, or the manner of
calculating the overhead allocation) any such costs or other expenses to be
charged to Purchaser without the prior written approval of Purchaser, which
approval shall not be unreasonably withheld. QCP shall not be entitled to charge
Purchaser for any such non-approved increased costs or expenses. In no event
shall Purchaser have any obligation to pay to QCP for any such costs to the
extent that they relate in any way to stock options held by any Selected
Business Employee.
3. The Selected Business Employees shall perform such services as are reasonably
specified by Purchaser from time to time. Except for those services specifically
agreed to by the parties to be provided to Seller pursuant to the Retained
Business Support Agreement, [ *** ], the Selected Business Employees shall,
unless otherwise mutually agreed, perform services exclusively for Purchaser
primarily for the purpose of design and development of CDMA handsets which
incorporate Seller ASICs, to be manufactured by Purchaser, with sales and
marketing and administrative support provided by QCP. The parties agree that in
the event of any competing demands for services of the Selected Business
Employees which may arise under the Retained Business Support Agreement or
otherwise, the first priority of the Selected Business Employees in performing
services shall be to perform those services to be performed for the benefit of
Purchaser.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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4. The statutory officers of QCP shall be selected by Seller. All statutory
officers of QCP shall consist of Seller officers and/or employees that are not
within the group of Selected Business Employees.
5. The Board of Directors of QCP will consist of one board member. The board
member shall be selected by Seller and will be an individual that is not within
the group of Selected Business Employees.
6. QCP shall retain control of the employment relationship with the Selected
Business Employees throughout the [ *** ] period, including the right to adjust
pay, discipline, supervise, terminate, hire, promote, etc. QCP shall have the
exclusive right, in its sole discretion, to grant stock options, if any, to the
Selected Business Employees.
7. During the [ *** ] term, unless otherwise mutually agreed, Seller will not
transfer any Selected Business Employee to Seller.
8. During the [ *** ] term, QCP will be responsible for ensuring compliance with
applicable employment laws, including those related to payroll and compensation,
benefits, withholding of state and federal taxes, workers compensation
insurance, disability insurance, workplace safety, state and federal law
relating to the employment relationship, as well as applicable record-keeping
requirements. Any penalties or additional payments required as a result of QCP's
failure to pay wages, taxes, insurance or other amounts required by law shall be
borne by QCP.
9. Purchaser and QCP shall agree upon appropriate terms and conditions relating
to confidentiality of information of Purchaser and QCP, and to ownership of
intellectual property created or conceived by the Selected Business Employees
during the [ *** ] term. Generally, any intellectual property created or
conceived by any Selected Business Employee (except for intellectual property
created or conceived in connection with performing those services specifically
agreed to by the parties to be provided to Seller pursuant to the Retained
Business Support Agreement) during the [ *** ] term shall be the property of
Purchaser; provided, however, if any such intellectual property is derivative of
any intellectual property owned by or licensed to Seller (or its affiliates) and
in existence prior to the Closing Date, Purchaser shall not have any rights in
such underlying intellectual property except as expressly granted to Purchaser
elsewhere.
10. After the [ *** ] term, Purchaser shall identify those Selected Business
Employees that Purchaser desires (excluding the statutory officers and the
director of QCP) to hire as full-time employees of Purchaser and may make offers
of employment to such employees. Any Selected Business Employee that is not
hired or that declines to be hired by Purchaser may be transferred by Seller to
Seller (or any affiliate of Seller). Purchaser shall pay all costs and expenses
associated with any Selected Business Employee that is not offered employment by
Purchaser as set forth above and is terminated by QCP upon the expiration of the
[ *** ] term and not otherwise employed by Purchaser and/or Seller; provided,
however, Purchaser shall have no liability for any such costs or expenses to the
extent that they relate in any way to stock options in Seller held by any such
Selected Business Employee, and Seller shall
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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indemnify and hold harmless Purchaser with respect to any and all claims brought
by Selected Business Employees after the [ *** ] term to the extent such claims
against Purchaser relate in any way to stock options in Seller held by any such
Selected Business Employee.
11. If during the [ *** ] term Purchaser elects to reduce the number of Selected
Business Employees, then Seller (and any of its affiliates) shall be entitled to
transfer any such Selected Business Employees which Purchaser desires to exclude
from the list of Selected Business Employees. Purchaser shall (i) pay all costs
and expenses associated with any such Selected Business Employees not so
transferred by Seller to Seller (or its affiliates) who are terminated by QCP
prior to the expiration of the [ *** ] term and not otherwise employed by Seller
(or its affiliates), and (ii) indemnify and hold harmless Seller and its
officers, directors, employees and affiliates with respect to any and all claims
arising out of or relating to any such early termination by QCP of any such
Selected Business Employees; provided, however, Purchaser shall have no
liability for any such costs or expenses and Purchaser shall have no obligation
to provide such indemnification to the extent that they relate in any way to
stock options in Seller held by any such Selected Business Employee, and Seller
shall indemnify and hold harmless Purchaser with respect to any and all claims
brought by Selected Business Employees to the extent such claims against
Purchaser relate in any way to stock options in Seller held by any such Selected
Business Employee.
12. The parties shall mutually agree to the manner in which Selected Business
Employees shall be permitted to represent themselves with respect to third
parties (for example, with respect to the use of business cards, stationary and
the like); provided, however, in no case shall the Selected Business Employees
be permitted to represent themselves in a manner which is inconsistent with
being anything other than QCP employees; provided further, however, that that
shall not preclude the Selected Business Employees from representing that, in
their capacity as employees of QCP, they are performing services for Purchaser.
13. Services performed by the Selected Business Employees shall be provided on
an "AS-IS" basis. QCP makes no warranty concerning such services.
14. With respect to any actions (or inaction) of the Selected Business Employees
which are done as a result of the requirements or other requests of Purchaser,
Purchaser shall indemnify and hold harmless Seller, QCP and Seller's officers,
directors, employees and affiliates with respect to any and all claims arising
out of or relating to any such actions (or inaction). Without limitation to the
prior sentence, Purchaser shall indemnify and hold harmless Seller, QCP and
Seller's officers, directors, employees and affiliates with respect to any and
all claims for infringement arising out of or relating to engineering services
provided to Purchaser by QCP and the Selected Business Employees. With respect
to any actions (or inaction) of the Selected Business Employees which are done
as a result of the requirements or other requests of QCP (other than as a result
of the requirements or other requests of Purchaser), QCP shall indemnify and
hold harmless Purchaser and Purchaser's officers, directors, employees and
affiliates with respect to any and all claims arising out of or relating to any
such actions (or inaction).
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT F
PRINCIPAL TERMS OF THE LEASE AGREEMENTS
LEASED FACILITIES: Purchaser agrees to lease or sublease, as the case
may be, certain facilities from Seller as follows
(collectively, the "Leases") for use by Purchaser
in continuing the Business:
[ *** ]
PREMISES: The foregoing list of properties represents the
parties' current expectations as to the space to be
leased by Purchaser.
[ *** ]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[ *** ]
All of the facilities will be delivered to
Purchaser on a then current "as is" basis, without
warranty by Seller; provided, however, the
Purchaser shall have the right to inspect the
facilities prior to the Closing and prepare a list
of items requiring repair in order to put such
properties in the condition required by the terms
and conditions set forth in the Agreement, and
Seller shall reasonably promptly fix, at Seller's
cost and expense, those items required to be so
repaired. Any future alterations will require the
consent of Seller and the landlord under any
applicable Master Lease.
[ *** ]
LEASE TERM: [ *** ]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[ *** ]
With respect to all other facilities, the term of
the subject lease or sublease shall expire
concurrently with the expiration of the existing
term under the applicable Master Lease. Seller
shall not be required to exercise any option to
extend the term under any Master Lease. The lease
or sublease arrangements shall commence on
consummation of the sale of the Business; provided,
however, that in the event the sale transaction
does not close, Seller and Purchaser shall be under
no obligation to lease the facilities, obtain
assignments of leases or enter into subleases. Each
form of lease or sublease shall be prepared by
Seller and shall contain such other terms and
conditions as are commonly found in leases
currently being used by landlords for similar space
in the vicinity of the subject properties.
[ *** ]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[ *** ]
NON-OWNED FACILITIES: As to each facility [ *** ] Seller, at its
election, shall either assign the lease for such
facility to Purchaser or sublease the subject space
to Purchaser. Purchaser and Seller acknowledge that
each proposed assignment and sublease will be
subject to obtaining the consent of the landlord
under the applicable Master Lease, and will be
further subject to the restrictions on
assignment/subletting contained in the applicable
Master Lease.
Each sublease shall provide that the subtenant will
perform all of the obligations of the tenant under
the Master Lease as well as such other obligations
as are set forth in the form of sublease to be
prepared by Seller and approved by Purchaser.
Seller will use reasonable good faith efforts, at
no cost or liability to Seller, to cause the
landlord under each Master Lease to perform its
obligations under the Master Lease for the benefit
of Purchaser.
[ *** ]
LEASE RATE: [ *** ]
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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[ *** ]
[ *** ]
USE: Purchaser shall use the respective premises only
for uses similar to those currently being conducted
by Seller in such premises.
DEFAULTS; REMEDIES: Each lease/sublease shall contain customary default
provisions, including without limitation, failure
to pay rent, failure to perform the terms of the
lease/sublease, and
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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bankruptcy of Purchaser, etc. In addition, each
lease/sublease shall contain customary remedies for
tenant defaults, including, without limitation,
late charges, the right to terminate Purchaser's
possession of the leased premises, the right to
seek damages, and the right to keep the lease or
sublease in effect if so elected by Seller.
ASSIGNMENT/SUBLEASES: None of the leases/subleases shall be assigned by
Purchaser, nor shall any sublease be entered into,
without the prior written consent of Seller, which
consent shall not be unreasonably withheld;
provided, however, Purchaser shall be able to
sublease portions of a subject facility(ies) to an
Affiliate(s) of Purchaser without obtaining the
prior written consent of Seller. In addition, with
respect to any subleased space, the consent of the
landlord under the Master Lease will have to be
obtained as well. [ *** ]
[ *** ]
BROKERS: Each party shall be responsible for the payment of
any fees or commissions payable to any broker
retained by such party in connection with this
transaction, and any extension of the term of any
lease.
OTHER TERMS: Each lease/sublease shall contain a requirement
that Purchaser maintain adequate insurance and
other customary terms and conditions consistent
with the leasing of commercial property.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT G
PRINCIPAL TERMS OF THE RETAINED BUSINESS SUPPORT AGREEMENT
TERM: Purchaser shall provide Seller with prescribed Services
(as defined below) and access to equipment and facilities
(as described below) for a period of between six (6) and
twelve (12) months (depending on the nature of the
Service, equipment and/or facilities, which time frame for
any given type of Service, equipment and/or facility shall
be specified in greater detail in the definitive Retained
Business Support Agreement or attached statements of
work), or for that longer period of time as is mutually
agreed to by the parties or that shorter period of time as
is directed by Seller for any particular Service,
equipment or facility (the "Term"). The provision of
Services and the access to equipment and facilities shall
be on mutually agreed upon terms and conditions, taking
into account the availability of the subject equipment and
facilities, as well as the work load of potentially
affected personnel. The parties shall cooperate in good
faith to define reasonable parameters for the provision of
Services and the access to any subject equipment and
facilities. Seller acknowledges and agrees that, in the
event of any conflict between the needs of Purchaser and
the needs of Seller with respect to the utilization of
affected personnel, equipment or facilities, the needs of
Purchaser shall have priority.
SERVICES: The type and scope of such Services which Purchaser shall
make available to Seller shall consist of those services
which are currently provided in the Business (except to
the extent providing such Services compromises or could
reasonably be expected to compromise Purchaser's
confidential information, as reasonably determined by
Purchaser) and which support other current business
activities of Seller (such as the Condor business and
other government and high security business and
applications, the ASICs business, the Globalstar business
and other satellite based business and applications such
as global positioning, the OmniTracs business and other
tracking or monitoring type businesses and applications,
HDR, Eudora, net broadcast applications, and the wireless
network test and deployment tools and software
businesses), including the following services and
technical support (collectively, the "Services"):
Manufacturing: Purchaser may provide services relating to
the manufacture and assembly of subscriber equipment.
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Engineering Services: Purchaser may provide engineering
and technical services, including test.
Assistance with Litigation Matters: Purchaser may provide
Seller with reasonable access to personnel and records
with respect to any pending or threatened litigation
matters to the extent such personnel and/or records are
knowledgeable about/relevant to such matters.
EQUIPMENT/
FACILITIES: The type and scope of access to equipment and facilities
which Purchaser shall make available to Seller shall
consist of the use of that equipment and those facilities
that are used in the Business and which support other
current business activities of Seller, including equipment
and facilities used for test and development purposes
(except to the extent providing access to such equipment
or facilities compromises or could reasonably be expected
to compromise Purchaser's confidential information, as
reasonably determined by Purchaser).
DESIGNATION: As soon as reasonably practical and in any event prior to
the Closing Date, Seller shall designate to Purchaser the
specific type and scope of the Services requested by
Seller, as well as identified the equipment and facilities
as to which Seller desires access; provided, however,
Seller acknowledges and agrees that the ability of
Purchaser to provide any requested Service and access as
of the Closing Date and thereafter, and the initial
quality of such Service, may be negatively impacted to the
extent Seller makes its designations at a time(s) closer
to the Closing Date than at an earlier time(s).
PERFORMANCE OF
SERVICES/ACCESS: Purchaser shall provide the Services and permit such
access to equipment and facilities on an ongoing basis
during the Term in accordance with mutually agreed upon
reasonable parameters, taking into account availability of
the subject equipment and facilities, as well as the work
load of potentially affected personnel.
QCP EMPLOYEES: It is acknowledged that Services to be provided under the
Retained Business Support Agreement may be performed by
employees transferred to QCP and who otherwise are to
exclusively provide their services to Purchaser in support
of the Business. The use of any such employees shall
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be subject to mutually agreed upon statements of work or
other mutually agreed upon work orders.
CHARGE FOR
SERVICES/ACCESS: [***]
OTHER TERMS: The Retained Business Support Agreement shall contain
other customary terms and conditions
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT H
PRINCIPAL TERMS OF THE TRADEMARK LICENSE AGREEMENT
FORM OF AGREEMENT: Seller and Purchaser shall enter into a Trademark
License Agreement (the "Agreement") which shall
contain normal and customary terms and conditions
which shall be mutually agreed to and not
otherwise inconsistent with this term sheet.
LICENSE TERMS: Seller shall grant a nonexclusive,
nontransferable, world-wide, royalty free license
to Purchaser to use the name "QUALCOMM" and
certain other trademarks of Seller to be mutually
agreed to by the parties on all product lines
manufactured in commercial quantities by the
Business as of the Closing Date (including on (i)
all finished goods inventory purchased by
Purchaser from Seller which finished goods
inventory bore the name "QUALCOMM" on the Closing
Date, (ii) 5GP model units and PdQ units, and
(iii) on parts and accessories for any such
Business products so long as Purchaser continues
to manufacture, support and/or sell the products
to which such parts and accessories relate). Such
license to use may include the use of such
trademarks on co-branded items, to the extent the
parties mutually agree. If and to the extent the
parties mutually agree, Seller may grant a
nonexclusive, nontransferable, world-wide, license
to Purchaser to use the name "QUALCOMM" and
certain other trademarks of Seller (to be mutually
agreed to by the parties) on other product lines
manufactured in commercial quantities by
Purchaser.
AFFIRMATIVE COVENANTS: The Agreement shall contain customary covenants,
including the duty of Purchaser to (i) maintain
certain quality standards set by Seller for all
products bearing the "QUALCOMM" name or any
trademark licensed under the Agreement, and (ii)
notify Seller with respect to any infringements of
the trademarks.
In addition, the parties shall cooperate in
obtaining any required registrations or making any
filings in any country to protect the trademarks
from unlawful use.
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TERM OF AGREEMENT: Except to the extent necessary to permit Purchaser
to perform warranty obligations and support the
Business products, parts and accessories (for
example, by providing replacement parts bearing
any subject trademark), the license granted under
the Agreement shall terminate [***] after the
Closing Date, unless mutually extended.
In addition, the Agreement shall terminate in the
event Purchaser fails to maintain the quality
standards set by Seller with respect to the
products, parts and/or accessories manufactured or
sold by Purchaser that bear the name "QUALCOMM"
(and the certain other trademarks of Seller to be
mutually agreed to).
GOVERNING LAW; VENUE: California; San Diego, California
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT I
PRINCIPAL TERMS OF THE TRANSITION SERVICES AGREEMENT
TERM: Seller shall provide Purchaser with the Services (as
defined below) for a period of between six (6) and twelve
(12) months (depending on the nature of the Service, which
time frame for any given Service shall be specified in
greater detail in the subject agreement or attached
statement of work), or for that longer period of time as
is mutually agreed to by the parties or that shorter
period of time as is directed by Purchaser for any
particular Service (the "Term"). These Services are in
addition to those services being provided to Purchaser by
QCP, as more fully described in the Principal Terms of
Employee Matters Agreement term sheet.
SERVICES: The type and scope of such Services which Seller shall
make available to Purchaser shall consist of those
services which Seller currently provides in support of the
Business (except to the extent providing such Services
compromises or could reasonably be expected to compromise
Seller's confidential information, as reasonably
determined by Seller), including the following services
and technical support (collectively, the "Services"):
MIS Services: Seller may provide management information
services to Purchaser related to the Business, including
coordination of procurement of hardware and software and
software development and sales and manufacturing.
Accounting Services: Seller may provide bookkeeping,
accounting services, internal audit and financial
analytical support services, each as related to the
Business.
Human Resources and Payroll Services: Seller may provide
services related to human resources as well as
administration of employee payroll matters and maintenance
of general employee insurance and benefit obligations and
advice on employee relations and similar issues, each as
related to the Business.
Facilities Services: Seller may provide services related
to facilities to be leased by Purchaser from Seller such
as security, mail services, etc.
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Engineering Services: Seller may provide engineering and
technical services, including but not limited to providing
access to the test bed facility.
As soon as reasonably practical and in any event prior to
the Closing Date, Purchaser shall designate to Seller the
specific type and scope of the Services requested by
Purchaser; provided, however, Purchaser acknowledges and
agrees that the ability of Seller to provide any requested
Service as of the Closing Date and thereafter, and the
initial quality of such Service, may be negatively
impacted to the extent Purchaser makes its designations at
a time(s) closer to the Closing Date than at an earlier
time(s).
PERFORMANCE OF
SERVICES: Seller shall provide the Services on an ongoing basis
during the Term.
CHARGE FOR
SERVICES: [***]
OTHER TERMS: The Transition Services Agreement shall contain other
customary terms and conditions.
*** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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EXHIBIT J
FORM OF OPINION OF PURCHASER'S AND PARENT CORPORATION'S COUNSEL
Please note that, as a firm, we are not able to opine on the
enforceability of noncompete, nonsolicit or licensing provisions. In addition,
the opinion shall contain customary assumptions and exceptions. The following
opinions are subject to approval by our opinion committee.
1. Each of the Purchaser and the Parent Corporation is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to own, operate or lease the properties and assets now owned, operated
or leased by it and to carry on its business as it has been and is currently
conducted. Each of the Purchaser and the Parent Corporation has all necessary
corporate power and authority to execute and deliver the Asset Purchase
Agreement and the Related Agreements to which it is a party, to perform its
obligations thereunder and to consummate the transactions contemplated thereby.
The execution and delivery by each of the Purchaser and the Parent Corporation
of the Asset Purchase Agreement and the Related Agreements to which it is a
party, the performance by it of its obligations thereunder and the consummation
by it of the transactions contemplated thereby have been duly authorized by all
requisite corporate action on its part. The Asset Purchase Agreement and the
Related Agreements to which each of the Purchaser and the Parent Corporation is
a party have been duly executed and delivered by it, and (assuming due
authorization, execution and delivery by the Seller) the Asset Purchase
Agreement and the Related Agreements to which each of the Purchaser and the
Parent Corporation is a party constitute its legal, valid and binding
obligations, enforceable against it in accordance with their respective terms,
except as rights to indemnity under Article VIII of the Asset Purchase Agreement
and rights to indemnity and contribution under any of the Related Agreements may
be limited by applicable laws and except as enforceability may be limited by
applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, arrangement, moratorium or
similar law affecting creditors' rights and subject to general equity principles
and to limitations on availability of equitable relief, including specific
performance.
2. Assuming that all approvals required under the HSR Act have been made
or obtained, the execution, delivery and performance by each of the Purchaser
and the Parent Corporation of the Asset Purchase Agreement and the Related
Agreements to which it is a party do not and will not, to the best of our
knowledge, conflict with or violate (or cause an event which could have a
Material Adverse Effect as a result of) any law or governmental order of the
State of California or the United States of America applicable to the Purchaser
or the Parent Corporation or any of their respective assets, properties or
businesses (except that we express no opinion as to any law or governmental
order related to any telecommunications regulatory matter).
3. The execution, delivery and performance by each of the Purchaser and
the Parent Corporation of the Asset Purchase Agreement and the Related
Agreements to which it is a party, do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority of the State of California or the
United
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States of America, except the notification requirements of the HSR Act (except
that we express no opinion as to any law or governmental order related to any
telecommunications regulatory matter).
4. The execution, delivery and performance of the Asset Purchase
Agreement and the Related Agreements to which each of the Purchaser and the
Parent Corporation is a party do not and will not violate any provision of its
Certificate of Incorporation or Articles of Incorporation or bylaws.
5. To the best of our knowledge, as of the date of the Asset Purchase
Agreement, there was no Action pending or threatened in writing, which seeks to
delay or prevent the consummation of, or which would be reasonably likely to
materially adversely affect the Purchaser's or the Parent Corporation's ability
to consummate the transactions contemplated by the Asset Purchase Agreement or
any Related Agreement, pending before any Governmental Authority of the State of
California or the United States of America.
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EXHIBIT K
FORM OF OPINION OF SELLER'S COUNSEL
Please note that, as a firm, we are not able to opine on the enforceability of
noncompete, nonsolicit or licensing provisions. In addition, the opinion shall
contain customary assumptions and exceptions. The following opinions are subject
to approval by our opinion committee.
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all necessary
corporate power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on the Business as it has been
and is currently conducted. The Company has all necessary corporate power and
authority to execute and deliver the Asset Purchase Agreement and the Related
Agreements to which it is a party, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery by
the Company of the Asset Purchase Agreement and the Related Agreements to which
it is a party, the performance by the Company of its obligations thereunder and
the consummation by the Company of the transactions contemplated thereby have
been duly authorized by all requisite corporate action on the part of the
Company. The Asset Purchase Agreement and the Related Agreements to which it is
a party have been duly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by the Purchaser and the Parent
Corporation) the Asset Purchase Agreement and the Related Agreements to which
the Company is a party constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as rights to indemnity under Article VIII of the Asset Purchase
Agreement and rights to indemnity and contribution under any of the Related
Agreements may be limited by applicable laws and except as enforceability may be
limited by applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, arrangement, moratorium
or similar law affecting creditors' rights and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
2. Assuming that all approvals required under the HSR Act, and that all
consents, approvals, authorizations, other actions, filings and notifications
listed in Sections 3.2, 3.3 and 3.15 of the Disclosure Schedule, have been made
or obtained, the execution, delivery and performance by the Company of the Asset
Purchase Agreement and the Related Agreements to which the Company is a party do
not and will not, to the best of our knowledge, conflict with or violate (or
cause an event which could have a Material Adverse Effect as a result of) any
law or governmental order of the State of California or the United States of
America applicable to the Company or any of its assets, properties or
businesses, including, without limitation, the Assets and the Business (except
that we express no opinion as to any law or governmental order related to any
telecommunications regulatory matter).
3. The execution, delivery and performance by the Company of the Asset
Purchase Agreement and the Related Agreements to which the Company is a party,
do not and will not require any consent, approval, authorization or other order
of, action by, filing with or notification to, any Governmental Authority of the
State of California or the United States of America, except (i) as described in
Sections 3.2, 3.3 and 3.15 of the Disclosure Schedule and (ii)
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the notification requirements of the HSR Act (except that we express no opinion
as to any law or governmental order related to any telecommunications regulatory
matter).
4. The execution, delivery and performance of the Asset Purchase
Agreement and the Related Agreements to which the Company is a party do not and
will not violate any provision of the certificate of incorporation or bylaws of
the Company.
5. Except as disclosed in Section 3.12 of the Disclosure Schedule, to
the best of our knowledge, as of the date of the Asset Purchase Agreement, there
were no Actions by or against the Company relating to the Business, or affecting
or that could reasonably be expected to materially and adversely affect any of
the Assets or the Business, pending before any Governmental Authority of the
State of California or the United States of America (or, to the best of our
knowledge, threatened in writing to be brought by or before any Governmental
Authority of the State of California or the United States of America). To the
best of our knowledge, none of the matters disclosed in Section 3.12 of the
Disclosure Schedule could reasonably be expected to materially and adversely
affect the legality, validity or enforceability of any of the material terms of
the Asset Purchase Agreement and the Related Agreements or the consummation of
the transactions contemplated thereby.
2.
