EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of March 2, 2001
between
MPD TECHNOLOGIES, INC.
and
COMTECH TELECOMMUNICATIONS CORP.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.01 Certain Defined Terms.............................................1
Section 1.02 Glossary of Defined Terms.........................................6
Section 1.03 Terms Generally...................................................6
ARTICLE II PURCHASE AND SALE
Section 2.01 Assets to Be Sold.................................................7
Section 2.02 Assumption and Exclusion of Liabilities...........................9
Section 2.03 Purchase Price...................................................11
Section 2.04 Closing..........................................................11
Section 2.05 Closing Deliveries by the Purchaser..............................11
Section 2.06 Closing Deliveries by the Sellers................................12
Section 2.07 Adjustment of Purchase Price.....................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 3.01 Incorporation and Authority of the Seller........................15
Section 3.02 No Conflict......................................................15
Section 3.03 Consents and Approvals...........................................15
Section 3.04 No Subsidiaries; Affiliates......................................15
Section 3.05 Financial Information............................................16
Section 3.06 Absence of Undisclosed Liabilities...............................16
Section 3.07 Absence of Certain Changes or Events.............................16
Section 3.08 Compliance with Laws.............................................16
Section 3.09 Litigation.......................................................17
Section 3.10 Material Contracts...............................................17
Section 3.11 Intellectual Property............................................17
Section 3.12 Environmental Matters............................................18
Section 3.13 Assets...........................................................18
Section 3.14 Inventories......................................................18
Section 3.15 Taxes............................................................18
Section 3.16 Product and Service Warranties...................................19
Section 3.17 Labor Matters; Employment Matters................................19
Section 3.18 Brokers..........................................................19
Section 3.19 Backlog..........................................................19
Section 3.20 Insurance........................................................19
Section 3.21 No Other Representations.........................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 Incorporation and Authority of the Purchaser.....................20
Section 4.02 No Conflict......................................................20
Section 4.03 Consents and Approvals...........................................20
Section 4.04 Litigation.......................................................21
Section 4.05 Financing........................................................21
Section 4.06 Brokers..........................................................21
ARTICLE V ADDITIONAL AGREEMENTS
Section 5.01 Conduct of Business Prior to the Closing.........................21
Section 5.02 Investigation....................................................23
Section 5.03 Access to Information............................................24
Section 5.04 Books and Records................................................25
Section 5.05 Confidentiality..................................................25
Section 5.06 Regulatory and Other Authorizations; Consents....................25
Section 5.07 Notification to Governmental Authorities.........................26
Section 5.08 Bulk Transfer Laws...............................................27
Section 5.09 Conveyance Taxes.................................................27
Section 5.10 Services and License Agreement...................................27
Section 5.11 Insurance Coverage...............................................27
Section 5.12 Further Action...................................................27
Section 5.13 Customers and Marketing..........................................27
Section 5.14 Notice of Certain Events.........................................27
Section 5.15 Employees Matters................................................28
Section 5.16 Non-Competition..................................................28
Section 5.17 Financial Statements.............................................29
ARTICLE VI CONDITIONS TO CLOSING
Section 6.01 Conditions to Obligations of the Seller..........................29
Section 6.02 Conditions to Obligations of the Purchaser.......................29
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination......................................................30
Section 7.02 Effect of Termination............................................31
Section 7.03 Waiver...........................................................31
ARTICLE VIII INDEMNIFICATION
Section 8.01 Indemnification by the Purchaser.................................31
Section 8.02 Indemnification by the Seller....................................32
Section 8.03 Notification of Claims...........................................33
Section 8.04 Exclusive Remedies...............................................34
Section 8.05 Other Indemnification Matters....................................34
ARTICLE IX GENERAL PROVISIONS
Section 9.01 Survival.........................................................35
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Section 9.02 Expenses.........................................................35
Section 9.03 Notices..........................................................36
Section 9.04 Public Announcements.............................................37
Section 9.05 Headings.........................................................37
Section 9.06 Severability.....................................................37
Section 9.07 Entire Agreement.................................................37
Section 9.08 Assignment.......................................................37
Section 9.09 No Third-Party Beneficiaries.....................................37
Section 9.10 Amendment........................................................38
Section 9.11 Governing Law; Submission to Jurisdiction; Waivers...............38
Section 9.12 Waiver of Jury Trial.............................................38
Section 9.13 Counterparts.....................................................38
Section 9.14 No Presumption...................................................38
EXHIBIT 1.01 Designated Employees
EXHIBIT 2.07 January 2001 Statement of Inventory
EXHIBIT 5.10(a) Terms of Services Agreement
EXHIBIT 5.10(b) Terms of License Agreement
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ASSET PURCHASE AGREEMENT, dated as of March 2, 2001, between MPD
Technologies, Inc., a corporation organized under the laws of the State of New
York (the "Seller"), and Comtech Telecommunications Corp., a corporation
organized under the laws of Delaware (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller is and has been engaged, in part, in the
business of designing, developing, manufacturing, marketing, distributing,
supplying and selling satellite, medical and military amplifiers and
flightline/depot test equipment (excluding the designing, developing,
manufacturing, marketing, distributing, supplying and selling of (i) the MRES
2000 Radar Environment Simulator and (ii) any and all satellite, medical and
military amplifiers and flightline/depot test equipment contemplated by the
Excluded Contracts (as hereinafter defined), the "Business");
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, the Business, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in connection with such sale, the Seller is willing to
license to the Purchaser certain intellectual property used in the Business and
to provide certain specified transitional services to the Purchaser following
the Closing (as hereinafter defined), upon the terms and subject to the
conditions set forth in the License Agreement and the Services Agreement (each
as hereinafter defined), respectively.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accumulated Inventory" means the value of Inventories. For the
purposes of determining the value of Inventories under this definition,
(i) Inventories consisting of components will be stated at an amount
equivalent to their average historical purchase price and (ii) Inventories
consisting of finished products or works-in-progress shall be valued at an
amount equivalent to the average cost of the components kited or released
to that particular job, plus direct labor and other direct charges, plus
labor and material overhead costs that were applied to those jobs, less
(x) previously applied costs of sales, (y) reserves for obsolete or
slow-moving inventory, if any, and (z) projected cost overruns. Overhead
costs are calculated as follows: (i) labor overhead equals the cost of
direct labor multiplied by 200% and (ii) material overhead equals the cost
of materials related to a particular job multiplied by 15%. Non-recurring
engineering costs relating to the Rockwell Aero I Project 228285 of
approximately $520,000 will be excluded from
both the January 2001 Statement of Accumulated Inventory and the Statement
of Inventory.
"Action" means any claim, 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" means this Agreement (including the Exhibits hereto and
the Disclosure Schedule) and all amendments hereto made in accordance with
Section 9.10.
"Assumption Agreement" means the Assumption Agreement to be executed
by the Purchaser on the Closing Date pursuant to Section 2.05(b).
"Xxxx of Sale" means the Xxxx of Sale and Assignment to be executed
by the Seller on the Closing Date pursuant to Section 2.06(a).
"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 New York.
"Business Intellectual Property" means the Business Owned
Intellectual Property and the Business Licensed Intellectual Property.
"Code" means the Internal Revenue Code of 1986, as amended.
"Control" means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise. The term
"Controlled" shall have a correlative meaning.
"Customer Contract" means those agreements, contracts, leases,
purchase orders, commitments and licenses with customers to which the
Seller is a party which solely relate to the Business.
"Designated Amount" means an amount which shall equal 2% of the
amount of Accumulated Inventory less Unliquidated Progress Xxxxxxxx set
forth on the January 2001 Statement of Accumulated Inventory.
"Designated Employee" means any Person listed on Exhibit 1.01, or
any other Person mutually agreed upon from time to time by the Seller and
the Purchaser in writing.
"Disclosure Schedule" means the Disclosure Schedule delivered by the
Seller to the Purchaser on the date hereof.
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"Encumbrance" means any security interest, pledge, mortgage, lien,
adverse claim or other encumbrance of any kind.
"Environmental Law" means any Law existing or in effect as of the
date hereof relating to human health, safety or pollution or protection of
the environment, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under or issued pursuant
to any Environmental Law.
"Governmental Authority" means any United States federal, state or
local or any non-United States 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, petroleum products,
by-products or breakdown products, radioactive materials, asbestos, urea
formaldehyde or polychlorinated biphenyls, and (b) any chemical, material,
substance or waste defined as toxic, hazardous or a pollutant, contaminant
or waste, or regulated, under any Environmental Law.
"Intellectual Property" means: United States, international, and
non-United States patents and patent applications, trademarks and service
marks, whether or not registered, including all common law rights, and
registrations and applications for registration thereof, copyrights,
whether or not registered, and registrations and applications for
registration thereof, and confidential and proprietary information,
including all trade secrets, know-how (including proprietary know-how and
use and application know-how), computer software (including source codes),
manufacturing, engineering and other drawings, technology, technical
information, engineering data, design and engineering specifications,
promotional literature, customer and supplier lists and similar data in
writing.
"Inventories" means all inventory, merchandise, finished goods,
work-in-progress and raw materials related solely to the Business
maintained, held or stored by or on behalf of the Seller.
"IRS" means the Internal Revenue Service.
"Knowledge" with respect to the Seller or "Seller's knowledge" means
the actual knowledge of Xxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxx XxXxxxxxxx, Xxx
Xxxxxxx, Xx Xxxxxxx, Xxxxxx Xxxxxx or Xxxx-Xxxxxx Xxxxxxx.
"Law" means any federal, state, local or non-United States statute,
law, ordinance, regulation, rule, code, order or other requirement of law
(including common law).
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"Leased Real Property" means any of the real property leased by the
Seller, as tenant or lessee, together with, to the extent leased by the
Seller, all buildings and other structures, facilities or improvements
currently or hereafter located thereon.
"Legal Opinion" means a legal opinion addressing the due
authorization, execution, delivery and enforceability of this Agreement
and, in the case of the legal opinion to be delivered by the Seller, the
Parent Guaranty, subject to customary exceptions, limitations and
assumptions.
"Liabilities" means any and all debts, liabilities, claims, demands,
fines, penalties or obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured, including, without limitation, those
arising under any Law, Action or Governmental Order and those arising
under any contract, agreement, arrangement, commitment or undertaking.
"Manufacturers Representatives" means the independent sales
representatives and subrepresentatives of the Business as of the Closing
Date.
"Material Adverse Effect" means any change in, or effect on (i) the
Business as currently conducted by the Seller that is materially adverse
to the results of operations or the financial condition of the Business or
(ii) the Seller's ability to consummate the transactions contemplated by
this Agreement; provided, however, that "Material Adverse Effect" shall
not include any change in, or effect on, the Business directly or
indirectly arising out of or attributable to (x) changes or effects that
generally affect the industries in which the Business operates or (y)
changes in general economic, regulatory or political conditions.
"Owned Real Property" means any of the real property owned by the
Seller, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon.
"Parent Guaranty" means a guaranty executed by Ericsson Inc. in
favor of the Purchaser which shall guaranty the payment obligations of the
Seller when due contained in Article VIII hereof, up to a maximum
aggregate amount equal to 100% of the Purchase Price.
"Permitted Encumbrances" means 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 or which are being contested in
good faith in proper proceedings; (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, in each case, are not more than 30 days overdue and, in
the aggregate, are immaterial in amount; and (c) pledges or deposits to
secure obligations under workers' compensation laws or similar legislation
or to secure public or statutory obligations.
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"Person" means any natural person, general or limited partnership,
corporation, limited liability company, firm, association or other legal
entity.
"Product Liabilities" means, with respect to any products
manufactured by or on behalf of the Seller or any of its predecessors
prior to the Closing Date and relating to the Business, all Liabilities
resulting from actual or alleged harm, injury, damage or death to Persons,
property or business.
"Purchaser's Accountants" means KPMG LLP.
"Real Property" means the Leased Real Property and the Owned Real
Property.
"Receivables" means any and all accounts receivable, notes and other
amounts receivable from third parties, including, without limitation,
customers, solely arising from the conduct of the Business before the
Closing Date, whether or not in the ordinary course, together with all
unpaid financing charges accrued thereon; provided, however, that the term
shall not include any rights to refunds for Taxes for any period, or any
portion of any period, ending on or prior to the Closing Date.
"Seller's Accountants" means Xxxxxx Xxxxxxxx LLP.
"Statement of Accumulated Inventory" means a statement setting forth
the amount of Accumulated Inventory less the Unliquidated Progress
Xxxxxxxx of the Seller as of the Closing Date, to be delivered by the
Seller to the Purchaser in accordance with Section 2.07(a).
"Tax" or "Taxes" means any and all taxes of any kind whatsoever
imposed by any taxing authority or Governmental Authority, whether payable
directly or by withholding (together with any interest, penalties,
additions to tax and additional amounts imposed with respect thereto).
"Tax Returns" means all returns and reports (including elections,
declarations, amendments, schedules, information returns or attachments
thereto) required to be supplied to a Tax authority relating to Taxes.
"Transaction Agreements" means this Agreement, the Xxxx of Sale, the
Assumption Agreement, the License Agreement and the Services Agreement.
"Transferred Employees" means those Designated Employees who accept
offers of employment from the Purchaser effective as of the Closing Date.
"Unliquidated Progress Xxxxxxxx" means that portion of progress
xxxxxxxx that have been paid to the Seller and that have not been offset
on a pro-rata basis against shipments.
"WRT-100 Technology" means the flightline test set for predictive
windshear systems for commercial airline applications as outlined in US
Patent No. 5,371,505 and US Patent No. 5,384,572.
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SECTION 1.02 Glossary of Defined Terms. Each of the terms set forth
below shall have the meaning ascribed thereto in the following sections:
Term Section
---- -------
Allocation...............................................2.03(b)
Assumed Liabilities......................................2.02(a)
Business.................................................Recitals
Business Licensed Intellectual Property..................3.11
Business Owned Intellectual Property.....................3.11
Closing..................................................2.04
Closing Date.............................................2.04
Confidentiality Agreement................................5.05
Excluded Assets..........................................2.01(b)
Excluded Contracts.......................................2.01(b)(iv)
Excluded Liabilities.....................................2.02(b)
Financial Statements.....................................3.05
Indemnified Party........................................8.03(a)
Indemnifying Party.......................................8.03(a)
Independent Accounting Firm..............................2.07(b)(ii)
January 2001 Statement of Accumulated Inventory..........2.07(a)(i)
License Agreement........................................5.10
Listed Assumed Contracts.................................2.02(a)(i)
Losses...................................................8.01(a)
Purchaser................................................Preamble
Purchaser Ancillary Asset ...............................5.18
Purchaser Employees......................................5.15(b)
Purchase Price...........................................2.03
Purchaser Indemnified Party..............................8.02(a)
Reassignment Agreement...................................8.05(c)
Seller...................................................Preamble
Seller Ancillary Asset...................................5.18
Seller Employees.........................................5.15(b)
Seller Indemnified Party.................................8.01(a)
Services Agreement.......................................5.10
Transferred Assets.......................................2.01(a)
Transferred Business Intellectual Property...............2.01(a)(iv)
Transferred Contracts....................................2.01(a)(i)
Unlisted Assumed Contracts...............................2.02(a)(i)
SECTION 1.03 Terms Generally. (a) Words in the singular shall be
deemed to include the plural and vice versa and words of one gender shall be
deemed to include the other genders as the context requires, (b) the terms
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement and not to any
particular provision of this Agreement, and Article, Section, paragraph, Exhibit
and Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this
6
Agreement unless otherwise specified, (c) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation", unless otherwise specified, (d) the word "or" shall not be
exclusive and (e) provisions shall apply, when appropriate, to successive events
and transactions.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01 Assets to Be Sold. (a) Upon 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, and the Purchaser shall,
on the Closing Date, purchase from the Seller, free and clear of any
Encumbrances except Permitted Encumbrances, all of the Seller's right, title and
interest in and to any and all assets or rights of the Seller that are solely or
primarily used in, held for use in or necessary for the conduct of the Business
as currently conducted, including the following assets, but excluding the
Excluded Assets (the "Transferred Assets"):
(i) all rights of the Seller under those Customer Contracts listed
on Section 2.01(a)(i) of the Disclosure Schedule and under any other
agreements, contracts, leases, purchase orders, commitments or licenses
that relate solely or primarily to the Business (subject to Section
5.06(c)) other than contracts, agreements, leases, commitments or licenses
that (x) are material and were not entered into in the ordinary course of
the Business, (y) relate solely to the Excluded Assets or (z) represent
solely a performance obligation of the Seller (the "Transferred
Contracts");
(ii) all Inventories at the Closing Date;
(iii) the test equipment and test equipment fixtures listed on
Section 2.01(a)(iii) of the Disclosure Schedule, including (A) all
documentation and source codes held by the Seller at Closing which relate
solely or primarily to such assets and (B) the materials listed on Section
2.01(a)(iii)(B) of the Disclosure Schedule;
(iv) all the Business Intellectual Property, including, without
limitation, the statistical process control software and source code and
macros related thereto, excluding the Business Intellectual Property
expressly included in the Excluded Assets (the "Transferred Business
Intellectual Property");
(v) all deposits, deferred charges, advance payments and prepaid
expenses relating solely to the Transferred Assets;
(vi) all books of account, general and financial information,
invoices, shipping records, supplier lists, correspondence and other
documents, records and files which relate solely to the Business;
(vii) all claims, warranties, causes of action, choses in action,
rights of recovery and rights of set-off of any kind, to the extent
pertaining to or arising out of the Business or the Transferred Assets,
and enuring to the benefit of the Seller;
7
(viii) all sales and promotional literature and other sales-related
materials owned, previously used, currently used, associated with or
employed by the Seller at the Closing Date for use solely in connection
with the conduct of the Business;
(ix) all franchises, permits, licenses, agreements, waivers and
authorizations issued or granted by any Governmental Authority held or
used by the Seller solely in connection with, or required for, the
performance of Transferred Contracts, to the extent transferable;
(x) those screens, test equipment, fixturing and computer software
and programs (including documentation, data files and source code) listed
in Section 2.01(a)(x) of the Disclosure Schedule;
(xi) all right, title and interest held by the Seller in any
trademark, service xxxx, brand name, certification xxxx, trade name,
corporate name or other indication of origin that (x) consists of,
incorporates or is based on the terms "MPD Technologies" or "Microwave
Power Devices" or Microwave Power Devices' logo, and any other similar
term or symbol, or (y) relates solely to the conduct of the Business;
(xii) all packaging material that is related solely to the conduct
of the Business; and
(xiii) all of the Seller's goodwill that is related solely to the
Business.
(b) Excluded Assets. Notwithstanding the terms of Section 2.01(a),
the Seller shall not sell, convey, assign, transfer or deliver to the Purchaser,
and the Purchaser shall not purchase, and the Transferred Assets shall not
include, the Seller's right, title and interest in or to any assets of the
Seller that are neither (x) solely or primarily used in, held for use in or
necessary for the conduct of the Business as currently conducted nor (y)
specifically enumerated in Section 2.01(a) of this Agreement, including, without
limitation, the following assets (the "Excluded Assets"):
(i) all cash and cash equivalents, securities, and negotiable
instruments of the Seller on hand, in lock boxes, in financial
institutions or elsewhere;
(ii) any rights to Tax refunds, credits or similar benefits relating
to the Business or the Transferred Assets attributable to periods ending,
or an event occurring, on or prior to the Closing Date;
(iii) the minute books from the meetings of the board of directors
and stockholders of the Seller, and the stock records and corporate seal
of the Seller;
(iv) all rights of the Seller under the Customer Contracts listed on
Section 2.01(b)(iv) of the Disclosure Schedule (the "Excluded Contracts")
and, except as otherwise expressly included in the Transferred Assets, all
of the Seller's right, title and interest on the Closing Date in, to and
under all other assets, rights and claims of every kind used or intended
to be used primarily in the performance of such Excluded Contracts and are
listed on Section 2.01(b)(iv) of the Disclosure Schedule, including,
without
8
limitation, any Business Intellectual Property which is used primarily in,
was developed primarily for, or related primarily to, the performance of
such Excluded Contracts and is listed on Section 2.01(b)(iv) of the
Disclosure Schedule;
(v) all Receivables at the Closing Date;
(vi) all the Seller's right, title and interest on the Closing Date
in, to and under all assets, rights and claims relating to the WRT-100
Technology;
(vii) all the Seller's right, title and interest on the Closing Date
in, to and under all assets, rights and claims relating to the MRES 2000
Radar Environment Simulator, including without limitation, any Business
Intellectual Property which is used solely in, was developed solely for,
or related solely to, the MRES 2000 Radar Environment Simulator;
(viii) all Real Property; and
(ix) all rights of the Seller under the Transaction Agreements.
SECTION 2.02 Assumption and Exclusion of Liabilities. (a) Upon the
terms and subject to the conditions set forth in this Agreement, including
Section 5.06(b), the Purchaser shall, by executing and delivering, on the
Closing Date, the Assumption Agreement, assume, and agree to pay, perform and
discharge when due, the following debts, liabilities and obligations of the
Seller (whether fixed or contingent, matured or unmatured, arising by law or by
contract or otherwise, on or prior to the Closing Date) (the "Assumed
Liabilities"), other than the Excluded Liabilities as set forth in Section
2.02(b) below:
(i) any and all obligations and commitments (including, without
limitation, any and all express product warranty and after warranty
service obligations and any obligations associated with purchase orders
placed for components on order for backlogged production jobs) that are
required to be performed by the Seller after the Closing Date under (I)
(x) the Transferred Contracts listed on Section 2.02(a)(i) of the
Disclosure Schedule and (y) any Transferred Contract that is entered into
after the date hereof in accordance with Section 5.01 hereof or with the
prior written consent of the Purchaser (the Transferred Contracts referred
to in the preceding clauses (x) and (y) collectively, the "Listed Assumed
Contracts") and (II) all other Transferred Contracts (the "Unlisted
Assumed Contracts"), excluding any obligations, commitments or Liabilities
owed to or accruing in favor of any employees, independent sales
representatives or subrepresentatives or consultants except to the extent
expressly assumed pursuant to clauses (iii), (iv) or (v) of this Section
2.02(a) and excluding any Liabilities arising out of or relating to any
breach or default of any of the Transferred Contracts by the Seller;
(ii) [intentionally omitted];
(iii) any and all Liabilities and obligations to pay unpaid
commissions earned by Manufacturers Representatives under the applicable
Manufacturers Representatives' agreement (x) for orders booked (but not
shipped) prior to the Closing Date or (y) for
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orders booked (and shipped) after the Closing Date and after the
termination of their agreements with the Seller in connection with the
transactions contemplated hereby;
(iv) any and all written obligations, commitments and Liabilities of
the Seller to make any cash payment under any "Long-Term Incentive Plan"
or "Executive Retention Program" with any Transferred Employees, to the
extent such "Long-Term Incentive Plan" or "Executive Retention Program"
agreement is listed in Section 2.02(a)(iv) of the Disclosure Schedule,
except any payments due thereunder on or about May 2001, but excluding (x)
any investment gain in any deferred compensation account, and (y) any
other Liability of the Seller under such agreements except to the extent
assumed pursuant to clause (v) of this Section 2.02(a);
(v) any and all obligations, commitments and Liabilities relating to
the employment by the Purchaser or any subsidiary of the Purchaser of the
Transferred Employees solely with respect to periods commencing on or
after the Closing Date; and
(vi) any Liabilities of the Purchaser under the Transaction
Agreements to which it is a party.
(b) Excluded Liabilities. Except as specifically provided in Section
2.02(a), the Purchaser shall not assume and shall not have any liability for any
Liabilities, obligations or commitments of the Seller, its predecessors and
Affiliates, and the Seller shall duly and timely pay, perform and discharge all
such Liabilities, obligations and commitments (the "Excluded Liabilities"). The
Excluded Liabilities include, without limitation, the following Liabilities:
(i) all Taxes of the Seller, including income, franchise, sales,
payroll and withholding taxes for any period, or any portion of any
period, ending on or prior to the Closing Date;
(ii) any Liabilities of the Seller relating to the Excluded Assets;
(iii) any Liabilities of the Seller for any components delivered to
the Seller by suppliers prior to the Closing Date or services received by
the Seller prior to the Closing Date, except to the extent expressly
assumed in clause (iii) of Section 2.02(a);
(iv) any Liabilities of the Seller under the Transaction Agreements;
(v) any obligations, commitments or Liabilities of the Seller
relating to the employment of the employees of the Business or
Manufacturers Representatives other than those obligations, commitments
and Liabilities assumed under clauses (iii), (iv) or (v) of Section
2.02(a);
(vi) any Liabilities of the Seller arising from any violations of
Law by the Seller prior to the Closing Date;
(vii) Product Liabilities;
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(viii) Liabilities of the Seller in respect of any indebtedness for
borrowed money and other extensions of credit, surety, performance and
other bonds, guaranties, intercompany accounts, accounts payable, capital
leases, endorsements and like obligations; and
(ix) Liabilities of the Seller in respect of any real property owned
or leased by the Seller, partnership entities, securities of the Seller,
investments in securities or financial instruments by the Seller and
management services with any Affiliate of the Seller.
SECTION 2.03 Purchase Price. Subject to the adjustments set forth in
Section 2.07, the aggregate purchase price for the Transferred Assets shall be
$11,000,000 in cash (the "Purchase Price").
SECTION 2.04 Closing. Upon the terms and subject to the conditions
of this Agreement, the sale and purchase of the Transferred 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 Shearman &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M. New York time
on the third Business Day following the satisfaction or waiver of all conditions
to the obligations of the parties set forth in Article VI, 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").
SECTION 2.05 Closing Deliveries by the Purchaser. At the Closing,
the Purchaser shall deliver to the Seller:
(a) the Purchase Price by wire transfer in immediately available
funds to the bank account or bank accounts specified by the Seller at
least two Business Days prior to the Closing Date;
(b) an executed counterpart of the Assumption Agreement and such
other instruments as may be reasonably requested by the Seller to effect
the assumption by the Purchaser of the Assumed Liabilities and to evidence
such assumption on the public records, all such instruments to be in form
and substance reasonably satisfactory to the Seller;
(c) the certificates and other documents required to be delivered
pursuant to Section 6.01;
(d) an executed counterpart of each Transaction Agreement to which
the Purchaser is a party; and
(e) a true and complete copy, certified by the Secretary or an
Assistant Secretary of the Purchaser, of the resolutions duly and validly
adopted by the Board of Directors of the Purchaser evidencing its
authorization of the execution and delivery of this Agreement and the
Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby.
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SECTION 2.06 Closing Deliveries by the Sellers. At the Closing, the
Seller shall deliver to the Purchaser:
(a) an executed counterpart of the Xxxx of Sale and such other
instruments as may be reasonably requested by the Purchaser to transfer
the Transferred Assets to the Purchaser or to evidence such transfer on
the public records, all such instruments to be in form and substance
reasonably satisfactory to the Purchaser;
(b) a receipt for the Purchase Price;
(c) the certificates and other documents required to be delivered
pursuant to Section 6.02;
(d) an executed counterpart of each Transaction Agreement to which
the Seller is a party;
(e) a true and complete copy, certified by the Secretary or an
Assistant Secretary of the Seller, of the resolutions adopted by the Board
of Directors and the sole shareholder of the Seller evidencing their
authorization of the execution and delivery of this Agreement and the
Transaction Agreements and the consummation of the transaction
contemplated hereby and thereby; and
(f) an executed Parent Guaranty in form and substance reasonably
satisfactory to the Purchaser.
SECTION 2.07 Adjustment of Purchase Price. The Purchase Price shall
be subject to adjustment after the Closing as specified in this Section 2.07:
(a) Statement of Accumulated Inventory. (i) As promptly as
practicable, but in any event within 60 calendar days following the
Closing Date, the Seller shall deliver to the Purchaser the Statement of
Accumulated Inventory, which Statement of Accumulated Inventory shall be
prepared on the same basis as the January 31, 2001 statement of
Accumulated Inventory attached hereto as Exhibit 2.07 (the "January 2001
Statement of Accumulated Inventory"), and shall be accompanied by a
certificate of the chief financial officer of the Seller certifying that
it has been prepared in accordance with this Agreement.
(ii) Notwithstanding the terms of any other Section of this
Agreement, during the preparation of the Statement of Accumulated
Inventory by the Seller and the period of any dispute referred to in
Section 2.07(b), (x) the Purchaser shall provide the Seller and the
Seller's Accountants full access to the books, records, facilities and
employees of the Purchaser and shall cooperate fully with the Seller and
the Seller's Accountants, in each case to the extent and in the manner
required or directed by the Seller or the Seller's Accountants in order to
prepare the Statement of Accumulated Inventory and to investigate the
basis for any such dispute, and (y) the Seller shall provide the Purchaser
and the Purchaser's Accountants full access to the books, records,
facilities and employees of the Seller and shall cooperate fully with the
Purchaser and the Purchaser's Accountants, in each case to the extent and
in the manner required or directed by the
12
Purchaser or the Purchaser's Accountants in order to review and analyze
the Statement of Accumulated Inventory and to investigate the basis for
any such dispute; provided, however, that any such investigation shall be
conducted in such a manner as not to interfere unreasonably with the
operation of the Business or the Seller's business.
(b) Disputes. (i) Subject to clause (ii) of this Section 2.07(b),
the Statement of Accumulated Inventory 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
Statement of Accumulated Inventory to the extent the net effect of the
amounts so disputed by the Purchaser would, in the aggregate, affect the
amount of Accumulated Inventory reflected on the Statement of Accumulated
Inventory by more than the Designated Amount, but only on the basis that
the amounts reflected on the Statement of Accumulated Inventory were not
arrived at in a manner consistent with the preparation of the January 2001
Statement of Accumulated Inventory or reflect mathematical or clerical
error; provided, however, that the Purchaser shall have notified the
Seller and the Seller's Accountants in writing of each disputed item,
specifying the estimated amount thereof in dispute and setting forth, in
reasonable detail, the basis for such dispute, within 30 Business Days of
the Seller's delivery of the Statement of Accumulated Inventory to the
Purchaser. In the event of such a dispute, the Purchaser's Accountants and
the Seller's Accountants shall attempt to reconcile the differences, and
any written resolution by them as to any disputed amounts shall be final,
binding and conclusive on the parties hereto. If any such resolution 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
amount of Accumulated Inventory reflected on the Statement of Accumulated
Inventory by more than the Designated Amount, all such amounts remaining
in dispute shall then be deemed to have been resolved in favor of the
Statement of Accumulated Inventory delivered by the Seller to the
Purchaser. If the Purchaser's Accountants and the Seller's Accountants are
unable to reach a resolution with such effect within 15 Business Days
after receipt by the Seller and the Seller's Accountants of the
Purchaser's written notice of dispute and the items remaining in dispute
are such that the Purchase Price would be adjusted by at least the
Designated Amount, the Purchaser's Accountants and the Seller's
Accountants shall submit the items remaining in dispute for resolution to
an independent accounting firm of international reputation mutually
acceptable to the Seller and the Purchaser (such accounting firm being
referred to herein as the "Independent Accounting Firm"), which shall,
within 30 Business Days after such submission, determine and report in
writing to the Seller and the Purchaser upon such remaining disputed
items, and such report shall be final, binding and conclusive on the
Purchaser and the Seller. The fees and disbursements of the Independent
Accounting Firm shall be allocated between the Purchaser and the Seller in
the same proportion that the aggregate amount of such remaining disputed
items so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by each such party (as finally determined by the
Independent Accounting Firm) bears to the total amount of such remaining
disputed items so submitted.
13
(iii) In acting under this Agreement, the Seller's Accountants, the
Purchaser's Accountants and the Independent Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.
(c) Purchase Price Adjustment. The Statement of Accumulated
Inventory shall be deemed final for the purposes of this Section 2.07 upon
the earliest of (A) the failure of the Purchaser to notify the Seller of a
dispute within 30 Business Days of the Seller's delivery of the Statement
of Accumulated Inventory to the Purchaser, (B) the written resolution of
all disputes, pursuant to Section 2.07(b)(ii), by the Seller's Accountants
and the Purchaser's Accountants, and (C) the written resolution of all
disputes, pursuant to Section 2.07(b)(ii), by the Independent Accounting
Firm. Subject to the limitation set forth in Section 2.07(b)(ii), within
three Business Days of the Statement of Accumulated Inventory being deemed
final, a Purchase Price adjustment shall be made as follows:
(i) in the event that (x) the amount of Accumulated Inventory shown
on the Statement of Accumulated Inventory less the amount of the
Unliquidated Progress Xxxxxxxx shown on the Statement of Accumulated
Inventory is less than (y) the amount of Accumulated Inventory less the
amount of the Unliquidated Progress Xxxxxxxx shown on the January 2001
Statement of Accumulated Inventory by at least the Designated Amount, then
the Purchase Price shall be adjusted downward in an amount equal to such
difference and the Seller shall, within three Business Days of such
determination, pay the amount of such difference to the Purchaser by wire
transfer in immediately available funds; and
(ii) in the event that (x) the amount of Accumulated Inventory shown
on the Statement of Accumulated Inventory less the amount of the
Unliquidated Progress Xxxxxxxx shown on the Statement of Accumulated
Inventory exceeds (y) the amount of Accumulated Inventory less the amount
of the Unliquidated Progress Xxxxxxxx shown on the January 2001 Statement
of Accumulated Inventory by at least the Designated Amount, then the
Purchase Price shall be adjusted upward in an amount equal to such
difference and the Purchaser shall, within three Business Days of such
determination, pay the amount of such difference to the Seller by wire
transfer in immediately available funds.
(d) Any payments required to be made by the Seller or the Purchaser
pursuant to Section 2.07(c) shall bear interest from the Closing Date
through the date of payment on the basis of the average daily rate of
interest publicly announced by Citibank N.A. in New York, New York from
time to time as its prime lending rate from the Closing Date to the date
of such payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser, except as
otherwise set forth in the Disclosure Schedule, as follows (it being understood
by the parties that any matter set forth in any section of the Disclosure
Schedule shall be deemed disclosed with respect to any
14
other section of this Article III to which such matter relates, so long as the
description of such matter contains sufficient facts to provide reasonable
notice of the relevance of the matter):
SECTION 3.01 Incorporation and Authority of the Seller. The Seller
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of New York and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Seller, and (assuming due authorization,
execution and delivery by the Purchaser) constitutes a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
terms. As of the Closing Date, the Parent Guaranty shall have been duly executed
and delivered by Ericsson Inc., and shall constitute a legal, valid and binding
obligation of Ericsson Inc. enforceable against it in accordance with its terms.
SECTION 3.02 No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.03 have been obtained
and all filings and notifications listed in Section 3.03 of the Disclosure
Schedule have been made, and except as may result from any facts or
circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement by the Seller do not and will not (a) violate or
conflict with the Certificate of Incorporation or By-laws (or other comparable
governing documents) of the Seller, (b) conflict with or violate any Law or
Governmental Order applicable to the Seller or (c) except as set forth in
Section 3.02 of the Disclosure Schedule, result in any breach of, or constitute
a default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien or other encumbrance on any of the Transferred Assets pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to the Transferred Assets or the Business
to which the Seller is a party or by which any of the Transferred Assets is
bound, except, in the case of clause (b) or (c), as would not, individually or
in the aggregate, have a Material Adverse Effect or prevent or materially delay
the consummation by the Seller of the transactions contemplated hereby.
SECTION 3.03 Consents and Approvals. The execution and delivery of
this Agreement by the Seller do not, and the performance of this Agreement by
the Seller will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority, except
(a) as described in Section 3.03 of the Disclosure Schedule, (b) where failure
to obtain such consent, approval, authorization or action, or to make such
filing or notification, would not have a Material Adverse Effect or prevent or
materially delay the consummation by the Seller of the transactions contemplated
hereby or (c) as may be necessary as a result of any facts or circumstances
relating solely to the Purchaser.
SECTION 3.04 No Subsidiaries; Affiliates. The Seller has no
subsidiaries. Except as set forth on Section 3.04 of the Disclosure Schedule,
the Business has been conducted solely through the Seller at all times since its
incorporation, and all assets, properties and rights relating solely to the
Business are held by, and all agreements, obligations and transactions relating
solely to the Business have been entered into, incurred and conducted by, the
Seller rather than any Affiliate of Seller.
15
SECTION 3.05 Financial Information. (a) True and complete copies of
the statements of results of operations of the Business for the nine (9) months
ended September 2000, the 11 months ended November 2000 and for the year ended
December 1999 (collectively, the "Financial Statements") have been delivered by
the Seller to the Purchaser. The Financial Statements (i) were prepared in
accordance with the books of account and other financial records of the Business
and in accordance with United States generally accepted accounting principles
consistently applied, (ii) present fairly in all material respects results of
operations of the Business for the periods covered thereby and (iii) include all
adjustments that are necessary for a fair presentation of the results of the
operations of the Business for the periods covered thereby.
(b) The January 2001 Statement of Accumulated Inventory has been
prepared in accordance with United States generally accepted accounting
principles applied on a basis consistent with the Financial Statements and in
accordance with all books, records and accounts of the Business, subject,
however, to the adjustments and other mutually agreed exclusions and/or
procedures provided for in the definition of Accumulated Inventory or set forth
in Section 3.05(b) of the Disclosure Schedule.
SECTION 3.06 Absence of Undisclosed Liabilities. There are no
Liabilities of the Seller relating to the Transferred Assets or the Business
which would, individually or in the aggregate, have a Material Adverse Effect,
except Liabilities (i) set forth in Section 3.06 of the Disclosure Schedule or
otherwise disclosed in the Disclosure Schedule or this Agreement or (ii)
incurred in the ordinary course of business after January 31, 2001 and prior to
the Closing that were not incurred in breach or violation of any covenant of
Seller contained in this Agreement.
SECTION 3.07 Absence of Certain Changes or Events. Since January 31,
2001, except as disclosed in Section 3.07 of the Disclosure Schedule (i) except
as would not, individually or in the aggregate, have a Material Adverse Effect,
the Seller has conducted the Business solely in the ordinary course and has not
taken any action that would constitute a breach or default of any covenant of
the Seller set forth in Article V of this Agreement if taken after the date of
this Agreement, and (ii) there has not been any event or occurrence that,
individually or in the aggregate, has had or could reasonably be expected to
have, a Material Adverse Effect.
SECTION 3.08 Compliance with Laws. Except as set forth in Section
3.08 of the Disclosure Schedule: (a) (i) to the Seller's Knowledge, the Seller
holds, and is in compliance with the terms of, all material permits, licenses,
exemptions, orders and approvals of all Governmental Authorities applicable to
the conduct of the Business or the ownership or use of the Transferred Assets
(the "Seller Permits"), (ii) no action or proceeding is pending or, to the
Seller's Knowledge, threatened, and, to the Seller's Knowledge, no fact exists
or event has occurred, that, in either case, has a reasonable possibility of
resulting in a revocation, non-renewal, termination, suspension or other
impairment of any of the Seller Permits, other than any event or fact which
would cause any Seller Permit to expire or terminate in accordance with the
stated terms thereof other than as a result of the Seller's breach or violation
thereof, (iii) to the Seller's Knowledge, the Business is not being conducted
(and has not been conducted) in violation of any applicable Laws or Governmental
Orders, and (iv) to the Seller's Knowledge, no investigation or review by any
Governmental Authority with respect to the Business or the
16
Transferred Assets is pending or threatened and (b) to the Seller's Knowledge,
no Governmental Entity has indicated to the Seller an intention to conduct the
same.
SECTION 3.09 Litigation. Except as set forth in Section 3.09 of the
Disclosure Schedule, there is no suit, action, proceeding or investigation
pending or, to the Seller's Knowledge, threatened against the Seller or the
Transferred Assets that relates to the Business that, if adversely determined,
would have a Material Adverse Effect or materially impair or delay the ability
of the Seller to consummate the transactions contemplated hereby.
SECTION 3.10 Material Contracts. (a) Section 2.01(a)(i) of the
Disclosure Schedule includes each Customer Contract that (A) is likely to
involve consideration of more than $500,000, in the aggregate, during the
calendar year ending December 31, 2001 or (B) is likely to involve consideration
of more than $1,000,000, in the aggregate, over the remaining term of such
contract, and which, in either case, cannot be canceled by the Seller without
penalty or further payment and without more than 90 days' notice.
(b) Except as disclosed in Section 3.10(b) of the Disclosure
Schedule and except as would not have a Material Adverse Effect, each
Transferred Contract: (i) is valid and binding on the Seller, and, to the
Knowledge of the Seller, the counterparties thereto and is in full force and
effect and (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in Section 3.02 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 3.10(b) of the Disclosure Schedule, the Seller is not and, to the
Knowledge of the Seller, no other party is, in breach of, or default under, any
Transferred Contract, except for such breaches as would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 3.11 Intellectual Property. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as set forth
in Section 3.11 of the Disclosure Schedule: (i) no claim has been asserted
against the Seller within the two year period preceding the date of this
Agreement that the conduct of the Business as currently conducted infringes upon
or may infringe upon or misappropriates the Intellectual Property of any third
party and, to the Seller's Knowledge, there is no reasonable basis for any such
claim ; (ii) with respect to each item of Intellectual Property owned by the
Seller which is used solely or primarily in, was developed solely or primarily
for, or relates solely or primarily to, the Business ("Business Owned
Intellectual Property") that is included in the Transferred Business
Intellectual Property, the Seller is the owner of the entire right, title and
interest in and to such Business Owned Intellectual Property and is entitled to
use such Business Owned Intellectual Property in the continued operation of the
Business; (iii) with respect to each item of Intellectual Property licensed to
the Seller which is used solely or primarily in, was developed solely or
primarily for, or relates solely or primarily to, the Business ("Business
Licensed Intellectual Property") that is included in the Transferred Business
Intellectual Property, the Seller has the right to use such Business Licensed
Intellectual Property in the continued operation of the Business in accordance
with the terms of the license agreement governing such Business Licensed
Intellectual Property; (iv) to the Knowledge of the Seller, the Business Owned
Intellectual Property that is included in the Transferred Business Intellectual
Property is valid and enforceable, and has not been adjudged invalid or
unenforceable in whole or in part; (v) to the Knowledge of the Seller, no
17
person is engaging in any activity that infringes upon the Business Owned
Intellectual Property that is included in the Transferred Business Intellectual
Property; (vi) to the Knowledge of the Seller, each license of the Business
Licensed Intellectual Property that is included in the Transferred Business
Intellectual Property is valid and enforceable, is binding on all parties to
such license, and is in full force and effect; (vii) to the Knowledge of the
Seller, no party to any license of the Business Licensed Intellectual Property
that is included in the Transferred Business Intellectual Property is in breach
thereof or default thereunder; and (viii) neither the execution of this
Agreement nor the consummation of any of the transactions contemplated thereby
shall have a Material Adverse Effect with respect to the Transferred Business
Intellectual Property.
SECTION 3.12 Environmental Matters. Except as set forth in Section
3.12 of the Disclosure Schedule or as would not have a Material Adverse Effect,
to the Seller's Knowledge, (i) the Business is conducted in compliance with all
applicable Environmental Laws and the Seller has obtained and is in compliance
with all Environmental Permits relating to or required for the Business, and
(ii) there are no Liabilities or written claims pursuant to any Environmental
Law pending or threatened against the Seller or any predecessor of the Seller
relating to the Business.
SECTION 3.13 Assets. Except for the Excluded Assets, the Transferred
Assets, together with any intellectual property which may be the subject of the
License Agreement constitute all of the assets owned or used by the Seller in
the conduct of the Business. Except as set forth in Section 3.13 of the
Disclosure Schedule, the Seller has good, valid and marketable title to, or a
valid leasehold interest in, or a valid license to use, all of the Transferred
Assets and any intellectual property which may be the subject of the License
Agreement, in each case free and clear of all Encumbrances, except Permitted
Encumbrances (and except as to any leased asset, the provisions of any such
lease, and as to any licensed asset, the provisions of any such license).
SECTION 3.14 Inventories. The Inventory of the Business the value of
which is reflected on the January 2001 Statement of Accumulated Inventory, (i)
is of merchantable quality, usable and salable at normal profit margins for the
Business and in accordance with the Seller's historical sales practices in the
ordinary course of business, and (ii) does not include any items that are
obsolete, damaged, excessive, below standard quality, slow moving or for
discontinued product lines.
SECTION 3.15 Taxes. Except as set forth in Section 3.15 of the
Disclosure Schedule, the Seller has timely filed all material Tax Returns
required to be filed with respect to Taxes pertaining, in whole or in part, to
the Transferred Assets or the Business. All such Tax Returns are true, correct
and complete in all material respects, and the Seller has duly paid all Taxes
shown on such Tax Returns and has paid or made adequate provision for payment of
all accrued but unpaid Taxes anticipated in respect of such Tax Returns. Except
as set forth in Section 3.15 of the Disclosure Schedule, and except as would not
have a Material Adverse Effect, the Seller has not received notice from a taxing
authority in a jurisdiction where the Seller does not file Tax Returns that the
Seller is or may be subject to taxation by such jurisdiction.
18
SECTION 3.16 Product and Service Warranties. Except as set forth in
Section 3.16 of the Disclosure Schedule, the Seller has not received written
notice of any material claims (including, without limitation, claims for
material Product Liabilities, defects or breaches or product or service
warranties or after warranty service obligations, including claims alleging
implied breach of warranties or merchantability or fitness for any particular
purpose) in connection with the manufacture, production, sale, distribution or
use of any of the products or services of the Business which relate to any of
the Transferred Assets.
SECTION 3.17 Labor Matters; Employment Matters. Except as set forth
in Section 3.17 of the Disclosure Schedule: (i) there are no controversies
pending or, to the Knowledge of the Seller, threatened, between the Seller and
any of the Designated Employees or Manufacturers Representatives regarding the
Seller's compliance with applicable wage and hour, equal employment, safety and
other similar legal requirements relating to employees, (ii) the Seller is not a
party to, or bound by, any collective bargaining agreement, contract or other
understanding with a labor union or labor organization that includes any of the
Designated Employees, and there is, to the Seller's Knowledge, no activity
involving any of the Designated Employees seeking to certify a collective
bargaining unit or engaging in any other organizational activity; and (iii)
there are no strikes, slowdowns, work stoppages, lockouts, or, to the Seller's
Knowledge, threats thereof, by or with respect to any of the Designated
Employees. To the Seller's Knowledge, none of the Designated Employees or the
Manufacturers Representatives has indicated to the Seller as of the date of this
Agreement that he or she is considering terminating his or her employment. To
the Seller's Knowledge, the Seller has complied in all material respects with
all applicable wage and hour, equal employment, safety and other legal
requirements relating to its employees employed in the Business.
SECTION 3.18 Brokers. Except as set forth in Section 3.18 of the
Disclosure Schedule, 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 Seller.
SECTION 3.19 Backlog. Section 3.19 of the Disclosure Schedule sets
forth the backlog of the Business as of January 31, 2001, which represents firm
orders, each of which is covered by a customer contract or written purchase
order. Except as set forth in Section 3.19 of the Disclosure Schedule, the
Seller is not aware of any customer commitment comprising such backlog that is
reasonably likely to be terminated or canceled.
SECTION 3.20 Insurance. The Seller maintains, and has maintained at
all times since at least January 1, 1996, insurance policies providing insurance
coverage with respect to the Business and its products and services that is
customary for businesses of similar size and type.
SECTION 3.21 No Other Representations. (a) NEITHER THE SELLER NOR
ANY OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES
HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, AND THE SELLER IS NOT LIABLE FOR, OR
BOUND IN ANY MANNER BY, ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES,
GUARANTIES, PROMISES OR
19
STATEMENTS PERTAINING TO THE BUSINESS OR THE TRANSFERRED ASSETS, EXCEPT AS
SPECIFICALLY SET FORTH IN THIS ARTICLE III.
(b) EXCEPT AS SET FORTH IN THIS ARTICLE III, THE SELLER MAKES NO
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF THE BUSINESS OR ANY OF THE TRANSFERRED ASSETS, INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
SECTION 4.01 Incorporation and Authority of the Purchaser. The
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser, and (assuming
due authorization, execution and delivery by the Seller) constitutes a legal,
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms.
SECTION 4.02 No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Sections 3.02 and 3.03 have been
obtained and all filings listed in Sections 3.02 and 3.03 of the Disclosure
Schedule have been made, and except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate
or conflict with the Certificate of Incorporation or By-laws (or other similar
applicable documents) of the Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to the Purchaser or (c) result in any breach of,
or constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to any Person any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of any lien or other encumbrance on any of the assets or properties of
the Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument relating to
such assets or properties to which the Purchaser or any of its subsidiaries is a
party or by which any of such assets or properties is bound except, in the case
of clause (b) or (c), as would not, individually or in the aggregate, prevent or
materially delay the consummation by the Purchaser of the transactions
contemplated hereby.
SECTION 4.03 Consents and Approvals. The execution and delivery of
this Agreement by the Purchaser do not, and the performance of this Agreement by
the Purchaser will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority, except
(a) as described in Section 3.03 of the Disclosure Schedule, (b) where failure
to obtain such consent, approval, authorization or action,
20
or to make such filing or notification, would not prevent or materially delay
the consummation by the Purchaser of the transactions contemplated by this
Agreement and (c) as may be necessary as a result of any facts or circumstances
relating solely to the Seller.
SECTION 4.04 Litigation. No claim, action, proceeding or
investigation is pending which seeks to delay or prevent the consummation of the
transactions contemplated hereby or which would be reasonably likely to
adversely affect or restrict the Purchaser's ability to consummate the
transactions contemplated by this Agreement.
SECTION 4.05 Financing. The Purchaser has all funds necessary to
consummate the transactions contemplated by, and perform its obligations under,
the Transaction Agreements and pay the fees and expenses it incurs in connection
with such transactions and obligations.
SECTION 4.06 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.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing. (a) The
Seller covenants and agrees that, between the date hereof and the Closing Date,
the Seller shall conduct the Business and hold and use the Transferred Assets
only in the ordinary course of the Business consistent with prior practice,
except as described in Section 5.01(a) of the Disclosure Schedule or with the
prior written consent of the Purchaser. Without limiting the generality of the
foregoing, the Seller covenants and agrees that, prior to the Closing, the
Seller:
(i) will use all reasonable efforts to preserve its relationships
with its customers, suppliers and other persons with which it has
significant business relationships in respect of the Business or the
Transferred Assets;
(ii) will not (x) change its accounting methods, principles or
practices used in respect of the Business or the Transferred Assets or (y)
revalue any of the Transferred Assets;
(iii) will not incur, or assume or become subject to, whether
directly or by way of guarantee or otherwise, any Liability solely in
connection with the Business or the Transferred Assets, other than (x)
Excluded Liabilities, (y) Liabilities that are discharged prior to the
Closing and (z) trade or business obligations or Liabilities incurred in
the ordinary course of the Business that, individually or in the
aggregate, would not have a Material Adverse Effect;
(iv) will not permit or allow any of the Transferred Assets to be
subject to any additional Encumbrances other than Permitted Encumbrances
arising in the ordinary course of the Business after the date hereof or
Encumbrances that are discharged prior to
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the Closing, or sell, transfer, lease or otherwise dispose of any of the
Transferred Assets, except for sales of inventory in the ordinary course
of the Business;
(v) will not grant any increase in salary, wages, bonuses,
commissions or other compensation payable or to become payable to any of
the Manufacturers Representatives, make any change in the manner in which
any of the Manufacturers Representatives are compensated, or provide for
any additional or supplemental benefits for any of the Manufacturers
Representatives that would increase any of the Assumed Liabilities;
(vi) will not grant any increase in salary, wages, bonuses,
commissions or other compensation payable or to become payable to any
Designated Employees, make any change in the manner in which any
Designated Employees are compensated, or provide for any additional or
supplemental benefits for any Designated Employees that would increase any
of the Assumed Liabilities;
(vii) will not make any capital expenditure or commitment for
additions to property, equipment or facilities solely maintained or solely
related to the Business or the Transferred Assets;
(viii) will not license, sell, transfer pledge, dispose of or permit
to lapse any right under or respecting, or enter into any settlement
regarding the breach or infringement of, any of the Business Intellectual
Property;
(ix) will not cancel, modify or breach any existing insurance
coverage solely with respect to the Business or the Transferred Assets, or
fail to pay any premium payable thereunder when due;
(x) will not enter into, or be a party to, any transaction with any
Affiliate that relates solely to the Business or any of the Transferred
Assets except transactions in the ordinary course of the Business
consistent with past practice and on terms that are not less favorable to
the Seller than would be obtained in an arm's length transaction with an
unrelated third party;
(xi) will not permit the Inventories to exceed the limits set forth
in Section 5.01(a) of the Disclosure Schedule;
(xii) will not agree, whether in writing or otherwise, to do
anything described in clauses (ii) through (xi) above;
(xiii) will make or cause to be made all necessary filings with
respect to the Business or the Transferred Assets with all Governmental
Authorities; and
(xiv) will notify the Purchaser of the occurrence of any event or
the receipt of any written communication which asserts non-performance by
the Seller under any Transferred Contract or any firm order comprising the
backlog referred to in Section 3.19 of this Agreement.
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(b) Notwithstanding the covenants of the Seller contained in Section
5.01(a) and notwithstanding the Seller's agreement pursuant to Section 2.01(a)
(xi), the Purchaser hereby agrees that the Seller may change its legal name from
"MPD Technologies Inc." to "Ericsson Amplifier Technologies Inc" or any similar
name. The Seller and the Purchaser shall cooperate fully with each other to
allow the Seller to achieve such a name change while preserving the right of the
Purchaser to acquire the Seller's current name hereunder. Further, the Seller
and the Purchaser shall cooperate fully with each other to amend any export
licenses (if necessary) to reflect such circumstances and changes. After the
Closing, the Purchaser shall grant the Seller a non-exclusive license to use the
name "MPD Technologies, Inc." in connection with the Seller's performance of the
Excluded Assets and the Excluded Liabilities until such time as the Seller has
amended its export licenses to reflect its name change.
SECTION 5.02 Investigation. (a) The Purchaser acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Business, the
Transferred Assets and the Assumed Liabilities, (ii) has been furnished with or
given adequate access to such information about the Business, the Transferred
Assets and the Assumed Liabilities as it has requested and (iii) will not assert
any claim (other than claims for fraud) against the Seller or any of its
directors, officers, employees, agents, stockholders, Affiliates, consultants,
counsel, accountants, investment bankers or representatives, or hold the Seller
or any such Persons liable, for any inaccuracies, misstatements or omissions
with respect to information (other than the representations and warranties of
the Seller contained in this Agreement) furnished by the Seller or such persons
concerning the Seller, the Business, the Transferred Assets or the Assumed
Liabilities; provided, however, that nothing in this Section 5.02 shall be
deemed to qualify any of the representations and warranties made by the Seller
in or pursuant to this Agreement or impair or limit the Purchaser's right to
rely on such representations or warranties or its rights with respect thereto
under any provision of this Agreement, including, without limitation, Articles
VI, VII and VIII hereof. Any implied warranty or similar rights applicable to
any of the transactions contemplated hereby under the Law of any jurisdiction is
hereby expressly and irrevocably waived by each party hereto to the fullest
extent permitted by such Law, and each party hereto agrees that it shall not
seek to enforce any such implied warranties or similar rights against the other
party.
(b) In connection with the Purchaser's investigation of the
Business, the Transferred Assets and the Assumed Liabilities, the Purchaser has
received from the Seller certain estimates, projections and other forecasts for
the Business and certain plan and budget information. The Purchaser acknowledges
that there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that the Purchaser is familiar with
such uncertainties, that the Purchaser is taking full responsibility for making
its own evaluation of the adequacy and accuracy of all estimates, projections,
forecasts, plans and budgets so furnished to it, and that the Purchaser will not
assert any claim against the Seller or any of its Affiliates or any of its
directors, officers, employees, agents, stockholders, affiliates, consultants,
counsel, accountants, investment bankers or representatives, or hold the Seller
or any such Persons liable with respect thereto. Accordingly, the Seller makes
no representation or warranty with respect to any estimates, projections,
forecasts, plans or budgets referred to in this Section 5.02(b).
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SECTION 5.03 Access to Information. (a) From the date hereof until
the time of the Closing, upon reasonable notice, the Seller shall, and shall
cause each of its officers, directors, employees, auditors and agents to: (i)
afford the officers, employees and authorized agents and representatives of the
Purchaser reasonable access, during normal business hours, to the offices,
properties, books, records and assets of the Business, (ii) furnish to such
persons of the Purchaser such additional financial and operating data and other
information regarding the Business (or legible copies thereof) as the Purchaser
may from time to time reasonably request and (iii) make available to such
persons the employees of the Seller engaged in the Business, and use its
reasonable efforts to cause the Manufactures Representatives to be so available;
provided, however, that such investigation shall not unreasonably interfere with
any of the businesses or operations of the Seller or any of its Affiliates.
(b) In order to facilitate the resolution of any claims made by or
against or incurred by the Seller or any Affiliate or for which the Seller or
any Affiliate remains liable, after the Closing, upon reasonable notice, the
Purchaser shall (i) afford the officers, employees and authorized agents and
representatives of the Seller reasonable access, during normal business hours,
to the offices, properties, books and records of the Purchaser and/or its
Affiliates in respect of the Business relevant to such claims, (ii) furnish to
the officers, employees and authorized agents and representatives of the Seller
such additional financial and other information regarding the Business as the
Seller or such Persons may from time to time reasonably request relevant to such
claims and (iii) make available to the Seller the employees of the Purchaser
and/or its Affiliates in respect of the Business whose assistance, testimony or
presence is necessary to assist the Seller in evaluating any such claims and in
defending such claims, including the presence of such persons as witnesses in
hearings or trials for such purposes; provided, however, that such investigation
shall not unreasonably interfere with the business or operations of the
Purchaser or any of its Affiliates and provided further that the Seller shall
bear all of the out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in complying with this Section 5.03(b), except to the extent
indemnified pursuant to Section 8.01.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser or any Affiliate or for which the Purchaser
or any Affiliate remains liable, after the Closing, upon reasonable notice, the
Seller shall (i) afford the officers, employees and authorized agents and
representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, books and records of the Seller and/or its
Affiliates in respect of the Business and relevant to such claims (ii) furnish
to the officers, employees and authorized agents and representatives of the
Purchaser such additional financial and other information regarding the Business
as conducted prior to the Closing as the Purchaser or such Persons may from time
to time reasonably request relevant to such claims and (iii) make available to
the Purchaser the employees of the Seller and/or its Affiliates who had been
employees in the Business and whose assistance, testimony or presence is
necessary to assist the Purchaser in evaluating any such claims and in defending
such claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that such investigation shall not
unreasonably interfere with the business or operations of the Seller or any of
its Affiliates and provided further that the Purchaser shall bear all of the
out-of-pocket costs and expenses (including, without limitation, attorneys fees,
but excluding reimbursement for
24
salaries and employee benefits) reasonably incurred in complying with this
Section 5.03(c), except to the extent indemnified pursuant to Section 8.02.
SECTION 5.04 Books and Records. (a) The Purchaser agrees that it
shall preserve and keep all books and records in respect of the Business that
the Seller transfers to the Purchaser in the Purchaser's possession for a period
of at least seven years from the Closing Date in a manner consistent with the
past practice of the Seller. After such seven-year period, before the Purchaser
shall dispose of any of such books, records and assets, at least 90 calendar
days' prior written notice to such effect shall be given by the Purchaser to the
Seller, and the Seller shall be given an opportunity, at its cost and expense,
to remove and retain all or any part of such books and records as the Seller may
select. During such seven-year period, duly authorized representatives of the
Seller shall, upon reasonable notice, have access thereto during normal business
hours to examine, inspect and copy such books and records.
(b) If, in order properly to prepare documents required to be filed
with Governmental Authorities or its financial statements or required under any
applicable Law, it is necessary that either party hereto or any successors be
furnished with additional information relating to the Business and such
information is in the possession of the other party hereto, such party agrees to
use its reasonable efforts to furnish such information to such other party, at
the cost and expense of the party being furnished such information.
SECTION 5.05 Confidentiality. (a) The terms of the letter agreement
dated as of December 18, 2000 (the "Confidentiality Agreement") between the
Seller and the Purchaser are hereby incorporated by reference and shall continue
in full force and effect until the Closing, at which time such Confidentiality
Agreement and the obligations of the Purchaser under this Section 5.05 shall
terminate; provided, however, that the Confidentiality Agreement shall terminate
only in respect of that portion of the Information or Items (as such terms are
defined in the Confidentiality Agreement) exclusively relating to the
transactions contemplated by this Agreement (the "Transaction Information and
Items"). If this Agreement is, for any reason, terminated prior to the Closing,
the Confidentiality Agreement shall continue in full force and effect thereafter
in accordance with its terms in respect of such Information or Items.
(b) The Seller and the Purchaser agree that after the Closing Date,
the Seller shall treat the Transaction Information and Items as if the Seller
were the Recipient and the Purchaser the Disclosing Party under the
Confidentiality Agreement.
SECTION 5.06 Regulatory and Other Authorizations; Consents. (a) The
Purchaser shall use all its reasonable best efforts to promptly obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement, and the Seller shall
fully cooperate with, and use all reasonable efforts to assist, the Purchaser in
promptly seeking to obtain all such authorizations, consents, orders and
approvals (it being understood that neither the Seller nor the Purchaser or any
of their Affiliates shall be required to pay any fees or other payments to any
such regulatory bodies or officials in order to obtain any such authorization,
consent order or approval (other than normal filing fees), and the Purchaser and
its Affiliates shall not be required to agree to modification, limitation or
other change in or with respect to the Transferred Assets or the conduct of the
Business). Each party agrees to
25
make, or cause to be made, promptly any filing with any Governmental Authority
that the Purchaser identifies to the Seller as being required. The Seller shall
not take any action that would have the effect of delaying, impairing or
impeding the receipt of any required approvals.
(b) The Purchaser shall use its best efforts to cause the Seller and
its Affiliates to be released as of the Closing, or as soon thereafter as
possible, from all indemnities, guaranties and guaranty obligations of the
Seller and such Affiliates relating to obligations of such Persons with respect
to the Business and the Transferred Assets. The Seller shall fully cooperate
with, and use all reasonable efforts to assist the Purchaser in the matters
referred to in this Section 5.06(b).
(c) The Seller shall promptly give such notice to third parties and
use its reasonable efforts to obtain such third-party consents (excluding the
consents of any Governmental Authorities) necessary to transfer the Transferred
Assets to the Purchaser, including, without limitation, all third-party consents
that the Purchaser may deem necessary or desirable in connection with the
transfer of the Transferred Contracts. The Seller shall not be required to
compensate any third party to obtain any such consent or approval. The Purchaser
shall fully cooperate with and use all reasonable efforts to assist the Seller
in giving such notices and obtaining such consents.
(d) The parties hereto agree that, in the event any consent,
approval or authorization from third parties necessary or desirable to preserve
for the Purchaser any right or benefit under any Transferred Contract is not
obtained prior to the Closing, the Seller will, subsequent to the Closing,
cooperate fully with and use all reasonable efforts to assist the Purchaser in
attempting to obtain such consent, approval or authorization as promptly
thereafter as practicable. To the extent that an attempted assignment of any
Transferred Contract without the consent of any other party to such Transferred
Contract would constitute a breach thereof, then, notwithstanding anything in
this Agreement to the contrary, such assignment shall not occur until such time
as the required consent of such other party or parties to the contract shall
have been obtained; provided, however, that until and unless such consent,
approval or authorization is obtained, the Seller shall use all reasonable
efforts to provide the Purchaser with the rights and benefits of the affected
Transferred Contract to the extent relating to the Business and, if the Seller
provides such rights and benefits, the Purchaser shall assume the obligations
and burdens thereunder. The Purchaser will cooperate with the Seller in
obtaining any of the foregoing consents, approvals or authorizations from third
parties and, if applicable, in obtaining any of such rights and benefits. In
addition, in the event such consents, approvals, authorizations or benefits are
not obtained, the Purchaser and the Seller shall each negotiate with the other
and enter into subcontracting or similar contractual relationships on terms and
conditions reasonably acceptable to each, the purpose of which shall be to
provide the Purchaser with the rights and benefits of the affected Transferred
Contract against the performance by the Purchaser of the obligations and burdens
of the Seller thereunder.
SECTION 5.07 Notification to Governmental Authorities. The Purchaser
and the Seller shall cooperate with each other in connection with, and comply in
all material respects with, all material applicable laws, if any, requiring
notification of the transactions contemplated by this Agreement.
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SECTION 5.08 Bulk Transfer Laws. The Purchaser hereby waives
compliance by the Seller with the provisions of any applicable bulk sale or bulk
transfer laws of any jurisdiction in connection with the sale to the Purchaser
of the Transferred Assets. The Seller shall indemnify and hold harmless the
Purchaser against any and all liabilities (including Tax liabilities) that may
be asserted by third parties against the Purchaser as a result of noncompliance
by the Seller with any such bulk transfer law (except for those assumed by the
Purchaser hereunder or in the Assumption Agreement).
SECTION 5.09 Conveyance Taxes. The Seller and the Purchaser shall
share equally any real property transfer or gains, sales, use, transfer, value
added, stock transfer, stamp taxes and any similar Taxes which become payable in
connection with the transactions contemplated hereby, and the parties 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.
SECTION 5.10 Services and License Agreement. At the Closing, the
Seller and the Purchaser shall enter into (i) a services agreement (the
"Services Agreement"), substantially on the terms set forth on Exhibit 5.10(a)
attached hereto and (ii) a license agreement (the "License Agreement"),
substantially on the terms set forth on Exhibit 5.10(b) attached hereto.
SECTION 5.11 Insurance Coverage. The Purchaser acknowledges that the
Seller has advised it that, effective 12:01 a.m. on the Closing Date, the
Transferred Assets shall cease to be insured by the Seller's and its Affiliates'
insurance policies, and the Purchaser further acknowledges such policies are
Excluded Assets.
SECTION 5.12 Further Action. At any time, and from time to time,
after the date hereof (including after the Closing) each party hereto shall,
without further consideration, execute and deliver to any other party hereto
such instruments of transfer and assumption, and shall take such other action,
as such other party may reasonably request to carry out the transfer of assets
and the assumption of liabilities contemplated by this Agreement.
SECTION 5.13 Customers and Marketing. From and after the date hereof
through the Closing Date, the Seller shall introduce the Purchaser to the
customers of the Business for the purpose of enabling the Purchaser to evaluate
the business relationship with such customers, and shall conduct such marketing
activities with respect to such customers as the Purchaser reasonably requests,
including using reasonable efforts to provide the services of Xxxx Xxxxxx.
SECTION 5.14 Notice of Certain Events. Until the Closing, the Seller
shall promptly give the Purchaser written notice of the occurrence, or failure
to occur, of any event or state of facts that would cause any representation or
warranty made by the Seller in this Agreement to be untrue or inaccurate or any
covenant, condition or agreement which is to be performed or satisfied by it
impossible to be so complied with or satisfied or make such performance or
satisfaction materially more difficult than in the absence of such fact or
occurrence or which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or pursuant
to this Agreement or a Schedule or Exhibit hereto. No notification under this
Section 5.14 shall affect or modify the
27
representations, warranties, covenants or agreements of the Seller or the
conditions to the respective obligations of the parties hereunder.
SECTION 5.15 Employees Matters. (a) Commencing on the date hereof
and until the Closing Date, the Seller shall cooperate with the Purchaser in the
efforts of the Purchaser to arrange for its employment of any of the Designated
Employees. With respect to each Designated Employee with whom the Purchaser
declines or fails to reach such an arrangement, the Seller shall not terminate
the employment of, decrease the salary of, or otherwise materially impair the
employment terms of, such Designated Employee during the term of the Services
Agreement and, so long as such Designated Employee remains employed by the
Seller, the Seller shall make such Designated Employee available during normal
business hours for the performance of the Seller's obligations thereunder
(provided that the Seller shall not be prohibited from terminating such
Designated Employee at any time for cause).
(b) As separate and independent covenants, each of the Seller and
the Purchaser agrees with the other that for a period of two years after the
Closing Date, except as otherwise mutually agreed, neither the Seller nor the
Purchaser shall solicit the performance of services by, in the case of the
Purchaser, any Designated Employee that is not a Transferred Employee or any
other employee of Seller (collectively, "Seller Employees") or, in the case of
the Seller, any Transferred Employee or any other employee of the Purchaser
(collectively, "Purchaser Employees"); provided, however, that the foregoing
will not prohibit a general solicitation to the public made exclusively through
national or international media; provided further, that the foregoing will also
not prohibit either party or one of its respective Affiliates from soliciting
any Seller Employee or Purchaser Employee, as the case may be, whose employment
has terminated following the Closing Date. Each of the Seller and the Purchaser
acknowledges that the covenants set forth in this Section 5.15(b) are an
essential element of this Agreement and that, but for the agreement to comply
with these covenants, neither the Seller nor the Purchaser would have entered
into this Agreement. Each of the Seller and the Purchaser acknowledges that its
respective undertakings pursuant to this Section 5.15(b) constitute independent
covenants and shall not be affected by performance or nonperformance of any
other provision of this Agreement. Each of the Seller and the Purchaser has
independently consulted with its counsel and after such consultation agrees that
the covenants set forth in this Section 5.15(b) are reasonable and proper.
SECTION 5.16 Non-Competition. The Seller shall not, for a period of
five (5) years after the Closing Date, directly engage, anywhere in the world,
in the business of designing, manufacturing, assembling, distributing or selling
or promoting for sale any product, process, good or service that is
substantially the same as any product, process, good or service that the Seller
sells under any Listed Assumed Contract as of the Closing. The Seller
acknowledges that, in view of the nature of the Business and the business
objectives of the Purchaser in acquiring the Business, and the consideration
paid to the Seller therefore, the restriction contained in this Section 5.16 is
reasonably necessary to protect the legitimate business interests of the
Purchaser and that any violation of such restriction will result in irreparable
injury to the Purchaser and the Business for which damages will not be an
adequate remedy. The Seller therefore acknowledges that, if such restriction is
violated, in addition to any other remedies to which the Purchaser may be
entitled, the Purchaser shall be entitled to
28
preliminary and injunctive relief as well as to an equitable accounting of
earnings, profits and other benefits arising from such violation.
SECTION 5.17 Financial Statements The Seller and its directors,
officers and employees shall cooperate with the Purchaser, and the Seller shall
use reasonable efforts to cause its independent accountants to cooperate, in
each case at the Purchaser's sole cost and expense with respect to out-of-pocket
expenses, in providing all financial information to the Purchaser relating to
the Business as the Purchaser may reasonably request in connection with the
preparation by the Purchaser of such audited financial statements as may be
required to be filed by the Purchaser with the Securities and Exchange
Commission.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01 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:
(e) Representations and Warranties; Covenants. (i) Each of the
representations and warranties of the Purchaser contained in this
Agreement shall be true and correct as of the Closing Date as though made
on and as of the Closing Date, except that those representations and
warranties that address matters only as of a particular date shall remain
true and correct as of such date, except, in each case, where the failure
to be so true and correct would not materially delay or prevent the
consummation of the transactions contemplated hereby; (ii) 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, except that the Purchaser shall have complied in all
respects with its obligations under Section 2.05 hereof; and (iii) the
Seller shall have received a certificate of the Purchaser to such effect
signed by a duly authorized officer of the Purchaser;
(f) No Governmental Order. There shall be no Governmental Order in
existence which expressly prohibits or materially restrains the
transactions contemplated by this Agreement;
(g) Transaction Agreements. The Purchaser shall have duly executed
and delivered each Transaction Agreement to which it is a party and each
such agreement shall be in full force and effect; and
(h) Legal Opinion. The Purchaser shall have delivered to the Seller
a Legal Opinion in form and substance reasonably acceptable to the Seller
addressed to the Seller from Proskauer Rose LLP.
SECTION 6.02 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:
29
(i) Representations and Warranties; Covenants. (i) Each of the
representations and warranties of the Seller contained in this Agreement
that contain a Material Adverse Effect or materiality qualifier shall be
true and correct, and each of the other representations and warranties of
the Seller contained in this Agreement shall be true and correct in all
material respects, as of the Closing Date as though made on and as of the
Closing Date, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct
in all material respects as of such date; (ii) the covenants and
agreements contained in this Agreement to be complied with by the Seller
on or before the Closing shall have been complied with in all material
respects, except that the Seller shall have complied in all respects with
its obligations under Section 2.06 hereof; and (iii) the Purchaser shall
have received a certificate of the Seller to such effect signed by a duly
authorized officer of the Seller;
(j) No Governmental Order. There shall be no Governmental Order in
existence which expressly prohibits or materially restrains the
transactions contemplated by this Agreement;
(k) Transaction Agreements. The Seller shall have duly executed and
delivered each Transaction Agreement to which it is a party and each such
agreement shall be in full force and effect;
(l) Contract Consents. The Seller shall have received written
consents, which may include consents subject to the satisfaction of
reasonable conditions (which conditions may include, without limitation,
first article inspection or other quality control conditions), to the
assignment of those Customer Contracts listed in Section 3.03(c) of the
Disclosure Schedule which represented at least 70% of the revenues
generated from the Transferred Contracts in 2000; and
(m) Legal Opinion. The Seller shall have delivered to the Purchaser
a Legal Opinion addressed to the Purchaser from Shearman & Sterling, in
form and substance reasonably acceptable to the Purchaser.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01 Termination. This Agreement may be terminated at any
time prior to the Closing:
(n) by the mutual written consent of the Seller and the Purchaser;
(o) by the Seller or the Purchaser, if the Closing shall not have
occurred prior to July 31, 2001; provided, however, that the right to
terminate this Agreement under this Section 7.01(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 prior to such date; or
30
(p) by the Purchaser or the Seller in the event of the issuance of a
final, nonappealable Governmental Order restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby.
SECTION 7.02 Effect of Termination. In the event of the termination
of this Agreement as provided in Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except (a) as set forth in Sections 5.05 and 9.02 and (b) nothing herein shall
relieve either the Seller or the Purchaser from liability for any willful breach
of this Agreement or willful failure to perform hereunder.
SECTION 7.03 Waiver. At any time prior to the Closing, either party
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party 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 such rights.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Indemnification by the Purchaser. (a) Subject to
Sections 8.01(b), 8.03, 8.05 and 9.01, the Purchaser shall indemnify, defend and
hold harmless the Seller, its Affiliates and their respective employees,
officers, directors, agents, successors and assigns (each, a "Seller Indemnified
Party") against, and reimburse each Seller Indemnified Party for, any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (whether arising out of or resulting from any Action brought by any
Governmental Authority or third party or a breach by a party to this Agreement
of any representation, warranty or covenant to the other party to this Agreement
and including reasonable attorneys' and consultants' fees and expenses and other
legal costs and expenses reasonably incurred in investigation, remediation,
defense or settlement) (collectively, "Losses") that such Seller Indemnified
Party may at any time suffer or incur as a result of or in connection with:
(i) the breach of any representation or warranty made by the
Purchaser in this Agreement;
(ii) the failure by the Purchaser to perform any of its covenants or
agreements contained in this Agreement or any Transaction Agreement to
which it is a party;
(iii) the Assumed Liabilities, except for any claims with respect to
which the Seller is obligated to indemnify the Purchaser Indemnified
Parties under Section 8.02(a)(iv) or Section 8.02(a)(v); and
31
(iv) other than to the extent constituting an Excluded Liability,
any Liabilities arising from the conduct of the Business or the ownership
of the Transferred Assets by the Purchaser following the Closing,
including, without limitation, the performance of the Transferred
Contracts.
(b) Notwithstanding any other provision to the contrary, the
Purchaser shall not be required to indemnify, defend or hold harmless any Seller
Indemnified Party against or reimburse any Seller Indemnified Party for any
Losses pursuant to Section 8.01(a): (i) unless the Seller has notified the
Purchaser in writing in accordance with Section 8.03(a) of its claim for
indemnification within the applicable survival period set forth in Section 9.01
and (ii) with respect to indemnification under Section 8.01(a)(i), until the
aggregate amount of the Seller Indemnified Party's Losses exceeds one percent
(1%) of the Purchase Price, after which the Purchaser shall be obligated for all
Losses of the Seller Indemnified Parties in excess of such amount; provided,
however, that the cumulative indemnification obligations of the Purchaser under
Section 8.01(a)(i) shall in no event exceed 100% of the Purchase Price.
SECTION 8.02 Indemnification by the Seller. (a) Subject to Sections
8.02(b), 8.03, 8.05 and 9.01 hereof, the Seller shall indemnify, defend and hold
harmless the Purchaser, its Affiliates and their respective employees, officers
and directors, agents, successors and assigns (each, a "Purchaser Indemnified
Party") against, and reimburse any Purchaser Indemnified Party for, any and all
Losses that such Purchaser Indemnified Party may at any time suffer or incur as
a result of or in connection with:
(i) the breach of any representation or warranty made by the Seller
in this Agreement;
(ii) the failure by the Seller to perform any of its covenants or
agreements contained in this Agreement or any Transaction Agreement to
which it is a party;
(iii) the Excluded Liabilities;
(iv) Losses arising from any Unlisted Assumed Contract; and
(v) Losses arising from any warranty obligation assumed by the
Purchaser under any of the Listed Assumed Contracts which relate to
products manufactured by the Seller prior to the Closing Date.
(b) Notwithstanding any other provision to the contrary, the Seller
shall not be required to indemnify, defend or hold harmless any Purchaser
Indemnified Party against or reimburse any Purchaser Indemnified Party:
(i) with respect to indemnification pursuant to Section 8.02(a)(i):
(x) unless the Purchaser has notified the Seller in writing in accordance
with Section 8.03(a) of its claim for indemnification within the
applicable survival period set forth in Section 9.01 and (y) until the
aggregate amount of the Purchaser Indemnified Party's Losses exceeds one
percent (1%) of the Purchase Price, after which the Seller shall be
obligated for all Losses of the Purchaser Indemnified Parties in excess of
such amount; provided,
32
however, that the cumulative indemnification obligations of the Seller
pursuant to Section 8.02(a)(i) shall in no event exceed fifty percent
(50%) of the Purchase Price;
(ii) with respect to indemnification pursuant to Sections
8.02(a)(ii) or 8.02(a)(iii), unless the Purchaser has notified the Seller
in writing in accordance with Section 8.03(a) of its claim for
indemnification before the sixth anniversary of the Closing Date;
(iii) with respect to indemnification pursuant to Section
8.02(a)(iv): (x) unless, with respect to any Losses unrelated to a
warranty obligation, the Purchaser has notified the Seller in writing in
accordance with Section 8.03(a) of its claim for indemnification before
the second anniversary of the Closing Date, (y) unless, with respect to
any Losses related to a warranty obligation which relates to a product
manufactured by the Seller prior to the Closing Date, the Purchaser has
notified the Seller in writing in accordance with Section 8.03(a) of its
claim for indemnification prior to the expiration of such warranty
obligation, and (z) until the aggregate amount of the Purchaser
Indemnified Party's Losses exceeds $250,000, after which, subject to
Section 8.05(c), the Seller shall be obligated for all Losses of the
Purchaser Indemnified Parties in excess of such amount; and
(iv) with respect to indemnification pursuant to Section 8.02(a)(v):
(x) unless the Purchaser has notified the Seller in writing in accordance
with Section 8.03(a) of its claim for indemnification not later than
thirty (30) days after the expiration of the warranty obligation giving
rise to such Loss and (y) until the aggregate amount of the Purchaser
Indemnified Party's Losses exceeds $1,000,000, after which the Seller
shall be obligated for all Losses of the Purchaser Indemnified Parties in
excess of such amount; provided, however, that the cumulative
indemnification obligations of the Seller pursuant to Section 8.02(a)(v)
shall in no event exceed $1,000,000.
SECTION 8.03 Notification of Claims. (a) A party that may be
entitled to be indemnified pursuant to Section 8.01 or 8.02 (the "Indemnified
Party") shall promptly notify the party liable for such indemnification (the
"Indemnifying Party") in writing of any claim or demand or facts or
circumstances which the Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement (including a pending or
threatened claim or demand asserted by a third party against the Indemnified
Party), describing in reasonable detail the facts and circumstances with respect
to the subject matter of such claim or demand; 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 prejudiced by such failure. Subject to the Indemnifying Party's right
to defend in good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article VIII within
30 days after the receipt of written notice thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 8.03(a), and if such claim or demand
relates to a pending or threatened claim or demand asserted by a third party
against the Indemnified Party which the Indemnifying Party acknowledges is a
claim or demand for which it must indemnify, defend and
33
hold harmless the Indemnified Party against or reimburse the Indemnified Party
for under Section 8.01 or 8.02, the Indemnifying Party shall have the right to
employ counsel reasonably acceptable to the Indemnified Party to defend any such
claim or demand asserted against the Indemnified Party. The Indemnified Party
shall have the right to participate in the defense of any such claim or demand
at its own expense. The Indemnifying Party shall notify the Indemnified Party in
writing, as promptly as practicable (but in any case before the due date for the
answer or response to a claim) after the date of the notice of claim given by
the Indemnified Party to the Indemnifying Party under Section 8.03(a) of its
election to defend in good faith any such third party claim or demand. The
Indemnified Party shall make available to the Indemnifying Party or its agents
all records and other material in the Indemnified Party's possession reasonably
required by it for its use in, and shall otherwise cooperate with the
Indemnifying Party in, defending any third-party claim or demand, and the
Indemnifying Party shall reimburse the Indemnified Party for all the reasonable
out-of-pocket expenses in connection therewith. The Indemnifying Party shall not
settle or compromise any such claim or demand without the prior consent of the
Indemnified Party, unless the Indemnified Party is given a full and
unconditional release of any and all liability by all relevant parties relating
thereto. So long as the Indemnifying Party is defending in good faith any such
claim or demand asserted by a third party against the Indemnified Party, the
Indemnified Party shall not settle or compromise such claim or demand. If the
Indemnified Party assumes the defense of any such claim or demand and proposes
to settle such claim and demand prior to final judgment thereon or to forgo any
appeal with respect thereto, then the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof and the Indemnifying Party
shall have the right to participate in the settlement or assume or reassume the
defense of such claim or proceeding.
SECTION 8.04 Exclusive Remedies. Following the Closing, (i) except
for performance of the obligations set forth in Article II and Section 5.05 and
except for the indemnification obligations specified in Section 5.08, the Seller
and the Purchaser acknowledge and agree that the indemnification provisions of
Sections 8.01 and 8.02 shall be the sole and exclusive remedies of the Seller
and the Purchaser, respectively, for any breach of the representations or
warranties herein or nonperformance of any covenants and agreements herein of
the other parties and (ii) anything herein to the contrary notwithstanding, no
breach of any representation, warranty, covenant or agreement contained herein
shall give rise to any right on the part of the Purchaser or the Seller to
rescind this Agreement or any of the transactions contemplated hereby.
SECTION 8.05 Other Indemnification Matters. (a) For all purposes of
this Article VIII, "Losses" shall be net of (i) any insurance payable to the
Indemnified Party from its own insurance policies in connection with the facts
giving rise to the right of indemnification and (ii) the estimated present value
of any Tax benefits received by or accruing to the Indemnified Party.
(b) The Seller and the Purchaser agree that all payments made by
either to or for the benefit of the other under any indemnity provisions of this
Agreement and for any misrepresentations or breach of warranties or covenants
shall be treated as adjustments to the purchase price or as capital
contributions for Tax purposes and that such treatment shall govern for purposes
hereof.
34
(c) The Purchaser and the Seller agree that with respect to
indemnification pursuant to Section 8.02(a)(iv), if the aggregate amount of
Purchaser Indemnified Party's Losses exceeds $250,000, the Seller may (but shall
not be obligated to) elect to have any or all Unlisted Assumed Contracts which
gave rise to such indemnification transferred back to the Seller, along with
access (whether by license or otherwise) to any assets (tangible or intangible)
of Purchaser necessary or useful (in the reasonable opinion of the Seller) in
the performance of such Unlisted Assumed Contracts. The Purchaser shall sell to
the Seller any inventory, merchandise, finished goods, work-in-progress or raw
materials the Purchaser has on hand that are necessary or useful (in the
reasonable opinion of the Seller) in the performance of such Unlisted Assumed
Contracts. The Seller shall pay the Purchaser for any inventories transferred by
the Purchaser to the Seller pursuant to this Section 8.05(c) an amount equal to
the contractual price, if any, for such inventories as reflected on
corresponding purchase orders from the customers under the relevant Customer
Contract. Such transfer to the Seller shall be made pursuant to an assignment
and assumption agreement (a "Reassignment Agreement") in form and substance
reasonably acceptable to the Seller and the Purchaser. Upon the execution of a
Reassignment Agreement (i) the Seller shall have no further obligation to
indemnify the Purchaser for any Losses arising from any Unlisted Assumed
Contract transferred to the Seller pursuant to such Reassignment Agreement and
(ii) such Unlisted Assumed Contract shall no longer be deemed an "Unlisted
Assumed Contract" for purposes of this Agreement. The Seller shall notify the
Purchaser in writing of its election pursuant to this Section 8.05(c) within
thirty (30) days after notice of the claim for indemnification by the Purchaser
and shall specify in such notice the Unlisted Assumed Contracts it elects to
have transferred to it and shall attach a draft Reassignment Agreement for the
Purchaser's review. The Purchaser shall notify the Seller within fifteen (15)
days of its receipt of such notice and draft Reassignment Agreement of any
objection it may have to the form of such agreement. The parties shall negotiate
the terms of such Reassignment Agreement in good faith and shall execute such
agreement within thirty (30) days of the Seller's notice to the Purchaser.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Survival. Subject to the limitations and other
provisions of this Agreement, the representations and warranties of the parties
hereto contained in this Agreement shall survive the Closing and shall remain in
full force and effect for a period of twelve months after the Closing Date;
provided, however, that the representations and warranties contained in (i)
Sections 3.01, 3.02, 3.03, 4.01, 4.02, and 4.03 shall survive indefinitely and
(ii) Sections 3.11, 3.12, 3.13, 3.15, 3.18 and 4.06 shall survive the Closing
and remain in full force and effect for a period of five years after the Closing
Date.
SECTION 9.02 Expenses. Except as may be otherwise specified herein,
all costs and expenses, including 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.
35
SECTION 9.03 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by overnight courier service, by facsimile (followed by delivery of a
copy via overnight courier service) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.03):
(a) if to the Seller:
MPD Technologies, Inc.
00 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telecopier: (000) 000-0000
with copies to:
Ericsson Inc.
000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to the Purchaser:
Comtech Telecommunications Corp.
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopier: (000) 000-0000
36
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 9.04 Public Announcements. Except as may be required by
applicable Law or stock exchange rules, no party to this Agreement shall make,
or cause to be made, any public announcements 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, and the parties
shall agree as to the timing and contents of any such announcement.
SECTION 9.05 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06 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 a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 9.07 Entire Agreement. The Transaction Agreements, together
with the Confidentiality Agreement, constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the Seller and the
Purchaser with respect to the subject matter hereof and except as otherwise
expressly provided herein.
SECTION 9.08 Assignment. This Agreement shall 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 (i) this
Agreement shall be binding upon the respective successors and permitted assigns
of the parties hereto and (ii) the Purchaser may assign all of its rights and
obligations hereunder to Comtech PST Corp., provided that such assignment shall
not release the Purchaser from its obligations hereunder.
SECTION 9.09 No Third-Party Beneficiaries. Except as provided in
Article VIII, this Agreement is for the sole 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 or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
37
SECTION 9.10 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the Seller and the
Purchaser.
SECTION 9.11 Governing Law; Submission to Jurisdiction; Waivers.
This Agreement shall be governed by, and construed in accordance with, the Laws
of the State of New York. The Seller and the Purchaser agree that any dispute
relating to or arising from this Agreement or the transactions contemplated
hereby shall be resolved only in the Courts of the State of New York or the
United States District Court for the Southern District of New York and the
appellate courts having jurisdiction of appeals in such courts, and the parties
hereto hereby irrevocably submit to the exclusive jurisdiction of such courts in
any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or proceeding.
SECTION 9.12 Waiver of Jury Trial. The Seller and the Purchaser
hereby irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based in contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the Seller or the Purchaser in the
negotiation, administration, performance and enforcement thereof.
SECTION 9.13 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. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.14 No Presumption. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
38
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MPD TECHNOLOGIES, INC.
By:________________________________
Name:
Title:
COMTECH TELECOMMUNICATIONS CORP.
By:________________________________
Name:
Title:
39
EXHIBIT 1.01
DESIGNATED EMPLOYEES
Xxxxx Xxxxxxxxx
Xxxx XxXxxxxxxx
Xxxx Xxxxxx
Xxxxxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxxx York
Xxxx Xxxxxxx
Xxxxx Xxxxxx
EXHIBIT 2.07
JANUARY 2001 STATEMENT OF INVENTORY
JAN 31, 2001
------------
ENDING INVENTORY (WIP) $4,512,335
ADJUSTMENTS:
13 WIRELESS 10,853
23 WIRELESS 2,588,641
J8330 BIG DASA (142,078)
J8592 BIG DASA SPARES (174,223)
J8593 DASA MW 411,698
J9035 INDRA RES 477,143
TOTAL ADJUSTMENTS 3,172,034
ADJUSTED NON-WIRELESS WIP 1,340,301
COMPONENT INVENTORY 1,268,422
TOTAL NON-WIRELESS INVENTORY 2,608,723
LESS XXXXXX IFF 345,038
TOTAL LESS XXXXXX IFF 2,263,685
LESS AERO I 520,000
TOTAL LESS AERO I $1,743,685
Exhibit 5.10 (a)
Principal Terms of Services Agreement
Purpose: To define the rights and obligations of
Comtech and MPD with respect to:
Subcontract by Comtech to MPD of (a)
manufacture of products to be shipped after
Closing Date under the Asset Purchase
Agreement (the "Purchase Agreement") and
prior to August 1, 2001 (the "Transition
Period") under customer contracts assumed by
Comtech (the "Assumed Contracts"), and (b)
warranty service to be performed during
Transition Period. The Transition Period to
be extended for up to 30 additional days,
but only with respect to any product that is
not transferred to Comtech by August 1,
2001.
Engineering support by MPD for warranty
service, production and technology transfer
and customer support during Transition
Period and for up to six months thereafter,
but limited to aggregate 1,000 hours.
Other transition assistance.
Production Jobs to be All shipments due to be shipped to customers
Subcontracted: during Transition Period under Assumed
Contracts, regardless of whether customer
has novated or consented to assignment of
contract to Comtech.
Materials, Equipment, etc.: MPD will use (a) Inventories purchased by
Comtech from MPD under the Purchase
Agreement, (b) materials received under
purchase orders assumed under the Purchase
Agreement, (c) test equipment, tools and
test equipment fixtures purchased under the
Purchase Agreement and (d) other materials
provided by Comtech (collectively, "Comtech
Assets").
Comtech will retain title to all Comtech
Assets and MPD will, with respect to such
Comtech Assets, enter into waivers
reasonably requested by Comtech's secured
lender.
Warranty Service to be All warranty service during Transition
Subcontracted: Period.
Customer Billing: MPD will, on behalf of Comtech, invoice all
shipments under the Assumed Contracts to
customers that have not novated or consented
to assignment of contract and promptly remit
customer payments to Comtech.
Comtech will directly invoice all other
customers.
Quality Assurance: MPD to assure level of workmanship
consistent with past practice.
Engineering Support: MPD engineering staff to be available to
assist in (a) production transition,
documentation review and other aspects of
technology transfer and (b) warranty service
and other customer support.
Other Transition Assistance: MPD to provide Comtech assistance during
Transition Period with respect to sales and
marketing, materials and purchasing, finance
and accounting and information technology.
MPD Compensation: For subcontracted manufacturing, MPD to be
paid amount equal to 200% of direct labor
costs and 15% of material costs.
For engineering support post-Transition
Period, MPD to be paid $130/hour.
MPD to be reimbursed for out-of-pocket
expenses for third party services (e.g.,
consulting services), not to exceed $5,000
in any month without Comtech prior consent.
MPD Personnel: With respect to engineering and other staff
required to provide engineering support and
other transition assistance, MPD will (a)
not terminate the employment of, decrease
the salary of, or otherwise materially
impair the employment terms of, such staff
and (b) will make such staff available
during normal business hours for the
performance of engineering support and other
transition assistance (provided that MPD may
terminate any employee at any time for
cause).
Exhibit 5.10 (b)
Principal Terms of License Agreement
Purposes: To provide Comtech the right to use any and
all intellectual property that is used in
the Business but is not part of the
Transferred Assets.
To provide MPD the right to use any and all
intellectual property that is part of the
Transferred Assets that was used primarily
(but not solely) in the Business.
Definitions: "Licensor" - MPD and/or Comtech, in its
capacity as a licensor under the License
Agreement.
"Licensee" - MPD and/or Comtech, in its
capacity as a licensee under the License
Agreement.
"MPD IP" - intellectual property licensed to
Comtech under the License Agreement.
"Comtech IP - intellectual property licensed
to MPD under the License Agreement.
"Licensed IP" - MPD IP and Comtech IP.
Nature of License Grants: Perpetual, worldwide, fully-paid,
royalty-free and non-exclusive, with right
of Licensee to sublicense and/or assign.
Limit of Grant: Grant is limited to intellectual property
that may be licensed by the Licensor without
violation of law or breach of any agreement
with an unaffiliated third party.
Restrictions: Comtech not to use MPD IP outside the
Business and MPD not to (a) use MPD IP or
Comtech IP for any activity prohibited by
Section 5.16 of the Purchase Agreement
or (b) sell, transfer or license MPD IP or
Comtech IP to third parties (including
affiliates) for use in any activity
prohibited by Section 5.16 of the Purchase
Agreement.
Third Party Infringement: Comtech and MPD to notify the other of any
known third party infringement of any
Licensed IP.
Each of Comtech and MPD entitled to bring
action against the third party (and retain
any recovery) if the third party is
infringing owned intellectual property, or
intellectual property licensed to it. Each
of Comtech and MPD, at its own expense, to
cooperate with the party bringing the
action.
Claims of Infringement by Third MPD to assume the defense of, and indemnify
Parties: Comtech with respect to, any third party
claim that the use of the MPD IP by Comtech
violates such party's intellectual property
rights.
