Exhibit 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
TERABEAM WIRELESS,
PROXIM CORPORATION,
PROXIM WIRELESS NETWORKS, INC.
and
PROXIM INTERNATIONAL HOLDINGS, INC.
July 18, 2005
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
July 18, 2005 (the "Signing Date"), between TERABEAM WIRELESS, the business name
of YDI Wireless, Inc., a Delaware corporation ("Purchaser") and PROXIM
CORPORATION, a Delaware corporation ("Parent"), PROXIM WIRELESS NETWORKS, INC.,
a Delaware corporation ("PWC"), and PROXIM INTERNATIONAL HOLDINGS, INC., a
Delaware corporation, ("PIH" and together with Parent and PWC, "Proxim" or
"Sellers").
PRELIMINARY STATEMENTS
A. Sellers have commenced chapter 11 cases in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") (such cases,
the "Chapter 11 Cases") and currently are operating as debtors in
possession under chapter 11 of title 11 of the United States Code, 11
U.S.C. xx.xx. 101, et seq. (the "Bankruptcy Code");
B. Subject to the approval of the Bankruptcy Court, Sellers desire to sell to
Purchaser, and Purchaser desires to purchase from Sellers, certain of
Sellers' assets, all upon the terms and subject to the conditions set
forth in this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Purchaser and Sellers, intending to be legally bound,
hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITY
1.1. Purchase and Sale of Assets.
Pursuant to Sections 363 and 365 of the Bankruptcy Code and the Sale Order
(as such term is defined in Section 9.3(a) hereof) and subject to the terms and
conditions and in reliance upon the representations and warranties contained in
this Agreement, at the Closing (as such term is defined in Section 3.1 hereof),
Sellers shall sell, transfer and assign to Purchaser, and Purchaser shall
purchase and assume from Sellers, all of Sellers' right, title and interest in,
to and under the assets, properties and rights listed in this Section 1.1,
wherever located, free and clear of any and all liens (including but not limited
to any and all "liens" as defined in Bankruptcy Code ss. 101(37)) ("Liens"),
claims (including but not limited to any and all "claims" as defined in
Bankruptcy Code ss. 101(5) and the Cure Amounts (as such term is defined in
Section 1.4 hereof) to be paid by Sellers in accordance with Section 1.4
(together, "Claims")), mortgages, deeds of trust, guarantees, security
agreements, security interests, pledges, options, hypothecations, charges,
obligations, rights, restrictions, interests and encumbrances in or with respect
to any of the following assets, properties or rights (including without
limitation any options or rights to purchase such property and any mechanic's or
tax liens or any restrictions, limitations or claims of infringement on the use
of any computer program embedded in any portion of the following assets which
constitutes goods, as that term is defined in ss. 9102(44) of the Revised
Uniform Commercial Code and any supporting information provided in connection
with the goods (collectively, "Goods") relating to the program if (i) the
program is associated with such goods in such a manner that it customarily is
considered part of such goods, or (ii) as the owner of such goods, Sellers
acquired the right to use the program in connection with such goods, whether
arising prior to or subsequent to the filing of Sellers' Chapter 11 petitions),
whether imposed by agreement, understanding, law, equity or otherwise (together,
the "Other Rights") (Liens, Claims and Other Rights are defined herein
collectively as "Encumbrances"), but excluding (y) the Excluded Assets (as such
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term is defined in Section 1.2 hereof), and (z) Encumbrances that do not have a
material adverse impact upon the Purchased Assets (as defined herein) and the
Business (as defined below) (it being agreed by the parties that Encumbrances
arising from the filing by the United States of America Federal Trade Commission
(the "FTC") of its objection motion, dated July 18, 2005, in the Chapter 11
Cases and the possible granting by the Bankruptcy Court of the relief requested
in that motion shall not be deemed to have such a material adverse impact) for
the period commencing on the Commencement Date (as defined in Section 4 below)
through the Closing Date (such assets, properties and rights, collectively, the
"Purchased Assets"):
(a) All fixed assets, machinery, equipment, development equipment, test
equipment, tools, furniture, fixtures, computers, printers, computer disks and
other computer storage devises, computer software, supplies, spare and
replacement parts (collectively, the "Fixed Assets") and Goods, including,
without limitation, those Fixed Assets and Goods listed on Schedule 1.1(a)
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hereto;
(b) All customer and supplier lists and all other information as to
sources of supply and relationships with suppliers, vendors and customers
(collectively, the "Customers and Suppliers");
(c) Originals or copies of all books, records, correspondence, files,
manuals, drawings, diagrams, computer programs, data, personnel files for
Transferred Employees (as defined in Section 11.2(a) hereof) and other
documentation directly relating to the business of Proxim (the "Business") or
the Purchased Assets or the Assumed Liabilities, reasonably required by
Purchaser (other than attorney-client privileged materials insofar as they are
not directly related to any of the Intellectual Property to enable the
continuity of legal representation in connection with the Intellectual Property)
and files of non-Transferred Employees and other books and records not directly
related to the Purchased Assets, the Assumed Liabilities assets being sold to
Purchaser or the Business (collectively, the "Records");
(d) Subject to Section 2.2(c) below, all claims and rights under those
executory contracts and unexpired leases to which any of Sellers is a party (as
an original party or through assignment made prior to or on the Closing Date) to
the extent such contracts can be assumed and assigned under applicable law, and
which Sellers and Purchaser have mutually agreed to have Sellers assume and
assign to Purchaser pursuant to Section 365 of the Bankruptcy Code, all of which
are listed on Schedule 1.1(d) hereto, provided, however, such Schedule may be
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amended at any time by Purchaser from the Signing Date through and including the
Closing (collectively, the "Assumed Contracts");
(e) All artwork and other graphic media used in, or related to, the
Business;
(f) All Intellectual Property (as defined in Section 4.8(a)(i)).
(g) All investments in and securities of the subsidiaries listed on
Schedule 1.1(g) hereto (collectively, the "Transferred Subsidiaries") and all
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investments in third parties, including any rights to purchase securities in
such third parties (collectively, "Transferred Third Party Investments"), which
such Transferred Subsidiaries and Transferred Third Party Investments are listed
on Schedule 1.1(g) hereto, provided, however, such Schedule may be amended at
any time by Purchaser from the Signing Date through and including the Closing
but that the amendment of Schedule 1.1(g) after the Signing Date shall not alter
the definition of Transferred Subsidiaries for the purposes of any other
provision of this Agreement;
(h) All inventory, including (i) finished goods inventory, (ii) raw
materials, (iii) accessories, (iv) supplies, and (v) work in process
(collectively, "Inventory"), including without limitation the Inventory listed
on Schedule 1.1(h);
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(i) All pre-paid deposits for (i) trade show attendance, (ii) equipment
leases that are Assumed Contracts, (iii) real estate leases that are Assumed
Contracts, (iv) memberships, (v) software maintenance and licensing contracts to
which Sellers are a party, and (vi) all other Assumed Contracts (collectively,
the "Pre-Paid Deposits"), including without limitation the Pre-Paid Deposits on
Schedule 1.1(i);
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(j) All rights of Sellers under express or implied manufacturer warranties
related to any of the Goods or Fixed Assets being sold to Purchaser and
described in Section 1.1(a) hereof;
(k) All accounts receivable of Sellers, including any claims or actions
with respect thereto (the "Accounts Receivable");
(l) To the extent allowable by law, all rights or causes of action arising
out of occurrences before or after the Closing Date and related to any portion
of the Business or the Purchased Assets, including third party warranties and
guarantees and all related claims, credits, insurance claims, rights of recovery
and set-off and other similar contractual rights, as to third parties held by or
in favor of Sellers and arising out of, resulting from or relating to the
Business or the Purchased Assets (collectively, "Other Claims");
(m) All accounts, deposit accounts, security deposits, cash, and
restricted cash for security for letters of credit and other obligations owed to
Winthrop Financial Services in the sum of approximately $1,500,000, investment
securities and other cash equivalents held by Sellers and general intangibles of
Sellers, including but not limited to letter of credit rights and payment
intangibles, including promissory notes and all other payment or performance
obligations and instruments in favor of Sellers (collectively, "Accounts and
General Intangibles"), including the Accounts and General Intangibles listed on
Schedule 1.1(m);
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(n) All approvals, permits, grants, licenses and authorizations from
domestic and foreign local, state and federal governmental agencies relating to
the Business, to the extent such authorizations are assignable; and
(o) All assets, properties or rights that are not otherwise Excluded
Assets.
1.2. Excluded Assets.
Notwithstanding anything contained in this Agreement to the contrary, the
following assets, properties and rights will not be included in the Purchased
Assets (the "Excluded Assets"):
(a) Sellers' equity interests or investments in subsidiaries and third
parties not specifically listed on Schedule 1.1.(g);
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(b) All avoidance actions, including those under Sections 542-544, 547-551
and 553 of the Bankruptcy Code, against entities other than Purchaser and such
other persons or entities designated by Purchaser, and any amounts or other
property received or receivable in any such actions;
(c) All executory contracts and unexpired leases of Sellers that are not
Assumed Contracts;
(d) All intercompany receivables and intercompany claims between Sellers
and any of Sellers' subsidiaries and amongst any of Sellers' subsidiaries;
(e) All insurance policies and proceeds therefrom not related to the
Purchased Assets or any insurance policies relating to interruption of the
Business occurring on and after the Commencement Date as set forth in Schedule
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1.2(e);
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(f) All attorney-client privileged materials except insofar as they are
directly related to any of the Intellectual Property to enable the continuity of
legal representation in connection with the Intellectual Property; files of
non-Transferred Employees; and other books and records, correspondence, files
and computer programs and data not directly related to the Purchased Assets or
the Business;
(g) All "employee benefit plans" (as such term is defined by Section 3(3)
of the Employee Retirement Security Act of 1974, as amended ("ERISA")),
"employee pension benefit plans" (as such term is defined by Section 3(2) of
ERISA) and all other pension, profit sharing or cash or deferred compensation
plans and trusts and assets thereof and any other employee benefit plan or
arrangement thereof, if any, maintained by Sellers or any of their Subsidiaries
or any third party on behalf of Sellers or their Subsidiaries;
(h) The consideration paid by Purchaser in connection with this Agreement;
and
(i) All assets, properties or rights listed on Schedule 1.2(i).
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1.3. Assumed Liabilities.
As of the Closing, Sellers shall assume and assign to Purchaser all
Assumed Contracts. In accordance with Section 2.2(c) hereof, Purchaser shall pay
any undertakings (payment and/or performance) necessary to cure defaults under
such Assumed Contracts, as set forth on Schedule 1.3 (collectively, the "Cure
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Amounts"). Thereafter in due course Purchaser shall pay and fully satisfy all
liabilities and obligations of Sellers associated with the Assumed Contracts
arising after the Closing Date (the "Assumed Liabilities"). Except as set forth
herein, Purchaser has not agreed to pay, shall not be required to assume, and
shall have no liability or obligation with respect to, any liability or
obligation, direct or indirect, absolute or contingent, of Sellers, including
any liabilities or obligations associated with the Assumed Contracts arising on
or before the Closing Date.
SECTION 2. PURCHASE PRICE; TAXES; PURCHASE PRICE ALLOCATION
2.1. Purchase Price.
In addition to assuming the Assumed Liabilities and, subject to Section
2.2(c) hereof and paying all amounts necessary to satisfy the Cure Amounts,
Purchaser shall pay the Adjusted Purchase Price (as defined in Section 2.2(a)).
On the Closing Date, except as otherwise ordered by the Bankruptcy Court or
agreed to by Sellers and the counterparty to an Assumed Contract, Purchaser
shall pay the Cure Amounts directly to the counterparties to such Assumed
Contracts, in each case in accordance with Sections 1.3 and 2.2(c).
2.2. Payment of Purchase Price.
(a) Closing Date Payment. Purchaser shall pay the Adjusted Purchase Price
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and any other required amounts, if any, by wire transfer of immediately
available funds to the accounts designated by Sellers in an aggregate amount
determined in accordance with the following formula: (i) the Initial Purchase
Price plus, (ii) the Qualified Accounts Receivable minus, (iii) the Threshold
Qualified Accounts Receivable minus, (iv) the DIP Loan Obligations (as such term
is defined in the DIP Loan Agreement (as defined below)) minus, (v) the Basket
Cure Amount plus, (vii) the amount, if any, that the aggregate Cure Amounts is
less than the Basket Cure Amount (the "Adjusted Purchase Price").
(b) For purposes of this Agreement,
(i) "Initial Purchase Price" means the sum of Twenty-Eight Million Dollars
($28,000,000);
(ii) "Qualified Accounts Receivable" means the sum of Five Million Seven
Hundred Thousand Dollars ($5,700,000);
(iii) "Threshold Qualified Accounts Receivable" means the sum of Eight
Million Five Hundred Thousand Dollars ($8,500,000);
(c) Cure Amounts.
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At Closing and pursuant to Section 365 of the Bankruptcy Code, Sellers
shall assume and assign to Purchaser the Assumed Contracts. The Cure Amounts, as
determined by Purchaser and the counterparties to such contracts or the
Bankruptcy Court, if any, necessary to cure all defaults, if any, and to all pay
all actual or pecuniary losses that have resulted from such defaults under the
Assumed Contracts, shall be paid by Purchaser, on the Closing Date and upon such
payment Purchaser shall have no liability for the Cure Amounts. Notwithstanding
the foregoing, in the event the actual Cure Amounts for all Assumed Contracts
required to be paid on the Closing Date in accordance with this Agreement
exceeds Two Million Dollars ($2,000,000) plus the sum of pre-petition amounts
due to certain vendors and suppliers designated by Purchaser and Sellers as
"critical vendors" up to an amount of One Million Six Hundred and Fifty Thousand
Dollars ($1,650,000) to the extent such amounts are not otherwise approved by
the Bankruptcy Court and not paid by Sellers post petition (the "Basket Cure
Amount"), then Purchaser may, by written notice to Sellers, elect to (i) pay the
amount by which the Cure Amount exceeds the Basket Cure Amount (the "Excess
Basket Cure Amount") and/or (ii) cause Sellers to reject any Assumed Contract.
No later than three (3) business days prior to the Closing, Purchaser
shall notify Sellers in writing which of the Cure Amounts in excess of the
Excess Basket Cure Amount Purchaser has elected to pay, if any. No later than
one (1) business day prior to the Closing, Sellers shall notify Purchaser in
writing which of the Cure Amounts in excess of the Excess Basket Cure Amount
Sellers have elected to pay, if any.
Upon execution of this Agreement Purchaser shall have the exclusive right
to negotiate the assumption and assignment of each Assumed Contract, including
the Cure Amount, with the counterparty to such to-be Assumed Contract.
Notwithstanding the foregoing, Sellers and any Qualified Bidder (as such term is
defined in the Bidding Procedures attached hereto as Exhibit A) other than
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Purchaser, shall have the right to negotiate the assumption and assignment of
any contracts, including the cure amounts, in connection with any competing
offer.
2.3. Purchase Price Allocation.
Not later than sixty (60) days after the Closing Date, Purchaser shall
prepare and deliver to Sellers copies of Form 8594 and any required exhibits
thereto (collectively, the "Asset Allocation Statement") allocating the Adjusted
Purchase Price (including Assumed Liabilities) among the Purchased Assets in
accordance with Section 1060 of the Internal Revenue Code and the Treasury
regulations thereunder. Sellers shall have a period of ten (10) days after
delivery of the Asset Allocation Statement (the "Allocation Response Period") to
present in writing to Purchaser notice of any objections Sellers may have to the
allocations set forth therein (an "Allocation Objection Notice"). Unless Sellers
object within such ten (10) day period, the Asset Allocation Statement shall be
binding on the parties. If Sellers shall raise any objections within the
Allocation Response Period, Purchaser and Sellers shall negotiate in good faith
and use their commercially reasonable efforts to resolve such dispute. If the
parties fail to agree within fifteen (15) days after the delivery of the
Allocation Objection Notice, then the parties shall submit the Asset Allocation
Statement and the Allocation Objection Notice to an independent accountant for
resolution. Such accountant shall resolve the dispute by selecting the proposed
allocation submitted by either Purchaser or Sellers which in the sole judgment
of such accountant most accurately allocates the Adjusted Purchase Price and the
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Assumed Liabilities among the Purchased Assets in accordance with their relative
fair market values, but not by choosing any other formulation. Such accountant
shall render such decision and report to Purchaser and Sellers in writing,
specifying the reason for its decision in reasonable detail, not later than
thirty (30) days after the item has been referred to it. The costs, fees and
expenses of the accountant shall be borne equally by Purchaser and Sellers. The
Adjusted Purchase Price shall be allocated in accordance with the Asset
Allocation Statement, as finally determined, and all income tax returns and
reports filed by Purchaser and Sellers shall be prepared consistently with such
allocation.
2.4. Cooperation on Tax Matters.
(a) Purchase and Sellers shall furnish or cause to be furnished to each
other, as promptly as practicable, such information and assistance relating to
the Purchased Assets and Assumed Liabilities as is reasonably necessary for the
preparation and filing of any tax returns, claims for refunds, or other required
or optional filings related to tax matters, for the preparation of any tax
audit, for the preparation for any tax protest, and for the prosecution or
defense of any suit or other proceeding relating to tax matters.
(b) Purchaser shall retain possession of all accounting, business,
financial, and tax records and information relating to the Purchased Assets and
the Assumed Liabilities that are in existence on the Closing Date and
transferred to Purchaser hereunder for a period of at least seven (7) years from
the Closing Date. Thereafter, Purchaser shall be permitted to destroy such
records without notice to Sellers.
2.5. Transfer Taxes.
Sellers and Purchaser shall each pay half of any and all liabilities for
any sales, use, stamp, documentary, filing, recording, transfer, real estate
transfer, stock transfer, gross receipts, registration, duty, securities
transactions, or similar fees or taxes or governmental charges (together with
any interest or penalty, addition to tax or additional amount imposed) as levied
by any taxing authority in connection with the transactions contemplated by this
Agreement (collectively, "Transfer Taxes"). Sellers, as required by applicable
law, shall timely file or cause to be filed all necessary documents (including
all tax returns) with respect to the Transfer Taxes. Nothing contained in this
Section 2.5 shall be deemed to limit any transfer tax exemption in accordance
with Section 1146(c) of the Bankruptcy Code provided for in the Sale Order.
Sellers shall further seek the inclusion in the Sale Order a provision that
Sellers' sale, transfer, assignment and conveyance of the Purchased Assets to
Purchaser hereunder shall be entitled to the protections afforded under Section
1146(c) of the Bankruptcy Code. The parties will reasonably cooperate to
minimize any such taxes, including with respect to delivery location. To the
extent that an overpayment exists with respect to Transfer Taxes, such
overpayment will be shared in equal amounts by Sellers and Purchaser.
2.6. Prorations.
All personal property taxes, or ad valorem obligations and similar
recurring taxes and fees on the Purchased Assets for taxable periods beginning
before, and ending after, the Closing Date, shall be prorated between Purchaser
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and Sellers as of 12:01 a.m. western standard time on the Closing Date. With
respect to the taxes described in this Section 2.6, Sellers shall timely file
all tax returns due before the Closing Date with respect to such taxes and
Purchaser shall prepare and timely file all tax returns due after the Closing
Date with respect to such taxes. If one party remits to the appropriate taxing
authority payment for taxes, which are subject to proration under this Section
2.6 and such payment includes the other party's share of such taxes, such other
party shall promptly reimburse the remitting party for its share of such taxes.
SECTION 3. CLOSING; CLOSING DELIVERIES.
3.1. Closing.
The transactions contemplated by this Agreement (the "Closing") shall
occur within five (5) business days after the satisfaction or waiver of the
conditions set forth in Sections 7 and 8 hereof, at the offices of Purchaser,
located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other
place and on such other date and time as Purchaser and Sellers shall mutually
agree, orally or in writing (such date being referred to herein as the "Closing
Date"), provided, however, the Closing Date shall occur no later than July 29,
2005; provided, however, by written consent of Sellers and Purchaser such
Closing Date may be extended .
3.2. Sellers' Obligations.
At the Closing, unless specified otherwise, Sellers shall deliver, cause
to be delivered or make available to Purchaser:
(a) all of the Records included in the Purchased Assets;
(b) all of the Purchased Assets, which insofar as they are tangible will
remain at the premises where they are located, provided that Sellers will not
have any on-going obligations with respect to such assets or the storage thereof
at such premises;
(c) all documents of title relating to the Purchased Assets;
(d) any applicable filings, recordations, notices and consents;
(e) all originals or copies of all Assumed Contracts and appropriate
instruments of assignment thereof;
(f) copies of resolutions of Sellers' Boards of Directors certified by a
Secretary, Assistant Secretary, or other appropriate officer of Sellers,
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated hereby;
(g) a certificate (the "Sellers Closing Certificate") setting forth
Sellers' representations and warranties that, except as expressly set forth in
the Sellers Closing Certificate, (i) each of the representations and warranties
made by Sellers in this Agreement that are qualified as to a Material Adverse
Effect shall be true and correct, and the representations and warranties made by
Sellers in this Agreement that are not so qualified shall be true and correct,
except where their failure to be true and correct does not have and would not be
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reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect, in each case on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of the
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date, in which case as of such earlier date; (ii) each of
the covenants and obligations that Sellers is required to have complied with or
performed pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all material respects; and (iii) each of the
conditions set forth in Section 7 has been satisfied in all material respects.
For purposes of this Agreement, "Material Adverse Effect" means any material
adverse effect on, or change, event, occurrence or state of facts materially
adverse to (i) the Business for the period commencing from the Commencement Date
of execution of this Agreement until Closing, or (ii) the Purchased Assets, or
(iii) Sellers' ability to, in a timely manner, perform their obligations under
this Agreement or consummate the transactions contemplated hereby, or (iv) the
Business or the Purchased Assets, as a result of any action (excluding the
issuance of any subpoenas), claim, counterclaim, demand whatsoever, whether
known or unknown, liquidated, unliquidated, fixed, contingent, material,
immaterial, disputed, undisputed, legal or equitable, held by the FTC (it being
agreed that the filing by the FTC of its objection motion, dated July 18, 2005,
in the Chapter 11 Cases and the possible granting by the Bankruptcy Court of the
relief requested in that motion does not constitute a Material Adverse Effect);
provided, that none of the following, alone or in combination, shall constitute
a Material Adverse Effect: effects, changes, events, occurrences and states of
fact to the extent caused by (w) the announcement or pendency of this Agreement
and the transactions contemplated hereby (including cancellations of or delays
in customer orders, reductions in sales, disruption in supplier, distributor,
partner or similar relationships, loss of employees to the extent so caused, or
the commencement of the Chapter 11 Cases); (x) compliance by Sellers or the
Transferred Subsidiaries with the prohibitions of, or the taking of any action
required by, this Agreement; (y) changes in the U.S. economy or the economy of
any foreign country from which Sellers derive a material portion of its
revenues, or in the wireless networking / wireless communications industry
generally (but only to the extent that such changes do not have a
disproportionately adverse effect on Sellers); or (z) failure by Purchaser to
comply with the terms of or to take actions required by this Agreement;
(h) a Xxxx of Sale in substantially the same form as attached hereto as
Exhibit B, duly executed by Sellers;
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(i) a Xxxx of Sale (Intellectual Property) in substantially the same form
as attached hereto as Exhibit C, duly executed by Sellers; and
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(j) each of the agreements and documents contemplated to be delivered by
or entered into by Sellers in connection with or pursuant to this Agreement,
duly executed by Sellers.
3.3. Purchaser's Obligations.
At the Closing, Purchaser shall deliver or cause to be delivered to
Sellers:
(a) the Adjusted Purchase Price, payable as set forth in Section 2.2;
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(b) a certificate (the "Purchaser Closing Certificate") setting forth
Purchaser's representations and warranties that, except as expressly set forth
in the Purchaser Closing Certificate, (i) each of the representations and
warranties made by Purchaser was accurate in all material respects as of the
Signing Date (to the extent that such representation and warranty related to the
Signing Date) and is accurate in all material respects as of the Closing Date as
if made on the Closing Date, (ii) each of the covenants and obligations that
Purchaser is required to have complied with or performed pursuant to this
Agreement at or prior to the Closing has been duly complied with and performed
in all material respects; and (iii) each of the conditions set forth in Section
8 has been satisfied in all material respects;
(c) An Assumption Agreement, in substantially the same form as attached
hereto as Exhibit D, duly executed by Purchaser (to be delivered to Sellers);
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and
(d) each of the agreements and documents contemplated to be delivered by
or entered into by Purchaser in connection with or pursuant to this Agreement,
duly executed by Purchaser.
3.4. Passage of Title; Risk of Loss; Effectiveness.
Legal and equitable title and risk of loss with respect to all of the
Purchased Assets shall pass to Purchaser upon conveyance, assignment or transfer
of such assets. The transactions contemplated by this Agreement to be taken at
the Closing shall be effective as of Purchaser's close of business on the
Closing Date.
3.5. Instruments of Conveyance.
At the Closing, Sellers shall (at its own expense) execute and deliver (or
cause to be delivered) to Purchaser such bills of sale, endorsements,
assignments and other good and sufficient instruments of transfer, conveyance
and assignment (in each case in a form reasonably required by Purchaser) and
shall take such other actions as may be necessary or as Purchaser may reasonably
require in order to transfer Sellers' right, title and interest to the Purchased
Assets at the Closing. Simultaneously therewith, Sellers shall take (or shall
cause to be taken) all steps necessary to put Purchaser in possession or
operating control of the Purchased Assets which are in Sellers' possession or
operating control.
3.6. Further Assurances.
Sellers shall, to the extent of their resources, at any time and from time
to time after the Closing, and notwithstanding any knowledge of Purchaser at the
time of the execution of this Agreement or the Closing, upon the request of
Purchaser, do, execute, acknowledge and deliver, and cause to be done, executed,
acknowledged or delivered, all such further commercially reasonable acts, deeds,
transfers, conveyances, assignments, powers of attorney or assurances as may be
reasonably required to transfer, assign, convey and grant all of the Purchased
Assets to Purchaser in accordance with the terms hereof; provided, however, that
this Section 3.6 shall not imply that Sellers have any obligation to participate
in any litigation involving Purchaser.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of Sellers hereby represents and warrants to Purchaser that each of
the statements in this Section 4 was true, and correct as of June 10, 2005 (the
"Commencement Date"), and subject only to such exceptions and matters as are
specifically set forth in the correspondingly numbered section and lettered
subsection of the final disclosure schedule which was originally delivered by
the Sellers to Xxxxxxx Associates, Inc. ("Xxxxxxx") on or around the
Commencement Date in connection with the asset purchase agreement among the
Sellers and Xxxxxxx dated June 10, 2005 and which has been subsequently
delivered by Sellers to Purchaser (with specific reference to the Section or
subsection of this Agreement to which the information stated in such disclosure
relates) (the "Disclosure Schedule"); provided, that disclosure in any
particular section or subsection of the Disclosure Schedule shall be deemed to
be disclosed in another section or subsection of the Disclosure Schedule if the
relevance to such other section or subsection is readily apparent from the face
of such disclosure.
For the purposes of this Section and elsewhere in the Agreement,
"Knowledge" of Sellers and Parent means, with respect to any matter in question,
the actual knowledge, after a commercially reasonable inquiry, of such Sellers'
or Parents' respective directors and officers, and of Sellers' or Parents'
respective other employees who would reasonably be expected to have knowledge of
the matter in question.
4.1. Organization, Standing and Corporate Power.
(a) Each of Sellers is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority necessary to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted except as would not be reasonably likely to have a Material Adverse
Effect. Each of Sellers is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed, qualified or in good standing, individually or in the
aggregate, has not had and would not be reasonably likely to have a Material
Adverse Effect.
(b) As of the Signing Date, each of Sellers has delivered to Purchaser
correct and complete copies of the certificates of incorporation and by-laws (or
comparable organizational documents) of each of the Transferred Subsidiaries
(the "Subsidiary Documents"), in each case as amended to the Commencement Date.
All such Subsidiary Documents are in full force and effect and neither Sellers
nor any of the Transferred Subsidiaries are in violation of any of their
respective provisions except, in the case of a subsidiary as would not be
material to Sellers.
4.2. Authority; Binding Nature of Agreements.
Each of Sellers has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to obtaining the approval of the
Bankruptcy Court, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution, delivery and
11
performance by each of Sellers of this Agreement, and the consummation by it of
the transactions contemplated by this Agreement, have been duly authorized and
approved by each of Sellers' respective Boards of Directors, and subject to
approval of the Bankruptcy Court. No other corporate action on the part of each
of Sellers is necessary to authorize the execution, delivery and performance by
each of Sellers of this Agreement and the consummation by it of the transactions
contemplated by this Agreement. From and after the Signing Date, this Agreement
has been duly executed and delivered by each of Sellers and, assuming due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of Sellers, enforceable
against Sellers in accordance with its terms, except that such enforceability
shall be subject to approval of the Bankruptcy Court and bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws of
general application affecting or relating to the enforcement of creditors'
rights generally and general principles of equity, whether considered in a
proceeding at law or in equity (the "Bankruptcy and Equity Exception").
4.3. Seller SEC Documents; Undisclosed Liabilities.
(a) The consolidated financial statements of Parent included in the
reports, schedules, forms, prospectuses, and registration, proxy and other
statements filed with the United States Securities and Exchange Commission (the
"SEC") since March 26, 2002 (inclusive) (collectively and together with all
documents filed on a voluntary basis on Form 8-K, the "Seller SEC Documents")
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited quarterly statements, as indicated in the notes thereto).
(b) To Parent's Knowledge, none of the Transferred Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except liabilities (i) as and to the extent reflected
or reserved against on the unaudited balance sheet of Parent and its
subsidiaries as of April 1, 2005 (the "Balance Sheet Date") (including the notes
thereto) as set forth in the Seller SEC Documents filed by Parent and publicly
available prior to the Commencement Date (the "Filed Seller SEC Documents") or
(ii) incurred after the Balance Sheet Date in the ordinary course of business
consistent with past practice that, individually or in the aggregate, have not
had and are not likely to have a Material Adverse Effect and (iii) liabilities
contemplated by this Agreement or the Loan and Security Agreement (the "DIP Loan
Agreement") dated as of June 10, 2005, among the Sellers, Wirelesshome
Corporation, and Xxxxxxx.
4.4. Tax Matters.
(a) To Parent's Knowledge, each of the Transferred Subsidiaries has timely
filed, or has caused to be timely filed on its behalf (taking into account any
extension of time within which to file), all material Tax Returns required to be
filed by it, and all such filed Tax Returns are correct and complete in all
material respects. All Taxes shown to be due on such Tax Returns, or otherwise
required to be paid by Sellers or any of the Transferred Subsidiaries, have been
timely paid, except those being contested in good faith. For purposes of this
Agreement: (x) "Taxes" means (A) all federal, state, local or foreign taxes,
12
charges, fees, imposts, levies or other assessments, (B) all interest,
penalties, fines, additions to tax or additional amounts imposed by any
Governmental Authority in connection with any item described in clause (A), and
(C) any transferee liability in respect of any items described in clauses (A)
and/or (B), (y) "Tax Returns" shall mean any return, report, claim for refund,
estimate, information return or statement or other similar document relating to
or required to be filed with any Governmental Authority with respect to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof, and (z) "Governmental Authority" shall mean any government, court,
arbitrator, regulatory or administrative agency, commission or authority or
other governmental instrumentality, federal, state or local, domestic, foreign
or multinational.
(b) To Parent's Knowledge, no claim has been made by a taxing authority in
a jurisdiction where Sellers or any of the Transferred Subsidiaries does not
file Tax Returns that any of Sellers or a Transferred Subsidiary is or may be
subject to taxation in that jurisdiction. No Encumbrances for Taxes exist with
respect to any assets or properties of Sellers or any of the Transferred
Subsidiaries, except for Encumbrances for Taxes not yet due or which are being
contested in good faith as set forth in Schedule 4.4(b) hereto.
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4.5. Environmental Matters.
(a) To the Knowledge of each of Sellers and the Transferred Subsidiaries:
(i) each is, and has been, in compliance in all material respects with all
applicable Environmental Laws, and (ii) no investigation, suit, claim, action or
proceeding relating to or arising under Environmental Laws is pending or
threatened against or is affecting Sellers, the Transferred Subsidiaries or the
Purchased Assets that, if decided adversely to Sellers and the Transferred
Subsidiaries, would have or would be reasonably likely to have a Material
Adverse Effect, (iii) neither Sellers nor any of the Transferred Subsidiaries is
aware of any notice of any obligation, liability, order, settlement, judgment,
injunction or decree relating to or arising under Environmental Laws which would
be reasonably likely to result in a Material Adverse Effect.
(b) For purposes of this Agreement:
(i) "Environmental Laws" means all Laws relating in any way to the
environment, preservation or reclamation of natural resources, the presence,
management or Release of, or exposure to, Hazardous Materials, or to human
health and safety, including the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 5101 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean Water Act
(33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.),
the Safe Drinking Water Act (42 U.S.C. ss. 300f et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. ss. 651 et seq.), each of their state and local
counterparts or equivalents, each of their foreign and international
equivalents, and any transfer of ownership notification or approval statute
(including the Industrial Site Recovery Act (N.J. Stat. Xxx. ss. 13:1K-6 et
seq.)), as each has been amended and the regulations promulgated pursuant
thereto.
(ii) "Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
13
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any violation of
Environmental Law, whether known or unknown, accrued or contingent, to the
extent based upon, related to, or arising under or pursuant to any Environmental
Law, environmental permit, order or agreement with any Governmental Authority or
other Person.
(iii) "Hazardous Materials" means any material, substance of waste that is
regulated, classified, or otherwise characterized under or pursuant to any
Environmental Law as "hazardous", "toxic", a "pollutant", a "contaminant",
"radioactive" or words of similar meaning or effect.
(iv) "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing of or
migrating into or through the environment or any natural or man-made structure.
4.6. Contracts.
(a) For purposes of this Agreement, "Material Contract" means:
(i) all executory contracts required to be listed on Schedule G of the
bankruptcy schedules of assets and liabilities filed by Sellers in the Chapter
11 Cases;
(ii) all material contracts containing any covenant or provision which by
its terms materially limits, curtails or restricts the ability of any of Sellers
or any of the Transferred Subsidiaries to engage in any material line of
business, make use of any Purchased Asset or compete with any entity or person
in any material line of business;
(iii) all indentures, loan or credit agreements, pledge or security
agreements, mortgages, guarantees, promissory notes and contracts relating to or
evidencing indebtedness for borrowed money of any of Sellers or any of their
subsidiaries or granting an Encumbrance on any material property or assets of
any of Sellers or any of the Transferred Subsidiaries;
(iv) any material non-competition agreement or any other agreement or
obligation which limits or purports to limit in any respect the manner in which,
or the localities in which, the business of any of Sellers or any of their
Transferred Subsidiaries may be conducted;
(v) any material partnership, joint venture or strategic alliance (or any
contract substantially similar to any of the foregoing);
(vi) any material customer, client or supply contract that involves or is
reasonably likely to involve (i) with respect to customer and client contracts,
any of Sellers' top 20 customers and clients as a percentage of revenue in
fiscal year 2004 and the first fiscal quarter of 2005, with such customers and
clients representing approximately 80% of Sellers' revenue in fiscal year 2004
and the first fiscal quarter of 2005 taken as a whole, and (ii) with respect to
supply contracts, any of Sellers' top 20 suppliers as a percentage of Sellers'
cost of goods sold in fiscal year 2004 and the first fiscal quarter of 2005
taken as a whole, with such suppliers representing approximately 80% of Sellers'
cost of good sold in fiscal year 2004 and the first fiscal quarter of 2005;
14
(vii) any Assumed Contract;
(viii) licenses relating to Intellectual Property used in the Sellers'
current Products;
(ix) any commitment or agreement to enter into any of the foregoing; or
(x) all other contracts of such type entered into in accordance with
Section 6.1.
(b) Section 4.6 of the Disclosure Schedule sets forth a correct and
complete list of Sellers' Material Contracts. Sellers have, on or before the
Signing Date, delivered, or, in the case of those Material Contracts described
by Section 4.6(a)(i), made available to Purchaser correct and complete copies of
each Material Contract in force as of the Commencement Date, together with any
and all material amendments and supplements thereto.
(c) Each of the Material Contracts is valid, binding and in full force and
effect and is enforceable in accordance with its terms by Sellers and their
subsidiaries party thereto, provided, however, that such enforceability may be
limited by and is subject to Bankruptcy and Equity Exceptions. Except as set
forth in Section 4.6 of the Disclosure Schedule, neither Sellers nor any of
their subsidiaries are in default under any Material Contract to which Sellers
or any of their subsidiaries are a party (collectively, the "Seller Contracts"),
nor does any condition exist that, with notice or lapse of time or both, would
constitute a material default thereunder by Sellers and their subsidiaries. To
Parent's knowledge, neither Sellers nor any of the Transferred Subsidiaries has
received any written notice of termination or cancellation under any Material
Contract, received any written notice of breach or default in any material
respect under any Material Contract which breach has not been cured, or granted
to any third party any rights, adverse or otherwise, that would constitute a
breach of any Material Contract in any material respect.
4.7. Title to Property.
Each of Sellers and its subsidiaries has good and valid title to all
Purchased Assets (exclusive of Intellectual Property Rights and Technology),
free and clear of all Encumbrances except (x) landlord liens, mechanics liens
and statutory liens securing payments not yet due, (y) Encumbrances that are
disclosed in Section 4.7 of the Disclosure Schedule, and (z) Permitted
Encumbrances and such other imperfections or irregularities of title that,
individually or in the aggregate, do not and would not be reasonably likely to
materially adversely affect the use of the properties or assets subject thereto
or otherwise materially impair business operations as presently conducted.
For the purposes of this Agreement "Permitted Encumbrances" means (i)
liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith; (ii) liens
of carriers, warehousemen, mechanics, materialmen, vendors, and landlords
incurred in the ordinary course of business for sums not overdue, payable
without penalty or being contested in good faith; (iii) deposits under workers'
compensation, unemployment insurance and social security laws or to secure the
performance of bids, tenders, contracts or leases, or to secure statutory
obligations of surety or appeal bonds or to secure indemnity, performance or
other similar bonds in the ordinary course of business; (iv) easements,
15
reservations, rights of way, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances affecting real property in a
manner not materially or adversely affecting the value or use of such property;
(v) liens arising under this Agreement; (vi) liens in favor of Silicon Valley
Bank arising pursuant to the Loan and Security Agreement, dated December 27,
2002, as amended from time to time; (vii) liens securing obligations under a
capital lease if such liens do not extend to property other than the property
leased under such capital lease, and any accessions, replacements, substitutions
and proceeds (including insurance proceeds) thereof or thereto; (viii) liens
upon any equipment to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, so long as such lien extends only to the equipment financed, and
any accessions, replacements, substitutions and proceeds (including insurance
proceeds) thereof or thereto; (ix) liens in favor of customs and revenue
authorities arising as a matter of law to secure payments of customs duties in
connection with the importation of goods; (x) liens in favor of a bank or
securities intermediary with respect to fees and similar charges, whether
arising by law or by contract; (xi) liens on insurance proceeds in favor of
insurance companies granted solely as security for financed premiums; (xii) the
Warburg Group Liens (as such term is defined in the order approving the DIP
Financing); and (xiii) Encumbrances that do not have a material adverse impact
upon the Purchased Assets and the Business for the period commencing on the
Commencement Date.
4.8. Intellectual Property.
(a) For purposes of this Agreement:
(i) "Intellectual Property" means all Intellectual Property Rights of
Sellers and the Transferred Subsidiaries.
(ii) "Products" means all products of Sellers made commercially available
by Sellers at the Closing Date.
(iii) "Technology" means collectively, all designs, formulas, algorithms,
procedures, techniques, ideas, know-how, Software (whether in source code,
object code or human readable form), databases and data collections, Internet
websites and web content, tools, inventions (whether patentable or unpatentable
and whether or not reduced to practice), invention disclosures, developments,
creations, improvements, works of authorship, other similar materials and all
recordings, graphs, drawings, reports, analyses, other writings and any other
embodiment of the above, in any form or media, whether or not specifically
listed herein, and all related technology, documentation and other materials
used in, incorporated in, embodied in or displayed by any of the foregoing, or
used or useful in the design, development, reproduction, maintenance or
modification of any of the foregoing necessary for the conduct of the business
of Sellers or any of their subsidiaries, presently conducted.
(iv) "Intellectual Property Rights" shall mean all of the rights arising
from or in respect of the following, whether protected, created or arising under
the Laws of the United States or any foreign jurisdiction: (A) patents, patent
applications, any reissues, reexaminations, divisionals, continuations,
continuations-in-part and extensions thereof (collectively, "Patents"); (B)
trademarks, service marks, trade names (whether registered or unregistered),
service names, industrial designs, brand names, brand marks, trade dress rights,
16
Internet domain names, identifying symbols, logos, emblems, signs or insignia,
and including all goodwill associated with the foregoing (collectively,
"Marks"); (C) copyrights, whether registered or unregistered (including
copyrights in computer software programs), mask work rights and registrations
and applications therefore (collectively, "Copyrights"); (D) trade secrets in
each case excluding any rights in respect of any of the foregoing that comprise
or are protected by Copyrights or Patents (collectively, "Trade Secrets"); and
(E) all applications, registrations and permits related to any of the foregoing
clauses (A) through (D).
(v) "Publicly Available Software" means any open source or free Software
(including any Software licensed pursuant to a GNU public license) or other
Software, in each case that requires as a condition of use, modification or
distribution that other Software incorporated into, derived from or distributed
with such Software (a) be disclosed or distributed in source code form, (b) be
licensed for the purpose of making derivative works or (c) be redistributable at
no charge.
(vi) "Software" means computer programs, including any and all software
implementations of algorithms, models and methodologies whether in source code,
object code or other form, databases and compilations, including any and all
data and collections of data, descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing and all
documentation, including user manuals and training materials related to any of
the foregoing.
(b) With respect to the representations and warranties in this Section and
except as otherwise noted, Intellectual Property means all Intellectual Property
Rights of Sellers and the Transferred Subsidiaries used in the Products, or
necessary for the conduct of the business of Sellers or the Transferred
Subsidiaries, as presently conducted.
(c) Section 4.8(c) of the Disclosure Schedule sets forth an accurate and
complete list of all Patents, registered Marks, pending applications for
registrations of any Marks and any unregistered Marks, registered Copyrights and
pending applications for registration of any Copyrights owned or filed by
Sellers or any of their subsidiaries. Section 4.8(c) of the Disclosure Schedule
lists the record owner of each such Intellectual Property Right, the
jurisdictions in which each such Intellectual Property Right has been issued or
registered or in which any application for such issuance and registration has
been filed, and any proceedings or actions before any court, tribunal relating
to any such Intellectual Property Right.
(d) With respect to the Intellectual Property, all necessary registration,
maintenance and renewal fees currently due in connection with such material
items of Intellectual Property have been paid and all necessary documents and
certificates in connection with such material items of Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Intellectual Property.
(e) Except as set forth in Section 4.8(e) to the Disclosure Schedule, the
Intellectual Property owned by Sellers will be fully transferable to Purchaser
and the Material Contracts pursuant to which any of Sellers has licensed
Intellectual Property to Sellers, or any of them, will be fully assumable by
17
Purchaser, without restriction and without payment of any kind to any third
party, except for inbound "shrink-wrap" and generally available commercial
binary code end-user or enterprise licenses and except for technology in the
public.
(f) Except as set forth in Section 4.8(f) to the Disclosure Schedule, each
material item of Intellectual Property and all Intellectual Property licensed to
Sellers or any of their subsidiaries on an exclusive basis, is free and clear of
any Encumbrance.
(g) To Parent's Knowledge, except as set forth in Section 4.8(g) of the
Disclosure Schedule, no Intellectual Property owned by or exclusively licensed
to Sellers or any of their subsidiaries is subject to any proceeding or
outstanding order, holding, ruling, or judgment of any court of competent
jurisdiction that restricts in any manner the use, transfer or licensing thereof
by Sellers or any of their Subsidiaries or which would be reasonably likely to
adversely affect the validity, use, or enforceability of such Intellectual
Property.
(h) To Parent's Knowledge, except as set forth in Section 4.8(h) to the
Disclosure Schedule, all Material Contracts pursuant to which Sellers have
licensed Intellectual Property are in full force and effect and the consummation
of the transactions contemplated by this Agreement will not result in the
breach, modification, cancellation, termination or suspension of such Contracts
pursuant to which Sellers have licensed Intellectual Property.
(i) To Parent's Knowledge, no Intellectual Property is subject to
restriction, constraint, control, supervision or limitation imposed by any
governmental authority as a result of: (i) the use of government funding,
facilities of a university, college, other educational institution or research
center or funding from third parties in the development of any Intellectual
Property owned by or exclusively licensed to the Sellers or any of its
subsidiaries; or (ii) the involvement in, contribution to, or creation or
development of any Intellectual Property owned by or exclusively licensed to the
Sellers or any of its subsidiaries by any current or former employee, consultant
or independent contractor of the Sellers who performed services for the
government, university, college, or other educational institution or research
center during a period of time during which such employee, consultant or
independent contractor was also performing services for the Sellers or any of
its subsidiaries.
(j) To Parent's Knowledge, the manufacturing, licensing, marketing,
importation, offer for sale, sale or use of the Products do not infringe,
constitute an unauthorized use of or misappropriate any Intellectual Property
Rights of any third person or constitute unfair competition or trade practices
under the laws of any jurisdiction.
(k) To the Knowledge of Sellers, no Trade Secret material to the
businesses of Sellers or any of their subsidiaries as presently conducted has
been authorized to be disclosed or has been actually disclosed by Sellers or any
of their subsidiaries to any employee or any third Person other than pursuant to
a confidentiality or non-disclosure agreement restricting the disclosure and use
of the confidential Intellectual Property. Sellers and their subsidiaries have
taken all reasonably necessary and appropriate steps to protect and preserve the
confidentiality of all Trade Secrets.
(l) To Parent's Knowledge, Section 4.8(l) of the Disclosure Statement sets
forth a correct and complete list of all Software that is (i) owned exclusively
18
by Sellers or any of their subsidiaries; or (ii) used by Sellers or their
subsidiaries in their businesses and not exclusively owned by Sellers or their
subsidiaries or available on reasonable terms through commercial distributors or
in consumer retail stores, in each case that is material to the operation of
their businesses as presently conducted.
(m) No Publicly Available Software is, in whole or in part, embodied or
incorporated into any of the Products.
(n) To Parent's Knowledge, Sellers own, lease or license all Software,
hardware, databases, computer equipment and other information technology
(collectively, "Computer Systems") that are necessary for the operations of the
Business as presently conducted.
(o) To Parent's Knowledge, neither Sellers nor any of their subsidiaries
has disclosed or delivered to any party, or permitted the disclosure or delivery
to any party of, any Source Code (as defined below). Section 4.8(o) of the
Disclosure Schedule identifies each contract by and between any of Sellers or
any of their subsidiaries, and any escrow agents pursuant to which any of
Sellers or any of their subsidiaries has deposited, or is or may be required to
deposit, with an escrow holder or any other party, any Source Code and further
describes whether the execution of this Agreement or the consummation of the
transaction contemplated by this Agreement, in and of itself, would reasonably
be expected to result in the release from escrow of any Source Code. As used in
this Section 4.8(o), "Source Code" means any source code of the software or of
any portion or aspect of the software, or any material proprietary information
or algorithm contained in or relating to any software source code, in each case
of any Product or any product or technology currently under development by
Sellers or any of their subsidiaries.
4.9. Insurance, Claims and Warranties.
Section 4.9 of the Disclosure Schedule sets forth a correct and complete
list of all casualty insurance policies related to the Purchased Assets
maintained by Sellers or the Transferred Subsidiaries (the "Policies"). The
Policies (i) have been issued by insurers which, to the Knowledge of Sellers,
are reputable and financially sound, (ii) provide coverage for the Purchased
Assets in a manner in keeping with the nature of the Purchased Assets and
customary practice in the industries in which Sellers and the Transferred
Subsidiaries operate and (iii) are in full force and effect. No notice of
cancellation or termination has been received by Sellers with respect to any of
the Policies.
4.10. Inventories; Accounts Receivable; Customers and Suppliers.
(a) As of the date the Chapter 11 Cases are commenced, the Inventory is in
good and marketable condition, and are usable and saleable in the ordinary
course of business. The reserves reflected in Sellers' consolidated balance
sheet as of the Balance Sheet Date for obsolete, excess, damaged or otherwise
unusable Inventory were calculated in a manner consistent with past practice and
in accordance with GAAP consistently applied and are believed by Sellers in good
faith to be adequate.
(b) As of the date the Chapter 11 Cases are commenced: (i) all Accounts
Receivable have arisen from bona fide transactions in the ordinary course of
business consistent with past practice and are payable on ordinary trade terms;
19
(ii) all Accounts Receivable reflected on Sellers' consolidated balance sheet as
of the Balance Sheet Date or arising after the date thereof are good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts reflected thereon, which reserves
Sellers believe in good faith are adequate and which were calculated in a manner
consistent with past practice and in accordance with GAAP consistently applied;
and (iii) none of the Accounts Receivable (x) are subject to any setoffs or
counterclaims or (y) represent obligations for goods sold on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement.
(c) Schedule 4.10(c) sets forth a list of the twenty (20) largest
----------------
customers and the twenty (20) largest suppliers of Sellers and the Transferred
Subsidiaries, as measured by the dollar amount of purchases therefrom or
thereby, during the fiscal year ended December 31, 2004 and the fiscal period
ended April 1, 2005, taken together, showing the total sales by Sellers and the
Transferred Subsidiaries to each such customer and the total purchases by
Sellers and the Transferred Subsidiaries from each such supplier.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants, to and for the benefit of Sellers, that
(a) it is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite power and
authority to enter into and perform its obligations under this Agreement,
including approval of Purchaser's Board of Directors, (b) limited by and subject
to the Bankruptcy and Equity Exception, the execution, delivery and performance
of this Agreement has been duly authorized by all necessary corporate action,
limited by and subject to Bankruptcy and Equity Exceptions, (c) subject to the
entry of the Sale Order, this Agreement constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, and (d) that as of the Signing Date it has or has access to sufficient
funds to provide financing to Sellers on the terms contemplated by this
Agreement.
SECTION 6. COVENANTS OF SELLERS AND PURCHASER
6.1. Conduct of the Business Prior to Closing.
Except (i) as expressly permitted by this Agreement, (ii) as disclosed in
Section 6.1 of the Disclosure Schedule, (iii) with the written consent of
Purchaser (which shall not be unreasonably withheld or delayed) or (iv) as
required by applicable Law, during the period from the Commencement Date until
the Closing, Sellers shall, and shall cause each of the Transferred Subsidiaries
to, using commercially reasonable efforts: (w) conduct their business, (x)
comply in all material respects with all applicable Laws and, subject to any
change permitted pursuant Section 6.1 and the provisions of the Bankruptcy Code,
and the requirements of all Material Contracts, (y) maintain and preserve intact
its business organization and the goodwill of those having business
relationships with it and retain the services of its present officers and key
employees, in each case, to the end that its goodwill and ongoing business shall
be unimpaired at the Closing and (z) keep in full force and effect all material
insurance policies as identified in Schedule 6.1 maintained by Sellers and the
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Transferred Subsidiaries. Without limiting the generality of the foregoing,
except (i) as expressly permitted by this Agreement (ii) as disclosed in Section
20
6.1 of the Disclosure Schedule, (iii) with the written consent of Purchaser
(which shall not be unreasonably withheld or delayed) or (iv) as required by
applicable Law, during the period from the Commencement Date to the Closing:
(a) None of the Transferred Subsidiaries shall issue, sell, grant, dispose
of, pledge or otherwise encumber any shares of its capital stock, voting
securities or equity interests, or any securities or rights convertible into,
exchangeable or exercisable for, or evidencing the right to subscribe for any
shares of its capital stock, voting securities or equity interests, or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of its capital stock, voting
securities or equity interests or any securities or rights convertible into,
exchangeable or exercisable for, or evidencing the right to subscribe for, any
shares of its capital stock, voting securities or equity interests;
(b) None of the Transferred Subsidiaries shall incur or assume any
indebtedness for borrowed money or guarantee any indebtedness (or enter into a
"keep well" or similar agreement) or issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Transferred Subsidiaries, other than borrowings by the Transferred Subsidiaries
from Xxxxxxx under the DIP Loan Agreement, or except as otherwise agreed to in
writing by Purchaser. None of the Transferred Subsidiaries are obligated or
indebted for any intercompany receivables or intercompany claims owed to an
affiliate not constituting a Transferred Subsidiary; alternatively, none of the
Sellers and its respective estates or successors shall pursue any such
intercompany receivables or intercompany claims against the Transferred
Subsidiaries and such intercompany receivables or intercompany claims shall be
deemed released as of the Closing Date.
(c) None of the Transferred Subsidiaries shall sell, transfer, lease,
mortgage, encumber or otherwise dispose of or subject to any Encumbrance
(including pursuant to a sale-leaseback transaction or an asset securitization
transaction), other than a Permitted Encumbrance, any of the Purchased Assets
(including the securities of the Transferred Subsidiaries) or any material
assets outside the ordinary course of business of the Transferred Subsidiaries
to any entity or person, except (i) sales of inventory or used equipment in the
ordinary course of business consistent with past practice, (ii) pursuant to
contracts in force on the Commencement Date and listed on Section 6.1(c) of the
Disclosure Schedule, correct and complete copies of which have been made
available to Purchaser, or (iii) dispositions of obsolete or worthless assets;
(d) Neither Sellers nor the Transferred Subsidiaries shall directly or
indirectly acquire by merging or consolidating with, or by purchasing all of or
a substantial equity interest in, or by any other manner, any Person or
division, business or equity interest of any Person or any assets other than in
the ordinary course of business of Sellers or the Transferred Subsidiaries or up
to amounts set forth in the Budget (as such term is defined in the DIP Loan
Agreement);
(e) Neither Sellers nor the Transferred Subsidiaries shall make any
investment (by contribution to capital, property transfers, purchase of
securities or otherwise) in, or loan or advance (other than travel and similar
advances to its employees in the ordinary course of business consistent with
past practice) to, any entity or person other than a direct or indirect wholly
owned subsidiary of Sellers in the ordinary course of business;
21
(f) (i) Neither Sellers nor the Transferred Subsidiaries shall enter into,
terminate, reject or amend any Material Contract (other than the amendment of a
Material Contract described by Section 4.6(a)(vii) in the ordinary course of
business consistent with past practice), (ii) Neither Sellers nor the
Transferred Subsidiaries shall enter into, terminate or amend any other contract
that is material to Sellers and their subsidiaries taken as a whole (other than
the amendment of an existing customer, client or supply contract in the ordinary
course of business consistent with past practice), (iii) Neither Sellers nor the
Transferred Subsidiaries shall enter into or extend the term or scope of any
contract that purports to restrict Sellers, or any existing or future subsidiary
or affiliate of Sellers, from engaging in any line of business or in any
geographic area, (iv) Neither Sellers nor the Transferred Subsidiaries shall
enter into any contract that would be breached by, or require the consent of any
third party in order to continue in full force following, consummation of the
transactions contemplated by this Agreement, or (vi) Neither Sellers nor the
Transferred Subsidiaries shall release any entity or person from, or modify,
waive or fail to enforce any provision of, any confidentiality, standstill or
similar agreement;
(g) Neither Sellers nor the Transferred Subsidiaries shall amend their
respective certificates of incorporation and by-laws (or comparable
organizational documents);
(h) Neither Sellers nor the Transferred Subsidiaries shall adopt a plan or
agreement of complete or partial liquidation, dissolution, restructuring,
recapitalization, merger, consolidation or other reorganization (other than
transactions exclusively between wholly owned subsidiaries of Sellers), other
than a plan of reorganization or liquidation proposed in the Chapter 11 Cases.
Such plan may not alter, amend, or be contrary to the provisions of this
Agreement and the transactions contemplated hereby;
(i) The Transferred Subsidiaries shall not pay, discharge, settle or
satisfy any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) except (A) in the ordinary course of
business in an amount not exceeding Five Thousand Dollars ($5,000) in the case
of any individual claim, liability or obligation and Fifty Thousand Dollars
($50,000) in the aggregate to any other person; and (B) those obligations as set
forth in the Budget;
(j) Neither Sellers nor the Transferred Subsidiaries shall enter into any
compromises or settlements with respect to the Accounts Receivable, nor
consummate any such compromises or settlements;
(k) Neither Sellers nor the Transferred Subsidiaries shall issue any
broadly distributed communication of a general nature to employees (including
general communications relating to benefits and compensation) or customers
without the prior approval of Purchaser, except communications in the ordinary
course of business that do not relate to the transactions contemplated by this
Agreement; provided, however, that the Sellers or the Transferred Subsidiaries,
as the case may be, may issue such communications without the prior approval of
Purchaser in the event that Purchaser fails to make an authorized representative
reasonably available to the Sellers and the Transferred Subsidiaries for the
prompt review and approval of such communications;
22
(l) The Transferred Subsidiaries shall not settle or compromise any
litigation, proceeding or investigation except as would not be reasonably likely
to cause a Material Adverse Effect;
(m) Sellers shall not enter into any other letter of intent or agreement
to sell any or all of the Purchased Assets nor seek approval of the Bankruptcy
Court for such a letter of intent, unless and until either (i) the Bankruptcy
Court denies or declines to enter the Bidding Procedures Order or (ii) this
Agreement terminates in accordance with the provisions of Section 9.4 hereof; or
(n) Prior to the Closing Date, Sellers shall not initiate any preference
or other claims against any counterparties to the Assumed Contracts to the
extent that such claims would give rise to additional Cure Amounts.
6.2. Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement (including
Section 6.2(c)), each of the parties hereto shall cooperate with the other
parties and use (and shall cause their respective subsidiaries to use) their
respective commercially reasonable efforts promptly to (i) take, or cause to be
taken, all actions, and do, or cause to be done, all things, necessary, proper
or advisable to cause the conditions to Closing to be satisfied as promptly as
reasonably practicable and to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
and (ii) obtain all approvals, consents, registrations, permits, authorizations
and other confirmations from the Bankruptcy Court or third party necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement.
(b) Each of the parties hereto shall use its commercially reasonable
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission with the Bankruptcy Court or a Governmental Authority in
connection with the transactions contemplated by this Agreement and in
connection with any investigation or other inquiry by or before a Governmental
Authority relating to the transactions contemplated by this Agreement, including
any proceeding initiated by a private party, and (ii) keep the other party
informed in all material respects and on a reasonably timely basis of any
material communication received by such party from or given by such party to any
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated by this Agreement. Subject to applicable Laws
relating to the exchange of information, each of the parties hereto shall have
the right to review in advance, and to the extent practicable each will consult
the other on, all the information relating to the other parties and their
respective Subsidiaries, as the case may be, that appears in any filing made
with, or written materials submitted to, the Bankruptcy Court or any third party
and/or any Governmental Authority in connection with the transactions
contemplated by this Agreement.
(c) In furtherance and not in limitation of the covenants of the parties
contained in this Section 6.2, each of the parties hereto shall use its
commercially reasonable efforts to resolve such objections, if any, as may be
asserted or raised by the Bankruptcy Court, any party in interest to the Chapter
11 Cases, a Governmental Authority or other Person with respect to the
23
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement, Sellers shall not, without Purchaser's
prior written consent, commit to any divestiture transaction or agree to any
restriction on its business, and nothing in this Section 6.2. shall (i) limit
any applicable rights a party may have to terminate this Agreement pursuant to
Section 9.4 so long as such party has up to then complied in all material
respects with its obligations under this Section 6.2, or (ii) require Purchaser
or Sellers to offer, accept or agree to (A) dispose or hold separate any part of
its or Sellers' businesses, operations, assets or product lines (or a
combination of Purchaser's and Sellers respective businesses, operations, assets
or product lines), (B) not compete in any geographic area or line of business,
and/or (C) restrict the manner in which, or whether, Purchaser or Sellers or any
of their affiliates may carry on business in any part of the world, in the case
of (A), (B) or (C) as would be material to Purchaser or Sellers.
(d) [Intentionally Omitted].
6.3. Public Announcements.
Neither Sellers nor Purchaser shall issue or cause the publication of any
press release or other public announcement (to the extent not previously issued
or made in accordance with this Agreement) with respect to this Agreement or the
transactions contemplated herein without the prior consent of the other party
(which consent shall not be unreasonably withheld or delayed), except as may be
required by Law, court process or by any applicable listing agreement with a
national securities exchange or Nasdaq as determined in the good faith judgment
of the party proposing to make such release (in which case such party shall not
issue or cause the publication of such press release or other public
announcement without prior consultation with the other party to the extent
practicable).
6.4. Certain Notifications.
(a) Sellers shall (as such acts are applicable to Sellers):
(1) Promptly notify Purchaser of (i) any action taken by Sellers, or any
circumstance or event, that could reasonably be expected to have a Material
Adverse Effect and (ii) any fact, circumstance, event, or action affecting the
Purchased Assets (A) which, if known at the Commencement Date, would have been
required to be disclosed in or pursuant to this Agreement or (B) the existence,
occurrence or taking of which would result in any of the representations and
warranties of Sellers contained in this Agreement or any agreement contemplated
to be delivered by or entered into by Sellers in connection with or pursuant to
this Agreement not being true and correct in all material respects as of the
Commencement Date or at the Closing, provided, however, if there is (i) any
action taken by Sellers, or any circumstance or event, that could reasonably be
expected to have a Material Adverse Effect and (ii) any fact, circumstance,
event, or action affecting the Purchased Assets (A) which, if known at the
Commencement Date, would have been required to be disclosed in or pursuant to
this Agreement or (B) the existence, occurrence or taking of which would result
in any of the representations and warranties of Sellers contained in this
24
Agreement or any agreement contemplated to be delivered by or entered into by
Sellers in connection with or pursuant to this Agreement not being true and
correct in all material respects as of the Commencement Date or at the Closing,
Purchaser shall be permitted to terminate this Agreement in accordance with the
provisions of Section 9.4 hereof.
(2) Promptly notify Purchaser regarding any material breach of any
covenant or obligation of Sellers hereunder; and
(3) Promptly notify Purchaser in writing of the occurrence of any
circumstance or event which will result in, or could reasonably be
expected to result in, the failure of Sellers to timely satisfy any of the
closing conditions specified in Section 7 of this Agreement.
(b) From the Signing Date until the Closing Date, Purchaser shall:
(1) Promptly notify Sellers in writing of the occurrence of any
circumstance or event which will result in, or could reasonably be
expected to result in, the failure of Purchaser to timely satisfy any of
the closing conditions specified in Section 8 of this Agreement; and
(2) Promptly forward to Sellers a copy (unless already served on
Sellers' counsel) of any notice, application, motion, objection, response,
proposed order or other documents or pleadings relating in any way to this
Agreement or the transactions contemplated hereby or thereby (together
with a true and correct copy of any such documents or pleadings).
6.5. Access to Personnel and Information.
From the Signing Date until the Closing Date, Sellers shall make all
commercially reasonable efforts to (a) permit Purchaser and its representatives
to have free and reasonable access at all reasonable times and upon reasonable
advance notice, and in a manner so as not to interfere with the normal business
operations of Sellers, to all premises, properties, personnel, persons and
entities having business relationships with Sellers in respect of the Purchased
Assets (including landlords, telecommunications service providers, investors,
customers and distributors), books, records (including tax records), contracts,
and documents of Sellers to the extent related to the Purchased Assets, (b)
permit Purchaser to consult with present and former personnel and consultants of
Sellers, and (c) furnish Purchaser with all financial, operating and other data
and information related to the Purchased Assets as Purchaser may reasonably
request. No information or knowledge obtained in any investigation pursuant to
this Section 6.5 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the transactions contemplated hereby.
6.6. Rejection of Contracts.
Except for those Material Contracts listed in Schedule 6.6, Sellers shall
------------
not seek to have any Material Contracts related to the Business rejected in the
Chapter 11 Cases until after the Closing Date.
6.7. Updated Cure Amounts.
Prior to the date of the hearing by the Bankruptcy Court approving this
Agreement and the transactions contemplated thereunder (the "Approval Hearing"),
Sellers shall provide to Purchaser any communications or pleadings received by
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Sellers reflecting or asserting a cure amount that is different than the
corresponding Cure Amounts described in Schedule 1.3, and Schedule 1.3 shall be
------------ ------------
accordingly amended.
6.8. Post-Closing Covenants.
(a) After the Closing, Sellers and Purchaser, as applicable, shall use
commercially reasonable efforts to deliver to Sellers or Purchaser, as
applicable, (A) any mail, packages and other communications addressed to Sellers
or Purchaser, as applicable, and relating to the Purchased Assets that properly
belongs to Sellers or Purchaser, as applicable, and (B) any cash, securities or
other property Sellers or Purchaser, as applicable, receives that properly
belongs to Sellers or Purchaser, as applicable.
(b) Sellers shall, for a period of one (1) year after the Closing Date, at
Purchaser's request, provide Purchaser and its representatives with access to
and the right to make copies of all remaining records and documents related to
the Purchased Assets, possession of which is retained by Sellers, as may be
necessary or useful in connection with Purchaser's use of the Purchased Assets
after the Closing. If during such period Sellers elects to dispose of such
records and documents, Sellers shall give Purchaser thirty (30) days' prior
written notice, during which period Purchaser shall have the right to take such
records and documents without further consideration.
SECTION 7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Purchased Assets, assume the
Assumed Contracts and take the other actions required to be taken by Purchaser,
on the Closing Date, are subject to the satisfaction, at or prior to the Closing
of the following conditions (any of which may be waived by Purchaser, in whole
or in part):
7.1. Accuracy of Representations.
The representations and warranties made by Sellers in this Agreement that
are qualified as to a Material Adverse Effect shall be true and correct, and the
representations and warranties made by Sellers in this Agreement that are not so
qualified shall be true and correct except where their failure to be true and
correct does not have and would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect, in each case on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date, in
which case as of such earlier date, as confirmed in the Sellers Closing
Certificate executed by the responsible officer of Sellers.
7.2. Performance of Obligations.
Sellers shall have performed and complied in all material respects with
all obligations and agreements required in this Agreement to be performed or
complied with by them prior to Closing Date, and Purchaser shall have received
the Sellers Closing Certificate signed by an authorized officer of Sellers (in
form and substance reasonably satisfactory to Purchaser), dated as of the
Closing Date, to such effect.
26
7.3. [Intentionally Omitted.]
7.4. Court Approvals; No Injunction.
(a) [Intentionally Omitted]
(b) The Court shall have entered the Sale Order, in form and substance
reasonably acceptable to Purchaser.
(c) No order, decree or judgment of any court, agency or Governmental
Authority shall have been rendered against any party hereto which would render
it unlawful, as of the Closing Date, to effect the transactions contemplated by
this Agreement in accordance with its terms.
7.5. Certain Liabilities
(a) The Lease Agreement with CarrAmerica Realty Operating Partnership,
L.P., dated as of May 9, 2005, shall be in full force and effect and assigned to
Purchaser.
7.6. [Intentionally Omitted]
7.7. Assumed Contracts.
On or before the Closing Date, the Bankruptcy Court shall have granted
Sellers' request to assume the Assumed Contracts and authorized the assignment
of the Assumed Contracts to Purchaser.
7.7 Transfer of DIP Lender Protections.
In the event that Purchaser is determined to be the "Qualified Bidder" who
submitted the "Successful Bid" in the "Auction", then, prior to any of
Purchaser's "Deposit" or second deposit that will have been placed into the "DIP
Loan Obligation Escrow" (together, the "Purchaser's Deposits") being used to pay
any portion of the "Topping Fee" to Xxxxxxx or to repay any of the DIP Financing
to Xxxxxxx (as the foregoing undefined terms in quotation marks are defined in
the Bidding Procedures), (a) Xxxxxxx, without any further payment, shall have
irrevocably assigned and transferred to Purchaser all of Xxxxxxx'x rights,
benefits, and priorities under and arising from the DIP Loan Agreement, the
documents and other transactions contemplated thereby, and any orders of the
Bankruptcy Court relating thereto pursuant to documentation in form and
substance acceptable to Purchaser and (b) the Bankruptcy Court shall have
entered an order as part of the Sale Order (i) approving and requiring as a
condition precedent to any payments being made to Xxxxxxx the foregoing
assignment and transfer, (ii) with respect to any portion of the Purchaser's
Deposits used to satisfy any DIP Financing obligations of Sellers to Xxxxxxx,
granting to Purchaser all of the rights, benefits, priorities, and protections
already granted to Xxxxxxx as lender pursuant to the Final Order (A) Authorizing
Postpetition Financing and Granting Security Interests and Superpriority
Administrative Expense Status Pursuant to 11 U.S.C. xx.xx. 361, 362, and 364;
27
(B) Authorizing Use of Cash Collateral; (C) Modifying the Automatic Stay
pursuant to 11 U.S.C. ss. 362; (D) Granting Adequate Protection Pursuant to
U.S.C. xx.xx. 361, 362, 363,364, and 552; and (E) Scheduling Interim and Final
Hearings Pursuant to Bankruptcy Rule 4001 entered in the Chapter 11 Cases, and
(iii) deeming any portion of the Purchaser's Deposits used to pay the Topping
Fee as an administrative priority expense under Sections 503(b) and 507(a)(1) of
the Bankruptcy Code, which order shall be in form and substance acceptable to
Purchaser. In the event any of the foregoing conditions is not satisfied, then
Purchaser shall be entitled to terminate this Agreement immediately. Further, if
the form of Sale Order submitted to the Bankruptcy Court for approval does not
contain the foregoing terms (in form and substance acceptable to Purchaser),
then Purchaser shall be entitled to immediately terminate this Agreement and
withdraw the offer reflected in this Agreement. In the event that Purchaser
terminates this Agreement and/or withdraws the offer reflected in this Agreement
in accordance with the foregoing provisions, then Purchaser's Deposits will be
immediately returned to Purchaser and shall not be used to satisfy any
obligations to Xxxxxxx or for any other purpose.
7.10 Retention Plan.
The terms of any employee retention plan, customer retention plan,
supplier retention plan, or other similar plan implemented by any of the Sellers
prior to the Closing Date shall be reasonably acceptable to Purchaser,
including, without limitation, the employees, customers, or suppliers affected,
the incentives offered, and the timing of payment or receipt of any incentive.
SECTION 8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS AT THE CLOSING
Sellers' obligations to sell the Purchased Assets (including assigning to
Purchaser the Assumed Contracts) and take the other actions required to be taken
by Sellers at and following the Closing Date are subject to the satisfaction, at
or prior to the Closing, of the following conditions (any of which may be waived
by Sellers, in whole or in part):
8.1. Accuracy of Representation.
The representation and warranties made by Purchaser in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date.
8.2. Performance of Obligations.
Purchaser shall have performed all material obligations herein engaged to
be performed or observed by it
on or prior to the Closing Date.
8.3. DIP Financing.
Purchaser shall have complied in all respect with the terms of the DIP
Loan Agreement and the transactions contemplated thereunder (the "DIP
Financing") arising from and after date that both the DIP Loan Agreement is
assigned and transferred to Purchaser and the assignment and transfer is
approved by the Bankruptcy Court, all as contemplated in Section 7.9 above.
28
8.4. Court Approval.
The Court shall have entered the Sale Order.
8.5. No Adverse Proceedings.
No order, decree or judgment of any court, agency or governmental entity
shall have been rendered against, any party hereto which would render it
unlawful, as of the Closing Date, to effect the transactions contemplated by
this Agreement in accordance with its terms.
SECTION 9. BANKRUPTCY COURT MATTERS; TERMINATION.
9.1. Approval of Bidding Procedures.
(a) Effective July 1, 2005, the Bankruptcy Court entered an order (the
"Bidding Procedures Order") approving procedures by which bidding for the
Sellers' assets could occur (the "Bidding Procedures").
(b) As used in this Agreement, an "Alternative Transaction" shall include
(a) the sale (whether by stock sale, merger, consolidation or otherwise) of all
or a substantial portion of the capital stock of Sellers to a party other than
Purchaser, (b) the sale of all or any of the Purchased Assets pursuant to the
Bidding Procedures to a party other than Purchaser, or (c) a transaction or
series of transactions outside or independent of the Bidding Procedures that
result in Sellers realizing not less than an aggregate of Twenty One Million
Dollars ($21,000,000) in cash and/or fair market value of debt and/or equity
securities (such fair value to be determined by the Bankruptcy Court from a
party other than Purchaser or, if Sellers shall not then be the subject of the
Chapter 11 Cases, then jointly by Sellers and Purchaser or, failing such joint
determination, by an independent nationally recognized investment banking firm
jointly selected by Sellers and Purchaser or, failing such joint selection, by
such an independent nationally recognized investment banking firm selected by
two other investment banking firms selected one each by Sellers and Purchaser)
from the sale or transfer of Purchased Assets, in each case to a Person other
than Purchaser, excluding the sale of Inventory in the order course of Sellers'
Business.
9.2. No Solicitation Period.
(a) [Intentionally Omitted]
(b) Following entry of the Bidding Procedures Order until the bid deadline
set forth therein, Sellers and Sellers' and Sellers' subsidiaries' respective
officers, directors, other employees, investment bankers, attorneys, financial
advisors, accountants, agents and other representatives shall not be subject to
any restrictions with respect to the solicitation or encouragement of any entity
concerning the potential or actual submission of a qualified bid in accordance
with the Bidding Procedures; provided, however, that within twenty-four (24)
hours after Sellers' receipt of any offer for an Alternative Transaction,
Sellers must deliver to Purchaser by electronic or facsimile transmission or
same day courier service true and complete copies of all documents related to
any such Alternative Transaction.
29
(c) To the extent the Bidding Procedures Order is inconsistent with the
terms of this Agreement, the Bidding Procedures Order shall control (subject to
Section 7.9 above).
9.3. Bankruptcy Court Approval.
(a) At least twenty-five (25) days prior to the hearing at which the
Bankruptcy Court shall consider Sellers' request for entry of an order in
substantially the form attached hereto as Exhibit E, including such changes
---------
thereto requested or approved by Purchaser in its reasonable discretion (the
"Sale Order"), Sellers shall serve a copy of the motion for approval of the Sale
Order (along with a copy of the proposed Sale Order and the Bidding Procedures
Order) on each jurisdiction where the Purchased Assets are subject to tax.
Sellers shall cause the Sale Order to contain terms complying with Section 7.9
above.
(b) Sellers shall obtain entry by the Bankruptcy Court of the Sale Order
by no later than July 27, 2005, unless such date is extended by written consent
of Sellers and Purchaser.
(c) If the Bidding Procedures Order or the Sale Order or any other orders
of the Bankruptcy Court relating to this Agreement shall be appealed by any
party (or a petition for certiorari or motion for reconsideration, amendment,
clarification, modification, vacation, stay, rehearing or reargument shall be
filed with respect to any such order), Sellers shall diligently defend against
such appeal, petition or motion and shall use their reasonable best efforts to
obtain expedited resolution of any such appeal, petition or motion.
(d) Sellers shall not file any motion or application seeking entry of the
Sale Order, or any pleading or filing relating to the Cure Amounts with the
Bankruptcy Court or any other court or Governmental Authority without the
consent of Purchaser, which consent shall not be unreasonably withheld or
delayed.
(e) Sellers shall cooperate with Purchaser and its representatives in
connection with the Bidding Procedures Order, the Sale Order and the bankruptcy
proceedings in connection therewith. Such cooperation shall include, but not be
limited to, consulting with Purchaser at Purchaser's reasonable request
concerning the status of such proceedings and providing Purchaser with copies of
requested pleadings, notices, proposed orders and other documents related to
such proceedings as soon as reasonably practicable prior to any submission
thereof to the Bankruptcy Court. Sellers further covenant and agree that the
terms of any plan it submits to the Bankruptcy Court shall not conflict with,
supersede, abrogate, nullify or restrict the terms of this Agreement, or in any
way prevent or interfere with the consummation of performance of the
transactions contemplated by this Agreement, including without limitation, any
transactions contemplated by or approved pursuant to the Bidding Procedures
Order or the Sale Order.
(f) Notwithstanding anything to the contrary, neither Purchaser nor
Sellers shall be prohibited or otherwise restrained from making any filing with
the Bankruptcy Court to challenge or object to the entry of an order by the
Bankruptcy Court approving the entry by Sellers into an Alternative Transaction.
30
9.4. Termination.
At any time prior to the Closing, this Agreement may be terminated
(without prejudice to other remedies which may be available to the parties under
this Agreement, at law or in equity):
(a) by the mutual written consent of Purchaser and Sellers;
(b) immediately upon written notice of Purchaser to Sellers, or Sellers to
Purchaser, if the Closing does not occur on or prior to July 29, 2005, provided
that a later date may be agreed upon in writing by Purchaser and Sellers;
(c) immediately upon written notice by Purchaser to Sellers if (i) there
are any material breaches by Sellers of the representations and warranties set
forth in Article 4 hereof or the covenants of Sellers set forth in Article 6
hereof, (ii) Sellers' inability to satisfy the conditions precedent set forth in
Article 7 hereof, or (iii) there is a Material Adverse Effect;
(d) immediately upon written notice by Sellers to Purchaser if (i) there
are any material breaches by Purchaser of the representations and warranties set
forth in Article 5 hereof or the covenants of Sellers set forth in Article 6
hereof, or (ii) Purchaser's inability to satisfy the conditions precedent set
forth in Article 8 hereof; or
(e) by Sellers, in the event that a bid submitted by a bidder other than
Purchaser is the higher and better bid in accordance with the Bidding Procedures
and is approved by the Bankruptcy Court.
9.5. Effect of Termination.
If this Agreement is terminated in accordance with Section 9.4., all
further obligations of the parties hereunder shall terminate, provided, however,
that neither party shall be relieved of any obligation or liability arising from
any prior breach by such party of any provision of this Agreement.
SECTION 10. SURVIVAL
All representations and warranties of Sellers contained in this Agreement
and the applicable Sellers' Closing Certificate, bills of sale, endorsements,
assignments and other instruments of transfer, conveyance and assignment shall
terminate and be of no further force or effect after the Closing. However, to
the extent there is any covenant, agreement or obligation herein which, by its
terms, expressly contemplates performance by any of the parties after the
Closing, then such covenant, agreement or obligation shall survive the Closing.
SECTION 11. MISCELLANEOUS PROVISIONS
11.1. Disclaimer.
Purchaser further acknowledges that none of Sellers' directors or officers
shall have any personal liability for any representations, warranties, covenants
or obligations contained in this Agreement, except for actual fraud. Purchaser
31
further acknowledges that Purchaser has conducted due diligence regarding the
Purchased Assets and all such other matters relating to or affecting the
Purchased Assets as Purchaser deems necessary or appropriate in proceedings with
the transaction contemplated by this Agreement and, subject to all of the
conditions precedent set forth in Section 7 hereof and subject to the right of
Purchaser to terminate this Agreement in accordance with and pursuant to Section
9.4 hereof, Purchaser will consummate such transactions based upon such due
diligence and the Sellers representations and warranties contained in this
Agreement.
11.2. Employment.
(a) At any time immediately prior to or after the Closing, Purchaser shall
be permitted to offer employment to any of Sellers' employees and officers.
Subject to compliance with applicable law, Purchaser agrees that it shall offer
employment to all Proxim employees in China and Taiwan and further agrees that
it shall assume the employee obligations related to employees employed by the
Transferred Subsidiaries. Such individuals who accept such offers are referred
to herein as the "Transferred Employees." Subject to applicable laws, Purchaser
shall have the right to dismiss any or all Transferred Employees at any time,
with or without cause, and to change the terms and conditions of their
employment (including compensation and employee benefits provided to them).
Purchaser shall assume the paid time off balances of such Transferred Employee
existing at the Closing. In addition, Purchaser will assume any severance
obligations and employee benefits relating to the Transferred Employees
specifically required by federal, state, or foreign law. Purchaser shall have no
liability or responsibility for (y) any severance, paid time off, or any other
employee benefit relating to any employee of any of the Sellers or any of their
affiliates who is not a Transferred Employee or (z) any paid time off,
contractual severance benefits, or any other employee benefits relating to any
of the Transferred Employees that accrued prior to Closing (other than as
specifically described in this Section 11.2(a)).
Notwithstanding the above, Purchaser shall comply with the European
Transfer of Undertakings (Protection of Employment) Regulations (TUPE) related
to the acquisition of Proxim Europe B.V. and all employees in Europe.
(b) To the extent permitted by applicable law, from time to time following
the Closing, Sellers shall, or shall cause their Subsidiaries to, make available
to Purchaser such non-confidential data in personnel records of Transferred
Employees as is reasonably necessary for Purchaser to transition such employees
into Purchaser's records.
11.3. Objections by Counterparties to Executory Contracts.
In addition to the rights of Purchaser pursuant to 2.2(c) hereof, to the
extent any counterparty to a to-be assumed and assigned contract files an
objection to the transactions contemplated by this Agreement, Purchaser, in its
sole discretion, may elect to oppose such objection, not have such contract
assumed and assigned, or enter into a compromise with such counterparty.
32
11.4. Fees and Expenses.
Except as otherwise specifically provided herein, each party shall pay its
own fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
11.5. Attorneys' Fees.
If any legal action or other legal proceeding relating to this Agreement
or the enforcement of any provision hereof is brought against any party hereto,
the prevailing party shall be entitled to recover reasonable attorneys' fees,
costs and disbursements (in addition to any other relief to which the prevailing
party may be entitled).
11.6. Notices.
Any notice or other communication required or permitted to be delivered to
any party under this Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by telecopier) to the address or
telecopier number set forth beneath the name of such party below (or to such
other address or telecopier number as such party shall have specified in a
written notice given to the other parties hereto):
If to Sellers: Proxim Corporation
0000 X'Xxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
e-mail: xxxxxxxx@xxxxxx.xxx
-------------------
with a copy to: Xxxxxxxxx Xxxxx Xxxxx Xxxxx Xxxxx & Xxxxxxxxx
Three Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX. 94111-5994
Attn: Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
e-mail: xxxxxxx@xxxxxx.xxx
------------------
and
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Day, Esq.
Facsimile: (000) 000-0000
e-mail: xxxx@xxxx.xxx
-------------
33
If to Purchaser: Terabeam Wireless
0000 Xxx Xxxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
e-mail: xxxxxxxxxxx@xxxxxxxx.xxx
------------------------
Terabeam Wireless
with a copy to: 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
e-mail: xxxxxxxx@xxxxxxxx.xxx
---------------------
and
Xxxxxxxx, Xxxxxx & Finger
One Xxxxxx Square
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxxxxx, Esq.
Facsimile:(000) 000-0000
e-mail: xxxxxxxxxxxx@xxx.xxx
--------------------
11.7. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement.
11.8. Governing Law; Venue; Waiver of Jury Trial.
This Agreement is to be construed first in accordance with and governed by
the Bankruptcy Code and, to the extent that the Bankruptcy Code does not address
the matter at hand, then, in accordance with and governed by the internal laws
of the State of California without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. Unless otherwise agreed to by the parties in writing, each party to
this Agreement irrevocably consents and submits to the jurisdiction of the
Bankruptcy Court as to claims made in connection with this Agreement.
11.9. Successors and Assigns.
Subject to the entry of the Sale Order, this Agreement shall be binding
upon and inure to the benefit of Sellers and its successors and permitted
34
assigns (if any), including any Chapter 7 or Chapter 11 trustee appointed in
Sellers' Chapter 11 Cases, and Purchaser and its successors and permitted
assigns (if any). This Agreement may not be assigned by any party hereto without
the prior written consent of the other parties; provided, however, that
Purchaser may, without the consent of Sellers, freely assign any or all of its
rights and delegate any or all of its duties under this Agreement, in whole or
in part, to any affiliate of Purchaser; provided however that Purchaser shall
not be relieved of any liability under this Agreement as a result of such
assignment or delegation.
11.10. Specific Performance.
The rights and remedies of the parties hereto shall be cumulative (and not
alternative). Sellers acknowledges and agrees that Purchaser would be damaged
irreparably in the event any of the provisions of this Agreement was not
performed by Sellers in accordance with its specific terms or otherwise was
breached. Accordingly, upon entry of the Sale Order and Purchaser being declared
the winning bidder through and including the Closing, Sellers agrees that
Purchaser shall be entitled to enforce specifically this Agreement and the terms
and provisions hereof in any action or proceeding in addition to any other
remedy to which it may be entitled, at law or in equity. All rights under this
Section shall expire at the Closing and shall be of no further force and effect.
11.11. Waiver.
No failure or delay on the part of any party hereto to exercise any right
or remedy under this Agreement shall operate as a waiver of such right or
remedy, and no single or partial exercise of any such right or remedy shall
preclude any other or further exercise thereof. No party shall be deemed to have
waived any claim arising out of this Agreement, or any right or remedy under
this Agreement, unless the waiver of such claim, right or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party.
11.12. Amendments.
This Agreement may not be amended other than by a written instrument duly
executed and delivered by a duly authorized officer on behalf of each of the
parties hereto.
11.13. Severability.
In the event that any provision of this Agreement shall be determined to
be invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement shall not be impaired or otherwise affected and shall continue to be
valid and enforceable to the fullest extent permitted by law.
11.14. Parties in Interest.
None of the provisions of this Agreement is intended to provide any rights
or remedies to any person or entity other than the parties hereto and their
respective successors and permitted assigns (if any).
35
11.15. Preparation of this Agreement.
Each of the parties hereby acknowledges and agrees that (a) Purchaser and
Sellers jointly and equally participated in the drafting of this Agreement and
all other agreements contemplated hereby, (b) both Purchaser and Sellers have
been adequately represented and advised by legal counsel with respect to this
Agreement and the transactions contemplated hereby and (c) no presumption shall
be made that any provision of this Agreement shall be construed against either
party by reason of such role in the drafting of this Agreement and any other
agreement contemplated hereby.
11.16. Entire Agreement.
The Agreement (including schedules and exhibits hereto) sets forth the
entire understanding of the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings among or between any of the
parties relating to the subject matter hereof and thereof, except the
non-disclosure agreements previously executed by Purchaser and Sellers.
11.17. Time of the Essence; Further Assurances.
The parties hereto acknowledge that time is of the essence to this
Agreement. Prior to the Closing Date, Sellers agree to provide all assistance
reasonably requested by Purchaser in order to acquire all right, title and
interest in the Purchased Assets, and Purchaser agrees to provide all assistance
reasonably requested by Sellers to obtain entry of the Sale Order and consummate
the Closing, including without limitation the provision of documents and
information to Purchaser as Purchaser may reasonably request in good faith;
provided, however, that nothing contained herein shall be deemed to obligate
Purchaser to waive any requirement in Section 7 of this Agreement (including,
without limitation, the requirements in Section 7.4(b) of this Agreement).
11.18. Plan.
Subsequent to the Closing, without the prior written consent of the party
affected, this Agreement may not be modified by the terms of any plan of
reorganization proposed by Sellers and filed in the Court, or otherwise.
[SIGNATURE PAGE FOLLOWS]
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first written above.
TERABEAM WIRELESS
YDI WIRELESS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
Chief Executive Officer
S-1
(Asset Purchase Agreement)
PROXIM CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
President and Chief Executive Officer
S-2
(Asset Purchase Agreement)
PROXIM WIRELESS NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President
S-3
(Asset Purchase Agreement)
PROXIM INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President
S-4
(Asset Purchase Agreement)
