EXECUTION COPY
ASSET PURCHASE AGREEMENT
between
COMTECH TELECOMMUNICATIONS CORP.,
COMTECH/AHA ACQUISITION CORP.
and
ADVANCED HARDWARE ARCHITECTURES, INC.
Dated as of June 25, 2002
EXECUTION COPY
TABLE OF CONTENTS
PAGE
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ARTICLE I THE TRANSACTION......................................................1
1.1. Sale and Purchase of Assets..........................................1
1.2. Assumption of Certain Liabilities....................................3
1.3. Consent of Third Parties.............................................6
1.4. Closing..............................................................6
1.5. Purchase Price.......................................................6
1.6. Post-Closing Adjustment to Purchase Price............................6
1.7. Deliveries and Proceedings at Closing................................8
1.8. Allocation of Consideration..........................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER............................9
2.1. Qualification; No Interest in Other Entities.........................9
2.2. Authorization and Enforceability....................................10
2.3. No Violation of Laws or Agreements..................................10
2.4. Financial Statements................................................10
2.5. No Changes..........................................................11
2.6. Contracts...........................................................12
2.7. Permits and Compliance With Laws....................................13
2.8. Environmental Matters...............................................14
2.9. Consents............................................................14
2.10. Title...............................................................14
2.11. Sufficiency of Assets...............................................14
2.12. Taxes...............................................................14
2.13. Patents and Intellectual Property Rights............................15
2.14. Accounts Receivable.................................................18
2.15. Labor Relations.....................................................18
2.16. Employee Benefit Plans..............................................18
2.17. Absence of Undisclosed Liabilities..................................19
2.18. No Pending Litigation or Proceedings................................19
2.19. Products Liability..................................................19
2.20. Insurance...........................................................20
2.21. Relationship with Suppliers.........................................20
2.22. WARN Act............................................................20
2.23. Condition of Assets.................................................20
2.24. Transactions with Related Parties...................................20
2.25. Brokerage...........................................................20
2.26. Disclosures.........................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER...........................21
3.1. Organization and Good Standing......................................21
3.2. Authorization and Enforceability....................................21
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3.3. No Violation of Laws or Agreements..................................21
3.4. Consents............................................................21
3.5. Brokerage...........................................................22
ARTICLE IV COVENANTS..........................................................22
4.1. Change of Name......................................................22
4.2. Public Announcement.................................................22
4.3. Further Assurances..................................................22
4.4. Cooperation.........................................................22
4.5. Post-Closing Obligation to Employees................................23
4.6. Taxes...............................................................24
4.7. Certain Taxes and Expenses..........................................24
4.8. Maintenance of Books and Records....................................24
4.9. Collection of Receivables...........................................24
4.10. Product Returns.....................................................25
4.11. Exclusive Dealing...................................................25
4.12. Right of Inspection.................................................25
4.13. Conduct of Business.................................................26
4.14. Compliance With Bulk Transfer Act...................................26
4.15. Disclosure of Changes...............................................26
4.16. Stockholder Approval................................................26
4.17. Updating Schedules..................................................26
ARTICLE V CONDITIONS TO CLOSING...............................................26
5.1. Conditions Precedent to Obligations of Buyer........................26
5.2. Conditions Precedent to Obligations of Seller.......................28
ARTICLE VI INDEMNIFICATION AND CERTAIN ADDITIONAL COVENANTS...................29
6.1. Indemnification Obligations...........................................29
ARTICLE VII TERMINATION.......................................................32
7.1. Termination...........................................................32
7.2. Effect of Termination.................................................33
ARTICLE VIII MISCELLANEOUS....................................................33
8.1. Construction........................................................33
8.2. Nature and Survival of Covenants and Representations................33
8.3. Notices.............................................................33
8.4. Successors and Assigns..............................................34
8.5. Exhibits and Schedules..............................................35
8.6. Governing Law.......................................................35
8.7. Consent to Jurisdiction.............................................35
8.8. Severability........................................................35
8.9. No Third Party Beneficiaries........................................35
8.10. Amendment and Waiver................................................35
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8.11. Counterparts........................................................36
8.12. Headings............................................................36
8.13. Certain Defined Terms...............................................36
8.14. Entire Agreement....................................................36
8.15. Parent..............................................................37
DEFINED TERMS
PAGE
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2000 Financial Statements.....................................................11
2001 Financial Statements.....................................................11
Acquired Assets................................................................2
Acquired Liabilities...........................................................3
Advanced Hardware Architectures...............................................22
Affiliate.....................................................................36
Agreement......................................................................1
associate.....................................................................20
Authority.....................................................................36
Beneficiary...................................................................23
Benefit Plans.................................................................19
Business.......................................................................1
Buyer..........................................................................1
Buyer Indemnified Parties.....................................................29
Buyer Terminating Breach......................................................33
Buyer Transaction Documents....................................................9
CERCLA........................................................................14
Closing........................................................................6
Closing Date...................................................................6
Closing Date Payment...........................................................6
Closing Net Asset Statement....................................................7
Code...........................................................................9
Consultant....................................................................18
Contracts......................................................................2
Damages.......................................................................29
employee pension benefit plan..................................................5
employee welfare benefit plan..................................................5
Employees.....................................................................19
Environmental Laws............................................................14
Equipment and Other Tangible Personal Property.................................2
ERISA..........................................................................5
Excluded Assets................................................................3
finally determined.............................................................7
Financial Statements..........................................................11
FIRPTA Affidavit...............................................................8
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GAAP...........................................................................5
including.....................................................................33
including without limitation..................................................33
Indemnified Party.............................................................30
Indemnifying Party............................................................30
Intellectual Property.........................................................17
Intercompany Payables..........................................................5
IP ...........................................................................17
Leasehold Property............................................................14
Leasehold Real Property Interests..............................................2
Licensed IP...................................................................18
Lien..........................................................................36
Litigation Conditions.........................................................30
Lockbox Account...............................................................25
Material Adverse Effect.......................................................37
Net Asset Value................................................................7
noncompetition................................................................13
Noncompetition Agreement.......................................................8
nonsolicitation...............................................................13
OSHA..........................................................................14
Parent.........................................................................1
Permits........................................................................2
Person........................................................................37
Premises.......................................................................3
Prime Rate.....................................................................8
Purchase Price.................................................................6
Purchased IP..................................................................18
qualifying event..............................................................23
Retained Liabilities...........................................................4
Review Period..................................................................7
Seller.........................................................................1
Seller Account Parties........................................................25
Seller Indemnified Parties....................................................29
Seller Terminating Breach.....................................................32
Seller Transaction Documents...................................................9
Seller's Accountants...........................................................7
Seller's knowledge............................................................37
single employer...............................................................36
stay...........................................................................4
strict liability...............................................................4
Tax...........................................................................15
Taxes.........................................................................15
Third Accounting Firm..........................................................7
Third Party Claim.............................................................30
Transaction Documents..........................................................9
Transferred Employees.........................................................23
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Work Permits..................................................................18
worms.........................................................................17
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TABLE OF EXHIBITS
Exhibit A - Form of Voting and Proxy Agreement
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Noncompetition Agreement
Exhibit D - Form of General Warranty Assignment
Exhibit E - FIRPTA Affidavit of Seller
Exhibit F - Form of Opinion of Counsel to Seller
Exhibit 5.1(f) Tyco Submarine Systems, Ltd. Release & Settlement Agreement
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ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
June 25, 2002, by and among ADVANCED HARDWARE ARCHITECTURES, INC. ("Seller"), a
Delaware corporation having its principal place of business at 0000 XX Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, COMTECH TELECOMMUNICATIONS CORP.
("Parent"), a Delaware corporation, and COMTECH/AHA ACQUISITION CORP. ("Buyer"),
a Delaware corporation and wholly owned subsidiary of Parent.
Background
Seller is engaged in the business of design, development and
marketing of high value integrated circuit solutions and semiconductors,
including technology involving single-chip lossless compression and
decompression integrated circuits based on the Adaptive Lossless Data
Compression algorithm (the "Business"). Buyer desires to purchase substantially
all of the assets, properties and rights of the Business, and Seller desires to
sell such assets, properties and rights, on the terms and subject to the
conditions set forth in this Agreement.
As contemplated herein, Seller shall submit the transactions
contemplated hereby to its stockholders for their approval pursuant to Section
271 of the Delaware General Corporation Law. Accordingly, concurrently with the
execution and delivery of this Agreement and as a condition and inducement to
Parent's willingness to enter into this Agreement, certain holders of the shares
of preferred stock and common stock of Seller ("Seller Stock") with voting power
(determined on a fully diluted basis) sufficient to approve this Agreement and
the transactions contemplated hereby, are entering into an agreement with Parent
in the form attached hereto as Exhibit A (the "Voting and Proxy Agreement")
granting Parent the right to vote such shares of Seller Stock in accordance with
the terms set forth in the Voting and Proxy Agreement.
Terms
THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE TRANSACTION
1.1. Sale and Purchase of Assets.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined in Section 1.4), Seller shall sell, assign, transfer,
deliver and convey to Buyer the Acquired Assets, free and clear of all Liens (as
defined in Section 8.13) for the Purchase Price specified below in Section 1.5.
(b) As used herein, the term "Acquired Assets" means all of Seller's
right, title, and interest in, under and to all of the assets, properties and
rights constituting, or used in, the Business as a going concern of every kind,
nature and description other than Excluded Assets (as defined in Section 1.1(c)
below), wherever such assets, properties and rights are located and whether such
assets, properties and rights are real, personal or mixed, tangible or
intangible, and whether or not any of such assets, properties and rights have
any value for accounting purposes or are carried or reflected on or specifically
referred to in Seller's books or financial statements, including all of the
following assets, properties and rights constituting, or used in, the Business:
(i) all leaseholds and subleaseholds in real property,
together with all easements, rights of way, uses, licenses, hereditaments,
tenements, privileges and other appurtenances thereto, comprising all real
property leaseholds or subleaseholds of Seller more particularly described in
Schedule 1.1(b)(i) hereto (the "Leasehold Real Property Interests");
(ii) all equipment, furnishings, furniture, fixtures, computer
equipment, computer hardware, office equipment, office supplies, motor vehicles,
goods, spare and repair parts and other tangible personal property (the
"Equipment and Other Tangible Personal Property");
(iii) the Purchased IP (as defined in Section 2.13);
(iv) accounts, notes and other receivables;
(v) all prepaid items and unbilled receivables and fees;
(vi) Intellectual Property (as defined in Section 2.13),
goodwill, licenses and sublicenses granted and obtained with respect thereto,
and rights and remedies against infringements thereof, and rights to protection
of interests therein under the laws of all jurisdictions;
(vii) subject to Sections 1.2(a) and 1.3 hereof, all rights of
Seller under the contracts, agreements and instruments relating to (A) the sale
by Seller of its products or (B) the purchase or other acquisition by Seller of
Purchased IP and (C) the grant to Seller of rights in or relating to the
Licensed IP (as defined in Section 2.13); and
(viii) other contracts, agreements, purchase orders or
instruments to which Seller is a party that are listed in Schedule 1.1(b)(viii)
hereto ("Scheduled Contracts," and together with the contracts, agreements and
instruments described in (vii) above, the "Contracts");
(ix) subject to Section 1.3, franchises, approvals, permits,
authorizations, licenses, orders, registrations, certificates, variances, and
other similar permits or rights obtained from any Authority (as defined in
Section 8.13) and all pending applications therefor (the "Permits");
(x) books, records, ledgers, files, documents (including
originally executed copies of all Contracts, correspondence, tax returns,
memoranda, forms, lists (including customer or licensee lists), new product
development materials, creative materials, advertising
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and promotional materials, studies, reports, whether in hard copy or electronic
or magnetic format, in each instance, to the extent relating to, or otherwise
material to the conduct of, the Business or the Employees (as defined in Section
2.16);
(xi) all rights, choses in action, claims and entitlements
arising out of occurrences before or after the Closing Date, including third
party warranties and guarantees and other similar contractual rights as to third
parties held by or in favor of Seller or its Affiliates that relate to any of
the Acquired Assets otherwise described in this Section 1.1(b); and
(xii) all assets and properties reflected on the Closing Net
Asset Statement referred to in Section 1.6.
(c) As used herein, the term "Excluded Assets" means all of Seller's
(i) cash and cash equivalents, (ii) real property and buildings located at
[2365] NE Xxxxxxx Court, Pullman, Washington (the "Premises"), and (iii) any and
all rights of Seller in and to any real property associated with the operations
of the Business formerly conducted in Oregon and the United Kingdom.
1.2. Assumption of Certain Liabilities.
(a) Subject to the terms and conditions of this Agreement, except as
otherwise specifically provided in this Section 1.2 (including in respect of the
Retained Liabilities, as set forth in paragraph (b) below) or in Section 1.3,
Buyer hereby assumes and agrees to pay, discharge or perform, as appropriate,
the following specific liabilities and obligations of Seller (the "Acquired
Liabilities"):
(i) the liabilities and obligations of Seller arising in the
regular and ordinary course of the Business that are reflected on the face of
the Closing Net Asset Statement (excluding any notes or schedules thereto) in
accordance with Section 1.6, but only to the extent of the amount reflected
thereon;
(ii) all liabilities and obligations of Seller that are
required to be performed or fulfilled, in whole or in part, on or after the
Closing Date under the Contracts, except that Buyer shall not assume or agree to
pay, discharge or perform any liabilities or obligations under any Contracts (A)
that were required to be performed or fulfilled on or prior to the Closing Date
or (B) that arise out of any breach or default (including for this purpose any
event which, with notice or lapse of time, or both, would constitute such a
breach or default) by Seller of any provision of any Contract, including
liabilities or obligations arising out of any failure to perform any agreement,
contract, commitment or lease in accordance with its terms prior to the Closing;
and
(iii) the costs, up to $15,000, of the financial audit report
of the Business for the five-month period ended May 31, 2002, requested by Buyer
as a condition to Closing set forth in Section 5.1(g) below.
(b) Buyer is not assuming any liabilities, commitments or
obligations (contingent or absolute, known or unknown and whether or not
determinable as of the Closing) of Seller except for the Acquired Liabilities as
specifically and expressly provided for above, whether
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such liabilities or obligations relate to payment, performance or otherwise, and
all liabilities, commitments or obligations not expressly transferred to Buyer
hereunder as Acquired Liabilities are being retained by Seller (the "Retained
Liabilities"), who shall remain liable therefor in accordance with the terms of
this Agreement. Seller shall indemnify Buyer from all Retained Liabilities,
including any Retained Liabilities created by statute or common law, in
accordance with Section 6.1 hereof.
Without limiting the foregoing, all of the following shall be
considered Retained Liabilities and not Acquired Liabilities for the purposes of
this Agreement:
(i) all liabilities and obligations of Seller or its
Affiliates under any agreements, contracts, leases or licenses to which Seller
or any such Affiliate is a party on the Closing Date, other than (a) Contracts,
and (b) obligations of Seller reflected on the face of the Closing Net Asset
Statement (excluding any notes or schedules thereto);
(ii) all obligations arising prior to the Closing under the
Contracts that are required under the terms of the applicable Contract to be
performed by Seller or its Affiliates prior to the Closing, and all liabilities
or obligations arising from any breach or default or alleged breach or default
by Seller or its Affiliates of a Contract;
(iii) except to the extent of Product warranties covered by
Section 1.2(a)(i) above, any product liability, breach of contract, product
warranty, product return or similar claim, regardless of when made or asserted,
which arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made or alleged to have been made or which is
imposed or asserted to be imposed by operation of law (including by reason of
any "strict liability" or related theory of tort law), in connection with any
product licensed, leased or sold by, or any service performed by or on behalf
of, Seller or its Affiliates prior to the Closing, including any such claim
relating to any Purchased IP and any such claim seeking recovery for
consequential damages, lost revenue or income;
(iv) any federal, state, foreign or local Tax (as defined in
Section 2.12(b)) (A), including any federal, state, foreign or local Tax payable
with respect to the business, assets (other than Buyer's Taxes accruing from and
after the Closing with respect to the Acquired Assets), properties or operations
of Seller, or its Affiliates, or (B) incident to or arising as a consequence of
the negotiation or consummation by Seller or its Affiliates of this Agreement
and the transactions contemplated hereby;
(v) any liability or obligation with respect to compensation
of any nature owed to any employees, former employees, agents or independent
contractors of Seller, whether or not employed by Buyer after the Closing Date,
that (A) arises out of or relates to the employment or service provider
relationship between Seller or its Affiliates and any such individuals, or (B)
arises out of or relates to events or conditions occurring on or before the
Closing Date, including any obligation to grant options or pay severance,
retention or "stay" bonuses, or similar arrangements;
(vi) all liabilities and obligations of Seller under any
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security
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Act of 1974, as amended ("ERISA")) maintained by Seller or any of its
Affiliates, any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) maintained by Seller or any of its Affiliates, and any other written or
oral plan, agreement or arrangement maintained by Seller or any of its
Affiliates involving direct or indirect compensation to employees of Seller or
its Affiliates, including insurance coverage, severance benefits, disability
benefits, deferred compensation, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
post-retirement compensation of any employees of Seller or its Affiliates,
including any such liabilities and obligations which arise on or before the
Closing Date;
(vii) any liability or obligation of Seller or its Affiliates
arising or incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated hereby, and fees
and expenses of counsel, accountants, brokers, finders and other experts;
(viii) any indebtedness for borrowed money, including any
indebtedness secured by a Lien on any Acquired Assets, any liabilities arising
from any guaranty, suretyship or similar arrangement, any liabilities under any
letter of credit and any liabilities under any lease of any property (whether
real, personal or mixed) which in conformity with generally accepted accounting
principles ("GAAP") is or should be accounted for as a capital lease;
(ix) except as otherwise expressly set forth herein, any
liability or obligation of Seller or its Affiliates relating to any business,
division or operations not constituting the Business, including any business,
division or operations previously sold by Seller or its Affiliates, and any
liabilities or obligations arising out of any disposition of such business,
division or operations;
(x) any liability or obligation of Seller arising out of any
notice, claim, demand, action or proceeding based on or relating to any actual
or alleged infringement, dilution, violation or misappropriation of any patent,
copyright, trademark, trade secret or other intellectual property right of any
third party including any such notice, claim, demand, action or proceeding
arising out of any indemnification obligation to customers or licensees under
any Contract; provided, however, that Seller shall not be obligated to indemnify
Buyer with respect to any Retained Liability described in this Section 1.2(b)(x)
unless Seller had knowledge on or before the Closing of any such alleged
infringement, dilution, violation or misappropriation;
(xi) any liability of Seller or the Business to any Affiliate
of Seller incurred prior to the Closing (the "Intercompany Payables"); or
(xii) any other liability of Seller or its Affiliates
whatsoever, including any liability arising out of or relating to the ownership
or operation of the Acquired Assets and the Business on or prior to the Closing
Date (including any predecessor operations), including any claims, obligations
or litigation arising out of or relating to events or conditions occurring on or
before the Closing Date (including the threatened or pending litigation set
forth on Schedule 2.18 hereto), regardless of when made or asserted, except, in
the case of this subparagraph (xii), for the Acquired Liabilities as
specifically and expressly set forth herein.
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1.3. Consent of Third Parties. Seller is assigning to Buyer, and Buyer is
assuming, the Contracts and the Permits which are to be transferred to Buyer as
and to the extent provided in this Agreement. To the extent that the assignment
of all or any portion of any Contract or Permit shall require the consent of the
other party thereto or any other third party, this Agreement shall not
constitute an agreement to assign any such Contract or Permit included in the
Acquired Assets if an attempted assignment without any such consent would
constitute a breach or violation thereof. In order, however, to provide Buyer
the full realization and value of every Contract and Permit of the character
described in the immediately preceding sentence, Seller agrees that on and after
the Closing, it will, at the request and under the direction of Buyer, in the
name of Seller or otherwise as Buyer shall specify, take all reasonable actions
and do or cause to be done all such things as shall in the reasonable opinion of
Buyer or its counsel be necessary or proper (a) to assure that the rights of
Seller under such Contracts and Permits shall be preserved for the benefit of or
transferred or issued to Buyer and (b) to facilitate receipt of the
consideration to be received by Seller in and under every such Contract and
Permit, which consideration shall be held for the benefit of, and shall be
delivered to, Buyer. Nothing in this Section 1.3 shall in any way diminish
Seller's obligations hereunder to obtain all consents and approvals and to take
all such other actions prior to or at Closing as are necessary to enable Seller
to convey or assign good and marketable title free and clear of Liens (other
than Permitted Exceptions) to all the Acquired Assets to Buyer.
1.4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") or the "Closing Date" shall occur no later than the
second business day after the satisfaction or waiver of the conditions set forth
in Article 5 hereof. Seller and Buyer each shall use its reasonable efforts to
cause such conditions to be satisfied as soon as practicable after the date
hereof.
1.5. Purchase Price.
(a) Purchase Price. The aggregate purchase price to be paid by Buyer
for the purchase of the Acquired Assets is $6,800,000 (the "Purchase Price"),
payable as provided in the succeeding sentence, and the assumption of the
Acquired Liabilities. Of such $6,800,000, (i) $6,050,000 shall be payable in
cash at the Closing (the "Closing Date Payment"), and (ii) $750,000 shall be in
cash to be deposited by Buyer in escrow (the "Escrowed Amount") for payment, in
whole or in part, to Seller and/or Buyer, pursuant to an escrow agreement in the
form of Exhibit B hereto (the "Escrow Agreement"). Notwithstanding anything to
the contrary in the preceding sentence, the Purchase Price is subject to
adjustment as provided in Section 1.6 below.
(b) Payment of Closing Date Payment. The Closing Date Payment shall
be paid by the Buyer on the Closing Date by federal or other wire transfer to
the account or accounts designated by Seller in writing at least two (2)
business days prior to the Closing.
1.6. Post-Closing Adjustment to Purchase Price.
(a) Within ninety (90) days after the Closing, Buyer shall prepare
and deliver to Seller a statement (the "Closing Net Asset Statement") of the Net
Asset Value of the Business, as of the Closing Date, determined in accordance
with GAAP and this Agreement. For purposes
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hereof, (x) "Net Asset Value" with respect to the Business means (1) all
Acquired Assets minus (2) all Acquired Liabilities, in each case as such assets
and liabilities are accrued and reflected on the Closing Net Asset Statement;
provided, however, that the amount for intangibles shall not be more than the
amount on the Most Recent Balance Sheet (i.e., $256,000). Seller agrees to
cooperate and agrees to request that BDO Xxxxxxx ("Seller's Accountants")
cooperate, with Buyer and Buyer's accountants in connection with the preparation
of the Closing Net Asset Statement, and, in connection therewith, shall provide
to Buyer and Buyer's accountants such books, records and information as may be
reasonably requested from time to time.
(b) Except as otherwise provided in this Section 1.6(b), the Closing
Net Asset Statement delivered by Buyer to Seller shall be deemed to be and shall
be final, binding and conclusive on the parties hereto. Seller may dispute any
amounts reflected on the Closing Net Asset Statement, but only on the basis that
such amounts were not calculated in accordance with GAAP or this Agreement;
provided, however, that Seller shall notify Buyer in writing of each disputed
amount, and specify the amount thereof in dispute, within twenty (20) days of
Seller's receipt of the Closing Net Asset Statement (such 20-day period
hereinafter referred to as the "Review Period"). Any and all portions of the
Closing Net Asset Statement which are not subject to dispute by Seller shall be
deemed final and binding on the parties hereto, provided that such portions are
not related to or affected by the disputed amount. In the event of a dispute
with respect to the Closing Net Asset Statement, Buyer and Seller shall attempt
to reconcile their differences and any written resolution mutually agreed by
them as to any disputed amounts shall be final, binding and conclusive on the
parties. If Buyer and Seller are unable to reach a written resolution to such
effect within ten (10) Business Days of receipt of Seller's written notice of
dispute to Buyer, Buyer and Seller shall submit the amounts remaining in dispute
for resolution to an independent accountant firm of national reputation mutually
appointed by Seller and Buyer (such independent accounting firm being herein
referred to as the "Third Accounting Firm"), which shall, within ten (10)
Business Days after such submission, determine and report to the parties upon
such remaining disputed amounts, and such report shall be final, binding and
conclusive on the parties hereto with respect to the amounts disputed. The fees
and disbursements of the Third Accounting Firm shall be allocated between Buyer,
on the one hand, and Seller, on the other, so that Seller's share of such fees
and disbursements shall be in the same proportion that the aggregate amount of
such remaining disputed amounts so submitted by Seller to the Third Accounting
Firm that is unsuccessfully disputed by Seller (as finally determined by the
Third Accounting Firm) bears to the total amount of such remaining disputed
amounts so submitted by Seller to the Third Accounting Firm, and Buyer's share
shall be the balance of such fees and disbursements.
(c) Schedule 1.6(c) hereto sets forth the forecasted balance sheet
of Seller as of February 28, 2002 (the "Most Recent Balance Sheet"), adjusted to
reflect the Excluded Assets and the Retained Liabilities. The Most Recent
Balance Sheet reflects a net asset value (i.e., Acquired Assets minus Acquired
Liabilities) of $922,238. If the Net Asset Value as finally determined exceeds
such $922,238, then the Purchase Price shall be increased, on a
dollar-for-dollar basis, by such amount, and Buyer shall pay Seller the amount
in cash by federal or other wire transfer of immediately available funds to an
account or accounts designated by Seller. If the Net Asset Value as finally
determined is less than such $922,238, then the Purchase Price shall be
decreased, on a dollar-for-dollar basis, by such amount, and Seller shall pay
Buyer the amount in cash by federal or other wire transfer of immediately
available funds to an account or
7
accounts designated by Buyer. Buyer or Seller, as the case may be, shall make
any payment required as a result of an adjustment to the Purchase Price pursuant
to this Section 1.6 within ten (10) Business Days after the amount has been
finally determined in accordance with Section 1.6(b) (it being understood that
with respect to any portion of the Closing Net Asset Statement which is not
subject to dispute by Seller, the phrase "finally determined" shall mean the
expiration of the Review Period), together with interest thereon for the period
commencing on the Closing Date through the date on which such amount is paid,
calculated at the rate announced by Citibank, N.A. from time to time as its
prime or base interest rate for business loans (the "Prime Rate").
1.7. Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries to Buyer. Seller shall deliver to Buyer:
(i) the Escrow Agreement, duly executed by Seller;
(ii) the Noncompetition Agreement substantially in the form of
Exhibit C hereto (the "Noncompetition Agreement"), duly executed by Seller;
(iii) general warranty assignments for all Leasehold Property
(as defined in Section 2.10) duly executed and acknowledged by Seller, each
substantially in the form of Exhibit D hereto;
(iv) the Foreign Investment in Real Property Tax Act
Certification and Affidavit, duly executed by Seller, substantially in the form
of Exhibit E hereto (the "FIRPTA Affidavit");
(v) an opinion of counsel to Seller, substantially in the form
of Exhibit F hereto;
(vi) the Purchased IP, by electronic means reasonably
acceptable to Buyer;
(vii) evidence of the consent and approval of third parties
for the Contracts set forth on Schedule 1.7(a)(vii);
(viii) title certificates to any motor vehicles included in
the Acquired Assets, duly executed by Seller (together with any other transfer
forms necessary to transfer title to such vehicles);
(ix) all agreements, records and other documents required by
this Agreement;
(x) a receipt for the payment of the Closing Date Payment,
duly executed by Seller;
(xi) all such other instruments of conveyance as shall, in the
reasonable opinion of Buyer, be necessary to vest in Buyer good, valid and
marketable title to the Acquired
8
Assets in accordance with Section 1.1 hereof, including evidence of release and
removal of all Liens on the Acquired Assets.
(b) Deliveries By Buyer to Seller. Buyer shall deliver to Seller:
(i) wire transfer, to the account(s) specified by Seller, of
immediately available funds in an amount equal to the Closing Date Payment;
(ii) wire transfer, to the account specified by the Escrow
Agent under the Escrow Agreement, of immediately available funds in an amount
equal to the Escrowed Amount;
(iii) the Escrow Agreement, duly executed by Buyer; and
(iv) the Noncompetition Agreement, duly executed by Buyer.
(c) Transaction Documents. The agreements, instruments and documents
referenced in this Section 1.7, together with this Agreement and such other
agreements and instruments required to be delivered pursuant to this Agreement,
are referred to herein collectively as the "Transaction Documents." The
Transaction Documents to be executed and delivered by Seller hereunder are
referred to herein collectively as "Seller Transaction Documents." The
Transaction Documents to be executed and delivered by Buyer hereunder are
referred to herein collectively as "Buyer Transaction Documents."
1.8. Allocation of Consideration. The consideration paid by Buyer to
Seller shall be allocated among the Acquired Assets on the basis of a valuation
report of a valuation or accounting firm selected by Buyer. Buyer and Seller
shall each report the federal, state and local income and other tax consequences
of the transactions contemplated by this Agreement (which for purposes of this
Agreement includes the Transaction Documents) in a manner consistent with such
allocation, including the preparation and filing of Form 8594 under Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor
form or successor provision of any future tax law, or any comparable provision
of state or local tax law), with their respective federal, state and local
income tax returns for the taxable year that includes the Closing Date and shall
not take any position contrary thereto in connection with any amended return.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.1. Qualification; No Interest in Other Entities.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate the Acquired Assets and
the Business as and where currently being
9
conducted. Seller is qualified to do business and is in good standing as a
foreign corporation in the jurisdictions in which the nature of the business
conducted by it or the ownership or use of the assets and properties
constituting its business make such qualification necessary, except for such
jurisdictions the failure to qualify in which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect (as defined
in Section 8.13).
(b) No shares of any corporation or any ownership or other
investment or equity interest, either of record, beneficially or equitably, in
any Person, are included in the Acquired Assets.
2.2. Authorization and Enforceability. Seller has full corporate power and
authority to make, execute, deliver and perform this Agreement and the other
Seller Transaction Documents to which it is a party, and the execution, delivery
and performance of this Agreement and the other Seller Transaction Documents to
which it is a party by Seller have been duly authorized by all necessary
corporate action on the part of Seller, with the exception of the approval of
the holders of a majority of the outstanding Seller Stock. This Agreement has
been, and as of the Closing Date the other Seller Transaction Documents have
been, duly executed and delivered by Seller. This Agreement is a legal, valid
and binding obligation of Seller, enforceable in accordance with its terms. As
of the Closing Date, the other Seller Transaction Documents are the legal, valid
and binding obligations of Seller, enforceable in accordance with their
respective terms.
2.3. No Violation of Laws or Agreements. The execution, delivery, and
performance of this Agreement and the other Seller Transaction Documents do not,
and the consummation of the transactions contemplated by this Agreement and the
other Seller Transaction Documents will not, (a) contravene any provision of the
Certificate of Incorporation or Bylaws or similar organizational document of
Seller or (b) to Seller's knowledge, violate, conflict with, result in a
material breach of, or constitute a material default (or an event which might,
with the passage of time or the giving of notice, or both, constitute a material
default) under, or result in or permit the termination, modification,
acceleration, or cancellation of, or result in the creation or imposition of any
Lien of any nature upon any of the Acquired Assets or give to others any
interests or rights therein under, (i) any indenture, mortgage, loan or credit
agreement, license, instrument, lease, contract or other agreement, oral or
written, to which Seller is a party or by which the Business or any of the
Acquired Assets may be bound in writing, (ii) any Permit, authorization,
franchise, governmental approval or authorization or (iii) any judgment,
injunction, writ, award, decree, restriction, ruling, or order of any court,
arbitrator or Authority or any applicable constitution, law, ordinance, rule or
regulation, including any bulk sales laws.
2.4. Financial Statements. The books of account and related records of
Seller for the Business fairly reflect in reasonable detail all assets,
liabilities and transactions relating to the Business and are in accordance with
GAAP. Schedule 2.4 contains the Seller's audited financial statements as of the
period ended December 31, 2000 (the "2000 Financial Statements") and Seller's
unaudited financial statements as of and for the annual period ended December
31, 2001 (the "2001 Financial Statements" and together with the 2000 Financial
Statements, the "Financial Statements"). The Financial Statements (a) are
correct and complete in all material respects and are substantially in
accordance with the books and records of Seller; (b) fairly present the results
of operations, financial position, assets and liabilities of the Business as of
10
their respective dates or for the periods covered thereby; (c) have been
prepared in accordance with GAAP on a basis consistent with past practice; and
(d) reflect accurately all costs and expenses of the Seller as if the Seller was
independent and not affiliated with any other corporation or business.
2.5. No Changes. Since December 31, 2001, Seller has conducted the
Business only in the ordinary course of business consistent with past practice.
Without limiting the foregoing, since such date, except as disclosed in Schedule
2.5 hereto, with respect to the Business there has not been:
(a) any material change in the business, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of the
Business (other than changes in the ordinary course of business consistent with
past practice, none of which changes, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect);
(b) (i) any material change in the salaries or other compensation
payable or to become payable to, or (ii) any advance (excluding advances for
ordinary business expenses) or loan greater than $25,000 to, any Employee or
(iii) any material change or addition to, or material modification of, other
benefits (including any bonus, profit-sharing, pension or other employee benefit
plan) to which any of the Employees are entitled, or (iv) any material payments
to any employee benefit plan or any other pension, retirement, profit-sharing,
bonus or similar plan except payments in the ordinary course of business;
(c) any incurrence, assumption or guarantee of any obligation or
liability (absolute, accrued, contingent or otherwise) other than in the
ordinary course of business consistent with past practice and which has not had
and could not reasonably be expected to have a Material Adverse Effect;
(d) any discharge or satisfaction of any Liens against or in favor
of the Business, or payment or satisfaction of any obligation or liability of or
relating to the Business, (whether absolute, accrued, contingent or otherwise)
other than (i) liabilities shown on the 2001 Financial Statements, or (ii)
liabilities incurred since the date of the 2001 Financial Statements in the
ordinary course of business which have not had or could not reasonably be
expected to have a Material Adverse Effect;
(e) any change or any threat of any change in any of its relations
with, or any loss or threat of loss of any of the suppliers, clients, customers,
licensees, licensors or employees of the Business which, individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect, or any alteration in any material respect of the customary practices
with respect to the collection of accounts receivable of the Business or payment
of accounts payable of the Business or the provision of discounts, rebates or
allowances;
(f) any material modification, amendment or termination of any, or
the entering into of any material contract, agreement, lease, plan or commitment
to which Seller is a party or by which it is bound or any cancellation,
modification or waiver of any material debts or claims held by Seller (including
any such debts or claims of an Affiliate of Seller) or any waiver of any
11
other material rights of Seller, in each case solely in respect of a Scheduled
Contract or other Acquired Asset or Acquired Liability, or otherwise related to
the Business;
(g) any damage, destruction or loss affecting the Business in excess
of $50,000, whether or not covered by insurance;
(h) any material change by Seller in its method of accounting or
keeping its books of account or accounting practice that relates to the
Business;
(i) any disposition of or failure to keep in effect any rights in,
to or for the use of any Intellectual Property;
(j) any sale, lease, license, transfer or other disposition of any
assets, properties or rights of the Business, except licenses of Purchased IP in
the ordinary course of business consistent with past practice;
(k) any dividend, distribution or payment (including the declaration
or setting aside therefor, or agreement with respect thereto) in respect of its
capital shares or redemption, repurchase or acquisition (or agreement with
respect thereto) of any of its capital shares, or the payment of any
Intercompany Payables;
(l) any Contract to make any capital expenditures in excess of
$50,000 or any Contract to make capital expenditures in an amount which, when
aggregated with any other such Contract, exceeds $50,000; or
(m) any mortgage, pledge or subjection to Lien of any kind of any
Acquired Assets.
2.6. Contracts. Schedule 2.6 hereto contains a list of the following
contracts and other agreements (written or oral) relating to the Business or by
which Seller or any assets or properties of Seller (including any Acquired
Assets or Acquired Liabilities) are bound or affected (irrespective of whether
Seller or any Affiliate thereof is a party thereto):
(a) any agreement (or group of related agreements) for the
licensing, lease or sale of Purchased IP or other products, or other personal
property, or for the furnishing or receipt of services (including maintenance or
support services in respect of Purchased IP), the performance of which (i) will
extend over a period of more than one year, (ii) has resulted in a loss to the
Business in excess of $50,000 or (iii) will involve consideration in excess of
$50,000;
(b) any agreement (or group of related agreements) for the lease of
(i) personal property to or from any Person providing for lease payments in
excess of $50,000 per annum or (ii) real property to or from any Person;
(c) any agreement organizing, forming or governing a partnership,
joint venture or similar arrangement;
12
(d) any agreement prohibiting or restricting competition, soliciting
persons for employment, soliciting customers for business or otherwise
containing "noncompetition" or "nonsolicitation" provisions;
(e) any agreement (or group of related agreements) under which the
Business or Seller has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money in an amount greater than $50,000, or any
capitalized lease obligation under which any of the Acquired Assets are subject
to a Lien;
(f) any material agreement under which the consequences of a default
or termination will likely have a Material Adverse Effect;
(g) any material commission, distribution, dealer, representative or
sales agency agreement related to the Business;
(h) any agreement for the employment of any individual on a
part-time, consulting, or other similar basis providing annual compensation in
excess of $50,000 or providing severance or other post-termination benefits;
(i) any other agreement (or group of related agreements) related to
the Acquired Assets not otherwise described in paragraphs (a)-(h) above and
continuing over a period of more than one (1) year from the date hereof or
exceeding $50,000 in value.
Seller has delivered to Buyer a correct and complete copy of each written
agreement listed in Schedule 2.6 and a written summary setting forth the terms
and conditions of each oral agreement referred to therein. With respect to each
contract listed on Schedule 2.6, except as disclosed on Schedule 2.6, (i) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) Seller is not, and to Seller's knowledge, no other party thereto, is in
material breach or default, and no event has occurred (or, to Seller's
knowledge, is likely to occur) which with notice or lapse of time (or both)
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; (iii) neither Seller, nor to Seller's
knowledge, any other party has repudiated or threatened to repudiate any
provision of any Scheduled Contract and (iv) Buyer's acquisition of the Acquired
Assets at the Closing will not give rise to a material breach, default or
violation by Seller of any Scheduled Contract and will not require the consent
or approval of any third party except as otherwise expressly set forth herein.
2.7. Permits and Compliance With Laws. Except as disclosed in Schedule
2.7, Seller possesses and, to Seller's knowledge, is in compliance in all
material respects with all permits, approvals, franchises, governmental
authorities and registrations required to operate the Business and own, lease or
otherwise hold the Acquired Assets under all applicable laws, rules,
regulations, ordinances and codes. Except as disclosed in Schedule 2.7, to
Seller's knowledge, Seller has conducted the Business and is now doing so in
compliance with all applicable laws, rules, regulations, ordinances, codes,
judgments and orders (including immigration laws, the Occupational Safety and
Health Act and the rules and regulations thereunder ("OSHA") and the Americans
with Disabilities Act). All Permits are in full force and effect, and there are
no proceedings pending or, to Seller's knowledge, threatened that seek the
revocation, cancellation, suspension or any adverse modification of any Permits.
On the Closing Date, the Permits in full
13
force and effect which will be transferred to Buyer, to the extent permissible
to do so under applicable law or regulation, will constitute, to Seller's
knowledge, all of the Permits required for Buyer's possession, ownership and use
of the Acquired Assets and operation of the Business.
2.8. Environmental Matters. To Seller's knowledge, the business, assets
and properties of Seller are and have been operated and maintained in
compliance, in all material respects, with all applicable federal, state, city,
county and local environmental protection laws and regulations (collectively,
"Environmental Laws"). To Seller's knowledge, no event has occurred which, with
or without the passage of time or the giving of notice, or both, would
constitute material non-compliance by Seller with, or a material violation by
Seller of, Environmental Laws. To Seller's knowledge, neither Seller nor any of
Seller's Affiliates, has caused or knows of a disposal, discharge or release (as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended ("CERCLA")) of wastes, pollutants, contaminants or hazardous or
toxic substances, on or from any site which currently is or formerly was owned,
leased, occupied or used by Seller or any of Seller's Affiliates. To Seller's
knowledge, there is no site (a) which is listed, or proposed for listing on a
registry or inventory of inactive hazardous waste sites or sites potentially
requiring investigation or response maintained by any Authority and which
currently is or formerly was owned, leased, occupied or used by Seller or its
Affiliates or (b) with respect to which Seller or its Affiliates has received
notice that Seller is considered to be a potentially responsible person for
cleanup or other liability in respect of Environmental Laws or about which
information has been requested from Seller or its Affiliates.
2.9. Consents. Except as specified in Schedule 2.9, no consent, approval
or authorization of, or registration or filing with, any Authority or, to
Seller's knowledge, any other Person is required in connection with the
execution, delivery and performance of this Agreement or the other Transaction
Documents, or the consummation of the transactions contemplated hereby or
thereby, including in connection with the assignment of Scheduled Contracts to
Buyer.
2.10. Title. Seller has and is conveying to Buyer at Closing (by general
warranty assignments in the case of Leasehold Real Property Interests
("Leasehold Property")) indefeasible, good and valid title to all of the
Acquired Assets constituting personal property (including the Purchased IP) and
a good, valid and marketable leasehold interest in all Leasehold Property.
Except as specified in Schedule 2.10, none of the Acquired Assets is subject to
any Lien.
2.11. Sufficiency of Assets. No Affiliate of Seller has any ownership
interests, Lien or other right, interest or title in or to any of the assets,
rights or properties constituting or used in the conduct of the Business,
including any assets, rights or properties (other than Excluded Assets)
constituting or used in the conduct of the Business formerly conducted in Oregon
and the United Kingdom.
2.12. Taxes.
(a) To Seller's knowledge, Seller and its Affiliates have (i) filed
all returns and reports for Taxes, including information returns, that are
required to have been filed in connection with, relating to, or arising out of,
the Business, (ii) paid all Taxes that are shown to
14
have come due pursuant to such returns or reports and (iii) paid all other Taxes
for which a notice of assessment or demand for payment has been received. To
Seller's knowledge, all such returns or reports relating to the Business have
been prepared in accordance with all applicable laws. Schedule 2.12 lists all
jurisdictions in which Seller has filed income, employment, sales and use and
personal and real property tax returns with respect to the Business during the
past three fiscal years. Except as disclosed in Schedule 2.7, there are no
ongoing Tax audits or examinations or, to Seller's knowledge, threatened tax
disputes with respect to the Business or Acquired Assets. The Seller is not a
party to any tax sharing or tax allocation agreement.
(b) As used herein "Taxes" and "Tax" mean any U.S. or non-U.S.
federal, state, and local income, payroll, withholding, excise, sales, use,
personal property, use and occupancy, business and occupation, mercantile, real
estate, gross receipts, license, employment, severance, stamp, premium, windfall
profits, social security (or similar unemployment), transfer, registration,
value added, alternative, or add-on minimum, estimated, or capital stock and
franchise tax, including any interest, penalty or addition thereto, whether
disputed or not.
2.13. Patents and Intellectual Property Rights.
(a) Schedule 2.13(a) contains a complete and accurate list of all
material patents and patent applications, trademarks, service marks, trade
names, material copyrights (including computer software programs), and
registrations and applications for registration of industrial designs,
copyrights, mask works, trademarks, service marks, trade names, trade dress and
domain names used or held for use by Seller in the conduct of the Business
specifying as to each such item, as applicable: (i) the owner of the item, (ii)
the jurisdictions in which the item is issued or registered or in which any
application for issuance or registration has been filed, (iii) the respective
issuance, registration, or application number of the item, and (iv) the date of
application and issuance or registration of the item.
(b) Schedule 2.13(b) contains a complete and accurate list of all
material licenses, sublicenses, consents and other agreements (whether written
or otherwise): (i) pertaining to any patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights, mask works,
trade secrets, computer software (other than standard, commercially available
off-the-shelf software), web site design, or other Intellectual Property used by
Seller in the conduct of the Business, or (ii) by which Seller licenses or
otherwise authorizes a third party to use such Intellectual Property. Neither
Seller nor, to Seller's knowledge, any other party is in breach of or default
under any such license or other agreement, and except as set forth on Schedule
2.13(b), each such license or other agreement, to Seller's knowledge, is now
and, subject to obtaining any required consent to the assignment thereof by
Seller to Buyer, upon the Closing shall be, valid and in full force and effect.
(c) Except as set forth in Schedule 2.13(c), Seller owns or is
licensed or otherwise has the right to use, and has the right to bring actions
for the infringement or other violation of, all trademarks, service marks, trade
names, copyrights, inventions, technology, know-how, designs, formulae, trade
secrets, trade dress, mask works, confidential and proprietary information,
computer software, domain names and other Intellectual Property used in the
operation of the Business or necessary for the operation of the Business as it
is currently conducted.
15
(d) Except as set forth on Schedule 2.13(d), the Business as
currently conducted, including the design, development, use, import,
manufacture, license and sale of the products, technology or services of the
Business, does not infringe, dilute, misappropriate or otherwise violate the
patents, industrial design rights, trademarks, service marks, trade names, trade
dress, copyrights, mask works, trade secrets or other Intellectual Property
rights of any third party, and no claim has been made or notice given to that
effect. To Seller's knowledge, the products, technology and services currently
under development in connection with the Business do not infringe, dilute,
misappropriate or otherwise violate the patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights, mask works,
trade secrets or other Intellectual Property rights of any third party, and no
claim has been made or notice given to that effect. To Seller's knowledge, no
third party has violated or infringed any of Seller's patents, industrial design
rights, trademarks, service marks, trade names, trade dress, copyrights, trade
secrets or other Intellectual Property rights. Except as set forth in Schedule
2.13(d), Seller has not given any indemnification to any third party against
infringement of such Intellectual Property rights.
(e) Except as set forth in Schedule 2.13(e), all of the patents,
industrial design registrations, trademark and service xxxx registrations,
copyright registrations, mask work registrations and domain name registrations
indicated in Schedule 2.13(a) are valid and in full force, are held of record in
the name of Seller, and are not the subject of any cancellation or reexamination
proceeding or any other proceeding challenging their extent or validity. Except
as set forth in Schedule 2.13(e), Seller is the applicant of record in all
patent applications, and applications for trademark, service xxxx, trade dress,
industrial design, copyright, mask work and domain name registration indicated
in Schedule 2.13(a), and no opposition, extension of time to oppose,
interference, rejection, or refusal to register has been received in connection
with any such application.
(f) Seller has taken reasonable and customary steps to protect its
confidential or proprietary information, including, without limitation,
obtaining customary written non-disclosure agreements from employees,
consultants and other third parties at or prior to the time of disclosure by
Seller of any such confidential or proprietary information.
(g) Schedule 2.13(g) contains a complete and accurate list of all
material Purchased IP. Except as set forth on Schedule 2.13(g), Seller owns all
right, title and interest in and to the material Purchased IP, free and clear of
all Liens and other encumbrances, including claims or rights of joint owners and
employees, agents, consultants or other parties involved in the development,
creation, marketing, maintenance or enhancement of such computer software. To
Seller's knowledge, the Purchased IP consists entirely of material: (i) which
was created as a work for hire (as defined under U.S. copyright law) by a person
or persons who were at the time of creation the regular, full-time, salaried
employees of Seller, all rights in which are now owned by Seller or (ii) the IP
ownership of which was fully and irrevocably transferred to Seller pursuant to a
written agreement executed by the owner thereof. Except as set forth on Schedule
2.13(b), no Purchased IP has been licensed, sold, rented or otherwise
transferred to any third party.
(h) Schedule 2.13(h) contains a complete and accurate list of all
material Licensed IP. Schedule 2.13(h) sets forth a list of all license fees,
rents, royalties or other charges that, to
16
Seller's knowledge, Seller is required to or obligated to pay with respect to
Licensed IP. Seller, to its knowledge, is in compliance in all material respects
with all applicable provisions of such agreements and such agreements are now,
and immediately following the Closing shall be, in full force and effect. The
transactions contemplated under this Agreement do not and will not trigger any
provision under any license or agreement related to the Licensed IP to
renegotiate or increase the license, support or other fees or charges due under
such license or agreement. All the licenses relating to Licensed IP constitute
Contracts and, pursuant to the assignment of the Contracts to Buyer occurring
hereunder, Buyer will succeed to all the rights of Seller to the Licensed IP.
(i) The Purchased IP and the Licensed IP constitute all of the IP
used in the Business as presently conducted. To Seller's knowledge, except as
set forth on Schedule 2.13(i), all of the Purchased IP and Licensed IP is fully
and adequately documented, and Seller has made adequate provision for the
maintenance and enhancement of the Purchased IP and the Licensed IP for its
continued use in the Business as presently conducted. To Seller's knowledge,
except as set forth in Schedule 2.3(i) all of the Purchased IP and Licensed IP
performs in material conformance with the applicable specifications and
documentation for such Purchased IP and Licensed IP. To Seller's knowledge, the
Purchased IP and the Licensed IP do not contain any viruses, "worms,"
cancelbots, disabling or malicious code.
(j) The information technology systems included in the Acquired
Assets, including all computer hardware, software, firmware and
telecommunications systems used in the Business, perform in material conformance
with the applicable specifications or documentation for such systems. Seller has
taken commercially reasonable steps to provide for the archival, back-up,
recovery and restoration of the critical business data of the Business, to the
extent such data is included in the Acquired Assets.
(k) As used herein, "Intellectual Property" or "IP" means,
collectively, any and all of the following in any jurisdiction throughout the
world: (i) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, re-examination,
utility, model and design patents, patent applications, patent registrations and
applications for patent registrations, (ii) copyrights (including computer
software in source code or object code form) and registrations and applications
for registration of copyrights, (iii) trade secrets and legal rights therein,
(iv) trademarks, service marks, trade dress, logos, slogans, trade names and
corporate names (whether or not registered), including all variations,
derivations, combinations, registrations and applications for registration or
renewals of the foregoing and all goodwill associated therewith, (v) Internet
domain names and registrations and applications for registration or renewals
thereof, (vi) all other intellectual property and proprietary rights and (vii)
all remedies against past, present and future infringement or other violation of
any of the foregoing rights and rights of protection of interest therein under
the laws of all jurisdictions.
(l) As used herein, "Licensed IP" means any Intellectual Property
owned by parties other than Seller (and any related documentation) that is
licensed to or used by Seller or are otherwise used in the Business.
(m) As used herein, "Purchased IP" means any Intellectual Property
owned by Seller (and any related documentation) that is used by Seller or
otherwise used in the Business.
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2.14. Accounts Receivable. The accounts receivable of Seller arising from
the Business as set forth on the Financial Statements or arising since the date
thereof are valid and genuine; have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of business consistent with past practice; are not subject
to valid defenses, set-offs or counterclaims; and will be collected within
ninety (90) days after the billing at the full recorded amount thereof less, in
the case of accounts receivable appearing on the Closing Net Asset Statement,
the recorded allowance for collection losses on the Closing Net Asset Statement.
The allowances for collection losses on the balance sheets included in the
Financial Statements have been determined in accordance with GAAP consistent
with past practice.
2.15. Labor Relations.
(a) Except as disclosed on Schedule 2.15(a) hereto: (i) no Employee
is represented by any union or other labor organization; (ii) there is no unfair
labor practice charge pending or, to Seller's knowledge, threatened against
Seller relating to any of the Employees as relates to the Business; (iii) there
are no negotiations or strikes, disputes, slow downs or stoppages relating to
any of the Employees or the Business pending or, to Seller's knowledge,
threatened against or involving Employees or the Business; and (iv) no labor
grievance relating to any of the Employees or Former Employees as relates to the
Business is pending.
(b) With respect to each Employee on or before the Closing Date,
Seller will have paid all accrued but unused vacation time, and all other
accrued compensation, and satisfied all other employment-related payments and
debts to such Employee in conjunction with the Seller's termination of such
Employee's employment, such that, on the Closing Date, such Employees will not
be owed any further compensation or other payment from Seller.
(c) Each individual who has provided consulting services to Seller
and who, at the time he or she provided such services, was not a then-current
employee of Seller is referred to in this paragraph (d) as a "Consultant" with
respect to any time period during which such individual provided consulting
services to Seller but was not an employee of Seller. Each Consultant is or was
(at the time such consulting services were provided to Seller but such
Consultant was not an employee of Seller), an independent contractor of Seller
and not an employee of Seller under all then-applicable federal, state and local
laws, including but not limited to the Code, applicable workers compensation law
and applicable unemployment insurance law.
(d) Schedule 2.15(d) sets forth a list of all Employees who hold a
temporary work authorization, including H-1B, F-1 or J-1 visas or work
authorizations (the "Work Permits"), setting forth the name of the employee, the
type of Work Permit and the length of time remaining on such Work Permit.
2.16. Employee Benefit Plans.
(a) Schedule 2.16(a) lists the name, job title, current base salary
or hourly wage, date of hire, 2001 vacation entitlement, social security number
(as applicable) and assigned location of all salaried and non-union hourly
employees actively employed as of the Closing
18
Date by Seller or any of its Affiliates whose primary responsibilities relate to
the Business. No such individual is on short-term disability or approved leave
of absence. All individuals included on Schedule 2.16(a) are herein referred to
as the "Employees."
(b) To Seller's knowledge, set forth on Schedule 2.16(b) is a true
and complete list (designated on a salary and hourly basis) of each material
pension, retirement, supplemental retirement, deferred compensation, excess
benefit, profit sharing, employment, bonus, incentive, stock purchase, stock
ownership, stock option, stock appreciation right, severance, salary
continuation, termination, change-of-control, health, life, disability, group
insurance, vacation, holiday, sick-day, sabbatical and fringe benefit plan,
program, contract, or arrangement (whether written or unwritten, qualified or
nonqualified, funded or unfunded, foreign or domestic and including any that
have been frozen) maintained, contributed to, or required to be contributed to,
by Seller or any of Seller's Affiliates in respect of any Employee of Seller, or
under which Seller or any of Seller's Affiliates has any liability with respect
to any Employee (the "Benefit Plans").
2.17. Absence of Undisclosed Liabilities. Except as disclosed in Schedule
2.17 hereto, Seller, to its knowledge, has no liabilities with respect to the
Business, either direct or indirect, matured, or unmatured or absolute,
contingent or liquidated, except:
(a) those liabilities set forth in the Most Recent Balance Sheet and
not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of business under any
Contract; and
(c) those liabilities incurred, in or as a result of the normal and
ordinary course of business since the date of the Most Recent Balance Sheet and
reflected in the books and records related to the Business or that could, to
Seller's knowledge, reasonably be expected to have a Material Adverse Effect.
2.18. No Pending Litigation or Proceedings. Except as set forth on
Schedule 2.18, there are no actions, suits, investigations or proceedings
(including any arbitration or mediation proceedings) pending against or, to
Seller's knowledge, threatened against Seller in respect of the Business, or
affecting the Business or any of the Acquired Assets. Except as disclosed in
Schedule 2.18 hereto, there are currently no outstanding judgments, decrees or
orders of any court, arbitrator or Authority against Seller or any Affiliate of
Seller, which relate to or arise out of the conduct of the Business or the
ownership, condition or operation of the Business or the Acquired Assets. Seller
has heretofore provided Buyer with a list setting forth generally a description
of settlements or similar amounts paid in respect of any actions, suits,
investigation or proceedings, actual or threatened, to the extent such
settlement or payment occurred after December 31, 2001 (excluding workers'
compensation claims) binding on any of Seller or any Affiliates of Seller with
respect to the Business.
2.19. Products Liability. Except as set forth on Schedule 2.19, to
Seller's knowledge, there are no (a) liabilities, fixed or contingent, with
respect to any products of the Business that are based on a theory of strict
product liability or negligence (as distinct from product warranty claims
described in clause (b) below), or (b) liabilities of Seller, fixed or
contingent, which have been asserted, with respect to the Business for the
breach of any express or implied product
19
warranty with respect to any product manufactured, licensed or sold by Seller,
or services provided by Seller in the conduct of the Business.
2.20. Insurance. Seller has been covered in all material respects, and at
all relevant times in the last five years by insurance in scope and amount that
Seller believes is reasonable for the business in which it is engaged and the
liabilities it has actually incurred in respect of the Business during such five
year period.
2.21. Relationship with Suppliers. Seller knows of no written or oral
communication, fact, event or action which exists or has occurred within six
months prior to the date of this Agreement, which would lead Seller reasonably
to believe that any current supplier or licensor to Seller of items material to
the Business, which items cannot be replaced at comparable cost and the loss of
which would likely have a Material Adverse Effect, will terminate or adversely
modify its business relationship with the Business.
2.22. WARN Act. Seller has not employed one hundred (100) or more
employees within the meaning of the WARN Act (29 USC ss.ss.2101 - 2109).
2.23. Condition of Assets. Each tangible Acquired Asset, to Seller's
knowledge, is free from material defects, has been maintained in a manner deemed
reasonable by Seller, and is in good operating condition and repair (subject to
normal wear and tear). Except as described on Schedule 2.23, to the knowledge of
Seller, Seller's inventory is saleable in the ordinary course of business
subject to any reserve therefor reflected on the Most Recent Balance Sheet.
2.24. Transactions with Related Parties. Except as described in Schedule
2.24, since December 31, 2001, no Affiliate of Seller (and no officer or
director of any such Affiliate, or any "associate" (as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended) of such officer or
director) has engaged in any of the following transactions:
(a) borrowed money in a material amount from or loaned money in a
material amount to Seller for the benefit of the Business;
(b) asserted any material contractual or other claims, express or
implied, of any kind whatsoever against Seller relating to the Business or the
Acquired Assets or the Acquired Liabilities; or
(c) acquired any interest in the Acquired Assets.
2.25. Brokerage. Except as set forth on Schedule 2.25, neither Seller nor
its Affiliates have made any agreement or taken any other action which might
cause any Person to become entitled to a broker's or finder's fee or commission,
or any indemnification or limitation on liability, as a result of the
transactions contemplated hereunder. Seller will be responsible for all
liabilities and obligations set forth on Schedule 2.25.
2.26. Disclosures. No representation or warranty made by Seller in this
Agreement, any Schedule hereto or certificate furnished by Seller to Buyer
pursuant to this Agreement or the other Seller Transaction Documents contains
any untrue statement of a material fact or omits any material fact necessary to
make the statements contained herein or therein in light of the
20
circumstances under which they were made not misleading in any material respect.
Seller has no reason to believe that any loss of any employee, agent, customer
or supplier will result because of the consummation of the transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. Authorization and Enforceability. Buyer has full corporate power and
corporate authority to make, execute, deliver and perform this Agreement and the
Buyer Transaction Documents. The execution, delivery and performance by Buyer of
this Agreement and Buyer Transaction Documents have been duly authorized by all
necessary corporate action on the part of Buyer, including, if required,
stockholder approval. This Agreement has been, and as of the Closing Date the
other Buyer Transaction Documents have been, duly executed and delivered by
Buyer. This Agreement is a legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms. As of the Closing Date, the
other Buyer Transaction Documents are legal, valid and binding obligations of
Buyer, enforceable against it in accordance with their respective terms.
3.3. No Violation of Laws or Agreements. The execution, delivery and
performance of this Agreement and the Buyer Transaction Documents do not, and
the consummation of the transactions contemplated hereby and thereby will not
(a) contravene any provision of the Certificate of Incorporation or Bylaws of
Buyer; (b) violate, conflict with, result in a breach of, or constitute a
default (or an event which might, with the passage of time or the giving of
notice, or both, constitute a default) under, or result in or permit the
termination, modification, acceleration, or cancellation of, or result in the
creation of any Lien of any nature whatsoever upon any of the Acquired Assets or
give any other any interests or rights therein under (i) any indenture,
mortgage, loan or credit agreement, license, instrument, lease, contract, plan,
permit, or other agreement (written or oral) to which Buyer is a party, or by
which Buyer may have rights or by which the Business or any of the Acquired
Assets may be bound or affected, (ii) any permit, authorization, franchise,
governmental approval or authorization or (iii) any judgment, injunction, writ,
award, decree, restriction, ruling or order of any court, arbitrator or
Authority, domestic or foreign, or any applicable constitution, law, ordinance,
rule or regulation, including any bulk sales law. Buyer has had an opportunity
to discuss the Business, management and financial affairs of Seller with
directors, officers and management of Seller and has had the opportunity to
review Seller's operations and facilities. Buyer has determined that the
transactions contemplated by this Agreement are in the best interests of the
stockholders of Buyer and are on terms that are fair to such stockholders.
3.4. Consents. No consent, approval or authorization of, or registration
or filing with, any Authority is required in connection with the execution,
delivery and performance of this
21
Agreement or the other Buyer Transaction Documents or the consummation of the
transactions contemplated hereby or thereby by Buyer.
3.5. Brokerage. Buyer and its Affiliates have not made any agreement or
taken any other action which might cause any Person to become entitled to a
broker's or finder's fee or commission as a result of the transactions
contemplated hereby.
ARTICLE IV
COVENANTS
4.1. Change of Name. (a) After the Closing, Seller shall change its
corporate name (i) so as to delete the words "Advanced Hardware Architectures"
(in any combination of upper case and lower case letters) and (ii) to adopt a
new name not similar to its existing name, and Seller will cause a certificate
of amendment to its certificate of incorporation effecting such change to be
duly filed with the Secretary of State of the State of Delaware within five (5)
Business Days from the Closing Date. Promptly after such filing, Seller will
deliver proof of said filing to Buyer. On the Closing Date, Seller shall deliver
to Buyer any and all required instruments deemed necessary by any and all
applicable Governmental Authorities to terminate any previously filed assumed
name or trade names listed on Schedule 4.1. Seller shall cause the same to be
duly filed with all applicable governmental or quasi-governmental offices within
ten (10) days after the Closing. Promptly after any such filing, Seller will
deliver proof of said filing to Buyer.
4.2. Public Announcement. No party hereto shall make or issue, or cause to
be made or issued, any public announcement or written statement concerning this
Agreement or the transactions contemplated hereby without the prior written
consent of each other party, except (a) to its officers, directors, employees
and representatives who need to know such information, (b) as may be reasonably
necessary to comply with such party's covenants hereunder or to satisfy any of
the conditions set forth in Article V hereof, or (c), in the case of Parent, as
required by law or Nasdaq rule.
4.3. Further Assurances. Seller from time to time after the Closing, at
Buyer's request, will execute, acknowledge and deliver to Buyer such other
instruments of conveyance and transfer and will take such other actions and
execute such other documents, certifications, and further assurances as Buyer
may reasonably require in order to vest more effectively in Buyer or to put
Buyer more fully in possession of any of the Acquired Assets or better to enable
Buyer to complete, perform and discharge any of the Acquired Liabilities. Each
party shall cooperate and deliver such instruments and take such action as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby.
4.4. Cooperation. Buyer and Seller shall cooperate with each other and
shall cause their Affiliates, officers, employees, agents and representatives to
cooperate with each other to ensure the orderly transition of the Business from
Seller to Buyer and to minimize the disruption to the Business resulting from
the transactions contemplated hereby.
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4.5. Post-Closing Obligation to Employees.
(a) Effective as of 12:01 a.m. on the Closing Date, Seller shall
cause the employment of all Employees who are employees of Seller (other than
those individuals who are listed on Schedule 4.5(a) and those individuals who
are not actively employed due to short-term disability or approved leave of
absence, whose employment shall be terminated upon their return to active
employment) to be terminated. Effective as of 12:01 a.m. on the Closing Date,
Buyer shall offer employment to all Employees terminated in accordance with the
preceding sentence on terms and conditions determined by Buyer. All Employees to
whom Buyer offers employment and who accept such employment are herein referred
to as the "Transferred Employees." Nothing in this Section 4.5 shall limit
Buyer's authority to terminate the employment of any Transferred Employee or any
other Employee at any time and for whatever reason.
(b) Seller shall be solely responsible for any liability, claim or
expense (including reasonable attorneys' fees) related to compensation or
employee benefits incurred by Buyer as the result of any claims against Buyer or
its Affiliates that are made by any Employees or former employees (or the
Beneficiary of any Employee or former employee) who do not become Transferred
Employees, including claims asserted against Buyer as a result of their
termination by Seller or its Affiliates, whether or not in accordance with the
terms of this Agreement. As used herein, "Beneficiary" means the Person(s)
designated by an Employee or former employee, by operation of law or otherwise,
as entitled to compensation, benefits, insurance coverage, payments or any other
goods or services under an employee benefit plan.
(c) Seller shall be solely responsible for any liability, claim or
expense with respect to compensation or employee benefits of any nature owed to
any Transferred Employee or the Beneficiary of any Transferred Employee that
arises out of or relates to the employment relationship between Seller or any of
its Affiliates and any Transferred Employee. Without limiting the foregoing,
Seller shall be responsible for the payment of any employee benefits (including,
without limitation, any severance payments or benefits) that become due to any
Transferred Employees as a result of their termination by Seller in accordance
with Section 4.5(a).
(d) Seller shall be responsible for all legally mandated health care
continuation coverage for Employees and former employees and their covered
dependents who had or have a loss of coverage due to a "qualifying event"
(within the meaning of Section 603 of ERISA) which occurred or occurs on or
prior to the Closing Date.
(e) Seller shall retain liability for payment of any long-term or
short-term disability benefits to any Employee or former employee that relate to
a disability which first occurred prior to the Closing Date; provided, however,
that Seller shall cease to be responsible for any such liability on and after
the date that such Employee or former employee commences employment with Buyer.
Notwithstanding any other provision of this Agreement to the contrary, any offer
of employment by Buyer may be conditioned upon (i) any Employee or former
employee having completed a physical examination, which will be performed by a
physician chosen by Buyer, and (ii) Buyer's determination that the results of
such test are acceptable.
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4.6. Taxes.
(a) Buyer and Seller shall: (i) each provide the other with such
assistance as may reasonably be requested by any of them in connection with the
preparation of any Tax return, any audit or other examination by any taxing
authority or any judicial or administrative proceeding with respect to Taxes;
(ii) each retain and provide the other with any records or other information
which may be relevant to such return, audit, examination or proceeding; and
(iii) each provide the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to be
shown on any Tax return of the other for any period (which shall be maintained
confidentially). Without limiting the generality of the foregoing, Buyer and
Seller shall retain, until the applicable statutes of limitations (including all
extensions) have expired, copies of all Tax returns, supporting work papers, and
other books and records or information which may be relevant to such returns for
all Tax periods or portions thereof ending before or including the Closing Date,
and shall not destroy or dispose of such records or information without first
providing the other party with a reasonable opportunity to review and copy the
same.
4.7. Certain Taxes and Expenses. Seller shall be responsible for state and
local sales, use, transfer, real property transfer, documentary stamp, recording
and other similar taxes arising from and with respect to the sale and purchase
of the Acquired Assets. The parties shall cooperate in giving effect to the
foregoing. Buyer shall bear its accounting, legal and other expenses incurred in
connection with the transactions contemplated by this Agreement (it being
understood that payment of Seller's expenses is dealt with in Section 1.2).
4.8. Maintenance of Books and Records. Buyer and Seller shall cooperate
fully with one another after the Closing so that (subject to any limitations
that are reasonably required to preserve any applicable attorney-client
privilege) each party has access to the business records, contracts and other
information existing at the Closing Date and relating in any manner to the
Acquired Assets (whether in the possession of Seller or Buyer). No files, books
or records existing at the Closing Date and relating in any manner to the
Acquired Assets shall be destroyed by any party for a period of six years after
the Closing Date without giving the other party at least thirty (30) days prior
written notice, during which time such other party shall have the right (subject
to the provisions hereof) to examine and to remove any such files, books and
records prior to their destruction. The access to files, books and records
contemplated by this Section 4.8 shall be during normal business hours and upon
not less than two days prior written request, shall be subject to such
reasonable limitations as the party having custody or control thereof may impose
to preserve the confidentiality of information contained therein, and shall not
extend to material subject to a claim of privilege unless expressly waived by
the party entitled to claim the same.
4.9. Collection of Receivables. Seller shall if requested by Buyer,
irrevocably authorize, instruct and direct that the account parties of all
accounts, notes and receivables constituting Acquired Assets (such parties, the
"Seller Account Parties") shall make and deliver all payments relating thereto
on or after the Closing to such location, bank and account (the "Lockbox
Account") as Buyer shall specify. If, notwithstanding such instruction, any of
the Seller Account Parties remit payments on or after the Closing directly or
indirectly to Seller or its Affiliates instead of to the Lockbox Account, Seller
agrees promptly (and in any event no later
24
than two business days following receipt) to deliver all such payments
(including but not limited to negotiable instruments which shall be duly
endorsed by Seller to the order of Buyer) to Buyer. Seller hereby designates,
makes, constitutes and appoints Buyer (and all persons designated by Buyer) as
its true and lawful attorney-in-fact to receive, give receipts for, take,
endorse, assign, deliver, deposit, demand, collect, xxx on, compound, and give
acquittance for any and all information, documents, payments forms (including
negotiable and non-negotiable instruments) and proceeds received by Buyer via
the Lockbox Account or from Seller that relate to the accounts, notes and
receivables of the Seller Account Parties constituting Acquired Assets, all in
the sole discretion of Buyer. Seller shall use all reasonable efforts to assist
Buyer in collecting in full from Seller Account Parties all amounts owed
pursuant to all accounts, notes and receivables constituting Acquired Assets.
4.10. Product Returns. Seller shall be responsible for (and indemnify
Buyer for), customer or licensee claims for product returns with respect to
products (a) developed, manufactured by or for, or licensed or sold by Seller or
(b) manufactured by or for Seller and licensed or sold by Buyer after the
Closing, unless such returns result from product defects due primarily to
Buyer's acts or omissions after the Closing or are Acquired Liabilities, and,
provided such returns are accepted by Buyer under policies substantially the
same as Seller's policies regarding returns and provided further, that Buyer
shall promptly notify Seller upon learning of any claim for a product return or
product warranty and shall supply Seller with information that Seller may
reasonably request with respect thereto. Seller shall have the right to
participate in, and shall be given reasonable prior written notice of, all
discussions Buyer conducts with any customer or licensee in resolving the terms
of any such return. Nothing in this Section 4.10 shall give rise to any
liability of Seller for any claims based on the infringement of any third
party's intellectual property rights.
4.11. Exclusive Dealing. In consideration of the expense and effort
expended and to be expended by Buyer in connection with its due diligence
investigation of the Business and the Acquired Assets, Seller shall deal
exclusively with Buyer for the sale of the Business and the Acquired Assets
prior to July 31, 2002. Neither Seller, nor any of its officers, directors, or
stockholders, nor any of Seller's Affiliates, their officers, directors or
stockholders, shall either directly or indirectly(whether through
representative, agents, financial advisors, counsel or otherwise): (a) initiate,
solicit, seek , or accept any inquiries or proposals with respect to (i) a sale
of any of the Seller's assets or the Business or (ii) the sale or other
disposition of the stock of Seller, whether by merger, consolidation,
liquidation, or reorganization of Seller (collectively referred to as an
"Acquisition Proposal"), (b) engage in any negotiations concerning, or provide
information to, or have any discussions with, any person relating to an
Acquisition Proposal or (c) otherwise cooperate in any effort or attempt to
make, implement or accept an Acquisition Proposal or undermine Buyer's attempt
to consummate the transaction contemplated herein.
4.12. Right of Inspection. From the date of this Agreement through the
Closing Date, Seller shall permit Buyer and its authorized representatives, with
reasonable notice to: (i) have full access to Seller's properties during regular
business hours, (ii) make its employees and authorized representatives available
to confer with Buyer and its authorized representatives, and (iii) make
available to Buyer and its authorized representatives all books, papers and
records relating to the Acquired Assets and the Business, or the Acquired
Liabilities.
25
4.13. Conduct of Business. Except as otherwise provided in this Section
4.13, from the date of this Agreement until the Closing Date, Seller will
conduct the Business in a commercially reasonable manner and in substantially
the same manner as it has previously. Seller will use all commercially
reasonable efforts to preserve and maintain its assets and all relationships
with, and the goodwill of, suppliers, customers and Employees. Seller will not
(a) do any act or omit to do any act that could reasonably be expected to cause
a material breach or default of any material contract, obligation, lease,
license, or other material agreement to which Seller is a party, (b) enter into
any long-term supply contracts with any customers or (c) take any action or
permit to occur any event of a type described in Section 2.5(a)-(m) hereof.
4.14. Compliance With Bulk Transfer Act. To the extent applicable, the
parties agree to waive compliance with the provisions of any bulk transfer laws.
Seller agrees to indemnify and hold Buyer harmless from and with respect to any
liability that may accrue to Buyer arising out of such waiver. A waiver by Buyer
of compliance with such bulk transfer laws shall not in any manner waive,
nullify or limit Seller's warranties or indemnities under this Agreement.
4.15. Disclosure of Changes. Seller will promptly notify Buyer in writing
of (a) any threatened lawsuit or claim; (b) any change that has a Material
Adverse Effect; and (c) any material change in any representations or warranties
of Seller set forth in this Agreement or in any exhibit, schedule, certificate
or other document delivered to Buyer by Seller pursuant to this Agreement, if
such material change would likely have a Material Adverse Effect.
4.16. Stockholder Approval. As promptly as practicable after the date
hereof, Seller, acting through its Board of Directors, shall, subject to and in
accordance with applicable law and its Certificate of Incorporation and Bylaws,
(i) promptly and duly call, give notice of and hold a meeting of the holders of
Seller Stock for the purpose of voting to (x) approve the principal terms of
this Agreement, (ii) recommend to the stockholders of Seller that they vote in
favor of the matters described in the preceding clause (i), (iii) include in any
written material furnished to such holders such recommendation and (iv) take all
reasonable and lawful action to solicit and obtain such vote in favor of the
matters described in clause (i) above. At or prior to the Closing, Seller shall
deliver to Parent a certificate of its Secretary setting forth the voting
results from its stockholder meeting.
4.17. Updating Schedules. Notwithstanding anything to the contrary
contained in this Agreement, Seller shall be entitled at or before the Closing
to amend any and all schedules referred to in Article II hereof for the purpose
solely of reflecting thereon events that have occurred after the date hereof;
provided, however, that any such amendment of any schedule shall not impair in
any respect Buyer's right, pursuant to Section 5.1 hereof, with respect to the
condition set forth in Section 5.1(a).
ARTICLE V
CONDITIONS TO CLOSING
5.1. Conditions Precedent to Obligations of Buyer. The obligation of Buyer
under this Agreement to consummate the transactions contemplated by this
Agreement on the Closing Date
26
shall be subject to the satisfaction, at or prior to the Closing Date, of all of
the following conditions, any one or more of which may be waived by Buyer:
(a) Representations and Warranties Accurate. (i) The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects, as of the date of this Agreement, (ii) the
representations and warranties of Seller contained in this Agreement and as
modified by any amended schedule pursuant to Section 4.17 hereof shall be true
and correct in all material respects as of the Closing Date, and (iii) each
material adverse change in any such amended schedule, and all such changes that
are in the aggregate materially adverse, shall be satisfactory to Buyer in its
sole discretion.
(b) Performance by Seller. Seller shall have performed and complied
in all material respects with all covenants and agreements required to be
performed or complied with by it hereunder on or prior to the Closing Date.
(c) Consents. All consents required, and all notifications required
to have been given, in connection with the consummation of the transactions
contemplated by this Agreement and the Closing (including those set forth on
Schedule 5.1(c) hereto) shall have been duly obtained, made or given and shall
be in full force and effect, without the imposition upon Buyer of any condition,
restriction or required undertaking.
(d) Hi/fn, Inc. (i) Seller shall have effectively assigned to Buyer,
or Buyer shall have entered into directly, a license agreement substantially on
the terms of Seller's existing license with Hi/fn, Inc., pursuant to which Buyer
shall have all the rights granted to Seller, including the right to use the
licensed technology on all products developed by Seller (regardless of stage of
development) or Buyer for consideration not in excess of $2.00 per unit, or (ii)
Buyer shall have obtained a license with another party providing Buyer
substantially comparable technology ("Alternate Technology") on terms, including
economic terms, substantially comparable to the terms contemplated by the
preceding clause (i), which other party shall be reasonably acceptable to Buyer
in its discretion, including with respect to whether customers of the Business
will desire to continue doing business with Buyer if Buyer will be relying upon
such Alternate Technology for future products.
(e) Mentor. Seller shall have effectively assigned to Buyer, or
Buyer shall have entered into directly, a license agreement with Mentor, which
license shall be satisfactory to Buyer, in its sole discretion.
(f) Tyco Submarine Systems, Ltd. Seller, Tyco Telecommunications
(US) Inc. and Tyco Submarine Systems, Ltd. shall have entered into a Release and
Settlement Agreement substantially in the form of Exhibit 5.1(f) hereto, except
that such agreement shall, by its terms, be assignable to Buyer as a successor
of substantially all of the assets of Seller.
(g) Audit Report. Seller shall have delivered to Buyer financial
statements as of and for the five-month period ending May 31, 2002, together
with the audit report thereon of BDO Xxxxxxx.
(h) No Legal Prohibition. No suit, action, investigation, inquiry or
other proceeding by any Governmental Entity or other Person shall have been
instituted or threatened
27
which arises out of or relates to this Agreement, or the transactions
contemplated hereby and no injunction, order, decree or judgment shall have been
issued and be in effect or threatened to be issued by any Governmental Entity of
competent jurisdiction, and no statute, rule or regulation shall have been
enacted or promulgated by any Governmental Entity and be in effect, which in
each case restrains or prohibits, in a material manner, the consummation of the
transactions contemplated hereby.
(i) Certificate. Buyer shall have received a certificate, dated the
Closing Date, signed by a duly authorized officer of Seller, to the effect that
the conditions set forth in Sections 5.1(a) (i) and (ii), 5.1(b), and 5.1(c)
have been satisfied.
(j) Seller Stockholder Approval. Seller shall have delivered to
Buyer evidence of the necessary stockholder approval to duly authorize Seller to
make, execute, deliver and perform this Agreement and the other Seller
Transaction Documents to which Seller is a party.
(k) Seller Transaction Documents. Buyer shall have received from
Seller the executed Seller Transaction Documents.
(l) No Material Adverse Change. No event, violation, circumstance or
other matter shall have occurred that has had a Material Adverse Effect or can
reasonably be expected to have a Material Adverse Effect.
5.2. Conditions Precedent to Obligations of Seller. The obligations of
Seller under this Agreement to consummate the transactions contemplated by this
Agreement on the Closing Date shall be subject to the satisfaction, at or prior
to the Closing Date, of all of the following conditions, any one or more of
which may be waived by Seller:
(a) Representations and Warranties Accurate. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects, as of the date of this Agreement and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
(b) Performance by Buyer. Buyer shall have performed and complied in
all material respects with all covenants and agreements required to be performed
or complied with by it hereunder on or prior to the Closing Date.
(c) No Legal Prohibition. No suit, action, investigation, inquiry or
other proceeding by any Governmental Entity or other Person shall have been
instituted or threatened which arises out of or relates to this Agreement or the
transactions contemplated hereby and no injunction, order, decree or judgment
shall have been issued and be in effect or threatened to be issued by any
Governmental Entity of competent jurisdiction, and no statute, rule or
regulation shall have been enacted or promulgated by any Governmental Entity and
be in effect, which in each case restrains or prohibits, in a material manner,
the consummation of the transactions contemplated hereby.
(d) Certificate. Seller shall have received a certificate, dated the
Closing Date, signed on behalf of Buyer by an officer of Buyer, to the effect
that the conditions set forth in Sections 5.2(a) and 5.2(b) have been satisfied.
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(e) Buyer Transaction Documents. Seller shall have received from
Buyer the executed Buyer Transaction Documents.
ARTICLE VI
INDEMNIFICATION AND CERTAIN ADDITIONAL COVENANTS
6.1. Indemnification Obligations. Seller and Buyer agree as follows:
(a) Seller's Indemnification Obligations. (i) Subject to the
limitations contained in this Article VI, Seller shall indemnify Buyer and its
Affiliates and the respective agents, advisors, representatives, directors and
officers of Buyer and its Affiliates (the "Buyer Indemnified Parties") from, and
hold the Buyer Indemnified Parties harmless from and against, any and all
Damages arising out of or resulting from (A) any breach of any representation or
warranty made by Seller in this Agreement, (B) any breach of any covenant or
agreement made by Seller in this Agreement (other than in Section 4.10 or 4.11
hereof) or in any Seller Transaction Document, (C) any violation or liability
arising under any bulk sales law, (D) any Retained Liability, (E) the reasonable
costs of enforcing any Buyer Indemnified Party's rights hereunder, and (F) any
breach of any covenant or agreement made in Section 4.10 or 4.11 hereof.
(ii) For purposes of this Agreement, "Damages" shall mean any
and all losses, liabilities, obligations, damages (including governmental
penalty or punitive damages and including reasonable costs of investigation,
clean up and remediation), deficiencies, interest, costs and expenses and any
claims, actions, demands, causes of action, judgments, costs and expenses
(including reasonable attorneys' fees and all other reasonable expenses incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened incurred in connection with the successful enforcement of this
Agreement).
(b) Buyer's Indemnification Obligations. Buyer shall indemnify
Seller and its agents, advisors and representatives and their respective
directors, officers and other Affiliates (the "Seller Indemnified Parties")
from, and hold the Seller Indemnified Parties harmless from and against, any and
all Damages arising out of or resulting from (i) any breach of any
representation warranty made by Buyer in this Agreement, (ii) any breach of any
covenant or agreement made by Buyer in this Agreement or in any Buyer
Transaction Document, (iii) any Acquired Liabilities, and (iv) the reasonable
costs of enforcing any Seller Indemnified Party's rights hereunder.
(c) Indemnification Procedures.
(i) A party seeking indemnification pursuant to this Section
6.1 (an "Indemnified Party") shall give prompt notice to the party from whom
such indemnification is sought (the "Indemnifying Party") of the assertion of
any claim, the incurrence of any Damages, or the commencement of any action,
suit or proceeding, of which it has knowledge and in respect of which indemnity
may be sought hereunder, and will give the Indemnifying Party such information
with respect thereto as the Indemnifying Party may reasonably request, but
failure to give such required notice shall relieve the Indemnifying Party of any
liability hereunder only to the extent that the Indemnifying Party has suffered
material actual prejudice thereby. The
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Indemnifying Party shall have the right, exercisable by written notice to the
Indemnified Party within ten (10) business days of receipt of notice from the
Indemnified Party of the commencement of or assertion of any claim or action,
suit or proceeding by a third party in respect of which indemnity may be sought
hereunder (a "Third Party Claim"), to assume the defense of such Third Party
Claim which involves (and continues to involve) solely monetary damages;
provided that (A) the Indemnifying Party expressly agrees in such notice that,
as between the Indemnifying Party and the Indemnified Party, the Indemnifying
Party shall be solely obligated to satisfy and discharge the Third Party Claim;
(B) the defense of such Third Party Claim by the Indemnifying Party will not, in
the reasonable judgment of the Indemnified Party, have any continuing material
adverse effect on the Indemnified Party's business; and (C) the Indemnifying
Party makes reasonably adequate provision to ensure the Indemnified Party of the
ability of the Indemnifying Party to satisfy the full amount of any adverse
monetary judgment that may result (the conditions set forth in clauses (A), (B)
and (C) are collectively referred to as the "Litigation Conditions").
(ii) Within ten (10) days after the Indemnifying Party has
given notice to the Indemnified Party of its intended exercise of its right to
defend a Third Party Claim, the Indemnified Party shall give notice to the
Indemnifying Party of any objection thereto based upon the Litigation
Conditions. If the Indemnified Party so objects, the Indemnified Party shall
continue to defend the Third Party Claim until such time as such objection is
withdrawn. If no such notice is given, or if any such objection is withdrawn,
the Indemnifying Party shall be entitled to assume and conduct such defense,
with counsel selected by the Indemnifying Party and reasonably acceptable to the
Indemnified Party, until such time as the Indemnified Party shall give notice
that any of the Litigation Conditions, in its reasonable judgment, are no longer
satisfied.
(iii) The Indemnifying Party or the Indemnified Party, as the
case may be, shall have the right to participate in (but not control), at its
own expense, the defense of any Third Party Claim which the other party is
defending as provided in this Agreement.
(iv) The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim as provided in this Agreement, shall not
consent to a settlement of, or the entry of any judgment arising from, any such
Third Party Claim without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld or delayed). The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld or delayed), enter into any
compromise or settlement which commits the Indemnified Party to take, or to
forbear to take, any action. The Indemnified Party shall have the sole and
exclusive right to settle any Third Party Claim, on such terms and conditions as
it deems reasonably appropriate, to the extent such Third Party Claim involves
equitable or other non-monetary relief, and shall have the right to settle any
Third Party Claim involving monetary damages with the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
(v) Any Buyer Indemnified Party shall be entitled to payment
from the Escrowed Amount of any amount due such Buyer Indemnified Party pursuant
to this Article VI and Seller shall give the escrow agent under the Escrow
Agreement all such notices as shall be necessary to permit such payment from the
Escrowed Amount. Subject to any Buyer
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Indemnified Parties' claims under this Article VI that may be pending at such
time, Seller shall be entitled to payment of the Escrowed Amount (or balance
thereof, as the case may be) upon the date that is twelve (12) months after the
Closing Date and Buyer shall give the escrow agent under the Escrow Agreement
all such notices as shall be necessary to permit such payment to Seller. Amounts
paid in respect of indemnification obligations of the parties, including any
portion of the Escrowed Amount paid to the Buyer Indemnified Parties pursuant to
the Escrow Agreement, shall be treated as an adjustment to the Purchase Price.
Whether or not the Indemnifying Party chooses to defend or prosecute any claim
involving a third party, all the parties hereto shall cooperate in the defense
or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
(vi) No action or claim for Damages arising out of or
resulting from a breach of representations or warranties shall be brought or
made after the expiration of the period set forth in Section 8.2.
(vii) The indemnification provided for in Section
6.1(a)(i)(A), Section 6.1(a)(i)(B), Section 6.1(b)(i) or Section 6.1(b)(ii)
hereof shall not be required unless and until, at the time of any such
determination, the aggregate amount of Damages otherwise subject to
indemnification under this Section 6.1 exceeds $200,000, in which event the
indemnified party or parties will be entitled to indemnification for the full
amounts of their Damages; provided, however, that the foregoing limitation shall
not apply to any claim based on (A) a breach of the representation set forth in
Section 2.14 hereof or (B) a breach of any representation or warranty made in
this Agreement constituting fraud. Notwithstanding anything to the contrary
contained in this Agreement, Seller's maximum indemnity obligation under Section
6.1(a)(i)(A) or Section 6.1(a)(i)(B) for the payment of Damages, and Buyer's and
any Buyer Indemnified Party's sole and exclusive remedy for any breach of any
representation or warranty made by Seller in this Agreement or for the breach of
any covenant or agreement made by Seller in this Agreement (other than Sections
4.10 or 4.11 hereof) or in any Seller Transaction Document shall in no event
exceed the Escrowed Amount; provided, however, that the foregoing limitation
shall not apply to any claim based on (x) a breach of the representation set
forth in Section 2.14 hereof or (y) a breach of any representation, warranty,
covenant or agreement made by Seller in this Agreement or any Seller Transaction
Document constituting fraud.
(viii) No right to indemnification under this Section 6.1
shall be limited by reason of any investigation or audit conducted before or
after the Closing of any party hereto or the knowledge of such party of any
breach of any representation, warranty, agreement or covenant by the other party
at any time, or the decision by such party to complete the Closing.
Notwithstanding anything to the contrary herein, Buyer shall have the right,
irrespective of any knowledge of audit or investigation by Buyer, to rely fully
on the representations, warranties and covenants of Seller contained herein.
Seller acknowledge and agree that each of the representations and warranties of
Seller in this Agreement is not to be affected or limited by any previous or
other disclosures, express or implied, to Buyer, its officers, representatives
or professional advisors.
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ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time (with respect to Section 7.1(b) through (e), by written
notice by the terminating party to the other party):
(a) by mutual written consent duly authorized by an officer of
Seller and an officer of Buyer; or
(b) by either Buyer or Seller if the Closing shall not have occurred
on or prior to July 31, 2002 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
willful failure to fulfill any material obligation under this Agreement has been
the cause of or resulted in the failure of the Closing to occur on or before
such date); or
(c) by either Buyer or the Seller if a Governmental Entity shall
have (i) issued a non-appealable final judgment, order, injunction, decree or
ruling or taken any other action or (ii) enacted, enforced or deemed applicable
to the transactions contemplated hereby a Law in final form, in each case having
the effect of permanently restraining, enjoining, prohibiting or making illegal
the consummation of the transactions contemplated hereby (provided that the
party seeking to terminate pursuant to this Section 7.1(c) shall have used
commercially reasonable efforts to have any such judgment, order, injunction,
decree, ruling or other action vacated or lifted); or
(d) by Buyer, upon a material breach of any representation,
warranty, covenant or agreement of the Seller set forth in this Agreement such
that the conditions set forth in Section 5.1(a) or 5.1(b) would not be
substantially satisfied (a "Seller Terminating Breach"), provided that, if such
Seller Terminating Breach is curable prior to the expiration of thirty (30) days
from notice to the Seller of its occurrence through the exercise of the Seller's
commercially reasonable efforts, and for so long as the Seller continues to
exercise such commercially reasonable efforts, Buyer may not terminate this
Agreement under this Section 7.1(d) until the expiration of such period without
such Seller Terminating Breach having been cured (but in no event shall the
preceding proviso be deemed to extend the date set forth in Section 7.1(b)); or
(e) by the Seller, upon a material breach of any representation,
warranty, covenant or agreement of Buyer set forth in this Agreement such that
the conditions set forth in Section 5.2(a) or 5.2(b) would not be substantially
satisfied (a "Buyer Terminating Breach"), provided that, if such Buyer
Terminating Breach is curable prior to the expiration of thirty (30) days from
notice to Buyer of its occurrence through the exercise of Buyer's commercially
reasonable efforts, and for so long as Buyer continues to exercise such
commercially reasonable efforts, Seller may not terminate this Agreement under
this Section 7.1(e) until the expiration of such period without such Buyer
Terminating Breach having been cured (but in no event shall the preceding
proviso be deemed to extend the date set forth in Section 7.1(b)).
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7.2. Effect of Termination. Upon the termination of this Agreement
pursuant to Section 7.1, each party's right of termination under Section 7.1 is
in addition to any other rights it may have under this Agreement or otherwise,
and the exercise of a right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 7.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Section 4.2 will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of this Agreement by the other
party, or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE VIII
MISCELLANEOUS
8.1. Construction. Buyer and Seller have participated jointly in the
negotiation and drafting of this Agreement and the Transaction Documents. In the
event any ambiguity or question of intent or interpretation arises, this
Agreement and the Transaction Documents shall be construed as if drafted jointly
by Buyer and Seller and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or the other Transaction Documents. Any reference to any federal,
state, local or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" in this Agreement shall mean "including without
limitation." Nothing in the Disclosure Schedules hereto shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
exception is described on the Disclosure Schedule with reasonable particularity
and expressly refers to the applicable section of this Agreement. Section
references refer to this Agreement unless otherwise specified.
8.2. Nature and Survival of Covenants and Representations. With respect to
the several covenants, agreements, representations and warranties of the parties
hereto in this Agreement or in any Disclosure Schedule or Exhibit hereto or any
certificate or other document delivered pursuant to this Agreement: (a) the
covenants and agreements (including in respect of Retained Liabilities and
Acquired Liabilities and indemnification therefor) shall survive the Closing
indefinitely; and (b) the representations and warranties shall survive until the
date twelve (12) months after the Closing Date except that (i) the
representations and warranties of Seller set forth in Sections 2.1, 2.2, 2.3,
2.10 and 2.11 and of Buyer set forth in Sections 3.1, 3.2 and 3.3 shall survive
indefinitely; and (ii) the representations and warranties of Seller set forth in
Sections 2.8, 2.12 and 2.16 shall survive until the statute of limitations
applicable to such matters expires.
8.3. Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed duly given only upon delivery
to the party personally (including by reputable overnight courier service), when
faxed (with written confirmation of transmission having been received) during
normal business hours or three days after being mailed by
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registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below (or at such other address for a party as shall be
specified by such party by like notice):
If to Buyer:
Comtech/AHA Acquisition Corp.
c/o Comtech Telecommunications Corp.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Seller:
Advanced Hardware Architectures, Inc.
0000 XX Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax:
Attention:
with a copy to:
White & Xxx LLP
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxx, Esq.
8.4. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto, except that Buyer may
assign its rights under this Agreement to any Affiliate or any successor in
interest to, or assignee of, Buyer or any of the Acquired Assets; provided that
such Affiliate, successor in interest or assignee of Buyer agrees to be bound by
all the terms and conditions of this Agreement, including Buyer's obligations to
indemnify Seller under Section 6.1 below.
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8.5. Exhibits and Schedules. All Exhibits and Disclosure Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.
8.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof.
8.7. Consent to Jurisdiction. Each of Buyer and Seller irrevocably submits
to the exclusive jurisdiction of (a) the Supreme Court of the State of New York
sitting in New York County and (b) the United States District Court for the
Southern District of New York, for purposes of any suit, action or other
proceeding arising out of this Agreement or transaction contemplated hereby (and
agrees not to commence any action, suit or proceeding relating hereto except in
such courts). Each of Buyer and Seller further agrees that service of any
process, summons or document by U.S. registered mail to such party's respective
address set forth in Section 8.3 shall be effective service of process for any
action, suit or proceeding with respect to any matters to which it has been
submitted to jurisdiction as set forth in the immediately preceding sentence.
Each of Buyer and Seller irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in of (a) the Supreme Court of
the State of New York sitting in New York County and (b) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
8.8. Severability. The parties agree that (a) the provisions of this
Agreement shall be severable in the event that any provision hereof is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
(b) such invalid, void or otherwise unenforceable provision shall be
automatically replaced by another provision which is as similar as possible in
terms to such invalid, void or otherwise unenforceable provision but which is
valid and enforceable and (c) the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
8.9. No Third Party Beneficiaries. Nothing herein expressed or implied is
intended or should be construed to confer upon or give to any Person other than
the parties hereto (and the Buyer Indemnified Parties and Seller Indemnified
Parties referred to in Section 6.1) and their successors and permitted assigns
any benefits, rights or remedies under or by reason of this Agreement.
8.10. Amendment and Waiver. The parties may, by mutual agreement, amend
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of the other party; (b)
waive any inaccuracies in representations and warranties by the other party; (c)
waive compliance by the other party with any of the covenants or agreements
contained herein and performance of any obligations by the other party; and (d)
waive the fulfillment of any condition that is precedent to the performance by
such party of any of its obligations under this Agreement. To be effective, any
such amendment or waiver must be in writing and be signed by the party providing
such waiver or
35
extension, as the case may be. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which any party may
otherwise have at law or in equity. The waiver by any party hereto of any breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach, whether or not similar.
8.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
8.12. Headings. The headings preceding the text of the sections and
paragraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.
8.13. Certain Defined Terms. As used herein, the terms below have the
following definitions:
(a) "Affiliate" of any Person means any Person, directly or
indirectly controlling, controlled by or under common control with such Person,
including, for any purpose relating to employee benefits, an entity that is, or
at any relevant time was, together with the Seller, treated as a "single
employer" under Section 414(b), 414(c), 414(m) or 414(o) of the Code.
(b) "Authority" means any federal, state, local or foreign
governmental or regulatory entity (or any department, agency, authority or
political subdivision thereof or any court or arbitrator).
(c) "Lien" means any lien, charge, claim, pledge, security interest,
conditional sale agreement or other title retention agreement, lease, mortgage,
security agreement, right of first refusal, option, restriction, tenancy,
license, covenant, right of way, easement or other encumbrance (including the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or statute or law of any jurisdiction).
(d) "Material Adverse Effect" means any event, violation,
inaccuracy, circumstance or other matter relating to the Acquired Assets or
Acquired Liabilities that causes Buyer to incur actual damages in the aggregate
amount of $200,000 or more, as determined at the time of such precipitating
event, violation, inaccuracy circumstance or other matter.
(e) "Person" means an individual, a corporation, a partnership, an
association, a joint venture, a limited liability Seller, an Authority, a trust
or other entity or organization.
(f) "Seller's knowledge" means the actual knowledge of Xxx Xxxxxx,
Consultant, Xxxx Xxxxxxx, President, Xxxx Xxxxxxx, Controller, Xxxxx Xxxxxx,
Operations Manager, Xxxx Xxxxxxxx, Test and Product Engineering Manager, and
each member of the Board of Directors of Seller as constituted as of the date
hereof. Seller's knowledge does not mean that Seller has made any actual
inquiry, nor does it mean that Seller has made the inquiry that might have been
made by a "reasonable" person under the circumstances.
8.14. Entire Agreement. This Agreement, together with the Disclosure
Schedules and Exhibits hereto and the other Transaction Documents, constitutes
the entire understanding of the
36
parties with respect to the subject matter hereof, supersedes any prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.
8.15. Parent. Parent shall cause Buyer to perform each of its obligations
under this Agreement.
[Signature page follows]
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first written above.
COMTECH TELECOMMUNICATIONS CORP.
By /s/ Xxxxxxx X. Porcelain
------------------------------------------------
Name: Xxxxxxx X. Porcelain
Title: Vice President of Operational Finance
COMTECH/AHA ACQUISITION CORP.
By /s/ Xxxxxx XxXxxxxx
------------------------------------------------
Name: Xxxxxx XxXxxxxx
Title: President
ADVANCED HARDWARE ARCHITECTURES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
38
