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EXHIBIT 1
ASSET PURCHASE AGREEMENT
BETWEEN
MERCURY COMPUTER SYSTEMS, INC.
(AS "SELLER"),
AND
INTERNATIONAL BUSINESS MACHINES CORPORATION
(AS "BUYER")
DATED: DECEMBER 13, 1999
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TABLE OF CONTENTS
ARTICLE I Purchase and Sale of Acquired Assets............................ 1
SECTION 1.01. Purchase and Sale.................................... 1
SECTION 1.02. Acquired Assets and Excluded Assets.................. 2
SECTION 1.03. Assumption of Certain Liabilities.................... 5
SECTION 1.04. Consents of Third Parties............................ 6
ARTICLE II The Closing..................................................... 7
SECTION 2.01. Closing Date......................................... 7
SECTION 2.02. Transactions To Be Effected at the Closing........... 7
SECTION 2.03. Risk of Loss......................................... 8
ARTICLE III Representations and Warranties of Seller........................ 8
SECTION 3.01. Organization, Standing and Power..................... 8
SECTION 3.02. Authority; Execution and Delivery; Enforceability.... 8
SECTION 3.03. No Conflicts; Consents............................... 8
SECTION 3.04. Financial Statements................................. 9
SECTION 3.05. Assets Other than Real Property Interests............ 9
SECTION 3.06. Real Property........................................ 10
SECTION 3.07. Contracts............................................ 10
SECTION 3.08. Inventory............................................ 12
SECTION 3.09. Personal Property.................................... 13
SECTION 3.10. Permits.............................................. 13
SECTION 3.11. Sufficiency of Acquired Assets....................... 13
SECTION 3.12. Taxes................................................ 13
SECTION 3.13. Proceedings.......................................... 14
SECTION 3.14. Benefit Plans........................................ 15
SECTION 3.15. Absence of Changes or Events......................... 16
SECTION 3.16. Compliance with Applicable Laws...................... 16
SECTION 3.17. Employee and Labor Matters........................... 17
SECTION 3.18. Transactions with Affiliates......................... 18
SECTION 3.19. Effect of Transaction................................ 18
SECTION 3.20. Disclosure........................................... 18
SECTION 3.21. Suppliers............................................ 19
SECTION 3.22. Year 2000 Compliance................................. 19
SECTION 3.23. Customers............................................ 19
ARTICLE IV Representations and Warranties of Buyer......................... 20
SECTION 4.01. Organization, Standing and Power..................... 20
SECTION 4.02. Authority; Execution and Delivery; and
Enforceability....................................... 20
SECTION 4.03. No Conflicts; Consents............................... 20
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ARTICLE V Covenants....................................................... 21
SECTION 5.01. Covenants of Seller Relating to Conduct of Business.. 21
SECTION 5.02. No Solicitation...................................... 22
SECTION 5.03. Access to Information................................ 23
SECTION 5.04. Reasonable Efforts................................... 23
SECTION 5.05. Expenses; Transfer Taxes; Refunds; Tax Liabilities... 23
SECTION 5.06. Brokers or Finders................................... 24
SECTION 5.07. Employee Matters..................................... 24
SECTION 5.08. Benefit Plan Matters................................. 24
SECTION 5.09. Supplemental Disclosure.............................. 25
SECTION 5.10. Post-Closing Cooperation............................. 25
SECTION 5.11. Publicity............................................ 25
SECTION 5.12. Agreement Not To Compete............................. 26
SECTION 5.13. Bulk Transfer Laws................................... 26
SECTION 5.14. Further Assurances................................... 27
SECTION 5.15. Supplies............................................. 27
SECTION 5.16. Names Following Closing.............................. 27
SECTION 5.17. Tax Matters.......................................... 27
SECTION 5.18. Allocation of Expenses............................... 27
SECTION 5.19. Buyers Agreement Regarding Seller's Employees........ 28
ARTICLE VI Conditions Precedent............................................ 28
SECTION 6.01. Conditions to Each Party's Obligation................ 28
SECTION 6.02. Conditions to Obligation of Buyer.................... 29
SECTION 6.03. Conditions to Obligation of Seller................... 31
SECTION 6.04. Frustration of Closing Conditions.................... 32
ARTICLE VII Termination, Amendment and Waiver............................... 32
SECTION 7.01. Termination.......................................... 32
SECTION 7.02. Effect of Termination................................ 32
SECTION 7.03. Amendments and Waivers............................... 33
ARTICLE VIII Indemnification................................................. 33
SECTION 8.01. Indemnification by Seller............................ 33
SECTION 8.02. Indemnification by Buyer............................. 34
SECTION 8.03. Termination of Indemnification....................... 34
SECTION 8.04. Procedures........................................... 34
SECTION 8.05. Survival of Representations.......................... 35
SECTION 8.06. Right of Setoff...................................... 35
ARTICLE IX General Provisions.............................................. 35
SECTION 9.01. Assignment........................................... 35
SECTION 9.02. No Third-Party Beneficiaries......................... 35
SECTION 9.03. Attorney Fees........................................ 35
SECTION 9.04. Notices.............................................. 36
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SECTION 9.05. Interpretation; Exhibits and Schedules;
Certain Definitions.................................. 36
SECTION 9.06. Counterparts......................................... 38
SECTION 9.07. Entire Agreement..................................... 38
SECTION 9.08. Severability......................................... 38
SECTION 9.09. Consent to Jurisdiction.............................. 38
SECTION 9.10. Governing Law........................................ 38
SECTION 9.11. Waiver of Jury Trial................................. 39
SECTION 9.12. Dispute Resolution................................... 39
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ASSET PURCHASE AGREEMENT (together with the schedules and exhibits hereto, this
"Agreement') dated as of December 13, 1999, between Mercury Computer Systems, a
Massachusetts corporation ("SELLER"), and International Business Machines
Corporation, a New York corporation ("BUYER").
Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all the assets of Seller's Shared Storage Business
Unit (the "BUSINESS"), upon the terms and subject to the conditions set forth in
this Agreement.
Accordingly, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
SECTION 1.01. PURCHASE AND SALE. (a) On the terms and subject to
the conditions set forth in this Agreement, at the Closing (as defined in
Section 2.01), Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase from Seller ~~all the right, title and interest as of
the Closing of Seller ~~in, to and under the Acquired Assets (as defined in
Section 1.02(a)), for: (i) an aggregate purchase price (the "PURCHASE Price") of
Twenty-three Million Five Hundred Thousand Dollars ($23,500,000), payable as set
forth in Section 1.01(b), below, and (ii) the assumption of the Assumed
Liabilities (as defined in Section 1.03(a)). The purchase and sale of the
Acquired Assets and the assumption of the Assumed Liabilities is referred to in
this Agreement as the "ACQUISITION."
(b) The Purchase Price shall be paid by Buyer as follows:
(i) an aggregate of $5,500,000 shall be paid to Seller on the
Closing Date as follows: $4,500,000 by wire transfer in immediately available
funds, to a bank designated in writing by Seller (such designation to be made at
least two(2) business days prior to the Closing Date) and $1,000,000 to be held
as a holdback by Buyer for setoff as set forth in Section 8.06 until the time of
the last quarterly payment set forth in Section 1.01(ii) at which point any
unused amount held in the holdback will be paid to Seller; and
(ii) $18,000,000 shall be paid to Seller in twelve (12) equal
quarterly installments of $1,500,000 on the first business day of March , June ,
September and December (each, a "Quarterly Payment Date"). The first such
payment shall be made on 6/1/2000.
(c) In addition to the Purchase Price, Buyer shall pay to
Seller, interest in the amount of $1,200,000, payable in equal quarterly
installments of $100,000, beginning on the first Quarterly Payment Date
following the Closing Date.
(d) For the period beginning upon the date of the first payment
outlined above and ending upon the date of payment in full of the Purchase
Price, Buyer may, at Buyer's sole
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discretion, terminate this agreement (a "Termination"). In the event of a
Termination, (i) Buyer shall return all intellectual property acquired pursuant
to this Agreement to Seller, (ii) Buyer shall have no obligation to make any
further payments pursuant to Section 1.01(b) or (c), (iii) Seller shall have no
obligation to return to Buyer any amounts previously paid pursuant to Section
1.01 and (iv) the restrictions set forth in Section 5.12 hereof shall
immediately cease and be of no further force or effect. In order to effect a
Termination hereunder, Buyer shall be required to deliver to the President of
Seller, via hand delivery, a written notice of termination ("Notice") signed by
Buyer's senior executive responsible for corporate business development. The
notice shall set forth Buyer's intent to cause a Termination and the date on
which such Termination shall be effective, which date shall be at least 20
business days after the date of the Notice. Buyer shall have the right to cancel
any such Termination, at its sole discretion, at any time until the effective
time of such Termination. In no event will late payment or other actual or
potential breach of this Agreement be deemed to be a Termination.
SECTION 1.02. ACQUIRED ASSETS AND EXCLUDED ASSETS. (a) The term
"ACQUIRED ASSETS" means all the business, properties, assets, goodwill and
rights of Seller of whatever kind and nature, real or personal, tangible or
intangible, including those set forth on the Schedules hereto that are owned,
leased or licensed by Seller on the Closing Date (as defined in Section 2.01)
and used, held for use or intended to be used primarily in the operation or
conduct of the Business, other than the Excluded Assets (as defined in Section
1.02(b)), including:
(i) all interests in real property of Seller (the "PREMISES");
(ii) all raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories of Seller, including those
set forth on Schedule 1.02(ii), that on the Closing Date are located on the
Premises, and all of Seller's raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories ~~(including in transit, on
consignment or in the possession of any third party) on the Closing Date that is
used, held for use or intended to be used primarily in the operation or conduct
of the Business, all as set forth in Schedule 1.02(a)(ii) (collectively, the
"INVENTORY");
(iii) all other tangible personal property and interests therein,
including all machinery, equipment, furniture, furnishings and vehicles, of
Seller~~ set forth in Schedule 1.02(a)(iii) that is used, held for use or
intended to be used primarily in the operation or conduct of the Business (the
"PERSONAL PROPERTY");
(iv) all trademarks (registered or unregistered), service marks,
brand names, certification marks, trade dress, assumed names, trade names, and
other indications of origin (other than those set forth on Schedule 1.02(iv)
hereof), the goodwill associated with the foregoing and registrations in any
jurisdiction of, and application in any jurisdiction to register the foregoing
including any extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patented, patentable or
not patentable in any jurisdiction; trade secrets, know-how and confidential
information and rights, to the extent provided by applicable laws, in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works of commercial value, whether copyrights, copyrightable or not
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copyrightable in any jurisdiction; registration or applications for registration
of copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights and computer programs and
software (including source code, object code and data) and licenses, immunities,
covenants not to xxx and all rights to any of the foregoing (the "INTELLECTUAL
PROPERTY") of Seller that are used, held for use or intended to be used
primarily in the operation or conduct of the Business (such Intellectual
Property being the "ASSIGNED INTELLECTUAL PROPERTY" as more fully set forth in
that certain Intellectual Property Agreement substantially in the form set out
in Exhibit A hereto, to be entered into by Buyer and Seller on the Closing Date
(the "IP AGREEMENT");
(v) all trade secrets, confidential information, inventions,
know-how, formulae, processes, procedures, research records, records of
inventions, test information, market surveys and marketing know-how of Seller
that are used, held for use or intended to be used primarily in the operation or
conduct of the Business (the "TECHNOLOGY");
(vi) all Permits (as defined in Section 3.10) of Seller set
forth in Schedule 1.02(a)(vi) that are used, held for use or intended to be used
primarily in the operation or conduct of the Business (the "ASSIGNED PERMITS");
(vii) all contracts, licenses, agreements, commitments and all
other legally binding arrangements, whether oral or written ("CONTRACTS"), to
which Seller is a party or by which Seller is bound that are set forth in
Schedule 1.02(vii), and subject to Section 1.02(c) herein, all other Contracts
(including purchase orders and sales orders) to which Seller is a party or by
which Seller is bound that are used, held for use or intended to be used
primarily in, or that arise primarily out of, the operation or conduct of the
Business or to which the Acquired Assets are subject (the "ASSIGNED CONTRACTS");
(viii) all rights in and to products sold or leased (including
products returned after the Closing and rights of rescission, replevin and
reclamation) in the operation or conduct of the Business;
(ix) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items that are used, held for use or
intended to be used primarily in, or that arise primarily out of, the operation
or conduct of the Business;
(x) all rights, claims and credits to the extent relating to
any other Acquired Asset or any Assumed Liability, including any such items
arising under insurance policies and all guarantees, warranties, indemnities and
similar rights in favor of Seller in respect of any other Acquired Asset or any
Assumed Liability;
(xi) all books of account, ledgers, general, financial,
accounting and personnel records, files, invoices, customers' and suppliers'
lists, other distribution lists, billing records, sales and promotional
literature, manuals, customer and supplier correspondence (in all cases, in any
form or medium), of Seller that are used, held for use or intended to be used
primarily in, or that arise primarily out of, the conduct or operation of the
Business (the "RECORDS"); and
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(xii) all goodwill generated by or associated with the Business.
(b) The term "EXCLUDED ASSETS" means:
(i) (A) all accounts receivable other than those related to
continuing service and support of the acquired products or any amounts related
to prepaid services of Seller on the Closing Date arising out of the operation
or conduct of the Business and (B) all assets identified on Schedule 1.02(b);
(ii) all cash and cash equivalents of Seller;
(iii) all rights, claims and credits of Seller to the extent
relating to any other Excluded Asset or any Excluded Liability (as defined in
Section 1.03(b)), including any such items arising under insurance policies and
all guarantees, warranties, indemnities and similar rights in favor of Seller in
respect of any other Excluded Asset or any Excluded Liability;
(iv) all the assets of Seller Pension Plans (as defined in
Section 3.14); (v) all rights of Seller under this Agreement, the Ancillary
Agreements (as defined in Section 9.05) and the other agreements and instruments
executed and delivered in connection with this Agreement;and
(vi) all assets of Seller which are not related to the Business.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, to the extent that, after the Closing Date, Buyer or Seller become
aware of Contracts to which Seller is a party or by which Seller is bound and
that were used, held for use or intended to be used primarily in, or arose
primarily out of, the operation or conduct of the Business or to which the
Acquired Assets were subject as of the Closing Date, and such Contracts were not
listed as Assigned Contracts on Schedule 1.02(a)(vii), Buyer shall have the
option, in its sole discretion, to (i) assume the rights and obligations under
any or all of such Contracts (in which case such Contracts shall be deemed
Acquired Assets hereunder), or (ii) not assume the rights and obligations under
any or all of such Contracts (in which case such Contracts shall not be
considered Acquired Assets hereunder) and Buyer shall have no liability with
respect thereto.
SECTION 1.03. ASSUMPTION OF CERTAIN LIABILITIES. (a) Upon the
terms and subject to the conditions of this Agreement, Buyer shall assume,
effective as of the Closing, and from and after the Closing Buyer shall pay,
perform and discharge when due all liabilities, obligations and commitments of
Seller under the Assigned Contracts to the extent such liabilities, obligations
and commitments relate to the period from and after the Closing (the "ASSUMED
LIABILITIES").
(b) Notwithstanding Section 1.03(a), or any other provision of
this Agreement or any Ancillary Agreement, Buyer shall not assume any of the
following liabilities, obligations and
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commitments of Seller (the "EXCLUDED LIABILITIES"), all of which shall be
retained and paid, performed and discharged when due by Seller:
(i) any liability, obligation or commitment of Seller, except
as specifically set forth in Section 1.03(a), relating to or arising out of the
Business or any Acquired Asset, whether express or implied, liquidated,
absolute, accrued, contingent or otherwise, or known or unknown, and based upon,
arising out of or resulting from any fact, circumstance, occurrence, condition,
act or omission existing on or occurring on or prior to the Closing;
(ii) any liability, obligation or commitment of Seller, whether
express or implied, liquidated, absolute, accrued, contingent or otherwise, or
known or unknown, arising primarily out of the operation or conduct by Seller or
any of its affiliates of any business other than the Business;
(iii) any liability, obligation or commitment of Seller (a)
arising out of any actual or alleged breach by Seller of, or nonperformance by
Seller under, any Contract (including any Assigned Contract) prior to the
Closing or (b) accruing under any Assigned Contract with respect to any period
prior to the Closing;
(iv) any liability, obligation or commitment of Seller arising
out of (a) any suit, action or proceeding ("PROCEEDING") pending or, to the
knowledge of Seller after due inquiry, threatened as of the Closing Date or (b)
any actual or alleged violation by Seller or any of its affiliates of any
Applicable Law (as defined in Section 3.03) prior to the Closing;
(v) any account payable of Seller;
(vi) any liability, obligation or commitment of Seller that
relates primarily to, or that arises primarily out of, any Excluded Asset, or
that arises out of the distribution to, or ownership by, Seller of the Excluded
Assets or associated with the realization of the benefits of any Excluded Asset;
(vii) any liability, obligation or commitment for Taxes (as
defined in Section 3.12), whether or not accrued, assessed or currently due and
payable, (a) of Seller or (b) relating to the operation or ownership of the
Business or the assets for any Tax period (or portion thereof) ending on or
prior to the Closing Date (for purposes of this clause (vii), all real property
Taxes, personal property Taxes and similar ad valorem obligations levied with
respect to the Acquired Assets for a Tax period that includes (but does not end
on) the Closing Date shall be apportioned between Seller and Buyer based upon
the number of days of such period included in the pre-Closing Tax period and the
number of days of such Tax period after the Closing Date (which period shall
include the Closing Date));
(viii) any liability, obligation or commitment for transfer,
documentary, sales, use, registration, value-added and other similar Taxes
(including all applicable real estate transfer Taxes and real property transfer
gains Taxes) and related amounts (including any penalties, interest and
additions to Tax) incurred in connection with this Agreement, the Ancillary
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Agreements, the Acquisition and the other transactions contemplated hereby and
thereby ("TRANSFER TAXES");
(ix) any liability, obligation or commitment of Seller arising
under any Seller Benefit Plan (as defined in Section 3.14(a));
(x) any liability, obligation or commitment of Seller that
relates to, or that arises out of, products manufactured, shipped or sold by or
on behalf of Seller on or prior to the Closing Date (including claims of
negligence, personal injury, product damage, product liability, product
warranties, promotional obligations, strict liability, product recall or any
other claims (including workers' compensation, employer's liability or
otherwise)), whether such liability, obligation or commitment relates to or
arises out of accidents, injuries or losses occurring on or prior to or after
the Closing Date, but not including any such obligation or commitment which can
be fulfilled by Buyer through the provision of normal and customary maintenance
and support activities, which will include when necessary providing a new
version of the product;
(xi) any liability, obligation or commitment of Seller that
relates to, or that arises out of, the employment or the termination of the
employment with Seller of any employee or former employee of the Business
(including as a result of the transactions contemplated by this Agreement); and
(xii) any liability, obligation or commitment of Seller to any of
its affiliates.
(c) Buyer shall acquire the Acquired Assets free and clear of
all liabilities, obligations and commitments of Seller~~, other than the Assumed
Liabilities, and free and clear of all Liens (as defined in Section 3.05), other
than Permitted Liens (as defined in Section 3.05).
SECTION 1.04. CONSENTS OF THIRD PARTIES. (a) Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any asset or any claim or right or any benefit arising
under or resulting from such asset if an attempted assignment thereof, without
the consent of a third party, would constitute a breach or other contravention
of the rights of such third party, would be ineffective with respect to any
party to an agreement concerning such asset, or would in any way adversely
affect the rights of Seller ~~or, upon transfer, Buyer under such asset. If any
transfer or assignment by Seller to, or any assumption by Buyer of, any interest
in, or liability, obligation or commitment under, any asset requires the consent
of a third party, then such assignment or assumption shall be made subject to
such consent being obtained. To the extent any Assigned Contract may not be
assigned to Buyer by reason of the absence of any such consent, Buyer shall not
be required to assume any Assumed Liabilities arising under such Assigned
Contract.
(b) If any such consent is not obtained prior to the Closing,
Seller, and Buyer shall cooperate (at their own expense) in any lawful and
reasonable arrangement reasonably proposed by Buyer under which Buyer shall
obtain the economic claims, rights and benefits under the asset, claim or right
with respect to which the consent has not been obtained in accordance with this
Agreement. Such reasonable arrangement may include: (i) the
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subcontracting, sublicensing or subleasing to Buyer of any and all rights of
Seller against the other party to such third-party agreement arising out of a
breach or cancellation thereof by the other party, and; (ii) the enforcement by
Seller of such rights. To the extent, and only to the extent, Buyer is able to
receive the economic claims, rights and benefits under such asset, Buyer shall
be responsible for the Assumed Liabilities, if any, arising under such asset.
ARTICLE II
THE CLOSING
SECTION 2.01. CLOSING DATE. The closing of the Acquisition (the
"CLOSING") shall take place at the offices of Buyer, Xxx Xxxxxxx Xxxx, Xxxxxx,
Xxx Xxxx 00000, at 10:00 a.m. on the 15th or 30 day of the calendar month in
which all the conditions set forth in Article VI have been satisfied, but in no
event prior to January 15, 2000 (or, to the extent permitted, waived by the
party entitled to the benefits thereof), or at such other place, time and date
as shall be agreed between Seller and Buyer. The date on which the Closing
occurs is referred to in this Agreement as the "CLOSING DATE." All transactions
provided for herein to occur on and as of the Closing Date shall be deemed to
have occurred simultaneously and to be effective as soon as Seller and Buyer
have completed the Closing or as of the close of business on the Closing Date,
whichever first occurs.
SECTION 2.02. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the
Closing:
(a) Seller shall deliver to Buyer: (i) such appropriately
executed bills of sale, assignments and other instruments of transfer relating
to the Acquired Assets in form and substance reasonably satisfactory to Buyer
and its counsel; and (ii) such other documents as Buyer or its counsel may
reasonably request to demonstrate satisfaction of the conditions and compliance
with the covenants set forth in this Agreement; and
(b) Buyer shall deliver to Seller: (i) the amount set forth in
Section 1.01(b)(i); (ii) such appropriately executed assumption agreements and
other instruments of assumption providing for the assumption of the Assumed
Liabilities in form and substance reasonably satisfactory to Seller and its
counsel; and (iii) such other documents as Seller or its counsel may reasonably
request to demonstrate satisfaction of the conditions and compliance with the
covenants set forth in this Agreement.
SECTION 2.03. RISK OF LOSS. Until the Closing, any loss of or
damage to the Acquired Assets from fire, casualty or any other occurrence shall
be the sole responsibility of Seller.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, as of the date of this
Agreement and as of the Closing Date, as follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. Seller is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has full corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct the Business and its other businesses as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, have not had and
could not reasonably be expected to have a material adverse effect: (i) on the
business, assets, financial condition or results of operations of Seller and its
subsidiaries, taken as a whole, or of the Business; (ii) on the ability of
Seller to perform its obligations under this Agreement and the Ancillary
Agreements; or (iii) on the ability of Seller to consummate the Acquisition and
the other transactions contemplated hereby (a "SELLER MATERIAL ADVERSE Effect").
Seller is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the Acquired Assets held by it or the nature
of the Business make such qualification necessary for it to conduct the Business
as currently conducted by it, except where the failure to be so qualified would
not be a Seller Material Adverse Impact. Seller has made available to Buyer true
and complete copies of its certificate of incorporation and by-laws~~, in each
case as amended through the date of this Agreement.
SECTION 3.02. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
Seller has full power and authority to execute this Agreement and the Ancillary
Agreements to which it is a party and to consummate the Acquisition and the
other transactions contemplated hereby and thereby. The execution and delivery
by Seller of this Agreement and the Ancillary Agreements to which it is a party
and the consummation by Seller of the Acquisition and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. Seller has duly executed and delivered this Agreement and
prior to the Closing will have duly executed and delivered each Ancillary
Agreement to which it is a party, and this Agreement constitutes, and each
Ancillary Agreement to which it is a party will after the Closing constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms.
SECTION 3.03. NO CONFLICTS; CONSENTS. The execution and delivery
by Seller of this Agreement does not, the execution and delivery by Seller of
each Ancillary Agreement to which it is a party will not, and the consummation
of the Acquisition and the other transactions contemplated hereby and thereby
and compliance by Seller with the terms hereof and thereof will not conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or
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guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the Acquired Assets under, any provision of: (i) the
certificate of incorporation or by-laws of Seller or any of its subsidiaries;
(ii) any Assigned Contract to which Seller or any of its subsidiaries is a party
or by which any of their respective properties or assets is bound; or (iii) any
judgment, order or decree ("JUDGMENT") or statute, law, ordinance, rule or
regulation ("APPLICABLE LAW") applicable to Seller or any of its subsidiaries or
the Acquired Assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, have not had and could
not reasonably be expected to have a Seller Material Adverse Effect. No consent,
approval, license, permit, order or authorization ("CONSENT") of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "GOVERNMENTAL ENTITY"), is required to be obtained or made by or with
respect to Seller or any of its subsidiaries in connection with (a) the
execution, delivery and performance of this Agreement or any Ancillary Agreement
or the consummation of the Acquisition or the other transactions contemplated
hereby and thereby or (b) the conduct by Buyer of the Business following the
Closing as conducted on the date hereof, other than (i) compliance with and
filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and (ii) compliance with and filings under Section
13(a) of the Securities Exchange Act of 0000 (xxx "XXXXXXXX XXX").
SECTION 3.04. FINANCIAL STATEMENTS. (a) Schedule 3.04 sets forth:
(i) Seller's unaudited balance sheet for the Business as of September 30, 1999,
and (ii) Seller's income statements for the Business for the fiscal years ended
June 30, 1998 and June 30, 1999 (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements have been prepared from the books and records of Seller
relating to the Business and fairly present the financial condition and results
of operation of the Business as of the dates and for the periods indicated.
(b) The Business does not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent, unasserted or otherwise)
that have had or could reasonably be expected to have a Seller Material Adverse
Effect, except (i) for items set forth in Schedule 3.04, and (ii) for Taxes.
SECTION 3.05. ASSETS OTHER THAN REAL PROPERTY INTERESTS. (a)
Seller has good and valid title to all the Acquired Assets, in each case free
and clear of all mortgages, liens, security interests, charges, easements,
leases, subleases, covenants, rights of way, options, claims, restrictions or
encumbrances of any kind (collectively, "LIENS"), except: (i) such as are set
forth in Schedule 3.05 (all of which shall be discharged prior to the Closing);
and (ii) mechanics', carriers', workmen's, repairmen's or other like Liens
arising or incurred in the ordinary course of business, Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business and liens for
Taxes that are not due and payable or that may thereafter be paid without
penalty (the Liens described in clause (ii) above are referred to collectively
as "PERMITTED LIENS"). In no event will Permitted Liens in the aggregate
materially impair the value of the Acquired Assets.
(b) This Section 3.05 does not relate to real property or
interests in real property.
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SECTION 3.06. REAL PROPERTY. (a) Schedule 3.06 sets forth a
complete list of all real property and interests in real property owned in fee
by Seller and used, held for use or intended to be used primarily in the
operation or conduct of the Business, other than any such property or interest
constituting an Excluded Asset (individually, an "OWNED PROPERTY"). Schedule
3.06 sets forth a complete list of all real property and interests in real
property leased by Seller and used, held for use or intended to be used
primarily in the operation or conduct of the Business, other than any such
property or interest constituting an Excluded Asset (individually, a "LEASED
PROPERTY" and, collectively, with the Owned Property, the "BUSINESS PROPERTY").
SECTION 3.07. CONTRACTS. (a) Except as set forth in Schedule 3.07
and except for Contracts relating solely to Excluded Assets, Seller is not a
party to or bound by any Contract that is used, held for use or intended for use
primarily in, or that arises primarily out of, the operation or conduct of the
Business and that is:
(i) an employment agreement or employment contract that is not
terminable by Seller by notice of not more than 60 days;
(ii) a collective bargaining agreement or other Contract with
any labor organization, union or association;
(iii) an agreement granting exclusive rights to any third party,
a covenant not to compete or other covenant of Seller restricting the
development, manufacture, marketing or distribution of the products and services
of Seller or restricting the right of Seller to grant any of such rights to any
other party, other than those agreements set forth on Schedule 3.07(iii);
(iv) an agreement pursuant to which any third party has the
right to manufacture or reproduce copies of any Assigned Intellectual Property,
other than those agreements set forth on Schedule 3.07(iv) (such listed
agreements shall be referred to herein as the "MANUFACTURING AGREEMENTS");
(v) an agreement pursuant to which any third party has the
right to distribute (as a distributor, reseller or other similar capacity but
excluding value added resellers) copies of any Assigned Intellectual Property,
other than those agreements set forth on Schedule 3.07(v) (such listed
agreements shall be referred to herein as the "DISTRIBUTION AGREEMENTS");
(vi) an agreement pursuant to which any third party has the
right to distribute copies of any Assigned Intellectual Property as a value
added reseller, other than those agreements set forth on Schedule 3.07(vi) (such
listed agreements shall be referred to herein as the "VAR AGREEMENTS");
(vii) an agreement pursuant to which any third party is entitled
to (1) any error corrections to any Assigned Intellectual Property or any
maintenance services with respect to any Assigned Intellectual Property, or (2)
any new versions, releases, updates, improvements or other
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enhancements to any Assigned Intellectual Property, in both cases other than
those set forth on Schedule 3.07(vii) (such listed agreements shall be referred
to herein as the "CUSTOMER MAINTENANCE AND SUPPORT AGREEMENTS" and such list
shall specify for each agreement the date upon which Seller's obligation to
provide such maintenance and support terminates);
(viii) a Contract with (a) any shareholder of Seller, (b) any
affiliate of Seller or (c) any current or former officer, director or employee
of Seller or any of its affiliates (other than employment agreements covered by
clause (i) above);
(ix) a lease, sublease or similar Contract with any person under
which (a) Seller is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any person or (b) Seller
~~is a lessor or sublessor of, or makes available for use by any person, any
tangible personal property owned or leased by Seller;
(x) (a) a continuing Contract for the future purchase of
materials, supplies or equipment (other than purchase orders for inventory in
the ordinary course of business consistent with past practice) or (b) a
management, service, consulting or other similar Contract, in any such case that
has an aggregate future liability to any person in excess of $25,000 and is not
terminable by Seller ~~by notice of not more than 60 days;
(xi) a license, sublicense, option or other Contract relating in
whole or in part to the Assigned Intellectual Property (including any license or
other Contract under which Seller ~~is licensee or licensor of any Assigned
Intellectual Property) or to any Technology;
(xii) a Contract granting a Lien (other than a Permitted Lien)
upon any Business Property or any other Acquired Asset;
(xiii) a power of attorney (other than a power of attorney given
in the ordinary course of business with respect to routine tax matters);
(xiv) a Contract not made in the ordinary course of business;
(xv) a confidentiality agreement;
(xvi) a Contract (including a purchase order), involving payment
by Seller of more than $25,000 or extending for a term more than 180 days from
the date of this Agreement (unless terminable without payment or penalty upon no
more than 60 days' notice), other than purchase orders entered into in the
ordinary course of the Business after the date of this Agreement and not in
violation of this Agreement;
(xvii) a Contract (including a sales order) involving the
obligation of Seller ~~to deliver products or services for payment of more than
$25,000 or extending for a term more than 180 days from the date of this
Agreement (unless terminable without payment or penalty upon no more than 60
days' notice), other than sales orders entered into in the ordinary course of
the Business after the date of this Agreement and not in violation of this
Agreement;
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(xviii) a Contract for the sale of any Acquired Asset (other than
inventory sales in the ordinary course of business) or the grant of any
preferential rights to purchase any Acquired Asset or requiring the consent of
any party to the transfer thereof;
(xix) a Contract with or license or Permit by or from any
Governmental Entity;
(xx) a Contract for any joint venture, partnership or similar
arrangement;
(xxi) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar representative;
(xxii) other Contract that has an aggregate future liability to
any person (other than Seller) in excess of $25,000 and is not terminable by
Seller by notice of not more than 60 days for a cost of less than $25,000 (other
than purchase orders and sales orders); or
(xxiii) a Contract other than as set forth above to which Seller
is a party or by which it or any of its assets or businesses is bound or subject
that is material to the Business or the use or operation of the Acquired Assets.
(b) Except as set forth in Schedule 3.07(b), all Contracts
listed in the Schedules are valid, binding and in full force and effect and are
enforceable by Seller, as applicable, in accordance with their terms. Except as
set forth in Schedule 3.07(b), Seller has performed all obligations required to
be performed by it to date under the Assigned Contracts, and it is not (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder and, to the knowledge of Seller, no other
party to any Assigned Contract is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder. Seller has not, except as disclosed in the applicable Schedule,
received any notice of the intention of any party to terminate any Assigned
Contract listed in any Schedule. Complete and correct copies of all Contracts
listed in the Schedules, together with all modifications and amendments thereto,
have been made available to Buyer.
(c) Schedule 3.07(c) sets forth each Assigned Contract with
respect to which the Consent of the other party or parties thereto must be
obtained by virtue of the execution and delivery of this Agreement or the
consummation of the Acquisition to avoid the invalidity of the transfer of such
Contract, the termination thereof, a breach, violation or default thereunder or
any other change or modification to the terms thereof.
SECTION 3.08. INVENTORY. Each item of Inventory is free of any
material defect or deficiency and is in good, usable and currently marketable
condition in the ordinary course of business (subject, in the case of raw
materials and work-in-process, to the completion of the production process). The
Inventory is generally of a quality useable and saleable at Seller's customary
gross margins and with customary markdowns consistent in all material respects
with past practice in the ordinary course of business.
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SECTION 3.09. PERSONAL PROPERTY. Schedule 3.09 sets forth a brief
description of each item of Personal Property with an original cost in excess of
$1,000, indicating, in each case, the purchase price thereof, the year of
purchase and the accumulated book depreciation. Each such item is in good
working order (ordinary wear and tear excepted), is free from any material
defect and has been maintained in all material respects in accordance with the
past practice of the Business and generally accepted industry practice, and no
repairs, replacements or regularly scheduled maintenance relating to any such
item has been deferred.
SECTION 3.10. PERMITS. (a) Schedule 3.10 sets forth all
certificates, licenses, permits, authorizations and approvals ("PERMITS") issued
or granted to Seller by Governmental Entities that are used or held for use in
the operation or conduct of the Business. Except as set forth in Schedule 3.10:
(i) all such Permits are validly held by Seller, and Seller has complied in all
material respects with all terms and conditions thereof; (ii) during the past
three (3) years, Seller has not received notice of any Proceedings relating to
the revocation or modification of any such Permits the loss of which,
individually or in the aggregate, has had or could reasonably be expected to
have a Seller Material Adverse Effect; and (iii) none of such Permits will be
subject to suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of the Acquisition.
(b) Seller possesses all Permits to own or hold under lease and
operate the Acquired Assets and to conduct the Business as currently conducted.
SECTION 3.11. SUFFICIENCY OF ACQUIRED ASSETS. The Acquired Assets
(together with the Excluded Assets specified in Section 1.02(b)(i)), comprise
all the assets employed by Seller in connection with the Business. The Acquired
Assets are sufficient for the conduct of the Business immediately following the
Closing in substantially the same manner as currently conducted.
SECTION 3.12. TAXES. (a) For purposes of this Agreement: "TAX"
means: (i) any tax, impost, duty, withholding, charge, fee, levy or other
assessment or charge of any kind whatsoever imposed by any Government Entity or
Taxing Authority, whether domestic or foreign ("TAXING AUTHORITY") (including,
but not limited to, any tax imposed under Subtitle A of the Code (as defined
herein) and any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding tax on amounts paid, payroll, employment, excise,
severance, stamp, capital stock, occupation, property, environmental or windfall
profit tax, premium, custom, duty or other tax), together with any interest,
penalty, addition to tax or additional amount due attributable to or imposed
with respect to such amounts and obligations under any agreement or arrangements
with any person with respect to such amounts; (ii) any liability for the payment
of any amount of the type described in clause (i) above as a result of a party
to this Agreement being a member of an affiliated, consolidated or combined
group with any other corporation at any time on or prior to the Closing Date;
and (iii) any liability of any person with respect to the payment of any amounts
of the type described in clause (i) or (ii) above as a result of any express or
implied obligation of such person to indemnify any other person. Provided
however, the above definition of Tax shall not include any item which is not
directly or indirectly related to the Business.
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"CODE" means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
(b) Except as set forth in Schedule 3.12: (i) Seller, and any
affiliated group, within the meaning of Section 1504 of the Code, of which
Seller is or has been a member, has filed or caused to be filed in a timely
manner (within any applicable extension periods) all material Tax returns,
reports and forms required to be filed by the Code or by applicable state, local
or foreign Tax laws; (ii) all Taxes shown to be due on such returns, reports and
forms and required to be paid have been timely paid in full or will be timely
paid in full by the due date thereof; (iii) all Taxes required to be withheld or
collected or deposited have been withheld, collected or deposited; (iv) no
notice of any proposed adjustment or notice of underpayment has been issued by
any Governmental Authority with respect to such Taxes; (v) no claim has been
asserted or threatened with respect to any Taxes that remain outstanding; (vi)
no extensions of the time for assessment of any Taxes has been requested or
granted (other than any such extension that is no longer in effect); (vii) no
protests are pending with respect to any Taxes; and (viii) no material Tax Liens
have been filed and no material claims are being asserted or investigations
instituted with respect to any Taxes which would give rise to any such Lien.
(c) Except as set forth in Schedule 3.12: (i) neither Seller
nor any of its affiliates has made with respect to Seller, or any assets of the
Business, any consent under Section 341 of the Code; (ii) none of the Acquired
Assets is "tax exempt use property" within the meaning of Section 168(h) of the
Code; and (iii) none of the Acquired Assets is a lease made pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954.
(d) Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
SECTION 3.13. PROCEEDINGS. Schedule 3.13 sets forth a list of each
pending or, to the knowledge of Seller, threatened Proceeding arising out of the
conduct of the Business or against or affecting any Acquired Asset and that: (a)
relates to or involves more than $1,000; (b) seeks any material injunctive
relief; or (c) relates to or may give rise to any legal restraint on or
prohibition against the transactions contemplated by this Agreement. Except as
set forth in Schedule 3.13, none of the Proceedings or claims listed in Schedule
3.13 as to which there is at least a reasonable possibility of adverse
determination would have, if so determined, individually or in the aggregate, a
Seller Material Adverse Effect. To the knowledge of Seller, except as set forth
in Schedule 3.13, Seller is not a party or subject to or in default under any
Judgment applicable to the conduct of the Business or any Acquired Asset or
Assumed Liability. Except as set forth in Schedule 3.13, there is not any
Proceeding or claim by Seller pending, or which Seller intends to initiate,
against any other Person arising out of the conduct of the Business. Except as
set forth in Schedule 3.13, to the knowledge of Seller, there is no pending or
threatened investigation of or affecting the conduct of the Business or any
Acquired Asset or Assumed Liability.
SECTION 3.14. BENEFIT PLANS. (a) Schedule 3.14 contains a list and
brief description of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee
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Retirement Income Security Act of 1974, as amended ("ERISA")), maintained or
contributed to by Seller for the benefit of any officers or employees of the
Business ("SELLER PENSION PLANS") and all "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), bonus, stock option, stock purchase, deferred
compensation plans or arrangements and other employee fringe benefit plans
maintained, or contributed to, by Seller or any of its affiliates for the
benefit of any officers or employees of the Business (all the foregoing,
including Seller Pension Plans, being herein called "SELLER BENEFIT PLANS").
Seller has delivered to Buyer true, complete and correct copies of: (i) each
Seller Benefit Plan (or, in the case of any unwritten Seller Benefit Plans,
descriptions thereof); (ii) the two most recent annual reports on Form 5500
(including all schedules and attachments thereto) filed with the Internal
Revenue Service with respect to each Seller Benefit Plan (if any such report was
required); (iii) the most recent summary plan description for each Seller
Benefit Plan for which such a summary plan description is required; and (iv)
each trust agreement, group annuity contract or other funding and financing
arrangement relating to any Seller Benefit Plan.
(b) Each Seller Benefit Plan has been administered in all
material respects in accordance with its terms. Seller and all Seller Benefit
Plans are in compliance in all material respects with the applicable provisions
of ERISA, the Code, all other Applicable Laws and all applicable collective
bargaining agreements. No accumulated funding deficiency, whether or not waived,
exists with respect to any Seller Benefit Plan subject to Title IV of ERISA and
in respect of which Seller or any of its Affiliates is (or if such plan were
terminated, would under Section 4069 of ERISA been deemed to be) an employer. No
liability to the Pension Benefit Guarantee Corporation has been or is reasonably
expected by Seller to be incurred with respect to any Seller Benefit Plan.
Seller has not incurred and does not reasonably expect to incur any withdrawal
liability under Title IV or ERISA with respect to any plan which is a
multiemployer plan. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will involve any
transaction which constitutes a prohibited transaction which could subject any
party hereto to the penalty or tax on prohibited transactions imposed by Section
502 of ERISA or Section 4975 of the Code. Except as set forth in Schedule 3.14,
all material reports, returns and similar documents with respect to Seller
Benefit Plans required to be filed with any Governmental Entity or distributed
to any Seller Benefit Plan participant have been duly and timely filed or
distributed. Except as set forth in Schedule 3.14, there are no Proceedings
pending, or, to the knowledge of Seller, threatened against or involving any
Seller Benefit Plan and, to the knowledge of Seller, there are no investigations
by any Governmental Entity or other claims (except routine claims for benefits
payable in the normal operation of Seller Benefit Plans) pending or threatened
against or involving any Seller Benefit Plan or asserting any rights to benefits
under any Seller Benefit Plan. Except as set forth in Schedule 3.14, none of the
Proceedings, investigations and claims listed in Schedule 3.14 as to which there
is at least a reasonable possibility of adverse determination, would have, if so
determined, individually or in the aggregate, a Seller Material Adverse Effect.
Except as set forth in Schedule 3.14, to the knowledge of Seller, there are no
unasserted claims of the type that would be required to be disclosed in Schedule
3.14 if pending or threatened that if asserted would have at least a reasonable
possibility of an adverse determination.
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(c) Schedule 3.14(c) contains a true and complete copy of each
retention agreement (each, a "RETENTION AGREEMENT") between each employee of the
Business and Seller.
(d) Except as set forth in Schedule 3.14, no employee or former
employee of the Business will become entitled to any bonus, retirement,
severance, job security or similar benefit or any enhanced benefit solely as a
result of the transactions contemplated hereby.
SECTION 3.15. ABSENCE OF CHANGES OR EVENTS. Since June 30, 1999,
there has not been any material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of the Business,
taken as a whole. Since June 30, 1999, Seller has caused the Business to be
conducted in the ordinary course and in substantially the same manner as
previously conducted and has made all reasonable efforts consistent with past
practices to preserve the relationships of the Business with customers,
suppliers and others with whom the Business deals.
SECTION 3.16. COMPLIANCE WITH APPLICABLE LAWS. (a) Except as set
forth in Schedule 3.16, the Business is in compliance in all material respects
with all Applicable Laws, including those relating to occupational health and
safety or the environment. Except as set forth in Schedule 3.16, Seller has not
received any written or oral communication during the past three (3) years from
a Governmental Entity that alleges that the Business is not in compliance in any
material respect with any Applicable Law.
(b) Except as set forth in Schedule 3.16: (i) during the past
three (3) years, Seller has not received any written or, to Seller's knowledge,
any oral communication from a Governmental Entity that alleges that the Business
is not in compliance in any material respect with any Environmental Law; (ii)
Seller holds, and is in compliance with, all Permits required to conduct the
Business under the Environmental Laws (as defined below), and is in compliance
with all Environmental Laws; and (iii) Seller has no knowledge of any
environmental reports, audits, data and other information, other than those set
forth in Schedule 3.16, that disclose environmental liabilities which relate to
the Business that, individually or in the aggregate, could reasonably be
expected to have a Seller Material Adverse Effect and (iv) in connection with
the conduct of the Business, Seller has not entered into or agreed to any court
decree or order and is not subject to any Judgment relating to compliance with
any Environmental Law or to investigation or cleanup of Hazardous Materials (as
defined below) under any Environmental Law. Seller has no contingent liabilities
in respect of the Business in connection with any Hazardous Materials that,
individually, or in the aggregate, have had or could reasonably be expected to
have a Seller Material Adverse Effect. Except as set forth in Schedule 3.16,
there are no aboveground or underground storage tanks on or under any Business
Property. The term "ENVIRONMENTAL LAWS" means any and all Applicable Laws,
Judgments and Permits issued, promulgated or entered into by any Governmental
Entity, relating to the environment, preservation or reclamation of natural
resources, or to the management, Release (as such term is defined below) or
threatened Release of Hazardous Materials, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. xx.xx. 9601
ET seq. ("CERCLA"), the Federal Water Pollution Control Act, as amended by the
Clean Water Act of
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1977, 33 U.S.C. xx.xx. 1251 et seq., the Clean Air Act of 1970, as amended, 42
U.S.C. xx.xx. 7401 ET seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
xx.xx. 2601 et seq., the Occupational Safety and Health Act of 1970, as amended,
29 U.S.C. xx.xx. 651 ET seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. xx.xx. 11001 et seq., the Safe Drinking Water Act of
1974, as amended, 42 U.S.C. xx.xx. 300(F) ET seq., the Hazardous Materials
Transportation Act, 49 U.S.C. xx.xx. 1801 et seq., and any similar or
implementing state or local law, and all amendments or regulations promulgated
thereunder. The term "HAZARDOUS MATERIALS" means all explosive or regulated
radioactive materials or substances, hazardous or toxic substances, wastes or
chemicals, petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or asbestos containing materials, and all other materials
or chemicals regulated pursuant to any Environmental Law, including materials
listed in 49 C.F.R. ss. 172.101 and materials defined as hazardous pursuant to
Section 101(14) of CERCLA. The term "RELEASE" means any spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
emanation or migration of any Hazardous Materials in, into, onto, or through the
environment (including ambient air, surface water, ground water, soils, land
surface, subsurface strata or workplace).
(c) The occupancies and uses of the Business Property, as well
as the operation of the Business Property, comply in all material respects with
all Applicable Laws and are not in violation of any thereof; and all
certificates of occupancy and all other Permits required by Applicable Law for
the proper use and operation of the Business Property are in full force and
effect. All material approvals, consents, Permits, utility installations and
connections required for the operation of the Business Property have been
granted, effected or performed and completed (as the case may be), and all fees
and charges therefor have been fully paid. Seller has not received written or,
to Seller's knowledge, any oral notice of, and does not otherwise have knowledge
of, any violations, Proceedings or Judgments relating to zoning, building use
and occupancy, traffic, fire, health, sanitation, air pollution, ecological,
environmental or other laws or regulations, against, or with respect to, the
Business Property.
SECTION 3.17. EMPLOYEE AND LABOR MATTERS. (a) Except as set forth
in Schedule 3.17(a): (i) there is not any, and during the past three (3) years
there has not been any, labor strike, dispute, work stoppage or lockout pending,
or, to the knowledge of Seller, threatened, against or affecting the Business;
(ii) to the knowledge of Seller, no union organizational campaign is in progress
with respect to the employees of the Business and no question concerning
representation of such employees exists; (iii) Seller is not engaged in any
unfair labor practice in connection with the conduct of the Business; (iv) there
are not any unfair labor practice charges or complaints against Seller pending,
or, to the knowledge of Seller, threatened, before the National Labor Relations
Board in connection with the conduct of the Business; (v) there are not any
pending, or, to the knowledge of Seller, threatened, union grievances against
Seller in connection with the conduct of the Business; (vi) there are not any
pending, or, to the knowledge of Seller, threatened, charges in connection with
the conduct of the Business against Seller or any current or former employee of
the Business before the Equal Employment Opportunity Commission or any state or
local agency responsible for the prevention of unlawful employment practices;
and (vii) Seller has received no written or, to Seller's knowledge, any oral
notice during the past three (3) years of the intent of any
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Governmental Entity responsible for the enforcement of labor or employment laws
to conduct an investigation of or affecting the Business and, to the knowledge
of Seller, no such investigation is in progress.
(b) Schedule 3.17(b) sets forth the name and address of each
employee (the "Employees") of and consultant (including contract employees) to
the Business as of the date hereof together with the current job title or
relationship to the Business, the current annual salary (including bonus) for
each such person, a list, by individual grant, of all unvested stock options
issued to each Employee or consultant and the vesting schedule associated with
such stock options.
(c) No Employee of the Business is, to the knowledge of Seller,
a party to or bound by any Contract, or subject to any Judgment that may
interfere with the use of such person's best efforts to promote the interests of
the Business, may conflict with the Business or the transactions contemplated
hereby or that has had or could reasonably be expected to have a Seller Material
Adverse Effect. To the knowledge of Seller, no activity of any employee of the
Business as or while an employee of the Business has caused a violation of any
employment contract, confidentiality agreement patent disclosure agreement or
other Contract to which such employee was a party. To the knowledge of Seller,
neither the execution and delivery of this Agreement, nor the conduct of the
Business by the employees of the Business, will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any Contract, under which any such employee is now obligated.
SECTION 3.18. TRANSACTIONS WITH AFFILIATES. Except as set forth in
Schedule 3.18, none of the Contracts set forth in Schedule 3.07 between the
Business, on the one hand, and Seller or any of its affiliates, on the other
hand, will continue in effect subsequent to the Closing. Except as set forth in
Schedule 3.18, after the Closing none of Seller's affiliates will have any
interest in any property (real or personal, tangible or intangible) or Contract
used in or pertaining to the Business. Except as set forth in Schedule 3.18,
Seller provides no material services to the Business.
SECTION 3.19. EFFECT OF TRANSACTION. Except as set forth in
Schedule 3.19, no creditor, employee, client, customer or other person having a
material business relationship with the Business has informed Seller in writing,
or to Seller's knowledge, by oral notice, that such person intends to change
such relationship because of the purchase and sale of the Business or the
consummation of any other transaction contemplated hereby.
SECTION 3.20. DISCLOSURE. No representation or warranty of Seller
contained in this Agreement or in any Ancillary Agreement, and no statement
contained in any document, certificate or Schedule furnished or to be furnished
by or on behalf of Seller to Buyer or any of its representatives pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading or necessary in order to fully and
fairly provide the information required
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to be provided in any such document, certificate or Schedule. The financial
projections relating to the Business delivered to Buyer were prepared on the
basis of assumptions Seller reasonably believed in good faith at the time of
preparation to be reasonable and Seller has no knowledge of any fact or
information that would lead it to believe that such assumptions are incorrect or
misleading in any material respect.
SECTION 3.21. SUPPLIERS. Except as set forth in Schedule 3.21,
between June 30, 1999 and the date of this Agreement, in the conduct of the
Business, Seller has not entered into or made any contract or commitment for the
purchase of merchandise other than in the ordinary course of business consistent
with past practice.
SECTION 3.22. YEAR 2000 COMPLIANCE. (a) Except as set forth in
Schedule 3.22, all technology constituting computer program code and all
computer systems of the Business are Year 2000 Compliant (as defined below). To
the knowledge of Seller, all Inventory that is, consists of, includes or uses
computer software is Year 2000 Compliant.
(b) The term "YEAR 2000 COMPLIANT", with respect to a computer
system or software program, means that such computer system or program when used
in accordance with its associated documentation, is capable of correctly
processing, providing and/or receiving date data within and between the 20th and
21st centuries, provided that all products (for example, hardware, software and
firmware) used with the computer system or program properly exchange date data
with it.
SECTION 3.23. CUSTOMERS. Except for the customers named in
Schedule 3.23, the Business does not have any customer to whom it made more than
5% of its sales during the most recent full fiscal year. Except as set forth in
schedule 3.23, since June 30, 1999, there has not been (i) any material adverse
change in the business relationship of the Business with any customer named in
Schedule 3.23 or (ii) any change in any material term (including credit terms)
of the sales agreements or related agreements with any such customer. During the
past twelve (12) months, Seller has not received any written or, to Seller's
knowledge, any oral customer complaint concerning the products and services of
the Business, nor has it had any such products returned by a purchaser thereof,
other than complaints and returns made in the ordinary course of business that,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Seller Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the date of
this Agreement and as of the Closing Date, as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Buyer is duly
organized, validly existing and in good standing under the laws of the State of
New York and has full
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corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
lease or otherwise hold its properties and assets and to carry on its business
as presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, have not had and could not reasonably be expected to have a material
adverse effect on the ability of Buyer to perform its obligations under this
Agreement and the Ancillary Agreements or on the ability of Buyer to consummate
the Acquisition and the other transactions contemplated hereby (a "BUYER
MATERIAL ADVERSE EFFECT").
SECTION 4.02. AUTHORITY; EXECUTION AND DELIVERY; AND
ENFORCEABILITY. Buyer has full power and authority to execute this Agreement and
the Ancillary Agreements to which it is a party and to consummate the
Acquisition and the other transactions contemplated hereby and thereby. The
execution and delivery by Buyer of this Agreement and the Ancillary Agreements
to which it is a party and the consummation by Buyer of the Acquisition and the
other transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action. Buyer has duly executed and delivered this
Agreement and prior to the Closing will have duly executed and delivered each
Ancillary Agreement to which it is a party, and this Agreement constitutes, and
each Ancillary Agreement to which it is a party will after the Closing
constitute, its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 4.03. NO CONFLICTS; CONSENTS. The execution and delivery
by Buyer of this Agreement do not, the execution and delivery by Buyer of each
Ancillary Agreement to which it is a party will not, and the consummation of the
Acquisition and the other transactions contemplated hereby and thereby and
compliance by Buyer with the terms hereof and thereof will not conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any Lien upon any of the properties
or assets of Buyer or any of its subsidiaries under, any provision of: (i) the
certificate of incorporation or by-laws of Buyer or any of its subsidiaries;
(ii) any Contract to which Buyer or any of its subsidiaries is a party or by
which any of their respective properties or assets is bound; or (iii) any
Judgment or Applicable Law applicable to Buyer or any of its subsidiaries or
their respective properties or assets other than, in the case of clauses (ii)
and (iii) above, any such items that, individually or in the aggregate, have not
had and could not reasonably be expected to have a Buyer Material Adverse
Effect. No Consent of or registration, declaration or filing with any
Governmental Entity is required to be obtained or made by or with respect to
Buyer or any of its subsidiaries in connection with the execution, delivery and
performance of this Agreement or any Ancillary Agreement or the consummation of
the Acquisition or the other transactions contemplated hereby and thereby, other
than: (A) compliance with and filings under the HSR Act; and (B) compliance with
and filings under Section 13(a) of the Exchange Act.
ARTICLE V
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COVENANTS
SECTION 5.01. COVENANTS OF SELLER RELATING TO CONDUCT OF BUSINESS.
(a) Except for matters set forth in Schedule 5.01 or otherwise expressly
permitted by the terms of this Agreement, from the date of this Agreement to the
Closing Seller shall conduct the Business in the usual, regular and ordinary
course in substantially the same manner as previously conducted (including with
respect to research and development efforts, advertising, promotions, capital
expenditures and inventory levels) and, to the extent consistent therewith, use
all reasonable efforts to keep intact the Business, keep available the services
of the current employees of the Business and preserve the relationships of the
Business with customers, suppliers, licensors, licensees, distributors and
others with whom the Business deals. Prior to the Closing, Seller~~ shall not
take any action that would, or that could reasonably be expected to, result in
any of the conditions to the purchase and sale of the Acquired Assets and
Business Property set forth in Article VI not being satisfied. In addition (and
without limiting the generality of the foregoing), except as set forth in
Schedule 5.01 or otherwise expressly permitted or required by the terms of this
Agreement, Seller shall not do any of the following in connection with the
Business without the prior written consent of Buyer:
(i) adopt or amend any Seller Benefit Plan (or any plan that
would be a Seller Benefit Plan if adopted), including the Retention Agreements
set forth in Schedule 3.14, or enter into, adopt, extend (beyond the Closing
Date), renew or amend any collective bargaining agreement or other Contract with
any labor organization, union or association, except in each case as required by
Applicable law;
(ii) grant to any officer or employee of the Business any
increase in compensation or benefits, except in the ordinary course of business
and consistent with past practice or as may be required under existing
agreements and except for any increases to which Buyer agrees;
(iii) grant any new stock options to any Employees, other than
those stock options listed on Schedule 3.17(b);
(iv) hire any new employees, contract employees or consultants
(or renew any contracts associated with any existing Employees, contract
employees or consultants) or make any changes to job titles or human resources
policies affecting the existing Employees, contract employees or consultants;
(v) permit, allow or suffer any Acquired Asset or the Business
Property to become subjected to any Lien of any nature whatsoever that would
have been required to be set forth in Schedule 3.05 if existing on the date of
this Agreement;
(vi) acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership,
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association, or other business organization or division thereof or otherwise
acquire any assets (other than investing) that are material, individually or in
the aggregate, to the Business.
(vii) sell, lease, license or otherwise dispose of any Acquired
Asset, except (a) inventory sold in the ordinary course of business and
consistent with past practice and (b) any Excluded Asset described in Section
1.02(b)(i); and
(viii) authorize any of, or commit or agree to take, whether in
writing or otherwise, to do any of, the foregoing actions.
(b) ADVISE OF CHANGES. Seller shall promptly advise Buyer in
writing of the occurrence of any matter or event that is material to the
business, assets, financial condition , results of operations or prospects of
the Business.
(c) AFFIRMATIVE COVENANTS. Until the Closing, Seller shall: (i)
maintain the Acquired Assets in the ordinary course of business in good
operating order and condition, reasonable wear and tear excepted; (ii) upon any
damage, destruction or loss to any material Acquired Asset, apply any and all
insurance proceeds received with respect thereto to the prompt repair,
replacement and restoration thereof to the condition of such Acquired Asset
before such event; and (iii) maintain its level and quality of inventory and
supplies, raw materials and spare parts in the ordinary course in a manner
consistent with past practice.
SECTION 5.02. NO SOLICITATION. Seller shall not, nor shall it
authorize or permit any officer, director or employee of or any investment
banker, attorney, accountant or other representative retained by it to: (i)
solicit, initiate or encourage any "other bid"; (ii) enter into any agreement
with respect to any other bid; or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any other
bid. Seller promptly shall advise Buyer orally and in writing of any other bid
or any inquiry with respect to or which could lead to any other bid and the
identity of the person making any such other bid or inquiry. As used in this
Section 5.02, "other bid" shall mean any proposal to acquire in any manner any
of the assets of the Business, other than: (a) the acquisition of inventory in
the ordinary course of business; and (b) any Excluded Asset described in Section
1.02(b)(i). Notwithstanding the foregoing, if (i) Seller receives an unsolicited
other bid from any third party, and (ii) a majority of Seller's Board of
Directors determines in good faith, based on such board's fiduciary duty to
Seller, that acceptance of such other bid is in the best interests of Seller,
then Seller may accept such other bid, provided that contemporaneously with the
acceptance of such other bid, Seller shall pay Buyer, as liquidated damages and
not as a penalty, a fee equal to Two Million Dollars ($2,000,000) (the "BREAKUP
FEE"). Upon receipt of such Breakup Fee, Buyer shall have no further claims
against Seller or any officer, director or employee of Seller in respect of
Seller's acceptance of such other bid, provided that nothing herein shall
preclude Buyer from bringing any claim that it may have in law or equity against
the third party making such other bid.
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SECTION 5.03. ACCESS TO INFORMATION. Seller shall afford to Buyer
and its accountants, counsel and other representatives reasonable access, upon
reasonable notice during normal business hours during the period prior to the
Closing, to all the personnel, properties, books, contracts, commitments, Tax
returns and records of the Business (other than the Excluded Assets), and during
such period shall furnish promptly to Buyer any information concerning the
Business as Buyer may reasonably request. For a period of two (2) years after
the Closing Date, each Party shall use its good faith reasonable efforts to
provide the other Party and its representatives at the other Party's expense,
information reasonably requested by the other Party relating to the Business or
the Acquired Assets to the extent required by the other Party to permit the
other Party to determine any matter relating to its rights and obligations under
this Agreement or the Ancillary Agreements and its compliance with applicable
Tax and financial reporting requirements. Any requests pursuant to this Section
5.03 shall be at the expense of the requesting Party.
SECTION 5.04. REASONABLE EFFORTS. Prior to the Closing and for a
period of twelve (12) months thereafter, each party shall, and shall cause its
affiliates to, use its reasonable efforts (at its own expense) to obtain, and to
cooperate in obtaining, all consents from third parties necessary or appropriate
to permit the transfer of the Acquired Assets to, and the assumption of the
Assumed Liabilities by, Buyer; PROVIDED, HOWEVER, that the parties shall not be
required to pay or commit to pay any amount to (or incur any obligation in favor
of) any person from whom any such consent may be required (other than nominal
filing or application fees).
SECTION 5.05. EXPENSES; TRANSFER TAXES; REFUNDS; TAX LIABILITIES.
(a) Whether or not the Closing takes place, and except as set
forth in Sections 5.10 and 9.03 and Article VIII, all costs and expenses
incurred in connection with this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expense, including all costs and expenses incurred pursuant to
Section 1.04.
(b) All Transfer Taxes incurred in connection with this
Agreement and the Ancillary Agreements and transactions contemplated hereby, and
shall be paid by Seller in addition to the consideration provided for in
Sections 1.01 to the extent legally able to do so, each party shall use
reasonable efforts to avail itself of any available exemptions from any such
Taxes or fees, and to cooperate with the other party in providing any
information and documentation that may be necessary to obtain such exemptions,
provided that neither Party shall be obligated to seek any exemption that would
require any governmental audit of its books and records.
(c) Any refunds and credits attributable to the pre-closing tax
period shall be for the account of seller and any refunds and credits
attributable to any period which is not part of the pre-closing tax period shall
be for the account of buyer.
(d) Seller hereby agrees to retain responsibility for, and
agrees to pay when due any and all taxes of every nature and description (i) of
Seller for any Taxable Period or portion
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thereof or (ii) otherwise relating to the business or the acquired assets for
any Taxable Period or portion of a Taxable Period which period or portion ends
on or prior to the closing date. In the event that Buyer reasonably determines
that a lien on the acquired assets (based upon unpaid taxes payable by Seller
under this agreement or by law) is imminent and notifies Seller accordingly,
then, unless Seller provides adequate protection (such as a bond or letter of
credit) reasonably satisfactory to buyer to ensure that there is no risk to
Buyer's ownership of the acquired assets, at Buyer's election, and in Buyer's
sole discretion, Buyer may pay any such taxes on Seller's behalf and Seller
hereby agrees to reimburse Buyer within 10 days after receiving notice thereof
for any such taxes so paid.
(e) Seller shall deliver to Buyer at Closing an affidavit in
substantially the form set forth in Exhibit D, duly executed and acknowledged,
certifying that Seller is a "domestic corporation" within the meaning of
Sections 7701(a)(3) and (4) of the Code and Section 1.897-1(j) of the applicable
Treasury regulations.
SECTION 5.06. BROKERS OR FINDERS. Each of Buyer and Seller
represent, that, except for Seller's engagement of Corporate Finance Advisors,
no agent, broker, investment banker or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement and
each Party shall be responsible for all liabilities and claims (including costs
and expenses of defending the same) arising in connection with any claim by any
finder or broker (including, with respect to Seller, Corporate Finance Advisors)
that it acted on behalf of such Party in connection with the transactions
contemplated thereby.
SECTION 5.07. EMPLOYEE MATTERS. (a) Seller shall have, prior to
the Closing, terminated all Employees and consultants to the Business.
(b) Buyer shall have made, prior to Closing, offers of
employment to all Employees set forth in Schedule 3.17(b) as of the date hereof,
and, to the extent Buyer has consented pursuant to section 5.01(a)(iv), to all
new employees hired by Seller between the date hereof and the Closing Date.
(c) Except as set forth on Schedule 3.17(d), no Employee has
ever, to the knowledge of Seller after due inquiry, been employed by Buyer or
any Buyer affiliate.
SECTION 5.08. BENEFIT PLAN MATTERS. Buyer shall offer the
Employees compensation packages which, taken as a whole, are on terms no less
favorable than employment terms, for new employees of Buyer with similar
experience and qualifications.
SECTION 5.09. SUPPLEMENTAL DISCLOSURE. Seller shall have the
continuing obligation until the Closing promptly to supplement or amend the
Schedules with respect to any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Schedules.
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SECTION 5.10. POST-CLOSING COOPERATION. (a) Buyer and Seller shall
cooperate with each other, and shall cause their officers, employees, agents,
auditors and representatives to cooperate with each other, for a period of 180
days after the Closing to ensure the orderly transition of the Business from
Seller to Buyer and to minimize any disruption to the Business. After the
Closing, upon reasonable written notice, Buyer and Seller shall furnish or cause
to be furnished to each other and their employees, counsel, auditors and
representatives access, during normal business hours, to such information and
assistance relating to the Business (to the extent within the control of such
party) as is reasonably necessary for financial reporting and accounting
matters.
(b) After the Closing, upon reasonable written notice, Buyer
and Seller shall furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance (to the extent within the control
of such party) relating to the Acquired Assets (including, access to books and
records) as is reasonably necessary for the filing of all Tax returns, and
making of any election related to Taxes, the preparation for any audit by any
Taxing Authority, and the prosecution or defense of any claim, suit or
proceeding related to any Tax return. Seller and Buyer shall cooperate with each
other in the conduct of any audit or other proceeding relating to Taxes
involving the Business. In the event that Seller shall after the Closing take
any position in any state or Tax return, or reach any settlement or agreement on
audit, which is in any manner inconsistent with any position taken by Seller in
any filing, settlement or agreement made by Seller prior to the Closing and such
inconsistent position: (i) requires the payment by Buyer of more Tax than would
have been required to be paid had such position not been taken or such
settlement or agreement not been reached; (ii) affects the determination of
useful life, basis or method of depreciation, amortization or accounting of any
of the Acquired Assets; or (iii) accelerates the time at which any Tax must be
paid by Buyer, Seller shall provide timely and reasonable notice to Buyer of
such position and indemnify Buyer for any additional Tax owed due to Seller's
taking a position in any state or Tax return, or reaching any settlement, or
agreement on audit, which is in any manner inconsistent with any position taken
by Seller in any filing, settlement or agreement made by Seller prior to the
Closing.
(c) Each party shall be responsible for out-of-pocket costs and
expenses incurred by it in assisting the other pursuant to this Section 5.10.
Neither party shall be required by this Section 5.10 to take any action that
would unreasonably interfere with the conduct of its business or unreasonably
disrupt its normal operations (or, in the case of Buyer, the Business).
SECTION 5.11. PUBLICITY. No public release or announcement
concerning the transactions contemplated hereby shall be issued by either party
without the prior consent of the other party (which consent shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or announcement
shall allow the other party reasonable time to comment on such release or
announcement in advance of such issuance.
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SECTION 5.12. AGREEMENT NOT TO COMPETE. (a) Seller understands
that Buyer shall be entitled to protect and preserve the going concern value of
the Business to the extent permitted by law and that Buyer would not have
entered into this Agreement absent the provisions of this Section 5.12 and,
therefore, for a period of three (3) years from the Closing, Seller shall not
directly or indirectly:
(i) engage in activities or businesses, or establish any new
businesses, within North America that are substantially in competition with the
Business ("COMPETITIVE ACTIVITIES"), including: (a) selling goods or services of
the type sold by the Business, except that if any goods or services were not
sold by the Business during the period of time that it was owned by Seller and
are not sold by the Business at the time of the Closing (collectively,
"PERMITTED GOODS AND SERVICES"), Seller may sell any Permitted Goods and
Services notwithstanding anything contained in this Agreement; (b) soliciting
any customer or prospective customer of the Business to purchase any goods or
services sold by the Business, other than Permitted Goods and Services, from
anyone other than Buyer and its affiliates; and (c) assisting any person in any
way to do, or attempt to do, anything prohibited by clause (a) or (b) above; and
(ii) perform any action, activity or course of conduct that is
substantially detrimental to the Business (other than the sale of Permitted
Goods and Services) or business reputation ("DETRIMENTAL ACTIVITIES"),
including: (a) soliciting, recruiting or hiring any employees of the Business or
persons who have worked for the Business within six (6) months of the Closing
Date; and (b) soliciting or encouraging any employee, contractor or consultant
of the Business to leave the employment of Buyer.
(b) Section 5.12(a) shall be deemed not breached as a result of
the ownership by Seller of (i) less than an aggregate of 5% of any class of
stock of a person engaged, directly or indirectly, in Competitive Activities, or
(ii) less than 10% in value of any instrument of indebtedness of a person
engaged, directly or indirectly, in Competitive Activities.
(c) Notwithstanding any other provision of this Agreement, it
is understood and agreed that the remedy of indemnity payments pursuant to
Article VIII and other remedies at law would be inadequate in the case of any
breach of the covenants contained in Section 5.12(a). Buyer shall be entitled to
equitable relief, including the remedy of specific performance, with respect to
any breach or attempted breach of such covenants.
SECTION 5.13. BULK TRANSFER LAWS. Buyer hereby waives compliance
with any applicable "bulk transfer law" of any jurisdiction; provided, that
Seller agrees to indemnify and hold harmless Buyer with respect to any
noncompliance with such laws and Buyer's waiver with respect thereto.
SECTION 5.14. FURTHER ASSURANCES. From time to time, as and when
requested by either party, the other party shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and shall take,
or cause to be taken, all such further or other actions (subject to Section
5.04), as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement,
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including, in the case of Seller, executing and delivering to Buyer such
assignments, deeds, bills of sale, consents and other instruments as Buyer or
its counsel may reasonably request as necessary or desirable for such purpose.
SECTION 5.15. SUPPLIES. Buyer shall not use stationery, purchase
order forms or other similar paper goods or supplies (collectively, the
"SUPPLIES"), that state or otherwise indicate thereon that the Business is a
division or unit of Seller~~ more than fifteen (15) days after the Closing Date
without first crossing out or marking over such statement or indication or
otherwise clearly indicating on such Supplies that the division or unit is no
longer a division or unit of Seller, as applicable. Buyer shall not reorder any
Supplies which state or otherwise indicate thereon that the division or unit is
a division or unit of Seller.
SECTION 5.16. NAMES FOLLOWING CLOSING. Immediately following the
Closing, Seller shall amend or terminate any certificate of assumed name or
d/b/a filings so as to eliminate its right to use the names, trademarks, and
service marks primarily used in connection with the Business, and Seller shall
not thereafter use those names or other names acquired by Buyer hereunder or
names confusingly similar thereto.
SECTION 5.17. TAX MATTERS. Buyer and seller hereby agree to the
allocation of the Purchase price set forth in schedule 5.17 (the "allocation
statements"), allocating the total of the purchase price (and other payments
properly treated as additional purchase price for tax purposes) to the different
acquired assets pursuant to section 1060 of the code. Buyer and seller shall
each file all income, franchise and other tax returns (as defined below) and
execute such other documents as may be required by any governmental authority,
in a manner consistent with the allocation statements. buyer shall prepare the
form 8594 under section 1060 of the code based on the allocation statements and
deliver such form to seller within sixty (60) days after the closing date. Buyer
and Seller agree to file such form with each relevant Taxing Authority and to
refrain from taking any position inconsistent with such form or the allocation
statements.
SECTION 5.18. ALLOCATION OF EXPENSES. It is the intent of the
Parties that Buyer shall not assume any obligations which derive from or relate
to goods delivered to, services rendered to or benefits received by Seller on or
prior to the Closing Date. Accordingly, as soon as practicable after the Closing
Date, but in any event not later than thirty (30) days after the Closing Date,
the Parties shall make such payments to the other party to effect the proration
of payments made by Seller on or prior to the Closing Date and payments made by
Buyer after the Closing Date as may be necessary to carry out the intent of the
Parties. Such adjustments shall include, without limitation, the following:
(i) proration of expenses such as utilities and telephone
charges as they relate to the Acquired Assets;
(ii) payment by Buyer to Seller of any amounts paid by Seller
pursuant to the terms of any Assigned Contract with a supplier or vendor for
products delivered or services rendered to Buyer after the Closing Date;
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(iii) payment by Seller to Buyer of any amounts owed by Buyer
pursuant to the terms of any Assigned Contract with a supplier or vendor for
products delivered or services rendered to Seller on or prior to the Closing
Date;
(iv) proration of any real property or personal property Taxes;
and
(v) proration of any prepaid expenses, to the extent that such
expenses relate to periods after the Closing Date.
SECTION 5.19 BUYER AGREEMENT REGARDING SELLER'S EMPLOYEES. Buyer
agrees that for a period of twenty four (24) months from the Closing, neither
its Tivoli Systems Subsidiary or the storage software organization of its
Storage Systems Division will hire for employment any of the then current
employees of the Seller who (i) were employees of Seller as of the Closing and
(ii) were referred to the Buyer for employment directly from one of the former
employees of Seller who were transferred as a part of this Agreement. Buyer will
not be deemed to be in violation of this provision to the extent Buyer's
personnel records indicate that any employee otherwise covered by its terms was
referred to Buyer from some source other than former employees of the Seller who
were transferred as part of this Agreement or who responded to Buyer's general
employment advertising. Seller agrees to notify its employees of these hiring
restrictions and to notify Buyer in writing of any alleged breach of these
provisions. In the event that Buyer hires any Seller employee in violation of
this provision, Buyer will not be in breach of this Agreement if Buyer
terminates the employment of such employee within 30 days of written notice by
Seller.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION. The
obligation of Buyer to purchase and pay for the Acquired Assets and the
obligation of Seller~~ to sell the Acquired Assets to Buyer is subject to the
satisfaction or waiver on or prior to the Closing of the following conditions:
(a) GOVERNMENTAL APPROVALS. The waiting period under the HSR
Act, if applicable to the consummation of the Acquisition, shall have expired or
been terminated. All other authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity necessary for the consummation of the Acquisition shall have
been obtained or filed or shall have occurred.
(b) NO INJUNCTIONS OR RESTRAINTS. No Applicable Law or
Injunction enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition preventing the consummation of
the Acquisition shall be in effect.
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SECTION 6.02. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
Buyer to purchase and pay for the Acquired Assets is subject to the satisfaction
(or waiver by Buyer) on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller in this Agreement and the Ancillary Agreements that are
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date
hereof and as of the Closing Date as though made on the Closing Date, except to
the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date).
(b) CLOSING DOCUMENTS. Seller shall have delivered to Buyer the
following documents:
(i) a certificate of Seller, dated the Closing Date, to the
effect that Seller's representations and warranties in this Agreement and the
Ancillary Agreements are true and correct and that all actions required to be
taken by Seller prior to the Closing have been duly taken;
(ii) a certificate of Seller, dated the Closing Date, to the
effect that Seller has performed or complied in all material respects with the
obligations and covenants required by this Agreement to be performed or complied
with by Seller by the time of Closing;
(iii) an incumbency certificate dated the Closing Date, for the
authorized signatories of Seller executing this Agreement and the Ancillary
Agreements at the Closing; and
(iv) a certificate of the secretary or assistant secretary of
Seller, dated the Closing Date, as to the continued existence of Seller.
(c) ANCILLARY AGREEMENTS. Seller shall have entered into each
of the Ancillary Agreements to be executed by it and each such Ancillary
Agreement shall be in full force and effect without breach hereunder.
(d) ABSENCE OF PROCEEDINGS. There shall not be pending or
threatened any Proceeding: (i) challenging or seeking to restrain or prohibit
the Acquisition or any other transaction contemplated by this Agreement or the
Ancillary Agreements or seeking to obtain from Buyer or any of its subsidiaries
in connection with the Acquisition any damages; (ii) seeking to prohibit or
limit the ownership or operation by Buyer or any of its subsidiaries of any
material portion of the business or assets of Buyer (including the Business) or
any of its subsidiaries, or to compel Buyer or any of its subsidiaries to
dispose of or hold separate any material portion of the business or assets of
Buyer (including the Business) or any of its subsidiaries, in each case as a
result of the Acquisition or any of the other transactions
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contemplated by this Agreement; (iii) seeking to impose limitations on the
ability of Buyer to acquire or hold, or exercise full rights of ownership of,
the Acquired Assets; or (iv) seeking to prohibit Buyer or any of its
subsidiaries from effectively controlling in any material respect the Business.
(e) TRANSFER TAXES. Seller shall have prepared, executed and
filed all returns, questionnaires, applications or other documents regarding any
Transfer Tax that is required to be filed by Seller prior to Closing.
(f) CONSENTS. Buyer shall have received from Seller written
consents from all third parties necessary to effect the Acquisition, other than
such consents the absence of which, individually or in the aggregate, could not
reasonably be expected to have a Seller Material Adverse Effect.
(g) EMPLOYEE ACCEPTANCES. Seller shall have terminated all
employees, contractors and consultants to the Business and Buyer shall have
received written confirmation from the individuals listed in Schedule 6.02(g),
of such individuals' acceptance of Buyer's offer of employment.
(h) NO ADVERSE CHANGES. There shall have been no material
adverse change with respect to the Acquired Assets or the Business between the
date of execution of this Agreement and the Closing.
(i) SELLER EMPLOYEE AGREEMENTS. Seller shall have not amended
or terminated any of the Seller Employee Agreements.
(j) OTHER DOCUMENTS. Seller shall have furnished to Buyer such
other documents relating to Seller's corporate existence and authority
(including copies of resolutions of the board of directors of Seller), and such
other matters as Buyer or its counsel may reasonably request.
(k) Prior to Closing, a final review shall be performed to
demonstrate that the Acquired Assets and related documentation and materials
conform to and function in accordance with the items set forth below. The
Parties will bring the Assets to Buyer's designated lab facility and perform the
following tests that will be observed by Buyer:
(i) Successfully build all products listed in Schedule
1.02(a)(ii).
(ii) Run though a sanity test of all products to ensure the code
installs and functions correctly. This will include:
- creating installable images from the compiled code
- installing these images on clean machines (machines that have
no code currently installed on them)
- verifying to Buyer that all Code listed in Schedule 2.1a has
been delivered, and that all Code is installed in the
appropriate directory structure
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SECTION 6.03. CONDITIONS TO OBLIGATION OF SELLER. The obligation
of Seller to sell, assign, convey, and deliver the Acquired Assets is subject to
the satisfaction (or waiver by Seller) on or prior to the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer made in this Agreement and the Ancillary Agreements that are
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date
hereof and as of the Closing Date as though made on the Closing Date, except to
the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date).
(b) CLOSING DOCUMENTS. Buyer shall have delivered to Seller the
following documents:
(i) a certificate of Buyer, dated the Closing Date, to the
effect that Buyer's representations and warranties in this Agreement and the
Ancillary Agreements are true and correct and that all actions required to be
taken by Buyer prior to the Closing have been duly taken;
(ii) a certificate of Buyer, dated the Closing Date, to the
effect that Buyer has performed and complied in all material respects with the
obligations and covenants required by this Agreement to be performed or complied
with by Buyer by the time of Closing;
(iii) an incumbency certificate, dated the Closing Date, for the
authorized signatories of Buyer executing this Agreement and the Ancillary
Agreements at the Closing; and
(iv) a certificate of the secretary or assistant secretary of
Buyer, dated the Closing Date, as to the continued existence of Buyer.
(c) ANCILLARY AGREEMENTS. Buyer shall have entered into each of
the Ancillary Agreements to be executed by it and each such Ancillary Agreement
shall be in full force and effect without breach thereunder.
(d) TRANSFER TAXES. Buyer shall have prepared, executed and
filed all returns, questionnaires, applications or other documents regarding any
Transfer Tax that is required to be filed by Buyer prior to Closing.
(e) ABSENCE OF PROCEEDINGS. There shall not be pending or
threatened any Proceeding challenging or seeking to restrain or prohibit the
Acquisition or any other transaction contemplated by this Agreement or the
Ancillary Agreements or seeking to obtain from Seller or
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any of its subsidiaries in connection with the Acquisition any damages that are
material in relation to Seller and its subsidiaries taken as whole.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. Neither Buyer nor
Seller may rely on the failure of any condition set forth in this Article VI to
be satisfied if such failure was caused by such Party's failure to act in good
faith or to use its reasonable efforts to cause the closing to occur, as
required by Section 5.04.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the Acquisition
and the other transactions contemplated by this Agreement abandoned at any time
prior to the Closing:
(i) by mutual written consent of Seller and Buyer;
(ii) by Buyer, if the Closing does not occur on or prior to
February 1, 2000; or
(iii) by Buyer if, in its reasonable opinion, compliance with any
request for additional information made by the United States Federal Trade
Commission or the United States Department of Justice pursuant to the HSR Act
would be burdensome or unduly expensive;
(iv) by Seller, upon its acceptance of an unsolicited other bid
and payment to Buyer of the Breakup Fee, as set forth in Section 5.02. PROVIDED,
HOWEVER, that the party seeking termination pursuant to clause (ii) is not then
in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement.
(b) In the event of termination by Seller or Buyer pursuant to
this Section 7.01, written notice thereof shall forthwith be given to the other
and the transactions contemplated by this Agreement shall be terminated, without
further action by either party.
SECTION 7.02. EFFECT OF TERMINATION. If this Agreement is
terminated and the transactions contemplated hereby are abandoned as described
in Section 7.01, this Agreement shall become null and void and of no further
force and effect, except for the provisions of: (i) Section 5.05 relating to
certain expenses; (ii) Section 5.06 relating to finder's fees and broker's fees;
(iii) Section 7.01 and this Section 7.02; and (iv) Section 5.11 relating to
publicity. Nothing in this Section 7.02 shall be deemed to release any Party
from any liability for any breach by such party of the terms and provisions of
this Agreement or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement.
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SECTION 7.03. AMENDMENTS AND WAIVERS. This Agreement may not be
amended except by an instrument in writing duly executed on behalf of each of
the parties hereto. By an instrument in writing Buyer, on the one hand, or
Seller, on the other hand, may waive compliance by the other party with any term
or provision of this Agreement that such other party was or is obligated to
comply with or perform.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNIFICATION BY SELLER. (a) From and after the
Closing, Seller shall indemnify Buyer, its affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) net of any third party insurance proceeds ("LOSSES"), as incurred
(payable promptly upon written request), arising from, in connection with or
otherwise with respect to:
(i) any breach of any representation or warranty of Seller that
survives the Closing and is contained in this Agreement or in any Ancillary
Agreement;
(ii) any breach of any covenant of Seller contained in this
Agreement or in any Ancillary Agreement;
(iii) any Excluded Liability;
(iv) the failure to comply with statutory provisions relating to
bulk sales and transfers, if applicable;
(v) any fees, expenses or other payments incurred or owed by
Seller to any brokers, financial advisors or comparable other persons retained
or employed by it in connection with the transactions contemplated by this
Agreement; and
(vi) any claim or assessment asserted against an indemnified
party with respect to any Taxes relating to the operations of Seller or any
affiliate of Seller for all periods prior to the Closing Date or resulting from
the transfer by Seller or its affiliates of the Acquired Assets.
(b) Seller shall not be required to indemnify any person under
clause (i) of Section 8.01(a) in excess of $ 7,000,000, except as otherwise
specifically provided in the Intellectual Property Agreement. No claim for
indemnification shall be brought against Seller for any individual claims which
are less than $5,000.00 and no claim or claims for indemnification shall be
brought against Seller for claims which are less than $50,000.00 until the
cumulative total of claims (excluding claims which are less than $5,000.00) are
greater than $50,000.00.
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SECTION 8.02. INDEMNIFICATION BY BUYER. From and after the
Closing, Buyer shall indemnify Seller, its affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any Loss, as
incurred (payable promptly upon written request), for or on account of or
arising from or in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of Buyer
contained in this Agreement or in any Ancillary Agreement;
(ii) any breach of any covenant of Buyer contained in this
Agreement or in any Ancillary Agreement;
(iii) any Assumed Liability; or
(iv) any fees, expenses or other payments incurred or owed by
Buyer to any brokers, financial advisors or other comparable persons retained or
employed by it in connection with the transactions contemplated by this
Agreement or by any Ancillary Agreement.
SECTION 8.03. TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless any party, (i) pursuant to Section 8.01 (a)(i) or
8.02 (i), shall terminate when the applicable representation and warranty
terminates pursuant to Section 8.05 and (ii) pursuant to the other clauses of
Sections 8.01 and 8.02 shall not terminate; PROVIDED, HOWEVER, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim pursuant to Section 8.04 to the party to be providing the
indemnification.
SECTION 8.04. PROCEDURES. (a) THIRD PARTY CLAIMS. In order for a
party (the "INDEMNIFIED PARTY"), to be entitled to any indemnification provided
for under this Agreement in respect of, arising out of or involving a claim made
by any person against the indemnified party (a "THIRD PARTY Claim"), such
indemnified party must notify the indemnifying party in writing of the Third
Party Claim promptly following receipt by such indemnified party of written
notice of the Third Party Claim; PROVIDED, HOWEVER, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually and materially
prejudiced as a result of such failure
(b) ASSUMPTION. If a Third Party Claim is made against an
indemnified party, the indemnifying party shall be entitled to participate in
the defense thereof with counsel selected by the indemnifying party; PROVIDED,
HOWEVER, that such counsel is not reasonably objected to by the indemnified
party. The indemnified party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the indemnifying
party's prior written consent (which consent shall not be unreasonably
withheld). The indemnified party shall agree to any settlement, compromise or
discharge of a Third Party Claim that the indemnifying party may recommend and
that by its terms obligates the indemnifying party to pay the full amount of the
liability in connection with such Third Party Claim, which releases the
indemnified party
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completely in connection with such Third Party Claim and that would not
otherwise adversely affect the indemnified party.
SECTION 8.05. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements contained in this
Agreement, the Ancillary Agreements (other than the IP Agreement) and in any
document delivered in connection herewith shall survive the Closing for a period
of three (3) years following the Closing Date, PROVIDED, HOWEVER, that the
representations and warranties contained in the IP Agreement shall survive
according to the terms of such IP Agreement, PROVIDED, FURTHER, that all
representations and warranties relating to Taxes shall survive the Closing Date
until the applicable period of limitation on assessment or refund of any
relevant Tax has expired.
SECTION 8.06. RIGHT OF SETOFF. Buyer shall be entitled and
authorized at any time and from time to time, to the fullest extent permitted by
law, to setoff and apply any and all of the holdback and amounts payable during
the last five (5) quarters of payments pursuant to Section 1.01, against any of
and all the indemnification obligations in respect of Losses pursuant to this
Agreement and the IP Agreement. The rights of Buyer under this section are in
addition to any other rights and remedies which Buyer may have.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. ASSIGNMENT. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by Buyer or Seller
(including by operation of law in connection with a merger or consolidation of
Buyer or Seller) without the prior written consent of the other party hereto.
Notwithstanding the foregoing, (a) Buyer may assign its right to purchase the
Acquired Assets or any portion thereof hereunder to an affiliate of Buyer
without the prior written consent of Seller. Any attempted assignment in
violation of this Section 9.01 shall be void.
SECTION 9.02. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Article VIII, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
SECTION 9.03. ATTORNEY FEES. A party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including legal fees, incurred by such
other party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
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SECTION 9.04. NOTICES. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent by facsimile or sent, postage prepaid, by registered,
certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand or facsimile, or if mailed, three days
after mailing (one business day in the case of express mail or overnight courier
service), as follows:
(i) if to Buyer:
International Business Machines Corporation
Xxx Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx
with a copy to:
International Business Machines Corporation
Xxx Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.; and
(ii) if to Seller,
Mercury Computer Systems
000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, President
with a copy to:
Xxxxxxxx , Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
SECTION 9.05. INTERPRETATION; EXHIBITS AND SCHEDULES; CERTAIN
DEFINITIONS.
(a) The headings contained in this Agreement, in any Exhibit or
Schedule hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All Exhibits and 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. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
When a reference is made in this Agreement to a Section, Exhibit or Schedule,
such reference shall be to a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated.
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(b) For all purposes hereof:
"AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"ANCILLARY AGREEMENTS" shall mean the Assumption Agreement, the
Xxxx of Sale, the Intellectual Property Agreement and the Real Estate Agreement
and all Attachments or Exhibits attached thereto and expressly referenced
therein.
"ASSUMPTION AGREEMENT" shall mean the Assignment and Assumption
Agreement substantially in the form set out in Exhibit B to be entered into by
the Parties on the Closing Date.
"XXXX OF SALE" shall mean the Xxxx of Sale substantially in the
form set out in Exhibit C to be entered into by Buyer and Seller on the Closing
Date.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Agreement for
Exchange of Confidential Information dated October 13, 1999, between Buyer and
Seller, as such may be further modified, amended, supplemented or replaced from
time to time.
"INCLUDING" means including, without limitation.
"PARTIES" shall mean Buyer and Seller.
"PARTY" shall mean Buyer or Seller, as the case may be.
"PERSON" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.
"SUBSIDIARY" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person or by another subsidiary of such person.
SECTION 9.06. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other party.
SECTION 9.07. ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements, ~~along with the Schedules and Exhibits thereto, contain the entire
agreement and
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understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter. Neither party shall be liable or bound to any other party in any
manner by any representations, warranties or covenants relating to such subject
matter except as specifically set forth herein or in the Ancillary Agreements.
SECTION 9.08. SEVERABILITY. If any provision of this Agreement (or
any portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 9.09. CONSENT TO JURISDICTION. Each party irrevocably
submits to the exclusive jurisdiction of: (a) the Supreme Court of the State of
New York, Westchester County; and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each of Buyer and Seller agrees to
commence any such action, suit or proceeding either in the United States
District Court for the Southern District of New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of New York, Westchester County. Each of Buyer
and Seller further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 9.09. 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, any Ancillary Agreement or the
transactions contemplated hereby and thereby in: (i) the Supreme Court of the
State of New York, Westchester County; or (ii) the United States District Court
for the Southern District of New York; and hereby and thereby 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.
SECTION 9.10. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
SECTION 9.11. WAIVER OF JURY TRIAL. Each party hereby waives to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each party: (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver; and (b) acknowledges that it and the other
parties hereto have been induced to
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enter into this Agreement and the Ancillary Agreements, as applicable, by, among
other things, the mutual waivers and certifications in this Section 9.11.
SECTION 9.12 DISPUTE RESOLUTION. The parties agree that prior to
any Termination or commencement of litigation, reasonable efforts will be made
to facilitate a meeting of appropriate sponsoring senior executives of each
party to attempt to resolve the issue(s) involved.
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IN WITNESS WHEREOF, Seller and Buyer have duly executed this
Agreement as of the date first written above.
MERCURY COMPUTER SYSTEMS INTERNATIONAL BUSINESS MACHINES
CORPORATION
by /s/ J. R. Bertelli by /s/ Xxx X. Xxxxxx
------------------------------ ---------------------------------
Name: J.R. BERTELLI Name: XXX X. XXXXXX
Title: Chief Executive Officer Title: Vice President, Corporate
Development and Real Estate
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