ASSET PURCHASE AGREEMENT
By and Between
STANFORD TELECOMMUNICATIONS, INC.
and
INTEL CORPORATION
Dated as of September 22, 1999
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................... 5
1.01. Definitions....................................................................... 5
1.02. Index of Other Defined Terms...................................................... 11
ARTICLE II PURCHASE AND SALE.................................................................. 12
2.01. Purchased Assets.................................................................. 12
2.02. Excluded Assets................................................................... 14
2.03. Assumption of Liabilities......................................................... 14
2.04. Excluded Liabilities.............................................................. 15
2.05. Assignment of Contracts and Rights................................................ 16
2.06. Purchase Price.................................................................... 16
2.07. Closing........................................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER......................................... 17
3.01. Existence and Good Standing....................................................... 17
3.02. Authorization and Enforceability.................................................. 17
3.03. Governmental or Other Authorization............................................... 17
3.04. Non-Contravention................................................................. 18
3.05. Financial Statements; Undisclosed Liabilities; Books and Records.................. 18
3.06. Absence of Certain Changes........................................................ 19
3.07. Properties: Material Leases; Tangible Assets...................................... 20
3.08. Receivables....................................................................... 20
3.09. Inventories....................................................................... 21
3.10. Litigation........................................................................ 21
3.11. Material Contracts................................................................ 21
3.12. Permits; Required Consents........................................................ 22
3.13. Compliance with Applicable Laws................................................... 22
3.14. Employment Agreements; Employee Benefits.......................................... 23
3.15. Labor and Employment Matters...................................................... 23
3.16. Intellectual Property............................................................. 23
3.17. Advisory Fees..................................................................... 32
3.18. Environmental Compliance.......................................................... 32
3.19. Insurance......................................................................... 33
3.20. Tax Matters....................................................................... 33
3.21. Sufficiency of and Title to the Purchased Assets.................................. 34
3.22. Product Warranties................................................................ 34
3.23. Backlog........................................................................... 35
3.24. Customer, Supplier and Foundry Relationships...................................... 35
3.25. Full Disclosure................................................................... 36
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER........................................ 36
4.01. Existence and Good Standing........................................................ 36
4.02. Authorization and Enforceability................................................... 36
4.03. Governmental or Other Authorization................................................ 36
4.04. Non-Contravention.................................................................. 36
4.05. Advisory Fees...................................................................... 37
ARTICLE V COVENANTS OF SELLER................................................................. 37
5.01. Operation of Business Prior to Closing............................................. 37
5.02. Compliance with Terms of Required Governmental Approvals and
Required Contractual Consents...................................................... 39
5.03. Maintenance of Insurance Policies; Purchaser Designated Loss
Payee.............................................................................. 40
5.04. No Continuing Negotiations......................................................... 40
5.05. Access to Information.............................................................. 40
5.06. Notices of Certain Events.......................................................... 41
5.07. Transition; Customer Introductions................................................. 41
5.08. Transfer of Certain Materials to Purchaser......................................... 41
5.09. Post-Closing Transition Services................................................... 41
5.10 Assistance with Transfer of Third Party Intellectual Property
Rights............................................................................. 42
5.11 Delivery........................................................................... 42
5.12 Release of Moral Rights............................................................ 42
5.13 Indemnification for Certain Matters................................................ 42
ARTICLE VI COVENANTS OF PURCHASER............................................................. 42
6.01. Compliance with Terms of Governmental Approvals and Consents....................... 42
6.02. Employees and Offers of Employment................................................. 43
6.03. Use of Marks....................................................................... 43
ARTICLE VII COVENANTS OF ALL PARTIES.......................................................... 43
7.01. Further Assurances................................................................. 43
7.02. Certain Filings.................................................................... 43
7.03. Public Announcements............................................................... 44
7.04. Tax Matters........................................................................ 44
7.05. Allocation of Purchase Price....................................................... 46
7.06. Confidentiality.................................................................... 47
7.07. Waiver of Bulk Sales Laws.......................................................... 47
ARTICLE VIII CONDITIONS TO CLOSING............................................................ 47
8.01. Conditions to Obligations of Purchaser............................................. 47
8.02. Conditions to Obligations of Seller................................................ 50
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ARTICLE IX TERMINATION........................................................................ 52
9.01. Grounds for Termination............................................................ 52
9.02. Effect of Termination.............................................................. 53
ARTICLE X MISCELLANEOUS....................................................................... 53
10.01. Notices........................................................................... 53
10.02. Amendments; Waivers............................................................... 55
10.03. Expenses.......................................................................... 55
10.04. Successors and Assigns............................................................ 56
10.05. Governing Law..................................................................... 56
10.06. Counterparts; Effectiveness....................................................... 56
10.07. Entire Agreement.................................................................. 56
10.08. Captions.......................................................................... 56
10.09. Severability...................................................................... 56
10.10. Construction...................................................................... 56
10.11. Dispute Resolution................................................................ 57
10.12. Submission to Jurisdiction; Waiver of Jury Trial.................................. 57
10.13. Meaning of Include and Including.................................................. 58
10.14. Cumulative Remedies............................................................... 58
10.15. Third Party Beneficiaries......................................................... 58
10.16. Specific Performance.............................................................. 58
10.17. Survival.......................................................................... 59
EXHIBITS
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Exhibit 1.01A Form of Assignment and Assumption Agreement
Exhibit 1.01B Form of Xxxx of Sale
Exhibit 1.01C Form of Non-Competition Agreement
Exhibit 1.01D Form of Patent Assignments
Exhibit 3.05 Financial Information of the Business
Exhibit 8.01 Matters to be Covered by Opinion of Legal Counsel to Seller
Exhibit 8.02 Matters to be Covered by Opinion of Legal Counsel to Purchaser
SCHEDULES
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Schedule 1.01 Seller Individuals With Knowledge
Schedule 2.01(a)(i) Inventory
Schedule 2.01(a)(ii) Inventory Not Purchased
Schedule 2.01(c) Equipment
Schedule 2.01(e) Intellectual Property Rights
Schedule 2.01(f) Prepaid Expenses
Schedule 2.01(h) Assumed Contracts
Schedule 2.01(l) Accounts Receivable
Schedule 2.02(b) Excluded Contracts
Schedule 3.03 Seller Governmental Authorizations
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Schedule 3.04 Non-Contravention Exceptions
Schedule 3.05(c) Liabilities of Seller
Schedule 3.06 Ordinary Course Exceptions
Schedule 3.10 Litigation
Schedule 3.11(a) Material Contracts
Schedule 3.11(c) Largest Suppliers
Schedule 3.12(a) Permits
Schedule 3.12(b) Required Consents
Schedule 3.16(b) Marks
Schedule 3.16(c) Patents
Schedule 3.16(e) Trade Secrets
Schedule 3.16(f) Software
Schedule 3.16(g) Documentation
Schedule 3.16(h) Licensed Technology Agreements
Schedule 3.16(i) Technology Distribution Agreements
Schedule 3.16(j) Ownership
Schedule 3.16(k) Existing Product Performance
Schedule 3.16(l) Infringement
Schedule 3.16(m) Employee Confidentiality
Schedule 3.16(o) Disabling Codes
Schedule 3.16(p) Year 2000
Schedule 3.18 Environmental Permits
Schedule 3.19 Insurance Policies
Schedule 3.20 Tax Matters
Schedule 3.22 Product Warranties
Schedule 3.23 Backlog
Schedule 3.24 Customer, Supplier and Foundry Relationships
Schedule 4.03 Purchaser Approvals
Schedule 4.04 Consents Required by Purchaser
Schedule 5.07 Certain Employees to Provide Assistance
Schedule 7.05 Allocation of Purchase Price
Schedule 8.01(c) Required Purchaser Closing Consents
Schedule 8.01(f) Certain Employees That May be Offered Employment
Schedule 8.02(c) Required Seller Closing Consents
APPENDICES
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Appendix A Employee Matters
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, dated as of September 22, 1999 (the
"Agreement"), is by and between Stanford Telecommunications, Inc., a Delaware
corporation ("Seller" ) and Intel Corporation, a Delaware corporation
("Purchaser"). All capitalized terms have the meanings ascribed to such terms in
Article I or as otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller substantially all of the assets of the Business;
WHEREAS, Seller desires to license back from Purchaser, and Purchaser
desires to license to Seller, certain of the Intellectual Property Rights
included in the Purchased Assets;
WHEREAS, Purchaser desires to license from Seller, and Seller desires
to license to Purchaser, certain Intellectual Property Rights not included in
the Purchased Assets;
WHEREAS, Purchaser and Seller are entering into the Supply Agreement,
Seller License Agreement and Purchaser License Agreement simultaneously
herewith;
WHEREAS, in connection with the sale of the Purchased Assets to
Purchaser by Seller, Seller has agreed to enter into a non-competition agreement
in favor of Purchaser;
WHEREAS, Seller has entered into that certain Agreement and Plan of
Merger dated as of June 22, 1999 with Newbridge Networks Corporation
("Newbridge") and a Subsidiary of Newbridge, pursuant to which, upon
consummation of the transactions contemplated therein, Seller will become a
wholly owned Subsidiary of Newbridge (the "Merger"); and
WHEREAS, as a condition to consummation of the transactions
contemplated hereby, Newbridge has agreed to execute a noncompetition agreement
with Purchaser to be effective upon effectiveness of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. The following terms, as used herein, have the
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the following meanings:
"Acquisition Documents" means this Agreement, the Supply Agreement,
the Xxxx of Sale, the Assignment and Assumption Agreement, the Seller License
Agreement, the Purchaser
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License Agreement, the Non-Competition Agreement, the Transition Services
Agreement and the Patent Assignments and any other document or agreement
executed in connection with any of the foregoing, together with any Exhibits and
Schedules thereto, and in each case as modified, amended, supplemented, restated
or renewed from time to time.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such other Person.
"Applicable Law" means, with respect to any Person, any federal,
state, local or foreign statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to such Person or
any of its Affiliates or ERISA Affiliates or any of their respective properties,
assets, officers, directors, employees, consultants or agents.
"Assignment and Assumption Agreement" means that certain Assignment
and Assumption Agreement dated as of the Closing Date, to be entered into by
Purchaser and Seller, in substantially the form attached hereto as Exhibit
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1.01A.
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"Associate" or "Associated With" means, when used to indicate a
relationship with any Person, (a) any other Person of which such first Person is
an officer, director or partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities,
partnership or membership interests or other comparable ownership interests
issued by such other Person, (b) any trust or other estate in which such first
Person has a ten percent (10%) or more beneficial interest or as to which such
first Person serves as trustee or in a similar fiduciary capacity and (c) any
relative or spouse of such first Person who has the same home as such first
Person.
"Xxxx of Sale" means that certain Xxxx of Sale dated as of the Closing
Date, to be executed by Seller in favor of Purchaser, in substantially the form
attached hereto as Exhibit 1.01B.
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"Books and Records" means with respect to any Person, all files,
documents, instruments, papers, books and records of such Person's operations,
affairs, financial condition, results of operations, prospects, assets or
Liabilities, including financial statements, Tax Returns, work papers and
letters from accountants and auditors, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, customer and marketing materials and
information, product data sheets, performance benchmark reports, customer
account histories and profiles, sales training and presentation materials,
customer support materials, support bulletins, vendor lists, contracts,
licenses, customer lists, Permits, computer files and programs, retrieval
programs, operating data and plans, projections, forecasts and environmental
studies and plans.
"Business" means the telecom components products business of Seller,
which produces and sells (i) wireline broadband silicon components, (ii)
wireless Local Multipoint Distribution System ("LMDS") broadband silicon
components and (iii) wireless Multipoint Multichannel Distribution System
("MMDS") broadband silicon components; for each of (i) through (iii), as
heretofore or currently conducted by Seller, including all products, software
and other aspects of such business under current research or development.
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"Business Day" means each day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco, California are authorized or
required by law to close.
"Closing Date" means the date of the Closing.
"Contracts" means all contracts, agreements, options, leases,
licenses, sales and purchase orders, commitments and other instruments of any
kind, whether written or oral, to which Seller is a party or is otherwise bound.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages (whether direct or indirect but excluding
consequential damages), deficiencies, costs, expenses, Liabilities, judgments,
settlements, awards, fines, response costs, sanctions, Taxes, penalties, charges
and amounts paid in settlement, including reasonable out-of-pocket costs, fees
and expenses (including costs, fees and expenses of attorneys, accountants and
auditors and other agents of, or other Persons retained by, such Person).
"Division" means Seller's telecom components products division, which
engages in the Business and such other units or aspects of Seller's operations
which are used in the Business.
"Employee Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA, that is sponsored or contributed to by Seller or
Purchaser or any ERISA Affiliate covering employees or former employees of
Seller or Purchaser, or with respect to which Seller or Purchaser or any ERISA
Affiliate is a party or is otherwise bound.
"Employee Pension Benefit Plan" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is regulated under Title IV of
ERISA or is subject to the funding requirements of Part III of Title I of ERISA,
or Section 412 of the Code, other than a multiemployer plan within the meaning
of Sections 3(37) or 4001(a)(3) of ERISA.
"Environmental Law" means any applicable federal, state, local or
foreign law, statute, treaty, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree or injunction relating to:
(a) "Releases" (as defined in 42 U.S.C. sec. 9601(22)) or threatened Releases of
Hazardous Material into the environment, (b) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of a
Hazardous Substance, (c) the health or safety of employees in the workplace, (d)
protecting or restoring natural resources or (e) the environment, including the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), the Clean Air Act, the Water
Pollution Control Act, the Safe Drinking Water Act and the Toxic Substances
Control Act ("TSCA").
"Environmental Liabilities" means all Liabilities of Seller (whether
such Liabilities are owed to Governmental Authorities, third Persons or
otherwise) relating to violations, acts or conditions existing on or prior to
the Closing Date as follows: (a) attributable to Seller's failure to comply
with any Environmental Law on or prior to the Closing Date, (b) attributable to
environmental contamination by Seller or any other Person on any property on
which Seller
3
operated or conducted business on or prior to the Closing Date or (c) arising
out of contamination by materials disposed of at any location by or for Seller
on or prior to the Closing Date.
"Equipment" means all machinery, equipment, furniture, office
equipment, communications equipment, computer equipment, vehicles, spare and
replacement parts, fuel and other tangible personal property (and interests in
any of the foregoing), used in connection with the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of Seller means any other Person that, together with
Seller, as of the relevant measuring date under ERISA, was or is required to be
treated as a single employer under Section 414 of the Code.
"GAAP" means generally accepted accounting principles in the United
States of America applied on a consistent basis.
"Governmental Approval" means an authorization, consent, approval,
permit or license issued by, or a registration or filing with, or notice to, or
waiver from, any Governmental Authority.
"Governmental Authority" means any foreign or domestic federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Material" or "Hazardous Substance" means any substance or
material, respectively, (a) the presence of which requires investigation or
remediation under any Environmental Law, (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law, (c) that is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic or otherwise hazardous and is regulated by any Governmental Authority
having or asserting jurisdiction over the Business, (d) that contains gasoline,
diesel fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or
asbestos or (e) as such terms is defined in any indemnification provision in any
Contract.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HSR Filings" means the filings made under the HSR Act by Seller and
Purchaser in respect of Seller's sale and Purchaser's purchase of the Purchased
Assets.
"IRS" means the Internal Revenue Service.
"Knowledge" means, with respect to any Person, the actual knowledge of
such Person, after reasonable inquiry. For purposes hereof, a Person shall be
deemed to have actual knowledge of the contents of all Books and Records with
respect to which such Person has
4
reasonable access. Without limiting the generality of the foregoing, with
respect to any Person that is a corporation, limited liability company,
partnership or other business entity, actual knowledge shall be deemed to
include the actual knowledge of all directors, officers, partners and members of
any such Person provided that with respect to Seller, actual knowledge shall be
--------
deemed to be the actual knowledge of the individuals identified on Schedule
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1.01.
----
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person.
"Lien" means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, encumbrance or hypothecation
in respect of such asset.
"Material Adverse Effect" means, with respect to any Person, any
circumstance of, change in, or effect on, or group of such circumstances of,
changes in or effects on, the operations, financial condition, earnings, or
results of operations, prospects, assets or Liabilities of the Person, that
results in or would reasonably be expected to result in, a material adverse
effect on, or a material adverse change in, the operations, financial condition,
earnings, results of operations, prospects, assets or Liabilities of such
Person.
"Non-Competition Agreement" means that certain Non-Competition
Agreement dated as of the Closing Date, to be executed by Newbridge, Seller and
Purchaser, in substantially the form attached hereto as Exhibit 1.01C.
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"Patent Assignments" means those certain Assignments dated as of the
Closing Date, to be executed by Seller in favor of Purchaser, each in
substantially the form attached hereto as Exhibit 1.01D.
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"Permitted Liens" means (a) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due and (b)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Persons and other Liens imposed by Applicable Law
incurred in the ordinary course of business for sums not yet delinquent or
immaterial in amount and being contested in good faith. Notwithstanding the
foregoing, no Lien arising under the Code or ERISA with respect to the
operation, termination, restoration or funding of any Benefit Plan sponsored by,
maintained by or contributed to by Seller or any of its ERISA Affiliates or
arising in connection with any excise tax or penalty tax with respect to such
Benefit Plan shall be a Permitted Lien.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust, estate or other similar business entity or
organization, including a Governmental Authority.
"Post-Closing Tax Period" means any Tax period (or portion thereof)
ending after the Closing Date.
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"Pre-Closing Tax Period" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"Purchaser License Agreement" means that certain License Agreement
dated as of the date hereof, between Purchaser, as licensor, and Seller, as
licensee.
"Seller License Agreement" means that certain License Agreement dated
as of the date hereof between Seller, as licensor, and Purchaser, as licensee.
"Subsidiary" means, with respect to any Person, (a) any corporation as
to which more than fifty percent (50%) of the outstanding stock having ordinary
voting rights or power (and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency occurs and such
rights may be exercised) is owned or controlled, directly or indirectly, by such
Person and/or by one or more of such Person's direct or indirect Subsidiaries
and (b) any partnership, joint venture or other similar relationship between
such Person (or any Subsidiary thereof) and any other Person (whether pursuant
to a written agreement or otherwise).
"Supply Agreement" means that certain Original Equipment Manufacturer
and Software License Agreement of even date herewith, by and between Seller and
Purchaser.
"Taxes" means (a) all foreign, federal, state, local and other net
income, gross income, gross receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, transfer, franchise, profits, license, lease,
service, service use, withholding, backup withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium, property, prohibited
transactions, windfall or excess profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto, (b)
any Liability for payment of amounts described in clause (a) whether as a result
of transferee Liability, of being a member of an Affiliated, consolidated,
combined or unitary group for any period, or otherwise through operation of law
and (c) any Liability for the payment of amounts described in clause (a) or (b)
as a result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other person for Taxes; and
the term "Tax" means any one of the foregoing Taxes.
"Tax Returns" means all returns, declarations, reports, statements,
information statement, forms or other documents filed or required to be filed
with respect to any Tax.
"Transition Services Agreement" means that certain Transition Services
Agreement dated as of the Closing Date, to be negotiated and executed by Seller
and Purchaser.
"Tort Claim" means any claim, on any grounds or basis, under any
statute or common law, for personal injury, wrongful death, defamation, property
damage, product liability, wrongful interference with economic interests or
other tortious conduct of a Person (whether or not Liability is predicated on
negligence, intentional or reckless conduct, breach of contract or strict
liability).
1.02 Index of Other Defined Terms. In addition to these terms
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defined above, the following terms shall have the respective meanings given
thereto in the sections indicated below:
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Defined Term Section
Agreement Preamble
Assumed Contracts Section 2.01(h)
Assumed Contracts Section 2.01(l)
Assumed Liabilities Section 2.03
bulk sales Section 7.07
Business System Section 3.16(p)(i)
CERCLA Section 1.01
Closing Section 2.07
CNDA Section 5.05
Contaminant Section 3.16(o)
Delivery Protocol Section 2.07
Development Environments Section 3.16(a)(i)
Disabling Code Section 3.16(o)
DofJ Section 7.02
Excluded Assets Section 2.02
Excluded Intellectual Property Rights Section 2.02(d)
Financial Information Date Section 3.05(a)
Financial Information Section 3.05(a)
FTC Section 7.02
Insurance Policies Section 3.19
Intellectual Property Assets Section 3.16(a)(iii)
Intellectual Property Rights Section 31.6(a)(ii)
Invention Disclosures Section 3.16(e)
Inventory Section 2.01(a)
Licensed Intellectual Property Section 3.16(h)(v)
Licensed Software Section 3.16(f)
Licensed Technology Agreements Section 3.16(h)
Material Contracts Section 3.11(a)
Merger Preamble
Newbridge Preamble
Outside Date Section 9.01(b)
Owned Marks Section 3.16(b)
Owned Patents Section 3.16(c)
Owned Software Section 3.16(f)
Owned Trade Secrets Section 3.16(e)
Permits Section 3.12(a)
Proceedings Section 3.10
Products Section 3.16(k)
proprietary Section 3.16(a)(i)
Purchase Price Section 2.06
Purchased Assets Section 2.01
Purchaser Approvals Section 4.03
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Purchaser Preamble
RCRA Section 1.01
Receivables Section 3.08
Releases Section 1.01
Required Consents Section 3.12(b)
Required Contractual Consent Section 3.12(b)
Required Governmental Approval Section 3.12(b)
Retained Marks Section 6.03
safe harbor lease Section 3.20(h)
Sales Tax Section 7.04(e)
Seller Preamble
Software Section 3.16(a)(iv)
ST Taxes Section 7.02(c)
Supply Contracts Section 3.24
Systems Section 3.16(o)
tax exempt use property Section 3.20(h)
Technology Distribution Agreements Section 3.16(i)
TSCA Section 1.01
ultimate parent entity Section 7.02
ultimate parent entity Section 7.02
workbenches Section 3.16(a)(i)
Year 2000 Compliant Section 3.16(p)(i)
ARTICLE II
PURCHASE AND SALE
2.01 Purchased Assets. Upon the terms and subject to the conditions
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of this Agreement, at the Closing, Purchaser agrees to purchase from Seller, and
Seller agrees to sell, transfer, assign and deliver to Purchaser, free and clear
of all Liens other than Permitted Liens, all of the assets, properties and
business of the Business, of every kind and description, wherever located,
tangible or intangible, owned, held, licensed, leased or otherwise used in
connection with the Business, as the same shall exist on the Closing Date
(collectively, the "Purchased Assets"). Without limiting the generality of the
foregoing, the Purchased Assets shall include all of Seller's right, title and
interest in, to and under:
(a) all items of inventory relating to the Business (the
"Inventory"), notwithstanding how classified in the financial records of
Seller, whether Software, hardware or otherwise, and including all raw
materials, finished goods, Products, supplies, spare parts, samples and
work in progress, including those items listed on Schedule 2.01(a)(i) but
-------------------
not including such items of inventory listed on Schedule 2.01(a)(ii);
--------------------
(b) all collateral materials, manuals, promotional materials,
sales materials, display materials and product information materials used
in the operation of the Business;
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(c) all of the fixed and other tangible personal property used
in connection with the operation of the Business, including all capital
assets used in the design and development of the Intellectual Property
Rights and all Equipment described on Schedule 2.01(c);
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(d) all backlog of the Business;
(e) all Intellectual Property Assets and other intangible
property (including all of Seller's rights, claims, credits, causes of
action or rights of set-off against third Persons relating to the Purchased
Assets) used in connection with, the Business, including all right, title
and interest in the intellectual property rights listed on Schedule 2.01(e)
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including Owned Software, and any other Development Environments and any
other Software tools used in connection with the Business;
(f) all prepaid expenses (including ad valorem taxes, leases and
rentals) relating to the Business as existing on or prior to the Closing
Date, including the prepaid expenses listed on Schedule 2.01(f);
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(g) all information and assets, whether tangible or intangible,
relating to technical or engineering support of the Business and the
Products;
(h) all Contracts listed on Schedule 2.01(h) (the "Assumed
----------------
Contracts");
(i) all Permits;
(j) all Products;
(k) the originals or true copies of the Books and Records
relating to the Business, other than those described in Section 2.02(c);
(l) all accounts receivable relating to the Business, including
the amount of One Million Dollars ($1,000,000) payable by Terayon
Communication Systems ("Terayon") under the intellectual property
license agreement between Terayon and Seller, and the accounts receivable
listed on Schedule 2.01(l);
----------------
(m) all goodwill associated with the Purchased Assets; and
(n) All (i) other assets (and related rights) acquired,
developed or used in connection with the Business currently or previously
and (ii) warranties, representations made to Seller by third parties with
respect to any of the foregoing Purchased Assets, the Business or Assumed
Liabilities, all rights, remedies, set-offs, allowances, rebates, discounts
and credits granted to Seller or its Affiliates with respect to any of the
foregoing Purchased Assets, the Business or Assumed Liabilities, together
with any and all claims, causes of action and rights of Seller or its
Affiliates existing previously, now or hereafter with respect to any of the
foregoing Purchased Assets, the Business or Assumed Liabilities. To the
extent any tangible or intangible assets or rights are discovered or
identified at any time before or after the Closing Date which, pursuant to
the Agreement, constitute
9
Purchased Assets and should have been transferred to Purchaser, are still
in Seller's or any of Seller's Affiliates' possession, Seller shall
immediately transfer and promptly deliver them (or cause them to be
delivered) to Purchaser, without additional charge.
2.02 Excluded Assets. Subject to Section 2.01, Purchaser and Seller
---------------
expressly understand and agree that the following assets and properties of
Seller (the "Excluded Assets") shall be excluded from the Purchased Assets:
(a) all assets, tangible or intangible, real or personal, that
are not used by Seller in connection with the Business;
(b) all Contracts that are not Assumed Contracts, including the
Contracts relating to the Business listed on Schedule 2.02(b);
----------------
(c) the minute books, stock ledgers, accounting records and Tax
Returns of Seller, provided that Purchaser shall have access to and be
--------
provided with copies of all accounting records and Tax Returns relating to
the Business pursuant to Section 5.05;
(d) any Intellectual Property Rights used in Seller's wireless
broadband boards and systems business (the "Excluded Intellectual Property
Rights");
(e) all cash and cash equivalents on hand and in banks on the
Closing Date;
(f) all Employee Benefit Plans and Employee Pension Benefit
Plans;
(g) all insurance contracts in effect as of the date of this
Agreement insuring the Purchased Assets;
(h) the inventory listed on Schedule 2.01(a)(ii); and
--------------------
(i) all leasehold or ownership interests in real property or any
improvements thereon.
2.03 Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions of this Agreement, effective at the time of Closing, Purchaser agrees
to assume the accounts payable and accrued liabilities set forth on the Seller's
balance sheet as of the Financial Information Date included in the Financial
Information attached to this Agreement as Exhibit 3.05 (subject to Sections 7.2
------------
and 7.5 of Appendix A to this Agreement with respect to accrued vacation and
----------
sick days) and as incurred in the ordinary course of business consistent with
past practices as reflected on the balance sheet as of the Closing Date
delivered at Closing subject to Section 8.01(a) and the Liabilities arising out
of Purchaser's operation of the Business and ownership of the Purchased Assets,
but only to the extent such Liabilities accrue after the Closing Date (the
"Assumed Liabilities ", and all other Liabilities being referred to herein as
"Excluded Liabilities").
2.04 Excluded Liabilities. Except for those Liabilities expressly
--------------------
assumed by Purchaser pursuant to Section 2.03, the Purchaser shall not assume
and shall not be liable for, and
10
Seller shall retain and remain solely liable for and obligated to discharge and
indemnify and hold Purchaser harmless for, all of the debts, expenses,
contracts, agreements, commitments, obligations and other Liabilities of any
nature whatsoever of Seller, the Business or the Purchased Assets through and on
the Closing Date, whether known or unknown, accrued or not accrued, fixed or
contingent, including the following:
(a) Breaches of Contracts. Any Liability for breaches by Seller
---------------------
or any Affiliates of Seller prior to the Closing Date of any instrument,
purchase order or Contract or any Liability for payments or amounts due
under any instrument, purchase order or Contract on or prior to the Closing
Date;
(b) Taxes. Except as otherwise provided in Section 7.04, any
-----
Liability for Taxes attributable to or imposed upon Seller or any
Affiliates of Seller, or attributable to or imposed upon the Business or
the Purchased Assets for any period (or portion thereof) through the
Closing Date;
(c) Indebtedness. Any Liability for or in respect of any loan
------------
or other indebtedness for money borrowed of Seller or any Affiliates or
Associates of Seller on or prior to the Closing Date;
(d) Benefit Plans. Any Liability of the Seller or the Business,
-------------
arising on or prior to the Closing Date, attributable to any Employee
Benefit Plan or other employee benefit;
(e) Employees. Any Liability for making payments of any kind
---------
(including as a result of this sale of Purchased Assets or as a result of
the termination by Seller of employment of employees of Seller, or other
claims arising out of the terms and conditions of employment with Seller,
or for sick days, bonus or severance pay, stock option or other employee
incentive plans or otherwise except as expressly provided in Appendix A) to
----------
employees of Seller or in respect of payroll taxes for employees of Seller;
(f) Agreements. Any Liability of Seller incurred in connection
----------
with the making or performance of this Agreement and the transactions
contemplated hereby;
(g) STEL-9257. Any Liability arising in connection with
---------
Seller's sales of its STEL-9257 Products to Hybrid Networks or the return
of such products; and
(h) MDT Claims. Any Liability in connection with any claims
----------
against Purchaser by Micro Devices Technology, Inc. and any Proceedings in
connection therewith as described on Schedule 3.10.
-------------
2.05 Assignment of Contracts and Rights. Anything in this Agreement
----------------------------------
or any other Acquisition Document to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Purchased Asset or any
claim or right or any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without the consent of a party thereto, would
constitute a breach or other contravention thereof or in any way adversely
affect the rights of Purchaser or Seller thereunder. Seller shall use
commercially reasonable efforts to obtain the
11
consent of the other Persons for the assignment thereof to Purchaser as
Purchaser may request. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would adversely affect the rights
thereunder so that Purchaser would not receive all such rights, Seller and
Purchaser shall cooperate in a mutually agreeable arrangement under which
Purchaser would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including subcontracting, sub-licensing or sub-
leasing to Purchaser, or under which Seller would enforce for the benefit of
Purchaser, with Purchaser assuming Seller's obligations, any and all rights of
Seller against a third party thereto. Seller shall promptly pay to Purchaser
when received all monies received by Seller in respect of any Purchased Asset or
any claim or right or any benefit arising thereunder, except to the extent the
same represents an Excluded Asset.
2.06 Purchase Price. The aggregate purchase price payable by
--------------
Purchaser to Seller for the Purchased Assets (the "Purchase Price") shall be
Thirty Seven Million Five Hundred Thousand Dollars ($37,500,000).
2.07 Closing. The closing of the purchase and sale of the Purchased
-------
Assets hereunder (the "Closing") shall take place at the offices of Xxxxxx, Xxxx
& Xxxxxxxx LLP, 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, as soon as possible,
but in no event later than five (5) days after satisfaction of the conditions
set forth in Article VIII, or at such other time or place as the parties may
agree. At the Closing:
(a) Seller shall deliver to Purchaser the Patent Assignments and
such other endorsements, consents, assignments, instruments of conveyance
and transfer documents (including the Xxxx of Sale and Assignment and
Assumption Agreement) as Purchaser may reasonably request to vest in
Purchaser all right, title and interest in, to and under the Purchased
Assets and the Business. Simultaneously with the consummation of the
transactions contemplated hereby, Seller, through its officers, agents and
employees, will put Purchaser into full possession and enjoyment of all
tangible Purchased Assets, terms FOB Seller, unless Purchaser otherwise
specifies in writing that title and risk of loss pass outside of
California. At the Closing, Seller shall commence delivery to Purchaser of
those Purchased Assets identified by Purchaser to be delivered by remote
telecommunications or such other method as Purchaser in its sole discretion
directs. Seller shall use all commercially reasonable efforts to comply
with the delivery protocol established jointly by Purchaser and Seller
prior to Closing with respect to such Purchased Assets (the "Delivery
Protocol");
(b) Seller and Purchaser shall execute and deliver the
Assignment and Assumption Agreement;
(c) Each of Seller, Newbridge and Purchaser shall execute and
deliver the Non-Competition Agreement;
(d) Seller and Purchaser shall execute and deliver the
Transition Services Agreement; and
(e) Purchaser shall pay the Purchase Price to Seller.
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated herein, Seller represents and warrants
to Purchaser as follows:
3.01 Existence and Good Standing. Seller is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all corporate power and authority required to carry on its
business as now conducted and to own and operate the businesses as now owned and
operated by it (including the Business). Seller is not required to be qualified
to conduct business in any state other than such states where the failure to be
so qualified, whether singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on it. Seller has heretofore
delivered to Purchaser complete and correct copies of its certificate of
incorporation and bylaws as currently in effect.
3.02 Authorization and Enforceability. The execution, delivery and
--------------------------------
performance by Seller of this Agreement and the other Acquisition Documents, and
the consummation of the transactions contemplated hereby and thereby, are within
Seller's powers and have been duly authorized by all necessary corporate and
stockholder action on its part. This Agreement and the Supply Agreement have
been and, when executed at the Closing, the other Acquisition Documents will
have been, duly and validly executed by Seller and, assuming the due execution
and delivery of this Agreement and the other Acquisition Documents to which it
is a party by Purchaser, as applicable, will constitute the legal, valid and
binding agreements of Seller, enforceable against Seller in accordance with
their respective terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
3.03 Governmental or Other Authorization. Except as set forth
-----------------------------------
on Schedule 3.03, the execution, delivery and performance by Seller of this
-------------
Agreement and the other Acquisition Documents, and the consummation by it of the
transactions contemplated hereby and thereby, require no Governmental Approval
from any Governmental Authority or any consent, waiver or approval of any other
Person.
3.04 Non-Contravention.
-----------------
(a) Except as set forth on Schedule 3.04, the execution,
-------------
delivery and performance of this Agreement and the other Acquisition
Documents by Seller, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of Seller, (b) assuming receipt of
the Required Consents, contravene or conflict with or constitute a material
violation of any provision of any Applicable Law binding upon or applicable
to Seller, the Purchased Assets or the Business or (c) assuming receipt of
the Required Consents, constitute a default under, give rise to any right
of termination, cancellation, modification, or acceleration of, or to a
loss of any material benefit to which the Business is entitled, or result
in the creation or imposition of any Lien on the Purchased Assets (other
13
than Permitted Liens), or any Permit relating to the Business or by which
Seller, any of the Purchased Assets or the Business may be bound or
materially affected.
(b) Newbridge has consented to this Agreement and the
transactions contemplated hereby, and will enter into the NonCompetition
Agreement as a condition to the obligation of Purchaser to consummate the
Closing.
3.05 Financial Statements; Undisclosed Liabilities; Books and Records.
----------------------------------------------------------------
(a) Attached hereto as Exhibit 3.05 is financial data and other
------------
financial information of the Business as of June 30, 1999 (the "Financial
Information Date") and for the year ended March 31, 1999 (collectively, the
"Financial Information"). The Financial Information has been prepared
internally by Seller and has not been audited by any independent certified
public accountants or auditors.
(b) The Financial Information has been prepared based on the
Books and Records of Seller and includes items accounted for in accordance
with GAAP consistent with the methods used for the purpose of preparing the
accounting for such items in connection with the Seller's financial
statements for prior periods and presents fairly the financial condition
and results of operations of the Business as of the dates indicated or for
the periods indicated.
(c) There are no Assumed Liabilities of Seller relating to the
Business other than (i) any Liability accrued in accordance with GAAP or
disclosed in the Financial Information; (ii) Liabilities incurred in the
ordinary course of business since the Financial Information Date that are
consistent with Seller's past practices and are not individually or in the
aggregate material to the Business or the Purchased Assets and (iii) the
Liabilities described on Schedule 3.05(c) hereto.
----------------
(d) All of the Books and Records of Seller relating to the
Business have been made available to Purchaser prior to the execution of
this Agreement and contain a true and complete record, in all material
respects, of the business, operations, financial condition, results of
operations, assets and Liabilities relating to the Business. Seller has no
Books and Records recorded, stored, maintained, operated or otherwise
wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or
not) that are not under the exclusive ownership and direct control of
Seller.
3.06 Absence of Certain Changes. Except as set forth on Schedule
-------------------------- --------
3.06, since the Financial Information Date, the Business has been conducted in
----
the ordinary course consistent with past practice, and there has not been:
(a) any event, occurrence, state of circumstances or facts or
change in respect of the Division or in the Business that has had or that
may be reasonably expected to have, either alone or together, a Material
Adverse Effect on the Business;
14
(b) (i) any change in any Liabilities of Seller that has had, or
that may be reasonably expected to have, a Material Adverse Effect on the
Business or (ii) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by Seller in connection with the Business
or any of the Purchased Assets;
(c) any creation, assumption or sufferance of (whether by action
or omission) the existence of any Lien on any of the Purchased Assets,
other than Permitted Liens;
(d) any waiver, amendment, termination or cancellation of any
Assumed Contract or any relinquishment of any material rights thereunder by
Seller, other than, in each such case, actions taken in the ordinary course
of business consistent with past practice that are not material with
respect to any such Assumed Contract;
(e) any representation of Seller to any employee or former
employee of the Business that Purchaser would assume, continue to maintain
or implement any Benefit Plan after the Closing Date;
(f) any change by Seller in its accounting principles, methods
or practices or in the manner it keeps its accounting books and records
relating to the Business, except any such change required by a change in
GAAP;
(g) any (i) single capital expenditure commitment relating to
the Business by Seller in excess of Fifty Thousand Dollars ($50,000) or
aggregate capital expenditures relating to the Business by Seller in excess
of One Hundred Thousand Dollars ($100,000) for additions to property,
plant, equipment or intangible capital assets comprising Purchased Assets
likely to occur, in whole or in part, after the Closing Date or (ii) sale,
assignment, transfer, lease or other disposition of or agreement to sell,
assign, transfer, lease or otherwise dispose of, any Purchased Asset, other
than sales of Inventory in the ordinary course of business consistent with
past practice;
(h) any material damage, destruction or other casualty loss with
respect to any Purchased Asset or any other material asset or property
owned, leased or otherwise used by Seller in the Business, whether or not
covered by insurance; or
(i) any discount or other promotion for the early payment of
accounts receivable of the Business, except in the ordinary course of
business consistent with past practice.
3.07 Properties; Material Leases; Tangible Assets.
--------------------------------------------
(a) Seller has legal, valid and binding leasehold or license
interests in all leased personal property or personal properties that are
Purchased Assets, except those properties disposed of in the ordinary
course of business consistent with past practice after the Financial
Information Date thereof free and clear of all Liens (other than Permitted
Liens).
15
(b) All tangible personal properties and assets that are
Purchased Assets are in good operating condition and repair (subject to
normal wear and tear) and are adequate for the uses to which they are put,
and no material personal properties or assets necessary for the conduct of
the Business in substantially the same manner as the Business has
heretofore been conducted are in need of replacement, maintenance or repair
except for routine replacement, maintenance and repair. Schedule 2.01(c)
----------------
sets forth a correct and complete list of all Equipment owned or leased by
Seller and used in connection with the Business.
(c) There are no personal property leases or licenses relating
to the Business to which Seller is a party or by which Seller is bound.
3.08 Receivables. Schedule 2.01(l) sets forth a correct and complete
----------- ----------------
list of all accounts receivable, notes receivable and other receivables relating
to the Business (collectively, the "Receivables") and the amounts owed by the
third Persons obligated to pay Seller with respect thereto. Each of the
Receivables was recorded in accordance with GAAP and was entered into by a
Seller in the ordinary course of business, consistent with past practice, and,
to the Knowledge of Seller, constitutes the legal, valid and binding obligation
of the third Person obligated to pay Seller with respect thereto. To the
Knowledge of Seller, none of the Receivables is subject to any valid defense,
offset or counterclaim. Seller has no Knowledge of any pending or threatened
claim or assertion by any such third Person that such third Person is not
obligated to pay Seller the full amount of any such Receivable. To the Knowledge
of Seller, the Receivables are collectible in full in the ordinary course of
business, consistent with past practice, subject to any reserve therefor
identified in Schedule 2.01(l).
----------------
3.09 Inventories. Schedule 2.01(a)(i) sets forth all inventories of
----------- -------------------
raw materials, work-in-process and finished goods included in the Purchased
Assets as of July 1, 1999. All Inventory acquired after the Financial
Information Date was acquired in the ordinary course of business of business
consistent with past practice. All such Inventories consist of a quality and
quantity usable and saleable (free of any material defect or deficiency) in the
ordinary course of business, consistent with past practice, except for slow-
moving, damaged or obsolete items and materials of below standard quality, all
of which have been written down to net realizable value or in respect of which
adequate reserves have been provided, in each case as fully reflected in the
Financial Information. The value at which Inventories are carried in the
Financial Information reflect the normal inventory valuation policy of Seller in
accordance with GAAP and on a basis consistent with that of preceding periods.
Schedule 2.01(a)(i) contains a complete accurate list of the locations
-------------------
(including locations of Inventory held by distributors or representatives where
the Inventory is located).
3.10 Litigation. There are no actions, suits, claims, charges,
----------
hearings, arbitrations, audits, proceedings (public or private) or, to the
Knowledge of Seller, investigations (collectively, "Proceedings") that have
been brought or initiated by or against any Governmental Authority or any other
Person, or are pending or, to the Knowledge of Seller, threatened (a) by or
against Seller relating to any of the Purchased Assets or the Business or (b)
that seeks to prevent, enjoin, alter or delay the transactions contemplated by
this Agreement or any of the other Acquisition Documents. There are no existing
orders, judgments or decrees of any Governmental
16
Authority relating to the Business or any of the Purchased Assets. Except as
disclosed on Schedule 3.10, there are no Proceedings that have been brought or
-------------
initiated or, to Seller's Knowledge, threatened to be brought or initiated, by
any customer or other third Person against Seller relating to any of the
Purchased Assets or the Business.
3.11 Material Contracts.
------------------
(a) Schedule 3.11(a) sets forth a complete list of all Contracts
----------------
that are material to the Business or any of the Purchased Assets, including
the following (the "Material Contracts"): (i) each sales Contract relating
to the Business pursuant to which the dollar volume of sales to Seller
exceeded Fifty Thousand Dollars ($50,000) in the fiscal year ending April
1, 1999 or in the first three (3) months of fiscal year 2000, (ii) each
Contract that requires payment by or to Seller in respect of the Business
or any of the Purchased Assets subsequent to the date of this Agreement of
more than Fifty Thousand Dollars ($50,000), (iii) all Contracts in respect
of the Business relating to, and evidences of, indebtedness for borrowed
money or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any Purchased Asset), (iv) all
partnership, joint venture or other similar Contracts, arrangements or
agreements, relating to the Business or any of the Purchased Assets; (v)
each license of Intellectual Property Assets by or to Seller not otherwise
set forth on Schedule 3.16(h) or Schedule 3.16(i); and (vi) all other
---------------- ----------------
Contracts relating to the Business or any of the Purchased Assets where the
loss of any such Contract or a group of such Contracts, or a default under
any such Contract or group of such Contracts, could be reasonably expected
to be material to the Business.
(b) Each Material Contract is a legal, valid and binding
obligation of Seller and, to the Knowledge of Seller, each other Person who
is a party thereto, enforceable against Seller and each such Person in
accordance with its terms, and neither Seller nor, to the Knowledge of
Seller, any other party thereto is in material default thereunder.
(c) Schedule 3.11(c) sets forth a list (by name and address) of
----------------
the ten (10) largest suppliers of the Business for the 12-month period
ended April 1, 1999 and the three (3) months ended July 31, 1999, together
with the dollar amount of sales during said period and a list of the
products purchased.
3.12 Permits; Required Consents.
--------------------------
(a) Schedule 3.12(a) sets forth all approvals, authorizations,
----------------
certificates, consents, licenses, orders and permits and other similar
authorizations of all Governmental Authorities (and all other Persons)
necessary for the operation of the Business in substantially the same
manner as currently operated by Seller currently and during the past twelve
(12) months (collectively, the "Permits"). Seller holds all material
Permits and approvals of Governmental Authorities necessary for the lawful
conduct of the Business. Except as set forth in Schedule 3.12(a), each
----------------
Permit is valid and in full force and effect in all material respects, and
none of the Permits will be terminated or become terminable or impaired in
any material respect as a result of the transactions contemplated hereby.
17
(b) Schedule 3.12(b) lists (i) each Governmental Approval
----------------
required under Applicable Law to be obtained by Seller by virtue of the
execution and delivery of this Agreement and the other Acquisition
Documents, or the consummation of the transactions contemplated hereby and
thereby, or to avoid the loss of, or any material modification to, any
Permit (each, a "Required Governmental Approval") and (ii) each Contract
with respect to which the consent of the other party or parties thereto
must be obtained by Seller by virtue of the execution and delivery of this
Agreement and the other Acquisition Documents, or the consummation of the
transactions contemplated hereby and thereby to avoid the loss of any
material benefit under, or any material modification to, any such Contract,
(each, a "Required Contractual Consent" and, collectively with the Required
Governmental Approvals, the "Required Consents").
3.13 Compliance with Applicable Laws. Seller has not violated or
-------------------------------
infringed, and is not violating or infringing, in any material respect, in
connection with the Business or its ownership of any of the Purchased Assets,
any Applicable Law relating to the Business or the Purchased Assets or any
order, writ, injunction or decree of any Governmental Authority relating to the
Business or the Purchased Assets.
3.14 Employment Agreements; Employee Benefits. Reference is made to
----------------------------------------
Appendix A which is incorporated herein by reference.
----------
3.15 Labor and Employment Matters. Reference is made to Appendix A
---------------------------- ----------
which is incorporated herein by reference.
3.16 Intellectual Property.
---------------------
(a) Certain Definitions. When used in this Section 3.16, the
-------------------
following capitalized terms shall have the following meanings:
(i) "Development Environments" means any device,
programming, documentation, media and other objects, including compilers,
"workbenches," tools, and higher-level or "proprietary" languages, used by
Seller for the development, maintenance and implementation of any Software,
to the extent such objects may be necessary for any subsequent maintenance
or enhancement of such Software;
(ii) "Intellectual Property Rights" means intellectual
property rights arising from or in respect of the following, whether
protected, created or arising under the laws of the United States or any
other jurisdiction:
(1) fictional business names, trade names, trademarks
and service marks (whether registered or unregistered, including any
applications for registration of any of the foregoing), logos,
Internet domain names, trade dress rights and general intangibles of a
like nature, together with the goodwill associated with any of the
foregoing (collectively, "Marks");
18
(2) patents and applications therefor, including
continuation, divisional, continuation-in-part, or reissue patent
applications and patents issuing thereon (collectively, "Patents");
(3) copyrights and registrations and applications
therefor (collectively, "Copyrights") and mask work rights; and
(4) know-how, inventions, discoveries, concepts,
ideas, methods, processes, designs, formulae, technical data,
drawings, specifications, data bases and other proprietary and
confidential information, including customer lists, in each case
excluding any rights in respect of any of the foregoing that comprise
or are protected by Copyrights, mask work rights or Patents
(collectively, "Trade Secrets");
(iii) "Intellectual Property Assets", for purposes of this
Agreement, means all Intellectual Property Rights owned or licensed by
Seller and used in the Business other than Excluded Intellectual Property
Rights, and all further uses of the terms Marks, Patents, Copyrights, and
Trade Secrets in this Section 3.16 shall mean Marks, Patents, Copyrights,
and Trade Secrets that are Intellectual Property Assets; and
(iv) "Software" means any and all (w) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (x) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (y) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
and (z) all documentation, including user manuals and training
documentation, relating to any of the foregoing, in each case developed by
or for, or licensed or made available to, Seller and used in the Business.
(b) Marks. Schedule 3.16(b) sets forth an accurate and complete
----- ----------------
list of all registered Marks, pending applications for registration of any
Marks and material unregistered Marks, in each case owned by Seller and
used by Seller in the Business as presently conducted (collectively, "Owned
Marks"). Except as may be set forth in Schedule 3.16(b):
----------------
(i) Seller owns all right, title and interest in each of
the Owned Marks, free and clear of any and all Liens, covenants, conditions
and restrictions or other adverse claims or interests of any kind or
nature, and Seller has not received any notice or claim (whether written or
oral) challenging Seller's exclusive and complete ownership of such Marks
or suggesting that any other Person has any claim of legal or beneficial
ownership or other claim or interest with respect thereto;
(ii) to Seller's Knowledge, the use of any of the Owned
Marks by Purchaser in accordance with Section 6.03 does not create a
likelihood of confusion with any trade name, trademark or service xxxx of
any other Person;
19
(c) Owned Patents. Schedule 3.16(c) sets forth an accurate and
------------- ----------------
complete list of all Patents owned by Seller (collectively, "Owned
Patents"). Except as may be set forth on Schedule 3.16(c):
----------------
(i) Seller is the owner of all right, title and interest
in and to all Owned Patents, in each case free and clear of any and all
Liens, covenants, conditions and restrictions or other adverse claims or
interests of any kind or nature, and neither Seller nor its Affiliates have
received any notice or claim (whether written or oral) challenging Seller's
complete and exclusive ownership of the Owned Patents or suggesting that
any other Person has any claim of legal or beneficial ownership with
respect thereto;
(ii) Seller and its Affiliates have not received any
notice or claim (whether written or oral) challenging or questioning the
validity or enforceability of any of the Owned Patents or indicating an
intention on the part of any Person to bring a claim that any Owned Patent
is invalid, is unenforceable or has been misused and, to Seller's
Knowledge, no Owned Patent otherwise has been challenged or threatened in
any way;
(iii) to the Knowledge of Seller, the Owned Patents are
valid and enforceable, provided that no representation regarding validity
or enforceability is made with respect to patent applications;
(iv) Seller has not taken any action or failed to take any
action (including a failure to disclose material prior art in connection
with the prosecution of any Patent), conducted the Business, or used or
enforced (or failed to use or enforce) any of the Owned Patents in a manner
that would result in the abandonment or unenforceability of any of the
Owned Patents;
(v) the inventions disclosed in the Owned Patents may be
practiced by Seller without infringing any other patents owned by any
Person;
(vi) Seller has taken commercially reasonable steps to
protect Seller's rights in and to the Owned Patents;
(vii) Seller has not granted to any Person any right,
license or permission to practice any of the Owned Patents other than
pursuant to any Technology Distribution Agreement disclosed in Schedule
--------
3.16(i);
--------
(viii) all of the Owned Patents are currently in compliance
with legal requirements including proofs of working or use);
(ix) all maintenance fees, annuities, and the like due on
the Owned Patents have been timely paid;
(x) no Owned Patent has been or is now involved in any
interference, reissue, reexamination or opposition Proceeding or any other
litigation or Proceeding of any kind;
20
(xi) to Seller's Knowledge, there is no patent or patent
application issued to or filed by any other Person, which patent or patent
application is actually interfering with any Owned Patents; and
(xii) to Seller's Knowledge, the activities, technology,
products or operations of no other Person has infringed or is infringing in
any material respect on any of the Owned Patents.
(d) Owned Copyrights/Maskworks. There are no copyrights owned
--------------------------
by, or pending applications for registration for Copyrights, by Seller in
connection with the Business.
(e) Trade Secrets. Schedule 3.16(e) sets forth a summary of all
------------- ----------------
memoranda of invention or invention disclosures owned by Seller that relate
to the Business and that are not covered by any patents or patent
applications included in the Owned Patents (collectively, the "Invention
Disclosures"). Seller has taken reasonable precautions in accordance with
standard industry practice to protect the secrecy, confidentiality and
value of all Invention Disclosures and all other material Trade Secrets of
Seller (collectively, "Owned Trade Secrets"). Except as may be set forth
in Schedule 3.16(e):
----------------
(i) Seller has the absolute and unrestricted right to use
all of the Owned Trade Secrets and none of the Owned Trade Secrets is
subject to any Liens, covenants, conditions and restrictions or other
adverse claims or interests of any kind or nature, and neither Seller nor
its Affiliates have received any notice or claim (whether written or oral)
challenging Seller's absolute and unrestricted right to use any of the
Owned Trade Secrets or suggesting that any other Person has any claim of
any kind with respect thereto;
(ii) with respect to the Owned Trade Secrets, the
documentation relating thereto is current, accurate and sufficient in
detail and content to identify and explain it and to allow its full and
proper use without reliance on the special knowledge or memory of others;
(iii) except under appropriate confidentiality obligations
that, to the Knowledge of Seller, have been fully observed and performed,
there has been no disclosure by Seller of material confidential information
or other Owned Trade Secrets to any other Person; and
(iv) no other Person has misappropriated any of the Owned
Trade Secrets.
(f) Software. Schedule 3.16(f) sets forth a complete and
-------- ----------------
accurate list of all of the Software (i) that is owned exclusively by
Seller and used in the conduct of the Business (collectively, the "Owned
Software"), and all Software that is used by Seller in the conduct of the
Business that is not exclusively owned by Seller (collectively, the
"Licensed Software"), excluding off-the-shelf desktop applications (other
than Development
21
Environments) available on reasonable terms through commercial distributors
or in consumer retail stores for a license fee of no more than Twenty-Five
Thousand Dollars ($25,000). Except as may be set forth in Schedule 3.16(f):
----------------
(i) Seller is the owner of all right, title and interest in
and to all Owned Software, including all Copyrights, Trade Secrets and
other Intellectual Property Rights relating thereto, in each case free and
clear of any and all liens, encumbrances, covenants, conditions and
restrictions or other adverse claims or interests of any kind or nature,
and Seller and its Affiliates have not received any notice or claim
(whether written or oral) challenging Seller's complete and exclusive
ownership of all Owned Software and all such Intellectual Property Rights
relating thereto, or suggesting that any other Person has any claim of
legal or beneficial ownership with respect thereto;
(ii) Seller has not assigned, licensed, transferred or
encumbered to or for the benefit of any Person any of its rights in or to
any Software in which it has rights, including any Copyrights, Trade
Secrets or other Intellectual Property Rights of Seller with respect
thereto, excluding any non-exclusive licenses granted to customers in the
ordinary course of business and any license granted pursuant to any
Technology Use Agreement disclosed in Schedule 3.16(i);
----------------
(iii) no source code of any Owned Software has been licensed or
otherwise made available to any Person, Seller has treated the source code
of the Owned Software, and the data associated therewith, as confidential
and proprietary business information, and has taken all reasonable steps to
protect the same as trade secrets of Seller;
(iv) any Person identified in Schedule 3.16(f) as having
----------------
received any such source code or data is bound by an appropriate
confidentiality and non-disclosure agreement with respect thereto, and
Seller is not aware of any material breach of any such agreement or any
threatened disputes or disagreements with respect thereto;
(v) none of the Software developed by or for Seller contains
any programming code, documentation, or other materials or any Development
Environments that embody Intellectual Property Rights of any Person other
than Seller, except for such materials or Development Environments obtained
by Seller from Persons that make such materials or Development Environments
generally available on standard commercial terms and that have expressly
licensed Seller to utilize such materials or Development Environments in
the manner they have been utilized;
(vi) Seller has lawfully acquired the right to use the Licensed
Software as it is used in the conduct of the Business as presently
conducted, and has not exercised any rights in respect of any Licensed
Software, including any reproduction, distribution or derivative work
rights, outside the scope of any license expressly granted by the Person
from which the right to use such Licensed Software was obtained;
22
(vii) no royalties, fees, honoraria or other payments are
payable by Seller to any Person by reason of the ownership, use, sale,
licensing, distribution or other exploitation of any Software;
(viii) none of the Software products that Seller has distributed
or otherwise made available to third parties or that have been designed by
Seller for commercial distribution (i) contain any Licensed Software or
(ii) contain any lines of code or other Software licensed to Seller by any
other third party that has made such Software (or other Software from such
Software is derived) available to Seller subject to the condition that
Seller shall not charge a fee or otherwise seek any compensation in
connection with re-distributing or otherwise exploiting such Software; and
(ix) the Owned Software was (A) developed by employees of
Seller in the course of their employment by Seller, (B) developed by
independent contractors that have assigned in writing to Seller all such
contractors' respective rights in the Software developed thereby or (C)
otherwise acquired by Seller from a third party pursuant to a written
agreement containing an express assignment of rights by such third party to
Seller.
(g) Software Documentation. Except as may be set forth in
----------------------
Schedule 3.16(g), Seller has taken all actions customary in the software
----------------
industry to document the Owned Software and its operation.
(h) Agreements in Respect of Licensed Technology. Schedule 3.16(h)
-------------------------------------------- ----------------
sets forth a complete and accurate list of all license agreements granting
to Seller any material right to use or practice any rights under any
Intellectual Property Asset other than software commercially available on
reasonable terms to any person for a license fee of no more than Twenty-
Five Thousand Dollars ($25,000) but including all such agreements that are
otherwise material to Seller (collectively, the "Licensed Technology
Agreements"), indicating for each the title and the parties thereto. There
is no material outstanding or, to Seller's Knowledge, threatened dispute or
disagreement with respect to any Licensed Technology Agreement. Seller owns
or possesses adequate licenses or other rights to use all of its
Intellectual Property Assets. Schedule 3.16(h) contains a complete and
----------------
accurate list and summary description, including any royalties paid or
received by Seller, other royalty obligations or other volume or milestone-
based payment obligations of Seller, of all Contracts relating to the
Intellectual Property Assets to which Seller is a party or by which Seller
is bound, except for any license for common publicly retailed software
programs that are currently distributed with a value of less than Twenty-
Five Thousand Dollars ($25,000). Except as may be set forth in Schedule
--------
3.16(h):
-------
(i) all Licensed Technology Agreements are, and until the Closing
will remain, in full force and effect, and Seller is not in material breach
thereof, nor is it aware of any claim or information to the contrary;
(ii) there are no outstanding and, to Seller's Knowledge, no
threatened disputes or disagreements with respect to any Licensed
Technology Agreement;
23
(iii) the expiration dates of all Licensed Technology
Agreements are sufficiently distant from the date hereof that no potential
impairment of the value of any of Seller's products could reasonably be
imputed by virtue of the non-renewal of the term of any Licensed Technology
Agreement;
(iv) the rights licensed under each Licensed Technology
Agreement shall be exercisable by Purchaser on and after the Closing to the
same extent as exercisable by Seller prior to the Closing (subject to any
applicable consent requirement);
(v) the Licensed Technology Agreements together expressly
confer on Seller valid and enforceable rights under or in respect of all of
the Intellectual Property Rights that are not owned exclusively by Seller
and that are used or practiced in the Business (collectively, the "Licensed
Intellectual Property"); and
(vi) Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will conflict
with or result in a breach of any of the terms, conditions or provisions
of, or constitute a material default under, or result in the impairment of
any material rights under, any Licensed Technology Agreement.
(i) Agreements Involving Distribution or Other Rights Granted
---------------------------------------------------------
to Third Parties. Schedule 3.16(i) contains a complete and accurate
---------------- ----------------
specific list of all agreements and arrangements involving the grant by
Seller to any Person of any right to distribute, develop, prepare
derivative works based on, support or maintain or otherwise commercially
exploit any Software or other Products or technology of Seller used in
connection with the Business, including any value-added reseller
agreements, joint development or marketing agreements or strategic alliance
agreements involving any Software or such Products or technology
(collectively, "Technology Distribution Agreements"). Except as may be set
forth in Schedule 3.16(i):
----------------
(i) all Technology Distribution Agreements are, and until
the Closing will remain, in full force and effect, and Seller is not in
material breach thereof, nor is it aware of any claim or information to the
contrary;
(ii) there are no outstanding and, to Seller's Knowledge,
no threatened disputes or disagreements with respect to any Technology
Distribution Agreement; and
(iii) neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will conflict
with or result in a material breach of any of the terms, conditions or
provisions of, or constitute a material default under any Technology
Distribution Agreement.
(j) Sufficiency of Owned and Licensed Intellectual Property.
-------------------------------------------------------
Except as set forth in Schedule 3.16(j), the Owned Patents, the Owned Trade
----------------
Secrets and the Licensed Intellectual Property constitute all of the
Intellectual Property Rights necessary for the
24
conduct of the Business as presently conducted by Seller and constitute all
of the Intellectual Property Rights necessary to operate the Business after
the Closing in substantially the same manner as the Business heretofore has
been operated by Seller.
(k) Performance of Existing Products. Except as may be set
--------------------------------
forth in Schedule 3.16(k), all products that Seller has distributed or
-----------------
otherwise made available to third parties or that have been designed by
Seller for commercial distribution, or have been used by Seller in
connection with the performance of services for any of its customers in
connection with the Business (the "Products"), perform in all material
respects, free of significant bugs or programming or other design errors.
(l) Infringement. Except as may be set forth in Schedule
------------ --------
3.16(l), neither Seller nor any of its Affiliates is, nor has been during
--------
the three (3) -year period prior to the date hereof, a party to any
Proceeding, nor is, or during the one (1) -year period prior to date hereof
has been, any Proceeding, to Seller's Knowledge, threatened, that involves
or involved a claim of infringement, misappropriation or other wrongful use
or exploitation, either (i) by Seller or any of its Affiliates against any
other Person or (ii) by any Person against Seller or any of its Affiliates
of any Intellectual Property Asset or other Intellectual Property Right
used or exploited by Seller in the conduct of the Business, nor, to the
Knowledge of Seller, is there any reasonable basis therefor. Except as may
be set forth in Schedule 3.16(l), Seller has the exclusive right to bring
----------------
actions against any Person that is infringing any Intellectual Property
Assets other than Licensed Intellectual Property and to retain for itself
any Damages recovered in any such action.
(m) Employee Confidentiality Agreements. Except as set forth in
------------------------------------
Schedule 3.16(m), all current and former employees and consultants of
----------------
Seller whose duties or responsibilities relate to the Business have entered
into confidentiality, invention assignment and proprietary information
agreements with Seller in substantially the form provided to Purchaser. To
the Knowledge of Seller, no employee or consultant of Seller whose duties
or responsibilities relate to the Business is obligated under any agreement
(including licenses, covenants or commitments of any nature) or subject to
any judgment, decree or order of any court or administrative agency, or any
other restriction that would interfere with the use of his or her best
efforts to carry out his or her duties for Seller or to promote the
interests of Seller or that would conflict with the Business. The carrying
on of the Business by such employees and contractors of Seller and the
conduct of the Business as presently proposed, will not, to Seller's
Knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees or consultants or Seller is
now obligated. Except as set forth in Schedule 3.16(m), to the Knowledge
----------------
of Seller, it will not be necessary to utilize any inventions or any other
intellectual property of any employees of Seller acquired prior to their
employment by Seller in order to carry on the Business as presently
conducted by Seller. To the Knowledge of Seller, at no time during the
conception of or reduction to practice of any of Intellectual Property
Right owned by Seller was any developer, inventor or other contributor to
such Intellectual Property Right operating under any grants from any
governmental entity or agency or private source, performing research
sponsored by any governmental entity or agency or private source or subject
to any
25
employment agreement or invention assignment or nondisclosure agreement or
other obligation with any third party that could adverselyaffect Seller's
rights in such Intellectual Property Rights. Schedule 3.16(m) lists each
----------------
present and past employee, independent contractor and consultant who
participated in a material way in the creation or development of any Owned
Software or any other material Intellectual Property Asset, indicating, in
the case of any such employee, whether such employee is a present or past
employee and, if a past employee, the name of the current employer of such
past employee, if known by Seller. Without limiting the generality of the
foregoing, Schedule 3.16(m) specifically identifies each inventor named in
----------------
any Owned Patents (either individually or jointly with others), and
indicates whether such inventor is a current employee of Seller and, if not
a current employee of Seller, (i) the relationship of such inventor to
Seller at the time the respective invention was made and the present
relationship, if any, of such inventor with Seller and (ii), if known, the
employer and current position of such inventor with such employer.
(n) Export Restrictions. Seller has not exported or transmitted
-------------------
Software or other Products in connection with the Business to any country
to which such export or transmission is restricted by any applicable United
States regulation or statute, without first having obtained all necessary
and appropriate United States or foreign government licenses or permits.
(o) Disabling Code and Contaminants. The components
-------------------------------
manufactured by Seller and used in Seller's Products in connection with the
Business are free of any disabling codes or instructions (a "Disabling
Code"), and, to Seller's Knowledge, any virus or other intentionally
created, undocumented contaminant (a "Contaminant"), that may, or may be
used to, access, modify, delete, damage or disable any Systems (as defined
below) or that may result in damage thereto. Seller has taken reasonable
steps and implemented reasonable procedures to ensure that its internal
computer systems used in connection with the Business (consisting of
hardware, software, databases or embedded control systems, "Systems")
connection with the Business obtained by Seller from third party suppliers
are, to the Knowledge of Seller, free of any Disabling Codes or
Contaminants that may, or may be used to, access, modify, delete, damage or
disable any of the Systems or that might result in damage thereto. Except
as may be set forth in Schedule 3.16(o), Seller has in place appropriate
----------------
disaster recovery plans, procedures and facilities and has taken all
reasonable steps to safeguard its Systems and restrict unauthorized access
thereto.
(p) Year 2000.
---------
(i) Except as set forth in Schedule 3.16(p), Seller's
----------------
Products (including Products currently under development) will record,
store, process and calculate and present calendar dates falling on and
after December 31, 1998, and will calculate any information dependent on or
relating to such dates in the same manner and with the same functionality,
data integrity and performance as the products record, store, process,
calculate and present calendar dates on or before December 31, 1998, or
calculate any information dependent on or relating to such dates
(collectively "Year 2000 Compliant"). Except as set forth in Schedule
--------
3.16(p), (A) none of Seller's Products will lose significant functionality
-------
26
with respect to the introduction of records containing dates falling on or
after December 31, 1998; and (B) all of Seller's internal computer systems
(including to Seller's Knowledge, third party software) comprised of
software, hardware, databases or embedded control systems (microprocessor
controlled, robotic or other device) related to the Business (collectively,
a "Business System"), that constitutes a part of, or is used in
connection with the use, operation or enjoyment of, any tangible or
intangible asset or real property of Seller, including its accounting
systems, are Year 2000 Compliant. Except as set forth on Schedule 3.16(p),
----------------
the current versions of Seller's Software and all other Intellectual
Property Rights may be used prior to, during and after December 31, 1998,
such that such Software and Intellectual Property Assets will operate prior
to, during and after such time period without error caused by date data
that represents or references different centuries or more than one century.
(ii) Seller's Products and the conduct of the Business will
not be materially adversely affected by the advent of the year 2000, the
advent of the twenty-first century or the transition from the twentieth
century through the year 2000 and into the twenty-first century. Except as
set forth on Schedule 3.16(p), Seller is not reasonably likely to incur
----------------
expenses arising from or relating to the failure of any of its Business
Systems or any Products (including all Products sold on or prior to the
date hereof) as a result of the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through
the year 2000.
(q) Patents Licensed to Purchaser. Seller is the owner of all
-----------------------------
right, title and interest in and to all Patents to be licensed by Seller to
Purchaser pursuant to the Seller License Agreement, in each case free and
clear of any and all Liens, and Seller has the right and authority to grant
the license of such Patents as provided in the Seller License Agreement.
Neither Seller nor its Affiliates have received any written notice or claim
challenging or questioning Seller's complete and exclusive ownership of the
Patents to be licensed to Purchaser pursuant to the Seller License
Agreement.
3.17 Advisory Fees. There is no investment banker, broker, finder or
--------------
other intermediary or advisor that has been retained by or is authorized to act
on behalf of Seller, who might be entitled to any fee, commission or
reimbursement of expenses from Seller, or any Affiliate or Associate of Seller,
upon consummation of the transactions contemplated by this Agreement.
3.18 Environmental Compliance.
------------------------
(a) Seller has obtained and is in material compliance with all
approvals, authorizations, certificates, consents, licenses, orders and
permits or other similar authorizations of all Governmental Authorities, or
from any other Person, that are required under any Environmental Law
applicable to the Business, a correct and complete list of which is set
forth on Schedule 3.18.
-------------
27
(b) Seller has complied with all other limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws applicable to the
Business.
(c) There are no past or present events, conditions,
circumstances, practices, incidents, actions, omissions or plans relating
to or in any way affecting the Business or any of the Purchased Assets that
violate or violated or may after the Closing violate any Environmental Law
or that may give rise to any Environmental Liability with respect to the
Purchased Assets or the Business (i) under any Environmental Law applicable
to the Business or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including underground storage
tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any Hazardous Substance in connection with
the Business.
3.19 Insurance. Set forth on Schedule 3.19 is a complete and correct
--------- -------------
list of all material insurance policies of any kind owned by Seller
currently in force with respect to the Business (collectively, the
"Insurance Policies" ), including all "occurrence based" liability policies
regardless of the periods to which they relate. Schedule 3.19 also sets
-------------
forth for each Insurance Policy the type of coverage, the insurer and the
amounts of coverage. The Insurance Policies as currently in effect
constitute insurance against all risks of a character and in such amounts
as are usually insured against by similarly situated companies in the same
or similar businesses. Seller has complied in all material respects with
the provisions of all such policies. No insurer under any such Insurance
Policy has canceled or generally disclaimed liability under any such policy
or, to Seller's Knowledge, indicated any intent to do so or not to renew
any such policy. All material claims under the policies listed on Schedule
--------
3.19 have been filed in a timely fashion.
----
3.20 Tax Matters. Except as set forth on Schedule 3.20 hereto:
----------- -------------
(a) Schedule 3.20 sets forth (i) the jurisdictions in which
-------------
Seller has filed, is required to file and is expected to file Tax Returns
of or with respect to the Business or the Purchased Assets for all taxable
periods beginning on or after April 1, 1996 and the types of Taxes to which
such Tax Returns relate, (ii) those taxable years for which examinations by
the IRS or the state, local or foreign taxing authority have been
completed, or are presently being conducted, those years for which notice
of pending or threatened examination or adjustment with respect to Taxes of
or with respect to the Business or the Purchased Assets for all taxable
periods beginning on or after April 1, 1996 has been received, and those
years for which required Tax Returns for such Taxes have not yet been filed
and (iii) the adjustments to income made as a result of such examinations
or related proceedings and the issues giving rise to such payments. Except
to the extent indicated on Schedule 3.20, all deficiencies asserted or
-------------
assessments made as a result of any examinations by the IRS or state, local
or foreign taxing authority with respect to the Business or the Purchased
Assets have been fully paid, or are fully reflected as a liability in the
Financial Information, or are set forth on Schedule 3.20 and are being
-------------
contested in good faith and have been fully reflected in the Financial
Information to the extent required by GAAP. Schedule 3.20 sets forth all
-------------
Tax Returns with respect to the Business or the Purchased Assets not
otherwise described above that are presently under examination and all
28
assessments and deficiencies with respect to the Tax Returns that are
presently being contested by Seller;
(b) Seller has filed on a timely basis all Tax Returns required
to have been filed by it with respect to the Business or the Purchased
Assets and has paid on a timely basis all Taxes required to be shown
thereon as due. All such Tax Returns are complete, accurate and correctly
reflect the Tax liability required to be reported thereon. Such Tax
Returns do not contain a disclosure statement under Section 6662 of the
Code (or any predecessor provision or comparable provision of state, local
or foreign law). The provisions for Taxes in the Financial Information set
forth the estimated Liability of Seller for Taxes with respect to the
Business or the Purchased Assets relating to periods covered thereby. No
material election has been made with respect to the Business and the
Purchased Assets that have not been provided to Purchaser. No Seller has
received notice that it is or may be subject to Tax with respect to the
Business or the Purchased Assets in a jurisdiction in which it has not
filed or does not currently file Tax Returns with respect to the Business
or the Purchased Assets;
(c) All Taxes that were required to be collected or withheld by
Seller with respect to the Business or the Purchased Assets have been duly
collected or withheld, and all such amounts that were required to be
remitted to any taxing authority have been duly remitted;
(d) There are no Liens for Taxes (other than for current Taxes
not yet due and payable) upon any of the Purchased Assets;
(e) The Business does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable Tax
treaty or convention between the United States of America and such foreign
country, and has not engaged in a trade or business within any foreign
country; and
(f) None of the Purchased Assets is property that is required to
be treated as owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986, and none of the Purchased Assets is "tax exempt use
property" within the meaning of Section 168(h) of the Code.
3.21 Sufficiency of and Title to the Purchased Assets. Upon
------------------------------------------------
consummation of the transactions contemplated by this Agreement, Seller will
have assigned, transferred and conveyed to Purchaser all of the Purchased
Assets, which constitute substantially all of the properties and assets now held
or employed by Seller in connection with the Business.
3.22 Product Warranties. Schedule 3.22 sets forth copies of the
------------------ -------------
written, and descriptions of all oral, product warranties and guaranties by
Seller currently in effect with respect to the Purchased Assets and the
Business. There have not been any material deviations from such warranties and
guaranties, and salesmen, employees, distributors and agents of Seller are not
29
authorized to undertake obligations to any customer or to other third parties in
excess of such warranties or guaranties. To the Knowledge of Seller, no Tort
Claims, or claims with respect to product warranties or guarantees on Products
or services, exist relating to the Business or any of the Purchased Assets.
3.23 Backlog.
-------
(a) Schedule 3.23 sets forth, with respect to each Assumed
-------------
Contract having unfilled backlog and all other backlog as of June 30, 1999,
the backlog of Seller thereunder as of such date. With respect to each
Assumed Contract, Seller has disclosed in writing to Purchaser the name of
each customer, the dollar amount of backlog, any dollar amounts included
which are unfunded by any customer in respect of undelivered orders, a
brief description of the Products and services to be provided, the proposed
delivery dates therefor and any unexercised valid and subsisting options in
the backlog giving a brief description of the Assumed Contracts to which
they relate.
(b) Except as set forth on Schedule 3.23, all of the Assumed
-------------
Contracts constituting the backlog of Seller as it relates to the Business
(i) were entered into in the ordinary course of business at usual and
customary xxxx-ups at the time entered into and (ii) would be capable of
performance in accordance with the terms and conditions of each such
Contract by Seller without loss, if it retained the Purchased Assets to be
transferred, and made the planned capital expenditures therefor.
3.24 Customer, Supplier and Foundry Relationships. Except as set
--------------------------------------------
forth on Schedule 3.24, since January 1, 1998, no Seller has lost, had a
-------------
material disagreement with or experienced a material adverse change in its
relationship with (a) any customer of the Business representing more than five
percent (5%) of the revenues of the Business during any of the years ended
December 31, 1998, or (b) any material supplier to the Business. Schedule 3.24
-------------
sets forth a complete and accurate list of each (1) foundry relationship, wafer
and circuit board manufacturing and fabricating agreement, understanding or
commitment in connection with the Business, (2) integrated circuit die, circuit
board or device purchase, supply or service agreement, understanding or
commitment, used in connection with the Business, in whole or in part, whether
written or oral, and (3) any other agreements or contracts, whether written or
oral, under which Seller obtains services or products for use in producing
Seller's finished Products, including test and assembly agreements ("Supply
Contracts"). Seller has delivered to Purchaser a correct and complete copy
of each Supply Contract and provided a written summary of each material oral
Supply Contract. There are no fees, penalties, price uplifts, shortfall
payments, xxxx backs or other amounts outstanding under such Supply Contracts.
The quantities available for purchase under each such Supply Contract are as
stated on the face of such Supply Contract or are summarized in Schedule 3.24.
-------------
Each manufacturing or service site that requires qualification under the terms
of a Supply Contract is qualified, and no unresolved differences with respect to
product or process specifications remains outstanding. All manufacturing or
service terms and conditions are as they appear to be on the face of the Supply
Contracts. Seller has not received any written or oral notice from the other
party to any Supply Contract, or from any other supplier to Seller in connection
with the Business, to the effect that such party will not accept purchase orders
from Seller on such terms, conditions and quantities consistent with past
practices. Prices required to be paid for products or
30
services under such Supply Contract are stated in such Supply Contracts. No
condition exists that permit a termination or a material change of such Supply
Contracts by the other party under such Supply Contract.
3.25 Full Disclosure. The information contained in this Agreement
---------------
and the Schedules and Exhibits with respect to the Division, the Business, the
Purchased Assets and the results of operations, financial condition and
prospects of the Business and the transactions contemplated by this Agreement
are correct and complete in all material respects and do not omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Purchaser hereby represents and
warrants to Seller as follows:
4.01 Existence and Good Standing. Purchaser is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all corporate power and authority required to carry on its
business as now conducted and to own and operate its businesses as now owned and
operated by it. Purchaser has heretofore delivered to Seller complete and
correct copies of its certificate of incorporation and bylaws as currently in
effect.
4.02 Authorization and Enforceability. The execution, delivery and
--------------------------------
performance by Purchaser of this Agreement and the other Acquisition Documents,
and the consummation of the transactions contemplated hereby and thereby, are
within each of Purchaser's powers and have been duly authorized by all necessary
corporate and stockholder action on its part, respectively. This Agreement has
been and, when executed at the Closing, the other Acquisition Documents to which
it is a party will have been, duly and validly executed by Purchaser, and,
assuming the due execution and delivery of this Agreement and the other
Acquisition Documents by Seller, will constitute the legal, valid and binding
agreements of Purchaser, enforceable against it in accordance with their
respective terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
4.03 Governmental or Other Authorization. Except as set forth on
-----------------------------------
Schedule 4.03, the execution, delivery and performance by Purchaser of this
-------------
Agreement and the other Acquisition Documents to which it is a party, and the
consummation by it, respectively, of the transactions contemplated hereby and
thereby, require no Governmental Approval from any Governmental Authority or any
consent, waiver or approval of any other Person (such required consents and
approvals, the "Purchaser Approvals").
4.04 Non-Contravention. Except as set forth on Schedule 4.04, the
----------------- -------------
execution, delivery and performance of this Agreement and the other Acquisition
Documents by Purchaser, where applicable, and the consummation of the
transactions contemplated hereby and thereby, do
31
not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws of Purchaser, (b) assuming receipt of the Purchaser
Approvals that are Governmental Approvals, contravene or conflict with or
constitute a material violation of any provision of any Applicable Law binding
upon or applicable to Purchaser, respectively, or (c) assuming receipt of the
Purchaser Approvals that are not Governmental Approvals, contravene or
constitute a default under any material agreement to which Purchaser is a party.
4.05 Advisory Fees. There is no investment banker, broker, finder or
-------------
other intermediary or advisor that has been retained by or is authorized to act
on behalf of Purchaser, who might be entitled to any fee, commission or
reimbursement of expenses from Purchaser or its Affiliates or Associates, upon
consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
Seller agrees that:
5.01 Operation of Business Prior to Closing. Between the date hereof
--------------------------------------
and the Closing Date, Seller shall operate the Business in the ordinary course
consistent with past practice, except as agreed to in writing by Purchaser.
Without limiting the generality of the foregoing, between the date hereof and
the Closing Date (and, as the context permits, thereafter);
(a) Negative Covenants. Seller shall not do any of the following
------------------
with respect to the Business without the prior written consent of
Purchaser;
(i) make any distributions of property used in the
Business;
(ii) acquire or sell any assets of the Business except
Inventory in the ordinary course of business consistent with past practice,
cancel any debts or claims involving any Person relating to the Business,
or pledge, assign or otherwise convey, or cause or allow any Lien to be
placed upon any Purchased Asset except in the ordinary course of business
consistent with past practice;
(iii) enter into any transaction with respect to any
Purchased Asset outside of the ordinary course of business consistent with
past practice, where the expenditure is likely to occur, in whole or in
part, after the Closing Date (other than the Merger);
(iv) amend its certificate of incorporation or bylaws in
any way that would have or could reasonably be expected to materially
affect the Business, any material Purchased Asset or the prospects for
consummating the transactions contemplated by this Agreement or the other
Acquisition Documents;
(v) permit its corporate existence or any Permit to be
suspended, lapsed, revoked or modified in any material respect;
32
(vi) amend, modify or terminate any Assumed Contract;
(vii) allow any insurance policy relating to the Business
or any Purchased Asset to be amended or terminated without replacing such
policy with a policy providing at least equal coverage, insuring comparable
risks and issued by an insurance company financially comparable to the
prior insurance company;
(viii) except pursuant to any agreements disclosed in the
Schedules or Exhibits or for normal salary adjustments consistent with past
practice, increase any benefits payable, termination pay policies or
employment agreements with any employee of Seller engaged in performing
duties directly in connection with the Business;
(ix) make any representation or commitment to employees
of Seller performing duties in connection with the Business with respect to
Purchaser's intention (or that of any Affiliate or Associate of Purchaser)
to offer employment to any such employee or to the continued maintenance of
any Benefit Plan after the Closing;
(x) make any promises, representations or guarantees to
employees of the Business that would in any way bind or obligate Purchaser
(or any Affiliate or Associate of Purchaser) to hire any such employees;
and
(xi) settle or compromise any pending or threatened claim
or Proceeding that (A) relates to the transactions contemplated hereby or
in the other Acquisition Documents or (B) the settlement or compromise of
which shall affect in any manner the Purchased Assets or the Business.
(b) Affirmative Covenants. Seller shall:
---------------------
(i) maintain its assets and properties used in the
Business (including all Intellectual Property Rights) in the ordinary
course of business consistent with past practice, reasonable wear and tear,
damage by fire and other casualty excepted;
(ii) promptly repair, restore or replace any of its
respective assets or properties used in the Business in the ordinary course
of business consistent with past practice;
(iii) upon any damage, destruction or loss to any of the
Purchased Assets, apply any and all insurance proceeds received with
respect thereto to the prompt repair, replacement and restoration thereof;
(iv) comply in all material respects with all Applicable
Laws with respect to the Business;
(v) properly and timely file all Tax Returns with
respect to the Purchased Assets or the Business required to be filed and
make timely payment of all applicable Taxes when due and pay the expenses
of preparation therefor;
33
(vi) use commercially reasonable efforts to consummate
the transactions contemplated by this Agreement;
(vii) take all commercially reasonable actions necessary
to be in material compliance with all Assumed Contracts and to maintain the
effectiveness of all Permits;
(viii) notify Purchaser of any action, event, condition or
circumstance, or group of actions, events, conditions or circumstances that
results in, or could reasonably be expected at the time to result in, a
Material Adverse Effect on the Division, the Business or any of the
Purchased Assets;
(ix) notify Purchaser of any claims or the commencement
of any Proceeding by or against Seller or any threatened Proceeding of
which Seller becomes aware that relates to the Business, any of the
Purchased Assets or the transactions contemplated by this Agreement or any
of the other Acquisition Documents;
(x) pay accounts payable of the Business and pursue
collection of accounts receivable of the Business in the ordinary course of
business consistent with past practice;
(xi) pay all amounts required to be paid or contributed
under any Benefit Plan;
(xii) preserve its relationships with suppliers to and
customers of the Business and others having business relations with the
Division; and
(xiii) [omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission]
(c) Communications with Respect to Business Operations. A
--------------------------------------------------
representative of Seller shall meet with a representative of Purchaser on a
weekly basis to deliver an oral report describing in reasonable detail the
operations of the Business for the immediately preceding week, such oral
report to include information on all proposed purchases of assets,
incurrence of Liabilities, product developments and sales, and developments
in customer and supplier relationships, as well as any other information
that would be useful to Purchaser in keeping abreast of changes or proposed
changes in the Business and the Purchased Assets.
5.02 Compliance with Terms of Required Governmental Approvals and
-------------------------------------------------------------
Required Contractual Consents. From and after the Closing Date, Seller
-----------------------------
shall comply at its own expense with all conditions and requirements imposed on
Seller as set forth in (a) each Required Governmental Approval to the extent
necessary such that each such Required Governmental Approval will remain in full
force and effect assuming, if applicable, continued compliance with the terms
thereof by Purchaser and (b) each Required Contractual Consent to the extent
necessary such that each such Required Contractual Consent will remain effective
and enforceable against the
34
Persons giving such Required Contractual Consents assuming, if applicable,
continued compliance with the terms thereof by Purchaser.
5.03 Maintenance of Insurance Policies; Purchaser Designated Loss
------------------------------------------------------------
Payee. From the date hereof to and including the Closing Date, Seller shall
-----
not take or fail to take any action if such action or inaction would
materially adversely affect the applicability of any insurance in effect on the
date hereof that covers all or any part of the Purchased Assets or the Business.
Promptly after the execution and delivery of this Agreement, either (a) Seller
shall cause Purchaser to be designated an additional loss payee under any
contract of insurance insuring claims arising before or after the Closing Date
and relating to the operation of the Business prior to the Closing Date,
including all Tort Claims; provided, however, that Purchaser shall be so
-------- -------
designated only to the extent that it would have an insurable interest under the
terms of such policies; or (b) Seller shall assign to Purchaser any claims to
recover losses under such insurance policy.
5.04 No Continuing Negotiations. Between the date hereof and the
--------------------------
earlier of the termination of this Agreement and the Closing Date, Seller will
not (nor will Seller permit any of its officers, directors, employees, agents,
representatives or Affiliates to) directly or indirectly, take any of the
following actions with any party other than Purchaser: (i) solicit, initiate,
entertain or encourage any proposals or offers from, or conduct discussions with
or engage in negotiations with any person relating to any possible acquisition
of the Purchased Assets or the Business (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise); (ii) provide information with
respect to the Purchased Assets or the Business to any person, other than
Purchaser, relating to, or otherwise cooperate with, facilitate or encourage any
effort or attempt by any such person with regard to, any possible acquisition of
the Purchased Assets or the Business (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise); or (iii) enter into any
agreement with any person providing for the possible acquisition of the
Purchased Assets or the Business (whether by way of merger, purchase of capital
stock, purchase of assets or otherwise); other than sales of Inventory in the
ordinary course of business consistent with past practice and actions required
in connection with the Merger.
5.05 Access to Information. Purchaser and its authorized agents
---------------------
(including its attorneys and accountants and auditors) shall have full
authority to conduct a complete review of the Purchased Assets and the Business,
including the business, operations, prospects, condition (financial and
otherwise) and Liabilities of the Business. Without limiting the generality of
the foregoing, Purchaser shall be provided access to audit reports and working
papers of Seller's internal and independent accountants and auditors to the
extent that they relate to the Purchased Assets and the Business. Seller shall,
and shall cause its employees, agents and representatives to, reasonably
cooperate with such examination and shall make full and complete disclosure to
Purchaser and their representatives of all facts relating to the Purchased
Assets and the Business, including the business, operations, prospects,
condition (financial or otherwise) and Liabilities of the Business. Each of the
parties hereto will hold, and will cause its consultants and advisers to hold,
in confidence all documents and information furnished to it by or on behalf of
another party to this Agreement in connection with the transactions contemplated
by this Agreement pursuant to the terms of that certain Corporate Nondisclosure
Agreement Number 0573308 entered into between Seller and Purchaser dated May 4,
1999 (the "CNDA").
35
5.06 Notices of Certain Events. Seller shall promptly notify
-------------------------
Purchaser of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement or any of the other
Acquisition Documents;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; or
(c) any event or change that would result in a breach of any
representation, warranty or covenant in this Agreement.
5.07 Transition; Customer Introductions. Between the date hereof and
----------------------------------
the Closing Date, Seller shall provide, without cost to Purchaser, the services
of the employees of Seller set forth on Schedule 5.07 to assist Purchaser in
-------------
connection with all transition matters arising under the transactions
contemplated by this Agreement. Seller shall, upon the request of Purchaser, use
commercially reasonable efforts to introduce Purchaser, or to arrange for a
personal introduction of Purchaser's representatives, to customers of and
suppliers to the Business for the purpose of allowing Purchaser to evaluate the
Business and its prospects and for the purpose of ensuring good customer and
supplier relationships following the Closing. Seller shall use commercially
reasonable efforts to encourage all customers of the Business designated by
Purchaser to purchase Products and services of the Business from Purchaser after
the Closing and shall otherwise take all actions reasonably requested by
Purchaser such that customers of the Business purchase the Products and services
of the Business from Purchaser after the Closing.
5.08 Transfer of Certain Materials to Purchaser. At such time, if
------------------------------------------
any, as Seller is no longer required to retain any Books and Records relating to
the Business, the Division or any of the Purchased Assets, Seller shall offer to
transfer such Books and Records to Purchaser at Purchaser's expense (but with no
charge payable to Seller other than the reasonable out-of-pocket costs of
Seller) prior to destroying such Books and Records.
5.09 Post-Closing Transition Services. Seller shall provide certain
--------------------------------
services to Purchaser after the Closing Date as set forth in the Transition
Services Agreement.
5.10 Effort to Obtain Consents; Assistance with Transfer of Third
------------------------------------------------------------
Party Intellectual Property Rights. Seller shall use commercially reasonable
----------------------------------
efforts to obtain the Required Contractual Consents and to transfer or
sublicense to Purchaser all Seller's rights as licensee under third party
licenses included in the Purchased Assets and Intellectual Property Assets used
in connection with or necessary for the conduct of the Business.
5.11 Delivery. Upon or promptly after the Closing, Seller shall
--------
deliver possession to Purchaser of at least one (1) tangible copy of any and all
Software used in connection with the Business that is either a Purchased Asset
or licensed to Purchaser under the Seller License Agreement in compliance with
the Delivery Protocol.
5.12 Release of Moral Rights. Seller irrevocably waives and
-----------------------
relinquishes, and agrees to indemnify and hold Purchaser harmless from and
against any claim or Proceeding in
36
which Seller asserts, any "moral rights" or their equivalent arising under the
Applicable Law of any country anywhere in the world that Seller may possess with
respect to any Purchased Assets or any of Seller's Intellectual Property Rights
licensed by Seller to Purchaser under the Seller License Agreement other than
the right of attribution.
5.13 Indemnification for Certain Matters. Seller agrees to indemnify
-----------------------------------
and hold Purchaser harmless in connection the claims for Damages with respect to
Excluded Liabilities. Seller's liability for repair or replacement of STEL 9257
products (as disclosed in Schedule 3.22) shall not exceed Purchaser's cost to
manufacture the replacement products.
ARTICLE VI
COVENANTS OF PURCHASER
Purchaser agrees that:
6.01 Compliance with Terms of Governmental Approvals and Consents.
------------------------------------------------------------
From and after the Closing Date, Purchaser shall comply at its own expense with
all conditions and requirements imposed on Purchaser as set forth in (a) the
Purchaser Approvals that are Governmental Approvals, to the extent necessary
such that all such Governmental Approvals will remain in full force and effect
assuming, if applicable, continued compliance of the terms thereof by Seller and
(b) all Purchaser Approvals of Persons other than Governmental Authorities, to
the extent necessary such that all such consents and approvals will remain
effective and enforceable against the Persons giving such consents and
approvals, assuming, if applicable, continued compliance with the terms thereof
by Seller.
6.02 Employees and Offers of Employment. Reference is made to
----------------------------------
Appendix A which is incorporated herein by reference.
----------
6.03 Use of Marks. Notwithstanding any other provision herein, no
------------
interest in or right to use the name "Stanford Telecommunications, Inc." or any
derivation thereof (the "Retained Marks") is being transferred to Purchaser
pursuant to the transactions contemplated by this Agreement. Purchaser agrees
not to use any materials bearing Retained Marks or sell, transfer or ship any
Inventory or Products bearing Retained Marks (i) unless requested to do so by
Seller, (ii) to the extent displayed on any of the Purchased Assets at the
Closing Date or as a result of an end-of-life determination within ninety (90)
days of the Closing Date or (iii) as required under Assumed Contracts with
customers until such time as Purchaser shall have qualified the use of its logo,
trademark or tradenames with each such customer.
ARTICLE VII
COVENANTS OF ALL PARTIES
7.01 Further Assurances. Each party hereto agrees to execute and
------------------
deliver such other documents, certificates, agreements and other writings and to
take such other commercially reasonable actions as may be reasonably necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and the other
37
Acquisition Documents. Subject to Sections 7.02, 8.01(b) and 8.02(b), the
parties agree to cooperate with the reasonable requests of all Governmental
Authorities in connection with the transactions contemplated by this Agreement
and the other Acquisition Documents. Notwithstanding the foregoing, no party
hereto shall have any obligation to expend any funds or to incur any other
obligation in connection with the consummation of the transactions contemplated
hereby (including, by way of illustration only, any payment in connection with
obtaining the Required Consents or Purchaser Approvals) other than normal out-
of-pocket expenses (such as fees of counsel, accountants and auditors and filing
fees with Governmental Authorities) reasonably necessary to consummate such
transactions.
7.02 Certain Filings. The parties hereto shall cooperate with one
---------------
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Assumed Contract is required
or reasonably appropriate, in connection with the consummation of the
transactions contemplated by this Agreement and the other Acquisition Documents.
Without limiting the generality of the foregoing, Purchaser and its Affiliates
and Associates (including any "ultimate parent entity", as defined in the HSR
Act), and Seller and Seller's respective Affiliates and Associates (including
any "ultimate parent entity", as defined in the HSR Act) shall promptly prepare
and make their respective filings and, unless this Agreement shall have been
terminated pursuant to Section 9.01, thereafter shall make all required or
requested submissions, under the HSR Act and any other Applicable Law, if
required. Subject to the terms and conditions of this Agreement, in taking such
actions or making any such filings, the parties hereto shall furnish information
required in connection therewith and seek timely to obtain any such actions,
consents, approvals or waivers; provided, however, that the parties hereto shall
-------- -------
cooperate with each other in connection with the making of all such filings,
including, to the extent the following is permitted by Applicable Law and will
not involve the disclosure of confidential or proprietary information of one
party hereto to another, by (a) providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
reasonable additions, deletions or changes suggested in connection therewith and
(b) providing to each other party copies of all correspondence from and to any
Governmental Authority in connection with any such filing. Notwithstanding the
foregoing, Purchaser or Seller shall not be under any obligation to comply with
any request or requirement imposed by the Federal Trade Commission (the "FTC"),
the Department of Justice (the "DofJ") or any other Governmental Authority in
connection with the compliance with the HSR Requirements if Purchaser or Seller,
in the exercise of such entity's reasonable discretion, deems such request or
requirement unduly burdensome. Without limiting the generality of the foregoing,
Purchaser and Seller shall not be obligated to comply with any request by, or
any requirement of, the FTC, the DofJ or any other Governmental Authority: (i)
to disclose information Purchaser or Seller, as the case may be, reasonably
deems it in the best interests of such Purchaser or Seller, as the case may be,
to keep confidential; (ii) to dispose of any assets or operations; or (iii) to
comply with any restriction on the manner in which they conduct their respective
operations.
7.03 Public Announcements. Neither Purchaser nor Seller shall
--------------------
issue any press release or otherwise make any public statements with respect to
the transactions contemplated by this Agreement and the other Acquisition
Documents, without the prior consent of Purchaser (in the case of Seller) or
Seller (in the case of Purchaser), except as may be required by Applicable
38
Law, or by the rules and regulations of, or pursuant to any agreement with, the
Nasdaq National Market. If any party determines, with the advice of counsel,
that it is required by Applicable Law to make this Agreement, the other
Acquisition Documents or any terms hereof or thereof public, it shall, a
reasonable time before making any public disclosure, consult with the other
parties regarding such disclosure and seek confidential treatment for such terms
or portions of this Agreement or other Acquisition Documents as may be requested
by the other parties. The parties agree there shall be no public announcement of
this Agreement or the other Acquisition Documents or the transactions
contemplated hereby or thereby except as may be required by Applicable Law or as
mutually agreed by the parties. The parties agree to announce this Agreement or
the other Acquisition Documents or the transactions contemplated hereby or
thereby to Seller's employees, customers, vendors and strategic partners at such
time and in such form as is mutually agreed upon by the parties.
7.04 Tax Matters.
-----------
(a) Cooperation. From and after the Closing Date, the parties
-----------
hereto agree to furnish or cause to be furnished to one another, upon
request, as promptly as practicable, such information and assistance
relating to the Purchased Assets and the Business 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 or Proceeding relating to any
Tax Return. The parties hereto shall cooperate with each other in the
conduct of any audit or other Proceeding related to Taxes involving the
Business and each shall execute and deliver such powers of attorney and
other documents as are necessary to carry out the intent of this Section
7.04(a).
(b) Allocation of Property Taxes. All personal property taxes
----------------------------
and similar ad valorem obligations levied with respect to the Purchased
Assets for a taxable period that includes (but does not end on) the Closing
Date shall be apportioned between Seller and Purchaser as of the Closing
Date based on the number of days of such taxable period included in the
Pre-Closing Tax Period and the number of days of such taxable period
included in the Post-Closing Tax Period. Seller shall be liable for the
proportionate amount of such Taxes that is attributable to the Pre-Closing
Tax Period, and Purchaser shall be liable for the proportionate amount of
such Taxes that is attributable to the Post-Closing Tax Period. Within a
reasonable period after the Closing, Seller and Purchaser shall present a
statement to the other setting forth the amount of reimbursement to which
each is entitled under this Section 7.04(b), together with such supporting
evidence as is reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other within
ten (l0) days after delivery of such statement. Thereafter, Seller shall
notify Purchaser upon receipt of any xxxx for personal property taxes
relating to the Purchased Assets, part or all of which are attributable to
the Post-Closing Tax Period, and shall promptly deliver such xxxx to
Purchaser who shall pay the same to the appropriate taxing authority,
provided that if such xxxx covers any part of the Pre-Closing Tax Period,
Seller shall also remit prior to the due date of assessment to Purchaser
payment for the proportionate amount of such xxxx that is attributable to
the Pre-Closing Tax Period. In the event that either Seller or Purchaser
shall thereafter make a payment for which it is entitled to reimbursement
under this Section 7.04(b), the other party shall make such reimbursement
39
promptly, but in no event later than thirty (30) days after the
presentation of a statement setting forth the amount of reimbursement to
which the presenting party is entitled along with such supporting evidence
as is reasonably necessary to calculate the amount of reimbursement. Any
payment required under this Section 7.04(b) and not made when due shall
bear interest at the rate per annum determined, from time to time, under
the provisions of Section 6621(a)(2) of the Code for each day until paid.
(c) Other Taxes. To the extent that there are any Taxes
-----------
attributable to the Purchased Assets or the Business other than those
treated specifically in Section 7.04(b), (d) and (e), this Section 7.04(c)
shall apply. Seller shall prepare and file (or cause to be prepared and
filed) on a timely basis (to the extent not filed on or before the date of
this Agreement) all Tax Returns for all taxable periods ending on or before
the Closing Date, shall (subject to Section 7.04(e)), pay all Taxes shown
to be due on such Tax Returns, and shall indemnify and hold Purchaser
harmless against, from and in respect of (i) all Taxes of the Company
attributable to the Purchased Assets or the operation of the Business (the
"ST Taxes") for all taxable periods (or any portion thereof) which end on
or before the Closing Date, and (ii) with respect to any taxable period
commencing before the Closing Date and ending after the Closing Date, all
ST Taxes attributable to the Pre-Closing Period. For purposes of this
Agreement, the portion of any Tax that is attributable to the Pre-Closing
Period shall be (i) in the case of a Tax that is not based on net income,
gross income, premiums or gross receipts, the total amount of such Tax for
the Period in question multiplied by a fraction, the numerator of which is
the number of days in the Pre-Closing Period, and the denominator of which
is the total number of days in such taxable period, and (ii) in the gross
income, premiums or gross receipts, the Tax that would be due with respect
to the Pre-Closing Period if such Pre-Closing Period were a separate
taxable period, except that exemptions, allowances, deductions or credits
that are calculated on an annual basis (such as the deduction for
depreciation or capital allowances) shall be apportioned on a per diem
basis. For purposes hereof, all Taxes which are the subject of this Section
7.04(c) arising from this transaction, except as set forth in Section
7.04(e), shall be deemed to be Taxes attributable to the Pre-Closing Period
and shall be the responsibility of Seller (including any transfer,
documentary, sales, use or other Taxes assessed upon or with respect to the
transfer of the Purchased Assets to Purchaser, and any recording or filing
fees with respect thereto). Purchaser shall prepare and file (or cause to
be prepared and filed) on a timely basis all Tax Returns for all taxable
periods beginning after the Closing Date, shall pay all taxes shown to be
due on such Tax Returns, and shall indemnify and hold Seller harmless
against, from and respect of all ST Taxes (i) for any taxable year or
period commencing after the Closing Date, and (ii) for any taxable period
beginning before and ending after the Closing Date, other than Taxes
attributable to the Pre-Closing Period. The provisions of Section 7.04(b)
regarding payment, verification, and interest shall apply to the Taxes that
are subject to this Section 7.04(c).
(d) Sales Tax Certificates. Seller will cooperate with
----------------------
Purchaser in obtaining the certificate described in Sections 6811 through
6813 of the California Revenue and Taxation Code with respect to any Sales
Tax Liability arising prior to and in connection with the acquisition of
the Purchased Assets.
40
(e) Sales and Use Taxes. The sales and use Taxes arising out of
-------------------
the transfer of the Purchased Assets (the "Sales Tax") shall be determined
at Closing based on the allocation described in Section 7.05 and shall be
paid by Purchaser. To the extent permitted by Applicable Law, Seller shall
cooperate fully with Purchaser in minimizing the Sales Tax. To the extent a
taxing authority provides notice to Seller of an audit of the Sales Tax,
Seller shall immediately notify Purchaser and Purchaser shall assume
responsibility for such audit and shall pay when due any additional Sales
Tax ultimately assessed with respect to the transactions contemplated by
this Agreement, other than those additional Sales Tax imposed by reason of
Seller's failure to comply with the procedures set forth in the Delivery
Protocol which Taxes shall be the responsibility of Seller. Purchaser shall
have complete authority to control, settle or defend any proposed
adjustment to the Sales Tax and Seller shall cooperate fully with
Purchaser, in its defense or settlement of any proposed adjustment to the
Sales Tax.
7.05 Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated in accordance with Schedule 7.05 (as such allocation of Purchase Price
-------------
Schedule shall be determined prior to Closing and attached hereto). Each of the
parties hereto agrees to report the transactions contemplated hereby for state
and federal Tax purposes in accordance with such allocation of the Purchase
Price. Purchaser shall prepare Schedule 7.05 subject to Seller's approval,
-------------
which approval shall not be unreasonably withheld.
7.06 Confidentiality. The parties understand and agree that this
---------------
Agreement is subject to the terms and conditions of the CNDA. In the event that
any party hereto receives a request to disclose all or any part of any
confidential information under the terms of a subpoena, order, civil
investigative demand or similar process issued by a court of competent
jurisdiction or by another Governmental Authority, such party agrees to: (i)
immediately notify the party to whom such confidential information relates of
the existence, terms and circumstances surrounding such request, (ii) consult
with such party to whom the information relates on the advisability of taking
legally available steps to resist or narrow such request and (iii) if disclosure
of such information is required, furnish only that portion of the confidential
information that, in the opinion of counsel to the party who has received the
request, such party is legally compelled to disclose and advise the party to
whom such confidential information relates as far in advance of such disclosure
as possible so that such party to whom the confidential information relates may
seek an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such confidential information. In any
event, the party who receives the request shall not oppose actions by the party
to whom the confidential information relates to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
such confidential information.
7.07 Waiver of Bulk Sales Laws. Purchaser and Seller hereby waive
-------------------------
compliance with all applicable "bulk sales" laws in respect of the transactions
contemplated by this Agreement.
41
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Obligations of Purchaser. The obligations of
--------------------------------------
Purchaser to consummate the Closing are subject to the satisfaction or waiver of
each of the following conditions:
(a) Accounts Payable and Accrued Liabilities Cap. At Closing,
---------------------------------------------
Seller shall deliver to Purchaser a balance sheet reflecting the accounts
payable and accrued liabilities of the Business as of the Closing Date (the
"Closing Liabilities"). The Closing Liabilities shall not exceed the
sum of (i) the accounts payable and accrued liabilities of the Business as
of June 30, 1999, plus (ii) Sixty-Five Thousand Dollars ($65,000) (the
"Liability Cap"). If the Closing Liabilities exceed the Liability Cap,
then (i) Seller shall immediately pay to Purchaser an amount equal to the
overage; or (ii) Purchaser shall have no obligation to consummate the
Closing.
(b) Performance by Seller. (i) Seller shall have performed and
---------------------
satisfied in all material respects each of its obligations hereunder and in
the Supply Agreement required to be performed and satisfied by it on or
prior to the Closing Date, (ii) each of the representations and warranties
of Seller contained herein or in any of the other Acquisition Documents and
in any Schedules or Exhibits hereto or thereto shall have been true and
correct in all material respects and contained no misstatement or omission
that would make any such representation or warranty misleading when made
and shall be true and correct in all material respects and contain no
misstatement or omission that would make any such representation or
warranty materially misleading at and as of the Closing with the same force
and effect as if made as of the Closing and (iii) Purchaser shall have
received a certificate signed by a duly authorized executive officer of
Seller to the foregoing effect and to the effect that the conditions
specified within this Section 8.01(a) have been satisfied.
(c) Required Governmental Approvals. All Required Governmental
-------------------------------
Approvals and Purchaser Approvals that are Governmental Approvals shall
have been obtained without the imposition of any conditions that are or
would become applicable to any of the Purchased Assets, the Business or
Purchaser (or any Affiliate or Associate of Purchaser) after the Closing
that would be materially burdensome on any such Purchased Assets, the
Business or Purchaser (or any Affiliate or Associate of Purchaser) or their
respective businesses substantially as such businesses have been conducted
prior to the Closing Date or as such businesses, as of the date hereof and
the Closing Date, would be reasonably expected to be conducted after the
Closing Date. All Required Governmental Approvals and Purchaser Approvals
that are Governmental Approvals shall be in effect as of the Closing Date,
and no Proceedings shall have been instituted or threatened by any
Governmental Authority as of the Closing Date with respect thereto as to
which there is a material risk of a determination that would terminate the
effectiveness of, or otherwise materially and adversely modify the terms
of, any such Required Governmental Approval or Purchaser Approval. All
applicable waiting periods with respect to Required Governmental Approvals
and Purchaser Approvals that are Governmental Approvals shall have expired
or
42
been terminated by the applicable Governmental Authority, and all
conditions and requirements prescribed by Applicable Law or by such
Required Governmental Approvals and Purchaser Approvals to be satisfied on
or prior to the Closing Date shall have been satisfied to the extent
necessary such that all Required Governmental Approvals and Purchaser
Approvals that are Governmental Approvals are, and will remain, in full
force and effect assuming continued compliance with the terms thereof after
the Closing.
(d) Required Contractual Consents. All Required Contractual
-----------------------------
Consents and Purchaser Approvals that are not Governmental Approvals set
forth on Schedule 8.01(c) shall have been obtained without the imposition
----------------
of any conditions that are or would become applicable to any of the
Purchased Assets, the Business or Purchaser (or any Affiliate or Associate
of Purchaser) after the Closing that would be materially burdensome on any
such Purchased Assets, the Business or Purchaser (or any Affiliate or
Associate of Purchaser) or their respective businesses substantially as
such businesses have been conducted prior to the Closing Date or as such
businesses, as of the date hereof and the Closing Date, would be reasonably
expected to be conducted after the Closing Date. All Required Contractual
Consents and Purchaser Approvals set forth on Schedule 8.01(c) shall be in
----------------
effect as of the Closing Date. All conditions and requirements prescribed
by any Required Contractual Consent or Purchaser Approval that is not a
Governmental Approval to be satisfied on or prior to the Closing Date shall
have been satisfied to the extent necessary such that all such Required
Contractual Consents and Purchaser Approvals are effective and enforceable
as of the Closing Date and will remain effective and enforceable against
the Persons giving such Required Contractual Consents and Purchaser
Approvals assuming continued compliance with the terms thereof. No
Proceeding shall have been instituted or threatened with respect thereto
that creates a material risk that any material Liability will be imposed on
Purchaser (or any Affiliate or Associate of Purchaser). All conditions and
requirements prescribed by any Required Contractual Consent or Purchaser
Approval that is not a Governmental Approval to be satisfied on or prior to
the Closing Date shall have been satisfied to the extent necessary such
that no material Liability will be imposed on Purchaser (or any Affiliate
or Associate of Purchaser) in connection with or as a result of the
consummation of the transactions contemplated by this Agreement and the
other Acquisition Documents.
(e) No Violation. The transactions contemplated by this
------------
Agreement and the other Acquisition Documents and the consummation of the
Closing shall not violate any Applicable Law. No temporary restraining
order, preliminary or permanent injunction, cease and desist order or other
order issued by any court or other Governmental Authority or any other
legal restraint or prohibition preventing the transfers contemplated hereby
or the consummation of the Closing, or imposing Damages in respect thereto,
shall be in effect as of the Closing Date, and there shall be no pending or
threatened actions or proceedings by any Governmental Authority (or
determinations by any Governmental Authority) or by any other Person having
jurisdiction with respect to such matter challenging or in any manner
seeking to restrict or prohibit the transfer and exchange contemplated
hereby or the consummation of the Closing, or to impose conditions that
would be materially burdensome on the Purchased Assets, the Business or
Purchaser (or any Affiliate or Associate of Purchaser) or their respective
businesses substantially as such businesses have been
43
conducted prior to the Closing Date or as said businesses, as of the date
hereof, would be reasonably expected to be conducted after the Closing
Date.
(f) Acceptance of Employment with Purchaser by certain Seller
---------------------------------------------------------
Employees. All of the engineers and at least ninety percent (90%) of the
---------
other employees of Seller to whom Purchaser has made offers of employment,
a list of whom is set forth on Schedule 8.01(f), shall have accepted
employment with Purchaser (or an Affiliate of Purchaser) on terms
consistent with those set forth on Appendix A.
----------
(g) Material Adverse Effect. Since the date hereof, there shall
-----------------------
not have been, as of the Closing Date, any event, occurrence, development
or state of circumstances or facts or change in the Purchased Assets,
Assumed Liabilities or the Business (including any damage, destruction or
other casualty loss affecting the Purchased Assets or the Business) that
has had or that may be reasonably expected to have, either alone or
together with all such events, occurrences, developments, states of
circumstances or facts or changes, a Material Adverse Effect on the
Business or the Purchased Assets.
(h) Allocation of Purchase Price. Purchaser and Seller shall
----------------------------
have agreed on the allocation of the Purchase Price pursuant to Section
7.05.
(i) Transition Services Agreement. Purchaser and Seller shall
------------------------------
have agreed upon, executed and delivered the Transition Services Agreement,
pursuant to which for a limited period of xxxx Xxxxxx will provide certain
services for Purchaser's benefit in connection with the operation of the
Business.
(j) Acquisition Documents. Seller shall have executed and
---------------------
delivered to Purchaser all Acquisition Documents to which Seller is a
party, and Newbridge shall have executed and delivered the Non-Competition
Agreement.
(k) Opinion of Counsel. Purchaser shall have received opinions
------------------
of counsel from Xxxxxx Xxxx & Priest LLP, counsel to Seller, and internal
corporate counsel to Newbridge, dated the Closing Date, in substantially
the form attached hereto as Exhibit 8.01.
------------
(l) Release of Liens. Seller shall have obtained the release of
----------------
all Liens on the Purchased Assets and shall have delivered to Purchaser all
termination statements or other documentation evidencing such releases.
(m) Secretary's Certificate. Seller shall have delivered to
-----------------------
Purchaser at the Closing a certificate of its Secretary or Assistant
Secretary certifying (a) attached copies of the Certificate of
Incorporation and Bylaws of Seller, (b) attached copies of the resolutions
of the board of directors of Seller relating to this Agreement, the
Acquisition Documents and the transactions contemplated hereby and thereby,
and (c) the signatures and titles of the officers of Seller who have
executed this Agreement and each Exhibit, Schedule and other document
delivered at or prior to the Closing.
44
8.02 Conditions to Obligations of Seller. The obligations of Seller
-----------------------------------
to consummate the Closing are subject to the satisfaction or waiver of each of
the following conditions:
(a) Performance by Purchaser. (A) Purchaser shall have
------------------------
performed and satisfied in all material respects their obligations
hereunder required to be performed and satisfied by them on or prior to the
Closing Date, (B) each of the representations and warranties of Purchaser
contained herein or in any of the other Acquisition Documents and in any
Schedules or Exhibits hereto or thereto shall have been true and correct in
all material respects and contained no misstatement or omission that would
make any such representation or warranty misleading when made and shall be
true and correct in all material respects and contain no misstatement or
omission that would make any such representation or warranty materially
misleading at and as of the Closing with the same force and effect as if
made as of the Closing and (C) Seller shall have received a certificate
signed by a duly authorized executive officer of Purchaser to the foregoing
effect and to the effect that the conditions specified within this Section
8.02(a) have been satisfied.
(b) Required Governmental Approvals. All Required Governmental
-------------------------------
Approvals shall have been obtained without the imposition of any conditions
that are or would become applicable to Seller (or any Affiliate or
Associate of Seller) after the Closing that would be materially burdensome
on Seller (or any Affiliate or Associate of Seller). All Required
Governmental Approvals shall be in effect as of the Closing Date, and no
Proceedings shall have been instituted or threatened by any Governmental
Authority as of the Closing Date with respect thereto as to which there is
a material risk of a determination that would terminate the effectiveness
of, or otherwise materially and adversely modify the terms of, any such
Required Governmental Approval. All applicable waiting periods with
respect to such Required Governmental Approvals shall have expired or been
terminated by the applicable Governmental Authority, and all conditions and
requirements prescribed by Applicable Law or by such Required Governmental
Approvals to be satisfied on or prior to the Closing Date shall have been
satisfied to the extent necessary such that all Required Governmental
Approvals are, and will remain, in full force and effect assuming continued
compliance with the terms thereof after the Closing.
(c) Required Contractual Consents. All Required Contractual
-----------------------------
Consents set forth on Schedule 8.02(c) shall have been obtained without the
----------------
imposition of any conditions that are or would become applicable to Seller
(or any Affiliate or Associate of Seller) after the Closing that would be
materially burdensome on Seller (or any Affiliate or Associate of Seller).
All Required Contractual Consents shall be in effect as of the Closing
Date. All conditions and requirements prescribed by any Required
Contractual Consent set forth on Schedule 8.02(c) to be satisfied on or
----------------
prior to the Closing Date shall have been satisfied to the extent necessary
such that all Required Contractual Consents are effective and enforceable
as of the Closing Date and will remain effective and enforceable against
Persons giving such Required Contractual Consents assuming continued
compliance with the terms thereof. No Proceeding shall have been
instituted or threatened with respect thereto that creates a material risk
that any material Liability will be imposed on Seller. All conditions and
requirements prescribed by any Required Contractual Consent (or any such
45
other consent) to be satisfied on or prior to the Closing Date shall have
been satisfied to the extent necessary such that no material Liability will
be imposed on Seller in connection with or as a result of the consummation
of the transactions contemplated by this Agreement and the other
Acquisition Documents.
(d) No Violation. The transactions contemplated by this
------------
Agreement and the other Acquisition Documents and the consummation of the
Closing shall not violate any Applicable Law. No temporary restraining
order, preliminary or permanent injunction, cease and desist order or other
order issued by any court or other Governmental Authority or any other
legal restraint or prohibition preventing the transfer and exchange
contemplated hereby or the consummation of the Closing, or imposing Damages
in respect thereto, shall be in effect as of the Closing Date, and there
shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) or
by any other Person challenging or in any manner seeking to materially
restrict, prohibit or condition the transfer and exchange contemplated
hereby or the consummation of the Closing, or to impose conditions that
would be materially burdensome on Seller (or any Affiliate or Associate of
Seller) or their respective businesses substantially as such businesses
have been conducted prior to the Closing Date or as said businesses, as of
the date hereof, would reasonably be expected to be conducted after the
Closing Date.
(e) Allocation of Purchase Price. Purchaser and Seller shall
----------------------------
have agreed on the allocation of the Purchase Price pursuant to Section
7.05.
(f) Transition Services Agreement. Purchaser and Seller shall
------------------------------
have agreed upon, executed and delivered the Transition Services Agreement,
pursuant to which for a limited period of xxxx Xxxxxx will provide certain
services for Purchaser's benefit in connection with the operation of the
Business.
(g) Acquisition Documents. Purchaser shall have executed and
---------------------
delivered to Seller all Acquisition Documents to which Purchaser is a
party.
(h) Opinion of Counsel. Seller shall have received an opinion
------------------
of counsel from Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to Purchaser, dated
the Closing Date, in substantially the form attached hereto as
Exhibit 8.02.
------------
ARTICLE IX
TERMINATION
9.01 Grounds for Termination. This Agreement may be
-----------------------
terminated at any time prior to the Closing:
(a) By mutual written agreement of Seller and Purchaser;
(b) By Seller or Purchaser at any time after December 31, 1999
(the "Outside Date") upon five (5) days' written notice to the other
parties; provided that no
46
party may terminate this Agreement pursuant to this clause (b) if such
party's failure to fulfill any of its obligations under this Agreement
shall have been a principal reason that the Closing shall not have occurred
on or before the Outside Date;
(c) By Seller or Purchaser if there shall be or be pending any
law or regulation that makes the consummation of the transactions
contemplated hereby illegal or otherwise prohibited or any court of
competent jurisdiction in the United States or other United States federal
or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby and such order, decree, ruling or other action is or shall have
become nonappealable;
(d) By Purchaser at any time following the expiration of fifteen
(15) days from the date that Purchaser has given written notice to Seller
of any one or more material inaccuracies or material misrepresentations in
or material breaches of the representations or warranties made by Seller
contained herein, or any other inaccuracy, misrepresentation or other
breach of the representations or warranties made by Seller under this
Agreement if the aggregate of such other inaccuracies, misrepresentation or
breach shall be material; provided, however, that no termination under this
-------- -------
clause (d) shall take effect if such breaches shall have been cured in all
material respects within such fifteen (15)-day period;
(e) By Seller at any time following the expiration of fifteen
(15) days from the date that Seller has given written notice to Purchaser
of the failure by Purchaser to perform and satisfy in any material respect
any of Purchaser's obligations under this Agreement required to be
performed and satisfied by Purchaser on or prior to the Closing Date, or
the failure to perform and satisfy any other obligations of Purchaser under
this Agreement if the aggregate of all such other failures shall be
material; provided, however, that no termination under this clause (e)
-------- -------
shall take effect if such failures shall have been cured in all material
respects within such fifteen (15)-day period;
(f) By Purchaser if either shall receive a second request in
respect of their HSR Filing determined by them to be unduly burdensome and
Purchaser shall prove unable to negotiate a means satisfactory to it for
complying with such burdensome second request or the FTC or DofJ shall
impose any condition on Purchaser in respect thereof deemed unacceptable by
Purchaser, respectively;
(g) By Seller if Seller shall receive a second request in
respect of its HSR Filing determined by Seller to be unduly burdensome and
Seller shall prove unable to negotiate a means satisfactory to Seller for
complying with such burdensome second request, or the FTC or DofJ shall
impose any condition on Seller in respect thereof deemed unacceptable by
Seller; and
(h) [omitted pursuant to a request for confidential treatment
and filed separately with the Securities and Exchange Commission]
47
Any party desiring to terminate this Agreement pursuant to any one or
more of clauses (b) through (h) shall give written notice of such termination
and the basis therefor to the other parties.
9.02 Effect of Termination. Any termination of this Agreement shall
---------------------
not affect any Liability of any party hereto to any other party hereto as a
result of any breach of this Agreement.
ARTICLE X
MISCELLANEOUS
10.01 Notices. All notices and other communications pursuant to
-------
this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth below or to such other
address as the party to whom notice is to be given may have furnished to the
other parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (A) in the
case of personal delivery, on the date of such delivery, (B) in the case of
telecopier, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), (C) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next Business Day delivery, on
the next Business Day after the date when sent and (D) in the case of mailing,
on the third Business Day following that on which the piece of mail containing
such communication is posted:
if to Purchaser, to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
48
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to Seller, to:
Stanford Telecommunications, Inc.
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Priest LLP
000 Xxxx Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as the person to whom notice is given may
have previously furnished to the others in writing in the manner set forth
above. Any party hereto may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended.
10.02 Amendments; Waivers.
-------------------
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by all parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of a warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of a warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent
49
occurrence. No failure or delay by a party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided under Applicable Law.
10.03 Expenses. All costs and expenses incurred in connection with
--------
this Agreement and the other Acquisition Documents and in closing and carrying
out the transactions contemplated hereby and thereby shall be paid by the party
incurring such cost or expense; provided, however, that the filing fee in
-------- -------
respect of the HSR Filings shall be borne by Purchaser.
10.04 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors,
heirs, personal representatives and permitted assigns. No party hereto may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of each other party, which approval
shall not be unreasonably withheld. No such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations. Notwithstanding the foregoing, this Agreement and any of the
Acquisition Documents may be assigned to Newbridge.
10.05 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the internal laws (without reference to choice
or conflict of laws) of the State of Delaware.
10.06 Counterparts; Effectiveness. This Agreement may be signed in
---------------------------
any number of counterparts and the signatures delivered by telecopy, each of
which shall be an original, with the same effect as if the signatures were upon
the same instrument and delivered in person. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other parties hereto.
10.07 Entire Agreement. This Agreement (including the Schedules
----------------
and Exhibits referred to herein, which are hereby incorporated by reference),
the other Acquisition Documents and the CNDA constitute the entire agreement
between and among the parties with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements, understandings
and negotiations, both written and oral, between and among the parties with
respect to the subject matter of this Agreement. Neither this Agreement nor any
provision hereof is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
10.08 Captions. The captions herein are included for convenience
--------
of reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article, Section, Exhibit or Schedule are
references to an Article, Section, Exhibit or Schedule of this Agreement, unless
otherwise specified, and include all subparts thereof.
10.09 Severability. If any provision of this Agreement, or the
------------
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding
50
the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of the date this Agreement was
executed or last amended.
10.10 Construction. The parties hereto intend that each
------------
representation, warranty, and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
10.11 Dispute Resolution.
------------------
(a) All disputes arising directly under the express terms of
this Agreement or the grounds for termination thereof shall be resolved as
follows: The senior management of all parties to the dispute shall meet to
attempt to resolve such disputes. If the disputes cannot be resolved by
such senior management, any party may make a written demand for formal
dispute resolution and specify therein the scope of the dispute. Within
thirty (30) days after such written notification, the parties agree to meet
for one (1) day with an impartial mediator and consider dispute resolution
alternatives other than litigation. If an alternative method of dispute
resolution is not agreed upon within thirty (30) days after the one (1) day
mediation, either party may begin litigation Proceedings.
(b) Notwithstanding the provisions of Section 10.11(a) above,
each party shall have the right, without the requirement of first seeking a
remedy through arbitration, to seek preliminary injunctive or other
equitable relief in any proper court in the event that such party
determines that eventual redress through arbitration will not provide a
sufficient remedy for any violation of this Agreement by any other party.
(c) In the event a Proceeding is brought to enforce or
interpret any provision of this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees and costs in an amount to be
fixed by the court or arbitrator, as applicable.
10.12 Submission to Jurisdiction; Waiver of Jury Trial.
------------------------------------------------
(a) The parties hereby irrevocably submit to the jurisdiction
of the courts of the State of Delaware and the Federal courts of the United
States of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any Proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto
or that such Proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts,
and the parties hereto irrevocably agree that all claims with respect to
such Proceeding shall be heard and determined in such a Delaware State or
Federal court. The parties hereby consent to and
51
grant any such court jurisdiction over the person of such parties and over
the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 10.12 or in such other manner as may be permitted by
Applicable Law, shall be valid and sufficient service thereof.
(b) The parties agree that irreparable damage may occur and
that the parties would not have any adequate remedy at law in the event
that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal
court located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or
in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) 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 THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.12.
10.13 Meaning of Include and Including. Whenever in this Agreement
--------------------------------
the word "include" or "including" is used, it shall be deemed to mean "include,
without limitation" or "including, without limitation," as the case may be, and
the language following "include" or "including" shall not be deemed to set forth
an exhaustive list.
10.14 Cumulative Remedies. The rights, remedies, powers and
-------------------
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided under Applicable Law.
10.15 Third Party Beneficiaries. No provision of this Agreement
-------------------------
shall create any third party beneficiary rights in any Person, including any
employee or former employee of Seller or any Affiliate or Associate thereof
(including any beneficiary or dependent thereof).
10.16 Specific Performance. The parties hereby acknowledge and
--------------------
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take
52
all actions as are necessary on its part to the consummation of the transactions
contemplated herein, may cause irreparable injury to the other parties, for
which Damages, even if available, may not be an adequate remedy. Accordingly,
each party hereby consents to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of such party's obligations and to
the granting by any court of the remedy of specific performance of its
obligations hereunder.
10.17 Survival. The representations and warranties and covenants
--------
of the parties set forth in Articles III, IV, V, VI and VII shall terminate at
and as of the Closing; provided, however, that the provisions of Sections 5.11,
-------- -------
5.12, 5.13, 6.01, 6.03, 7.03, 7.04, 7.05 and 7.06 shall survive the Closing.
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IN WITNESS WHEREOF, the parties hereto here caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
PURCHASER:
INTEL CORPORATION,
a Delaware corporation
By:________________________
Name: Xxxxxx Xxxxxxx
Title: Vice President and Treasurer
SELLER:
STANFORD TELECOMMUNICATIONS, INC.,
a Delaware corporation
By:________________________
Name:
Title:
54
