EXHIBIT 2.5
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ASSET PURCHASE AGREEMENT
dated as of
January 24, 2004
among
Honeywell International Inc.,
Honeywell Intellectual Properties Inc.
and
Finisar Corporation
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TABLE OF CONTENTS
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1. CLOSING.................................................................................... 1
1.1 Closing Date................................................................... 1
1.2 Effectiveness.................................................................. 1
1.3 Transactional Overview......................................................... 1
2. PURCHASE AND SALE.......................................................................... 2
2.1 Purchase and Sale.............................................................. 2
2.2 Excluded Assets................................................................ 3
2.3 Assignment of Assets........................................................... 4
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION....................................... 5
3.1 Initial Purchase Price......................................................... 5
3.2 Post-Closing Adjustment........................................................ 5
3.3 Allocation of Purchase Price................................................... 7
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.................................................. 8
4.1 Assumption of Certain Liabilities and Obligations by Purchaser................. 8
4.2 Excluded Liabilities........................................................... 8
5. EMPLOYEE AND EMPLOYEE BENEFITS MATTERS..................................................... 10
5.1 Scope of Article............................................................... 10
5.2 US Employees................................................................... 10
5.3 Non-US Employees............................................................... 13
6. REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................. 16
6.1 Due Organization............................................................... 16
6.2 Authority...................................................................... 16
6.3 No Conflict of Organizational Documents and Laws............................... 17
6.4 Approvals...................................................................... 17
6.5 Financial Statements........................................................... 17
6.6 Absence of Certain Changes..................................................... 18
6.7 Title to Assets; Personal Property............................................. 19
6.8 Real Property.................................................................. 19
6.9 Contracts...................................................................... 19
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6.10 Intellectual Property.......................................................... 20
6.11 Litigation, Claims and Proceedings............................................. 22
6.12 Environmental Conditions....................................................... 22
6.13 Non-Environmental Permits...................................................... 23
6.14 Compliance with Law............................................................ 23
6.15 Labor and Employee Benefits.................................................... 23
6.16 Insurance...................................................................... 25
6.17 Taxes.......................................................................... 25
6.18 Sufficiency of Assets.......................................................... 25
6.19 Product Warranties............................................................. 25
6.20 Finder's Fee................................................................... 25
6.21 WARRANTY DISCLAIMER............................................................ 25
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................ 26
7.1 Due Organization............................................................... 26
7.2 Authority...................................................................... 26
7.3 No Conflict of Organizational Documents and Laws............................... 27
7.4 Approvals...................................................................... 27
7.5 Litigation..................................................................... 27
7.6 Finder's Fee................................................................... 27
7.7 Certain Acknowledgments and Other Matters...................................... 27
7.8 Funds.......................................................................... 27
8. PRE-CLOSING COVENANTS...................................................................... 28
8.1 Conduct of Business............................................................ 28
8.2 Access to Records and Properties............................................... 28
8.3 Certain Governmental Consents.................................................. 29
8.4 Third Party Consents........................................................... 30
8.5 Public Announcements........................................................... 30
8.6 Notification of Certain Matters................................................ 30
8.7 Reasonable Efforts; Environmental Permits...................................... 31
8.8 Amendment to Schedules of Transition Services Agreement........................ 31
8.9 Construction of the IT Room.................................................... 32
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8.10 Delivery of Emergency Response Plan............................................ 32
8.11 Invention Disclosure Assignments............................................... 32
9. CONDITIONS TO OBLIGATIONS OF PURCHASER..................................................... 32
9.1 Absence of Injunction.......................................................... 32
9.2 Certificates of Sellers........................................................ 32
9.3 No Breach...................................................................... 32
9.4 H-S-R Act...................................................................... 33
9.5 Environmental Permit Consent................................................... 33
9.6 Required Consents.............................................................. 33
10. CONDITIONS TO OBLIGATIONS OF SELLERS....................................................... 33
10.1 Absence of Injunction.......................................................... 33
10.2 Certificates of Purchaser...................................................... 33
10.3 No Breach...................................................................... 33
10.4 H-S-R Act...................................................................... 34
10.5 Environmental Permit Consent................................................... 34
11. TERMINATION; SURVIVAL...................................................................... 34
11.1 Termination.................................................................... 34
11.2 Effect of Termination.......................................................... 34
12. DOCUMENTS TO BE DELIVERED BY SELLERS AT THE CLOSING........................................ 35
13. DOCUMENTS TO BE DELIVERED BY PURCHASER AT THE CLOSING...................................... 36
14. POST-CLOSING OBLIGATIONS................................................................... 36
14.1 Covenant Not to Compete........................................................ 36
14.2 Tax Matters.................................................................... 38
14.3 Further Assurances............................................................. 39
14.4 Reports; Access to Books and Records........................................... 40
14.5 Cooperation in Litigation...................................................... 40
14.6 Names and Marks................................................................ 41
14.7 Transitional Operation of the Business under Sellers' Environmental Permits.... 41
14.8 Manufacture of VCSELs.......................................................... 42
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14.9 Continued Supply of Supplied Parts and Attenuation Coating..................... 43
14.10 Reserve License of Intellectual Property....................................... 44
14.11 Reimbursed Costs............................................................... 45
14.12 Covenant Not to ▇▇▇............................................................ 45
14.13 Licensed Software.............................................................. 46
15. INDEMNIFICATION............................................................................ 46
15.1 Indemnification by Sellers..................................................... 46
15.2 Indemnification by Purchaser................................................... 47
15.3 Survival....................................................................... 47
15.4 Limitations on Indemnity....................................................... 48
15.5 Indemnification Procedure...................................................... 50
15.6 Exclusive Remedy............................................................... 52
15.7 Treatment of Indemnity Payments................................................ 53
16. MISCELLANEOUS.............................................................................. 53
16.1 Expenses....................................................................... 53
16.2 Bulk Sales..................................................................... 53
16.3 Assignability.................................................................. 53
16.4 Binding Effect................................................................. 53
16.5 Notices........................................................................ 53
16.6 Counterparts................................................................... 55
16.7 Attachments and Schedules...................................................... 55
16.8 Governing Law.................................................................. 55
16.9 Arbitration.................................................................... 55
16.10 Definitions.................................................................... 56
16.11 Headings....................................................................... 64
16.12 Amendment...................................................................... 64
16.13 Entire Agreement............................................................... 65
16.14 Waivers........................................................................ 65
16.15 Third Party Rights............................................................. 65
16.16 Severability................................................................... 65
16.17 No Rights of Set Off........................................................... 65
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16.18 Agency......................................................................... 65
16.19 Consent to Jurisdiction........................................................ 65
16.20 Terms Generally................................................................ 66
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TABLE OF CONTENTS
Attachment A - Knowledge of Sellers
Exhibit 12(d) - Form of Transition Services Agreement
Exhibit 12(e) - Form of ▇▇▇▇▇▇▇▇▇▇ Lease
Exhibit 12(f) - Form of License Agreement
Exhibit 12(g) - Form of Ion Implant Agreement
Exhibit 12(i) - Form of Environmental Systems Separation and Services Agreement
Exhibit 12(j) - Form of Shared Site Services Agreement
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TABLE OF CONTENTS
continued
SCHEDULES
Schedule 2.1(b) - Personal Property
Schedule 2.2(l) - Excluded Patents and Patent Applications
Schedule 2.2(o) - Excluded Assets
Schedule 5.2 - US Employees
Schedule 6.1 - Organization
Schedule 6.3 - No Conflict
Schedule 6.5 - Financial Statements
Schedule 6.6 - Absence of Certain Changes
Schedule 6.7 - Title to Assets; Personal Property
Schedule 6.8(c) - Condition of Property
Schedule 6.9 - Material Contracts
Schedule 6.10 - Intellectual Property
Schedule 6.11 - Litigation, Claims and Proceedings
Schedule 6.12 - Environmental Conditions
Schedule 6.13 - Non-Environmental Permits
Schedule 6.14 - Compliance with Law
Schedule 6.15(a) - Labor and Employee Benefits
Schedule 6.15(b) - US Benefit Plans
Schedule 6.15(c) - Non-US Benefit Plans
Schedule 6.16 - Insurance
Schedule 6.19- Product Warranties
Schedule 7.4 - Approvals - Purchaser
Schedule 8.1 - Conduct of Business
Schedule 8.2(b) - Site Map Indicating Location of IT/Telephone Room
Schedule 9.6 - Required Consents
Schedule 14.7 - Transitional Environmental Permits
Schedule 14.9 - Prices for Supplied Parts and Supplied Services
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") made as of January 24, 2004 among
Honeywell International Inc., a Delaware corporation ("Honeywell"), Honeywell
Intellectual Properties Inc., an Arizona corporation ("HIPI" and, together with
Honeywell, the "Sellers"), and Finisar Corporation, a Delaware corporation
("Purchaser").
A. Sellers, through Honeywell's VCSEL Optical Products business, are
engaged in the businesses of designing, manufacturing, marketing and selling
VCSELs (as defined herein), associated receivers and related packaging and
providing technical support in respect of such VCSELs, associated receivers and
related packaging (all of the foregoing, as conducted by Honeywell and its
Affiliates are referred to collectively as the "Business").
▇. ▇▇▇▇▇▇▇ desire to sell the Assets (as defined below) and Purchaser
desires to acquire the Assets, for the consideration as stated hereunder and on
the terms and conditions as set forth in this Agreement.
C. When used in this Agreement, the defined terms, which are
capitalized, shall have the meanings as set forth in Section 16.10, or elsewhere
herein.
In consideration of the mutual covenants and agreements contained in this
Agreement, Sellers and Purchaser agree as follows:
1. CLOSING.
1.1 Closing Date. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at 10:00 a.m. Eastern Time at
the offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇, on the third Business Day after all conditions to the obligations of
Purchaser and Sellers under Articles 9 and 10 of this Agreement shall have been
satisfied or waived (other than those requiring a delivery of a certificate or
other document, or the taking of other action, at the Closing), or at such other
place and on such other date as the parties may mutually agree in writing (such
date on which the Closing occurs hereinafter is referred to as the "Closing
Date").
1.2 Effectiveness. The consummation of the transactions contemplated by
this Agreement and the Closing shall be deemed to take place at 12:01 a.m.,
Central Standard Time, on the Closing Date (the "Effective Time") and no
transaction shall be deemed to have been completed and no document or
certificate shall be deemed to have been delivered until all transactions are
completed and all documents are delivered.
1.3 Transactional Overview. Subject to the terms and conditions
contained herein, unless otherwise agreed in writing, the parties contemplate
that the transaction envisioned by this Agreement will be effected as described
in this Section.
(a) United States - Asset Sale. The Business in the United States
will be transferred to Purchaser pursuant to an asset sale.
(b) Employees Outside the United States. The Business employs
three individuals outside the United States: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the United
Kingdom, Mr. Y.T. ▇▇▇ in South Korea and Mr. Menjoe Deng in Taiwan. The
foregoing employees will become employees of Purchaser at the Closing pursuant
to Article 5. Assets of the Business in the United Kingdom, South Korea and
Taiwan consist solely of the books and records used by such employees in the
conduct of the Business. The parties anticipate that the physical relocation of
the foregoing employees and their use after the Closing Date of Sellers' offices
and office equipment (including computer equipment) shall be governed by the
Transition Services Agreement.
2. PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions
contained herein, except as otherwise provided in Sections 2.2 and 2.3 hereof,
at the Closing, Sellers shall sell, convey, transfer and assign to Purchaser,
and Purchaser shall purchase, assume and acquire from Sellers, all of Sellers'
right, title and interest in and to the following assets, properties and rights
(the "Assets"):
(a) all inventory, including raw materials, work-in-process and
finished goods, of the Business ("Inventory");
(b) all furnishings, furniture, computer equipment, office
equipment and supplies, vehicles, tooling (but for customer-owned tooling, only
Sellers' right to use such tooling), patterns, dies, jigs, machinery and
equipment, and other tangible personal property (other than Inventory) used
exclusively in the Business ("Personal Property"), including the Personal
Property described on Schedule 2.1(b);
(c) the Transferred Intellectual Property;
(d) all contracts, agreements, arrangements and/or commitments
relating exclusively to the Business (other than Excluded Assets, Intellectual
Property Licenses and Permits) ("Contracts");
(e) all customer and vendor lists relating exclusively to the
Business, all files and documents (including credit information) to the extent
relating exclusively to customers and vendors of the Business; and all
production data, equipment maintenance data, accounting records, inventory
records, sales and sales promotional data, advertising materials, cost and
pricing information, business plans, reference catalogs and any other such data
and records, in each case to the extent relating exclusively to the Business;
provided, however, that Sellers shall be entitled to retain copies of any such
materials which are necessary for their tax, accounting, legal or other
reasonable business purposes;
(f) all rights pursuant to any express or implied warranties,
representations or guarantees made by suppliers furnishing goods or services to
the extent furnished to the Business;
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(g) all trade accounts receivable and trade notes receivable of
the Business, whether recorded or unrecorded, including without limitation,
inter-company trade accounts receivable ("Accounts Receivable");
(h) prepaid expenses and deposits relating primarily to the
Business to the extent such prepaid expenses and deposits will accrue to the
benefit of Purchaser in respect of the Business following the Closing and except
for the prepaid expenses and deposits described on Schedule 2.2(o) ("Prepaid
Expenses");
(i) all goodwill of the Business; and
(j) all other assets, properties and rights owned, used or held
for use by Sellers exclusively in the Business.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained
in this Agreement, the following assets, properties and rights ("Excluded
Assets") are not intended to and shall not be sold, assigned, transferred or
conveyed to Purchaser hereunder and such assets, properties and rights shall not
be deemed Assets hereunder:
(a) all cash (including, without limitation, cash overdrafts),
cash equivalents and marketable securities (including, without limitation, all
money market accounts and mutual fund accounts);
(b) all of Sellers' and their Affiliates' rights in and to all
names, marks, trade names and trademarks incorporating "Honeywell,"
"AlliedSignal," or any derivation therefrom and all corporate symbols or logos
incorporating "Honeywell" or "AlliedSignal," either alone or in combination and
any and all goodwill represented thereby and pertaining thereto;
(c) contracts of insurance maintained by or on behalf of Sellers
(including any return of charges or premiums under retrospective rating plans)
and all rights thereunder;
(d) all rights of Sellers under this Agreement or any Ancillary
Agreement;
(e) Sellers' corporate seals, minute books and other corporate
records;
(f) all refunds, rebates, abatements, or credits for Taxes that
are Excluded Liabilities;
(g) all assets not dedicated exclusively to the Business used in
providing general and administrative services or information technology services
to the Business;
(h) any employee data which relates to employees who are not
Employees or which Sellers are prohibited by Law or agreement from disclosing or
delivering to Purchaser;
(i) employee benefit plans of Sellers and the assets thereof,
except to the extent provided by Article 5;
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(j) all claims, rights, benefits and interests arising under or
resulting from any Excluded Asset or Excluded Liability;
(k) shares or other ownership interests held by Sellers or their
Affiliates in any Person;
(l) all intellectual property of Sellers or any of their
Affiliates other than the Transferred Intellectual Property, including all
rights in and to the patents and the patent applications listed on Schedule
2.2(l);
(m) Sellers' and their Affiliates' rights in (x) the parcel of
real property and building located in Richardson, Texas (the "Richardson
Facility"); (y) the parcel of real property and building located in ▇▇▇▇▇▇,
Mexico, (the "Juarez Facility"); and (z) the parcel of real property and
building located in Plymouth, Minnesota (the "Plymouth Facility");
(n) all Permits; and
(o) all assets, properties and rights described on Schedule
2.2(o).
2.3 Assignment of Assets.
(a) Notwithstanding anything to the contrary in this Agreement
(but subject to Sections 9.3 and 10.3) or any Ancillary Agreement, to the extent
that any sale, conveyance, transfer or assignment or attempted sale, conveyance,
transfer or assignment of any Contract, Intellectual Property License or other
Asset described in Section 2.1 to be sold, conveyed, transferred or assigned to
Purchaser, or any claim, right or benefit arising thereunder or resulting
therefrom (collectively, the "Interests"), would constitute a breach under such
related Asset or a violation of any applicable Laws, or such Interest is not
capable of being sold, conveyed, transferred or assigned without any Consent
which has not been obtained by (or does not remain in full force and effect at)
the Closing, this Agreement shall not constitute a sale, conveyance, transfer or
assignment thereof, or an attempted sale, conveyance, transfer or assignment
thereof, unless and until such Interest (a "Retained Interest") can be sold,
conveyed, transferred and assigned in accordance with Section 2.1 without such a
breach or violation of Laws or after such Consent is obtained, at which time
such Retained Interest shall be deemed to be sold, conveyed, transferred and
assigned in accordance with Section 2.1, whereupon it shall cease to be a
Retained Interest. The foregoing does not limit Sellers' and Purchaser's
obligations under the provisions of Section 8.4.
(b) Sellers and Purchaser shall, during the remaining term of any
Retained Interest, use their reasonable efforts to (i) obtain any required third
party Consent to the sale, conveyance, transfer and assignment of such Interest
(which shall not include any obligation of Sellers or Purchaser to pay any
consideration therefor or agree to relinquish or modify any rights in exchange
therefor); (ii) cooperate in any reasonable and lawful arrangements (that do not
violate the terms of the relevant Retained Interest) designed to provide the
benefits of such Retained Interest to Purchaser, in which case Purchaser shall
promptly pay or satisfy the corresponding liabilities and obligations to the
extent Purchaser would have been responsible therefor if such Retained Interest
had been transferred to Purchaser at the Closing; and (iii) enforce, at the
request of Purchaser and subject to Purchaser's prompt reimbursement of Sellers'
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out of pocket costs, any rights of Sellers arising from such Retained Interest
against the issuer thereof or the other party or parties thereto (including the
right to elect to terminate any such Retained Interest in accordance with the
terms thereof upon the advice of Purchaser).
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION.
3.1 Initial Purchase Price.
(a) The initial purchase price to be paid by Purchaser for the
Assets (the "Initial Purchase Price") shall be seventy-five million dollars
($75,000,000.00). The Initial Purchase Price shall be subject to adjustment as
hereinafter set forth in Section 3.2.
(b) At the Closing, Purchaser shall pay the Initial Purchase Price
to Honeywell, by a wire transfer of immediately available funds in US currency
to a bank account to be designated in writing by Honeywell not less than two (2)
Business Days prior to the Closing Date.
3.2 Post-Closing Adjustment.
(a) The Initial Purchase Price shall be increased or decreased by
the amount, if any, by which the Final Net Working Capital is greater or less
than five million four hundred ninety-five thousand dollars ($5,495,000) (the
"Initial Net Working Capital"), provided, however, that any increase or decrease
in the Initial Purchase Price shall not exceed seven million dollars $7,000,000.
"Final Net Working Capital" means the sum of (x) Inventory (net of reserves),
Trade Receivables and any other assets in existence as of the Effective Time
which would be classified as current assets in accordance with the Accounting
Principles less (y) Customer Credits, Inter-company Trade Payables, Prepaid
Expenses, Accrued Liabilities and any other liabilities in existence as of the
Effective Time which would be classified as current liabilities in accordance
with the Accounting Principles, in each case as shown on the Final Closing Net
Working Capital Statement (as defined herein). The Initial Purchase Price as
adjusted pursuant to this Section 3.2 hereinafter shall be referred to as the
"Adjusted Purchase Price".
(b) Not later than ninety (90) days after the Closing Date,
Sellers will prepare and deliver to Purchaser a statement of the net working
capital of the Business as of the close of business on the day prior to the
Closing Date (the "Proposed Closing Net Working Capital Statement") prepared in
accordance with the accounting policies, practices and procedures used to
prepare the Reference Balance Sheet and summarized in the Financial Statements
(the "Accounting Principles"). The Proposed Closing Net Working Capital
Statement shall not include any Excluded Assets or Excluded Liabilities. The net
amount of Inventory set forth on the Proposed Closing Net Working Capital
Statement shall reflect Sellers' annual obsolescence review of inventory for
2004 conducted in accordance with the Accounting Principles. Purchaser agrees to
provide Sellers and Sellers' accountants, at no cost to Sellers, access to the
books and records of the Business to the extent reasonably requested by Sellers
for purposes of preparing the Proposed Closing Net Working Capital Statement and
will cause appropriate
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personnel of Purchaser to provide reasonable assistance to Sellers and their
representatives, at no cost to Sellers, in the preparation of the Proposed
Closing Net Working Capital Statement. Sellers agree to provide Purchaser and
Purchaser's accountants, at no cost to Purchaser, access to the books and
records of the Business to the extent reasonably requested by Purchasers for
purposes of reviewing the Proposed Closing Net Working Capital Statement, and
any related supported schedules prepared by Sellers in connection with the
preparation of the Proposed Closing Net Working Capital Statement, and will
cause appropriate personnel of Sellers to provide reasonable assistance to
Purchaser and its representatives, at no cost to Purchaser, in Purchaser's
review of the Proposed Closing Net Working Capital Statement.
(c) Unless Purchaser notifies Sellers in writing that it disagrees
with any aspect of the Proposed Closing Net Working Capital Statement (such
notice to include Purchaser's objections and reasonably detailed proposed
revisions to said documents and in reasonable detail the basis therefor along
with any relevant supporting data), within thirty (30) days after receipt
thereof, the Proposed Closing Net Working Capital Statement shall be conclusive
and binding on Sellers and Purchaser. If Purchaser so notifies Sellers in
writing within such thirty (30) day period, then Sellers and Purchaser shall
attempt to resolve their differences with respect thereto within fifteen (15)
days after Sellers' receipt of Purchaser's written notice of disagreement. Any
disputes not resolved by Sellers and Purchaser within such fifteen (15) day
period regarding the Proposed Closing Net Working Capital Statement will be
resolved by Deloitte & Touche (the "Firm"). The Firm shall make a determination
on the disputes so submitted as well as such modifications, if any, to the
Proposed Closing Net Working Capital Statement as reflect such determination,
and the same shall be conclusive and binding upon the parties. The Firm shall be
instructed by the parties to resolve any disputes in respect of the Proposed
Closing Net Working Capital Statement in strict accordance with the terms of
this Section 3.2 and the Accounting Principles. The determination of the Firm
for any item in dispute cannot, however, be in excess of, nor less than, the
greatest or lowest value, respectively, claimed for that particular item in the
Proposed Closing Net Working Capital Statement, in the case of Sellers, or in
the notice of objections described in the first sentence of this paragraph, in
the case of Purchaser. The fees and expenses of the Firm shall be shared equally
by Sellers and Purchaser. As used herein, "Final Closing Net Working Capital
Statement" shall mean either (x) the Proposed Closing Net Working Capital
Statement as mutually agreed to by the parties or (y) in the event of any
dispute resolved by the Firm, the Proposed Closing Net Working Capital Statement
as amended and restated by the Firm.
(d) Not later than thirty (30) days after the engagement of the
Firm to resolve a dispute pursuant to subsection (b) above (as evidenced by its
written acceptance by facsimile or otherwise to the parties), the parties shall
submit simultaneous briefs to the Firm (with a copy to the other parties)
setting forth their respective positions regarding the issues in dispute, and
not later than thirty (30) days after the submission of such briefs the parties
shall submit simultaneous reply briefs (with a copy to the other parties). The
Firm shall render its decision resolving the dispute within thirty (30) days
after submission of the reply briefs. If additional briefing, a hearing, or
other information is required by the Firm, the Firm shall give notice thereof to
the parties as soon as practicable before the expiration of such thirty (30) day
period, and the parties shall promptly respond with a view to minimizing any
delay in the decision date.
(e) Any adjustment required hereunder shall be payable as follows:
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(i) If the Final Net Working Capital is less than the
Initial Net Working Capital, within five (5) Business Days of the final
determination of the Final Net Working Capital, Sellers shall pay to Purchaser
the difference (less amounts previously paid pursuant to clause (iii) below in
respect of such difference) plus interest thereon at the rate of LIBOR plus
0.25% per annum from (but excluding) the Closing Date through and including the
date of payment. Such payment shall be made by a wire transfer of immediately
available funds in US currency to a bank account designated in writing by
Purchaser.
(ii) If the Final Net Working Capital is more than the
Initial Net Working Capital, within five (5) Business Days of the final
determination of the Final Net Working Capital, Purchaser shall pay to Sellers
the difference (less amounts previously paid pursuant to clause (iii) below in
respect of such difference) plus interest thereon at the rate of LIBOR plus
0.25% per annum from (but excluding) the Closing Date through and including the
date of payment. Such payment shall be made by a wire transfer of immediately
available funds in US currency to a bank account designated in writing by
Sellers.
(iii) If at any time after the delivery of the Proposed
Closing Net Working Capital Statement, any portion of any adjustment is not in
dispute between Purchaser and Sellers or, if following any such dispute, the
parties resolve their difference with respect to all or any portion thereof
without a determination by the Firm, Purchaser or Sellers, as the case may be,
shall within five (5) Business Days pay to the other the amount of the
adjustment not previously paid by Purchaser or Sellers and not in dispute, plus
interest thereon at the rate of LIBOR plus 0.25% per annum from (but excluding)
the Closing Date through and including the date of payment. Such payment shall
be made by a wire transfer of immediately available funds in US currency to a
bank account designated in writing by Purchaser or Sellers, as the case may be.
(f) The purpose of this Section 3.2 is to determine the purchase
price to be paid by Purchaser under this Agreement. Accordingly, any
determination pursuant to subsection (c) above made by the Firm shall not be
deemed to be an indemnification by either Sellers or Purchaser, as the case may
be, pursuant to Article 15, nor subject to the limitation on indemnities set
forth in Section 15.4 hereof.
3.3 Allocation of Purchase Price. Prior to the Closing, Sellers and
Purchaser shall mutually agree to the allocation of the Initial Purchase Price
(plus those Assumed Liabilities reflected on the Reference Balance Sheet that
constitute liabilities for federal income tax purposes) among the Assets and the
non-competition provision set forth in Section 14.1 in accordance with Section
1060 of the Code (the "Allocation of Purchase Price"). Within thirty (30) days
after the Adjusted Purchase Price is finally determined, Sellers and Purchaser
shall adjust the Allocation of Purchase Price to reflect any adjustment to the
Initial Purchase Price pursuant to Section 3.2 and the Assets and Assumed
Liabilities as finally determined and reflected on the Closing Net Working
Capital Statement. In the event of any such adjustment to the Purchase Price,
such adjustment shall be allocated on a dollar for dollar basis to the
particular class of Asset or Assumed Liabilities that gave rise to such
adjustment (the "Final Allocation"). Sellers and Purchaser shall prepare and
file Form 8594 or such other form or statement as may be required by Law, and
any comparable state or local income tax form in a manner consistent with the
Final Allocation. Sellers and Purchaser shall
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adhere to the Final Allocation for all Tax-related purposes including any
federal, foreign, state, county or local income and franchise Tax Return filed
by them after the Closing Date, including the determination by Sellers of
taxable gain or loss on the sale of the Assets and the determination by
Purchaser of its tax basis with respect to the Assets.
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
4.1 Assumption of Certain Liabilities and Obligations by Purchaser.
Except as otherwise provided in Section 4.2 hereof, from and after the Closing
Date, Purchaser shall, without any further responsibility or liability of, or
recourse to, Sellers, or any of their respective directors, shareholders,
officers, employees, agents, consultants, representatives, Affiliates,
successors or assigns, absolutely and irrevocably assume and be liable and
solely responsible for the following liabilities, claims, obligations, costs and
expenses of any kind or nature whatsoever, whether arising before or after the
Closing and whether known or unknown, fixed or contingent, matured or unmatured
("Liabilities"), arising out of or relating to:
(a) the ownership, use or possession of the Assets after the
Effective Time, including any claim that a product used, manufactured, sold or
offered for sale by Purchaser after the Effective Time infringes any patent,
copyright, trademark or other intellectual property right;
(b) the Business or the conduct of the Business after the
Effective Time;
(c) Liabilities with respect to employee and employee benefits
matters assumed by Purchaser under Article 5;
(d) Liabilities under or with respect to the Contracts,
Intellectual Property Licenses and Permits (other than to the extent that such
Liabilities are attributable to or accrue or arise from any act or omission
prior to the Effective Time);
(e) Liabilities with respect to the Business set forth on the
Reference Balance Sheet or which arise after the Reference Date in the ordinary
course and are reflected on the Final Closing Net Working Capital Statement; and
(f) Liabilities for Taxes allocated to Purchaser pursuant to
Sections 14.2(b) and 14.2(c).
The Liabilities described in the foregoing clauses (a) through (f) are referred
to collectively as the "Assumed Liabilities").
4.2 Excluded Liabilities. Except as expressly provided in Section 4.1,
Purchaser shall not assume (by virtue of this Agreement, including Section 2.1,
or the transactions contemplated hereby or otherwise), and shall not have any
liability or responsibility for, any Liabilities relating to the Business, the
Assets or any Seller; provided, however, it is understood and agreed that those
Liabilities specifically addressed in the following clauses of this Section 4.2
or elsewhere in this Agreement, shall be
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handled as set forth therein. All such Liabilities (collectively, the "Excluded
Liabilities") are, and at all times shall remain, the Liabilities of Sellers and
shall include the following Liabilities:
(a) any Liabilities for Taxes allocated to Sellers pursuant to
Sections 14.2(a) and 14.2(c);
(b) any Liabilities under any agreement for indebtedness for
borrowed money to third parties;
(c) all Liabilities with respect to employee and employee benefit
matters that are not assumed by Purchaser under Article 5;
(d) except with respect to matters relating in any way to
Environmental Laws, Environmental Permits, or Hazardous Materials, which are
addressed exclusively by Sections 4.2(e), and except for Liabilities with
respect to employee and employee benefits matters that are assumed by Purchaser
under Article 5, all Liabilities arising as a result of litigation or claims
(including without limitation written notices of events giving rise to bodily
injury or death) arising from acts or omissions of Sellers or their Affiliates
or the operation of the Business prior to the Effective Time including, without
limitation, Liabilities related to or arising from bodily harm, death or
personal injury arising from or related to any product shipped, distributed or
sold by, or any service provided by, Sellers or their Affiliates prior to the
Closing Date; provided, however, that, notwithstanding anything herein to the
contrary, all Product Warranty Claims to the extent reserved for, or reflected
on the Final Closing Net Working Capital Statement shall be Assumed Liabilities
and Losses for purposes of Section 15.2(c).
As used herein, "Product Warranty Claims" shall mean all Liabilities for
consequential, incidental and liquidated damages as well as lost profits, other
monetary amounts due to customers of the Business with respect or related to
defects in goods and equipment delivered to customers or services provided to
customers, or goods and equipment in transit to customers, in each case,
occurring prior to the Closing Date, in connection with the return, replacement
and/or repair or rework of goods and equipment and/or services, whether pursuant
to (i) product warranties extended by Sellers or their Affiliates in respect of
products delivered to the customers of the Business prior to the Closing Date or
(ii) product warranties or obligations implied or provided by applicable Law
including by operation of Law, in respect of products delivered to customers of
the Business prior to the Closing Date, and whether or not such involve any
misrepresentation or breach of warranty by Sellers or their Affiliates;
(e) subject to Section 15.5(d), any Environmental Liabilities
arising out of, or resulting from, the operation of the Business prior to the
Effective Time (the "Excluded Environmental Liabilities");
(f) any Liabilities under Contracts, Intellectual Property
Licenses and Permits to the extent arising out of or relating to a breach or
default thereof by Sellers prior to the Effective Time;
(g) except with respect to matters relating in any way to
Environmental Laws, Environmental Permits, or Hazardous Materials, which are
addressed exclusively by Sections
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4.2(e), Liabilities with respect to all pending suits, actions, arbitrations,
administrative or other proceedings, or governmental investigations;
(h) all trade payables of the Business; and
(i) any Liabilities to the extent relating to the Excluded Assets.
5. EMPLOYEE AND EMPLOYEE BENEFITS MATTERS.
5.1 Scope of Article. This Article 5 contains the covenants and
agreements of the parties with respect to (a) the status of employment of the
employees of Sellers or their Affiliates, employed in the Business as of the
Closing Date ("Employees"), and (b) the employee benefits and employee benefit
plans provided or covering such Employees and former employees of Sellers or
their Affiliates who terminated employment with Sellers or their Affiliates
while employed in the Business or retired from the Business ("Former
Employees"). Nothing herein expressed or implied confers upon any Employee or
Former Employee any rights or remedies of any nature or kind whatsoever under or
by reason of this Article 5.
5.2 US Employees. This Section 5.2 applies only to Employees and Former
Employees employed or previously employed by the Business in the United States
(the "US Business"). Set forth in Schedule 5.2 is a list of all Employees of the
US Business as of a date not more than thirty (30) days prior to the date
hereof.
5.2.1 Employment.
(a) Offer of Employment. Purchaser shall offer employment
effective as of the Closing Date to all Employees located in the United States
("US Employees") and who are employed by Sellers immediately prior to the
Closing Date. A US Employee who is absent immediately prior to the Closing Date
due to vacation, holiday, authorized leave of absence, illness, injury or
short-term or long-term disability shall be considered to be employed
immediately prior to the Closing Date. Purchaser shall initially provide US
Employees with a position with substantially similar requirements and
responsibilities and, for at least one (1) year after the Closing Date, with
base pay that is no less than that provided by the Sellers on the day before the
Closing Date. US Employees who become employed by the Purchaser through the
acceptance of an offer of employment effective as of the Closing Date shall be
referred to as "Transferred US Employees" and shall become employees of the
Purchaser as of the Closing Date.
(b) Purchaser Benefit Plans. Following the Closing Date,
Transferred US Employees will be eligible to participate, to the same extent as
similarly situated Purchaser employees, in Purchaser's "employee benefit plans"
as defined in Section 3(3) of ERISA or other plans, arrangements or agreements
providing benefits to employees (or to any dependent or beneficiary thereof) of
Purchaser, including without limitation, all vacation, holiday, cafeteria,
medical, disability, stock purchase, policies, programs, practices or
arrangements (each a "Purchaser Benefit Plan"). Transferred US Employees shall,
as soon as administratively feasible after the Closing Date, be enrolled in the
Purchaser Benefit Plans, and until such enrollment date,
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shall continue to participate in Sellers' Welfare Benefit Plans to the extent,
if any, as provided in Section 5.2.5(a). The Purchaser Benefit Plans shall (i)
credit all service with Sellers for purposes of eligibility and participation;
(ii) waive any pre-existing condition limitation or exclusion or any
actively-at-work requirement; (iii) credit all payments made by a Transferred US
Employee for healthcare expenses during the current plan year for purposes of
deductibles, co-payments and maximum out-of-pocket limits, but only to the
extent such Transferred US Employee provides written evidence of such payments.
In addition, Transferred US Employees shall be eligible, in the same manner as
Purchaser's similarly situated employees, for option grants under Purchaser's
employee stock option plans, as approved from time to time in the discretion of
Purchaser's Board of Directors, or a committee thereof, and subject to the terms
and conditions of such plans.
(c) Work Location. If any offer of employment by Purchaser under
this Section 5.2 requires a US Employee's principal place of business to be more
than fifty (50) miles from the US Employee's current principal place of business
with Sellers prior to the Closing Date, Purchaser acknowledges and agrees that
if such Employee refuses to accept such offer, Purchaser shall be liable for the
severance pay benefit described in Section 5.2.1(d) to which such Employee may
be entitled under Sellers' severance plan or applicable law.
(d) Severance Benefits. If Purchaser terminates the employment of
any Transferred US Employee within one (1) year after the Closing Date, for any
reason other than cause, Purchaser shall pay such Transferred US Employee a
severance benefit, consisting of notice pay, salary continuation and continued
benefits and insurance coverage that shall in no event be less than, or paid
later than, the severance benefit, if any, to which such Transferred US Employee
would have been entitled if Sellers' severance plans, as in effect as of the
Closing Date, applied to such termination of employment. For purposes of this
Section 5.2.1(d), service with both Sellers and Purchaser shall be taken into
account in computing the amount of such benefit. After the one year anniversary
of the Closing Date, Purchaser shall have no obligation to offer or pay any
severance benefit to a Transferred US Employee, except as may be required by
Purchaser's then applicable severance plan, if any, covering similarly situated
employees of the Purchaser.
(e) Employee Claims. Purchaser shall be responsible for, and shall
indemnify and hold harmless, Sellers against any liability, claim or obligation
(including reasonable attorney's fees) relating to or arising out of any offer
of employment by Purchaser or the employment or termination of employment of
Employees on or after the Closing Date, except to the extent, that such
liability, claim or obligation is based on obligations or liabilities of Sellers
that constitute Excluded Liabilities.
5.2.2 Pension Plan. Sellers shall amend the Honeywell Retirement
Earnings Plan ("Sellers' Pension Plan") to fully vest all Transferred US
Employees in their accrued benefit under Sellers' Pension Plan as of the Closing
Date. Sellers shall retain liability for benefits accrued by Transferred US
Employees under Sellers' Pension Plan as of the Closing Date.
5.2.3 Savings Plans. Sellers shall amend the Honeywell Savings and
Ownership Plan I ("Sellers' Savings Plan") to provide that Transferred US
Employees shall fully vest in
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their Sellers' Savings Plan accounts (the "Accounts") as of the Closing Date.
Purchaser shall maintain or establish as of the Closing Date one or more
tax-qualified defined contribution savings plan or plans ("Purchaser's Savings
Plan") which provides each Transferred Employee with eligibility, vesting,
contribution and benefit payment provisions that are the same as that provided
to other similarly situated employees of Purchaser. Transferred US Employees
with account balances under the Sellers' Savings Plan shall be eligible to
effect a direct rollover (as described in Section 401(a)(31) of the Code), in
accordance with the rollover provisions of Purchaser's Savings Plan and such
plan's applicable rollover policies, of all or a portion of any such Transferred
US Employee's balance under the Sellers' Savings Plan, including notes or other
evidence of indebtedness relating to an outstanding loan to the Transferred US
Employee from the Sellers' Savings Plan, provided, however, that rollovers of
after-tax employee contributions to Purchaser's Savings Plan shall not be
permitted. Purchaser's Savings Plan shall (i) permit immediate participation and
eligibility for employer contributions for all Transferred US Employees as of
the Closing Date; (ii) credit all service with Sellers for purposes of the
eligibility, participation, vesting and benefit accrual requirements of
Purchaser's Savings Plans; and (iii) meet all requirements for a qualified cash
or deferred arrangement under Section 401(k) of the Code.
5.2.4 Retiree Health and Life Insurance Benefits. Purchaser shall
not assume any liabilities or obligations of Sellers for benefits payable to
Transferred US Employees under any of Sellers' retiree medical benefit or
retiree life insurance benefit programs.
5.2.5 Employee Welfare Plans.
(a) Purchaser shall, as of the Closing Date, and solely in
accordance with the terms and conditions of the Transition Services Agreement,
assume and pay all liabilities and obligations of Sellers for the benefits
payable or to become payable to Transferred US Employees and their beneficiaries
under the medical, dental, life insurance, disability, vacation, cafeteria,
flexible spending, dependent care and other welfare benefit plans and programs
covering Employees identified in Schedule 6.15(b) (collectively "Sellers'
Welfare Benefit Plans"); provided, however, that Purchaser shall not assume any
liability or obligation of Sellers for medical, dental, or life insurance
benefit claims of Transferred US Employees incurred prior to the Closing Date.
For purposes of this Section 5.2.5, a medical or dental benefit claim shall be
deemed to be incurred when the services giving rise to the claim are performed
and not when the Employee is billed for such services or submits a claim for
benefits.
(b) Purchaser shall (i) cover the Transferred US Employees under a
medical and dependent care flexible spending account plan sponsored by Purchaser
("Purchaser's Section 125 Plan") effective as of the Closing Date, (ii)
recognize the elections that each such Transferred US Employee had in effect
under Sellers' Section 125 Plan for the calendar year in which such Transferred
US Employee becomes covered under Purchaser's ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, (▇▇▇) cause
Purchaser's Section 125 Plan to assume the account balances associated with each
Transferred US Employee's flexible spending accounts under the plan of the
Sellers covering each such Transferred US Employee up to the annual contribution
limits provided under Purchaser's Section 125 Plan, and (iv) be responsible for
reimbursement of all previously unreimbursed eligible medical and dependent care
claims incurred by Transferred US Employees in such calendar year. Sellers shall
provide, or cause Sellers' Section 125 Plan administrator to
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provide, Purchaser with all data necessary, on a timely basis, for Purchaser to
provide the benefits required under this Section 5.2.5(b).
5.2.6 Other Compensation Arrangements. From and after the Closing
Date, Purchaser shall assume and pay when due all liabilities and obligations of
Sellers relating to accrued vacation of Transferred US Employees as of the
Closing Date. After the Closing Date, vacation will accrue in accordance with
Purchaser's vacation policies as provided in Section 5.2.1(b) above.
5.2.7 Severance and WARN Act Liability. Purchaser agrees to pay and
be responsible for all liability, cost or expense for severance benefits that
arise from the termination of employment of any Transferred US Employee by
Purchaser on or after the Closing Date to the extent contemplated by Section
5.2.1(d) of this Agreement. Purchaser agrees to pay and be responsible for all
liability, cost, expense and sanctions resulting from any failure to comply with
the WARN Act, and the regulations thereunder, in connection with the
consummation of the transactions described in or contemplated by this Agreement.
5.2.8 Health Care Continuation Coverage. Purchaser agrees to provide
Transferred US Employees and their covered beneficiaries with continuation
coverage required by Section 4980B of the Code or Sections 601 through 608 of
ERISA ("COBRA") as a result of "qualifying events" (as defined in Section 4980B
of the Code) which occur on or after the Closing Date.
5.2.9 Cooperation. Sellers and Purchaser shall cooperate with each
other with respect to any employment-related charge, complaint, investigation or
inquiry of any kind relating to any Employee or Former Employee, including but
not limited to, providing copies of documents and making witnesses available.
Sellers and Purchaser agree that Purchaser shall reinstate any Former Employee
if Purchaser consents to such reinstatement (which consent shall not be
unreasonably withheld) or if reinstatement is ordered by a court or governmental
agency; provided, that Sellers must make a good faith effort to defend against
any such charge, complaint, investigation or inquiry.
5.2.10 IRS Form W-2. The parties agree that they shall comply with
the alternative procedure of Section 5 of IRS Revenue Procedure 96-60, 1996-2
C.B. 399 and Section 5 of IRS Procedure 99-50, 1999-52 I.R.B. 757, and that
Purchaser shall prepare and file Forms W-2 for the Employees for the year in
which the Closing occurs and Sellers shall be relieved of preparing IRS Forms
W-2 for the Employees for the year in which the Closing occurs.
5.2.11 Workers' Compensation. Purchaser shall be responsible for all
liabilities and obligations for workers' compensation claims relating to any
Transferred US Employee which arise out of, or relate to, occurrences on or
after the Closing Date.
5.3 Non-US Employees. This Section 5.3 applies only to Employees and
Former Employees employed by or previously employed in the Business outside of
the United States (the "Non-US Business"). Set forth in Section 1.3(b) is a list
of all Employees of the Non-US Business as of the date hereof.
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5.3.1 Scope of Section. This Section 5.3 contains covenants and
agreements of the parties on and as of the Closing Date with respect to:
(a) the status of employment of the Employees employed by Sellers
and their Affiliates in the Non-US Business, whether hourly or salaried, and who
are actively at work on the Closing Date, or who are absent on the Closing Date
due to vacation or holiday or other leave, whether paid or unpaid, or due to
illness (the "Non-US Employees") upon the sale of the Business to Purchaser; and
(b) the Non-US Benefit Plans provided or covering such
Non-US Employees.
5.3.2 Employment and Other Employee Matters.
(a) The parties understand and agree that wherever legally
permissible or required, the Non-US Employees shall become employees of
Purchaser by operation of applicable law or regulations ("Transfer Provisions")
or pursuant to the terms of any necessary transfer agreement relating to that
jurisdiction. Where such transfer is not possible in the manner described in the
preceding sentence, Purchaser shall offer the Non-US Employees employment on
terms and conditions consistent with those described in Section 5.3.2(b) below
and as required by law to effectuate their employment with the Purchaser
effective upon the Closing Date.
(b) The parties agree that the contracts of employment of Non-US
Employees will have effect from the Closing Date as if originally made between
Purchaser and the Non-US Employees with positions, duties, responsibilities,
compensation, employee benefits, and other terms and conditions of employment,
including those arising from collective labor agreements, which are not less
favorable in any respect than those in effect with Sellers immediately before
the Closing Date and for the period as required by applicable Law or one (1)
year, if longer. In computing the amount of entitlement under all terms and
conditions of employment, including compensation and employee benefits, service
with both Sellers and Purchaser shall be taken into account. Except as set forth
in the Transition Services Agreement, each Non-US Employee shall cease to be an
active participant in all Sellers' Non-US Benefits Plans on the Closing Date.
(c) For the avoidance of doubt, Purchaser acknowledges that it
shall be solely responsible for any amounts becoming payable to Non-US Employees
under any Laws as a result of their being dismissed by Purchaser at any time on
or after the Closing Date, notwithstanding that such amount may be calculated
under the Laws by reference to periods of employment with Sellers as well as
periods of employment with Purchaser.
(d) Purchaser shall indemnify Sellers against all losses, costs,
liabilities, expenses, actions, proceedings, claims and demands arising out of
or in connection with:
(i) any change in the working conditions of the Non-US
Employees occurring on or after the Closing Date (including, without limitation,
any change in the principal work location of the Non-US Employees by the
Purchaser);
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(ii) the change of employer occurring by virtue of this
Agreement being significant and detrimental to any of the Non-US Employees;
(iii) the employment by Purchaser on or after the Closing Date
of the Non-US Employees other than on terms at least as favorable as those
enjoyed immediately prior to the Closing Date;
(iv) any claim by a Non-US Employee (whether in contract or
in tort or under statute for any remedy including, without limitation, for
breach of contract, unfair dismissal, redundancy, statutory redundancy, equal
pay, sex, race or disability discrimination, unlawful deductions from wages or
for breach of statutory duty or of any nature) as a result of anything done or
omitted to be done by Purchaser; or
(v) the refusal of any Non-US Employee to accept employment
with Purchaser if such refusal is attributable to the failure of Purchaser to
offer employment in accordance with Section 5.3.
(e) If Purchaser terminates the employment of any Non-US Employee
within one (1) year after the Closing Date, Purchaser shall pay such Non-US
Employee a redundancy or severance benefit that shall in no event be less than,
nor paid later than, the benefit, if any, to which such Non-US Employee would
have been entitled under Sellers' redundancy settlement policy, as in effect as
of the Closing Date, if such policy applied to such termination of employment
or, if greater, the redundancy or severance benefit required by Law or a
collective bargaining agreement. After the one-year anniversary of the Closing
Date, Purchaser shall have no obligation to offer or pay any severance benefits
to a non-US Employee, except as may be required by Purchaser's then-applicable
severance plans, if any, covering similarly situated employees of the Purchaser,
or by Law or a collective bargaining agreement.
(f) Purchaser declares to the Sellers that it will accept the
benefit and the burden of the collective bargaining agreements covering Non-US
Employees, to the extent disclosed to Purchaser prior to the date hereof, as if
such agreements had been made by Purchaser and not by Sellers.
(g) In the event Laws require that Purchaser or its Affiliates
assume liabilities for any benefits accrued for a Non-US Employee under any
Non-US Benefit Plan, Seller or Seller's applicable benefit plan shall pay to, or
transfer to, Purchaser or Purchaser's applicable benefit plan the current amount
of assets, if any, held in respect to such of such Non-US Employee under such
Non-US Benefit Plan. Following the transfer, as described above, Sellers and the
related Seller Non-US Benefit Plan will be discharged from any further liability
towards such Non-US Employee or towards Purchaser with respect to such
transferred benefit.
(h) The Non-US Employees will cease active participation in any
stock option, stock purchase or other stock plan of Sellers as of the Closing
Date. If required by Law, each Non-US Employee who either was immediately prior
to the Closing Date a member of such a plan or who, but for Closing, would have
become eligible to become a member after the Closing Date of such a plan will be
offered membership in a Purchaser's replacement plan with
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effect from the Closing Date or such later date as the employee would have
become eligible for Sellers' plan had the Closing not occurred.
(i) From and after the Closing Date, Purchaser shall assume and
pay when due all liabilities and obligations of Sellers relating to accrued
vacation of Non-US Employees as of the Closing Date.
(j) With respect to the calendar year in which the Closing Date
occurs, Purchaser shall be responsible for and pay a cash incentive compensation
award to each Non-US Employee who is eligible for an award under Sellers'
incentive compensation plans for such year which is at least equal to the
incentive compensation award such Non-US Employee would have received under
Sellers' incentive compensation plans immediately prior to the Closing Date, had
such Non-US Employee remained employed by the Sellers through the end of the
calendar year in which the Closing Date occurs.
(k) To the extent permitted by Law, Purchaser shall give to
Sellers, and Sellers shall give to Purchaser, on a timely basis all requisite
and pertinent information which Sellers and Purchaser, respectively, may require
in order to comply with their respective obligations with respect to the Non-US
Employees.
(l) Purchaser shall comply with all obligations under applicable
National Laws to provide information to Sellers for onward transmission to
Non-US Employees or their representatives and/or to provide such information
directly to the Non-US Employees or their representatives.
6. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Purchaser as
follows:
6.1 Due Organization. Each of the Sellers is a legal entity of the type
described in Schedule 6.1, duly organized, validly existing and in good standing
under the Laws of the jurisdiction indicated in Schedule 6.1. Each of the
Sellers is duly qualified to transact business in any jurisdiction where the
ownership or leasing of the Assets and the conduct of the Business require them
to be so qualified except where the failure to be so qualified would not,
individually or in the aggregate with other such failures, reasonably be
expected to have a Material Adverse Effect. Sellers have all requisite corporate
power and authority to conduct the Business as it is now being conducted by them
and to enter into and perform their respective obligations under this Agreement
and the Ancillary Agreements to which they are contemplated to be parties.
6.2 Authority. The execution, delivery and performance of this Agreement
and each of the Ancillary Agreements contemplated to be executed and delivered
at the Closing by each Seller has been duly and validly authorized by all
necessary corporate action on the part of the applicable Seller or Sellers. Upon
execution by the relevant Seller, this Agreement shall have been duly and
validly executed and delivered by such Seller and shall be enforceable against
such Seller in accordance with its terms except to the extent that (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization,
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moratorium or other similar Laws relating to creditors' rights generally and is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (ii)
specific performance may not be available in certain jurisdictions outside the
US (the foregoing clauses (i) and (ii), collectively, the "Enforceability
Exceptions"). As of the Closing Date, each of the Ancillary Agreements
contemplated to be executed and delivered hereunder by a Seller at the Closing
will have been duly and validly executed and delivered by the applicable Seller
or Sellers and will be enforceable against the applicable Seller or Sellers in
accordance with its terms, except to the extent of the Enforceability
Exceptions.
6.3 No Conflict of Organizational Documents and Laws. The consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements
will not result in (a) the breach of any term or provision of the charter,
articles or certificate of incorporation or any other organizational document or
bylaws of any Seller, or (b) except as set forth in Schedule 6.3, assuming
satisfaction of all Approval requirements referred to in Section 6.4, the
violation by any Seller of any Law applicable to such Seller, except in the case
of clause (b) above, for such breaches or violations, if any, which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or preclude Sellers in any material respect from consummating the
transactions contemplated by this Agreement.
6.4 Approvals. No Approval is necessary to make this Agreement or any of
the Ancillary Agreements contemplated to be executed and delivered by any Seller
at the Closing an enforceable obligation of such Seller to permit such Seller or
to consummate the transactions contemplated hereunder or thereunder without
violating any Law, except for (i) the filing under the H-S-R Act and the
expiration or termination of all applicable waiting periods; (ii) the approval,
consent or clearance (other than as provided in clause (i)) of the relevant
Governmental Authorities to the extent required by Law in the jurisdictions
where Assets are located ("Other Merger Approvals"); and (iii) Approvals under
or in respect of Permits.
6.5 Financial Statements.
(a) Schedule 6.5 sets forth the unaudited, pro forma statement of
net assets of the Business as at May 31, 2003, and the notes relating thereto
(the "Reference Balance Sheet") and the unaudited, pro forma results of
operations of the Business for the twelve-month periods ended December 31, 2001
and December 31, 2002, respectively, and the notes relating thereto (the "Income
Statements"). As used herein, (i) "Reference Date" means May 31, 2003; and (ii)
"Financial Statements" means collectively the Reference Balance Sheet and the
Income Statements and the notes relating thereto. The Financial Statements
present fairly in all material respects the financial position of the Business
as of May 31, 2003 as well as the operating results of the Business for the
twelve-month periods ended December 31, 2001 and December 31, 2002, in
conformity with the accounting policies, practices and procedures of the
Business as set forth in the notes to the Financial Statements in Schedule 6.5;
provided, however, the Financial Statements do not reflect Excluded Liabilities
or Excluded Assets.
(b) Accounts Receivable. All accounts receivable of the Business
(including those accounts receivable shown on the Reference Balance Sheet that
have not yet been collected
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and those accounts receivable that have arisen since the Reference Date and have
not yet been collected) represent valid obligations of customers of the Business
arising from bona fide transactions entered into in the ordinary course of
business. None of such accounts receivable are subject to any claim of offset or
recoupment or counterclaim, and Sellers have no knowledge of any facts that
would be likely to give rise to any such claim. Other than product warranty
claims arising in the ordinary course of business, no amount of such accounts
receivable is contingent upon the future performance by Sellers of any
obligation and, other than as reflected on the Reference Balance Sheet or the
Final Closing Net Working Capital Statement, no agreement for deduction or
discount has been made with respect to any such accounts receivable.
(c) Inventories. The inventories shown on the Reference Balance
Sheet or thereafter acquired by Sellers with respect to the Business consist of
items of a quantity or quality usable or salable in the ordinary course of
business, as the Business is currently being conducted. Since the Reference
Date, Sellers have continued to replenish inventories in a normal and customary
manner consistent with past practices. Sellers have not received notice that
they will experience in the foreseeable future any difficulty in obtaining, in
the desired quantity and quality and at a reasonable price and upon reasonable
terms and conditions, supplies or component products required for the
manufacture, assembly or production of the products sold by the Business. The
value at which inventories are carried reflect the Accounting Principles. Due
provision has been made on the books of the Business for all slow-moving,
obsolete or unusable inventories in accordance with the Accounting Principles.
6.6 Absence of Certain Changes. Except as set forth on Schedule 6.6,
since the Reference Date, (i) Sellers have conducted the Business in all
material respects in the ordinary course of business, (ii) there has been no
change in the financial position or results of operations of the Business that
has had or is reasonably likely to have a Material Adverse Effect and (iii)
neither Seller, with respect to the Business, has:
(a) to Sellers' Knowledge, suffered any physical damage,
destruction or casualty loss in an amount exceeding $500,000 in the aggregate
affecting the Assets or the Business which is not covered by insurance;
(b) except as disclosed in Schedule 8.1, made or granted any
material general wage or salary increase with respect to employees of Sellers
employed in the Business or made or granted any material increase in the
payments of benefits with respect to such employees under any bonus, insurance,
pension or other employee benefit plan or program, in each case other than in
the ordinary course of business or pursuant to existing agreements or
commitments or benefit plans or as required by Law;
(c) to Sellers' Knowledge, waived any rights under any Contract or
Intellectual Property License which waiver, individually or in the aggregate
with other such waivers, has had or is reasonably likely to have a Material
Adverse Effect;
(d) subjected any material Assets to any Encumbrance (other than
Permitted Liens);
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(e) sold, transferred, or otherwise disposed of any material
assets, properties or rights of the Business, except in the ordinary course of
business;
(f) made any loans or advances to, or guarantees for the benefit
of, any Person (for the avoidance of doubt, such matters shall not include
Accounts Receivable outstanding in the ordinary course of business); or
(g) committed to do any of the foregoing.
6.7 Title to Assets; Personal Property.
(a) Except as set forth in Schedule 6.7, Sellers have good and
marketable title or its equivalent to all of their owned Personal Property, the
Inventory and the Accounts Receivable (and a valid leasehold interest in the
Personal Property leased to them and a valid right to use their customer-owned
tooling), free and clear of all Encumbrances (other than Permitted Liens).
Except as set forth in Schedule 6.7, Sellers' Personal Property has been
maintained in all material respects in accordance with normal industry practice
and, taken as a whole, is in good operating condition and repair in all material
respects, normal wear and tear excepted.
(b) At the Closing, except for any Assets subject to Section 2.3,
Sellers shall convey to Purchaser good and marketable title or its equivalent
to, or a valid leasehold interest in or right to use, the Assets, free and clear
of all Encumbrances (other than Permitted Liens).
6.8 Real Property.
(a) Other than the ▇▇▇▇▇▇▇▇▇▇ Facility, the ▇▇▇▇▇▇ Facility and
the Plymouth Facility, there is no real property owned by Sellers and used or
held for use in the Business.
(b) There are no leases, subleases, licenses or other occupancy
agreements related to the real property of Sellers used or held for use in the
Business.
(c) Except as set forth on Schedule 6.8(c), all buildings,
fixtures, improvements and structures located on and all appurtenances belonging
to the ▇▇▇▇▇▇▇▇▇▇ Facility have been maintained in all material respects in
accordance with normal industry practice and, taken as a whole, are in good
condition and repair in all material respects, normal wear and tear excepted.
6.9 Contracts.
(a) Schedule 6.9 lists as of the date of this Agreement each
Contract to which any Seller is a party and which meets any of the following
criteria (each, a "Material Contract"):
(i) involves the purchase or sale by the Business of goods
or services in excess of $350,000 annually following the Closing and is not
terminable by Sellers without material penalty on less than thirty (30) days
notice;
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(ii) contains commitments of suretyship, guaranty or
indemnification in excess of $100,000 annually by the Business following the
Closing (except for guarantees, warranties and indemnities in connection with
the sale of goods and/or services of the Business in the ordinary course of
business);
(iii) contains a financing commitment for the lending of funds
from the Business to any Person (other than credit terms offered to customers in
connection with the sale of goods and/or services of the Business in the
ordinary course of business) following the Closing;
(iv) contains a partnership agreement or joint venture
agreement with a third party;
(v) contains confidentiality or non-competition restrictions
binding on a Seller or contains exclusive distribution, supply or manufacturing
agreements that are not terminable by Sellers without material penalty on less
than thirty (30) days notice;
(vi) if terminated prior to the expiration of its term could
reasonably be expected to have a Material Adverse Effect; or
(vii) involves the payment or receipt by the Business of more
than $350,000 annually following the Closing.
(b) Sellers have delivered to Purchaser a true and complete copy
of each Material Contract. Except as otherwise indicated in Schedule 6.9 as of
the date of this Agreement:
(i) each such Material Contract is in full force and effect,
and neither Sellers, nor, to Sellers' Knowledge, any other party to any of the
Material Contracts is in material default thereunder, or has since January 1,
2003 given notice of default to any other party thereunder;
(ii) to the Knowledge of Sellers, no condition exists which
with notice or lapse of time or both would constitute a default by any Seller
under any Material Contract, except where such default, individually or in the
aggregate with other such defaults, would not reasonably be expected to have a
Material Adverse Effect; and
(iii) no Consent is required under any Material Contract in
order to consummate the transactions contemplated hereby.
(c) Except as disclosed in Schedule 6.9, as of the date of this
Agreement no customer or supplier with respect to any Material Contract has
indicated in writing to any Seller that it intends to stop or materially
decrease the rate of business done with the Business or desires to materially
renegotiate its contract or current arrangement with the Business.
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6.10 Intellectual Property.
(a) Schedule 6.10 lists all of the following Transferred
Intellectual Property of Sellers as of the date of this Agreement: (i) the
Patents; (ii) the Trademarks; (iii) registered copyrights used exclusively in
the Business; (iv) material unregistered copyrights; (v) Intellectual Property
Licenses (true and complete copies of which have been delivered or made
available to Purchaser); and (vi) any other material Transferred Intellectual
Property.
(b) Attachment 2.2(o)(3) to Schedule 2.2(o) lists all computer
software programs (other than commercially available off-the-shelf software
purchased or licensed for less than a total cost of $250,000 in the aggregate)
used in the Business, but which are not part of the Transferred Intellectual
Property.
(c) Except as disclosed in Schedule 6.10:
(i) Except for the Intellectual Property Licenses, Sellers
are the sole and exclusive owners and have good and marketable title to the
Transferred Intellectual Property, and the Transferred Intellectual Property is
free and clear of all Encumbrances (other than Permitted Liens).
(ii) To the Knowledge of Sellers, as of the date of this
Agreement, Sellers are conducting the Business in a manner which does not
violate any valid intellectual property right of another Person which violation,
individually or in the aggregate with other such violations, would reasonably be
expected to have a Material Adverse Effect.
(iii) Between January 1, 2001 and the date of this Agreement,
(x) there has been no Intellectual Property Claim received by Sellers, which
Intellectual Property Claim, individually or in the aggregate with other such
claims, would reasonably be expected to have a Material Adverse Effect, and (y)
no written claims have been made by Sellers that any activity of another Person
infringes upon any of the Transferred Intellectual Property.
(iv) To the Knowledge of Sellers, as of the date of this
Agreement there is no unauthorized use, disclosure, infringement or
misappropriation of the Transferred Intellectual Property or other intellectual
property rights primarily used in the Business by any third party, including,
without limitation, employees or former employees of Sellers.
(v) The Transferred Intellectual Property, together with the
computer software programs used in the Business listed on Attachment 2.2(o)(3)
to Schedule 2.2(o), shall, at the Closing, constitute all of the material
Intellectual Property as is sufficient to operate the Business as conducted at
the Closing including all Intellectual Property of Sellers used in the Business.
(vi) As of the date of this Agreement, (x) each Intellectual
Property License listed on Schedule 6.10 is, to Sellers' Knowledge, in full
force and effect, and neither Sellers nor, to Sellers' Knowledge, any other
party to any such Intellectual Property License is in default thereunder, or has
given notice of default to any other party thereunder; (y) to the Knowledge of
Sellers, no condition exists which with notice or lapse of time or both would
constitute a default by any Seller under any such Intellectual Property License;
and (z) no
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Consent is required under any such Intellectual Property License in order to
consummate the transactions contemplated hereby.
(d) Employee Invention Agreements. Except as set forth on Schedule
6.10, all current employees, contractors and consultants who have performed work
for the Business (including but not limited to all the Employees) and any other
third parties who have been involved in the development of any Intellectual
Property or other Asset, have executed and delivered invention assignment and
confidentiality agreements, in a form sufficient to vest all right, title and
interest in Sellers in and to all Intellectual Property in work product created
during the course of work in the Business ("Employee Inventions Agreements"),
and all current employees, contractors and consultants of the Business who have
access to confidential information or trade secrets authored, created or
developed in the conduct of the Business have executed nondisclosure agreements
containing reasonable restrictions on the use and disclosure of material
nonpublic information pertaining to the Business and Assets. Except as set forth
on Schedule 6.10, all former employees of the Business who have been involved in
the development of any material Intellectual Property or other Asset have
executed and delivered an Employee Inventions Agreement. Sellers have taken
reasonable steps to protect the secrecy and confidentiality of all material
nonpublic information pertaining to the Business and Assets.
(e) Nondisclosure Agreements. To Sellers' Knowledge, except
pursuant to a nondisclosure agreement, no third party is in possession of any
material confidential information pertaining to the design, development or
manufacture of any products in the Business or other Assets except for prototype
evaluation units provided by Sellers to potential customers.
(f) No Government Funding. Sellers have not granted to any
Governmental Authorities the right to make, have made, use or sell on an
exclusive basis any Transferred Intellectual Property pursuant to governmental
or third party funding, grants or resources which were utilized in connection
with designing, developing or manufacturing products in the Business or
otherwise in the conduct of the Business and no governmental entity has any
ownership or exclusive rights in or to any of the Assets or the Transferred
Intellectual Property. Schedule 6.10 lists the Transferred Intellectual Property
for which Sellers have granted rights to Governmental Authorities.
(g) Export Control Laws. With respect to the Business and the
Assets, the Sellers are in substantial compliance with, and at all times have
substantially complied with all U.S. export control laws and regulations,
including, without limitation, the U.S. Export Administration Regulations, the
Foreign Assets Control Regulations and the International Traffic in Arms
Regulations.
6.11 Litigation, Claims and Proceedings. Except as listed in Schedule
6.11, as of the date of this Agreement, there is no suit, action, arbitration,
administrative or other proceeding, or governmental investigation pending, or to
Sellers' Knowledge, threatened in writing against or related to the Assets, the
Business or the ▇▇▇▇▇▇▇▇▇▇ Facility or against any Seller which would materially
and adversely affect their ability to perform their obligations hereunder or
under any Ancillary Agreement, or which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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6.12 Environmental Conditions. To the Knowledge of Sellers, except as set
forth in Schedule 6.12, Sellers have had all material Environmental Permits
which are necessary to own and operate the Assets and to conduct the Business as
it is being conducted as of the date of this Agreement. To the Knowledge of
Sellers, Schedule 6.12 sets forth the following information as of the date of
this Agreement:
(a) A list and description of any evidence of soil or groundwater
contamination on or migrating from the ▇▇▇▇▇▇▇▇▇▇ Facility where such
contamination is required to be remediated by a Governmental Authority under
requirements imposed by any Environmental Law(s);
(b) A list of reports in Sellers' possession or control of
environmental audits or tests conducted by Sellers since January 1, 2001 of the
▇▇▇▇▇▇▇▇▇▇ Facility;
(c) A list of Environmental Claims, including claims made by third
parties for personal injury or property damage (other than workers' compensation
claims) received by Sellers currently pending in connection with the Business;
and
(d) A list of any CERCLA Section 104(e) requests since January 1,
2001 or information requests under analogous state statutes relating to
Hazardous Materials resulting from operations at the ▇▇▇▇▇▇▇▇▇▇ Facility.
6.13 Non-Environmental Permits. To the Knowledge of Sellers, except as
set forth in Schedule 6.13, Sellers have all material Non-Environmental Permits
which are necessary to own and operate the Assets and to conduct the Business as
it is being conducted as of the date of this Agreement. Except as set forth in
Schedule 6.13, each such Permit is in full force and effect, Sellers are in
substantial compliance with all of their obligations with respect thereto, and
(subject to the following sentence) no event has occurred which permits, or upon
the giving of notice or lapse of time or otherwise would permit, revocation or
early termination of any such Non-Environmental Permit. Except as set forth on
Schedule 6.13, no Consent is required under any such Non-Environmental Permit in
order to consummate the transactions contemplated hereby.
6.14 Compliance with Law. Except as set forth in Schedule 6.14, Sellers,
with regard to the Assets and Business, have not received written notice from
any Governmental Authority during the twelve (12) months preceding the date of
this Agreement that they are in default under or in violation of statutes, laws
or regulations of such Governmental Authority (collectively, "Laws") (other than
Environmental Laws) applicable to any of the Assets or to the operation of the
Business, except for any such default or violation which has been cured or
corrected or would not, individually or in the aggregate with such defaults or
violations, reasonably be expected to have a Material Adverse Effect.
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6.15 Labor and Employee Benefits.
(a) Schedules 6.15(a)(i) - (a)(iii) list the following as of the
date of this Agreement with respect to the US Employees and Non-US Employees of
Sellers and their Affiliates employed in the Business:
(i) All written arrangements that compel the employment of
any such employee at a salary in excess of $100,000 per annum or any Non-US
Employee and are not terminable on less than ninety (90) days' notice;
(ii) All material written agreements and letters of
understanding currently in effect with works councils, labor unions or
associations representing any such employees other than mandatory collective
bargaining agreements whether national or industry wide; and
(iii) Strikes related to the Business in which any such
employees are participating or have participated since January 1, 2002.
(b) Schedule 6.15(b) lists, as of the date of this Agreement, with
respect to the US Business, all employee benefit plans (as defined in Section
3(3) of ERISA) and all written bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, which are maintained, contributed to or sponsored by Sellers with
respect to any Employees or Former Employees of the US Business (collectively,
the "US Benefit Plans"). Sellers have made available to the Purchaser a complete
and accurate copy of each US Benefit Plan (or a written summary of any unwritten
US Benefit Plan) and the most recently distributed summary plan description and
summary of material modifications relating to a US Benefit Plan.
(c) Schedule 6.15(c) lists, as of the date of this Agreement, with
respect to the Non-US Business, all material written employee benefit plans
including disability benefits, leaving service and severance benefits,
retirement benefits, life, health, retirement indemnities, accident benefits as
well as any bonus plans, profit-sharing plans, seniority awards, stock option
plans, stock purchase plans, restricted stock, stock appreciation rights or
other forms of incentive compensation, deferred compensation or post-retirement
insurance, compensation or benefits, which are maintained, contributed to or
sponsored by Sellers or their Affiliates with respect to any Non-US Employees
other than any plan, program or arrangement required by national law or sector
collective bargaining agreement (the "Non-US Benefit Plans"). Sellers have made
available to the Purchaser a complete and accurate copy or summary of each
Non-US Benefit Plan (including all amendments thereto), and any summary
distributed to employees relating to each Non-US Benefit Plan.
(d) Except as otherwise stated in Schedule 6.15(b) and Schedule
6.15(c), to the Knowledge of Sellers:
(i) with respect to any US Benefit Plan subject to Title IV
of ERISA, (A) no liability has been incurred to the PBGC other than premium
payments pursuant to Sections 4006 and 4007 of ERISA; (B) no action has been
taken by Sellers or, to the Knowledge
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of Sellers, by the PBGC, to terminate such plan; and (C) no "reportable event,"
within the meaning of Section 4043 of ERISA, (other than an event for which the
requirement of notice has been waived by the PBGC) has occurred since January 1,
2001;
(ii) Sellers have not incurred material liability for any tax
imposed under Section 4975 of the Code or Part 5 Subtitle B of Title I of ERISA
with respect to any of the US Assumed Benefit Plans;
(iii) no US Benefit Plan which is a Pension Plan has incurred
an "accumulated funding deficiency," as such term is defined in such Section 412
of the Code and Section 302 of ERISA, whether or not waived;
(iv) none of the US Benefit Plans is a multiemployer plan
within the meaning of Section 3(37)(A) of ERISA;
(v) each US Benefit Plan which is a group health plan (as
such term is defined in Section 607 of ERISA) complies and has complied, in all
material respects, with the applicable requirements of Part 6 Subtitle B of
Title I of ERISA;
(vi) no suit, action, litigation, claim, complaint, charge,
proceeding, hearing, investigation or demand (excluding claims for benefits
incurred in the ordinary course of plan activities) which could result in a
material liability to Purchaser has been or is reasonably expected to be brought
against or with respect to any of the US Benefit Plans or the Non-US Benefit
Plans;
6.16 Insurance. Schedule 6.16 lists all material liability and casualty
insurance policies in force as of the date of this Agreement for the benefit of
Sellers with respect to the Business or the Assets, the premiums of which are
paid and will continue to be paid by Sellers through the Closing Date.
6.17 Taxes. (a) All material Tax Returns required to be filed by Sellers
prior to the Closing Date in respect of the Assets or the Business have been (or
will have been by the Closing Date) filed in a timely manner (taking into
account all extensions of due dates) and all such Tax Returns are (or will be)
true, correct and complete in all material respects, (b) all Taxes shown on such
Tax Returns have been paid when due, and (c) there are no unpaid Taxes with
respect to any period ending before the Closing Date which are or could give
rise to a lien on the Assets or the Business, except for current Taxes not yet
due and payable. Neither Seller has made any payments, is obligated to make any
payments, or is a party to any agreement that under any circumstances could
obligate such Seller to make any payments with respect to employees or
independent contractors of the Business that, to the extent such liability is an
Assumed Liability, will not be deductible by Purchaser under Section 280G of the
Code.
6.18 Sufficiency of Assets. The Assets (when taken together with the
Ancillary Agreements) constitute all of the assets materially necessary to
conduct the Business as the same was conducted immediately prior to the date of
this Agreement except for (i) the Excluded Assets and (ii) dispositions in the
ordinary course of business.
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6.19 Product Warranties. Except as set forth in Schedule 6.19, as of the
date of this Agreement no product manufactured, sold, licensed, leased or
delivered by the Business is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions with respect to
such products in any such sale, lease or license. Attached to Schedule 6.19 are
such standard terms and conditions for sale or lease for the Business
(containing applicable guaranty, warranty and indemnity provisions).
6.20 Finder's Fee. Sellers have done nothing to cause Purchaser to incur
any liability to any party for any brokerage or finder's fee or agent's
commission, or the like, in connection with this Agreement or any transaction
provided for herein.
6.21 WARRANTY DISCLAIMER. SELLERS AND PURCHASER AGREE THAT EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE ANCILLARY AGREEMENTS, SELLERS HAVE
NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES
OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, EITHER HEREIN OR OTHERWISE, AS TO
THE BUSINESS, THE ASSETS, THE ASSUMED LIABILITIES, THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY OTHER MATTER PERTAINING TO ANY OF THE FOREGOING. IN ANY EVENT,
SELLERS EXPRESSLY DISCLAIM AND MAKE NO REPRESENTATION OR WARRANTY TO PURCHASER
(1) AS TO MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
QUALITY, WITH RESPECT TO ANY OF THE TANGIBLE ASSETS BEING SO TRANSFERRED, OR AS
TO THE CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN
SECTION 2-312 OF THE NEW YORK UNIFORM COMMERCIAL CODE OR THE UNIFORM COMMERCIAL
CODE OF ANY OTHER APPLICABLE JURISDICTION OR IN ANY STATUTE APPLICABLE TO REAL
PROPERTY), (2) WITH RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE
DELIVERED TO OR MADE AVAILABLE TO PURCHASER, (3) WITH RESPECT TO THE VALIDITY OR
PATENTABILITY OF INTELLECTUAL PROPERTY, (4) WITH RESPECT TO THE SCOPE OF
INTELLECTUAL PROPERTY, (5) WITH RESPECT TO ANY WARRANTY AGAINST NONINFRINGEMENT
OF THIRD PARTY RIGHTS, INCLUDING INTELLECTUAL PROPERTY RIGHTS, OR (6) WITH
RESPECT TO ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO PURCHASER
EXCEPT, IN THE CASE OF CLAUSES (4), (5) AND (6) ONLY, AS EXPRESSLY COVERED BY A
REPRESENTATION OR WARRANTY CONTAINED IN SECTIONS 6.1 THROUGH 6.20 HEREOF.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, THE ASSETS ARE BEING SOLD, CONVEYED, TRANSFERRED,
ASSIGNED AND DELIVERED AND THE ASSUMED LIABILITIES ARE BEING ASSUMED "AS IS" AND
"WHERE IS". ANY COST ESTIMATES, PROJECTIONS OR OTHER PREDICTIONS, INCLUDING BUT
NOT LIMITED TO THOSE CONTAINED OR REFERRED TO IN THE SCHEDULES HERETO, ARE NOT,
AND SHALL NOT BE DEEMED TO BE, REPRESENTATIONS OR WARRANTIES OF SELLERS.
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7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Sellers as follows:
7.1 Due Organization. Purchaser is a corporation duly organized and
validly existing and in good standing under the Laws of Delaware and has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and all Ancillary Agreements to which it is
contemplated to be a party.
7.2 Authority. The execution, delivery and performance of this Agreement
and each of the Ancillary Agreements contemplated to be executed and delivered
at the Closing by Purchaser has been duly and validly authorized by all
necessary corporate action on the part of Purchaser. Upon execution by
Purchaser, this Agreement shall have been duly and validly executed and
delivered by Purchaser and shall be enforceable against Purchaser in accordance
with its terms, except to the extent of the Enforceability Exceptions. As of the
Closing Date, each of the Ancillary Agreements contemplated to be executed and
delivered hereunder by Purchaser at the Closing will have been duly and validly
executed and delivered by Purchaser and will be enforceable against Purchaser in
accordance with its terms, except to the extent of the Enforceability
Exceptions.
7.3 No Conflict of Organizational Documents and Laws. The consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements
will not result in (a) the breach of any term or provision of the charter,
articles or certificate of incorporation or any other organizational document or
bylaws of Purchaser, or (b) assuming satisfaction of all Approval requirements
referred to in Section 7.4, the violation by Purchaser of any Law applicable to
Purchaser, except in the cases of clause (b) above, for such breaches or
violations, if any, which would not reasonably be expected to preclude Purchaser
in any material respect from consummating the transactions contemplated by this
Agreement or to subject Sellers to any liability with respect thereto.
7.4 Approvals. No Approval is necessary to make this Agreement or any of
the Ancillary Agreements contemplated to be executed and delivered by Purchaser
at the Closing an enforceable obligation of Purchaser or to permit Purchaser to
consummate the transactions contemplated hereunder or thereunder without
violating any Law, except for (i) the filing under the H-S-R Act and the
expiration or termination of all applicable waiting periods; (ii) Other Merger
Approvals, if applicable; and (iii) as set forth in Schedule 7.4.
7.5 Litigation. As of the date of this Agreement there is no suit,
action, arbitration, administrative or other proceeding, or governmental
investigation, pending or, to Purchaser's knowledge, threatened in writing
against Purchaser or any of its Affiliates which would materially and adversely
effect its ability to perform its obligations hereunder, or under any Ancillary
Agreement.
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7.6 Finder's Fee. Purchaser has done nothing to cause Sellers to incur
any liability to any party for any brokerage or finder's fee or agent's
commission, or the like, in connection with this Agreement or any transaction
provided for herein.
7.7 Certain Acknowledgments and Other Matters.
(a) Purchaser acknowledges and agrees to the application of the
Accounting Principles used to prepare the Financial Statements.
(b) Purchaser has such knowledge and experience in financial,
technological and business matters that it is capable of evaluating the merits
and risks of purchasing the Business. Purchaser confirms that Sellers have made
available to Purchaser the opportunity to ask questions of the management
employees of the Business and to acquire such additional information about the
Business and the Assets as the Purchasers have requested and all such
information has been received.
7.8 Funds. As of the date of this Agreement, Purchaser has sufficient
funds or written commitments for sufficient funds (true and complete copies of
which have been delivered to Honeywell) and as of the Closing shall have
sufficient funds, to enable it to pay the Initial Purchase Price at the Closing
as contemplated herein. Immediately following the Closing after giving effect to
the transactions contemplated hereby, Purchaser will be Solvent.
8. PRE-CLOSING COVENANTS.
8.1 Conduct of Business. During the period from the date hereof until
the Closing, except (i) as otherwise contemplated by this Agreement or as
consented to in writing by Purchaser, and (ii) for any change described on
Schedule 8.1 or any of the other Schedules hereto (the exceptions described in
clauses (i) and (ii) of this sentence are referred to collectively as "Permitted
Changes"), Sellers shall:
(a) conduct the Business and utilize the Assets in the ordinary
course of business;
(b) not transfer, pledge, mortgage, encumber or otherwise grant
any rights in any Assets, except in the ordinary course of business or pursuant
to Contracts, Intellectual Property Licenses and Permits;
(c) use their reasonable efforts consistent with past practices to
maintain the Business intact, to retain their Employees, and to preserve the
good relations of its suppliers, customers and others with whom it has business
relations (it being agreed that nothing herein shall prohibit Sellers from
terminating the employment of any Employee if a Seller deems it appropriate
under the circumstances to do so);
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(d) not make or grant any general wage or salary increase with
respect to their employees or make any material increase in the payments of
benefits with respect to their employees under any bonus, insurance, pension or
other employee benefit plan or program, in each case other than in the ordinary
course of business or pursuant to existing agreements or commitments or benefit
plans or as required by law; and
(e) not enter into any material contract or agreement outside the
ordinary course of business.
8.2 Access to Records and Properties.
From the date hereof until the Closing Date, Sellers shall:
(a) Provide Purchaser and its officers and other representatives
and employees with such access to the facilities of the Business and its
principal personnel and such books and records pertaining to the Business, as
Purchaser may reasonably request in order to effectuate the transactions
contemplated hereby, without charge by Sellers to Purchaser (but otherwise at
Purchaser's expense), provided that Purchaser agrees that such access will be
requested and exercised during normal business hours and without causing
unreasonable interference with the operations of the Business;
(b) Subject to delivery of Proof of Insurance (as defined below),
provide Purchaser and its officers and other representatives and employees with
such reasonable access to the facilities of the Business and its principal
personnel to enable Purchaser to commence information technology and telephony
integration at the ▇▇▇▇▇▇▇▇▇▇ Facility, including the equipping of a room at the
▇▇▇▇▇▇▇▇▇▇ Facility indicated on the site plan attached hereto as Schedule
8.2(b) (the "IT Room"), provided that Purchaser agrees that such access will be
requested and exercised during normal business hours and without causing
unreasonable interference with the operations of the Business.
As used herein, "Proof of Insurance" shall mean that prior to entering the
▇▇▇▇▇▇▇▇▇▇ Facility to commence installation of wiring and related activities in
respect of the foregoing information technology and telephony integration,
Purchaser shall provide Sellers proof of insurance satisfactory to Sellers in
their reasonable judgment with respect to the following:
(i) Workers' Compensation Insurance in accordance with the
laws of the state of Texas with a limit of not less than $1,000,000 for each
accident;
(ii) Commercial General Liability Insurance with limits of
not less than $5,000,000 applicable to bodily injury, sickness or death for any
one occurrence and $5,000,000 for loss of or damage to property for any one
occurrence;
(iii) Automobile Liability Insurance for owned, non-owned,
hired and all other vehicles used by Purchaser, its employees and agents with
limits of not less than $5,000,000 applicable to bodily injury, sickness or
death of any one person, $5,000,000 for more than one person for any one
occurrence and $5,000,000 for loss of or damage to property for any one
occurrence.
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Sellers and their Affiliates, and their respective employees, officers and
agents shall be an additional insured, in each of Purchaser's policies, except
Workers' Compensation. The additional insured status will only apply to the
matters set forth in this Section 8.2(b), specifically for any claim for bodily
injury or property damage as a result of Purchaser's negligent activities in
installing wiring and other activities related to information technology and
telephony integration on or prior to the Closing Date; and
(c) Make available to Purchaser, upon reasonable request, for
inspection and review all documents, or copies thereof, listed in the Schedules
hereto, and all files, records and papers pertaining to any proceedings and
matters listed in the Schedules hereto.
8.3 Certain Governmental Consents. Within two (2) Business Days
following the date hereof, Sellers and Purchaser shall each make their initial
filing (and shall thereafter make any required filings (including responses to
requests for additional information)) with the FTC and the DOJ pursuant to the
H-S-R Act and any other Governmental Authority with respect to which a waiting
period must terminate, or whose acquiescence or consent is necessary, in order
for the transactions contemplated by this Agreement to be consummated. The
parties shall use reasonable best efforts to demonstrate that such transactions
should not be opposed by the FTC, the DOJ or other such Governmental Authority,
and Purchaser and Sellers shall use reasonable best efforts to eliminate as
promptly as practicable any objection that the FTC, DOJ or other such
Governmental Authority may have to the transactions contemplated hereby provided
that neither party shall be required to make any sale of a business unit,
including any material portion or product line of the Business, as a result of
such reasonable best efforts. Purchaser and Sellers shall oppose any adversarial
proceedings under antitrust, competition or trade regulation laws seeking to
block the transactions contemplated by this Agreement (including, without
limitation, defending through litigation on the merits any claim asserted in any
court by any Person) and shall use reasonable best efforts to have vacated or
terminated any order, stay, judgment or decree that would restrain, prevent or
delay the Closing. No such proceeding or litigation shall be settled or
terminated unilaterally without the written consent of both Honeywell and
Purchaser, if the effect of such settlement or termination would be a failure to
satisfy the conditions set forth in Sections 9.5 and 10.5, or Sections 9.1 and
10.1. Any actions taken by Sellers or Purchaser to comply with their respective
obligations under this Section 8.3 shall be deemed not to have or be reasonably
expected not to have a Material Adverse Effect.
8.4 Third Party Consents. Sellers shall use reasonable efforts (which
shall not include any obligation of Sellers to pay any consideration therefor or
agree to relinquish or modify any rights in exchange therefor) to obtain all
Consents required from third parties (other than Governmental Authorities),
whose Consent is required pursuant to any Material Contract or otherwise to
consummate the transactions contemplated hereby. Purchaser shall use reasonable
efforts (which shall not include any obligation of Purchaser to pay any
consideration therefor or agree to relinquish or modify any rights in exchange
therefor) to obtain all Consents required from third parties (other than
Governmental Authorities), whose Consent is required to consummate the
transactions contemplated hereby.
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8.5 Public Announcements. On and after the date hereof, Sellers and
Purchaser shall consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement and the
transactions contemplated hereby. Neither Sellers nor Purchaser shall issue any
press release or make any public statement prior to obtaining the other party's
approval, which approval shall not be unreasonably withheld, except that no such
approval shall be necessary to the extent disclosure may be required by Law
(including, without limitation, any required disclosures to employee
representatives) or any listing agreement of either party hereto or to employee
consultation and information proceedings required of Sellers by applicable Law;
provided, however, that if disclosure shall be required pursuant to applicable
Law or a listing agreement, the parties shall seek to make such disclosure in a
form mutually acceptable to them. The obligations under any confidentiality
agreement executed between the parties shall survive the execution of this
Agreement.
8.6 Notification of Certain Matters. Between the date hereof and the
Closing, Sellers and Purchaser will give prompt notice in writing to the other
of (i) any information known to them that indicates that any of their
representations or warranties, as the case may be, contained herein will not be
true and correct in a manner that will result in the failure of a condition
contained in Articles 9 or 10 to the other parties' obligations hereunder; and
(ii) the occurrence of any event known to Sellers or Purchaser which will
result, or have a reasonable prospect of resulting, in the failure to satisfy a
condition specified in Articles 9 (in the case of Sellers) or 10 (in the case of
Purchaser).
8.7 Reasonable Efforts; Environmental Permits.
(a) Sellers and Purchaser shall use their reasonable efforts to
satisfy, and to cooperate with and to assist the other in satisfying, the
conditions set forth in Articles 9 and 10, respectively.
(b) Consistent with the provisions of the Environmental Systems
Separation and Services Agreement, Purchaser shall promptly prepare and submit,
at Purchaser's sole expense, all applications or other documentation required to
obtain all material Environmental Permits which are necessary for Purchaser to
own and operate the Assets and to conduct the Business as it is being conducted
as of the date hereof at the ▇▇▇▇▇▇▇▇▇▇ Facility. Sellers agree to cooperate
with Purchaser to assist Purchaser with obtaining such material Environmental
Permits through the provision of such relevant information as is in the
possession of and reasonably available to Sellers and Sellers shall, without
charge to Purchaser, execute such documentation as reasonably required to
facilitate the acquisition of such material Environmental Permits by Purchaser.
In the event that circumstances require that certain of such Environmental
Permits be jointly held by Sellers and Purchaser, (i) Sellers and Purchaser
shall cooperate in preparing, executing and submitting applications for, and
obtaining issuance or reissuance of, such Environmental Permits and (ii) to the
extent such issues are not adequately addressed by the Environmental Systems
Separation and Services Agreement, Sellers and Purchaser shall negotiate in good
faith and enter into agreements consistent with the principles and provisions of
the Environmental Systems Separation and Services Agreement, as necessary,
governing the
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respective responsibilities and liabilities of Sellers and Purchaser with
respect to compliance with the terms, conditions, and requirements of such
Environmental Permits.
(c) Purchaser and Sellers shall take those actions identified in
the Environmental Systems Separation and Services Agreement to separate air,
wastewater, waste management, monitoring, and other environmental systems at the
▇▇▇▇▇▇▇▇▇▇ Facility associated with the Business from those associated with the
Retained Businesses at the ▇▇▇▇▇▇▇▇▇▇ Facility, such that (to the extent
specified in the Environmental Systems Separation and Services Agreement) the
air emissions and wastewater discharges from the Business can be separately
identified in applicable Environmental Permits and can be separately controlled,
treated and monitored. Costs and responsibilities for implementing those actions
identified in the Environmental Systems Separation and Services Agreement shall
be as specified in the Environmental Systems Separation and Services Agreement
and Section 14.11 of this Agreement.
8.8 Amendment to Schedules of Transition Services Agreement.
The Parties acknowledge and agree that at any time prior to the Closing
Date, Purchaser may, by written notice (a "Termination Notice") delivered to
Sellers, amend or revise the schedules to the Transition Services Agreement
solely to reflect the deletion of any transition service which Purchaser elects
to forego after the Closing; provided, however, that Purchaser shall be required
to reimburse Sellers for costs and expenses reasonably incurred by Sellers in
anticipation of providing any transition service subject to a Termination Notice
delivered within fifteen (15) days prior to the Closing Date if such costs and
expenses cannot be avoided by reasonable actions taken by Sellers.
8.9 Construction of the IT Room.
On the date hereof, Honeywell shall commence construction of the IT Room
based on specifications and plans mutually agreed to by the Parties. Sellers
shall at all times maintain complete control and oversight over construction of
the IT Room and the installation of any appurtenances thereto, including without
limitation installation of telephone switches, cables and wiring. One-half of
any costs or expenses incurred by Sellers prior to the Closing in connection
with the fulfillment of their obligations under this Section 8.9 ("IT Costs")
shall be reimbursed by Purchaser at the Closing.
8.10 Delivery of Emergency Response Plan. Prior to the Closing, Purchaser
shall deliver to Sellers a written emergency response plan and procedures for
Purchaser's operations at the ▇▇▇▇▇▇▇▇▇▇ Facility in accordance with Section
7.01(b) of the Environmental Systems Separation and Services Agreement.
8.11 Invention Disclosure Assignments. Prior to the Closing, Sellers
shall use reasonable commercial efforts to obtain from their current and former
employees an assignment of patent rights in respect of all
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invention disclosures listed on Attachment 6.10(3) to Schedule 6.10 in form and
substance satisfactory to Purchaser in its reasonable discretion; provided,
however, that, with respect to former employees, reasonable commercial efforts
shall mean mailing a form of assignment to the former employees at their last
known address and providing Purchaser with the names and last known addresses of
the former employees, copies of the letter and form of assignment sent to the
former employees and any executed assignment or other response that Sellers
receive from such former employees.
9. CONDITIONS TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to be performed by Purchaser at the Closing
are subject to the satisfaction at or prior to the Closing of each of the
following conditions, unless waived by Purchaser in its sole discretion:
9.1 Absence of Injunction. No order, stay, judgment or decree shall have
been issued by any court and be in effect that prohibits or enjoins in any
material respect the consummation of the transactions contemplated by this
Agreement.
9.2 Certificates of Sellers. Purchaser shall have received all
certificates, instruments, agreements and other documents to be delivered on or
before the Closing Date pursuant to Article 12 of this Agreement; provided,
however, that Sections 9.4, 9.5 and 9.6 shall be the sole condition to
Purchaser's obligations relating to the obtaining of Consents.
9.3 No Breach. Each representation and warranty of Sellers contained in
this Agreement shall be true and correct as of the Closing as though such
representation and warranty was made on and as of such time (except to the
extent a different date is specified therein, in which case such representation
and warranty will be true and correct as of such date), with such exceptions as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect; provided, however, that, for purposes of determining
whether a breach of any individual representation or warranty constitutes a
Material Adverse Effect, representations and warranties already themselves
qualified by materiality or Material Adverse Effect shall be true and correct in
all respects. Each covenant and agreement of Sellers required by this Agreement
to be performed by them at or prior to the Closing will have been duly performed
and complied with in all material respects as of the Closing. At the Closing,
Purchaser will have received a certificate, dated the Closing Date and duly
executed by a senior executive officer of Honeywell, to the effect that the
conditions set forth in this Section 9.3 have been satisfied.
9.4 H-S-R Act. The waiting period under the H-S-R Act applicable to the
purchase of the Assets shall have expired or otherwise been terminated.
9.5 Environmental Permit Consent. Purchaser and Sellers shall have
received reasonable assurances, which may be in the form of comfort letters,
from the applicable Governmental Authorities, that pending the transfer,
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modification, or reissuance of existing Environmental Permits or issuance of new
Environmental Permits to Purchaser, Purchaser may continue operation of the
Business at the ▇▇▇▇▇▇▇▇▇▇ Facility during the Permit Transition Period
consistent with the manner currently conducted under the terms and conditions of
the existing Environmental Permits as contemplated under Section 14.7 under the
Transitional Environmental Permits, and Sellers may continue their operations at
the ▇▇▇▇▇▇▇▇▇▇ Facility during the Permit Transition Period in the manner
currently conducted under the terms and conditions of the existing Environmental
Permits as contemplated under Section 14.7.
9.6 Required Consents. All Consents set forth on Schedule 9.6 shall have
been obtained.
10. CONDITIONS TO OBLIGATIONS OF SELLERS.
The obligations of Sellers to be performed by Sellers at the Closing are
subject to the satisfaction at or prior to the Closing of each of the following
conditions, unless waived by Sellers in their sole discretion:
10.1 Absence of Injunction. No order, stay, judgment or decree shall have
been issued by any court and be in effect that prohibits or enjoins in any
material respect the consummation of the transactions contemplated by this
Agreement.
10.2 Certificates of Purchaser. Sellers shall have received all funds
called for by Section 3.1 and all certificates, instruments, agreements and
other documents to be delivered on or before the Closing Date pursuant to
Article 13 of this Agreement; provided, however, that Section 10.4 and 10.5
shall be the sole condition to Sellers' obligations relating to the obtaining of
Consents.
10.3 No Breach. Each representation and warranty of Purchaser contained
in this Agreement shall be true and correct as of the Closing as though such
representation and warranty was made on and as of such time (except to the
extent a different date is specified therein, in which case such representation
and warranty will be true and correct as of such date), with such exceptions as,
individually or in the aggregate, would not reasonably be expected to materially
adversely effect their ability to perform their obligations hereunder, or under
any other Ancillary Agreement; provided, however, that, for purposes of
determining whether a breach of any individual representation or warranty
constitutes a Material Adverse Effect, representations and warranties already
themselves qualified by materiality shall be true and correct in all respects.
Each covenant and agreement of Purchaser required by this Agreement to be
performed by it at or prior to the Closing will have been duly performed and
complied with in all material respects as of the Closing. At the Closing,
Sellers will have received a certificate, dated the Closing Date and duly
executed by a senior executive officer of Purchaser, to the effect that the
conditions set forth in this Section 10.3 have been satisfied.
10.4 H-S-R Act. The waiting period under the H-S-R Act applicable to the
purchase of the Assets shall have expired or otherwise been terminated.
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10.5 Environmental Permit Consent. Purchaser and Sellers shall have
received reasonable assurances, which may be in the form of comfort letters,
from the applicable Governmental Authorities, that pending the transfer,
modification, or reissuance of existing Environmental Permits or issuance of new
Environmental Permits to Purchaser, Purchaser may continue operation of the
Business at the ▇▇▇▇▇▇▇▇▇▇ Facility during the Permit Transition Period
consistent with the manner currently conducted under the terms and conditions of
the existing Environmental Permits as contemplated under Section 14.7 under the
Transitional Environmental Permits, and Sellers may continue their operations at
the ▇▇▇▇▇▇▇▇▇▇ Facility during the Permit Transition Period in the manner
currently conducted under the terms and conditions of the existing Environmental
Permits as contemplated under Section 14.7.
11. TERMINATION; SURVIVAL.
11.1 Termination. Notwithstanding anything to the contrary set forth
herein, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual consent of Purchaser and Sellers;
(b) by Purchaser, (i) if the transactions contemplated hereby are
not consummated on or before April 30, 2004 (the "Deadline") as a result of the
failure of a condition in Article 9 or (ii) if any condition in Article 9 shall
become incapable of being satisfied, unless, in the case of each of clauses (i)
and (ii), such failure or incapacity was caused by Purchaser's breach of a
covenant or agreement contained herein; or
(c) by Sellers, (i) if the transactions contemplated hereby are
not consummated on or before the Deadline as a result of the failure of a
condition in Article 10 or (ii) if any condition in Article 10 shall become
incapable of being satisfied, unless, in the case of each of clauses (i) and
(ii), such failure or incapacity was caused by Sellers' breach of a covenant or
agreement contained herein.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, this Agreement (including without limitation the representations
and warranties contained in Articles 6 and 7) shall become null and void and of
no further force and effect, and none of the parties hereto (nor their
respective Affiliates, directors, shareholders, officers, employees, agents,
consultants, attorneys-in-fact or other representatives) shall have any
liability in respect of such termination. Notwithstanding the foregoing, if such
termination is effected pursuant to Section 11.1(b) or (c) and there has been a
breach of a covenant or agreement contained herein, or Purchaser breaches its
representation contained in Section 7.8, the party having so breached shall
remain liable to the other party hereto on account of such breach of a covenant
or agreement contained herein, and the non-breaching party shall retain all
rights in equity or law arising as a result of such breach. The provisions of
this Section 11.2, of Sections 8.5, 16.1, 16.8, 16.13 and 16.19 and of any
confidentiality agreement between the parties shall survive any termination of
this Agreement.
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12. DOCUMENTS TO BE DELIVERED BY SELLERS AT THE CLOSING.
At the Closing, Sellers shall deliver to Purchaser (subject to Section
2.3):
(a) In addition to the certificate referred to in Section 9.3, a
secretary's certificate of Honeywell certifying to (i) resolutions adopted by
Sellers evidencing the authorizations described in Section 6.2; (ii) the
constituent documents of Sellers; (iii) incumbency of the officers of Sellers
executing this Agreement and the Ancillary Agreements; and (iv) the Allocation
of Purchase Price;
(b) An executed ▇▇▇▇ of sale or other appropriate instruments of
transfer or assignment and assumption, in form reasonably acceptable to
Purchaser, with respect to all of Sellers' owned Personal Property, Inventory,
Accounts Receivable, Contracts, Intellectual Property Licenses and any other
Assets not transferred or assigned by any other document or instrument described
in this Section;
(c) Separately executed and acknowledged assignments, in
recordable form and reasonably acceptable to Purchaser, sufficient to transfer
Sellers' Patents and Trademarks that are included in the Transferred
Intellectual Property (collectively, the "Intellectual Property Assignments")
and powers of attorney in forms reasonably acceptable to Purchaser executed by
Sellers permitting Purchaser to prosecute any pending applications for
Transferred Intellectual Property rights; provided, however, that with respect
to any non-US Transferred Intellectual Property, in the event any required
governmental certifications have not been obtained by the Closing, such
certifications shall be delivered as promptly as practicable after receipt;
(d) Executed agreement or agreements covering transitional
services to be provided by or to the parties or their Affiliates after the
Closing, substantially in the form of Exhibit 12(d) (the "Transition Services
Agreement"); provided, however, that to the extent the schedules to the
Transition Services Agreement do not include costs for all of the services to be
provided, the costs will be mutually agreed to by the Parties prior to the
Closing and will not exceed the Sellers' actual costs of providing such services
without any allocation of overhead;
(e) Executed lease agreement with respect to Purchaser's lease of
that portion of the ▇▇▇▇▇▇▇▇▇▇ Facility used by Sellers in the conduct of the
Business on the date hereof, substantially in the form of Exhibit 12(e) (the
"▇▇▇▇▇▇▇▇▇▇ Lease");
(f) Executed license agreement, substantially in the form of
Exhibit 12(f) (the "License Agreement");
(g) Executed ion implant outsource agreement, substantially in the
form of Exhibit 12(g) (the "Ion Implant Agreement");
(h) Executed single property agreement in form and substance
mutually agreed to by the Parties, consistent with the terms of the
Environmental System and Separation Agreement, based on good faith negotiations
conducted by the Parties after the date hereof (the "Single Property
Agreement");
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(i) Executed Environmental Systems Separation and Services
Agreement, substantially in the form of Exhibit 12(i) (the "Environmental
Systems Separation and Services Agreement"); provided, however, that to the
extent the schedules to the Environmental Systems Separation and Services
Agreement are not complete, the Parties shall negotiate in good faith and
mutually agree prior to the Closing on the provisions needed to complete the
schedules; and
(j) Executed Shared Site Services Agreement, substantially in the
form of Exhibit 12(j) (the "Shared Site Services Agreement").
13. DOCUMENTS TO BE DELIVERED BY PURCHASER AT THE CLOSING.
At the Closing, Purchaser shall make the wire transfer of funds called for
by Section 3.1 and shall execute where applicable and deliver to Sellers:
(a) Executed undertakings and assumptions of Purchaser, in form
reasonably satisfactory to Sellers, with respect to the assumption by Purchaser
of the Assumed Liabilities;
(b) In addition to the certificate referred to in Section 10.3, a
secretary's certificate certifying to (i) resolutions adopted by Purchaser
evidencing the authorizations described in Section 7.2; (ii) the constituent
documents of Purchaser; (iii) incumbency of the officers of Purchaser executing
this Agreement and the Ancillary Agreements; and (iv) the Allocation of Purchase
Price; and
(c) Executed Intellectual Property Assignments, Transition
Services Agreement, ▇▇▇▇▇▇▇▇▇▇ Lease, Ion Implant Agreement, License Agreement,
Single Property Agreement, Environmental Systems Separation and Services
Agreement and Shared Site Services Agreement.
14. POST-CLOSING OBLIGATIONS.
14.1 Covenant Not to Compete. Sellers agree that they shall not, for a
period of two (2) years after the Closing Date, engage anywhere in the world in
the Business as conducted on the Closing Date ("Competitive Activities");
provided, however, that the term Competitive Activities shall not include, and
the foregoing shall not prohibit:
(a) Sellers or any of the accounts managed by them, including
without limitation, any pension or other benefit plan of Sellers, from owning
any outstanding capital stock or other equity interests of any Person engaging
in any Competitive Activities provided the aggregate beneficial ownership of
Sellers (without reference to pension or other benefit plan assets) does not
exceed more than five percent (5%) of all issued and outstanding securities of
any such Person;
(b) Sellers or any of their Affiliates from engaging in any other
businesses other than the Business;
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(c) Sellers or any of their Affiliates from acquiring any Person
or business that engages in Competitive Activities provided that (i) such
activities do not constitute the principal activities of the Person or business
acquired, as applicable, (based on the sales of such business during the
preceding four (4) full calendar quarters) and (ii) if Competitive Activities
constitute in excess of twenty percent (20%) of the revenues of the Person or
business acquired, Sellers use their reasonable efforts to divest that portion
of such Person or business that engages in Competitive Activities (a "Divested
Business") within twenty (20) months after the acquisition thereof; provided,
however, that prior to the sale of a Divested Business, Sellers comply with the
Right of First Refusal (as defined below);
(d) Sellers or any of their Affiliates from maintaining or
acquiring any business that designs, develops, manufactures, markets, repairs,
overhauls and/or sells the kinds of materials or services that are supplied to
the Business as of the Closing Date; provided, that design, development,
manufacture, marketing, repair, overhaul and/or sale of such materials or
services is part of a broader business and neither Sellers nor any of their
Affiliates are engaging in such business for the purposes of being in the
Business;
(e) Sellers or any of their Affiliates from (x) the research,
development, production, manufacture, supply, sale, purchase, or use of
optoelectronic or photonic devices or products other than VCSELs, (y) research
and development activities (including the manufacture of research prototypes and
the delivery of such prototypes in non-commercial quantities and related
information to a Governmental Authority as required by a scientific or
educational research grant or program) related to VCSELs or the use of VCSELs
that are outside of the 830-870 nm wavelength, or (z) internal research and
development activities for applications which utilize VCSELs in the 830-870 nm
wavelength;
(f) Sellers or any of their Affiliates from the manufacture,
supply, sale, purchase or use of VCSELs, subject to the conditions and
limitations provided in Section 14.8;
(g) Sellers or any of their Affiliates from owning any and all of
the Excluded Assets and Retained Interests;
(h) Sellers or any of their Affiliates from undertaking any
obligations and exercising their rights under Section 14.8 or the Commercial
Agreements; or
(i) Sellers or any of their Affiliates from designing, developing,
manufacturing, marketing, repairing, overhauling and/or selling products that
incorporate VCSELs, provided that such products cannot be characterized
principally as a VCSEL.
The foregoing prohibition, subject to the exceptions permitted in
subsections (a)-(i) above, shall apply only to Sellers and their Subsidiaries
and shall not apply to any current or future Affiliate (other than a Subsidiary)
or direct or indirect stockholder of Sellers. In addition, notwithstanding
anything to the contrary in this Agreement, the prohibitions in this Section
14.1 shall not apply to (i) any businesses or operations of Sellers or any of
their Subsidiaries which are transferred to any third party (other than to a
Subsidiary of any Seller) after the date hereof, or (ii) to any Subsidiaries of
Sellers the stock of which is transferred to any third party (other than to a
Subsidiary of any Seller) after the date hereof.
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As used herein, "Right of First Refusal" shall mean that before engaging
in discussions with respect to the transfer of a Divested Business to any Person
in accordance with Section 14.1(c), Sellers shall deliver a written notice (the
"Sale Notice") to Purchaser stating the intention of Sellers, or one or more of
their Affiliates, to divest a Divested Business and describing in reasonable
detail the Divested Business. For a period of thirty (30) days following
delivery of a Sale Notice (such date, the "Sale Notice Delivery Date"),
Purchaser shall, at its sole cost and expense, have the opportunity to conduct
reasonable and customary financial, operating and legal due diligence on the
Divested Business. Sellers shall provide reasonable cooperation and assistance
to Purchaser in connection with the foregoing due diligence activities.
Purchaser shall have the option exercisable for a period of forty (40) days
following the Sale Notice Delivery Date to provide Sellers with a definitive
offer to purchase the Divested Business, such notice to set forth the cash or
other consideration to be paid by Purchaser for the Divested Business and any
additional material terms and conditions associated with a proposed transaction
(such notice, the "Exercise Notice"). Within ten (10) days following the
delivery of the Exercise Notice, Sellers may elect, in their sole discretion, to
accept or reject the offer set forth in the Exercise Notice. During the period
beginning on the Sale Notice Delivery Date and ending on the later of forty (40)
days thereafter if no Exercise Notice is delivered by such date, or the date
Sellers deliver their notice of rejection of the offer set forth in a properly
delivered Exercise Notice (the "Exclusivity Period"), Sellers shall not offer or
discuss the possible sale of the Divested Business with any Person other than
Purchaser.
If Sellers reject the offer of Purchaser for the Divested Business set
forth in the Exercise Notice, any rights of Purchaser to acquire the Divested
Business shall terminate. Sellers and their Affiliates may thereafter sell the
Divested Business in one or more transactions to any Person in a manner
consistent with Section 14.1(c) of this Agreement.
If Sellers accept the offer of Purchaser for the Divested Business set
forth in the Exercise Notice, the Parties shall use commercially reasonable
efforts to enter into a definitive agreement and satisfy the closing conditions
contained therein within sixty (60) days from the date of delivery of the
Exercise Notice, and the Exclusivity Period shall be extended until the end of
such sixty (60) day period. If, despite the reasonable commercial efforts of the
Parties to consummate the sale of the Divested Business within the foregoing
sixty (60) day period, the Parties are unable to consummate a transaction for
the Divested Business, Sellers and their Affiliates may thereafter sell the
Divested Business in one or more transactions to any Person in a manner
consistent with Section 14.1(c) of this Agreement.
The Right of First Refusal set forth above shall terminate and be of no
further effect from and after the second anniversary of the date hereof.
14.2 Tax Matters.
(a) Pre-Closing Taxes. Sellers shall be responsible for and shall
pay any and all Taxes other than Transfer Taxes arising or resulting from (i)
the conduct of the Business or the ownership of the Assets prior to the Closing
Date and (ii) the sale of the Business and the Assets on the Closing Date
pursuant to this Agreement, which liability shall be one of the Excluded
Liabilities.
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(b) Post-Closing Taxes. Purchaser shall be responsible for and
shall pay any and all Taxes arising or resulting from the conduct of the
Business or the ownership of the Assets on or after the Closing Date (excluding
the sale of the Business and the Assets on the Closing Date pursuant to this
Agreement), which liability shall be one of the Assumed Liabilities.
(c) Transfer Taxes. Purchaser, on the one hand, and Sellers, on
the other hand, shall each pay fifty percent (50%) of all Transfer Taxes imposed
or incurred by reason of the transfer of the Assets by Sellers to Purchaser
hereunder.
(d) Personal Property Taxes. Purchaser and Sellers shall pay their
respective portion, prorated as of the Closing Date, of state and local personal
property Taxes with respect to the Assets.
(e) Cooperation and Exchange of Information. Sellers and Purchaser
shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return, amended return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or in conducting any audit or other proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by taxing authorities and records
concerning the ownership and tax basis of property, which either party may
possess. Each party shall make its employees available on a mutually convenient
basis to provide explanation of any documents or information provided hereunder.
Notwithstanding the foregoing, neither party shall be required to prepare any
documents (except Tax data packages referred to below), or determine any
information not then in its possession, in response to a request under this
Section. Each party will retain all returns, schedules and workpapers and all
material records or other documents relating thereto, until the expiration of
the statute of limitations (including extensions) of the taxable years to which
such returns and other documents relate and, unless such returns and other
documents are offered to the other party, until the final determination of any
payments which may be required in respect of such years under this Agreement.
Any information obtained under this Section shall be kept confidential, except
as may be otherwise necessary in connection with the filing of returns or claims
for refund or in conducting any audit or other proceeding. Purchaser shall at
its own cost and expense fully and accurately complete and submit any Tax data
packages required by Sellers within the time periods established by the tax
department of Honeywell consistent with past practices.
14.3 Further Assurances. From time to time after the Closing, without
further consideration, the parties shall cooperate with each other and shall
execute and deliver instruments of transfer or assignment or assumption, or such
other documents, to the other party as such other party reasonably may request
to evidence or perfect Purchaser's right, title and interest to the Assets or to
more effectively relieve Sellers of any liabilities or obligations to be assumed
by Purchaser hereunder, and otherwise carry out the transactions contemplated by
this Agreement.
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14.4 Reports; Access to Books and Records.
(a) After the Closing, Purchaser shall permit Sellers to have
reasonable access to and the right to make copies of such of Purchaser's or its
Affiliates' books, records and files for any reasonable purpose of Sellers, such
as for use in litigation, financial reporting, tax return preparation, or tax
compliance matters. In addition, Purchaser shall make available to Sellers, upon
Sellers' reasonable request, personnel of Purchaser or its Affiliates who are
familiar with any such matter requested. Purchaser agrees to preserve and keep
all of the books, records and files of the Business included in the Assets for a
period of not less than five (5) years after the Closing Date, or for any longer
period as may be required (i) by any Governmental Authority, (ii) by any Law or
(iii) in connection with any ongoing litigation, suit or proceeding. Prior to
disposing of any such information, Purchaser shall afford Sellers a reasonable
opportunity, at Seller's expense, to segregate, remove or copy such books,
records and files as Sellers may select. Purchaser shall also make available to
Sellers to the extent related to an Excluded Liability copies of (x) process,
material, test, manufacturing and quality specifications, and (y) sales
information reflecting volume, customers, yearly totals and similar information.
(b) After the Closing, Sellers shall permit Purchaser to have
reasonable access to and the right to make copies of such of Sellers' or their
Affiliates' books, records and files related to the Business as were not
conveyed to Purchaser on the Closing for any reasonable purpose of Purchaser,
such as for use in litigation, financial reporting, tax return preparation, or
tax compliance matters. In addition, Sellers shall make available to Purchaser,
upon Purchaser's reasonable request, personnel of Sellers or their Affiliates
who are familiar with any such matter requested.
(c) Purchaser and Sellers acknowledge and agree that if audited
financial statements of the Business are required by applicable Law or
regulations promulgated by the Securities and Exchange Commission ("SEC") or
U.S. generally accepted accounting principles, Purchaser may request Seller to
use reasonable commercial efforts to engage Seller's independent auditor (the
"Audit Firm") to perform an audit of the financial statements of the Business
for any periods required by such Law, SEC Regulations or U.S. generally accepted
accounting principles. Purchaser and Sellers shall share equally all fees, costs
and expenses related to the audit of the financial statements by the Audit Firm.
Sellers shall provide Purchaser and the Audit Firm access to such books and
records related to the Business and their personnel as the Audit Firm may
reasonably require. Other than as expressly set forth in this clause (c),
Sellers shall have no liability or obligation of any kind whatsoever in respect
of the preparation or publication of audited financial statements for the
Business or to secure an audit opinion from the Audit Firm.
14.5 Cooperation in Litigation. Purchaser and Sellers shall reasonably
cooperate with each other at the requesting party's expense in the prosecution
or defense of any claim, litigation or other proceeding arising from their
respective conduct of the Business acquired by Purchaser pursuant to this
Agreement and involving one or more third parties. Purchaser and Sellers shall
cooperate in (i) maintaining all records used in and relevant to claims referred
to in Article 4 and (ii) designating custodian(s) of record for such purposes.
The party requesting such cooperation shall pay the reasonable out-of-
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pocket expenses incurred in providing such cooperation (including reasonable
legal fees and disbursements) by the party providing such cooperation and by its
officers, directors, employees and agents, but shall not be responsible for
reimbursing such party or its officers, directors, employees and agents for
their time spent in such cooperation. Purchaser agrees that it shall not, and
shall cause its Affiliates not to, encourage any third party to commence any
lawsuit in respect of, or otherwise pursue, claims referred to in Article 4.
14.6 Names and Marks. Purchaser acknowledges and agrees that it does not
by virtue of any of the transactions contemplated by this Agreement or
otherwise, obtain any rights to any names, marks, trade names or trademarks
incorporating "Bendix," "AlliedSignal," or "Honeywell," or any derivation
therefrom or any corporate symbols or logos incorporating "Bendix,"
"AlliedSignal," or "Honeywell" either alone or in combinations or any goodwill
represented thereby and pertaining thereto, all of which is, and will remain,
the sole property of Sellers. Purchaser further acknowledges and agrees that
Sellers retain exclusively all rights to any names, marks, trade names or trade
marks not used exclusively in the Business. Notwithstanding the foregoing, for a
period not to exceed ninety (90) days from the Closing Date, Purchaser shall
have the limited right (i) to use up Inventory, stationery and other printed
material acquired pursuant to this Agreement without modifying any trademark or
logo thereon, provided that all such material carrying the "AlliedSignal" or
"Honeywell" name shall clearly indicate by stamp, sticker or other similar
notice or marking that the Assets are now owned by Purchaser, and (ii) to use
Personal Property acquired pursuant to this Agreement without modifying any
trademark or logo thereon, provided that, in the case of tooling, Purchaser
marks any product manufactured with such tooling to indicate the date of
manufacture and shall eliminate such trademark or logo from such tooling prior
to abandoning or disposing thereof.
14.7 Transitional Operation of the Business under Sellers' Environmental
Permits. In the event that prior to the Closing Date Purchaser is unable to
obtain the issuance in Purchaser's name of Environmental Permits required for
the continued operation of the Business at the ▇▇▇▇▇▇▇▇▇▇ Facility consistent
with the provisions of the Environmental Systems Separation and Services
Agreement, then subject to receipt of any required prior approval or assurances
from the applicable Governmental Authority and the terms and conditions of this
subsection, for the period until completion of the Separations Work for a
particular environmental system as provided in the Environmental Systems
Separation and Services Agreement (the "Permit Transition Period"), Purchaser
may utilize the Environmental Permits listed on Schedule 14.7 (the "Transitional
Environmental Permits") held by Sellers for the operation of the Business at the
▇▇▇▇▇▇▇▇▇▇ Facility consistent with the provisions and obligations set forth in
the Environmental Systems Separation and Services Agreement. During the Permit
Transition Period:
(a) Sellers shall use reasonable efforts to maintain the
Transitional Environmental Permits in effect and in good standing, and shall
make timely application for the renewal or reissuance of any such Transitional
Environmental Permits that may otherwise expire during the Permit Transition
Period.
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(b) Purchaser shall comply with all of Purchaser's obligations set
forth in the Environmental Systems Separation and Services Agreement.
(c) Except for those Environmental Permits identified in the
Environmental Systems Separation and Services Agreement which are jointly held
after implementation of the Separations Work, Purchaser shall use reasonable
best efforts to replace each Transitional Environmental Permit with
Environmental Permits under which Purchaser is the identified permittee
(collectively, the "Replacement Environmental Permits"). Sellers shall
reasonably cooperate, at their own expense, with Purchaser to assist Purchaser
in obtaining such Replacement Environmental Permits through the provision of
such relevant information as is in the possession of and reasonably available to
Sellers and Sellers shall, without charge to Purchaser, execute such
documentation as reasonably required to facilitate the acquisition of such
Replacement Environmental Permits by Purchaser.
Upon the receipt of any Replacement Environmental Permit, Purchaser shall
immediately and without further action by the parties hereto cease to operate
under the Transitional Environmental Permits. Other than the Transitional
Environmental Permits and any Environmental Permit required to be jointly held,
Purchaser shall operate the Business under Environmental Permits which it has
obtained in its own name. At all times during Purchaser's operation of the
Business at the ▇▇▇▇▇▇▇▇▇▇ Facility, including without limitation the Permit
Transition Period, Purchaser shall operate the Business in compliance with all
Environmental Permits and Transitional Environmental Permits, all applicable
Environmental Law and the provisions of the Environmental Systems Separation and
Services Agreement.
14.8 Manufacture of VCSELs. If after the Closing Date, Sellers or their
Affiliates desire to have manufactured VCSELs of any wavelengths (including
commercial quantities of VCSELs developed under Section 14.1(e)(y) or VCSELs for
use in applications developed under Section 14.1(e)(z)) utilizing the
Transferred Intellectual Property, Sellers and such Affiliates shall submit to
Purchaser in writing a request (a "Manufacturing Request") to manufacture such
VCSELs. The Manufacturing Request shall include technical specifications in
reasonable detail so as to permit Purchaser to evaluate the technical and
economic feasibility of producing such VCSELs and Seller's estimate of the
quantity and delivery schedule for the VCSELs. Within thirty (30) days after the
delivery of the Manufacturing Request, Purchaser shall either deliver to Sellers
in writing (x) an offer to manufacture the VCSELs described in the Manufacturing
Notice ("Specified VCSELs"), including an indication of price based upon the
volumes of Specified VCSELs which Sellers desire to purchase ("Acceptance
Notice") or (y) a statement that Purchaser does not wish to manufacture
Specified VCSELs ("Rejection Notice"). The price of the Specified VCSELs set
forth in the Acceptance Notice shall be no less favorable than any price at
which Purchaser would provide Specified VCSELs or their technological equivalent
in comparable transactions with third parties that are not Affiliates of
Purchaser. Promptly upon delivery of an Acceptance Notice, Purchaser shall
commence development of a production model of the Specified VCSELs. If Purchaser
delivers (x) an Acceptance Notice but within six (6) months of the delivery of
the Manufacturing Request for VCSELs with a wavelength between 830-870 nm or
within twelve (12) months for VCSELs with any other wavelength (provided that
after nine (9) months Purchaser shall be capable of demonstrating reasonably
diligent efforts in developing such VCSELs) is unable to deliver Specified
VCSELs in reasonable quantities which meet Sellers'
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specifications, or such other period as Sellers and Purchaser may agree, or (y)
a Rejection Notice, Sellers shall have the right to either manufacture Specified
VCSELs themselves or, subject to the Manufacturing Subcontracting Arrangement
(as defined below), have Specified VCSELs manufactured by any Person identified
by Sellers and approved in writing by Purchaser, such approval not to be
unreasonably withheld or delayed (a "Contract Manufacturer"). If pursuant to the
foregoing sentence, Sellers elect to manufacture Specified VCSELs or have a
Contract Manufacturer manufacture Specified VCSELs, Purchaser covenants and
agrees not to assert any of its rights in the Transferred Intellectual Property
against Sellers or the Contract Manufacturer solely with respect to the
manufacture of the Specified VCSELs in accordance with this Section 14.8;
provided, however, that Specified VCSELs must be for use or distribution in
Sellers' product or products which incorporate or embed VCSELs.
As used herein, "Manufacturing Subcontracting Arrangement" shall mean the
reasonably expeditious negotiation, execution and delivery of a manufacturing
subcontracting arrangement by Purchaser, on the one hand, and the Contract
Manufacturer, on the other hand, pursuant to which Purchaser and the Contract
Manufacturer agree that the Contract Manufacturer shall supply to Sellers, on
behalf of Purchaser, Specified VCSELs on terms and conditions which are
commercially reasonable and in volumes and on a delivery schedule consistent
with the needs of Sellers. The price per VCSEL paid by Sellers to Purchaser for
Specified VCSELs manufactured pursuant to the Manufacturing Subcontracting
Arrangement shall be eight percent (8%) in excess of the price per VCSEL which
is paid by Purchaser to the Contract Manufacturer. Pursuant to a Manufacturing
Subcontracting Arrangement, Purchaser shall provide the Contract Manufacturer
with the right to utilize the Transferred Intellectual Property to supply
Specified VCSELs subject to such typical and customary confidentiality
restrictions as may be required by Purchaser. Purchaser shall use reasonable
commercial efforts to assist Sellers in facilitating the Manufacturing
Subcontracting Arrangement.
If Sellers manufacture the Specified VCSELs themselves, Sellers shall pay
to Purchaser for the Specified VCSELs a royalty equal to the sum of three
percent (3%) of the fair market value of the Specified VCSELs manufactured by
Sellers plus the amount which Purchaser must pay to third parties under any
license agreements that pertain to the manufacture of the Specified VCSELs.
14.9 Continued Supply of Supplied Parts and Attenuation Coating.
(a) For a period of twelve (12) months after the Closing Date,
Sellers shall use reasonable commercial efforts to supply Purchaser with silicon
back monitor diodes and ceramic insulators ("Supplied Parts") in volumes
comparable to those on which such parts were provided by Sellers to the Business
prior to the Closing Date and for prices as set forth on Schedule 14.9 attached
hereto. Other than price, the terms and conditions shall be based on Sellers'
standard terms and conditions for the supply of similar items in comparable
transactions with third parties that are not Affiliates of Sellers. Purchaser
shall provide Sellers on a weekly basis with a thirty-day forecast of its
requirements for Supplied Parts. Purchaser shall use reasonable commercial
efforts to identify and utilize third party sources for Supplied Parts and as
soon as such third party sources are identified shall cease placing orders for
Supplied Parts with Sellers. Purchaser shall promptly notify Sellers in writing
that it has obtained a third party source for Supplied
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Products and shall purchase from Sellers, at Sellers' cost (as reflected by the
carrying value of inventory in their accounting books and records) all remaining
raw material and work-in-progress related to Supplied Products that Sellers have
on hand F.O.B. Sellers' facilities where such Supplied Products are manufactured
and all finished good inventory of Supplied Parts that Sellers have on hand
F.O.B. Sellers' facilities where such Supplied Parts are manufactured at the
prices specified on Schedule 14.9.
(b) For a period of twelve (12) months after the Closing Date,
Sellers shall use reasonable commercial efforts to service Purchaser's
requirements for attenuation coating with respect to window cans at the
▇▇▇▇▇▇▇▇▇▇ Facility ("Supplied Services") in volumes comparable to those for
which such service was provided by Sellers to the Business prior to the Closing
Date and for prices as set forth on Schedule 14.9 attached hereto. Other than
price, the terms and conditions shall be based on Sellers' standard terms and
conditions for the supply of similar services in comparable transactions with
third parties that are not Affiliates of Sellers. Purchaser shall provide
Sellers on a weekly basis with a thirty-day forecast of its requirements for
Supplied Services. Purchaser shall use reasonable commercial efforts to identify
and utilize third party sources for Supplied Services and as soon as such third
party sources are identified shall cease placing orders for Supplied Services
with Sellers. Purchaser shall promptly notify Sellers in writing that it has
obtained a third party source for Supplied Services.
14.10 Reserve License of Intellectual Property.
(a) Notwithstanding the assignment and the sale of the Transferred
Intellectual Property hereunder, as of the Closing Date, Sellers hereby reserve
and shall have for themselves and each of their Affiliates a paid up
royalty-free, world-wide, irrevocable, perpetual, non-exclusive license with the
Right to Sublicense (as defined below), under the Transferred Intellectual
Property to fully exercise such Transferred Intellectual Property outside of the
scope of Competitive Activities (except for the activities described in Section
14.1(e)(z)), including without limitation, the right to manufacture, have
manufactured, use, sell, offer for sale, export, import, or otherwise transfer
any and all chips, components, devices, products, optical subassemblies, or
packaging thereof that are outside of the scope of Competitive Activities.
(b) To the extent that Purchaser does not produce commercially
available VCSELs in accordance with Section 14.8 above, notwithstanding the
assignment and the sale of the Transferred Intellectual Property contemplated
hereunder and notwithstanding anything to the contrary herein, including,
without limitation, Section 14.1 hereof, as of the Closing Date, Sellers hereby
reserve and shall have for themselves and each of their Subsidiaries and
Affiliates a royalty-bearing, world-wide, non-exclusive license under the
Transferred Intellectual Property, subject to the royalty and other terms set
forth in Section 14.8, solely for the manufacture of VCSELs by Sellers in
respect of the manufacture, use, sale, offer for sale, export, or import of
products which incorporate a VCSEL.
(c) Notwithstanding the foregoing assignment and the sale of the
Transferred Intellectual Property hereunder, and subject to the restrictions of
Section 14.1 hereof, as of the Closing Date, Sellers hereby reserve and shall
have for themselves and each of their Affiliates a paid up royalty-free,
world-wide, irrevocable, perpetual, non-exclusive license, under the
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Transferred Intellectual Property to fully exercise such Transferred
Intellectual Property for Sellers' internal research, development or other
scientific purposes as expressly permitted under Section 14.1(e)(y).
(d) Except as expressly set forth in this Section 14.10 or Section
14.8, the reservation of rights by Sellers under this Section 14.10 does not
include the right to sell commercial products that utilize the Transferred
Intellectual Property or engage in Competitive Activities.
(e) As used herein, "Right to Sublicense", with respect to
Transferred Intellectual Property, shall mean the right to convey to any
customer of Sellers or their Affiliates, with respect to any product containing
a VCSEL manufactured by or for Sellers or their Affiliates that Sellers or their
Affiliates sell, lease or transfer to such customer, the rights to use, resell
and transfer such products as sold or leased by Sellers or their Affiliates to
such customer.
14.11 Reimbursed Costs. Purchaser agrees to reimburse Sellers for one-half
of any reasonable out-of-pocket costs or expenses incurred by Sellers or its
Affiliates in respect of the performance by Sellers of their obligations under
the Environmental Systems Separation and Services Agreement or the Shared Site
Services Agreement (together with any IT Costs incurred on or prior to the date
hereof, "Reimbursed Costs"). Purchaser shall reimburse Sellers within thirty
(30) days of the delivery to Purchaser of any invoice setting forth in
reasonable detail the nature and type of Reimbursed Costs for which Seller is
liable hereunder.
14.12 Covenant Not to ▇▇▇.
(a) Sellers agree that with respect to any Covered Patent (as
defined below) owned by Sellers or for which Sellers have the right on or prior
to the Closing Date to grant licenses of the scope of the licenses granted to
Purchaser in the License Agreement, Sellers will not assert any claims against
Purchaser or any Affiliate of Purchaser for direct infringement, contributory
infringement or inducement of infringement of the Covered Patents for the
manufacture, use, sale, offer for sale or import of any apparatus designed or
manufactured with any technology or other material embodying any of the
Transferred Intellectual Property, or any derivative or improvement thereof,
made by or for Purchaser. "Covered Patents" shall mean (i) any issued patents
and patent applications (including provisional applications) issued or filed,
respectively, on or prior to the Closing Date that claim a process for
manufacturing (including designing and constructing) a VCSEL, a structure of a
VCSEL or VCSEL Component Packaging, (ii) issued patents stemming from patent
applications (including provisional applications) filed after the Closing Date
claiming inventions in existence on or prior to the Closing Date to the extent
such issued patents claim a process for manufacturing (including designing and
constructing) a VCSEL, a structure of a VCSEL or VCSEL Component Packaging, and
(iii) all reissues, divisions, renewals, extensions, continuations and
continuations-in-part (to the extent the subject matter is supported by the
parent of the continuation-in-part) with respect to clauses (i) and (ii)
thereof, in any jurisdiction worldwide. For purposes of this Section 14.12,
"VCSEL Component Packaging" shall mean a package consisting of one or more VCSEL
die, with or without additional optical, electronic, and/or mechanical
components or subassemblies (e.g., detector, lens, fiber optic coupler, VCSEL
data modulation circuitry),
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including all VCSEL-based optical subassemblies made by or for the Business on
or prior to the Closing Date, and shall not be construed to mean a higher-level
product application of a VCSEL, such as a sensor (e.g., for cytometry or
turbidity), an atomic clock, or a LIDAR device.
(b) Sellers agree that they will not assert any claims against
Purchaser or any Affiliate of Purchaser for contributory infringement or
inducement of infringement of any patent or patent application owned or licensed
by Sellers as of the Closing Date, and for which Sellers have the right on or
prior to the Closing Date to grant licenses of the scope of the licenses granted
to Purchaser in the License Agreement, for the manufacture, use, sale, offer for
sale or import of any VCSEL or VCSEL Component Packaging designed or
manufactured with any technology or other material embodying any of the
Transferred Intellectual Property, or any derivative or improvement thereof made
by or for Purchaser, and all reissues, divisions, renewals, extensions,
continuations and continuations-in-part (to the extent the subject matter is
supported by the parent of the continuation-in-part) of such patents in any
jurisdiction worldwide. For the avoidance of doubt, the patents within the scope
of this Section 14.12 include but are not limited to the patents listed on
Schedule 2.2(l).
(c) This covenant not to ▇▇▇ is personal to Purchaser (or
Purchaser's permitted assignee or successor-in-interest) and shall not affect or
restrict any other rights or defenses of either Sellers or Purchaser as to each
party's respective Intellectual Property other than as specifically stated in
this Section 14.12.
14.13 Licensed Software. Subject to the terms and conditions of this
Agreement, Sellers grant to Purchaser and Purchaser accepts a nonexclusive,
nontransferable, perpetual license, without the right to sublicense, to use the
binary form of each item of software designated with a "C" on Attachment
2.2(o)(3) to Schedule 2.2(o) ("Licensed Software") solely for Purchaser's own
internal purposes in accordance with the operation of the Business. Purchaser
shall not decompile, disassemble, reverse engineer, copy, create derivative
works, modify or otherwise use the Licensed Software except as authorized
herein. Purchaser may make only two (2) copies of the Licensed Software in
non-printed, machine-readable form, to be used solely for archival or backup
purposes ("Archival Copies"). Purchaser shall include all copyright and trade
secret notices and serial numbers on the Archival Copies, which shall be owned
solely by Sellers or their third-party suppliers as applicable. Except as
expressly granted in this Section 14.13, no license or right, including
sublicensing rights, either expressly, implicitly, by estoppel, conduct of the
Parties, or otherwise, is granted by Sellers to Purchaser. The Licensed Software
is licensed *AS IS * with no support, upgrades, enhancements, or improvements of
any sort. Accordingly, Sellers make no express or implied representations or
warranties, and to the maximum extent permitted by applicable law hereby
disclaims all warranties, express or implied, arising by operation of law or
otherwise, with respect to the Licensed Software or its condition or use by
Purchaser, including, but not limited to, any implied warranty of
merchantability, any implied warranty of fitness for particular purpose, any
implied warranty arising from course of performance, course of dealing or usage
of trade.
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15. INDEMNIFICATION.
15.1 Indemnification by Sellers. Subject to Section 15.4, if the Closing
occurs, Sellers shall, jointly and severally, defend and indemnify and hold
harmless Purchaser and its directors, officers, employees and Affiliates from
and against and in respect of any and all claims, liabilities, obligations,
losses, damages (excluding punitive, consequential and indirect damages), costs,
and out of pocket expenses (including without limitation, reasonable legal,
accounting and similar expenses) (individually a "Loss" and collectively,
"Losses") which any of them may incur which are the direct and proximate result
of any one or more of the following:
(a) any breach of any covenant or agreement on the part of any
Seller in this Agreement or any Ancillary Agreement (other than a Commercial
Agreement);
(b) any breach of a representation and warranty set forth in
Article 6;
(c) any of the Excluded Liabilities; and
(d) any breach of Sellers' covenants set forth in Sections 8.7 and
14.7 or any violation occurring on or after the Effective Time under any
Transitional Environmental Permit or Replacement Environmental Permit by the
Sellers or their Affiliates; provided, however, that for purposes of this
Section 15.1(d), Losses shall include consequential and indirect damages arising
from or related to Purchaser's inability to operate the Business in the ordinary
course as a result of the foregoing breaches or violations; provided further,
however, for the avoidance of doubt, the failure of the applicable Governmental
Authority to approve or to continue to approve Purchaser's operation of the
Business during the Permit Transition Period under the Transitional
Environmental Permits or thereafter under Replacement Environmental Permits
shall not constitute either (i) a breach of Sellers' covenants set forth in
Sections 8.7 and 14.7, or (ii) a violation by Sellers or their Affiliates under
any Transitional Environmental Permit or Replacement Environmental Permit.
15.2 Indemnification by Purchaser. Subject to Section 15.4, if the
Closing occurs, Purchaser shall defend, indemnify and hold harmless Sellers and
their directors, officers, employees and Affiliates from and against and in
respect of any and all Losses which any of them may incur which are the direct
and proximate result of any one or more of the following:
(a) any breach of any covenant or agreement on the part of any
Purchaser in this Agreement or any Ancillary Agreement (other than a Commercial
Agreement);
(b) any breach of a representation or warranty set forth in
Article 7;
(c) any of the Assumed Liabilities; and
(d) any breach of Purchaser's covenants set forth in Sections 8.7
and 14.7 or any violation occurring on or after the Effective Time under any
Transitional Environmental Permit or Replacement Environmental Permit by the
Business, the Purchaser or its Affiliates; provided, however, that for purposes
of this Section 15.2(d), Losses shall include consequential
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and indirect damages arising from or related to Sellers' inability to operate
their business of designing and manufacturing silicon and GaAs wafers at the
▇▇▇▇▇▇▇▇▇▇ Facility in the ordinary course as a result of the foregoing breaches
or violations; provided further, however, for the avoidance of doubt, the
failure of the applicable Governmental Authority to approve or to continue to
approve Sellers' operation of the business of designing and manufacturing
silicon and GaAs wafers at the ▇▇▇▇▇▇▇▇▇▇ facility during the Permit Transition
Period under the Transitional Environmental Permits or thereafter under
Replacement Environmental Permits shall not constitute either (i) a breach of
Purchaser's covenants set forth in Sections 8.7 and 14.7, or (ii) a violation by
Purchaser or its Affiliates under any Transitional Environmental Permit or
Replacement Environmental Permit.
15.3 Survival. The parties agree that, regardless of any investigation
made at any time by the parties, the representations and warranties made by
Sellers and Purchaser in Articles 6 and 7, respectively, of this Agreement (and
any indemnity obligations) shall survive the Closing and shall terminate, and be
of no further force and effect, and no claims with respect thereto may be made
by Purchaser or Sellers after the first anniversary of the Closing Date;
provided, however, that the representations and warranties contained in Section
6.17 (Taxes) shall survive to the expiration of the applicable statute of
limitations. If any claim for indemnification hereunder, which has been
previously asserted by either party to this Agreement pursuant to a notice of
claim in accordance with Section 15.5 below, is still pending at the expiration
of the applicable survival period, such claim shall continue to be subject to
the indemnification provisions of this Agreement until resolved.
15.4 Limitations on Indemnity.
Notwithstanding anything to the contrary contained in this Agreement:
(a) Sellers shall have no liability or obligation to Purchaser (or
any other Indemnitee) with respect to claims made pursuant to Section 15.1(b) to
the extent that Losses under that Section in the aggregate are equal to or less
than three percent (3%) of the Initial Purchase Price (the "Threshold"), and
thereafter only to the extent that such Losses exceed the Threshold; provided,
however, that (A) in no event shall Sellers' aggregate liability or obligation
for Losses (other than Losses covered by Sections 15.1(a), 15.1(c) and 15.1(d))
exceed thirty-five percent (35%) of the Initial Purchase Price (the "Cap"), and
(B) in no event shall Sellers have any liability or obligation with respect to
any individual claim (or group of related claims or claims having a similar
factual basis) made under Section 15.1(b) unless the Losses claimed thereunder
exceed one hundred fifty thousand dollars ($150,000) (each such claim a "De
Minimis Claim" and, together, the "De Minimis Claims"). For the avoidance of
doubt no De Minimis Claims shall be applied against the Threshold.
(b) Sellers shall have no liability or obligation to Purchaser (or
any other Indemnitee) with respect to claims made pursuant to Section 15.1(b)
unless Sellers have received notice of such claim (describing the claim in
reasonable detail, the amount thereof with reasonable certainty, and the basis
thereof) within the applicable survival period set forth in Section 15.3.
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(c) Sellers shall have no liability or obligation to Purchaser for
any Loss to the extent the liability attributable to such Loss is reflected or
reserved for on the Final Closing Net Working Capital Statement determined
pursuant to Section 3.2 (and such Loss shall not be included as a Loss for
purposes of the Threshold or the Cap).
(d) Purchaser shall have no liability or obligation to any Seller
(or any other Indemnitee) with respect to claims made pursuant to Section
15.2(b) to the extent that Losses under that Section in the aggregate are equal
to or less than the Threshold, and thereafter only to the extent that such
Losses exceed the Threshold; provided, however, that (A) in no event shall
Purchaser's aggregate liability or obligation for Losses (other than Losses
covered by Sections 15.2(a), 15.2(c) and 15.2(d)) exceed the Cap, and (B) in no
event shall Purchaser have any liability or obligation with respect to any
individual claim (or group of related claims or claims having a similar factual
basis) made under Section 15.2(b) unless the Losses claimed thereunder exceed a
De Minimis Claim. For the avoidance of doubt no De Minimis Claims shall be
applied against the Threshold.
(e) Purchaser shall have no liability or obligation to any Seller
(or any other Indemnitee) with respect to claims made pursuant to Section
15.2(b) unless Purchaser has received notice of such claim (describing the claim
in reasonable detail, the amount thereof with reasonable certainty and the basis
thereof) within the applicable survival period set forth in Section 15.3.
(f) Upon payment of any amount pursuant to any claim for
indemnification hereunder, the Indemnitor shall be subrogated, to the extent of
such payment, to all of the Indemnitee's rights of recovery against any third
party with respect to the matters to which such claim relates.
(g) Any amounts payable by an Indemnitor pursuant to Sections 15.1
or 15.2 (and any amounts applied towards the Threshold) shall be reduced by (i)
any related insurance recoveries net of any costs incurred for such recovery and
any retrospective rate increase resulting therefrom and (ii) any payments from
third parties who are not Affiliates of the indemnified party.
(h) The amount of any Loss shall be determined without duplication
or double counting of the same Loss under Sections 15.1(a), 15.1(b), 15.1(c) and
15.1(d), if applicable, in the case of indemnification by Sellers, and under
Sections 15.2(a), 15.2(b), 15.2(c) and 15.2(d), if applicable, in the case of
indemnification by Purchaser. With respect to claims made pursuant to Sections
15.1(b) and 15.2(b), the amount of any Loss shall be determined without giving
effect to any Material Adverse Effect or other materiality qualification or
similar qualification contained or incorporated directly or indirectly in any
representation or warranty contained in Article 6 or Article 7. In making any
determination as to whether there exists a valid claim under Section 15.1(b) or
Section 15.2(b), Material Adverse Effect or other materiality qualification or
similar qualification contained or incorporated directly or indirectly in any
representation or warranty contained in Article 6 or Article 7 (except for the
use of the term material in the definition of Material Contract) shall be
disregarded and the amount recoverable pursuant to such claim shall be subject
only to the limitations provided in this Section 15.4. All matters relating to
the Closing Net Working Capital Statement shall be finally settled in
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accordance with Section 3.2. In the event that Losses incurred by Indemnitees
result from the conduct of the Business both prior to and after the Closing,
Sellers' obligations under this Article 15 (and any amounts applied towards the
Threshold) shall be based solely on such Losses to the extent arising out of the
conduct of the Business prior to the Closing Date, and Sellers shall not be
responsible for such Losses to the extent arising out of the conduct of the
Business on or after the Closing Date, and Purchaser's obligations under this
Article 15 (and any amounts applied toward the Threshold) shall be based solely
on such Losses to the extent arising out of the conduct of the Business on or
after the Closing Date, and Purchaser shall not be responsible for such Losses
to the extent arising out of the conduct of the Business prior to the Closing
Date.
(i) Notwithstanding anything to the contrary in Sections 15.4(a),
15.4(d) or elsewhere herein, there shall be no Threshold or Cap on the amount of
an Indemnitor's liability with respect to, and an Indemnitee shall be entitled
to recover any and all Losses resulting from, fraud or willful misconduct on the
part of the Indemnitor.
(j) With respect to Environmental Claims, there shall be a
rebuttable presumption that any Environmental Liabilities arising from or
related to a "recognized environmental condition" as defined in ASTM E1527-00
that is described in the Phase I Environmental Site Assessment, dated January
12, 2004 and delivered to the Purchaser prior to the date hereof, arose out of,
or resulted from, the operation of the Business prior to the Effective Time.
There shall also be a rebuttable presumption that any liability, claim,
obligation, cost or expense arising from or related to a "recognized
environmental condition" as defined in ASTM E1527-00 on that portion of the
▇▇▇▇▇▇▇▇▇▇ Facility occupied by Purchaser pursuant to the ▇▇▇▇▇▇▇▇▇▇ Lease that
is not described in the Phase I Environmental Site Assessment, dated January 12,
2004 and delivered to Purchaser prior to the date hereof, was caused by the acts
or omissions of Purchaser.
15.5 Indemnification Procedure.
(a) Any party making a claim for indemnification hereunder (an
"Indemnitee") shall notify the indemnifying party (an "Indemnitor") of the claim
in writing promptly after receiving written notice of any action, lawsuit,
proceeding, investigation or other claim against it (if by a third party) or
discovering the liability, obligation or facts which may reasonably be expected
to give rise to such claim for indemnification, describing the claim, the amount
thereof (if known and quantifiable), and the basis thereof (a "Notice of
Claim"), provided that the failure to so notify an Indemnitor shall not relieve
the Indemnitor of its obligations hereunder except to the extent such failure
shall have actually prejudiced the Indemnitor.
(b) With respect to any third party action, lawsuit, proceeding,
investigation or other claim which is the subject of a Notice of Claim, an
Indemnitor shall be entitled to assume and control (with counsel of its choice)
the defense of such action, lawsuit, proceeding, investigation or other claim at
the Indemnitor's expense and at its option by sending written notice of its
election to do so within fifteen (15) days after receiving the Notice of Claim
from the Indemnitee as aforesaid; provided, however, that:
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(i) The Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice for such purpose (the
fees and expenses of such separate counsel shall be borne by Indemnitee); and to
assert against any third party (other than the Indemnitor or any of its
Subsidiaries or Affiliates) any and all crossclaims and counterclaims the
Indemnitee may have, subject to Indemnitor's consent, which consent shall not be
unreasonably withheld or delayed;
(ii) If the Indemnitor elects to assume the defense of any
such claim, the Indemnitor shall be entitled to compromise or settle such claim
in its sole discretion so long as either (x) such compromise or settlement is
purely monetary and provides an unconditional release of the Indemnitee with
respect to such claim or (y) the Indemnitor shall obtain the prior written
consent of the Indemnitee (which shall not be unreasonably withheld or delayed);
and
(iii) If the Indemnitor shall not have assumed the defense of
such claim within the fifteen (15) day period set forth above, the Indemnitee
may assume the defense of such claim with counsel selected by it and may make
any compromise or settlement thereof or otherwise protect against the same and
be entitled to all amounts paid as a result of such third party claim, demand,
suit or action or any compromise or settlement thereof, provided that, in the
case of any such compromise or settlement, (x) such compromise or settlement is
purely monetary and provides an unconditional release of the Indemnitor with
respect to such claim or (y) the Indemnitee shall obtain the prior written
consent of the Indemnitor (which shall not be unreasonably withheld or delayed).
The Indemnitee shall give the Indemnitor notice of the name of counsel selected
by it prior to the time of assuming the defense and the Indemnitor shall have
five (5) Business Days in which to object to such counsel. In the event of such
objection, the Indemnitor shall have the obligation to defend on the terms
specified in Section 15.5(b)(ii).
(c) The Indemnitee shall at all times cooperate, at its own
expense, in all reasonable ways with, make its relevant files and records
available for inspection and copying by, and make its employees available or
otherwise render reasonable assistance to, the Indemnitor. To the extent
Indemnitor is actually harmed by any failure by the Indemnitee to so cooperate,
such failure shall render null and void any obligation of the Indemnitor to
indemnify the Indemnitee pursuant to this Article 15.
(d) The foregoing paragraphs (a) through (c) notwithstanding, with
respect to any claim by an Indemnitee for indemnification pursuant to Section
15.1(c) with respect to Section 4.2(e), or Section 15.1(b) with respect to
Section 6.12, the Indemnitee shall give the Indemnitor sole control of the
defense of the underlying matter with respect to which the Indemnitee claims
indemnity (hereinafter "Purchaser Claims"), including any actions to address an
environmental condition in a manner and to an extent necessary to cause the
Assets to be in substantial compliance with Environmental Laws, including
without limitation, site investigations, and the treatment, destruction,
containment, removal or transportation off-site for disposal of Hazardous
Materials (hereinafter a "Site Remediation"). Without further consideration
(except as set forth below), the Indemnitee agrees that it shall support and
cooperate in any and all reasonable ways with the Indemnitor. The foregoing
obligation shall include, without limitation, the following:
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(i) providing the Indemnitor, its employees, agents,
contractors and subcontractors and other authorized representatives engaged by
or associated with the Indemnitor (collectively, the "Indemnitor Personnel") and
representatives of any governmental agency with access to property of the
Indemnitee to conduct Site Remediation; provided, however, that such access
shall only occur at times and for periods reasonably agreed to by Purchaser and
such access shall not unduly interfere with the Business activities conducted at
any facilities;
(ii) any and all reasonable assistance in securing any
required permits or approvals (including without limitation by holding in its
name any such permit where necessary or appropriate) in order to perform any
Site Remediation; provided, however, that reasonable, out of pocket expenses
incurred by the Indemnitee in performing such assistance shall be reimbursed by
the Indemnitor;
(iii) such support by the Indemnitee as may be reasonably
required and requested by the Indemnitor or Indemnitor Personnel in conducting
any Site Remediation and in managing, settling or defending any third party
claim; including without limitation, permitting the Indemnitor to review, copy
and/or consult pertinent books, documents and records and interview with
knowledgeable employees, provided that reasonable expenses incurred by the
Indemnitee in performing such assistance shall be reimbursed by the Indemnitor;
(iv) such decision, comments or information as may reasonably
be requested by the Indemnitor to avoid delay in the performance of any Site
Remediation and/or any settlement or defense of any third party claim;
(v) any necessary easements upon any property of the
Indemnitee, any necessary access to utilities, including but not limited to
water, at the expense of the Indemnitor (provided the charges for such utilities
are separately metered), and any necessary place to receive any treated water,
provided that such easement or access does not materially interfere with the
Business activities conducted at any facilities;
(vi) all reasonable assistance in prosecuting any claims it
may have against third party contributors to the underlying matter; and
(vii) permit the Indemnitor to take any Site Remediation
necessary to fulfill Indemnitor's responsibilities under this Agreement.
The Indemnitor shall conduct, manage and control through counsel,
consultant or contractor of its choosing: (a) any interaction with, including,
without limitation, any negotiation, of an agreement or settlement with
Governmental Authorities; (b) any Site Remediation; and (c) any claim, action
proceeding, investigation with respect to any Purchaser Claims. Without limiting
the foregoing, the Indemnitee agrees not to: (i) interfere with the Indemnitor's
management of the foregoing, including without limitation, at any time
conducting negotiations, settlements, or communication with Governmental
Authorities or third parties except as required by law; or (ii) at any time,
take or offer to any Governmental Authority or third party any position
inconsistent with positions taken or offered by the Indemnitor or Indemnitor
Personnel with respect to a Purchaser Claim. Furthermore, Purchaser agrees to
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promptly notify Sellers of any notice concerning any Site Remediation or
Environmental Claim made by any party on or after the Closing Date.
15.6 Exclusive Remedy.
(a) Except as set forth in Section 15.6(b), the sole and exclusive
remedy of Purchaser and the sole and exclusive obligation of Sellers for (i) any
breach of any representation or warranty made by Sellers, (ii) any breach,
nonfulfillment or nonperformance of any covenant or agreement to be performed,
complied with or fulfilled by Sellers under this Agreement or any Ancillary
Agreement (other than the Commercial Agreements), or (iii) any other Losses
referred to in Section 15.1 hereof (other than Losses related to Sellers'
refusal to consummate the Transactions contemplated hereunder upon satisfaction
of all of the conditions set forth in Article 10 of this Agreement), shall be as
expressly provided in this Article 15 (or Section 11.2 as applicable) and
Sellers shall have no other obligations with respect thereto.
(b) If Sellers breach the covenant in Section 14.1, Sellers
acknowledge such violation or breach will cause irreparable injury to Purchaser,
the amount of which will be impossible to estimate or determine and which cannot
be adequately compensated. Accordingly, if Sellers breach the covenant in
Section 14.1, Purchaser shall be entitled to specific performance, temporary and
permanent injunctive relief or such other equitable remedies as may be available
from any court of competent jurisdiction without the necessity of proving actual
damage.
(c) The sole and exclusive remedy of Sellers and the sole and
exclusive obligation of Purchaser for (i) any breach of any representation or
warranty made by Purchaser, (ii) any breach, nonfulfillment or nonperformance of
any covenant or agreement to be performed, complied with or fulfilled by
Purchaser under Article 14 of this Agreement or any Ancillary Agreement (other
than the Commercial Agreements), or (iii) any other Losses referred to in
Section 15.2 hereof (other than Losses related to Purchaser's refusal to
consummate the transactions contemplated hereunder upon satisfaction of all of
the conditions set forth in Article 9 of this Agreement), shall be as expressly
provided in this Article 15 (or Section 11.2 as applicable) and Purchaser shall
have no other obligations with respect thereto.
15.7 Treatment of Indemnity Payments. The Sellers and Purchaser agree
that all indemnification payments made in accordance with Article 15 will be
treated by the parties as an adjustment to the Initial Purchase Price.
16. MISCELLANEOUS.
16.1 Expenses. Except as otherwise provided herein, whether or not the
transactions contemplated hereby are consummated, all costs, expenses and
disbursements incurred by Sellers and Purchaser in connection with this
Agreement and the transactions contemplated hereby shall be borne by them,
respectively.
16.2 Bulk Sales. Purchaser hereby waives compliance with any applicable
bulk sales law.
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16.3 Assignability. This Agreement shall not be assignable by any party
without the express written consent of the other party hereto; provided,
however, that any Seller, other than Honeywell, may assign this Agreement to a
Subsidiary (wholly owned, directly or indirectly, by Honeywell) and Purchaser
may assign this Agreement to any of its wholly-owned Subsidiaries, in any case
so long as the assignor guarantees, by instrument in form and substance
reasonably satisfactory to the other party, the obligations of the assignee
under this Agreement. Any assignment in violation of this Section 16.3 shall be
null and void and of no force and effect.
16.4 Binding Effect. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the successors and permitted assigns of the
parties hereto.
16.5 Notices. All notices or other communications required or permitted
to be given hereunder shall be (as elected by the party giving such notice) (i)
personally delivered against receipt to the party to whom it is to be given with
copies to all others listed, (ii) transmitted by telecopy, (iii) transmitted by
postage prepaid certified mail, return receipt requested, or (iv) delivered from
a point in the United States by a recognized overnight courier service as
follows:
(a) If to Sellers:
Senior Vice President and General Counsel
Honeywell International Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Vice President and General Counsel -
Automated Control Solutions
Honeywell International Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Purchaser:
Finisar Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: President and CEO
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Finisar Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications shall be deemed to have been duly given on
(A) the date of receipt if delivered personally or by telecopy (with issuance by
the transmitting machine of confirmation of successful transmission), (B) the
day of delivery as indicated on the return receipt if delivered by mail, or (C)
one (1) Business Day after the date of delivery in the US to the overnight
courier if sent by overnight courier. Any party hereto may change its address
for purposes hereof by notice to all other parties.
16.6 Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute and be the same instrument. Telecopy versions of
this Agreement that contain telecopy facsimiles of signatures shall be deemed
duplicate, executed originals of this Agreement.
16.7 Attachments and Schedules. All Attachments and Schedules attached
hereto are incorporated herein and expressly made a part of this Agreement as
though completely set forth herein. All references to this Agreement herein or
in any of the Attachments or Schedules shall be deemed to refer to this entire
Agreement, including all Attachments and Schedules. Any item or matter required
to be disclosed on a particular Schedule pursuant to this Agreement shall be
deemed to have been disclosed if information for such item or matter complying
with such disclosure requirements is set forth on another Schedule under this
Agreement. Neither the specification of any dollar amount in the representations
and warranties set forth in Article 6 or elsewhere herein nor the
indemnification provisions of Article 15 nor the inclusion of any Schedule shall
be deemed to constitute an admission by Sellers, or otherwise imply, that any
such amounts or the items so included are material for purposes of this
Agreement or are required to be listed on the relevant Schedule.
16.8 Governing Law. This Agreement shall in all respects be interpreted,
construed, and governed by and in accordance with the laws of the State of New
York, disregarding any conflict of laws provisions which may require the
application of the law of another jurisdiction.
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16.9 Arbitration. In the event of any dispute, controversy or claim after
the Closing between Purchaser and Sellers arising out of or relating to this
Agreement (other than as provided in Section 3.2 with respect to Final Net
Working Capital or with respect to Section 14.1), the parties shall attempt to
resolve such dispute among themselves within thirty (30) calendar days from the
date either party sends written notice of such dispute to the other party. If
the parties fail to resolve the dispute within such period, the dispute shall be
settled by binding arbitration, before three (3) arbitrators, which shall be the
sole and exclusive procedure for the resolution of any such dispute. Within ten
(10) calendar days after receipt of a notice of intention to arbitrate sent by
one party, each party shall designate in writing one (1) arbitrator to resolve
the dispute, which two (2) arbitrators shall, in turn, jointly select a third
arbitrator within twenty (20) calendar days of their designation, failing which,
the third arbitrator shall be appointed by the American Arbitration Association
(the "AAA") in accordance with the Commercial Arbitration Rules of the AAA (the
"Commercial AAA Rules"). The arbitrators so designated shall each be a lawyer
experienced in commercial and business affairs who is not an employee,
consultant, officer or director of any party hereto or any Affiliate of any
party to this Agreement and who has not received any compensation, directly or
indirectly, from any party hereto or any Affiliate of any party to this
Agreement during the two (2) year period preceding the Closing Date. The
arbitration proceedings shall be governed by the Commercial AAA Rules but need
not be administered by that organization. Purchaser and Sellers shall request
the arbitrators to use their best efforts to rule on each disputed issue within
thirty (30) calendar days after the completion of the hearings; provided,
however, that the failure of the arbitrators to so rule during such period shall
not affect or impair the validity of any arbitration award. The determination of
the arbitrators as to the resolution of any dispute shall be final, binding and
conclusive upon all parties hereto. All rulings of the arbitrators shall be in
writing, with the reasons for the ruling given, and shall be delivered to the
parties hereto. Each party shall pay the fees of its respective designated
arbitrator and its own costs and expenses of the arbitration. The fees of the
third arbitrator shall be paid fifty percent (50%) by each of the parties. The
place of the arbitration shall be New York, New York. Any arbitration award may
be entered in and enforced by any court having jurisdiction thereof and the
parties hereby consent and submit to the jurisdiction of the courts of any
competent jurisdiction for purposes of the enforcement of any arbitration award.
16.10 Definitions. For purposes of this Agreement:
"Accounting Principles" shall have the meaning specified in Section
3.2(b).
"Accounts" shall have the meaning specified in Section 5.2.3.
"Accounts Receivable" shall have the meaning specified in Section
2.1(g).
"Adjusted Purchase Price" shall have the meaning specified in
Section 3.2(a).
"Affiliate" shall mean, as to any specified Person, any other
Person, which, directly or indirectly, at the time such determination is being
made, controls, is controlled by or is under common control with, such specified
Person. For purposes of this definition, "control"
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means the possession of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall have the meaning specified in the Preamble.
"Ancillary Agreements" shall mean the Commercial Agreements and each
other agreement and instrument to be executed and delivered by any Seller or
Purchaser pursuant to this Agreement.
"Approval" shall mean any Consent of, or filing required to be made
with, any Governmental Authority.
"Assets" shall have the meaning specified in Section 2.1.
"Assumed Liabilities" shall have the meaning specified in Section
4.1
"Business" shall have the meaning specified in Recital A.
"Business Day" or "business day" shall mean a day other than a
Saturday, Sunday or other day on which banks in New York, New York are required
to or may be closed.
"Cap" shall have the meaning specified in Section 15.4(a).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act as of 1980, as amended.
"Closing" shall have the meaning specified in Section 1.1(a).
"Closing Date" shall have the meaning specified in Section 1.1(a).
"COBRA" shall have the meaning specified in Section 5.2.8.
"Code" shall mean the US Internal Revenue Code of 1986, as amended.
"Commercial Agreements" shall mean the Transition Services
Agreement, ▇▇▇▇▇▇▇▇▇▇ Lease, Ion Implant Agreement, License Agreement, Shared
Site Services Agreement, Single Property Agreement and Environmental Systems and
Separation Agreement.
"Competitive Activities" shall have the meaning specified in Section
14.1.
"Consent" shall mean any action, approval, consent or authorization.
"Contracts" shall have the meaning specified in Section 2.1(d).
"Deadline" shall have the meaning specified in Section 11.1(b).
"DOJ" shall mean the US Department of Justice.
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"Dollars" or "$" shall mean lawful currency of the US.
"Effective Time" shall have the meaning specified in Section 1.2
"Employees" shall have the meaning specified in Section 5.1.
"Encumbrance" shall mean any pledge, lien, collateral assignment,
security interest, mortgage, deed of trust, title retention, conditional sale or
other security arrangement, or any charge or any other encumbrance of any kind.
"Enforceability Exceptions" shall have the meaning specified in
Section 6.2.
"Environmental Claims" shall mean any and all actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or violation,
notices of liability or potential liability, investigations, proceedings,
consent orders or consent agreements made by a Governmental Authority relating
in any way to any Environmental Law, any Environmental Permit or any Hazardous
Material or any third party claim arising from any alleged injury or threat of
injury to health, safety or the Environment.
"Environmental Law" shall mean any federal, state or local statute,
regulation or ordinance, as in effect on the Closing Date, relating to the
protection of the environment, protection of the health and safety of employees
and other workers, and protection of or compensation to individuals from or
related to exposures to Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et. seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substance
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) or any Law
having similar effect in any jurisdiction other than the US.
"Environmental Liabilities" shall mean all liabilities, claims,
obligations, costs and expenses of any kind or nature whatsoever, whether
arising before or after the Closing, and whether known or unknown, fixed or
contingent, matured or unmatured, arising under Environmental Laws relating to
the Business, Assets, or arising in connection with or relating to Environmental
Claims including, without limitation, all such liabilities, claims, obligations,
costs and expenses associated with any facility formerly owned or operated by
the Business or used by the Business for the offsite disposal of waste.
"Environmental Permit" shall mean any permit, approval,
identification number, license or other authorization required to operate the
Business under any applicable Environmental Law.
"Environmental Systems Separation and Services Agreement" shall have
the meaning specified in Section 12(i).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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"Excluded Assets" shall have the meaning specified in Section 2.2.
"Excluded Environmental Liabilities" shall have the meaning
specified in Section 4.2(e).
"Excluded Liabilities" shall have the meaning specified in Section
4.2.
"Final Allocation" shall have the meaning specified in Section 3.3.
"Final Net Working Capital" shall have the meaning specified in
Section 3.2(a).
"Final Closing Net Working Capital Statement" shall have the meaning
specified in Section 3.2(c).
"Financial Statements" shall have the meaning specified in Section
6.5.
"Firm" shall have the meaning specified in Section 3.2(c).
"Former Employees" shall have the meaning specified in Section 5.1.
"FTC" shall mean the Federal Trade Commission.
"Governmental Authority" shall mean any foreign, Federal, State,
county, city or other governmental authority, agency or instrumentality.
"Hazardous Materials" shall mean any substance, material or waste
which is regulated by any Governmental Authority, which substance, material or
waste includes, without limitation, petroleum and its by-products, friable
asbestos, and any material or substance which is defined as a "hazardous waste,"
"hazardous substance," "hazardous material," "restricted hazardous waste,"
"industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or
"toxic substance" under any provision of Environmental Law(s) or which poses or
threatens to pose a risk of harm to health, safety or the environment.
"Honeywell" shall have the meaning specified in the Preamble.
"H-S-R Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and any substantive US antitrust law applicable to the
transactions contemplated hereby.
"Income Statements" shall have the meaning specified in Section 6.5.
"Indemnitee" shall have the meaning specified in Section 15.5(a).
"Indemnitor" shall have the meaning specified in Section 15.5(a).
"Indemnitor Personnel" shall have the meaning specified in Section
15.5(d)(I).
"Initial Net Working Capital" shall have the meaning specified in
Section 3.2(a).
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"Initial Purchase Price" shall have the meaning specified in Section
3.1(a).
"Intellectual Property" shall mean any or all of the following
intellectual property: (i) all patents and patent applications (including
disclosures and provisional applications) and all reissues, divisions, renewals,
extensions, continuations and continuations-in-part thereof in any jurisdiction
in the world and all trademarks, tradenames, service marks and applications
therefor; (ii) processes, formulas, computer software and other electronic
media, engineering designs, trade secrets, know-how, inventions and discoveries,
whether patented, patentable or not, including without limitation, those in
development, and design, manufacturing, engineering and other technical
information; (iii) all works of authorship, copyrights, mask works, copyright
and mask work registrations and applications therefor; (iv) rights under all
licenses, agreements or other documents (to the extent transferable), if any,
under which intellectual property rights were granted by a third party or to a
third party; (v) the goodwill associated with the trademarks, trade names and
service marks; (vi) tangible documentation of property and rights referred in
clauses (i)-(v); and (vii) all rights Sellers may have to ▇▇▇ for infringement
of or interference with property and rights referred in clauses (i)-(v) of this
definition.
"Intellectual Property Assignments" shall have the meaning specified
in Section 12(c).
"Intellectual Property Claim" shall mean (i) any written claim
challenging the scope, validity or enforceability of any of the Transferred
Intellectual Property or (ii) any written claim that any of the products
designed, manufactured or sold by the Business infringes the intellectual
property rights of another Person.
"Intellectual Property Licenses" shall have the meaning specified in
the definition of Transferred Intellectual Property.
"Interests" shall have the meaning specified in Section 2.3(a).
"Inventory" shall have the meaning specified in Section 2.1(a).
"Ion Implant Agreement" shall have the meaning specified in Section
12(g).
"IRS" shall mean the Internal Revenue Service.
"IT Room" shall have the meaning specified in Section 8.2(b).
"IT Costs" shall have the meaning specified in Section 8.9.
"▇▇▇▇▇▇ Facility" shall have the meaning specified in Section
2.2(m).
"Knowledge of Sellers", "Sellers' Knowledge" or variants thereof
when used to qualify any representation or warranty of Sellers contained in this
Agreement or any other document or instrument furnished to Purchaser by Sellers
pursuant to this Agreement refers to the actual knowledge as of the date of this
Agreement of the persons employed by Sellers whose names are set forth on
Attachment A.
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"Laws" shall have the meaning specified in Section 6.14.
"Liabilities" shall have the meaning specified in Section 4.1.
"License Agreement" shall have the meaning specified in Section
12(f).
"LIBOR" shall mean the rate for three month US dollar deposits which
appears on the Bloomberg Page BBAM as of 11:00 a.m., London time, on the day
that is one (1) Business Day preceding the Closing Date. If such rate does not
so appear on the Bloomberg Page BBAM, "LIBOR" shall mean the average of the
rates at which three month US dollar deposits are offered by ▇▇▇▇▇▇ Guaranty
Trust of New York and Bankers Trust Company to first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) one (1) Business Day
preceding the payment date.
"Loss" and "Losses" shall have the meaning specified in Section
15.1.
"Material Adverse Effect" shall mean a material adverse effect on
the business, financial condition or results of operations of the Business taken
as a whole, except for (i) changes resulting from general economic, financial or
market conditions; (ii) changes resulting from changes generally applicable to
the information technology industry; (iii) changes resulting from any outbreak
or escalation of hostilities, act or acts of terrorism or other national or
international calamity or crisis; (iv) the suspension of trading in securities
on any domestic or foreign stock exchange; (v) the taking of any action by any
Governmental Authority in respect of its monetary or fiscal affairs; or (vi)
changes resulting from this Agreement of the transactions contemplated hereby.
"Material Contract" shall have the meaning specified in Section
6.9(a).
"Non-Environmental Permit" shall mean any approval, permit, license
or other authorization issued by any Governmental Authority other than
Environmental Permits.
"Non-US Benefit Plan" shall have the meaning specified in Section
6.15(c).
"Non-US Business" shall have the meaning specified in Section 5.3.
"Non-US Employees" shall have the meaning specified in Section
5.3.1(a).
"Notice of Claim" shall have the meaning specified in Section
15.5(a).
"Other Merger Approvals" shall have the meaning specified in Section
6.4.
"Patents" shall have the meaning specified in the definition of
Transferred Intellectual Property.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any Environmental Permit or Non-Environmental
Permit.
"Permit Transition Period" shall have the meaning specified in
Section 14.7.
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"Permitted Changes" shall have the meaning specified in Section 8.1.
"Permitted Liens" shall mean (i) liens for property taxes and
assessments or other government charges or levies not yet in default or the
validity of which is being contested in good faith by appropriate proceedings,
(ii) liens of mechanics, materialmen, laborers, warehousemen, carriers and other
similar common law or statutory liens arising in the ordinary course of business
or the basis for which is being contested and adequate provision therefore has
been made in the books of the appropriate entity, (iii) liens and encumbrances
existing on the date of this Agreement and disclosed in Schedule 6.7 attached
hereto, (iv) zoning, entitlement and other land use and environmental
regulations by governmental agencies, (v) liens securing liabilities that
constitute Assumed Liabilities, (vi) any other liens, encumbrances and other
title matters which do not materially detract from the value or materially
interfere with the present use of the relevant asset or property, and (vii)
liens reflecting capitalized leases from the Person financing a purchase of
equipment so long as the lien is limited to the specific equipment so acquired.
"Person" shall mean any individual, corporation, partnership
(general, limited or limited liability), limited liability company, joint
venture, association, trust, or other entity or organization.
"Personal Property" shall have the meaning specified in Section
2.1(b).
"Plymouth Facility" shall have the meaning specified in Section
2.2(m).
"Prepaid Expenses" shall have the meaning specified in Section
2.1(h).
"Proposed Closing Net Working Capital Statement" shall have the
meaning specified in Section 3.2(b).
"Purchase Price" means the Initial Purchase Price, plus or minus any
adjustments permitted under this Agreement.
"Purchaser Benefit Plan" Shall have the meaning specified in Section
5.2.1(b).
"Purchaser Claims" shall have the meaning specified in Section
15.5(d).
"Purchaser" shall have the meaning specified in the Preamble.
"Purchaser's Savings Plans" shall have the meaning specified in
Section 5.2.3.
"Reference Balance Sheet" shall have the meaning specified in
Section 6.5.
"Reference Date" shall have the meaning specified in Section 6.5.
"Replacement Environmental Permits" shall have the meaning specified
in Section 14.7(iii).
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"Retained Intellectual Property" shall mean any and all Intellectual
Property of Sellers that is used primarily in the Business, other than the
Transferred Intellectual Property.
"Retained Interest" shall have the meaning specified in Section
2.3(a).
"▇▇▇▇▇▇▇▇▇▇ Facility" shall have the meaning specified in Section
2.2(m).
"▇▇▇▇▇▇▇▇▇▇ Lease" shall have the meaning specified in Section
12(e).
"Sellers" shall have the meaning specified in the Preamble.
"Sellers' Deferred Compensation Arrangements" shall have the meaning
specified in Section 5.2.6(a).
"Sellers' Pension Plan" shall have the meaning specified in Section
5.2.2(a).
"Sellers' Savings Plans" shall have the meaning specified in Section
5.2.3.
"Sellers' Welfare Benefit Plans" shall have the meaning specified in
Section 5.2.5(a).
"Shared Site Services Agreement" shall have the meaning specified in
Section 12(j).
"Single Property Agreement" shall have the meaning specified in
Section 12(h).
"Site Remediation" shall have the meaning specified in Section
15.5(d).
"Solvent" means with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Subsidiary" shall mean, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by such Person.
"Supplied Parts" shall have the meaning specified in Section
14.9(a).
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"Supplied Services" shall have the meaning specified in Section
14.9(b).
"Tax" or "Taxes" shall mean (i) all federal, state, local or foreign
taxes, charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, uses, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i), and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Threshold" shall have the meaning specified in Section 15.4(a).
"Trademarks" shall have the meaning specified in the definition of
Transferred Intellectual Property.
"Transfer Taxes" shall mean all transfer, documentary, sales, use,
stamp, registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement (including
any real property transfer tax and any similar Tax).
"Transferred Intellectual Property" shall mean any or all the
following Intellectual Property (except for Excluded Assets) of Sellers used
primarily in the Business as it is being conducted on the date of this
Agreement, including: (i) all patents and patent applications (including
disclosures and provisional applications) and all reissues, divisions, renewals,
extensions, continuations and continuations-in-part thereof in any jurisdiction
in the world ("Patents"), subject to the rights of third parties, and all
trademarks, trade names, service marks and applications therefor ("Trademarks");
(ii) processes, formulas, computer software and other electronic media,
engineering designs, trade secrets, know-how, inventions and discoveries,
whether patented, patentable or not, including without limitation, those arising
from or relating to development, and design, manufacturing, engineering and
other technical information; (iii) all works of authorship, copyrights, mask
works, copyright and mask work registrations and applications therefor; (iv)
Sellers' rights under all licenses, agreements or other documents (to the extent
transferable), if any, under which intellectual property rights were granted to
Sellers by a third party, or to a third party by Sellers (collectively,
"Intellectual Property Licenses"); (v) the goodwill associated with the
Trademarks; (vi) tangible documentation of property and rights referred in
clauses (i)-(v); and (vii) all rights Sellers may have to ▇▇▇ for infringement
of or interference with property and rights referred in clauses (i)-(v) of this
definition.
"Transition Services Agreement" shall have the meaning specified in
Section 12(d).
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"Transitional Environmental Permits" shall have the meaning
specified in Section 14.7.
"US Benefit Plans" shall have the meaning specified in Section
6.15(b).
"US Business" shall have the meaning specified in Section 5.2.
"US Employees" shall have the meaning specified in Section 5.2.1(a).
"VCSEL" or "Vertical Cavity Surface Emitting Laser" shall mean a
semiconductor device that comprises a substrate and a plurality of semiconductor
layers formed on the substrate, where the device emits at least partially
coherent light perpendicular to the plurality of layers and where the plurality
of layers include an active layer with an active region, and the laser cavity is
established in a vertical direction with respect to the plane of the active
region.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act.
"Workers Compensation Program" shall mean statutory workers
compensation coverages and programs (and comparable coverages and programs) in
any jurisdiction.
16.11 Headings. The headings and subheadings of this Agreement are
inserted for convenience of reference only and shall not affect the
interpretation of this Agreement.
16.12 Amendment. This Agreement may be amended only in a writing signed by
all parties hereto.
16.13 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede all previous agreements, understandings or
discussions with respect to the subject matter hereof. Except as set forth in
the preceding sentence, any and all prior arrangements, representations,
promises, understandings and conditions in connection with said subject matter
and any representations, promises or conditions not expressly incorporated
herein or expressly made a part hereof shall not be binding upon any party
hereto.
16.14 Waivers. Any waiver of rights hereunder must be set forth in writing
signed by the party against whom the waiver is to be effective. A waiver of any
breach or failure to enforce any of the terms or conditions of this Agreement
shall not in any way affect, limit or waive any party's rights at any time to
enforce strict compliance thereafter with every term or condition of this
Agreement for any other breach or failure to comply with the terms and
conditions of this Agreement.
16.15 Third Party Rights. Except as otherwise provided in Article 15
hereof with respect to the indemnification obligations for the benefit of
directors, officers, employees and Affiliates, the provisions of this Agreement
are for the sole benefit of Purchaser and Sellers and shall not inure to the
benefit of any other Person
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(other than permitted assigns of the parties hereto) either as a third party
beneficiary or otherwise.
16.16 Severability. If and to the extent that any court of competent
jurisdiction holds any provisions (or any part thereof) of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
16.17 No Rights of Set Off. Purchaser waives and relinquishes any and all
rights to set off or to apply any monies held or indebtedness or other
obligations now or hereafter owing by Purchaser to Sellers or any of their
Affiliates against any obligations of Sellers or any of their Affiliates now or
hereafter existing under this Agreement or any Ancillary Agreement.
16.18 Agency. All Sellers other than Honeywell hereby appoint Honeywell as
their agent, for all purposes under this Agreement, including the giving of
notices and the conduct of any dispute resolution.
16.19 Consent to Jurisdiction. Subject to the final sentence of Section
16.9, each Purchaser and each Seller hereby submits to the exclusive
jurisdiction of the courts of general jurisdiction of the State of New York and
the federal courts of the US located in the City of New York solely in respect
of the interpretation and enforcement of the provisions of this Agreement and
any other agreement, instrument or other document entered into in connection
herewith and hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of this
Agreement or any such other agreement, instrument or other document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in such courts or that this Agreement or any such other
agreement, instrument or other document may not be enforced in or by such courts
or that its property is exempt or immune from execution, that the suit, action
or proceeding is brought in an inconvenient forum, or that the venue of the
suit, action or proceeding is improper. Service of process with respect thereto
may be made upon any Purchaser or Seller by mailing a copy thereof by registered
or certified mail, postage prepaid, to such party at its address as provided in
Section 16.5 hereof, provided that service of process may be accomplished in any
other manner permitted by applicable Law.
16.20 Terms Generally. (i) Words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include the
other gender as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Attachments hereto) and not to any particular provision of this Agreement,
and Article, Section, paragraph, Attachment, Exhibit and Schedule references are
to the Articles, Sections, paragraphs, Attachments, Exhibits and Schedules to
this Agreement unless otherwise specified, (iii) the word "including" and words
of similar import when used in this Agreement shall mean "including, without
limitation," unless otherwise specified, (iv) the word "or" shall not be
exclusive and (v) the language used in this Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
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[The next page is the signature page]
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IN WITNESS WHEREOF, the duly authorized officers or representatives of the
parties hereto have duly executed this Asset Purchase Agreement as of the date
first written above.
HONEYWELL INTERNATIONAL INC.
By: _______________________________________
Name:
Title:
HONEYWELL INTELLECTUAL
PROPERTIES INC.
By: ______________________________________
Name:
Title:
FINISAR CORPORATION
By: ______________________________________
Name:
Title:
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