EXHIBIT 10.18
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
BY AND AMONG
SCIENTIFIC-ATLANTA, INC.
(a Georgia Corporation)
AND
ARRIS INTERNATIONAL, INC.
(a Delaware Corporation)
TEXSCAN DE MEXICO, S.A. DE C.V.
(a Mexican Company)
November 13, 2002
Table of Contents
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1. PURCHASE AND SALE OF ASSETS....................................................................1
1.1 Purchase and Sale.....................................................................1
1.2 Excluded Assets.......................................................................3
1.3 Excluded Contracts....................................................................3
1.4 Purchase Price; Total Consideration...................................................4
1.5 Assumption of Certain Liabilities.....................................................4
1.6 Obligations Not Assumed...............................................................5
1.7 Sales Taxes...........................................................................6
1.8 Prepaids; Accruals....................................................................6
1.9 Allocation of Purchase Price..........................................................6
1.10 Closing...............................................................................6
1.11 Transactions and Documents at Closing.................................................6
1.12 Post-Closing Purchase Price Adjustment................................................7
2. ADDITIONAL AGREEMENTS.........................................................................10
2.1 Purchaser's Access and Inspection....................................................10
2.2 Confidentiality......................................................................11
2.3 Cooperation..........................................................................11
2.4 Expenses.............................................................................11
2.5 Brokers..............................................................................11
2.6 Covenant Against Competition.........................................................11
2.7 Public Announcements.................................................................12
2.8 Waiver of Bulk Sales Law Compliance..................................................12
2.9 Employees............................................................................12
2.10 Employee Benefit Plans and Other Liabilities.........................................14
2.11 Welfare Plans........................................................................14
2.12 Workers' Compensation................................................................15
2.13 Pre-Closing Warranty Obligations.....................................................15
2.14 Agreements with Contract Manufacturers and OEMs......................................15
2.15 Settlement of Patent Dispute; Cross License; Patent Licenses.........................16
2.16 Distribution Agreement...............................................................17
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2.17 Transition Services Agreement........................................................17
2.18 Amendment to Fixed Assets Register...................................................17
2.19 Exclusion of Certain Purchase Orders.................................................18
2.20 Consignment of Solectron Component Inventory.........................................18
2.21 Fulfillment of Certain Distribution and Customer Sales Agreements....................19
2.22 Additional Purchase Orders...........................................................19
3. REPRESENTATIONS AND WARRANTIES OF SELLER......................................................19
3.1 Schedules............................................................................19
3.2 Organization and Compliance..........................................................20
3.3 Enforceability of Agreement..........................................................20
3.4 No Inconsistent Obligations..........................................................20
3.5 Consents.............................................................................20
3.6 Possession of Franchises, Licenses, Etc..............................................21
3.7 Financial Statements.................................................................21
3.8 Liabilities..........................................................................21
3.9 Title to Properties; Sufficiency of Assets...........................................21
3.10 Inventories..........................................................................21
3.11 Returns and Consignments; Warranty Obligations.......................................22
3.12 Fixed Assets.........................................................................22
3.13 Authority to Conduct Business and Intellectual Property Rights.......................22
3.14 Assigned Contracts...................................................................24
3.15 Contingencies........................................................................24
3.16 Taxes................................................................................25
3.17 Employment Matters...................................................................25
3.18 Employee Benefit Matters.............................................................25
3.19 Environmental Matters................................................................26
3.20 Absence of Certain Business Practices................................................26
3.21 Agreements and Transactions with Related Parties.....................................27
3.22 Absence of Changes...................................................................27
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3.23 Full Disclosure......................................................................28
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................................28
4.1 Organization.........................................................................28
4.2 Authorization; No Inconsistent Agreements............................................28
4.3 Full Disclosure......................................................................28
5. CONDUCT OF SELLER'S ACTIVES BUSINESS PENDING CLOSING..........................................28
5.1 Business in the Ordinary Course......................................................29
5.2 No Material Changes..................................................................29
5.3 Compensation.........................................................................29
5.4 Employee Benefit Plans...............................................................30
6. CONDITIONS TO OBLIGATIONS OF PURCHASER........................................................30
6.1 Representations and Warranties.......................................................30
6.2 Compliance with Agreements and Conditions............................................30
6.3 Certificates of Seller...............................................................30
6.4 Resolutions..........................................................................30
6.5 Government Consents..................................................................30
6.6 Required Consents....................................................................30
6.7 Employment of Key Employees..........................................................30
6.8 Settlement and Cross-License Agreement...............................................31
6.9 Transition Services Agreement........................................................31
6.10 Release of Liens.....................................................................31
6.11 No Inconsistent Requirements.........................................................31
7. CONDITIONS TO OBLIGATIONS OF SELLER...........................................................31
7.1 Representations and Warranties.......................................................31
7.2 Compliance with Agreements and Conditions............................................31
7.3 Certificate of Purchaser.............................................................31
7.4 Resolutions..........................................................................31
7.5 Settlement and Cross-License Agreement; Limited Patent License Agreement.............31
7.6 No Inconsistent Requirements.........................................................32
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8. INDEMNITIES...................................................................................32
8.1 Indemnification of Purchaser.........................................................32
8.2 Defense of Claims....................................................................32
9. PAYMENT OF INDEMNIFIED LOSSES.................................................................33
9.1 Limitations on Liability.............................................................33
9.2 Set-Off Against Additional Payments..................................................33
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATIONS AND OTHER PROVISIONS.............34
10.1 Survival.............................................................................34
10.2 Liabilities Not Assumed..............................................................34
10.3 Covenants............................................................................34
11. TERMINATION...................................................................................34
11.1 Termination for Certain Causes.......................................................34
12. MISCELLANEOUS.................................................................................35
12.1 Notices..............................................................................35
12.2 Counterparts.........................................................................36
12.3 Entire Agreement.....................................................................36
12.4 Governing Law........................................................................36
12.5 Successors and Assigns...............................................................36
12.6 Partial Invalidity and Severability..................................................36
12.7 Waiver...............................................................................36
12.8 Headings.............................................................................36
12.9 Number and Gender....................................................................36
12.10 Time of Performance..................................................................37
12.11 Definition of Knowledge..............................................................37
13. INDEX OF DEFINITIONS..........................................................................37
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EXHIBITS AND SCHEDULES
EXHIBITS TO AGREEMENT FOR PURCHASE AND SALE OF ASSETS:
Exhibit Description
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A Allocation of Purchase Price
B General ▇▇▇▇ of Sale and Assignment
C Assumption Agreement
D Settlement and Cross-License Agreement
E Limited Patent License Agreement
F Transition Services Agreement
SCHEDULES TO AGREEMENT FOR PURCHASE AND SALE OF ASSETS:
Schedule Description
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1.1(a) Fixed Assets Register
1.1(b) Physical Count Inventory Listing
1.1(e) Assigned Contracts
1.1(f) P.O. Register
1,12(a)(ii)(C) Scrapped Inventory
2.9 Excluded Employees
2.14 Contract Manufacturer Agreements
2.18(a) Assets on Fixed Assets Register and Used in Conduct of
Excluded Businesses
2.18(b) Assets Not on Fixed Assets Register but Used in Conduct of
Actives Business
2.20 Solectron Component Inventory Detail
2.21 Excluded Distribution & Sales Agreements
2.22 Additional Purchase Orders
3.2 Foreign Qualifications; Prior Names; Locations of
Transferred Assets; and Places of Business
3.4 Inconsistent Obligations
3.5 Required Consents
3.7 Exceptions to Financial Statements
3.8 Liabilities of Seller
3.9 Permitted Liens
3.11(a) Returns and Consignments
3.11(b) Standard Warranty Terms
3.11(c) Exceptions to Standard Warranty Terms
3.11(d) Potential Catastrophic Failures
3.12 Exceptions to Condition, Use or Operation of Personal
Property
3.13(b) License In Agreements
3.13(c) License Out Agreements
3.13(e) IP Patents
3.13(f) IP Trademarks
3.13(g) Claims or Proceedings Regarding Intellectual Property
3.15 Contingencies
3.16 Tax Matters
3.17(a) Collective Bargaining Agreements
3.17(b) Health and Safety Matters
3.18(a) Plans
3.18(b) Plan Administration Matters
3.19 Environmental Matters
3.21 Related Party Transactions
3.22 Changes since Reference Date
6.7 Key Employees
12.11 Knowledge of Seller
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AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is made and entered into as of the 13th day of November,
2002, by and among SCIENTIFIC-ATLANTA, INC., a corporation organized under the
laws of the State of Georgia ("PURCHASER"), ARRIS INTERNATIONAL, INC., a
corporation organized under the laws of the State of Delaware ("ARRIS INTL"),
and TEXSCAN DE MEXICO, S.A. DE C.V., a company organized under the laws of
Mexico and the wholly-owned subsidiary of ARRIS Intl ("ARRIS MEXICO") (ARRIS
Intl and ARRIS Mexico, being sometimes referred to herein, collectively and
jointly and severally, as "SELLER").
W I T N E S S E T H:
WHEREAS, Seller, through that portion of its business generally known
as the Actives Electronics Business (the "ACTIVES DIVISION"), is engaged in the
business of designing, manufacturing, distributing and selling (i) RF
transmission products, including but not limited to RF amplifiers, RF
integrators and ▇▇ ▇▇▇▇▇▇▇ management products, and (ii) optical transmission
products, including but not limited to optical transmitters and nodes, DWDM
transport systems, multi-band block converters, and element management software,
including status monitoring and control systems (such business, collectively,
the "ACTIVES BUSINESS"); and
WHEREAS, Seller desires to sell and transfer to Purchaser and Purchaser
desires to acquire from Seller, the assets and properties of the Actives
Division which are used in or otherwise required for the conduct and operation
of Seller's Actives Business, upon the terms and conditions contained herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE. Subject to the terms and conditions
contained herein, Seller agrees to sell, transfer, convey and assign to
Purchaser, and Purchaser agrees to purchase and acquire from Seller, on the
Closing Date (as defined in Section 1.10 below), all of Seller's right, title
and interest in and to the assets and properties used primarily in the conduct
and operation of Seller's Actives Division, excluding therefrom the Excluded
Assets (as defined in Section 1.2(b) below) (such assets to be transferred, the
"TRANSFERRED ASSETS"), including, without limitation, the following:
(a) all of Seller's machinery and equipment, tooling,
production equipment, test equipment, motor vehicles, furniture and fixtures,
computer equipment and computer software (to the extent such software is
transferable; provided that, to the extent any software listed in the Fixed
Assets Register (hereinbelow defined) cannot be transferred to Purchaser and, in
accordance with Section 2.18(a) below, Purchaser determines such software is
required for the conduct of the Actives Business, an Adjustment in the purchase
price will be made in accordance with Section 1.12(a)(i) below) used primarily
in or otherwise required for the conduct and operation of Seller's Actives
Business, including, without limitation (i) all such items of machinery and
equipment, tooling, production equipment, test equipment, motor vehicles,
furniture and fixtures, computer equipment and computer software listed on the
"Actives Electronics-AIMS Fixed Assets Register, July 2002" (the "FIXED ASSETS
REGISTER"), a copy of which is attached hereto as Schedule 1.1(a) (with such
deletions from or additions to the Fixed Assets Register as are made in
accordance with the provisions of Section 2.18 below; as so amended by such
deletions or additions, the "AMENDED FIXED ASSETS REGISTER"), and (ii) all of
such assets included in "Machinery & equipment", "Furniture & fixtures", and
"Computer equipment &
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software" on the unaudited balance sheet of the Actives Business as of July 31,
2002 (the "JULY 31 BALANCE SHEET", as more fully hereinafter defined in Section
3.7), with only such additions and deletions as may have occurred since July 31,
2002 or may hereafter occur between the date hereof and the Closing Date in the
ordinary and necessary course of Seller's Actives Business in accordance with
Section 5 below (collectively, the "FIXED ASSETS");
(b) all of the inventories of raw materials,
work-in-process, and finished goods or products, of Seller's Actives Division in
existence at the close of business on the last business day before the Closing
Date, including, without limitation the items of inventory (i) included in the
listing of inventory prepared by Purchaser and Seller in connection with the
physical count of inventory conducted by the parties on or about October 15,
2002 (the "PHYSICAL COUNT INVENTORY LISTING"), a copy of which is attached
hereto as Schedule 1.1(b), and (ii) included in the listing of inventory on
Schedule 3.11(a), dated September 30, 2002, attached hereto, with only such
additions or deletions as may have occurred since the date of such Schedules,
respectively, or may hereafter occur between the date hereof and the Closing
Date in the ordinary and necessary course of Seller's Actives Business in
accordance with Section 5 below (collectively, the "INVENTORIES");
(c) all of the proprietary and confidential information
of Seller used primarily in, or otherwise required for, the conduct and
operation of Seller's Actives Business, including, without limitation: (i) trade
secrets, technical information, know-how, ideas, designs, processes, procedures,
algorithms, discoveries, patents, patent applications, and copyrights, and all
improvements thereof, relating to Seller's Actives Business and the products of
the Actives Division, including, but not limited to the IP Patents set forth in
Schedule 3.13(e), (ii) originals or copies of all data, files, books and
records, customer lists, and order information, (iii) any internally-developed
software used primarily in, or otherwise required for, the conduct of the
Actives Business, and (iv) all other information, intellectual property rights
and intangible property rights relating to the operation of the other
Transferred Assets or Seller's Actives Business, including but not limited to
the rights of Seller under the IP License Agreements set forth in Schedule
3.13(b) and Schedule 3.13(c) (but excluding therefrom any IP License Agreements
that are Excluded Contracts (as defined in Section 1.3 below));
(d) all of the trademarks, service marks, and trade names
of Seller used primarily in, or otherwise required for, the conduct and
operation of Seller's Actives Business (excluding therefrom, any trademark,
service ▇▇▇▇ or trade name incorporating in whole or in part the name "ARRIS" or
the name "ANTEC") including the trademarks, service marks and trade names set
forth in Schedule 3.13(f) hereto, and all registrations and pending applications
therefor, and all goodwill associated therewith;
(e) all of Seller's right, title and interest under the
(i) sales agreements, contract manufacturing agreements, OEM agreements, leases,
licenses and other agreements which are identified in Schedule 1.1(e) attached
hereto, and (ii) the sales or customer orders listed in the sales order backlog
which also is identified in Schedule 1.1(e) attached hereto (the "SALES ORDER
BACKLOG"), together with sales orders which are issued by customers to Seller
and entered into by Seller after the date of such Sales Order Backlog in the
ordinary and necessary course of Seller's Active Business in accordance with
Section 5 below (all such sales or customer orders, the "SALES ORDERS") (all of
the foregoing, together with the Purchase Orders referred to in Section 1.1(f)
below, but excluding therefrom the Excluded Contracts (defined in Section 1.3
below), collectively, the "ASSIGNED CONTRACTS");
(f) subject to the provisions of Section 1.3 and Section
2.19 below, all of Seller's right, title and interest under (i) the purchase
orders listed on the order entry registered dated October 31, 2002 (the "P.O.
REGISTER"), a copy of which is attached hereto as Schedule 1.1(f), that remain
open or unfilled in whole or in part as of the Closing Date, together with (ii)
purchase orders which are entered into by Seller after the date of the P.O.
Register in the
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ordinary and necessary course of Seller's Actives Business in accordance with
Section 5 below, at prices and on terms consistent with the prior operating
practices of Seller's Actives Division (collectively, all of the foregoing, the
"PURCHASE ORDERS");
(g) all deposits, prepaids and other assets of similar
nature related to the Transferred Assets or otherwise arising from the conduct
of the Actives Business (the "PREPAIDS"), if any, but only to the extent such
Prepaids are included in the calculation of the Post-Closing Purchase Price
Adjustment (as hereinafter defined in Section 1.12); and
(h) all of Seller's right and interest in all rights,
choses in action and claims, known or unknown, matured or unmatured, accrued or
contingent, against third parties, arising from or relating to any of the other
Transferred Assets or any Assigned Contract.
1.2 EXCLUDED ASSETS. Notwithstanding anything in this Agreement to
the contrary, the Transferred Assets shall not include the following
(collectively, all of the following, the "EXCLUDED ASSETS"):
(a) the assets and properties of Seller's (i) taps and
passives business, product lines and developments, (ii) fiber-to-the-business
and fiber-to-the-home businesses, product lines and developments, (iii) Atoga
product lines and developments, (iv) cable telephone and data businesses
(whether CBR, IP, DOCSIS or other transmission protocols), products, product
lines and any developments, improvements, enhancements or extensions thereof
(including without limitation Host Digital Terminals, Voice Ports, Packet Ports,
Telephony Ports, Cable Modem Termination Systems (CMTSs), Cable Modems, Home
Gateways, Universal Access Switches, Universal Services Gateways, Commercial
Services Gateways whether under Seller's Cornerstone(R), Cadant(R),
Touchstone(R), Global Access(TM) marks or any other name), (v) the Keptel
business, (vi) the ARRIS Electronic Systems Products business, (vii) the ARRIS
Telewire business, and (viii) the ARRIS Powering business (collectively, all of
the foregoing, the "EXCLUDED BUSINESSES") (including for these purposes as
Excluded Assets, the assets and equipment listed on Schedule 2.18(a) (or part
thereof) that, in accordance with the provisions of Section 2.18, are determined
by Purchaser not to be required for the conduct of the Actives Business are
thereby excluded from the Transferred Assets); and
(b) certain assets of Seller's Active Business that shall
be excluded from the Transferred Assets (the "EXCLUDED ACTIVES ASSETS"),
including only (i) cash, (ii) any fee interest or leasehold interest in any land
or buildings used in the conduct of the Actives Business, or any other interest
in real property, (iii) any of the notes and accounts receivable of Seller
arising from or as a result of Seller's Actives Business, (iv) any of Seller's
rights and interests in or under any Excluded Contract or otherwise in or under
any contract or agreement other than the Assigned Contracts, (v) the employee
and personnel records of the Actives Business, (vi) any trademark, service ▇▇▇▇
or trade name of Seller incorporating in whole or in part the name "ARRIS" or
the name "ANTEC" regardless of whether such ▇▇▇▇ or name is used in the conduct
of Seller's Actives Business, (vii) all of the assets included within the "Other
fixed assets" category on the July 31 Balance Sheet, (viii) subject to the
provisions of Section 2.20 below, the Solectron Component Inventory (as defined
below in Section 1.3), and (ix) any rights or interests of Seller under any of
the insurance policies of Seller.
1.3 EXCLUDED CONTRACTS. Anything herein to the contrary
notwithstanding, the Assigned Contracts shall not include any of the following
contracts and agreements (and none of the following contracts and agreements
shall be listed on, or be construed to be a part of the contracts and agreements
listed on, Schedule 1.1(e)): (i) all purchase orders for RF hybrid part number
495118622; (ii) any purchase orders for component parts (or portion of such
purchase orders) excluded from the Transferred Assets in accordance with the
provisions of Section 2.19 below (if any); (iii) subject to the provisions of
Section 2.20 below, that certain purchase order dated on or about October 15,
2002 (or other agreement) with Solectron to repurchase from
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Solectron certain excess component inventory at a purchase price of $367,000,
approximately (the "SOLECTRON COMPONENT INVENTORY"), (iv) except for the AT&T
Broadband Sales Contract dated December 1, 1999, as amended (which agreement is
listed on Schedule 1.1(e) and is an Assigned Contract hereunder), and subject to
the provisions of Section 2.21 below, any and all customer sales agreements and
distribution agreements, including but not limited to that the certain
distribution agreement with Antec S.A., providing for the exclusive distribution
of the products of the Actives Business in South America by Antec S.A.; (v) the
License In Agreement (as hereinafter defined) with Lucent Technologies GRL
Corporation dated February 1, 2000, (vi) the License In Agreement with DiTech
Communications Corp. dated August 13, 1999; (vii) the Contract Manufacturer &
OEM Agreements (as hereinafter defined in Section 2.14) that Purchaser
determines, in its sole discretion, are not to be assigned and transferred by
Seller to Purchaser at Closing but instead are to be terminated (as defined in
Section 2.14, "EARLY CONTRACT TERMINATION") in accordance with the provisions of
Section 2.14; (viii) any and all purchase orders issued after the date hereof to
any vendor or supplier under any Excluded Contract with any vendor or supplier;
and (ix) any sales or customer orders issued under any Excluded Distribution &
Sales Agreement (as defined below) (collectively, all of the foregoing contracts
and agreements, the "EXCLUDED CONTRACTS").
1.4 PURCHASE PRICE; TOTAL CONSIDERATION.
(a) In connection with the purchase and sale of the
Transferred Assets, Purchaser shall pay to Seller, subject to adjustment in
accordance with the provisions of Section 1.12 below, an aggregate sum of
$37,500,000 (the "TOTAL CONSIDERATION").
(b) The Total Consideration shall be paid by Purchaser to
Seller (i) on the Closing Date and (ii) subject to the provisions of Section
1.12 below, on the Additional Payment Date (as defined below), as follows:
(i) On the Closing Date, Purchaser shall pay to
Seller, in immediately available funds, an amount equal to $32,500,000
(the "CLOSING PAYMENT"); and
(ii) Subject to the provisions of Section 1.12
below, on that date (the "ADDITIONAL PAYMENT DATE") which is ten (10)
days after the Adjustment Date (as hereinafter defined in Section
1.12(a) below), Purchaser shall pay to Seller, in immediately available
funds, an amount equal to $5,000,000 (the "ADDITIONAL PAYMENT"),
together with interest thereon from the Closing Date until paid at an
annual rate of interest equal LIBOR plus 50 basis points.
1.5 ASSUMPTION OF CERTAIN LIABILITIES.
(a) Purchaser agrees to assume on the Closing Date, and
to pay or perform in accordance with their terms, the following fixed and
determinable obligations and liabilities of Seller relating to Seller's Actives
Business or the Transferred Assets (collectively the "ASSUMED LIABILITIES"):
(i) Seller's obligations arising from and after
the Closing Date to pay when due amounts owing and perform obligations
under the Assigned Contracts; provided that, Purchaser will not assume
any obligation or liability resulting from or arising out of any
default, breach or non-performance by Seller prior to the Closing Date
under or with respect to any of the Assigned Contracts;
(ii) the accrued but unpaid expenses arising from
the conduct of Seller's Active Business and relating solely to the
Transferred Assets (the "ACCRUALS"), if
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any, but only to the extent such Accruals are included in the
calculation of the Post-Closing Purchase Price Adjustment; and
(iii) Seller's obligations to perform
repair-or-replace service warranty work on products sold by Seller to
the customers of Seller's Actives Business prior to the Closing Date
(the "PRE-CLOSING WARRANTY OBLIGATIONS"), subject however to the
following:
(A) from and after the Closing Date,
Purchaser shall assume and perform the Pre-Closing Warranty
Obligations of Seller;
(B) from and after the Closing Date,
Purchaser shall be solely liable for, incur and pay such
Pre-Closing Warranty Obligations up to an amount equal to
$2,000,000 (said amount to include only the direct labor,
material and conversion costs incurred to satisfy or fulfill
such Pre-Closing Warranty Obligations, and to exclude any
indirect costs, overheads, or corporate charges or
allocations) (the "DIRECT WARRANTY COSTS");
(C) if and to the extent that the Direct
Warranty Costs incurred by Purchaser to satisfy or fulfill the
Pre-Closing Warranty Obligations exceed $2,000,000, in the
aggregate and at any future date, then in such event, Seller
shall be liable for and shall reimburse to Purchaser one-half
(50%) of the amount of such Direct Warranty Costs in excess of
$2,000,000 (as more fully hereinafter defined in Section
2.13(b), the "EXCESS DIRECT WARRANTY COSTS"), subject to and
in accordance with the provisions of Section 2.13 below.
(b) Nothing contained in this Section 1.5 or in any
instrument of assumption executed by Purchaser at the Closing shall be deemed to
release or relieve Seller from its representations, warranties, covenants and
agreements contained in this Agreement or in any certificate, schedule,
instrument or document executed pursuant hereto or in connection herewith,
including, without limitation, the obligations of Seller to indemnify Purchaser
in accordance with the provisions of Section 8 below.
1.6 OBLIGATIONS NOT ASSUMED. Except for the Assumed Liabilities,
Purchaser shall not assume any obligation or liability of Seller of any kind,
and Seller shall pay, satisfy and perform all of its obligations (other than the
Assumed Liabilities), whether fixed, contingent, known or unknown and whether
existing as of the Closing or arising thereafter, which may affect in any way
the Transferred Assets or the operation of the Actives Business. Without
limiting the generality of the foregoing, under no circumstances shall Purchaser
be deemed to assume any liability or obligation of Seller arising out of or
relating to: (a) any actual or alleged tortious conduct of Seller or any of its
employees or agents; (b) any product liability claim, or any claim arising out
of Seller's infringement or alleged infringement of any third party's
Intellectual Property; (c) any claim predicated on strict liability or any
similar legal theory; (d) the violation of any law, ordinance or regulation
prior to the Closing; (e) any business or business activities of Seller which
are not part of Seller's Actives Business; (f) any liability of Seller for any
taxes of any kind or character; (g) any liability, expense or accrued expense
for salaries, wages, bonus, vacation pay or other item of employee compensation
or employee benefits with respect to any employee of Seller, including, but not
limited to, any such liability, expense or accrued expenses of Seller existing
or accrued as of the Closing with respect to the Transferred Employees to be
employed by Purchaser pursuant to Section 2.9 below, or (h) any liability of
Seller under or arising by reason of this Agreement. Notwithstanding any other
provision of this Agreement, the obligations of Seller pursuant to this
paragraph shall survive the Closing and the transactions contemplated by this
Agreement.
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1.7 SALES TAXES. Seller, on the one hand, and Purchaser, on the
other hand, each shall pay fifty percent (50%) of any and all sales, use,
excise, transfer, value added and similar taxes imposed by any governmental
authority in any jurisdiction in connection with the transactions contemplated
herein. The parties agree to cooperate with one another to make application for
and secure any exemptions from, or credits in respect of, any such sales, use,
excise, transfer, goods and services tax or value-added tax, and to execute such
documents, forms and applications as may be required to secure such exemptions
or credits.
1.8 PREPAIDS; ACCRUALS. The following accrued but unpaid expenses
or prepaid items relating to Seller's Actives Business and the Transferred
Assets existing or accrued as of the Closing Date shall be included in the
calculation of the Post-Closing Purchase Price Adjustment: (a) ad valorem and
similar taxes with respect to the Transferred Assets; (b) rents, royalties and
other payments, if any, due under the Assigned Contracts; (c) deposits with
respect to the Transferred Assets; (d) license fees relating to any of the
Transferred Assets; and (e) governmental assessments and charges for services to
or with respect to any of the Transferred Assets.
1.9 ALLOCATION OF PURCHASE PRICE. The parties agree that the
Total Consideration is being paid for, and shall be allocated among, the
Transferred Assets and noncompetition covenants as set forth on Exhibit A
attached hereto, or in accordance with such other allocation as the parties
shall mutually agree not later than one hundred twenty (120) days after the
Closing Date; and, such allocation shall be made in conformity with Section
1060(b) of the Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE
CODE") the regulations promulgated thereunder (and neither party shall
unreasonably withhold its consent from or its agreement to an allocation made in
conformity with such statutes, regulations or rules). Purchaser and Seller agree
to cooperate in filing all information required by Section 1060(b) of the
Internal Revenue Code and the regulations thereunder, and to take no position on
any income tax return, report or filing inconsistent with such allocation;
provided that nothing herein shall be construed as a warranty by one party to
the other than such allocation will be accepted or agreed by any taxing
authority.
1.10 CLOSING. Unless otherwise agreed by the parties in writing,
the consummation of the transactions contemplated in this Agreement (the
"CLOSING") shall take place at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, Suite 2400, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m. local time, on the later of: (a) November 21, 2002; or (b) the second
business day after the date on which all conditions to closing contained in
Sections 6 and 7 have been satisfied (the "CLOSING DATE"); provided, however,
that if the conditions to closing contained in Sections 6 and 7 have not been
satisfied or waived by December 31, 2002 (the "TERMINATION DATE"), the
obligations of the parties to consummate the transactions contained herein shall
terminate. Provided, however, that such termination shall not discharge or
otherwise affect any liability of either party for failure to comply with or
perform its obligations to satisfy any such conditions.
1.11 TRANSACTIONS AND DOCUMENTS AT CLOSING.
(a) At the Closing:
(i) Seller shall convey to Purchaser all of
Seller's right, title and interest in and to the Transferred Assets,
free and clear of any and all liens, claims, charges and encumbrances,
and in furtherance thereof shall deliver to Purchaser one or more
General Bills of Sale and Assignment in substantially the form attached
hereto as Exhibit B, together with such other bills of sale,
assignments, certificates of title, documents and other instruments of
transfer and conveyance as Purchaser and its legal counsel shall
reasonably request, including but not limited to any forms or
assignments
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required to transfer to Purchaser the IP Patents and IP Trademarks, and
all registrations thereof; and
(ii) upon such delivery by Seller: Purchaser
shall (A) pay the Closing Payment, in accordance with and subject to
the provisions of Section 1.4(b)(i) above; and Purchaser shall assume
the Assumed Liabilities by delivering to Seller one or more Assumption
Agreements in substantially the form attached hereto as Exhibit C.
(b) All deliveries, payments and other transactions and
documents relating to the Closing shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing).
(c) Each party shall, at the request of any other party
from time to time and at any time, whether on or after the Closing Date, and
without further consideration, execute and deliver such deeds, assignments,
transfers, assumptions, conveyances, powers of attorney, receipts,
acknowledgements, acceptances and assurances as may be reasonably necessary to
procure for the party so requesting, and its successors and assigns, or for
aiding and assisting in collecting and reducing to possession, any and all of
the Transferred Assets or the Assumed Liabilities, or otherwise to satisfy and
perform the obligations of the parties hereunder.
1.12 POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) Within sixty (60) days after Closing, Purchaser shall
deliver to Seller (the date of such delivery being the "ADJUSTMENT DATE") a
statement (the "STATEMENT") showing its calculation of the post-closing purchase
price adjustment ("POST-CLOSING PURCHASE PRICE ADJUSTMENT" or "ADJUSTMENT"), as
follows:
(i) FIXED ASSETS. The Statement shall itemize
the Fixed Assets delivered by Seller to Purchaser on the Closing Date
(taking into account, the items of Fixed Assets included or excluded
under the provisions of Section 2.18 below), in the same categories or
groupings of assets as shown for Fixed Assets on the July 31 Balance
Sheet, showing for each such category or grouping of items of Fixed
Assets, in the aggregate for all such items in such category, the
original cost for such items, the accumulated depreciation for such
items, and the resulting net book value for all such items, all
determined in accordance with generally accepted accounting principles
(the total net book value of all categories of all such Fixed Assets
delivered by Seller to Purchaser on the Closing Date, the "TOTAL NET
BOOK VALUE OF FIXED ASSETS DELIVERED").
(A) If the Total Net Book Value of the Fixed
Assets Delivered exceeds $3,760,021 (the "TARGET NET BOOK
VALUE OF FIXED ASSETS", subject to and as the same may be
adjusted in accordance with the provisions of Section 2.18
below), then a positive purchase price adjustment (in favor of
Seller) shall be made in an amount equal to such excess; or,
alternatively (subject to application of the Fixed Asset
Threshold Amount, as set forth below),
(B) If the Total Net Book Value of the Fixed
Assets Delivered is less than the Target Net Book Value of
Fixed Assets (again, as may be adjusted in accordance with the
provisions of Section 2.18), then a negative purchase price
adjustment (in favor of Purchaser) shall be made in an amount
equal to such shortfall (again, subject to application of the
Fixed Asset Threshold Amount, as set forth below).
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(C) Provided, however, that if an item of
Fixed Assets listed in the Fixed Assets Register is not
delivered at Closing or otherwise missing (or, in the case of
an item of computer software, such item of software cannot be
transferred to Purchaser), and (1) if such missing or
non-transferable item has been fully depreciated on the Fixed
Assets Register or otherwise on Seller's books, and (2) if
Purchaser determines, in its reasonable discretion, that such
missing or non-transferable item is critical to the conduct of
the Actives Business, then in such case the Total Net Book
Value of Fixed Assets Delivered shall be reduced by an amount
equal to ten percent (10%) of the original cost of such
missing item.
Provided that, a Post-Closing Purchase Price Adjustment shall be made
pursuant to the provisions of this Section 1.12(a)(i) respecting the
Fixed Assets only if, and only to the extent that (i) in the case of an
Adjustment in favor of Seller, the Total Net Book Value of Fixed Assets
Delivered exceeds the Target Net Book Value of Fixed Assets plus
$150,000 (such $150,000 amount, the "FIXED ASSET THRESHOLD AMOUNT"), or
(ii) in the case of an Adjustment in favor of Purchaser, the Total Net
Book Value of Fixed Assets Delivered is less than the Target Net Book
Value of Fixed Assets minus the Fixed Asset Threshold Amount.
(ii) INVENTORIES. The Statement shall also
itemize in reasonable detail the Inventories delivered by Seller to
Purchaser on the Closing Date, showing for each item or category of
items of Inventory (at the part number level), Seller's unit standard
cost for such item(s) as of July 31, 2002, being the unit standard cost
for such items of inventory as shown on the July 31, 2002 perpetual
inventory (and not the net inventory after any reserves), said unit
standard cost as of July 31 to also be provided on the Physical Count
Inventory Listing (or schedule attached thereto) for each item of
inventory listed therein (or, in the case of a new part number, if the
unit standard cost as of July 31, 2002, of any item is not available,
then such item of inventory shall be valued at its original cost); and,
the Statement shall show the total standard cost in the aggregate for
all such items of Inventory delivered by Seller to Purchaser on the
Closing Date (the "TOTAL STANDARD COST OF INVENTORY DELIVERED").
(A) If the Total Standard Cost of the
Inventory Delivered exceeds $32,363,000 (the "TARGET STANDARD
COST OF INVENTORY", subject to and as the same may be amended
in accordance with the provisions of Section 1.12(a)(ii)(C)
below), then a positive purchase price adjustment (in favor of
Seller) shall be made in an amount equal to such excess; or,
alternatively,
(B) If the Total Standard Cost of the
Inventory Delivered is less than the Target Standard Cost of
Inventory, then a negative purchase price adjustment (in favor
of Purchaser) shall be made in an amount equal to such
shortfall.
(C) Schedule 1.12(a)(ii)(C) attached hereto
sets forth, by part number for each item of such Inventory, a
listing of items of Inventory scrapped since July 31, 2002. If
and to the extent that (i) such items of inventory that have
been scrapped have been specifically identified as reserved in
such Schedule (and not merely charged to a general reserve),
and (ii) the aggregate standard cost of all such items of
scrapped inventory (determined on the basis of the unit
standard cost shown in the July 31, 2002 perpetual inventory)
does not exceed $260,000, then the Target Standard Cost of
Inventory shall be reduced by the amount of such aggregate
amount of scrapped inventory (such reduction in the Target
Standard Cost of Inventory not to exceed, in any event,
$260,000).
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(iii) PREPAIDS; ACCRUALS. The Statement shall also
itemize in reasonable detail the amount of the Prepaids transferred by
Seller to Purchaser at Closing and the amount of the Accruals assumed
by Purchaser from Seller at Closing.
(A) If the amount of the Prepaids exceed the
amount of the Accruals, then a positive purchase price
adjustment (in favor of Seller) shall be made in an amount
equal to such excess; or, alternatively,
(B) If the amount of the Prepaids is less
than the amount of the Accruals, then a negative purchase
price adjustment (in favor of Purchaser) shall be made in the
amount of such shortfall.
(iv) POST-CLOSING PURCHASE PRICE ADJUSTMENT. The
Statement shall calculate the aggregate, net Post-Closing Purchase
Price Adjustment, whether it be a net positive purchase price
adjustment owing by Purchaser to Seller or, alternatively, a net
negative purchase price adjustment owing by Seller to Purchaser,
computed in accordance with the foregoing provisions of Section
1.12(a)(i), (ii) and (iii) and taking into account each of the positive
and negative purchase price adjustments for Fixed Assets, Inventory,
and Prepaids and Accruals.
(b) In rendering the Statement showing the Post-Closing
Purchase Price Adjustment, Purchaser and its accountants shall consult with
Seller and its accountants as may be necessary to determine such Adjustment in
accordance with the terms hereof, and as may be required Seller shall grant to
Purchaser and its accountants access to and copies of such of Seller's books and
records necessary to determine the Adjustment and prepare the Statement.
(c) Any dispute which may arise between Purchaser and
Seller as to the Statement or any part thereof, and the calculation of the
Post-Closing Purchase Price Adjustment, shall be resolved in the following
manner:
(i) If Seller disputes the Statement or the
Post-Closing Purchase Price Adjustment, Seller shall notify the
Purchaser in writing within ten (10) days after the Adjustment Date,
and shall specify in detail the basis and reason for such dispute and
the amount which is in dispute (the "DISPUTED AMOUNT");
(ii) during the twenty (20) day period following
the date of such notice, Purchaser and Seller shall attempt to resolve
such dispute; and
(iii) if at the end of the twenty (20) day period
specified in clause (ii) above, the parties shall have failed to reach
agreement with respect to such dispute, the matter shall be referred to
the Atlanta office of PriceWaterhouse Coopers, or such other firm of
independent certified public accountants as the parties mutually agree,
who shall act as an arbitrator. The arbitrator shall be instructed to
use every reasonable effort to perform such services within thirty (30)
days of the submission to it of the Statement and related dispute and,
in any case, as soon as practicable after such submission. Each of the
parties shall bear all costs and expenses incurred by it in connection
with such arbitration, and the fees of the arbitrator shall be shared
equally by the Purchaser, on the one hand, and Seller, on the other
hand. The provision for arbitration shall be specifically enforceable
by the parties and the decision of the arbitrator in accordance with
the provisions hereof shall be final and binding and there shall be no
right of appeal therefrom.
(d) Subject to the provisions of Section 1.12(e) below,
within ten (10) days after the Adjustment Date, the amount of the Post-Closing
Purchase Price Adjustment shall be paid by Purchaser to Seller, or as the case
may be, by Seller to Purchaser, in either case in
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immediately available funds. Any payment made under this Section 1.12(d) shall
bear interest from the Closing Date until paid at an annual rate of interest
equal to the one month London Interbank Offering Rate as published in the Wall
Street Journal on the Closing Date ("LIBOR"), plus fifty (50) basis points.
(e) Provided, however, that:
(i) At the election of Seller, any Adjustment
payable by Seller to Purchaser under Section 1.12(d) above may be
set-off against and reduce the amount otherwise due to Seller from
Purchaser on the Additional Payment Date; if, however, such Adjustment
payable by Seller to Purchaser exceeds the amount of such Additional
Payment, such excess amount shall be paid by Seller to Purchaser in
immediately available funds in accordance with the provisions of
Section 1.12(d) above (and the balance applied against, so as to reduce
to zero, the Additional Payment);
(ii) In the event of a dispute made in accordance
with the provisions of Section 1.12(c) above, (A) notwithstanding such
dispute, the parties shall make any adjusting payment required under
Section 1.12(d) above to the extent that the amount of the Adjustment
set forth in the Statement exceeds the Disputed Amount, at the time and
in the manner set forth above, (B) the balance (being the Disputed
Amount or such different amount compromised by the parties or
determined by arbitration (whether more or less than the Disputed
Amount) (the "SETTLEMENT AMOUNT"), together with interest thereon from
the Closing Date until paid at an annual rate of interest equal to
LIBOR, plus fifty (50) basis points, shall be paid within five (5) days
of such compromise or determination, (C) if such compromise or
determination is made prior to the payment of the Additional Payment,
the Settlement Amount, if owing by Seller to Purchaser, may be set-off
by Seller against the Additional Payment, subject to the limitations of
Section 1.12(e)(i) above and to the extent that any amount of
Additional Payment remains payable and outstanding, and (D) pending
such dispute and until the Settlement Amount is determined, Purchaser
shall have the right to withhold from the Additional Payment an amount
equal to the Disputed Amount; and
(iii) Purchaser shall have the right to set-off
against and reduce the Additional Payment payable by Purchaser to
Seller, by the amount of any Adjustment Amount or Settlement Amount
payable by Sellers to Purchaser, if and to the extent such Adjustment
Amount or Settlement Amount is not paid in full when due.
2. ADDITIONAL AGREEMENTS.
2.1 PURCHASER'S ACCESS AND INSPECTION. Seller shall provide
Purchaser and its authorized representatives reasonable access during normal
business hours from and after the date hereof until the Closing to the
Transferred Assets and the books and records of Seller relating to Seller's
Actives Business for the purpose of making such investigation as Purchaser may
require, and Seller shall furnish Purchaser such information concerning Seller's
Actives Business or the Transferred Assets as Purchaser may request. Seller
shall assist Purchaser in making such investigation and shall cause its counsel,
accountants, engineers, consultants and other non-employee representatives to be
reasonably available to and to cooperate with Purchaser for such purposes. No
investigation made heretofore or hereafter by Purchaser shall limit or affect
the representations, warranties, covenants and indemnities of Seller hereunder,
each of which shall survive any such investigation. Purchaser acknowledges that
access by Purchaser to the books, records and information of the Excluded
Business and to proprietary information of third parties may be restricted.
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2.2 CONFIDENTIALITY. If the transactions contemplated herein are
not consummated, Purchaser shall return to Seller all documents and other
written information furnished by Seller to Purchaser, and Purchaser shall be and
remain bound by the provisions of that certain Confidentiality Agreement dated
May 15, 2002, by and between S-A and Seller.
2.3 COOPERATION. The parties shall cooperate fully with each other
and with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and all parties shall use their best efforts to consummate the
transactions contemplated herein and to fulfill their obligations hereunder,
including, without limitation, causing to be fulfilled at the earliest practical
date the conditions precedent to the obligations of the parties to consummate
the transactions contemplated hereby. Without the prior written consent of the
other parties, no party hereto may take any intentional action that would cause
the conditions precedent to the obligations of the parties hereto to effect the
transactions contemplated hereby not to be fulfilled, including, without
limitation, taking or causing to be taken any action which would cause the
representations and warranties made by such party herein not to be true, correct
and complete as of the Closing.
2.4 EXPENSES.
(a) All expenses incurred by Purchaser in connection with
the authorization, preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants for Purchaser, shall be paid by Purchaser. All expenses
incurred by Seller in connection with the authorization, preparation, execution
and performance of this Agreement, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants for Seller shall be
paid by Seller.
(b) The parties understand and agree that (i) Seller
shall, with the assistance of Purchaser, pack, palletize, wrap the Inventories,
and load the Inventories and the Fixed Assets and other tangible Transferred
Assets on Purchaser's trucks at Seller's facilities, and (ii) Purchaser shall be
responsible for the shipment, carriage and delivery of such Transferred Assets
from Seller's facilities to Purchaser's facilities and the expense and costs
thereof, including insurance costs.
2.5 BROKERS. Each party hereto represents and warrants that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated herein. Each party shall indemnify the other
parties and hold them harmless from and against any and all claims or demands
for commissions or other compensation by any broker, finder or similar agent
claiming to have been employed by or on behalf of such party.
2.6 COVENANT AGAINST COMPETITION.
(a) In order to induce Purchaser to enter into this
Agreement and purchase the Transferred Assets as provided herein, Seller agrees
that, for a period of two (2) years beginning on the Closing Date and ending on
the second anniversary date thereof, it will not, without the prior written
consent of Purchaser, for its own account or jointly with another, directly or
indirectly, for or on behalf of any individual, partnership, corporation or
other legal entity, as principal, agent or otherwise:
(i) engage in, consult with, or own, control,
manage or otherwise participate in the ownership, control or management
of a business engaged in the manufacture, assembly, purchase for
resale, sale, or distribution of any headend-to-home access loop analog
HFC products, including: (A) analog optical transmitters including 1310
nm transmitters, 1550 nm transmitters and 1550 nm QAM transmitters; (B)
analog DWDM/CWDM products; (C) optical amplifiers; (E) fiber optic
nodes; (F) baseband digital
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reverse transmitters; (G) RF signal managers and RF integrators; (H)
other similar headend-to-node access loop analog HFC products; and (I)
element management software, including status monitoring and control
systems exclusively for such products (collectively, the
"HEADEND-TO-HOME ACCESS LOOP ANALOG HFC PRODUCTS"); or
(ii) solicit, call upon, or attempt to solicit
the patronage of any individual, partnership, corporation or other
legal entity, for the purpose of obtaining the patronage of any such
individual, partnership, corporation or other legal entity for the
purchase of any Headend-to-Home Access Loop Analog HFC Products, except
on behalf of Purchaser; or
(iii) solicit or induce, or in any manner attempt
to solicit or induce, any Transferred Employee to leave his or her
employment with Purchaser, whether or not such employment is pursuant
to a written contract with Purchaser or otherwise.
(b) The parties acknowledge that Purchaser and Seller are
active competitors throughout their respective businesses outside of the Actives
Business. The covenants set forth in Section 2.6(a) are to be construed so as to
not affect the current or future operations of such other businesses. The
covenants set forth in Section 2.6(a) shall not be construed so as to restrict,
and shall not restrict, in any way, the operations, business, sales and
marketing efforts or other commercial activities of (i) any distribution or
resale business which Seller engages in, (ii) any of the Excluded Businesses or
their respective products, product lines or any improvements, enhancements or
extensions thereof, (iii) any purchaser of Seller or of Seller's assets or
businesses (in whole or in part), or (iv) any business acquired by Seller or its
parent company (whether through acquisition, merger or otherwise) provided that
such acquisition by Seller (or its parent company) occurs after the date that is
eighteen (18) months after the Closing Date. In addition, the covenants set
forth in Section 2.6(a) shall not restrict the ability of Seller to provide
joint bids with other manufacturers or distributors or to provide bids using the
products of competitors of Purchaser (and sell products pursuant to such bids or
joint bids) when Seller believes in good faith that the likelihood of its
achieving sales will be enhanced by using such products of others in such bids.
2.7 PUBLIC ANNOUNCEMENTS. The parties hereto shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereby and, except as
required by law or applicable securities law regulation, any party planning to
make such a press release or public statement shall submit copies of the
proposed press release or public statement to the other party for review at
least three (3) business days prior to the dissemination thereof and shall
include all reasonable revisions requested by the reviewing party.
Notwithstanding the foregoing, this Section 2.7 shall not preclude any party
from issuing such press releases, making such other public statements or making
such filings with or applications to governmental authorities or courts as such
party in good faith believes to be required under applicable law or applicable
securities law regulations.
2.8 WAIVER OF BULK SALES LAW COMPLIANCE. Compliance with the bulk
sales laws in any jurisdiction where Seller conducts its business applicable to
the purchase and sale of the Transferred Assets (if any) is hereby waived by
Purchaser, and Seller hereby agrees to defend, indemnify and hold harmless
Purchaser and its affiliates from and against any claims by any person arising
out of or due to the failure to comply with such bulk sales laws, including,
without limitation, any claims by any person against all or any part of the
Transferred Assets. The obligations of Seller under this paragraph shall not be
subject to any limitations set forth in Section 9.1(a) or Section 10.1 of this
Agreement, which shall not apply to the obligations of Seller under this
paragraph.
2.9 EMPLOYEES.
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(a) From and after the date hereof, Seller shall provide
Purchaser and its authorized representatives reasonable access during normal
business hours to the employees of the Actives Division, to permit Purchaser to
interview such employees, to determine whether Purchaser wishes to offer
employment to such employees, and to explain to such employees the terms and
conditions of employment, benefits and other matters relating to employment with
Purchaser. Prior to the Closing Date, Purchaser shall provide to Seller the
names of the employees of Seller's Actives Division to whom Purchaser intends to
offer employment with Purchaser effective the Closing Date (the "SELECTED
EMPLOYEES"); provided that, Purchaser shall not make offers of employment to any
of the employees listed on Schedule 2.9 attached hereto. Seller agrees to
cooperate with Purchaser and provide reasonable assistance to Purchaser in
extending offers of employment to the Selected Employees, in the manner
described in Section 2.9(b) below. In no event shall Seller solicit or induce,
or in any manner attempt to solicit or induce, any Selected Employee (i) to be
employed by Seller or by Seller's Excluded Businesses, or (ii) otherwise to not
accept Purchaser's offer of employment. Seller agrees that any Selected Employee
who refuses an offer of employment by Purchaser shall not be entitled to receive
any severance pay or benefits from Seller under any severance plan, policy or
arrangement of Seller.
(b) The number of Selected Employees will be not less
than forty (40). Purchaser shall invite the Selected Employees to apply for
consideration for employment with Purchaser upon terms and conditions of
employment initially set by Purchaser; in connection therewith, letters will be
distributed to the Selected Employees inviting them to apply for consideration
for employment with Purchaser, and said letters will generally describe wages,
benefits and other terms and conditions being offered by Purchaser. All such
offers of employment will be on such terms and conditions as Purchaser, in its
sole discretion, may determine and extend to the Selected Employees (or any of
them); provided that, each such offer (i) will be at a comparable base salary as
such employee has with Seller (as heretofore disclosed by Seller to Purchaser in
writing), and (ii) will generally include such benefits as are provided by
Purchaser to its employees similarly situated. Purchaser and Seller shall
cooperate with one another, and use reasonable efforts to cause or induce each
of the Selected Employees listed in Schedule 6.7, or substitutions therefor
agreed by Purchaser (the "KEY EMPLOYEES") to accept Purchaser's offer of
employment. Any Selected Employee to whom Purchaser offers employment and who
elects to become an employee of Purchaser, is hereinafter referred to as a
"TRANSFERRED EMPLOYEE". In the event that Purchaser terminates the employment of
any Transferred Employee for reasons other than "cause" during the period of
time that severance would have been paid by Seller to such employee in
accordance with Seller's severance plan, had such employee's employment been
terminated by Seller as of the Closing Date in circumstances that such employee
would be entitled to severance under Seller's severance plan (the "Severance
Period"), Purchaser agrees that it will provide severance pay to such terminated
Transferred Employee through the end of the Severance Period. The Transferred
Employees who accept Purchaser's offer of employment at the terms and conditions
initially set by Purchaser shall become employees of Purchaser immediately
following the Closing. Nothing in this Agreement shall be construed as giving
any person any right to any terms and conditions of employment, including but
not limited to any type of compensation or benefits, with Purchaser. Nothing in
this Agreement is intended to, nor does it, confer any rights or privileges upon
any person not a party to this Agreement.
(c) Seller shall be responsible for all liabilities and
costs arising from or relating to any claims by or on behalf of persons who at
or prior to the Closing are or were employees of Seller, including but not
limited to employees of the Actives Business and including all Transferred
Employees, in respect of salary, wages, back pay, severance pay, accrued
vacation, accrued sick leave, personal days, shut down benefits, and any other
similar obligations ("TERMINATION COSTS") relating to such employees' employment
with Seller and/or the termination of such employees' employment with Seller, or
any break in service or any other event entitling someone to payments for such
benefits which occurs on or prior to the Closing. Without limiting the
generality of the foregoing, Seller shall be liable for compliance under
governing state, federal
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and local laws and regulations relating to employment, including but not limited
to the Worker Adjustment and Retraining Notification Act ("WARN ACT"), for the
termination of the employment of any employees prior to or at Closing.
(d) Purchaser shall only be responsible for all
Termination Costs relating to the termination of any Transferred Employee's
employment with Purchaser which occurs after the Closing.
2.10 EMPLOYEE BENEFIT PLANS AND OTHER LIABILITIES.
(a) Purchaser will permit the Transferred Employees
hired by Purchaser to participate, on the same basis that Purchaser's employees
similarly situated participate, in any employee benefit plans and programs, as
that term is defined by Section 3(2)(A) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), as are maintained or may be
established by Purchaser and made available to the employees of Purchaser,
excluding therefrom any defined benefit or pension plan. Purchaser shall not be
required to recognize prior service or benefit service with Seller for any
purpose, plan or welfare benefit.
(b) No assets or liabilities with respect to Transferred
Employees shall be transferred, as a result of this Agreement, from any pension
plans maintained, sponsored, contributed to, or required to be contributed to by
Seller applicable to its employees in the Actives Business to any plan
maintained or established by Purchaser, and Seller shall retain all obligations
to fund or otherwise provide benefits accrued by Transferred Employees under
such pension plans before the Closing.
(c) Except as otherwise provided in this Agreement,
Seller shall retain, and Purchaser shall not assume, any liabilities and
obligations of Seller relating to employees or employee benefits. Without
limiting the foregoing, Seller shall retain, and Purchaser shall not assume,
obligations and liabilities with respect to (i) any pension plans, welfare plans
and other employee benefit plans or arrangements maintained, sponsored,
contributed to, or required to be contributed to by Seller relating to
Transferred Employees, or any other present, former or retired employees of
Seller, including, without limitation, liabilities and obligations for retiree
benefits and (ii) any other employee-related liabilities arising at or before,
or by reason of, the Closing, or otherwise in respect of any period at or before
the Closing, including without limitation the obligation to provide
"continuation coverage" (as defined in Section 4980B(f) of the Internal Revenue
Code, as amended) to any such person and Seller shall offer and provide such
continuation coverage.
(d) Purchaser shall offer the Transferred Employees who
were participants on the Closing Date in Seller's group health plan the option
to obtain coverage under a group health plan, which plan will give such
employees credit for their service with Seller towards any waiting period, or
exclusion or limitation for preexisting conditions with respect to the benefits
provided thereunder to the Transferred Employees, as the case may be. All other
terms and conditions of any such plan, including without limitation, eligibility
and service requirements, shall be in Purchaser's sole discretion.
2.11 WELFARE PLANS.
(a) Effective immediately after the Closing, each
Transferred Employee shall become a participant in such employee welfare benefit
plans (as such term is defined in Section 3(1) of ERISA and other benefit
arrangements, if any, as may be provided by Purchaser if such Transferred
Employee participated on the day prior to the Closing Date in a parallel plan
maintained by Seller.
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(b) With respect to any disability benefits, Seller's
welfare benefit plans shall be responsible for payment of any and all benefits
(regardless of whether payment is required to be made after the Closing) for:
(i) any individual who is in receipt of such benefits as of the Closing, and
(ii) any individual who becomes disabled prior to the Closing and who remains
disabled for the length of any qualifying disability period.
(c) Notwithstanding anything contained herein, Purchaser
shall not be obligated to provide retiree medical welfare benefits to any
Transferred Employee or other present, former, or retired employee of Seller.
All retiree medical benefits provided at any time by Seller shall be the sole
responsibility of Seller.
2.12 WORKERS' COMPENSATION. Seller will retain liability for all
workers' compensation claims filed by the Transferred Employees which are
primarily attributable to accidents or events occurring prior to the Closing,
whether claims therefor are filed before or after the Closing. Except to the
extent retained by Seller as set forth in the foregoing sentence, Purchaser
shall be liable for workers' compensation claims arising out of accidents or
events occurring after the Closing with respect to Transferred Employees.
2.13 PRE-CLOSING WARRANTY OBLIGATIONS.
(a) In accordance with the provisions of Section 1.5(a)
(iii) hereof: (i) Purchaser shall be solely responsible for the Direct Warranty
Costs incurred to satisfy or fulfill such Pre-Closing Warranty Obligations up to
$2,000,000; and (ii) Purchaser, on the one hand, and Seller, on the other hand,
each shall be responsible for one-half of the Direct Warranty Costs in excess of
$2,000,000 (as defined in Section 1.5(a)(iii), the "EXCESS DIRECT WARRANTY
COSTS").
(b) Purchaser shall invoice Seller for its one-half share
of all Excess Direct Warranty Costs, on a monthly basis in arrears, if, and as
and when, such Excess Direct Warranty Costs are incurred. Seller shall reimburse
and pay to Purchaser the amount of any and all such invoices for Excess Direct
Warranty Costs, within thirty (30) days of receipt of such invoice.
(c) Seller shall have the right from time to time, but
not more often than quarterly, at Seller's expense on reasonable notice to
Purchaser, to inspect and audit the books and records of Purchaser relating,
solely, to the Direct Warranty Costs incurred by Purchaser to satisfy or fulfill
the Pre-Closing Warranty Obligations, for the purpose of determining and
confirming the amount of the Excess Direct Warranty Costs payable by Seller to
Purchaser. In connection therewith, Purchaser shall cooperate with Seller and
grant to Seller and its accountants access to such banks and records for such
purpose.
2.14 AGREEMENTS WITH CONTRACT MANUFACTURERS AND OEMS.
(a) Schedule 2.14 attached hereto sets forth a complete
list of each contract or agreement of Seller pursuant to which a third party
manufactures or assembles component parts or products for Seller's Actives
Business, whether as a contract manufacturer or as an original equipment
manufacturer ("OEM") (the "CONTRACT MANUFACTURER AND OEM AGREEMENTS"). Seller
has heretofore delivered to Purchasers a true, correct and complete copy of each
of the Contract Manufacturer and OEM Agreements. Except as set forth in Schedule
3.5 as a Required Consent, no consent, approval or action of, or any filing with
or notice to, any other party or any person is required for Seller to assign to
Purchaser its rights and obligations under any Contract Manufacturer and OEM
Agreement.
(b) Purchaser shall have the right to determine, at its
sole discretion and at any time at or prior to Closing, which Contract
Manufacturer and OEM Agreements shall be assigned by Seller to Purchaser at
Closing. All Contract Manufacturer and OEM Agreements so
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selected by Purchaser to be assigned by Seller to Purchaser shall be Assigned
Contracts hereunder, and shall be added or deemed to be part of Schedule 1.1(e)
for all purposes of this Agreement. All Contract Manufacturer and OEM Agreements
not so selected by Purchaser to be assigned by Seller to Purchaser, shall be
terminated by Seller and treated as an Early Contract Termination in accordance
with the provisions of this Section 2.14 (and, accordingly, any and all costs
incurred with such Early Contract Termination shall be shared in the manner set
forth below).
(c) From and after the Closing Date, Seller shall
cooperate fully with Purchaser in connection with, and shall use its reasonable
best efforts to effectuate the assignment, transfer and transition of each
Contract Manufacturer and OEM Agreement that Purchaser has selected to be
assigned to Purchaser at Closing. It is understood and agreed that,
notwithstanding such assignment, Purchaser shall have the right to determine,
solely in its discretion, which of the Contract Manufacturing and OEM
Agreements, so assigned by Seller to Purchaser, are to be terminated following
Closing prior to the normal expiration of such agreements ("EARLY CONTRACT
TERMINATIONS"). The parties shall cooperate with one another and use their
reasonable best efforts to effect any such Early Contract Terminations over a
phased, transitional period at the lowest possible costs.
(d) Any and all costs incurred in connection with all
Early Contract Terminations (whether by reason that (i) such contract was not
assigned at Closing or (ii) alternatively, such contract was terminated early by
Purchaser after Closing), including but not limited to amounts paid in
settlement to the third party contract manufacturer by reason of such early
termination, shall be borne by Seller, on the one hand, and Purchaser, on the
other hand, equally on a 50%/50% basis; except that Purchaser's share of any
such costs incurred in connection with an Early Contract Termination of the JDS
Uniphase Development Agreement shall not exceed $250,000.
(e) In the event that in connection with any Early
Contract Termination, (i) any item of equipment, tooling or other fixed asset
included in the Fixed Assets transferred by Seller to Purchaser at Closing or
(ii) any item of inventory included in the Inventory transferred by Seller to
Purchaser at Closing, is not transferred by the third party contract
manufacturer to Purchaser, then in any and each such event: (A) Seller shall
either, at the election of Seller, (A) replace such item of Fixed Assets or
Inventory (such replacement item to be reasonably satisfactory to Purchaser) or
(B) reimburse Purchaser the amount of the Adjustment respecting Fixed Assets
that would result from such item being missing under the provisions of Section
1.12(a)(i) above; (B) such replacement or reimbursement shall be made as a
separate purchase price adjustment, without regard to the procedures or the
timing set forth in Section 1.12; and (C) such replacement or reimbursement
shall not be considered or deemed to be a part of the costs to be shared by
Seller and Purchaser pursuant to Section 2.14(d) above, but instead shall be
paid solely by Seller.
2.15 SETTLEMENT OF PATENT DISPUTE; CROSS LICENSE; PATENT LICENSES.
(a) At the Closing: (i) Purchaser and Seller shall enter into a Settlement and
Cross-License Agreement, substantially in the form of Exhibit D attached hereto
(the "SETTLEMENT AND CROSS-LICENSE AGREEMENT"), pursuant to which: (i) the
parties will settle all disputes and release all claims relating to the alleged
infringement by Seller of U.S. Patent Nos. 5,850,165 and 5,648,745; (ii) the
parties will settle all disputes and release all claims relating to the alleged
infringement by Purchaser of U.S. Patent No. 6,033,101; and (iii) the parties
will cross-license one another as to the use of such patents, on a
non-exclusive, royalty-free and perpetual basis.
(b) At the Closing, Purchaser and Seller shall enter into
a Limited Patent License Agreement, substantially in the form of Exhibit E
attached hereto (the "LIMITED PATENT LICENSE AGREEMENT"), pursuant to which
Purchaser will grant to Seller a limited license to use the U.S. patents issuing
or that may issue under two patent applications entitled, respectively, "Fiber
Tray
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Clutch Hinge" and "Module Fiber Optic Connector Cleaning Slide" (being patent
applications transferred by Seller to Purchaser at Closing) with respect to the
manufacture and sale of certain of Seller's products, on a non-exclusive,
royalty-free and perpetual basis.
2.16 DISTRIBUTION AGREEMENT. Purchaser and Seller agree to
negotiate and, if mutually agreeable to Purchaser and Seller, execute and enter
into a distribution agreement, on and subject to the terms and conditions
generally contained in Purchaser's existing distribution agreement with Seller's
Telewire business, and such other terms as may be negotiated and mutually
agreed, on or after the Closing Date; provided that, notwithstanding this
statement of intent, if for any reason the parties shall have not executed and
entered into a mutually agreeable distribution agreement on or before January 1,
2003, then this Section 2.16 shall be of no further force or effect and the
parties shall have no liability or obligation to one another hereunder.
2.17 TRANSITION SERVICES AGREEMENT. At the Closing, Purchaser and
Seller shall enter into a Transition Services Agreement, substantially in the
form of Exhibit F attached hereto (the "TRANSITION SERVICES AGREEMENT"),
pursuant to which Seller shall provide to Purchaser certain services from and
after the Closing, including but not limited to: e-mail, telephone and mail
forwarding; information technology support; continued use of certain of Seller's
facilities; customer support; transition with respect to order entry and return;
and data movement (such as inventory logs and data); in each case, for such
period or periods of time as are established in the Transition Services
Agreement. The Transition Services Agreement shall also provide (i) for the
joint preparation, as between Purchaser and Seller, of notifications to
customers, (ii) a limited license granting to Purchaser the right to use the
ARRIS and ANTEC trademarks and names, for such period of time (A) as is required
to fully consume inventories of parts, packaging and other items transferred to
Purchaser that are marked with such trademarks and names and/or (B) reasonably
required to replace tooling transferred to Purchaser that stamp or print such
trademarks and names, and (iii) the period of time following the Closing in
which Purchaser will be allowed to remove the Fixed Assets and Inventories from
Seller's facilities, and other matters as more fully set forth in the Transition
Services Agreement.
2.18 AMENDMENT TO FIXED ASSETS REGISTER. (a) Schedule 2.18(a)
attached hereto lists certain assets, equipment and software, otherwise also
listed and contained on the Fixed Assets Register, that (A) Seller uses, in
part, in the conduct of the Excluded Businesses and/or (B) in the case of
software, Seller cannot transfer to Purchaser. In connection with the
determination of the Post-Closing Purchase Price Adjustment for Fixed Assets, if
Purchaser determines, in its reasonable discretion, that the assets, equipment
and software listed on Schedule 2.18(a), or any part thereof, are not required
for the conduct of the Actives Business, then in such event (but only in such
event), (i) the assets, equipment and software, or part thereof, listed on
Schedule 2.18(a) and determined by Purchaser not to be required for the conduct
of the Actives Business will be excluded and deleted from the Fixed Assets
Register, (ii) such assets, equipment and software determined by Purchaser not
to be required for the conduct of the Actives Business will not constitute a
part of the Transferred Assets hereunder, and (iii) the Target Net Book Value of
Fixed Assets (as defined in Section 1.12(a)(i) above) shall be reduced by the
net book value of such assets, equipment and software excluded from the Fixed
Assets Register (as such net book value of such assets, equipment and software
is shown in the Fixed Assets Register), such that no Post-Closing Purchase Price
Adjustment will be made in respect of or on account of the exclusion of such
assets, equipment and software from the Transferred Assets (notwithstanding that
such assets and equipment were listed in the Fixed Assets Register); provided,
however, that the aggregate net book value of such assets, equipment and
software so excluded (and the associated reduction in the Target Net Book Value
of Assets) shall not exceed $360,000.
(b) Schedule 2.18(b) attached hereto lists certain assets
and equipment, not otherwise listed or contained in the Fixed Assets Register,
that Seller has placed in service since the date of the Fixed Assets Register
and that Seller uses in the conduct of the Actives Business.
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In connection with the determination of the Post-Closing Purchase Price
Adjustment for Fixed Assets, if Purchaser determines, in its reasonable
discretion, that the assets and equipment listed on Schedule 2.18(b), or any
part thereof, are required for the conduct of the Actives Business, then in such
event (but only in such event), (i) the assets and equipment, or part thereof,
listed on Schedule 2.18(b) and determined by Purchaser to be required for the
conduct of the Actives Business will be included in and added to the Fixed
Assets Register, (ii) such assets and equipment determined by Purchaser to be
required for the conduct of the Actives Business will constitute a part of the
Transferred Assets hereunder, and (iii) the Total Net Book Value of the Fixed
Assets Delivered (as defined in Section 1.12(a)(i) above) shall be increased by
the net book value of such assets and equipment added to the Fixed Assets
Register (but no adjustment shall be made to the Target Net Book Value of Fixed
Assets by reason thereof), such that an Adjustment favorable to Seller will be
made in respect of or on account of the addition of such assets and equipment to
the Transferred Assets (notwithstanding that such assets and equipment were not
originally listed in the Fixed Assets Register).
2.19 EXCLUSION OF CERTAIN PURCHASE ORDERS. From and after the
Closing Date, Purchaser and Seller shall cooperate with one another and, by not
later than sixty (60) days after the Closing Date, conduct and conclude a review
of all the Purchase Orders assigned to Purchaser at Closing, so as to determine
whether there are any such Purchase Orders on the P.O. Register where the
projected demand for products of the Actives Business in the twelve month period
following the Closing Date will not, taking into account the Inventories for
such component parts in existence and transferred to Purchaser on the Closing
Date, fully consume all such inventories of such component parts (whether in
existence as of Closing, or resulting from purchases under such Purchase Orders)
in the manufacture of products during such twelve month period. In connection
therewith, the parties will negotiate with one another in good faith so as to
mutually determine the projected demand for the products of the Actives Business
during such twelve month period, taking into account historical sales data and
current sales trends as of the Closing Date. To the extent that any Purchase
Orders are determined by the parties to require the purchase of component parts
in excess of the quantity of component parts so required to meet the projected
demand during such twelve month period, such excess portion of such Purchase
Order shall be excluded from the Transferred Assets and assigned back from
Purchaser to Seller and assumed by Seller.
2.20 CONSIGNMENT OF SOLECTRON COMPONENT INVENTORY. Schedule 2.20
attached hereto provides a detailed listing of the Solectron Component
Inventory, showing by part number line item the quantity and the return price
thereof. Pursuant to and in accordance with the provisions of Section 1.2 and
Section 1.3 hereof, the Solectron Component Inventory (having an estimated,
aggregate value of $367,000), and the purchase order or other agreements
pursuant to which Seller agreed to reacquire such inventory from Solectron, are
to be excluded from the Transferred Assets (and excluded from the Inventories to
be transferred to Purchaser hereunder). However, Purchaser agrees to take
possession of the Solectron Component Inventory on a consignment basis, as
follows: (i) on the Closing Date or within sixty (60) days thereafter, Seller
shall cause the Solectron Component Inventory to be delivered to a warehouse of
Purchaser, as specified by Purchaser, where such inventory shall be segregated
from Purchaser's inventories and held by Purchaser until December 31, 2004, on a
consignment basis; (ii) from and after such delivery and until December 31,
2004, Purchaser shall use reasonable efforts to sell, or to assist Seller to
sell, the Solectron Component Inventory to Solectron, its
predecessor-in-interest or to other third parties, on such terms and at such
prices as are agreed to or approved by Seller (such agreement or approval not be
unreasonably withheld); (iii) within thirty (30) days after the end of each
calendar quarter, commencing March 31, 2003 and thereafter each March 31, June
30, September 30 and December 31 through and including December 31, 2004,
Purchaser shall remit and pay over to Seller, all proceeds received by Purchaser
during the calendar quarter then ending from or in respect of sales of the
Solectron Component Inventory; and (iv) all items of the Solectron Component
Inventory that remain unsold as of the close of business on December 31, 2004,
shall be scrapped by Purchaser.
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2.21 FULFILLMENT OF CERTAIN DISTRIBUTION AND CUSTOMER SALES
AGREEMENTS. Schedule 2.21 attached hereto sets forth a listing of distribution
agreements and/or customer sales agreements relating to the Actives Business
that, pursuant to the provisions of Section 1.3 hereof, are to be Excluded
Contracts and are not to be assigned to or assumed by Purchaser at Closing (such
agreements listed on Schedule 2.21, the "EXCLUDED DISTRIBUTION & SALES
AGREEMENTS"). Schedule 2.21 shows, for each such Excluded Distribution & Sales
Agreement, the period of time following Closing for which Seller must continue
to supply and sell product under such agreement to the third-party thereto
(having given to such third-party notice of termination thereunder, or otherwise
having exercised any and all rights to terminate such agreement prior to its
normal expiration) (such period of time, the "NOTICE PERIOD"). Purchaser agrees
that, from and after Closing and, with respect to each Excluded Distribution &
Sales Agreement, during and throughout the Notice Period applicable to such
Excluded Distribution & Sales Agreement, Purchaser will sell to Seller (on a
purchase order basis, subject to Purchaser's standard terms and conditions) any
and all product required to be purchased by Seller from Purchaser for the
purpose of re-selling such product to the applicable third-party in order to
fulfill Seller's minimum contractual requirements under such Excluded
Distribution & Sales Agreement during such Notice Period.
2.22 ADDITIONAL PURCHASE ORDERS. Schedule 2.22 attached hereto
lists certain purchase orders issued by Seller to vendors or suppliers that
relate to the Actives Business (but which are not included in the P.O. Register
set forth in Schedule 1.1(f)). From and after the date hereof, Seller and
Purchaser shall cooperate with one another, meet, and negotiate in good faith
with one another so as to mutually agree and determine, by not later than sixty
(60) days after the Closing Date, which of the purchase orders listed on
Schedule 2.22 are to be assigned by Seller to Purchaser, and assumed by
Purchaser, in consideration of the nature, type and quality of items or services
to be acquired pursuant to such purchase orders and their relationship and
utility to the Actives Business. All such purchase orders so determined to be
assigned to and assumed by Purchaser (the "ADDITIONAL PURCHASE ORDERS") shall,
upon such assignment and assumption, constitute Purchase Orders and Assigned
Contracts for all purposes hereunder; and, Seller and Purchaser shall execute
and deliver such additional documents of conveyance (substantially in the form
of the General ▇▇▇▇ of Sale and Assignment and the Assumption Agreement attached
hereto as Exhibit B and Exhibit C, respectively), with respect to such
Additional Purchase Orders as may be reasonably necessary to evidence such
assignment and assumption of such Additional Purchase Orders.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Purchaser to enter into this Agreement, to conduct their due
diligence and to purchase the Transferred Assets, ARRIS Intl and ARRIS Mexico,
jointly and severally, represent and warrant to Purchaser as follows:
3.1 SCHEDULES. All information set forth in this Agreement and
the Schedules hereto is true, correct, complete and set forth in a manner that
is not misleading as of the date of this Agreement. The information contained in
the Schedules hereto shall be deemed to be part of and qualify only those
representations and warranties contained in this Section 3 which make specific
reference to the Schedules hereto. Unless otherwise indicated, all capitalized
terms used in the Schedules hereto shall have the same meanings as in this
Agreement. All documents and other writings furnished to Purchasers pursuant to
this Agreement or the Schedules hereto are true, correct and complete as of the
date furnished and any and all modifications or amendments of the same have been
delivered to Purchaser. At all times prior to and including the Closing Date,
Seller shall promptly provide Purchaser with written notification of any event,
occurrence or other information of any kind whatsoever which affects, or may
affect, the continued truth, correctness or completeness of any representation,
warranty or covenant made in this Agreement, the Schedules hereto or any other
document or writing furnished to Purchaser pursuant to this Agreement. All such
written notifications shall specifically identify any and all of
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the representations, warranties or covenants affected by the event, occurrence
or information that necessitated the giving of such notice. No such notification
or other disclosure shall be deemed to amend or supplement this Agreement or the
Schedules hereto.
3.2 ORGANIZATION AND COMPLIANCE. ARRIS Intl is a corporation
validly existing and in good standing under the laws of the State of Delaware;
and ARRIS Mexico is a company validly existing and in good standing under the
laws of Mexico. Seller has all requisite corporate power and authority and is
entitled to own or lease the Transferred Assets and to carry on Seller's Actives
Business as and in all places where such business is now conducted and such
properties are owned or leased. Each Seller has complied in all material
respects with all laws, rules, regulations and ordinances with respect to the
operation and conduct of Seller's Actives Business. ARRIS Intl is duly licensed,
qualified or domesticated in all fifty (50) states, and is duly licensed or
registered in each foreign country where it conducts the Actives Business.
Schedule 3.2 hereto lists (a) all locations where any Transferred Assets are
located, or where the Actives Division has an office or place of business or
maintains any Inventory, and (b) all names under which either Seller has
operated the Actives Division during the past five years, if different from its
present corporate name.
3.3 ENFORCEABILITY OF AGREEMENT. Each of ARRIS Intl and ARRIS
Mexico has the full corporate power and authority to enter into and execute this
Agreement and to carry out the transactions contemplated hereby in accordance
with its terms. Except for the Purchase Orders, there are no outstanding
contracts, demands, commitments or other agreements or arrangements under which
ARRIS Intl or ARRIS Mexico is or may become obligated to sell, transfer or
assign any of the Transferred Assets. This Agreement has been duly and validly
authorized and approved by all necessary corporate action, and all transactions
required hereunder to be performed by each of ARRIS Intl and ARRIS Mexico have
been duly and validly authorized and approved by all necessary corporate action.
This Agreement has been duly and validly executed and delivered on behalf of
each of ARRIS Intl and ARRIS Mexico by its duly authorized officers. This
Agreement constitutes the valid and legally binding obligation, subject to
general equity principles, of ARRIS Intl and of ARRIS Mexico, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally.
3.4 NO INCONSISTENT OBLIGATIONS. Except as disclosed in Schedule
3.4 hereto, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein will result in a violation
or breach of, or constitute a default under: (a) the certificate of
incorporation or bylaws of ARRIS Intl or any similar charter document of ARRIS
Mexico; or (b) any (i) term or provision of any indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other instrument,
contract, agreement or commitment, (ii) writ, order, judgment, decree, law,
rule, regulation, or ordinance, (iii) applicable ruling or order of any
administrative or governmental body, or (iv) other commitment or restriction, to
which ARRIS Intl or ARRIS Mexico is a party or by which ARRIS Intl, ARRIS Mexico
or any of the Transferred Assets is subject or bound; nor will such actions
result in (x) the creation of any claim, lien, charge or encumbrance on any of
the Transferred Assets, (y) the acceleration or creation of any obligation of
ARRIS Intl, or (z) the forfeiture of any material right or privilege of ARRIS
Intl or of ARRIS Mexico relating to the Transferred Assets or the Actives
Business. Neither ARRIS Intl nor ARRIS Mexico is in default under or in
violation of (a) its certificate of incorporation or bylaws, or (b) any writ,
order, judgment, decree, law, rule, regulation, or ordinance, or (c) any
applicable ruling or order of any administrative or governmental body.
3.5 CONSENTS. The execution and delivery of this Agreement by
Seller and the consummation of the transactions contemplated by this Agreement
(including but not limited to the assignment to Purchaser of the Assigned
Contracts) (a) do not require the consent, approval or action of, or any filing
with or notice to, any public, governmental or judicial authority, (b) do not
require the consent or approval of ARRIS Intl's or ARRIS Mexico's board of
directors, and (c)
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except for the consents and approvals (i) required to assign to Purchaser the
Assigned Contracts and the Sales Orders and (ii) the other consents and
approvals specified in Schedule 3.5 hereto (collectively, the "REQUIRED
CONSENTS"), do not require the consent, approval or action of, or any filing
with or notice to, any third-party, person, firm or other entity.
3.6 POSSESSION OF FRANCHISES, LICENSES, ETC. Seller possesses all
material franchises, certificates, licenses, permits and other authorizations
from public, governmental, regulatory or judicial authorities, free from
burdensome restrictions, that are necessary for the ownership, maintenance and
operation of the Active Business and the properties and assets used in the
conduct of the Active Business, and Seller is not in violation of any thereof.
3.7 FINANCIAL STATEMENTS. Prior to the date hereof, Seller has
delivered to Purchaser copies of the unaudited Balance Sheet of Seller's Actives
Division as at July 31, 2002 (the "JULY 31 BALANCE SHEET") and the unaudited
Statement of Income for the seven month period then ended (such statements,
including the July 31 Balance Sheet, the "INTERIM FINANCIAL STATEMENTS"). Except
as disclosed in Schedule 3.7 hereto, the Interim Financial Statements, and each
of them, are true and correct, have been prepared from the books and records of
Seller on a basis consistent with prior years, and present fairly the financial
condition Seller's Actives Division, as the case may be, as at July 31, 2002 and
the results of its operations for the seven-month period then ended.
3.8 LIABILITIES. Seller has no debt, liability or obligation
relating to the Transferred Assets, the Actives Division or the conduct of
Seller's Actives Business, of a type required to be included in financial
statements in accordance with the customary divisional accounting practices of
Seller applied consistently, except (i) those reflected on the July 31 Balance
Sheet as at July 31, 2002, (ii) liabilities incurred in the ordinary course of
business since July 31, 2002, and (iii) as otherwise specifically disclosed in
Schedule 3.8 hereto.
3.9 TITLE TO PROPERTIES; SUFFICIENCY OF ASSETS. The Transferred
Assets are all assets, other than the Excluded Actives Assets, necessary to
sell, license and use the items and perform the services presently being sold,
licensed, used or performed by Seller in connection with Seller's Actives
Business, or otherwise necessary to conduct Seller's Actives Business as
currently being conducted by Seller and as conducted during the periods covered
by the Interim Financial Statements. Seller has, and upon consummation of the
transactions contemplated by this Agreement at the Closing, Purchaser will have,
good and marketable title to all of the Transferred Assets, free and clear of
any and all claims, liens, charges, restrictions and encumbrances of any kind or
character, except (i) as disclosed in Schedule 3.9 hereto, and (ii) liens for
property, ad valorem or governmental taxes which are not past due.
3.10 INVENTORIES. The Inventories of Seller's Actives Division
which constitute part of the Transferred Assets all are of a type and nature
used or useable in the conduct of the Actives Business, and, except to the
extent of the reserves shown on the July 31 Balance Sheet, (a) if finished
goods, are merchantable and conform in all respects to customary trade standards
for merchantable goods, and (b) if not finished goods, are of a quality suitable
and useable for the production or completion of finished goods, for sale in the
ordinary course of Seller's Actives Business. All products manufactured or
purchased by Seller for sale to its customers through Seller's Actives Division,
including all finished goods which are a part of the Inventory, meet the
standards of all applicable laws, rules, regulations and ordinances pertaining
to the legality of the manufacture and sale of such products (i) in the United
States, and (ii) to the knowledge of Seller, in each foreign country where the
products of Seller's Actives Business are manufactured or sold. None of the
goods sold or otherwise distributed by Seller or its predecessors through
Seller's Actives Division prior to the Closing Date shall be, nor has Seller or
its predecessors received any notice claiming the same to be, hazardous or
unsafe in design, specification, material, content, function or otherwise. The
cost of each item of Inventory set forth in the Physical Count Inventory Listing
or otherwise in the books and records of Seller, reflects the standard cost
thereof as of
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July 31, 2002, and has been determined in accordance with Seller's customary
cost accounting practices applied consistently. Notwithstanding the foregoing,
this representation shall not be deemed to have been breached except to the
extent that the aggregate amount of the dollar loss arising from all breaches
hereof exceeds (i) the amount of the inventory reserves reflected on the July 31
Balance Sheet plus (ii) $1,000,000.
3.11 RETURNS AND CONSIGNMENTS; WARRANTY OBLIGATIONS.
(a) Except as set forth in Schedule 3.11(a) hereto, no
customer of Seller's Actives Division has any right to return any goods for
credit or refund pursuant to any agreement or binding practice that Seller will
take back goods which are unsold. Without limiting the generality of the
foregoing, Seller's Actives Division does not presently have any goods in the
possession of its customers on consignment or on a similar basis.
(b) Except as provided by the terms and conditions of (i)
Seller's standard warranty, as set forth in Schedule 3.11(b), and (ii) the
additional or different warranties provided by Seller by contract to the
customers listed on Schedule 3.11(c) (which Schedule identifies the customers
and describes in reasonable detail such additional or differing warranties),
Seller has not given any express warranty with respect to any goods or products
sold or services performed through Seller's Actives Division prior to the
Closing Date. Except for the facts and circumstances set forth in Schedule
3.11(d), to the knowledge of Seller, there is no fact or circumstance, or claim
or claims made or threatened to be made, which may cause any catastrophic
failure in any products or product lines of the Actives Business. For these
purposes, "catastrophic failure" shall mean that, during the Indemnity Survival
Period (as hereinafter defined), a product of the Actives Business experiences a
defect of five percent (5%) or more, as a result of the same failure mode.
Common defects are all defects with the same failure mechanism, mode and
location for the product. Common defects exclude user serviceable parts.
3.12 FIXED ASSETS.
(a) Except as set forth in Schedule 3.12 hereto, all of
the machinery, equipment, tooling, furniture and fixtures, vehicles, computer
equipment and other Fixed Assets which constitute part of the Transferred Assets
or which are leased by Seller pursuant to an Assigned Contract, are in good
condition and repair, taken as a whole and subject to normal wear and tear,
suited for the use intended and operated in conformity with all applicable laws,
rules, regulations and ordinances. The original cost of each item of Fixed
Assets set forth in the Fixed Assets Register or otherwise in the books and
records of Seller, is true and correct and has been determined in accordance
with generally accepted accounting principles. All leases pursuant to which
Seller is lessee of any Personal Property which constitute part of the Assigned
Contracts, are valid and effective in accordance with their terms. There is not
under any of such leases any default by Seller, or any event of default or event
which with notice or lapse of time, or both, would constitute a default by
Seller and in respect of which Seller has not taken adequate steps to prevent a
default on its part from occurring. To the knowledge of Seller, all lessors of
any machinery, equipment or other tangible personal property leased by Seller
pursuant to an Assigned Contract have fully and completely performed and
satisfied their respective duties and obligations under such leases, and Seller
has no claims, actions or causes of action against any such lessor for failure
to fully and completely perform and satisfy its duties and obligations
thereunder.
3.13 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL PROPERTY RIGHTS
(a) "INTELLECTUAL PROPERTY" shall mean: (i) patents,
patent applications, invention disclosures, and inventions and improvements
thereto (whether patentable or unpatentable and whether or not reduced to
practice); (ii) trademarks, service marks, trade dress, logos, trade names, and
corporate names, and registrations and applications for registration
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thereof; (iii) copyrights, mask works, and registrations and applications for
registration thereof; and (iv) trade secrets and confidential technical and
business information, including ideas, formulas, compositions, know-how,
manufacturing processes and techniques, research and development information,
technical and financial data, marketing and business plans, pricing and cost
information, and proprietary rights in computer software, engineering design
packages, documentation, drawings, specifications, designs, proposals, and
customer and supplier lists.
(b) Schedule 3.13(b) lists each material license,
contract, or other agreement pursuant to which Seller is granted rights in any
Intellectual Property that is presently used in the Actives Business and that is
owned by any other party (the "LICENSE IN AGREEMENTS").
(c) Schedule 3.13(c) lists each material license,
contract, or other agreement pursuant to which Seller or any affiliate of Seller
has granted rights or otherwise licensed to others any Intellectual Property
that is presently used in the Actives Business (the "LICENSE OUT AGREEMENTS")
(the License In Agreements and the License Out Agreements being sometimes
hereinafter referred to, collectively, as the "IP LICENSE AGREEMENTS").
(d) Purchaser has heretofore been provided access to
complete and correct copies of each of the IP License Agreements. All of the IP
License Agreements are valid and effective in accordance with their terms; and,
to the knowledge of Seller, no condition exists or has occurred which, with the
giving of notice or the lapse of time, or both, would constitute a default under
any IP License Agreement.
(e) Schedule 3.13(e) lists each U.S. patent and U.S.
patent application that is presently used in the Actives Business and that is
owned by or registered in the name of Seller or an affiliate of Seller
(collectively, including any and all foreign counterparts of any such IP Patent,
the "IP PATENTS").
(f) Schedule 3.13(f) lists each trademark and service
▇▇▇▇ application and registration that is presently used in the Actives Business
and that is owned by Seller ("IP TRADEMARKS"). With respect to all trademark
applications filed on an intent-to-use basis and pending as of the date hereof,
Statements of Use for such applications have been timely filed, or shall be
timely filed prior to the Closing Date.
(g) Except as set forth on Schedule 3.13(g), there are no
claims or demands of any other person (other than the contractual rights of any
licensee or licensor under any of the IP License Agreements) pertaining to
infringement or alleged infringement of the Intellectual Property of any third
party by reason of the conduct of the Actives Business or the manufacture, sale,
importation or other use of the products of the Actives Business, and no
proceedings have been instituted or are pending which challenge the rights of
the Company in respect thereof.
(h) Seller has taken commercially reasonable steps to
establish and preserve its ownership of all of its material copyright, trade
secret, and other proprietary rights with respect to its products and
technology. Seller regularly requires its consultants and its professional and
technical employees to execute agreements pursuant to which ownership of
inventions related to the Actives Business and developed by such employees is
assigned to Seller.
(i) As of the date of this Agreement, neither Seller nor
any affiliate of Seller is party to any legal proceeding filed in connection
with any Intellectual Property pertaining to the Actives Business.
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(j) Except as set forth in Schedule 3.5 as a Required
Consent, the assignment by Seller to Purchaser of the IP License Agreements (or
any one of them), does not require the consent, approval or action of, or any
filing with or notice to, any person, firm or other entity.
(k) Except for the Excluded Contracts and the Excluded
Actives Assets: Seller has, and upon consummation of the transactions
contemplated by this Agreement at the Closing, Purchaser will have, the means,
rights and information required to manufacture, process, sell, offer for sale
and use the items and perform the services as presently being manufactured,
processed, offered for sale, sold, used or performed by Seller's Actives
Division, including, without limitation, the means, rights and information
required to manufacture, process, offer for sale, sell and use all such items
and perform all such services without incurring any liability for (i) license
fees or royalties, except for such license fees or royalties as are payable
under the License In Agreements, or (ii) any claims of infringement of patents,
trade secrets, copyrights, trademark, service ▇▇▇▇, or other proprietary rights.
3.14 ASSIGNED CONTRACTS.
(a) The Assigned Contracts include all existing contracts
and commitments (a) which are necessary to conduct Seller's Actives Business in
the same manner as currently conducted by Seller, (b) by which the Transferred
Assets may be bound or affected, or (c) which relate to or affect the
Transferred Assets. Except for the Assigned Contracts and the Excluded
Contracts, there are no distribution agreements or other selling arrangements to
which Seller is a party with respect to the Actives Business, or the marketing
and sale of the products of the Actives Business. Seller has heretofore
delivered to Purchaser a true, correct and complete copy of each of the written
Assigned Contracts and a complete and accurate summary of each oral Assigned
Contract. All of the Assigned Contracts have been entered into in the ordinary
course of Seller's Actives Business, and are valid and effective in accordance
with their terms. None of the Assigned Contracts constitutes a restraint of
trade under any applicable law; and none of the Assigned Contracts contain any
non-competition or similar restrictive covenant to which Seller or the Actives
Business is bound. Seller has performed all obligations to be performed by it as
of the date of this Agreement under all Assigned Contracts, and Seller is not in
default or in arrears under any of the terms thereof. No condition exists or has
occurred which, with the giving of notice or the lapse of time, or both, would
constitute a default or accelerate the maturity of, or otherwise modify, any
Assigned Contract; and all Assigned Contracts are in full force and effect. To
the knowledge of Seller, no default by any other party to any Assigned Contract
is known or claimed by Seller to exist.
(b) To the knowledge of Seller, Seller's Actives Business
possesses the requisite Intellectual Property, equipment and other resources
necessary to perform fully each Assigned Contract, without incurring costs in
excess of the compensation to be received by Seller for such performance; and,
to the knowledge of Seller, the performance by Seller of any and all Assigned
Contracts will not result in or create any "loss contingency" which is either
"probable" or "reasonably possible" as all such terms are defined in Statement
of Financial Accounting Standards No. 5 of the Financial Accounting Standards
Boards ("FASB LOSS CONTINGENCY").
3.15 CONTINGENCIES. Except as set forth in Schedule 3.15 hereto,
there are no actions, suits, claims, demands or proceedings pending or
threatened against, by or affecting Seller's Actives Division or the Transferred
Assets in any court or before any arbitrator, private alternative dispute
resolution system or governmental agency, nor do there exist any other FASB Loss
Contingencies. Except as set forth in Schedule 3.15 hereto, Seller has not been
charged with, nor is it under investigation with respect to any charge
concerning, any violation of any provision of any applicable law, rule,
regulation, or ordinance, or order, decree or governmental restriction with
respect to Seller's Actives Business. There are no unsatisfied judgments against
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Seller or any consent decrees, writs, restraining orders, or preliminary or
permanent injunctions to which Seller's Actives Division or any of the
Transferred Assets are subject.
3.16 TAXES. Except as disclosed in Schedule 3.16 hereto, all taxes
(including, without limitation, all income, property, sales, use, customs,
franchise, value added, ad valorem, withholding, employees' income withholding,
and social security taxes, and all other taxes imposed on Seller or its income,
properties, sales, franchises, operations or employee benefit plans or trusts),
and all deposits in connection therewith required by applicable law, imposed by
any jurisdiction, or by any governmental unit or taxing authority, and all
interest and penalties thereon (all of the foregoing hereafter collectively
referred to as "TAXES"), which are due and payable by Seller for all periods
through the date hereof have been paid in full, and adequate reserves for all
other Taxes, whether or not due and payable, and whether or not disputed, have
been set up on the books of Seller. From and after the date of this Agreement,
Seller will duly file all returns and reports with respect to Taxes, and will
pay all Taxes imposed on Seller, which directly or indirectly affect Purchaser's
operation of Seller's Actives Business or the Transferred Assets after the
Closing Date, or which might create a lien or encumbrance on the Transferred
Assets, or which would adversely affect Purchaser's ability to carry on Seller's
Actives Business after the Closing Date.
3.17 EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 3.17(a) hereto, (i)
Seller is not a party to any collective bargaining agreement or agreement of any
kind with any union or labor organization with respect to the employees of
Seller's Actives Business, (ii) no union or other collective bargaining unit has
been certified or recognized by Seller as representing any employee of Seller's
Actives Business nor, to the knowledge of Seller, is a union or other collective
bargaining unit seeking recognition for such purpose, (iii) there are no
controversies pending, or to the knowledge of Seller threatened, between Seller
and any labor union or collective bargaining unit representing, or seeking to
represent, any of the employees of Seller's Actives Business, and (iv) there has
been no attempt by any union or other labor organization to organize any of the
employees of Seller's Actives Business at any time in the past five years.
Seller has complied in all material respects with all obligations under all
labor laws and labor related laws applicable to persons employed in connection
with Seller's Actives Business, including, without limitation, those laws, rules
and regulations relating to wages, hours, health and safety, payment of social
security withholding and other taxes, maintenance of workers' compensation
insurance, immigration, labor and employment relations and employment
discrimination. To the extent that a Transferred Employee is a party to any
confidentiality agreement or nondisclosure agreement with Seller, Seller
covenants and agrees that effective the Closing Seller waives the provisions of
any such agreement insofar as such provisions apply to the Actives Business.
(b) Without limitation as to the provisions of the
foregoing Section 3.17(a), except as set forth in Schedule 3.17(b) hereto,
Seller has complied in all material respects with all federal, state, national
and local laws, rules, regulations and ordinances respecting health, safety and
working conditions applicable to the employees of Seller's Actives Business, and
has provided Purchaser with copies of all reports filed and notices provided
under any such laws, rules, regulations and ordinances during the last five
years with respect to any employee of, or the conduct of, Seller's Actives
Business. The conduct and operation of Seller's Actives Business does not
involve any unusual risk to the health or safety of its employees (including,
without limitation, any risk associated with hazardous airborne contaminants or
hazardous chemicals or waste materials) and, to the knowledge of Seller, no
employee of Seller's Actives Division has suffered any adverse health
consequence or personal injury as a result of his or her working conditions or
employment by Seller within the past five years.
3.18 EMPLOYEE BENEFIT MATTERS.
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(a) Schedule 3.18(a) hereto lists all written and
material oral plans, programs, and similar agreements, commitments or
arrangements maintained by or on behalf of Seller or any other party that
provide benefits or compensation to, or for the benefit of, current or former
employees of Seller's Actives Division ("PLAN" or "PLANS"). Except as set forth
on Schedule 3.18(a), only current and former employees of Seller's Actives
Division participate in the Plans.
(b) With respect to each Plan, except as set forth on
Schedule 3.18(b) hereto: (i) no litigation or administrative or other proceeding
is pending or threatened involving such Plan; (ii) such Plan has been
administered and operated in compliance with, and has been amended to comply
with, all applicable laws, rules, and regulations; (iii) Seller and its
predecessors, if any, have made and as of the Closing Date will have made or
accrued, all payments and contributions required, or reasonably expected to be
required, to be made under the provisions of such Plan or required to be made
under applicable laws, rules and regulations, with respect to any period prior
to the Closing Date, such amounts to be determined using the ongoing actuarial
and funding assumptions of the Plan; (iv) such Plan is fully funded in an amount
sufficient to pay all liabilities accrued (including liabilities and obligations
for health care, life insurance and other benefits after termination of
employment) and claims incurred to the date hereof, (v) on the Closing Date such
Plan will be fully funded in an amount sufficient to pay all liabilities accrued
(including liabilities and obligations for health care, life insurance and other
benefits after termination of employment) and claims incurred to the Closing
Date, or adequate reserves will be set up on Seller's books and records, or
paid-up insurance will be provided, therefor; and (vi) such Plan has been
administered and operated only in the ordinary and usual course and in
accordance with its terms, and there has not been in the five years prior hereto
any material increase in the liabilities of such Plan.
3.19 ENVIRONMENTAL MATTERS. Seller (including its predecessors for
whose acts and omissions it is responsible) has complied in all material
respects with all applicable laws, rules, regulations and ordinances relating to
pollution and environmental control, as the same relate or are applicable to
Seller's Actives Division or Seller's Actives Business. All hazardous or toxic
waste, materials and substances on, in, under or off-site from the real property
used in the conduct of Seller's Actives Business, have been properly removed and
disposed of, and no past or present disposal, spill or other release of, or
treatment, transportation or other handling of, hazardous waste, materials or
substances on, in, under or off-site from any real property used in the conduct
of Seller's Actives Business, or adjacent property, will subject Seller or
Purchaser to corrective or compliance action or any other liability. Schedule
3.19 hereto contains a true, correct and complete description of all litigation,
investigations and other proceedings, rulings, orders or citations pending, or
to the knowledge of Seller, threatened or contemplated by government officials
with respect to Seller's Actives Division or the Transferred Assets, in each
case relating to releases, emissions or potential releases or emissions into the
environment of solids, liquids, gases, heat, light, noise, radiation and other
forms of matter or energy or the proper disposal of materials, including solid
waste materials.
3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the knowledge of
Seller, neither Seller nor any officer, employee or agent of Seller, nor any
other person acting on its behalf, has, directly or indirectly, within the past
five years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of Seller's Actives Business (or assist Seller in
connection with any actual or proposed transaction for Seller's Actives
Business) which (a) might subject Seller to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or which might have an adverse
effect on the Transferred Assets, (b) if not given in the past, might have had
an adverse effect on the Transferred Assets or Seller's Actives Business, or (c)
if not continued in the future, might adversely affect the Transferred Assets or
Seller's Actives Business, or which might subject Seller to suit or penalty in
any private or governmental litigation or proceeding.
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3.21 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as
set forth in Schedule 3.21 hereto, Seller's Actives Division is not directly or
indirectly a party to any contract, agreement, or lease with, or any other
commitment to, (a) any subsidiary or affiliate of Seller, (b) any director or
officer of Seller, (c) any corporation or other entity in which any of the
foregoing parties has, directly or indirectly, at least a five percent (5.0%)
beneficial interest in the share capital or other type of equity interest in
such corporation, or (d) any partnership in which any such party is a general
partner (any or all of the foregoing being herein referred to as "RELATED
PARTIES"). Without limiting the generality of the foregoing, except as disclosed
in Schedule 3.21 hereto, (i) no Related Party, directly or indirectly, owns or
controls any assets or properties which are or have been used in Seller's
Actives Business, and (ii) no Related Party, directly or indirectly, engages in
or has any significant interest in or connection with any business (X) which is
or which within the last three years has been a competitor, customer or supplier
of Seller's Actives Division or has done business with Seller's Actives
Division, or (Y) which as of the date hereof sells or distributes products or
services which are similar or related to the products or services of Seller's
Actives Division.
3.22 ABSENCE OF CHANGES. Except as expressly provided for in this
Agreement or as may be set forth in Schedule 3.22 hereto, since July 31, 2002
(the "REFERENCE DATE"):
(a) there has been no change in the business, assets,
liabilities, results of operations or financial condition of Seller's Actives
Division or in its relationships with suppliers, customers, employees, lessors
or others, other than changes in the ordinary course of business, none of which
have been or will be, in the aggregate, materially adverse to the Transferred
Assets or the business or condition (financial or otherwise) of Seller's Actives
Division;
(b) there has been no damage, destruction or loss to the
properties or business of Seller's Actives Division, whether or not covered by
insurance, which has or will have a materially adverse effect on such properties
or business, or the operations, or prospects of Seller's Actives Division;
(c) the business of Seller's Actives Division has been
operated in the ordinary course and consistent with its prior practices, and not
otherwise;
(d) the Transferred Assets have been maintained in good
order, repair and condition, taken as a whole and ordinary wear and tear
excepted;
(e) the books, accounts and records of Seller's Actives
Division have been maintained in the usual, regular and ordinary manner on a
basis consistent with prior years;
(f) there has been no labor dispute, organizational
effort by any union or unfair labor practice charge involving Seller's Actives
Division or its employees;
(g) there has been no mortgage, charge, lien, claim or
other encumbrance or security interest (other than liens for current taxes which
are not past due) created on or in any of the Transferred Assets or assumed by
Seller with respect to any Transferred Assets;
(h) there has been no sale, transfer, lease or other
disposition of any asset or assets of Seller's Actives Division, except sales of
inventory in the ordinary course of Seller's Actives Business, and no debt to,
or claim or right of, Seller's Actives Division has been canceled, compromised,
waived or released;
(i) there has been no amendment, termination or waiver
of, or any notice of any amendment, termination or waiver of, any material right
of Seller under any contract,
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agreement or lease, or governmental license, permit or permission arising from
or relating to Seller's Actives Business;
(j) there have been no amendments or other corporate
actions having the effect of an amendment increasing past or future
contributions of any kind whatsoever to any employee benefit plan of Seller's
Actives Division; and
(k) Seller has not transferred or granted any rights
under, or entered into any settlement regarding the breach or infringement of,
any license, patent, copyright, trademark, trade name, trade secret, invention
or similar rights used or useable in Seller's Actives Business, or modified any
existing rights with respect thereto.
3.23 FULL DISCLOSURE. No representation, warranty or covenant of
Seller contained in this Agreement or in the Schedules hereto or in any other
written statement or certificate delivered by Seller pursuant to this Agreement
or in connection with the transactions contemplated herein contains, at the time
it is made, any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
As an inducement to Seller to enter into this Agreement and to sell the
Transferred Assets to Purchaser, Purchaser hereby represents, warrants and
covenants as follows:
4.1 ORGANIZATION. Purchaser is a corporation, validly existing and
in good standing under the laws of the State of Georgia.
4.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS. Purchaser has full
corporate power and authority to make, execute and perform this Agreement, and
the transactions contemplated hereby. This Agreement and all transactions
required hereunder to be performed by Purchaser have been duly and validly
authorized and approved by all necessary corporate action on the part of
Purchaser. This Agreement has been duly and validly executed and delivered on
behalf of Purchaser by its duly authorized officers, and this Agreement
constitutes the valid and legally binding obligation of Purchaser enforceable,
subject to general equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally. Neither the execution
and delivery of this Agreement nor the consummation of the transactions hereby
contemplated will constitute a violation or breach of the articles of
incorporation or the bylaws of Purchaser or any provision of any contract or
other instrument to which Purchaser is a party or by which any of the assets of
Purchaser may be affected or secured, or any order, writ, injunction, decree,
statute, rule or regulation to which Purchaser is subject, or will result in the
creation of any lien, charge, or encumbrance on any of the assets of Purchaser
or acceleration of any debt.
4.3 FULL DISCLOSURE. No representation, warranty or covenant of
Purchaser contained in this Agreement, or in any other written statement or
certificate delivered by Purchaser pursuant to this Agreement or in connection
with the transactions contemplated herein, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
5. CONDUCT OF SELLER'S ACTIVES BUSINESS PENDING CLOSING.
Seller covenants and agrees that, except as may otherwise be provided
herein, without the prior written consent of Purchaser, between the date hereof
and the Closing Date:
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5.1 BUSINESS IN THE ORDINARY COURSE. Seller's Actives Business
shall be conducted only in the ordinary and usual course and consistent with
prior practices. Without limiting the generality of the foregoing:
(a) Except as provided in Section 1.1(f) above, and
except as provided in Section 5.1(b) below, Seller shall not enter into any
contracts, agreements or other arrangements in connection with Seller's Actives
Business, and except as otherwise expressly provided herein, Seller will not
enter into any contract nor effect any transaction with any Related Party
relating to Seller's Actives Division or Seller's Actives Business.
(b) Seller shall not enter into any contracts,
agreements or other arrangements to sell, distribute or supply goods or services
to any customer or any third party relating to Seller's Actives Division except
in the ordinary course of Seller's Actives Business at prices and on terms
consistent with the prior operating practices of Seller.
(c) Except for sales of inventory and normal disposal of
used motor vehicles and equipment in the ordinary course of Seller's Actives
Business, Seller shall not sell, assign, transfer, convey, pledge, mortgage,
encumber or otherwise dispose of, or cause the sale, assignment, transfer,
conveyance, pledge, mortgage, encumbrance or other disposition of any of the
Transferred Assets.
(d) All contracts or commitments of Seller for the
purchase of raw materials, products, services and supplies relating to Seller's
Actives Division shall be entered into only in the ordinary and regular course
of Seller's Actives Business to enable the Actives Division to conduct its
normal business operations and to maintain its normal inventory of raw materials
and finished goods, at prices and on terms consistent with the prior operating
practices of the Actives Division. Seller will not enter into any contract or
commitment for the purchase of materials, products, services or supplies for
Seller's Actives Business except contracts or commitments which comply with the
provisions of Section 1.1(f) above.
(e) Seller shall maintain, preserve and protect all of
the Transferred Assets in good condition, taken as a whole, except for ordinary
wear and tear and damage by fire or other casualty.
(f) The books, records and accounts of Seller's Actives
Division shall be maintained in the usual, regular and ordinary course of
business on a basis consistent with prior practices and in accordance with
generally accepted accounting principles.
(g) Seller shall use all reasonable efforts to preserve
Seller's Actives Business, to keep available the services of Seller's present
employees, to preserve the goodwill of the suppliers, customers and others
having business relations with Seller's Actives Division, and to assist
Purchaser in employing the Selected Employees of Seller's Actives Division
affective the Closing Date on terms satisfactory to Purchaser.
5.2 NO MATERIAL CHANGES. No action shall be taken by Seller or any
Shareholder which shall materially alter the financial structure, practices or
operations of Seller's Actives Business.
5.3 COMPENSATION. No increase shall be made in the compensation
payable or to become payable to any employee of Seller's Actives Division, and
no bonus or profit-share payment or other arrangement (whether current or
deferred) shall be made to or with any such employee.
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5.4 EMPLOYEE BENEFIT PLANS. Seller shall timely make all
contributions and other payments to the Plans relating to the Actives Division
which it is obligated to make as of the date hereof. Other than contributions or
payments declared or obligated to be paid to the Plans as of the date hereof, no
contributions shall be declared for or paid to any Plan.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
All obligations of Purchaser under this Agreement are subject to the
fulfillment and satisfaction of each of the following conditions on or prior to
the Closing, any or all of which may be waived in whole or in part by Purchaser:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement, the Schedules hereto and in
any certificate, instrument, schedule, agreement or other writing delivered by
or on behalf of Seller in connection with the transactions contemplated by this
Agreement shall be true and correct as of the date when made and shall be deemed
to be made again at and as of the Closing Date and shall be true and correct at
and as of such time; provided however, that this Section 6.1 shall be deemed to
have been satisfied even if all such representations and warranties are not so
true and correct unless the failure of such representations and warranties to be
so true and correct, individually and in the aggregate, has had, or is
reasonably likely to have, a material adverse effect on the Actives Business or
is reasonably likely to materially burden or impair the ability of Seller to
consummate the transactions contemplated by this Agreement.
6.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by each such party prior to or on the
Closing Date, in all material respects taken as a whole.
6.3 CERTIFICATES OF SELLER. Seller shall have delivered to
Purchaser certificates executed by the president or any vice-president of
Seller, dated as of the Closing, certifying in such detail as Purchaser may
reasonably request as to (a) the fulfillment and satisfaction of the conditions
specified in Sections 6.1 and 6.2 above, (b) the absence of any material adverse
change in Seller's Actives Business prior to the Closing, and (c) Seller's
financial wherewithal and condition (including, certification as to the minimum
net asset value of Seller).
6.4 RESOLUTIONS. Purchaser shall have received duly adopted
resolutions of the Board of Directors of Seller, certified by the Secretary or
Assistant Secretary of Seller, dated the Closing Date, authorizing and approving
the execution of this Agreement and all other action necessary to enable Seller
to comply with the terms of this Agreement.
6.5 GOVERNMENT CONSENTS. Purchaser shall have received from any
and all persons, firms, and other legal entities, or any public or governmental
authorities, bodies or agencies or judicial authority having jurisdiction over
the transactions contemplated by this Agreement, or any part hereof, such
consents, authorizations and approvals as are necessary for the consummation
thereof, and all notices required to be given to government authorities shall
have been given and all applicable waiting periods shall have expired.
6.6 REQUIRED CONSENTS. Seller shall have delivered to Purchaser
all the Required Consents.
6.7 EMPLOYMENT OF KEY EMPLOYEES. The Key Employees set forth on
Schedule 6.7, or substitutions therefor agreed by Purchaser, shall have accepted
Purchaser's employment offer to begin employment with Purchaser immediately
after the Closing Date.
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6.8 SETTLEMENT AND CROSS-LICENSE AGREEMENT. The parties shall have
executed and entered into the Settlement and Cross-License Agreement.
6.9 TRANSITION SERVICES AGREEMENT. The parties shall have executed
and entered into the Transition Services Agreement.
6.10 RELEASE OF LIENS. Seller shall have delivered to Purchaser
UCC-3 forms, duly executed by the secured parties, or such other lien releases
or discharges, as Purchaser may reasonably request to evidence the release and
discharge of any and all liens upon any of the Transferred Assets.
6.11 NO INCONSISTENT REQUIREMENTS. No legal action or investigation
shall have been commenced by any public agency or authority and no judicial or
administrative order shall have been issued seeking to enjoin or prohibit the
transactions contemplated hereby.
7. CONDITIONS TO OBLIGATIONS OF SELLER.
All of the obligations of Seller under this Agreement are subject to
the fulfillment and satisfaction of each of the following conditions on or prior
to the Closing, any or all of which may be waived in whole or in part by Seller:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by Purchaser in
connection with the transactions contemplated by this Agreement shall be true
and correct as of the date when made and shall be deemed to be made again at and
as of the Closing Date and shall be true and correct at and as of such time;
provided however, that this Section 7.1 shall be deemed to have been satisfied
even if all such representations and warranties are not so true and correct
unless the failure of such representations and warranties to be so true and
correct, individually and in the aggregate, is reasonably likely to materially
burden or impair the ability of Purchaser to consummate the transactions
contemplated by this Agreement.
7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Purchaser shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or on the
Closing Date, in all material respects taken as a whole.
7.3 CERTIFICATE OF PURCHASER. Purchaser shall have delivered to
Seller a certificate, executed by the president or any vice-president of
Purchaser, dated the Closing Date, certifying in such detail as Seller may
reasonably request to the fulfillment and satisfaction of the conditions
specified in Sections 7.1 and 7.2 above.
7.4 RESOLUTIONS. Purchaser shall have delivered to Seller duly
adopted resolutions of the Board of Directors of Purchaser, certified by the
Secretary or an Assistant Secretary of Purchaser, dated the Closing Date,
authorizing and approving the execution of this Agreement by Purchaser and all
other action necessary to enable Purchaser to comply with the terms of this
Agreement.
7.5 SETTLEMENT AND CROSS-LICENSE AGREEMENT; LIMITED PATENT LICENSE
AGREEMENT. The parties shall have executed and entered into (i) the Settlement
and Cross-License Agreement and (ii) the Limited Patent License Agreement.
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7.6 NO INCONSISTENT REQUIREMENTS. No legal action or investigation
shall have been commenced by any public agency or authority and no judicial or
administrative order shall have been issued seeking to enjoin or prohibit the
transactions contemplated hereby.
8. INDEMNITIES.
8.1 INDEMNIFICATION OF PURCHASER. Seller and Parent, jointly and
severally, shall indemnify and hold harmless Purchaser, and its direct and
indirect parent corporations and affiliates, their officers and directors
(hereafter collectively "INDEMNITEES") from and against and in respect of any
and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement pursuant to Section 8.2(b) below
("INDEMNIFIED LOSSES"), suffered or incurred by any Indemnitee by reason of, or
arising out of:
(a) any misrepresentation, breach of warranty or breach
or nonfulfillment of any agreement of Seller contained in this Agreement or in
any certificate, schedule, instrument or document delivered to Purchaser by or
on behalf of Seller pursuant to the provisions of this Agreement, including,
without limitation, the Schedules hereto;
(b) all obligations and liabilities of Seller other than
the Assumed Liabilities, whether direct or indirect, fixed or contingent, known
or unknown, including, without limitation, all obligations and liabilities
resulting from or arising out of any default, performance or non-performance by
Seller prior to the Closing under or with respect to any Assigned Contract; and
(c) any claims, assessments, fines, liabilities,
obligations, damages, costs, and expenses, known or unknown, fixed or
contingent, claimed or demanded by third parties or any government agency or
body of competent authority, against Indemnitees (or any of them) arising out of
or resulting from Seller's operation of its business (including Seller's Actives
Business) or the Transferred Assets prior to and including the Closing Date,
including, without limitation, any liability or obligation described in Section
8.1(b) above; and
(d) one-half of the amount of any Excess Direct Warranty
Costs.
8.2 DEFENSE OF CLAIMS.
(a) If any claim or action by a third party arises after
the Closing Date for which Seller or Parent may be liable under the terms of
this Agreement, or if any other event shall occur as a result of which any
Indemnitee may suffer any Indemnified Loss, then Indemnitees (or any Indemnitee)
shall notify Seller in writing of such claims, action or event within thirty
(30) days after such claim, action or event arises or occurs and is known to
Indemnitees (or any of them), and shall give Seller a reasonable opportunity:
(i) to conduct any proceedings or negotiations
in connection therewith and necessary or appropriate to defend Indemnitees;
(ii) to take all other required steps or
proceedings to settle or defend any such claim or action; and
(iii) to employ counsel to contest any such claim
or action in the name of Indemnitees or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by Seller. If Seller wishes to dispute any
claim for Indemnified Loss, Seller shall give written notice to Indemnitees
within thirty (30) days after notice from Indemnitees of such claim;
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and, if Seller wishes to assume the defense of any such third-party claim or
action, and provided that Indemnitees' interest shall not be impaired by such
assumption of the defense of such claim or action, then Seller shall give
written notice to Indemnitees within thirty (30) days after notice from
Indemnitees of such claim or action (unless the claim or action reasonably
requires a response in less than thirty (30) days after the notice is given to
Seller, in which event they shall notify Indemnitees at least ten (10) days
prior to such reasonably required response date), and Seller shall thereafter
assume the defense of any such claim or liability, through counsel reasonably
satisfactory to Indemnitees; provided that Indemnitees may participate in such
defense at their own expense and shall, in any event, have the right to control
the defense and settlement of the claim or action.
(b) If Seller does not assume the defense of, or if after
so assuming Seller fails to defend, any such claim or action, then Indemnitees
may defend against such claim or action in such manner as they may deem
appropriate (provided that Seller may participate in such defense at its own
expense) and Indemnitees may settle such claim or litigation on such terms as
they may deem appropriate, and, subject to the provisions of Section 9 below,
Seller shall reimburse Indemnitees for the amount of all expenses, legal and
otherwise, reasonably and necessarily incurred by Indemnitees in connection with
the defense against and settlement of such claim or action. If no settlement of
such claim or litigation is made, Seller shall, subject to the provisions of
Section 9 below, satisfy any judgment rendered with respect to such claim or in
such action, before Indemnitees are required to do so, and pay all expenses,
legal or otherwise, reasonably and necessarily incurred by Indemnitees in the
defense of such claim or litigation.
(c) If a judgment is rendered against any of the
Indemnitees in any action covered by the indemnification hereunder, or any lien
in respect of such judgment attaches to any of the assets of any of the
Indemnitees, Seller shall, subject to the provisions of Section 9 below,
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of Seller, an appeal is taken
under which the execution of the judgment or satisfaction of the lien is stayed.
If and when a final judgment is rendered in any such action, Seller shall
forthwith pay such judgment or discharge such lien before any of Indemnitees is
compelled to do so.
9. PAYMENT OF INDEMNIFIED LOSSES.
9.1 LIMITATIONS ON LIABILITY.
(a) Indemnitees shall not be entitled to reimbursement or
payment from Seller pursuant to the provisions of Section 8.1(a) above unless or
until the aggregate amount of the Indemnified Losses shall exceed an amount
equal to two percent (2.0%) of the Total Consideration paid by Purchaser to
Seller, in which event one-half (1/2) of all Indemnified Losses up to such
amount (and, all Indemnified Losses in excess of such amount, subject to the
maximum below) may be claimed (provided that, such limitation shall not apply to
reimbursement or payments from Seller or Parent pursuant to the provisions of
Section 8.1(b), 8.1(c) or 8.1(d)).
(b) The liability of Seller for claims made by
Indemnitees under the provisions of Section 8.1(a) above shall be limited to an
amount equal to forty percent (40.0%) of the Total Consideration paid by
Purchaser to Seller (provided that, such limitation shall not apply to
reimbursement or payments from Seller pursuant to the provisions of Sections
8.1(b), 8.1(c) or 8.1(d)).
9.2 SET-OFF AGAINST ADDITIONAL PAYMENTS. Any amounts of
Indemnified Losses due to Indemnitees pursuant to Section 8.1 above may, at the
election of Purchaser, be satisfied
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in whole or in part by way of set-off against all or any portion of the
Additional Payment remaining to be paid by Purchaser to Seller.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATIONS AND OTHER
PROVISIONS.
10.1 SURVIVAL. The representations and warranties of the parties
contained in this Agreement, and the indemnifications of Purchaser by Seller and
Parent under Section 8.1(a) of this Agreement, shall survive any investigation
heretofore or hereafter made by Purchaser and the consummation of the
transactions contemplated herein and shall continue in full force and effect for
the period (the "INDEMNITY SURVIVAL PERIOD") beginning on the Closing Date and
continuing until the second anniversary of the Closing Date. Provided, however,
that the Indemnity Survival Period shall be extended automatically to include
any time period necessary to resolve a specific claim for indemnification which
was made before expiration of the Indemnity Survival Period but not resolved
prior to its expiration; and provided, further, that any such extension shall
apply only as to claims asserted and not so resolved within the Indemnity
Survival Period.
10.2 LIABILITIES NOT ASSUMED. Notwithstanding the provisions of
Section 10.1 above, Seller shall remain liable, during the Indemnity Survival
Period and at all times thereafter, for all liabilities and obligations of
Seller not assumed pursuant to Section 1.5 above, including, without limitation,
the liabilities and obligations specified in Sections 1.6, 8.1(b), 8.1(c) and
8.1(d) above.
10.3 COVENANTS. Notwithstanding the provisions of Section 10.1
above, the covenants of the parties contained in this Agreement, including but
not limited to the provisions of Sections 1.4, 1.5, 1.6, 1.7, 1.9, 1.11(c), 2.2,
2.3, 2.4, 2.5, 2.6, 2.8, 2.9, 2.10, 2.11, 2.12, 2.13 and 2.14 shall survive the
expiration of the Indemnity Survival Period and continue in effect, in
accordance with their respective terms.
11. TERMINATION.
11.1 TERMINATION FOR CERTAIN CAUSES. This Agreement may be
terminated prior to or on the Closing Date by Seller or Purchaser upon written
notice to the other party as follows:
(a) By Purchaser, in the event that the conditions to
closing contained in Section 6 have not been satisfied by Seller or waived by
Purchaser by the Termination Date.
(b) By Seller, in the event that the conditions to
closing contained in Section 7 have not been satisfied by Purchaser or waived by
Seller by the Termination Date.
(c) By Purchaser, if a material adverse change in the
Actives Business of Seller shall have occurred, or any substantial part of the
Transferred Assets of Seller are destroyed due to fire or other casualty.
(d) By Purchaser, if the terms, covenants or conditions
of this Agreement to be complied with or performed by the Seller at or before
the Closing Date shall not have been complied with or performed, or if any
representation or warranty of Seller is breached or is not true and correct, and
such noncompliance, nonperformance, or breach or misrepresentation shall have a
material adverse effect upon the Actives Business or the Transferred Assets.
(e) By Seller if the terms, covenants or conditions of
this Agreement to be complied with or performed by Purchaser at or before the
Closing Date shall not have been complied with or performed, or if any
representation or warranty of Purchaser hereunder is breached or is not true and
correct, and such noncompliance, non-performance or breach or
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misrepresentation shall materially reduce the value or amount of the Total
Consideration payable hereunder.
(f) By any party to this Agreement, if any action, suit
or proceeding shall have been instituted against such party to restrain or
prohibit this Agreement or the consummation of the transactions contemplated
herein, or to seek damages from such party by reason of this Agreement or the
consummation of transactions contemplated herein, and such action, suit or
proceeding shall be pending as of a date ten (10) days before the scheduled
Closing Date or any court of competent jurisdiction shall have entered a
temporary, preliminary or permanent restraining order in respect of same.
12. MISCELLANEOUS.
12.1 NOTICES.
(a) All notices, demands or other communications required
or permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class, certified or registered air mail,
return receipt requested, or by facsimile transmission to the intended recipient
thereof at its address, or facsimile number set out below. Any such notice,
demand or communication shall be deemed to have been duly given immediately (if
given or made by confirmed facsimile) or three days after mailing (if given or
made by letter addressed to a location within the country in which it is
posted), and in proving same it shall be sufficient to show that the envelope
containing the same was duly addressed, stamped and posted, or that receipt of a
facsimile was confirmed by the recipient. The addresses and facsimile numbers of
the parties for purposes of this Agreement are:
(i) If to Purchaser: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Scientific-Atlanta, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
General Counsel
Scientific-Atlanta, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Seller: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
and Chief Financial Officer
ARRIS Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Jr.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Suite 5200
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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(b) Any party may change the address to which notices,
requests, demands or other communications to such parties shall be delivered or
mailed by giving notice thereof to the other parties hereto in the manner
provided herein.
12.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
12.3 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed by or on behalf
of the party entitled to the benefit of the provision against which enforcement
is sought.
12.4 GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Georgia, without regard to conflicts rules.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns.
12.6 PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable. If any term of this Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the parties that the remaining terms hereof, or part thereof
shall constitute their agreement with respect to the subject matter hereof and
all such remaining terms, or parts thereof, shall remain in full force and
effect. To the extent legally permissible, any illegal, invalid or unenforceable
provision of this Agreement shall be replaced by a valid provision which will
implement the commercial purpose of the illegal, invalid or unenforceable
provision.
12.7 WAIVER. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on the
part of any party hereto to exercise, and no delay in exercising any right,
power or remedy created hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or remedy by any such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No waiver by any party hereto to any breach of or
default in any term or condition of this Agreement shall constitute a waiver of
or assent to any succeeding breach of or default in the same or any other term
or condition hereof.
12.8 HEADINGS. The headings of particular provisions of this
Agreement are inserted for convenience only and shall not be construed as a part
of this Agreement or serve as a limitation or expansion on the scope of any term
or provision of this Agreement.
12.9 NUMBER AND GENDER. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
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12.10 TIME OF PERFORMANCE. Time is of the essence.
12.11 DEFINITION OF KNOWLEDGE. The words "KNOWN", "TO THE KNOWLEDGE
OF," "TO THE BEST KNOWLEDGE OF," "AWARE" or words of similar import employed in
this Agreement with reference to any individual or entity shall be conclusively
presumed to mean that the person or entity has made reasonable and diligent
efforts under the circumstances to become knowledgeable; and, with respect to
Seller, shall mean the knowledge of the individuals listed on Schedule 12.11.
13. INDEX OF DEFINITIONS.
The definitions for the following defined terms used in this Agreement
can be found as follows:
Defined Term Section
------------ -------
Accruals 1.5(a)(ii)
Actives Business Recitals
Actives Division Recitals
Additional Payment 1.4(b)(ii)
Additional Payment Date 1.4(b)(ii)
Additional Purchase Orders 2.22
Adjustment 1.12(a)
Adjustment Date 1.12(a)
Amended Fixed Assets Register 1.1(a)
ARRIS Intl Preamble
ARRIS Mexico Preamble
Assigned Contracts 1.1(e)
Assumed Liabilities 1.5(a)
Closing 1.10
Closing Date 1.10
Closing Payment 1.4(b)(i)
Contract Manufacturer and OEM Agreements 2.14(a)
Direct Warranty Costs 1.5(a)(iii)(B)
Disputed Amount 1.12(c)(i)
Early Contract Terminations 2.14(c)
ERISA 2.10(a)
Excess Direct Warranty Costs 2.13(b)
Excluded Actives Assets 1.2(b)
Excluded Assets 1.2
Excluded Businesses 1.2(a)
Excluded Contracts 1.3
Excluded Distribution & Sales Agreements 2.21
FASB Loss Contingency 3.14(b)
Fixed Assets 1.1(a)
Fixed Assets Register 1.1(a)(i)
Fixed Asset Threshold Amount 1.12(a)(i)
Headend-to-Home Access Loop Analog HFC Products 2.6(a)(i)
Indemnified Losses 3.1
Indemnitees 8.1
Indemnity Survival Period 10.1
Intellectual Property 3.13(a)
Interim Financial Statements 3.7
Internal Revenue Code 1.9
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Inventories 1.1(b)
IP License Agreements 3.13(c)
IP Patents 3.13(e)
IP Trademarks 3.13(f)
July 31 Balance Sheet 3.7
Key Employees 2.9(b)
Knowledge 12.11
LIBOR 1.12(d)
License In Agreements 3.13(b)
License Out Agreements 3.13(c)
Notice Period 2.21
Physical Count Inventory Listing 1.1(b)
Plan 3.18(a)
Plans 3.18(a)
P.O. Register 1.1(f)
Post-Closing Purchase Price Adjustment 1.12(a)
Pre-Closing Warranty Obligations 1.5(a)
Prepaids 1.1(g)
Purchase Orders 1.1(f)
Purchaser Preamble
Reference Date 3.22
Related Parties 3.21
Required Consents 3.5
Sales Order Backlog 1.1(e)
Sales Orders 1.1(e)
Selected Employees 2.9(a)
Seller Preamble
Settlement Amount 1.12(e)(ii)
Settlement and Cross-License Agreement 2.15
Severance Period 2.9
Solectron Component Inventory 1.3
Statement 1.12(a)
Target Net Book Value of Fixed Assets 1.12(a)(i)(A)
Taxes 3.16
Termination Costs 2.9(c)
Termination Date 1.10
Total Consideration 1.4(a)
Total Net Book Value of Fixed Assets Delivered 1.12(a)(i)
Total Standard Cost of Inventory Delivered 1.12(a)(ii)
Transferred Assets 1.1
Transferred Employee 2.9(b)
Transition Services Agreement 2.17
WARN Act 2.9(c)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PURCHASER:
SCIENTIFIC-ATLANTA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: CEO
------------------------------
SELLER:
ARRIS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: Executive VP & CFO
------------------------------
TEXSCAN DE MEXICO,
S.A. DE C.V.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: Executive VP & CFO
------------------------------
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