EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AVAYA, INC.,
COMMSCOPE, INC.
AND
SS HOLDINGS, LLC
DATED OCTOBER 26, 2003
TABLE OF CONTENTS
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Page
ARTICLE I DEFINITIONS...............................................1
1.1 Defined Terms................................................1
1.2 Additional Defined Terms....................................11
1.3 Other Definitional and Interpretive Matters.................13
ARTICLE II PURCHASE AND SALE OF THE BUSINESS........................14
2.1 Purchase and Sale of Assets.................................14
2.2 Excluded Assets.............................................16
2.3 Purchase Price..............................................17
2.4 Adjustment of Cash Payment; IT Transfer Costs...............17
2.5 Assumed Liabilities.........................................19
2.6 Excluded Liabilities........................................20
2.7 Further Assurances; Further Conveyances and
Assumptions; Consent of Third Parties.......................21
2.8 No Licenses.................................................23
2.9 Bulk Sales Law..............................................23
2.10 Taxes.......................................................23
2.11 Parent Guaranty.............................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.................24
3.1 Organization and Qualification; Seller Subsidiaries.........24
3.2 Avaya Tianjin...............................................24
3.3 Authorization; Binding Effect...............................24
3.4 Non-Contravention; Consents.................................24
3.5 Title to Personal Property; Principal Equipment;
Sufficiency of Assets.......................................25
3.6 Real Estate.................................................26
3.7 Compliance With Laws........................................27
3.8 Business Employees..........................................27
3.9 Material Contracts..........................................30
3.10 Environmental Matters.......................................31
3.11 Financial Statement; Undisclosed Liabilities; Absence
of Changes..................................................33
3.12 Intellectual Property.......................................34
3.13 Brokers.....................................................35
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TABLE OF CONTENTS
(continued)
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3.14 Taxes.......................................................35
3.15 Value-Added Resellers, Distributors and Suppliers...........36
3.16 Business Records............................................36
3.17 Litigation..................................................37
3.18 Affiliated Transactions.....................................37
3.19 Product Recalls; Defects....................................37
3.20 Accounts Receivable.........................................37
3.21 Distributor Incentive and Marketing Programs................37
3.22 Inventory...................................................37
3.23 Securities Act..............................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER .................38
4.1 Organization and Qualification..............................38
4.2 Authorization; Binding Effect...............................38
4.3 Non-Contravention; Consents.................................39
4.4 SEC Reports; Financial Statements...........................39
4.5 Parent Common Stock.........................................39
4.6 Brokers.....................................................40
4.7 Sufficiency of Funds........................................40
4.8 No Inducement or Reliance; Independent Assessment...........40
ARTICLE V CERTAIN COVENANTS........................................40
5.1 Access and Information......................................40
5.2 Conduct of Business.........................................42
5.3 Tax Reporting and Allocation of Consideration...............43
5.4 Transferred Employees.......................................44
5.5 Reasonable Best Efforts.....................................51
5.6 Contacts with Suppliers and Customers.......................52
5.7 Sale by Buyer of Inventory Marked With Avaya's Name.........52
5.8 Non-Solicitation of Employees...............................52
5.9 Home Depot..................................................52
5.10 Financing...................................................52
5.11 Advice of Changes...........................................53
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TABLE OF CONTENTS
(continued)
Page
5.12 Third Party Confidentiality Agreements......................53
5.13 No Negotiation or Solicitation..............................53
5.14 Non-Competition.............................................54
5.15 Collateral Agreements.......................................54
5.16 Financial Statements........................................54
5.17 Listing of Shares...........................................55
5.18 Past Due Licenses...........................................55
5.19 Supply Agreement............................................55
ARTICLE VI CONFIDENTIAL NATURE OF INFORMATION.......................55
6.1 Confidentiality Agreement...................................55
6.2 Proprietary Subject Matter..................................56
ARTICLE VII CLOSING..................................................57
7.1 Deliveries by Seller or the Seller Subsidiaries.............57
7.2 Deliveries by Parent and Buyer..............................58
7.3 Closing Date................................................58
7.4 Contemporaneous Effectiveness...............................58
ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING..........................58
8.1 General Conditions..........................................58
8.2 Conditions Precedent to Parent's and Buyer's
Obligations.................................................59
8.3 Conditions Precedent to Seller's Obligations................59
8.4 Subsequent Closings.........................................60
8.5 Sale of Avaya Tianjin Shares................................61
ARTICLE IX STATUS OF AGREEMENTS.....................................61
9.1 Survival....................................................61
9.2 Indemnification Provisions for Benefit of Parent and
Buyer.......................................................62
9.3 Indemnification Provisions for Benefit of Seller............62
9.4 Indemnity Adjustments.......................................62
9.5 Limitation on Indemnification...............................63
9.6 General Procedures for Indemnification......................64
ARTICLE X MISCELLANEOUS PROVISIONS.................................65
10.1 Notices.....................................................65
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TABLE OF CONTENTS
(continued)
Page
10.2 Expenses....................................................65
10.3 Entire Agreement; Modification..............................66
10.4 Assignment; Binding Effect; Severability....................66
10.5 Governing Law...............................................66
10.6 Consent to Jurisdiction.....................................66
10.7 Waiver of Jury Trial........................................67
10.8 Execution in Counterparts...................................67
10.9 Public Announcement.........................................67
10.10 No Third-Party Beneficiaries................................67
ARTICLE XI TERMINATION AND WAIVER...................................67
11.1 Termination.................................................67
11.2 Effect of Termination.......................................68
11.3 Collateral Agreements; Material to Be Returned..............68
11.4 Waiver of Agreement.........................................68
11.5 Amendment of Agreement......................................69
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EXHIBITS
Exhibit A...............Environmental Remediation License Agreement
Exhibit B...............Full Financing Side Letter
Exhibit C-1.............Intellectual Property License Agreement
Exhibit C-2.............Patent Assignment
Exhibit C-3.............Trademark Assignment (by Avaya Inc.)
Exhibit C-4.............Trademark Assignment (by Avaya Integrated
Cabinet Solution)
Exhibit C-5.............Technology Assignment Agreement
Exhibit C-6.............Transitional Trademark License Agreement
Exhibit D...............Registration Rights Agreement
Exhibit E...............SMP Letter Agreement
Exhibit F...............Standstill Agreement
Exhibit G...............Convertible Note
Exhibit H...............Commitment Letter
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SCHEDULES
Schedule 1.1............Seller's knowledge
Schedule 2.1(m).........Agreements with Respect to Transferred
Employees
Schedule 2.1(m).........Agreements
Schedule 2.2(e).........Excluded Agreements
Schedule 2.2(f).........Excluded Land
Schedule 2.2(i).........Other Excluded Rights, Properties and Assets
Schedule 2.2(p).........Singapore Property
Schedule 2.4(a).........Estimated Closing Net Assets Calculations
Schedule 2.5(c).........ACS US Vehicle List as of September 30, 2003
and ACS International Vehicle List as of
September 30, 2003
Schedule 3.1............Seller Subsidiaries
Schedule 3.2............Avaya Tianjin
Schedule 3.4(a).........Non-Contravention
Schedule 3.4(b)(ii).....Required Consents
Schedule 3.5(a).........Exceptions to Title to Personal Property
Schedule 3.5(b).........Condition of Principal Equipment
Schedule 3.6(a).........Assumed Leases; Leased Premises
Schedule 3.6(b).........Transferred Premises
Schedule 3.7(b).........Governmental Permits
Schedule 3.8(a)(i)......Business Employees
Schedule 3.8(a)(ii).....Other Agreements Covering Employees
Schedule 3.8(b).........Company Plans and Employment Agreements
Schedule 3.8(d).........Company Plan Compliance
Schedule 3.8(g).........Compensation and Plan Changes
Schedule 3.8(g)(i)......Company Plan Events
Schedule 3.8(h).........Labor Disputes/ Certification for Collective
Bargaining Agent
Schedule 3.8(i).........WARN Act
Schedule 3.8(k).........Plan Liability
Schedule 3.8(l).........Plan Trust
Schedule 3.8(m).........Pension Plan Information
Schedule 3.8(n).........Independent Contractor Status
Schedule 3.9............Material Contracts
Schedule 3.10 ..........Environmental Matters
Schedule 3.11(a)........Financial Statements
Schedule 3.11(b)........Exceptions to Financial Statements in
Accordance with GAAP
Schedule 3.11(c)........Undisclosed Liabilities
Schedule 3.11(d)........Pre-signing Conduct of Business
Schedule 3.12(a)........Sufficiency of Intellectual Property
Schedule 3.12(b)........Intellectual Property Claims or Proceedings
Schedule 3.12(c)........Intellectual Property Breaches
Schedule 3.14(g)........Deferred, Roll Back Tax, Tax Rebate or
Incentive Programs
Schedule 3.15 ..........Distributors, VARS and Suppliers
Schedule 3.17...........Litigation
Schedule 3.17(a)........Grievances
Schedule 3.18...........Affiliated Transactions
Schedule 3.19...........Product Recalls/Defects
Schedule 3.21...........Distributor Incentive and Marketing Programs
Schedule 3.21(a)........U.S. Distributor Incentive and Marketing
Programs
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Schedule 3.22(a)........Consigned Material from Vendors
Schedule 3.22(b)........Consigned Material from Customers
Schedule 4.3(b).........Buyer's Consents
Schedule 5.2............Post-signing Conduct of Business
Schedule 5.2(a).........Dropped Patents
Schedule 5.2(b).........Capital Expenditures
Schedule 5.4(f).........Pension Transfer Assumptions
Schedule 5.4(p).........Foreign Transferred Employees
Schedule 5.4(s).........Irish Pension Assumptions
Schedule 8.5............Tianjin Valuation
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Purchase Agreement") is made as
of October 26, 2003, by and between Avaya Inc., a Delaware corporation
("Seller" or "Avaya"), CommScope, Inc., a Delaware corporation ("Parent"),
and SS Holdings, LLC, a Delaware limited liability company and wholly-owned
subsidiary of Parent ("Buyer" or "SS Holdings").
R E C I T A L S
A. WHEREAS, Seller and the Seller Subsidiaries (as hereinafter
defined) are, among other things, engaged, through Seller's Connectivity
Solutions group, in the worldwide design, development, manufacture,
marketing and sales of (i) physical layer end-to-end structured cabling
solutions, systems and related hardware, including components thereof,
supporting telecommunications applications, including network applications,
local, wide and storage area networks, private and public switched
telephone networks and central offices of telecommunications service
providers (the "Structured Cabling Solutions"); (ii) software used in the
development, design, creation, testing, installation, operation and
maintenance of Structured Cabling Solutions; and (iii) integrated cabinet
solutions which provide enclosures for telecommunications and other
electronic equipment (collectively, the "Business");
B. WHEREAS, the Business is composed of certain assets and liabilities
that are currently owned by Seller and the Seller Subsidiaries or with
respect to which Seller and the Seller Subsidiaries are currently
obligated, as the case may be;
C. WHEREAS, Seller and the Seller Subsidiaries desire to sell,
transfer and assign to Buyer, and Buyer desires to purchase from Seller and
the Seller Subsidiaries, the Purchased Assets (as hereinafter defined), and
Buyer is willing to assume, the Assumed Liabilities (as hereinafter
defined), in each case as more fully described and upon the terms and
subject to the conditions set forth herein; and
D. WHEREAS, Seller and/or one or more of the Seller Subsidiaries and
Buyer desire to enter into each Assignment and ▇▇▇▇ of Sale, each
Assumption Agreement, the Intellectual Property Agreements, the Transition
Services Agreement, each Lease Assignment, each Real Estate Deed, the
Registration Rights Agreement, the Convertible Note, the Environmental
Remediation License Agreement, the Standstill Agreement, SMP Letter
Agreement and the Full Financing Side Letter (each as hereinafter defined
and collectively, the "Collateral Agreements").
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For the purposes of this Purchase Agreement, the
following terms shall have the following meanings:
"Affiliate" of any Person means any Person that controls, is
controlled by, or is under common control with such Person. As used
herein, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a
Person, whether through ownership of voting securities or other
interests, by contract or otherwise.
"Agreement" means any written or oral contract, commitment,
lease, sublease, license, sublicense or other agreement.
"Assignment and ▇▇▇▇ of Sale" means each assignment and ▇▇▇▇ of
sale in customary form, including as to a particular jurisdiction, as
reasonably agreed by Buyer and Seller prior to Closing.
"Assumed Leases" means the Leases with respect to the Leased
Premises, other than a Lease to which Avaya Tianjin is a party.
"Assumption Agreement" means each assumption agreement in
customary form, including as to a particular jurisdiction, as
reasonably agreed by Buyer and Seller prior to Closing.
"Avaya Tianjin" means Avaya Tianjin Cable Company, Ltd.
"Avaya Tianjin Joint Venture Agreement" means the Joint Venture
Contract dated as of August 1, 1993, between Tianjin Electric Wire and
Cable Company and AT&T International, Inc., as amended.
"Belden Contract" means that certain Sales Incentive Agreement
dated September 26, 1997, by and between Lucent Technologies, Inc.
(predecessor to Avaya) and Cables Systems International, Inc.
(predecessor to ▇▇▇▇▇▇ Inc.), as amended.
"Business Day" means a day that is not a Saturday, a Sunday or a
statutory or civic holiday in the State of New York.
"Business Employees" means the employees, consultants,
independent contractors and agents (who in all cases are individuals)
of Seller or the Seller Subsidiaries who are primarily employed in, or
otherwise primarily providing services to, the Business. "Business
Employees" shall also include any employee of Avaya Tianjin.
"Business Records" means all books, records, ledgers, documents
and files, or other similar information (in any form or medium,
including data stored in electronic form) used or held for use
primarily in the operation or conduct of the Business or otherwise
primarily related to the Purchased Assets, including price lists,
customer lists, vendor lists, correspondence, mailing lists, warranty
information, catalogs, sales promotion literature, sales records,
invoices, credit records, advertising materials, brochures, records of
operation, standard forms of documents, manuals of operations or
business procedures, photographs, production data, purchasing
materials and records, personnel records, manufacturing and quality
control records and procedures, research and development files and
materials (to the extent assigned to Buyer pursuant to the
Intellectual Property Agreements), data and laboratory books (if
related to the Intellectual Property, to the extent assigned to Buyer
pursuant to the Intellectual Property Agreements), invention
disclosures (to the extent assigned to Buyer pursuant to the
Intellectual Property Agreements), litigation files, plans,
specifications, as built drawings and product testing reports required
by any Governmental Body, but excluding any such items to the extent
(i) they are included in, or primarily related to, the Excluded Assets
or Excluded Liabilities, (ii) any applicable Law prohibits their
transfer or (iii) they are confidential personnel records relating to
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employees other than the Transferred Employees or confidential medical
information relating to the Transferred Employees for which Buyer has
no ongoing need.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. ▇▇.▇▇. 9601 et
seq., as amended.
"Closing" means the closing of the transactions described in
Article VII.
"Closing Date" means the date of the Closing as determined
pursuant to Section 7.3.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreements" means the collective
bargaining agreements between Seller and the Unions governing the
employment and employee benefits of certain represented Business
Employees, as the same exist as of the date of this Purchase Agreement
and as they may be amended, modified or superseded, each of which is
identified on Schedule 2.1(m).
"Company Plan" means each plan, program, policy, payroll
practice, contract, agreement, commitment or other arrangement
providing for bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock option, stock purchase, phantom
stock, retirement, savings, excess benefit, supplemental unemployment,
paid time off, educational assistance, vacation, sick leave,
severance, disability, death benefit, medical, dental, or life
insurance, whether formal or informal, funded or unfunded, written or
oral and whether or not legally binding, and including, without
limitation, each "employee benefit plan," within the meaning of
Section 3(3) of ERISA and each Multi-Employer Plan (other than an
Employee Agreement) which is now or previously has been sponsored,
maintained or contributed to, or required to be maintained or
contributed to, by Seller or any of the Seller Subsidiaries or Avaya
Tianjin for the benefit of any Business Employee; provided, however,
that Company Plan shall not include the Collective Bargaining
Agreements or Non-U.S. Collective Bargaining Agreements.
"Competition Laws" means Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade and
includes the HSR Act and, to the extent applicable, equivalent Laws of
any other jurisdiction (including, for the avoidance of doubt, the
European Union or the member states thereof).
"Confidentiality Agreement" means the agreement between
Seller and Parent dated March 7, 2002, as amended July 25, 2003.
"Contracts" means all Third-Party Agreements, supply contracts,
purchase orders, sales orders and instruments used or held for use
primarily in the operation or conduct of the Business, and to which
Seller or any Seller Subsidiary is a party (i) for the lease of the
Leased Equipment, (ii) for the provision by a Third Party of goods or
services to the Business, (iii) for the sale by the Business of goods
or the performance by the Business of services, and (iv) for the sale
and distribution of products of the Business, but the term "Contracts"
shall exclude the Licenses, Leases, Company Plans, Employee Agreements
and Excluded Agreements.
"Domestic Subsidiary" means any Seller Subsidiary organized under
the laws of any jurisdiction within the United States of America.
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"Early Retiree" means any represented Business Employee who
accepted the Early Retirement Program.
"Early Retirement Program" means that certain offer under the
Collective Bargaining Agreements that provided certain benefits to any
represented Business Employee who submitted an intention to retire
between August 1 and August 14, 2003, inclusive, and who retired on or
prior to August 31, 2003.
"Employee Agreement" means each management, employment, bonus,
change in control, retention, severance or similar Agreement between
the Seller, any Seller Subsidiary or Avaya Tianjin and any Business
Employee, except for any such Agreement under any Company Plan.
"Encumbrance" means any lien (statutory or other), claim,
hypothecation, assignment, deposit arrangement, encumbrance, charge or
other security interest, mortgage, pledge, easement, title exception,
right of first refusal, right of first offer, put right, restrictive
covenant or other adverse claim of any kind or nature whatsoever
(including any conditional sale or other title retention agreement) or
other similar restriction or Third-Party right.
"Environmental Law" means any applicable Law that governs the
existence of or provides a remedy for Release of Hazardous Substances,
the protection of natural resources or the environment, the management
of Hazardous Substances, health, safety or other activities involving
Hazardous Substances including under CERCLA or any other similar Law,
in each case as is or may become effective on, or prior to, the
Closing Date.
"Environmental Remediation License Agreement" means the agreement
in substantially the form set forth as Exhibit A.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member
of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Seller within the meaning of
Section 414(b), (c) or (m) of the Code, or required to be aggregated
with the Seller under Section 414(o) of the Code, or is under "common
control" with the Seller, within the meaning of Section 4001(a)(14) of
ERISA.
"Excluded Agreements" means (i) Agreements identified in Schedule
2.2(e), (ii) Agreements that constitute General Purchase Agreements,
(iii) Agreements that relate primarily to Excluded Assets or Excluded
Liabilities and (iv) this Purchase Agreement.
"Excluded Taxes" means any Liability for any Taxes arising out of
or relating to the Business or the Purchased Assets for any
Pre-Closing Tax Period (other than any (i) Liability for Taxes of
Avaya Tianjin and (ii) Liabilities pursuant to Section 2.10 of this
Purchase Agreement which shall be governed solely by such section);
provided, however, in the case of any taxable period that includes
(but does not end on) the Closing Date (a "Straddle Period"):
(a) real, personal and intangible property Taxes ("Property
Taxes") relating to the Purchased Assets allocable to the Pre-Closing
Tax Period shall be equal to the amount of such Property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in the
Pre-Closing Tax Period and the denominator of which is the number of
days in the Straddle Period; and
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(b) the Taxes (other than Property Taxes) relating to
Purchased Assets allocable to the Pre-Closing Tax Period shall be
computed as if such taxable period ended as of the close of business
on the Closing Date, provided that exemptions, allowances or
deductions that are calculated on an annual basis and for which
applicable Law does not require or permit separate computations for
the portion of the Straddle Period that ends on the Closing Date shall
be allocated between the period ending on the Closing Date and the
period after the Closing Date in proportion to the number of days in
each period.
"Fixtures and Supplies" means all furniture, furnishings and
other tangible personal property owned by Seller or a Seller
Subsidiary and used or held for use primarily in the operation or
conduct of the Business, including desks, tables, chairs, file
cabinets and other storage devices and office supplies, but excluding
any such items that primarily relate to Excluded Assets or Excluded
Liabilities.
"Full Financing Side Letter" means the letter agreement
substantially in the form set forth as Exhibit B.
"GAAP" means United States generally accepted accounting
principles.
"General Purchase Agreements" means Third-Party supply or other
Agreements between Seller or an Affiliate of Seller and a Third Party
pursuant to which Seller or an Affiliate of Seller purchases products
or services from such Third Party for any of Seller's or such
Affiliate's businesses other than solely for the Business.
"Governmental Body" means any legislative, executive or judicial
unit of any governmental entity (federal, state, local, foreign or
supranational) or any department, commission, board, agency, bureau,
official or other regulatory, administrative or judicial authority
thereof.
"Governmental Permits" means all Permits issued to or filed or
obtained by Seller or a Seller Subsidiary with respect to the
Business, the Assumed Leases or the Premises by a Governmental Body.
"Hazardous Substance" means (i) any material defined as a
hazardous, toxic or dangerous waste, substance or material pursuant to
any Environmental Law, (ii) petroleum and byproducts thereof, asbestos
and PCBs and (iii) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Governmental Body
pursuant to any Environmental Law.
"Home Depot" means Home Depot U.S.A., Inc.
"Home Depot Parcel" means the tract of land adjacent to the
Nebraska Property, containing approximately 49.971 acres, transferred
to Home Depot by Seller pursuant to the Home Depot Purchase Agreement.
"Home Depot Purchase Agreement" means that certain purchase
agreement, dated as of July 22, 2002 by Avaya and July 24, 2002 by
Home Depot, between Avaya, as seller, and Home Depot, as buyer, as
amended by an Amendment to Purchase Agreement dated March 18, 2003 by
Avaya and March 28, 2003 by Home Depot, and a Second amendment to
Purchase Agreement dated April 1, 2003 by Avaya and Home Depot, for
the sale of the Home Depot ▇▇▇▇▇▇.
▇
"▇▇▇ ▇▇▇" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the
ordinary course of business), (iv) lease obligations of such Persons,
which in accordance with GAAP, should be capitalized or (v) in the
nature of guarantees of the obligations described in clauses (i)
through (iv) above of any other Person.
"Intellectual Property" means copyrights, patents, service marks,
trademarks, trade names, domain names, industrial models, trade
secrets, mask work rights, any applications and registrations for any
of the foregoing, and any other proprietary and intellectual property
rights, including all such rights to Proprietary Subject Matter.
"Intellectual Property Agreements" means the agreements in
substantially the form set forth as Exhibits C-1 through C-6.
"Inventory" means all inventory, wherever located, including raw
materials, work in process, recycled materials, finished products,
inventoriable supplies, parts and non-capital spare parts owned by
Seller or a Seller Subsidiary and used or held for use primarily in
the operation or conduct of the Business, and any rights of Seller or
a Seller Subsidiary to the warranties received from suppliers and any
related claims, credits, rights of recovery and setoff with respect to
such Inventory, but only to the extent such rights are assignable.
"Ireland Property" means that certain property located in Bray,
Ireland, more fully described on Schedule 3.6(b) hereof.
"IRS" means the U.S. Internal Revenue Service.
"Law" means any law, statute, ordinance, rule, regulation, code,
order, judgment, injunction, decree or other requirement of any
Governmental Body, and any rule or regulation of any stock exchange on
which the relevant party's securities are listed.
"Lease" means any Agreement for the lease or sublease of any of
the Leased Premises.
"Lease Assignment" means each assignment agreement with respect
to a Lease in customary form, reasonably agreed to by Buyer and Seller
prior to the Closing; provided, however, that, to the extent required
by custom and/or applicable Law of the jurisdiction in which a Leased
Premise is located, with such changes as are required by custom or
applicable Law or reasonably required by Buyer, together with any
other transfer declarations or other filings as are necessary or
reasonably required by Buyer to give effect to such assignment
(provided that no such separate assignment or other declaration or
filing shall alter the parties' rights or obligations set forth in the
aforesaid assignment).
"Leased Equipment" means all computer hardware and supporting and
attached peripherals, servers, telecommunications equipment,
machinery, equipment, automobiles and other vehicles, tools, molds and
other similar items leased and used or held for use by Seller or a
Seller Subsidiary primarily in the operation or conduct of the
Business, but excluding any such items which are Excluded Assets or
Excluded Liabilities.
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"Leased Premises" means all the real property that is leased or
subleased by Seller or a Seller Subsidiary from Third Parties and used
or held for use primarily in the operation or conduct of the Business,
including the real property leased under the Ireland Letting Agreement
(as hereinafter defined), which real property, as of the date hereof,
is identified on Schedule 3.6(a).
"Liability" means all Indebtedness, obligations, commitments and
other liabilities of a Person (whether known, unknown, absolute,
accrued, contingent, fixed, liquidated, unliquidated, or otherwise, or
whether due or to become due).
"Licensed Avaya Trademarks" shall have the meaning set forth in
the Transitional Trademark License Agreement attached hereto as
Exhibit C-6.
"Licenses" means all Agreements (i) under which Seller or a
Seller Subsidiary is granted the right to use any Proprietary Subject
Matter of a Third Party that is used or held for use primarily in the
operation or conduct of the Business, (ii) under which Seller or a
Seller Subsidiary grants a Third Party the right to use any
Proprietary Subject Matter of Seller or a Seller Subsidiary that is
used or held for use primarily in the operation or conduct of the
Business, or (iii) identified on Schedule 2.1(h).
"Multi-Employer Plan" means each Company Plan which is a
"multi-employer plan" within the meaning of Section 3(37) or
4001(a)(3) of ERISA.
"Nebraska Property" means that certain parcel(s) of land located
in Omaha, Nebraska, more fully described on Schedule 3.6(b) hereof.
"Non-U.S. Collective Bargaining Agreements" means the collective
bargaining agreements between Seller and the unions governing the
employment and employee benefits of certain represented Business
Employees employed outside of the United States, as the same exist as
of the date of this Purchase Agreement and as they may be amended,
modified or superseded, each of which is identified on Schedule
2.1(m)(3).
"Nonassignable Licenses" means those Agreements (i) under which
Seller or a Seller Subsidiary has the right to use any Proprietary
Subject Matter of a Third Party that is used or held for use primarily
in the operation or conduct of a business of Seller or a Seller
Subsidiary other than the Business, or (ii) identified on Schedule
2.2(e).
"Off-Balance Sheet Liability" means any transaction or Agreement
under which Seller or any Seller Subsidiary has (i) an obligation,
including a contingent obligation, under a guarantee Agreement, (ii) a
retained or contingent interest in assets transferred to an
unconsolidated Person or (iii) an Agreement that would be accounted
for as a derivative instrument but is classified as equity in the
Financial Statements.
"Pension Plan" means each "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA which is a Company Plan or other
plan pursuant to which Seller, any Seller Subsidiary, Avaya Tianjin or
any ERISA Affiliates may have liability.
"PBGC" means the Pension Benefit Guaranty Corporation.
7
"Permits" means all permits and licenses, certificates of
inspection, approvals, consents, waivers, concessions, exemptions,
orders, registrations, notices or other authorizations, including any
amendment, modification or renewal thereof.
"Permitted Encumbrances" means any (i) liens for Taxes,
assessments and other governmental charges or liens of carriers,
landlords, warehousemen, mechanics and material men incurred in the
ordinary course of business, in each case for sums not yet due and
payable or due but not delinquent or being contested in good faith,
(ii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security with respect to any
Transferred Employee, (iii) purchase money liens on the fixed assets
set forth on Schedule 3.5(a), (iv) Licenses and any other licenses
granted by Seller or an Affiliate in connection with sales of products
in the ordinary course of business, (v) the Encumbrances set forth on
Schedule 3.5(a), (vi) any Encumbrances that may be contained in the
organizational documents of Avaya Tianjin or the Avaya Tianjin Joint
Venture Agreement and (vii) all existing licenses to or under Seller's
Intellectual Property as of the date hereof.
"Permitted Real Property Encumbrances" means only the following
and no other lien or encumbrance: (i) liens for Taxes, assessments and
other governmental charges for sums not yet due and payable or due but
not delinquent, (ii) liens for Taxes, assessments and other
governmental charges for sums being contested in good faith, which are
due and payable on or prior to the Closing Date or but for the contest
would be due and payable on or prior to the Closing Date, and any such
Tax, assessment or other governmental charge being contested, shall
not be an Assumed Liability, but rather shall be an Excluded
Liability, and Seller shall pay on a timely basis any and all amounts
determined to be due in connection therewith, (iii) mechanics',
carriers', workers', materialmen's, warehousemen's and similar liens
arising or incurred in the ordinary course of business, (iv) any
Encumbrances, encroachments, zoning laws and other land use
restrictions which (a) with respect to the Transferred Premises, do
not prevent the use of the Transferred Premises for the purposes of
conducting the Business consistent with the past practices of Seller
and (b) with respect to the Transferred Premises and the Leased
Premises, have not had nor would be reasonably expected to have a
Seller Material Adverse Effect, provided that except as otherwise
provided in item (v) below, in no event shall any Encumbrance securing
money owed, be a Permitted Real Property Encumbrance, (v) the terms of
the Assumed Leases, the Ireland Letting Agreement (as hereinafter
defined) and the obligations to Home Depot under the Home Depot
Amendment assumed by Buyer under Section 5.9 below and (vi)
Encumbrances and other exceptions set forth on Schedule 3.6(a) and
3.6(b) provided the same do not secure money owed and which (a) with
respect to the Transferred Premises, do not prevent the use of the
Transferred Premises for the purposes of conducting the Business
consistent with the past practices of Seller and (b) with respect to
the Transferred Premises and the Leased Premises, have not had, nor
would be reasonably expected to have a Seller Material Adverse Effect.
"Person" means any individual, corporation, limited liability
company, partnership, firm, association, joint venture, joint stock
company, trust, unincorporated organization or other entity, or any
Governmental Body.
"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the Closing Date.
"Premises" means the Leased Premises and the Transferred
Premises.
"Principal Equipment" means all computer hardware and supporting
and attached peripherals, servers, telecommunications equipment,
machinery, equipment, automobiles and
8
other vehicles, tools, molds and other similar items used or held for
use by Seller or a Seller Subsidiary primarily in the operation or
conduct of the Business including, in each case, embedded software
therein, but not the Leased Equipment or any such items which are
Excluded Assets or Excluded Liabilities. Principal Equipment includes
rights to the warranties received from the manufacturers, sellers and
distributors of such items and to any related claims, credits, rights
of recovery and setoff with respect to such items, but only to the
extent such rights are assignable.
"Proprietary Subject Matter" means: (i) all information (whether
or not protectable by patent, copyright, mask work or trade secret
rights) not generally known to the public, including know-how and
show-how, specifications, technical manuals and data, libraries,
blueprints, drawings, proprietary processes, product information,
development work-in-process, inventions, discoveries and trade
secrets; (ii) patentable subject matter, patented inventions and
inventions subject to patent applications; (iii) industrial models and
industrial designs; (iv) works of authorship, Software (as defined in
the Technology Assignment Agreement attached hereto as Exhibit C-5)
and copyrightable subject matter; (v) mask works; and (vi) trademarks,
trade names, service marks, emblems, logos, insignia and related
marks.
"Real Estate Deed" means (i) with respect to the Nebraska
Property, a Nebraska special warranty deed, in recordable form and
duly executed by Seller, conveying title to the Nebraska Property to
Buyer consistent with the title representations set forth in Section
3.6(b)(i) herein, and (ii) with respect to the Ireland Property, a
deed of conveyance or deed of transfer in the form necessary to grant
and convey or transfer the Ireland Property in fee simple to Buyer in
accordance with Irish laws consistent with the title representations
set forth in Section 3.6(b)(i) herein, and (iii) with respect to the
Singapore Property, an instrument in the form necessary to convey
title to the Singapore Property to Buyer in accordance with local
custom and usage in Singapore, Singapore Law and the requirements of
Governmental Bodies in Singapore and consistent with the title
representations set forth in Section 3.6(b)(i) herein.
"Real Property" means the Leased Premises and the Transferred
Premises.
"Registration Rights Agreement" means the agreement in
substantially the form set forth as Exhibit D.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Substance in the indoor or outdoor environment,
including the movement of Hazardous Substance through or in the air,
soil, surface water, ground water or property.
"Remedial Action" means all actions required by Environmental Law
or by any Governmental Body undertaken to (i) clean up, remove,
remediate, investigate, treat, or in any other way respond to or
address any Hazardous Substance; or (ii) investigate or prevent the
Release or minimize the further Release of any Hazardous Substance so
that it does not cause environmental pollution, migrate or endanger
public health, welfare or the environment.
"Retention Agreements" means those certain Agreements identified
as such on Schedule 2.1(m)(1).
9
"Security Agreement" means the security agreement, dated as of
March 25, 2002, by and among Seller, the other grantor parties thereto
and The Bank of New York Company, Inc., as collateral trustee.
"Seller Material Adverse Change" or "Seller Material Adverse
Effect" means any change, effect, event, occurrence or state of facts
that is materially adverse to the business, assets, condition
(financial or otherwise) or results of operations of the Business,
taken as a whole, other than any change, effect, event, occurrence or
state of facts (i) relating to the United States or foreign economies
in general, (ii) relating to either the telecommunications industry in
general or the structured cabling systems industry in general and, in
either case, not specifically relating to the Business or (iii)
resulting from the public announcement of the transactions
contemplated by this Purchase Agreement or Parent's or Buyer's contact
with the suppliers, distributors and technology partners of the
Business pursuant to Section 5.6, provided that with respect to (i)
and (ii) such changes do not adversely affect the Business in a
disproportionate manner.
"Seller's knowledge" or "knowledge of the Seller" means the
actual knowledge of the individuals set forth on Schedule 1.1.
"Singapore Property" means the building and other improvements
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, and more fully described on
Schedule 3.6(b).
"SMP Letter Agreement" means the letter agreement dated as of the
date hereof attached as Exhibit E.
"Standstill Agreement" means the agreement substantially in the
form set forth as Exhibit F.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed with respect
to any Taxes.
"Taxes" means all taxes of any kind, and all charges, fees,
customs, levies, duties, imposts, required deposits or other
assessments, including all net income, capital gains, gross income,
gross receipt, property, franchise, sales, use, excise, withholding,
payroll, employment, social security, worker's compensation,
unemployment, occupation, capital stock, ad valorem, value added,
transfer, gains, profits, net worth, asset, transaction, and other
taxes, and any interest, penalties or additions to tax with respect
thereto, imposed upon any Person by any taxing authority or other
Governmental Body under applicable Law and includes any Liability
arising under any tax sharing agreement or any Liability for Taxes of
another person by contract, as a transferee or successor, under
Treasury. Reg. ss.1.1502-6 or analogous state, local or foreign law
provision or otherwise.
"Third Party" means any Person not an Affiliate of the other
referenced Person or Persons.
"Transfer Regulations" means the European Communities (Protection
of Employees on Transfer of Undertaking) Regulations, 2003.
"Transferred Premises" means all the real property, buildings and
other improvements that are owned and used or held for use by Seller
or a Seller Subsidiary primarily in the operation or conduct of the
Business, which real property is identified on Schedule 3.6(b).
10
"Transition Services Agreement" means an agreement for services
in form and substance as reasonably agreed to by Buyer and Seller.
"Unions" means the International Brotherhood of Electrical
Workers and its Local No. 1614 and Local No. 1974.
"Welfare Plan" means each Company Plan which is an "employee
welfare benefit plan" (within the meaning of Section 3(1) of ERISA).
1.2 Additional Defined Terms. For purposes of this Purchase Agreement,
the following terms shall have the meanings specified in the Sections
indicated below:
TERM SECTION
---- -------
"Acceptance Period"...........................Section 2.4(b)
"Accounts Payable"............................Section 2.5(j)
"Accounts Receivable".........................Section 2.1(k)
"Actual Return" ..............................Section 5.4(e)
"Asset Acquisition Statement".................Section 5.3(b)
"Assumed Liabilities"............................Section 2.5
"Avaya".............................................Preamble
"Avaya Retiree Welfare Plans"..............Section 5.4(g)(i)
"Avaya Southeast Property"....................Section 2.2(f)
"Avaya VEBAs"..............................Section 5.4(g)(i)
"Average Price"..................................Section 2.3
"Balance Sheets"........................Section 3.11(a)(iii)
"Business".........................................Recital A
"Business Intellectual Property".............Section 3.12(a)
"Buyer".............................................Preamble
"Buyer Indemnified Party"........................Section 9.2
"Buyer Material Adverse Effect"...............Section 4.1(a)
"Buyer Represented Pension Plan"..............Section 5.4(f)
"Buyer VEBAs"..............................Section 5.4(g)(i)
"Cash Payment"...................................Section 2.3
"Claims Period"..................................Section 9.1
"Closing Date"...................................Section 7.3
"Closing Net Assets"..........................Section 2.4(a)
"Closing Net Assets Threshold"................Section 2.4(e)
"Collateral Agreements"............................Recital D
"Commitment Letter"..............................Section 4.7
"Components"....................................Section 5.14
"Convertible Note"...............................Section 2.3
"Critical Services".............................Section 5.15
"Designated Remedial Action"..................Section 9.5(b)
11
"Dispute Notice"..............................Section 2.4(b)
"Effects Package Agreement"....................Section 2.6k)
"Environmental Reports"......................Section 3.10(f)
"Estimated Closing Net Assets"................Section 2.4(a)
"Exchange Act"...................................Section 4.4
"Excluded Assets"................................Section 2.2
"Excluded Liabilities"...........................Section 2.6
"Financial Statements".......................Section 3.11(a)
"First Pension Transfer Amount"...............Section 5.4(e)
"First Transfer Date".........................Section 5.4(e)
"Foreign Transferred Employees"...............Section 5.4(p)
"Home Depot Amendment"...........................Section 5.9
"Indemnified Party"...........................Section 9.6(a)
"Indemnifying Party"..........................Section 9.6(a)
"Ireland Letting Agreement"................Section 3.6(a)(v)
"Irish Pension Liabilities"...................Section 5.4(h)
"Irish Pension Plan"..........................Section 5.4(s)
"Irish Taxes Consolidation Act"...............Section 2.3(c)
"IT Transfer Costs"...........................Section 2.4(a)
"Last Day"....................................Section 5.4(c)
"Leased Premises Consents"................Section 2.7(d)(ii)
"Losses".........................................Section 9.2
"Mandatorily Transferred Employees"...........Section 5.4(a)
"Material Contracts".............................Section 3.9
"Negotiating Period"..........................Section 2.4(b)
"Neutral Accounting Firm".....................Section 2.4(c)
"Nonassignable Assets"........................Section 2.7(c)
"non-U.S. Law"................................Section 5.4(a)
"Parent"............................................Preamble
"Parent Common Stock".............................Section2.3
"Parent SEC Reports".............................Section 4.4
"Parent Shares"..................................Section 2.3
"PCBs".......................................Section 3.10(f)
"Pension Liabilities".........................Section 5.4(h)
"Pension Transfer Amount".....................Section 5.4(f)
"Post-Closing Statement"......................Section 2.4(a)
"Primary Closing"................................Section 8.4
"Purchase Price".................................Section 2.3
"Purchase Agreement"................................Preamble
"Purchased Assets"...............................Section 2.1
"PWC"..........................................Section 5.16
12
"Represented Pension Trust"...................Section 5.4(e)
"Represented Transferred Employees"...........Section 5.4(a)
"Required Consents"...........................Section 3.4(b)
"Retiree Welfare Liabilities"..............Section 5.4(g)(i)
"Rights Agreement"..............................Section 5.18
"Salaried Transferred Employees"..............Section 5.4(a)
"SEC"............................................Section 4.4
"Second Pension Transfer Amount"..............Section 5.4(e)
"Second Transfer Date"........................Section 5.4(e)
"Securities Act"................................Section 3.24
"Seller"............................................Preamble
"Seller Indemnified Party".......................Section 7.3
"Seller Subsidiaries"............................Section 3.1
"Seller's Cafeteria Plan".....................Section 5.4(c)
"Straddle Period"................................Section 1.1
"Structured Cabling Solutions".....................Recital A
"Subsequent Closing".............................Section 8.4
"Supply Agreement"..............................Section 5.19
"Third-Party Claim"...........................Section 9.6(a)
"Threshold"...................................Section 9.5(a)
"Transfer Taxes"................................Section 2.10
"Transferred Avaya Tianjin Shares"............Section 2.1(l)
"Transferred Employees".......................Section 5.4(a)
"Underfunding"................................Section 5.4(j)
"U.S. Transferred Employees"..................Section 5.4(k)
"VEBA Transfer Amount".....................Section 5.4(g)(i)
"VEBAs" ......................................Section 5.4(g)
"WARN Act"....................................Section 3.8(i)
1.3 Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of this Purchase Agreement, the following
rules of interpretation shall apply:
Calculation of Time Period. When calculating the period of time
before which, within which or following which any act is to be done or
step taken pursuant to this Purchase Agreement, the date that is the
reference date in calculating such period shall be excluded. If the
last day of such period is a non-Business Day, the period in question
shall end on the next succeeding Business Day.
Gender and Number. Any reference in this Purchase Agreement to
gender shall include all genders, and words imparting the singular
number only shall include the plural and vice versa.
Headings. The provision of a Table of Contents, the division of
this Purchase Agreement into Articles, Sections and other subdivisions
and the insertion of headings are for convenience of reference only
and shall not affect or be utilized in construing or interpreting this
Purchase
13
Agreement. All references in this Purchase Agreement to any "Article"
or "Section" are to the corresponding Article or Section of this
Purchase Agreement unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Purchase Agreement as a whole and not merely
to a subdivision in which such words appear unless the context
otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit
any general statement that it follows to the specific or similar items
or matters immediately following it.
Payments and Computations. Except for the payment of the Purchase
Price (which shall be paid at the Closing), each party shall make each
payment due to another party to this Purchase Agreement not later than
1:00 p.m., New York City time, on the day when due. All payments shall
be measured and paid in U.S. dollars by wire transfer in immediately
available funds to the account or accounts designated by the party
receiving such payment. Whenever any payment under this Purchase
Agreement shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of payment of
interest, if applicable.
Schedules and Exhibits. The Schedules and Exhibits attached to
this Purchase Agreement shall be construed with and as an integral
part of this Purchase Agreement to the same extent as if the same had
been set forth verbatim herein. To the extent reasonably apparent on
its face, disclosure by Seller on any one Schedule of this Purchase
Agreement shall be deemed disclosed for the purposes of all other
Schedules to which the disclosure is relevant. Notwithstanding the
foregoing, if a word or phrase defined in this Purchase Agreement is
given a different meaning in any Schedule or Exhibit, such different
definition shall apply only to the Schedule or Exhibit defining that
word or phrase independently, and the meaning given that word or
phrase in this Purchase Agreement shall control for purposes of this
Purchase Agreement, and such alternative meaning shall have no bearing
or effect, on the interpretation of this Purchase Agreement or any
Schedule of this Purchase Agreement.
Reasonable Best Efforts. The obligation of a party to use
reasonable best efforts to accomplish an objective does not require a
material expenditure of funds or the incurrence of a material
liability on the part of the obligated party.
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
2.1 Purchase and Sale of Assets. Upon the terms and subject to the
conditions of this Purchase Agreement and in reliance on the
representations and warranties contained herein, on the Closing Date,
Seller shall, or shall cause one or more of the Seller Subsidiaries to,
subject to Section 2.7, sell, transfer, assign, convey and deliver to
Buyer, and Buyer shall purchase, acquire, assume and accept from Seller or
the applicable Seller Subsidiary, all of the right, title and interest in,
to and under the assets, properties and business (as a going concern),
titles, estates, remedies, powers, privileges, of every kind, nature,
character and description (whether tangible or intangible, real, personal
or mixed, whether absolute, accrued, contingent, fixed or otherwise,
wherever located and whether now existing or acquired on or prior to the
Closing Date), whether or not any of such assets, properties or rights have
any value for accounting purposes or are carried or reflected on or
specifically referred to in Seller's or the applicable Seller Subsidiary's
financial statements, owned, used or held for use primarily in the
operation or conduct
14
of the Business by Seller or the applicable Seller Subsidiary on the
Closing Date (except in each case for the Excluded Assets) (collectively,
the "Purchased Assets"), free and clear of all Encumbrances other than
Permitted Encumbrances and Permitted Real Property Encumbrances. The
Purchased Assets include:
(a) the Assumed Leases;
(b) the Transferred Premises;
(c) the Principal Equipment;
(d) the Fixtures and Supplies;
(e) the Inventory;
(f) the Business Intellectual Property;
(g) the Contracts;
(h) the Licenses;
(i) the Business Records;
(j) the Governmental Permits that are necessary for the
operation or conduct of the Business, including those set forth on Schedule
3.7(b), but only to the extent that such Governmental Permits are
assignable or transferable to Buyer;
(k) the accounts receivable of the Business existing on the
Closing Date (including, for the avoidance of doubt, (i) invoiced accounts
receivable, (ii) accrued but uninvoiced accounts receivable and (iii) all
other accounts or notes receivable from customers, distributors and
resellers of the Business, and, in each case, the full benefit of all
security therefor, other than any Accounts Receivable from Seller or any
Affiliate of Seller (collectively, the "Accounts Receivable");
(l) all the capital stock of Avaya Tianjin (such capital
stock being referred to as the "Transferred Avaya Tianjin Shares") held by
Seller or any Affiliate of Seller;
(m) (i) the Retention Agreements with respect to any
Transferred Employee, (ii) insofar as they govern the employment of
Represented Transferred Employees, the Collective Bargaining Agreements and
the Non-U.S. Collective Bargaining Agreements, and (iii) with respect to
any Transferred Employee, the Employee Agreements set forth on Schedule
2.1(m)(4);
(n) notes receivable, dated March 20, 2002, issued by
Electroconductores, C.A. in favor of Avaya International L.L.C. in the
aggregate amount of $300,000;
(o) all goodwill attributable to the Business;
(p) any rights, claims or causes of action of Seller or any
Seller Subsidiary against Third Parties relating to the Business or a
Purchased Asset occurring on or prior to the Closing Date, subject to
Section 2.2(h) and as otherwise provided in the Intellectual Property
Agreements;
(q) all prepaid charges, expenses, sums and fees related to
the Premises or under any Contract, License or Governmental Permit included
in the Purchased Assets;
15
(r) subject to the limitations on use set forth in Section
5.7 and the Transitional Trademark License Agreement, all sales and
marketing or packaging materials, samples or prototypes containing any
Avaya Trademarks and used primarily in connection with the Business and all
other similar sales and marketing or packaging materials and marketing
studies containing any identification indicating an association with Seller
and used primarily in connection with the Business; and
(s) any assets reflected in the Post-Closing Statement (as
hereinafter defined).
2.2 Excluded Assets. Notwithstanding anything in Section 2.1 to the
contrary, it is hereby expressly acknowledged and agreed that the Purchased
Assets shall not include, and neither Seller nor any of the Seller
Subsidiaries is selling, transferring, assigning, conveying or delivering
to Buyer, and Buyer is not purchasing, acquiring or accepting from Seller
or any of the Seller Subsidiaries, any of the rights, properties or assets
set forth or described in Sections 2.2(a) through (o) (the rights,
properties and assets expressly excluded by this Section 2.2 from the
Purchased Assets being referred to herein as the "Excluded Assets"):
(a) any cash, cash equivalents, bank deposits or similar
cash items of Seller or any Affiliate of Seller;
(b) any Proprietary Subject Matter of Seller or any
Affiliate of Seller or Intellectual Property in and to the same that is not
used or held for use primarily in the operation or conduct of the Business;
(c) any (i) confidential personnel and medical records
pertaining to any Business Employee other than the Transferred Employees;
(ii) books and records that Seller or any Affiliate of Seller is required
by Law to retain or that Seller reasonably determines are necessary or
advisable to retain; provided, however, that Buyer shall have the right to
make copies of such retained books and records that relate to the Business
or any of the Purchased Assets; and (iii) the information management
systems of Seller and any Affiliate of Seller other than (A) those used or
held for use primarily in the operation or conduct of the Business and
contained within computer hardware included as a Purchased Asset pursuant
to Section 2.1 or (B) listed on Schedule 2.1(h) as transferable to Buyer;
(d) except as specifically provided in Section 2.10, any
claim, right or interest of Seller or any Affiliate of Seller, other than
Avaya Tianjin, in or to any refund, rebate, abatement or other recovery for
Taxes, together with any interest due thereon or penalty rebate arising
therefrom, to the extent attributable to any Pre-Closing Tax Period;
(e) the Excluded Agreements and the Nonassignable Licenses;
(f) the approximately 60 acre parcel of land adjoining the
Home Depot Parcel, as more particularly described on Schedule 2.2(f) (the
"Avaya Southeast Property");
(g) except as explicitly set forth in Section 5.4, all the
assets of or relating to the Company Plans, and any insurance policies,
administration contracts and trust agreements pertaining thereto;
(h) any rights, claims or causes of action of Seller or any
Seller Subsidiary against Third Parties relating to or arising out of the
Excluded Assets and Excluded Liabilities;
(i) any of the rights, properties and assets set forth on
Schedule 2.2(i);
16
(j) except as explicitly set forth in Section 5.4, any
insurance policies or rights of proceeds thereof;
(k) any claim, right or interest in or to any capital stock
of the Seller Subsidiaries or to the minute books, charter documents, stock
record books or other books and records that relate to the organization,
existence or capitalization of such Seller Subsidiaries;
(l) any Retention Agreement or collective bargaining
agreement other than those included in Section 2.1 as a Purchased Asset;
(m) the Early Retirement Program;
(n) the equipment used for carrying out the Designated
Remedial Action (as hereinafter defined) pursuant to Section 9.5(b) hereof;
(o) all other assets, properties, interests and rights of
Seller or any Affiliate of Seller not used or held for use primarily in the
operation or conduct of the Business; and
(p) except as set forth on Schedule 2.2(p), the Singapore
Property.
2.3 Purchase Price. In consideration of the sale, transfer,
assignment, conveyance and delivery by Seller and the Seller Subsidiaries
of the Purchased Assets to Buyer, and in addition to assuming the Assumed
Liabilities, Parent shall cause Buyer at the Closing to (i) pay to Seller
an aggregate amount equal to Two Hundred Ten Million Dollars ($210,000,000)
in cash (the "Cash Payment") by wire transfer of immediately available
funds to an account or accounts designated by Seller's written instructions
given to Buyer at least two Business Days prior to the Closing, which
amount shall be subject to adjustment pursuant to Section 2.4 below, (ii)
deliver to Seller a stock certificate or certificates of Parent (bearing
any applicable legend required under federal or state securities laws) in
the names and amounts designated by Seller at least two Business Days prior
to Closing representing a number of shares (the "Parent Shares") of common
stock, par value $0.01 per share, of Parent ("Parent Common Stock")
determined as follows: if the average per share closing price of the Parent
Common Stock, as reported on the New York Stock Exchange Composite
Transactions Tape (as reported by The Wall Street Journal (Northeast
Edition)), or if not reported thereby, by any other authoritative source)
for the ten (10) trading days immediately prior to the trading day prior
the Closing Date ("Average Price") is (a) not less than $10.00 and not more
than $13.00, then the number of Parent Shares shall be equal to Thirty-Four
Million Nine Hundred Thousand Dollars ($34,900,000) divided by the Average
Price; (b) less than $10.00, then the number of Parent Shares shall be
equal to 3,490,000 shares of Parent Common Stock; and (c) more than $13.00,
then the number of Parent Shares shall be equal to 2,684,615 shares of
Parent Common Stock, and (iii) as subject to adjustment pursuant to
Sections 2.4, 5.4(j), 5.4(r) and 8.4, deliver to Seller a convertible note
in the aggregate principal amount of Eighteen Million Dollars
($18,000,000), the summary terms of which are set forth on Exhibit G
attached hereto (the "Convertible Note" and, together with the Cash Payment
and the Parent Shares, collectively, the "Purchase Price").
2.4 Adjustment of Cash Payment; IT Transfer Costs.
(a) Estimated Closing Net Assets. No later than five Business
Days prior to the Closing Date, Seller shall deliver to Buyer its good
faith estimate (including reasonable supporting documentation) of the
Closing Net Assets of the Business, as defined and calculated in accordance
with Schedule 2.4(a) as of the close of business on the Business Day prior
to the Closing Date (the "Estimated Closing Net Assets"). If the Estimated
Closing Net Assets are less than the Closing Net Assets Threshold, then
such shortfall shall first reduce the amount of the Convertible Note,
dollar for dollar, and
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to the extent the amount of the Convertible Note is reduced to zero, any
remaining shortfall shall reduce the Cash Payment, dollar for dollar. If
the Estimated Closing Net Assets are more than the Closing Net Assets
Threshold then such excess shall increase the amount of the Convertible
Note, dollar for dollar.
(b) Post-Closing Statement. As soon as practicable but in any
event within 60 days after the Closing Date, Parent will cause Buyer to
prepare (or cause to be prepared) and deliver to Seller a statement (the
"Post-Closing Statement") showing (i) Buyer's calculation of the Closing
Net Assets of the Business as defined on and calculated in accordance with
Schedule 2.4(a) as of the close of business on the Business Day prior to
the Closing Date, including, in each case, the calculation thereof in
reasonable detail and (ii) the aggregate costs of all license, transfer and
assumption fees paid or payable (to the extent Buyer determines, in its
discretion, that it requires such license, transfer or assumption) by Buyer
in order to license, on substantially similar terms and conditions as those
binding Seller, all Software (as defined in the Technology Assignment
Agreement attached hereto as Exhibit C-5) currently used in the Business
that is not assigned or transferred under this Purchase Agreement ("IT
Transfer Costs") at no additional charge; provided, however, that such
costs shall not include any amounts paid or payable for Software that
constitutes an upgrade from that utilized in the Business (provided that,
if the version currently used in the Business is no longer available from,
or is being phased out by, the applicable vendor, the costs associated with
any such upgrade shall be included up to the amount of the original
purchase price of the Software being replaced). Buyer shall provide to
Seller such back-up or supporting data relating to the preparation of the
Post-Closing Statement and the calculations of Closing Net Assets and IT
Transfer Costs reflected thereon as Seller may reasonably request. Buyer
shall also provide, and cause its representatives to provide, as
applicable, Seller and its accountants and other representatives with such
reasonable access to the books, records, files, working papers and
personnel of Buyer or its representatives, as applicable, at reasonable
times and upon reasonable notice, as Seller may reasonably request for the
purposes of evaluating the Post-Closing Statement and the calculations of
Closing Net Assets and IT Transfer Costs reflected thereon.
(c) Acceptance Period; Delivery of Dispute Notice. Seller shall,
within the 30 day period following receipt thereby of such Post-Closing
Statement (the "Acceptance Period"), notify Buyer of acceptance or
non-acceptance, as the case may be, of the Post-Closing Statement and the
calculation of Closing Net Assets and IT Transfer Costs reflected thereon.
If no such notice is delivered to Buyer by Seller within the Acceptance
Period, the Post-Closing Statement and the calculations of Closing Net
Assets and IT Transfer Costs reflected thereon shall be deemed to have been
accepted by Seller and shall be binding upon all of the parties to this
Purchase Agreement for all purposes of this Purchase Agreement. If Seller
gives notice (a "Dispute Notice") to Buyer within the Acceptance Period
that Seller does not agree with or otherwise does not accept the
calculation of the Closing Net Assets and IT Transfer Costs reflected in
the Post-Closing Statement, Seller shall describe in such Dispute Notice in
reasonable detail, the nature of any disagreement, identify the items
involved and the dollar amount of each such disagreement and provide
reasonable supporting documentation for each disagreement. Buyer and Seller
shall endeavor in good faith to resolve all disagreements within the 30 day
period (the "Negotiating Period") following the delivery by Seller of such
Dispute Notice.
(d) Determination of Disputes by Neutral Accounting Firm. If
Buyer and Seller are unable to resolve any disagreements regarding the
Post-Closing Statement and the calculations reflected thereon within the
Negotiating Period, then, upon the expiration of the Negotiating Period,
any remaining disputes may at any time be referred for resolution, at the
election of either Seller or Buyer, to Ernst & Young LLP or such other
internationally recognized accounting firm that is mutually acceptable to
Buyer and Seller (the "Neutral Accounting Firm"). The Neutral Accounting
Firm shall investigate only those items which are in dispute and shall not
assign a value to any item that is (i) greater than the greatest value for
such item claimed by either of Buyer or Seller or (ii) lower than the
lowest value for such item claimed by either of Buyer or Seller. The
Neutral Accounting Firm's determination shall be based only
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upon written submissions by Buyer and Seller, and not upon an independent
review by the Neutral Accounting Firm. The Parties shall instruct the
Neutral Accounting Firm to render its determination within 30 days of the
referral of such matter thereto, and the determination of the Neutral
Accounting Firm shall be final and binding upon all parties to this
Purchase Agreement for all purposes of this Purchase Agreement. Neither
Seller nor Buyer shall have any ex parte communications or meetings with
the Neutral Accounting Firm without the prior consent of Buyer (in the case
of Seller) or Seller (in the case of Buyer). The fees and expenses of the
Neutral Accounting Firm shall be paid by the party whose calculation or
estimate of disputed items on an aggregate basis represents the greatest
difference from the Neutral Accounting Firm's determination of those items
on an aggregate basis.
(e) Adjustment. Promptly following the final determination of the
Closing Net Assets, but in no event more than five Business Days
thereafter, (i) if the amount of the Closing Net Assets exceeds the
Estimated Closing Net Assets, then the aggregate principal amount of the
Convertible Note shall be adjusted upward, dollar for dollar, by any such
excess or (ii) if the amount of the Closing Net Assets is less than the
Estimated Closing Net Assets, then the aggregate principal amount of the
Convertible Note shall be reduced, dollar for dollar, and to the extent the
amount of the Convertible Note is reduced to zero, Seller shall pay to
Buyer by wire transfer of immediately available funds to such account or
accounts as Buyer may designate to Seller in writing, an amount equal to
such difference. For the purposes of this Purchase Agreement, "Closing Net
Assets Threshold" means the amount set forth on Schedule 2.4(a). Promptly
following the final determination of the IT Transfer Costs, but in no event
more than five Business Days thereafter, if the IT Transfer Costs exceed
Two Million Two Hundred Thousand Dollars ($2,200,000), then the aggregate
principal amount of the Convertible Note shall be reduced, dollar for
dollar by the amount of such excess, and to the extent the amount of the
Convertible Note is reduced to zero, Seller shall pay to Buyer by wire
transfer of immediately available funds to such account or accounts as
Buyer may designate to Seller in writing, an amount equal to such
difference. Any amounts paid under this Section 2.4(e) shall be paid
together with interest thereon at the rate of interest per annum equal to
the prime rate as announced by ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A. on the date
payment is to be made, calculated from the Closing Date through the date on
which payment is made.
2.5 Assumed Liabilities. On the Closing Date, Buyer shall execute and
deliver to Seller or the applicable Seller Subsidiary one or more
Assumption Agreements and one or more Lease Assignments pursuant to which,
notwithstanding anything to the contrary contained in this Purchase
Agreement (including Section 2.6), Buyer shall accept, assume and agree to
pay, perform or otherwise discharge, in accordance with the respective
terms and subject to the respective conditions thereof, the Liabilities of
Seller and the Seller Subsidiaries pursuant to and under the Assumed
Liabilities. For purposes of this Purchase Agreement, the term "Assumed
Liabilities" means only the following Liabilities of Seller and the Seller
Subsidiaries and no other Liabilities whatsoever:
(a) any Liability with respect to (i) accrued and unpaid salary
and award accruals for U.S. Transferred Employees and (ii) accrued and
unpaid vacation, sick days, personal days, floating holidays and sales
commissions for Transferred Employees;
(b) any Liability or term or condition of employment which is
applicable to any Transferred Employee who is not located in the United
States, but only to the extent that such Liability or term or condition of
employment is attributable to the Transferred Employee's employment in the
Business and the assumption of such Liability or term or condition of
employment is explicitly set forth in Section 2.5 or 5.4;
(c) the Liabilities under the (i) Assumed Leases, (ii) Contracts,
(iii) Licenses, (iv) Leased Equipment, (v) Government Permits, (vi) with
respect to any Transferred Employees, the Retention Agreements and the
Employee Agreements identified on Schedule 2.1(m)(4), (vii) with respect to
any
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Transferred Employee, the automobile leases set forth on Schedule 2.5(c)
and (viii) the Collective Bargaining Agreements and the Non-U.S. Collective
Bargaining Agreements included in Section 2.1 as a Purchased Asset (other
than with respect to monetary damages resulting from any breaches or
violations by Seller or a Seller Subsidiary of the Assumed Leases,
Contracts, Licenses, Leased Equipment and Governmental Permits, Retention
Agreements, Employee Agreements, automobile leases, Collective Bargaining
Agreements and Non-U.S. Collective Bargaining Agreements occurring prior to
or on the Closing Date);
(d) with respect to the Business, any of the following arising
from sales of products in the ordinary course of business before the
Closing or otherwise included in the Purchased Assets: (i) product warranty
Liabilities, (ii) product returns, (iii) rebates, marketing and discount
programs and (iv) consignment inventory Liabilities;
(e) the Permitted Encumbrances and the Permitted Real Property
Encumbrances;
(f) any Liability for any Taxes (i) of Avaya Tianjin or (ii)
arising out of or relating to the Business or the Purchased Assets for any
period other than a Pre-Closing Tax Period, except as specifically provided
in Section 2.10;
(g) any Liability under the ▇▇▇▇▇▇ Contract;
(h) any Liability reflected in the Post-Closing Statement; and
(i) the accounts payable of the Business existing on the Closing
Date (including, for the avoidance of doubt, (i) invoiced accounts payable,
(ii) accrued but uninvoiced accounts payable and (iii) consigned accounts
payable), other than accounts payable to Seller or any Affiliate of Seller
(collectively, the "Accounts Payable").
2.6 Excluded Liabilities. Buyer shall not assume or be obligated to
pay, perform or otherwise assume or discharge any Liabilities of Seller or
any Seller Subsidiary or Affiliate of Seller, whether direct or indirect,
known or unknown, absolute or contingent, whether or not any such Liability
has a value for accounting purposes or is carried or reflected on or
specifically referred to in either Seller's or the applicable Seller
Subsidiary's financial statements, whether or not of, associated with or
arising from the Business or the operation thereof or any Purchased Asset,
that are not Assumed Liabilities (collectively, "Excluded Liabilities"),
including:
(a) any Excluded Taxes;
(b) any Liability for any judgment, order, decree, ruling or
charge, or any action, suit, grievance, arbitration, proceeding, hearing or
investigation of, in, or before any Governmental Body or before any
arbitrator, pending as of the Closing Date and to the extent relating to
any act or omission occurring or condition existing prior to the Closing,
other than with respect to any such matters that relate to or arise from an
Assumed Liability;
(c) subject to Section 2.7(f), any Liability under the Excluded
Agreements, Nonassignable Licenses and Nonassignable Assets or otherwise
arising out of or under the Excluded Assets;
(d) any Liability of Seller or any Affiliate of Seller under the
Contribution and Distribution Agreement, dated as of September 30, 2000, by
and between Lucent Technologies Inc. and Seller;
20
(e) any Liability with respect to any individual that is an
employee (including any Business Employee), consultant, independent
contractor, or agent of Seller, the Seller Subsidiaries or Affiliates of
Seller, in each case who is not a Transferred Employee or an employee of
Avaya Tianjin on the Closing Date; without limiting the generality of the
foregoing, any inducement, pension, severance, accrued vacation, accrued
personal day, accrued sick day, medical insurance or other Liability under
the Early Retirement Program or otherwise associated with the Early
Retirees or with a Company Plan to the extent covering any Early Retiree
shall be an "Excluded Liability";
(f) except as explicitly set forth in Section 2.5 or Section 5.4,
any Liability arising under any Company Plan;
(g) any Liability arising under or related in any way to
Environmental Law, including the Remedial Action of Hazardous Substances
at, to or from the Premises, that arises out of any act or omission that
first occurred or failed to occur in whole or in part prior to the Closing
Date;
(h) any Liability relating to, resulting from or arising out of
workers' compensation claims incurred or made on or prior to the Closing
Date;
(i) any Indebtedness of Seller or any Seller Subsidiary;
(j) subject to Buyer's compliance with its obligations under
Section 5.4(l), Buyer shall have no Liability for any damages or other
losses which Seller may incur arising out of a claim by the Unions that
Buyer failed to assume the Collective Bargaining Agreements;
(k) any Liability under the Memorandum of Agreement (the "Effects
Package Agreement") dated May 31, 2003 among Seller and System Council T-3,
I.B.E.W., on behalf of itself and Local Nos. 1614 and 1974, I.B.E.W., and
any grievances related thereto; and
(l) any Liabilities to the extent attributable to the employment
or termination of employment of any Transferred Employee on or prior to the
Closing Date, except as explicitly set forth in Section 2.5 or 5.4.
2.7 Further Assurances; Further Conveyances and Assumptions; Consent
of Third Parties.
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(a) From time to time following the Closing, subject to
applicable data protection Laws, Seller shall, and shall cause its
Affiliates to, make available to Buyer such data in personnel records of
Transferred Employees (other than confidential medical information relating
to the Transferred Employees for which Buyer has no ongoing need) as is
reasonably necessary for Buyer to transition such employees into Buyer's
records and otherwise comply with its obligations under Section 5.4 of this
Purchase Agreement.
(b) From time to time following the Closing, Seller and Buyer
shall, and shall cause their respective Affiliates to, execute, acknowledge
and deliver all such further conveyances, notices, assumptions, releases
and acquittances and such other instruments, and shall take such further
actions, as may be necessary or appropriate to assure fully to Buyer and
its respective successors or assigns, all of the properties, rights,
titles, interests, estates, remedies, powers and privileges intended to be
conveyed to Buyer under this Purchase Agreement and the Collateral
Agreements and to assure fully to Seller and its Affiliates and their
successors and assigns, the assumption of the Liabilities intended to be
assumed by Buyer under this Purchase Agreement and the Collateral
Agreements, and to otherwise make effective the transactions contemplated
hereby and thereby, including (i) transferring back to Seller or the
applicable Seller Subsidiary any asset or Liability not contemplated by
this Purchase Agreement to be a Purchased
21
Asset or an Assumed Liability, respectively, which asset or Liability was
transferred to Buyer at the Closing, (ii) transferring to Buyer any asset
or Liability contemplated by this Purchase Agreement to be a Purchased
Asset or an Assumed Liability, respectively, which was not transferred to
Buyer at the Closing and (iii) to the extent that Seller or any of its
Affiliates have provided the landlord under any Lease with a bank guarantee
or letter of credit, Buyer shall, upon the assignment of such Lease,
provide such landlord with a substitute letter of credit or bank guarantee
so that Seller's or its Affiliate's bank guarantee or letter of credit will
be released.
(c) Nothing in this Purchase Agreement nor the consummation of
the transactions contemplated hereby shall be construed as an attempt or
agreement to assign any Purchased Asset, including any Contract, Lease,
License, Governmental Permit, certificate, approval, authorization or other
right, which by its terms or by Law is nonassignable without the consent of
a Third Party or a Governmental Body or is cancelable by a Third Party or
Governmental Body in the event of an assignment ("Nonassignable Assets")
unless and until such consent shall have been obtained. Seller shall, and
shall cause its Affiliates to, use its or their, as applicable, reasonable
best efforts, if requested by Buyer, to obtain such consents promptly;
provided, however, that such cooperation shall not require Seller or any of
its Affiliates to make any payment to obtain any such consent with respect
to any Nonassignable Asset, except to the extent that Buyer has agreed in
writing to reimburse Seller for such expenses, or remain secondarily
liable. Except as provided in Section 8.2(c), the failure of any such
consent or approval to be obtained or the failure of any such Nonassignable
Asset to constitute a Purchased Asset or any circumstances resulting
therefrom shall not, individually or in the aggregate, constitute a Seller
Material Adverse Effect or a breach by Seller of any representation,
warranty, covenant or agreement contained in this Purchase Agreement or a
failure of any condition precedent to Buyer's obligations under this
Purchase Agreement.
(d) (i) Buyer and Seller shall use their respective reasonable
best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate all obligations
under any and all Contracts or other Liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of Seller and
its Affiliates so that, in any such case, Buyer shall be solely responsible
for such Liabilities. To the extent permitted by applicable Law, in the
event consents to the assignment thereof cannot be obtained, such
Nonassignable Assets shall be held, as of and from the Closing Date, by
Seller or the applicable Affiliate of Seller in trust for Buyer (or any
successor to or assignee of Buyer, by operation of Law or otherwise) and
the covenants and obligations thereunder shall be performed by Buyer in
Seller's or such Affiliate's name and all benefits and obligations existing
thereunder shall be for Buyer's account. Seller shall take or cause to be
taken at Seller's reasonable expense such actions in its name or otherwise
as Buyer may reasonably request so as to provide Buyer with the benefits of
the Nonassignable Assets and to effect collection of money or other
consideration that becomes due and payable under the Nonassignable Assets,
and Seller or the applicable Affiliate of Seller shall promptly pay over to
Buyer all money or other consideration received by it with respect to all
Nonassignable Assets.
(ii) Notwithstanding anything to the contrary contained in
Sections 2.7(d)(i) and (e) hereof, with respect to the Leased Premises,
Buyer and Seller shall use commercially reasonable efforts (not including
payment of moneys to Third-Parties above and beyond any customary and
reasonable ministerial or administrative fee) to obtain, or cause to be
obtained, any consent, substitution, assignment, assumption, approval,
amendment, lease termination or new lease on substantially the same terms
(collectively, the "Leased Premises Consents") required to assign any
Lease, to novate all obligations under any Lease or to obtain in writing
the unconditional release of Seller and its Affiliates so that, in any such
case, Buyer shall be solely responsible only for those liabilities and
obligations that arise from and after Closing.
22
(e) As of and from the Closing Date, Seller on behalf of itself
and its Affiliates authorizes Buyer, to the extent permitted by applicable
Law and the terms of the Nonassignable Assets, at Buyer's expense, to
perform all the obligations and receive all the benefits of Seller or its
Affiliates under the Nonassignable Assets and appoints Buyer its
attorney-in-fact to act in its name and on its behalf or in the name of the
applicable Affiliate of Seller and on such Affiliate's behalf with respect
thereto.
(f) Notwithstanding anything in this Purchase Agreement to the
contrary, unless and until any consent or approval with respect to any
Nonassignable Asset is obtained, such Nonassignable Asset shall not
constitute a Purchased Asset and any associated Liability shall not
constitute an Assumed Liability for any purpose under this Purchase
Agreement, except to the extent that Buyer receives the benefit of such
Nonassignable Asset.
2.8 No Licenses. Except as set forth in the Intellectual Property
Agreements or in Section 5.7 hereof, no title, right or license of any kind
is granted to Parent or Buyer pursuant to this Purchase Agreement with
respect to any Proprietary Subject Matter or Intellectual Property of
Seller or any Affiliate of Seller, either directly or indirectly, by
implication, by estoppel or otherwise.
2.9 Bulk Sales Law. Buyer hereby waives compliance by Seller and each
of the Seller Subsidiaries with the requirements and provisions of any
"bulk-transfer" Laws of any jurisdiction that may otherwise be applicable
with respect to the sale of any or all of the Purchased Assets to Buyer.
2.10 Taxes. Buyer and Seller shall share equally all transfer,
documentary, sales, use, stamp, registration, and other similar Taxes that
may be imposed, assessed or payable by reason of the execution of, or
consummation of the transactions contemplated by, this Purchase Agreement
and all reasonable out of pocket costs and expenses relating to such Taxes
("Transfer Taxes"); provided, however, that (a) Buyer shall have the sole
responsibility for (i) Transfer Taxes imposed as a result of Buyer's or its
assignee's present or former connection with a jurisdiction (other than a
present or former connection with the jurisdiction of the United States (or
any jurisdiction thereof or therein) or the jurisdiction of the relevant
selling entity) imposing such Transfer Tax and (ii) value added Taxes to
the extent they are fully recoverable by Buyer or its Affiliate via refund,
credit, input credit, deduction and/or offset and (b) Seller shall have the
sole responsibility for Seller's or any Seller Subsidiary's net income,
franchise or other Taxes based on Seller's or any Seller Subsidiary's net
income or gains from the transactions contemplated by this Purchase
Agreement. Any refunds of Transfer Taxes split by Buyer and Seller pursuant
to this Section 2.10 shall be divided equally between Buyer and Seller. To
the extent a party pays Transfer Taxes which are levied on the other party,
to the extent permitted by Law, such payment shall be deemed to be an
adjustment to the Purchase Price and any refund shall also be deemed an
adjustment to the Purchase Price. Buyer and Seller agree that the
allocation of the fees and expenses relating to the transfer and
recordation of registered Business Intellectual Property is covered in the
Intellectual Property Agreements and is not intended to be allocated by
this Section 2.10.
2.11 Parent Guaranty. Parent unconditionally guarantees, as a primary
obligor, the fulfillment of the covenants, agreements and payment and
performance obligations of Buyer under this Purchase Agreement and each of
the Collateral Agreements to which it is a party and shall be primarily
responsible for all such covenants, agreements and payment and performance
obligations to the extent Buyer fails to perform the same.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 Organization and Qualification; Seller Subsidiaries. Seller is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Schedule 3.1 sets forth a complete list of
each Affiliate of Seller that is engaged in the operation or conduct of the
Business or that has title to, a leasehold interest in, or the license or
right to use, any asset used or held for use in the conduct of the Business
or an obligation or Liability that is an Assumed Liability (collectively,
the "Seller Subsidiaries"). Seller and, except as set forth on Schedule
3.1, each Seller Subsidiary has all requisite corporate or similar power
and authority to own, lease and operate the Purchased Assets owned, leased
or operated by it and to carry on its portion of the Business as presently
conducted and is duly qualified to do business and is in good standing as a
foreign corporation or other entity (in any jurisdiction that recognizes
such concept) in each jurisdiction where the ownership or operation of its
properties and assets or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing individually or in the aggregate does not have or would not
reasonably be expected to have a Seller Material Adverse Effect.
3.2 Avaya Tianjin. Schedule 3.2 sets forth the authorized and
outstanding stock of Avaya Tianjin as of the date hereof. All of the Avaya
Tianjin shares are validly issued, fully paid and nonassessable and owned
of record and beneficially by the Affiliate of Seller identified in
Schedule 3.2. Upon delivery of the Avaya Tianjin shares and payment of the
Purchase Price as herein provided, Buyer will acquire good, valid and
transferable title thereto, free and clear of any Encumbrances, other than
any Permitted Encumbrances. Schedule 3.2 sets forth the outstanding
Indebtedness of Avaya Tianjin.
3.3 Authorization; Binding Effect.
-----------------------------
(a) Seller has all requisite corporate power and authority to
execute and deliver this Purchase Agreement and the Collateral Agreements
to which it will be a party and to effect the transactions contemplated
hereby and thereby, and the execution, delivery and performance of this
Purchase Agreement and the Collateral Agreements to which it will be a
party have been duly authorized by all requisite corporate action. Each
Seller Subsidiary that has title to any Purchased Asset or an obligation
that is an Assumed Liability has all requisite power and authority to
execute and deliver the Collateral Agreements to which it will be a party
and to effect the transactions contemplated thereby, and the execution,
delivery and performance of the Collateral Agreements to which it will be a
party will be as of the Closing Date (or at the time of any Subsequent
Closing, as applicable) duly authorized by all requisite action.
(b) This Purchase Agreement has been duly executed and delivered
by Seller and this Purchase Agreement is, and the Collateral Agreements to
which Seller and each Seller Subsidiary will be a party, when duly executed
and delivered by Seller or such Seller Subsidiary, will be, valid and
legally binding obligations of Seller or such Seller Subsidiary,
enforceable against Seller or such Seller Subsidiary, as applicable, in
accordance with their respective terms, assuming, in each case, the due
execution and delivery by the other party or parties thereto.
3.4 Non-Contravention; Consents.
---------------------------
(a) Assuming that all of the consents, approvals, orders,
authorizations, registrations and declarations referred to in clause (i),
(ii) and (iii) of Section 3.4(b) have been made or obtained, as
24
applicable, and except as set forth on Schedule 3.4(a), the execution,
delivery and performance of this Purchase Agreement by Seller and the
Collateral Agreements by Seller or any Seller Subsidiary that is a party
thereto and the consummation of the transactions contemplated hereby and
thereby do not and will not: (i) result in a breach or violation of any
provision of Seller's or the applicable Seller Subsidiary's charter, bylaws
or similar organizational documents, (ii) violate or result in a breach of
or constitute an occurrence of default under any provision of, result in
the acceleration or cancellation of any obligation under, or give rise to a
right by any party to terminate or amend its obligations under, any
mortgage, deed of trust, conveyance to secure debt, note, loan, indenture,
lien, lease, Agreement, instrument or other arrangement or commitment to
which Seller or the applicable Seller Subsidiary is a party or by which it
is bound and which is used or held for use primarily in the operation or
conduct of the Business or the Purchased Assets or (iii) violate any order,
judgment, decree, rule or regulation of any Governmental Body having
jurisdiction over Seller, a Seller Subsidiary or the Purchased Assets other
than, in the case of clauses (ii) and (iii), any such violations, breaches,
defaults, accelerations, cancellations of obligations or rights that arise
otherwise and, individually or in the aggregate, do not have and would not
reasonably be expected to have a Seller Material Adverse Effect.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person is required to be
obtained by Seller or a Seller Subsidiary in connection with the execution
and delivery of this Purchase Agreement or the Collateral Agreements to
which Seller or such Seller Subsidiary will be a party or for the
consummation of the transactions contemplated hereby or thereby by Seller
or such Seller Subsidiary, except for (i) any filings required to be made
under the HSR Act and any applicable filings required under foreign
Competition Laws, (ii) those set forth on Schedule 3.4(b)(ii) (items (i)
and (ii) being referred to herein as the "Required Consents"), (iii)
consents or approvals of Third Parties that are required to transfer or
assign to Buyer any Purchased Assets or assign the benefits of or delegate
performance with regard thereto, including all consents and approvals of
Third Parties necessary to effect the transfer of the Real Property from
Seller to Buyer, including landlord and sublandlord consents to assignment
of the Leased Premises and governmental approvals necessary to effect the
transfer of the Transferred Premises, and (iv) such consents, approvals,
orders, authorizations, registrations, declarations or filings the failure
of which to be obtained or made, individually or in the aggregate, does not
have and would not reasonably be expected to have a Seller Material Adverse
Effect.
3.5 Title to Personal Property; Principal Equipment; Sufficiency of
Assets.
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(a) Except as set forth on Schedule 3.5(a), (i) Seller or a
Seller Subsidiary owns or leases all Inventory, machinery, equipment and
other tangible assets necessary for the conduct of its respective business
as it relates to the Business, as presently conducted, and (ii) Seller or a
Seller Subsidiary has, and at the Closing will have and will convey to
Buyer, good and valid title to, or a valid, binding and indefeasible
leasehold interest or license in, all personal tangible Purchased Assets,
free and clear of any Encumbrance other than Permitted Encumbrances.
(b) Except as set forth on Schedule 3.5(b), each item of material
Principal Equipment and other tangible assets used in the Business, (i) has
been maintained in accordance with normal industry practices, (ii) complies
in all material respects with applicable Law, and (iii) is in good
operating condition and repair, subject to normal wear and tear.
(c) Except for (i) the assets that will be used in connection
with providing services to Buyer under the Transition Services Agreement,
(ii) the Excluded Assets and (iii) rights to use assets that will be
provided to Buyer under the Intellectual Property License Agreement
attached hereto as Exhibit C-1, and subject to the limitations set forth in
Section 3.12 hereof, the Purchased Assets are sufficient to conduct the
Business as presently conducted.
25
3.6 Real Estate.
-----------
(a) Schedule 3.6(a) contains a complete and accurate list, as of
the date hereof, of the Leased Premises and the Leases. Except as set forth
in Schedule 3.6(a):
(i) each Assumed Lease is in full force and effect, and is
enforceable in all material respects in accordance with its terms against
Seller or a Seller Subsidiary and, to Seller's knowledge, against each
other Person that is a party thereto;
(ii) Seller or a Seller Subsidiary has good and valid
leasehold title to the Leased Premises free and clear of all Encumbrances
other than and subject to the Permitted Real Property Encumbrances;
(iii) there is no default under any Assumed Lease which has
had or which would reasonably be expected to have a Seller Material Adverse
Effect, nor has Seller or any Seller Subsidiary received (as a tenant) or
given (as a landlord/licensor) any written notice of any material default
(or any condition or event which, after notice or lapse of time or both,
would constitute a material default) under any Assumed Lease;
(iv) neither Seller nor any Seller Subsidiary owes any
brokerage commissions with respect to any Leased Premises; and
(v) the Letting Agreement dated June 18, 2002 between Avaya
Ireland Limited, as landlord, and Avaya International Sales Limited, as
tenant (for part of the property at ▇▇▇▇▇ ▇▇▇▇▇ Avenue, Bray, Ireland) (the
"Ireland Letting Agreement"), and each other Lease or license pursuant to
which Seller or any Seller Subsidiary is the landlord/licensor, if any,
constitutes a valid and subsisting demise of the premises described therein
for the term described therein; such lease or license has not been altered,
amended, changed or modified except as provided hereunder; such lease or
license is in full force and effect in each and every respect; and, to
Seller's knowledge, the landlord/licensor under such lease is not in
material default under the lease or license and, to Seller's knowledge, no
condition exists or event has occurred which with the passage of time or
the giving of notice or both would constitute a material default
thereunder.
(b) Schedule 3.6(b) contains a complete and accurate list, as of
the date hereof, of the Transferred Premises. Except as set forth on
Schedule 3.6(b):
(i) Seller or a Seller Subsidiary has good and insurable fee
simple title to the Nebraska Property free and clear of all Encumbrances
other than and subject to the Permitted Real Property Encumbrances. Seller
or a Seller Subsidiary has good and marketable fee simple title, or its
reasonable equivalent in the jurisdiction in which the property is located
unless such equivalent is unavailable or not customarily delivered in such
jurisdiction, then whatever is customarily delivered in the applicable
jurisdiction, to the Ireland Property and the Singapore Property free and
clear of all Encumbrances other than and subject to the Permitted Real
Property Encumbrances;
(ii) Seller or a Seller Subsidiary is in possession of the
Transferred Premises and the Leased Premises subject to the terms of the
Leases and the Ireland Letting Agreement; and
(iii) to Seller's knowledge, all improvements upon the
Transferred Premises and all leased improvements on the Leased Premises
located in Richardson, Texas and in Australia are in satisfactory condition
and repair for the continued use in the ordinary course of business
consistent with past practice.
26
3.7 Compliance With Laws.
--------------------
(a) With respect to the Business and Real Property, Seller and
each Seller Subsidiary is in compliance with all applicable Laws and all
Permits, except for instances of noncompliance or possible noncompliance
that individually or in the aggregate do not have and would not reasonably
be expected to have a Seller Material Adverse Effect.
(b) Schedule 3.7(b) identifies each material Permit that relates
primarily to, or is necessary for, the conduct of the Business. Seller or a
Seller Subsidiary owns, holds or possesses all material Permits necessary
for the operation or conduct of the Business as currently conducted. Seller
has made available to Buyer accurate and complete copies of all of the
Permits set forth on Schedule 3.7(b), including all renewals thereof and
all amendments thereto. Each Permit identified on Schedule 3.7(b) is valid
and in full force and effect. Seller and each Seller Subsidiary is in
compliance with all of the terms and requirements of each Permit identified
on Schedule 3.7(b), except to the extent such non-compliance would not be
reasonably expected to have a Seller Material Adverse Effect. To Seller's
knowledge, other than the transactions contemplated by this Purchase
Agreement, no event has occurred and no condition or circumstance exists,
that might (with or without notice or lapse of time) constitute or result,
directly or indirectly, in the revocation, withdrawal, suspension,
cancellation, termination or modification of any Permit set forth on
Schedule 3.7(b).
(c) Notwithstanding anything contained in this Section 3.7 to the
contrary, no representation or warranty made by Seller in Section 3.7(a) or
Section 3.7(b) shall apply to compliance by Seller with any Laws that are
the subject matter of the representations made in Sections 3.8, 3.10 and
3.14.
3.8 Business Employees.
------------------
(a) Schedule 3.8(a)(i) contains a complete and accurate list as
of the date hereof of all the Business Employees (other than employees of
Avaya Tianjin) and identifies the location of each such Business Employee,
their job title, salary, annual bonus paid in the 2002 fiscal year, start
date, which Business Employees are covered by an Agreement listed in
Schedule 2.1(m) or Schedule 3.8(a)(ii), which Business Employees are
consultants, independent contractors or agents of Seller or the Seller
Subsidiaries, which Business Employees are authorized to work in the United
States pursuant to a visa and the nature of each such visa, and which
Business Employees are on leave of absence or short-term disability leave.
During the three months ended August 31, 2003, except as disclosed on
Schedule 3.8(a)(i), no Business Employee spent less than 100% of his or her
business hours with the Seller, the Seller Subsidiaries or Avaya Tianjin on
matters relating to the Business. Except as set forth on Schedule 2.1(m)
and Schedule 3.8(a)(ii), none of the Business Employees (including those
employed by Avaya Tianjin) is represented by any union, labor organization,
works council or employee association, and none of Seller, any Seller
Subsidiary or Avaya Tianjin is a party to or bound by any collective
bargaining or similar agreement, or work rules or practices, agreed to with
any labor organization, works council or employee association applicable to
Business Employees.
(b) Schedule 3.8(b) contains a true and complete list of each
Company Plan and each material Employee Agreement.
(c) Seller has made available to the Buyer a current, accurate
and complete copy (or, to the extent no such copy exists, a written
accurate description) of (i) all documents embodying or relating to each
Company Plan, each material Employee Agreement, each Collective Bargaining
Agreement and each Non-U.S. Collective Bargaining Agreement, including all
amendments thereto and any related trust agreement or other funding
instrument; (ii) the most recent determination letter received from the
IRS, if
27
any, for each Company Plan and related trust which is intended to satisfy
the requirements of Section 401(a) of the Code; (iii) with respect to the
Company Plan, the most recent summary plan description together with the
most recent summary of material modifications, if any, required under
ERISA; and (iv) with respect to each Company Plan, to the extent
applicable, for the three most recent years (A) the Form 5500 and attached
schedules, (B) audited financial statements prepared in accordance with
GAAP or the applicable accounting standards for any such financial
statements prepared in respect of Company Plans maintained outside of the
United States, and (C) actuarial valuation reports prepared in accordance
with the professional standards applicable thereto.
(d) Except as set forth on Schedule 3.8(d), (i) each Company Plan
has been established and administered in all material respects in
accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Code and other applicable Laws and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code is so qualified and has received a favorable
determination letter from the IRS to the effect that each such Company Plan
is so qualified and that each trust forming a part of any such Company Plan
is exempt from tax pursuant to Section 501(a) of the Code and nothing has
occurred, whether by action or failure to act, that would reasonably be
expected to cause the loss of such qualification or exemption, or Seller
has operated such Company Plan in accordance with section 401(a) of the
Code; (iii) no event has occurred and no condition exists that would
subject Seller, any Seller Subsidiaries or Avaya Tianjin or any ERISA
Affiliate to any excise tax, fine, Encumbrance or penalty imposed by ERISA,
the Code or other applicable Laws; (iv) no "prohibited transaction," within
the meaning of Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to any Company Plan which would subject Seller, any
Seller Subsidiary, Avaya Tianjin or any ERISA Affiliates to any Liability;
(v) none of Seller, any Seller Subsidiary, Avaya Tianjin or any ERISA
Affiliate is in violation of, any Company Plan or trust or in breach of any
Employee Agreement; (vi) to the knowledge of each of Seller, no audit or
investigation by the IRS, the U.S. Department of Labor or the PBGC is
pending, threatened or anticipated, and no intervention by the IRS, the
U.S. Department of Labor or the PBGC is threatened or anticipated with
respect to the transaction contemplated under this Purchase Agreement; and
(vii) no liability under any Company Plan has been funded nor has any such
obligation been satisfied with the purchase of a contract from an insurance
company as to which Seller, any of its Seller Subsidiaries or Avaya Tianjin
has received notice that such insurance company is insolvent or is in
rehabilitation or any similar proceeding.
(e) None of Seller, any Seller Subsidiary, Avaya Tianjin or any
ERISA Affiliate (i) are currently contributing to or are obligated to
contribute to, or incurred any withdrawal liability (within the meaning of
Section 4201 of ERISA) to any Multi-Employer Plan or (ii) has contributed
to or has been obligated to contribute to any such Multi-Employer Plan with
respect to any Business Employee.
(f) With respect to any Company Plan, Collective Bargaining
Agreement or Non-U.S. Collective Bargaining Agreement, except as set forth
on Schedule 3.17, (i) no actions, proceedings, arbitrations, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of Seller, threatened, and (ii) to the
knowledge of Seller, no facts or circumstances exist that could give rise
to any such actions, suits or claims.
(g) Except as set forth in Schedule 3.8(g), or as required
pursuant to the terms of any Company Plan or any Employee Agreement, since
December 31, 2002, there has not been any (i) increase in the compensation
or fringe benefits of any Business Employee who is a present or former
director, officer or employee of Seller, any Seller Subsidiary or Avaya
Tianjin (except for increases in salary or wages in the ordinary course of
business consistent with past practice), (ii) grant of any severance or
termination pay to any Business Employee who is a present or former
director, officer or employee of Seller, any Seller Subsidiary or Avaya
Tianjin other than in the ordinary course of business and consistent with
past practice, (iii) loan or advance of money or other property by Seller,
any Seller Subsidiary or
28
Avaya Tianjin to any Business Employee who is a present or former director,
officer or employee, (iv) with respect to any Business Employee,
establishment, adoption, entrance into, material amendment or termination
of any Company Plan or trust, or (v) with respect to any Business Employee,
establishment, adoption, entrance into or material amendment of any
Employee Agreement (other than such establishment, adoption, entrance into
or material amendment of an Employee Agreement with any non-U.S. Business
Employee or U.S. Business Employee below the position of director which is
in the ordinary course of business consistent with past practice). Except
as set forth on Schedule 3.8(g)(i) or in Section 5.4, the execution of, and
performance of the transactions contemplated by, this Purchase Agreement
will not (either alone or upon the occurrence of any additional or
subsequent events) (x) constitute an event under any Company Plan, Employee
Agreement or trust that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any Business Employee, or (y) result in the triggering or
imposition of any restrictions or limitations on the right to amend or
terminate any Company Plan and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject to
applicable Taxes.
(h) Except as set forth in Schedule 3.8(h) with respect to the
Business, (i) there is not presently pending or existing, and to Seller's
knowledge there is not threatened, any strike, slowdown, picketing or work
stoppage, (ii) there is no pending application for certification of a
collective bargaining agent, or (iii) there are no pending actions or
proceedings filed by, or on behalf of, any Business Employees or groups of
Business Employees, or to the knowledge of Seller threatened to be filed,
with any court, arbitration tribunal or Governmental Body, in each case,
that would, individually or in the aggregate, have a Seller Material
Adverse Effect.
(i) Schedule 3.8(i), contains a complete list of each current or
former Business Employee who has experienced an "employment loss" within
the meaning of the Worker Adjustment and Retraining Notification Act (the
"WARN Act") during the 90-day period ending on the date of this Purchase
Agreement. Schedule 3.8(i) shall be amended as necessary during the period
commencing on the date of this Purchase Agreement and ending on the Closing
Date to reflect any additional Business Employees who experience an
"employment loss" within the meaning of the WARN Act during such period,
and such amended Schedule 3.8(i) shall be provided to Buyer at Closing.
(j) Seller, each Seller Subsidiary and Avaya Tianjin (i) are in
compliance with all applicable Laws respecting employment, employment
practices, labor, terms and conditions of employment and wages and hours,
in each case, with respect to Business Employees, and (ii) have withheld
all amounts required by Law or by agreement to be withheld from the wages,
salaries and other payments to Business Employees, except in each case for
such noncompliance or failures to withhold that would not, individually or
in the aggregate, have a Seller Material Adverse Effect.
(k) Except as disclosed on Schedule 3.8(k), Seller, each Seller
Subsidiary and Avaya Tianjin (i) are not liable for any arrears of wages or
any Taxes or any penalty for failure to comply with any of the foregoing,
and (ii) are not liable for any payment to any trust or other fund or to
any governmental or administrative authority, with respect to social
security or other benefits for Business Employees, in each case, that
would, individually or in the aggregate, have a Seller Material Adverse
Effect.
(l) Except as disclosed on Schedule 3.8(l), no Company Plan is
funded by a trust described in Section 501(c)(9) of the Code. Each of such
trusts which assets are to be transferred pursuant to Section 5.4 has
received a favorable determination letter from the IRS with respect to its
compliance with Section 501(c)(9) of the Code and Seller is not aware of
any circumstances likely to
29
result in revocation of any such favorable determination letter, or Seller
has operated such trusts in accordance with Section 501(c)(9) of the Code.
(m) Except as set forth on Schedule 3.8(m), (i) no steps have
been taken to terminate any Pension Plan and no termination of any Pension
Plan has occurred pursuant to which all Liabilities have not been satisfied
in full, (ii) no Liability under Title IV of ERISA (other than premiums to
the PBGC) has been incurred by Seller, any Seller Subsidiary, Avaya Tianjin
or any ERISA Affiliate which has not been satisfied in full, and no event
has occurred and no condition exists that could reasonably be expected to
result in Seller, any Seller Subsidiary, Avaya Tianjin or any ERISA
Affiliate incurring a Liability under Title IV of ERISA or could constitute
grounds for terminating any Pension Plan; (iii) no proceeding has been
initiated by the PBGC to terminate any Pension Plan or to appoint a trustee
to administer any Pension Plan; (iv) each Pension Plan which is subject to
Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code, has
been maintained in compliance with the minimum funding standards of ERISA
and the Code, and no such Pension Plan has incurred any "accumulated
funding deficiency," as defined in Section 412 of the Code and Section 302
of ERISA, whether or not waived; (v) none of Seller, any Seller Subsidiary,
Avaya Tianjin or any ERISA Affiliate has sought or received a waiver of its
funding requirements with respect to any Pension Plan and all contributions
payable with respect to each Pension Plan have been timely made; and (vi)
no reportable event, within the meaning of Section 4043 of ERISA, and no
event described in Section 4062 or 4063 of ERISA, has occurred with respect
to any Pension Plan.
(n) Except as set forth in Schedule 3.8(n), Seller has not
classified any individual as an "independent contractor" or of similar
status who, according to a Company Plan or the law of any applicable
jurisdiction, should have been classified as an employee or of similar
status. No individual who provides services to Seller, the Seller
Subsidiaries or Avaya Tianjin in connection with the Business, in any
capacity, has been improperly excluded from participating in any Company
Plan, other than exclusions that would not, individually or in the
aggregate, have a Seller Material Adverse Effect.
(o) All Company Plans subject to the Laws of a jurisdiction
outside of the United States (i) have been maintained in all material
respects in accordance with all applicable requirements and (ii) if they
are intended to qualify for special tax treatment meet all requirements for
such treatment except, in each case, for such noncompliance that would not,
individually or in the aggregate, have a Seller Material Adverse Effect.
(p) Seller is not liable to make any payment to any person under
the Redundancy Payments ▇▇▇ ▇▇▇▇ to 2003 or any voluntary redundancy scheme
or practice or pursuant to the Protection of Employees (Employer's
Insolvency) Acts 1984 to 2001.
(q) To the extent that Seller has terminated in the 12-month
period ending on the date of this Purchase Agreement, or terminates prior
to the Closing Date, the employment of any person employed by it by reason
of the transfer of assets contemplated in this Purchase Agreement, every
such termination has been or shall be, as the case may be, for economic,
technical and organizational reasons entailing changes in the work force
and is not and shall not be in contravention of the Transfer Regulations,
and the Seller has furnished to the Buyer details of every such termination
or proposed termination, as the case may be.
3.9 Material Contracts. Schedule 3.9 contains a complete and accurate
list of all existing contracts and commitments of Seller or a Seller
Subsidiary, whether written or oral, used or held for use primarily in the
operation or conduct of the Business or by which the Purchased Assets may
be bound or affected that (i) would require over the full term thereof
payments by or to Seller or a Seller Subsidiary of more than $500,000, (ii)
are notes, mortgages, indentures, letters of credit, guarantees or other
obligations
30
for lending or borrowing of $100,000 or more pursuant to which any of the
Purchased Assets are pledged or mortgaged as collateral and any agreement
creating any guarantee or other agreement to be liable for the obligations
of another Person (other than Seller or a Seller Subsidiary), (iii) are
joint venture or partnership agreements used or held for use primarily in
the operation or conduct of the Business, or (iv) contain any covenant not
to compete, take or pay, or covenant prohibiting the development, sales,
manufacture, marketing or distribution of the products or services of the
Business or restrict the ability of Seller or a Seller Subsidiary to hire
or solicit for hire any Person with respect to which the Business will be
obligated following the Closing (the "Material Contracts"). Each Material
Contract is valid, binding and enforceable against Seller or the applicable
Seller Subsidiary and, to Seller's knowledge, the other parties thereto in
accordance with its terms, and is in full force and effect. Except as set
forth on Schedule 3.9, neither Seller nor any Seller Subsidiary has
received any written notice that it is in default under or in breach of or
is otherwise delinquent in performance under any Material Contract, and, to
Seller's knowledge, each of the other parties thereto has performed all
obligations required to be performed by it under, and is not in default
under, any Material Contract and no event has occurred that, with notice or
lapse of time, or both, would constitute such a default, except for
breaches, failures of performance or defaults that individually or in the
aggregate do not have and would not reasonably be expected to have a Seller
Material Adverse Effect.
3.10 Environmental Matters. Except as set forth in Schedule 3.10 and
with respect to the Business:
(a) (i) Seller and each Seller Subsidiary are in compliance with
all Environmental Laws with respect to the Business and have obtained or
filed, and provided Buyer access to true and complete copies of, all
Governmental Permits required to be obtained under Environmental Law
necessary for the construction, ownership, operation and transfer to Buyer
of the Purchased Assets, and the operation or conduct of the Business, (ii)
all such Governmental Permits are duly issued and in full force and effect
and Seller is not aware of any amendment, review, revocation or non-renewal
or other change of any of the Governmental Permits, (iii) no material
Governmental Permits required to be obtained under Environmental Law
contain any terms or conditions with which Seller and each Seller
Subsidiary is not, or does not expect to remain, in compliance, and (iv)
Seller knows of no facts or circumstances that may prevent or substantially
increase the cost of compliance by Seller or any Seller Subsidiary with
Environmental Laws, except, in each case, where failures to obtain, file or
maintain in full force and effect such Governmental Permits or be in
compliance with Environmental Law or such Governmental Permits,
individually or in the aggregate, do not have and would not reasonably be
expected to have a Seller Material Adverse Effect;
(b) Except for those matters that individually or in the
aggregate do not have and would not reasonably be expected to have a Seller
Material Adverse Effect, none of the Premises included in the Purchased
Assets is subject to any threatened or on-going claim by, notice of
violation from, investigation by, order from or agreement with any Person
relating to (i) any Environmental Law, (ii) any Remedial Action, or (iii) a
breach of any Governmental Permit;
(c) Neither Seller nor any Seller Subsidiary is subject to any
actual or, to the knowledge of Seller, threatened judicial or
administrative proceeding, order, judgment, decree or settlement alleging
or addressing a material violation of, or material liability under, any
Environmental Law with respect to any of the Purchased Assets;
(d) Seller or each applicable Seller Subsidiary has filed all
notices required to be filed with respect to the Purchased Assets under any
Environmental Law indicating past or present presence, treatment, storage
or disposal of a Hazardous Substance or reporting a spill or Release of a
Hazardous
31
Substance into the environment, except where failures to file any such
notices, individually or in the aggregate, do not have and could not
reasonably be expected have a Seller Material Adverse Effect;
(e) Neither Seller nor any Seller Subsidiary has received any
written notice, complaint or claim with respect to the Purchased Assets to
the effect that any Seller or Seller Subsidiary is or may be liable to any
Person as a result of the presence, management, Remedial Action, Release or
threatened Release of a Hazardous Substance;
(f) Seller has made available to Buyer copies of all
non-privileged environmental or health and safety related assessments,
studies, reports, analyses, regulatory inspection reports, correspondence
with regulatory authorities and results of investigations or Remedial
Action involving the Purchased Assets ("Environmental Reports"), including
but not limited to Environmental Reports pertaining to Releases, Remedial
Action, underground and above-ground storage tanks, polychlorinated
biphenyls ("PCBs"), asbestos in any buildings or products, off-site
disposal of wastes, and environmental consent orders, fines and penalties,
that are in Seller's or Seller's Subsidiaries' possession, custody or
control;
(g) There does not exist, is not occurring and, to the knowledge
of Seller, has not occurred at any time any Release or management of any
Hazardous Substance on, in, under, to or from any of the Purchased Assets
in violation of any Environmental Law or that may result in any Liability
or obligation of the Seller, any Seller Subsidiary, or the Buyer;
(h) Neither Seller nor any Seller Subsidiary owns or operates,
nor to knowledge of Seller, has any of them formerly owned or operated, any
site, nor has the Seller or any Seller Subsidiary sent waste to a site,
that (i) was not an authorized waste disposal facility pursuant to
Environmental Law, (ii) has been placed on the "National Priorities List,"
the "CERCLIS" list or any other list of sites published by a Governmental
Body with suspected or confirmed environmental problems, (iii) is subject
to or the source of a claim, administrative order or other request to
undertake Remedial Action or to pay money under any Environmental Law, or
(iv) is otherwise the subject of any investigation relating to or arising
under any Environmental Law;
(i) Schedule 3.10 identifies (i) all on site locations where each
Seller or Seller Subsidiary has Released, stored, or disposed of Hazardous
Substances (except for storage of cleaning, pest control and office
supplies held for use by Seller in the ordinary course of business), (ii)
all underground storage tanks, and the capacity and contents of such tanks,
located on any Premises or, to the knowledge of Seller, formerly located on
any Premises, (iii) all lead based paint, asbestos or presumed asbestos
that, to the knowledge of Seller, is contained in or forming part of any
building, building component, structure or Premises owned, leased or
otherwise occupied by Seller, and (iv) all PCBs used or stored at any
Premises;
(j) To the knowledge of Seller, no products made, manufactured,
constructed, distributed, sold, leased, supported or installed by Seller or
any Seller Subsidiary contain asbestos, asbestos containing material,
mercury, mercury-containing material, PCBs or PCB-containing material; and
(k) This Section 3.10 contains the sole and exclusive
representations and warranties of Seller with respect to Environmental Law.
32
3.11 Financial Statement; Undisclosed Liabilities; Absence of Changes.
----------------------------------------------------------------
(a) Schedule 3.11(a) contains true and complete copies of the
following financial statements of the Business (the "Financial
Statements"):
(i) audited balance sheets as of September 30, 2000 and
2001, in each case with a report by PricewaterhouseCoopers LLP;
(ii) audited statements of operations and cash flows for the
years ended September 30, 2000 and 2001, in each case with a report by
PricewaterhouseCoopers LLP; and
(iii) unaudited balance sheets as of September 30, 2002,
December 31, 2002, March 31, 2003 and June 30, 2003 (the "Balance Sheets")
and unaudited statements of operations for the three months and twelve
months ended September 30, 2002, the three months ended December 31, 2002,
the three and six months ended March 31, 2003 and the three and nine months
ended June 30, 2003.
(b) Except as set forth on Schedule 3.11(b), the Financial
Statements were prepared in accordance with GAAP (except, in the case of
the unaudited Financial Statements, for normal and recurring year-end
adjustments which, individually or in the aggregate, would not be material,
and the omission of footnotes). The Financial Statements were prepared on
the basis of the books and records of the Business (in each case, as of the
date of such Financial Statements) and present fairly, in all material
respects, the financial position of the Business as of the dates thereof
and the results of its operations and cash flows for each of the periods
then ended, in each case in conformity with GAAP applied on a consistent
basis throughout the periods covered thereby.
(c) Neither Seller nor any Seller Subsidiary has any Liability
with respect to the Business that would have been required to be disclosed,
reflected in or reserved against on the Balance Sheet as of June 30, 2003,
other than (i) Liabilities disclosed, reflected or reserved against on the
Balance Sheet as of June 30, 2003 or disclosed in the notes thereto, (ii)
Liabilities incurred in the ordinary course of business since June 30,
2003, (iii) Liabilities incurred since June 30, 2003 that would not
reasonably be expected to be material to the Business, (iv) the Liabilities
set forth on Schedule 3.11(c), and (v) Liabilities incurred in connection
with the transactions contemplated hereby. Except as set forth on Schedule
3.11(c), there are no Off-Balance Sheet Liabilities that relate to the
Business.
(d) Except as set forth on Schedule 3.11(d), since June 30, 2003
to the date of this Purchase Agreement, Seller and the Seller Subsidiaries
have conducted and operated the Business in the ordinary course and there
has not been any:
(i) change, effect, event, occurrence or state of facts that
has had, or would be reasonably likely to have, a Seller Material Adverse
Effect;
(ii) change in any method of accounting or accounting
practice by Seller with respect to the Business, except for any change
required by reason of a concurrent change in GAAP and any change or series
of changes that did not have an impact of more than $500,000 with respect
to any of the Financial Statements;
(iii) (A) employment, retention, bonus, deferred
compensation, severance, retirement or other similar agreement entered into
with any Business Employee (or any amendment to any such existing
agreement), (B) change in employment terms for any Business Employee, in
each case other than in the ordinary course of business consistent with
past practice with respect to Business Employees
33
who are not officers of the Seller or any Affiliate of Seller, other than
the Early Retirement Program, or (C) increase in the number of Business
Employees by more than 2%;
(iv) license or sublicense of any material rights to any
Business Intellectual Property to any Third Party, or license or sublicense
of any material rights in any Intellectual Property to any Third Party if
any such license or sublicense would materially and adversely affect
Buyer's ability to operate the Business after the Closing, or agreement to
any material restriction on its use of any Business Intellectual Property;
(v) sale or other disposition of any material assets of the
Business, except Inventory in the ordinary course of business;
(vi) acquisition of assets by or for the Business for
consideration of $100,000 or more, or lease of any assets by or for the
Business providing for annual payments by the Business of $100,000 or more,
other than in the ordinary course of business consistent with past
practice;
(vii) termination, or material extension or material
modification, or waiver of any rights with respect to, any Material
Contract, Assumed Lease, Premises, License except in the ordinary course of
business consistent with past practice;
(viii) Tax election or change in any Tax election or Tax
accounting method, settlement of any audit or filing of any Tax Return by
or with respect to Avaya Tianjin to the knowledge of Seller, other than as
required by Law; or
(ix) commitment on the part of Seller, any Seller Subsidiary
or the Business to do any of the foregoing.
3.12 Intellectual Property.
---------------------
(a) Seller or one of the Seller Subsidiaries (i) owns and has the
right to assign to Buyer all of the Intellectual Property that it is
assigning to Buyer, and (ii) has a valid right to license all of the
Intellectual Property that it is licensing to Buyer pursuant to and in
accordance with the terms of the Intellectual Property Agreements
(collectively, the "Business Intellectual Property"). Except for rights
arising under the Nonassignable Licenses, rights to use the Licensed Avaya
Trademarks other than as provided in Section 5.7 and as otherwise described
on Schedule 3.12(a), the Business Intellectual Property constitutes, and
upon the Closing, Buyer will have, all of the rights in Business
Intellectual Property required for Buyer to operate the Business subsequent
to the Closing Date in the manner that the Business is being conducted as
of the date hereof and as of the Closing Date, and to make, have made, use,
lease, import, offer to sell and sell the products of the Business, as such
products existed as of the date hereof and as of the Closing. Except as
otherwise disclosed on Schedule 3.12(a), neither Seller nor any of the
Seller Subsidiaries has agreed to any restrictions on the use of Business
Intellectual Property that would adversely affect the Buyer's rights under
the Intellectual Property Agreements.
(b) Except as set forth on Schedule 3.12(b), to Seller's
knowledge (i) neither Seller nor any of the Seller Subsidiaries has
infringed the Intellectual Property of any Third Party in its conduct of
the Business and (ii) there are no claims, notices or demands of any Third
Party pertaining to the Business Intellectual Property with respect to the
operation of the Business by Seller or the Seller Subsidiaries or with
respect to the Purchased Assets, other than any such claims or demands that
individually or in the aggregate do not have and would not reasonably be
expected to have a Seller Material Adverse Effect. Except as set forth on
Schedule 3.12(b), no proceedings have been instituted, or, to Seller's
knowledge, are pending which challenge the rights of Seller or any Seller
Subsidiary with respect to the Business
34
Intellectual Property, other than any such proceedings that individually or
in the aggregate do not have and would not reasonably be expected to have a
Seller Material Adverse Effect.
(c) Each License that is included in the Business Intellectual
Property is valid, binding and enforceable against Seller or the applicable
Seller Subsidiary and, to Seller's knowledge, the other parties thereto, in
accordance with its terms, and is in full force and effect. Except as set
forth on Schedule 3.12(c), neither Seller nor any Seller Subsidiary has
received any written notice that it is in default under or in breach of or
is otherwise delinquent in performance under any such License and, to
Seller's knowledge, each of the other parties thereto has performed all
obligations required to be performed by it under, and is not in default
under, any such License and no event has occurred that, with notice or
lapse of time, or both, would constitute such a default, except for
breaches, failures of performance or defaults that individually or in the
aggregate do not have and would not reasonably be expected to have a Seller
Material Adverse Effect.
(d) At the Closing, Seller or one of the Seller Subsidiaries will
provide, either by assignment or royalty-free license to Buyer, in
accordance with and subject to the limitations of the Intellectual Property
Agreements, all of the Business Intellectual Property. In the event that
Seller breaches the warranty set forth in Section 3.12(a), Buyer shall
provide Seller with a reasonable opportunity to cure that breach by the
assignment or licensing by Seller or one of the Seller Subsidiaries to
Buyer at no additional cost to Buyer, in accordance with the Intellectual
Property Agreements, of those components of such technology which are
required by Buyer to conduct the Business after the Closing and to make,
have made, use, lease, import, offer to sell or sell any products of the
Business, as such products existed as of the Closing Date. Notwithstanding
the foregoing, under no circumstances shall Seller be required to grant to
Buyer a license, right or other permission to use the Seller name, other
than as set forth in Section 5.7 or in the Transitional Trademark License
Agreement attached hereto as Exhibit C-6.
3.13 Brokers. Other than CitiGroup Global Markets Inc., the fees and
expenses of which will be paid by Seller, no broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Purchase Agreement based upon
arrangements made by or on behalf of Seller or any Affiliate of Seller.
3.14 Taxes.
-----
(a) (i) All Tax Returns with respect to a material amount of
Taxes required to be filed with respect to the Business, any of the
Purchased Assets and Avaya Tianjin have been filed in a timely manner
(within any applicable extension periods); (ii) all such Tax Returns were
(and as to Tax Returns not filed on the date hereof will be) true, complete
and correct and all Taxes with respect to the Business, the Purchased
Assets and Avaya Tianjin that are due (whether or not shown or required to
be shown on any Tax Return) or claimed or asserted by any taxing authority
to be due have been timely paid in full or have been properly reserved for
in accordance with GAAP or, in the case of non-United States jurisdictions,
generally accepted accounting procedures in such jurisdictions and will be
timely paid in full by the due date thereof; (iii) there are no material
Tax liens with respect to the Business, the Purchased Assets or Avaya
Tianjin; and (iv) there are no audits or other administrative proceedings
or court proceedings in the United States and, in the case of non-United
States jurisdictions, to the knowledge of the Seller there are no audits or
other administrative proceedings or court proceedings presently pending or
threatened with regard to any Taxes related to the Business, Purchased
Assets or Avaya Tianjin and no taxing authority has asserted any claims in
writing with respect to any Taxes with respect to the Business and/or any
of the Purchased Assets or Avaya Tianjin.
35
(b) (i) None of the Purchased Assets is "tax exempt use property"
within the meaning of Section 168(h) of the Code or "tax exempt bond
financed property" within the meaning of Section 168(g) of the Code and
(ii) none of the Purchased Assets is subject to any lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954.
(c) Seller and each Domestic Subsidiary is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code and shall provide
Buyer with the affidavit referred to in Section 1445(b)(2) of the Code. No
Seller Subsidiary that is not a Domestic Subsidiary is selling pursuant to
this Purchase Agreement a United States real property interest within the
meaning of Section 897 of the Code. Avaya Tianjin does not own a United
States real property interest within the meaning of Section 897 of the
Code.
(d) To the knowledge of Seller, no written claim has ever been
made by an authority in a jurisdiction where Seller or any of the Seller
Subsidiaries or Avaya Tianjin does not file Tax Returns, that it is or may
be subject to taxation by that jurisdiction with respect to the Business,
the Purchased Assets or Avaya Tianjin. To the knowledge of Seller, Avaya
Tianjin is not the beneficiary of any extension of time with which to file
any Tax Return.
(e) Seller, each of the Seller Subsidiaries, with respect to the
Business and Purchased Assets, and Avaya Tianjin have withheld and paid all
Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and all Forms W-2 and 1099 required with
respect thereto have been properly completed and timely filed.
(f) Since its formation, Avaya Tianjin has been consistently
treated as a corporation for U.S. federal income tax purposes.
(g) Except as set forth on Schedule 3.14(g), none of the Real
Property is subject to any deferred, roll back tax or tax rebate or
incentive program.
3.15 Value-Added Resellers, Distributors and Suppliers. Seller and the
Seller Subsidiaries have used their reasonable business efforts to maintain
good working relationships with all of their respective customers,
distributors, value-added resellers, dealers and suppliers. Since June 30,
2003, neither Seller nor any Seller Subsidiary has materially altered the
conduct of its relations with value-added resellers, distributors or
suppliers, including without limitation, sales terms and conditions.
Schedule 3.15 sets forth a complete and accurate list of the 10 largest
distributors and value-added resellers, on the one hand, and suppliers, on
the other hand, of the Business in terms of dollar value of goods and
services sold and purchased by the Business, for the nine months ended June
30, 2003 and the fiscal year ended September 30, 2002. Except as set forth
on Schedule 3.15, as of the date hereof, neither the Seller nor any Seller
Subsidiary has been notified in writing by any distributor, value-added
reseller or supplier listed in Schedule 3.15, that such distributor,
value-added reseller or supplier intends to: (i) cease doing business with
the Business; (ii) materially reduce the amount of business it now does
with the Business; or (iii) materially alter the terms and conditions
pursuant to which business will be conducted with the Business. Neither
Seller nor any Seller Subsidiary with respect to the Business has entered
into any Agreement with any distributor, supplier or value-added reseller
which is intended to or has the effect of providing credit support to such
distributor, supplier or value-added reseller, other than trade payables
incurred in the ordinary course of business.
3.16 Business Records. The Business Records have been maintained in
accordance with good business practices and applicable legal and accounting
requirements, reflect only bona fide and genuine
36
transactions, and accurately reflect in all material respects the basis for
the Seller's and the Seller Subsidiaries' respective financial position and
results of operations.
3.17 Litigation. Schedule 3.17 sets forth each instance in which
Seller or any Seller Subsidiary with respect to the Business or the Real
Property is as of the date hereof (i) subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) a party or,
to Seller's knowledge, threatened to be made a party to any action, suit,
proceeding (including condemnation and takings proceedings), hearing, or
investigation of, in, or before any Governmental Body or before any
arbitrator in each case, specifically excluding any instances related to
Environmental Law. None of the actions, suits, proceedings, hearings and
investigations set forth on Schedule 3.17 would reasonably be expected to
result in any Seller Material Adverse Change.
3.18 Affiliated Transactions. Except as set forth on Schedule 3.18,
there are no Agreements for the purchase and sale of products and services
offered by the Business between the Seller, on the one hand, or any of its
Affiliates (other than the Business), on the other hand.
3.19 Product Recalls; Defects. Except as set forth in Schedule 3.19,
since September 30, 2001, there has been no material pending, or to
Seller's knowledge, threatened recall or investigation of any product or
system of products sold by Seller or any Seller Subsidiary in connection
with the Business. Since September 30, 2001 there has been no material
pending, or to Seller's knowledge, threatened claim that any products
manufactured, assembled or distributed by the Business are defective.
3.20 Accounts Receivable. All Accounts Receivable of the Business,
including without limitation all Accounts Receivable as shown on the
Financial Statements, are bona fide receivables and were incurred in the
ordinary course of business for products delivered or services rendered. As
of the date of this Purchase Agreement, no notice has been received from
any account debtor that any amount of such Accounts Receivable is subject
to any pending or threatened set-off, discount or counterclaim of any kind,
other than set-offs, discounts or counterclaims consistent with past
practices and the applicable reserves for doubtful accounts reflected in
the Financial Statements.
3.21 Distributor Incentive and Marketing Programs. Schedule 3.21
includes copies of or accurate descriptions of the standard terms and
conditions of distributor incentive and marketing programs for the products
of Business sold in the United States. Except as set forth in Schedule
3.21, the products manufactured by the Business which have been sold by the
Business in the United States, have been sold in all material respects in
accordance with the standard distributor incentive and marketing programs.
3.22 Inventory. All Inventory whether reflected on the Financial
Statements or subsequently created or acquired, has been created or
acquired in the ordinary course of business and is suitable, usable, or
saleable for the purposes for which it is intended, subject to normal and
customary allowances for spoilage, damage and outdated items. All Inventory
has been valued on the Financial Statements based on the lower of market
value or Seller's cost of the Inventory. The markdowns and provisions for
obsolescence and shrinkage reflected on the Financial Statements have been
fairly determined consistent with past practices in accordance with GAAP.
The reserve for obsolescence and shrinkage reflected on the Financial
Statements has been fairly determined consistent with past practices in
accordance with GAAP and is adequate to provide for excess, slow moving,
obsolete, defective, damaged or missing Inventory. Schedule 3.22 sets forth
all Inventory consigned to or from Third Parties.
3.23 Securities Act. (i) The Parent Shares issued to Seller pursuant
to this Purchase Agreement will not be transferred or otherwise disposed of
by Seller except in a transaction registered, or exempt from registration,
under the Securities Act of 1933, as amended (the "Securities Act"), (ii)
Seller
37
is acquiring the Parent Shares for its own account, for investment and not
with a view to the distribution thereof within the meaning of the
Securities Act; (iii) Seller understands that the Parent Shares have not
been, and will not be, registered under the Securities Act or any state
securities laws, by reason of their acquisition by Parent in a transaction
exempt from the registration requirement thereof, and that the Parent
Shares may not be sold unless such sale is registered under the Securities
Act and applicable state securities laws or is exempt from registration
thereunder; (iv) Seller further understands that the exemption from
registration afforded by Rule 144 under the Securities Act (the provisions
of which are known by Seller) depends on the satisfaction of various
conditions and that, if applicable, Rule 144 may afford the basis for sales
of Parent Shares only in limited amounts; (v) Seller is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act); and (vi)
Seller has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the investment in
the Parent Shares hereunder and is able to bear the economic risk of loss
of such investment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Parent and Buyer represent and warrant to Seller, jointly and
severally, that:
4.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the Laws of the
State of Delaware, and has all requisite corporate power and authority to
carry on its business as currently conducted and to own or lease and
operate its properties. Buyer is a limited liability company duly
organized, validly existing and in good standing under the Laws of the
State of Delaware, and has all requisite limited liability company power
and authority to carry on its business as currently conducted and to own or
lease and operate its properties. Each of Parent and Buyer is duly
qualified to do business and is in good standing (in any jurisdiction that
recognizes such concept) as a foreign corporation or limited liability
company, as applicable, in each jurisdiction where the ownership or
operation of its assets or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing individually or in the aggregate does not have and would not
reasonably be expected to have a material adverse effect on the ability of
Parent or Buyer to perform its respective obligations under this Purchase
Agreement and the Collateral Agreements (a "Buyer Material Adverse
Effect"). Buyer was organized for the sole purpose of consummating the
transactions contemplated by this Purchase Agreement, the Commitment Letter
(as hereinafter defined) and the Collateral Agreements. Except for
Liabilities incurred in connection with its organization or the negotiation
and consummation of the transactions contemplated by this Purchase
Agreement, the Commitment Letter and the Collateral Agreements, Buyer has
neither incurred any Liabilities nor engaged in any business.
4.2 Authorization; Binding Effect.
-----------------------------
(a) Each of Parent and Buyer has all requisite power and
authority to execute and deliver this Purchase Agreement and the Collateral
Agreements and to effect the transactions contemplated hereby and thereby,
and the execution, delivery and performance of this Purchase Agreement and
the Collateral Agreements have been duly authorized by all requisite
action.
(b) This Purchase Agreement has been duly executed and delivered
by each of Parent and Buyer and this Purchase Agreement is, and the
Collateral Agreements, when duly executed and delivered by Parent and
Buyer, as the case may be, will be valid and legally binding obligations of
Parent and Buyer, enforceable against Parent and Buyer in accordance with
their respective terms.
38
4.3 Non-Contravention; Consents.
---------------------------
(a) The execution, delivery and performance of this Purchase
Agreement and the Collateral Agreements by each of Parent and Buyer and the
consummation of the transactions contemplated hereby and thereby do not and
will not (i) result in a breach or violation of any provision of Parent's
certificate of incorporation or bylaws or Buyer's certificate of formation
or limited liability company agreement, (ii) violate or result in a breach
of or constitute an occurrence of default under any provision of, result in
the acceleration or cancellation of any obligation under, or give rise to a
right by any party to terminate or amend its obligations under, any
mortgage, deed of trust, conveyance to secure debt, note, loan, indenture,
lien, lease, Agreement, instrument or other arrangement or commitment to
which Parent or Buyer is a party or by which they or their respective
assets or properties are bound or (iii) violate any order, judgment,
decree, rule or regulation of any Governmental Body having jurisdiction
over Parent or Buyer or any of their respective properties, other than, in
the case of clauses (ii) and (iii), any such violations, breaches,
defaults, accelerations or cancellations of obligations or rights that
individually or in the aggregate do not have and would not reasonably be
expected to have a Buyer Material Adverse Effect.
(b) Except as set forth on Schedule 4.3(b), no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Person is required to be obtained by Buyer in connection with the execution
and delivery of this Purchase Agreement and the Collateral Agreements or
the consummation of the transactions contemplated hereby or thereby by
Parent or Buyer, except for (i) any filings required to be made under the
HSR Act and any applicable filings required under foreign Competition Laws
and (ii) such consents, approvals, orders, authorizations, registrations,
declarations or filings the failure of which to be obtained or made,
individually or in the aggregate, do not have and would not reasonably be
expected to have a Buyer Material Adverse Effect.
4.4 SEC Reports; Financial Statements. Parent has filed all forms,
reports and documents required to be filed with the Securities and Exchange
Commission ("SEC") since December 31, 2002 (any of the foregoing filed
prior to the date hereof are referred to herein as the "Parent SEC
Reports"). Each Parent SEC Report complied at the time of filing in all
material respects with all applicable requirements of the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect as of the filing date of such Parent SEC Report. None of such
Parent SEC Reports, including any financial statements or schedules
included or incorporated by reference therein, contained when filed any
untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in
order to make the statements therein in light of the circumstances under
which they were made not misleading, except to the extent superseded by a
Parent SEC Report filed subsequently and prior to the date hereof. The
audited consolidated financial statements of Parent included in the Parent
SEC Reports fairly present in all material respects, the financial position
of Parent as of the dates thereof and the results of its operations and
cash flows for each for the periods then ended, in each case in conformity
with GAAP applied on a consistent basis throughout the periods covered
thereby (subject in the case of unaudited financial statements, to normal
and recurring year-end audit adjustments which, individually or in the
aggregate, would not be material).
4.5 Parent Common Stock. The Parent Shares to be issued to Seller as a
portion of the Purchase Price have been duly authorized and, when issued at
Closing, shall be validly issued, fully paid and nonassessable. The shares
of Parent Common Stock to be issued upon conversion of the Convertible Note
have been duly authorized and reserved, and when issued upon conversion of
the Convertible Note in accordance with the terms of the Convertible Note,
shall be validly issued, fully paid and nonassessable.
39
4.6 Brokers. Other than Wachovia Capital Markets, LLC, the fees and
expenses of which will be paid by Parent and Buyer, no broker, investment
banker, financial advisor or other Person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Purchase Agreement
based on arrangements made by or on behalf of Parent or Buyer or any of
their Affiliates.
4.7 Sufficiency of Funds. Parent has delivered to Seller a true and
complete copy of a letter of commitment obtained by Parent from Wachovia
Bank, National Association to provide debt financing for the transactions
contemplated hereby pursuant to a senior secured credit facility (the
"Commitment Letter"). An executed copy of the Commitment Letter is attached
hereto as Exhibit H. Assuming that the financing contemplated by the
Commitment Letter is consummated in accordance with the terms thereof, the
funds to be borrowed thereunder by Parent (including, if applicable, with
respect to the special closing commitment), together with Parent's
available cash, will provide sufficient funds to Parent and Buyer to make
the Cash Payment and to consummate the transactions contemplated hereby. As
of the date of this Purchase Agreement, to the actual knowledge of senior
management of Parent, there are no facts or circumstances related to the
business, assets, condition or operation of Parent and its subsidiaries or
the Business that create a reasonable basis for Parent to believe that
Parent will not be able to obtain the financing contemplated by the
Commitment Letter.
4.8 No Inducement or Reliance; Independent Assessment.
-------------------------------------------------
(a) With respect to the Purchased Assets, the Business and any
other rights or obligations to be transferred hereunder or under the
Collateral Agreements or pursuant hereto or thereto, neither Parent nor
Buyer has been induced by and has not relied upon any representations,
warranties or statements, whether express or implied, made by Seller, any
Affiliate or any agent, employee, attorney or other representative of
Seller or by any other Person representing or purporting to represent
Seller, that are not expressly set forth in this Purchase Agreement or in
the Collateral Agreements (including the Schedules and Exhibits hereto and
thereto), whether or not any such representations, warranties or statements
were made in writing or orally.
(b) Each of Parent and Buyer acknowledges that it has made its
own assessment of the present condition and the future prospects of the
Business and is sufficiently experienced to make an informed judgment with
respect thereto. Each of Parent and Buyer further acknowledges that neither
Seller nor any Affiliate of Seller has made any warranty, express or
implied, as to the future prospects of the Business or its profitability
for Parent or Buyer or with respect to any forecasts, projections or
business plans prepared by or on behalf of Seller and delivered to Buyer in
connection with the Business and the negotiation and the execution of this
Purchase Agreement.
ARTICLE V
CERTAIN COVENANTS
5.1 Access and Information.
----------------------
(a) Upon reasonable advance notice, Seller shall, and shall cause
its Affiliates to, give to Parent, Buyer and their officers, employees,
accountants, counsel and other representatives reasonable access (including
for the purpose of inspection and copying) during Seller's or the
applicable Affiliate's normal business hours prior to the Closing to the
Real Property, Purchased Assets, Business Records and Business Employees
and to all of Seller's or the applicable Affiliate's properties, books,
contracts, commitments, reports of examination and records (excluding
confidential portions of personnel and medical records) directly relating
to the Business, the Purchased Assets or the Assumed Liabilities (but
40
excluding the Excluded Assets and Excluded Liabilities and subject to any
limitations that are reasonably required to preserve any applicable
attorney-client privilege or Third-Party confidentiality obligation) for
the purpose of allowing Parent and Buyer to (i) observe Seller's year end
audit, including an audit of the physical Inventory, (ii) conduct
appraisals of the Purchased Assets and (iii) conduct environmental due
diligence. Seller shall, and shall cause its Affiliates to, assist Parent
and Buyer, at Parent's and Buyer's expense, in making such investigation
and shall cause its counsel, accountants, engineers, consultants and other
non-employee representatives to be reasonably available to Parent and Buyer
for such purposes. In conducting any inspections, sampling, investigations
or tests of the Transferred Premises or Leased Premises or in installing
any temporary monitoring ▇▇▇▇▇ or equipment thereon, Parent, Buyer and
their agents and representatives shall: (i) not interfere in any material
respect with the operation and maintenance of the Transferred Premises and
Leased Premises; (ii) not damage in any material respect any part of the
Transferred Premises and Leased Premises or any personal property owned or
held by any Third Party; (iii) comply with all applicable Laws; (iv)
promptly pay when due all of its costs of all tests, investigations, and
examinations performed by or on behalf of Parent and Buyer with regard to
the Transferred Premises and Leased Premises; (vi) not permit any
Encumbrances to attach to the Transferred Premises or Leased Premises by
reason of the exercise of its rights hereunder; (vii) repair any damage to
the Transferred Premises and Leased Premises resulting directly or
indirectly from any such inspection or tests; (viii) carry insurance
reasonably requested by Seller, name Seller as an additional insured
thereunder, and provide Seller with copies of such insurance; (ix) not
reveal or disclose prior to Closing any information obtained concerning the
Transferred Premises and Leased Premises to any Third Parties, except as
reasonably necessary to effectuate the Closing or except as may be
otherwise required by applicable Law; and (x) not take subsurface soil or
groundwater samples in the vicinity of the Designated Remedial Action
without Seller's consent (which consent shall not be unreasonably withheld
or delayed).
(b) Each of Parent and Buyer indemnifies and holds Seller
harmless from and against any and all Encumbrances, claims, causes of
action, damages, Liabilities and expenses (including reasonable attorneys'
fees) arising out of Parent's and Buyer's negligent inspections, sampling,
investigations or tests, or Parent's and Buyer's negligent installation of
any temporary monitoring ▇▇▇▇▇ or equipment permitted under this Purchase
Agreement; provided, however, the indemnity in this Section 5.1(b) shall
not extend to protect Seller from any Encumbrances, claims, causes of
action, damages, Liabilities and expenses (including reasonable attorneys'
fees) arising out of discovery by Parent or Buyer of any Hazardous
Substance or contamination. Parent's and Buyer's obligations under this
Section 5.1(b) shall survive the termination of this Purchase Agreement and
shall survive the Closing for 18 months and shall be subject to the
indemnification claims procedures in Section 9.6.
(c) After the Closing Date, each of the parties shall, and shall
cause their respective Affiliates to, provide to each other and to their
respective officers, employees, counsel and other representatives, upon
request (subject to any limitations that are reasonably required to
preserve any applicable attorney-client privilege or Third-Party
confidentiality obligation), reasonable access for inspection and copying
of all Business Records, Governmental Permits, Licenses, Leases, Contracts,
insurance records and any other information existing as of the Closing Date
and relating to the Business, the Purchased Assets or the Assumed
Liabilities, and shall make their respective personnel reasonably available
for interviews, depositions and testimony in any legal matter concerning
transactions contemplated by this Purchase Agreement, the operations or
activities relating to the Business or the Purchased Assets and as
otherwise may be necessary or desirable to enable the party requesting such
assistance to: (i) comply with any reporting, filing or other requirements
imposed by any Governmental Body; (ii) assert or defend any claims or
allegations in any litigation or arbitration or in any administrative or
legal proceeding, other than claims or allegations that one party to this
Purchase Agreement has asserted against the other; or (iii) subject to
clause (ii) above, perform its obligations under this Purchase Agreement.
The party requesting such information or assistance shall reimburse the
other party for all reasonable out of pocket costs and expenses incurred by
such party in providing such
41
information and in rendering such assistance. The access to files, books
and records contemplated by this Section 5.1(c) shall be during normal
business hours and upon reasonable prior notice and shall be subject to
such reasonable limitations as the party having custody or control thereof
may impose to preserve the confidentiality of information contained
therein.
(d) Buyer shall preserve all Business Records, Licenses, Leases,
Contracts and Governmental Permits for at least seven years after the
Closing Date. After such seven-year period and at least 90 days prior to
the planned destruction of any Business Records, Licenses, Leases,
Contracts or Governmental Permits, Buyer shall notify Seller in writing and
shall make available to Seller, upon its request, such Business Records,
Licenses, Leases, Contracts and Governmental Permits. Buyer further agrees
that, to the extent Business Records, Licenses, Leases, Contracts or
Governmental Permits are placed in storage, they will be indexed in such a
manner as to make individual document retrieval possible in an expeditious
manner.
(e) Seller shall use its commercially reasonable efforts to
deliver to Buyer a current, accurate survey of the Nebraska Property, and
shall provide reasonable assistance to Buyer in order for Buyer to obtain,
at Buyer's expense, a current title insurance commitment on the Nebraska
Property.
5.2 Conduct of Business. From and after the date of this Purchase
Agreement and until the Closing Date, except as set forth on Schedule 5.2
or as otherwise contemplated by this Purchase Agreement or as Parent and
Buyer shall otherwise consent to in writing, Seller and each of the Seller
Subsidiaries, with respect to the Business:
(a) will carry on the Business in the ordinary course and, to the
extent consistent therewith, use commercially reasonable best efforts to
keep intact the Business, and keep available the services of the Business
Employees;
(b) will not permit, other than in the ordinary course of
business or as may be required by applicable Law or a Governmental Body,
any of the Purchased Assets (real or personal, tangible or intangible) to
be sold, licensed or subjected to any Encumbrance (other than a Permitted
Encumbrance);
(c) (i) will not file any new original patent application on
invention disclosures resulting from research and development activities of
the Business other than foreign patent applications based on previously
filed United States patent applications, and (ii) will not sell, lease,
license, transfer or dispose of any asset valued in excess of $250,000 that
would otherwise be a Purchased Asset, except (A) the Transferred Avaya
Tianjin Shares pursuant to the organizational documents of Avaya Tianjin or
the Avaya Tianjin Joint Venture Agreement, (B) sales of Inventory in the
ordinary course of business consistent with past practice, and (C) the
failure to pay maintenance fees for patent registrations to the extent that
Seller has notified Buyer in writing as of the date hereof of its intent to
abandon specific patent registrations and Buyer has not objected in
writing;
(d) will not acquire any asset that will be a Purchased Asset
except in the ordinary course of business;
(e) will not enter into, terminate, or materially extend or
materially modify, or waive any rights with respect to, any Material
Contract, Assumed Lease, Premises or License or modify any Encumbrance on
the Real Property, except (other than with respect to Licenses related to
the Business Intellectual Property) in the ordinary course of business,
provided, however, that Seller will not extend either of the Leases for the
Leased Premises set forth on Schedule 3.6(a) located in Richardson, Texas;
42
(f) will not incur or assume any Indebtedness other than
Indebtedness that will constitute Excluded Liabilities;
(g) will not adopt, amend or terminate any Company Plan in a
manner affecting Business Employees, except as required by applicable Law
or pursuant to any of the Agreements listed on Schedule 2.1(m);
(h) will not increase the number of Business Employees by more
than 2% from the number as of the date hereof, increase the rate of
compensation for any of the Business Employees or otherwise enter into or
alter any employment, consulting or managerial services agreement affecting
the Business or Business Employees, except (i) for normal merit or
cost-of-living increases to non-executive Business Employees, or (ii) in
the ordinary course of business consistent with past practice;
(i) will make capital expenditures necessary or advisable to
maintain the business in accordance with the capital expenditures budget
attached hereto as Schedule 5.2(i) and will not commit Buyer to make any
capital expenditures in excess of $250,000 in the aggregate;
(j) will not make a change or series of changes in any method of
accounting practice by the Seller with respect to the Business except for
any change required by reason of a concurrent change in GAAP and any change
that will not have an impact of more than $500,000 with respect to any of
the Financial Statements;
(k) will not license or sublicense any rights to any Business
Intellectual Property to any Third Party, or license or sublicense any
rights in any Intellectual Property to any Third Party if any such license
or sublicense would adversely affect Buyer's rights under the Intellectual
Property Agreements, or agree to any restriction on its use of any Business
Intellectual Property;
(l) except as required by applicable Law and excluding Avaya
Tianjin from the definition of Seller Subsidiary for the purposes of this
clause, will not cause, participate, facilitate or suggest that Avaya
Tianjin file any Tax Return, or make any Tax election, other than in a
manner consistent with past practice, or settle any audit, examination or
other claim for Taxes, or change any accounting or Tax methods, practices
or policies;
(m) will perform and comply in all material respects with its
obligations under the Material Contracts;
(n) will use commercially reasonable efforts to maintain good
working relationships with all of the customers, distributors, value-added
resellers, dealers and suppliers of the Business and will not materially
alter its working relationships with customers, distributors, value-added
resellers, dealers and suppliers, including sales terms and conditions;
(o) will maintain and operate the Real Property in the same
manner as it currently is being maintained and operated; and
(p) will not enter into any agreement or commitment with respect
to any of the foregoing.
5.3 Tax Reporting and Allocation of Consideration.
---------------------------------------------
(a) Seller and Buyer acknowledge and agree that (i) Seller will
be responsible for and will perform all Tax withholding, payment and
reporting duties with respect to any wages and other
43
compensation paid by Seller or any Seller Subsidiary to any Business
Employee in connection with the operation or conduct of the Business prior
to or on the Closing Date and (ii) Buyer will be responsible for and will
perform, or where applicable will cause Avaya Tianjin to perform, all Tax
withholding, payment and reporting duties with respect to any wages and
other compensation paid by Buyer or Avaya Tianjin to any Transferred
Employee in connection with the operation or conduct of the Business after
the Closing Date.
(b) Seller and Buyer recognize their mutual obligations pursuant
to Section 1060 of the Code to timely file IRS Form 8594 (the "Asset
Acquisition Statement") with their respective United States federal income
tax returns. Accordingly, Buyer shall furnish Seller, no later than 120
days after the Closing Date, a proposed allocation of the Purchase Price
for United States federal income tax purposes and the Assumed Liabilities
among the Purchased Assets consistent with the provisions of Section 1060
of the Code and the Treasury Regulations thereunder. Seller shall have
thirty days after its receipt of Buyer's proposed allocation to object to
such allocation. If Seller objects, Buyer and Seller negotiate in good
faith to resolve such objections. Any issues not resolved by such
negotiations shall be submitted to an independent accounting firm of
national standing satisfactory to the parties which shall resolve the
issues within 30 days after submission of the issues to such accounting
firm. The costs of the accounting firm shall be shared equally by Seller
and Buyer. The parties agree to prepare the Asset Acquisition Statement in
accordance with the allocations proposed by Buyer as amended by the results
of the negotiations and resolutions of the accounting firm described above
and to timely file such Asset Acquisition Statement with their respective
United States federal income tax returns and neither Seller nor Buyer shall
take a Tax position which is inconsistent with such Purchase Price
allocation; provided, however, that the parties agree that, in all events,
the Asset Acquisition Statement will provide that the portion of the
Purchase Price and the Assumed Liabilities allocated to any of the
Purchased Assets which are held by a Seller Subsidiary that is not a
Domestic Subsidiary shall be equal to the net book value of such Purchased
Assets as of the Closing Date, or the Subsequent Closing, as applicable.
(c) Buyer and Seller hereby agree that the portion of the
Purchase Price properly attributable to the Purchased Assets situated in
Ireland or otherwise related to Ireland consists entirely of cash, being
part of the Cash Payment. The applicable Seller Subsidiary shall produce to
Buyer (or Buyer's assignee or assignees under Section 10.4, if appropriate)
prior to Closing a tax certificate under Section 980 of the Irish Taxes
Consolidation Act, 1997 (as amended) in relation to the land and buildings
situated in Ireland that are part of the Purchased Assets.
5.4 Transferred Employees.
---------------------
(a) As of the Closing Date (for purposes of this Section 5.4, the
Closing Date shall also refer to the date of each Subsequent Closing, as
applicable), Buyer shall make offers of employment to all Business
Employees listed on Schedule 3.8(a)(i) as amended and presented to Buyer at
Closing and anytime prior to Closing if reasonably requested by Buyer
(including those absent due to vacation, holiday, illness, leave of absence
or short-term disability, but excluding any Business Employees on long-term
disability, any Business Employee whose employment is automatically
transferred to Buyer pursuant to any applicable Law of any non-U.S.
jurisdiction (a "non-U.S. Law") regardless of whether such Business
Employee accepts Buyer's offer of employment ("Mandatorily Transferred
Employees") with respect to which the terms of Section 5.4(p) shall apply,
or any Business Employee employed by Avaya Tianjin); provided that: (i)
unless otherwise required under applicable non-U.S. Law, with respect to
any Business Employee who is on leave or short-term disability as of the
Closing Date, Buyer shall only be required to make offers of employment to
such Business Employees who are able and willing to return to work within
180 days after the Closing Date, and (ii) with respect to Business
Employees covered by a Collective Bargaining Agreement or a Non-U.S.
Collective Bargaining Agreement, Business Employees on leave, short-term
disability or long-term disability on the Closing Date who subsequently are
able and
44
willing to return to work shall be offered employment if, as and when
required by the applicable Agreement. A Business Employee who accepts
Buyer's offer of employment and commences employment with Buyer or who is a
Mandatorily Transferred Employee, in either case, as of the effective date
of their employment with Buyer, are collectively referred to as
"Transferred Employees"; provided, however, that no Early Retiree shall be
a Transferred Employee. Transferred Employees who are represented by a
union on the Closing Date are referred to as "Represented Transferred
Employees"; and Transferred Employees who are not represented by a union on
the Closing Date are referred to as "Salaried Transferred Employees."
Employment with Buyer of Transferred Employees shall be effective as of the
day following the Closing Date, except that (x) the employment of Salaried
Transferred Employees receiving short-term disability benefits or on
approved leave of absence (excluding vacation, holiday, scheduled
non-working day or illness other than short-term disability) on the Closing
Date will become effective as of the date they present themselves for work
with Buyer; provided, however, that Buyer shall not be required to employ
any Salaried Business Employee who is able to return to active service and
does not present himself or herself for work with Buyer on the first
Business Day following the last day of his or her approved absence, and no
such Business Employee shall be a Transferred Employee, and (y) the
employment of the Represented Transferred Employees receiving short-term or
long-term disability benefits or on an approved leave of absence on the
Closing Date will become effective if, as and when required by the
applicable Agreement. Buyer agrees to assume all immigration-related
rights, duties and obligations of Seller with regard to both nonimmigrant
and immigrant processes, including the obligations of all certified labor
condition applications, labor certification applications, and immigrant
visa petitions, and act as successor in interest with regard to such
applications and petitions.
(b) As of the Closing Date, Buyer or an Affiliate of Buyer shall
adopt, or cause to be adopted for the benefit of U.S. Salaried Transferred
Employees a total compensation package of salary, bonus opportunity and
benefits (other than retiree welfare benefits and defined benefit pension
plans) that is in the aggregate comparable to that provided to U.S.
Salaried Transferred Employees by Seller on the Closing Date (other than
retiree welfare benefits and defined benefit pension plans); provided that
nothing herein shall prohibit Buyer or any of its Affiliates from amending
or terminating any plan at any time following the Closing Date. Each
employee benefit plan (as described in Section 3(3) of ERISA) of Buyer and
its subsidiaries, including pension plans, welfare plans, vacation plans
and severance plans, shall recognize (i) for purposes of satisfying any
deductibles, co-pays and out-of-pocket maximums during the coverage period
that includes the Closing Date, any payment made by any Transferred
Employee towards deductibles, co-pays and out-of-pocket maximums in any
comparable Company Plan and (ii) for purposes of eligibility to
participate, early retirement eligibility (if any), early retirement
subsidies (if any), vesting and schedule of benefits, all service with
Seller or a Seller Subsidiary, including service with predecessor employers
that was recognized by any comparable Company Plan and any prior unbridged
service with Seller or a Seller Subsidiary; provided that such service
shall not be recognized to the extent such recognition would result in a
duplication of benefits or if such service would not have been recognized
under Buyer's plan in respect of its employees.
(c) Subject to any agreements set forth in the Transition
Services Agreement, Seller agrees to maintain the Avaya Inc. Reimbursement
Account Plan ("Seller's Cafeteria Plan") until the later of (i) December
31, 2003, and (ii) the last day on which claims may be submitted to
Seller's Cafeteria Plan pursuant to the terms thereof for the period ending
December 31, 2003 ("Last Day"), for the benefit of each Transferred
Employee who has such an account under Seller's Cafeteria Plan on the
Closing Date, and shall permit any and all of such Transferred Employees to
continue their participation in Seller's Cafeteria Plan through December
31, 2003. Through and including December 31, 2003, Seller shall continue to
accept contributions made pursuant to any existing salary reduction
elections made by Transferred Employees under Seller's Cafeteria Plan for
the 2003 plan year. Such elections shall be honored by Buyer as if such
elections were made under a cafeteria plan qualified under Section 125 of
the Code maintained by Buyer, and Buyer shall transfer to Seller any such
contributions made by a
45
Transferred Employee pursuant such an election promptly after receipt of
such contributions. Seller shall accept and process any claims incurred on
or prior to December 31, 2003 under Seller's Cafeteria Plan in accordance
with the terms thereof. Buyer agrees to reimburse Seller for any reasonable
costs incurred as a result of Seller's administration of Seller's Cafeteria
Plan for the period commencing after the Closing Date and ending on the
Last Day, provided that such costs shall be limited to those attributable
to Transferred Employees who are actually employed by Buyer.
(d) Seller shall cause all Transferred Employees to become fully
vested in the Avaya Inc. Savings Plan, the Avaya Inc. Savings Plan for
Salaried Employees, the Avaya Inc. Pension Plan, the Avaya Inc. Pension
Plan for Salaried Employees (Services Based Program and Account Balance
Program), the Avaya Inc. Deferred Compensation Plan, the Avaya Inc.
Supplemental Pension Plan and to the extent required by applicable Law or
the terms of the applicable plan documents, the Avaya equity programs (as
applicable) on the Closing Date and agrees to contribute any matching
contributions to the Avaya Inc. Savings Plan and the Avaya Inc. Savings
Plan for Salaried Employees on such date that such contributions are
normally made under such plans, without regard to whether the Transferred
Employee is employed by Seller on such contribution date, and to amend such
plans, if necessary, to permit such contributions.
(e) Buyer shall, on or prior to a date (the "First Transfer
Date") to be mutually agreed by Buyer and Seller, establish a defined
benefit pension plan (the "Buyer Represented Pension Plan"), with trusts
thereunder (the "Represented Pension Trust"), for the purpose of accepting
a transfer of the pension plan liabilities and assets attributable to
Represented Transferred Employees, as described herein. Buyer shall prior
to the First Transfer Date provide Seller with written evidence of (i) the
adoption of the new plan by Buyer, (ii) the creation of the trust
thereunder, and (iii) the submission by Buyer of such plan to the IRS for a
favorable determination letter. On the First Transfer Date, Seller will
transfer or cause to be transferred from the trust under the Avaya Pension
Plan to the Represented Pension Trust, cash or, to the extent agreed by the
parties, marketable securities/units in commingled funds, in an amount
equal to 90% of the estimated Pension Transfer Amount for the Represented
Transferred Employees (the "First Pension Transfer Amount"), plus earnings
on the amounts transferred from the Closing Date through the First Transfer
Date at a rate equal to the actual investment gain or loss (realized and
unrealized) on the assets of the Avaya Inc. Pension Plan for which a daily
valuation is made (assuming no change in the allocation of assets among the
different investment accounts after the Closing Date and all benefit
payments are made from a fixed income investment account designated by
Seller and reasonably acceptable to Buyer) (the "Actual Return"). As of a
date not more than 60 days after the First Transfer Date (the "Second
Transfer Date"), Seller shall transfer or cause to be transferred from the
trust under the Avaya Pension Plan to the Represented Pension Trust cash
or, to the extent agreed by the parties hereto, marketable securities/units
in commingled funds, in an amount (the "Second Pension Transfer Amount")
equal to the sum of (i) the Pension Transfer Amount minus the First Pension
Transfer Amount, plus (ii) earnings on the amount described in clause (i)
from the Closing Date through the Second Transfer Date equal to the Actual
Return. In the event the Second Pension Transfer Amount is less than zero,
then Buyer shall transfer or cause to be transferred such amount in cash
from the Represented Pension Trust back to the trust under the Avaya Inc.
Pension Plan, plus investment gain or loss thereon based on the fixed
income portfolio under Buyer's Represented Pension Plan. Subject to the
completion of the foregoing asset transfers, as of the Closing Date, all of
the obligations and associated Liabilities of the Avaya Inc. Pension Plan
relating to the Represented Transferred Employees shall be assumed in full
by the Buyer Represented Pension Plan, except that prior to the First
Transfer Date all payments required under the Avaya Inc. Pension Plan shall
be made by the Avaya Inc. Pension Plan.
(f) For purposes of this Section 5.4, the "Pension Transfer
Amount" shall mean the minimum required transfer amount determined in
accordance with the terms of the Avaya Inc. Pension Plan and the
requirements of Section 414(1) of the Code based on the accrued benefit
obligation, as of the
46
Closing Date, of Represented Transferred Employees as if they were employed
as of such date by Seller, utilizing the "safe harbor" rates and
assumptions set forth in the regulations promulgated under Section 4044 of
ERISA as of the Closing Date, except that the termination and retirement
rate assumptions utilized for purposes of this Section 5.4(f) shall be the
assumptions set forth on Schedule 5.4(f) and no expense load, including any
loading charge determined under the Loading Assumptions set forth in
Appendix C to Part 4044 of the PBGC Regulations, shall be charged and the
assets of the Avaya Inc. Pension Plan shall be deemed to include all
accrued but unpaid contributions to the plan.
(g) Assets of certain of Seller's Voluntary Employees' Benefits
Associations ("VEBAs") will be transferred to Buyer's VEBAs as described in
this Section 5.4(g).
(i) This Section 5.4(g)(i) shall govern the transfer of
assets from the Avaya Post-retirement Life and Health VEBAs for Represented
Transferred Employees (also referred to herein as the "Avaya VEBAs") to one
or more corresponding Buyer Post-retirement Life and Health VEBAs (also
referred to herein as the "Buyer VEBAs"), which Buyer shall establish and
submit to the IRS for a favorable ruling as to their tax-exempt status
prior to the Second Transfer Date. If Seller is reasonably satisfied that
the corresponding Buyer Post-retirement Life and Health VEBAs are
tax-exempt under Section 501(c)(9) of the Code, then on or prior to the
Second Transfer Date, Seller shall determine the aggregate present value,
as of the Closing Date, of the accumulated post-retirement benefit
obligation of the Avaya Inc. Retiree Medical Expense Plan and the Avaya
Inc. Life Insurance Plans (together the "Avaya Retiree Welfare Plans")
funded by such Avaya Post-retirement Life and Health VEBAs, with respect to
all Represented Transferred Employees (the "Retiree Welfare Liabilities"),
and shall transfer or cause to be transferred to Buyer's Post-Retirement
Life and Health VEBAs cash or, to the extent agreed by the parties,
marketable securities/units in commingled funds, in an amount determined as
set forth below. Such amount (the "VEBA Transfer Amount") shall be equal to
the fair market value as of the Closing Date of the assets of the plans
funded by such Avaya VEBAs multiplied by a fraction, the numerator of which
shall be the accumulated post-retirement benefits obligation under FAS 106
for Represented Transferred Employees whose post-retirement life and health
benefits are funded by such VEBAs, and the denominator of which shall be
the accumulated post-retirement benefits obligation under FAS 106 for all
participants and dependents whose post-retirement life and health benefits
are funded by such VEBAs. Buyer and Seller shall adopt, and shall use their
reasonable best efforts to cause their insurers to adopt, procedures to
implement such asset transfers in a reasonable and expeditious manner that
is consistent with the underlying group life insurance contracts and
applicable legal requirements.
(ii) For purposes of this Section 5.4(g), all Liability
determinations shall be made as of the Closing Date, based on the active
and inactive census data as of the Closing Date. For purposes of
determining the Retiree Welfare Liabilities, the assumptions and methods
shall be those set forth on Schedule 5.4(f). The amounts to be transferred
as described above shall be decreased by the aggregate amount of any
payments made by an Avaya VEBA with respect to Represented Transferred
Employees prior to such transfer, and adjusted by earnings or losses on the
amounts transferred from the Closing Date through the date of such transfer
at a rate equal to the actual investment gain or loss (realized and
unrealized) on the assets of the Avaya VEBAs. Upon the completion of the
foregoing transfer, all obligations and associated liabilities of each of
the Avaya Post-retirement Life and Health VEBAs with respect to the
Represented Transferred Employees shall be assumed in full by the
corresponding Buyer Post Retirement Life and Health VEBAs, and prior to the
completion of the asset transfers described in this Section 5.4(g), all
payments required under the Avaya Retiree Welfare Plans shall be made by
Buyer's portion of the Avaya VEBAs. Nothing in this Purchase Agreement
shall be interpreted to provide that any assets transferred pursuant to
this Section 5.4(g) have reverted to Seller or Buyer.
47
(h) Seller, on or prior to the Second Transfer Date, shall notify
Buyer in writing of Seller's determination of the amounts of assets
required to be transferred in accordance with the provisions of Sections
5.4(e), (f), (g) and (s) and the defined benefit pension plan projected
benefit obligation, as defined in FAS 87 in respect of the Represented
Transferred Employees, as of the Closing based on the assumptions set forth
on Schedule 5.4(f) (the "Pension Liabilities"), the defined benefit pension
plan projected obligation, as defined in FAS 87 in respect of the
Transferred Employees located in Ireland as of the Closing based on the
assumptions set forth on Schedule 5.4(s) (the "Irish Pension Liabilities"),
and the Retiree Welfare Liabilities based on the assumptions set forth on
Schedule 5.4(f), and shall provide Buyer with a copy of the census data and
actuarial reports (which shall be prepared in accordance with the
professional standards applicable thereto) relating to the determination of
such amounts, together with such related materials as Buyer may reasonably
request, and, in the case of the transfers of assets contemplated by
Sections 5.4(e), (f), (g) and (s), shall provide Buyer with a written
determination by Seller's actuary that the amounts of assets proposed to be
transferred are not less than the required amounts determined in accordance
with this Purchase Agreement.
(i) Buyer shall notify Seller in writing of Buyer's disagreement
with any determination made by Seller pursuant to Section 5.4(h) as soon as
practicable and in any event within 180 days after the date on which the
information specified in Section 5.4(h) is provided to Buyer. If no such
notice is given by Buyer prior to the expiration of the foregoing period,
the determinations contained in Seller's notice to Buyer shall be
conclusive and binding upon the parties hereto. If Buyer gives written
notice to Seller prior to the expiration of the foregoing period setting
forth any objections to the determinations made by Seller, the parties
shall attempt in good faith to reach an agreement as to all matters in
dispute. If the parties hereto, notwithstanding such good-faith effort,
fail to resolve all matters in dispute within 30 days after Buyer advises
Seller of its objections, then any remaining disputed matters shall be
finally and conclusively determined by a qualified independent actuary
selected by Seller and Buyer, which actuary shall not be the regular
actuary of either party. Promptly, but in no event later than 30 days after
its acceptance of its appointment, the actuary shall determine only those
matters in dispute and shall render a written report as to the disputed
matters and the resulting calculation of the pension or other assets
required to be transferred by Seller in accordance with the provisions of
Section 5.4(e), (f), (g) and (s), which report shall be conclusive and
binding upon the parties. The parties shall share the fees and expenses of
the actuary equally.
(j) If the sum of the Pension Liabilities and the Retiree Welfare
Liabilities exceeds the sum of the Pension Transfer Amount and VEBA
Transfer Amount (such excess herein referred to as the "Underfunding") by
more than $66,700,000, then on the Second Transfer Date, the principal
amount of the Convertible Note shall be reduced dollar for dollar,
effective as of the Closing Date, by the amount of the Underfunding
exceeding $66,700,000; provided, however, that to the extent that the
amount of the Underfunding exceeding $66,700,000 reduces the amount of the
Convertible Note to zero, Seller shall pay to Buyer by wire transfer of
immediately available funds to such account or accounts as Buyer may
designate to Seller in writing, the amount of the Underfunding exceeding
$66,700,000 not so applied in reduction of the Convertible Note. If
$66,700,000 exceeds the amount of the Underfunding, then on the Second
Transfer Date, the principal amount of the Convertible Note shall be
increased dollar for dollar, effective as of the Closing Date, by the
amount of such excess; provided, however, that such increase shall not be
in excess of $10,000,000. Any amounts paid under this Section 5.4(j) shall
be paid together with interest thereon at the rate of interest per annum
equal to the prime rate as announced by ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A. on the
date payment is to be made, calculated from the Closing Date through the
date on which payment is made.
(k) Seller hereby acknowledges that for FICA and FUTA Tax
purposes, Buyer qualifies as a successor employer with respect to the
Transferred Employees located in the United States ("U.S. Transferred
Employees"). In connection with the foregoing, at Buyer's option, Seller
agrees to follow the
48
"Alternative Procedures" set forth in Section 5 of Revenue Procedure 96-60.
Buyer shall notify Seller of its intention to follow the "Alternative
Procedures" on or immediately after the Closing Date. If the "Alternative
Procedures" are followed, Seller and Buyer understand that Buyer shall
assume Seller's entire obligation to furnish a Form W-2, Wage and Tax
Statement, to the U.S. Transferred Employees. In addition to all personnel
files and records relating to the Transferred Employees that Seller shall
deliver to Buyer as of the Closing Date or as otherwise required by this
Purchase Agreement, Seller shall timely provide Buyer with any and all
other information (and in such format and media) as it shall reasonably
request to properly comply with the requirements in the preceding sentence,
which in no event shall be more than 10 Business Days after the date that
Buyer notifies Seller of its intention to follow such "Alternate
Procedures."
(l) SS Holdings shall recognize the Unions as the exclusive
bargaining representatives for the respective collective bargaining units
of the Represented Transferred Employees and assume the Collective
Bargaining Agreements effective as of the Closing Date. Buyer or its
delegate shall recognize the union or equivalent Person under any Non-U.S.
Collective Bargaining Agreement and shall assume each such Non-U.S.
Collective Bargaining Agreement effective as of the Closing Date. Buyer
agrees that, as successor employer under each such collective bargaining
agreement, it shall comply with any equitable relief legally binding on
Buyer awarded pursuant to such collective bargaining agreements after the
Closing Date.
(m) Buyer shall make and be responsible for all accrued bonus,
sales incentive or similar compensation payments, if any, to Transferred
Employees for any period prior to the Closing Date and assumed pursuant to
Section 2.5, and neither Seller nor any of its Affiliates shall have any
Liability with respect to such obligations.
(n) Except as explicitly set forth in Section 5.4(c) and (g), (i)
Seller shall retain all Liability for all medical, dental, life insurance
or other welfare benefit claims incurred under its Company Plans on or
prior to the Closing Date, and neither Buyer nor any of its Affiliates
shall have any Liability with respect to such obligations, and (ii) after
the Closing Date, Buyer shall be responsible for all such claims incurred
after the Closing Date with respect to each Transferred Employee under and
in accordance with Buyer's benefit plans. For purposes of this Section
5.4(n), a claim will be deemed to have been incurred on the date of death
in the case of life insurance benefits and on the date on which the medical
treatment or service was rendered or expense actually incurred in the case
of medical, dental and other claims.
(o) Seller shall be responsible for and shall defend, indemnify
and hold harmless Buyer for any failure to provide health continuation
coverage (including any penalties, excise taxes or interest resulting from
the failure to provide continuation coverage) required by Section 4980B of
the Code due to qualifying events with respect to Transferred Employees
which occur on or before the Closing Date. Buyer shall be responsible for
and shall defend, indemnify and hold harmless Seller for any failure to
provide health continuation coverage (including any penalties, excise taxes
or interest resulting from the failure to provide continuation coverage)
required by Section 4980B of the Code due to qualifying events with respect
to Transferred Employees which occur after the Closing Date and Seller
shall be responsible for providing any applicable COBRA notices with
respect to events occurring on the Closing Date.
(p) With respect to any Mandatorily Transferred Employee or any
other Transferred Employee employed outside the U.S. on the Closing Date
(collectively the "Foreign Transferred Employees"), (i) Buyer or its
subsidiaries shall provide terms and conditions of employment with respect
to each such Foreign Transferred Employee that are the same as the terms
and conditions of employment applicable to such Foreign Transferred
Employee immediately prior to the applicable Closing Date to the extent
required by applicable non-U.S. Law to accomplish the transfer of
employment of such employee,
49
the sale of the Business or avoid the payment of any severance or
termination Liability to the employee that would otherwise arise under
applicable non-U.S. Laws in connection with the transfer of employment or
the consummation of the transaction and (ii) Buyer and Seller agree to take
such actions as are reasonably practicable in connection therewith,
including the assumption by Buyer of Liabilities attributable to the
employment of any Foreign Transferred Employee on or prior to the Closing
Date, but only if and to the extent necessary to accomplish the transfer of
employment, the sale of the Business or avoid the payment of any severance
or termination Liability to the employee that would otherwise arise in
connection with the transfer of employment or the consummation of the
transaction under any applicable non-U.S. Law. In the event Buyer is
obligated to assume any Liability attributable to the employment of any
Foreign Transferred Employee on or prior to the Closing Date that would
otherwise be a Liability of Seller, notwithstanding clause (ii) of the
foregoing sentence, Seller shall remain responsible for such Liability.
(q) After the Closing Date, Buyer or an Affiliate of Buyer shall
adopt, or cause to be adopted for the benefit of Transferred Employees
employed outside of the United States on the Closing Date, a total
compensation package of salary, bonus opportunity and benefits, that, in
the aggregate, is comparable to that provided to such Transferred Employees
by Seller on the Closing Date (other than retiree welfare benefits and
defined benefit pension plans). On the Closing Date, to the extent required
to transfer the employment or the Business or to avoid payment of any
severance, Seller agrees, with respect to each Transferred Employee
employed outside the U.S., to vest any benefits which have not vested as of
the Closing Date or credit service with Buyer after the Closing Date for
vesting purposes under any of its non-U.S. Company Plans.
(r) Under Seller's applicable Company Plan or Plans, as currently
in effect, any Salaried Transferred Employee who as of the Closing Date (a)
is at least age 55 and has at least 15 years of service is eligible to
elect on a one-time basis to commence to receive Seller subsidized retiree
medical benefits at any time following the Closing Date as a retired
employee; or (b) is at least age 50 and has at least 15 years of service is
eligible to elect on a one-time basis to commence to receive retiree
medical benefits, at the sole expense of the Salaried Transferred Employee,
at any time following the Closing Date as a retired employee; it being
understood that the foregoing does not constitute a representation or
commitment that such benefits will be provided in the future and that such
benefits are and shall be provided in accordance with and subject to the
terms of the applicable plan document. Subject to the applicable plan
document, as amended from time to time (but, until the expiration of the
current Collective Bargaining Agreement with the Unions on May 31, 2006,
not in a manner that, in form, materially discriminates against Transferred
Employees as compared to similarly situated Seller employees participating
in the applicable Company Plan), this benefit shall be available for
election on a one-time basis under the Company Plans at any time after the
Closing Date, regardless of whether the Salaried Transferred Employee is
employed by Buyer at the time of the election. All Liabilities under the
applicable Company Plan with respect to the obligations described in this
Section 5.4(r) shall be borne solely by Seller, and neither Buyer nor any
of its Affiliates shall have any Liability with respect to such
obligations.
(s) Buyer shall assume or otherwise accept a transfer of the
assets and liabilities of the pension plan maintained in the Republic of
Ireland that is a defined benefit scheme (as defined under the Irish
Pensions Act of 1990) (the "Irish Pension Plan") attributable to
Transferred Employees located in the Republic of Ireland in a manner that
is mutually agreed upon by Buyer and Seller; provided, however, that only
the assumptions set forth in Schedule 5.4(s) shall be utilized for purposes
of the determinations to be made under this Section 5.4(s). The amount of
the assets to be transferred shall be decreased by the aggregate amount of
any payments made by the Irish Pension Plan with respect to Transferred
Employees located in the Republic of Ireland prior to such transfer, and
shall be adjusted by earnings or losses on the amounts transferred from the
Closing Date through the date of such transfer at a rate equal to the
actual investment gain or loss (realized and unrealized) on the assets of
the Irish Pension Plan. To the extent
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that the Irish Pension Liabilities exceed the asset transfer amount
(determined as of the Closing Date prior to adjustment for earnings and
losses between the Closing Date and the date that the assets are
transferred), the amount of the Convertible Note shall be reduced, dollar
for dollar, effective as of the Closing Date, by the amount of such excess.
To the extent the amount of the Convertible Note is reduced to zero, Seller
shall pay to Buyer by wire transfer of immediately available funds to such
account or accounts as Buyer may designate to Seller in writing, an amount
equal to such underfunding not so applied in reduction of the Convertible
Note, plus interest thereon at the rate of interest per annum equal to the
prime rate as announced by ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A. on the date payment
is to be made, calculated from the Closing Date through the date on which
payment is made.
(t) Buyer shall be exclusively responsible for any Liability to
the extent attributable to the employment or termination of employment of
any Transferred Employee following the Closing Date, including, but not
limited to, any Liability attributable to service required to be recognized
pursuant to Section 5.4(b).
5.5 Reasonable Best Efforts. Upon the terms and subject to the
conditions set forth in this Purchase Agreement, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Purchase Agreement and
the Collateral Agreements, including using reasonable best efforts to
accomplish the following: (i) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (ii) the
obtaining of all necessary actions or nonactions, waivers, permits,
consents and approvals from Governmental Bodies and the making of all
necessary registrations, notices, amendments, applications and other
filings (including filings with Governmental Bodies, if any) and the taking
of all steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by any Governmental Body, (iii) the
obtaining of all necessary consents, approvals, releases or waivers from
Third Parties, including consent to and approval of the novation or
assignment of Contracts, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Purchase
Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered
by any Governmental Body vacated or reversed (v) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Purchase
Agreement and the Collateral Agreements, (vi) the implementation of the
provisions of Section 5.4 in a manner that avoids the interruption of the
provision of pay and employee benefits from and after the Closing Date and
(vii) the provision by Seller to Buyer of at least two weeks advance notice
of any material Benefit Plan changes that impact Business Employees. Not
limiting the generality of the foregoing, Seller and Buyer shall, or shall
cause any ultimate parent entity with respect thereto to, use reasonable
best efforts to (a) take promptly all actions necessary to make the filings
required under the HSR Act or Competition Laws of any foreign jurisdiction
(and in any event each party shall, or shall cause its ultimate parent
entity to, use its reasonable best efforts to, make such filings no later
than the date that is 10 Business Days after the date hereof), (b) comply
at the earliest practicable date with any request for additional
information received by Seller or Buyer or their Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act or Competition Laws of any foreign
jurisdiction, and (c) cooperate with each other in connection with their
respective filings under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by
this Purchase Agreement commenced by either the Federal Trade Commission,
the Antitrust Division of the Department of Justice or state attorneys
general or any foreign jurisdiction. For purposes of this Section 5.5, the
reasonable best efforts of any party hereto shall include payment by such
party (or its Affiliates) of all standard fees and expenses which are legal
obligations of such party related
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to obtaining any consents from a Governmental Body, including all fees
incurred in connection with all filings under any Competition Laws
(including the HSR Act and EC Common Market).
5.6 Contacts with Suppliers and Customers. With the prior consent of
Seller, which consent shall not be unreasonably withheld or delayed, Buyer
and its representatives shall have the right to contact key suppliers and
distributors and technology partners of the Business.
5.7 Sale by Buyer of Inventory Marked With Avaya's Name. Seller grants
to Buyer a license to use the Licensed Avaya Trademarks in accordance with
the terms and conditions set forth in the Transitional Trademark License
Agreement attached hereto as Exhibit C-6, and other than as set forth
therein, in no event shall Buyer or any Affiliate of Buyer advertise or
hold itself out as Avaya or an Affiliate of Avaya after the Closing Date.
5.8 Non-Solicitation of Employees. Seller shall not, and shall cause
its representatives and Affiliates not to, for a period of two years from
the date hereof, directly or indirectly, solicit the employment (including
as a consultant or independent contractor) of, or engage as an employee,
consultant or independent contractor, any Transferred Employee without
Buyer's prior written consent. The term "solicit the employment" shall not
be deemed to include generalized searches for employees through media
advertisements, employment firms or otherwise that are not focused on
Persons employed by Buyer or any successor. This restriction shall not
apply to solicitations directed at any Transferred Employee whose
employment with Buyer or its successor has theretofore been involuntarily
terminated by Buyer or its successor after the Closing.
5.9 Home Depot. Buyer acknowledges that Seller has sold and
transferred to Home Depot the Home Depot Parcel pursuant to the Home Depot
Purchase Agreement and, as the owner of the Nebraska Property, is bound to
cooperate in certain matters with Home Depot with respect to the Nebraska
Property and the development of the Home Depot Parcel, as more particularly
set forth in the Amendment to the Home Depot Purchase Agreement executed by
Seller on March 18, 2003 and executed by Home Depot on March 28, 2003 (the
"Home Depot Amendment"). Seller shall assign to Buyer, and Buyer shall
assume, the rights and obligations of Seller under Paragraph 4 of the Home
Depot Amendment to the extent relating to the Nebraska Property, but
specifically excluding any rights and obligations relating to the Home
Depot Parcel or the Avaya Southeast Property. Without limiting the
foregoing, (i) Buyer shall assume the obligation to maintain the separate
access road to Seller's facility located on the Nebraska Property
referenced in Paragraph 4(a) of the Home Depot Amendment, (ii) Seller shall
assign to Buyer all easements, rights and benefits appurtenant to the
Nebraska Property under the REA (as defined in the Home Depot Purchase
Agreement), the escrow agreement referenced in Paragraph 4(h) of the Home
Depot Amendment, and that letter agreement dated April 15, 2003 between
Avaya and Home Depot regarding culvert design and tree relocation costs,
and (iii) Seller shall remain solely responsible for all liabilities and
obligations relating to the Avaya Southeast Property, whether arising under
the Home Depot Purchase Agreement, the REA or any other document or source.
Notwithstanding anything to the contrary herein, Seller shall pay on demand
all documented out-of-pocket expenses incurred by Buyer in connection with
the Home Depot Purchase Agreement, the REA, the Home Depot Parcel and/or
the Avaya Southeast Property, except for the obligations and Liabilities to
be assumed hereunder. Notwithstanding anything to the contrary contained
herein, Buyer shall only assume the obligations and liabilities under the
REA which are applicable to the owner of property which is being
transferred to Buyer pursuant to this Purchase Agreement.
5.10 Financing.
---------
(a) Parent agrees to use its commercially reasonable efforts to take,
or cause to be taken, all actions with respect to itself and Buyer
necessary to consummate the transactions contemplated by the
52
Commitment Letter. Parent will promptly notify Seller in writing of any
termination of the Commitment Letter or any proposed changes or
modifications to the Commitment Letter that would materially adversely
affect the ability of Parent to consummate the transactions contemplated by
this Purchase Agreement. Parent will not amend, modify or supplement any of
the material terms or conditions of the Commitment Letter relating to the
amount or closing conditions thereof or in a manner reasonably likely to
materially adversely affect the ability of Parent to consummate of the
transactions contemplated by this Purchase Agreement without the prior
written consent of Seller, which consent shall not be unreasonably withheld
or delayed.
(b) If at any time prior to the termination of this Purchase
Agreement the financing contemplated by the Commitment Letter is no longer
available to Parent, Parent agrees to use its commercially reasonable
efforts to arrange alternative financing on terms which in Parent's
judgment are at least as favorable to Parent as those contemplated by the
Commitment Letter to enable Parent and Buyer to consummate the transactions
contemplated by this Purchase Agreement and the Collateral Documents.
(c) Seller shall use its commercially reasonable efforts and
cooperate with Buyer and its agents and representatives in connection with
the financing contemplated by the Commitment Letter or, as applicable,
alternative financing arrangements, including providing reasonable access
to the Purchased Assets, Business Records, officers, directors, employees
agents and other representatives of Seller, and using commercially
reasonable efforts to cause its officers, directors, employees, agents,
legal advisors, auditors and other representatives to assist and cooperate
with the preparation of a standard confidential memorandum and participate
in and cooperate with the marketing of any loan syndication and any
meetings with rating agencies and prospective lenders; provided that Parent
shall reimburse Seller for any out-of-pocket expenses incurred by Seller in
connection with providing such cooperation or assistance.
5.11 Advice of Changes. Each party hereto will promptly advise the
other in writing of (i) the failure of any condition to be satisfied by it
hereunder, (ii) any notice or other communication from any Person that the
consent of such Person is required for the consummation of the transactions
contemplated by this Purchase Agreement or the Collateral Agreements, (iii)
any notice or other communication from any Governmental Body in connection
with the transactions contemplated by this Purchase Agreement or the
Collateral Agreements, (iv) Seller's receipt of any written notice from any
value added reseller, distributor or supplier set forth on Schedule 3.15
that such distributor, value-added reseller or supplier intends to: (A)
cease doing business with the Business; (B) materially reduce the amount of
business it now does with the Business; or (C) materially alter the terms
and conditions pursuant to which business will be conducted with the
Business. Seller will promptly advise Buyer in writing of (i) any event
known by Seller that would render any representation or warranty of Seller
contained in this Agreement untrue or inaccurate in any material respect or
(ii) any change, condition or event that has had or could be reasonably
expected to have a Seller Material Adverse Effect. No disclosure pursuant
to this Section 5.11, however, shall be deemed to amend or supplement the
Schedules or to prevent or cure any misrepresentation, breach of warranty,
or breach of covenant.
5.12 Third Party Confidentiality Agreements. Within two Business Days
after the date hereof, Seller shall request that all Persons who received
Confidential Information of or relating to the proposed sale of the
Business or any material portion thereof since July 1, 2003 return or
destroy such Confidential Information in accordance with the provisions of
the applicable confidentiality agreement entered into between Seller and
such Person.
5.13 No Negotiation or Solicitation. From the date hereof until the
earlier of the Closing Date or the date on which this Purchase Agreement is
terminated pursuant to Article XI, Seller will not, and will not permit any
of its Affiliates, officers, employees, directors, investment bankers or
representatives
53
to, solicit offers, inquiries or proposals from, disclose information to,
afford any access to or negotiate or participate in discussions (and Seller
shall immediately cease providing information to, and engaging in
discussions or negotiations that are ongoing) with, other Persons in
connection with the possible sale, disposition, recapitalization or other
similar transaction involving all or any part of the Business.
Notwithstanding the foregoing, nothing in this Section 5.13 shall prohibit
any acquisition of Seller, whether by way of merger, purchase of capital of
capital stock, purchase of substantially all assets, including the
Purchased Assets, or otherwise.
5.14 Non-Competition. Seller agrees that, for five (5) years following
the Closing Date, it will not, and will cause its Affiliates not to,
directly or indirectly, sell, distribute, make or have made any products,
or engage in any business or other endeavor of a kind which competes with
the Business as currently conducted, in any area of the world; provided,
however, that neither Seller nor any Seller Subsidiary shall be prevented
from (a) acquiring shares of capital stock, partnership or other equity
interests in any Person as investments of Seller's pension funds or funds
of any other Company Plan whether or not such Person is engaged in the same
business as the Business, (b) acquiring ownership of 5% or less of any
class of securities registered under the Exchange Act, (c) performing any
act or conducting any business contemplated by this Purchase Agreement or
any of the Collateral Agreements, (d) purchasing, selling, installing or
otherwise utilizing products and services of the Business, or products and
services similar to the products of the Business (cumulatively, the
"Components"), for internal use or to include with or incorporate in
products sold by, or as part of maintenance or service offerings of, Seller
or any of its Affiliates so long as Seller and its Affiliates do not
private label any such Components, use any marks of the Seller or its
Affiliates to identify such Components nor otherwise represent or market to
customers that Seller or any of its Affiliates has designed or manufactured
such Components; or (e) enforcing its rights under that certain patent
license agreement between Avaya Licensing Corporation and Panduit
Corporation, effective as of December 4, 2002, that certain patent license
agreement between Avaya Licensing Corporation and Leviton Manufacturing
Co., Inc., effective as of November 15, 2002, and that certain patent
license agreement between AT&T IPM Corp., AT&T Network Cable Systems and
Superior Modular Products Incorporated dated June 1, 1995 (as assigned to
and assumed by Seller), subject to the limitations in the Intellectual
Property License Agreement.
5.15 Collateral Agreements. Prior to the Closing Date, Seller, on the
one hand, and Parent and Buyer, on the other hand, shall negotiate in good
faith (a) the form of the Convertible Note to be delivered to Seller at
Closing pursuant to Section 2.3 in accordance with the summary of terms
thereof set forth on Exhibit G attached hereto, (b) the Transition Services
Agreement including the schedules for the services to be attached to the
Transition Services Agreement and (c) the time periods to be used in the
Transitional Trademark License Agreement. With respect to the Transition
Services Agreement, assuming that the services requested are not more than
the services currently provided to the Business, the cost of such services
will not be in excess of One Million Two Hundred Fifty Thousand Dollars
($1,250,000) per month. The parties acknowledge that Parent or Buyer may
require certain services deemed critical to the operation of the Business
(the "Critical Services") and such Critical Services shall be subject to a
term extension as Parent or Buyer reasonably determine and subject to cost
terms as are mutually agreeable, provided, that Critical Services shall not
include any legal or accounting (excluding payroll) services. Subject to
the limitations set forth in this Section 5.15, Seller agrees to provide
all services necessary for Parent and Buyer to operate the Business
substantially the same as at the signing of this Purchase Agreement.
5.16 Financial Statements. Prior to the Closing, Seller shall deliver
to Buyer true and complete copies of the audited balance sheets as of
September 30, 2002 and 2003 and audited statements of operations and cash
flows for the years ended September 30, 2002 and 2003, in each case with a
report by PricewaterhouseCoopers LLP ("PWC"), that present fairly, in all
material respects, the financial position of the Business as of the dates
thereof and the results of its operations and cash flows for the
54
period then ended, in each case in conformity with GAAP applied on a
consistent basis throughout the periods covered thereby. Seller shall use
its reasonable best efforts to cause PWC to give Buyer and Buyer's
accountants reasonable access to representatives of PWC and PWC's work
papers.
5.17 Listing of Shares. Parent shall use its reasonable best efforts
to cause (a) the Parent Shares to be issued by Parent as a portion of the
Purchase Price and (b) the shares of Parent Common Stock to be issued by
Parent upon conversion of the Convertible Note, to be approved for listing
on the New York Stock Exchange, subject to official notice of issuance,
prior to the Closing Date.
5.18 Past Due Licenses. Not later than 60 days after the Closing Date
(or such earlier time as may be required to avoid Buyer's loss of a
License), Seller shall make any and all payments due with respect to the
Licenses set forth on Schedule 3.12(c).
5.19 Supply Agreement. Prior to the Closing Date, Seller, Parent and
Buyer shall negotiate in good faith, the terms and conditions of a supply
agreement (the "Supply Agreement") relating to the purchase of products
currently manufactured or sold in connection with the Business, it being
understood that, notwithstanding any other provision of this Purchase
Agreement, the execution of the Supply Agreement shall not be a condition
precedent to the obligations of the parties under this Purchase Agreement.
5.20 Apportionments. The following items will be adjusted as of the
Closing Date (or as soon thereafter as is reasonably feasible, and the
appropriate party promptly will pay adjustment amounts as necessary to
prorate such amounts as of the Closing Date):
(i) rent and other charges payable under any Assumed Lease
for the calendar month (or other period for paying rent or charges) in
which the Closing Date occurs;
(ii) gas, electricity, sewer, water and other utility
charges for the billing period that includes the Closing Date; and
(iii) charges under service, management or other agreements,
if any, that remain in effect after the Closing Date and are assumed by
Buyer for the billing period that includes the Closing Date.
ARTICLE VI
CONFIDENTIAL NATURE OF INFORMATION
6.1 Confidentiality Agreement.
-------------------------
(a) Parent agrees that the Confidentiality Agreement shall apply
to (i) all documents, materials and other information that it shall have
obtained regarding Seller or its Affiliates during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Purchase
Agreement), any investigations made in connection therewith and the
preparation of this Purchase Agreement and related documents and (ii) all
analyses, reports, compilations, evaluations and other materials prepared
by Parent or its counsel, accountants or financial advisors that contain or
otherwise reflect or are based upon, in whole or in part, any of the
provided information; provided, however, that subject to Section 6.2(a),
the Confidentiality Agreement shall terminate as of the Closing and shall
be of no further force and effect thereafter with respect to information of
Seller or a Seller Subsidiary the ownership of which is transferred to
Buyer.
55
(b) Notwithstanding this Article VI or the Confidentiality
Agreement, each party hereto (and each employee, representative or other
agent of each party) may disclose to any and all Persons, the tax treatment
and tax structure of the transactions contemplated by this Purchase
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such tax treatment
and tax structure; provided, however, that (i) this provision shall not
permit such disclosure until the earliest of (a) the date of the public
announcement of discussions relating to the transactions contemplated by
this Purchase Agreement, (b) the date of the public announcement of such
transactions, or (c) the date of the execution of an agreement to enter
into such transactions; (ii) this provision shall not permit the disclosure
of the identity of any of the parties; and (iii) nothing in this provision
shall limit in any way any party's ability to consult any tax advisor
(including a tax advisor independent from all other entities involved in
the transactions contemplated by this Purchase Agreement) regarding the tax
treatment or tax structure of such transactions.
6.2 Proprietary Subject Matter.
--------------------------
(a) Except as provided in Sections 6.2(b) and (d), after the
Closing and for a period of three years following the Closing Date, each of
the parties agrees that it will keep confidential all Proprietary Subject
Matter of the other party or its Affiliates that is received from, or made
available by, the other party, in the course of the transactions
contemplated hereby, including, for purposes of this Section 6.2, (i)
information about the Business's business plans and strategies, marketing
ideas and concepts, especially with respect to unannounced products and
services, present and future product plans, pricing, volume estimates,
financial data, product enhancement information, business plans, marketing
plans, sales strategies, customer information (including customers'
applications and environments), market testing information, development
plans, specifications, customer requirements, configurations, designs,
plans, drawings, apparatus, sketches, software, hardware, data, prototypes,
connecting requirements or other technical and business information,
except, in the case of Parent's and Buyer's obligation, for such
Proprietary Subject Matter as is conveyed to Buyer as part of the Purchased
Assets, and (ii) all Proprietary Subject Matter included in the Purchased
Assets in the case of Seller's obligation.
(b) Notwithstanding the foregoing, such Proprietary Subject
Matter shall not be deemed confidential and none of the parties shall have
any obligation with respect to any such Proprietary Subject Matter that:
(i) at the time of disclosure was already known to Seller or
Parent and Buyer, as the case may be, other than as a result of this
transaction, free of restriction as evidenced by documentation in Seller's
or Parent's and Buyer's possession, as the case may be, other than
Proprietary Subject Matter included in the Purchased Assets in the case of
Seller's obligation;
(ii) is or becomes publicly known through publication,
inspection of a product or otherwise, and through no breach, negligence or
other wrongful act of Seller or Parent and Buyer, as the case may be;
(iii) is received by Seller or Parent and Buyer, as the case
may be, from a Third Party without similar restriction and without breach
of any agreement, other than Proprietary Subject Matter included in the
Purchased Assets in the case of Seller's obligation; or
(iv) to the extent it is independently developed by Seller
or Parent and Buyer, as the case may be, other than Proprietary Subject
Matter included in the Purchased Assets in the case of Seller's obligation.
56
(c) If Seller (or any of its Affiliates) or Parent and Buyer (or
any of their Affiliates), as the case may be, is requested or required (by
oral question, interrogatory, request for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
Proprietary Subject Matter of the other party, such party will promptly
notify the other party of such request or requirement and will cooperate
with such other party such that such other party may seek an appropriate
protective order or other appropriate remedy. If, in the absence of a
protective order or the receipt of a waiver hereunder, a party (or any of
its Affiliates) is in the opinion of its counsel compelled to disclose the
Proprietary Subject Matter of the other party or else stand liable for
contempt or suffer other censure or significant penalty, such party (or its
Affiliate) may disclose only so much of the Proprietary Subject Matter to
the Person compelling disclosure as is required by Law. Seller or Parent
and Buyer, as the case may be, will exercise its (and will cause its
Affiliates to exercise their) reasonable best efforts to obtain a
protective order or other reliable assurance that confidential treatment
will be accorded to such Proprietary Subject Matter.
(d) Except to the extent that disclosure thereof is required
under accounting, stock exchange or federal securities or labor relations
Laws disclosure obligations, the terms and conditions of this Purchase
Agreement and the Collateral Agreements, and all attachments and amendments
hereto and thereto shall be considered Proprietary Subject Matter protected
under this Article VI. Notwithstanding anything in this Article VI to the
contrary, in the event that any such Proprietary Subject Matter is also
subject to a limitation on disclosure or use contained in another written
agreement between Parent or Buyer and Seller or their respective Affiliates
that is more restrictive than the limitation contained in this Article VI,
then the limitation in such other agreement shall supersede this Article
VI. Upon the Closing, Seller's Proprietary Subject Matter included in the
Purchased Assets shall be the property of Buyer, and Parent and Buyer shall
have no obligations to Seller pursuant to this Article VI with respect
thereto; provided however, nothing in the foregoing paragraph shall alter
any rights or obligations set forth in the Intellectual Property License
Agreement attached hereto as Exhibit C-1.
ARTICLE VII
CLOSING
7.1 Deliveries by Seller or the Seller Subsidiaries. On the Closing
Date (or to the extent applicable, at any Subsequent Closing), Seller
shall, or shall cause a Seller Subsidiary to, deliver to Buyer the
following:
(a) the duly executed Collateral Agreements to be executed by
Seller or a Seller Subsidiary;
(b) duly endorsed stock certificates evidencing the Transferred
Avaya Tianjin Shares;
(c) all consents, waivers or approvals theretofore obtained by
Seller with respect to the sale of the Purchased Assets or the consummation
of the transactions contemplated by this Purchase Agreement or the
Collateral Agreements;
(d) a certificate of an appropriate officer of Seller, dated the
Closing Date, certifying the fulfillment of the conditions set forth in
Sections 8.2(a) and (b);
(e) a certificate or certificates in form and substance
reasonably satisfactory to Buyer, duly executed and acknowledged,
certifying that Seller and each Domestic Subsidiary is exempt from
withholding under Section 1445 of the Code and, if necessary, information
sufficient for the closing agent to complete an IRS Form 1099; and
57
(f) except to the extent otherwise contemplated by Section 8.4,
all such other bills of sale, assignments and other instruments of
assignment, transfer or conveyance and such other documents and instruments
as Buyer may reasonably request or as may be otherwise necessary or
desirable to evidence and effect the sale, transfer, assignment, conveyance
and delivery of the Purchased Assets to Buyer and to put Buyer in actual
possession or control of the Purchased Assets including certifications or
instruments customarily required from a seller for the issuance of title
insurance policies on all Real Property where title insurance is available.
7.2 Deliveries by Parent and Buyer. On the Closing Date (or to the
extent applicable, at any Subsequent Closing), Parent and Buyer shall
deliver, or cause to be delivered, to Seller the following:
(a) the Purchase Price as provided in Section 2.3;
(b) the duly executed Collateral Agreements to be executed by
Parent, Buyer or their respective subsidiaries;
(c) a certificate of an appropriate officer of each of Parent and
Buyer, dated the Closing Date, certifying the fulfillment of the conditions
set forth in Sections 8.3(a) and (b);
(d) all such other documents and instruments as Seller may
reasonably request or as may be otherwise necessary or desirable to
evidence and effect the assumption by Buyer of the Assumed Liabilities; and
(e) evidence of the obtaining of or the filing with respect to,
any required approvals set forth on Schedule 4.3(b).
7.3 Closing Date. The Closing shall take place at the offices of Weil,
Gotshal & ▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at 10:00 a.m. local time, within five Business Days after the date
on which the last of the conditions specified in Article VIII has been
satisfied or waived, or at such other place or time or on such other date
as Seller and Buyer may agree upon in writing (such date and time being
referred to herein as the "Closing Date").
7.4 Contemporaneous Effectiveness. All acts and deliveries prescribed
by this Article VII, regardless of chronological sequence, will be deemed
to occur contemporaneously and simultaneously on the occurrence of the last
act or delivery, and none of such acts or deliveries will be effective
until the last of the same has occurred.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 General Conditions. The obligations of Parent and Buyer and Seller
to effect the Closing of the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, any of which may be mutually waived in writing by Seller and
Parent and Buyer:
(a) No order or ruling of any court, arbitrator or administrative
agency with competent authority shall be in effect that enjoins, restrains,
conditions, stays or prohibits consummation of the transactions
contemplated by this Purchase Agreement or the Collateral Agreements or
imposes material conditions on Buyer's operation of the Business or
ownership or use of the Purchased Assets following the Closing.
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(b) Any applicable waiting period under the HSR Act relating to
the transactions contemplated by this Purchase Agreement or the Collateral
Agreements shall have expired or been terminated, and the parties shall
have obtained all material consents, waivers and approvals under all other
Competition Laws required in connection with the transactions contemplated
by this Purchase Agreement or the Collateral Agreements.
(c) The Bank of New York Company, Inc., as collateral agent under
the Security Agreement, shall have released all Encumbrances it has in the
Purchased Assets, and Buyer shall have received termination statements on
form UCC-3 or such other appropriate form which shall have been prepared
and signed by The Bank of New York Company, Inc. for filing on the Closing
Date.
8.2 Conditions Precedent to Parent's and Buyer's Obligations. The
obligations of Parent and Buyer to effect the Closing of the transactions
contemplated hereby are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions, any of which may be waived in
writing by Parent and Buyer:
(a) The representations and warranties of Seller contained in
this Purchase Agreement or in any schedule, certificate or document
delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects (except for representations and warranties that are subject to a
materiality qualification, which representations and warranties as so
qualified shall be true and correct in all respects) at and as of the
Closing Date, as though such representations and warranties were made at
and as of the Closing Date, except to the extent that (i) such
representations and warranties are made as of a specified date, in which
case such representations and warranties shall be true and correct in all
material respects as of such date, and (ii) any breach thereof (without
regard to any qualification as to materiality or Seller Material Adverse
Effect), individually or when aggregated with all such breaches, has not
had and would not be reasonably likely to have a Seller Material Adverse
Effect.
(b) Seller and/or the applicable Seller Subsidiary shall have
performed in all material respects all obligations and agreements and
complied in all material respects with all covenants required by this
Purchase Agreement to be performed or complied with by it prior to or at
the Closing, including executing and delivering the Collateral Agreements
and making each of the other deliveries set forth in Section 7.1.
(c) The Required Consents (or waivers in lieu thereof) shall have
been obtained and shall be in full force and effect.
(d) No change, effect, event, occurrence or state of facts shall
have occurred which, individually or in the aggregate, has had a Seller
Material Adverse Effect.
(e) The financing contemplated by the Commitment Letter (or, if
applicable, with respect to the special closing commitment) shall have been
funded by the lenders party thereto.
8.3 Conditions Precedent to Seller's Obligations. The obligations of
Seller to effect the Closing of the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of each of the
following conditions, any of which may be waived in writing by Seller:
(a) The representations and warranties of Parent and Buyer
contained in this Purchase Agreement or in any schedule, certificate or
document delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true and correct in all
material respects (except for representations and warranties that are
subject to a materiality qualification, which
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representations and warranties as so qualified shall be true and correct in
all respects) at and as of the Closing Date, as though such representations
and warranties were made at and as of the Closing Date, except to the
extent that (i) such representations and warranties are made as of a
specified date, in which case such representations and warranties shall be
true and correct in all material respects as of such date, and (ii) any
breach thereof (without regard to any qualification as to materiality or
Buyer Material Adverse Effect), individually or when aggregated with all
such breaches, has not had and would not be reasonably likely to have a
Buyer Material Adverse Effect.
(b) Parent and Buyer shall have performed in all material
respects all obligations and agreements and complied in all material
respects with all covenants required by this Purchase Agreement to be
performed or complied with by it prior to or at the Closing, including
executing the Collateral Agreements and making each of the other deliveries
set forth in Section 7.2.
8.4 Subsequent Closings. Notwithstanding any provision in this
Purchase Agreement to the contrary, in the event that all the conditions
set forth in Sections 8.2 and 8.3 have been satisfied, and all the
conditions set forth in Section 8.1 have been satisfied with respect to the
portion of the Business conducted by Seller and the Seller Subsidiaries in
the United States of America, the Commonwealth of Australia, the
Netherlands, Singapore and the Republic of Ireland, but the conditions set
forth in Section 8.1 have not been satisfied with respect to the portion of
the Business conducted by Seller and the Seller Subsidiaries in one or more
other jurisdictions, Seller and Parent and Buyer agree to consummate the
Closing with respect to all assets and Liabilities of the Business in such
jurisdictions with respect to which the conditions set forth in Section 8.1
have been satisfied (the "Primary Closing"). In connection with the Primary
Closing the parties shall enter into the Intellectual Property Agreements
covering the Business Intellectual Property on a worldwide basis, even if
the other assets and Liabilities in certain countries are to be conveyed
and assumed in a Subsequent Closing. In the event of the Primary Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Seller, those Purchased Assets and
Assumed Liabilities constituting the portion of the Business conducted in
such jurisdictions with respect to which the conditions set forth in
Section 8.1 have been satisfied, and Buyer shall pay the Purchase Price
minus the net book value of the Purchased Assets (as reflected in the books
and records of Seller or the applicable Seller Subsidiary at such time)
that were not so transferred, other than the Avaya Tianjin shares, which
shall be equal to the value on Schedule 8.5. Such reduction, if any, shall
first reduce the amount of the Convertible Note, dollar for dollar, and to
the extent the amount of the Convertible Note is reduced to zero, any
remaining shortfall shall reduce the Cash Payment, dollar for dollar. The
closing or closings with respect to the Purchased Assets and Assumed
Liabilities not sold, transferred, assigned, conveyed and delivered, and
purchased, acquired and accepted, at the Primary Closing (each, a
"Subsequent Closing") shall occur from time to time as promptly as
practical after the conditions set forth in Section 8.1 have been satisfied
with respect to the portion of the Business conducted in any particular
jurisdiction. At each Subsequent Closing, Buyer shall pay to Seller and the
Seller Subsidiaries, as applicable, the net book value of the Purchased
Assets (as reflected in the books and records of Seller or the applicable
Seller Subsidiary at such time), other than the Avaya Tianjin shares, which
shall be equal to the value on Schedule 8.5, being transferred at such
Subsequent Closing and assume all related Assumed Liabilities at such
Subsequent Closing. In no event shall the conditions set forth in Sections
8.2(a) and 8.3(a) be deemed to apply to any Subsequent Closing, and, except
as provided in Section 8.5 below, in no event shall the aggregate
consideration paid by Buyer to Seller and its Subsidiaries, as applicable,
at the Primary Closing and all Subsequent Closings be less than or more
than the Purchase Price. The sale, assignment, transfer, conveyance and
delivery, and the purchase, acquisition and acceptance, of the Purchased
Assets and the Assumed Liabilities at each Subsequent Closing shall be
effected pursuant to short-form bills of sale and assumption agreements, in
each case in such form as Seller and Buyer mutually agree satisfies the
requirements of applicable local Law. From and after the Primary Closing,
the entirety of the Business (including that portion operated by
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Seller and the Seller Subsidiaries) shall be operated for the benefit and
detriment of Buyer in accordance with Section 2.6.
8.5 Sale of Avaya Tianjin Shares. If the Transferred Avaya Tianjin
Shares are transferred to any Third Party in accordance with the applicable
provisions of any existing contractual obligations of Seller or any Seller
Subsidiary (or the applicable provisions of the joint venture agreement,
limited liability company agreement or other governing documents of Avaya
Tianjin), then if the purchase price received by Seller is greater than the
value of the Transferred Avaya Tianjin Shares as set forth on Schedule 8.5,
Seller shall pay to Buyer 50% of the amount by which such purchase price
exceeds such value. Any payments required by the preceding sentence shall
be made by wire transfer of immediately available funds within 10 Business
Days after written notice from Seller is received by Buyer (with such
written notice detailing the material terms and purchase price with respect
to any transfer of Transferred Avaya Tianjin Shares to a Third Party);
provided that such notice will be sent by Seller as soon as practicable
after the receipt by Seller of the purchase price with respect to any
transfer of Transferred Avaya Tianjin Shares to a Third Party. Any
Transferred Avaya Tianjin Shares that are transferred to any Third Party
shall no longer be considered a Purchased Asset for purposes of this
Purchase Agreement and, as of the date of such transfer, the Convertible
Note shall be deemed to be reduced downward by the amount set forth on
Schedule 8.5, or to the extent that the Convertible Note is not
outstanding, Seller shall pay to Buyer the amount set forth on Schedule 8.5
in cash by wire transfer of immediately available funds to such account or
accounts as Buyer may designate in writing.
ARTICLE IX
STATUS OF AGREEMENTS
The rights and obligations of Parent and Buyer and Seller under this
Purchase Agreement shall be subject to the following terms and conditions:
9.1 Survival. The covenants contained in this Purchase Agreement,
unless otherwise expressly set forth herein, shall survive the Closing
without limitation. The representations and warranties of Parent and Buyer
and Seller contained in this Purchase Agreement shall survive the Closing
solely for purposes of this Article IX and such representations and
warranties shall terminate at the close of business on the date that is 18
months after the Closing Date (the "Claims Period") (and for the avoidance
of doubt, claims asserted in writing (which shall state in reasonable
detail the basis of such claim, together with supporting documentation)
before such date shall be deemed timely made regardless of whether
litigation or arbitration proceedings are commenced by such date);
provided, however, that such limitation shall not apply to the following:
(a) Seller's representations and warranties in Section 3.8 with
respect to Business Employees and Section 3.14 with respect to Taxes, which
shall survive until 60 days after the expiration of the applicable statute
of limitations;
(b) Seller's representations and warranties in Section 3.2 with
respect to Avaya Tianjin, excluding the last sentence thereof, and Section
3.3 with respect to Authorization, which shall survive indefinitely;
(c) Parent's and Buyer's representations and warranties in
Section 4.2 with respect to Authorization and Section 4.5 with respect to
Parent Shares, which shall survive indefinitely; and
(d) Seller's representations and warranties in Section 3.6(b)(i)
(with respect to title of the Nebraska Property), shall not survive the
Closing.
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Neither Seller nor Buyer shall have any Liability whatsoever with
respect to any such representations or warranties after such applicable
period, except with respect to claims for which notice was provided prior
to the expiration of such periods.
9.2 Indemnification Provisions for Benefit of Parent and Buyer. Seller
shall indemnify and hold harmless Parent, Buyer and their Affiliates and
any director, officer, employee or agent of Parent and Buyer or such
Affiliates (each, a "Buyer Indemnified Party"), from and against any and
all claims, actions, suits, proceedings, liabilities, obligations, losses
and damages, amounts paid in settlement, interest, costs and expenses
(including reasonable attorneys' fees, court costs and other out-of-pocket
expenses incurred in investigating, preparing or defending the foregoing)
(collectively, "Losses") incurred, suffered or sustained by any Buyer
Indemnified Party to the extent that such Losses result from, arise out of,
relate to, are based upon, or are caused by (a) subject to Section 9.1, any
breach or inaccuracy of any representation or warranty of Seller contained
in this Purchase Agreement or any certificates delivered pursuant to this
Purchase Agreement (without giving effect to any qualification as to
materiality or Seller Material Adverse Effect), (b) the breach by Seller
of, or failure by Seller to comply with, any covenant or agreement
contained in this Purchase Agreement to the extent not theretofore waived
in writing by Parent or Buyer, (c) any Excluded Liability, (d) Buyer's
waiver of any applicable Bulk Sales Laws, or (e) any and all grievances or
other disputes filed against Seller or any Affiliate of Seller pursuant to
any Collective Bargaining Agreement or Non-U.S. Collective Bargaining
Agreement or other agreement between Seller and the unions to the extent
attributable to any act or omission occurring on or prior the Closing Date.
9.3 Indemnification Provisions for Benefit of Seller. Parent and Buyer
shall indemnify and hold harmless Seller and its Affiliates and any
director, officer, employee or agent of Seller or such Affiliates (each a
"Seller Indemnified Party") from and against any and all Losses resulting
from, arising out of, relating to, based upon, or caused by (a) any breach
or misrepresentation of any such representation or warranty of Parent or
Buyer contained in this Purchase Agreement or any certificates delivered
pursuant to this Purchase Agreement (without giving effect to any
qualification as to materiality or Buyer Material Adverse Effect), (b) any
breach by Parent or Buyer of or failure to comply with any covenant or
agreement contained in this Purchase Agreement, to the extent not
theretofore waived in writing by Seller, (c) any Assumed Liability, (d)
Buyer's operation of the Business following the Closing, except for matters
where Seller has agreed to indemnify Buyer pursuant to Section 9.2 of this
Purchase Agreement, or (e) any Liability related to Avaya Tianjin, except
with respect to Losses for which a Buyer Indemnified Party is indemnified
by Seller pursuant to Section 9.2(a).
9.4 Indemnity Adjustments.
---------------------
(a) Amounts payable with respect to the parties' indemnification
obligations shall be treated as an adjustment to the Purchase Price. Buyer
and Seller agree to cooperate in the preparation of a supplemental Asset
Acquisition Statement as required by Section 5.3 and Treasury Reg. ss.
1.1060-1(e) as a result of any adjustment to the Purchase Price pursuant to
the preceding sentence. Whether or not the Indemnifying Party chooses to
defend or prosecute any Third-Party Claim both parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested
in connection therewith or as provided in Section 5.1.
(b) The amount of the Indemnifying Party's liability under this
Purchase Agreement shall be net of any applicable insurance proceeds
actually received by the Indemnified Party. The indemnification obligations
of each party hereto under this Article IX shall inure to the benefit of
the directors, officers, employees, agents, successors and assigns and
Affiliates of the other party hereto on the same terms as are applicable to
such other party.
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9.5 Limitation on Indemnification.
-----------------------------
(a) The Indemnifying Party's or Parties' liability for all claims
made under Section 9.2(a) or Section 9.3(a), as applicable, shall be
subject to the following limitations: (i) the Indemnifying Party shall have
no liability for such claims until the aggregate amount of the Losses
incurred shall exceed Two Million Five Hundred Thousand Dollars
($2,500,000) (the "Threshold"), in which case the Indemnifying Party shall
only be liable for Losses in excess of the Threshold, (ii) the Indemnifying
Party shall have no liability for any single claim unless the amount of
Losses for such claim exceeds Fifty Thousands Dollars ($50,000), and (iii)
other than with respect to Losses based on fraud or intentional
misrepresentation, the Indemnifying Party's or Parties' aggregate liability
for all such claims shall not exceed One Hundred Twenty Five Million
Dollars ($125,000,000); provided, however, that the limitations set forth
in this Section 9.5(a) shall not apply to Parent's and Buyer's obligations
pursuant to Section 5.1(b) or to Seller's obligations with respect to
breach of any representation or warranty set forth in Sections 3.1
(Organization), 3.3 (Authorization) and 3.8(e) (ERISA Affiliate).
(b) Seller shall undertake all Remedial Action to respond to all
Releases of Hazardous Substances existing prior to the Closing Date at the
Nebraska Property ("Designated Remedial Action") that is necessary to
comply with all applicable Environmental Law as may currently be in effect
or may come into effect in the future until such time as the Designated
Remedial Action results in a determination by all Governmental Bodies that
have asserted jurisdiction over the Designated Remedial Action that no
further action is required. Buyer shall provide Seller with commercially
reasonable access to the Nebraska Property pursuant to the Environmental
Remediation License Agreement. Seller shall submit its plan(s) for
Designated Remedial Action and final drafts of any other submissions and/or
material correspondence to Governmental Bodies for Buyer's review and
comment, which comments shall not be unreasonably rejected by Seller,
before undertaking any work to be performed and/or making such submissions.
Buyer shall have the right to be present and comment during all material
conversations or meetings with Governmental Bodies regarding the Nebraska
property. Seller shall promptly provide to Buyer copies of all written
information, documents and submissions (copies of which shall be provided
to Buyer prior to their submission to any Governmental Body) relating to
the Designated Remedial Action as well as correspondence to and from any
Governmental Body with jurisdiction over the Designated Remedial Action.
Seller will indemnify, defend and hold harmless Buyer from and against any
and all Losses arising out of the Designated Remedial Action (including
reasonable attorneys' fees), except for such Losses arising out of or
related to the willful misconduct or gross negligence of Buyer. Seller
shall promptly provide to Buyer all final draft reports, data, lab
analyses, any supporting information necessary to interpret such data and a
final copy generated or prepared in connection with the performance of the
Designated Remedial Action. Seller shall have no obligation hereunder to
undertake Remedial Action which exceeds the standards necessary to obtain a
no further action determination from any Governmental Bodies that have
asserted jurisdiction over the Designated Remedial Action.
(c) The indemnification provided in this Article IX shall be the
sole and exclusive remedy after the Closing Date for damages available to
the parties to this Purchase Agreement for breach of any of the terms,
conditions, representations or warranties contained herein, any right,
claim or action arising from the transactions contemplated by this Purchase
Agreement or with respect to the Designated Remedial Action, other than a
claim or action based on fraud or intentional misrepresentation; provided,
however, this exclusive remedy for damages does not preclude a party from
bringing an action for specific performance or other equitable remedy to
require a party to perform its obligations under this Purchase Agreement or
any Collateral Agreement.
(d) All parties shall use commercially reasonable efforts to
mitigate their damages.
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(e) If there is any outstanding balance on the Convertible Note,
any amounts payable by Seller to a Buyer Indemnified Party with respect to
its indemnification obligations under this Article IX shall first be
applied to repay any outstanding amount of the Convertible Note, dollar for
dollar, until the Convertible Note is repaid in full. The rights to
indemnification under this Article IX shall not otherwise be subject to
set-off for any claim by the Indemnifying Party against any Indemnified
Party, whether or not arising from the same event giving rise to such
Indemnified Party's claim for indemnification.
(f) Notwithstanding anything contained in this Purchase Agreement
to the contrary, no party shall be liable to the other party for any
special, punitive, exemplary or consequential loss or damage arising out of
this Purchase Agreement; provided, however, that the foregoing shall not be
construed to preclude recovery by the Indemnified Party with respect to
Losses (i) directly incurred from Third Party Claims or (ii) for actual
lost profits or incidental damages.
9.6 General Procedures for Indemnification.
--------------------------------------
(a) If any third party shall notify any Buyer Indemnified Party
or Seller Indemnified Party seeking indemnification under this Purchase
Agreement (the "Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for indemnification against
any other party (the "Indemnifying Party") under this Article IX, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay or failure on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is actually prejudiced. Such
notice shall describe the Third Party Claim in reasonable detail, together
with supporting documentation.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against any Loss the Indemnified Party may suffer resulting from, arising
out of, relating to, based upon, or caused by the Third Party Claim, and
(ii) the Third Party Claim involves only money damages or both money
damages and equitable relief against the Indemnified Party that cannot be
severed, where the claims for money damages are the primary claims asserted
by the Third Party and the claims for equitable relief are incidental to
the claims for money damages.
(c) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 9.6(b), (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party shall not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party, and (iii) the Indemnifying Party
shall not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of
the Indemnified Party unless such settlement or judgment relates solely to
monetary damages. The Indemnifying Party shall not, without the Indemnified
Party's prior written consent, enter into any compromise or settlement that
(i) commits the Indemnified Party to take, or to forbear to take, any
action and/or (ii) does not provide for a complete release by such Third
Party of the Indemnified Party.
(d) In the event any of the conditions in Section 9.6(b) above is
not satisfied, however, (i) the Indemnified Party may defend against the
Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnified Party may
(y) consent to the entry of
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any judgment or enter into any settlement with respect to the equitable
relief sought in the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith) and (z)
consent to the entry of any judgment or enter into any settlement with
respect to the monetary damages sought in the Third Party Claim without the
consent of the Indemnifying Party, (iii) the Indemnifying Party shall
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys'
fees and expenses), and (iv) the Indemnifying Party will remain responsible
for any Losses the Indemnified Party may suffer resulting from, arising out
of, relating to, based upon, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Article IX.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given upon receipt if (a)
mailed by certified or registered mail, return receipt requested, (b) sent
by Federal Express or other express carrier, fee prepaid, (c) sent via
facsimile with receipt confirmed or (d) delivered personally, addressed as
follows or to such other address or addresses of which the respective party
shall have notified the other.
If to Seller, to: Avaya Inc.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
- Mergers and Acquisitions
▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Buyer, to: CommScope, Inc.
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Fried, Frank, Harris, Shiver & ▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.2 Expenses. Except as otherwise provided in this Purchase
Agreement, each party to this Purchase Agreement will bear all the fees,
costs and expenses that are incurred by it (or, in the case of Seller, by
any Affiliate or Seller Subsidiary) in connection with the transactions
contemplated hereby,
65
whether or not such transactions are consummated, and all such fees, costs
and expenses incurred by Seller or any Seller Subsidiary shall be Excluded
Liabilities.
10.3 Entire Agreement; Modification. The agreement of the parties,
which consists of this Purchase Agreement (including the Schedules and
Exhibits hereto) and the Collateral Agreements, sets forth the entire
agreement and understanding between the parties and supersedes any prior
agreement or understanding, written or oral, relating to the subject matter
of this Purchase Agreement and the Collateral Agreements. No amendment,
supplement, modification or waiver of this Purchase Agreement shall be
binding unless executed in writing by the party to be bound thereby, and in
accordance with Sections 11.4 and 11.5.
10.4 Assignment; Binding Effect; Severability. This Purchase Agreement
may not be assigned by any party hereto without the other party's written
consent, except for (a) assignments and transfers by operation of Law, (b)
prior to Closing, Parent and Buyer may assign any or all of their rights,
interests and obligations hereunder to one or more direct or indirect
Subsidiaries of Parent, provided that in such case Parent and Buyer
nonetheless will remain responsible for the performance of their respective
obligations hereunder and (c) Parent and Buyer may assign any or all of
their rights and interests hereunder to any bank, agent for a lenders
syndicate or other lender to Parent, Buyer or any of their Affiliates or
Subsidiaries for collateral security. This Purchase Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
successors, legal representatives and permitted assigns of each party
hereto. The provisions of this Purchase Agreement are severable, and in the
event that any one or more provisions are deemed illegal or unenforceable
the remaining provisions shall remain in full force and effect unless the
deletion of such provision shall cause this Purchase Agreement to become
materially adverse to either party, in which event the parties shall use
reasonable best efforts to arrive at an accommodation that best preserves
for the parties the benefits and obligations of the offending provision.
10.5 Governing Law. THIS PURCHASE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, IRRESPECTIVE OF THE CHOICE OF LAWS PRINCIPLES OF THE STATE OF NEW
YORK, AS TO ALL MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION,
EFFECT, ENFORCEABILITY, PERFORMANCE AND REMEDIES.
10.6 Consent to Jurisdiction. Each of Parent, Buyer and Seller
irrevocably submits, and Seller agrees to cause the Seller Subsidiaries to
irrevocably submit to, the exclusive jurisdiction of (a) the Supreme Court
of the State of New York, New York County, and (b) the United States
District Court for the Southern District of New York, for the purposes of
any suit, action or other proceeding arising out of this Purchase Agreement
or any transaction contemplated hereby (and each agrees that no such
action, suit or proceeding relating to this Purchase Agreement or any
transaction contemplated hereby shall be brought by it or any of its
Affiliates except in such courts). Each of Parent, Buyer and Seller further
agrees and Seller agrees to cause the Seller Subsidiaries to agree, that
service of any process, summons, notice or document by U.S. registered mail
to such person's respective address set forth above shall be effective
service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set
forth above in the immediately preceding sentence. Each of Parent, Buyer
and Seller irrevocably and unconditionally waives (and agrees not to plead
or claim), and Seller agrees to cause the Seller Subsidiaries to
irrevocably and unconditionally waive (and not to plead or claim), any
objection to the laying of venue of any action, suit or proceeding arising
out of this Purchase Agreement or the transactions contemplated hereby in
(i) the Supreme Court of the State of New York, New York County, or (ii)
the United States District Court for the Southern District of New York or
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
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10.7 Waiver of Jury Trial. Each party hereby waives, and agrees to
cause each of its Affiliates to waive, to the fullest extent permitted by
applicable Law, any right it may have to a trial by jury with respect to
any litigation directly or indirectly arising out of, under or in
connection with this Purchase Agreement. Each party (a) certifies that no
representative of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to
enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Purchase Agreement by,
among other things, the mutual waivers and certifications in this Section
10.7.
10.8 Execution in Counterparts. This Purchase Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.9 Public Announcement. Prior to the signing of this Purchase
Agreement, Seller, Parent and Buyer shall prepare a mutually agreeable
releases announcing the transaction contemplated hereby. Except for such
press releases, neither Seller, Parent nor Buyer shall, without the
approval of the other, make any press release or other public announcement
concerning the existence of this Purchase Agreement or the terms of the
transactions contemplated by this Purchase Agreement, except as and to the
extent that any such party shall be so obligated by Law, in which case the
other party shall be advised and the parties shall use their reasonable
best efforts to cause a mutually agreeable release or announcement to be
issued; provided, however, that the foregoing shall not preclude
communications or disclosures necessary to comply with accounting, stock
exchange or federal securities Law disclosure obligations.
10.10 No Third-Party Beneficiaries. Except as expressly provided in
Article IX, nothing in this Purchase Agreement, express or implied, is
intended to or shall (a) confer on any Person other than the parties hereto
and their respective successors or assigns any rights (including
Third-Party beneficiary rights), remedies, obligations or liabilities under
or by reason of this Purchase Agreement or (b) constitute the parties
hereto as partners or as participants in a joint venture. This Purchase
Agreement shall not provide Third Parties with any remedy, claim,
liability, reimbursement, cause of action or other right in excess of those
existing without reference to the terms of this Purchase Agreement. Nothing
in this Purchase Agreement shall be construed as giving to any Business
Employee, or any other individual, any right or entitlement under any
employee benefit plan (as described in Section 3(3) of ERISA), policy or
procedure maintained by Seller or Buyer, except as expressly provided in
such plan, policy or procedure. No Third Party shall have any rights under
Section 502, 503 or 504 of ERISA or any regulations thereunder because of
this Purchase Agreement that would not otherwise exist without reference to
this Purchase Agreement. Except as expressly provided in Article IX, no
Third Party shall have any right, independent of any right that exists
irrespective of this Purchase Agreement, under or granted by this Purchase
Agreement, to bring any suit at law or equity for any matter governed by or
subject to the provisions of this Purchase Agreement.
ARTICLE XI
TERMINATION AND WAIVER
11.1 Termination. This Purchase Agreement may be terminated at any
time prior to the Closing Date by:
(a) Mutual Consent. The mutual written consent of Parent and
Buyer, on the one hand, and Seller, on the other hand;
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(b) Failure of Parent and Buyer Condition. Parent and Buyer upon
written notice to Seller if any of the conditions to the Closing set forth
in Section 8.2 shall have become incapable of fulfillment and shall not
have been waived in writing by Parent and Buyer;
(c) Failure of Seller Condition. Seller upon written notice to
Parent and Buyer if any of the conditions to the Closing set forth in
Section 8.3 shall have become incapable of fulfillment and shall not have
been waived in writing by Seller;
(d) Court or Administrative Order. Parent and Buyer, on one hand,
or Seller, on the other hand, if there shall be in effect a final,
non-appealable order of a court or government administrative agency of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereby;
(e) Delay. Parent and Buyer, on the one hand, or Seller, on the
other hand, if the Primary Closing shall not have occurred by February 28,
2004;
provided, however, that the party seeking termination pursuant to clause
(b), (c) or (e) is not then in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Purchase Agreement.
11.2 Effect of Termination. In the event of the termination of this
Purchase Agreement in accordance with Section 11.1, this Purchase Agreement
shall become void and have no effect, without any liability on the part of
any party or its directors, officers or stockholders, except under the
Confidentiality Agreement and for the obligations of the parties hereto as
provided in Article VI relating to the obligations of Parent, Buyer and
Seller to keep confidential certain information, Section 10.2 relating to
certain expenses, Section 10.9 relating to publicity and this Section 11.2;
provided, however, that nothing herein, and no termination of this Purchase
Agreement, shall relieve any party hereto from liability for any breach or
default under this Purchase Agreement prior to the effectiveness of such
termination. Nothing in this Section 11.2 shall be deemed to release either
party from any liability for any willful and material breach of any
obligation hereunder.
11.3 Collateral Agreements; Material to Be Returned.
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(a) In the event of the termination of this Purchase Agreement in
accordance with Section 11.1, the transactions contemplated by this
Purchase Agreement shall be terminated, without further action by any party
hereto.
(b) Furthermore, in the event that this Purchase Agreement is
terminated as provided herein:
(i) Parent and Buyer shall return all documents and other
material received from Seller, any Affiliate of Seller or any
representative of Seller or of any Affiliate of Seller relating to the
Business or the transactions contemplated by this Purchase Agreement,
whether obtained before or after the execution of this Purchase Agreement,
to Seller; and
(ii) Seller shall return all documents and other material
received from Parent and Buyer or any Affiliate of Buyer or any
representative of Parent and Buyer or any Affiliate of Parent and Buyer
relating to Parent and Buyer or the transactions contemplated by this
Purchase Agreement, whether obtained before or after the execution of this
Purchase Agreement, to Parent and Buyer.
11.4 Waiver of Agreement. Any term or condition hereof may be waived
at any time prior to the Closing Date by the party hereto which is entitled
to the benefits thereof by action taken by a duly
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authorized officer or employee, whether before or after the action of such
party; provided, however, that such action shall be evidenced by a written
instrument duly executed on behalf of such party by such duly authorized
officer or employee. The failure of either party to enforce at any time any
provision of this Purchase Agreement shall not be construed to be a waiver
of such provision nor shall it in any way affect the validity of this
Purchase Agreement or the right of such party thereafter to enforce each
and every such provision. No waiver of any breach of this Purchase
Agreement shall be held to constitute a waiver of any other or subsequent
breach.
11.5 Amendment of Agreement. This Purchase Agreement may be amended
with respect to any provision contained herein at any time prior to the
Closing Date by action of the parties hereto taken by their duly authorized
officers or employees; provided, however, that such amendment shall be
evidenced by a written instrument duly executed on behalf of each party by
such duly authorized officers or employees.
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IN WITNESS WHEREOF, each party has caused this Purchase Agreement to
be duly executed on its behalf by its duly authorized officer as of the
date first written above.
AVAYA INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
COMMSCOPE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
SS HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President