<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 11, 1995
------------------------
Bolt Beranek and Newman Inc.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 1-6435 04-2164398
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
150 CambridgePark Drive, Cambridge, Massachusetts 02140
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 873-2000
----------------------
The exhibit index is located at sequentially numbered page 9.
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On December 8, 1994, Cisco Systems, Inc. ("Cisco") and LightStream Corporation,
a majority-owned subsidiary of the Registrant ("LightStream"), entered into an
Asset Purchase Agreement (the "Asset Purchase Agreement") pursuant to which
Cisco agreed to buy all or substantially all of the assets of LightStream, a
corporation which develops and markets computer networking products based upon
asynchronous transfer mode ("ATM") technology, for a cash consideration of
$120,000,000. The closing of the transaction occurred on January 11, 1995.
Under the terms of the sale, Registrant, which owns in excess of 80% of the
equity interest in LightStream, is to receive from LightStream approximately
83% of the net distribution of the proceeds of the transaction, and
Ungermann-Bass Networks, Inc., which owns the minority interest in LightStream,
is to receive the remainder. Of the cash consideration paid to LightStream,
$12,000,000 was placed in an escrow fund, and periodically declining portions
of such amount are to be maintained for up to two years following the closing
of the transaction, subject to any claims under the Asset Purchase Agreement by
Cisco. As part of the sale, Cisco hired substantially all of the employees of
LightStream, and will operate from Registrant's former facility in Billerica,
Massachusetts.
The consideration paid by Cisco for the assets of LightStream was determined in
arm's-length negotiations.
A copy of the Asset Purchase Agreement, as amended, is attached hereto as
Exhibit 1 and the foregoing statements with respect to the terms of the Asset
Purchase Agreement are qualified in their entirety by reference to the attached
Exhibit 1.
In a related transaction, Registrant and Cisco agreed on a strategic alliance
under which Registrant and Cisco would jointly market Internet access, design,
implementation, and management services. Under the strategic alliance
agreement, Registrant will be the majority provider in the U.S. of Internet
access to Cisco, and the two companies will jointly market Registrant's
Internet service and product offerings to Cisco's installed customer base and
prospects. Additionally, Registrant will manage part of Cisco's internal
network. Cisco and Registrant also will jointly market Registrant's outsourced
Internet management services for private router networks, and Registrant's and
Cisco's services and products for Internet protocol networks. Registrant will
also receive significant discounts on the purchase of up to $30 million of
Cisco equipment.
<PAGE> 3
Item 7. Financial Statements and Exhibits.
b) Pro Forma Financial Information.
For purposes of this presentation, pro forma adjustments have been made
to the results of operations and balance sheet of Registrant to provide
information as to how the disposition of the assets of LightStream might have
affected the statements of operations and financial position of Registrant.
The unaudited pro forma consolidated balance sheet of Registrant was prepared
as if the disposition had occurred on December 31, 1994. The unaudited pro
forma consolidated statements of operations of Registrant were prepared as if
the disposition had taken place at the beginning of each period presented.
This unaudited pro forma information does not purport to be indicative of the
results of operations of Registrant that would have been obtained if the
disposition had occurred at the beginning of the periods presented, and is not
intended to be a projection of future results.
The following pro forma information is provided herewith:
1. Unaudited Pro Forma Consolidated Balance Sheet of Registrant as
of December 31, 1994
2. Unaudited Pro Forma Consolidated Statement of Operations of
Registrant for the Year Ended June 30, 1994
3. Unaudited Pro Forma Consolidated Statement of Operations of
Registrant for the Six Months Ended December 31, 1994
4. Unaudited Explanatory Notes to the Pro Forma Financial Statements
c) Exhibits
1 Asset Purchase Agreement dated as of December 8, 1994 by and
between Cisco Systems, Inc. and LigtStream Corporation, and
Amendment No. 1 thereto.
The exhibits and schedules to the Asset Purchase Agreement are
not being filed herewith. Except to the extent covered by an
application for an order pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, granting confidential treatment
of certain contractual provisions, which application may be filed
in the future, a copy of any exhibit or schedule will be furnished
supplementally to the Commission, upon request. A description of
the exhibits and schedules identifying the contents of such
exhibits and schedules is contained in the Asset Purchase
Agreement, and a listing of such exhibits and schedules follows
the Asset Purchase Agreement.
<PAGE> 4
<TABLE>
Bolt Beranek and Newman Inc.
Pro Forma Consolidated Balance Sheet
As of December 31, 1994
(in thousands)
(unaudited)
<CAPTION>
Pro Forma Adjustments
-------------------------
Less Actual
12/31/94 LightStream Other 12/31/94
ASSETS Actual Corporation Adjustments Pro Forma
- ------ -------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and temporary investments $ 56,572 $ 8,814 $ 108,000 $ 155,758
Restricted cash 12,000 12,000
Accounts receivable, net 42,301 2,675 39,626
Inventories, net 985 380 605
Other current assets 5,621 15 5,606
-------- -------- --------- ---------
Total current assets 105,479 11,884 120,000 213,595
Property, plant and equipment, net 22,147 1,742 20,405
Other assets 7,647 7,647
-------- -------- --------- ---------
$135,273 $ 13,626 $ 120,000 $ 241,647
======== ======== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 5,868 $ 1,705 $ $ 4,163
Accrued compensation and retirement plan 6,492 597 5,895
Accrued restructuring 10,533 10,533
Due to former minority interest 13,500 13,500
Other accrued costs 15,458 1,508 20,400 34,350
Deferred revenue 13,883 2,142 11,741
-------- -------- --------- ---------
Total current liabilities 52,234 5,952 33,900 80,182
6% convertible subordinated debentures due 2012 73,510 73,510
Commitments and contingencies
Minority interest 1,479 (1,479)
Shareholders' equity:
Common stock, $1 par value, authorized:
100,000,000 shares; issued: 21,558,635 shares 21,559 21,559
Additional paid-in capital 58,215 58,215
Foreign currency translation adjustment 323 323
Retained deficit (39,860) (39,860)
-------- -------- --------- ---------
40,237 40,237
Less shares in treasury, at cost: 4,527,464 shares 32,187 32,187
-------- -------- --------- ---------
Total shareholders' equity 8,050 7,674 87,579 87,955
-------- -------- --------- ---------
$135,273 $ 13,626 $ 120,000 $ 241,647
======== ======== ========= =========
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE> 5
<TABLE>
Bolt Beranek & Newman Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended June 30, 1994
(in thousands except per share amounts)
(unaudited)
<CAPTION>
Pro Forma Adjustments
-------------------------
Less Actual
Actual LightStream Other Pro forma
Results Corporation Adjustments Results
------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue:
Services $165,759 $ 111 $ 70 $ 165,718
Products 30,345 1,428 190 29,107
--------- -------- ------ ---------
196,104 1,539 260 194,825
--------- -------- ------ ---------
Costs and expenses:
Costs of services 118,147 573 89 117,663
Costs of products 11,938 1,181 123 10,880
Research and development expenses 22,451 6,505 209 16,155
Selling, general and administrative expenses 52,012 4,020 237 48,229
--------- -------- ------ ---------
204,548 12,279 658 192,927
--------- -------- ------ ---------
Income (loss) from operations (8,444) (10,740) (398) 1,898
Interest income 2,190 384 288 2,094
Interest expense (4,606) (4,606)
Minority interest 2,071 (2,071) 0
Other income, net 965 965
--------- -------- ------ ---------
Net income (loss) $ (7,824) $(10,356) $(2,181) $ 351
========= ======== ======= =========
Net income (loss) per share $ ($0.48) $ $0.02
========= =========
Shares used in per-share calculations 16,179 17,018
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE> 6
<TABLE>
Bolt Beranek and Newman Inc.
Pro Forma Consolidated Statement of Operations
For the Six Months Ended December 31, 1994
(in thousands except per share amounts)
(unaudited)
<CAPTION>
Pro Forma Adjustments
-------------------------
Less Actual
Actual LightStream Other Pro forma
Results Corporation Adjustments Results
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue:
Services $ 85,370 $ 3,580 $ 59 $ 81,849
Products 17,545 4,865 246 12,926
-------- ------- ------- -------
102,915 8,445 305 94,775
-------- ------- ------- -------
Costs and expenses:
Costs of services 56,293 1,317 75 55,051
Costs of products 6,975 3,013 252 4,214
Research and development expenses 12,300 3,930 132 8,502
Selling, general and administrative expenses 33,946 3,874 436 30,508
-------- ------- ------- -------
109,514 12,134 895 98,275
-------- ------- ------- -------
Loss from operations (6,599) (3,689) (590) (3,500)
Interest income 1,210 250 188 1,148
Interest expense (2,220) (2,220)
Minority interests 741 (693) 48
Other income, net 3,535 3,535
-------- ------- ------- -------
Loss before income taxes (3,333) (3,439) (1,095) (989)
Provision for income taxes 400 28 28 400
-------- ------- ------- -------
Net loss $ (3,733) $(3,467) $(1,123) $(1,389)
======== ======= ======= =======
Net loss per share $ ($0.22) $($0.08)
======== =======
Shares used in per-share calculations 16,717 16,717
The accompanying notes are an integral part of the pro forma financial statements.
</TABLE>
<PAGE> 7
BOLT BERANEK AND NEWMAN INC.
Explanatory Notes to the Pro Forma Financial Statements
(unaudited)
A. Basis of Presentation
On January 11, 1995, the Registrant sold the assets of its 80% majority
owned subsidiary, LightStream Corporation, as described in Item 2. of this
Form 8-K. These pro forma financial statements reflect the impact this
sale would have had on Registrant's consolidated historical financial
statements provided herein.
B. Pro Forma Adjustments to Consolidated Balance Sheet
The consolidated balance sheet as of December 31, 1994 has been
adjusted to eliminate the LightStream Corporation assets and liabilities
which have been sold.
The other adjustments reflect the $120,000,000 cash consideration to
be received. The gain from the sale, net of tax, is currently estimated
to be approximately $80,000,000 after considering the minority interest
and estimated costs to be incurred in connection with the sale.
C. Pro Forma Adjustments to Consolidated Statements of Operations
The consolidated statements of operations have been adjusted to eliminate
the revenue and expenses associated with LightStream Corporation for each
period presented.
The other adjustments include intercompany transactions which had been
eliminated in Registrant's consolidated statements of operations and
fixed corporate costs which had been allocated to LightStream Corporation.
The interest income adjustment represents the additional interest
income that Registrant would have earned on the $15,000,000 of cash
Registrant contributed to form LightStream Corporation.
The minority interest adjustment represents the elimination of the 20%
minority interest owned by Ungermann-Bass Networks, Inc.
In October of 1993, Registrant and Ungermann-Bass Networks, Inc. combined
technology, staff and other resources to form Lightstream Corporation,
which upon inception was approximately 80% owned by Registrant and 20%
owned by Ungermann-Bass Networks, Inc. Registrant and Ungermann-Bass
Networks, Inc. contributed $15,000,000 and $5,000,000 in cash,
respectively, to fund the enterprise.
In fiscal year 1993, prior to the formation of Lightstream Corporation,
Registrant's Asynchronous Transfer Mode activities were conducted by its
then Communications Division and resulted in a pre-tax operating loss of
approximately $3,600,000 for the first quarter ended September 30, 1993.
These results are not included in the actual results of LightStream
Corporation for the year ended June 30, 1994.
The gain from the sale has not been reflected in the pro forma
consolidated statements of operations.
<PAGE> 8
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 26, 1995 BOLT BERANEK AND NEWMAN INC.
By: /s/ Ralph A. Goldwasser
-----------------------
Ralph A. Goldwasser
Senior Vice President and
Chief Financial Officer
<PAGE> 9
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
1 Asset Purchase Agreement dated as of
December 8, 1994 by and between the
Registrant and Cisco Systems, Inc., and
Amendment No. 1 thereto.
9
<PAGE> 1
EXHIBIT 1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is dated as of December 8, 1994 by and between Cisco
Systems, Inc., a California corporation ("Purchaser"), and Lightstream
Corporation, a Massachusetts corporation ("Seller").
WHEREAS, Seller is engaged in the business of designing, developing,
marketing, and supporting asynchronous transfer mode ("ATM") switching equipment
(the "Business"); and
WHEREAS, Purchaser desires to acquire from Seller and Seller desires to
transfer to Purchaser, all or substantially all of the properties, assets,
rights and obligations of Seller related to the Business, and to assume certain
specified liabilities of Seller, all upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
---------------------------
SECTION 1.1 DESCRIPTION OF ASSETS TO BE ACQUIRED. Upon the terms and
subject to the conditions set forth in this Agreement, at the Time of Closing
(as defined in Section 6.1 hereof), Seller agrees to convey, sell, transfer,
assign, and deliver to Purchaser, and Purchaser agrees to purchase from Seller,
all right, title, and interest of Seller at the Time of Closing in and to
certain assets, properties, and rights related to the Business, as follows:
(a) All interests in machinery, equipment, computer hardware,
peripherals, operating software, application software, development and
debugging tools, development environments and quality assurance equipment and
furniture and fixtures (the "Related Property"), that are listed on
Schedule 1.1(a) hereto;
(b) All inventory owned by Seller related to the Business
(whether located on the premises of the facilities leased by Seller in
Billerica, Massachusetts, in transit to or from such premises, in other
storage or warehouse facilities, at the facility of the Seller's manufacturing
agent in Roosevelt, Minnesota, or otherwise) including, without limitation,
raw materials, work-in-progress, finished goods and supplies that are listed
on Schedule 1.1(b) hereto, excluding any excess, unused or obsolete items (the
"Inventory");
<PAGE> 2
(c) All claims and rights under all agreements, contracts,
contract rights, licenses, purchase and sale orders, quotations, and other
executory commitments associated with the Business (collectively, the
"Contracts"), that are listed on Schedule 1.1(c) hereto including the
"Contracts Requiring Novation or Consents to Assignment" as such phrase is
defined in Section 4.1(1)(C) hereof;
(d) All claims and rights under all franchises, licenses,
permits, consents, authorizations, certificates and approvals (collectively
referred to herein as "Permits") of any federal, state, or local regulatory,
administrative, or other governmental agency or body issued to or held by
Seller which are necessary, related or incidental to the Business, that are
listed on Schedule 1.1(d) hereto;
(e) All rights, title and interest to patents, trademarks,
patent applications, trademark rights, trade secrets, information, proprietary
rights, license rights, service marks, inventions, tradenames, copyrights,
processes, technical information, software, licenses, designs and
confidentiality agreements, logos, and customer and supplier lists related to
the Business, together with the goodwill associated therewith (collectively,
the "Proprietary Rights"), that are listed on Schedule 1.1(e) hereto;
(f) All accounts receivable of Seller related to the
Business, that are listed on Schedule 1.1(f) hereto (the "Accounts Receivable");
(g) Copies of originals of books of account, general ledgers,
sales invoices, accounts payable and payroll records, drawings, files, papers,
and all other records of Seller including such records of Seller held by
Seller's majority parent corporation as custodian on behalf of Seller related
to the Business, excluding minute books and corporate stock record books of
Seller (the "Records"), provided that with respect to any such Records which are
comprised of both information relating to the Business and to portions of the
business of Seller's majority parent corporation and with respect to Records
which are in the possession of Seller's majority parent corporation but which
relate to the Business, Seller shall provide Purchaser with excerpts or copies
of such Records relating to the Business as Purchaser shall reasonably request
from time to time, but the party now possessing such Records may retain
possession of the original records;
(h) All rights, if any, under express or implied warranties
from suppliers and vendors of Seller which are related to the Business;
(i) All of Seller's causes of action, judgments, and claims
or demands of whatever kind or description arising out of or relating to the
Business other than those arising under this Agreement;
(j) All goodwill associated with the Business (the
"Goodwill");
2.
<PAGE> 3
(k) All of Seller's cash on hand or on deposit, whether or
not generated in connection with the Business, at the Time of Closing; and
(1) Such other properties or assets ("Other Assets") that are
listed on Schedule 1.1(l) hereto.
The assets, properties, and rights to be conveyed, sold, transferred,
assigned, and delivered to Purchaser pursuant to this Section 1.1 are sometimes
hereinafter collectively referred to as the "Assets".
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding the provisions of
Section 1.1 hereof, the Assets to be transfferred to Purchaser pursuant to this
Agreement shall not include assets listed on Schedule 1.2 hereof (collectively,
the "Excluded Assets").
ARTICLE II
ASSUMED LIABILITIES
-------------------
SECTION 2.1 ASSUMED LIABILITIES. Subject to Section 2.2 hereof,
Purchaser hereby agrees at the Time of Closing to assume, satisfy or perform
when due:
(a) those liabilities and obligations of Seller incurred in
the ordinary course of business which are either (i) reflected on Seller's
balance sheet as of November 30, 1994, (ii) not required to be reflected
thereon in accordance with generally accepted accounting principles or (iii)
incurred subsequent to November 30, 1994, including, without limitation, those
liabilities and obligations in excess of $100,000 specifically identified on
Schedule 2.1 hereto but excluding any obligation to Alex. Brown & Sons
Incorporated referred to in Section 4.1(t) except to the extent such
obligation is covered by Section 5.20;
(b) those liabilities and obligations of Seller arising after
the Time of Closing under the Contracts and Permits; and
(c) any liability or obligation of Seller for making payments
on account of Seller's severance policies, true copies of which are attached
hereto as Schedule 2.1(c) hereto (including accrued or earned salary,
commissions or vacation pay), to employees of Seller who are not employed by
Purchaser at or prior to the Time of Closing, or in respect of payroll taxes
for employees of Seller arising after the date of this Agreement and prior to
the Closing, including but not limited to the reimbursement of Seller for its
liabilities and obligations arising under or with respect to the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") with respect to three
months of COBRA coverage for each employee not employed by Purchaser at or
prior to the Time of Closing or with respect to labor or employment claims
arising
3.
<PAGE> 4
directly or indirectly from the transactions contemplated by this Agreement;
provided, however, that Purchaser's obligation to such- reimbursement and
assumption of such liabilities under this subsection (c) shall not exceed in
amount the cash conveyed to Purchaser under Section 1.1(k) above and with
respect to liabilities related to such labor or employment claims, Purchaser
shall assume no liability for claims attributable to actions of Seller or
Seller's officers, directors, shareholders, employees, agents or affiliates
other than directly resulting from the transactions contemplated by this
Agreement.
The liabilities assumed hereunder by the Purchaser are collectively
called herein the "Assumed Liabilities".
SECTION 2.2 LIABILITIES NOT ASSUMED. Other than the Assumed
Liabilities, Purchaser shall not assume, nor shall Purchaser or any affiliate
of Purchaser, be deemed to have assumed or guaranteed, any other liability or
obligation of any nature of Seller, or claims of such liability or obligation,
whether accrued, matured or unmatured, liquidated or unliquidated, fixed or
contingent, known or unknown arising out of (i) acts or occurrences, or related
to any of the Assets, prior to the Time of Closing, (ii) any liability or
obligation of Seller with respect to rights of shareholders who have complied
with all requirements for perfecting appraisal rights in connection with the
transactions contemplated by this Agreement as set forth in the Massachusetts
Corporation Code, or (iii) any other liability or obligation of Seller
(collectively, the "Unassumed Liabilities"). In the event Purchaser is deemed
responsible for any Unassumed Liabilities, Seller shall indemnify Purchaser
pursuant to Section 8 of this Agreement from and against all losses incurred by
Purchaser in satisfying such liabilities or obligations.
ARTICLE III
PURCHASE PRICE
--------------
SECTION 3.1 CONSIDERATION. Upon the terms and subject to the
conditions contained in this Agreement, in consideration for the Assets and the
other forms of consideration to be given by Seller and in full payment therefor,
Purchaser will pay, or cause to be paid, the purchase price set forth in
Section 3.2 hereof to Seller, subject to adjustment in accordance with the
provisions set forth herein, and Purchaser will assume all of the Assumed
Liabilities.
SECTION 3.2 PAYMENT OF PURCHASE PRICE. The purchase price ("Purchase
Price") to be paid or payable by Purchaser to Seller for the Business and the
other forms of consideration to be given by Seller shall be One Hundred and
Twenty Million Dollars ($120,000,000), which shall be payable by wire
transfers at the Time of Closing of which One Hundred and Eight Million Dollars
($108,000,000) will be paid to Seller and Twelve
4.
<PAGE> 5
Million Dollars ($12,000,000) will be paid to the Escrow Agent (as defined in
Section 8.1 hereof).
SECTION 3.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price
shall be allocated among the Assets and the noncompetition covenant provided
for in Section 5.2 hereof as set forth in a statement of allocation of the
Purchase Price (plus assumed liabilities), such statement to be prepared by
Purchaser at the Time of Closing. If Purchaser and Seller cannot agree on such
allocation statement within ten days of the Time of Closing, the allocation
statement shall be determined by a partner of the accounting firm of Coopers &
Lybrand chosen by that firm's Boston and San Francisco offices. The statement
of the allocation prepared in accordance with this Section 3.3 shall be binding
upon the parties hereto and shall be prepared using the allocation methods and
principles required by Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code") and the Treasury Regulations promulgated thereunder.
Neither Purchaser nor Seller shall take any position inconsistent with such
allocation, and any and all filings with and reports made to any taxing
authority will be consistent with that allocation, except in each case to the
extent that Purchaser or Seller reasonably believes, after discussion with the
others, that the foregoing will result in a violation of applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Purchaser that:
(a) ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and has all requisite power and authority to
own and operate the Business in the places where the Business is now conducted
and to directly own, lease, and operate the Assets. Seller is duly qualified
or licensed to do business as a corporation in each of the jurisdictions in
which the nature of the Business or location of properties related to the
Business requires such qualification or licensing and where the failure to be
so qualified would have a material adverse effect on the Business.
(b) AUTHORIZATION OF SELLER. Seller has full power and
authority to enter into this Agreement, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby, including, without
limitation, the execution and delivery of this Agreement, bills of sale,
assignments and assumptions, novations and other instruments evidencing the
conveyance of the Assets or delivered in accordance with Section 6.2 hereunder
(the "Closing Documents"). Seller has taken all necessary and appropriate
corporate action, including obtaining all necessary board and
5.
<PAGE> 6
shareholder consents, with respect to the execution and delivery of this
Agreement and the Closing Documents. This Agreement constitutes the valid and
binding obligation of Seller enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting the rights and remedies of creditors and subject to the general
principles of equity.
(c) FINANCIAL INFORMATION. Seller has delivered to Purchaser its audited
balance sheets and related statements of operations and cash flows of the
Seller at and for the fiscal year ended June 30, 1994 and unaudited balance
sheets and related statements of operations at and for the three months ended
September 30, 1994 of the Business (collectively, the "Financial Statements").
Each Financial Statement is complete and correct in all respects and has been
or will be as of the Time of Closing, prepared on a consistent basis throughout
the periods indicated and with each other and prepared in accordance with
generally accepted accounting principles ("GAAP") (except that the interim
statements (i) are prepared in a manner including all material adjustments,
consisting only of normal recurring accruals necessary for a fair presentation
of the results for these periods, (ii) are not necessarily indicative of the
results for the full fiscal year and (iii) are unaudited and do not include
footnotes). The Financial Statements fairly describe the financial condition
and operating results of Seller as of the dates, and for the periods, indicated
therein. The Financial Statements set forth all accrued vacation, salary and
bonuses and other forms of compensation payable to the service providers of the
Business as of the dates and for the periods indicated in the respective
Financial Statements. Schedule 4.1(c) sets forth a list of the current
installed base of Seller's software and hardware by serial number.
(d) RETURNS. Except as set forth on Schedule 4(d) Seller has not had any
of its products related to the Business returned by a purchaser or user thereof,
other than for minor, nonrecurring warranty problems. Seller is not aware of
any (i) pending warranty claims for such products, (ii) right to return such
products (other than units under customary evaluation terms), or (iii)
evaluation units expected to be returned after their evaluation period.
(e) ABSENCE OF CERTAIN CHANGES AND EVENTS. Since June 30, 1994, there has
not been:
(i) Any material adverse change in the financial condition,
results of operation, assets, liabilities or Business of Seller or any
occurrence, circumstance, or combination thereof which reasonably could be
expected to result in a material adverse change to the Business;
(ii) Any change other than in the ordinary course of business
made by Seller in its method of operating the Business or its accounting
practices relating thereto;
6.
<PAGE> 7
(iii) Any sale, lease, or disposition of, or any agreement to sell,
lease, or dispose of any of the Assets, other than sales, leases, or
dispositions in the usual and ordinary course of Business and other than
pursuant to this Agreement;
(iv) Any modification, waiver, change, amendment, release, rescission,
accord and satisfaction, or termination of, or with respect to, any term,
condition, or provision of any material Contract relating to or affecting the
Business, the Assets, or the Assumed Liabilities, other than any satisfaction
by performance in accordance with the terms thereof in the usual and ordinary
course of Business;
(v) Any adverse relationships or conditions with vendors, suppliers or
customers that may have a material adverse effect on the Business or the
Assets; or
(vi) Any borrowing or lending of money by Seller, including to or from
its shareholders, but excluding for this purpose (A) sales made on ordinary
trade terms, (B) intercompany liabilities of Seller and its majority parent
corporation made in the ordinary course of business (other than intercompany
liabilities relating to intercompany loans or interest) and (C) intercompany
liabilities of Seller and its majority parent corporation relating to this
Agreement that do not in the aggregate exceed $100,000 and excluding the
permitted expenditures under Section 5.20; or
(vii) Any other event or condition of any character that has had a
material adverse effect, or may reasonably be expected to have a material
adverse effect, on the Assets or the Business.
(f) UNDISCLOSED LIABILITIES. There are no debts, claims, liabilities, or
obligations with respect to the Business or to which the Assets are subject,
liquidated, unliquidated, accrued, absolute, contingent, or otherwise, that are
not identified in the Financial Statements.
(g) INVENTORY. Schedule 1.1(b) hereto lists all of Seller's inventory other
than excess, unused or obsolete items. All items included in the Inventory are
the property of Seller and, as of the Time of Closing, are free and clear of
any mortgage, pledge, lien, security interest or other encumbrance. To the best
of Seller's knowledge, all of the Inventory consists of items of a quality and
quantity usable and saleable in the ordinary and usual course of the Business.
Based on Seller's forecast, no more than 25% of the Inventory to be purchased
from Seller's manufacturing agent will be excess or obsolete items.
(h) TAXES. Seller has completed and duly filed (or has received an
extension of time to file and will complete and file in such extended time) in
correct form with the appropriate United States, state and local governmental
agencies and with the appropriate foreign countries and political subdivisions
thereof, all Tax (as
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hereinafter defined) returns and reports required to be filed; all of such
returns and reports are accurate and complete; and Seller has paid in full or
made adequate provisions on its financial statements for all Taxes,
assessments or deficiencies shown to be due on such Tax returns and reports or
claimed to be due by any taxing authority or otherwise due or owing. Seller has
made all payments of estimated income Tax through the date hereof and all
withholdings of Tax required to be made under all applicable United States,
foreign, state and local tax laws and regulations, and such withholdings have
either been paid to the respective governmental agencies or set aside in
accounts for such purpose or accrued, reserved against and entered upon the
books of such company. The Assets are not subject to any liens for Taxes,
except liens for current Taxes not yet due. There is no contract, agreement,
plan or arrangement, including but not limited to the provisions of this
Agreement, covering any current or former employee of the Business that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code.
For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any governmental,
regulatory or administrative entity or agency responsible for the imposition of
any such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined, unitary or other group for any Taxable
period and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation to
indemnify any other person.
(i) COMPLIANCE WITH LAW. Seller has complied and is in compliance
with all applicable federal, state, and, to the best of Seller's knowledge,
local laws, statutes, licensing requirements, rules, and regulations, and
judicial or administrative decisions applicable to the Business. Seller has
been granted all material permits from federal, state, and local government
regulatory bodies necessary to carry on the Business, all of which are
currently valid and in full force and effect. There is no order issued,
investigation, or proceeding pending or, to the best of Seller's knowledge,
threatened, or notice served with respect to any violation of any law,
ordinance, order, writ, decree, rule, or regulation issued by any federal,
state, local, or foreign court or governmental or regulatory agency or
instrumentality applicable to the Business.
(j) GOVERNMENTAL CONSENTS. No consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with any federal, state, local, or provincial governmental authority on
the part of Seller is required
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in connection with the consummation of the transactions
contemplated hereunder other than under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act").
(k) PROPRIETARY RIGHTS. Set forth on Schedule 1.1(e) hereto is a complete
and accurate list and brief description of all Proprietary Rights owned or held
by Seller used in the Business. Except as set forth on Schedule 4.1(k)(1),
Seller has complete and undisputed title and ownership of or adequate rights
(license or otherwise) to utilize all Proprietary Rights necessary for or used
in the Business, without any conflict with or infringement of the rights of
others. Except as set forth on Schedule 4.1(k) hereto, LightStream exclusively
owns all right, title and interest in and to all technology and intellectual
property rights developed or in the process of being developed under (1) the
Technology Licensing Agreement dated August 22, 1994, by and between
LightStream Corporation and Tellabs Operations, Inc. and (2) the Technology
Development and Licensing Agreement dated September 26, 1994, by and between
LightStream Corporation and NEC Corporation.
Except as set forth on Schedule 4.1(k)(1), there are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
Seller bound by or a party to any options, licenses or agreements of any kind
with respect to the proprietary rights of any other person or entity. Seller
has not received any communications nor is it aware of any entity alleging that
Seller has violated or, by conducting the Business as currently conducted,
would violate any proprietary rights of any other person or entity. Seller is
not aware that any of its employees or consultants associated with the Business
is obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of his
or her best efforts to promote the interests of Seller or that would conflict
with the Business as now conducted. Neither the execution nor delivery of this
Agreement nor the carrying on of the Business by its employees or consultants
will conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument of
which Seller is aware under which any of such employees or consultants or
Seller is now obligated.
Schedule 1.1(e) also indicates all patents, patent applications, trademarks
(registered or unregistered), licenses and, independent contractor or
consulting agreements and any other Proprietary Rights that require a consent
or waiver to consummate the transactions contemplated in this Agreement. Except
as set forth on Schedule 1.1(e), all of Seller's license agreements with
respect to its Proprietary Rights are in writing and evidence legitimate
ownership of such rights in Seller.
(l) CONTRACTS AND COMMITMENTS.
(A) There is set forth on Schedule 1.1(c) a list of all outstanding
contracts, setting forth the parties and the dates, including expiration dates,
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thereto which relate to the Business, whether or not in writing, to which
Seller is a party or to which any of the Assets are subject.
(B) Seller has performed all of its obligations under the terms of each
material Contract and is not in default thereunder. No event or omission has
occurred which but for the giving of notice or lapse of time or both would
constitute a default by any party thereto under any such Contract, where such
default by any party could have a material adverse effect on the Business or
the Assets. Each such Contract is valid and binding on all parties thereto and
in full force and effect. Seller has received no notice of default,
cancellation, or termination in connection with any such Contract.
(C) Schedule 1.1(c) lists all Contracts, under .the heading "Contracts
Requiring Novation or Consent to Assignment," that require a novation or
consent to assignment, as the case may be, prior to the Time of Closing so that
Purchaser shall be made a party in place of Seller or as assignee (the
"Contracts Requiring Novation or Consent to Assignment"). Such list is
complete, accurate and includes every Contract which, if no novation occurs to
make Purchaser a party thereto or if no consent to assignment is obtained,
would have a material adverse effect on Purchaser's ability to operate the
Business in the same manner as the Business was operated by Seller prior to the
Time of Closing.
(m) ASSETS. The Assets (together with the Excluded Assets and the
services provided to Seller by Seller's majority parent corporation under the
intercompany services arrangement between them) include all the assets used by
Seller to operate the Business in the same manner as the Business was operated
by Seller prior to the Time of Closing.
(n) OPERATING CONDITION OF ASSETS. All of the Assets are being
transferred to Purchaser in good operating condition and repair (normal wear
and tear excepted).
(o) TITLE TO THE ASSETS.
(A) Except as set forth on Schedule 4(o) attached hereto and except for
Permitted Encumbrances, Seller has good and marketable title to the Assets free
and clear of any pledges, liens, encumbrances, security interests, equities,
charges, and restrictions of any nature whatsoever (collectively, the "Liens").
The term "Permitted Encumbrances" shall mean (a) Liens for current taxes not
due and payable and (b) Liens reflected in the Financial Statements. Any and
all Liens set forth on Schedule 4(o), with the exception of Permitted
Encumbrances, shall be terminated as of the Time of Closing, and Seller shall
transfer the Assets to Purchaser free and clear of all such Liens.
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(B) By virtue of the deliveries made at the Closing, Purchaser will
obtain good and marketable title to the Assets, free and clear of all Liens
except for Permitted Encumbrances.
(p) LITIGATION. Except as set forth on Schedule 4(p), there is no claim,
litigation, action, suit, or proceeding, administrative or judicial, pending
or, to Seller's knowledge, threatened against Seller relating to the Business,
or involving the Assets, at law or in equity, before any federal, state, local,
or foreign court, or regulatory agency, or other governmental authority,
including, without limitation, any unfair labor practice or grievance
proceedings or otherwise.
(q) NO CONFLICT OR DEFAULT. Neither the execution and delivery of this
Agreement nor, subject to obtaining the approval described in Section 5.16
below, compliance with the terms and provisions hereof, including without
limitation, the consummation of the transactions contemplated hereby, will
violate any statute, regulation, or ordinance of any governmental authority, or
conflict with or result in the breach of any term, condition, or provision of
Seller's Articles of Organization or Bylaws, or, subject to obtaining the
consents described in Section 5.10 below, of any agreement, deed, contract,
mortgage, indenture, writ, order, decree, legal obligation, or instrument to
which Seller is a party or by which it or any of the Assets are or may be
bound, or constitute a default (or an event which, with the lapse of time or
the giving of notice, or both, would constitute a default) thereunder.
(r) LABOR RELATIONS. With respect to the Business:
(A) Seller is in compliance in all material respects with Title VII of
the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, all
applicable federal, state, and local laws, rules, and regulations relating to
employment, and all applicable laws, rules and regulations governing payment of
minimum wages and overtime rates, and the withholding and payment of taxes from
compensation of employees.
(B) Except as set forth on Schedule 4(r), there are no written or oral
separation, severance or golden parachute agreements with the service providers
of the Business. To the best of Seller's knowledge, Seller has no agreement
with any employee that specifies terms and conditions inconsistent with those
described in Seller's employee personnel handbook and in Seller's severance
policies.
(C) Schedule 4(r) attached hereto lists all the employees of, under the
heading "Employees," and all the consultants to, under the heading
"Consultants," Seller who provide services for the Business and their
applicable position, and annual compensation as of the Time of Closing.
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(D) All payments due from Seller on account of employee health and
welfare insurance have been paid or accrued as a liability on its balance
sheets as at November 30, 1994.
(E) All severance, bonus and vacation payments by Seller which are or
were due under the terms of any agreement have been paid or accrued as a
liability on its balance sheets as at November 30, 1994. Seller has no
severance obligations except as set forth on Schedule 2.1(c).
(s) PENSION, WELFARE, PROFIT SHARING, ETC. Except as set forth on
Schedule 4(s) hereto, Seller has no "Employee Pension Benefit Plan" in effect,
as such term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Schedule 4(s) contains a list of
each "employee welfare benefit plan" (as defined in Section 3(1) of ERISA),
including plans providing for health coverage, disability, severance or life
insurance, maintained for the benefit of or contributed to by Seller for the
benefit of any employee or terminated employee of Seller. Seller's employees
are provided medical coverage pursuant to the Seller's majority parent
corporation's medical plan. Seller does not maintain a medical plan separate
from Seller's majority parent corporation's medical plan.
(t) BROKERS' AND FINDERS' FEES. Seller is not obligated to pay any fees
or expenses of any broker or finder in connection with the origin, negotiation,
or execution of this Agreement or in connection with any transactions
contemplated hereby, except the investment banking fees of Alex. Brown & Sons
Incorporated, which fees shall be payable by Seller after the Time of Closing
and which shall not be payable or paid by Seller prior to the Time of Closing
or by Purchaser except as provided in Section 5.20.
(u) CUSTOMERS. Schedule 4(u) attached hereto lists all customers of the
Business since the date of Seller's incorporation. Prior to the Time of
Closing, Seller shall furnish Purchaser with complete and accurate copies or
descriptions of all current agreements with such customers.
(v) SUPPLIERS. Schedule 4(v) hereto lists all suppliers (other than
suppliers of goods and services that are not material to Seller and do not
individually cost more than $10,000 on an annual basis) to the Business since
the date of Seller's incorporation. Except as set forth on Schedule 4(v),
Seller is not aware of any event, happening, or fact which would lead it to
believe that any of such suppliers (other than Seller's majority parent
corporation and Seller's manufacturing agent, AT&T) will not continue to supply
the current level and type of products currently being provided to Seller on
similar terms and conditions.
(w) BOOKS AND RECORDS. The books and records of Seller to which
Purchaser and its accountants and attorneys have been given access are the true
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books and records of Seller and, to the best of Seller's knowledge, truly and
fairly reflect the underlying facts and transactions in all respects.
(x) COMPLETE DISCLOSURE. No representation or warranty by Seller in
this Agreement, and no exhibit, schedule, statement, certificate, or other
writing furnished to Purchaser pursuant to this Agreement or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein in the context in
which they were made not misleading.
(y) BACKLOG. Schedule 4(y) hereto sets forth the backlog of orders
relating to the Business that Seller is to ship and contract work to be
performed as of the Time of Closing. To the best of Seller's knowledge, Seller
or its manufacturing agent either possesses sufficient inventory of parts,
materials and personnel to produce the same within their scheduled delivery
dates or such parts or materials have lead times such that Seller can acquire
such parts and materials in time to produce and ship such backlog in accordance
with its scheduled shipping requirements.
(z) ACCOUNTS RECEIVABLE. Except as set forth on Schedule 4.1(z), to the
best of Seller's knowledge, the amount of all Accounts Receivable, unbilled
invoices and other debts due or recorded in the records and books of account of
Seller as being due to Seller as at the Closing relating to the Business will
be good and payable in full in the ordinary course of Business; no contest with
respect to the amount or validity of any amount is pending; and none of such
Accounts Receivable or other debts is or will at the Closing be subject to any
counterclaim, return or set-off, except for the amount reserved for product
returns and bad debts in the Financial Statements. The values at which accounts
receivable are carried reflect the accounts receivable valuation policy of
Seller which is consistent with its past practice and in accordance with GAAP
applied on a consistent basis.
(aa) INTERESTED PARTY RELATIONSHIPS. Except as set forth on Schedule
4(aa), Seller does not have any material financial interest, direct or
indirect, in any material supplier or customer or other party to any contract
which is material to the Business, or in competition with the Business. For
purposes of this subsection (aa) the term "Seller" is deemed to include Seller
and any corporation which, directly or indirectly, alone or together with
others, controls, is controlled by, or is in common control with Seller.
(ab) LIMITATION. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES
SET FORTH IN THIS ARTICLE IV, NO REPRESENTATION OR WARRANTY WHATSOEVER IS MADE
BY SELLER AND SELLER HEREBY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES IMPLIED
AS TO THE CONDITION, VALUE OR QUALITY OF THE ASSETS AND SPECIFICALLY DISCLAIMS
WITH RESPECT TO THE
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ASSETS ANY REPRESENTATIONS AND WARRANTIES OF
MERCHANTABILITY, USAGE OR FITNESS FOR ANY PARTICULAR PURPOSE.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents and warrants to Seller that:
(a) ORGANIZATION OF PURCHASER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has all requisite power and authority to own and operate its
business.
(b) AUTHORIZATION OF PURCHASER. Purchaser has full power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including, without limitation,
the execution and delivery of this Agreement. Purchaser has taken all necessary
and appropriate corporate action, including obtaining all necessary board
consents, with respect to the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors and subject to general principles of equity.
(c) PURCHASER'S FUNDS. Purchaser has and will have the funds necessary
to pay at the Closing the Purchase Price required by Section 3.2 to be paid.
(d) GOVERNMENTAL CONSENTS. No consent, approval, order, or authorization
of, or registration, qualification, designation, declaration, or filing with
any federal, state, local or provincial governmental authority on the part of
Purchaser is required in connection with the consummation of the transactions
contemplated hereunder other than under the HSR Act.
(e) LITIGATION. There is no claim, litigation, action, suit or
proceeding, administrative or judicial, pending or, to Purchaser's knowledge,
threatened against Purchaser relating to this Agreement or the transactions
contemplated hereunder, at law or in equity, before any federal, state, local
or foreign court, or regulatory agency, or other governmental authority, which
could result in the institution of legal proceedings to prohibit or restrain the
consummation or performance of this Agreement or the transactions contemplated
hereby or claim damages as a result of this Agreement or the transactions
contemplated hereby.
(f) NO CONFLICT OR DEFAULT. Neither the execution and delivery of this
Agreement nor, subject to obtaining the approvals described in Section 5.17
below, compliance with the terms and provisions hereof, including, without
limitation, the consummation of the transactions contemplated hereby, will
violate any statute, regulation, or ordinance of any governmental authority, or
conflict with or result in the breach of any term, condition, or provision of
Purchaser's Articles of Incorporation or
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Bylaws, or of any material agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation, or instrument to which Purchaser is a
party or by which it is or may be bound, or constitute a default (or an event
which, with the lapse of time or the giving or notice, or both, would
constitute a default) thereunder.
(g) BROKERS' AND FINDERS' FEES. Purchaser is not obligated to pay any
fees or expenses of any broker or finder in connection with the origin,
negotiation, or execution of this Agreement or in connection with any
transactions contemplated hereby.
(h) COMPLETE DISCLOSURE. No representation or warranty by Purchaser in
this Agreement, and no exhibit, schedule, statement, certificate, or other
writing furnished to Seller pursuant to this Agreement or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein in the context in
which they were made not misleading.
ARTICLE V
COVENANTS
---------
SECTION 5.1 COVENANTS AGAINST DISCLOSURE. Until the Time of Closing, no
party or its affiliates shall disseminate any press release or announcement or
otherwise make any disclosure to third parties concerning the transactions
contemplated by this Agreement and Purchaser will not make any disclosures to
third parties, excluding the announcement of this Agreement, that could be
reasonably expected to damage the Business or products of Seller without the
prior consent of Seller and Purchaser, except as, in the reasonable opinion of
a party, required by law.
SECTION 5.2 NON-COMPETITION.
5.2.1 Commencing at the Time of Closing and continuing for
three (3) years thereafter, Seller agrees that it shall not engage, directly or
indirectly, whether on its own account or as a shareholder, partner, joint
venturer, consultant, advisor, and/or agent, of any person, firm, corporation,
or other entity, in any or all of the following activities within the United
States:
(a) Enter into or engage, directly or indirectly, in the Business;
(b) Solicit customers, suppliers, or business patronage which results
in competition with Purchaser in the Business;
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(c) Encourage or solicit any employees of Purchaser to leave the
employment of Purchaser for any reason; or
(d) Promote or assist, financially or otherwise, any person, firm,
association, corporation, or other entity engaged in the Business, other than
through the distribution of the Purchase Price to the shareholders of Seller.
5.2.2 Without limitation, the parties agree and intend that the
covenants contained in this Section 5.2 shall be deemed to be a series of
separate covenants and agreements, one for each and every county or political
subdivision of each state of the United States. If, in any judicial proceeding,
a court shall refuse to enforce in such action any of the separate covenants
deemed included herein, then at the option of Purchaser, wholly-unenforceable
covenants or components thereof shall be deemed eliminated from the provisions
hereof for the purpose of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such a proceeding. The parties
intend to have covenants enforceable to the fullest extent of the law as to
scope, time and geography.
5.2.3 The parties agree that due to the unique nature of the
services and capabilities of Seller, there can be no adequate remedy at law for
any breach of its obligations under this Section 5.2, that any such breach may
allow Seller and/or third parties to unfairly compete with Purchaser resulting
in irreparable harm to Purchaser and therefore, that upon any such breach or
any threat thereof, Purchaser shall be entitled to appropriate equitable relief
in addition to whatever remedies it might have at law. Further, Purchaser shall
be entitled to indemnification by Seller from any loss or harm, including,
without limitation, attorneys' fees, including attorneys' fees on appeal, and
costs of suit, in connection with any breach, or any enforcement, of each of
their respective obligations pursuant to this Section 5.2.
5.2.4 Seller acknowledges, represents and warrants to Purchaser
that the covenants of Seller in this Section 5.2 are reasonably necessary for
the protection of Purchaser's interests under this Agreement and are not unduly
restrictive upon Seller.
5.2.5 Purchaser shall notify Seller of any breach or alleged
breach by Seller of any provision of this Agreement and, within thirty (30)
days after the date of mailing of such notice by Purchaser to Seller,
Seller shall cure such breach or alleged breach. Failure to cure such breach
or alleged breach to Purchaser's reasonable satisfaction within such time
period shall constitute a default under this Agreement and Purchaser shall be
entitled to exercise any of its available rights and remedies.
SECTION 5.3 EMPLOYEES. Set forth on each of Schedule 5.3(a) and 5.3(b)
is a list of employees of the Business to whom Purchaser will make an offer of
employment comparable to such employee's current position, effective at the
Time of
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Closing and on terms at least as favorable as those set forth on Schedule
5.3(a) and 5.3(b), respectively. Purchaser will negotiate in good faith to hire
the employees on Schedule 5.3(b) and will incentivize such employees consistent
with its policies regarding other employees of Purchaser, including the
issuance of options to purchase the Common Stock of Purchaser in such amounts
and on such terms as determined by Purchaser in its sole discretion. Seller
shall cooperate with Purchaser to assist Purchaser in employing such employees
and Seller may, in its sole discretion, provide incentives to any or all of
such employees to so join Purchaser. Purchaser shall have no obligation to
make an offer of employment to any employee of Seller except those listed on
Schedule 5.3(a) and Schedule 5.3(b).
SECTION 5.4 MAINTENANCE OF BUSINESS. Except as otherwise required to
perform its obligations under this Agreement, during the period from the date
hereof through the Time of Closing, Seller shall carry on and use its
reasonable efforts to preserve the Business, Goodwill, and relationships with
customers, suppliers, officers, employees, agents, licensees and others with
respect to the Business in substantially the same manner as Seller did prior to
the date hereof. Seller will use its reasonable efforts to keep and maintain
the existing favorable Business relationship with each of its respective
customers, suppliers, officers, employees, licensees and agents with respect to
the Business. If Seller becomes aware of a deterioration in a relationship with
any customer, supplier, licensee, officer, employee or agent with respect to
the Business, it will promptly bring such information to the attention of
Purchaser and will use its reasonable efforts to restore such relationship.
Seller shall not, without the prior written consent of Purchaser:
(a) (i) Enter into any commitment or transaction not in
the ordinary course of business, to be performed over a period
longer than six months in duration, or to purchase in any 30
day period fixed assets with an aggregate purchase price
exceeding $100,000, or (ii) sell or commit to sell any
products with an aggregate purchase price greater than
$100,000 in any single month (x) if the expected profit
margins are lower than those customarily obtained for sales of
similar products by Seller in the past, or (y) to any customer
with existing accounts receivable more than forty-five (45)
days past due in accordance with Seller's historical
accounting practices (excluding any receivables related to
sales returns) or with respect to which Purchaser has notified
Seller that it is reasonably concerned about the
creditworthiness of the customer;
(b) Grant any severance or termination pay to any
director, officer, employee or consultant, except mandatory
payments made pursuant to standard written agreements or
written severance policies of Seller attached as Schedule
2.1(c) hereto outstanding on the date hereof;
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(c) Except for transfers in the ordinary course of
business consistent with past practice, transfer to any
person or entity any rights to Seller's Proprietary Rights;
provided, however, that Seller shall not transfer any
source code or the rights thereto, whether or not in the
ordinary course of business, to any person or entity except
pursuant to written agreements set forth on the schedules
hereto and in effect as of the date hereof;
(d) Enter into or amend any agreements pursuant to
which any other party is granted manufacturing, marketing,
distribution or other similar fights of any type or scope with
respect to any products of Seller unless such agreement is
entered into in the ordinary course of business and provided
that such agreement may be terminated at any time (at no cost
or penalty) by Seller and provided further that notice shall
be given to Purchaser prior to the time Seller enters into
such agreement;
(e) Except in the ordinary course of business, amend
or otherwise modify the terms of any material Contract;
(f) Commence a lawsuit other than for the routine
collection of bills, to protect assets of Seller or for
breach of this Agreement;
(g) Declare or pay any dividends on or make any
other distributions (whether in cash or property) in
respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any securities in respect of, in lieu of or
in substitution for shares of its capital stock if the effect
of such a transaction is to reduce or encumber the assets of
Seller, or repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former
employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in
connection with any termination of service to Seller;
(h) Cause or permit any amendments to its Articles of
Organization or Bylaws;
(i) Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof, or
otherwise acquire or agree to acquire any assets
(other than the purchase of inventory in the ordinary
course of business) which are material, individually
or in the aggregate, to Seller;
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(j) Sell, lease, license or otherwise dispose of any of
Seller's properties or assets except in the ordinary course of
business;
(k) Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others; provided, however,
Seller can continue to incur liability to its majority parent
corporation with respect to certain services provided by such
corporation to Seller on the date of this Agreement on the
terms and conditions in effect on the date of this Agreement;
(l) Adopt or amend any employee benefit plans, programs,
policies or other arrangements, or enter into any employment
contract, pay any special bonus or special remuneration to
any director, employee or consultant, or increase the salaries
or wage rates of its employees other than pursuant to
scheduled employee reviews under Seller's normal employee
review cycle, or in connection with the hiring of employees
(other than officers) in the ordinary course of business, in
all cases consistent with past practice;
(m) Revalue any of its assets, including without
limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course
of business and consistent with past practice;
(n) Pay, discharge or satisfy in an amount in excess of
$25,000 in any one case any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business of liabilities reflected or
reserved against in Seller's Financial Statements;
(o) Engage in any activities or transactions that are
outside the ordinary course of its business;
(p) Fail to pay or otherwise satisfy its monetary
obligations as they become due, except such as are being
contested in good faith;
(q) Waive or commit to waive any rights with a value in
excess of $25,000;
(r) Cancel, materially amend or renew any insurance policy
other than in the ordinary course of business;
(s) Take, or agree in writing or otherwise to take, any of
the actions described in subsections (a) through (r) above.
19.
<PAGE> 20
SECTION 5.5 ACCESS TO INFORMATION. Subject to the terms of an
outstanding confidentiality agreement between the parties, from the date hereof
and provided permission has been received, if necessary, Seller will give
Purchaser and its Representatives (as such term is defined below) full access,
during normal Business hours, to all of the properties, books, contracts,
commitments, and records relating to the Business and the Assets, provided that
such access shall not unreasonably interfere with the normal operations of the
Business, and Seller will furnish to Purchaser and its officers, directors,
employees, agents or representative (collectively, "Representatives") during
such period all such information concerning the Business or the Assets as
Purchaser may reasonably request; provided, that any furnishing of such
information pursuant hereto or any investigation by Purchaser shall not affect
Purchaser's right to rely on the representations, warranties, agreements and
covenants made by Seller in this Agreement. All requests for permissions under
this Section 5.5 shall be made by Purchaser through an individual designated
for the purpose by Seller.
SECTION 5.6 OTHER DISCUSSIONS. Unless and until the earlier of (A) this
Agreement having been terminated by mutual consent or by either party pursuant
to Section 9.12 hereof or (B) May 1, 1995, Seller shall not, directly or
indirectly, through any officer, director, affiliate, agent or otherwise
solicit, initiate, or encourage any proposals or offers from any third party
relating to any possible acquisition of Seller or any of its subsidiaries
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise) (an "Alternative Acquisition"), or contract for or engage in any
sale of equity interests in Seller (other than pursuant to the exercise of
outstanding options or warrants or the sale of equity interests to existing
shareholders of Seller) (an "Equity Transaction"); nor will Seller participate
in any negotiations regarding or furnish to any person any information with
respect to, or otherwise cooperate with, facilitate or encourage any effort to
attempt by any person to do or seek any Alternative Acquisition or Equity
Transaction. Seller shall immediately cease and cause to be terminated any such
contacts or negotiations with third parties and shall immediately notify
Purchaser of all inquiries related to an Alternative Transaction or Equity
Transaction Seller receives after the date hereof and prior to May 1, 1995.
Other than as contemplated under this Agreement, disclosure by Seller of the
terms of this Agreement shall be a violation of this Section 5.6; provided,
however, that disclosure by Seller of the prohibitions of this Section 5.6 to a
third party in response to an Alternative Acquisition or Equity Transaction
shall not be a violation of this Section 5.6.
SECTION 5.7 INTENTIONALLY LEFT BLANK.
SECTION 5.8 CERTAIN HEALTH BENEFITS; COBRA. Purchaser shall take such
steps as are necessary to ensure that employees of Seller that accept offers of
employment with Purchaser at the Time of Closing are provided coverage, from
and after the Time of Closing, under Purchaser's welfare benefit plans
(including without limitation health plans) on substantially the same terms as
Purchaser's other employees, without limitation or exclusion for preexisting
conditions or similar limitations.
20.
<PAGE> 21
Purchaser will enter into an agreement with Seller's majority parent
corporation whereby such corporation shall be responsible for compliance with
the health care continuation coverage requirements of COBRA applicable to
employees of Seller who are employed by Purchaser on and after the Time of
Closing and Purchaser shall reimburse such corporation for the cost of
providing such coverage to employees of Seller who are not employees of
Purchaser on and after the Time of Closing for a three month period to each
such employee not employed by Purchaser and such corporation shall remain
liable for coverage in excess of three months for each such employee; provided,
however, Purchaser's obligation to reimburse Seller for such coverage shall not
exceed in amount the cash conveyed to Purchaser under Section 1.1(k). Seller
shall be responsible for any associated notice requirements for employees of
the Business who are terminated on or prior to the Time of Closing. Purchaser
shall cooperate with Seller in providing information to facilitate satisfaction
of any such notice requirement.
SECTION 5.9 POST CLOSING ASSISTANCE. For a period of 90 days after
the Time of Closing, Seller shall use its reasonable efforts to assist
Purchaser in transitioning and maintaining the operation and conduct of the
Business in the same manner as the Business was operated and conducted prior to
the Time of Closing. Purchaser will enter into an agreement with Seller's
majority parent corporation whereby such corporation shall (i) agree to use its
reasonable efforts to assist Purchaser in transitioning and maintaining the
operation and conduct of the Business in the same manner as the Business was
operated and conducted prior to the Time of Closing, and (ii) continue to
provide payroll services to all employees transferred at the Time of Closing
to Purchaser and to provide other routine services to the Business such as
E-mail, Internet, physical security, and campus transportation for a mutually
agreeable period. Purchaser shall reimburse Seller's majority parent
corporation at mutually agreed upon prices for such services.
SECTION 5.10 NOVATIONS. Purchaser will enter into an agreement with
Seller's majority parent corporation whereby such corporation will agree to use
reasonable efforts with Purchaser to obtain contract novations or consents to
assignment, as necessary, for all contracts requiring Novation or Consent to
Assignment prior to or as soon as practicable after the Time of Closing.
SECTION 5.11 POST CLOSING TRANSACTIONS.
(a) Purchaser will enter into an agreement with Seller's majority parent
corporation whereby such corporation shall (i) remit to Purchaser all
collections by it under Contracts, novated or otherwise, within ten (10)
business days after Seller's receipt of such collections and (ii) use its
reasonable efforts to assist Purchaser to collect all account receivables on
behalf of Purchaser after the Time of Closing.
21.
<PAGE> 22
(b) Subject to any approvals required by Seller's customers, Seller
shall subcontract the rights and obligations of any Contracts not novated to
Purchaser on the same terms and conditions provided in such Contracts.
(c) Seller's majority parent corporation will enter into a
Non-Disclosure Agreement in the form mutually agreed to by Purchaser and Seller
with respect to proprietary information of Seller disclosed to Seller's
majority parent corporation under that certain Subcontract Agreement No.
4004577 between BBN Systems and Technologies and Seller, dated January 3, 1994
(the "Subcontract Agreement"). Such Non-Disclosure Agreement shall further
provide a representation of Seller's majority parent corporation that it has
not used such proprietary information for purposes other than as specifically
set forth in the Subcontract Agreement and covenant that it will not use such
proprietary information in the future except for purposes specifically set
forth therein.
SECTION 5.12 SALES AND TRANSFER TAXES. Seller agrees to take all
actions reasonably requested by Purchaser to minimize any sales, use and other
transfer taxes and fees incurred in connection with the assignment, conveyance,
transfer and/or delivery of the Assets hereunder, including, without limitation
the transfer via means of electronic transmission of all assets capable of
being so transmitted. Seller further agrees to deliver all certificates
reasonably requested by Purchaser to verify the fact of such electronic
transmissions or other actions.
SECTION 5.13 TAX RETURNS. Seller shall properly file all returns,
statements, reports, forms or other documents (collectively, "Tax Returns")
that Seller is required by any applicable law to file with respect to Taxes
arising in or related to periods ending on or prior to the Time of Closing or
related to transactions or events occurring prior to the Time of Closing and
shall pay all such Taxes when due (which amount shall be reimbursed by
Purchaser to Seller, other than with respect to federal and state corporate
income taxes). With respect to state and local ad valorem taxes on the Assets
(whether personal or real, owned or leased) for the current Tax year, Purchaser
shall be responsible for the payment of all such Taxes for the period up to and
including the Time of Closing as well as for the payment of all such Taxes for
the period after the Time of Closing. Any supplemental property Taxes or
assessments which arise out of a revaluation of an Asset which revaluation
would not have occurred except for the change in ownership of the Asset shall
be borne by Purchaser. Any payment of Taxes due from one party to the other
pursuant to this Section 5.13 shall be paid at the Time of Closing.
SECTION 5.14 DELIVERY OF FINANCIAL INFORMATION AND SCHEDULES. Until the
Time of Closing, Seller shall deliver to Purchaser its unaudited balance sheets
and related statements of operations and cash flows at and for each month ended
prior to the Time of Closing as related to the Business (collectively, the
"Monthly Financials"). Each Monthly Financial shall be (i) complete and correct
in all respects as of the Time of
22.
<PAGE> 23
Closing, (ii) prepared on a consistent basis throughout the periods indicated,
and (iii) prepared in accordance with GAAP (except that the interim statements
are unaudited and do not include footnotes). The Monthly Financials shall
fairly describe the financial condition and operating results of Seller as of
the dates, and for the periods, indicated therein as of the dates and for the
periods indicated in the respective Financial Statements.
SECTION 5.15 EMPLOYEE BENEFIT PLANS. Seller may disperse, in accordance
with the terms of the applicable employee benefit plan and applicable law, all
funds from its employee medical and benefit and other compensatory plans that
are due and owing to employees of the Business.
SECTION 5.16 COMPENSATION OF LIGHTSTREAM EMPLOYEES. Upon or after the
Time of Closing, Seller agrees to use a portion of the Purchase Price to
compensate current Lightstream employees for the vested portion of their
options to purchase Lightstream capital stock.
SECTION 5.17 HART-SCOTT-RODINO FILINGS. Each of Purchaser and Seller
shall promptly make its filings under the HSR Act and shall make any required
submissions under the HSR Act with respect to this Agreement, and shall
cooperate with respect to the foregoing. Purchaser and Seller shall give prior
notice and consult prior to any meeting Seller or Purchaser has with the United
States Federal Trade Commission or Department of Justice with respect to the
filings of Seller and Purchaser under the HSR Act or any review by either of
the foregoing agencies. Each of Purchaser and Seller agrees to use its best
efforts to cause the conditions to closing referred to in Sections 7.1(k) and
7.2(d) to be met and agrees to take all reasonable steps necessary to obtain
early termination of the waiting period under the HSR Act.
SECTION 5.18 BULK SALES LAWS. Each of Seller and Purchaser hereby
waives compliance by the other with the so-called "bulk sales law" and any
other similar laws in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement. Seller shall indemnify Purchaser
from and hold it harmless against any liabilities, damages, costs, and expenses
resulting from or arising out of any action brought or levy made as a result of
Seller's failure to pay its liabilities owed to creditors, other than those
liabilities which have been expressly assumed, on such terms as expressly
assumed, by Purchaser pursuant to this Agreement.
SECTION 5.19 INDEMNIFICATION. Purchaser shall indemnify and hold
harmless Seller, any affiliate thereof and the directors, officers and
employees of Seller or any such affiliate from and against any and all losses
arising out of the Assumed Liabilities.
SECTION 5.20 EXPENSES. Upon consummation of the transactions
contemplated under this Agreement, Seller shall be entitled to withhold from
the cash to
23.
<PAGE> 24
be transferred to Purchaser at the Time of Closing an aggregate of $300,000 for
all fees and expenses (other than pursuant to intercompany services provisions)
of legal counsel, financial advisors and accountants in connection with the
transaction.
ARTICLE VI
CLOSING
-------
SECTION 6.1 TIME OF CLOSING. The transactions contemplated by this
Agreement shall be completed on the first Business day on which the last of the
conditions contained in Article VII hereof is fulfilled or waived (the "Time of
Closing"), with the expectation that the Closing shall occur on January 9, 1995
at 10:00 A.M., E.S.T., unless otherwise agreed to by Purchaser and Seller. The
Closing shall take place at the offices of Ropes & Gray, One International
Place, Boston, Massachusetts, or at such other place or date as may be agreed
to by Purchaser and Seller. The "Closing" shall mean the deliveries to be made
by the parties hereto at the Time of Closing in accordance with this Agreement.
SECTION 6.2 DELIVERIES BY SELLER. At the Closing, Seller shall deliver,
or cause to be delivered, to Purchaser the following:
(a) A good and sufficient Bill of Sale, Assignment and
Assumption of Liabilities Agreement for the Assets in the form mutually
agreed to by Purchaser and Seller, selling, delivering, transferring, and
assigning to Purchaser title to all of Seller's right, title, and interest to
the Assets, free and clear of all mortgages, pledges, liens, encumbrances,
security interests, equities, charges, and restrictions of any nature
whatsoever except as otherwise provided herein.
(b) An affidavit of Seller, substantially in the form mutually
agreed to by Purchaser and Seller, stating, under penalty of perjury, Seller's
United States taxpayer identification number and that Seller is not a foreign
person, pursuant to Section 1445(b)(2) of the Code.
(c) Good and sufficient assumptions and assignments of the
Proprietary Rights and Contracts, which shall be in form and substance
reasonably satisfactory to Purchaser and shall include the written consents of
all parties necessary in order to transfer all of Seller's rights thereunder
to Purchaser.
(d) INTENTIONALLY LEFT BLANK.
(e) An Officers' Certificate executed by the President and
Chief Financial Officer of Seller certifying (i) that the conditions specified
in subsections (a)-
24.
<PAGE> 25
(d) of Section 7.1 have been satisfied, (ii) that there shall have been no
material adverse change in the Business since the date of this Agreement, and
(iii) that the Financial Statements fairly reflect the financial condition of
Seller as of such dates and for the periods indicated in the respective
Financial Statements.
(f) Revised Schedules to this Agreement which shall be complete, true
and correct as of the Time of Closing. Seller acknowledges that any Schedules
not revised as of the Time of Closing shall be deemed true and correct as of
the Time of Closing.
(g) An Opinion Letter of Ropes & Gray, counsel for Seller, dated as of
the Time of Closing, in the form mutually agreed to by Purchaser and Seller.
(h) A Side Letter setting forth the obligations of Seller's majority
parent corporation and Purchaser with respect to certain post-closing matters,
substantially in the form of Exhibit 6.2(h).
(i) A Non-Disclosure Agreement of Seller's majority parent corporation
with respect to the Subcontract Agreement in the form mutually agreed to by
Purchaser and Seller.
SECTION 6.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser shall
deliver, or cause to be delivered, to Seller:
(a) The payment of the Purchase Price set forth in Section 3.2 hereof;
(b) A good and sufficient Bill of Sale, Assignment and Assumption of
Liabilities Agreement in the form mutually agreed to by Purchaser and Seller,
covering those liabilities of Seller assumed by Purchaser pursuant to Section
2.1 hereof;
(c) An Officer's Certificate executed by the President of Purchaser
certifying that the conditions specified in subsections (a) - (d) of Section
7.2 have been satisfied; and
(d) An Opinion Letter of Brobeck, Phleger & Harrison, counsel for
Purchaser, dated as of the Time of Closing, in the form mutually agreed to by
Purchaser and Seller.
25.
<PAGE> 26
(e) A Side Letter setting forth the obligations of Seller's
majority parent corporation and Purchaser with respect to certain post-closing
matters, substantially in the form of Exhibit 6.2(h).
(f) A letter amendment dated November 30, 1994 to the System
Integrater Agreement between Seller's minority shareholder corporation and
Purchaser setting forth the arrangement for permitting such corporation to
continue to market and sell the LightStream 2020 product and its derivatives.
SECTION 6.4 FURTHER ASSURANCES. At or after the Time of Closing, each party
shall prepare, execute, and deliver, such further instruments of conveyance,
sale, assignment, or transfer, and shall take or cause to be taken such other
or further action, as any party shall reasonably request of any other party at
any time or from time to time in order to perfect, confirm, or evidence in
Purchaser title to all or any part of the Assets or to consummate, in any other
manner, the terms and provisions of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. Each and every
obligation of Purchaser to be performed at the Closing shall be subject to the
satisfaction as of or before the Time of Closing of the following conditions
(unless waived in writing by Purchaser):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller set forth in Section 4.1 of this Agreement shall have been
true and correct when made and shall be true and correct as updated at and as
of the Time of Closing as if such representations and warranties were made as
of such date and time.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions, and other
obligations under this Agreement which are to be performed or complied with by
Seller shall have been fully performed and complied with at or prior to the
Time of Closing, including the delivery of the instruments and documents in
accordance with Section 6.2 hereof.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition, Business, Proprietary Rights or
properties of Seller which materially adversely affects the conduct of the
Business as currently being conducted.
(d) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of
26.
<PAGE> 27
the federal, state or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing and any applicable waiting
period under any applicable federal law shall have expired.
(e) INTENTIONALLY LEFT BLANK.
(f) APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered or to be
delivered to Purchaser under this Agreement shall be reasonably satisfactory to
Purchaser and its counsel in all respects.
(g) INTENTIONALLY LEFT BLANK.
(h) INTENTIONALLY LEFT BLANK.
(i) INTENTIONALLY LEFT BLANK.
(j) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The employees of
Seller set forth in Schedule 5.3(a) and eight of the thirteen employees of
Seller set forth in Schedule 5.3(b) shall have accepted employment with
Purchaser and shall have entered into an Employment and Non-Competition
Agreement substantially in the form attached hereto as Exhibits 7.1(j)-1, et
seq.
(k) HART-SCOTT-RODINO COMPLIANCE. Clearance from the appropriate
agencies pursuant to the HSR Act shall have been obtained by Purchaser and
Seller or all applicable waiting periods under the HSR Act shall have expired
or early termination shall have been granted by either the Federal Trade
Commission or the United States Department of Justice.
(l) MASSACHUSETTS TAX LIEN WAIVER. Purchaser shall have received
from Seller a copy of a waiver of tax lien issued by the Massachusetts
Commissioner of Revenue pursuant to Massachusetts General Laws Chapter 62C,
Sections 51 and 52.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF SELLER. Each and every
obligation of Seller to be performed at the Time of Closing shall be subject to
the satisfaction as of or before such time of the following conditions (unless
waived in writing by Seller):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser set forth in Section 4.2 of this Agreement shall have
been true and correct when made and shall be true and correct at and as of the
Time of Closing as if such representations and warranties were made as of such
date and time.
27.
<PAGE> 28
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions, and other
obligations under this Agreement which are to be performed or complied with by
Purchaser shall have been fully performed and complied with at or prior to the
Time of Closing, including the delivery of the instruments and documents in
accordance with Section 6.3 hereof.
(c) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing and any applicable waiting
period under any applicable federal law shall have expired.
(d) HART-SCOTT-RODINO COMPLIANCE. Clearance from the appropriate
agencies pursuant to the HSR Act shall have been obtained by Purchaser and
Seller or all applicable waiting periods under the HSR Act shall have expired
or early termination shall have been granted by either the Federal Trade
Commission or the United States Department of Justice.
(e) APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions, and other documents delivered or to be
delivered to Seller under this Agreement shall be reasonably satisfactory to
Seller and its counsel in all respects.
(f) PURCHASE PRICE. Purchaser shall have paid to Seller by wire
transfer an amount equal to the Purchase Price.
(g) INSTRUMENT OF BILL OF SALE, ASSIGNMENT AND ASSUMPTION OF
LIABILITIES AGREEMENT. Purchaser shall have executed and delivered an
Instrument of Bill of Sale, Assignment and Assumption of Liabilities Agreement
covering those liabilities of Seller assumed by Purchaser pursuant to Section
2.1 hereof in the form mutually agreed to by Purchaser and Seller.
(h) NEC CONSENTS. Purchaser shall have been made a party to or
received a consent to assignment of (i) the Technology Development and
Licensing Agreement, dated September 26, 1994, by and between Seller and NEC
Corporation and (ii) the VAR Agreement dated April 20, 1994 by and between
Seller and NEC Corporation.
28.
<PAGE> 29
(i) CERTAIN AGREEMENTS. Purchaser shall have entered into the
following agreements:
(i) a letter agreement with Bolt Beranek and Newman
Inc. for outstanding proposals under the LightStream
OEM Agreement with Bolt Beranek and Newman Inc.
dated October 14, 1993; and
(ii) a license agreement with Bolt Beranek and Newman
Inc. relating to certain proprietary technology of
Seller in the form attached hereto as Exhibit 7.2(i)
ARTICLE VIII
ESCROW FUND
-----------
SECTION 8.1 ESCROW FUND. As soon as practicable after the Time of
Closing, Twelve Million Dollars ($12,000,000) of the Purchase Price (the
"Escrow Fund") shall be deposited with, First Trust of California (or other
institution selected by Purchaser) as escrow agent (the "Escrow Agent"), such
deposit to constitute the Escrow Fund and to be governed by the terms set forth
herein and in the Escrow Agreement attached hereto as Exhibit 8.1. The Escrow
Fund shall be available to compensate Purchaser for and Seller agrees, to the
extent provided in this Article VIII, to indemnify Purchaser for any loss,
expense, liability or other damage, including attorneys' fees, to the extent of
the amount of such loss, expense, liability or other damage (collectively
"Damages") that Purchaser has incurred or reasonably anticipates incurring by
reason of the breach by Seller of any representation, warranty, covenant or
agreement of Seller contained herein or any misrepresentation by Seller made in
or pursuant to this Agreement. Purchaser and its affiliates shall act in good
faith and in a commercially reasonable manner to mitigate any Damages they may
suffer. Any claim for indemnification for Damages hereunder shall be offset or
reduced by (i) any tax benefit received by Purchaser or its affiliates as a
result of such Damages (as computed after taking into account any
indemnification to be received with respect thereto) and (ii) in the case of
third-party claims, by any amount actually recovered by Purchaser or its
affiliates pursuant to counterclaims made by any of them directly relating to
the facts giving rise to such third-party claims.
Section 9.13 of this Agreement shall be the exclusive remedy of
Purchaser and shall limit the liability of Seller for any breach of any
representation, warranty or covenant if the Agreement does not close. Resort to
the Escrow Fund shall be the exclusive remedy of Purchaser for any such
breaches and misrepresentations if the Agreement closes.
29.
<PAGE> 30
SECTION 8.2 DAMAGE THRESHOLD. Notwithstanding the foregoing, Purchaser
may not receive any assets from the Escrow Fund unless and until an Officer's
Certificate or Certificates (as defined in Section 8.4 below) identifying
Damages the aggregate amount of which exceeds $300,000 (which aggregate amount
cannot include any individual Damage items of $5,000 or less) has been
delivered to the Escrow Agent as provided in Section 8.5 below and such amount
is determined pursuant to this Article VIII to be payable, in which case
Purchaser shall receive the full amount of Damages in excess of such $300,000
amount; provided, however, that in no event shall Purchaser receive more than
the amount in the Escrow Fund. In determining the amount of any Damage
attributable to a breach, any materiality standard contained in a
representation, warranty or covenant of Purchaser shall be disregarded.
SECTION 8.3 ESCROW PERIOD. The Escrow Period shall terminate with
respect to one-third of the Escrow Fund at the expiration of six (6) months
after the Time of Closing, an additional one third of the original Escrow Fund
amount at the expiration of twelve (12) months after the Time of Closing, and
the remaining Escrow Fund upon the expiration of twenty-four (24) months after
the Time of Closing; provided, however, that a portion of the Escrow Fund,
which, in the reasonable judgment of Purchaser, subject to the objection of
Seller and the subsequent arbitration of the matter in the manner provided in
Section 8.6 hereof, is necessary to satisfy any unsatisfied claims specified in
any Officer's Certificate theretofore delivered to the Escrow Agent prior to
termination of the Escrow Period with respect to facts and circumstances
existing prior to expiration of the Escrow Period, shall remain in the Escrow
Fund until such claims have been resolved.
SECTION 8.4 CLAIMS UPON ESCROW FUND. Upon receipt by the Escrow Agent
on or before the last day of the Escrow Period of a certificate signed by any
officer of Purchaser (an "Officer's Certificate"):
(a) stating that Damages exist in an aggregate amount
greater than $300,000 (which aggregate amount cannot include
any individual Damage items of $5,000 or less), and
(b) specifying in reasonable detail the individual items
of such Damages included in the amount so stated, the date
each such item was paid, or properly accrued or arose, the
nature of the misrepresentation, breach of warranty or claim
to which such item is related,
the Escrow Agent shall, subject to the provisions of Article VIII hereof,
deliver to Purchaser out of the Escrow Fund, as promptly as practicable, assets
held in the Escrow Fund having a value equal to such Damages in excess of
$300,000.
SECTION 8.5 OBJECTIONS TO CLAIMS. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be
30.
<PAGE> 31
delivered to Seller and for a period of forty-five (45) days after such
delivery, the Escrow Agent shall make no delivery of assets pursuant to Section
8.5 hereof unless the Escrow Agent shall have received written authorization
from Seller to make such delivery. After the expiration of such forty-five
(45) day period, the Escrow Agent shall make delivery of the assets in the
Escrow Fund in accordance with Section 8.5 hereof, provided that no such
payment or delivery may be made if Seller shall object in a written statement
to the claim made in the Officer's Certificate, and such statement shall have
been delivered to the Escrow Agent and to Purchaser prior to the expiration of
such forty-five (45) day period.
SECTION 8.6 RESOLUTION OF CONFLICTS; ARBITRATION.
8.6.1 In case Seller shall so object in writing to any claim or
claims by Purchaser made in any Officer's Certificate, Purchaser shall
have forty-five (45) days to respond in a written statement to the
objection of Seller. If after such forty-five (45) day period there
remains a dispute as to any claims, Seller and Purchaser shall attempt
in good faith for sixty (60) days to agree upon the rights of the
respective parties with respect to each of such claims. If Seller and
Purchaser should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and shall be furnished to
the Escrow Agent. The Escrow Agent shall be entitled to rely on any
such memorandum and shall distribute the assets from the Escrow Fund
in accordance with the terms thereof.
8.6.2 If no such agreement can be reached after good faith
negotiation, either Purchaser or Seller may, by written notice to the
other, demand arbitration of the matter unless the amount of the
damage or loss is at issue in pending litigation with a third party,
in which event arbitration shall not be commenced until such amount is
ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by three
arbitrators. Within fifteen (15) days after such written notice is
sent, Purchaser and Seller shall each select one arbitrator, and the
two arbitrators so selected shall select a third arbitrator. The
decision of the arbitrators as to the validity and amount of any claim
in such Officer's Certificate shall be binding and conclusive upon the
parties to this Agreement, and notwithstanding anything in Section 8.6
hereof, the Escrow Agent shall be entitled to act in accordance with
such decision and make or withhold payments out of the Escrow Fund in
accordance therewith.
8.6.3 Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall
be held in Boston, Massachusetts under the commercial rules then in
effect of the American Arbitration Association.
31.
<PAGE> 32
Section 8.7 Third-Party Claims.
------------------------------
(a) In the event Purchaser becomes aware of a third-party claim which
Purchaser believes may result in a demand against the Escrow Fund, Purchaser
shall notify Seller of such claim, and Seller shall be entitled, at its
expense, to participate in any defense of such claim. Purchaser shall have the
right in its sole discretion to settle any such claim; provided, however, that
Purchaser may not affect the settlement of any such claim without the consent
of Seller, which consent shall not be unreasonably withheld. Seller agrees to
provide Purchaser with all reasonable assistance which Purchaser may request in
connection with its defense of such a claim. Any disputes in the defense of
such a claim, or in the appropriateness of any settlement of such a claim,
shall be the subject of arbitration between the parties under this Section. In
the event that Seller has consented to any such settlement, Seller shall have no
power or authority to object under Section 8.5 or any other provision of this
Article VIII to the amount of any claim by Purchaser against the Escrow Fund
for indemnity with respect to such settlement.
(b) Notwithstanding the foregoing provisions of Article VIII, any
claims for indemnification relating to Proprietary Rights shall require a
written demand on Purchaser alleging that the Proprietary Rights infringe any
patent, trade secret or intellectual property interest, and demanding that
Purchaser cease and desist using the Proprietary Rights or pay money to
claimant for the right to do so. In such event, Purchaser shall be required, in
order to be entitled to indemnification of such a claim hereunder, to in good
faith attempt to mitigate such claim by obtaining the right to continue to get
the benefit of the Proprietary Rights which are the subject of the claim by
granting a cross-license of patents or other intellectual property of Purchaser
to the entity bringing the claim, or to replace or modify the Proprietary
Rights so they become non-infringing but functionally equivalent, to the extent
that either method is practical as a commercially reasonable solution. The
Damages hereunder shall be limited to the reasonable direct damages including
the direct cost to Purchaser of effecting such cross-license or modification.
Any resolution of a claim pursuant to this Section 8.3(b) shall be deemed a
settlement of a claim for which Seller shall have the right of approval
pursuant to Section 8.3(a) hereto.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
SECTION 9.1 NOTICE. All notices and other communications required or
permitted under this Agreement shall be delivered to the parties at the address
set forth below their respective signature blocks, or at such other address
that they designate by notice to all other parties in accordance with this
Section 9.1. Any party delivering notice to Seller shall deliver a copy to Bolt
Beranek and Newman Inc., 150 Cambridge
32.
<PAGE> 33
Park Drive, 10th Floor, Cambridge, Massachusetts 02140, ATTN: John Montjoy,
Esquire, and to Robert F. Hayes, Esquire, Ropes & Gray, One International
Place, Boston, Massachusetts 02110, and to William Kaplan, Esq., UB Networks,
3900 Freedom Circle, Santa Clara, CA 95052, and any party delivering notice to
Purchaser shall deliver a copy to: Brobeck, Phleger & Harrison, Two Embarcadero
Place, 2200 Geng Road, Palo Alto, CA 94303, Attn: Edward M. Leonard, Esq. All
notices and communications shall be deemed to have been received unless
otherwise set forth herein: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of telex or facsimile transmission, on the
date on which the sender receives confirmation by telex or facsimile
transmission that such notice was received by the addressee, provided that a
copy of such transmission is additionally sent by mail as set forth in (iv)
below; (iii) in the case of overnight air courier, on the second Business day
following the day sent, with receipt confirmed by the courier; and (iv) in the
case of mailing by first class certified or registered mail, postage prepaid,
return receipt requested, on the fifth Business day following such mailing.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules
hereto, the documents referred to herein, and the documents executed
contemporaneously hereto at the Time of Closing, embody the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to such subject matter.
SECTION 9.3 BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon Seller, its successors and permitted assigns, and Purchaser and
its successors and permitted assigns. Neither this Agreement nor any of the
fights, interests, or obligations hereunder shall be transferred or assigned
(by operation of law or otherwise) by either of the parties hereto without the
prior written consent of the other party.
SECTION 9.4 EXPENSES OF TRANSACTION; TAXES. Except as set forth in
Section 5.20, each party shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby. Purchaser shall
pay all applicable sales, use, excise, transfer, documentary and any other
similar taxes arising out of the purchase and sale of the Assets.
SECTION 9.5 WAIVER; CONSENT. This Agreement may not be changed, amended,
terminated, augmented, rescinded, or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given or consented
thereto. Except to the extent that a party hereto may have otherwise agreed in
writing, no waiver by that party of any condition of this Agreement or breach
by the other party of any of its obligations or representations
33.
<PAGE> 34
hereunder or thereunder shall be deemed to be a waiver of any other condition
or subsequent or prior breach of the same or any other obligation or
representation by the other party, nor shall any forbearance by the first party
to seek a remedy for any noncompliance or breach by the other party be deemed
to be a waiver by the first party of its rights and remedies with respect to
such noncompliance or breach.
SECTION 9.6 COUNTERPARTS. This Agreement may be executed simultaneously
in multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 9.7 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
SECTION 9.8 INTENTIONALLY LEFT BLANK.
SECTION 9.9 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or employee of any party hereto or
any other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between
the parties to this Agreement.
SECTION 9.10 ATTORNEY'S FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement or to protect the
rights obtained hereunder each party shall bear its own costs and expenses.
SECTION 9.11 COOPERATION AND RECORDS RETENTION. Seller and Purchaser
shall (i) each provide the other with such assistance as may reasonably be
requested by them in connection with the preparation of any Tax Returns, or in
connection with any audit or other examination by any taxing authority or any
judicial or administrative proceedings relating to liability for Taxes, (ii)
each retain and provide the other, with any records or other information which
may be relevant to any such Tax Return, audit or examination, proceeding or
determination, and (iii) each provide the other with any final determination of
any such audit or examination, proceeding or determination that affects any
amount required to be shown on any Tax Return of the other for any period.
Without limiting the generality of the foregoing, Seller and Purchaser shall
use reasonable efforts to retain, until the applicable statute of limitations
(including any extensions) have expired, copies of all Tax Returns, supporting
work schedules and other records or information which may be relevant to such
Tax Returns for all tax periods or portions thereof ending before or including
the Time of Closing and shall not destroy or otherwise dispose of any such
records without first providing the other party with a reasonable opportunity
to review and copy the same. Purchaser shall keep the original
34.
<PAGE> 35
copies of the records at its facilities in Massachusetts and elsewhere, if
applicable, and, at Seller's expense, shall provide copies of the Records to
Seller upon Seller's request.
SECTION 9.12 TERMINATION. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time, but not later
than the Time of Closing:
(a) By mutual consent of the respective Boards of Directors of
Purchaser and Seller; or
(b) By the Board of Directors of Purchaser (i) if, on or after May 1,
1995, any of the conditions provided for in Article VII of this Agreement shall
not have been met or shall not have been waived in writing by Purchaser prior
to such date or (ii) the Board of Directors of Purchaser determines in the
exercise of its reasonable judgment that the pendency of any lawsuit or the
institution or threat of any governmental or administrative action,
investigation or inquiry which questions the validity or the legality of the
transactions contemplated hereby or which seeks to prevent, restrain, change or
obtain damages in respect of such transactions, makes it inadvisable to
consummate the transactions contemplated hereby, notwithstanding that such
lawsuit, action, investigation or inquiry may be deemed to be without merit; or
(c) By the Board of Directors of Seller if, on or after May 1, 1995,
any of the conditions provided for in Article VII of this Agreement shall not
have been met or shall not have been waived in writing by the Seller prior to
such date.
(d) In the event of termination and abandonment by the Board of
Directors of Purchaser or by the Board of Directors of Seller, or both,
pursuant to Section 9.12 hereof, written notice thereof shall forthwith be
given to the other party and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned without further action by
Purchaser or Seller. If this Agreement is terminated as provided herein:
(i) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same;
(ii) No such termination shall effect the obligations
under Section 9.13 hereof which shall survive termination of this
Agreement; and
(iii) All parties hereto shall bear their own costs associated
with this Agreement and all transactions described herein and the
35.
<PAGE> 36
parties hereto shall have no further obligation or liability to the
other parties except as stated in this Section 9.12.
SECTION 9.13 EXPENSE REIMBURSEMENT; BREAKUP FEE.
(a) If, at any time prior to the earlier of (i) the Time of Closing, (ii)
the termination of the Agreement by either party pursuant to Section 9.12 or
(iii) May 1, 1995, an Alternative Acquisition or an Equity Transaction (as such
terms are defined in Section 5.6 hereof) has occurred, or Seller publishes a
recommendation of its Board of Directors in support of such an Alternative
Acquisition or Equity Transaction (so long as Purchaser has not willfully
breached any material provision of this Agreement), then Seller shall pay to
Purchaser (by wire transfer or immediately available federal funds to an
account designated by Purchaser for such purpose) the sum of $10,000,000 (the
"Breakup Fee") on the fifth business day following the occurrence of such an
event.
(b) The parties hereto agree that the Breakup Fee shall be deemed to be
liquidated damages and that Purchaser's right to the payment of the Breakup Fee
shall be Purchaser's sole remedy to the exclusion of any other rights or
remedies under contract, at law or in equity to which Purchaser may be entitled
against (i) any shareholder or shareholders of Seller, or (ii) against Seller
in the event of any breach by Seller under this Agreement or a unilateral
termination by Seller of this Agreement other than as provided in Section 9.12.
(c) In the event that this Agreement is terminated by Purchaser (so long as
Purchaser has not willfully breached any material provision of this Agreement)
pursuant to Section 9.12(b)(i) and either (i) prior to such termination, Seller
has willfully or knowingly breached any of the representations, warranties or
covenants contained in this Agreement or (ii) this Agreement is terminated
because of Seller's willful failure to satisfy a condition to closing
reasonably within its control, then Seller shall pay to Purchaser (by wire
transfer or immediately available federal funds to an account designated by
Purchaser for such purpose) the sum of $5,000,000 on the fifth business day
following the termination of the Agreement under this subsection (c). The
parties further agree that in the event an Alternative Acquisition or an Equity
Transaction occurs within six months of the termination of this Agreement,
Seller shall pay to Purchaser (by wire transfer or immediately available
federal funds to an account designated by Purchaser for such purpose) the
additional sum of $5,000,000 on the fifth day following the occurrence of such
an event. The parties further agree that the foregoing payments shall
constitute the payment of liquidated damages, Purchaser shall be entitled to no
other right or remedy against Seller or any shareholder, employee or director
of Seller under contract, at law or in equity and Seller shall have no
liability with respect to any and all breaches of this Agreement, including
breaches of any representation, warranty, covenant or agreement or with respect
to any action or inaction taken in connection with this transaction, other than
the payment of the foregoing payments.
36.
<PAGE> 37
(d) In the event that this Agreement is terminated pursuant to Section
9.12(c) due to the failure to satisfy the condition set forth in Section
7.2(h), then Seller shall pay to Purchaser (by wire transfer or immediately
available federal funds to an account designated by Purchaser for such purpose)
the sum of $3,000,000 on the fifth business day following the termination of
the Agreement. The parties further agree that in the event an Alternative
Acquisition or an Equity Transaction occurs within six months of the
termination of this Agreement, Seller shall pay to Purchaser (by wire transfer
or immediately available federal funds to an account designated by Purchaser
for such purpose) the additional sum of $5,000,000 on the fifth day following
the occurrence of such an event. The parties further agree that the foregoing
payments shall constitute the payment of liquidated damages, Purchaser shall be
entitled to no other right or remedy against Seller under contract, at law or
in equity and Seller shall have no liability with respect to any and all
breaches of this Agreement, including breaches of any representation, warranty,
covenant or agreement or with respect to any action or inaction taken in
connection with this transaction, other than the payment of the foregoing
payments.
37.
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CISCO SYSTEMS, INC.
a California corporation
By: /s/ John T. Chambers
----------------------------------
Address: 170 West Tasman Drive
San Jose, CA 95134
LIGHTSTREAM CORPORATION
a Massachusetts corporation
By: /s/ George H. Conrades
----------------------------------
Address: 1100 Technology Park Drive
Billerica, MA 01821
38.
<PAGE> 39
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
-------------------------------------------
This Amendment No. 1 to Asset Purchase Agreement is dated as of January 11,
1995 among Cisco Systems, Inc., a California corporation, and LightStream
Corporation, a Massachusetts corporation ("LightStream").
WHEREAS, Cisco and LightStream have entered into an Asset Purchase
Agreement dated as of December 8, 1994 (the "Agreement"), which sets forth
representations, warranties, covenants, agreements and conditions relating to
the sale of certain specific assets and liabilities of LightsStream to Cisco.
NOW, THEREFORE, intending to be legally bound, and in consideration of the
promises and mutual covenants and agreements contained herein, Cisco and
LightStream hereby agree as follows:
1. Section 2.1(c) of the Agreement is hereby amended to read in
full as follows:
(c) any liability or obligation of Seller for making payments
under the Cisco Systems, Inc. and LightStream Corporation Joint
Severance Plan, a true copy of which is attached as Schedule 2.1(c)
hereto (including accrued or earned salary, commissions or vacation
pay), to employees of Seller who are not employed by Purchaser at or
prior to the Time of Closing and in respect of payroll taxes for
employees of Seller arising after the date of this Agreement and prior
to the Closing, including but not limited to the reimbursement of
Seller for its liabilities and obligations arising under or with
respect to the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") with respect to three months of COBRA coverage for each
employee not employed by Purchaser at or prior to the Time of Closing
or with respect to labor or employment claims arising directly or
indirectly from the transactions contemplated by this Agreement;
provided, however, that Purchaser's obligation to such reimbursement
and assumption of such labilities under this subsection (c) shall not
exceed in amount the cash conveyed to Purchaser under Section 1.1(k)
above and with respect to liabilities related to such labor or
employment claims, Purchaser shall assume no liability for claims
attributable to actions of Seller or Seller's officers, directors,
shareholders, employees, agents or affiliates other than directly
resulting from the transactions contemplated by this Agreement.
The liabilities assumed hereunder by the Purchaser are
collectively called herein the "Assumed Liabilities".
<PAGE> 40
IN WITNESS WHEREOF, Cisco and LightStream have caused this Amendment No. 1
to be signed by the respective officers thereunto duly authorized, all as of
the date first written above.
CISCO SYSTEMS, INC.
By: /s/ John T. Chambers
-------------------------------
Title: Executive Vice President
----------------------------
LIGHTSTREAM CORPORATION
By: /s/ George H. Conrades
-------------------------------
Title: Chairman of the Board
----------------------------
<PAGE> 41
<TABLE>
The following schedules and exhibits are not filed herewith:
<S> <C>
SCHEDULES
- ---------
1.1 (a) List of Related Property
1.1 (b) List of Inventory
1.1 (c) List of Contracts
1.1 (d) List of Permits
1.1 (e) List of Proprietary Rights
1.1 (f) List of Accounts Receivable
1.1 (l) List of Other Assets
1.2 List of Excluded Assets
2.1 List of Liabilities in Excess of $100,000
2.1 (c) Seller's Severance Policies
4 (o) List of Encumbered Assets
4 (p) List of Litigation
4 (r) List of Employees and Consultants
4 (s) List of Employee Benefit Plans
4 (u) List of Customers
4 (v) List of Suppliers
4 (y) Backlog
4.1(c) List of Installed Base
4.1(d) Returns
4.1(k) Proprietary Rights Not Exclusively Owned
4.1(k)(1) Options, Licenses and Agreements
4.1(z) Accounts Receivable
4 (aa) Interested Party Relationships
5.3 (a) List of Employees: Vice Presidents
5.3 (b) List of Employees: Engineers
EXHIBITS
- --------
6.2 (h) Side Letter
7.1 (j) Employment and Non-competition Agreements
7.2 (i) License Agreement with BBN
</TABLE>
Except to the extent covered by an application for an order pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended, granting
confidential treatment of certain contractual provisions, which application may
be filed in the future, Registrant agrees to furnish supplementally a copy of
any of these omitted schedules or exhibits to the Commission, upon request.
