<PAGE>
Exhibit 2.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
Between
Comtech Telecommunications Corp.,
a Delaware corporation
and
Adaptive Broadband Corporation,
a Delaware corporation,
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Table Of Contents
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ARTICLE 1 SALE AND PURCHASE OF THE ASSETS................................................ 1
1.1 Assets........................................................................... 1
1.2 Excluded Assets.................................................................. 2
ARTICLE 2 THE CLOSING..................................................................... 3
2.1 Place and Date................................................................... 3
2.2 Purchase Price................................................................... 3
2.3 Allocation of Purchase Price..................................................... 4
2.4 Assumption of Liabilities........................................................ 4
2.5 Excluded Liabilities............................................................. 5
2.6 Deliveries....................................................................... 5
2.7 Consent of Third Parties......................................................... 6
2.8 Books and Records................................................................ 6
2.9 Further Assurances............................................................... 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER........................................ 7
3.1 Organization, Standing, Etc. of Seller; Corporate Authorization; Enforceability.. 7
3.2 Certificate of Incorporation and Bylaws.......................................... 7
3.3 Compliance with Other Instruments and Laws....................................... 7
3.4 Governmental Authorizations And Consents......................................... 8
3.5 No Violations.................................................................... 8
3.6 Financial Statements............................................................. 8
3.7 Absence of Certain Changes or Events............................................. 8
3.8 Title to, and Condition of, Assets............................................... 10
3.9 Intellectual Property............................................................ 10
3.10 Benefit Plans.................................................................... 10
3.11 Litigation....................................................................... 12
3.12 Taxes............................................................................ 12
3.13 Contracts........................................................................ 12
3.14 Insurance........................................................................ 13
3.15 Environmental Quality............................................................ 13
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3.16 Brokers.......................................................................... 14
3.17 Employees........................................................................ 14
3.18 Accounts Receivable.............................................................. 14
3.19 Inventories...................................................................... 15
3.20 Completeness of Representations.................................................. 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER......................................... 15
4.1 Organization and Standing of Buyer; Certificate of Incorporation and Bylaws...... 15
4.2 Access........................................................................... 15
4.3 Authorization.................................................................... 15
4.4 Enforceability................................................................... 15
4.5 Compliance with Other Instruments and Laws....................................... 16
4.6 Governmental Authorizations and Consents......................................... 16
4.7 Financial Statements............................................................. 16
4.8 Litigation....................................................................... 16
4.9 Brokers.......................................................................... 16
4.10 Section 203...................................................................... 17
ARTICLE 5 COVENANTS OF SELLER............................................................. 17
5.1 Conduct of Business.............................................................. 17
5.2 Access and Information........................................................... 17
ARTICLE 6 COVENANTS OF BUYER.............................................................. 18
6.1 Confidentiality.................................................................. 18
6.2 Investigation.................................................................... 18
6.3 Insurance........................................................................ 18
6.4 Employees........................................................................ 18
6.5 Tax Cooperation and Retention.................................................... 20
6.6 Financing........................................................................ 20
ARTICLE 7 COVENANTS OF ALL PARTIES........................................................ 21
7.1 Best Efforts; Further Assurances................................................. 21
7.2 Certain Filings.................................................................. 21
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ii.
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7.3 Public Announcements............................................................. 21
7.4 Use of Business Names by Buyer................................................... 21
7.5 Consents; Cooperation............................................................ 22
7.6 Liability for Transfer Taxes..................................................... 23
7.7 Communications with Customers and Suppliers...................................... 23
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF BUYER TO CLOSE..................................... 23
8.1 Accuracy of Representations and Warranties....................................... 23
8.2 Performance...................................................................... 23
8.3 Certificate...................................................................... 24
8.4 Legal Proceedings................................................................ 24
8.5 HSR Act.......................................................................... 24
8.6 Consents......................................................................... 24
8.7 Transfer Documents............................................................... 24
8.8 Material Adverse Effect.......................................................... 24
8.9 Due Diligence Review............................................................. 24
8.10 Key Employees.................................................................... 24
8.11 Financing........................................................................ 25
8.12 Other Closing Documents.......................................................... 25
8.13 Finalization of Schedules and Exhibits........................................... 25
ARTICLE 9 CONDITIONS TO OBLIGATION OF SELLER TO CLOSE..................................... 25
9.1 Accuracy of Representations and Warranties....................................... 25
9.2 Performance...................................................................... 25
9.3 Certificate...................................................................... 25
9.4 Legal Proceedings................................................................ 25
9.5 HSR Act.......................................................................... 25
9.6 Consents......................................................................... 25
9.7 Assumption Agreement............................................................. 26
9.8 Other Closing Documents.......................................................... 26
ARTICLE 10 RESTRICTIVE COVENANTS........................................................... 26
10.1 Non-Competition.................................................................. 26
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(continued)
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10.2 Non-Solicitation of Employees.................................................... 26
10.3 Acknowledgments.................................................................. 26
ARTICLE 11 TERMINATION..................................................................... 27
11.1 Right to Terminate Agreement..................................................... 27
11.2 Effect of Termination............................................................ 27
ARTICLE 12 CERTAIN REMEDIES AND LIMITATIONS................................................ 28
12.1 Expiration of Representations, Warranties and Covenants.......................... 28
12.2 Indemnity by Seller.............................................................. 28
12.3 Indemnity by Buyer............................................................... 29
12.4 Defense of Third-Party Actions................................................... 29
12.5 Subrogation...................................................................... 30
12.6 Exclusivity...................................................................... 30
12.7 Retention of Records............................................................. 30
12.8 No Rescission.................................................................... 31
ARTICLE 13 MISCELLANEOUS................................................................... 31
13.1 Definition of Certain Terms...................................................... 31
13.2 Material Adverse Effect.......................................................... 35
13.3 Knowledge........................................................................ 35
13.4 Memorandum; Disclaimer of Projections............................................ 35
13.5 Expenses......................................................................... 35
13.6 Notices.......................................................................... 36
13.7 Assignment....................................................................... 37
13.8 Entire Agreement; Amendment; Governing Law; Etc.................................. 37
13.9 Counterparts..................................................................... 37
13.10 Venue............................................................................ 37
13.11 Attorney's Fees.................................................................. 38
13.12 Third-Party Rights............................................................... 38
13.13 Titles and Headings.............................................................. 38
13.14 Exhibits and Schedules........................................................... 38
13.15 Pronouns......................................................................... 38
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(continued)
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13.16 Severability..................................................................... 38
13.17 Time of Essence.................................................................. 38
13.18 Interpretation................................................................... 38
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v.
<PAGE>
ASSET PURCHASE AGREEMENT
This Amended and Restated Asset Purchase Agreement (this "Agreement") is
entered into as of July 10, 2000 by and between Comtech Telecommunications
Corp., a Delaware corporation ("Buyer"), and Adaptive Broadband Corporation, a
Delaware corporation ("Seller").
Recitals
A. Seller, through an unincorporated division (the "EF Data Division"),
is in the business of manufacturing and marketing satellite modems, transceivers
and related equipment (the "Business").
B. Buyer wishes to purchase or acquire from Seller, and Seller wishes to
sell, assign and transfer to Buyer, substantially all the assets of the
Business, and Buyer has agreed to assume certain of the liabilities of the
Business, all for the purchase price, and upon the terms and subject to the
conditions herein set forth.
C. Capitalized terms used herein without separate definitions have the
meanings given to such terms in Section 13.1.
D. This Agreement amends and restates in its entirety the Asset Purchase
Agreement entered into by and between Buyer and Seller on May 26, 2000, as
amended on June 30, 2000 and on July 7, 2000.
Now, Therefore, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, the parties
hereby agree as follows:
ARTICLE 1
Sale And Purchase Of The Assets
1.1 Assets. Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, all right,
title and interest of Seller in and to the properties, assets, contracts and
rights of every nature, kind and description, tangible and intangible, whether
real, personal or mixed, whether accrued, contingent or otherwise and whether
now existing or hereinafter acquired (other than the Excluded Assets) that
relate primarily to, or used primarily in, the Business, and the Business (and
the goodwill associated therewith) (collectively, the "Assets"), including,
without limitation,
(a) all of the Fixed Assets, Intellectual Property and Contracts;
(b) all notes and accounts receivable (except as set forth in Section
1.2(h) hereof) of the Business, including intercompany notes and accounts
receivable other than corporate-level intercompany receivables from Seller;
1.
<PAGE>
(c) all inventories of raw material, work in process, finished
products, goods, spare parts, replacement and component parts and office and
other supplies of the Business (the "Inventories");
(d) all of the other assets that are reflected on the April Balance
Sheet, including prepaid expenses, deferred charges, advance payments, security
deposits and prepaid items, as adjusted through the Closing Date in the ordinary
course of business;
(e) all of the Books and Records;
(f) all rights under express or implied warranties from Sellers'
suppliers with respect to the Assets;
(g) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(h) all rights to causes of action, lawsuits, claims and demands of
any nature available to or being pursued by Seller in connection with the Assets
or the Assumed Liabilities;
(i) all guarantees, warranties, indemnities and similar rights in
favor of Seller in connection with the Assets; and
(j) all computer hardware and software used primarily in the
Business, including all rights under licenses and other instruments or
agreements relating thereto.
1.2 Excluded Assets. Notwithstanding anything contained in Section 1.1
hereof to the contrary, the Assets do not include any of the following (herein
referred to collectively as the "Excluded Assets"):
(a) the name and mark "Adaptive Broadband" and any name or mark
derived from or including the foregoing, including without limitation, all
Logos, corporate symbols or logos incorporating, or Internet sites or addresses
incorporating the name, "Adaptive Broadband" and the name and mark "California
Microwave" and any name or mark derived from or including the foregoing,
including without limitation, all Logos, corporate symbols or logos
incorporating "California Microwave" (the "Excluded Intellectual Property");
(b) all cash and cash equivalents and similar type investments, such
as certificates of deposit, treasury bills and other marketable securities;
(c) all books and records relating to or used in the business of
Seller and not primarily relating to or used in the Business;
(d) all insurance policies maintained by Seller and all rights of
action, lawsuits, claims and demands, rights of recovery and set-off, and
proceeds, under or with respect to such insurance policies, except to the extent
the coverage thereof remains available after the Closing for claims relating to
the Assets or Assumed Liabilities;
2.
<PAGE>
(e) corporate-level intercompany accounts receivable from Seller;
(f) all rights to causes of action, lawsuits, claims and demands of
any nature available to or being pursued by Seller with respect to the Excluded
Assets or Excluded Liabilities;
(g) all rights, title and interest of Seller in and to prepaid Taxes
of the Business and any claims for any refund, credit, rebate or abatement with
respect to Taxes of the Business for any period or portion thereof through the
Closing Date, and any interest payable with respect thereto, except to the
extent such amounts are reflected on the September Balance Sheet;
(h) accounts receivables and interest receivables with LinkSat Brazil
Sistemas de Communicacao Ltda existing on the date hereof as listed on the
Adjusted April Balance Sheet in the amounts of $5,763,000 and $518,000,
respectively (collectively, the "LinkSat Receivables");
(i) goodwill on the books and records of Seller not related to the
Business or the Assets; and
(j) the assets listed on Schedule 1.2.
ARTICLE 2
The Closing
2.1 Place and Date. The closing of the sale and purchase of the Assets
(the "Closing"), and the assumption of the Assumed Liabilities, shall take place
at the offices of Cooley Godward LLP, One Maritime Plaza, 20th Floor, San
Francisco, California, or such other place upon which the parties may agree, on
the first business day following the date upon which each of the conditions to
closing set forth in Articles 8 and 9 of the Agreement shall have been
satisfied. The day on which the Closing actually occurs is herein sometimes
referred to as the "Closing Date."
2.2 Purchase Price.
(a) On the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to pay to Seller at the Closing an aggregate of U.S.
$61,500,000 and to assume the Assumed Liabilities as provided in Section 2.4.
The Purchase Price shall be paid by the wire transfer of immediately available
funds to such bank account or accounts as are specified by Seller in written
instructions given to Buyer at least three days prior to the Closing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the purchase price is subject to adjustment in accordance with
Section 2.2(c) or (d), as the case may be. Attached hereto as Schedule 2.2(b) is
the April Balance Sheet, as adjusted to reflect the elimination of Excluded
Assets and Excluded Liabilities, the provision of appropriate reserves with
respect to certain assets, and other procedures heretofore agreed upon by Seller
and Buyer
3.
<PAGE>
(the "Adjusted April Balance Sheet"). Promptly following the Closing, Seller and
Buyer shall jointly prepare a balance sheet as of the Closing Date in a manner
consistent with the preparation of the Adjusted April Balance Sheet (the
"Closing Balance Sheet"). If Buyer and Seller disagree with respect to any
matter relating to the preparation of the Closing Balance Sheet, such
disagreement shall be promptly submitted for resolution to a nationally
recognized accounting firm that is acceptable to Seller and Buyer (the
"Accounting Firm"). The determination of the Accounting Firm shall be final and
binding upon Seller and Buyer and the fees and expenses of the Accounting Firm
shall be borne equally by Seller and Buyer.
(c) If the net assets reflected on the Closing Balance Sheet are less
than the net assets reflected on the Adjusted April Balance Sheet, Seller will
promptly pay to Buyer the amount of such shortfall by wire transfer of
immediately available funds to such bank account or accounts as Buyer shall
specify in written instructions.
(d) If the net assets reflected on the Closing Balance Sheet exceed
the net assets reflected on the Adjusted April Balance Sheet, Buyer will
promptly pay to Seller the amount of such excess, such payment to be made by
wire transfer of immediately available funds to such bank account or accounts as
Seller shall specify in written instructions.
2.3 Allocation of Purchase Price. The parties agree to allocate the
aggregate of the Purchase Price and the Assumed Liabilities (collectively, the
"Aggregate Purchase Price") among the Assets in accordance with section 1060 of
the Code as mutually agreed to by the parties within 180 days following the
Closing. All such mutually agreed to allocations shall be used by each party in
preparing any filings required pursuant to Section 1060 of the Code or any
similar provisions of state or local law and all relevant income and franchise
tax returns. Neither Buyer nor Seller will take any position before any taxing
authority or in any judicial proceeding that is inconsistent with such mutually
agreed to allocations without the prior consent of the other party. The parties
shall in good faith exercise reasonable efforts to support such reported
allocations in any audit proceedings initiated by any taxing authority.
2.4 Assumption of Liabilities. Subject to the terms and conditions set
forth herein, at the Closing, Buyer shall assume and agree to pay, honor,
perform and discharge when due (collectively, the "Assumed Liabilities"): (a)
all payment obligations of Seller under all severance agreements as set forth in
Schedule 2.4(a) to the extent such obligations arise by virtue of Buyer's
discharge of any former employee of the Seller any time more than 60 days after
the Closing; (b) all product warranty obligations of Seller relating to the
Business and identified on Schedule 2.4(b); (c) all liabilities and obligations
of Seller to be paid or performed from and after the Closing Date under or
relating to the Contracts included among the Assets and set forth on Schedule
2.4(c) and which are validly assigned to Buyer, other than damages, penalties or
other like liabilities or obligations arising from or as a result of a breach of
any contract by Seller or Seller's failure to satisfy any requirement which it
was required to satisfy on or prior to the Closing; (d) all liabilities and
obligations of Seller relating to or arising out of the operation of the
Business in the ordinary course and reflected on the Closing Balance Sheet, (e)
all liabilities and obligations of Seller relating to or arising out of cost
overruns or adjustments to rates and factors used in pricing work performed or
services provided to customers prior to the Closing; (f) all liabilities and
obligations of Seller relating to or arising out of the lawsuits, claims or
other
4.
<PAGE>
matters described in Schedule 2.4(f); and (g) fifty percent (50%) of all other
liabilities and obligations (other than Excluded Liabilities) relating to the
Business or the Assets, which liabilities and obligations are not within the
Seller's knowledge but which arose in the ordinary course of business consistent
with past practice and are not specifically set forth above (all of such other
liabilities, the "Other Liabilities").
2.5 Excluded Liabilities. Buyer shall not assume or in any way be
responsible for, and Seller shall pay, discharge and be solely responsible for,
any debts, claims, commitments, liabilities and obligations of Seller and the
Business (the "Excluded Liabilities"), including, without limitation, the
following:
(a) Taxes for all periods prior to the Closing Date;
(b) liabilities arising directly out of the Excluded Assets;
(c) liabilities listed on Schedule 2.5;
(d) liabilities and obligations underlying any and all Permitted
Liens relating to Taxes which are not yet subject to penalties for non-payment
or which are being contested in good faith and by appropriate proceedings;
(e) any environmental liabilities arising out of conditions existing
or activities occurring with respect to the Assets or the Business on or prior
to the Closing and any other environmental liabilities relating to any other of
Seller's activities or operations prior to the Closing;
(f) except as otherwise provided herein, any liability or obligation
to any employee or former employee of Seller for compensation or benefits
incurred or accrued or otherwise arising out of services performed on or prior
to the Closing Date, or if later, the employees date of hire by Buyer under
Section 6.4;
(g) any deferred compensation obligation or any liability or
obligation of Seller arising out of or in connection with any employee benefit
plan;
(h) any liabilities arising from a violation or alleged violation by
the Seller prior to the Closing of any judgement, order, decree, statute, law,
ordinance, rule or regulation; and
(i) any liabilities arising from acts or omissions constituting or
alleged to constitute negligence, gross negligence, willful misconduct or other
tortious conduct by the Seller.
2.6 Deliveries. At the Closing, Seller shall deliver to Buyer such
assignments and other good and sufficient instruments of transfer as shall be
satisfactory in form and substance to Buyer, and shall be effective to vest in
Buyer good and marketable title, free and clear of any liens and encumbrances or
rights and claims of others, other than Permitted Liens, to all of the
5.
<PAGE>
Assets, and Buyer shall deliver to Seller such instruments of assumption as
shall be satisfactory in form and substance to Seller to ensure that Buyer has
assumed all of the Assumed Liabilities.
2.7 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if any assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of Buyer or Seller
thereunder; and no transfer or assignment to Buyer by Seller of any interest
under any such Governmental Approval, instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third party shall
be made until such consent or approval is obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, Seller
shall (a) continue to use all reasonable efforts to obtain any such approval or
consent after the Closing Date until such time as such consent or approval has
been obtained without any material third-party cost to Buyer, (b) hold such
Governmental Approval, instrument, contract, lease, permit or other agreement or
arrangement on behalf of Buyer, (c) cooperate with Buyer in any lawful
arrangement to provide that Buyer shall receive the benefits under any such
Governmental Approval, instrument, contract, lease or permit or other agreement
or arrangement, including performance by Seller, as agent, and (d) enforce and
perform for the account of Buyer any rights of Seller arising from such
Governmental Approval, instrument, contract, lease, permit or other agreement or
arrangement, provided that Buyer shall undertake to pay, perform, discharge or
satisfy the corresponding liabilities and obligations for the enjoyment of such
benefit to the extent Buyer would have been responsible therefor if such consent
or approval had been obtained.
2.8 Books and Records. From and after the Closing and until the sixth
anniversary thereof, (a) Seller agrees to grant to Buyer, upon reasonable notice
and during normal business hours, reasonable access to any books and records
that pertain to the Business but which are not Books and Records, and (b) Buyer
agrees to grant to Seller, upon reasonable notice and during normal business
hours, reasonable access to any Books and Records included in the Assets that
pertain to the operations of the Business on or prior to the Closing Date, for
any reasonable business purpose of Seller.
2.9 Further Assurances. Each party agrees, at any time and from time to
time after the Closing Date, upon reasonable request from the other party, to
do, execute, acknowledge and deliver, as appropriate, such further acts, deeds,
assignments, transfers, conveyances and powers of attorney as may reasonably be
required for the better assigning, transferring, granting, conveying, assuring
and confirming to such other party, or its successors and assigns, of any of the
assets, properties or liabilities to be assigned to it or retained by such party
as provided herein.
6.
<PAGE>
ARTICLE 3
Representations And Warranties Of Seller
Except to the extent set forth in the Disclosure Schedule delivered to
Seller contemporaneously herewith (the "Disclosure Schedule"), of which the
Schedules referred to below are a part, and in the documents and other materials
identified in the Disclosure Schedule, and subject to the limitations contained
in Article 11, Seller represents and warrants to Buyer that the following
statements are true in all material respects as of the date of this Agreement:
3.1 Organization, Standing, Etc. of Seller; Corporate Authorization;
Enforceability.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on the Business as currently conducted
and to own or lease and to operate the properties of the Business. Seller is
qualified to do business and is in good standing in each state of the United
States where the failure to so qualify would have a material adverse effect on
the Assets or the Business (taken as a whole) or financial condition or results
of operations of the Business (a "Material Adverse Effect on the Business").
(b) The execution and delivery of this Agreement and all other
documents and instruments executed or to be executed by Seller pursuant to this
Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Seller. This Agreement and all other documents and instruments
executed or to be executed by Seller pursuant to this Agreement have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Seller.
(c) This Agreement constitutes the valid and legally binding
obligation of Seller, enforceable in accordance with its terms, except as such
enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally.
3.2 Certificate of Incorporation and Bylaws. Copies of the certificate of
incorporation and bylaws or other organizational documents of Seller
(collectively, the "Organizational Documents") have been made available to
Buyer, and each such copy is true, correct and complete.
3.3 Compliance with Other Instruments and Laws. The execution and delivery
of this Agreement and all other documents and instruments executed or to be
executed by Seller pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby, will not (i) conflict with or
result in any violation or breach of or default under any provision (a) of the
Organizational Documents, or (b) of any mortgage, indenture, trust, lease,
partnership or other agreement or other instrument, permit, concession, grant,
franchise or license to which Seller is a party or the Assets or the Business is
subject, the result of which,
7.
<PAGE>
with respect to items identified in clause (b), would (either individually or in
the aggregate) have a Material Adverse Effect on the Business, or (c) of any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Seller, the Business or the Assets, the result of which, with respect to
items identified in clause (c), would (either individually or in the aggregate)
have a Material Adverse Effect on the Business or a material adverse effect on
the transactions contemplated hereby, or (ii) result in the creation of any Lien
(other than a Permitted Lien) on the Assets.
3.4 Governmental Authorizations And Consents. Except as set forth on
Schedule 3.4, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority, or any third
party, are required to be obtained or made by Seller in connection with the
execution, delivery, performance, validity and enforceability of this Agreement,
other than (a) a filing with the Federal Trade Commission and the Department of
Justice under the HSR Act, and (b) other consents, licenses, approvals,
authorizations, registrations or declarations, where the failure to obtain such
would not have a Material Adverse Effect on the Business or a material adverse
effect on the transactions contemplated hereby.
3.5 No Violations. Except as set forth on Schedule 3.5, Seller is not in
violation of any term of its certificate of incorporation or bylaws or other
charter documents or, to its knowledge, any mortgage, indenture, instrument or
agreement relating to indebtedness for borrowed money or of any judgment, decree
or order which names Seller, or of any term of any other Material Contract which
is among the Assets, which violation, either individually or when aggregated
with all other such violations, would have a Material Adverse Effect on the
Business. Seller is not in violation, of any law, ordinance, rule or
governmental regulation applicable to the Business or any of the Assets, which
violation, either individually or when aggregated with all other such
violations, would have a Material Adverse Effect on the Business.
3.6 Financial Statements. Seller has delivered to Buyer (a) the unaudited
balance sheet and the related unaudited statement of operations of the Business
as of and for the year ended June 30, 1999 and (b) the unaudited balance sheet
(the "April Balance Sheet") and the related unaudited statement of operations of
the Business as of and for the ten-month period ended April 30, 2000 (such
financial statements, including the notes thereto, hereinafter being referred to
as the "Financial Statements"). The Financial Statements were prepared on a
basis consistent with generally accepted accounting principles and present
fairly in all material respects the financial condition of the Business as of
the dates thereof and the results of its operations for the periods then ended,
except that the April Financial Statements were prepared on an interim basis,
are subject to normal year-end adjustments.
3.7 Absence of Certain Changes or Events.
(a) Except as set forth in Schedule 3.7, since April 30, 2000, (1)
Seller has not, with respect to the Business, entered into any transaction that
is not in the usual and ordinary course of business and (2) there has been no
Material Adverse Effect on the Business, and, to the knowledge of the Seller,
there has occurred no event that, with the passage of time, is reasonably likely
to result in a Material Adverse Effect on the Business.
8.
<PAGE>
(b) Except as set forth in Schedule 3.7, since April 30, 2000, Seller
has conducted its operations related to the Business in the ordinary course of
business, has used commercially reasonable efforts to maintain the Business,
Assets, its relations with employees, suppliers, licenses and operations related
to the Business as an ongoing business in accordance with past custom and
practice. Without limiting the generality of the foregoing, since April 30,
2000, in each case as related to the Business:
(i) Seller has not sold, leased, transferred, mortgaged or
assigned any of the Assets, tangible or intangible, other than in the ordinary
course of business;
(ii) No party (including Seller) has, other than in the
ordinary course of business, accelerated, terminated, materially modified, or
canceled any contract, lease, sublease, license, or sublicense (or series of
related contracts, leases, subleases, licenses, and sublicenses), excluding all
purchase orders and sales orders, involving more than $100,000 to which Seller
is a party or by which it or the Assets are bound;
(iii) Seller has not made any capital expenditure (or series
of related capital expenditures) outside the ordinary course of business;
(iv) Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other person;
(v) Seller has not canceled, compromised, knowingly waived
or released any right or claim (or series of related rights and claims), except
for any right or claim (or series of rights or claims) under any purchase order
or sales orders, outside the ordinary course of business;
(vi) Seller has not incurred, assumed, guaranteed or
discharged any obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, or any indebtedness for borrowed money,
except current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(vii) Seller has not terminated, and has not received any
notice of termination of, any material contract or lease, any contract for the
sale of SpectraCast or MIDAS equipment, or other material agreement;
(viii) Seller has not suffered any damage to or destruction or
loss of any tangible assets (whether or not covered by insurance), in any case
or in the aggregate, in excess of $100,000;
(xi) Seller has not made any change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay, conditionally or
otherwise, any bonus, incentive, retention or other compensation, retirement,
welfare, fringe or severance benefit or vacation pay, to or in respect of any
employee, distributor or agent of the Business, other than increases in the
ordinary course of business consistent with past practice in the compensation
payable to employees of the Business;
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(x) Seller has not encountered any labor union organizing
activity or had any actual or overtly threatened employee strikes, work
stoppages, slowdowns or lockouts; and
(xi) Seller has not agreed to take any action described in this
Section 3.7.
3.8 Title to, and Condition of, Assets. Except as set forth in Schedule
3.8 and except for personal property subject to valid leases, Seller has good
title to all the Assets. Except as set forth in Schedule 3.8 and except for
personal property subject to valid leases, the Assets are owned free and clear
of all Material Liens except for Permitted Liens. The tangible assets are in
good operating condition, subject to normal wear and tear. The Assets and the
Excluded Assets constitute all the assets used in the Business as presently
conducted. Schedule 3.8 sets forth a list of all capital assets included in the
Assets.
3.9 Intellectual Property.
(a) Seller owns, or is licensed or otherwise possesses the right to
use, all Intellectual Property that is necessary to conduct the Business as
currently conducted by Seller in all material respects and as proposed to be
conducted by Seller with respect to the products under development and listed on
Schedule 3.9(a).
(b) Schedule 3.9(b) sets forth a list of all patents, registered
copyrights, registered trademarks, registered trade names and registered service
marks, and any pending applications therefor, included in the Intellectual
Property.
(c) Except as set forth on Schedule 3.9(c), no material claims with
respect to the Intellectual Property have been asserted within the past three
years (1) to the effect that the sale, licensing or use of any of the products
of the Business infringes any other party's copyright, trademark, service mark,
trade secret or other intellectual property right, (2) against the use by Seller
of any Intellectual Property, or (3) challenging the ownership by Seller of any
of the Intellectual Property that Seller purports to own.
(d) To Seller's knowledge, Seller is not, with respect to the
Business or the Assets, infringing upon or violating any other party's
copyright, trademark, service mark, trade secret or other intellectual property
right.
3.10 Benefit Plans.
(a) Except as set forth on Schedule 3.10(a), neither Seller nor any
ERISA Affiliate maintains, is a party to, contributes to, or is obligated to
contribute to, any of the following in connection with the Business (whether or
not set forth in a written document):
(1) Any employee benefit plan, employee pension benefit plan,
employee welfare benefit plan, or multiemployer plan, all as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
regardless of whether or not a plan is exempt from some or all of the otherwise
applicable requirements of ERISA; or
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(2) Any bonus, deferred compensation, incentive, restricted
stock, stock purchase, stock option, stock appreciation right, supplemental
pension, profit sharing, royalty pool, severance or termination pay, loan
guarantee, relocation assistance, employee loan or other extensions of credit,
or other similar plan, program, agreement, policy, commitment, arrangement or
benefit currently in effect which is applicable to any present or former
employee or his or her survivors (whether or not published or generally known).
(b) As to each plan, program, agreement, policy, commitment,
arrangement or benefit listed on Schedule 3.10(b) (a "Benefit Plan"), Seller has
made available to Buyer complete, accurate and current copies of the text
(including amendments) of the Benefit Plan if previously reduced to writing or
has provided in Schedule 3.10(b) a description of all material elements of the
Benefit Plan if not previously reduced to writing. With respect to each employee
benefit plan (as defined in section 3(3) of ERISA) listed on Schedule 3.10(b),
Seller has made available to Buyer the following:
(1) Where applicable, the most recent summary plan description,
as described in section 102 of ERISA;
(2) Any summary of material modifications which has been
distributed to participants or filed with the U.S. Department of Labor but which
has not been incorporated in an updated summary plan description furnished under
paragraph (1) above;
(3) The annual reports, as described in section 103 of ERISA,
for the most recent three plan years for which an annual report has been
prepared (including any schedules);
(4) Where applicable, the actuarial reports for the most recent
three reporting periods for which such a report has been prepared; and
(5) Any trust agreement, investment management agreement,
contract with an insurance company or service provider, administration agreement
or other contract, agreement or insurance policy.
(c) With respect to each Benefit Plan:
(1) All of the currently applicable requirements of ERISA and
regulations thereunder have been fully and timely complied with in all material
respects;
(2) There is no act or omission of Seller, or any other person
or entity, which would constitute a material violation of or material prohibited
act under any applicable section of ERISA or the Code, or regulations under
either, and no amendment to such Benefit Plan is precluded by any waiver,
extension or prior amendment described in Section 412(f)(1) of the Code; and
(3) All contributions, premiums or other payments due from
Seller to (or under) such Benefit Plan for all periods prior to the date of this
Agreement have been fully paid or adequately provided for on the books of Seller
and all accruals have been made in accordance with prior practices.
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(d) Except as disclosed in Schedule 3.10(d), the transactions
contemplated by this Agreement will not, solely as a result of their
consummation, increase or accelerate any amount due under any employment
agreement or a Benefit Plan, require assets to be set aside or other forms of
security to be provided with respect to any liability under any employment
agreement or Benefit Plan, or result in any "parachute payment" (within the
meaning of Code Section 280G) under any employment agreement or Benefit Plan.
(e) Except as disclosed Schedule 3.10(e), no event or condition
exists or is reasonably expected to occur in connection with any (i) Benefit
Plan or (ii) any other benefit plan or arrangement maintained for the benefit of
any current or former employees, officers, directors or independent contractors
of the Seller or any ERISA Affiliate that would either (x) subject the Buyer or
any of its affiliates to any liability, contingent or otherwise to the IRS, the
Department of Labor or the Pension Benefit Guarantee Corporation or (y) cause
the imposition of any lien on the assets of the Buyer or any of its affiliates
under the Code or ERISA.
3.11 Litigation. Except as disclosed in Schedule 3.11, there are no
actions, suits, proceedings or governmental investigations pending, or to
Seller's knowledge, threatened, against Seller involving the Business or the
Assets, at law or in equity or before any court, governmental department,
commission, board, agency, authority or instrumentality, domestic or foreign, or
that have been settled, dismissed or resolved on or since December 31, 1996,
that have had or would reasonably be expected to have a Material Adverse Effect
on the Business. Seller is not subject to any judgment, stipulation, order or
decree arising from any action, suit, proceeding or investigation that
individually or in the aggregate have had or would reasonably be expected to
have a Material Adverse Effect on the Business.
3.12 Taxes. Except as set forth in Schedule 3.12, with respect to Taxes:
(a) Seller has filed or will file or cause to be filed (or
extensions of the time for filing have been or will be duly filed), within the
time prescribed by law, all Tax Returns relating to the Business that are or
were required to be filed under Federal, state, local or any foreign laws by
such company for all taxable periods ending on or prior to the Closing Date;
(b) Seller has, within the time and in the manner prescribed by law,
paid (and until the Closing will, within the time and in the manner prescribed
by law, pay) all Taxes that are shown to be due and payable on Returns filed
prior to the Closing.
3.13 Contracts. Seller has made available to Buyer a copy or description
of any outstanding written or oral (a) contract or arrangement for the
employment or retention as a consultant of any person by Seller relating to the
Business which is not terminable by Seller without cost to Seller or otherwise
represents an employment relationship which is not "at will" and which provides
for cash compensation equal to or greater than $100,000 per annum, (b)
collective bargaining agreement relating to the Business and to which Seller is
a party, (c) mortgage, indenture, note or installment obligation or other
instrument or contract relating to the Business and relating to any borrowing of
an amount in excess of $100,000 by Seller, (d) guaranty of any obligation in
excess of $100,000 by Seller and relating to the Business (excluding any non-
recourse guaranties and any endorsement made in the ordinary course of
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business for collection), (e) lease of real or personal property relating to the
Business under which Seller is lessor, except equipment leases entered into in
the ordinary course of business, none of which equipment leases requires annual
payments in excess of $10,000 per year, (f) lease of real property relating to
the Business under which Seller is lessee involving annual rentals in excess of
$50,000, (g) lease of personal property relating to the Business under which
Seller is lessee and under which Seller is obligated to make annual aggregate
payments of more than $50,000, (h) agreement for the purchase by Seller of
equipment relating to the Business other than agreements that do not, in the
aggregate, involve the obligation of the Seller to pay more than $50,000, (i)
open sales contract providing for future billings in excess of $50,000; (j)
agreement materially limiting the freedom of Seller to compete in the Business,
with any person or other entity or in any geographical area, (k) material
agreements with any non-employee sales representative or distributor, (l)
material agreements regarding the payment of any commissions; and (m) agreement
establishing any partnership, joint venture or other similar relationship. A
list or description of each of the items described in the previous sentence (the
"Material Contracts") is set forth on Schedule 3.13. Except as disclosed in
Schedule 3.13, all of the Material Contracts are in full force and effect and,
as to each Material Contract, there does not exist thereunder any material
default on the part of Seller, and there does not exist any event, occurrence or
condition, including the consummation of the transactions contemplated
hereunder, which (after notice, passage of time, or both) would constitute a
material default thereunder on the part of Seller, which default has had or
would have a Material Adverse Effect on the Business.
3.14 Insurance. Schedule 3.14 contains a list of all material insurance
policies maintained by or on behalf of or covering Seller in connection with the
Business (the "Policies"). Seller has made available to Buyer copies of all
current declaration sheets relating to the Policies. Except as noted on Schedule
3.14, to Seller's knowledge, as of the date of this Agreement, the Policies are
in full force and effect, no notices of cancellation or nonrenewal have been
received by Seller with respect thereto, and all premiums due thereon have been
paid.
3.15 Environmental Quality.
(a) Except as set forth on schedule 3.15(a), the conduct of the
Business complies in all material respects with all applicable Federal, state
and local laws (including the common law), ordinances, rules and regulations
relating to the injury to or the pollution or protection of human health and
safety or the environment, including those pertaining to air and water quality,
Hazardous Materials, waste, disposal or other environmental matters, and the
Clean Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Solid Waste Disposal Act, the Resource Conservation Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, and the
rules, regulations and ordinances of the cities and counties in which the
Business is located, the Environmental Protection Agency and all other
applicable Federal, state, regional and local agencies and bureaus
(collectively, "Environmental Laws").
(b) Seller (1), to its knowledge, has never sent a Hazardous
Material to a Business site that, pursuant to any applicable Environmental Law,
(A) has been listed or proposed for listing on the "National Priorities List" of
hazardous waste sites, the "CERCLIS"
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list, or any similar state list, or (B) is subject to a claim, an administrative
order or other request to take "removal" or "remedial" action, as defined in any
applicable Environmental Laws, or that would require Seller to pay for the costs
of cleaning up the site, (2) is in compliance in all material respects with all
applicable Environmental Laws in its conduct of the Business, (3) is not
involved in any suit or proceeding or has received any written notice or request
for information from any governmental agency or authority or other third party
that remains unresolved with respect to a release or threatened release of any
Hazardous Material in connection with its conduct of the Business or a violation
or alleged violation of any applicable Environmental Laws in connection with its
conduct of the Business, and has not received written notice of any claims from
any person or entity relating to property damage or to personal injuries from
exposure to any Hazardous Material in connection with its conduct of the
Business, and (4) has not received written notice that it has failed to timely
file any report required to be filed, nor has Seller failed to acquire any
necessary certificates, approvals, licenses, authorizations and permits or
failed to generate and maintain any required data, documentation and records
under all applicable Environmental Laws.
(c) Seller has not engaged in any operations or activities upon the
Assets or any real property included in the Assets or the Business for the
purpose of or in any way involving the handling, manufacture, treatment,
processing, storage, use, generation, release, discharge, spilling, emission,
dumping or disposal of any Hazardous Materials at, on, under or from such real
property, except in compliance with all applicable Environmental Laws.
(d) To Seller's knowledge, all Assets are in compliance, with
applicable Environmental Laws and there are no conditions existing with respect
to any of the Assets or the Business that require, or which with the giving of
notice or the passage of time or both will reasonably likely require "removal"
or "remedial" action, monitoring or closure pursuant to any applicable
Environmental Laws.
3.16 Brokers. With the exception of fees and expenses payable to SG Cowen
and certain employees of Seller and its Affiliates which shall be paid by
Seller, all negotiations relating to this Agreement, nd the transactions
contemplated hereby, have been carried on without the participation of any
Person acting on behalf of Seller or its Affiliates in such manner as to give
rise to any valid claim against Buyer for any brokerage or finder's commission,
fee or similar compensation, or for any bonus payable to any officer, director,
employee, agent or sales representative of or consultant to Seller or its
Affiliates upon consummation of the transactions contemplated hereby or thereby.
3.17 Employees. Set forth on Schedule 3.17 is a list, complete in all
material respects, of all employees of Seller who are primarily involved in the
Business, their title or position and current salary and other cash compensation
arrangements.
3.18 Accounts Receivable. Set forth on Schedule 3.18 is an aged list of
accounts receivable reflected in the April Balance Sheet. Such accounts
receivable, except to the extent of reserves appropriately reflected on the
April Balance Sheet have arisen from bona fide transactions in the ordinary and
normal course of the Business for goods or services delivered or rendered and
are collectible in the ordinary course of business.
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3.19 Inventories. All inventory of the Business, including reserves, are
accounted for on the April Balance Sheet in accordance with GAAP.
3.20 Completeness of Representations. No representation, warranty or
statement made herein, or in any document executed and delivered or to be
executed and delivered by Seller in connection with this Agreement, contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading. Seller is not aware of
any fact or condition (other than general conditions outside of the control of
Seller) which could reasonably be expected to have a Material Adverse Effect
upon the Business.
3.21 Other Liabilities. To Seller's knowledge, except to the extent set
forth in the Adjusted April Balance Sheet or the Disclosure Schedule, and except
for liabilities and obligations incurred in the ordinary course consistent with
past practice, there are no liabilities or obligations (of any nature, whether
absolute, accrued, contingent or otherwise) of or relating to, the Business or
the Assets.
ARTICLE 4
Representations and Warranties Of Buyer
Buyer represents and warrants to Seller as follows:
4.1 Organization and Standing of Buyer; Certificate of Incorporation and
Bylaws. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement, to carry out the transactions
contemplated hereby and to perform its obligations hereunder. Copies of the
certificate of incorporation and bylaws or other organizational documents of
Buyer have been made available to Seller, and each such copy is true, correct
and complete.
4.2 Access. Buyer has received and reviewed the Financial Statements and
is acquainted with the Business. Buyer and its Affiliates have been given access
to the assets, books, records, contracts and employees of the Business, and have
been given the opportunity to meet with officers and other representatives of
Seller and the Business for the purpose of investigating and obtaining
information regarding the Business, operations and legal affairs.
4.3 Authorization. The execution and delivery of this Agreement and all
other documents and instruments executed or to be executed by Buyer pursuant to
this Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Buyer. This Agreement and all other documents and instruments
executed or to be executed by Buyer pursuant to this Agreement have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Buyer.
4.4 Enforceability. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms, except as
such enforceability may
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be limited by equitable principles and by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or similar laws relating to or affecting
the rights of creditors generally.
4.5 Compliance with Other Instruments and Laws. The execution and delivery
of this Agreement and all other documents and instruments executed or to be
executed by Buyer pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default under any provision (a) of the charter or bylaws of
Buyer, or (b) of any material mortgage, indenture, trust, lease, partnership or
other agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Buyer or any of its properties or assets, the result of which,
with respect to items identified in clause (b) would (either individually or in
the aggregate) have a material adverse effect on the operations or financial
condition of Buyer and its subsidiaries, taken as a whole or would materially
impair Buyer's ability to consummate the transactions contemplated hereby (a
"Material Adverse Effect on Buyer").
4.6 Governmental Authorizations and Consents. No material consents,
licenses, approvals or authorizations of, or registrations or declarations with,
any Governmental Authority, bureau, agency or commission, or any third party,
are required to be obtained or made by Buyer in connection with the execution,
delivery, performance, validity and enforceability of this Agreement, other than
(a) a filing with the Federal Trade Commission and the Department of Justice
under the HSR Act and (b) other consents, licenses, approvals, authorizations,
registrations or declarations, where the failure to obtain such would not have a
Material Adverse Effect on Buyer.
4.7 Financial Statements. Buyer has delivered to Seller (a) the audited
balance sheet and the related audited statement of operations of Buyer as of and
for the three-year period ended July 31, 1999 and (b) the unaudited balance
sheet and the related unaudited statement of operations of Buyer as of and for
the six-month period ended January 31, 2000 (such financial statements,
including the notes thereto, hereinafter being referred to as the "Buyer
Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP and present fairly in all material respects the financial
position of Buyer as of the dates thereof and the results of operations for the
periods then ended, except that the January 31, 2000 Financial Statements were
prepared on an interim basis, are subject to normal year-end adjustments and do
not contain all the footnote disclosures required by GAAP.
4.8 Litigation. To the knowledge of Buyer, as of the date of this
Agreement, no action, suit, proceeding or governmental investigation is pending
against Buyer or its properties, at law or in equity or before any court,
governmental department, commission, board, agency, authority or
instrumentality, domestic or foreign, that seeks to question, delay or prevent
the consummation of the transactions contemplated hereby.
4.9 Brokers. With the exception of fees and expenses payable to ABN AMRO
Incorporated which shall be paid by Buyer, all negotiations relating to this
Agreement, and the transactions contemplated hereby, have been carried on
without the participation of any Person acting on behalf of Buyer or its
Affiliates in such manner as to give rise to any valid claim
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against Seller for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to Buyer or its Affiliates upon
consummation of the transactions contemplated hereby or thereby.
4.10 Section 203. Buyer is not and, for the three preceding years, has not
been, an "interested stockholder" of Seller within the meaning of Section 203 of
the Delaware General Corporation Law.
ARTICLE 5
Covenants Of Seller
5.1 Conduct of Business. Between the date of this Agreement and the
Closing Date, except as contemplated by this Agreement or referred to in the
Disclosure Schedule, and except as may be necessary to carry out the
transactions contemplated by this Agreement or any transaction contemplated by
or relating to any of the contracts or other matters referred to in this
Agreement or the Disclosure Schedules, Seller will not, without Buyer's prior
written consent (which consent shall not be unreasonably withheld or delayed by
Buyer):
(a) enter into any material transaction in connection with the
Business outside the ordinary course of business;
(b) conduct the Business in a manner that departs materially from the
manner in which the Business was being conducted prior to the date of this
Agreement;
(c) take any action of the type described in Section 3.7(b)(i), (ii),
(iii), (iv), (v), (vi) or (ix);
(d) except in the ordinary course and consistent with past practices,
grant or agree to grant any general increase in the rates of salaries or
compensation of its Employees, or any specific increase to any such Employee
whose total increase would be at an annual rate in excess of 10% of such
employee's annual salary or compensation prior to such increase, or any increase
in the pension, retirement or other employment benefits of the Employees; or
(e) agree or commit to do any of the foregoing.
5.2 Access and Information. Seller shall (and shall cause its officers,
directors, employees, auditors and agents to) afford to Buyer and to Buyer's
officers, employees, financial advisors, legal counsel, accountants, consultants
and other representatives reasonable access during normal business hours
throughout the period prior to the Closing to all of its books and records and
its properties, plants and personnel and during such period shall furnish
promptly to the Buyer a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of federal securities laws.
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ARTICLE 6
Covenants Of Buyer
6.1 Confidentiality. At all times prior to the Closing, Buyer shall hold
in strict confidence, and shall cause each of its Affiliates to hold in strict
confidence, all documents and information obtained with respect to Seller. At
all times prior to the Closing, Buyer shall not permit any of such documents or
information to be improperly utilized or to be disclosed or conveyed to any
other person or entity, and Buyer shall comply in all respects with the
provisions of the Confidentiality Agreement between Seller and Buyer dated
January 26, 2000 (the "Confidentiality Agreement"). Without limiting the
generality of the foregoing, and except as required by law or pursuant to valid
legal process, Buyer shall not contact any customers or employees of Seller
without the prior consent of an officer of Seller.
6.2 Investigation. In conducting its review of the Business, Buyer shall
not interfere in any material respect with the Business or with the performance
of their duties by Seller's employees. Buyer shall use commercially reasonable
efforts to complete its due diligence within one (1) week of the date of this
Agreement.
6.3 Insurance. Buyer shall use commercially reasonable efforts to obtain
and continuously maintain, from the Closing Date until the expiration of the
representations, warranties and covenants pursuant to Section 12.1, insurance
policies with respect to the Business and the Assets on terms and with coverage
no less favorable than those maintained by Buyer in connection with Buyer's
other businesses.
6.4 Employees.
(a) Buyer shall offer employment to (i) each Employee listed on
Schedule 3.17 who is actively at work for the Business immediately prior to the
Closing Date ("Active Employees"), and (ii) to each Employee who is not actively
at work on the Closing Date due solely to authorized leave of absence, sick
leave, short or long-term disability leave or military leave and who, within 180
days after the commencement of the leave, returns to active employment
immediately following such absence ("Inactive Employees"). An Employee's date of
hire by Buyer shall, in the case of an Active Employee, be the Closing Date, and
in the case of an Inactive Employee, on the date that such individual first
reports to work with Buyer. Active Employees and Inactive Employees who accept
Buyer's offer of employment and who become employees of Buyer shall be referred
to as "Transferred Employees." Seller agrees to facilitate the transition of the
Employees to Buyer's employment to the extent permitted by law, which
facilitation shall include, without limitation, affording Buyer and its
representatives reasonable opportunities to discuss with the Employees terms and
conditions of employment with Buyer. Seller will not take, or cause any
affiliate to take, any action that would impede, hinder, interfere or otherwise
compete with Buyer's effort to hire any Employee.
(b) Buyer shall assume all liabilities of Seller to the Transferred
Employees of the Business with respect to accrued vacation and sick days or
similar days off by means of a credit to such Employee of the Business of an
equal number of accrued days off under Buyer's
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benefit plans (except to the extent Seller does not credit its employees for
such number or type of days under its benefit plans, in which case Buyer shall
pay the Employee of the Business the value of such accrued days off in cash
within 30 days of Closing). Nothing herein shall restrict Buyer in the exercise
of its independent business judgment, as to the terms and conditions under which
such employment with Buyer shall be offered the duration of such offered
employment, the basis on which such offered employment is terminated or the
compensation or benefits offered to Employees of the Business. Nothing herein
shall be deemed to constitute an agreement to employ any Employee of the
Business for any specific length of time. Seller shall be solely responsible for
any and all severance commitments or obligations of Seller (including retention
incentive agreements) existing as of the Closing Date except with respect to
severance obligations (and not any other obligations under any retention
incentive agreements) for Transferred Employees of the Business who are employed
by the Buyer for at least 60 days after the Closing Date.
(c) Seller shall be responsible for any continuation of group health
coverage required under Section 4980B of the Code or Sections 601 through 608 of
ERISA with respect to (i) any Employee or any qualified beneficiary (as defined
in Section 4980B of the Code) of any such Employee who incurs a qualifying event
(as defined in Section 4980B of the Code) prior to such Employee's date of hire
by Buyer, including any such qualifying event incurred by reason of the
employee's termination of employment by Seller, and (ii) any Transferred
Employee or any qualified beneficiary (as defined in Section 4980B of the Code)
of any such Transferred Employee who incurs a qualifying event (as defined in
Section 4980B of the Code) after such employee's date of hire by Buyer;
provided, however, that Seller's responsibility for providing coverage for
Transferred Employees and qualified beneficiaries of such Transferred Employees
shall terminate upon the adoption by Buyer of a group health plan under which
Transferred Employees and their qualified beneficiaries are covered. Buyer shall
reimburse Seller for all costs incurred by Seller in covering all Transferred
Employees and qualified beneficiaries of such Transferred Employee under
Seller's group health plan, including, without limitation, applicable premiums
for such coverage and administrative costs associated with such coverage.
Reimbursement payments pursuant to this Section 6.4(c) shall be made on a
monthly basis by Buyer to Seller within ten (10) days following Buyer's receipt
of notice from Seller of the amount due to satisfy Buyer's reimbursement
obligation.
(d) Seller acknowledges that on and after the Closing Date the
account balances of Transferred Employees shall be distributable from the Seller
401(k) Plan in accordance with Section 401(k)(10) of the Code. Neither Seller
nor Seller 401(k) Plan shall place any Transferred Employee's plan loan into
default or declare a default with respect to any plan loan so long as such
individual transfers his or her account balance under the Seller 401(k) Plan,
together with the note evidencing the plan loan, to the Buyer 401(k) Plan
through a direct rollover on or as soon as administratively practicable
following the Closing Date. Buyer shall amend the Buyer's 401(k) Plan and Seller
shall and the Seller 401(k) Plan to the extent necessary in order to effectuate
the transactions contemplated under this paragraph (d). Seller and Buyer shall
cooperate with each other (and cause the trustees of the Seller 401(k) Plan and
the Buyer's 401(k) Plan to cooperate with each other) with respect to the
rollover of the distributions to the affected Transferred Employees.
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(e) Buyer shall use commercially reasonable efforts to enter into
employment agreements such of the employees listed on Schedule 8.10 as Buyer may
desire within one (1) week of the date of this Agreement.
6.5 Tax Cooperation and Retention.
(a) Buyer and Seller shall each at their own expense cooperate with,
and make available to, each other such tax data and other information as may be
reasonably required in connection with (1) the preparation or filing of any tax
return, election, consent or certification, or any claim for refund or the
preparation of Seller's financial statements, (2) any determinations of
liability for Taxes, or (3) any audit, examination or other proceeding in
respect of Taxes ("Tax Data"). Such cooperation shall include without limitation
making their respective employees and independent auditors reasonably available
on a mutually convenient basis for all reasonable purposes, including without
limitation, to provide explanations and background information and to permit the
copying of books, records, schedules, workpapers, notices, revenue agent
reports, settlement or closing agreements and other documents containing the Tax
Data ("Tax Documentation"). If a third party is retained in connection with any
review hereunder, the party retaining such third party shall be responsible for
any fees and expenses of such third party.
(b) The Tax Data and the Tax Documentation shall be retained until
one year after the expiration of all applicable statutes of limitations
(including extensions thereof); provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration of an applicable statute of limitations the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired).
6.6 Financing. Buyer shall use commercially reasonable efforts to enter
into binding commitment letters with one or more financial institutions pursuant
to which credit at least equal to 66-2/3% of the Purchase Price shall be
available to Buyer, on terms reasonably acceptable to Buyer for the purpose of
consummating the transactions contemplated hereby within one (1) one week of the
date of this Agreement.
6.7 LinkSat Receivables. Buyer shall cooperate with Seller in the
collection of the LinkSat Receivables and in connection therewith, Buyer shall
provide Seller reasonable access during normal business hours to (i) all Books
and Records relating to the LinkSat Receivables, and (ii) all employees having
knowledge relating to the LinkSat Receivables or access to the Books and Records
relating thereto. Such reasonable access (A) shall include, without limitation,
any access required in connection with any judicial or arbitration proceedings
relating to the LinkSat Receivables (including without limitation, access for
the purposes of taking depositions, providing testimony and affidavits,
preparing stipulations, interrogatories or motions, and otherwise conducting
discovery) and any copies of such documents as the Seller shall reasonably
request, and (B) shall be provided to Seller free of charge (other than
reasonable travel related expenses for Buyer's employees and reasonable
duplication charges).
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ARTICLE 7
Covenants Of All Parties
7.1 Best Efforts; Further Assurances. Subject to the terms and conditions
of this Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Buyer and Seller each will execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
7.2 Certain Filings. Buyer and Seller shall cooperate with one another (a)
in determining whether any action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
Contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (b) in taking such actions or making any such filings, in
furnishing such information as may be required in connection therewith,
including without limitation filings under the HSR Act, and in seeking timely to
obtain any such actions, consents, approvals or waivers.
7.3 Public Announcements. Neither Buyer nor Seller will issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby, or disclose the existence of this Agreement to
any person or entity, prior to the Closing and, after the Closing, will not
issue any such press release or make any such public statement without the prior
consent of the other party (which consent shall not be unreasonably withheld or
delayed), subject to any applicable disclosure obligations pursuant to law
(including Buyer's and Seller's requirement to issue a press release promptly
after the execution of this Agreement), provided that the party proposing to
issue any press release or similar public announcement or communication in
compliance with any such disclosure obligations shall use commercially
reasonable efforts to consult in good faith with the other party before doing
so.
7.4 Use of Business Names by Buyer.
(a) Buyer acknowledges that Seller has the absolute and exclusive
proprietary right to all names, marks, trade names, trademarks, service names
and service marks (collectively, "Names") incorporating "Adaptive Broadband" or
any similar Name and to all corporate symbols or logos (collectively, "Logos")
incorporating Adaptive Broadband or any similar name. All rights of Seller and
its Affiliates to the same and the goodwill represented thereby and pertaining
thereto are being retained by Seller. Buyer agrees that it will not, and will
cause the Business not to, use the Adaptive Broadband Name or the Name
"California Microwave" or any similar Names or any Logo incorporating such Names
or any similar Names in any manner, including in connection with the sale of any
products or services or otherwise in the conduct of the Business, except as
expressly permitted by subsection (b) of this Section 7.4.
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(b) For a period of six months from the Closing Date (the "Window
Period"), Seller shall and hereby irrevocably grants, effective as of the
Closing Date, on a fully-paid, royalty-free basis, to Buyer the right to use the
Adaptive Broadband Logo and the Adaptive Broadband Name in connection with the
operation of the Business as currently conducted including, during the Window
Period, to (1) use any molds or castings included in the equipment or machinery
included in the Assets despite the appearance thereon and on the products
manufactured therewith of the Adaptive Broadband Name or the Adaptive Broadband
Logo, (2) market and sell all such products produced by the Business and (3) use
any other assets on hand included in the Assets, including, without limitation,
any catalogs, invoices, packaging material or stationery, bearing the Adaptive
Broadband Name or Adaptive Broadband Logo (provided, however, that Buyer shall
use its commercially reasonable efforts to cease its use of the Adaptive
Broadband Name and the Adaptive Broadband Logo within three months). Immediately
upon the expiration of the Window Period, Buyer shall cease to use in any manner
the Adaptive Broadband Name or the Adaptive Broadband Logo incorporating such
Name and remove or obliterate such Name or the Adaptive Broadband Logo from any
molds, castings, products or other assets and clearly and prominently mark the
new name of the Business thereon. At all times following the Closing, Buyer
shall not indicate that Buyer or the Business is affiliated with Seller or any
of its affiliates.
7.5 Consents; Cooperation. Seller and Buyer will use their commercially
reasonable efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all governmental authorities or any other person or entity that are required on
their respective parts, for the consummation of the transactions contemplated by
this Agreement;
(b) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing;
(d) to (1) take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement (excluding satisfying
the closing conditions in Articles 8 or 9 hereof insofar as they relate to the
truth of representations and warranties but including otherwise satisfying the
closing conditions in Articles 8 or 9) and (2) refrain from taking any action
which reasonably could be expected to render any representation or warranty
contained in this Agreement untrue or incorrect in any material respect (except
to the extent a representation or warranty or covenant is qualified by
materiality in which case Seller will refrain from taking any action that would
render such representation or warranty untrue or incorrect) as of the Closing.
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7.6 Liability for Transfer Taxes. Buyer and Seller shall each be
responsible for and pay in a timely manner 50% of all sales, use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement. Each party hereto shall prepare and timely file all
Tax Returns required to be filed in respect of Transfer Taxes that are the
primary responsibility of such party under applicable law; provided, however,
that such party's preparation of any such Tax Returns shall be subject to the
other party's approval which approval shall not be withheld or delayed
unreasonably.
7.7 Communications with Customers and Suppliers. Seller and Buyer will
mutually agree upon all communications with suppliers and customers of the
Business relating to this Agreement and the transactions contemplated hereunder
prior to the Closing Date.
7.8 Communication and Cooperation. Seller and Buyer shall use commercially
reasonable efforts to ensure that the conditions to Closing shall have been
satisfied on or prior to June 30, 2000. Each party shall keep the other party
fully informed of the status of satisfying its conditions to Closing. Each party
shall promptly inform the other party if and to the extent the informing party
does not reasonably expect to satisfy the conditions to Closing in a timely
manner, or in any case, on or prior to June 30, 2000.
ARTICLE 8
Conditions To Obligations Of Buyer To Close
The obligations of Buyer to purchase the Business and the Assets and
otherwise consummate the transactions that are to be consummated at the Closing
are subject to the satisfaction, as of the Closing Date, of the following
conditions (any of which may be waived by Buyer in whole or in part):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of Seller set forth in Article 3 shall be accurate in all material
respects as of the Closing, as though made on and as of the Closing Date, except
to the extent that (a) any of such representations and warranties refers
specifically to a date other than the Closing Date, in which case such
representation or warranty shall have been accurate in all material respects as
of such other date, (b) the accuracy of any of such representations and
warranties is affected by any of the transactions contemplated by this
Agreement, and (c) a representation or warranty is modified in an updated
Disclosure Schedule delivered to Buyer at the Closing, which update does not
reflect any Material Adverse Effect on the Business; provided that any such
update is limited to items or events occurring, or claims asserted or made,
after the date hereof.
8.2 Performance. Seller shall have performed in all material respects all
obligations required by this Agreement to be performed by Seller on or before
the Closing Date.
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8.3 Certificate. Buyer shall have received from a duly authorized officer
of Seller a certificate dated the Closing Date confirming, to such person's
knowledge, that the conditions in Sections 8.1 and 8.2 have been met.
8.4 Legal Proceedings. There shall not have been instituted or threatened,
in writing, any legal proceeding or other binding order of any court or other
tribunal having jurisdiction over Buyer or Seller that seeks to prohibit the
transactions contemplated hereby.
8.5 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
8.6 Consents. All approvals, consents, waivers and authorizations that
(i) relate to the real estate leases for Seller's facilities in Tempe, Arizona
or (ii) are required to be obtained by Seller in connection with the
transactions contemplated by this Agreement (identified on Schedule 8.6) shall
have been obtained and shall be in full force and effect.
8.7 Transfer Documents. Seller shall have delivered to Buyer at the
Closing all documents, certificates and agreements necessary to transfer to
Buyer title to the Assets, free and clear of any and all Liens thereon, other
than Permitted Liens, including without limitation:
(a) a bill of sale, assignment and general conveyance, substantially
in the form of Exhibit 8.7, dated the Closing Date, with respect to the Assets;
(b) assignments, in form and substance reasonably satisfactory to
Buyer, of all Contracts, Intellectual Property and any other agreements and
instruments constituting Assets, dated the Closing Date, assigning to Buyer all
Seller's right, title and interest therein and thereto;
(c) an assignment of lease, dated as of the Closing Date, with
respect to each Lease; and
(d) certificates of title to all motor vehicles included in the
Assets to be transferred to Buyer hereunder, duly endorsed for transfer to Buyer
as of the Closing Date.
8.8 Material Adverse Effect. There shall not have occurred any event that
has had or is reasonably likely to have a Material Adverse Effect on the
Business.
8.9 Due Diligence Review. Buyer shall have completed its due diligence
review of the Business and the Assets and the results thereof shall be
satisfactory to Buyer in all material respects.
8.10 Key Employees. Buyer shall have entered into employment agreements
with such of the employees listed on Schedule 8.10 of the Business as Buyer
desires on terms reasonably acceptable to Buyer; provided that Buyer may list no
more than seven (7) key employees of the Business on Schedule 8.10.
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8.11 Financing. Buyer shall have entered into binding commitment letters
with one or more financial institutions pursuant to which credit at least equal
to 66-2/3% of the Purchase Price shall be available to Buyer, on terms
reasonably acceptable to Buyer for the purpose of consummating the transactions
contemplated hereby.
8.12 Other Closing Documents. Buyer shall have received at Closing, in
form and substance satisfactory to Buyer, an opinion of counsel to Seller and in
substantially the form of Exhibit 8.13.
ARTICLE 9
Conditions To Obligation Of Seller To Close
The obligation of Seller to sell the Business and the Assets and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived by Seller):
9.1 Accuracy of Representations and Warranties. The representations and
warranties of Buyer set forth in Article 4 shall be accurate in all material
respects as of the Closing, as though made on and as of the Closing Date, except
to the extent that (a) any of such representations and warranties refers
specifically to a date other than the Closing Date, in which case such
representation or warranty shall have been accurate in all material respects as
of such other date, or (b) the accuracy of any of such representations and
warranties is affected by any of the transactions contemplated by this
Agreement.
9.2 Performance. Buyer shall have performed in all material respects all
obligations required by this Agreement to be performed by Buyer on or before the
Closing Date.
9.3 Certificate. Seller shall have received from a duly authorized officer
of Buyer a certificate dated the Closing Date confirming, to such person's
knowledge, that the conditions in Sections 9.1 and 9.2 have been met.
9.4 Legal Proceedings. There shall not have been instituted or threatened,
in writing, any legal proceeding or other binding order of any court or other
tribunal having jurisdiction over Seller that seeks to prohibit the transactions
contemplated hereby.
9.5 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
9.6 Consents. All approvals, consents, waivers and authorizations required
to be obtained by Seller in connection with the transactions contemplated by
this Agreement (identified on Schedule 8.6) shall have been obtained and shall
be in full force and effect, except, where the failure to obtain such consents
did not and would not reasonably be expected to result in a Material Adverse
Effect on the Business or a material adverse effect on the transactions
contemplated by this Agreement.
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9.7 Assumption Agreement. Seller shall have received from Buyer an
Assumption Agreement, in substance and form satisfactory to Seller, under which
Buyer shall have assumed the Assumed Liabilities.
9.8 Other Closing Documents. Seller shall have received at Closing, in
form and substance satisfactory to Seller, an opinion of counsel to Buyer and in
substantially the form of Exhibit 9.8.
ARTICLE 10
Restrictive Covenants
10.1 Non-Competition. Neither Seller or any of its Affiliates shall, for a
period of three years after the Closing Date, directly or indirectly, anywhere
in the United States, separately or together with any other persons, own,
manage, operate, control, invest or acquire an interest in, or otherwise engage
or participate (whether as a proprietor, partner, stockholder, member, director,
officer, employee, consultant, joint venturer, investor, sales representative or
other participant) in any business, activity or enterprise that competes with
any primary aspect of the Business or any primary aspect of the Business
conducted by Buyer or any of its subsidiaries as conducted on the Closing Date
(collectively, "Competitive Activities"); provided that this Section shall not
prohibit the Seller from engaging in any Competitive Activities to the extent
that Seller is acquired by a Person that is engaged or becomes engaged in such
Competitive Activities, or, directly or indirectly, acquires a Person that is
engaged, at the time of such acquisition, in a Competitive Activity or becomes
engaged, after such acquisition, in a Competitive Activity; provided further
that, to the extent such acquired Person becomes engaged in a Competitive
Activity, Seller shall not transfer any know-how relating primarily to a
Competitive Activity to such acquired Person.
10.2 Non-Solicitation of Employees. Neither Seller or any of its
affiliates shall, for a period of three years after the Closing Date, directly
or indirectly, for itself or on behalf of any other individual or entity,
solicit any Transferred Employee of Buyer or any of its subsidiaries or induce
nor attempt to induce any such employee to leave his or her employment with
Buyer or any of its subsidiaries; provided that this Section shall not be
violated by virtue of any solicitations by recruiters or other agents acting on
behalf of Buyer so long as Buyer does not hire any Transferred Employees so
solicited by such recruiters or agents.
10.3 Acknowledgments. Seller acknowledges that, in view of the nature of
the Business and the business objectives of Buyer in acquiring the assets and
the goodwill of the Business, and the consideration paid under this Agreement
therefor, the restrictions contained in this Article 10 are reasonably necessary
to protect the legitimate business interests of Buyer and any violation of such
restrictions will result in irreparable injury to Buyer and its subsidiaries for
which damages will not be an adequate remedy. Seller therefore acknowledges
that, if any such restrictions are violated or threatened to be violated, Buyer
shall be entitled, in addition to all other rights and remedies as may be
provided by law, to specific performance, injunctive and other equitable relief
to prevent or restrain a breach of this Agreement, without the necessity of
showing any actual damage or posting bond or furnishing other security.
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ARTICLE 11
Termination
11.1 Right to Terminate Agreement. This Agreement may be terminated prior
to the Closing:
(a) by the mutual agreement of Seller and Buyer;
(b) by written notice of either party if the other party gives such
party notice pursuant to Section 7.8 hereof to the effect such other party does
not reasonably expect to satisfy a closing condition for which it is responsible
in a timely manner, or in any event, on or prior to July 10, 2000.
(c) by written notice of Buyer at any time after July 10, 2000, if
the Closing shall not have occurred on or prior to such date; provided, however,
that the right to terminate this Agreement under this Section 11.1(c) shall not
be available to Buyer if the action of Buyer or any of its Affiliates has been a
principal cause of or resulted in the failure of the Closing to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement; or
(d) by written notice of Seller at any time after July 10, 2000, if
the Closing shall not have occurred on or prior to such date; provided, however,
that the right to terminate this Agreement under this Section 11.1(d) shall not
be available to Seller if the action of Seller or any of its Affiliates has been
a principal cause of or resulted in the failure of the Closing to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement.
11.2 Effect of Termination. Upon the termination of this Agreement
pursuant to Section 11.1:
(a) Buyer shall promptly cause to be returned to Seller all
documents and information obtained in connection with this Agreement and the
transactions contemplated by this Agreement and all documents and information
obtained in connection with Buyer's investigation of the Business, including any
copies made by or supplied to Buyer or any of Buyer's agents of any such
documents or information; and
(b) No party hereto shall have any obligation or liability to the
other party hereto, except for its own breaches of this Agreement and except
that the parties hereto shall remain bound by the provisions of this Section
11.2 and Sections 6.1 and 7.3 and Article 12 and by the provisions of the
Confidentiality Agreement.
ARTICLE 12
Certain Remedies and Limitations
12.1 Expiration of Representations, Warranties and Covenants. Except for
the covenants contained in Article 10, the covenants set forth in this Agreement
shall terminate and
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expire, and shall cease to be of any force or effect, on the Closing Date, and
all liability of the parties hereto with respect to such covenants shall
thereupon be extinguished. This Section 12.1 shall not limit any covenant or
agreement of the parties that by its terms contemplates performance after the
Closing Date. All of the representations and warranties of Seller set forth in
this Agreement shall terminate and expire, and shall cease to be of any force or
effect, at 5:00 p.m. (California time) on the first anniversary of the Closing
Date, and all liability with respect to such representations and warranties
shall thereupon be extinguished; provided, however, that the representations and
warranties set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.12, 4.1, 4.3, 4.4,
4.5 and 4.6 (collectively, the "Five Year Matters") shall cease to be of any
force or effect at 5:00 p.m. (California time) on the fifth anniversary of the
Closing Date and that the representations and warranties set forth in Section
3.9, 3.15 and 3.20 (collectively, the "Two Year Matters") shall cease to be of
any force or effect at 5:00 p.m. (California time) on the second anniversary of
the Closing Date.
12.2 Indemnity by Seller.
(a) Subject to the provisions of Section 12.1 hereof relating to the
survival of representations and warranties and the other limitations contained
herein, from and after the Closing, Seller agrees to indemnify, defend and hold
harmless Buyer and its Affiliates, officers, directors, employees, agents and
stockholders (collectively, the "Buyer Indemnitees") against the net amount of
all claims, losses, liabilities, damages, deficiencies, costs and expenses,
including without limitation, losses resulting from the defense, settlement
and/or compromise of a claim and/or demand and/or assessment, reasonable
attorneys', consultants', accountants' and expert witnesses' fees, costs and
expenses of investigation, and the costs and expenses of enforcing the
indemnification provided hereunder (hereafter individually a "Loss" and
collectively "Losses") incurred by any of the Buyer Indemnitees (after deduction
of the amount of any insurance proceeds recoverable and net of any tax benefit)
and arising out of or relating to: (i) all Excluded Liabilities; (ii) any
misrepresentation or breach of any representation or warranty made by Seller in
this Agreement or any other document and instrument executed or to be executed
pursuant to this Agreement; and (iii) any breach of any covenant, agreement or
obligation of Seller contained in this Agreement. Notwithstanding the foregoing,
damages shall constitute Losses for the purpose of this Section 12.2 only to the
extent of the direct damages incurred (excluding consequential damages, whether
or not foreseeable).
(b) Seller shall not be required to indemnify Buyer Indemnitees with
respect to any claim for indemnification resulting from or arising out of
matters described above pursuant to Section 12.2(a)(ii), unless and until the
aggregate amount of all claims against Buyer Indemnitees exceeds two percent
(2%) of the Purchase Price and then only to the extent such aggregate amount
exceeds one percent (1%) of the Purchase Price. Claims thereafter may be
asserted regardless of amount; provided, however, that Seller's maximum
liability to Buyer Indemnitees under this Section 12.2 shall not exceed:
(1) in the case of Five Year Matters, 100% of the Purchase Price
in the aggregate;
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(2) in the case of Two Year Matters, 25% of the Purchase Price
in the aggregate for the first year after the Closing Date and 10% of the
Purchase Price in the aggregate thereafter; and
(3) in the case of all other matters, 20% of the Purchase Price
in the aggregate;
provided, further, that in no event shall Seller's maximum liability hereunder
exceed 100% of the Purchase Price.
12.3 Indemnity by Buyer. Subject to the provisions of Section 12.1 hereof
relating to the survival of representations and warranties and the other
limitations contained herein, from and after the Closing, Buyer agrees to
indemnify, defend and hold harmless the Seller and each of its Affiliates,
officers, directors, employees, agents and stockholders (collectively, the
"Seller Indemnitees") against the net amount of all Losses incurred by any of
the Seller Indemnitees (after deduction of the amount of any insurance proceeds
recoverable and net of any tax benefit) and arising out of or relating to: (i)
any Assumed Liabilities; (ii) any misrepresentation or breach of any
representation or warranty made by Buyer in this Agreement; and (iii) any breach
of any covenant, agreement or obligation of Buyer contained in this Agreement.
Notwithstanding the foregoing, damages shall constitute Losses for the purpose
of this Section 12.3 only to the extent of the direct damages incurred
(excluding consequential damages, whether or not foreseeable).
12.4 Defense of Third-Party Actions. If either a Buyer Indemnitee, on the
one hand, or a Seller Indemnitee, on the other hand (the "Indemnitee"), receives
notice or otherwise obtains knowledge of any matter or any threatened matter
that may give rise to an indemnification claim against the other party (the
"Indemnifying Party"), then the Indemnitee shall promptly deliver to the
Indemnifying Party a written notice describing such matter in reasonable detail.
The timely delivery of such written notice by the Indemnitee to the Indemnifying
Party shall not be a condition precedent to any liability on the part of the
Indemnifying Party under this Article 12 with respect to such matter, except,
and only to the extent of, any actual prejudice to the Indemnifying Party
resulting from such failure to make timely delivery. The Indemnifying Party
shall have the right, at its option to assume the defense of any such matter
with its own counsel, but only if the Indemnifying Party simultaneously agrees
to indemnify the Indemnitee for such matter. If the Indemnifying Party elects to
assume the defense of and indemnification for any such matter, then:
(a) notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnitee against any attorneys' fees or other expenses incurred
on behalf of the Indemnitee in connection with such matter following the
Indemnifying Party's election to assume the defense of such matter;
(b) the Indemnitee shall make available to the Indemnifying Party
all books, records and other documents and materials that are under the direct
or indirect control of the Indemnitee or any of the Indemnitee's agents and that
the Indemnifying Party considers necessary or desirable for the defense of such
matter;
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(c) the Indemnitee shall execute such documents and take such other
actions as the Indemnifying Party may reasonably request for the purpose of
facilitating the defense of, or any settlement, compromise or adjustment
relating to, such matter;
(d) the Indemnitee shall otherwise fully cooperate as reasonably
requested by the Indemnifying Party in the defense of such matter; and
(e) the Indemnitee shall not admit any liability with respect to
such matter.
If the Indemnifying Party elects not to assume the defense of and
indemnification for such matter, then the Indemnitee shall proceed with
reasonable diligence to defend such matter with the assistance of Cooley Godward
LLP (in the case of the Seller) or Proskauer Rose LLP (in case of the Buyer) or
other counsel reasonably satisfactory to the Indemnifying Party; provided,
however, that the Indemnitee shall not settle, adjust or compromise such matter,
or admit any liability with respect to such matter, without the prior written
consent of the Indemnifying Party, such consent not to be unreasonably withheld
or delayed.
12.5 Subrogation. To the extent that the Indemnifying Party makes or is
required to make any indemnification payment to the Indemnitee, the Indemnifying
Party shall be entitled to exercise, and shall be subrogated to, any rights and
remedies (including rights of indemnity, rights of contribution and other rights
of recovery) that the Indemnitee or any of the Indemnitee's affiliates may have
against any other person with respect to any Losses, circumstances or matter to
which such indemnification payment is directly or indirectly related. The
Indemnitee shall permit the Indemnifying Party to use the name of the Indemnitee
and the names of the Indemnitee's Affiliates in any transaction or in any
proceeding or other matter involving any of such rights or remedies; and the
Indemnitee shall take such actions as the Indemnifying Party may reasonably
request for the purpose of enabling the Indemnitee to perfect or exercise the
Indemnifying Party's right of subrogation hereunder.
12.6 Exclusivity. The right of each party hereto to assert indemnification
claims and receive indemnification payments pursuant to this Article 12 shall be
the sole and exclusive right and remedy exercisable by such party with respect
to any breach by the other party hereto of any representation, warranty or
covenant or failure to pay or perform any Assumed Liability or Excluded
Liability, as applicable.
12.7 Retention of Records. From and after the date of this Agreement,
Buyer and Seller shall preserve all books, records and other documents,
materials and information relevant to the representations, warranties and
covenants set forth in this Agreement for a period of six years following the
date of this Agreement or for such longer period as the rights of the parties
hereunder may exist.
12.8 No Rescission. Neither Buyer nor Seller shall be entitled to rescind
the purchase of the Business and the Assets by virtue of any failure of any
party's representations and warranties herein to have been true or any breach of
any party's obligations hereunder.
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ARTICLE 13
Miscellaneous
13.1 Definition of Certain Terms. As used herein, the terms defined in
this Section 13.1 wherever used in this Agreement shall have the following
respective meanings:
An "Affiliate" of a Person or entity shall mean a Person or entity
that is a stockholder, Director, officer, employee, agent, attorney, accountant
or representative of that Person or entity, or a Person or entity that directly
or indirectly controls, is controlled by or is under common control with that
Person or entity.
"Agreement" shall mean this Asset Purchase Agreement (including the
Exhibits and the Schedules), as the same from time to time may be amended,
supplemented or waived.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Government Approvals and (iii) orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any Governmental Authority.
"April Balance Sheet" has the meaning set forth in Section 3.6.
"Assets" shall have the meaning set forth in Section 1.1 hereof.
"Assumed Liabilities" has the meaning set forth in Section 2.4.
"Benefit Plan" has the meaning set forth in Section 3.10(b).
"Books and Records" shall mean all books and records, including
manuals, price lists, mailing lists, lists of customers, production data, sales
and promotional materials, purchasing materials, personnel records,
manufacturing and quality control records and procedures, research and
development files and accounting records (regardless of the media in which
stored), in each case primarily relating to or used in the Business.
"Business" shall mean the business currently conducted by Seller
through its EF Data Division, as described in Recital A at the head of this
Agreement.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
"Buyer Financial Statements" has the meaning set forth in Section 4.7.
"Buyer Indemnitees" has the meaning set forth in Section 12.2(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.1.
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"Closing Date" shall mean such date on which all of the conditions to
Closing set forth in Articles 8 and 9 shall have been satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Competitive Activities" has the meaning set forth in Section 10.1.
"Confidentiality Agreement" has the meaning set forth in Section 6.1.
"Consent" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority.
"Contracts" shall mean all agreements, contracts, commitments, orders,
licenses, leases and other instruments and arrangements (whether written or
oral) to which Seller is, or at the Closing will be, a party, or by which it or
any of its assets is, or at the Closing will be, bound primarily in connection
with the Business, the Assets or the Assumed Liabilities.
"Employee" shall mean any individual employed in the Business
immediately prior to the Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean the Seller and any other Person that,
together with the Seller, is treated as a single employer under Section 414 of
the Code.
"Excluded Assets" has the meaning set forth in Section 1.2.
"Excluded Intellectual Property" has the meaning set forth in Section
1.2(a).
"Excluded Liabilities" has the meaning set forth in Section 2.5.
"Financial Statements" has the meaning set forth in Section 3.6.
"Fixed Assets" shall mean all machinery, equipment, furniture,
furnishings, vehicles, tools, dies, molds and other tangible personal property
owned by Seller and related primarily to the Business, including, without
limitation, the fixed assets located at Seller's facilities located at 2105 West
Fifth Place, Tempe, Arizona 85281 and 2114 West Seventh Street, Tempe Arizona
85281.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied and consistent with past practices.
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority.
32.
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"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any governmental authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof, any
tribunal or arbitrator(s) of competent jurisdiction and any self-regulatory
organization.
"Hazardous Materials" shall mean any substance, material or waste that
is regulated under any Environmental Law including, without limitation, any
material or substance that is (1) defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" under any provision of any applicable law, (2) petroleum or any
petroleum-derived products, (3) asbestos, (4) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. (S) 1251 et
seq. (33 U.S.C. (S) 1321) or listed pursuant to Section 307 of the Clean Water
Act (33 U.S.C. (S) 1317), (5) defined as a "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.
(42 U.S.C. (S) 6903), or (6) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. (S) 9601 et seq. (42 U.S.C. (S) 9601).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indemnitee" has the meaning set forth in Section 12.4.
"Indemnifying Party" has the meaning set forth in Section 12.4.
"Independent Auditors" has the meaning set forth in Section 2.10(c).
"Intellectual Property" shall mean all patents, pending patent
applications, registered and unregistered copyrights, copyright applications,
inventions, trade secrets, research and development data, and know-how, computer
software or other intellectual property, the trademarks, service marks, trade
names, logos and any applications, in each case used primarily in the conduct of
the Business, other than the Excluded Intellectual Property.
"Inventories" has the meaning set forth in Section 1.1(c).
"Lien" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, lease, sublease, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, option, lien, right of first
refusal or other similar restrictions.
"LinkSat" has the meaning set forth in Section 1.1(h).
"Logos" has the meaning set forth in Section 7.4(a).
"Loss" has the meaning set forth in Section 12.2.
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"Material Adverse Effect on the Business" has the meaning set forth in
Section 3.1, as limited by Section 13.2.
"Material Adverse Effect on Buyer" has the meaning set forth in
Section 4.5, as limited by Section 13.2.
"Material Contracts" has the meaning set forth in Section 3.13.
"Names" has the meaning set forth in Section 7.4.
"Other Assets" has the meaning set forth in Section 2.4(h).
"Permitted Liens" shall mean (i) Liens for current taxes or
assessments or other governmental charges or levies which are not yet subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings; (ii) mechanics', carriers' or warehouseman's Liens
arising in the ordinary course of business which do not in the aggregate
materially adversely affect the value of the Assets or materially impair their
use in the operation of the Business; (iii) minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning restrictions as to the use of real properties which do not
materially interfere with the use, occupation and enjoyment of the Assets taken
as a whole; and (iv) Liens listed on Schedule 3.8 hereto.
"Person" shall mean any natural person, firm, partnership,
association, corporation, company, limited liability company, trust, business
trust, Governmental Authority or other entity.
"Policies" has the meaning set forth in Section 3.14.
"Pre-Closing Tax Period" shall mean any period ending with, on or
prior to the Closing Date with respect to which Seller is required to report
and/or pay any Tax relating to the Business.
"Purchase Price" has the meaning set forth in Section 2.2.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller 401(k) Plan" shall mean the Adaptive Broadband Corporation Tax
Deferred Savings and Deferred Profit Sharing Plan.
"Seller Indemnitees" has the meaning set forth in Section 12.3.
"Tax Data" has the meaning set forth in Section 6.5(a).
"Tax Documentation" has the meaning set forth in Section 6.5(a).
34.
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"Taxes" in the plural and "Tax" in the singular shall mean all
federal, state, local and foreign taxes, including income, employment (including
social security, withholding and state disability), excise, property, sales,
use, franchise, and other taxes, together with all interest, additions to tax
and penalties relating thereto.
"Tax Return" shall mean any return, report, declaration, form, claim
for refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Transfer Taxes" has the meaning set forth in Section 7.6.
"Window Period" has the meaning set forth in Section 7.4.
13.2 Material Adverse Effect. Any adverse change, event or effect that is
proximately caused by conditions affecting the United States economy generally
shall not be taken into account in determining whether there has been or would
be a Material Adverse Effect on the Business or a Material Adverse Effect on
Buyer (unless such conditions adversely affect Seller or Buyer, as the case may
be, in a materially disproportionate manner). Any adverse change, event or
effect that is proximately caused by any industry in which Buyer or Seller
competes shall not be taken into account in determining whether there has been
or would be a Material Adverse Effect on Buyer or Material Adverse Effect on the
Business (unless such conditions adversely affect Seller or Buyer, as the case
may be, in a materially disproportionate manner). Any adverse change, event or
effect that is proximately caused by the announcement or pendency of the sale of
the Business and the Assets shall not be taken into account in determining
whether there has been or would be a Material Adverse Effect on Buyer or a
Material Adverse Effect on the Business. Any adverse change, event or effect
that is proximately caused by any breach by Buyer or Seller of any covenant or
obligation set forth in this Agreement shall not be taken into account in
determining whether there has been or would be a Material Adverse Effect on the
Business or Material Adverse Effect on Buyer, respectively.
13.3 Knowledge. As used in this Agreement, a corporate party's
"knowledge" means the actual knowledge of any director or executive officer of
such party, and, in the case of Seller, William Carlin, Robert Hansen and Tim
Castelli.
13.4 Memorandum; Disclaimer of Projections. Seller makes no
representation or warranty to Buyer except as specifically made in this
Agreement. In particular, Seller makes no representation or warranty to Buyer
with respect to any financial projection or forecast delivered by or on behalf
of Seller to Buyer. Buyer acknowledges that (a) there are uncertainties inherent
in attempting to make such projections and forecasts, (b) it is familiar with
such uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it and (d) it shall have no claim against Seller with respect
thereto.
13.5 Expenses. If the purchase of the Assets is consummated or if this
Agreement is terminated, Seller and Buyer shall pay their own respective
expenses and costs incidental to the preparation of this Agreement, the
performance and compliance with all agreements contained in
35.
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this Agreement to be performed or complied with by them and the consummation of
the transactions contemplated hereby.
13.6 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery or (d) sent by facsimile transmission or telegram. All such notices,
requests, demands, waivers and other communication shall be deemed to have been
received (w) if by personal delivery on the day after such delivery, (x) if by
certified or registered mail, on the seventh business day after the mailing
thereof, (y) if by next-day or overnight mail or delivery, on the day delivered,
(z) if by facsimile or telegram, on the next day following the day on which such
facsimile or telegram was sent, provided that a copy is also sent by certified
or registered mail.
If to Buyer:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, NY 11747
Attention: President
Tel: 631-777-8900
Fax: 631-777-8877
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Robert A. Cantone
Tel: 212-969-3000
Fax: 212-969-2900
If to Seller, to:
Adaptive Broadband Corporation
1143 Borregas Avenue
Sunnyvale, CA 94089
Attention: Kenneth J. Wees
Tel: 408-743-3436
Fax: (408) 743-3482
36.
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with a copy to:
Cooley Godward llp
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111
Attention: Kenneth L. Guernsey
Tel: (415) 693-2091
Fax: (415) 951-3699
or, in each case, to such other address as may be specified in writing to the
other parties.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until it is actually received by the
party to whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 12.3.
13.7 Assignment. No party may assign or otherwise transfer this Agreement
or any of its rights hereunder to any person or entity, without the prior
written consent of Buyer and Seller which consent shall not be unreasonably
withheld or delayed; provided, however, that Buyer may assign its rights
hereunder to any wholly-owned subsidiary of Buyer without such consent of
Seller; provided further that in the case of any such assignment Buyer shall
guarantee the performance by such subsidiary of all Buyer's obligations
hereunder. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their successors and assigns.
13.8 Entire Agreement; Amendment; Governing Law; Etc. This Agreement
(together with the Exhibits and Schedules hereto) and the Confidentiality
Agreement embody the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof. This Agreement may be amended,
modified, waived, discharged or terminated only by (and any consent hereunder
shall be effective only if contained in) an instrument in writing signed by the
party against which enforcement of such amendment, modification, waiver,
discharge, termination or consent is sought. This Agreement shall be construed
in accordance with and governed by the laws of the State of California as it
applies to contracts to be performed entirely within the State of California.
13.9 Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which shall constitute
one instrument.
13.10 Venue. If any legal proceeding or other action relating to this
Agreement or any of the other agreements being executed and delivered in
connection herewith, or any of the transactions contemplated hereby or thereby,
is brought or otherwise initiated, the venue therefor shall be in San Jose,
California or New York, New York, each of which shall be deemed to be a
convenient forum. Each of the parties hereto hereby expressly and irrevocably
consents and submits to the jurisdiction of the United States District Court for
the Northern District of
37.
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California, the jurisdiction of the United States District Court for the
Southern District of New York and to the jurisdiction of the Superior Court in
and for the County of Santa Clara of the State of California in connection with
any such legal proceeding or other action.
13.11 Attorney's Fees. In the event that either party hereto initiates
any legal action arising out of or in connection with this Agreement, the
prevailing party shall be entitled to recover from the other party all
reasonable attorneys' fees, expert witness fees and expenses incurred by the
prevailing party in connection herewith.
13.12 Third-Party Rights. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto and their
respective successors in interest.
13.13 Titles and Headings. Titles and headings of sections of this
Agreement and the "Table of Contents," the "Table of Exhibits," the "Table of
Schedules" and the "Index of Schedules" included herewith, are for convenience
of reference only and shall not affect the construction of any provision of this
Agreement.
13.14 Exhibits and Schedules. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.
13.15 Pronouns. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
13.16 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13.17 Time of Essence. Time is of the essence of this Agreement.
13.18 Interpretation. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.
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In Witness Whereof, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
Buyer
Comtech Telecommunications Corp.
a Delaware corporation
By: /s/ J. Preston Windus
Its: Chief Financial Officer and
Senior Vice President
Seller
Adaptive Broadband Corporation
a Delaware corporation
By: /s/ Donna Birks
Its: Executive Vice President
and Chief Financial Officer
