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ASSET CONTRIBUTION AGREEMENT
between
3COM CORPORATION,
and
U.S. ROBOTICS CORPORATION
dated as of
June 5, 2000
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TABLE OF CONTENTS
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ARTICLE I 1
1.1 Definitions.........................................................................................1
ARTICLE II Transfer of Assets.........................................................................................5
2.1 Agreement to Transfer and Transfer of the Contributed Assets........................................5
2.2 Liabilities.........................................................................................6
2.3 Consideration for the Transfer......................................................................6
2.4 Cooperation.........................................................................................6
ARTICLE III Representations and Warranties of 3Com....................................................................6
3.1 Corporate Existence and Power.......................................................................6
3.2 Corporate Authorization.............................................................................6
3.3 Governmental Authorization..........................................................................7
3.4 Noncontravention....................................................................................7
3.5 Required Consents...................................................................................7
3.6 Absence of Certain Changes..........................................................................7
3.7 Material Contracts..................................................................................8
3.8 Licenses and Permits................................................................................9
3.9 Litigation..........................................................................................9
3.10 Properties.........................................................................................10
3.11 Taxes..............................................................................................11
3.12 Intellectual Property..............................................................................11
3.13 Labor Issues.......................................................................................12
3.14 Foreign Corrupt Practices Act......................................................................12
3.15 Product Warranties.................................................................................12
3.16 Finder's Fees......................................................................................12
3.17 ERISA Representations..............................................................................12
3.18 Financial Information..............................................................................13
ARTICLE IV Representations and Warranties of U.S. Robotics...........................................................13
4.1 Corporate Existence and Power......................................................................13
4.2 Corporate Authorization............................................................................13
4.3 Governmental Authorization.........................................................................13
4.4 Noncontravention...................................................................................14
4.5 Required Consents..................................................................................14
4.6 Financial Statements...............................................................................14
4.7 Litigation.........................................................................................14
4.8 Finders'Fees.......................................................................................14
4.9 WARN Act...........................................................................................14
4.10 Capitalization.....................................................................................14
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE V Covenants..................................................................................................15
5.1 Nonassignable Contracts and Permits................................................................15
5.2 Access to Information, Confidentiality.............................................................15
5.3 No Solicitation....................................................................................15
5.4 Reasonable Best Efforts; Further Assurances........................................................16
5.5 Certain Filings....................................................................................16
5.6 Public Announcements...............................................................................16
5.7 Required Consents..................................................................................16
5.8 Employees..........................................................................................16
5.9 Taxes..............................................................................................19
5.10 Incentive Program..................................................................................19
5.11 Additional Ancillary Agreements....................................................................19
5.12 General Cooperation................................................................................19
5.13 Tax Cooperation Rider..............................................................................19
ARTICLE VI 20
6.1 Master Services Agreement..........................................................................20
6.2 Assumed Liabilities................................................................................20
6.3 Cutover Date Contributed Assets....................................................................20
6.4 List of Contributed Assets.........................................................................20
6.5 Channel Inventory..................................................................................21
6.6 Additional Transition Services.....................................................................21
6.7 Effect of Cutover Date.............................................................................21
ARTICLE VII 21
7.1 Governing Law......................................................................................21
7.2 Third Party Beneficiaries..........................................................................22
7.3 Entire Agreement...................................................................................22
7.4 Successors and Assigns.............................................................................22
7.5 Further Assurances.................................................................................22
7.6 Amendment..........................................................................................22
7.7 Notices............................................................................................22
7.8 Counterparts.......................................................................................24
7.9 Representation by Counsel; Interpretation..........................................................24
7.10 Limitation of Liability............................................................................24
7.11 Consent to Jurisdiction............................................................................24
</TABLE>
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ASSET CONTRIBUTION AGREEMENT
THIS ASSET CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as
of June 5, 2000 (the "EFFECTIVE DATE"), between 3COM CORPORATION, a Delaware
corporation ("3COM"), and U.S. Robotics Corporation, a Delaware corporation
("U.S. ROBOTICS").
WHEREAS, 3Com intends to contribute certain assets to U.S. Robotics
associated with 3Com's sales, marketing and engineering activities, including
product testing and research and development, for analog modem products,
selected mobile (modem only) PC card products and ISDN modem products identified
in SCHEDULE 1.1 (s) to the Intellectual Property License Agreement (as defined
herein) (the "BUSINESS") in exchange for shares of U.S. Robotics Series A
Preferred Stock and other consideration provided for herein; and
WHEREAS, 3Com desires that such transfer of assets to U.S. Robotics
qualify as a tax free transfer of assets under Section 351 of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the
following meanings:
"ACCTON" means Accton Network (BVI) Co. Ltd., a company organized under
the laws of British Virgin Islands, which is the owner of approximately 41% of
the outstanding capital stock of U.S. Robotics as of the date hereof.
"ACQUIRED BUSINESS" means the Business, including the Contributed
Assets and the Assumed Liabilities.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. For purposes of this definition, "control" when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"ANCILLARY AGREEMENTS" means the Intellectual Property License
Agreement, the Master Services Agreement, the Transition Services Agreement, the
Real Property License, the Real Property Assignment, the Consulting Agreement,
the bill of sale attached as EXHIBIT D and the
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assumption agreement attached as EXHIBIT E, and each other document or agreement
delivered by 3Com or U.S. Robotics in connection with this Agreement.
"ASSUMED CONTRACTS" means those contracts, agreements, leases,
commitments and sales and purchase orders of 3Com relating to the Acquired
Business listed on SCHEDULE 1.1-D to this Agreement.
"ASSUMED LIABILITIES" means those debts, obligations, contracts and
liabilities of 3Com related to or arising out of the conduct of the Acquired
Business listed on SCHEDULE 1.1-D to this Agreement. The Assumed Liabilities
include the Assumed Contracts.
"BUSINESS" has the meaning set forth in the Recitals to this Agreement.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMPENSATION AND BENEFITS PLANS" means, collectively, each bonus,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, severance, compensation, medical, health, or
other plan, agreement, policy or arrangement established, maintained or
contributed to by 3Com, its affiliates or any deemed affiliate or controlled
group as may be applicable under ERISA or the Code.
"CONTRIBUTED ASSETS" means the following assets as they may exist on
the Closing Date:
(i) tangible assets presently located at the Premises or at
3Com's Boulder, Colorado location that was formerly the site for the Euphonics
business and generally being used for or necessary to the Acquired Business,
consisting of lab equipment and supplies, office furniture and office equipment
and supplies and computer hardware;
(ii) governmental permits, licenses, registrations, orders and
approvals solely related to the Acquired Business, to the extent such permits,
licenses, registrations, orders and approvals are separately transferable to
U.S. Robotics;
(iii) all rights under the Assumed Contracts;
(iv) the Transferred Intellectual Property; and
(v) all Additional Assets.
Notwithstanding anything in clauses (i) through (v) above, neither the
Excluded Assets listed on SCHEDULE 1.1-C to this Agreement nor any Intellectual
Property that is the subject of the Intellectual Property License Agreement
shall be considered Contributed Assets.
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"CONSULTING AGREEMENT" means the consulting services agreement between
3Com and U.S. Robotics pursuant to which 3Com will develop a global information
system for U.S. Robotics.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means those items listed on SCHEDULE 1.1-C to this
Agreement.
"CUTOVER DATE CONTRIBUTED ASSETS" means all of 3Com's right title and
interest in those assets listed in SCHEDULE 1.1-E to this Agreement.
"INTELLECTUAL PROPERTY" means, generally, (i) patents and utility
models and applications therefor and all reissues, re-examinations, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof; (ii) inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation embodying or evidencing
any of the foregoing; (iii) copyrights, copyright registrations and applications
therefor and all other rights corresponding thereto; (iv) mask works, mask work
registrations and applications therefor; (v) industrial designs and any
registrations and applications therefor; (vi) trade names, trade dress, logos,
domain names, common law trademarks and service marks, trademark and service
mark registrations and applications therefor and all goodwill associated
therewith; (vii) databases and data collections and all rights therein; and
(viii) computer software including all source code, object code, firmware,
development tools, files, records and data, all media on which any of the
foregoing is recorded.
"INTELLECTUAL PROPERTY LICENSE AGREEMENT" means, collectively, the
intellectual property licensing agreement substantially in the form attached
hereto as EXHIBIT A-1 with respect to the Intellectual Property described
therein and the license agreement substantially in the form attached hereto as
EXHIBIT A-2 with respect to the trademarks described therein.
"LICENSED INTELLECTUAL PROPERTY" means the Intellectual Property that
is the subject of the Intellectual Property License Agreement.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest or other encumbrance in respect of such
property or asset.
"MASTER SERVICES AGREEMENT" means the master services agreement
substantially in the form attached as EXHIBIT B with respect to certain
consulting services to be provided by 3Com to U.S. Robotics until the Cutover
Date.
"MATERIAL ADVERSE EFFECT" means (i) as to 3Com, a material adverse
effect on the business, liabilities, assets or condition (financial or
otherwise) of the Acquired Business, taken as whole, except any such effect
resulting from or arising as a result of the transactions contemplated hereby
(ii) as to U.S. Robotics, a material adverse effect on the business,
liabilities, assets or condition (financial or otherwise) of U.S. Robotics, NEL
or Accton except any such effect resulting from or arising as a result of the
transactions contemplated hereby.
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"NEL" means NEL (U.S.) Holdings, Inc., a Delaware corporation, which is
the owner of approximately 41% of the outstanding capital stock of U.S. Robotics
as of the date hereof.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"PREMISES" means the real property and premises located in Rolling
Meadows, Illinois from which the Business is presently conducted, as more
particularly described in the Real Property License.
"REAL PROPERTY ASSIGNMENT" means the Assignment of Lease with respect
to 3Com's premises used in connection with the Acquired Business in Boulder,
Colorado, substantially in the form attached as EXHIBIT G, pursuant to which
3Com assigns to U.S. Robotics, as of the Cutover Date, the existing lease with
respect to such premises, together with all necessary consents with respect
thereto including the consent attached hereto as EXHIBIT G.
"REAL PROPERTY LICENSE" means, collectively, the Rolling Meadows
License and the Multi-Site License substantially in the form attached as
EXHIBITS F-1 and F-2, respectively, pursuant to which 3Com grants U.S. Robotics
the right to use the Premises and the other locations described therein.
"REAL PROPERTY RIGHTS" means all rights of U.S. Robotics under the Real
Property Assignment and the Real Property License.
"REQUIRED CONSENTS" means, collectively, the 3Com Required Consents and
the U.S. Robotics Required Consents.
"SEC" means the U.S. Securities and Exchange Commission or any
successor agency.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"3COM'S KNOWLEDGE" means the knowledge, after reasonable inquiry, of
(i) 3Com's "Executive Committee (Execom)" and "Operations Committee (Opcom)"
members, but excluding any Person who is or has been an employee of the
Business, (ii) John Hrudicka, (iii) Najib Khouri-Haddad, (iv) John Kuo and (v)
Steven Borsand. In no event shall any individual included within the definition
of "3Com's Knowledge" have personal liability for any representation or warranty
made by 3Com under this Agreement.
"STOCK PURCHASE AGREEMENT" means the Series A Preferred Stock Purchase
Agreement of even date herewith among U.S. Robotics, Accton and NEL.
"TRANSACTION AGREEMENTS" means this Agreement and the Ancillary
Agreements.
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"TRANSFERRED INTELLECTUAL PROPERTY" means the Intellectual Property
listed on SCHEDULE 1.1-B to this Agreement.
"TRANSITION SERVICES AGREEMENT" means the transition services agreement
substantially in the form attached hereto as EXHIBIT C with respect to specified
services to be performed by 3Com for U.S. Robotics.
"WARN ACT" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
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Term Section
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Additional Assets 6.4
Business Recitals
Closing Common Stock 2.1
Cutover Date 2.3
Employees 5.8(a)
Employees on Leave 5.8(b)
Permits 3.8
Permitted Liens 3.10(a)
Service Credit 5.8(f)
Taxes 3.11
3Com Disclosure Schedule 3.3
3Com Required Consents 3.5
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ARTICLE II
TRANSFER OF ASSETS
2.1 AGREEMENT TO TRANSFER AND TRANSFER OF THE CONTRIBUTED ASSETS. The
closing (the "CLOSING") of the contribution of the Contributed Assets and the
assumption of the Assumed Liabilities hereunder shall take place at the offices
of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California,
concurrent with satisfaction of the conditions set forth in this Agreement, or
at such other time or place as 3Com and U.S. Robotics may agree. Upon and
subject to the terms and conditions of this Agreement, as of the Closing Date,
3Com hereby assigns, agrees to assign, transfers, conveys and delivers to U.S.
Robotics all of its right, title, and interest in the Contributed Assets;
provided that effective date of the assignment, transfer, conveyance and
delivery of (a) those assets identified on SCHEDULE 1.1-E shall be the Cutover
Date rather than the Closing Date, as provided in Section 6.3 and (b) the
Additional Assets shall be the date such Additional Assets are added to SCHEDULE
1.1-E in accordance with Section 6.4.
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2.2 LIABILITIES. Upon the terms and subject to the conditions of this
Agreement and effective at the time of the Closing, U.S. Robotics shall
unconditionally assume and agree to pay, satisfy and discharge when due in
accordance with their terms, and U.S. Robotics shall fully and forever hold 3Com
and its Affiliates harmless against, any and all Assumed Liabilities, by
delivery of an assumption agreement substantially in the form attached as
EXHIBIT E, duly executed by U.S. Robotics and 3Com; provided that the effective
date of the assumption of certain of such Assumed Liabilities shall be the
Cutover Date rather than the Closing Date, as provided in Section 6.2 of this
Agreement.
2.3 CONSIDERATION FOR THE TRANSFER. As consideration for the transfer
described in Sections 2.1 above, U.S. Robotics agrees to issue to 3Com (a)
2,952,000 shares of Series A Preferred Stock as set forth in the Subscription
Offer between U.S. Robotics, par value $0.0001 per share and of 3Com, of even
date herewith, (b) a warrant to purchase an aggregate of 15,181,333 shares of
Series A Preferred Stock of U.S. Robotics and/or Series B Preferred Stock of
U.S. Robotics, at an exercise price of $0.0001 per share, pursuant to a Warrant
in the form attached as EXHIBIT H, and subject to the limitations and conditions
set forth therein, and (c) one share of common stock of U.S. Robotics, par value
$0.0001 per share (the "COMMON STOCK").
2.4 COOPERATION. 3Com shall take all actions necessary to execute any
and all documents as may be reasonably requested by U.S. Robotics from time to
time to (a) transfer the Contributed Assets and otherwise fully vest or perfect
in U.S. Robotics all right, title and interest in and to the Contributed Assets
or (b) deliver the Real Property Rights to U.S. Robotics or grant U.S. Robotics
the benefits thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF 3COM
3Com represents and warrants to U.S. Robotics as of the date hereof
that:
3.1 CORPORATE EXISTENCE AND POWER. 3Com is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
3.2 CORPORATE AUTHORIZATION. 3Com has the requisite corporate power and
authority to enter into this Agreement and the other Transaction Agreements to
which it is a party and to perform its obligations hereunder and thereunder.
3Com has the requisite corporate power and authority to carry on the Acquired
Business as now being conducted and to own and operate the properties and assets
now owned and operated by it in connection with the Acquired Business. 3Com is
duly qualified or licensed to do business and is in good standing as a foreign
corporation in the jurisdiction in which the material portion of the Contributed
Assets is located. The execution and delivery of this Agreement and the other
Transaction Agreements to which it is a party, and performance by 3Com of its
obligations hereunder and thereunder, have been duly authorized by all necessary
corporate action on the part of 3Com. This Agreement constitutes, and the
Ancillary Agreements to which it is a party, when executed and delivered by
3Com, will constitute, valid and
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legally binding obligations of 3Com, enforceable against 3Com in accordance with
their respective terms, except (i) as may be limited by (x) applicable
bankruptcy, insolvency, reorganization or others laws of general application
relating to or affecting the enforcement of creditors' rights generally and (y)
the effect of rules of law governing the availability of equitable remedies and
(ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
3.3 GOVERNMENTAL AUTHORIZATION. Except as set forth on SCHEDULE 3.3 of
the disclosure schedule (the "3COM DISCLOSURE SCHEDULE") dated the date hereof
and delivered by 3Com to U.S. Robotics in connection with this Agreement, no
consent, approval, order or authorization of, or registration qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of 3Com is required in connection with the
consummation of the transactions contemplated by this Agreement.
3.4 NONCONTRAVENTION. Except as set forth on SCHEDULE 3.4 of the 3Com
Disclosure Schedule, the execution, delivery and performance by 3Com of each
Transaction Agreement to which it is a party and the consummation of the
transactions contemplated thereby do not and will not (i) violate the
Certificate of Incorporation or Bylaws of 3Com, (ii) assuming compliance with
the governmental matters referred to in Section 3.3, violate any applicable law,
rule, regulation, judgment, injunction, order or decree, (iii) assuming the
obtaining of all Required Consents, to 3Com's Knowledge, constitute a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of 3Com or to a loss of any benefit to which 3Com is
entitled under any provision of any agreement or other instrument binding upon
3Com, or (iv) result in the creation or imposition of any Lien on any
Contributed Asset, except, in the case of clauses (ii) and (iii), individually
and in the aggregate, as would not reasonably be expected to have a Material
Adverse Effect.
3.5 REQUIRED CONSENTS. SCHEDULE 3.5 to the 3Com Disclosure Schedule
sets forth, to 3Com's Knowledge, each material agreement or other instrument
binding upon 3Com requiring a consent or other action by any Person (the "3COM
REQUIRED CONSENTS") as a result of the transactions contemplated by this
Agreement, except (i) consents that may be required in connection with the
Assumed Contracts, and (ii) such consents or actions as would not, individually
or in the aggregate, have a Material Adverse Effect if not received or taken.
3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3.6 or
to the 3Com Disclosure Schedule, to 3Com's Knowledge, since February 29, 2000,
the Acquired Business has been conducted in the ordinary course consistent with
past practices by 3Com and there has not been:
(a) any damage, destruction or loss, whether or not covered by
insurance, with respect to the Contributed Assets or the property that is the
subject of or connected or related to the Real Property Rights, except for
such occurrences that have not resulted, and are not expected to result, in a
Material Adverse Effect;
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(b) any acquisition by 3Com relating to assets or business that
is material to the Acquired Business, other than in the ordinary course of
business, consistent with past practices or as contemplated by this Agreement;
(c) any sale, lease or disposition or commitment to sell, lease
or dispose by 3Com relating to assets or business material to the Acquired
Business, other than in the ordinary course of business, consistent with past
practices or as contemplated by this Agreement;
(d) any (i) employment, deferred compensation, severance,
retirement or other similar agreement (or any amendment to any such existing
agreement) entered into with any employee of the Business relating solely to
the Acquired Business, or (ii) grant of any severance or termination pay to
any Employee of 3Com relating solely to the Acquired Business in each case
other than in the ordinary course of business, consistent with past practices
or as contemplated by this Agreement;
(e) any notice received of termination of any contract, lease or
other agreement relating to the Acquired Business, termination of which could
reasonably be expected to have a Material Adverse Effect;
(f) any incurrence of obligation or liability related solely to
the Acquired Business, absolute, accrued, contingent or otherwise, whether
due or becoming due, 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, none of which
liabilities, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect;
(g) any assignment, mortgage, pledge or Lien relating to any of
the Contributed Assets or any property that is the subject of or connected or
related to the Real Property Rights;
(h) any material amendment or termination of or waiver or
forfeiture of a material right relating to any material contract, agreement
or license that is part of the Contributed Assets or the Real Property
Rights, other than in the ordinary course of business, consistent with past
practices;
(i) any material change in accounting methods or practices with
respect to the condition, operations, business, properties, assets or
liabilities or the Acquired Business; or
(j) any other event that could reasonably be expected to result
in a Material Adverse Effect.
3.7 MATERIAL CONTRACTS. Except for the contracts disclosed in SCHEDULE
3.7 to the 3Com Disclosure Schedule or as contemplated by this Agreement, with
respect to the Acquired Business, to 3Com's Knowledge, 3Com is not a party to or
bound by:
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(a) mortgages, indentures, security agreements or other
agreements and instruments relating to the borrowing of money, the extension
of credit or the granting of liens or encumbrances, in each case with respect
to amounts that are material to the Acquired Business;
(b) employment and consulting agreements;
(c) union or other collective bargaining agreements;
(d) material licenses of patents, trade secrets, know-how,
trademark, copyrights and other Intellectual Property;
(e) agreements, orders or commitments for the purchase of
services, raw materials, supplies or finished products from any one supplier
for an amount in excess of $500,000;
(f) contracts or options relating to the sale by 3Com of any
material asset of the Acquired Business, other than sales of inventory in the
ordinary course of business;
(g) Compensation and Benefit Plans established, maintained or
adopted on behalf of employees of the Business;
(h) contracts restricting the ability of the owner and operator
of the Acquired Business from freely engaging in any business or competing
anywhere in the world; or
(i) other contracts not made in the ordinary course of business
involving more than $500,000.
3.8 LICENSES AND PERMITS. SCHEDULE 3.8 to the 3Com Disclosure Schedule
describes, to 3Com's Knowledge, each governmental license, franchise, permit,
certificate, approval or other similar authorization of 3Com that is material to
the Acquired Business (the "PERMITS") together with the name of the government
agency or entity issuing such Permit. Except as set forth on SCHEDULE 3.8 to the
3Com Disclosure Schedule, to 3Com's Knowledge, (i) the Permits are valid and in
full force and effect, (ii) 3Com is not in default, and no condition exists that
with notice or lapse of time or both would constitute a default, under the
Permits, (iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby, and (iv) upon consummation of such transactions, U.S. Robotics will
acquire all of the right, title and interest in all the Permits. This
representation and warranty expressly excludes licenses, franchises, permits,
certificates, approvals or other authorizations that relate to Intellectual
Property.
3.9 LITIGATION. Except as set forth on SCHEDULE 3.9 to the 3Com
Disclosure Schedule, to 3Com's Knowledge, there is no action, suit,
investigation or proceeding of any nature, whether civil, criminal, regulatory
or otherwise, at law or in equity, pending or threatened against or affecting,
3Com or any of 3Com's properties, in each case to the extent relating solely to
the Acquired Business, before any court or arbitrator or any governmental body,
agency or official, which is
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reasonably likely to have a Material Adverse Effect or which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
3.10 PROPERTIES.
(a) To 3Com's Knowledge, 3Com has good title to the Real
Property Rights and all material personal property and assets included in the
Contributed Assets. To 3Com's Knowledge, none of such property or assets is
subject to any Lien, except:
(i) Liens disclosed on SCHEDULE 3.10(a) to the 3Com
Disclosure Schedule;
(ii) Liens for taxes, assessments and similar charges that
are not yet due or are being contested in good faith and by appropriate
proceedings, if necessary;
(iii) mechanic's, materialman's and similar charges that are
not yet due or are being contested in good faith and by appropriate
proceedings, if necessary;
(iv) Liens arising or incurred in the ordinary course of
business; or
(v) other Liens which do not, individually or in the
aggregate, materially interfere with the present use of, or materially
detract from the value of, any property or assets that are material to the
Acquired Business.
The Liens described in paragraphs (i)-(v) of this Section 3.10(a) are,
collectively, the "PERMITTED LIENS."
(b) To 3Com's Knowledge, the Contributed Assets are in good
operating condition and repair, subject only to ordinary wear and tear, and
to 3Com's Knowledge, neither 3Com nor any property or asset owned, leased or
otherwise used in connection with the Acquired Business is in violation of
any applicable ordinance, regulation, building, zoning, environmental or
other law in respect thereof. To 3Com's Knowledge, (i) the lease which is the
subject of the Real Property Assignment is in full force and effect, (ii) no
default or breach has occurred thereunder and no event has occurred or failed
to occur thereunder which, with the giving of notice or passage of time or
both would constitute a default or breach thereunder, and (iii) except for
the assignment to 3Com, the lease has not been assigned, sublet, transferred,
pledged, mortgaged, hypothecated or otherwise encumbered.
(c) To 3Com's Knowledge, SCHEDULE 3.10(c) to the 3Com
Disclosure Schedule lists all facts that could reasonably be expected to have
a Material Adverse Effect on the operation of the Acquired Business. U.S.
Robotics acknowledges that U.S. Robotics is acquiring the Contributed Assets
and the Acquired Business AS IS, and that, except as expressly set forth in
this Agreement, 3COM MAKES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND OR AS
TO ANY MATTER, INCLUDING AS TO THE MERCHANTABILITY OF ANY OF THE CONTRIBUTED
ASSETS OR THE REAL PROPERTY RIGHTS, THEIR FITNESS FOR A PARTICULAR
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PURPOSE OR THEIR CONDITION, OR ANY NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
3.11 TAXES. 3Com has in all material respects (a) timely filed all
federal, state, local or foreign, income, payroll, withholding, VAT, excise,
sales, use, customs duties, personal property, use and occupancy, business and
occupation, mercantile, real estate, capital stock and franchise or other tax
returns of any kind that specifically relates to the Acquired Business, the
Contributed Assets, the Real Property Rights and the Employees, and such filings
correctly reflect the income, franchise or other tax liability and all other
information reported thereon (rather than 3Com's business generally) (all the
foregoing taxes, including interest and penalties thereon and including
estimated taxes, being hereinafter collectively called "TAXES" and individually
a "TAX"), (b) paid all Taxes which are due in connection with the Acquired
Business, the Contributed Assets, the Real Property Rights and the Employees,
(c) paid all other Taxes for which a notice of assessment or demand for payment
has been received, and (d) there are no Liens for Taxes imposed in respect of
the Acquired Business or the Employees.
3.12 INTELLECTUAL PROPERTY.
(a) To 3Com's Knowledge, except as set forth on SCHEDULE 3.12 to
the 3Com Disclosure Schedule, the Transferred Intellectual Property and the
Licensed Intellectual Property together comprise all 3Com Intellectual
Property reasonably necessary for the operation of the Acquired Business.
(b) Except as set forth on SCHEDULE 3.12 to the 3Com Disclosure
Schedule, to 3Com's Knowledge, neither the manufacture, sale, use of any
products now or heretofore manufactured or sold by 3Com nor the operation of
the Acquired Business infringes the patents or other Intellectual Property
rights of any other Person.
(c) Except as set forth on SCHEDULE 3.12 to the 3Com Disclosure
Schedule, to 3Com's Knowledge, there is no pending or threatened litigation
or other legal action with respect to any of the Transferred Intellectual
Property, and no order, holding, decision or judgment has been rendered by
any court, arbiter, administrative agency or other government authority, and
no agreement, consent or stipulation exists to which, in any such event, 3Com
is a party, which would prevent 3Com, or after the Closing, U.S. Robotics,
from using any such Transferred Intellectual Property.
(d) Except as disclosed in SCHEDULE 3.12 to the 3Com Disclosure
Schedule, to 3Com's Knowledge, the use of the Transferred Intellectual
Property in the operation of the Acquired Business by U.S. Robotics (when
conducted in a manner substantially similar to 3Com's present operation of
the Business) will not result in U.S. Robotics being required either (i) to
pay any material royalties, other payments or consideration, or (ii) to grant
any right, to any third parties, either directly or indirectly or through
3Com, with respect to the Intellectual Property rights of such third parties.
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3.13 LABOR ISSUES. To 3Com's Knowledge, no work stoppage, slowdown,
picketing, concerted refusal to work overtime or labor strike involving the
Acquired Business is pending, threatened or reasonably anticipated. Except as
disclosed in SCHEDULE 3.13 to the 3Com Disclosure Schedule, to 3Com's
Knowledge, 3Com is not involved in, nor has 3Com been threatened with, any
labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. To 3Com's Knowledge, 3Com
has complied with all provisions of applicable laws and regulations
pertaining to employment of employees, including, without limitation, all
such laws and regulations relating to labor relations, equal employment, fair
employment practices, entitlements, prohibited discrimination or other
similar employment practices or acts, and has not engaged in any unfair labor
practices involving the Acquired Business, in each case which could,
individually or in the aggregate, directly or indirectly, reasonably be
expected to result in a Material Adverse Effect. 3Com is not presently, nor
has it in the past, been a party to, or bound by, any collective bargaining
agreement negotiated with its Employees and to 3Com's Knowledge no collective
bargaining agreement is being negotiated by 3Com.
3.14 FOREIGN CORRUPT PRACTICES ACT. Neither 3Com nor, to 3Com's
Knowledge, any director, officer, agent, Employee or other person associated
with or acting on behalf of 3Com in connection with the Acquired Business,
has used corporate funds for any unlawful contribution, gift, entertainment
or other expense relating to political activity or made any direct or
indirect unlawful payment to any United States or foreign government official
or employee from corporate funds or violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977 or paid or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
3.15 PRODUCT WARRANTIES. Except as set forth in SCHEDULE 3.15, (i)
3Com has no material unexpired, expressed, product warranty with respect to
any product that the Acquired Business currently manufactures or sells; (ii)
to 3Com's Knowledge, 3Com has not received any notice of any claim based on
any product warranty for failure of a product due to any single identifiable
cause involving more than 3% of all such products in any fiscal quarter,
except where 3Com has taken an appropriate reserve or provided an appropriate
remedy for the failure. 3Com makes no warranties, expressed or implied, with
respect to any of the products the Acquired Business manufactures or sells or
has manufactured or sold.
3.16 FINDER'S FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on
behalf of 3Com who might be entitled to any fee or commission from U.S.
Robotics upon consummation of the transactions contemplated by this
Agreement.
3.17 ERISA REPRESENTATIONS. Each Compensation and Benefit Plan that
3Com or any Affiliate of 3Com (or deemed affiliate under ERISA or the Code)
maintains, contributes to, or has any liability in respect of current or
former employees, agents, directors, or independent contractors or any
beneficiaries or dependents of any such current or former employees, agents,
directors, or independent contractors has been properly administered in
accordance with its terms and with
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applicable law. SCHEDULE 3.17 to the 3Com Disclosure Schedule sets forth each
such Compensation and Benefit Plan. Copies of such Compensation and Benefit
Plans have been delivered or made available to U.S. Robotics.
3.18 FINANCIAL INFORMATION. To 3Com's Knowledge, the financial
information regarding the Acquired Assets (other than the SAP fixed asset
list generated as of February 28, 2000) and the Acquired Business, and all
assumptions, calculations or adjustments to such financial information that
have been disclosed to U.S. Robotics are correct in all material respects and
do not misrepresent the financial information intended to be conveyed
thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF U.S. ROBOTICS
U.S. Robotics represents and warrants to 3Com as of the date hereof
that:
4.1 CORPORATE EXISTENCE AND POWER. U.S. Robotics is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware and has all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where the failure
to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION. U.S. Robotics has the requisite
corporate power and authority to enter into this Agreement and the other
Transaction Agreements to which it is a party and to perform its obligations
hereunder and thereunder. U.S. Robotics has the requisite corporate power and
authority to carry on the Acquired Business and to own and operate the
properties and assets to be operated by it in connection with the Acquired
Business. U.S. Robotics is duly qualified or licensed to do business and is
in good standing as a foreign corporation in the jurisdiction in which the
material portion of the Contributed Assets is located. The execution and
delivery of this Agreement and the other Transaction Agreements to which it
is a party, and performance by U.S. Robotics of its obligations hereunder and
thereunder, have been duly authorized by all necessary corporate action on
the part of U.S. Robotics. This Agreement constitutes, and the Ancillary
Agreements to which it is a party, when executed and delivered by U.S.
Robotics, will constitute, valid and legally binding obligations of U.S.
Robotics, enforceable against U.S. Robotics in accordance with their
respective terms, except (i) as may be limited by (x) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to
or affecting the enforcement of creditors' rights generally and (y) the
effect of rules of law governing the availability of equitable remedies and
(ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
4.3 GOVERNMENTAL AUTHORIZATION. No consent, approval, order or
authorization of, or registration qualification, designation, declaration or
filing with, any federal, state or local
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governmental authority on the part of U.S. Robotics is required in connection
with the consummation of the transactions contemplated by this Agreement.
4.4 NONCONTRAVENTION. The execution, delivery and performance by
U.S. Robotics of each Transaction Agreement to which it is a party and the
consummation of the transactions contemplated thereby do not and will not (i)
violate the Certificate of Incorporation or Bylaws of U.S. Robotics, (ii)
assuming compliance with the governmental matters referred to in Section 4.3,
violate in any material respect any applicable law, rule, regulation,
judgment, injunction, order or decree, (iii) constitute a default under, or
give rise to any right of termination, cancellation or acceleration of any
right or obligation of U.S. Robotics or to a loss of any benefit to which
U.S. Robotics is entitled under any provision of any material agreement or
other instrument binding upon U.S. Robotics, or (iv) result in the creation
or imposition of any Lien on any of the assets of U.S. Robotics, except, in
the case of clauses (ii) and (iii), individually and in the aggregate, as
would not have a Material Adverse Effect.
4.5 REQUIRED CONSENTS. No consents are required under any material
agreements or other instruments binding upon U.S. Robotics as a result of the
execution, delivery and performance of this Agreement.
4.6 FINANCIAL STATEMENTS. Without giving effect to the transactions
contemplated hereby, U.S. Robotics has not acquired, and has not prepared a
balance sheet showing, assets with a value in excess of $10,000,000, either
as of the end of the immediately preceding month end or as of a date 30 days
or more in advance of the Closing Date.
4.7 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of U.S. Robotics, threatened
against or affecting U.S. Robotics or any of its properties or assets before
any court or arbitrator or any governmental body, agency or official which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement.
4.8 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on
behalf of U.S. Robotics who might be entitled to any fee or commission from
3Com upon consummation of the transactions contemplated by this Agreement.
4.9 WARN ACT. U.S. Robotics is not planning or contemplating, and
has not made or taken, any decisions or actions concerning the conduct of the
Acquired Business after the Closing that would require the service of notice
under the WARN Act.
4.10 CAPITALIZATION. Without giving effect to the transactions
contemplated by the Stock Purchase Agreement, the authorized capital stock of
U.S. Robotics consists of 66,000,000 shares of Common Stock and 69,200,000
shares of Preferred Stock, 56,000,000 shares of which are designated Series A
Preferred Stock and 15,200,000 shares of which are designated Series B
Preferred Stock, of which none are issued and outstanding immediately prior
to the Closing.
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ARTICLE V
COVENANTS
5.1 NONASSIGNABLE CONTRACTS AND PERMITS. Notwithstanding any other
provision of this Agreement or the Ancillary Agreements, this Agreement shall
not constitute an agreement to contribute or transfer to U.S. Robotics any
agreement or any right thereunder, including with respect to any Intellectual
Property, if an attempted contribution or transfer, without the consent of a
third party, would constitute a breach or in any way adversely affect the
rights of U.S. Robotics or 3Com thereunder. U.S. Robotics shall pay all
costs, if any, payable by 3Com to any third parties and reasonably acceptable
to U.S. Robotics in connection with the transfer of contract rights, licenses
or sublicenses in connection with obtaining as such consent. Prior to the
Cutover Date, 3Com shall use its reasonable best efforts to obtain such
consents of third parties. If such consents are not obtained prior to the
Cutover Date, 3Com and U.S. Robotics will cooperate in a mutually agreeable
arrangement under which U.S. Robotics would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement, and U.S.
Robotics shall pay all costs and expenses incurred by U.S. Robotics or 3Com
in connection with such arrangement. In the event any 3Com Required Consents
with respect to the transfer of any agreement or rights are obtained after
the Closing Date, then such agreements shall be Assumed Contracts and such
agreements and rights shall be 3Com Contributed Assets.
5.2 ACCESS TO INFORMATION, CONFIDENTIALITY. Subject to the provision
of the Mutual Nondisclosure Agreement of even date herewith, as amended from
time to time, between 3Com and U.S. Robotics, U.S. Robotics will, with
respect to the Acquired Business, from and after the date of this Agreement
(and including and following the Closing Date), afford promptly to 3Com and
its counsel, financial advisors, auditors and other authorized
representatives reasonable access to its properties, books, records,
employees and auditors to the extent necessary to permit 3Com to determine
any matter relating to its rights and obligations hereunder or to any period
ending on or before the Closing Date, including its financial ability to
consummate the acquisition of the Acquired Business and the transactions
contemplated hereby. U.S. Robotics acknowledges that it shall not have access
to (i) confidential information that relates to 3Com as a whole or to
businesses of 3Com other than the Acquired Business, (ii) any information or
materials required to be kept confidential pursuant to agreements with third
parties or by law, or (iii) any privileged attorney-client communications or
attorney-work product.
5.3 NO SOLICITATION. 3Com covenants and agrees that from and after
the date of the agreement through the date that is one year following the
Closing Date, 3Com shall not solicit or cause or permit to be solicited by
any of its Affiliates any employee of U.S. Robotics for employment by 3Com or
any of its Affiliates. U.S. Robotics covenants and agrees that from and after
the date of this Agreement through the date that is one year following the
Closing Date, U.S. Robotics shall not solicit or cause or permit to be
solicited by any of its Affiliates any employee of 3Com for employment by
U.S. Robotics or any of its Affiliates.
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5.4 REASONABLE BEST EFFORTS; FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement, 3Com and U.S. Robotics will use their
reasonable 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. 3Com and U.S. Robotics agree to 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.
5.5 CERTAIN FILINGS. 3Com and U.S. Robotics shall cooperate with one
another (i) 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 material contracts, in connection with the consummation of the
transactions contemplated by this Agreement, and (ii) in taking such actions
or making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such actions, consents, approvals
or waivers. 3Com and U.S. Robotics will promptly supply to each other copies
of all correspondence, filings or communications by such party with any
governmental agency or member of its staff, with respect to any transactions
contemplated by this Agreement and any related or contemplated or
inconsistent transaction.
5.6 PUBLIC ANNOUNCEMENTS. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby after the
date hereof and prior to the Cutover Date and, except as may be required by
applicable law, will not issue any such press release or make any such public
statement prior to such consultation.
5.7 REQUIRED CONSENTS. 3Com and U.S. Robotics shall use their
reasonable best efforts to obtain the Required Consents prior to the Cutover
Date. Both prior to and following the Cutover Date, U.S. Robotics shall
cooperate with 3Com in connection with 3Com's obtaining any 3Com Required
Consents.
5.8 EMPLOYEES.
(a) U.S. Robotics shall offer employment to all employees of the
listed on SCHEDULE 5.8 to the 3Com Disclosure Schedule. The employment offers
shall be for base salaries at least as favorable to each employee as existing
on the Closing Date with respect to their employment by 3Com. For purposes of
this Agreement, such employees who accept such employment offers shall be
referred to as the "EMPLOYEES." 3Com shall retain liability for any severance
or other payment arising in connection with any employee of 3Com or any
affiliate or deemed affiliate under ERISA or the Code who does not accept an
offer of employment from U.S. Robotics (a "NON-TRANSFERRED EMPLOYEE"),
including any Employee on Leave until such time, if any, as such Employee on
Leave becomes an Employee.
(b) Persons who are employees of the Acquired Business and who
are on inactive status or are on leave of absence from their employment
either as a result of a medical disability or a personnel leave granted by
3Com as of the Closing Date ("EMPLOYEES ON LEAVE") shall not become
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Employees as of the Closing Date. However, U.S. Robotics shall offer
employment at the Acquired Business to each Employee on Leave, such
employment to commence at such time such Employee on Leave returns from
leave. An Employee on Leave shall not be treated as an Employee prior to the
date, if any, he or she is hired by U.S. Robotics, and U.S. Robotics shall
not be liable for any payments to or benefits for an Employee on Leave
preceding such date of hire.
(c) Except as provided specifically in this Agreement, U.S.
Robotics will not assume the Compensation and Benefit Plans or any liability
thereunder. 3Com shall retain liability for and shall indemnify U.S. Robotics
against any liability in connection with all wages, Compensation and Benefit
Plans and related matters, including claims for benefits or other payments by
an Employee or Employee's beneficiary or estate with respect to such
Employee's employment by 3Com or its affiliates prior to the Closing Date.
(d) 3Com shall continue to assume any and all liabilities for
Non-Transferred Employees under any Compensation and Benefit Plans and other
liabilities or obligations concerning or relating to Non-Transferred
Employees and shall indemnify, defend and hold harmless U.S. Robotics from
and against any and all losses, liabilities, claims, complaints, taxes,
damages, costs and expenses arising out of or relating in any way to the
employment, employment practices, terms and conditions of employment or
termination of employment by 3Com of any Non-Transferred Employee, including,
without limitation, any current or future losses, liabilities, claims,
complaints, taxes, damages, costs and expenses regarding the violation of
applicable Federal, state and local laws, rules and regulations relating to
immigration, discrimination, harassment, terms and conditions of employment,
work hours, wages, wages, plant closings or mass layoffs, child labor,
occupational health and safety and the payment and withholding of taxes and
other sums required by governmental authorities.
(e) U.S. Robotics shall provide compensation and benefits plans
to the Employees that are, in the aggregate, comparable to those that are
currently provided to such Employees by 3Com. U.S. Robotics shall take all
steps reasonably necessary to ensure that Employees do not suffer a lapse in
health, dental, vision, life, disability or 401(k) plan coverage. U.S.
Robotics shall cause the waiver of all limitations as to preexisting
conditions, exclusions and waiting periods and service requirements with
respect to participation and coverage requirements applicable to the
Employees immediately prior to employment by U.S. Robotics under any welfare
benefit plans that such Employees may be eligible to participate in after the
Closing Date. U.S. Robotics shall take such actions as are necessary to
provide each such Employee with credit for any co-payments and deductibles
paid prior to the Closing Date for purposes of satisfying any applicable
deductible, out of pocket, or similar requirements for the 2000 calendar year
under the comparable group health plan maintained by U.S. Robotics in which
each such Employee is eligible to participate after the Closing Date. As soon
as practicable after the Closing Date and in accordance with applicable law,
U.S. Robotics shall cause its 401(k) Plan to accept a plan to plan transfer
of the account balances of all Employees under 3Com's 401(k) Plan, which plan
shall vest transferred account balances on at least as rapid a schedule as
would be applicable under 3Com's 401(k) Plan. Thereafter, all Employee 401(k)
plan rights and benefits shall be determined under U.S. Robotics' 401(k) Plan
and as required by law.
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(f) Employees shall be given credit for service performed for
3Com ("SERVICE CREDIT") for purposes of the following benefits:
(i) 401(k)/profit sharing plans (for purposes of
participation, vesting, and as provided in
Section 5.8(e), benefit accrual);
(ii) welfare benefit plans including, but not limited to
short-term disability, long-term disability and
medical plans;
(iv) service awards, if any;
(v) service component of any retirement definition for
defined contribution plans only; and
(vi) defined benefit plans, if any (participation and vesting
only).
(g) Employees will be eligible for grants of options to purchase
U.S. Robotics common stock in accordance with U.S. Robotics regular stock
option grant practices.
(h) Commencing on the date of this Agreement, 3Com and U.S.
Robotics agree to cooperate fully with respect to the employment-related
actions which are necessary or reasonably desirable to accomplish the
transactions contemplated pursuant to this Agreement, including the provision
of records and information as each may reasonably request (including job
titles, short and long-term disability coverage, life insurance coverage,
operator certification and workers' compensation records and information) and
the making of all appropriate filings under the applicable law.
(i) With respect to Employees who are required to be furnished a
Form W-2 for the calendar year in which the Closing Date occurs, U.S.
Robotics and 3Com agree to follow the "standard procedure" set forth in
Revenue Procedure 96-60 with respect to discharging their respective income
and employment tax withholding and reporting obligations with respect to such
employees.
(j) As promptly as practicable after the Closing Date, 3Com
shall pay to the Employees all salary, overtime and other remuneration and
reimbursements for expenses earned, accrued and/or payable for all periods up
to the Closing Date in a manner consistent with 3Com's usual policies for
terminated employees.
(k) Both prior to and following the Closing Date, each party
shall reasonably cooperate (at its own expense) with the other party to
obtain such information as may be necessary or appropriate to satisfy the
requirements of this Section 5.8 and otherwise comply with applicable law.
(l) 3Com hereby waives, effective on and after the Closing Date,
any breach that would result under any agreement made by any Employee in
favor of 3Com not to compete with 3Com, its business activities or otherwise,
solely insofar as such breach arises by virtue of such Employee's employment
by U.S. Robotics in the Acquired Business after the Closing Date.
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(m) 3Com agrees to be responsible for any liability under the
WARN Act or such similar statute or regulation for those employment losses
(as defined in the WARN Act) by 3Com involving the Acquired Business
occurring prior to the Closing. U.S. Robotics agrees to be responsible for
any liability under the WARN Act or such similar statute or regulation for
the termination of any Transferred Employees (defined below) by U.S. Robotics
involving the Acquired Business on or after the Closing Date.
5.9 TAXES. The parties agree that the transfer of the Acquired
Business and the Contributed Assets pursuant to this Agreement is intended to
be an "occasional sale" pursuant to Illinois Reg. Section 130.110 or a "bulk
sale" pursuant to Illinois Reg. Section 130.1701, which is exempt from
Illinois State or local sales tax. Each party agrees to take such actions and
make such filings as the other party may request in furtherance of such
intention. If, contrary to the parties' intent, the transfer of the Acquired
Business and the Contributed Assets pursuant to this Agreement is determined
to be subject to State or local sales taxes, U.S. Robotics will be
responsible for and make all payments required with respect to, and will
indemnify 3Com and hold 3Com harmless from and against, any such taxes. In
addition to any sales taxes referenced in the preceding sentence, U.S.
Robotics shall be responsible for and shall make all payments required with
respect to, any excise, value-added, use, registration, stamp, transfer and
other like taxes. Except as provided in the preceding two sentences, 3Com
will be responsible for and make all payments required with respect to, and
will indemnify U.S. Robotics from and against, any liabilities of 3Com for
unpaid Taxes (with respect to the Acquired Business, the Contributed Assets,
the Real Property Rights or the Employees) for the periods ending on or prior
to the Closing Date.
5.10 INCENTIVE PROGRAM. 3Com shall, use commercially reasonable
efforts to meet U.S. Robotics' $127 million sales forecast for the three (3)
months ending August 31, 2000.
5.11 ADDITIONAL ANCILLARY AGREEMENTS. 3Com and U.S. Robotics shall
use their reasonable best efforts to enter into the Transition Services
Agreement and the Consulting Services Agreement within 14 days after the
Closing Date.
5.12 GENERAL COOPERATION. 3Com and U.S. Robotics shall cooperate
with one another, and direct and permit their respective employees to
cooperate, to the extent reasonably necessary, in connection with any now
existing or hereafter arising action, suit, investigation or proceeding with
regard to the Acquired Business.
5.13 TAX COOPERATION RIDER.
(a) After the Closing Date, each of 3Com and U.S. Robotics shall
(i) provide, or cause to be provided, to each other and each other's
respective subsidiaries, officers, employees, representatives and affiliates,
such assistance as may reasonably be requested by any of them in connection
with the preparation of any tax returns or any tax audits as such returns or
audits may relate to the Acquired Business, the Contributed Assets, or the
Employees and (ii) retain, or cause to be retained, for so long as any
taxable periods or tax audits shall remain open for adjustments, any records
or information which may be relevant to any such tax returns or audits. The
assistance provided for in this Section 5.13 shall include, without
limitation, each of 3Com and U.S. Robotics
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(x) making their agents and employees and the agents and employees of their
respective subsidiaries and affiliates available to each other on a mutually
convenient basis to provide such assistance as might reasonably be expected
to be of use in connection with any such tax returns or audits and (y)
providing, or causing to be provided, such information as might reasonably be
expected to be of use in connection with any such tax returns or audits,
including, without limitation, records, returns, schedules, documents, work
papers, opinions, letters or memoranda, or other relevant materials relating
thereto.
(b) Each party shall promptly inform, keep regularly apprised of
the progress with respect to and notify the other party in writing not later
than (i) as soon as possible after the receipt of any notice of any audit or
(ii) fifteen business days prior to the settlement or final determination of
any audit for which it was responsible pursuant to Section 5.9 hereof which
could affect the tax liability of U.S. Robotics for any taxable period.
ARTICLE VI
CUTOVER DATE
6.1 MASTER SERVICES AGREEMENT. 3Com and U.S. Robotics acknowledge
that pursuant to the Master Services Agreement, from the Closing Date to the
date on which the implementation by 3Com of a separate resource planning
application, including a separate instance of SAP (systems, applications and
products) for the Acquired Business has been completed in accordance with
objective criteria which have been reasonably agreed to by 3Com and U.S.
Robotics (the "CUTOVER DATE"), U.S. Robotics will act as a service
corporation to provide certain sales, marketing, customer service, supply
chain, product development and testing activities on behalf of 3Com. The
parties acknowledge that the Cutover Date is intended to occur on or before
September 1, 2000. U.S. Robotics agrees that prior to the Cutover Date, it
shall not conduct any business other than that contemplated by the Master
Services Agreement.
6.2 ASSUMED LIABILITIES. As of the Cutover Date, those Assumed
Liabilities noted on SCHEDULE 1.1-D to this Agreement as transferring as of
the Cutover Date rather than the Closing Date shall be deemed transferred to
and assumed by U.S. Robotics, without further action on the part of either
party. Prior to the Cutover Date, any changes to the warranty reserve
calculations shall be mutually agreed between 3Com and U.S. Robotics.
6.3 CUTOVER DATE CONTRIBUTED ASSETS. As of the Cutover Date, the
Cutover Date Contributed Assets shall be contributed to U.S. Robotics by 3Com
without payment or delivery of any additional consideration.
6.4 LIST OF CONTRIBUTED ASSETS. On or prior to the Cutover Date,
3Com shall provide U.S. Robotics with a final, audited list of the
Contributed Assets, which shall be deemed to constitute SCHEDULE 1.1-A to
this Agreement. If U.S. Robotics reasonably believes that other assets exist
that have been and will continue to be used by both 3Com and U.S. Robotics or
that are otherwise necessary for operation of the Acquired Business
("ADDITIONAL ASSETS"), which Additional Assets
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are not on SCHEDULE 1.1-A, then 3Com and U.S. Robotics shall use their
commercially reasonable efforts to determine in good faith whether such
Additional Assets shall be added to SCHEDULE 1.1-A. In addition, if 3Com
reasonably believes that any assets were included in SCHEDULE 1.1-A in error,
then 3Com and U.S. Robotics shall use their commercially reasonable efforts
to determine in good faith whether such assets shall be removed from SCHEDULE
1.1-A. The Additional Assets shall be included on the final SCHEDULE 1.1-A
and removed assets shall be excluded thereof at no cost to U.S. Robotics.
6.5 CHANNEL INVENTORY.
(a) UNITED STATES. 3Com shall use its commercially reasonable
efforts to ensure that the channel inventory for the United States region at
the Cutover Date shall not exceed four weeks' supply computed using the
average run rate for the sales out of the channel during the prior three
months.
(b) EUROPE. 3Com shall use its commercially reasonable efforts
to ensure that the channel inventory for the European region at the Cutover
Date shall not exceed six weeks' supply computed using the average run rate
for the sales out of the channel during the prior three months.
(c) ASIA PACIFIC. 3Com shall use its commercially reasonable
efforts to ensure that the channel inventory for the Asia Pacific region at
the Cutover Date shall not exceed six weeks' supply computed using the
average run rate for the sales out of the channel during the prior three
months.
6.6 ADDITIONAL TRANSITION SERVICES. On or prior to the Cutover Date,
3Com and U.S. Robotics shall agree upon such schedules to the Transition
Services Agreement as are reasonably necessary to reflect the services to be
provided by 3Com to U.S. Robotics following termination of the Master
Services Agreement.
6.7 EFFECT OF CUTOVER DATE. 3Com and U.S. Robotics acknowledge and
agree that the Cutover Date shall occur and the Master Services Agreement
shall terminate regardless of whether or not, by the Cutover Date, U.S.
Robotics has been able to secure from Persons other than 3Com the right to
use such Intellectual Property as U.S. Robotics believes necessary or
desirable to conduct the Acquired Business. In addition, on and after the
Cutover Date, 3Com shall have no obligation to sell any analog modem or other
products to U.S. Robotics, and U.S. Robotics shall have no obligation to
purchase any analog modem or other products from 3Com.
ARTICLE VII
MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with federal law as it applied to patents, copyrights and
trademarks and in accordance with the laws
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of the State of California as applied to contracts entered into and to be
performed entirely within the State of California.
7.2 THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended, nor shall it be constructed, to confer any rights or benefits upon
any person (including, but not limited to, any employee or former employee of
3Com) other than the parties hereto.
7.3 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
hereto, the Ancillary Agreements and the Stockholder Rights Agreement, each
dated as of the date hereof and among the parties hereto contain the entire
agreement between the parties with respect to the transfer of the Contributed
Assets to U.S. Robotics, and constitutes the complete, final and exclusive
embodiment of the parties agreement with respect to that subject matter and
supersedes all prior agreements whether written or oral which may have been
entered into by the parties on the subject matter.
7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that no party hereto will assign its rights
or delegate its obligations under this Agreement without the express written
consent of the other parties hereto.
7.5 FURTHER ASSURANCES. Each party hereto shall execute, deliver,
file and record, or cause to be executed, delivered, filed and recorded, such
further agreements, instruments and other documents, and take, or cause to be
taken, such further actions, as the other party hereto may reasonably request
as being necessary or advisable to effect or evidence the transactions
contemplated by this Agreement.
7.6 AMENDMENT. No change, modification or amendment of this
Agreement shall be valid or binding on the parties unless such change or
modification shall be in writing signed by the party against whom the same is
sought to be enforced.
7.7 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to 3Com, to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, CA 95052
Attention: Jef Graham
Telecopy: 408-326-8488
Telephone: 408-326-5000
with a copy to:
3Com Corporation
5400 Bayfront Plaza
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Santa Clara, CA 95052
Attention: General Counsel
Telecopy: 408-326-6434
Telephone: 408-326-5000
and
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94034
Attention: Kathleen B. Bloch, Esq.
Telecopy: 650-493-6811
Telephone 650-493-9300
if to U.S. Robotics, to:
U.S. Robotics Corporation
3800 Golf Road
Rolling Meadows, Illinois 60056
Attention: President
Telecopy:
Telephone: 847-262-5000
with a copy to each of:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attention: Ronald B. Given, Esq.
Telecopy: 312-706-8137
Telephone: 312-701-7382
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: David W. Pollak, Esq.
Telecopy: 212-309-6273
Telephone: 212-309-6000
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Michael Gisser, Esq.
Telecopy: 213-687-5600
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Telephone: 213-687-5213
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to
5:00 p.m. in the place of receipt and such day is a business day in the place
of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding business day in
the place of receipt.
7.8 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
7.9 REPRESENTATION BY COUNSEL; INTERPRETATION. 3Com and U.S.
Robotics each acknowledge that each party to this Agreement has been
represented by counsel in connection with this Agreement and the transactions
contemplated by this Agreement. Accordingly, any rule of law or any legal
decision that would require interpretation of any claimed ambiguities in this
Agreement against the party that drafted it has no application and is
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of 3Com and U.S. Robotics.
7.10 LIMITATION OF LIABILITY. In the event 3Com is determined liable
to U.S. Robotics for damages incurred or suffered by U.S. Robotics as a
result of any misrepresentation or breach of warranty set forth herein, in no
event shall the aggregate amount of 3Com's liability for all such
misrepresentations or breach of warranty exceed $2,000,000.
7.11 CONSENT TO JURISDICTION. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof shall be brought and maintained exclusively in the
state or federal courts located in the State of California. Each of the
parties by execution hereof (i) hereby irrevocably submits to the
jurisdiction of the state and federal courts located in the County of Santa
Clara, State of California, for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to
the jurisdiction of the above-named court, that it is immune from
extraterritorial injunctive relief, that his or its property is exempt or
immune from attachment or execution, that any such action, suit or proceeding
may not be brought or maintained in the above-named court should be dismissed
on the grounds of forum non conveniens, should be transferred to any court
other than the above-named court, should be stayed by virtue of the pendency
of any other action, suit or proceeding in any court other than the
above-named court, or that this Agreement or the subject matter hereof may
not be enforced in or by the above-named court. Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding
in any manner permitted by the laws of the State of California, agrees that
service of process by registered or certified mail, return receipt requested,
at the address specified in or pursuant to Section 7.7 hereof is reasonably
calculated to give actual notice and waives and agrees not to assert by way
of motion, as
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a defense or otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 7.1 hereof does not
constitute good and sufficient service of process. The provisions of this
Section 7.11 shall not restrict the ability of any party to enforce in any
court any judgment obtained in the state or federal courts located in the
State of California.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
3COM CORPORATION
By: /s/ Jeffrey Graham
----------------------------
Name: Jeffrey Graham
Title: Senior Vice President
Personal Connectivity
U.S. ROBOTICS CORPORATION
By: /s/ Tim Kattner
----------------------------
Name: Tim Kattner
Title: Vice President
By: /s/ Paul Kim
----------------------------
Name: Paul Kim
Title: Chief Financial Officer
[SIGNATURE PAGE TO ASSET CONTRIBUTION AGREEMENT]
<PAGE>
SCHEDULE 1.1-A
CONTRIBUTED ASSETS
[To be provided pursuant to section 6.3]
<PAGE>
SCHEDULE 1.1-B
TRANSFERRED
INTELLECTUAL PROPERTY
1. Trademarks:
AUDIOMODEM
COURIER
DATABURST
DATAVIEW
EUPHONICS
RAPIDCOMM
SPORTSTER
U.S. ROBOTICS
USROBOTICS logo
U.S. ROBOTICS X2 TECHNOLOGY logo
V.EVERYTHING
V.EVERYWHERE
X2
X2 logo
X2/DSL
X3
X4
WINM
WINMODEM
PRISM
SOUNDLINK
SOUNDLINK COMMANDER
2. www.USR.com and related U.S. Robotics domain names presently owned
by 3Com.
3. Trade dress associated with the "Transferred Products," as defined in
the Intellectual Property License Agreement, other than ISDN modem
products.
4. Software resident on test equipment that is part of the Contributed
Assets and that is used solely in connection with the Acquired
Business, which shall be transferred to U.S. Robotics to the extent
permitted under the terms thereof.
<PAGE>
SCHEDULE 1.1-C
EXCLUDED ASSETS
None.
<PAGE>
SCHEDULE 1.1-D
ASSUMED LIABILITIES,
INCLUDING ASSUMED CONTRACTS
** Indicates liability assumed as of Cutover Date rather then Closing Date.
** 1. Through November 30, 2001, U.S. Robotics will have all analog
only mobile products currently manufactured by Manufacturers'
Services Salt Lake City Operations ("MSSLC") continue to be
manufactured by MSSLC.
** 2. Stock rotation/price protection reserves. While reserves will
remain with 3Com, U.S. Robotics will purchase from 3Com at cost
stock rotated products that were returned to 3Com, so long as
such products are then considered current. If stock rotated
products sold by 3Com are returned to U.S. Robotics up to 90 days
after the Cutover Date, then U.S. Robotics will return such
products to 3Com and 3Com will reimburse to U.S. Robotics the
amount of the credit granted by U.S. Robotics to the customer. If
products are returned to U.S. Robotics more than 90 days but
fewer than 120 days after the Cutover Date, U.S. Robotics and
3Com shall cooperate to determine payment for and disposition of
such products.
** 3. Warranty reserve. Cash reserve will be transferred to U.S.
Robotics, and 3Com will subcontract warranty work to U.S.
Robotics.
** 4. OEM hub inventory which is considered current will be purchased
by U.S. Robotics from 3Com at book value.
** 5. Other accounts payable. Cash reserve will be transferred to U.S.
Robotics and U.S. Robotics shall be responsible for making
payment to associated vendors.
<PAGE>
SCHEDULE 1.1-E
CUTOVER DATE CONTRIBUTED ASSETS
1. Cash associated with reserves (including the warranty reserve and
other accounts payable).
2. Licenses from third parties with respect to 3Com Intellectual
Property that 3Com does not need to retain, provided that either (i)
such Intellectual Property is assignable without consent and without
cost, or (ii) if any consent or payment is required, such consent
has been obtained and such cost has been paid by U.S. Robotics.
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EXHIBIT A-1
INTELLECTUAL PROPERTY LICENSE AGREEMENT
<PAGE>
EXHIBIT A-2
TRADEMARK LICENSE AGREEMENT
<PAGE>
EXHIBIT B
MASTER SERVICES AGREEMENT
<PAGE>
EXHIBIT C
TRANSITION SERVICES AGREEMENT
<PAGE>
EXHIBIT D
BILL OF SALE
<PAGE>
EXHIBIT E
ASSUMPTION AGREEMENT
<PAGE>
EXHIBIT F-1
REAL PROPERTY LICENSE
<PAGE>
EXHIBIT F-2
MULTI-SITE LICENSE
<PAGE>
EXHIBIT G
ASSIGNMENT OF LEASE AND FORM OF CONSENT TO ASSIGNMENT
<PAGE>
EXHIBIT H
WARRANT
