UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 1999
BENCHMARK ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-10560 74-2211011
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3000 TECHNOLOGY DRIVE, ANGLETON, TEXAS 77515
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (409) 849-6550
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ITEM 5. OTHER EVENTS.
On January 22, 1999 Benchmark Electronics, Inc. ("Company") and its
subsidiary BEI Electronics Ireland Limited entered into an agreement with Ascend
Communications, Inc. ("Ascend") and its subsidiary Stratus Computer Ireland
("Stratus") to purchase certain inventory and equipment, and to hire certain
employees, of Stratus. The assets are being purchased at book value, currently
estimated at $48,000,000 in the aggregate. After the purchase, Benchmark will
provide systems integration and testing services to both Ascend and Stratus
Holdings Limited, the former Enterprise Computer Division of Stratus Computer
Inc. being divested by Ascend, for a three year period. Financing for the
purchase is expected to be provided from cash generated from operations and
draws under a new revolving credit facility.
Completion of the transaction is subject to satisfaction of customary
conditions to closing, including receipt of certain regulatory approvals.
Benchmark expects the transaction to close on or about March 1, 1999.
This report contains certain forward-looking statements regarding the
Company's business operations. The words "expect," "estimate," "anticipate,"
"predict," and similar expressions are intended to identify these
forward-looking statements. Such statements involve risks, uncertainties and
assumptions, including but not limited to industry and economic conditions and
customer actions discussed in the Company's filings with the Securities and
Exchange Commission, and the risk of receipt of government approvals and the
satisfaction of the other conditions to closing the transaction. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those
indicated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following materials are filed as exhibits to this Current Report
on Form 8-K.
EXHIBIT
NUMBER DESCRIPTION
2.1 Purchase and Sale Agreement by and between Stratus
Computer Ireland, Ascend Communications, Inc., BEI
Electronics Ireland Limited and Benchmark
Electronics, Inc. dated January 22, 1999.
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S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BENCHMARK ELECTRONICS, INC.
Dated: February 5, 1999 By: /s/ DONALD E. NIGBOR
Donald E. Nigbor
President
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Purchase and Sale Agreement by and between Stratus
Computer Ireland, Ascend Communications, Inc., BEI
Electronics Ireland Limited and Benchmark
Electronics, Inc. dated January 22, 1999.
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EXHIBIT 2.1
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
STRATUS COMPUTER IRELAND
ASCEND COMMUNICATIONS, INC.
SELLER
AND
BEI ELECTRONICS IRELAND LIMITED
AND
BENCHMARK ELECTRONICS, INC.,
PURCHASER
REGARDING
THE SALE OF CERTAIN ASSETS OF
SELLER IN THE REPUBLIC OF IRELAND
JANUARY 22, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1
Section I.1 ACTION...............................................1
Section I.2 AFFILIATE............................................2
Section I.3 AGREEMENT............................................2
Section I.4 ASSETS...............................................2
Section I.5 AUTHORITY OR AUTHORITIES.............................2
Section I.6 CLOSING..............................................2
Section I.7 CLOSING DATE.........................................2
Section I.8 CLOSING DATE EQUIPMENT VALUE.........................2
Section I.9 CLOSING DATE INVENTORY VALUE.........................2
Section I.10 EFFECTIVE TIME.......................................2
Section I.11 ENCUMBRANCES.........................................2
Section I.12 EQUIPMENT............................................2
Section I.13 EXCLUDED ASSETS......................................3
Section I.14 EXCLUDED RECORDS.....................................3
Section I.15 FACILITIES SHARING AGREEMENT.........................3
Section I.16 GAAP.................................................3
Section I.17 HSR ACT..............................................3
Section I.18 IDA..................................................3
Section I.19 DELETED TEXT.........................................3
Section I.20 DELETED TEXT.........................................3
Section I.21 INTELLECTUAL PROPERTY................................3
Section I.22 INVENTORIES..........................................3
Section I.23 LEGAL REQUIREMENTS...................................4
Section I.24 LOSSES...............................................4
Section I.25 MANUFACTURING AGREEMENT..............................4
Section I.26 MERGERS ACT..........................................4
Section I.27 NEWCO................................................4
Section I.28 OPERATIVE DOCUMENTS..................................4
Section I.29 PERMITS..............................................4
Section I.30 PERSON...............................................4
Section I.31 PURCHASE PRICE.......................................4
Section I.32 PURCHASER............................................4
Section I.33 DELETED TEXT.........................................4
Section I.34 RECORDS..............................................4
Section I.35 SELLER...............................................5
Section I.36 SELLER'S ACCOUNT.....................................5
Section I.37 SELLER'S DISCLOSURE SCHEDULES AND DISCLOSURE
SCHEDULES .........................................5
Section I.38 DELETED TEXT.........................................5
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Section I.39 SERVICES AGREEMENT...................................5
Section I.40 SETTLEMENT STATEMENT.................................5
Section I.41 SUCCESSOR EMPLOYEES..................................5
Section I.42 DELETED TEXT.........................................5
ARTICLE II SALE AND PURCHASE OF ASSETS......................................5
Section II.1 SALE AND PURCHASE OF ASSETS..........................5
SECTION II.2 CONTRACTS AND LIABILITIES OF SELLER..................6
Section II.3 APPORTIONMENT........................................6
ARTICLE III PURCHASE PRICE...................................................6
Section III.1 PURCHASE PRICE.......................................6
Section III.2 PAYMENTS AT CLOSING..................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.........................7
Section IV.1 STATUS AND AUTHORITY.................................7
Section IV.2 ENFORCEABILITY.......................................7
Section IV.3 GOVERNMENTAL AND OTHER CONSENTS......................7
Section IV.4 TITLE................................................7
Section IV.5 NO BREACH, ETC.......................................7
Section IV.6 COMPLIANCE WITH LAWS; PERMITS........................8
Section IV.7 CONTRACTS, ETC.......................................8
Section IV.8 PENSIONS AND BENEFITS................................8
Section IV.9 INTELLECTUAL PROPERTIES..............................9
Section IV.10 LITIGATION...........................................9
Section IV.11 BROKERS..............................................9
Section IV.12 CONDITION OF EQUIPMENT...............................9
Section IV.13 LABOR MATTERS........................................9
Section IV.14 INSOLVENCY..........................................11
Section IV.15 VALUE ADDED TAX.....................................11
Section IV.16 WITHHOLDING INFORMATION.............................12
Section IV.17 DISCLOSURE OF INFORMATION...........................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................12
Section V.1 CORPORATE STATUS AND AUTHORITY......................12
Section V.2 ENFORCEABILITY......................................12
Section V.3 GOVERNMENTAL AND OTHER CONSENTS.....................12
Section V.4 NO BREACH; ETC......................................12
Section V.5 BROKERS.............................................13
ARTICLE VI COVENANTS AND CERTAIN ACTIONS OF THE PARTIES....................13
Section VI.1 ACCESS PRIOR TO CLOSING DATE........................13
Section VI.2 RESTRICTIONS ON SUCCESSOR EMPLOYEES AND ASSETS......13
Section VI.3 ORDINARY COURSE.....................................14
Section VI.4 EXCLUSIVE NEGOTIATIONS..............................15
Section VI.5 EMPLOYEE MATTERS....................................15
Section VI.6 ACCESS AFTER CLOSING DATE...........................16
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Section VI.7 SALES TAXES.........................................17
Section VI.8 HSR ACT.............................................17
SectionVI.9 MERGERS ACT.........................................17
ARTICLE VII CONDITIONS TO CLOSING...........................................17
Section VII.1 CONDITIONS TO THE OBLIGATION OF PURCHASER...........17
Section VII.2 CONDITIONS TO THE OBLIGATION OF SELLER..............19
ARTICLE VIII CLOSING ....................................................20
Section VIII.1 CLOSING.............................................20
Section VIII.2 PURCHASE PRICE ADJUSTMENT...........................21
ARTICLE IX, LIMITED SURVIVAL OF CERTAIN REPRESENTATIONS AND WARRANTIES......22
Section IX.1 General Limitations......................................22
Section IX.2 Further Limitations.................................22
Section IX.3 Recovery From Third Parties.........................23
Section IX.4 Co-operation........................................23
Section IX.5 Treatment of Payments under Warranties..............23
ARTICLE X MISCELLANEOUS...................................................24
Section X.1 DISCLAIMER..........................................24
Section X.2 MODIFICATION; WAIVER................................24
Section X.3 ENTIRE AGREEMENT....................................24
Section X.4 EXPENSES............................................24
Section X.5 RIGHTS AND REMEDIES.................................25
Section X.6 FURTHER ACTIONS.....................................25
Section X.7 DISCLOSURE..........................................25
Section X.8 NOTICES.............................................25
Section X.9 ASSIGNMENT..........................................26
Section X.10 SEVERABILITY........................................26
Section X.11 COUNTERPARTS........................................27
Section X.12 HEADINGS; REFERENCES................................27
Section X.13 GOVERNING LAW.......................................27
Section X.14 PRONOUNS AND PLURALS................................27
SELLER'S DISCLOSURE SCHEDULES
Schedule 1.1 General Disclosure Schedule
Schedule IV.13 Employment Matters
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated this 22d day of January, 1999 is
by and between BENCHMARK ELECTRONICS, INC., a Texas corporation with its
principal place of business at 3000 Technology Drive, Angleton, Texas, U.S.A.
77515 ("Benchmark"), BEI ELECTRONICS IRELAND LIMITED, a private limited company
organized under the laws of the Republic of Ireland with its principal place of
business located at Blanchardstown Industrial Park, Dublin 15, Republic of
Ireland and a wholly owned subsidiary of Benchmark ("Company" and, together with
Benchmark, the "Purchaser"), ASCEND COMMUNICATIONS INC., a Delaware Corporation
with its principal place of business located at 1701 Harbor Bay Parkway,
Alameda, California, U.S.A., USA 94502 ("Ascend") and STRATUS COMPUTER IRELAND a
private unlimited liability company organized under laws of the Republic of
Ireland with its principal place of business at 41 Cedar Avenue, Hamilton, HM
12, Bermuda ("Stratus" and together with Ascend, the "Seller").
W I T N E S S E T H:
WHEREAS, Stratus is a supplier of computer systems and services having
a manufacturing facility in the Republic of Ireland; and
WHEREAS, Seller desires to sell to Purchaser certain fixed assets and
current inventory and to transfer certain employees, in the Republic of Ireland
of Stratus associated with the systems integration service to Purchaser and to
enter into a Services Agreement with Purchaser pursuant to which Purchaser will
provide systems integration services to Seller on a contract basis, all as
provided herein; and
WHEREAS, Purchaser desires to purchase certain fixed assets and certain
current inventory of Seller and hire certain employees in the Republic of
Ireland of the Seller and enter into a Services Agreement and a Manufacturing
Agreement with Seller pursuant to which Purchaser will provide systems
integration services to Seller and to Newco on a contract basis all as provided
herein;
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, and the payments herein provided for, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed to them in
this Article I unless such terms are defined elsewhere in this Agreement.
Section I.1 ACTION: Any action, lawsuit, investigation, proceeding, claim,
demand or other legal or arbitral proceeding before, or initiated by, any
Authority, including, but not limited
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to, any common or civil law action, or any other action under any theory or
process of recovery or relief, at law or in equity, whether based on nuisance,
negligence, trespass, strict liability, contract, statute or regulation and any
proceeding initiated by any Authority to issue, modify, adopt, revoke, suspend,
terminate or enforce the provisions of any Permit to the extent that such a
proceeding attempts to redress any violation or alleged violation of any Permit.
Section I.2 AFFILIATE: Any Person controlling, controlled by, or under
common control with Seller or Purchaser, as the case may be. The term "control"
as used in the preceding sentence means, with respect to a corporation, the
right to exercise, directly or indirectly, 50% or more of the voting rights
attributable to the shares of the controlled corporation, and with respect to
any Person other than a corporation, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
Person.
Section I.3 AGREEMENT: This Purchase and Sale Agreement and the schedules
attached hereto.
Section I.4 ASSETS: Equipment and Inventory, excluding the Excluded
Assets.
Section I. 5 AUTHORITY OR AUTHORITIES: Any governmental entity of
competent jurisdiction including any federal, state, municipal, local or other
governmental body, agency, court or instrumentality, whether an executive,
legislative, judicial, regulatory, or administrative agency, board, commission,
court or other authority of the United States of America, the European Union or
the Republic of Ireland.
Section I. 6 CLOSING: As defined in Section 8.1.
Section I.7 CLOSING DATE: As defined in Section 8.1.
Section I.8 CLOSING DATE EQUIPMENT VALUE: The book value of the Equipment,
net of depreciation, as of the Closing Date, determined in accordance with GAAP.
Section I.9 CLOSING DATE INVENTORY VALUE: The book value of the Inventory
as of the Closing Date, determined in accordance with GAAP on a FIFO basis.
[Section I.10 EFFECTIVE TIME: 12:01 a.m. Dublin, Ireland Time, on the
Closing Date.]
Section I.11 ENCUMBRANCES: Any title defect, mortgage, lien, assignment,
pledge, hypothecation, security interest, title retention agreement,
preferential purchase right, levy, execution, seizure, attachment, garnishment,
deemed trust, trust claim, easement or other charge or encumbrance, of any kind
whatsoever, legal or equitable.
Section I. 12 EQUIPMENT: All fixed assets, equipment, machines, parts,
materials, supplies, furniture and forklifts, excluding the Inventories
(including the items of Equipment described in the
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documents referred to in item 42 of Attachment A to the Schedule 1.1 save for
the items referred to in Michael Sparksman's e-mail of 23rd December 1998 to
Cary Fu of the Purchaser).
Section I.13 EXCLUDED ASSETS: All tangible and intangible assets,
properties, contracts and rights, including but not limited to Intellectual
Property rights, of Seller not included in the Assets.
Section I.14 EXCLUDED RECORDS: Any other Records of Seller to the extent
not related to the Assets or the Successor Employees.
Section I. 15 FACILITIES SHARING AGREEMENT: the Agreement to be negotiated
between the date of this Agreement and Closing allowing the Purchaser to share
the use of certain of the Seller's premises at Blanchardstown from the Closing
Date until not later than 31st December, 1999.
Section I.16 GAAP: Generally accepted accounting principles in the United
States of America, consistently applied.
Section I.17 HSR ACT: The Hart-Scott-Rodino Antitrust Improvements Act of
1976 of the United States, as amended, including the rules and regulations
promulgated thereunder.
Section I.18 IDA: Industrial Development Agency of Ireland.
Section I.19 DELETED TEXT:
Section I. 20 DELETED TEXT:
Section I.21 INTELLECTUAL PROPERTY: Intellectual property of any kind
used, held for use or developed for use by Seller; in connection with the Assets
including, without limitation, (i) designs, inventions, patents, patent
applications, patent rights (including, without limitation, any patents issuing
on such applications or rights); (ii) registered and unregistered trademarks,
trade names and registrations and applications therefor and user and other
trademark rights and the goodwill associated therewith; (iii) registered and
unregistered service marks and service mark registrations and applications
therefor and the goodwill associated therewith; (iv) registered and unregistered
brand names, slogans and logos and the goodwill associated therewith; (v)
copyrights, copyright applications and copyright registrations which were filed
or recorded; (vi) trade secrets, proprietary technology and processes, and
software; (vii) product and label registrations; (viii) any other proprietary
information and know how used, held for use or developed for use with the
Assets; and (ix) all renewals, modifications, extensions, reissues, divisions
and continuations of any of, and all licenses and leases of, the aforesaid
items.
Section I.22 INVENTORIES: The components, subassemblies and other
materials required to support the six month demand horizon forecast at 28th
February 1999 calculated as per the Seller's books excluding (1) RSS's and (2)
Components, subassemblies and other materials as calculated using the model as
detailed in Attachment M to the Services Agreement. The remaining inventory
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outside of the initial six months demand horizon shall be consigned to and
managed by Purchaser on a consignment basis
Section I.23 LEGAL REQUIREMENTS: Any and all applicable (a) federal, state
and local laws (statutory and administrative), rules, approvals, ordinances,
regulations, directions or decisions of any Authority, and (b) judgments,
orders, writs, injunctions and decrees of any Authority; excluding any Permits,
and (c) any common, civil or other judicially recognized law.
Section I. 24 LOSSES: Any losses, liabilities, damages, costs and expenses
(including reasonable attorney's fees and costs of investigation).
Section I. 25 MANUFACTURING AGREEMENT: A Manufacturing Agreement of even
date herewith among Seller and Purchaser pursuant to which Purchaser has agreed
to perform certain manufacturing services and which is to be assigned by Seller
to a newly-formed entity contemporaneously with the completion by Ascend of the
previously announced divestiture of Stratus' non-telecom business to Stratus
Holdings Limited, a Cayman Islands Company ("Newco").
Section I.26 MERGERS ACT: The Mergers, Take-overs and Monopolies (Control)
Act, 1978 of the Republic of Ireland, as amended.
Section I.27 NEWCO: Has the meaning set forth in Section 1.25.
Section I.28 OPERATIVE DOCUMENTS: This Agreement, the Manufacturing
Agreement, the Services Agreement, the Facilities Sharing Agreement, the
Settlement Statement and all other documents executed and delivered by Seller or
Purchaser at Closing.
Section I.29 PERMITS: Any and all permits, authorizations, certificates,
approvals, registrations or other approvals and licenses (including
Environmental Permits) granted by any Authority in connection with the Assets.
Section I.30 PERSON: An individual, partnership, joint venture,
corporation, bank, trust, unincorporated organization, and/or a government or
any department or agency thereof.
Section I.31 PURCHASE PRICE: As defined in Section 3.1.
Section I.32 PURCHASER: As defined above in the preamble.
Section I.33 DELETED TEXT:
Section I.34 RECORDS: All agreements, documents, manuals, books, records,
invoices, data, drawings, diagrams, pictorial or graphic works, photographs,
films, specifications, testing data, audits, filings and notices to or from any
Authority, and any other documentary material and files in the possession of the
Seller or any of its Affiliates or held on their behalf to the extent
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relating to the Assets, whether maintained on hard copy, microfiche, microform,
machine readable record or other data storage media or computer or magnetic
tapes, disks or other computer storage device or in other physical form, but
excluding the Excluded Records.
Section I.35 SELLER: As defined above in the preamble.
Section I.36 SELLER'S ACCOUNT: A bank account in Bermuda designated in
writing by Seller to Purchaser at least two days prior to the Closing Date.
Section I. 37 SELLER'S DISCLOSURE SCHEDULES AND DISCLOSURE Schedules:
Collectively, the Seller's disclosure schedules as attached hereto and subject
to amendment under the terms of Section VII.1(a) hereof and all documents
attached as part of this Agreement and identified as a Seller Disclosure
Schedule, which are part of this Agreement.
Section I.38 DELETED TEXT:
Section I.39 SERVICES AGREEMENT:: A Services and Supply Agreement of even
date herewith among Seller and Purchaser pursuant to which Purchaser has agreed
to perform systems integration services for Seller.
Section I. 40 SETTLEMENT STATEMENT: As defined in Section 7.2.
Section I.41 SUCCESSOR EMPLOYEES: Those employees of Seller transferring
to Purchaser and listed in the document referred to at item 47 of Attachment A
to Schedule 1.1.
Section I.42 DELETED TEXT:
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section II.1 SALE AND PURCHASE OF ASSETS. In accordance with the terms,
covenants and conditions set out in this Agreement the Seller, as beneficial
owner, agrees to sell, assign, transfer, convey and deliver to the Purchaser,
and the Purchaser agrees to purchase and accept from the Seller on the Closing
Date all of the Seller's right, title and interest in and to the Assets. The
Seller shall procure that on the Closing Date the Assets shall not be subject to
any charge, mortgage, lien, bill of sale, interest of any other person under a
leasing or hire purchase agreement or other Encumbrance whatsoever save as
disclosed in Seller's Disclosure Schedules and that the Seller shall have the
absolute and unconditional right to transfer to the Purchaser a good and
complete title thereto.
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Section II.2 CONTRACTS AND LIABILITIES OF SELLER:. Save as provided in
this Agreement, the Purchaser shall not be obliged to discharge any obligations
of Seller relating to the Assets under contracts of Seller.
Section II.3 APPORTIONMENT. (a) All periodical charges and outgoings
related to the Assets and (b) all liabilities in relation to salaries, wages
accrued , holiday pay for weekly paid Successor Employees, social insurance,
pension contributions, PAYE remittances and all other payments to or in respect
of the Successor Employees shall be apportioned on a time basis so that such
part of the relevant charges attributable to the period ended on the Closing
Date shall be borne by the Seller and such part of the relevant charges
attributable to the period commencing on the day following the Closing Date, as
applicable, shall be borne by the Purchaser. All licence fees, royalties and
other similar sums receivable in respect of the Assets shall be apportioned
between the Seller and the Purchaser on like terms.
(1) A statement showing the net amount (if any) payable under this
Section 2.4 shall be agreed between the parties within 40 days after the Closing
Date and failing such agreement shall be ascertained and certified by an
independent firm of Chartered Accountants ("the Accountants") agreed between the
parties or, failing agreement as to such appointment within 7 days of one party
notifying the other of its wish to appoint an independent firm, appointed by the
President for the time being of the Institute of Chartered Accountants in
Ireland on the written application of either party.
(2) The amounts due in respect of the apportionment as aforesaid
shall be paid by the Seller or the Purchaser (as the case may be) forthwith upon
agreement of the parties in respect of the amount due or the certification of
the Accountants (as the case may be).
ARTICLE III
PURCHASE PRICE
Section III.1 PURCHASE PRICE. The purchase price payable to Seller in
consideration of the Assets (the "Purchase Price") shall be an amount in U.S.
dollars equal to (i) the Closing Date Equipment Value based on net book value
PLUS (ii) the Closing Date Inventory Value based on gross book value, including
value-added, based on a six month demand horizon.
Section III.2 PAYMENTS AT CLOSING. The Seller and the Purchaser have
agreed that as at 1st March 1999 the estimated Closing Date Equipment Value is
US$8,000,000 and the estimated Closing Date Inventory Value is US$40,000,000. At
the Closing, Purchaser shall pay to the Seller $58,080,000, which amount is
comprised of (a) $8,000,000 (the estimated Closing Date Equipment Value) PLUS
(b) $40,000,000 the estimated Closing Date Inventory Value) and (c) estimated
applicable VAT of US$10,080,000. The amount of the estimate for each component
of the Purchase Price is subject to adjustment after the Closing Date to the
value of such component as of the Closing Date as provided in Section 8.2.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby warrants and represents to the Purchaser in relation to
the Assets as follow in Section 4 subject to any exceptions disclosed in the
Disclosure Schedules and any matter expressly provided for under the terms of
this Agreement or the Operative Documents:-
Section IV.1 STATUS AND AUTHORITY. Stratus is an unlimited private company
duly formed, validly existing under the laws of the Republic of Ireland. Ascend
is a corporation duly incorporated validly existing and in good standing under
the laws of Delaware. Stratus has all requisite power and authority to own and
operate its assets and to carry on its business as presently conducted. Seller
has all requisite corporate power and authority to execute and deliver this
Agreement and the other Operative Documents and to perform its obligations
hereunder and thereunder, and the execution, delivery and performance of this
Agreement and the other Operative Documents have been duly authorized by all
necessary corporate action on the part of Seller.
Section IV.2 ENFORCEABILITY. This Agreement does, and each of the other
Operative Documents when executed and delivered shall, constitute a legal, valid
and binding obligation of Seller enforceable in accordance with its terms as to
Seller, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws and judicial decisions of general applicability relating to or
affecting creditors' rights and to general principles of equity.
Section IV.3 GOVERNMENTAL AND OTHER CONSENTS. Except for approvals that
may be required under the Mergers Act, the HSR Act or from the IDA no consent,
waiver, approval or authorization of, or designation, declaration or filing
with, any Authority or other Person is or has been required on the part of
Seller in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
Section IV.4 TITLE. Seller owns legally and beneficially and has good and
valid title to all of the Assets, free and clear of all Encumbrances.
Section IV.5 NO BREACH, ETC. Except as disclosed in Seller's Disclosure
Schedules, the execution, delivery and performance of this Agreement and the
other Operative Documents by Seller and the consummation by Seller of the
transactions contemplated hereby and thereby will not result in (a) any conflict
with or breach or violation of or default under the memorandum of association or
articles of association of Seller or (b) any conflict with or breach or
violation of or default under, or result in the acceleration of, or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both), any obligation under any contract or any applicable Legal Requirement.
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Section IV.6 COMPLIANCE WITH LAWS; PERMITS. Seller possesses all Permits
necessary for the ownership and operation of the Assets; such Permits are in
full force and effect; and the Seller and the Assets are in compliance with such
Permits and all Legal Requirements applicable to the Assets, including without
limitation, laws related to labor and employment. All of the Permits are in full
force and effect, are valid and enforceable in accordance with their terms and
no violation of any thereof has occurred. Seller is not required to have any
permits in order to operate the Assets in the manner currently operated by
Seller.
Section IV.7 CONTRACTS, ETC. The Seller warrants that there is not
outstanding:
(1) any agreement between the Seller and any third party in
relation to the Assets which the execution or performance of the Agreement will
contravene or under which the third party will acquire a right of termination or
any option as a result of the signature or performance of this Agreement; or
(2) That it does not have outstanding any of the following
which affect the Assets:-
(3) any guarantee, indemnity, undertaking or obligation
(whether legally binding or not); or
(4) any mortgage, charge, lien or pledge or any similar
obligation or Encumbrance (including conditional obligations to create a
mortgage, charge, lien or pledge).
(5) To the best knowledge, information and belief of the
Seller, no party with whom the Seller has entered into any agreement or
arrangement is in default thereunder, being a default which affects the Assets
and, to the best of the knowledge, information and belief of the Seller, there
are no circumstances now existing likely to give rise to such a default.
Section IV.8 PENSIONS AND BENEFITS. (1) Save for the pension schemes
written details of which have been supplied to the Purchaser ("Disclosed
Schemes") there are not in existence nor has any proposal been announced to
establish any retirement, death or disability benefit schemes for the Successor
Employees nor is Stratus under any commitment to make payment of any pensions,
allowances, lump sums or other like benefits on or following the death,
retirement or disability of any existing or former employee or director of
Stratus or for the benefit of any dependents of such persons nor is it a party
to any pension, life assurance or retirement benefit scheme, agreement or
arrangement of any kind.
(2) The Disclosed Schemes are Defined Contribution Schemes within
the meaning of the Pensions Act 1990 and all contributions and expenses due
thereunder to the Closing Date will have been duly paid.
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Section IV.9 INTELLECTUAL PROPERTIES. (1) Except as disclosed in Seller's
Disclosure Schedules, to the knowledge of Seller in relation to the Assets there
is no unresolved claim or demand of any other Person pertaining to the
Intellectual Properties and no unresolved Actions have been instituted, or to
the knowledge of Seller or Parent, threatened against the Seller, or any
Affiliate of the Seller with respect to the Intellectual Properties.
(1) Except as set forth in Seller's Disclosure Schedules, the Assets
have not been operated and are not now being operated in a manner which (i)
infringes upon or violates any trademark, copyright, trade name, service mark,
design, patent or any right relating to any trade secret or other intellectual
property right of any other Person, or (ii) requires any license not included in
the Assumed Contracts from any other Person.
(2) No license other than the licenses granted pursuant to the
Services Agreement and Manufacturing Agreement is necessary for the Purchaser to
use, free and clear of all claims or rights of others the subject matter of all
patents, patent applications, trade secrets, know-how, developments, processes,
software and other rights related to the Assets, including products and rights
licensed from others.
Section IV.10 LITIGATION. There is no Action pending or, to the knowledge
of Seller threatened, by any Person before any Authority, against Seller, or its
properties or assets which (i) challenges or may challenge the validity of this
Agreement or any of the Operative Documents or seeks to enjoin or otherwise
restrain the transactions contemplated herein or materially and adversely
affects Seller's ability to perform its obligations hereunder and under the
Operative Documents or (ii) with respect to which the Purchaser or its
successors and assigns will have any responsibility or liability from and after
the Closing Date.
Section IV.11 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention of
any Person acting on behalf of Seller in such manner as to give rise to any
valid claim against Purchaser or any of its Affiliates for any broker's or
finder's commission, fee or similar compensation.
Section IV.12 CONDITION OF EQUIPMENT Seller has used and maintained the
equipment in the ordinary course of business. The equipment is in good operating
condition subject only to ordinary wear and tear through the Closing Date. After
the Closing Date the equipment shall be furnished on an "as is" "where is"
basis.
Section IV.13 LABOR MATTERS. (1) The Seller's Disclosure Schedules which
are deemed incorporated into this agreement give full particulars of all
collective agreements, customs and practices for the time being in force
concerning relations between the Seller and the Successor Employees or with any
trade union, show the name, job description, age and date of
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commencement of service of each Successor Employee and give details of the wages
or salary and all other benefits (including those regarding holidays, bonus
entitlements and company cars) and rights to which each Successor Employee is
entitled or with which they are each provided and save for what has been
disclosed there are no other agreements, customs and practices in place in
respect of the Successor Employees.
(2) There is not in existence any service agreement with any of the
Successor Employees which cannot be terminated by three months' notice or less
without giving rise to any claim for damages or compensation (other than a
statutory redundancy payment or statutory compensation for unfair dismissal) and
the Seller has not received notice of resignation from any Successor Employees
except for those employees who have submitted notices of resignation but have
not ceased employment as of the Closing Date, as specified in Schedule 4.21.
Notwithstanding the above, the parties anticipate that terminations and
backfilling of such positions will occur in the ordinary course of business
between the Date of this Agreement and the Closing Date.
(3) The basis of the remuneration payable to the Successor Employees
is the same as that in force at 8th January 1999 and the Seller is not obliged
to increase nor has it made any provision to increase the aggregate annual
remuneration payable to the Successor Employees by more than five per cent or to
increase the rates of remuneration of any of the Successor Employees.
Notwithstanding the above, Purchaser acknowledges that, in the ordinary course
of business, the annual review for the Successor Employees is scheduled for
March 1, 1999. Such review and applicable merit increases shall be in accordance
with the 1999 Annual Merit Review Plan and prior practice attached hereto as
Schedule 4.
(4) There are no amounts owing to any of the Successor Employees
other than remuneration accrued due or for reimbursement of normal business
expenses, except for certain education and similar program reimbursements.
(5) Save as disclosed in the Disclosure Schedules, (e.g., retention
bonuses for key employees), there is no agreement or arrangement between the
Seller and any of the Successor Employees with respect to his employment, his
ceasing to be employed or his retirement which is not included in the written
terms of his employment or previous employment (as the case may be).
(6) The Seller has maintained current, adequate and suitable records
regarding the service of each of the Successor Employees (including, without
limitation, details of terms of employment, payments of statutory sick pay,
statutory maternity pay, disciplinary and health and safety matters, income tax
and social insurance contributions) and termination of employment.
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(7) Save as disclosed in the Seller's Disclosure Schedules the
Seller does not have in existence nor is it proposing to introduce any share
incentive, share option, profit sharing, bonus or other incentive, scheme for
any of the Successor Employees.
(8) Save as disclosed in the Disclosure Schedules, none of the
Successor Employees has given notice terminating employment as a result of the
provisions of this Agreement.
(9) No negotiations for any increase in the remuneration or benefits
of any of the Successor Employees are current or to the best of the knowledge,
information and belief of the Seller are likely within a period of 6 months
after the Closing Date.
(10) Save as disclosed in the Disclosure Schedules, the Seller,
except in the normal course of business, has not made or agreed to make any
payment to, or provided or agreed to provide any benefit for any of the
Successor Employees or any dependent or any of them which was not allowable as a
deduction for the purposes of Taxation.
(11) To the best of the Seller's knowledge the Seller has complied
in all material respects as regards all of its Successor Employees with all
statutes, regulations, and orders and awards made or awarded thereunder.
(12) No employment regulation order affecting the terms of
employment of any Successor Employees has been made by the Labour Court under
the Industrial Relations Acts, 1946 to 1990.
(13) None of the Successor Employees is involved in any industrial
dispute and to the best of the Seller's knowledge, information and belief there
are no circumstances which may result in any industrial dispute involving any
Successor Employees or any former employees of the Seller and none of the
provisions of this Agreement, including the identity of the Purchaser, may lead
to any industrial dispute.
Section IV.14 INSOLVENCY. No receiver has been appointed by any person
over the whole or any part of the Assets. The Seller is not insolvent or unable
to pay its debts within the meaning of section 214 of the Companies Act, 1963
nor has the Seller stopped or suspended payment of its debts, nor has the Seller
sought from its creditors significant extensions of time for the payment of its
debts. No distress, execution or other process has been levied on any of the
Assets. There is no unfilled or unsatisfied judgment or Court order outstanding
against the Seller in relation to the Assets.
Section IV.15 VALUE ADDED TAX. Stratus is registered for Value Added Tax
in accordance with the terms of the Value Added Tax, Act, 1972.
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Section IV.16 WITHHOLDING INFORMATION: Seller has not willfully or
intentionally withheld any information which could have a material adverse
effect on a reasonable purchaser's decision to complete the transaction
contemplated by this Agreement.
Section IV.17 DISCLOSURE OF INFORMATION: To the best of the knowledge,
information and belief of the Seller, there are no material inaccuracies in any
representations the Seller has made to Purchaser and in any Disclosure
Schedules, in connection with this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes the following representations and warranties to Seller:
Section V.1 CORPORATE STATUS AND AUTHORITY. The Company is a private
limited company organized under the laws of the Republic of Ireland. Benchmark
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Texas. Purchaser has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as currently conducted and as proposed to be conducted. Purchaser has
all requisite corporate power and authority to execute and deliver this
Agreement and the other Operative Documents and to perform its obligations
hereunder and thereunder, and the execution, delivery and performance of this
Agreement and the other Operative Documents have been duly authorized by all
necessary corporate action on the part of Purchaser.
Section V.2 ENFORCEABILITY. This Agreement does, and each of the other
Operative Documents when executed and delivered shall, constitute a legal, valid
and binding obligation of Purchaser enforceable in accordance with its terms as
to Purchaser subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws and judicial decisions of general applicability
relating to or affecting creditors' rights and to general principles of equity.
Section V.3 GOVERNMENTAL AND OTHER CONSENTS. Except for approvals, if any,
required under the Mergers Act and the HSR Act, no consent, waiver, approval or
authorization of, or designation, declaration or filing with, any Authority or
other Person is or has been required on the part of Purchaser in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
Section V.4 NO BREACH; ETC. The execution, delivery, and performance of
this Agreement and the other Operative Documents by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and thereby
will not result in (a) any conflict with or breach or violation of or default
under the certificate of incorporation or by-laws of Purchaser and (b) any
conflict with or breach or violation of or default under, or result in the
acceleration of, or entitle any
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Person to accelerate (whether after the giving of notice or lapse of time or
both), any obligation under any agreement to which Purchaser is a party or any
applicable Legal Requirement.
Section V.5 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention of
any Person acting on behalf of Purchaser in such a manner as to give rise to any
valid claim against Seller or Parent or any of their Affiliates for any broker's
or finder's commission, fee or similar compensation.
ARTICLE VI
COVENANTS AND CERTAIN ACTIONS OF THE PARTIES
Section VI.1 ACCESS PRIOR TO CLOSING DATE. Except for attorney-client
privileged information upon reasonable notice, Seller shall permit Purchaser and
its authorized employees, agents, accountants, legal counsel, lenders,
environmental consultants and other authorized representatives (collectively
referred to herein as the "Purchaser Representatives") to have access to the
Records, Facilities, properties, personnel and officers of Seller for the
purpose of conducting an investigation of the condition and status of the
Assets, and furnish to Purchaser such other information as it may reasonably
request; provided, however, that such investigation shall be conducted in a
manner that does not unreasonably interfere with normal operations of Seller or
its respective employees or relationships with suppliers, customers or any
Authority.
Section VI.2 RESTRICTIONS ON SUCCESSOR EMPLOYEES AND ASSETS . From the
date hereof until the Closing Date, except as contemplated in this Agreement,
Seller will not, without the prior written consent of Purchaser, take or agree
to take any of the following actions with respect to the Successor Employees or
Assets:
(1) Save for the increase which may be due to Successor Employees
under Section IV.13(3) hereof and any salary adjustments and which may be deemed
necessary and agreed with Purchaser, increase the rate or change the form of
compensation payable to any officer, agent or employee or increase any employee
benefits, except increases in compensation and changes in benefits made in the
ordinary course of business in accordance with established policies and past
practice; (1st March 1999 review)
(2) dispose of (i) any Equipment, or (ii) any Assets except sales of
inventory in the ordinary course of business;
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(3) enter into any employment, consulting (other than in the
ordinary course of business on a per project basis) or similar agreement with
any Person or any agreement with a labor union or other collective bargaining
group;
(4) create, incur, assume or guarantee any Encumbrance upon any of
the Assets whether now owned or hereafter acquired;
(5) cancel or terminate any Assumed Contract;
(6) engage in any transaction in a manner that would cause any of
the representations and warranties contained herein to be or become untrue
to any material extent.
(7) maintain its books of account relating to the Assets other than
in the usual, regular and ordinary manner in accordance with GAAP and on a
basis consistent with prior periods or make any change in any of its
accounting methods or practices relating to the Assets;
(8) sell any of the Assets (other than sales of Inventory in the
ordinary course of business) to any person other than pursuant to this
Agreement;
(9) enter into or assume any contract, agreement, obligation, lease,
license or commitment which will bind the Assets or must be assumed by
Purchaser at the Closing;
Section VI.3 ORDINARY COURSE. from the date hereof until the Closing Date,
except as contemplated in this Agreement Seller will take the following actions:
(1) conduct its business relating to the Assets only in the ordinary
course and in substantially the same manner as heretofore conducted;
(2) maintain the Equipment and the facilities to be used pursuant to
the Facilities Sharing Agreement in accordance with its usual business practice;
(3) use its reasonable efforts to retain its present employees and
preserve its relationships with others having business relationships with it
that relate to the Assets;
(4) perform all its obligations under all applicable laws,
ordinances and regulations, contracts, agreements, commitments or undertakings
relating to or affecting the Assets, in a manner consistent with its usual
business practices;
(5) keep in full force and effect all present insurance policies
relating to the Assets or Successor Employees;
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(6) promptly notify the other party of any material loss or damage
to any Asset which has a replacement cost of greater than $10,000;
(7) except for purchases of raw materials inventory or sales of
finished Inventory in the ordinary course of business, not amend or change in
any material respect any Assumed Contract, or breach any Assumed Contract; and
(8) comply with or cause to be complied with all applicable and
material laws, rules, regulations and orders of all federal, state and local
Authorities or affecting or relating to the Assets.
Section VI.4 EXCLUSIVE NEGOTIATIONS. So long as Purchaser (a) negotiates
in good faith this Agreement and the other Operative Documents prior to the
Closing Date, none of Seller nor any of its Affiliates shall directly or
indirectly solicit, initiate or encourage the initiation of inquiries or
proposals from, or participate in any discussions or negotiations with, any
Person other than Purchaser concerning, or commit to or consummate or permit
Seller or any Affiliate of Seller to commit to or consummate the sale or
exchange of any of the Assets.
Section VI.5 EMPLOYEE MATTERS. (a) Set forth in item 47 of Attachment A to
Schedule 1.1 is a list of all Successor Employees as of the Closing Date. Seller
represents and warrants that the job classifications or positions, salary, and
seniority of the Successor Employees set forth on such attachment are true and
correct.
(b) Seller agrees that Seller shall remain responsible for, and
Seller will pay when due, all of Seller's separation or termination obligations
to any employee or Successor Employee up to and including the Closing Date.
(c) The Seller and the Purchaser acknowledge that the transfer of
the Assets is regulated by the European Communities (Safeguarding of Employees'
rights on Transfer of Undertakings) Regulations 1980 (the "Regulations") and
each of the parties shall discharge their obligations (if any) arising by virtue
of the provisions of the Regulations.
(d) Seller shall indemnify the Purchaser on a joint and several
basis against all claims, obligations or liabilities of any nature arising in
respect of the employment of the Successor Employees, to the extent that such
claim obligation or liability relates to the period prior to the Closing Date,
provided always that liabilities in respect of retirement and death benefits
shall be excluded from this indemnity to the extent that assets from the
Disclosed Schemes, as referred to in Section IV.8, are transferred to pension
arrangements nominated or established by the Company.
(e) Seller shall indemnify the Purchaser on against all claims,
obligations or liabilities of any nature arising in respect of the employment of
any Seller employee other than a Successor Employee.
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(f) Seller shall take such steps as are necessary to comply with the
provisions of the [Regulations] to the satisfaction of the Purchaser insofar as
the Regulations affect the transaction contemplated by this Agreement.
(g) Both prior to and following the Closing Seller shall furnish to
the Purchaser such information as the Purchaser may from time to time require in
respect of any and all matters arising out of contracts of employment and
employment relationships related to the Successor Employees or other agreements
relative thereto.
(h) After Closing, subject to the approval of the Irish Revenue
Commissioners, which the parties hereto will use their reasonable endeavours to
obtain Seller will permit the Company to participate in the Disclosed Schemes as
an associated employer for a period of 3 months (or such longer period as might
be agreed) from Closing pending the establishment by the Company of its own
retirement benefits scheme or schemes within that period.
(i) Purchaser shall indemnify and defend Seller on a joint and
several basis against all judgments, decrees, orders, awards, costs, liabilities
and expenses in connection with any claim whatsoever against Seller arising out
of circumstances subsequent to the Closing Date in connection with Purchaser's
obligations and liabilities to the Successor Employees whether by virtue of
contract, statute, common law or otherwise.
Section VI.6 ACCESS AFTER CLOSING DATE. After the Closing, Seller and
Purchaser (each, a "Holder") shall afford and shall cause its counsel and
independent public accountants to afford, to the other party and its
representatives, including the Records reviewer's counsel and accountants (the
"Records Reviewer"), reasonable access to all books, records, files, personnel
and documents related to the Assets in the Holder's possession or under the
Holder's control as may be reasonably requested by the Records Reviewer in order
to permit the Records Reviewer (at its cost and expense) to prepare and file tax
returns with an Authority and to prepare for and participate in any
investigation with respect thereto, to prepare for, participate in, assert or
defend any other investigation or litigation relating to or involving the
Records Reviewer or the Assets, and to discharge the Records Reviewer's
obligations or contest and defend any claims made under this Agreement and the
other Operative Documents. In addition, the Holder will cooperate and will
instruct all of its personnel to cooperate with the Records Reviewer in
connection with the foregoing. After the Closing, the Records Reviewer shall
have the right, at its cost and expense, to copy such books, records, files and
documents related to the Records Reviewer or the Assets as may be reasonably
useful to the Records Reviewer in connection with any of the matters described
in the preceding provisions of this Section VI.6. If the originals of any such
books, records, files and documents related to the Records Reviewer or the
Assets are required in connection with any proceeding, litigation or similar
matter, the Records Reviewer shall have the right to use such originals;
provided, the Records Reviewer shall attempt to have such originals released
from any such proceeding, litigation or other matter and
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returned to the Records Holder as soon as reasonably possible under the
circumstances. The Holder will cause the books, records, files and documents
related to the Records Reviewer or the Assets that are in the Holder's
possession to be maintained for not less than five years from the date of
Closing and in any case the Holder shall not destroy or allow the destruction of
the same without providing to the Records Reviewer a reasonable opportunity to
take possession thereof; provided, however, that the Holder shall only be
required to exercise the same standard of care in protecting the foregoing
books, records, files and documents that the Holder uses to protect its other
important business records.
Section VI.7 SALES TAXES. The parties shall use their best endeavours to
ensure that by virtue of the provisions of sections 3(5)(b)(iii) and 5(8) of the
Value Added Tax Act, 1972 no value added tax will be chargeable in respect of
the sale and purchase hereby agreed to be made. If, notwithstanding the
preceding sentence, the Seller is required to account to the Revenue
Commissioners for any value added tax on the sale hereunder, such value added
tax shall be paid by the Purchaser to the Vendor upon delivery of the
appropriate value added tax invoice.
Section VI.8 HSR ACT. Seller and Purchaser will, as promptly as
practicable after the execution of this Agreement, file with the U.S. Federal
Trade Commission and the U.S. Department of Justice the notification and report
form required for the transactions contemplated hereby and any supplemental
information which may be reasonably requested in connection therewith pursuant
to the HSR Act and the rules and regulations promulgated thereunder, which
notification and report form and supplemental information will comply in all
material respects with the requirements of the HSR Act and the rules and
regulations promulgated thereunder.
Section VI.9 MERGERS ACT:The Seller and Purchaser shall, as promptly as
practical after the execution of this Agreement, make a notification under the
Mergers Act.
ARTICLE VII
CONDITIONS TO CLOSING
Section VII.1 CONDITIONS TO THE OBLIGATION OF PURCHASER. The obligation of
Purchaser to proceed with the Closing contemplated hereby is subject to the
satisfaction on or prior to the Closing Date, as applicable, of all of the
following conditions, any one or more of which may be waived in writing, in
whole or in part, by Seller.
(a) Purchaser shall have complied in all material respects with each
of its covenants and agreements contained herein and each of its representations
and warranties contained in this Agreement shall be deemed to have been made
again at and as of the Closing Date subject to the Seller's entitlement to make
further amendments to the Disclosure Schedules in a form acceptable to the
purchaser as applicable, and shall then be true and correct in all material
respects.
(b) Purchaser shall have received a certificate, dated as of the
Closing Date, of an executive officer of Seller certifying as to the matters
specified in Section 7.1(a) hereof.
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(c) The waiting period under the HSR Act and the rules and
regulations promulgated thereunder applicable to the transactions contemplated
hereunder shall have expired or been terminated.
(d) Consent of IDA in a form satisfactory to Seller and to the
Purchaser on the basis that the contingent liability under the Grant Agreement
dated 29th May 1989 remains with Stratus.
(e) The Minister for Enterprise, Trade and Employment having stated
in writing that she does not intend to make an order under Section 9 of
the Mergers Act in relation to the proposed purchase of the Assets; or, in
the event of the said Minister making an order subject to conditions, the
Seller and the Purchaser being prepared to accept such conditions, or, in
the event of no such order being made and the said Minister not stating in
writing that she does not intend to make such an order, the relevant
period within the meaning of Section 6 of the said Act having elapsed.
(f) All necessary filings with and consents of any other
Governmental Authority or other third party required for the consummation of the
transactions contemplated in this Agreement shall have been made and obtained,
all waiting periods with respect to filings made with Authorities in
contemplation of the consummation of the transactions described herein shall
have expired or been terminated, and no Action or proceeding before any
Authority shall have been instituted or threatened to restrain or prohibit
Purchaser's acquisition of the Assets and no Authority shall have taken any
other action as a result of which the management of Purchaser reasonably deems
it inadvisable to proceed with the transactions hereunder.
(g) No material adverse change shall have occurred in the Assets
prior to the Closing Date, and the Assets shall not have suffered any material
loss of or damage whether or not covered by insurance, since date of this
Agreement, which change, loss or damage has or could reasonably be expected to
have a material adverse effect on the operation of the Assets, and Purchaser
shall have received a certificate signed by Seller dated the Closing Date to
such effect.
(h) No Action shall be pending in which there is sought any remedy
to restrain, enjoin or otherwise prevent the consummation of this Agreement or
the transactions in connection herewith.
(i) Seller and Purchaser shall have entered into the Services
Agreement and the Manufacturing Agreement.
(j) Stratus and Purchaser shall enter into the Facilities Sharing
Agreement on Closing.
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(k) Seller will deliver on Closing copies of all records of Pay
Related Social Insurance and PAYE relating to all Successor Employees duly
completed up to date.
Section VII.2 CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of
Seller to proceed with the Closing contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of all of the following conditions,
any one or more of which may be waived in writing, in whole or in part, by
Seller:
(a) Purchaser shall have complied in all material respects with its
covenants and agreements contained herein and each of its representations and
warranties contained herein and therein shall be deemed to have been made again
at and as of the Closing Date and shall then be true in all material respects.
(b) Seller shall have received a certificate, dated the Closing
Date, of an executive officer of Purchaser certifying as to the matters
specified in Section 7.2(a) hereof.
(c) The waiting period under the HSR Act and the rules and
regulations promulgated thereunder applicable to the transactions contemplated
hereunder shall have expired or been terminated.
(d) Consent of IDA in a form satisfactory to Seller and Purchaser on
the basis that the contingent liability under the Grant Agreement dated 29th May
1989 remains with Stratus Computer Ireland.
(e) The Minister for Enterprise, Trade and Employment having stated
in writing that she does not intend to make an order under Section 9 of the
Mergers Act in relation to the proposed purchase of the Assets; or, in the event
of the said Minister making an order subject to conditions, the Seller and
Purchaser being prepared to accept such conditions, or, in the event of no such
order being made and the said Minister not stating in writing that she does not
intend to make such an order, the relevant period within the meaning of Section
6 of the said Act having elapsed.
(f) Written opinion from the Irish Revenue Commissioners shall have
been received confirming that all income of Stratus will qualify for relief from
corporation tax pursuant to Chapter 1, Part 13 of the Taxes Consolidation Act,
1997 through 2010.
(g) All necessary filings with and consents of any other
Governmental Authority or other third party required for the consummation of the
transactions contemplated in this Agreement shall have been made and obtained,
all waiting periods with respect to filings made with Authorities in
contemplation of the consummation of the transactions described herein shall
have expired or been terminated, and no Action or proceeding before any
Authority shall have been instituted or threatened to restrain or prohibit
Purchaser's acquisition of the Assets and no Authority shall have taken any
other action as a result of which the management of Seller reasonably deems it
inadvisable to proceed with the transactions hereunder.
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(h) No material adverse change in the financial condition, results
of operations of the business of Purchaser, taken as a whole, shall have
occurred, and the business of Purchaser shall not have suffered any material
loss or damage to any of its properties or assets, whether or not covered by
insurance, since the date of this Agreement, which change, loss or damage has or
could reasonably be expected to have a material adverse effect on Purchaser, and
Seller shall have received a certificate signed by Purchaser dated the Closing
Date to such effect.
(i) No Action shall be pending in which there is sought any remedy
to restrain, enjoin or otherwise prevent the consummation of this Agreement or
the transactions in connection herewith.
(j) Seller and Purchaser shall have entered into the Services
Agreement and the Manufacturing Agreement.
(k) Seller and Purchaser shall enter into the Facilities Sharing
Agreement on Closing.
ARTICLE VIII
CLOSING
Section VIII.1 CLOSING. The closing of the transactions contemplated
hereby ("Closing") shall take place at the offices of Stratus at 41 Cedar
Avenue, Hamilton, HM12, Bermuda at the Effective Time on 1st March, 1999 or on
such other date as agreed to in writing by the parties ("the Closing Date"). At
the Closing the following events shall occur, each event being deemed to have
occurred simultaneously with the other events:
(1) Prior to the Closing Date the Seller shall ensure that all bolts
and fastenings attaching to the Assets to land and buildings shall be undone so
that the same shall be severed on the Closing Date and title to the Assets shall
pass by delivery, insofar as possible.
(2) Purchaser shall pay the funds to be delivered to Seller at the
Closing pursuant to Section 3.3 to Seller by wire transfer in lawful money of
the United States of America in immediately available funds, to Stratus' Account
in Bermuda not later than 11:00 a.m. Eastern Time on the Closing Date;
(3) Purchaser's acceptance of the Assets pursuant to the terms of
this Agreement shall be deemed confirmed; and
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(4) Seller and Purchaser shall execute and deliver the documents
required in Article VII and such certified resolutions, incumbency certificates
and other instruments as they mutually agree.
Section VIII.2 PURCHASE PRICE ADJUSTMENT. (a) Within 60 days following the
Closing Date, Purchaser shall prepare and deliver to Seller a settlement
statement (the "Settlement Statement"), based upon the Records, setting forth
the Closing Date Equipment Value and the Closing Date Inventory Value as of the
Closing Date as finally determined. Purchaser shall be obligated to make
available to Seller all books, records and other information in possession or
under control of Purchaser following the Closing, as may be reasonably requested
by Seller in connection with the review of the Settlement Statement.
(b) Within 30 days following the Seller's receipt of the proposed
Settlement Statement, Seller shall deliver to Purchaser a written report
containing any changes that Seller proposes to be made to such proposed
Settlement Statement. The parties shall undertake in good faith to agree on the
Settlement Statement no later than 30 days after delivery of such written report
by Seller; provided, if Purchaser and Seller shall be unable to agree on the
Settlement Statement within such 30-day period, each party shall promptly
thereafter engage on its behalf and at its cost and expense an independent
accounting firm for the purpose of assisting in the resolution of any remaining
disagreements between the parties with respect to such proposed Settlement
Statement. If the accounting firms engaged by the parties are unable to resolve
all disagreements with respect to such proposed Settlement Statement within 45
days following the appointment of the last to be selected of such accounting
firms, then such accounting firms shall agree upon and designate within 20 days
following the expiration of such 45-day period a third independent accounting
firm to resolve any disagreements remaining between such two accounting firms.
If such two accounting firms fail to agree on the selection of a third
accounting firm, the selection of such third accounting firm shall be submitted
to the then Chief Judge of the United States District Court having jurisdiction
in San Francisco, California, upon application of either party. Each party shall
bear and pay one-half of the fees and other costs charged by the third
accounting firm so selected. The Settlement Statement prepared by Purchaser
(adjusted pursuant to the agreement, if any, between Seller and Purchaser or the
determination of the accounting firm(s) selected pursuant hereto) shall be final
and binding.
(c) When the Settlement Statement has been agreed between the parties the
Purchase Price shall be increased or reduced as the case may be by the amount
shown in the Settlement Statement. Any amount due under the Settlement Statement
shall be paid 30 days after determination thereof to the relevant party.
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ARTICLE IX
LIMITED SURVIVAL
OF CERTAIN REPRESENTATIONS AND WARRANTIES
Section IX.1 GENERAL LIMITATIONS: Notwithstanding anything contained in
this Agreement and in particular the provisions of Section 4, the Seller will
not be liable under this Agreement or the Operative Documents in respect of any
claim unless:
(a) With the exception of any claim relating to Seller's title to the
Assets, notice of it is given in writing by the Purchaser to the Seller setting
out brief particulars of the grounds on which such claim is based within twelve
months following the Closing Date.
(b) the amount of that claim exceeds US$25,000; and
(c) the aggregate amount of all claims for which the Sellers would
otherwise be liable under this Agreement and the Operative Documents exceeds
US$250,000
or to the extent that the aggregate amount of the liability of the
Seller for all claims made under this Agreement and the Operative Documents
would thereby exceed US$16,000,000
Section IX.2 FURTHER LIMITATIONS: Notwithstanding anything to the contrary
in this Agreement and in particular the provisions of Section 4.
(a) the Seller will have no liability to the Purchaser in respect of any
claim for which the Purchaser is primarily liable arising as a result of
transactions in the ordinary course of business or ordinary wear and tear of the
Assets since the Closing Date.
(b) the Seller will have no liability to any person, firm or body
corporate other than the Purchaser (which, for the avoidance of doubt, will not
include any successor in title to the Purchaser) in respect of any matter
arising under this Agreement or the Operative Documents and, in particular, in
relation to the Warranties;
(c) if any circumstances giving rise to a claim arise the Purchaser
shall give written notice thereof to the Seller and keep the Seller fully
informed of all material developments relating to such circumstances;
(d) the Seller will be under no liability whatsoever in respect of any
breach or non-fulfillment of any of the Warranties unless the Purchaser has
served on the Vendors a written notice within the time specified in Section
1X.1.(a)
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(e) the Seller will not be liable in respect of any breach of the
Warranties or claim arising thereunder to the extent that such breach or claim
would not have arisen but for any change after the date hereof in any law or in
any regulation, directive or requirement of any agency of any state or in any
law, regulations or published codes of conduct relating to the relations between
the Seller and its Successor Employees; and
(f) the Purchaser will not be entitled to make any claim in respect of
any alleged breach or non-fulfillment of any of the Warranties if, after the
date hereof , any director or any person nominated by the Purchaser, without the
express consent in writing of the Seller, admits liability to a third party in
whole or in part for any matter or thing which might otherwise be the subject of
any such claim.
Section IX.3 RECOVERY FROM THIRD PARTIES: Where the Purchaser has or may
have a claim against any third party or under any insurance policy in force in
the name of the Purchaser which may give rise to a claim under this Agreement,
the Seller will be entitled forthwith to make a claim thereunder or to require
the Purchaser to make such claim, but by so doing the Seller shall not be taken
to admit that any such breach has occurred or that they are liable in any
particular amount or at all in respect thereof. If, twelve months after the
making of such claim, payment in full has not been made by such third party or
the insurers as the case may be, and if the Seller would be liable in respect of
such breach were it not for this Section 1X.3, the Seller shall, subject to
Sections IX.1 and 1X.2], pay an amount equal to any shortfall (or in the event
that no payment has been made, the amount of the claim) and will be entitled to
the return of such payment when received on foot of any such claim.
Section IX.4 CO-OPERATION: In relation to any claim or alleged claim under
this Agreement and without prejudice to the validity of the claim or alleged
claim in question, the Purchaser shall allow the Seller and its accountants,
solicitors and other professional advises to investigate the matter or
circumstance alleged to give rise to such claim and whether and to what extent
any amount is payable in respect of such claim pursuant to the terms of this
Agreement, and for such purpose the Purchaser shall give all such reasonable
assistance as the Seller or its accountants, solicitors or other professional
advisers may on reasonable notice request, including access to and copies of any
relevant documents or information in the possession of the Purchaser.
Section IX.5 TREATMENT OF PAYMENTS UNDER WARRANTIES: Any payment made to
the Purchaser will be treated for all purposes as a reduction in the Purchase
Price.
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ARTICLE X
MISCELLANEOUS
Section X.1 DISCLAIMER. EXCEPT FOR REPRESENTATIONS AND WARRANTIES SET
FORTH IN THIS AGREEMENT AND THE OPERATIVE DOCUMENTS, NO WARRANTIES OR
REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, ARE MADE WITH RESPECT TO THE TITLE,
CONDITION, DESIGN OR MARKETABILITY OF THE PERSONAL PROPERTY, EQUIPMENT OR
INVENTORY COMPRISING THE ASSETS, AND THERE IS EXPRESSLY NEGATED (a) ANY IMPLIED
WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (c) ANY IMPLIED WARRANTY OF NONINFRINGEMENT AND (d) ANY
IMPLIED WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS WITH RESPECT TO
THE PERSONAL PROPERTY, EQUIPMENT OR INVENTORY COMPRISING THE ASSETS, IT BEING
THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT EXCEPT AS PROVIDED IN THIS
AGREEMENT AND THE OPERATIVE DOCUMENTS, THE PERSONAL PROPERTY, EQUIPMENT AND
INVENTORY COMPRISING THE ASSETS SHALL BE CONVEYED AND TRANSFERRED TO PURCHASER
IN THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS", WITH ALL
FAULTS.
Section X.2 MODIFICATION; WAIVER. This Agreement may be modified, amended
or supplemented in any manner and at any time only by a written instrument
executed by Seller and Purchaser. No waiver by any party of any term or
condition hereof, or the breach of any covenant, agreement, warranty,
representation or provision contained herein, in any one or more instances,
shall be made to be or construed as a further continuing waiver of any such
term, condition or breach or a waiver of any other term, condition or breach.
Section X.3 ENTIRE AGREEMENT. This Agreement, the Seller's Disclosure
Schedules the Purchaser's Disclosure Schedules and the Operative Documents
constitute the entire agreement and understanding of Seller and Purchaser with
respect to the subject matter hereof and fully supersede, and accordingly Seller
and Purchaser disclaim and negate any and all statements, projections,
understandings, agreements, covenants, representations and warranties between
Seller and Purchaser, made by Seller, or any of Seller's officers, employees or
representatives to Purchaser, or set forth in any other document or writing
delivered or made available to Purchaser (as applicable) prior to the execution
and delivery of this Agreement saved as disclosed in Disclosure Schedules.
Section X.4 EXPENSES. Whether or not the transactions contemplated herein
shall be consummated, each party shall (except as otherwise specifically
provided herein) pay its own expenses incident to the preparation and
performance of this Agreement, including legal counsel and financial advisers.
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Section X.5 RIGHTS AND REMEDIES. The rights and remedies granted under
this Agreement shall not be exclusive rights and remedies but shall be in
addition to all other rights and remedies available at law or in equity.
Section X.6 FURTHER ACTIONS. Each party shall execute and deliver such
other certificates, agreements, conveyances, certificates of title, and other
documents and take such other actions as may reasonably be requested by the
other party in order to consummate or implement the transactions contemplated by
this Agreement.
Section X.7 DISCLOSURE. As used herein the phrase "disclosed in Seller's
Disclosure Schedules" or "disclosed in Purchaser's Disclosure Schedules" shall
include all matters referred to in any section or segment of the applicable
Disclosure Schedules and all matters referred to in any
document described in such Disclosure Schedules.
Section X.8 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand, or sent by telex or telecopy, or sent by United
States mail, first class, registered or certified, return receipt requested,
with proper postage prepaid, in each case addressed as follows:
If to Seller:
BY HAND DELIVERY OR MAIL
Stratus Computer Ireland
41 Cedar Avenue,
Hamilton, HM12,
Bermuda
Attention: General Counsel
With a copy to:
Ascend Communications, Inc.
1701 Harbor Bay Parkway
Alameda, California
U.S.A. 94502
Attention: General Counsel
If to Purchaser:
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BY HAND DELIVERY OR MAIL
Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas
U.S.A. 77515
Attention: President
or to such other address or to such other Person as either party shall have last
designated by notice given to the other party in accordance with this Section
10.8. Any notice given hereunder shall be deemed to have been given at the time
of receipt thereof by the party to whom such notice is addressed; provided, any
notice given by telex or telecopy and received after the receiving party's
normal business hours shall be deemed received by such party on the immediately
succeeding business day.
Section X.9 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted
hereby, neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned, by any party hereto without the prior written consent
of the other party. Either party may assign this Agreement and all of its rights
hereunder to any Affiliate of such party, but such assignment shall not affect
the assignor's rights and obligations as primary obligor under this Agreement.
Seller and Purchaser agree that (i) the sale, transfer or conveyance by Seller
or Purchaser of all or substantially all of its assets, (ii) the merger,
consolidation, reorganization of Seller or Purchaser with any third party, or
the recapitalization of Seller or Purchaser, or (iii) the change of control of
Seller or Purchaser or their respective parent companies, whether effected by
stock purchase, statutory share exchange, or otherwise, shall not constitute an
assignment of this Agreement by either Seller or Purchaser, but that Seller or
Purchaser (as the case may be) shall, as a condition precedent to the closing of
any sale, transfer or conveyance referred to in clause (i) above, require the
purchaser or transferee to assume all rights and obligations of Seller or
Purchaser (as the case may be) under this Agreement. Except as aforesaid,
nothing in this Agreement, express or implied, is intended to confer upon any
Person other than the parties hereto and their said successors and assigns
permitted hereby, and the Seller Indemnified Parties and Purchaser Indemnified
Parties, any rights, remedies or obligations under or by reason of this
Agreement.
Section X.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any adverse
manner to either party. Upon determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement
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to effect the original intent of the parties as closely as possible in an
acceptable manner to the end and that the transactions contemplated hereby are
fulfilled to the extent possible.
Section X.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
Section X.12 HEADINGS; REFERENCES. The article and section headings in
this Agreement are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof. Any
reference herein to an article or section shall be deemed to refer to the
applicable article or section of this Agreement unless otherwise stated herein.
Any reference to a schedule (other than the Seller's Disclosure Schedules and
the Purchaser's Disclosure Schedules) shall be deemed to refer to the applicable
schedule attached hereto, all of such schedules being incorporated herein by
this reference. Any reference to matters disclosed in Seller's Disclosure
Schedules or Purchaser's Disclosure Schedules shall be deemed to include all
matters disclosed in (or in any document specifically referenced in) any section
of the applicable Disclosure Schedules or in any other Schedule of this
Agreement.
Section X.13 GOVERNING LAW. This Agreement shall be construed, performed
and enforced in accordance with the laws of Ireland, exclusive of its rules
regarding conflicts of laws.
Section X.14 PRONOUNS AND PLURALS. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BENCHMARK ELECTRONICS, INC.
ATTEST:
By: /s/ CARY FU
Name: CARY FU
(Assistant) Secretary Title: EXECUTIVE VICE PRESIDENT
BEI ELECTRONICS IRELAND LIMITED
ATTEST:
By: /s/ CARY FU
Name: CARY FU
(Assistant) Secretary Title: EXECUTIVE VICE PRESIDENT
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ASCEND COMMUNICATIONS, INC.
ATTEST:
By: /s/ KENNETH FEHRNSTROM
Name: KENNETH FEHRNSTROM
(Assistant) Secretary Title: VICE PRESIDENT - BUSINESS DEVELOPMENT
STRATUS COMPUTER IRELAND
ATTEST:
By: /s/ JAMES KEYES
Name: JAMES KEYES
(Assistant) Secretary Title: DIRECTOR
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