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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: June 10, 1998
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ARIEL CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-25236 13-3137699
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(Commission File Number) (I.R.S. Employer Identification No.)
2540 Route 130, Cranbury, New Jersey 08512
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(Address of Principal Executive Offices) (Zip Code)
(609) 860-2900
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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TABLE OF CONTENTS
FORM 8-K
June 10, 1998
Item Page
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Item 2. Acquisition or Disposition of Assets 1
Signature 2
Exhibits E-1
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Exhibit
No. Title
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10 Asset Purchase Agreement by and among Ariel
Corporation, Cabletron Systems, Inc. and
CSG Acquisition, Inc. dated June 10, 1998.
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Item 2. Acquisition or Disposition of Assets
Sale of the Communications Systems Group
The Board of Directors of Ariel Corporation ("Ariel" or the "Company") voted
on June 4,1998 to enter into an agreement (the "Asset Purchase Agreement") to
sell all of the assets of its Communications Systems Group ("CSG") or DSLAM
unit to publicly held Cabletron Systems, Inc., of Rochester, New Hampshire
("Cabletron"). The Asset Purchase Agreement was entered into on June 10, 1998,
and upon closing the Company will receive approximately $33.5 million in cash
for the assets of the CSG less expenses of the transaction currently estimated
at approximately $3,975,000, including $1,541,673 in advisory fees to Mr.
Etienne Perold, a director of the Company, who has provided management
advisory services to the Company in the past. Cabletron will enter into
employment agreements with several members of the CSG team that will include
sign-on, performance and stay bonuses. Ariel's management anticipates that the
transaction will close sometime in July, however, closing of the transaction
will be subject to certain conditions, including but not limited to
governmental and third party approvals or consents. No assurances can be given
that the acquisition will be completed, on a timely basis, if at all.
A copy of the Asset Purchase Agreement is filed as Exhibit 10 hereto,
and is incorporated herein by reference. The foregoing description of the
transaction is qualified in its entirety by reference to the text of the Asset
Purchase Agreement.
Matters discussed herein, including any discussion of or impact,
expressed or implied, on Ariel's anticipated operating results and future
earnings per share contain forward-looking statements that involve risks and
uncertainties. Ariel's results may differ significantly from the results
indicated by such forward-looking statements. The sale of the assets of the
CSG Division is subject to several conditions, including but not limited to,
governmental and other third party approvals. No assurances can be given that
the above described acquisition will be completed, on a timely basis, if at
all. Additionally, Ariel's operating results may be affected by many factors,
including but not limited to, the timely development and acceptance of new
products, the impact of competitive products and pricing, the development of
OEM relationships, and changing market conditions. These and other risks are
detailed from time to time in Ariel's SEC reports, including its Form 10-K for
the year ended December 31, 1997 and its Form 10-Q for the quarter ended March
31, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Ariel Corporation
Dated: June 25, 1998 By:/s/ Anthony Agnello
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Anthony Agnello
Chairman and Chief Executive Officer
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EXHIBIT INDEX
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Exhibit
No. Title
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10 Asset Purchase Agreement by and among Ariel
Corporation, Cabletron Systems, Inc. and
CSG Acquisition, Inc. dated June 10, 1998.
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Exhibit 10
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ASSET PURCHASE AGREEMENT
AMONG
CABLETRON SYSTEMS, INC.,
CSG ACQUISITION, INC.
AND
ARIEL CORPORATION
JUNE 10, 1998
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TABLE OF CONTENTS:
Definitions...................................................................1
Acquisition of Assets by Buyer................................................7
Purchase and Sale of Assets..........................................7
Excluded Assets......................................................8
Assumption of Liabilities............................................9
Liabilities Not Assumed..............................................9
Purchase Price......................................................11
The Closing.........................................................11
Deliveries at the Closing...........................................11
Preliminary Allocation of Purchase Price............................12
Representations and Warranties of the Seller.................................12
Organization of the Seller..........................................12
[Intentionally Omitted].............................................12
Authorization of Transaction........................................12
Noncontravention....................................................12
Brokers' Fees.......................................................13
Title to Assets.....................................................13
All Assets Necessary to Conduct Business............................13
Subsidiaries........................................................13
Financial Statements................................................13
Guarantees..........................................................13
Absence of Changes..................................................13
Absence of Undisclosed Liabilities..................................15
Legal and Other Compliance..........................................15
No Material Adverse Change..........................................16
Taxes...............................................................16
Property, Plant and Equipment.......................................16
Intellectual Property...............................................18
Contracts...........................................................20
Notes and Accounts Receivable.......................................22
Powers of Attorney..................................................22
Insurance and Risk Management.......................................22
Litigation..........................................................22
Product Warranties; Defects; Liability..............................22
Employees...........................................................23
Employee Benefit Plans..............................................23
Environment, Health, and Safety.....................................24
Affiliated Transactions.............................................26
Government Contracts................................................26
Books and Records...................................................26
Consents............................................................27
Bankruptcy..........................................................27
Disclosure..........................................................27
Representations and Warranties of the Buyer..................................27
Organization of the Buyer...........................................27
Authority for Agreement.............................................27
Noncontravention....................................................27
Brokers' Fees.......................................................28
Bankruptcy..........................................................28
Litigation..........................................................28
Financial Ability to Close..........................................28
Due Diligence.......................................................28
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Covenants....................................................................28
General.............................................................28
Notices and Consents................................................28
Operation of Business...............................................29
Preservation of Business............................................29
Full Access.........................................................29
Notice of Developments..............................................29
Exclusivity.........................................................29
Employee Matters....................................................29
Access to Records after Closing.....................................30
Bulk Sales Compliance...............................................31
Transfer Taxes......................................................31
Future Assurances...................................................31
Conditions to Obligation to Close............................................31
Conditions to Obligation of the Buyer...............................31
Conditions to Obligations of the Seller.............................34
Confidentiality..............................................................35
Noncompetition...............................................................36
Covenants of the Seller.............................................36
Covenants of the Buyer..............................................36
Indemnification..............................................................37
Survival of Representations and Warranties..........................37
Indemnification Provisions for Benefit of the Buyer.................37
Environmental Indemnification.......................................38
Indemnification Provisions for Benefit of the Seller................38
Matters Involving Third Parties.....................................39
Non-Exclusive Remedy................................................40
Termination..................................................................40
Termination of Agreement............................................40
Effect of Termination...............................................41
Miscellaneous................................................................41
Press Releases and Public Announcements.............................41
No Third Party Beneficiaries........................................41
Entire Agreement....................................................41
Succession and Assignment...........................................41
Counterparts........................................................41
Headings............................................................41
Notices.............................................................41
Governing Law.......................................................43
Amendments and Waivers..............................................43
Severability........................................................43
Expenses............................................................43
Construction........................................................43
Incorporation of Exhibits and Schedules.............................44
Specific Performance................................................44
WAIVER OF JURY TRIAL................................................44
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Exhibits
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into on
June 10, 1998, by and among Cabletron Systems, Inc., a Delaware corporation
("Cabletron"), CSG Acquisition, Inc., a Delaware corporation and a
wholly-owned subsidiary of Cabletron ("Acquisition") (Cabletron and
Acquisition are collectively referred to herein as the "Buyer") and Ariel
Corporation, a Delaware corporation (the "Seller"). The Buyer and the Seller
are collectively referred to herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase all of the assets (and assume certain of the liabilities) of the
Communications Systems Group of the Seller in consideration of the Purchase
Price (as defined below).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
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"Acquired Assets" has the meaning set forth in Section 2.1 below.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preamble above.
"Ariel Products" has the meaning set forth in Section 8 below.
"Assumed Liabilities" has the meaning set forth in Section 2.3 below.
"Available Products" means products that the CSG purchases from third
parties that (i) have not been specifically modified for CSG and (ii) such
third party makes generally available for purchase by unaffiliated third
parties.
"Balance Sheet Assets" has the meaning set forth in Section 2.1(a) below.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could reasonably form the
basis for any specified consequence.
"Buyer" has the meaning set forth in the preamble above.
"Chemical Substance" means any chemical substance, including but not
limited to any (i) pollutant, contaminant, irritant, chemical, raw material,
intermediate, product, by-product, slag, construction debris; (ii) industrial,
solid, liquid or gaseous toxic or hazardous substance, material or waste,
(iii) petroleum or any fraction thereof; (iv) asbestos or asbestos-containing
material; (v) polychlorinated biphenyl; (vi) chlorofluoracarbons; and (vii)
other substance, material or waste, which is identified or regulated under any
Environmental Law or Safety Law.
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"Closing" has the meaning set forth in Section 2.6 below.
"Closing Date" has the meaning set forth in Section 2.6 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities Exchange Commission.
"Confidential Information" means any and all information concerning the
businesses and affairs of the CSG other than that information that is already
generally or readily obtainable by the public or is publicly known or becomes
publicly known through no fault of the Seller.
"Contracts" has the meaning set forth in Section 2.1(g) below.
"CSG" means the Seller with respect to its Communications Systems Group
division of Seller, including without limitation the Products, the Technology
and the business operations and assets of its Communications Systems Group.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Plan" has the meaning set forth in Section 3.25(a) below.
"Employees" has the meaning set forth in Section 5.8 below.
"Employment Agreement" has the meaning set forth in Section 5.8 below.
"Environment" means soil, land surface or subsurface strata, real
property, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater, water body sediments,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life and any other environmental medium or natural resource.
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"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act,
the Clean Air Act, and the Clean Water Act, each as amended and any other
federal, state, local or foreign law, regulation or legal requirement,
relating to: (a) the Release, containment, removal, remediation, response,
cleanup or abatement of any sort of any Chemical Substance; (b) the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, use, treatment, handling, storage, recycling,
disposal or transportation of any Chemical Substance; (c) exposure of persons,
including employees, to any Chemical Substance; (d) the management, use,
storage, disposal, cleanup or removal of asbestos, asbestos-containing
materials, polychlorinated biphenyls or any other Chemical Substance; (e) the
pollution, protection or clean up of the Environment; or (f) noise.
"Environmental Liabilities and Costs" means all Losses incurred: (i) to
comply with any Environmental Law; (ii) as a result of a Release of any
Chemical Substance; or (iii) as a result of any environmental conditions, in
each case present at, created by or arising out of the past or present
operations of Seller through the Closing Date.
"Environmental Permit" means any Permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by
any Environmental Law.
"Environmental Transfer Laws" has the meaning set forth in ss.
3.26(a)(ix) below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section 2.2 below.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Financial Statements" has the meaning set forth in Section 3.9 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 9.5(a) below.
"Indemnifying Party" has the meaning set forth in Section 9.5(a) below.
"Intellectual Property" means the entire right, title and interest in
and to all proprietary rights of every kind and nature, including Patents,
copyrights, Trademarks, mask works, trade secrets and proprietary information,
all applications for any of the foregoing, and any license or agreements
granting rights related to the foregoing (i) subsisting in, covering, reading
on, directly applicable to or existing in the Products or the Technology,
including, without limitation, all Intellectual Property identified in
Schedule 2.1(d); (ii) that are owned, licensed or controlled in whole or in
part by the CSG; or (iii) that, other than Available Products, are used in or
necessary to the development, manufacture, sales, marketing or testing of the
Products.
"Interim Financial Statements" has the meaning set forth in Section 3.9
below.
"Key Employee" has the meaning set forth in Section 6.1(g) below.
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"Knowledge" of an organization means actual knowledge of the Persons
within such organization having principal responsibility for the relevant
matters after reasonable investigation.
"Laws" means all applicable laws, rules, regulations, codes,
injunctions, judgments, orders, decrees, rulings, interpretations,
constitutions, ordinances, common law, or treaties, of any federal, state,
local municipal and foreign, international, or multinational government or
administration and related agencies.
"Leases" has the meaning set forth in Section 2.1(b) below.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, whether
incurred or consequential and whether due or to become due), including any
liability for Taxes.
"Lien" means any mortgage, pledge, lien, security interest, charge,
claim, equitable interest, encumbrance, restriction on transfer, conditional
sale or other title retention device or arrangement (including, without
limitation, a capital lease), transfer for the purpose of subjection to the
payment of any Indebtedness, or restriction on the creation of any of the
foregoing, whether relating to any property or right or the income or profits
therefrom; provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes to the extent that the payment thereof is not in
arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the uses of real
property if the same do not materially impair the use of such property in the
business of the CSG as currently conducted, (iii) statutory or common law
liens to secure landlords, lessors or renters under leases or rental
agreements confined to the premises rented to the extent that no payment or
performance under any such lease or rental agreement is in arrears or is
otherwise due, (iv) deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age pension
programs mandated under applicable laws or other social security regulations
and (v) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, statutory or common law liens to secure claims for
labor, materials or supplies and other like liens, which secure obligations to
the extent that payment thereof is not in arrears or otherwise due in the case
of (i) - (v), which have been incurred in the Ordinary Course of Business.
"Losses" has the meaning set forth in Section 9.2 below.
"Material Adverse Effect" means a material adverse effect in the
business, financial condition, operations, results of operations and prospects
of the CSG, taken as a whole.
"Multiemployer Plan" has the meaning set forth in Section 3.25(c) below.
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" and "Parties" have the meanings set forth in the preamble above.
"Patent" means any: (i) United States or foreign patent, patent
application, patent disclosure or other patent right; (ii) any division,
continuation, continuation-in-part or similar extension of an application that
is a Patent; and (iii) any patent or other patent right that issues or is
based upon an application that is a Patent.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Products" means all current products of the CSG including those
identified in Schedule 1.1, any subsequent or new versions of existing or
prior products currently being developed, any products currently being
developed by the CSG that are designed to supersede, replace or function as a
component of such products, and any upgrades, enhancements, improvements and
modifications to the foregoing prior to the Closing Date.
"Purchase Price" has the meaning set forth in Section 2.5 below.
"Related Entity" has the meaning set forth in Section 3.25(a) below.
"Release" means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of any Chemical Substance into the
Environment that may cause an Environmental Liability and Cost (including the
disposal or abandonment of barrels, containers, tanks or other receptacles
containing or previously containing any Chemical Substance).
"Safety Laws" means any federal, state, local and foreign law,
regulation or legal requirement relating to health or safety, including the
Occupational Safety and Health Act, as amended, as now or hereinafter in
effect relating to (a) exposure of employees to any Chemical Substance or (b)
the physical structure, use or condition of a building, facility, fixture or
other structure, including, without limitation, those relating to equipment or
manufacturing processes, or the management, use, storage, disposal, cleanup or
removal of any Chemical Substance.
"Safety Liabilities and Costs" means all Losses incurred to comply with
any Safety Law or as a result of any health or safety conditions present at,
created by or arising out of the past or present operations of the Seller
through and until the Closing Date.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Seller" has the meaning set forth in the preamble above.
"Statement of Assets" has the meaning set forth in Section 2.1(a) below.
"Statement of Liabilities" has the meaning set forth in Section 2.3(a)
below.
"Subsidiary" means with respect to any Person (i) any corporation at
least a majority of whose outstanding voting stock is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries; (ii) any general partnership,
joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or
by one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar, including FICA), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, information (including ideas, research and development,
know-how, formulas, compositions, processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, business and marketing plans and proposals, documentation,
and manuals), computer software, computer hardware, integrated circuits and
integrated circuit masks , electronic, electrical and mechanical equipment and
all other forms of technology, including improvements, modifications,
derivatives or changes, whether tangible or intangible, embodied in any form,
whether or not protectible or protected by patent, copyright, mask work right,
trade secret law or otherwise that (i) were conceived, developed, or reduced
to practice by or for the CSG, or (ii) are incorporated, embodied or used in
or are used to develop, manufacture, test, market, distribute or maintain and
support the Products.
"Third Party Claim" has the meaning set forth in Section 9.5(a) below.
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"Trademarks" means any trademarks, service marks, trade dress and logos
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith.
"Transamerica" has the meaning set forth in Section 6.1(n) below.
"Transamerica Credit Facility" means the Loan and Security Agreement
dated as of June 11, 1997, as amended and from time to time in effect, between
Seller and Transamerica.
"Welfare Plan" has the meaning set forth in Section 3.25(a) below.
2. Acquisition of Assets by Buyer.
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2.1. Purchase and Sale of Assets. The Seller agrees to sell and
transfer to the Buyer, and the Buyer agrees to purchase from the Seller at the
Closing, subject to and upon the terms and conditions contained herein, free
and clear of any Lien, except those Liens listed on Schedule 2.1(a), all
right, title, and interest in and to all of the assets constituting, or used
in or necessary for the operation of the CSG, (the "Acquired Assets"), which
includes, but is not limited to, the following properties and assets:
(1) All assets of the CSG set forth on the face of the Statement of
Assets attached hereto as Exhibit D-1 (the "Statement of Assets") and all
assets of the CSG that have been acquired since the date of the Statement of
Assets (other than assets reflected on the Statement of Assets that have been
disposed of in the Ordinary Course of Business since the date of the Statement
of Assets) (collectively, the "Balance Sheet Assets"), including without
limitation:
(1) all real property, improvements, fixtures and fittings thereon,
easements, rights-of way, and other appurtenant rights thereto (such as
appurtenant rights in and to public streets);
(2) all tangible personal property (such as machinery, equipment,
test equipment, raw materials, supplies, manufactured and purchased
parts, works in progress, finished goods, furniture, vehicles, tools,
jigs and dies, workstations, computer software stored on a tangible
medium, electronic, electrical and mechanical equipment, other computer
hardware and personal computers) whether in the Seller's possession or
in the possession of another party such as a manufacturer or vendor of
the Seller;
(3) all inventory, including raw materials, work-in-process and
finished goods; and
(4) all prepaid expenses and other current assets;
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(2) All rights with respect to leasehold interests and subleases and
rights thereunder relating to the real and personal property as listed on
Schedule 2.1(b) (the "Leases");
(3) All rights under all licenses (other than those transferred
pursuant to permits, authorizations, orders, registrations, certificates,
variances, approvals, consents and franchises or any pending applications
relating to any of the foregoing) including without limitation all
governmental permits, licenses, authorizations, approvals and consents
described in Schedule 2.1(c);
(4) All Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted in respect thereto and rights thereunder, remedies
against infringements thereof and rights to protection of interest therein,
including, without limitation the Intellectual Property described in Schedule
2.1(d) hereto;
(5) All technical data, designs, drawings, specifications,
documentation and manuals (or portions thereof);
(6) All customer, distributor, supplier and mailing lists, pricing and
cost information, and business and marketing plans (or portions thereof);
(7) All rights under any contracts, indentures, mortgages, instruments,
Liens, guaranties, or other agreements described in Schedule 2.1(g) (the
"Contracts");
(8) All claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off and rights of
recoupment;
(9) All business records and financial management reports, books,
files, plans, appraisals, environmental audits and reports, documents,
correspondence, lists, plats, architectural plans, drawings, notebooks,
specifications, creative materials, advertising and promotional materials,
marketing materials, studies, reports, equipment repair, maintenance or
service records whether written or electronically stored or otherwise
recorded, in each case, that is used in or by the CSG; and
(10) All of the Seller's rights to the use of the name "Communications
Systems Group", including d/b/a as Horizon and any variations thereof.
2.2 Excluded Assets. There shall be excluded from the Acquired Assets
to be sold, assigned, transferred, conveyed and delivered to Buyer hereunder,
and to the extent in existence on the Closing Date, there shall be retained by
the Seller, the following assets, properties and rights (collectively, the
"Excluded Assets"):
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(1) any of the rights of the Seller under this Agreement (or under any
side agreement between the Seller on the one hand and the Buyer on the other
hand entered into on or after the date of this Agreement); and
(2) such other assets set forth on Schedule 2.2(b).
2.3. Assumption of Liabilities. On the terms and subject to the
conditions set forth herein and except as contemplated by Section 2.4 hereof,
from and after the Closing, the Buyer will assume and satisfy or perform when
due only the following Liabilities (the "Assumed Liabilities"):
(1) all Liabilities of the CSG set forth on the face of the Statement
of Liabilities attached hereto as Exhibit D-2 (the "Statement of
Liabilities");
(2) all Liabilities of the CSG incurred after the date of the Statement
of Liabilities in the Ordinary Course of Business that would, if incurred
during the last fiscal year, be required in accordance with GAAP to be set
forth on the face of the Seller's most recent audited balance sheet and in any
event in an amount not to exceed $150,000.
(3) all Liabilities under the Contracts listed in Schedules 2.1(b) and
2.1(f) arising after the Closing Date other than Liabilities arising from any
breach or default occurring prior to the Closing Date.
(4) Liabilities or other agreements or obligations to purchase goods
set forth on Schedule 2.3(d) and such additional purchase orders that are
incurred in the Ordinary Course of Business after the date of the Statement of
Liabilities that are either (a) less than $10,000 or (b) have received the
prior approval of Buyer.
2.4. Liabilities Not Assumed. Except as expressly set forth in this
Agreement, the Buyer will not assume or perform any Liabilities not
specifically contemplated by Section 2.3 hereof, including but not limited to,
any of the following Liabilities (whether or not contemplated by Section 2.3):
(1) any Liability of the Seller for income, franchise, transfer, sales,
use and other Taxes (whether or not relating to the CSG and whether or not
incurred prior to the Closing).
(2) any Liability of the Seller for the unpaid Taxes of any Person
other than the Buyer (including Taxes imposed on the CSG) as a transferee or
successor, by contract, or otherwise;
(3) any Liability of the Seller to indemnify any Person by reason of
the fact that such Person was a director, officer, employee, or agent of the
Seller or was serving at the request of such entity as a partner, trustee,
director, officer, employee, or agent of another entity;
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(4) any Liability of the Seller arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any
time in respect of anything done, suffered to be done or omitted to be done by
the Seller (other than CSG) or any of its respective directors, officers,
employees or agents, or by CSG or any of its respective directors, officers,
employees or agents prior to the Closing;
(5) any Liability of the Seller for costs and expenses incurred in
connection with this Agreement, the making or performance of this Agreement
and the transactions contemplated hereby;
(6) any Liability of the Seller under this Agreement or under any
agreement between the Seller on the one hand and the Buyer on the other hand
entered into in connection with this Agreement;
(7) any Liability relating to or arising out of products manufactured
or sold or services rendered by the Seller (including the CSG) prior to the
Closing Date;
(8) any Liability of the Seller arising out of any Employee Plan
established or maintained by the Seller for the benefit of past or present
employees of the CSG or to which the CSG contributes or any liability or the
termination of any such plan;
(9) any Liability of the Seller for making payments or providing
benefits of any kind to its employees or former employees including, without
limitation, (i) as a result of the sale of the Acquired Assets or as a result
of the termination by the Buyer of any employees, (ii) arising out of, or
relating to, the Worker Adjustment and Retaining Act of 1988, (iii) to provide
former employees so-called COBRA continuation coverage to the extent such
COBRA continuation coverage is not available under the health care plans of
the Seller, (iv) in respect of medical and other benefits for existing and
future retirees, (v) any liability or obligation of the Seller in respect of
work-related employee injuries or worker's compensation claims and (vi) any
liability of the Seller pursuant to Section 5.8 hereof;
(10) any Liability of the Seller arising out of or resulting from
noncompliance prior to the Closing Date with any national, regional or local
laws, statutes, ordinances, rules, regulations, orders, determinations,
judgments, or directives, whether legislatively, judicially or
administratively promulgated (including, without limitation, any Environmental
Liabilities and Costs and Safety Liabilities and Costs whether or not arising
out of or resulting from Seller's noncompliance with Environmental Laws,
Environmental Transfer Laws or Safety Laws) or any other Laws;
(11) any Liability of the Seller under any leases, contracts, or
agreements not listed on Schedules 2.1(b) and 2.1(g);
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(12) any Liability of the Seller in respect of Environmental
Liabilities and Costs arising out of any condition existing at or prior to
Closing that constitutes a violation of or gives rise to a duty to remediate
under any Environmental Law that is occurring or occurred on any real property
(regardless of whether the Seller has any ownership or leasehold interest in
such property on the Closing Date) and without limit as to point of time,
knowledge or amount (including, without limitation, any Liability or
obligation to remediate any Chemical Substance, (i) generated, used, stored,
disposed of or Released at any property or facility owned or leased by the
Seller or its Affiliates at any time prior to the Closing Date, (ii) Released
from or in connection with any property or facility owned or leased by the
Seller or its Affiliates at any time prior to the Closing Date or (iii)
generated, used, stored, disposed of or Released in connection with the
Seller's past or present operations);
(13) any Liability of the Seller for accounts payable for goods or
services received or delivered prior to Closing; and
(14) any Liability of the Seller for any credits, or credit notes,
sales returns or other similar liabilities in connection with any sales of
Products prior to the Closing.
2.5. Purchase Price. Subject to Section 2.6, the Buyer agrees to assume
the Assumed Liabilities and pay to the Seller aggregate consideration
consisting of $33,500,000 in cash payable by wire transfer to the Seller in
accordance with written instructions of the Seller given to the Buyer at least
two business days prior to the Closing (the "Purchase Price").
2.6. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Ropes & Gray in
Boston, Massachusetts, commencing at 10:00 a.m. eastern time on July 27, 1998
or such other date as the Parties may mutually determine (the "Closing Date").
2.7. Deliveries at the Closing. At the Closing, the Seller will deliver
to the Buyer properly executed and acknowledged, if appropriate (i) the
various certificates, instruments, and documents referred to in Section 6.1
below; (ii) the assignments and the third party consents to assignment of the
Leases, Permits, Intellectual Property and contracts listed in Section 3.30 of
the Disclosure Schedule, (iii) such other instruments of sale, transfer,
conveyance, and assignment as the Buyer and its counsel may request, and (iv)
the Bill of Sale in the form attached hereto as Exhibit B-2 which includes a
power of attorney. The Buyer will execute, acknowledge (if appropriate), and
deliver the Assignment and Assumption Agreement in the form attached hereto as
Exhibit B-1 and will deliver the consideration specified in Section 2.5 above.
Simultaneously with such delivery, the Seller will use its best
efforts and take all action as may be necessary to put Buyer in possession and
operating control of the Acquired Assets.
At any time and from time to time after the Closing, at the request
of Buyer and without further consideration, except as stated below, the Seller
will execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Buyer may reasonably
determine is necessary to transfer, convey and assign to Buyer, and to confirm
Buyer's title to or interest in the Acquired Assets, to put Buyer in actual
possession and operating control thereof and to assist Buyer in exercising all
rights with respect thereto.
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2.8. Preliminary Allocation of Purchase Price. The Parties agree that
the preliminary allocation of the Purchase Price for the Acquired Assets shall
be as determined by the allocation formula set forth on Exhibit C hereto. The
Seller and Buyer agree that the allocation may be amended or modified by
mutual agreement to establish a final allocation prior to the filing of the
applicable Tax Returns of Buyer and Seller. The Seller and Buyer shall use
such final allocation in all Tax Returns.
3. RepreSentations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and, unless a date is
specified in such representation and warranty, will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3), except
as set forth in the disclosure schedule accompanying this Agreement (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3. Disclosure in one paragraph is not deemed disclosure for any other
paragraph unless specifically incorporated by reference in such paragraph.
3.1. Organization of the Seller. The Seller is a corporation, duly
organized, validly existing, and in good corporate standing under the laws of
the state of its incorporation.
3.2. [Intentionally Omitted]
3.3. Authorization of Transaction. The Seller has the power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its respective obligations hereunder.
All corporate and other actions or proceedings to be taken by or on the part
of the Seller to authorize and permit the execution and delivery by Seller of
this Agreement and the instruments required to be executed and delivered by
Seller pursuant hereto, the performance by Seller of its obligations
hereunder, and the consummation by Seller of the transactions contemplated
herein, have been duly and properly taken. This Agreement has been duly
executed and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller, enforceable in accordance with its terms and
conditions.
3.4. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject or
any provision of the charter or by-laws of the Seller or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by which it
is bound or to which any of the Acquired Assets is subject (or result in the
imposition of any Lien upon any of the Acquired Assets) except such event that
individually or in the aggregate would not have a Material Adverse Effect on
the Acquired Assets. The Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above) except for required filings under
the Hart-Scott-Rodino Act and foreign pre-merger notification requirements, if
any, which filings have been or will be made prior to Closing.
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3.5. Brokers' Fees. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer or the CSG
could become liable or obligated.
3.6. Title to Assets. The Seller has good and marketable title to, or a
valid leasehold interest in, the Acquired Assets free and clear of all Liens
or restrictions on transfer, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Statement of Assets and
except as set forth on Schedule 2.1(a).
3.7. All Assets Necessary to Conduct Business. The Acquired Assets
comprise all of the assets, properties and rights of every type and
description, real, personal, tangible and intangible used by the CSG or, other
than Available Products, necessary in the conduct of its business as it is
currently conducted or as currently proposed to be conducted by the CSG as of
the date of this Agreement. In particular, the Seller has not retained any
assets which are used in whole or in part by the CSG.
3.8. Subsidiaries. The Seller has no subsidiaries.
3.9. Financial Statements. The Statement of Assets and the Statement of
Liabilities (collectively, the "Financial Statements"), have been prepared in
accordance with GAAP applied on a consistent basis, are correct and complete
and present fairly the financial condition of the CSG as of such dates and are
consistent with the books and records of the CSG, subject to normal and
recurring year end adjustments (which will not be material individually or in
the aggregate) and lack of footnotes and other presentation items.
3.10. Guarantees. The CSG is not a guarantor or otherwise liable for
any Liability or obligation of any Person for any matter that relates to or
affects or will affect the CSG.
3.11. Absence of Changes. Since the date of the Financial Statements,
the Seller has operated and conducted the business of the CSG only in the
Ordinary Course of Business and, with respect only to, by and on behalf of the
CSG, there has not been:
(1) any sale, lease, transfer, or assignment of assets, tangible or
intangible, other than sales of assets in the Ordinary Course of Business;
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(2) any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) in an amount not in excess of
$10,000;
(3) any acceleration, termination, modification, or cancellation of any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving payments of more than $25,000 to
which the Seller is a party or by which it is bound;
(4) the creation or imposition of any Lien upon the Acquired Assets,
tangible or intangible;
(5) capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) involving payments of more than $25,000
or outside the Ordinary Course of Business;
(6) issuance of any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving payments of more than $15,000 singly or
$50,000 in the aggregate;
(7) any delay or postponement of payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
(8) any cancellation, compromise, waiver, or release of any right or
claim or Indebtedness (or series of related rights and claims) involving
payments of more than $25,000 or outside the Ordinary Course of Business;
(9) grant of any license or sublicense of any rights or modification of
any rights under or with respect to, or entered into any settlement regarding
any infringement of its rights to, any Intellectual Property;
(10) any supplier, major vendor, licensor, distributor and customer
that has terminated its business relationship with Buyer, and the Seller has
not received notice that any supplier, major vendor, licensor, distributor and
customer (i) intends to terminate or is considering terminating its respective
business relationship, (ii) has modified or intends to modify such
relationship with the CSG in a manner which is less favorable to the CSG or
(iii) has agreed not to or will not agree to do business on such terms and
subject to conditions at least as favorable as the terms and conditions as
provided to the CSG on the date of the Statement of Assets and the Seller is
not aware of any facts that would form the Basis for such termination or
modification or any threat or notification, orally or in writing of the
foregoing;
(11) any material damage, destruction, or loss (whether or not covered
by insurance) to the Acquired Assets;
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(12) any loan to, or any other transaction with, any directors,
officers and employees of the Seller outside the Ordinary Course of Business;
(13) any employment contract or collective bargaining agreement entered
into, written or oral, or modification of the terms of any existing such
contract or agreement except as contemplated by Section 5.8 below;
(14) any increase, modification or change in the compensation of any of
the officers and employees of CSG outside the Ordinary Course of Business;
(15) any adoption, amendment, modification or termination of any
Employee Plan or other plan, contract, or commitment for the benefit of any
officer or employee of CSG (or taken any such action with respect to any other
Employee Plan);
(16) any modification or change in the employment terms for any of the
officers and employees of CSG or any offer of employment outside the Ordinary
Course of Business;
(17) any charitable or other capital contribution outside the Ordinary
Course of Business or any pledge to make such a contribution;
(18) any modification or change in the application of GAAP from the
manner in which it was applied in the Statement of Assets;
(19) any other material occurrence, event, incident, action, failure to
act, or transaction outside the Ordinary Course of Business; and
(20) any commitment to any of the foregoing.
3.12. Absence of Undisclosed Liabilities. The Seller has no Liability
for which Buyer could be liable except as expressly set forth herein pursuant
to Section 2.3 above.
3.13. Legal and Other Compliance. The Seller is in compliance with all
applicable Laws the violation of which, either singularly or in the aggregate,
could have a Material Adverse Effect on the CSG and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against it alleging any failure so to
comply. Neither the ownership nor use of the Acquired Assets (excluding
Intellectual Property, which is addressed in Section 3.17) nor the conduct of
the business of the CSG conflicts with the rights of any other Person or
violates, or with the giving of notice or the passage of time or both will
violate, conflict with or result in a default, right to accelerate or loss of
rights under, any terms or provisions of any of its certificate of
incorporation or by-laws or any Lien, lease, license, agreement,
understanding, law, ordinance, rule or regulation, or any order, judgment or
decree to which the CSG is a party or by which the CSG may be bound or
affected. The Seller is not aware of any proposed Laws, rules, regulations,
ordinances, orders, judgments, decrees, governmental takings, condemnations or
other proceedings that would be applicable to the business, operations or
properties of the CSG and that might adversely affect such properties, assets,
liabilities, operations or prospects.
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3.14. No Material Adverse Change. Since the date of the Statement of
Assets, there has not been any change which has resulted in a Material Adverse
Effect and no event has occurred or circumstance exists that could reasonably
be likely to result in such a Material Adverse Effect.
3.15. Taxes. Except as set forth in Section 3.15 of the Disclosure
Schedule; (i) all Tax Returns that were required to be filed with respect to
the CSG have been filed, (ii) all such Tax Returns were correct and complete;
(iii) all Taxes owed with respect to the CSG (whether or not shown on any Tax
Return) have been paid except for Taxes being contested in good faith and for
which adequate reserves have been established; (iv) all Taxes required to have
been withheld and paid with respect to the CSG in connection with the amounts
paid or owing to any employee, independent contractor, creditor, stockholder
or other third party have been withheld and paid; (v) no notice has been
received from an authority in a jurisdiction where Tax Returns are not filed
with respect to the CSG that such jurisdiction may impose Taxes with respect
to the CSG; (vi) no statute of limitations has been waived in respect to Taxes
relating to the CSG, and no extension of time has ever been agreed to with
respect to a Tax assessment or deficiency relating to the CSG; (vii) all
federal, state, local, and foreign income Tax Returns with respect to the CSG
have been audited for taxable periods ended on or before December 31, 1993 and
Section 3.15 of the Disclosure Schedule sets forth those Tax Returns that
remain open and currently are the subject of audit; (viii) there is no pending
dispute, audit, investigation, proceeding or claim concerning any liability
for Taxes with respect to the CSG with respect to which Seller has received
written notice; and (ix) there are no Liens on any of the Acquired Assets of
the CSG that arose in connection with any failure (or alleged failure) to pay
any Tax.
3.16. Property, Plant and Equipment.
(1) The Seller does not own any real property that is used in
connection with the business or operations of the CSG. Section 3.16 of the
Disclosure Schedule lists all real property leased or subleased in connection
with the business or operations of the CSG. The Seller has delivered to the
Buyer correct and complete copies of the leases and subleases listed in Section
3.16 of the Disclosure Schedule (as amended to date), which leases and, if
any, subleases have not been amended or modified since the date thereof. With
respect to each lease and sublease listed in Section 3.16 of the Disclosure
Schedule:
(1) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(2) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above);
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(3) Seller has not received any written notice as to breach or default
under the lease and no event has occurred that, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(4) the Seller has not received notice that any party to the lease or
sublease has repudiated any provision thereof;
(5) there are no oral or written agreements, or forbearance programs in
effect as to, and Seller has not disputed, the lease or sublease and the,
Seller has not received notice that any third party has disputed the lease or
sublease;
(6) with respect to each sublease, if any, the representations and
warranties set forth in sub Sections (i) through (v) above are true and correct
with respect to the underlying lease;
(7) the CSG has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(8) with respect to each real property that is leased or subleased
there is either no mortgage on the fee interest in such property that predates
such lease or a non-disturbance agreement protecting the tenant's leasehold
interest has been obtained and a current and complete copy provided to the
Buyer;
(9) Seller has not received any written notice of any threatened
condemnation proceedings, lawsuits, or administrative actions relating to the
premises leased by CSG which would have a Material Adverse Effect on the use
or occupancy thereof;
(10) there are no leases, subleases, licenses concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of the premises leased by CSG or any portion thereof;
(11) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof by the Seller and have been
operated and maintained by the Seller in accordance with applicable laws,
rules, and regulations; and
(12) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities.
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(2) The CSG owns or leases all buildings, real property, improvements,
machinery, equipment, and other tangible assets necessary for the conduct of
CSG's business as presently conducted or as proposed to be conducted by the
CSG as of the date of this Agreement. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in satisfactory operating condition and repair (subject
to normal wear and tear), and is suitable, adequate and sufficient for the
purposes for which it presently is used and presently is proposed to be used
by the CSG as of the date of this Agreement.
3.17. Intellectual Property.
(1) The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property. Subject to
obtaining all necessary consents and effecting assignments as disclosed in
Section 3.30 of the Disclosure Schedule, each item of Intellectual Property
owned or used by the Seller in connection with the business of the CSG
immediately prior to the Closing hereunder will be owned or available for use
by the Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder. Except as disclosed in Section 3.17(a) of the Disclosure
Schedule, the Seller has taken all reasonable action to maintain and protect
each item of Intellectual Property that it owns or uses.
(2) Except as disclosed in Section 3.17(b) of the Disclosure Schedule,
the Seller has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any intellectual property rights of third
parties, and the Seller has never received or been made aware of any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Seller must license or refrain from using any Intellectual Property rights of
any third party). To the Knowledge of the Seller, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Seller.
(3) All of the Seller's employees that have participated in the
development of the Products have entered into employee agreements with the
Seller assigning all right, title and interest in the Intellectual Property
therein to the Seller. Pursuant to such employee agreements or applicable law,
the Seller owns all of the right, title and interest of their employees to any
Intellectual Property in the Products.
(4) Section 3.17(d) of the Disclosure Schedule identifies each patent
or registration which has been issued to the Seller with respect to its
Intellectual Property, identifies each pending patent application or
application for registration which has been made with respect to the Seller's
Intellectual Property, and identifies each license, agreement, or other
permission which the Seller has granted to any third party with respect to any
of the Intellectual Property. The Seller has delivered to the Buyer correct
and complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has made
available to the Buyer correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each
such item. Section 3.17(d) of the Disclosure Schedule also identifies each
trade name or unregistered trademark or servicemark used by the Seller in
connection with the business of the CSG. With respect to each item of
Intellectual Property required to be identified in Section 3.17(d) of the
Disclosure Schedule:
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(1) except as disclosed in Section 3.17(d) of the Disclosure
Schedule, the Seller possesses all right, title, and interest in and to
the item, free and clear of any Lien, license, or other restriction;
(2) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending, and the Seller has not received
notice that any such action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item; and
(4) the Seller has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(5) Section 3.17(e) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that the Seller uses in
connection with the business of the CSG pursuant to license, sublicense,
agreement, or permission. The Seller has delivered to the Buyer correct and
complete copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual Property
required to be identified in Section 3.17(e) of the Disclosure Schedule:
(1) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and
effect;
(2) subject to obtaining necessary consents as disclosed in Section
3.30 of the Disclosure Schedule, the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation
of the transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above);
(3) the Seller has not and, no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration
thereunder;
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(4) the Seller has not repudiated any provision of the license,
sublicense, agreement, or permission, and the Seller has not received
notice that any other party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(5) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (v) above are true and
correct with respect to the underlying license;
(6) the underlying item of Intellectual Property is not subject to
any outstanding injunction, judgment, order, decree, ruling, or charge;
(7) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or to the Knowledge of the
Seller, is threatened, which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(8) the CSG has not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(6) The CSG will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its businesses as presently
conducted and proposed to be conducted by the CSG as of the date of this
Agreement.
(7) Notwithstanding anything to the contrary contained in this Section
3.17 no representation is made concerning Available Products other than that
the Seller has not received notice that any third party has refused to sell
such Available Products to the CSG or that such Available Products have become
unavailable for purchase.
3.18. Contracts. Section 3.18 of the Disclosure Schedule lists the
following contracts and other agreements (including the Contracts and Leases
listed on Schedules 2.1(b) and 2.1(f) and contracts and agreements listed on
Sections 3.11, 3.16 and 3.17 of the Disclosure Schedule) to which the Seller or
the CSG is a party in connection with the business of the CSG: 1.1.
(1) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $25,000;
(2) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of
which will extend over a period of more than one year, result in a material
loss or involve consideration in excess of $25,000;
(3) any agreement concerning a partnership or joint venture;
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(4) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any Indebtedness in excess of
$25,000 or under which it has imposed a Lien on any of the Acquired Assets;
(5) any agreement concerning confidentiality or noncompetition;
(6) any agreement involving the Seller;
(7) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of the officers and employees of the CSG;
(8) any collective bargaining agreement;
(9) any agreement providing for the employment or consultancy with any
individual on a full-time, part-time, consulting or other basis providing
annual compensation in excess of $25,000 or providing severance or retirement
benefits;
(10) any agreement under which it has advanced or loaned any amount to
any of the CSG officers and employees other than in the Ordinary Course of
Business;
(11) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect;
(12) any contract or arrangement with any federal, state or local
government agency;
(13) any support contract with customers relating exclusively to the
Acquired Assets; or
(14) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000 per year.
The Seller has delivered to the Buyer a correct and complete copy of
each written agreement listed in Section 3.18 of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 3.18 of the Disclosure Schedule.
Except as disclosed in Section 3.18 of the Disclosure Schedule, with respect
to each such agreement: (i) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (ii) subject to the Buyer obtaining
the necessary consents disclosed in Section 3.30 of the Disclosure Schedule,
the agreement will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (iii) the Seller is not in breach or default
under the agreement and the Seller has not received notice that any third
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (iv) Seller has not
repudiated any provision of the agreement and the Seller has not received
notice that any other party has repudiated any provision of the agreement.
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3.19. Notes and Accounts Receivable. All notes and accounts receivable
of the CSG, if any, are reflected properly on its books and records in
accordance with GAAP, are valid receivables, arose from bona fide transactions
in the Ordinary Course of Business subject to no setoffs or counterclaims
except as recorded as accounts payable are current and collectible and will be
collected in accordance with their terms at their recorded amounts without
having to or threaten to resort to any collection efforts or legal proceedings
outside the Ordinary Course of Business, except as adjusted for the passage of
time through but until the Closing Date in accordance with GAAP and past
practice and custom of the Seller.
3.20. Powers of Attorney. Except pursuant to this Agreement and the
Exhibits hereto, there are no outstanding powers of attorney executed on
behalf of the Seller in respect of the CSG, or the Acquired Assets.
3.21. Insurance and Risk Management. The CSG has been covered during
the past 5 years by insurance in scope and amount customary and reasonable for
the businesses in which it has engaged during the aforementioned period.
Section 3.21 of the Disclosure Schedule describes any self-insurance
arrangements affecting the CSG.
3.22. Litigation. There are no judicial or administrative actions,
claims, suits, proceedings or investigations pending, and the Seller has not
received notice that any such judicial or administrative actions, claims,
suits, proceedings or investigations are threatened, that could be reasonably
likely to result in a Material Adverse Effect, or that question the validity
of this Agreement or of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement nor is there any Basis for
any such action, claim, suit, proceeding or investigation. There are no
judgments, orders, decrees, citations, fines or penalties heretofore assessed
against the Seller affecting the CSG, the Acquired Assets or Assumed
Liabilities under any federal, state or local law.
3.23. Product Warranties; Defects; Liability. To the Knowledge of the
Seller, each Product manufactured, sold, leased, or delivered by the CSG has
been in conformity in all material respects with all applicable federal,
state, local or foreign Laws and regulations, contractual commitments and all
express and implied warranties, and the Seller has any Liability (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any
Liability) for replacement or repair thereof or other damages in connection
therewith not covered by insurance. Except as disclosed in Section 3.23 of the
Disclosure Schedule, no product manufactured, sold, leased, or delivered by
the CSG is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Section 3.23 of the
Disclosure Schedule includes copies of the standard terms and conditions of
sale or lease for the CSG (containing applicable guaranty, warranty, and
indemnity provisions). To the Knowledge of the Seller, Seller has no Liability
(and there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
them giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the CSG and there has been no
inquiry or investigation made in respect thereof by any Person including any
governmental or administrative agency.
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3.24. Employees. Seller has not received notice that any executive, key
employee, or group of employees relating to the CSG has any plans to terminate
employment with the Seller, except as contemplated by Section 5.8. The Seller
has not experienced any labor disputes or work stoppage due to labor
disagreements with regard to the business of the CSG. The Seller is not nor
has it ever been a party to any collective bargaining agreements and the
Seller has not been the subject in the past 5 years of any organizational
activity.
3.25. Employee Benefit Plans.
(1) Seller Plans. Section 3.25 of the Disclosure Schedule sets forth
(1) all Employee Plans (A) that are maintained by Seller or by any
corporation, trust, partnership or other entity (a "Related Entity") that
would be considered as a single employer with Seller under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code, or to which Seller or
any Related Entity contributes or is required to contribute or with respect to
which Seller or any Related Entity has or may have any liability for premiums
or benefits, and (B) that benefit any Employee (a "Seller Plan"), as well as
(2) all plans, agreements, policies and arrangements that would be Seller
Plans if the term "employee" were construed to include outside directors,
consultants or other independent contractors who provide services to or for
the benefit of the CSG. For purposes of this Agreement, the term "Employee
Plan" means any plan, program, agreement, policy or arrangement (a "plan"),
whether covering a single individual or group of individuals, and whether or
not reduced to writing, that is: (i) a welfare benefit plan within the meaning
of Section 3(1) of ERISA (a "Welfare Plan"); (ii) a pension benefit plan
within the meaning of Section 3(2) of ERISA; (iii) a stock bonus, stock
purchase, stock option, restricted stock, stock appreciation right or similar
equity-based plan; or (iv) any other deferred-compensation, retirement,
welfare-benefit, bonus, incentive or fringe benefit plan or arrangement. With
respect to each Seller Plan, Seller has provided to Buyer accurate, current
and complete copies of each of the following: (1) where the plan has been
reduced to writing, the plan document together with all amendments; (2) where
the plan has not been reduced to writing, a written summary of all material
plan terms; and (3) copies of any summary plan descriptions, employee
handbooks or similar employee communications.
(2) No Liability. Except for payments contemplated by this Agreement,
no circumstance exists and no event (including any action or the failure to do
any act) has occurred with respect to any Employee Plan maintained or formerly
maintained by Seller or any Related Entity, or to which Seller or any Related
Entity is or has been required to contribute, that could subject Buyer to
Liability, or the Acquired Assets to any Lien, under ERISA or the Code, nor
will the transactions contemplated by this Agreement give rise to any such
Liability or Lien.
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(3) Multiemployer Plans. With respect to current and former employees
of the CSG, neither Seller nor any Related Entity contributes to, ever has
contributed to, or been required to contribute to any multiemployer plan
within the meaning of ERISA section 3(37) (a "Multiemployer Plan") or has any
Liability Employee (including withdrawal Liability) under any Multiemployer
Plan.
(4) Retiree Benefits; Certain Welfare Plans. Except as described in
Section 3.25 of the Disclosure Schedule and other than as required under
Section 601 et seq. of ERISA, no Seller Plan that is a Welfare Plan provides
benefits or coverage following retirement or other termination of employment.
Nothing has occurred with respect to any Employee Plan described in Section
4980B of the Code that could subject Seller or any Related Party to a tax
under Section 4980B of the Code.
(5) No Restrictions On Termination. No provision of any Seller Plan
would result in any limitation on the ability of Seller to terminate the plan
with respect to the Employees.
(6) The transactions contemplated by this Agreement shall not alone or
upon the occurrence of any additional or subsequent event, result in any
payment of severance or otherwise, or acceleration, vesting or increase in
benefits under any Employee Plan for the benefits of any Employee.
3.26. Environment, Health, and Safety.
(1) Except as disclosed in Section 3.26 of the Disclosure Schedule:
(1) the Seller in connection with the business of the CSG, has
complied and is in compliance with all applicable Environmental Laws
and Safety Laws the violation of which could have a Material Adverse
Effect;
(2) the Seller in connection with the business of the CSG has
obtained, and is and has been in material compliance with the
conditions of, all Environmental Permits required for the continued
conduct of the business of the CSG in the manner now conducted and
presently proposed to be conducted by the CSG as of the date of this
Agreement;
(3) the Seller in connection with the business of the CSG has filed
all required applications, notices and other documents necessary to
effect the timely renewal or issuance of all Environmental Permits for
the continued conduct of the business of the CSG in the manner now
conducted and presently proposed to be conducted by the CSG as of the
date of this Agreement;
(4) the Seller has not received notice that there are past or
present events, conditions or circumstances, that are likely to
interfere with or otherwise affect the business of the CSG in the
manner now conducted or which would interfere with compliance with any
Environmental Law or Permit or Safety Law;
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(5) the Seller has not received notice that there are circumstances
or conditions present at or arising out of the present or former
assets, properties, leaseholds, businesses or operations of the Seller
in connection with the business of the CSG in respect of off-site
storage, transportation or disposal of, or any off-site Release of, a
Chemical Substance which reasonably may be expected to give rise to any
Environmental Liabilities and Costs;
(6) the Seller has not received notice that there are circumstances
or conditions present at or arising out of the present or former
assets, properties, leaseholds, businesses or operations of the Seller
in connection with the business of the CSG, including but not limited
to any on-site Storage, use, disposal or Release of a Chemical
Substance, which reasonably may be expected to give rise to any
Environmental Liabilities and Costs or Safety Liabilities and Costs;
(7) the Seller in connection with the business of the CSG or the
present or past assets, properties, businesses, leaseholds or
operations of the Seller in connection with the business of the CSG has
not received within the past three years any order, decree, judgment,
complaint, agreement, claim, citation, or notice and is not subject to
any ongoing judicial or administrative proceeding indicating that the
Seller or the past and present assets of the CSG are or may be: (A) in
violation of any Environmental Law; (B) in violation of any Safety
Laws; (C) responsible for the on-site or off-site storage or Release of
any Chemical Substance; or, (D) liable for any Environmental
Liabilities and Costs or Safety Liabilities and Costs;
(8) the Seller has no reason to believe that the CSG will become
subject to a matter identified in subsection (vii); and the Seller has
not received notice of any investigation or review with respect to such
matters is pending or is threatened, nor has any Authority or other
third-party indicated an intention to conduct the same;
(9) neither the business of the CSG nor any of the Acquired Assets
is subject to, or as a result of the transactions contemplated by this
Agreement will be subject to, the requirements of any Environmental
Laws or other Laws which require notice, disclosure, cleanup or
approval prior to transfer of such Acquired Assets or the business of
the CSG or which will impose Liens on such Acquired Assets or otherwise
interfere with or affect the business of the CSG ("Environmental
Transfer Laws") or if subject to such requirements, the Seller has
complied therewith;
(10) Section 3.26 of the Disclosure Schedule lists all property
presently or previously leased, owned or operated by the Seller in
connection with the business of the CSG and identifies all such
property (and the area within that property) that has been used by the
CSG or by any other Person (including a prior owner or operator) for
the storage or disposal of Chemical Substances;
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(11) copies of all waste manifests under the Resource Conservation
and Recovery Act of 1976 as now in effect for treatment, storage,
disposal, reuse or recycling in connection with the transport or
disposal of Chemical Substances originating from the CSG or the
Acquired Assets have been made available to Buyer;
(12) Section 3.26 of the Disclosure Schedule sets forth a list of
all underground storage tanks owned or operated at any time by the
Seller in connection with the business of the CSG and except as
disclosed in Section 3.26 of the Disclosure Schedule, the Seller has
not received notice that any such tank is leaking or has leaked at any
time in the past, and there is no pollution or contamination of the
Environment caused by or contributed to or threatened by a Release of a
Chemical Substance from any such tank; and
(13) Section 3.26 of the Disclosure Schedule lists all
environmental audits, inspections, assessments, investigations or
similar reports in the Seller's possession or of which the Seller is
aware relating to the Acquired Assets or the CSG's business or the
compliance of the same with applicable Environmental Laws and Safety
Laws.
(2) For purposes of this Section 3.26 only, all references to the
"Seller" are intended to include any and all other entities to which the
Seller may be considered a successor under applicable Environmental Laws. The
representations and warranties in this section are the only representations
and warranties with respect to Environmental Laws or Environmental Liabilities
and Costs, or Safety Laws or Safety Liabilities and Costs notwithstanding any
other language in this Agreement of general applicability.
3.27. Affiliated Transactions. Except as set forth in Section 3.27 of the
Disclosure Schedule, the Seller and its Affiliates (excluding the CSG) do not
own or otherwise have any rights to or interests in any asset, tangible or
intangible, which is used in the business of the CSG which is not being
transferred as an Acquired Asset, other than the Excluded Assets.
3.28. Government Contracts. Except as set forth in Section 3.28 of the
Disclosure Schedule, the Seller (including the CSG) has not been and is not a
party to any contract or arrangement with any federal, state or local
government agency relating to the business of the CSG.
3.29. Books and Records. The books and all corporate and financial
records of the Seller relating to the CSG are complete and correct in all
material respects and have been maintained in accordance with applicable sound
business practices, laws and other material requirements.
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3.30. Consents. Section 3.30 of the Disclosure Schedule sets forth a
true, correct and complete list of the identities of any Person whose consent
or approval is required and the matter, agreement or contract to which such
consent relates in connection with the transfer, assignment or conveyance by
the Seller of any of the Acquired Assets.
3.31. Bankruptcy. The Seller is not involved in any action, suit,
complaint, charge, hearing, inquiry, investigation or legal or administrative
arbitration proceeding by or against the Seller as a debtor before any
governmental entity or authority under Title 11 of the U.S. Bankruptcy Act or
any other insolvency or debtor's relief act, whether state or federal, or for
the appointment of a trustee, receiver, liquidator, assignee, sequestration,
or other similar official for any part of the property of the Seller.
3.32. Disclosure. The representations and warranties contained in this
Section 3 (including the Disclosure Schedule and any other schedules and
exhibits required to be delivered by Seller to Buyer pursuant to this
Agreement) and any certificate furnished or to be furnished by Seller to Buyer
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 4 are
true, correct and complete as of the date of this Agreement and, unless a date
is specified in such representation and warranty, will be true, correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4).
4.1. Organization of the Buyer. Each of Cabletron and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
4.2. Authority for Agreement. Each of Cabletron and Acquisition has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and binding obligation of Cabletron and
Acquisition, enforceable in accordance with its terms and conditions.
4.3. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Cabletron and Acquisition is subject or
any provision of their respective charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either Cabletron or Acquisition is a
party or by which either is bound or to which any of either Cabletron's or
Acquisition's assets is subject. Cabletron and Acquisition do not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above), except for required
filings under the Hart-Scott-Rodino Act, which filings have been made.
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4.4. Brokers' Fees. Neither Cabletron nor Acquisition has any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
4.5. Bankruptcy. The Buyer is not involved in any action, suit,
complaint, charge, hearing, inquiry, investigation or legal or administrative
arbitration proceeding by or against the Buyer as a debtor before any
governmental entity or authority under Title 11 of the U.S. Bankruptcy Act or
any other insolvency or debtor's relief act, whether state or federal, or for
the appointment of a trustee, receiver, liquidator, assignee, sequestration,
or other similar official for any part of the property of the Buyer.
4.6. Litigation. No litigation or governmental proceeding is pending or
threatened that may challenge the validity of the obligations hereunder of the
Buyer or the performance of the terms and conditions of this Agreement by the
Buyer.
4.7. Financial Ability to Close. The Buyer has sufficient funds to
close the transactions contemplated by this Agreement at the Closing.
4.8. Due Diligence. In making its decision to purchase the Acquired
Assets, the Buyer has relied only on the representations and warranties
contained in this Agreement, the documents specified herein, on the schedules
or exhibits annexed hereto and the documents of the Seller filed with the
Securities and Exchange Commission, all of which have been provided to the
Buyer and all of which the Buyer has examined to its satisfaction.
5. Covenants. The Parties agree:
5.1. General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth
in Section 6 below).
5.2. Notices and Consents. The Seller has given any notices to third
parties, and the Seller will use its best efforts to obtain any third party
consents, that are required to transfer the Acquired Assets to Buyer, and any
other consent that the Buyer may reasonably request. Each of the Parties will
file Notification and Report Forms and related material that may be required
to be filed with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Hart-Scott-Rodino Act, and
will make any further filings pursuant thereto that may be necessary in
connection therewith.
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5.3. Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business in respect of the CSG except as necessary in connection with this
Agreement. Without limiting the generality of the foregoing, the Seller (i)
will not, in respect of the CSG, engage in any practice, take any action, or
enter into any transaction of the sort described in Section 3.11 above and
(ii) until Closing will (A) keep available to Buyer the services of the
Employees, and use reasonable efforts to keep agents and independent
contractors, and (B) use reasonable efforts to preserve for the benefit of
Buyer the goodwill of the CSG's customers, suppliers, landlords and others
having business relations with it.
5.4. Preservation of Business. The Seller will use reasonable efforts
to keep the business and properties of the CSG substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
5.5. Full Access. The Seller will permit representatives of the Buyer
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the CSG, to all premises,
properties, personnel, books, records (including Tax records), contacts, and
documents of or pertaining to the CSG.
5.6. Notice of Developments. Each Party will give prompt written notice
to the other Party of any specific events occurring subsequent to the
execution of this Agreement and prior to the Closing Date which would cause a
failure of the conditions set forth in Sections 6.1(a) and 6.2(a) hereof with
respect to representations and warranties of such Party. Disclosure by the
Seller pursuant to this Section 5.6, however, shall be deemed to amend or
supplement the Disclosure Schedule for the purpose of determining whether the
representations and warranties of the Seller are true and correct as of the
Closing Date for all purposes, including for purposes of Sections 9.2 and 9.3,
but excluding for purposes of satisfying the conditions set forth in Section
6.1(a).
5.7. Exclusivity. The Seller (including the CSG) will not (and the
Seller (including the CSG) will not cause or permit any of its Subsidiaries,
officers, directors, agents or Affiliates to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person, or enter
into or consummate any transaction, relating to the acquisition of any portion
of the Acquired Assets (other than sales of inventory in the Ordinary Course
of Business) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or
seek any of the foregoing. The Seller will notify the Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
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5.8. Employee Matters.
(1) Buyer shall offer employment to all persons on the active payroll
of the CSG on the date hereof as identified on Schedule 5.8 (the "Employees").
Such employment shall be effective on the first business day following the
Closing Date. In order to provide an incentive to the Employees to become
Employees of the Company, and in order to compensate the Employees for
services to be provided to the Buyer, as set forth in Exhibit I attached
hereto, the Buyer will pay to the Employees an amount agreed to by the Parties
in the form of signing and stay bonuses in accordance with the terms and
conditions of the employment agreements to be entered into between the
Employees and Buyer in the form attached hereto as Exhibit E (the "Employment
Agreements") and in accordance with the current policies of Buyer. The Buyer
agrees that the Seller has no obligation to pay any portion of such signing
and stay bonuses to the Employees. Subject to the terms of the Employment
Agreements, Buyer agrees to provide compensation and benefits that in the
aggregate, are reasonably similar to those provided to the Employees prior to
the date hereof; provided, however, that the benefits will be the standard
benefits of Buyer as previously described to Seller. The Employees shall be
eligible for the Employee Plans of the Buyer on the same terms as those
applicable to Buyer's employees generally. Notwithstanding anything to the
contrary contained herein, Buyer shall not be required to hire any individual
whose employment is terminated by Seller For Cause before the Closing Date.
For purposes of this Section 5.8(a), "For Cause" shall have the meaning set
forth in the Employment Agreement of each individual Employee (as if all
references to Buyer were to Seller), with respect to such Employee.
(2) The Seller shall (i) terminate all Employees immediately prior to
Closing and pay any and all Liabilities relating to such termination,
including, without limitation any payments and benefits due such Employees
pursuant to accrued salary and wages, pension, retirement, savings, health,
welfare and other benefits and severance payments or similar payments of the
Employees and (ii) provide to all Employees any notice (which notice shall be
reasonably acceptable to Buyer) required under any law or regulations in
respect of such termination including, without limitation COBRA.
(3) Employees (other than any Employee who is not employed by Buyer or
who is in an ineligible classification of employees) shall be eligible to
participate in Buyer's 401(k) plan following Closing without regard to the
normal entry-date requirements under such plan.
(4) Any Employee who immediately after the Closing becomes an active
full-time Employee of Buyer shall be eligible to participate in Buyer's
employee health, life insurance and disability plans as of the date such
employee commences active employment with the Buyer. For purposes of
calculating seniority and vacation, personal and sick time benefits following
the Closing, each Employee shall receive credit with Buyer for service while
employed by Seller.
(5) After Closing, Seller will promptly pay Employees' accrued vacation
through Closing.
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5.9. Access to Records after Closing. The Seller may retain a single
set of copies of any financial books and records of the CSG which Seller
reasonably believes will be required by it for the purpose of performing any
of Seller's accounting, public reporting, or other administrative functions
which are performed in the Ordinary Course of Seller's Business Section Seller
shall destroy such copies upon Seller's determination that any such copies are
no longer reasonably required by them for the purposes set forth in the
preceding sentence. Seller's use, disclosure and disposition of such copies
shall otherwise be governed in accordance withss.7 to the extent that such
copies contain Exclusive Confidential Information. For a period of five years
after the Closing Date, the Seller and its representatives shall have
reasonable access to any other financial books and records of the CSG to the
extent that such access may reasonably be required by the Seller in connection
with matters relating to or affected by the operations of the CSG prior to the
Closing Date. Such access shall be afforded by Buyer upon receipt of
reasonable advance notice and during normal business hours. Seller shall be
solely responsible for any costs or expenses incurred by them pursuant to
this Section 5.9.
5.10. Bulk Sales Compliance. Buyer hereby waives compliance by the CSG
with the provisions of the Bulk Sales Law of any state.
5.11. Transfer Taxes. Seller agrees to pay all sales, use and transfer
Taxes on the transfer of the Acquired Assets hereunder.
5.12. Future Assurances. At any time and from time to time after the
Closing, at the request of Buyer and without further consideration, except as
stated below, Seller will execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation and take such action as
Buyer may reasonably determine is necessary to transfer, convey and assign to
Buyer, and to confirm Buyer's title to or interest in the Acquired Assets, to
put Buyer in actual possession and operating control thereof and to assist
Buyer in exercising all rights with respect thereto. The Seller hereby
constitutes and appoints Buyer and its successors and assigns as its true and
lawful attorney in fact in connection with the transactions contemplated by
this instrument, with full power of substitution, in the name and stead of the
Seller but on behalf of and for the benefit of the Buyer and its successors
and assigns, to demand and receive any and all of the Acquired Assets and to
give receipt and releases for and in respect of the same and any part thereof,
and from time to time to institute and prosecute, in the name of the Seller or
otherwise, for the benefit of the Buyer or its successors and assigns,
proceedings at law, in equity, or otherwise, which the Buyer or its successors
or assigns reasonably deem proper in order to collect or reduce to possession
or endorse any of the Acquired Assets and to do all acts and things in
relation to the Acquired Assets that the Buyer or its successors or assigns
reasonably deem desirable.
6. Conditions to Obligation to Close.
6.1. Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
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(1) Representations and Warranties. The representations and warranties
set forth in Section 3 above shall be true and correct (in all material
respects, in the case of those representations and warranties that are not by
their express terms qualified by reference to materiality) when made and shall
be deemed to have been made again at and as of the Closing Date and shall then
be true and correct (in all material respects, in the case of those
representations and warranties that are not by their express terms qualified
by reference to materiality);
(2) Performance by Seller. The Seller shall have performed and complied
with all of its covenants, agreements and obligations hereunder through the
Closing;
(3) Consents. The Seller shall have procured all the governmental
approvals, consents or authorizations and third party consents specified in
Section 3.30 and Section 5.2 above, and the Buyer shall have received copies
of all such required government approvals, consents or authorizations and
third party consents in form and substance reasonably satisfactory to the
Buyer;
(4) Absence of Litigation. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (iii) have a Material Adverse Effect
on the right of the Buyer to own the Acquired Assets and to operate the
business of the CSG (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(5) Certificates. The Seller shall have delivered to the Buyer a
certificate signed by the Chief Executive Officer of the Seller to the effect
that each of the conditions specified above in Section 6.1(a)-(d) are
satisfied in all respects;
(6) Anti-trust Matters. All applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act and any applicable foreign
pre-merger filings shall have expired or otherwise been terminated;
(7) Employment Agreements. Ninety percent (90%) of the Employees
designated on Schedule 5.8 as a "Key Employee" shall have entered into an
Employment Agreement substantially in the form of Exhibit E hereto and the
same shall be in full force and effect;
(8) Termination Notices. The Seller shall have sent termination notices
to Employees as contemplated by Section 5.8;
(9) Opinion. The Buyer shall have received from counsel to the Seller
an opinion in substantially form and substance as set forth in Exhibit F
attached hereto, addressed to the Buyer, and dated as of the Closing Date;
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(10) Environmental Transfer Laws. The Seller shall have obtained all
certificates and made all filings required under Environmental Transfer Laws
for the transfer of the Acquired Assets, and the Buyer shall have received
copies of all such certificates and filings in form and substance reasonably
satisfactory to the Buyer;
(11) Environmental Report. Receipt of a Phase I Environmental Site
Assessment Report with respect to the Acquired Assets satisfactory to Buyer
and upon which the Buyer shall be entitled to rely;
(12) Landlord and Mortgagee Consents. The Seller shall have obtained
the consent of the landlord and the mortgagee of the leased real property used
by the CSG to the assignment of the respective lease or leases, and the Buyer
shall have received copies of such consents to assignment in form and
substance reasonably satisfactory to the Buyer;
(13) Additional Agreements. The Seller shall have entered into an
agreement in form and substance as set forth in Exhibit H attached hereto and
the same shall be in full force and effect;
(14) Transamerica Credit Facility. The Seller shall have obtained all
required consents of any lenders, including without limitation Transamerica
Business Credit Corporation ("Transamerica") under the Transamerica Credit
Facility to the transactions contemplated by this Agreement. Transamerica and
the other lenders under the Transamerica Credit Facility and any other holders
of Liens on the Acquired Assets shall have provided the Seller with
appropriate consents, release of Liens and such other documentation as the
Buyer may request to evidence their consent to the transactions contemplated
herein and the termination of any and all Liens and security interests in the
Acquired Assets, and the release of the Seller from any claims and the
discharge of any obligations relating to the Acquired Assets and the business
of the CSG;
(15) No Material Adverse Change. There shall not have been any change
that has resulted in a Material Adverse Effect and no event has occurred or
circumstance exists that may result in such a Material Adverse Effect; and
(16) All Necessary Actions. All actions to be taken by Seller in
connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 if it executes
a writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the
writing specifically so states.
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6.2. Conditions to Obligations of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(1) Representations and Warranties. The representations and warranties
set forth in Section 4 above shall be true and correct (in all material
respects, in the case of those representations and warranties which are not by
their express terms qualified by reference to materiality) when made and shall
be deemed to have been made again at and as of the Closing Date and shall then
be true and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality);
(2) Performance by Buyer. The Buyer shall have performed and complied
with all of its covenants hereunder through the Closing;
(3) Absence of Litigation. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(4) Certificates. The Buyer shall have delivered to the Seller a
certificate of the Buyer's Chief Financial Officer to the effect that each of
the conditions specified above in Section 6.2(a)-(c) is satisfied in all
respects;
(5) Anti-trust Matters. All applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated;
(6) Opinion. The Seller shall have received from counsel to the Buyer
an opinion in substantially form and substance as set forth in Exhibit G
attached hereto, addressed to the Seller, and dated as of the Closing Date;
(7) Additional Agreements. The Buyer shall have entered into an
agreement in form and substance as set forth in Exhibit H attached hereto and
the same shall be in full force and effect; and
(8) All Necessary Actions. All actions to be taken by Buyer in
connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to be
delivered by Buyer to Seller to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to Seller.
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The Seller may waive any condition specified in this Section 6.2 if it
executes a writing so stating at or prior to the Closing and such waiver shall
not be considered a waiver of any other provision in this Agreement unless the
writing specifically so states.
7. Confidentiality.
(1) From and after the Closing, the Seller will treat and hold as such
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which
are in its possession. From and after the Closing, in the event that the
Seller is requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of this Section 7(a). If, in the absence
of a protective order or the receipt of a waiver hereunder, the Seller is, on
the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, the Seller may disclose the
Confidential Information to the tribunal; provided, however, that the Seller
shall use its best efforts to obtain, at the request of the Buyer, an order or
other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as the Buyer shall
designate.
(2) If the Closing shall not occur, the Buyer will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Seller or destroy, at the request and option of the Seller,
all tangible embodiments (and all copies) of the Confidential Information
which are in its possession. In the event that the Buyer is requested or
required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Buyer will notify
the Seller promptly of the request or requirement so that the Seller may seek
an appropriate protective order or waive compliance with the provisions of
this Section 7(b). If, in the absence of a protective order or the receipt of
a waiver hereunder, the Buyer is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, the Buyer may disclose the Confidential Information to the tribunal;
provided, however, that the Buyer shall use its best efforts to obtain, at the
request of the Seller, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to
be disclosed as the Seller shall designate.
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8. Noncompetition.
8.1. Covenants of the Seller.
(1) The Seller agrees that, in consideration of the purchase by Buyer
hereunder, it shall not, on or prior to the date which is three (3) years
after the Closing Date, directly or indirectly, own, manage, operate, control,
provide consulting services to, participate in, lend its name to, invest in or
be connected in any manner with the management, ownership, operation or
control of any business, venture, or activity which designs, develops, markets
or distributes products, (the "Ariel Products") that directly competes with
the Products in that they offer comparable features and functionality;
provided, however, the Seller shall not be considered to be in default of this
Section 8 solely by virtue of holding for portfolio purposes as a passive
investor not more than five percent (5) of the issued and outstanding equity
securities of a corporation, the equity securities of which are listed or
quoted on a stock exchange or an over-the-counter market within the United
States.
(2) The Seller further agrees that for a period of three (3) years
after the Closing Date it will not directly or indirectly without the prior
written consent of Buyer, recruit, offer employment, employ, engage as a
consultant, lure or entice away or in any other manner persuade or attempt to
persuade any person who is an employee of the Buyer or any Subsidiary, group,
or division of Buyer or any Affiliate thereof (including the CSG), to leave
the employ of Buyer unless such person has been terminated by the Buyer or an
Affiliate of Buyer.
8.2. Covenants of the Buyer. The Buyer agrees that for three (3) years
from the Closing Date it will not engage in a program of solicitation which
has been endorsed or sanctioned by the senior management of the Buyer and is
meant to recruit, offer employment, employ, engage as a consultant, lure or
entice away or in any other manner persuade or attempt to persuade employees
of the Seller or any Subsidiary, group, or division of the Seller, to leave
the employ of the Seller unless such employees have been terminated by the
Seller. If the senior management of the Buyer should become aware of any such
program of solicitation or if such a program of solicitation is brought to the
attention of the senior management of the Buyer, the Buyer will cause the
program of solicitation to cease and this shall be the sole remedy of the
Seller for any such breach.
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9. Indemnification.
9.1. Survival of Representations and Warrants. All of the
representations and warranties of the Seller (except for those contained
in Sections 3.3 (Authorization of Transaction), 3.6 (Title to Assets), 3.15
(Taxes) and 3.26 (Environment, Health and Safety) contained herein or in any
document certificate or other instrument required to be delivered hereunder
shall survive the Closing and continue in full force and effect until eighteen
months after Closing. The representations and warranties of the Seller
contained in Section 3.26 shall survive the Closing and shall continue in full
force and effect for a period of three years thereafter. The representations
and warranties of the Seller contained in Sections 3.3, 3.6 and 3.15 shall
survive the Closing and shall continue in full force and effect without limit
as to time (subject to any applicable statutes of limitations and any
extensions or waivers thereof for taxes). The termination of any such
representation and warranty, however, shall not affect any claim for breaches
of representations or warranties if written notice thereof is given to the
breaching party or parties prior to such termination date. All of the
representations and warranties of the Buyer contained in Section 4 shall
survive the Closing and shall continue in full force and effect until eighteen
months after Closing. All covenants and indemnities of any Party in this
Agreement or in any document or certificate delivered hereunder shall, unless
otherwise specifically provided therein, remain in full force and effect
forever.
9.2. Indemnification Provisions for Benefit of the Buyer. Seller agrees
to indemnify, defend and hold harmless Buyer and its directors, officers and
Affiliates against and in respect of all Liabilities, obligations, judgments,
Liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, expenses, fees, costs, amounts
paid in settlement (including reasonable attorneys' and expert witness fees
and disbursements in connection with investigating, defending or settling any
action or threatened action), arising out of any claim, damages, complaint,
demand, cause of action, audit, investigation, hearing, action, suit or other
proceeding asserted or initiated or otherwise existing in respect of any
matter (collectively, the "Losses") that results from:
(1) the inaccuracy of any representation or warranty made by Seller
herein or any third party allegation which if true would mean a representation
or warranty made by the Seller herein was inaccurate, or resulting from any
misrepresentation, breach of warranty (as if all qualifiers specifically using
the following words "material", "materiality", "Knowledge", or "Material
Adverse Effect" were not contained in such representation or warranty) or
nonfulfillment of any agreement or covenant of Seller contained herein or in
any agreement or instrument required to be entered into in connection herewith
or from any misrepresentation in or omission from any schedule, document,
certificate or other instrument required to be furnished by Seller hereunder;
provided, however, that the Seller shall not be liable under this Section
9.2(a) in respect of Losses until the aggregate of such Losses exceeds
$200,000, provided, further, that after such event the Seller shall be
required to pay all amounts by which such aggregate amount of Losses exceeds
$100,000, up to a maximum aggregate amount of $6,000,000;
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(2) any Liability which is not an Assumed Liability (including any
Liability that becomes a Liability of the Buyer under any bulk transfer law of
any jurisdiction, under any common law doctrine of de facto merger or
successor liability, or otherwise by operation of law).
In the event that Seller may be obliged to indemnify Buyer under both
subsection (a) and subsection (b) of this Section 9.2, its obligations under
subsection (b) shall be controlling and the limitations provided in Sections 9.1
and 9.2(a) hereof relating to their obligations in respect of Losses resulting
from the inaccuracy of any representation and warranty, or any
misrepresentation, breach of warranty or non-fulfillment of an agreement or
covenant as described in Section 9.2(a), shall not apply. Buyer shall provide
Seller written notice for any claim made in respect of the indemnification
provided in this Section 9.2, whether or not arising out of a claim by a third
party.
9.3. Environmental Indemnification. Notwithstanding any other provision
of this Agreement to the contrary, this Section 9.3 shall control and limit
Seller's obligation to indemnify Buyer for Environmental Liabilities and
Costs. Seller agrees to indemnify and hold harmless Buyer against any
Environmental Liabilities and Costs to the extent arising out of any condition
existing at or prior to Closing that constitutes a violation of, or gives rise
to a duty to remediate under, Environmental Laws which occur on property that
is owned or leased by the Seller on the Closing Date without limit in point of
time, knowledge or amount, provided that Buyer has given notice to Seller of
any such violation of affirmative duty prior to the third anniversary of the
Closing Date.
9.4. Indemnification Provisions for Benefit of the Seller. Buyer hereby
agrees to indemnify, defend and hold harmless Seller and its respective
directors, officers and Affiliates against and in respect of all Liabilities,
obligations, judgments, Liens, injunctions, charges, orders, decrees, rulings,
damages, dues, assessments, Taxes, losses, fines, penalties, damages,
expenses, fees, costs, amounts paid in settlement (including reasonable
attorneys' and expert witness fees and disbursements in connection with
investigating, defending or settling any action or threatened action) arising
out of any claim, complaint, demand, cause of action, audit, investigation,
hearing, action, suit or other proceeding asserted or initiated in respect of
any matter that results from the inaccuracy of any representation or warranty
made by Buyer herein, or any third party allegation which if true would mean a
representation or warranty made by Buyer herein was inaccurate, or resulting
from any misrepresentation, breach of warranty or nonfulfillment of any
agreement or covenant of Buyer, including Buyer's agreement to assume certain
Liabilities of the CSG pursuant to Section 2.2 of this Agreement, contained
herein or in any agreement or instrument required to be entered into in
connection herewith or from any misrepresentation in or omission from any
schedule, document, certificate or other instrument required to be furnished
by Buyer hereunder.
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9.5. Matters Involving Third Parties.
(1) If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") that may give rise to a
claim for indemnification against any other Party (the "Indemnifying Party")
under this Section 9, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party forfeits any substantial rights
or defenses.
(2) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses the Indemnified Party may suffer covered by Sections
9.2, 9.3 or 9.4, as the case may be, (ii) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder, (iii)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom
or practice adverse to the continuing business interests of the Indemnified
Party, and (v) the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.5(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent shall not unreasonably be
withheld), and (iii) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim unless written agreement is obtained releasing the Indemnified Party
from all liability thereunder.
(4) In the event any of the conditions in Section 9.5(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (iii) the Indemnifying Party will remain responsible for any
Losses the Indemnified Party may suffer to the fullest extent provided in this
Section 9.
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9.6. Non-Exclusive Remedy. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedy any Party may have for breach of representation, warranty, or
covenant of this Agreement.
10. Termination.
10.1. Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(1) the Parties may terminate this Agreement by mutual written consent
at any time prior to the Closing;
(2) the Buyer may terminate this Agreement by giving written notice to
the Seller at any time prior to the Closing (i) in the event the Seller has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of 30 days after the notice
of breach or (ii) if the Closing shall not have occurred on or before the
latter of (A) 30 days after the expiration or other termination of all
applicable waiting periods under the Hart-Scott-Rodino Act and any
Environmental Transfer Laws and (B) 60 days from the date hereof, by reason of
the failure of any condition precedent under Section 6.1 hereof (unless the
failure results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement);
(3) Seller may terminate this Agreement by giving written notice to the
Buyer at any time prior to the Closing (i) in the event the Buyer has breached
any representation, warranty, or covenant contained in this Agreement in any
material respect, the Seller has notified the Buyer of the breach, and the
breach has continued without cure for a period of 30 days after the notice of
breach or (ii) if the Closing shall not have occurred on or before the latter
of (A) 30 days after the expiration or other termination of all applicable
waiting periods under the Hart-Scott-Rodino Act and any Environmental Transfer
Laws and (B) 60 days from the date hereof, by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure results
primarily from the Seller itself breaching any representation, warranty, or
covenant contained in this Agreement);
(4) by either Buyer or Seller, if a court of competent jurisdiction or
other governmental authority with competent jurisdiction shall have issued a
nonappealable final order, decree or ruling or taken any other nonappealable
final action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transfer of the Acquired Assets; or
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(5) by Seller, if Buyer fails to obtain adequate financing in order to
consummate the transactions contemplated by this Agreement.
10.2. Effect of Termination. If either Party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of either Party to the other
Party provided, however, that the provisions of Section 11.11 shall remain in
full force and effect and survive any termination of this Agreement.
11. Miscellaneous.
11.1. Press Release and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use the best efforts to provide the other Party with the
opportunity to review in advance the disclosure).
11.2. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
11.4. Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one business day following the date sent when
sent by overnight delivery and (iii) five business days following the date
mailed when mailed by registered or certified mail return receipt requested
and postage prepaid at the following address:
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If to the Seller:
-----------------
Ariel Corporation
2540 Route 130
Cranbury, NJ 08512
Attention: Anthony Agnello
Telephone: (609) 860-2900
Telecopy: (609) 860-1155
Copy to:
--------
Berger & Paul LLP
630 Third Avenue
New York, New York 10017
Attention: Harold W. Paul
Tel: (212) 661-2727
Fax: (212) 661-7060
Gadsby & Hannah LLP
225 Franklin Street
Boston, Massachusetts
Attention: Lawrence H. Gennari
Tel: (617) 345-7000
Fax: (617) 345-7050
If to the Buyer:
----------------
Cabletron Systems, Inc.
35 Industrial Way
Rochester, New Hampshire 03867
Attention: David J. Kirkpatrick
Tel: 603-332-9400
Fax: 603-332-4616
Copy to:
--------
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: Douglass N. Ellis, Jr.
Tel: 617-951-7000
Fax: 617-951-7050
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Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
11.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware.
11.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.10. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11. Expenses. Each of the Buyer and the Seller will bear its own
costs and expenses (including legal and accounting fees and expenses) and the
Seller will bear all of the costs and expenses (including legal and accounting
fees, expenses and brokers fees) of the CSG incurred in connection with this
Agreement and the transactions contemplated hereby. Except for fees paid to or
to be paid to (i) Etienne Perold, (ii) Needham & Co., Inc. and (iii) Floyd
Turner, the Seller represents that it has not paid any amount to any third
party, and will not pay any amount to any third party, with respect to any of
the costs and expenses of the Seller (including any of its legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
11.12. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.
The word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule
identifies the exception with particularity. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the other representation, warranty, or covenant.
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11.13. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.14. Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other remedy
to which it may be entitled, at law or in equity.
11.15. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING OUT OF OR PASSED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING
IN TORT OR CONTRACT OR OTHERWISE.
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<PAGE>
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the date first above written.
CABLETRON SYSTEMS, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
CSG ACQUISITION, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
ARIEL CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
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