================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended November 27, 1999, or,
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to
___________.
Commission File Number 1-4837
TEKTRONIX, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0343990
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
14200 SW KARL BRAUN DRIVE
BEAVERTON, OREGON 97077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 627-7111
26600 SW PARKWAY
WILSONVILLE, OREGON 97070-1000
(Address of principal executive offices) (Zip Code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
AT DECEMBER 25, 1999 THERE WERE 47,252,593 COMMON SHARES OF TEKTRONIX, INC.
OUTSTANDING.
(Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.)
<PAGE>
TEKTRONIX, INC. AND SUBSIDIARIES
- --------------------------------
INDEX
- ------
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets - 2
November 27, 1999 and May 29, 1999
Condensed Consolidated Statements of Operations - 3
for the Quarter ended November 27, 1999
and the Quarter ended November 28, 1998
for the Two Quarters ended November 27, 1999
and the Two Quarters ended November 28, 1998
Condensed Consolidated Statements of Cash Flows - 4
for the Two Quarters ended November 27, 1999
and the Two Quarters ended November 28, 1998
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 18
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURE 20
<PAGE>
<TABLE>
<CAPTION>
TEKTRONIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
Nov. 27, May 29,
(In thousands) 1999 1999
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 57,860 $ 39,747
Accounts receivable - net 128,637 165,979
Inventories 120,870 158,305
Net assets of discontinued operations 341,799 338,990
Other current assets 93,636 83,417
---------- ----------
Total current assets 742,802 786,438
Property, plant and equipment - net 253,651 283,769
Deferred tax assets 55,347 56,405
Other long-term assets 139,494 121,723
---------- ----------
Total assets $1,191,294 $1,248,335
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 79,564 $ 115,687
Accounts payable 171,578 171,306
Accrued compensation 94,282 108,982
Deferred revenue 4,319 2,438
---------- ----------
Total current liabilities 349,743 398,413
Long-term debt 150,596 150,722
Other long-term liabilities 69,364 77,638
Shareholders' equity:
Common stock 142,608 143,263
Retained earnings 454,046 458,613
Accumulated other comprehensive income 24,937 19,686
---------- ----------
Total shareholders' equity 621,591 621,562
---------- ----------
Total liabilities and shareholders' equity $1,191,294 $1,248,335
========== ==========
The accompanying notes are an integral part of these condensed consolidated financial
statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
TEKTRONIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Quarter ended Two quarters ended
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
(In thousands except for per share amounts) 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 261,271 $ 272,910 $ 542,018 $ 536,511
Cost of sales 141,274 185,579 297,729 331,516
----------- ----------- ----------- -----------
Gross profit 119,997 87,331 244,289 204,995
Research and development expenses 32,736 41,099 70,943 77,936
Selling, general and administrative
expenses 71,459 84,669 143,335 172,039
Equity in business ventures' loss 25 1,182 343 9,180
Non-recurring charges - 81,488 - 81,488
Charges related to the sale of the
Video and Networking division - - 26,100 -
----------- ----------- ----------- -----------
Operating income (loss) 15,777 (121,107) 3,568 (135,648)
Other expense - net 2,008 2,599 5,622 2,001
----------- ----------- ----------- -----------
Earnings (loss) from continuing
operations before taxes 13,769 (123,706) (2,054) (137,649)
Income tax expense (benefit) 4,828 (39,585) (78) (44,047)
----------- ----------- ----------- -----------
Earnings (loss) from continuing
operations 8,941 (84,121) (1,976) (93,602)
Discontinued operations:
Income (loss) from operations of
Color Printing and Imaging
(less applicable tax of $3,667, (824),
4,762, and 1,443, respectively) 6,245 (1,750) 8,680 3,068
----------- ----------- ----------- -----------
Net earnings (loss) $ 15,186 $ (85,871) $ 6,704 $ (90,534)
=========== =========== =========== ===========
Earnings (loss) per share - basic and
diluted $ 0.32 $ (1.82) $ 0.14 $ (1.87)
Earnings (loss) per share from
continuing operations - basic and
diluted $ 0.19 $ (1.79) $ (0.04) $ (1.93)
Earnings (loss) per share from
discontinued operations - basic
and diluted $ 0.13 $ (0.04) $ 0.18 $ 0.06
Dividends per share $ 0.12 $ 0.12 $ 0.24 $ 0.24
Average shares outstanding - basic 47,062 47,077 47,005 48,414
Average shares outstanding - diluted 47,636 47,077 47,468 48,583
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
TEKTRONIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Two quarters ended
Nov. 27, Nov. 28,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 6,704 $ (90,534)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Income from discontinued operations (8,680) (3,068)
Depreciation and amortization expense 30,016 32,184
Restructuring charges - 27,760
Non-recurring charges - 92,774
Charges related to the sale of the Video
and Networking division 26,100 -
Gain on sale of investments (217) (6,465)
Equity in business ventures' loss 343 9,180
Changes in operating assets and liabilities:
Accounts receivable 42,342 66,637
Inventories (18,631) (35,171)
Other current assets (13,634) (54,724)
Accounts payable 4,047 (2,892)
Accrued compensation (11,721) (38,321)
Other-net (10,647) (7,901)
---------- ----------
Net cash provided by (used in) continuing operations 46,022 (10,541)
Net cash provided by discontinued operations 5,986 1,833
---------- ----------
Net cash provided by (used in) operating activities 52,008 (8,708)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (22,536) (36,874)
Net proceeds from sale of business 22,600 -
Proceeds from sale of fixed assets 14,848 273
Proceeds from sale of investments 397 8,929
---------- ----------
Net cash provided by (used in) investing activities 15,309 (27,672)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term debt (36,123) 66,279
Issuance of long-term debt - -
Repayment of long-term debt (126) (511)
Issuance of common stock 12,889 931
Repurchase of common stock (14,573) (85,524)
Dividends (11,271) (11,658)
---------- ----------
Net cash used in financing activities (49,204) (30,483)
---------- ----------
Net increase (decrease) in cash and cash equivalents 18,113 (66,863)
Cash and cash equivalents at beginning of period 39,747 120,541
---------- ----------
Cash and cash equivalents at end of period $ 57,860 $ 53,678
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
Income taxes paid - net $ 3,999 $ 9,805
Interest paid 9,554 7,266
NON-CASH INVESTING ACTIVITIES
Note receivable for sale of Video and Networking assets $ 22,500 $ -
Common stock of Grass Valley Group, Inc. for sale of
Video and Networking assets 6,300 -
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The condensed consolidated financial statements and notes have been prepared by
the company without audit. Certain information and footnote disclosures normally
included in annual financial statements, prepared in accordance with generally
accepted accounting principles, have been condensed or omitted. Management
believes that the condensed statements include all necessary adjustments, which
are of a normal and recurring nature and are adequate to present financial
position, results of operations and cash flows for the interim periods. The
condensed information should be read in conjunction with the financial
statements and notes incorporated by reference in the company's latest annual
report on Form 10-K. The company's fiscal year is the 52 or 53 weeks ending the
last Saturday in May. Fiscal years 2000 and 1999 are 52 weeks.
DISCONTINUED OPERATIONS
On September 22, 1999, the company announced that it had reached an agreement
with Xerox Corporation (Xerox) to sell the net assets of the Color Printing and
Imaging division. On January 1, 2000, the company closed the sale of
substantially all of the assets of the division. The purchase price was $925.0
million in cash, with certain liabilities of the division assumed by Xerox.
Tektronix expects to realize a pre-tax gain on the sale of approximately $600.0
million. This gain will be recorded during the third quarter of 2000 as will the
loss from operations realized by the Color Printing and Imaging division during
the five weeks prior to the close of the sale and any transition costs or other
charges related to the transaction.
In accordance with Accounting Principles Board Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the company has accounted for the Color Printing and Imaging
division as a discontinued operation. Summarized results of operations for the
Color Printing and Imaging division were as follows:
<TABLE>
<CAPTION>
Quarter ended Two quarters ended
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
(In thousands except for per share amounts) 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 189,753 $ 159,254 $ 345,157 $ 314,632
----------- ----------- ----------- -----------
Earnings (loss) before taxes 9,912 (2,574) 13,442 4,511
Income tax expense (benefit) 3,667 (824) 4,762 1,443
----------- ----------- ----------- -----------
Net earnings (loss) $ 6,245 $ (1,750) $ 8,680 $ 3,068
=========== =========== =========== ===========
Net earnings (loss) per share $ 0.13 $ (0.04) $ 0.18 $ 0.06
=========== =========== =========== ===========
</TABLE>
Summarized net assets for the Color Printing and Imaging division were as
follows:
Nov 27, May 29,
(In thousands) 1999 1999
- -------------------------------------------------------------------------------
Current assets $ 253,141 $ 272,210
Long-term assets 173,620 177,810
Current liabilities (77,706) (98,633)
Long-term liabilities (7,256) (12,397)
------------ ------------
Net assets of discontinued operations $ 341,799 $ 338,990
============ ============
5
<PAGE>
SALE OF VIDEO AND NETWORKING
On August 9, 1999, the company announced that it had reached an agreement to
sell substantially all of the operating assets of its Video and Networking
division to Grass Valley Group, Inc. During the first quarter of 2000, Tektronix
recorded pre-tax charges of $26.1 million for losses expected to be incurred in
connection with the transaction. These charges were calculated based upon the
excess of the estimated net book value of net assets transferred over the
proceeds, as well as asset impairments expected to be incurred as a result of
the sale. On September 24, 1999, the companies closed the transaction. Tektronix
received cash of $23.7 million, net of transaction costs of $1.1 million, a note
receivable of $22.5 million, and a 10% equity interest in that company, which is
accounted for under the cost method. Actual losses incurred in connection with
the transaction were $26.1 million.
NON-RECURRING CHARGES
In the second quarter of 1999, the company announced and began to implement a
series of actions (the plan) intended to align worldwide operations with current
market conditions and to improve the profitability of its operations. These
actions include a net reduction of approximately 15% of the company's worldwide
workforce, the exit from certain facilities and the streamlining of product and
service offerings.
Major actions are summarized by each of the three business divisions in which
the company has historically operated. Measurement's service business was
consolidated from several depots in the United States and Europe into two depots
in each of these geographies. This consolidation resulted in headcount
reductions and the write-down and disposal of redundant inventory through the
first quarter of 2000. Measurement closed the Bend, Oregon manufacturing
facility during the third quarter of 1999 and consolidated that process into its
Beaverton, Oregon facilities. This action resulted in headcount reductions and
lease settlements. Measurement reduced headcount throughout the division,
primarily in manufacturing. During the second quarter of 1999, Color Printing
and Imaging discontinued three product lines - wide format, dye sublimation and
B-size solid ink. This action resulted in write-offs of disposed inventory.
Color Printing and Imaging also reduced headcount throughout the division,
primarily in manufacturing. During 1999, Video and Networking discontinued
development, manufacturing, and sales of non-linear digital editing products
sold under the Lightworks name. This decision resulted in headcount reductions,
write-offs of disposed inventory, incremental sales returns and bad debts, and
costs to fulfill commitments to deliver software enhancements on previously sold
product. Outside of the divisions, selective involuntary terminations have
occurred throughout the execution of the plan.
The company recorded pre-tax charges of $125.7 million to account for these
actions, including restructuring charges of $115.8 million and other
non-recurring charges of $9.9 million for related actions. The $115.8 million in
restructuring charges include $27.1 million in charges to cost of sales for the
write-off of excess inventory resulting from discontinued product lines and
consolidation of service centers worldwide, $56.9 million in severance expense
related to employee separation, $14.8 million in charges to facilities for lease
cancellation fees and $17.0 million in charges to long-term assets associated
with discontinued product lines. The $9.9 million for related actions include
$5.1 million of expected sales returns of previously sold product, $0.8 million
of bad debt expense related to existing accounts receivable that will not be
collected and $4.0 million of costs to fulfill commitments to deliver software
enhancements on previously sold product, all associated with exiting the
non-linear digital editing business.
6
<PAGE>
The pre-tax charges incurred under the plan impacted the company's results of
operations for the year ended May 29, 1999 as follows:
<TABLE>
<CAPTION>
Location of charge in the
consolidated statements of
(In thousands) operations
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Severance and benefits Non-recurring charges $ 56,924
Inventory write-offs Cost of sales 27,070
Lease buy-outs and
abandonment of facilities Non-recurring charges 16,942
Asset write-offs and impairments Non-recurring charges 14,804
Sales returns and allowances Net sales 5,120
Commitment for enhancements
related to discontinued products Research and development expenses 4,019
Bad debt expense related to Selling, general and
discontinued products administrative expenses 803
---------
$ 125,682
=========
</TABLE>
The pre-tax charges incurred under the plan affected the company's financial
position in the following manner:
<TABLE>
<CAPTION>
Equipment Payables
Accrued and other and other
(In thousands) compensation Inventories assets liabilities
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Original charges $ 54,680 $ 27,760 $ 18,200 $ 19,894
1999 activity:
Cash paid out (20,844) - - (7,415)
Non-cash disposals or write-offs - (27,070) (17,055) -
Adjustments to plan 2,244 (690) (455) 4,049
--------- --------- --------- ---------
Balance May 29, 1999 $ 36,080 $ - $ 690 $ 16,528
--------- --------- --------- ---------
2000 activity:
Cash paid out (16,611) - - (8,327)
Non-cash disposals or write-offs - - (690) -
Adjustments to plan - - - -
--------- --------- --------- ---------
Balance November 27, 1999 $ 19,469 $ - $ - $ 8,201
========= ========= ========= =========
</TABLE>
The charge of $54.7 million in accrued compensation reflects an original planned
headcount reduction of 1,371 employees worldwide. This charge was increased by a
net $2.2 million during the fourth quarter of 1999. The $2.2 million consists of
an $8.6 million reserve for severance of an additional 282 employees worldwide
across all responsibilities, offset in part by reversal of a $6.4 million
reserve for pension settlement that was not needed as settlement accounting was
not appropriate during the year. Headcount reduction under the current plan of
reorganization now totals 1,653 employees worldwide. Approximately 1,200
employees have been terminated under the plan. Severance of $37.5 million has
been paid to approximately 1,177 of these employees, while the other 23
employees will be paid severance in the third quarter of 2000. As a result of
the sale of the Color Printing and Imaging division, the company will need to
evaluate the severance reserves to determine whether all of the remaining
amounts are required. This process will take place during the third quarter, and
any excess reserve will be reversed to non-recurring charges.
7
<PAGE>
The $27.8 million charge to inventories includes inventories related to the
consolidation of Measurement service offerings, the discontinuation of three
Color Printing and Imaging product lines and the discontinuation of non-linear
digital editing products sold under the Lightworks name, which were written off
during the second quarter of 1999.
The charge of $18.2 million for equipment and other assets includes asset
impairments of $17.4 million and $0.8 million in reserve for bad debt expense.
The impaired assets are primarily related to discontinued product lines in Color
Printing and Imaging and Video and Networking and include manufacturing assets
of $6.2 million, goodwill and other intangibles of $6.5 million, and leasehold
improvements and other assets of $4.7 million.
The $19.9 million charge for payables and other liabilities includes reserves
for lease buy-outs and abandonment of facilities, sales returns and allowances
and commitments for enhancements related to discontinued products. This reserve
was increased by $4.0 million during 1999 to provide for additional costs to
exit certain sales and service offices worldwide and to fulfill certain
contractual commitments, partly offset by a decrease in original sales returns
allowances. The $8.2 million reserve remaining at the end of the period mainly
represents future lease payments on abandoned facilities that will continue over
the lives of the lease contracts.
RECEIVABLES
On September 10, 1996, the company entered into a five-year revolving
receivables purchase agreement with Citibank NA to sell, without recourse, an
undivided interest of up to $50.0 million in a defined pool of trade accounts
receivable. Receivables of $50.0 million were sold under this agreement as of
November 27, 1999 and are therefore not reflected in the accounts receivable
balance in the accompanying Condensed Consolidated Balance Sheet.
INVENTORIES
Inventories consisted of:
Nov. 27, May 29,
(In thousands) 1999 1999
- -------------------------------------------------------------------------------
Materials and work in process $ 51,325 $ 54,766
Finished goods 69,545 103,539
---------- ----------
Inventories $ 120,870 $ 158,305
========== ==========
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of:
Nov. 27, May 29,
(In thousands) 1999 1999
- -------------------------------------------------------------------------------
Land $ 4,754 $ 4,642
Buildings 170,074 186,525
Machinery and equipment 350,302 405,978
---------- ----------
525,130 597,145
Accumulated depreciation and amortization (271,479) (313,376)
---------- ----------
Property, plant and equipment - net $ 253,651 $ 283,769
========== ==========
8
<PAGE>
COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) and its components, net of tax, are as follows:
<TABLE>
<CAPTION>
Quarter ended Two quarters ended
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
(In thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings (loss) $ 15,186 $ (85,871) $ 6,704 $ (90,534)
Other comprehensive income (loss):
Currency translation adjustment 5,207 14,733 5,157 11,242
Unrealized loss on
available-for-sale securities (60) (340) (277) (4,446)
Reclassification adjustment for
realized gains (losses) included
in net income 360 (1,415) 371 (3,879)
---------- ---------- ---------- ----------
Comprehensive income (loss) $ 20,693 $ (72,893) $ 11,955 $ (87,617)
========== ========== ========== ==========
</TABLE>
BUSINESS SEGMENTS
The company has historically been organized based on the products and services
that it offers. During the periods reported, the company operated in three main
segments: Measurement, Color Printing and Imaging, and Video and Networking.
Operations for the Color Printing and Imaging division were accounted for as
discontinued during the quarter, and substantially all of the assets of the
division were sold to Xerox subsequent to quarter-end. In addition,
substantially all of the operating assets of the Video and Networking division
were sold to Grass Valley Group, Inc. in a transaction that closed September 24,
1999. Going forward, the only segment in which the company will operate is
Measurement.
The information provided below was obtained from internal information that was
provided to the company's chief operating decision-maker for the purpose of
corporate management. Assets, liabilities and expenses attributable to corporate
activity were not allocated to the three operating segments. Inter-segment sales
were not material and were included in net sales to external customers below.
Figures shown for 1999 were restated to include results for the VideoTele.com
product family within Measurement and exclude them from Video and Networking.
<TABLE>
<CAPTION>
Quarter ended Two quarters ended
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
(In thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales to external customers
(by division):
Measurement $ 253,325 $ 213,291 $ 481,359 $ 424,449
Video and Networking 7,946 59,619 60,659 112,062
---------- ---------- ---------- ----------
Net sales $ 261,271 $ 272,910 $ 542,018 $ 536,511
========== ========== ========== ==========
Net sales to external customers
(by region):
United States $ 140,484 $ 136,264 $ 287,695 $ 267,352
Europe 65,132 83,750 137,481 154,336
Pacific 29,399 27,718 57,924 61,090
Japan 14,746 13,953 35,547 30,005
Americas 11,510 11,225 23,371 23,728
---------- ---------- ---------- ----------
Net sales $ 261,271 $ 272,910 $ 542,018 $ 536,511
========== ========== ========== ==========
9
<PAGE>
Operating income (loss):
Measurement $ 26,375 $ 14,743 $ 49,033 $ 26,134
Video and Networking (10,710) (13,285) (19,013) (30,861)
Charges related to the sale of the
Video and Networking division - - (26,100) -
Non-recurring charges - (120,534) - (120,534)
Business ventures' income (loss)
and other 112 (2,031) (352) (10,387)
---------- ---------- ---------- ----------
Operating income (loss) $ 15,777 $ (121,107) $ 3,568 $ (135,648)
========== ========== ========== ==========
</TABLE>
INCOME TAXES
The provision for income tax expense (benefit) consisted of:
<TABLE>
<CAPTION>
Quarter ended Two quarters ended
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
(In thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States $ 1,448 $ (80,862) $ (23) $ (89,976)
State 483 (3,829) (8) (4,261)
Foreign 2,897 45,106 (47) 50,190
---------- ---------- ---------- ----------
Income tax expense (benefit) $ 4,828 $ (39,585) $ (78) $ (44,047)
========== ========== ========== ==========
</TABLE>
The annual effective rate used to calculate 1999 income tax benefit from
continuing operations was 32%. The effective rate used to calculate income tax
on continuing operations for the second quarter of 2000 was 35%, while the rate
used to calculate income tax on discontinued operations was 37%. Management
currently expects the company's overall effective tax rate for fiscal year 2000
will be 37%.
FUTURE ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new statement will require recognition
of all derivatives as either assets or liabilities on the balance sheet at fair
value. The new statement is effective for the company's fiscal year 2002, as
deferred by SFAS No. 137, but early adoption is permitted. Management has not
yet completed an evaluation of the effects this standard will have on the
company's consolidated financial statements.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
- ------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
GENERAL
The company has historically operated in three major business divisions:
Measurement, Color Printing and Imaging, and Video and Networking, as well as in
five major geographies: the United States; Europe; the Americas, including
Mexico, Canada and South America; the Pacific, excluding Japan; and Japan.
On August 9, 1999, the company announced that it had reached an agreement to
sell substantially all of the operating assets of its Video and Networking
division to Grass Valley Group, Inc. During the first quarter of fiscal year
2000, Tektronix recorded pre-tax charges of $26.1 million for losses expected to
be incurred in connection with the transaction. These charges were calculated
based upon the excess of the estimated net book value of net assets transferred
over the proceeds, as well as asset impairments expected to be incurred as a
result of the sale. On September 24, 1999, the companies closed the transaction.
Tektronix received cash of $23.7 million, net of transaction costs of $1.1
million, a note receivable of $22.5 million, and a 10% equity interest in that
company, which is accounted for under the cost method. Actual losses incurred in
connection with the transaction were $26.1 million.
Video and Networking operating results through September 24, 1999 have been
included in those from continuing operations for the periods reported. During
the quarter and two quarters ended November 27, 1999, Video and Networking
realized sales of $7.9 million and $60.7 million, respectively. For the same
periods, the division experienced operating losses of $10.7 million and $19.0
million, respectively. During the quarter and two quarters ended November 28,
1998, Video and Networking sales were $59.6 million and $112.1 million,
respectively. For these same periods, the division experienced operating losses
of $13.3 million and $30.9 million, respectively.
On September 22, 1999, the company announced that it had reached an agreement
with Xerox Corporation (Xerox) to sell the net assets of the Color Printing and
Imaging division. On January 1, 2000, the company closed the sale of
substantially all of the assets of the division. The purchase price was $925.0
million in cash, with certain liabilities of the division assumed by Xerox.
Tektronix expects to realize a pre-tax gain on the sale of approximately $600.0
million. This gain will be recorded during the third quarter of 2000 as will the
loss from operations realized by the Color Printing and Imaging division during
the five weeks prior to the close of the sale and any transition costs or other
charges related to the transaction.
In accordance with Accounting Principles Board Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the company has accounted for the Color Printing and Imaging
division as a discontinued operation. During the quarter and two quarters ended
November 27, 1999, Color Printing and Imaging realized sales of $189.8 million
and $345.2 million and operating income of $10.8 million and $14.9 million,
respectively. During the quarter and two quarters ended November 28, 1998, Color
Printing and Imaging realized sales of $159.3 million and $314.6 million,
respectively. For the same periods, the division experienced an operating loss
of $2.5 million and operating income of $4.7 million, respectively.
11
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NON-RECURRING CHARGES
In the second quarter of fiscal year 1999, the company announced and began to
implement a series of actions (the plan) intended to align worldwide operations
with current market conditions and to improve the profitability of its
operations. Simultaneously, the company recorded pre-tax charges of $125.7
million to account for these actions. Through the execution of the plan, the
company began to decentralize. As a final step in the decentralization of the
company, management committed to sell the majority of the operating assets of
the Video and Networking division and the net assets of the Color Printing and
Imaging division in early fiscal year 2000. Substantially all division-specific
actions included in the plan were completed prior to the consummation of these
transactions.
As of November 27, 1999, reserves of $19.5 million and $8.2 million remain for
severance and other liabilities, respectively. As a result of the sale of the
Color Printing and Imaging division, the company will need to evaluate the
severance reserves to determine whether all of the remaining $19.5 million is
required. This process will take place during the third quarter, and any excess
reserve will be reversed to non-recurring charges. The remaining $8.2 million
reserve for other liabilities mainly represents future lease payments on
facilities that were abandoned as a result of the decentralization of the
company. These payments will continue over the lives of the lease contracts.
Management currently expects that actions related to the remaining reserves will
require approximately $27.7 million in cash.
RESULTS OF OPERATIONS
Quarter and Two Quarters Ended November 27, 1999
vs.
Quarter and Two Quarters Ended November 28, 1998
NET INCOME FROM CONTINUING OPERATIONS
The company recognized net income from continuing operations of $8.9 million, or
$0.19 per diluted share, during the second quarter of 2000 as compared to a net
loss from continuing operations of $84.1 million, or $1.79 per diluted share,
recognized during the same period in 1999. During the first half of 2000, the
company recognized a net loss from continuing operations of $2.0 million, or
$0.04 per diluted share, as compared to net loss from continuing operations of
$93.6 million, or $1.93 per diluted share, for the first half of 1999.
The company recognized pre-tax non-recurring charges of $26.1 million during the
first quarter of 2000 and $120.5 million during the second quarter of 1999.
Excluding these charges, Tektronix would have recognized net income from
continuing operations of $8.9 million, or $0.19 per diluted share, for the
current quarter, as compared to a net loss of $2.2 million, or $0.05 per diluted
share, for the same period in 1999. During the first half of 2000, the company
would have recognized net income from continuing operations of $13.4 million, or
$0.28 per diluted share, as compared to net loss from continuing operations of
$11.6 million, or $0.24 per diluted share for the first half of 1999.
NET INCOME FROM DISCONTINUED OPERATIONS
The company recognized net income from discontinued operations of $6.2 million,
or $0.13 per diluted share, for the second quarter of 2000, as compared to a net
loss of $1.8 million, or $0.04 per diluted share, for the same period in 1999.
For the first half of 2000, the company recognized $8.7 million, or $0.18 per
diluted share, in net income from discontinued operations, as compared to net
income of $3.1 million, or $0.06 per diluted share, for the first half of 1999.
12
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SALES
Sales from continuing operations for the second quarter of 2000 were $261.3
million, down 4% from second quarter 1999 sales of $272.9 million. Sales for
Measurement were $253.3 million, as compared to sales of $213.3 million for the
second quarter of 1999. Measurement sales increased 19% over the prior year,
including growth in all geographies. The United States and the Pacific
experienced the most significant growth, up $25.4 million or 23% and $6.5
million or 29%, respectively. The majority of the increase was realized in sales
of oscilloscopes, wireless communication test products and logic analyzers.
Sales of these products increased due to positive market response to the launch
of new products at the end of 1999, continued growth in wireless communication
infrastructure and resurgence in the semiconductor industry.
Sales from continuing operations for the first half of 2000 were $542.0 million,
as compared to sales of $536.5 million for the first half of 1999. Measurement
sales were $481.4 million, as compared to sales of $424.4 million for the first
half of 1999. Measurement sales increased 13% over the prior year, including
growth in all geographies. The United States and Japan experienced the most
significant growth, up $38.6 million or 18% and $7.2 million or 27%,
respectively. Sales for the first half of 2000 increased in the same product
lines and for the same reasons discussed above under current quarter results.
ORDERS
Second quarter 2000 orders for Measurement were $241.6 million, up $34.6 million
or 17% over orders for the same period in 1999. Orders were up across all
geographies except Europe, where orders declined $7.1 million or 11%, as
compared to the same quarter of 1999. The decline in orders from Europe can be
attributed to a decline in the value of the Euro, as well as strong orders from
the region in the second quarter of 1999. Measurement orders from Europe for the
second quarter of 1999 were up 24% over those for the same quarter of 1998,
while orders from all other regions had declined. The United States and the
Pacific experienced the largest increases in orders during the current quarter,
up $31.1 million or 34% and $5.7 million or 21%, respectively. Orders from these
regions increased in the same product lines and for the same reasons as sales
increased for the quarter.
Measurement orders for the first half of 2000 were $485.3 million, up $89.0
million or 22% over orders for the same period in 1999. Orders were up across
all geographies, particularly in the United States and the Pacific. Orders from
the United States were $250.3 million, up $59.8 million or 31% from orders for
the same period in 1999. Orders from the Pacific were $62.0 million, up $12.9
million or 26% from orders for the same period in 1999. Orders were impacted by
the same favorable conditions that impacted sales.
GROSS PROFIT
The company's gross profit from continuing operations was $120.0 million for the
second quarter of 2000, an increase over gross profit of $87.3 million for the
same period in 1999. Excluding the non-recurring charges of $34.2 million, gross
profit was $121.6 million for the second quarter of 1999. As a percentage of net
sales, gross profit was 45.9% for the second quarter of 2000, as compared to
43.5% for the second quarter of 1999, excluding non-recurring charges.
The company's gross profit from continuing operations was $244.3 million for the
first half of 2000, an increase over gross profit of $205.0 million for the same
period in 1999. Excluding the non-recurring charges noted above, gross profit
was $239.2 million for the first half of 1999. As a percentage of net sales,
gross profit increased from 44.1%, excluding non-recurring charges, to 45.1% for
the first half of 2000.
Measurement gross profit improved from $103.0 million for the second quarter of
1999, to $122.7 million for the second quarter of 2000. As a percentage of net
sales, gross profit was 48.4%, as compared to 48.3% for the second quarter of
1999. Measurement gross profit for the first half of 2000 was $232.8 million, as
compared to $203.7 million for the first half of 1999. As a percentage of net
sales, gross profit was 48.4%, as compared to 48.0% for the first half of 1999.
The increase in both periods resulted mainly from higher margins on
oscilloscopes introduced during the third and fourth quarters of 1999.
13
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OPERATING EXPENSES
Operating expenses from continuing operations were $104.2 million, down $104.2
million from $208.4 million for the second quarter of 1999, due mainly to $81.5
million in non-recurring charges in the prior year, as well as a decrease in
selling, general and administrative and research and development expenses.
Selling, general and administrative expenses were $71.5 million for the quarter,
a decrease of $13.2 million from the same period in 1999, primarily as a result
of only one month of Video and Networking results included in this quarter.
Research and development expenses were $32.7 million, $8.4 million lower than
those recognized in the second quarter of 1999. The decline was due mainly to
$4.0 million in non-recurring charges in the prior year, as well as only one
month of Video and Networking results included in the current quarter.
For the first half of 2000, operating expenses from continuing operations were
$240.7 million, down $99.9 million from $340.6 million for the first half of
1999, due mainly to lower non-recurring charges, as well as a decrease in
selling, general and administrative expenses and losses on investments accounted
for under the equity method. Non-recurring charges for the first half of 2000
were $26.1 million, $55.4 million lower than the $81.5 million recorded during
the first half of 1999. Selling, general and administrative expenses were $143.3
million, a decrease of $28.7 million from the same period in 1999, primarily as
a result of only one month of Video and Networking results included this year.
Losses on investments accounted for under the equity method were $0.3 million,
$8.8 million lower than those recognized in the same period of 1999, primarily
due to Tektronix' $7.2 million share of the loss reported by Merix Corporation
during the first half of 1999.
OPERATING MARGIN
Measurement operating income for the second quarter of 2000 was $26.4 million,
as compared to $14.7 million generated in the same period of 1999. Operating
margin was approximately 10.4% of sales for the quarter, as compared to 6.9% for
the second quarter of 1999. Management currently expects that the measurement
division will continue to see operating margins of approximately 10% through the
end of the year, excluding any non-recurring charges or transition costs.
INCOME TAXES
Income taxes increased from a benefit of $39.6 million for the second quarter of
1999 to expense of $4.8 million for the second quarter of 2000 as a result of
earnings before taxes. Income tax expense related to discontinued operations was
$3.7 million for the current quarter, as compared to a benefit of $0.8 million
for the second quarter of 1999. Income tax benefit was $0.1 million for the
first half of 2000, as compared to income tax benefit of $44.0 million for the
same period in 1999 as a result of decreased losses before taxes. Income tax
expense related to discontinued operations was $4.8 million for the first half
of 2000, as compared to $1.4 million for the first half of 1999.
The annual effective rate used to calculate 1999 income tax benefit from
continuing operations was 32%. The effective rate used to calculate income tax
on continuing operations for the second quarter of 2000 was 35%, while the rate
used to calculate income tax on discontinued operations was 37%. Management
currently expects the company's overall effective tax rate for fiscal year 2000
will be 37%.
FINANCIAL CONDITION
At November 27, 1999, the company held $57.9 million in cash and cash
equivalents and bank credit facilities totaling $308.4 million, of which $221.2
million was unused. Unused facilities include $146.7 million in lines of credit
and $74.5 million under revolving credit agreements with United States and
foreign banks. Net cash proceeds from the sale of the net assets of the Color
Printing and Imaging division will be used to pay down outstanding debt and
returned to shareholders through the repurchase of common stock, with a small
amount retained for other corporate purposes.
14
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WORKING CAPITAL
At November 27, 1999, the company's working capital was $393.1 million, an
increase of $5.1 million from the end of 1999. Net assets from discontinued
operations were $341.8 million, an increase of $2.8 million during the first
half of the year. Excluding net assets of discontinued operations, working
capital was $51.3 million, a $2.3 million or 5% increase over year-end.
Current assets decreased $43.6 million during the first half of 2000, with
accounts receivable decreasing $37.3 million and inventory decreasing $37.4
million, offset in part by cash and cash equivalents increasing $18.1 million
and other current assets increasing $10.2 million.
Accounts receivable decreased due to a decrease of $50.9 million in Video and
Networking accounts receivable, which were excluded from the sale to Grass
Valley Group, Inc., offset in part by a decline of $5.0 million in securitized
receivables and an increase in Measurement accounts receivable resulting from
increased sales over the prior quarter.
Inventory declined due to $43.6 million of Video and Networking inventory that
did not remain at the end of the quarter as a result of the sale to Grass Valley
Group, Inc., offset in part by an increase in inventory in the Measurement
division. Measurement inventory, especially purchased materials and work in
process balances, were greater than those at year-end due to increased sales
over the prior quarter, as well as increased order backlog and production
forecasts going into the next quarter.
Cash and cash equivalents increased $18.1 million during the first half of the
year. Sources of cash included $46.0 million from continuing operations, $6.0
million from discontinued operations, $22.6 million in net proceeds from the
sale of Video and Networking and $14.8 million in proceeds from sales of real
estate and other fixed assets. Cash was consumed during the first half of the
year through capital expenditures of $22.5 million, dividends of $11.3 million
and a $36.1 million reduction in short-term debt.
Other current assets increased primarily due to the recording of the $5.0
million current portion of a note receivable from Grass Valley Group, Inc., as
well as an increase in current income tax benefits of $3.3 million associated
mainly with non-recurring charges recorded in connection with the sale of the
Video and Networking division.
Current liabilities decreased $48.7 million during the first half of 2000, due
mainly to a decrease in short-term debt of $36.1 million and a decrease in
accrued compensation of $14.7 million. Short-term debt declined as cash
requirements were met with cash received from the sale of Video and Networking
and other sources. Accrued compensation decreased mainly due to the transfer of
accrued payroll for Video and Networking employees to Grass Valley Group, Inc.,
payment of severance, as well as payment of year-end accruals of incentives and
commissions.
LONG-TERM FINANCIAL POSITION
Other long-term assets increased $17.8 million due mainly to the recording of
the $17.5 million long-term portion of a note receivable from Grass Valley
Group, Inc. and a 10% equity interest in that company, which is accounted for
under the cost method. Shareholders' equity was nearly flat, as compared to
year-end.
15
<PAGE>
YEAR 2000 UPDATE
Subject to continued monitoring of third party suppliers, Tektronix, Inc.'s Year
2000 Program (Program) is complete, and no material problems have arisen since
the end of calendar year 1999. The Program addressed the issue of computer
programs and embedded computer chips being unable to distinguish between the
year 1900 and the year 2000. All of the company's business computer systems are
year 2000 ready. Other information technology projects have not been delayed due
to the implementation of the Year 2000 Program.
Program
Tektronix' Program was divided into three major sections: (1) infrastructure
(information, logistics and other technology used in the company's business,
including hardware and software, which is sometimes referred to as IT); (2)
products (hardware and software products delivered to customers); and (3)
external suppliers and providers (vendors, manufacturers and suppliers to the
company). The general phases common to all sections were: (1) identification and
prioritization of various systems through an extensive inventory of all items
used throughout the company including customer products and services and
material third party manufacturers, suppliers and vendors; (2) remediation of
material systems through replacement or updates; (3) testing, including the
sending, receiving and processing of various information types to ensure ongoing
functionality, integrity and accuracy; and (4) contingency planning to establish
alternate solutions for any material systems determined not to be year 2000
compliant. Material items were those believed by the company to have a risk
involving the safety of individuals or that may cause damage to property or the
environment, or affect the continuation of business activities or materially
affect revenues. All phases for all three sections are complete.
The company's products that are not year 2000 ready have been identified, and
the company has determined to what extent upgrades will be made available to
make non-compliant products ready. All newly introduced products will be year
2000 ready. The company maintains a web site for customers to review product
readiness, including product upgrades, customer-serviceable fixes, and
non-compliant products for which upgrades will not be available.
Material external suppliers have been identified and prioritized. Tektronix has
evaluated the preparedness of material external suppliers. Contingency plans
address alternatives in the event that a material supplier is unable to supply
materials or services due to a lack of preparedness. Evaluating supplier
readiness included written representations from suppliers regarding their year
2000 readiness programs, as well as onsite assessments. Assessments were
conducted using the criteria established by the High Tech Consortium, LLC, an
organization consisting of approximately 15 other high technology companies that
was organized for the purpose of developing review criteria and sharing the
results of common supplier readiness assessments.
Costs
Costs associated with modifications to become year 2000 ready, as well as the
total cost of the Year 2000 Program (but not including the costs of the Oracle
enterprise system), are estimated as follows:
(In thousands)
- -------------------------------------------------------------------------------
Costs incurred through November 27, 1999 $ 2,368
Estimated remaining costs 358
-------
Total costs $ 2,726
=======
The total costs associated with required modifications to become year 2000
ready, as well as the total costs of the Year 2000 Program, are not expected to
be material to the company's financial position or operating results. Such costs
are expensed as incurred in accordance with generally accepted accounting
principles.
16
<PAGE>
Risks
The failure to correct a material year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the company's
results of operations, liquidity and financial condition. While the company is
not aware of any material 2000 related problems that have resulted from the new
year, due to the general uncertainty inherent in the year 2000 problem, the
company is unable to determine at this time whether the consequences of year
2000 failures will have a material impact on the company's results of
operations, liquidity or financial condition. The Year 2000 Program, which has
been completed, together with ongoing monitoring of suppliers during the Year
2000, is expected to significantly reduce the company's level of uncertainty
about the year 2000 problem and significantly reduce the risk of significant
interruptions of normal operations.
Tektronix believes that its most reasonably likely worst-case year 2000
scenarios would relate to problems with the systems of third parties rather than
with the company's internal systems or its products. The company believes the
risks are greatest with transportation supply chains and critical suppliers of
materials, because the company has less control over assessing and remediating
the year 2000 problems of third parties. A worst-case scenario involving a
transportation supply chain or a critical supplier of materials would be the
partial or complete shutdown of transportation facilities or the supplier, with
the resulting inability to provide critical materials to the company on a timely
basis. The company does not maintain the capability to replace most third-party
materials with internal production. Contingency planning includes alternatives
where efforts to work with critical suppliers to ensure year 2000 capability
have not been successful.
The company is not in a position to identify or to avoid all possible scenarios.
Contingency plans include mitigating the impact of various scenarios if they
were to occur. Due to the large number of variables involved, the company cannot
provide an estimate of the damage it might suffer if any of these scenarios were
to occur.
The above contains forward-looking statements including, without limitation,
statements relating to the company's plans, strategies, objectives,
expectations, intentions and resources and are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Readers are cautioned that forward-looking statements contained in the "Year
2000 Update" should be read in conjunction with the company's disclosures under
"Forward-looking Statements."
FORWARD-LOOKING STATEMENTS
Statements and information included in this Form 10-Q that relate to the
company's goals, strategies and expectations as to future results and events are
based on the company's current expectations. They constitute forward-looking
statements subject to a number of risk factors that could cause actual results
to differ materially from those currently expected or desired.
As with many high technology companies, risk factors that could cause the
company's actual results or activities to differ materially from these
forward-looking statements include, but are not limited to: worldwide economic
and business conditions in the electronics industry; competitive factors,
including pricing pressures, technological developments and new products offered
by competitors; changes in product and sales mix, and the related effects on
gross margins; the company's ability to deliver a timely flow of competitive new
products, and market acceptance of these products; the availability of parts and
supplies from third-party suppliers on a timely basis and at reasonable prices;
inventory risks due to changes in market demand or the company's business
strategies; changes in effective tax rates; customer demand; currency
fluctuations; and the fact that a substantial portion of the company's sales are
generated from orders received during the quarter, making prediction of
quarterly revenues and earnings difficult.
Tektronix has other risk factors in its business, including, but not limited to:
the continued growth in wireless communication infrastructure and the
semiconductor industry; the effects of year 2000 compliance issues later in the
year; the timely introduction of new products scheduled during the current year,
which could be affected by engineering or other development program slippage,
the ability to ramp up production or to develop effective sales channels;
customers' acceptance of and demand for new products; the ability to reduce
expenditures; and other risk factors listed from time-to-time in the company's
Securities and Exchange Commission reports and press releases.
17
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ------- ----------------------------------------------------------
Reference is made to Item 7A of the company's Annual Report on Form 10-K for the
year ended May 29, 1999.
18
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibit:
(2) (i) Amended Asset Purchase Agreement between Tektronix, Inc.
and Xerox Corporation dated as of September 22, 1999 and
Amendment Nos. 1 and 2 thereto.
(27) (i) Financial Data Schedule.
--------------
(b) Reports on Form 8-K:
Tektronix filed a report on Form 8-K on October 12, 1999 with respect
to the sale of substantially all of the operating assets related to
its video content production business to Grass Valley Group, Inc.
19
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
January 11, 2000 TEKTRONIX, INC.
By CARL W. NEUN
--------------------------------------
Carl W. Neun
Senior Vice President and
Chief Financial Officer
20
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description
----------- -------------------
(2) (i) Amended Asset Purchase Agreement between Tektronix,
Inc. and Xerox Corporation dated as of September 22,
1999 and Amendment Nos. 1 and 2 thereto.
(27) (i) Financial Data Schedule.
AMENDED ASSET PURCHASE AGREEMENT
dated as of September 22, 1999,
by and between
XEROX CORPORATION
and
TEKTRONIX, INC.
with respect to the assets of
its Color Printing and Imaging Products Division
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
SALE OF ASSETS AND CLOSING.............................................. 2
1.1 Assets...................................................... 2
1.2 Liabilities................................................. 7
1.3 Sale of United States Purchased Assets and Non-United States
Purchased Assets Owned by Selling Affiliates and Assumption
of Assumed Liabilities by the Purchasing Affiliates......... 12
1.4 Purchase Price; Allocation; Adjustment...................... 18
1.5 Closing..................................................... 23
1.6 Prorations.................................................. 25
1.7 Further Assurances; Post-Closing Cooperation................ 25
1.8 Third-Party Consents........................................ 26
1.9 Insurance Proceeds.......................................... 27
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER................................ 27
2.1 Organization of Seller and the Selling Affiliates........... 27
2.2 Authority................................................... 28
2.3 No Conflicts................................................ 28
2.4 Governmental Approvals and Filings.......................... 29
2.5 Books and Records........................................... 29
2.6 Financial Statements........................................ 29
2.7 Absence of Changes.......................................... 30
2.8 No Undisclosed Liabilities.................................. 32
2.9 Taxes....................................................... 32
2.10 Legal Proceedings........................................... 36
2.11 Compliance With Laws and Orders............................. 37
2.12 Benefit Plans: ERISA........................................ 37
2.13 Real Property............................................... 38
2.14 Tangible Personal Property.................................. 40
2.15 Intellectual Property Rights................................ 41
2.16 Contracts................................................... 42
2.17 Business Licenses........................................... 44
2.18 Insurance................................................... 44
2.19 Affiliate Transactions...................................... 44
2.20 Employees; Labor Relations.................................. 45
2.21 Environmental Matters, etc.................................. 45
2.22 Substantial Customers and Suppliers......................... 48
2.23 Accounts Receivable......................................... 48
AMENDED ASSET PURCHASE AGREEMENT
i
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Page
2.24 Inventory................................................... 48
2.25 Vehicles.................................................... 48
2.26 No Guarantees............................................... 49
2.27 Entire Business............................................. 49
2.28 Brokers..................................................... 49
2.29 Year 2000................................................... 49
2.30 Disclosure.................................................. 50
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................. 51
3.1 Organization of Purchaser and the Purchasing Affiliates..... 51
3.2 Authority................................................... 51
3.3 No Conflicts................................................ 51
3.4 Governmental Approvals and Filings.......................... 52
3.5 Legal Proceedings........................................... 52
3.6 Brokers..................................................... 52
ARTICLE 4
COVENANTS OF SELLER..................................................... 53
4.1 Regulatory and Other Approvals.............................. 53
4.2 HSR Filings, etc............................................ 53
4.3 Investigation by Purchaser.................................. 54
4.4 No Solicitations............................................ 54
4.5 Conduct of Business......................................... 55
4.6 Financial Statements and Reports; Filings................... 55
4.7 Employee Matters............................................ 56
4.8 Certain Restrictions........................................ 57
4.9 Security Deposits........................................... 58
4.10 Delivery of Books and Records, etc.; Removal of Property.... 58
4.11 Noncompetition.............................................. 58
4.12 Notice and Cure............................................. 60
4.13 Fulfillment of Conditions................................... 60
4.14 Environmental Matters. .................................... 61
ARTICLE 5
COVENANTS OF PURCHASER.................................................. 61
5.1 Regulatory and Other Approvals.............................. 61
5.2 HSR Filings, etc............................................ 62
5.3 Notice and Cure............................................. 62
5.4 Fulfillment of Conditions................................... 63
AMENDED ASSET PURCHASE AGREEMENT
ii
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Page
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF PURCHASER.................................. 63
6.1 Representations and Warranties.............................. 63
6.2 Performance................................................. 64
6.3 Officers' Certificates...................................... 64
6.4 No Material Adverse Change.................................. 64
6.5 Orders and Laws............................................. 64
6.6 Regulatory Consents and Approvals........................... 65
6.7 Third Party Consents........................................ 65
6.8 Title Insurance............................................. 65
6.9 General Assignment, Assignment Instruments.................. 66
6.10 Transition Agreement........................................ 66
6.11 Trademark License Agreement................................. 66
6.12 Technology Transfer Agreement............................... 66
6.13 Ancillary Agreements........................................ 66
6.14 Malaysian Stock Purchase Agreement.......................... 66
6.15 Proceedings................................................. 66
6.16 Accounting Policies......................................... 66
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF SELLER..................................... 67
7.1 Representations and Warranties.............................. 67
7.2 Performance................................................. 67
7.3 Officers' Certificates...................................... 67
7.4 Orders and Laws............................................. 68
7.5 Regulatory Consents and Approvals........................... 68
7.6 Third Party Consents........................................ 68
7.7 Assumption Agreement; Assumption Instruments................ 68
7.8 Transition Agreement........................................ 69
7.9 Trademark License Agreement................................. 69
7.10 Technology Transfer Agreement............................... 69
7.11 Ancillary Agreements........................................ 69
7.12 Malaysian Stock Purchase Agreement.......................... 69
7.13 Proceedings................................................. 69
ARTICLE 8
TAX MATTERS; CLOSING AND POST-CLOSING TAXES; VAT........................ 70
8.1 General..................................................... 70
8.2 Return Preparation.......................................... 70
8.3 Tax Refunds................................................. 71
8.4 Cooperation with Respect to Tax Matters..................... 72
AMENDED ASSET PURCHASE AGREEMENT
iii
<PAGE>
Page
8.5 Transfer Taxes.............................................. 73
8.6 Real Property Taxes......................................... 74
8.7 VAT......................................................... 74
ARTICLE 9
EMPLOYEE MATTERS........................................................ 77
9.1 Offer of Employment......................................... 77
9.2 Purchaser's Plan Service Credits............................ 77
9.3 Employee Benefit Programs Service Credits................... 78
9.4 WARN Act.................................................... 78
9.5 Foreign Nationals........................................... 78
9.6 Seller COBRA Compliance..................................... 78
9.7 Evidence of Insurability.................................... 79
9.8 HMO Coverage................................................ 79
9.9 Direct Transfer of 401(k) Balances.......................... 79
ARTICLE 10
SURVIVAL OF REPRESENTATIONS, WARRANTIES,COVENANTS AND
AGREEMENTS.............................................................. 79
ARTICLE 11
INDEMNIFICATION......................................................... 80
11.1 Tax Indemnification......................................... 80
11.2 Other Indemnification....................................... 82
11.3 Method of Asserting Claims.................................. 85
ARTICLE 12
TERMINATION............................................................. 88
12.1 Termination................................................. 88
12.2 Effect of Termination....................................... 91
ARTICLE 13
DEFINITIONS............................................................. 92
13.1 Definitions................................................. 92
ARTICLE 14
MISCELLANEOUS...........................................................104
14.1 Notices.....................................................104
14.2 Bulk Sales Act..............................................106
14.3 Entire Agreement............................................106
14.4 Expenses....................................................106
AMENDED ASSET PURCHASE AGREEMENT
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14.5 Public Announcements........................................106
14.6 Sony-Tektronix Corporation..................................106
14.7 Waiver......................................................107
14.8 Amendment...................................................107
14.9 No Third Party Beneficiary..................................107
14.10 No Assignment: Binding Effect...............................107
14.11 Headings....................................................107
14.12 Invalid Provisions..........................................107
14.13 Governing Law...............................................108
14.14 Accounting Policies.........................................108
14.15 Counterparts................................................108
AMENDED ASSET PURCHASE AGREEMENT
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EXHIBITS
Exhibit A Technology Transfer Agreement
AMENDED ASSET PURCHASE AGREEMENT
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This AMENDED ASSET PURCHASE AGREEMENT dated as of September 22, 1999, is
made and entered into by and between XEROX CORPORATION, a New York corporation,
("Purchaser"), and TEKTRONIX, INC., an Oregon corporation, ("Seller").
Capitalized terms not otherwise defined herein have the meanings set forth in
Section 13.1.
WHEREAS, Seller, through its Color Printing and Imaging Products Division
(the "Division"), and the wholly owned subsidiaries and Affiliates of Seller
identified in Section 2.1 of the Disclosure Schedules hereto (each such
subsidiary or Affiliate, a "Selling Affiliate"; all such subsidiaries and
Affiliates, collectively, the "Selling Affiliates") are engaged in the business
of developing, manufacturing, distributing and servicing printers and related
products, accessories and supplies throughout the world (such business as
conducted by the Division and the Selling Affiliates is hereinafter referred to
as the "Business");
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
desires to cause the Selling Affiliates to sell, transfer and assign to
Purchaser, substantially all of the assets relating to the Business, all in
accordance with the terms and conditions set forth in this Agreement; and
WHEREAS, Purchaser desires to purchase and acquire from Seller or the
Selling Affiliates, or to cause certain subsidiaries or Affiliates of Purchaser
(each such subsidiary or Affiliate, a "Purchasing Affiliate"; all such
subsidiaries and Affiliates, collectively, the "Purchasing Affiliates") to
purchase and acquire from Seller or the Selling Affiliates, said assets relating
to the Business and, in connection therewith, Purchaser has agreed to assume, or
to cause one or more Purchasing Affiliates to assume, certain Liabilities
relating to the Business, all in accordance with the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
SALE OF ASSETS AND CLOSING
1.1 Assets.
(a) Assets Purchased. On the terms and subject to the conditions set forth
in this Agreement, at the Closing or the applicable Foreign Closing, as the case
may be, Seller will sell, transfer, convey, assign and deliver to Purchaser or
to a Purchasing Affiliate or Purchasing Affiliates designated by Purchaser, and
will cause each of the Selling Affiliates to sell, transfer, convey, assign and
deliver to Purchaser or to the designated Purchasing Affiliate, free and clear
of all Liens other than Permitted Liens,
AMENDED ASSET PURCHASE AGREEMENT
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all of Seller's or the Selling Affiliates' right, title and interest in, to and
under the Assets and Properties used or held for use primarily in connection
with the Business, including but not limited to those Assets and Properties
described in this Section 1.1(a), and Purchaser or the designated Purchasing
Affiliate will purchase and pay for such Assets and Properties, as the same
shall exist on the Closing Date or the applicable Foreign Closing Date, as the
case may be (collectively, the "Purchased Assets"). Without limiting the
generality of the foregoing, the Purchased Assets shall not include any of the
Excluded Assets described in Section 1.1(b), but shall include the following:
(i) Real Property. The real property described in Section 1.1(a)(i) of
the Disclosure Schedule, and all of the rights arising out of the ownership
thereof or appurtenant thereto (the "Real Property"), together with all
buildings, structures, facilities, fixtures and other improvements thereto
(the "Improvements");
(ii) Real Property Leases. The leases and subleases of real property
described in Section 1.1(a)(ii) of the Disclosure Schedule as to which
Seller or a Selling Affiliate is the lessee or sublessee, together with any
options to purchase the underlying property and leasehold improvements
thereon, and in each case all other rights, subleases, licenses, permits,
deposits and profits appurtenant to or related to such leases and subleases
(the "Real Property Leases");
(iii) Inventory. All inventories of raw materials, work-in-process,
finished goods, demonstration equipment, office and other supplies, parts,
packaging materials and other accessories related thereto which are used or
held for use primarily in the conduct of the Business, including any of the
foregoing purchased subject to any conditional sales or title retention
agreement in favor of any other Person, but excluding any inventory
disposed of in the ordinary course of business before the Closing Date in
accordance with Section 4.8(a), together with all rights against suppliers
of such inventories (the "Inventory");
(iv) Accounts Receivable. All trade accounts receivable and all notes,
bonds and other evidences of Indebtedness of and rights to receive payments
arising out of sales occurring in the conduct of the Business and all
Security Agreements related thereto, including any rights with respect to
any third party collection procedures or any other Actions or Proceedings
which have been commenced in connection therewith, excluding any accounts
receivables included in Intercompany Accounts and any Sales Taxes included
in accounts receivable that are not invoiced as of the Closing Date or the
applicable Foreign Closing Date (the "Accounts Receivable");
(v) Tangible Personal Property. All furniture, computer hardware and
software, fixtures, equipment, machinery, tools, dies, jigs, patterns,
molds, breadboards, prototypes, engineering and pre-engineering models and
AMENDED ASSET PURCHASE AGREEMENT
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components and other tangible personal property (other than Inventory and
Vehicles) used or held for use primarily in the conduct of the Business
(including but not limited to the items listed in Section 1.1(a)(v) of the
Disclosure Schedule), including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other
Person, but excluding any such items disposed of in the ordinary course of
business before the Closing Date in accordance with Section 4.8(a) (the
"Tangible Personal Property");
(vi) Personal Property Leases. (A) The leases or subleases of Tangible
Personal Property used or held for use primarily in the conduct of the
Business, including those described in Section 1.1(a)(vi)(A) of the
Disclosure Schedule as to which Seller or a Selling Affiliate is the lessor
or sublessor, and (B) the leases of Tangible Personal Property used or held
for use primarily in the conduct of the Business, including those described
in Section 1.1(a) (vi) (B) of the Disclosure Schedule as to which Seller or
a Selling Affiliate is the lessee or sublessee, together with any options
to purchase the underlying property (the leases and subleases described in
subclauses (A) and (B) hereof, the "Personal Property Leases");
(vii) Business Contracts. All Contracts (other than the Real Property
Leases, the Personal Property Leases and the Accounts Receivable) which are
utilized in the conduct of the Business, including without limitation those
Contracts relating to suppliers, sales representatives, sales agents,
distributors, dealers, value-added resellers, purchase orders, service
arrangements, marketing arrangements, manufacturing arrangements, research
and development arrangements, product development arrangements and
licensing arrangements, including those listed in Section 2.16(a) of the
Disclosure Schedule (the "Business Contracts");
(viii) Prepaid Expenses. All prepaid items related primarily to the
Business and reflected in the Statement of Closing Net Assets as "prepaid
expenses" (the "Prepaid Expenses ");
(ix) Intangible Personal Property. All customer lists, intangibles for
marketing and other intangibles used or held for use in the conduct and/or
development of the Business (including any goodwill therein) and all
rights, privileges, claims, causes of action and options relating or
pertaining to the Business or the Purchased Assets, including but not
limited to the rights arising out of the covenant of non-competition in
Section 4.11 and the items listed in Section 1.1(a) (ix) of the Disclosure
Schedule, provided, however, that all Intellectual Property, including any
Intellectual Property transferred under the Technology Transfer Agreement,
shall be excluded (the "Intangible Personal Property");
AMENDED ASSET PURCHASE AGREEMENT
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(x) Business Licenses. All Licenses (including applications therefor)
utilized in the conduct of the Business (the "Business Licenses");
(xi) Vehicles. All motor vehicles owned or leased by Seller or a
Selling Affiliate and used or held for use primarily in the conduct of the
Business, including but not limited to the vehicles listed in Section
1.1(a) (xi) of the Disclosure Schedule (the "Vehicles");
(xii) Security Deposits. All security deposits deposited by or on
behalf of Seller or a Selling Affiliate as lessee or sublessee under the
Real Property Leases or the Personal Property Leases (the "Tenant Security
Deposits");
(xiii) Books and Records. All Books and Records used or held for use
in the conduct of the Business or otherwise relating to the Total Acquired
Assets, other than the minute books, stock transfer books, Tax Returns and
corporate seal of Seller or a Selling Affiliate (the "Business Books and
Records");
(xiv) Stock in Tektronix Malaysia Sdn. Bhd. All of the capital stock
and other equity or ownership interests owned by Seller or a Selling
Affiliate in Tektronix Malaysia Sdn. Bhd. to be acquired by Purchaser or a
Purchasing Affiliate in accordance with the terms and conditions of a Stock
Purchase Agreement, in form and substance reasonably acceptable to Seller
and Purchaser, that is usual and customary for transactions of such type in
Malaysia so as to effect the sale and transfer of all of the capital stock
of Tektronix Malaysia Sdn. Bhd. to the Purchaser or the designated
Purchasing Affiliate in order to give the parties the benefit of this
Agreement and to conform to the Laws, customs and practices of Malaysia;
(xv) Selling Affiliate Cash. All cash on hand and in banks with
respect to any Selling Affiliate, the Non-United States Purchased Assets of
which are not sold on the Closing Date and which arise in the operation of
the Business between the Closing Date and the applicable Foreign Closing
Date with respect to such Selling Affiliate (so long as such Foreign
Closing Date actually occurs); and
(xvi) Other Assets and Properties. All other Assets and Properties
used or held for use primarily in connection with the Business and not
excluded pursuant to Section 1.1(b) (the "Other Purchased Assets").
To the extent any of the Business Books and Records are items susceptible
to duplication and are either (AA) used in connection with any of Seller's or
the Selling Affiliates' businesses other than the Business or (BB) are required
by Law to be retained by Seller or a Selling Affiliate or are necessary to
assist Seller in the preparation of its financial statements, Seller or the
Selling Affiliate may deliver photocopies, other reproductions or electronic
media from which, in the case of Business Books and Records referred to in the
foregoing clause (AA), information solely concerning Seller's
AMENDED ASSET PURCHASE AGREEMENT
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or the Selling Affiliates' businesses other than the Business has been deleted.
(b) Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the following Assets and Properties (the "Excluded Assets") shall be
excluded from and shall not constitute Purchased Assets:
(i) Cash. Cash, commercial paper, certificates of deposit and other
bank deposits, treasury bills, other cash equivalents and rebates received
prior to Closing to the extent not reflected in the Statement of Closing
Net Assets (whether in respect of suppliers, insurers or otherwise other
than warranty rights);
(ii) Insurance. Life insurance policies on officers and other
employees of Seller and all other insurance policies relating to the
operation of the Business and rights arising from any refunds due
(including, but not limited to, retrospective premium adjustment) with
respect to insurance premium payments;
(iii) Employee Benefit Plans. All assets owned or held by any Benefit
Plans unless such assets relate to a foreign benefit obligation which
Purchaser is required to assume under applicable Laws;
(iv) Tax Refunds. All refunds or credits, if any, of Taxes due to or
from Seller or any of its Affiliates unless such refunds or credits are
included in the Statement of Closing Net Assets;
(v) Tax Deposits. Deposits of Seller or any Selling Affiliate with any
Taxing Authority, including without limitation, tax deposits, prepayment
and estimated payments unless included in the Statement of Closing Net
Assets;
(vi) Deferred Tax Assets. Any Deferred Tax Assets of Seller or any
Selling Affiliate related to the Business;
(vii) Tax and Financial Records. Seller's and Selling Affiliates' Tax
Returns, tax and financial records and reports and other documents and
records pertaining to Seller's and Selling Affiliates' operation of the
Business that Seller or Selling Affiliates are required by Laws to retain
or that will be necessary or advisable for Seller or Selling Affiliates to
retain, in their reasonable discretion, for tax or related purposes;
(viii) Real and Personal Property and Real Property Leases. The real
and personal property and real property leases described in Section
1.1(b)(viii) of the Disclosure Schedule;
(ix) Litigation Claims. Any rights (including indemnification) and
claims and recoveries under litigation of Seller or a Selling Affiliate (A)
AMENDED ASSET PURCHASE AGREEMENT
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commenced against third parties prior to the Closing Date or the applicable
Foreign Closing Date if and to the extent related to any of the Excluded
Assets or Retained Liabilities, whether arising by way of counterclaim or
otherwise or (B) arising out of or relating to events that occur following
the Closing;
(x) Shared Assets. The Shared Assets as defined in Section 2.27;
(xi) Intellectual Property. The Intellectual Property to be
transferred or licensed to Purchaser pursuant to the Technology Transfer
Agreement;
(xii) Excluded Obligations. The rights and obligations of Seller or a
Selling Affiliate in, to and under (A) all Contracts listed in Section
1.1(b)(xii) of the Disclosure Schedule or (B) any other Contracts, unless
the obligations of Seller or a Selling Affiliate in, to and under such
other Contracts are expressly assumed by Purchaser pursuant to Section
1.2(a);
(xiii) Tradename and Logo. All right, title and interest in, to and
under the "Tektronix" name, trademark, service mark and the Tektronix logo;
(xiv) Prepaid Expenses. Rights arising from prepaid expenses, if any,
with respect to Excluded Assets;
(xv) Other Excluded Assets and Properties. The Assets and Properties
described on Schedule 1.1(b)(xv) of the Disclosure Schedule;
(xvi) Certain Rights of Seller. Seller's rights under this Agreement,
the Ancillary Agreements and the Operative Agreements;
(xvii) Assets Disposed of in the Ordinary Course of Business. Any
assets described in the Disclosure Schedules to Section 1.1 that are
transferred or otherwise disposed of by Seller or a Selling Affiliate prior
to the Closing in the ordinary course of business without violation of this
Agreement; and
(xviii) Non-Business Assets and Properties. Any of the Assets and
Properties of Seller or a Selling Affiliate that are not primarily related
to or used primarily in connection with the Business, including but not
limited to, Assets and Properties used in Seller's measurement business or
video business.
1.2 Liabilities.
(a) Assumed Liabilities. In connection with the sale, transfer, conveyance,
assignment and delivery of the Purchased Assets pursuant to this Agreement, on
the terms and subject to the conditions set forth in this Agreement, at the
Closing or the applicable Foreign Closing, as the case may be, subject to
Section 11.2(a)(iii), Purchaser will assume and agree to pay, perform and
discharge when due, or will cause a
AMENDED ASSET PURCHASE AGREEMENT
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designated Purchasing Affiliate to assume and agree to pay, perform and
discharge when due, the following obligations of Seller or a Selling Affiliate,
as the case may be, arising primarily in connection with the operation of the
Business, as the same shall exist on the Closing Date or the applicable Foreign
Closing Date, as the case may be (the "AssumedLiabilities"), and no others:
(i) Real Property Lease Obligations. All obligations of Seller or a
Selling Affiliate under the Real Property Leases;
(ii) Accounts Payable. All obligations of Seller or a Selling
Affiliate with respect to accounts payable reflected or reserved against in
the Statement of Closing Net Assets and those arising in the ordinary
course of business since the date of the Statement of Closing Net Assets,
excluding (X) accounts payable included in Intercompany Accounts and (Y)
any amounts attributable to VAT which have been invoiced as of the Closing
Date or the applicable Foreign Closing Date (the "Accounts Payable");
(iii) Personal Property Lease Obligations. All obligations of Seller
or a Selling Affiliate under the Personal Property Leases;
(iv) Obligations under Business Contracts and Business Licenses. All
obligations of Seller or a Selling Affiliate under the Business Contracts
and Business Licenses;
(v) Accrued Expenses. All obligations of Seller or a Selling Affiliate
with respect to accrued expenses reflected or reserved against in the
Statement of Closing Net Assets or those incurred in the ordinary course of
business since the date of the Statement of Closing Net Assets, excluding
all accrued and unpaid expenses payable under Intercompany Accounts and all
Taxes (except to the extent they are Assumed Real Property Taxes) (the
"Accrued Expenses");
(vi) Assumed Real Property Taxes. The Prorated Real Property Taxes
arising out of the Business for the tax period during which the Closing
Date or the applicable Foreign Closing Date occurs (excluding any Liability
for Taxes arising out of the sale or transfer of the Real Property) (the
"Assumed Real Property Taxes"). The Assumed Real Property Taxes shall be
treated as an Assumed Liability irrespective of whether, at the time of
Closing or the applicable Foreign Closing, liability for the Real Property
Taxes attached or whether such Real Property Taxes have become payable or
have been paid by Seller or any Selling Affiliate;
(vii) Security Deposits. All obligations of Seller or a Selling
Affiliate with respect to any security deposit held by Seller or a Selling
Affiliate as lessor or sublessor under the Real Property Leases and the
Personal Property Leases (the "Landlord Security Deposits");
AMENDED ASSET PURCHASE AGREEMENT
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(viii) Severance and Other Employee-Related Liabilities. All
Liabilities and obligations expressly assumed by Purchaser in accordance
with Article 9;
(ix) Balance Sheet Liabilities. All Liabilities and obligations
reflected in the Statement of Closing Net Assets;
(x) Liabilities of Selling Affiliates. All Liabilities of Selling
Affiliates, the Non-United States Purchased Assets of which are not sold on
the Closing Date, which arise in the operation of the Business between the
Closing Date and the Foreign Closing Date with respect to such Selling
Affiliate (so long as such Foreign Closing Date actually occurs);
(xi) Warranty Obligations. All Liabilities and obligations under all
of Seller's or a Selling Affiliate's warranty arrangements for Business
products sold before or after the Closing, which arrangements were made in
the ordinary course of business consistent with past practices;
(xii) Customer Support and Service. All Liabilities and obligations
for customer support and services under Seller's policies and practices for
the Business, whether arising before or after the Closing, which policies
and practices were made in the ordinary course of business consistent with
past practices;
(xiii) Customer Policies. All Liabilities and obligations of the
Business to customers whose purchased products are no longer covered by
warranty consistent with Seller's long-term support policies, whether
arising before or after the Closing, which policies were made in the
ordinary course of business consistent with past practices; provided, that
such obligations and Liabilities shall be discharged in a manner and with a
level of professionalism customary in the industry and consistent with
Purchaser's practices;
(xiv) Wilsonville, Oregon. All Liabilities or obligations of Seller or
any Selling Affiliate, whether known or unknown, fixed or contingent, with
respect to or relating to any Environmental Laws or any Environmental Claim
arising out of any acts, omissions, or conditions relating to the
operations associated with the Real Property located at Wilsonville,
Oregon, but specifically excluding any Environmental Claim related to the
real property (located adjacent to Seller's Wilsonville, Oregon, property)
that was sold by Seller to Venture Properties, Inc. in 1998;
(xv) Intellectual Property Infringement. All claims against or
Liabilities of Seller or any Selling Affiliates arising out of or in any
way connected with infringement of any Intellectual Property arising out of
the conduct of the Business, whether before or after the Closing Date,
regardless of whether said claim or Liability is asserted, including but
not limited to any claim
AMENDED ASSET PURCHASE AGREEMENT
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or Liability for consequential or punitive damages in connection with the
foregoing;
(xvi) Litigation. All Liabilities and obligations related to pending
litigation listed in Section 2.10 of the Disclosure Schedule;
(xvii) Other Taxes. All Taxes expressly assumed by Purchaser or
Purchasing Affiliates in accordance with Article 8;
(xviii) Hazardous Products, etc. Any claims against or Liabilities
arising out of or in any way connected with (A) Products that contain a
hazard or are found by any Governmental or Regulatory Authority to contain
a hazard as that term is used in the United States Consumer Product Safety
Commission Act or any similar Laws (including, but not limited to, any
voluntary or required recalls of such Products), or (B) Epidemic Failures
of Products (including but not limited to any costs or expenses incurred in
connection with refunds, returns, replacements or repairs of same), in
either case arising out of the sale of Products or the conduct of the
Business by Seller or any Selling Affiliate prior to the Closing Date or
the applicable Foreign Closing Date, regardless of when or against whom
said claim or Liability is asserted, including, but not limited to, any
claim or Liability for consequential or punitive damages in connection with
the foregoing and, in either case, excluding Retained Liabilities described
in Section 1.2(b)(vii); and
(xix) Print Head Drift. All Liabilities and obligations related to
print head drift associated with Seller's Phaser 340/350/360 Products
("Print Head Drift").
Subject to Section 11.2(a)(iii), Purchaser shall remain solely responsible
for satisfying, discharging or performing all such Assumed Liabilities on a
timely basis in accordance with their terms, provided Purchaser or a Purchasing
Affiliate shall have the ability to contest, in good faith, any such claim of
Liability asserted in respect thereof by any Person.
(b) Retained Liabilities. Except for the Assumed Liabilities, and without
any implication that Purchaser or a Purchasing Affiliate is assuming any
Liability not expressly excluded by this Section 1.2(b) and, where applicable,
without any implication that any of the following would constitute Assumed
Liabilities but for this Section 1.2(b), neither Purchaser nor any Purchasing
Affiliate shall assume by virtue of this Agreement or the transactions
contemplated hereby, and shall have no liability for, any Liabilities of Seller
or a Selling Affiliate (including, without limitation, those related to the
Business) of any kind, character or description whatsoever, whether known or
unknown, contingent or otherwise, including but not limited to those Liabilities
described in this Section 1.2(b) (the "Retained Liabilities").
AMENDED ASSET PURCHASE AGREEMENT
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(i) Intercompany Accounts. Any Liabilities reflected in Intercompany
Accounts;
(ii) Fees. Any Liabilities for legal, accounting, audit and investment
banking fees, brokerage commissions, and any other expenses incurred by
Seller or the Selling Affiliates in connection with the negotiation and
preparation of this Agreement and the sale of the Assets and Properties;
(iii) Taxes. Any Liabilities of Seller or any of its Affiliates for
Taxes, irrespective of the manner in which such Taxes are reflected on the
financial statements of Seller or any Affiliate, including any Deferred Tax
Liability, except to the extent they are Assumed Real Property Taxes or are
expressly assumed by Purchaser or any Purchasing Affiliate in accordance
with Article 8;
(iv) Debt. Any Liability for or related to Indebtedness of Seller or
any of the Selling Affiliates, on its own behalf or on behalf of other
Persons, to banks, financial institutions or other Persons with respect to
borrowed money and including any interest payable in respect thereof;
(v) Severance Payments. Any Liabilities of Seller or any of the
Selling Affiliates to pay severance benefits or similar obligations which
arise either from any action by Seller or a Selling Affiliate prior to the
Closing Date or the applicable Foreign Closing Date or by virtue of the
sale of the Purchased Assets pursuant to the provisions hereof (other than
(A) any such Liabilities which arise out of any action by Purchaser or a
Purchasing Affiliate on or following the Closing Date or the applicable
Foreign Closing Date with respect to a Transferred Employee, it being
understood and agreed that any such Liabilities constitute Assumed
Liabilities hereunder or (B) obligations of Purchaser under Article 9);
(vi) Worker Claims. Any Liability in respect of any wrongful discharge
claim or claims by any Employees of Seller or any Selling Affiliate under
any Laws arising out of the conduct of the Business by Seller or by any
Selling Affiliate on or before the Closing Date or the applicable Foreign
Closing Date;
(vii) Tort and Product Claims. Any claims against or Liabilities of
Seller or any Selling Affiliates for injury to or death of persons
(including, without limitation, any worker's compensation claims) or
damages to or destruction of property, arising from the sale or
distribution of Products distributed, and/or business services provided, by
Seller or any Selling Affiliate prior to the Closing Date or the applicable
Foreign Closing Date, regardless of when said claim or Liability is
asserted, including but not limited to, any claim or Liability for
consequential or punitive damages in connection with the foregoing;
AMENDED ASSET PURCHASE AGREEMENT
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(viii) Benefit Plans. Except as specifically provided in Article 9,
any Liabilities arising out of or in connection with any of the Benefit
Plans;
(ix) Employee Payments. Any so-called "sale bonuses" or similar
payments payable to any Employees of Seller or any Selling Affiliate by
reason of the sale of the Purchased Assets;
(x) Environmental Claims. Any Liabilities or obligations of Seller or
any Selling Affiliate, whether known or unknown, fixed or contingent, with
respect to, or relating to, any Environmental Laws or any Environmental
Claim, arising out of any acts, omissions, or conditions relating to the
operations of the Business at locations other than Wilsonville, Oregon,
including but not limited to the disposal of, transportation to, and
arrangements for disposal of Hazardous Materials at Seller's Beaverton,
Oregon, Treatment, Storage and Disposal Facility, the Western Processing
Superfund Site located in Kent, Washington, and/or any other location and
Hazardous Materials Contamination on the real property (located adjacent to
Seller's Wilsonville, Oregon property) that was sold by Seller to Venture
Properties, Inc. in 1998, Seller's former manufacturing facility in
Heerenveen, The Netherlands, that was sold in 1996 and the Nanticoke
Microtechnologies facility in Nanticoke, Pennsylvania;
(xi) Non-Purchased Assets. Except as otherwise expressly provided in
this Agreement, any Liability or obligation, whether presently in existence
or hereafter arising, which is attributable to Assets and Properties that
are not Purchased Assets;
(xii) Litigation. Any Liability of Seller or any Selling Affiliates
for any claim, complaint, action, suit, proceeding, arbitration or
litigation (pending, threatened, contingent or otherwise) arising out of
any acts, omissions or conditions that occurred prior to the Closing Date
or the applicable Foreign Closing Date, except to the extent assumed by
Purchaser or a Purchasing Affiliate pursuant to Section 1.2(a); and
(xiii) Other. Without limitation by the specific enumeration of the
foregoing, any Liabilities not expressly assumed by Purchaser or a
Purchasing Affiliate pursuant to Section 1.2(a).
Seller shall remain solely responsible for satisfying, discharging or performing
all such Retained Liabilities on a timely basis in accordance with their terms,
provided that Seller or a Selling Affiliate shall have the ability to contest,
in good faith, any such claim of Liability asserted in respect thereof by any
Person.
1.3 Sale of United States Purchased Assets and Non-United States Purchased
Assets Owned by Selling Affiliates and Assumption of Assumed Liabilities by the
Purchasing Affiliates. Tektronix Export, Inc. ("TEI") and Tektronix Asia, Ltd.
("Tek
AMENDED ASSET PURCHASE AGREEMENT
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Asia") shall sell their United States Purchased Assets to Purchaser under terms
and conditions identical to the terms and conditions contained in this Agreement
governing the sale by Seller of its United States Purchased Assets. Seller shall
provide Purchaser with a separate bill of sale and any other commercially
reasonable documentation requested by Purchaser to evidence the sale of TEI and
Tek Asia's United States Purchased Assets to Purchaser. Certain of the
Non-United States Purchased Assets shall be sold to the Purchasing Affiliates
designated by Purchaser and certain of the Assumed Liabilities shall be assumed
by such Purchasing Affiliates pursuant to the terms and conditions of separate
Asset Purchase Agreements, in form and substance reasonably acceptable to Seller
and Purchaser, so as to effect the sale, transfer and assignment of the Assets
and Properties of the Selling Affiliates to the Purchasing Affiliates and the
assumption of the associated Assumed Liabilities by the Purchasing Affiliates in
order to give the parties the benefit of this Agreement and to conform to the
Laws, customs and practices of the relevant jurisdiction, as follows:
(a) Seller shall cause its Selling Affiliate, Tektronix Gesellschaft m.b.H.
("Austria Tek") to sell, transfer and assign the Assets and Properties of
Austria Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliates, Xerox Austria G.m.b.H. ("Xerox Austria"), which shall purchase all
of Austria Tek's Assets and Properties except for the Intangible Personal
Property and Accounts Receivable which shall be purchased by Xerox Channels
Limited ("Xerox Channels") and Purchaser shall cause Xerox Austria and Xerox
Channels to purchase such Assets and Properties and to assume certain Assumed
Liabilities from Austria Tek (the "Austria Acquisition");
(b) Seller shall cause its Selling Affiliate, Tektronix Australia Pty. Ltd.
("Australia Tek"), to sell, transfer and assign the Assets and Properties of
Australia Tek that constitute Non-United States Purchased Assets to Purchaser or
a designated Australian Purchasing Affiliate and Purchaser shall, or shall cause
such designated Purchasing Affiliate to purchase such Assets and Properties and
to assume certain Assumed Liabilities from Australia Tek (the "Australia
Acquisition");
(c) Seller shall cause its Selling Affiliate, Tektronix N.V. ("Belgium
Tek"), to sell, transfer and assign the Assets and Properties of Belgium Tek
that constitute NonUnited States Purchased Assets to Purchasing Affiliates, N.V.
Xerox S.A. ("Xerox Belgium"), which shall purchase all of Belgium Tek's Assets
and Properties except for the Intangible Personal Property and Accounts
Receivable which shall be purchased by Xerox Channels and Purchaser shall cause
Xerox Belgium and Xerox Channels to purchase such Assets and Properties and to
assume certain Assumed Liabilities from Belgium Tek (the "Belgium Acquisition");
(d) Seller shall cause its Selling Affiliate, Tektronix Industria e
Comercio Ltda. ("Brazil Tek"), to sell, transfer and assign the Assets and
Properties of Brazil Tek that constitute Non-United States Purchased Assets to
Purchasing Affiliate, Xerox Commercio E. Industria Ltda. ("Xerox Brazil"), and
Purchaser shall cause Xerox Brazil
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to purchase such Assets and Properties and to assume certain Assumed Liabilities
from Brazil Tek (the "Brazil Acquisition");
(e) Seller shall cause its Selling Affiliate, Tektronix Canada, Inc.
("Canada Tek"), to sell, transfer and assign the Assets and Properties of Canada
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliate,
Xerox Canada Ltd. ("Xerox Canada"), and Purchaser shall cause Xerox Canada to
purchase such Assets and Properties and to assume certain Assumed Liabilities
from Canada Tek (the "Canada Acquisition");
(f) Seller shall cause its Selling Affiliate, Tektronix Electronics (China)
Co., Ltd. ("China Tek"), to sell, transfer and assign the Assets and Properties
of China Tek that constitute Non-United States Purchased Assets to Purchaser or
to its designated Chinese Purchasing Affiliate and Purchaser shall, or shall
cause its designated Chinese Purchasing Affiliate to, purchase such Assets and
Properties and to assume certain Assumed Liabilities from China Tek (the "China
Acquisition");
(g) Seller shall cause its Selling Affiliate, Tektronix A/S ("Denmark
Tek"), to sell, transfer and assign the Assets and Properties of Denmark Tek
that constitute NonUnited States Purchased Assets to Purchasing Affiliates,
Xerox A/S ("Xerox Denmark"), which shall purchase all of Denmark Tek's Assets
and Properties except for the Intangible Personal Property and Accounts
Receivable which shall be purchased by Xerox Channels and Purchaser shall cause
Xerox Denmark and Xerox Channels to purchase such Assets and Properties and to
assume certain Assumed Liabilities from Denmark Tek (the "Denmark Acquisition");
(h) Seller shall cause its Selling Affiliate, Tektronix Oy ("Finland Tek"),
to sell, transfer and assign the Assets and Properties of Finland Tek that
constitute NonUnited States Purchased Assets to Purchasing Affiliates, Xerox Oy
("Xerox Finland"), which shall purchase all of Finland Tek's Assets and
Properties except for the Intangible Personal Property and Accounts Receivable
which shall be purchased by Xerox Channels, and Purchaser shall cause Xerox
Finland and Xerox Channels to purchase such Assets and Properties and to assume
certain Assumed Liabilities from Finland Tek (the "Finland Acquisition");
(i) Seller shall cause its Selling Affiliate, Tektronix S.A. ("France
Tek"), to sell, transfer and assign the Assets and Properties of France Tek that
constitute NonUnited States Purchased Assets to Purchasing Affiliates, Xerox -
THE DOCUMENT COMPANY SAS ("Xerox France"), which shall purchase all of France
Tek's Assets and Properties except for the Intangible Personal Property and
Accounts Receivable which shall be purchased by Xerox Channels, and Purchaser
shall cause Xerox France and Xerox Channels to purchase such Assets and
Properties and to assume certain Assumed Liabilities from France Tek (the
"France Acquisition");
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(j) Seller shall cause its Selling Affiliate, Tektronix GmbH ("Germany
Tek"), to sell, transfer and assign the Assets and Properties of Germany Tek
that constitute NonUnited States Purchased Assets to Purchasing Affiliates,
Xerox GmBh ("Xerox Germany"), which shall purchase all of Germany Tek's Assets
and Properties except for the Intangible Personal Property and Accounts
Receivable which shall be purchased by Xerox Channels, and Purchaser shall cause
Xerox Germany and Xerox Channels to purchase such Assets and Properties and to
assume certain Assumed Liabilities from Germany Tek (the "Germany Acquisition");
(k) Seller shall cause its Selling Affiliate, Tektronix Hong Kong Limited
("Hong Kong Tek"), to sell, transfer and assign the Assets and Properties of
Hong Kong Tek that constitute Non-United States Purchased Assets to Purchaser or
its designated Hong Kong Purchasing Affiliate and Purchaser shall, or shall
cause such designated Hong Kong Purchasing Affiliate to, purchase such Assets
and Properties and to assume certain Assumed Liabilities from Hong Kong Tek (the
"Hong Kong Acquisition");
(l) Seller shall cause its Selling Affiliate, Tektronix (India) Limited
("India Tek"), to sell, transfer and assign the Assets and Properties of India
Tek that constitute Non-United States Purchased Assets to Purchaser or its
designated Indian Purchasing Affiliate and Purchaser shall, or shall cause such
designated Indian Purchasing Affiliate to, purchase such Assets and Properties
and to assume certain Assumed Liabilities from India Tek (the "India
Acquisition");
(m) Seller shall cause its Selling Affiliate, Tektronix S.p.A. ("Italy
Tek"), to sell, transfer and assign the Assets and Properties of Italy Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliates, Xerox
S.p.A. ("Xerox Italy") which shall purchase all of Italy Tek's Assets and
Properties except for the Intangible Personal Property and Accounts Receivable
which shall be purchased by Xerox Channels, and Purchaser shall cause Xerox
Italy and Xerox Channels to purchase such Assets and Properties and to assume
certain Assumed Liabilities from Italy Tek (the "Italy Acquisition");
(n) Seller shall cause its Selling Affiliate, Tektronix Korea, Ltd. ("Korea
Tek"), to sell, transfer and assign the Assets and Properties of Korea Tek that
constitute NonUnited States Purchased Assets to Purchaser or its designated
Korean Purchasing Affiliate, and Purchaser shall, or shall cause such designated
Korean Purchasing Affiliate to, purchase such Assets and Properties and to
assume certain Assumed Liabilities from Korea Tek (the "Korea Acquisition");
(o) Seller shall cause its Selling Affiliate, Tektronix, S.A. de C.V.
("Mexico Tek"), to sell, transfer and assign the Assets and Properties of Mexico
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliate,
Xerox Mexicana, S.A. de C.V. ("Xerox Mexico"), and Purchaser shall cause Xerox
Mexico to purchase such Assets and Properties and to assume certain Assumed
Liabilities from Mexico Tek (the "Mexico Acquisition");
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(p) Seller shall cause its Selling Affiliate, Tektronix Holland N.V.
("Holland Tek"), to sell, transfer and assign the Assets and Properties of
Holland Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliates, Xerox (Nederland) BV ("Xerox Netherland"), which shall purchase all
of Holland Tek's Assets and Properties except for the Intangible Personal
Property and Accounts Receivable which shall be purchased by Xerox Channels, and
Purchaser shall cause Xerox Netherland and Xerox Channels to, purchase such
Assets and Properties and to assume certain Assumed Liabilities from Holland Tek
(the "Holland Acquisition");
(q) Seller shall cause its Selling Affiliate, Tektronix Distribution Europe
B.V. ("Europe Tek"), to sell, transfer and assign the Assets and Properties of
Europe Tek that constitute Non-United States Purchased Assets to Xerox Holding
(Nederland) BV ("Xerox Holding Holland") and/or its designated Dutch Purchasing
Affiliate which shall purchase all of Europe Tek's Assets and Properties and
Purchaser shall cause Xerox Holding Holland and/or its designated Dutch
Purchasing Affiliate to assume certain Assumed Liabilities from Europe Tek (the
"Dutch Acquisition").
(r) Seller shall cause its Selling Affiliate, Tektronix Norge A/S ("Norway
Tek"), to sell, transfer and assign the Assets and Properties of Norway Tek that
constitute NonUnited States Purchased Assets to Purchasing Affiliates, Xerox AS
("Xerox Norway") which shall purchase all of Norway Tek's Assets and Properties
except for the Intangible Personal Property and Accounts Receivable which shall
be purchased by Xerox Channels, and Purchaser shall cause Xerox Norway and Xerox
Channels to purchase such Assets and Properties and to assume certain Assumed
Liabilities from Norway Tek (the "Norway Acquisition");
(s) Seller shall cause its Selling Affiliate, Tektronix Southeast Asia Pte
Ltd ("Singapore Tek"), to sell, transfer and assign the Assets and Properties of
Singapore Tek that constitute Non-United States Purchased Assets to Purchaser or
its designated Singapore Purchasing Affiliate and Purchaser shall, or cause such
designated Singapore Purchasing Affiliate to, purchase such Assets and
Properties and to assume certain Assumed Liabilities from Singapore Tek (the
"Singapore Acquisition");
(t) Seller shall cause its Selling Affiliate, Tektronix Espanola, S.A.
("Spain Tek"), to sell, transfer and assign the Assets and Properties of Spain
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliates,
Xerox Espana, The Document Company, S.A.U. ("Xerox Spain") which shall purchase
all of Spain Tek's Assets and Properties except for the Intangible Personal
Property and Accounts Receivable which shall be purchased by Xerox Channels, and
Purchaser shall cause Xerox Espana and Xerox Channels to purchase such Assets
and Properties and to assume certain Assumed Liabilities from Spain Tek (the
"Spain Acquisition");
(u) Seller shall cause its Selling Affiliate, Tektronix AB ("Sweden Tek"),
to sell, transfer and assign the Assets and Properties of Sweden Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliates, Xerox AB
("Xerox Sweden"), which shall
AMENDED ASSET PURCHASE AGREEMENT
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purchase all of Sweden Tek's Assets and Properties except for the Intangible
Personal Property and Accounts Receivable which shall be purchased by Xerox
Channels, and Purchaser shall cause Xerox Sweden and Xerox Channels to purchase
such Assets and Properties and to assume certain Assumed Liabilities from Sweden
Tek (the "Sweden Acquisition");
(v) Seller shall cause its Selling Affiliate, Tektronix International AG
("Switzerland Tek"), to sell, transfer and assign the Assets and Properties of
Switzerland Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate, Xerox AG ("Xerox Switzerland") which shall purchase all of
Switzerland Tek's Assets and Properties except for the Intangible Personal
Property and Accounts Receivable which shall be purchased by Xerox Channels, and
Purchaser shall cause Xerox Switzerland and Xerox Channels to purchase such
Assets and Properties and to assume certain Assumed Liabilities from Switzerland
Tek (the "Switzerland Acquisition");
(w) Seller shall cause its Selling Affiliate, Tektronix Taiwan, Ltd.
("Taiwan Tek"), to sell, transfer and assign the Assets and Properties of Taiwan
Tek that constitute Non-United States Purchased Assets to Purchaser or its
designated Taiwanese Purchasing Affiliate and Purchaser shall, or shall cause
such designated Taiwanese Purchasing Affiliate to, purchase such Assets and
Properties and to assume certain Assumed Liabilities from Taiwan Tek (the
"Taiwan Acquisition");
(x) Seller shall cause its Selling Affiliate, Tektronix U.K. Limited
("United Kingdom Tek"), to sell, transfer and assign the Assets and Properties
of United Kingdom Tek that constitute Non-United States Purchased Assets to
Purchasing Affiliates, Xerox (UK) Limited ("Xerox UK"), which shall purchase all
of United Kingdom Tek's Assets and Properties except for the Intangible Personal
Property and Accounts Receivable which shall be purchased by Xerox Channels, and
the lease on the Lithuanian property, which shall be purchased by a Purchasing
Affiliate designated by Purchaser, and Purchaser shall cause Xerox UK, Xerox
Channels and the designated Purchasing Affiliate to purchase such Assets and
Properties and to assume certain Assumed Liabilities from United Kingdom Tek
(the "United Kingdom Acquisition");
(y) Seller shall cause its Selling Affiliate, Tektronix Export Inc.
("TEI"), to sell, transfer and assign the Assets and Properties of TEI that
constitute Non-United States Purchased Assets in the Netherlands to Xerox
(Europe) Limited; and in Brazil, Australia, Canada and Hong Kong to Purchaser or
its designated Brazilian, Australian, Canadian and Hong Kong Purchasing
Affiliates respectively, and Purchaser shall or shall cause the aforementioned
designated Purchasing Affiliates to, purchase such Assets and Properties and to
assume certain Assumed Liabilities from TEI (the "TEI Acquisition").
(z) Seller shall cause either its Selling Affiliate, GVG Japan, Ltd. ("GVG
Japan Tek"), or Seller's designated Japanese Selling Affiliate, to sell,
transfer and assign the Assets and Properties presently owned by GVG Japan Tek,
or subsequently owned by Seller or Seller's designated Japanese Selling
Affiliate (the former being referred to as "Japan's
AMENDED ASSET PURCHASE AGREEMENT
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Successor") that constitute Non-United States Purchased Assets to Purchaser or
its designated Japanese Purchasing Affiliate, and Purchaser shall, or cause such
designated Japanese Purchasing Affiliate to, purchase such Assets and Properties
and to assume certain Assumed Liabilities from Japan Tek or Japan's Successor
(the "Japan Acquisition");
(aa) Seller shall cause its Selling Affiliate, Tektronix Europe Ltd. ("Ltd.
Tek"), to sell, transfer and assign the Assets and Properties of Ltd. Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate, Xerox
(Europe) Limited ("Xerox Europe"), and Purchaser shall cause Xerox Europe to
purchase such Assets and Properties and to assume certain Assumed Liabilities
from Ltd. Tek (the "Europe Acquisition").
The portion of the Purchase Price Consideration and Cash Purchase Price in
respect of each of the Asset Purchase Agreements referred to in this Section 1.3
shall be as determined in Section 1.4. The Asset Purchase Agreements referred to
in this Section 1.3, together with any other agreements, documents or
instruments executed in connection therewith, are referred to, collectively, in
this Agreement as the "Ancillary Agreements". Seller unconditionally guarantees
any and all Liabilities and obligations of each Selling Affiliate in accordance
with the terms of this Agreement and the Ancillary Agreements to which it is a
party. In the event any Foreign Closing does not occur on the Closing Date,
Seller shall cause its Selling Affiliate to enter into arrangements reasonably
acceptable to the parties hereto with respect to the operation of that portion
of the Business until the consummation of the Foreign Closing or the termination
of this Agreement in respect thereof in accordance with Section 1.5.
Notwithstanding the foregoing, Purchaser shall have the right to designate any
other Purchasing Affiliate or Purchasing Affiliates to take the place of and be
substituted for another Purchasing Affiliate or Purchasing Affiliates at any
time at least ten (10) Business Days prior to the Closing Date or the applicable
Foreign Closing Date and Seller agrees that neither Seller nor any Selling
Affiliate shall refuse to amend the relevant Ancillary Agreements so as to
effect such designation. Further, in the event that a Selling Affiliate owns or
uses Assets and Properties that constitute Purchased Assets in any geographic
territory or jurisdiction other than the one set forth above in connection with
such Selling Affiliate, Purchaser may designate a Purchasing Affiliate in such
other geographic territory or jurisdiction to purchase such Assets and
Properties pursuant to the terms of an Asset Purchase Agreement to be executed
in respect thereof.
1.4 Purchase Price; Allocation; Adjustment.
(a) Purchase Price. The aggregate purchase price (the "Purchase Price
Consideration") for the Purchased Assets, the Purchased Intellectual Property
and for the covenants of Seller contained in Section 4.11 (collectively, the
"Total Acquired Assets") is the sum of (i) Nine Hundred Fifty Million Dollars
($950,000,000.00) (the "Cash Purchase Price"), subject to adjustment as provided
in Section 1.4(c), and (ii) Purchaser's and the Purchasing Affiliates'
assumption of the Assumed Liabilities in accordance with the terms of this
Agreement. The Purchase Price Consideration shall be allocated to the Total
Acquired Assets in accordance with Section 1.4(b). The portions of the Cash
Purchase Price allocated to the Seller and each Selling Affiliate shall be
payable by Purchaser or a
AMENDED ASSET PURCHASE AGREEMENT
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designated Purchasing Affiliate or Purchasing Affiliates, as the case may be, in
immediately available funds to the Seller and each Selling Affiliate at the
Closing or the relevant Foreign Closing in the manner provided in Section 1.5.
(b) Allocation of Purchase Price.
(i) Within thirty (30) days following the date of this Agreement,
Purchaser shall furnish to Seller a draft schedule (the "Draft Allocation
Schedule") for Seller and each Selling Affiliate (a "Selling Entity")
arranged in a columnar fashion, setting forth (A) the total fair market
value of the Total Acquired Assets being sold by that Selling Entity other
than goodwill in each relevant class (e.g., such Selling Entity's Class I
through Class IV Assets, as defined in Section 1060 of the Code (the
"Section 1060 Rules")), (B) a commercially reasonable estimate of the
amount of the total Assumed Liabilities of such Selling Entity, and (C) the
total Purchase Price Consideration (which shall be determined as set forth
in the Section 1060 Rules) for such Selling Entity. Seller shall render
commercially reasonable assistance to Purchaser in the preparation of the
Draft Allocation Schedule. The Draft Allocation Schedule shall be
considered final and binding (the "Pre-Closing Allocation Schedule") if
Seller has not conveyed objections to Purchaser within ten (10) Business
Days. If Seller conveys objections to the Pre-Closing Allocation Schedule
to Purchaser prior to the end of said ten-day period, Seller and Purchaser
shall discuss and attempt to resolve, in good faith, any disagreements with
respect to the Draft Allocation Schedule. If the parties are unable to
agree, then the dispute shall be submitted to an independent accounting
firm other than KPMG Peat Marwick ("KPMG"), Deloitte & Touche LLP
("Deloitte & Touche"), Arthur Andersen LLP ("Arthur Andersen") or
PricewaterhouseCoopers LLP ("PWC"), such firm to be agreed upon by Seller
and Purchaser (the "Independent Accountant"). The decision of the
Independent Accountant shall be binding. The fees and expenses of the
Independent Accountant shall be borne as provided in Section 1.4(c)(v).
Within ten (10) Business Days after the finalization of the Pre-Closing
Allocation Schedule, Seller and Purchaser shall negotiate the Cash Purchase
Price to be allocated to each Selling Entity in a manner consistent with
the Pre-Closing Allocation Schedule.
(ii) Purchaser and Seller shall each prepare and file in a timely
manner an IRS Form 8594 and other appropriate information, as required by
the Section 1060 Rules with respect to the portion of the Total Acquired
Assets allocable to the United States (the "Total United States Assets").
Such IRS Form 8594 shall be based on the fair market value of the Total
United States Assets and the Assumed Liabilities allocated thereto,
consistent with the allocations agreed to pursuant to this Section 1.4(b),
adjusted properly to reflect the final determination of the fair market
value of the Total United States Assets as shown on the Statement of
Closing Net Assets. Purchaser shall submit to Seller a draft copy of the
IRS Form 8594 ("Draft Form 8594") it proposes to file at least sixty (60)
days before the proposed filing date thereof. Within fifteen (15) days from
receiving the Draft Form
AMENDED ASSET PURCHASE AGREEMENT
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8594 from Purchaser, Seller shall either notify Purchaser in writing that
it accepts the Draft Form 8594 or shall set out its objections. Seller
shall be deemed to have accepted the Draft Form 8594 if it provides no
notification to Purchaser. Seller and Purchaser shall discuss and attempt
to resolve, in good faith, any disagreements with respect to the Draft Form
8594. If such disagreements are not resolved by thirty (30) days before the
due date of the IRS Form 8594, then the dispute shall be submitted to the
Independent Accountant in accordance with Section 1.4(b)(i) and the
Independent Accountant's determination shall be incorporated into the Draft
Form 8594. The Draft Form 8594 as agreed to by the parties or determined by
the Independent Accountant shall be the final Form 8594 (the "Final Form
8594") shall be attached to both Seller's and Buyer's U.S. Corporate Income
Tax Return for the tax year which includes the sale of the Total United
States Assets. If the Purchase Price allocable to the Total United States
Assets is adjusted after the Closing Date, the parties agree to revise and
amend any agreed Schedule and their respective IRS Form 8594 in the same
manner and according to the same procedure set forth above.
(iii) Purchaser and each Purchasing Affiliate and Seller and each
Selling Affiliate shall follow procedures similar to the procedures set
forth in Section 1.4(b)(ii) with respect to any reporting required by any
non-U.S. Taxing Authority similar in nature to the requirements of Section
1060 of the Code and IRS Form 8594.
(iv) The determination of the Purchase Price and the allocation of the
Purchase Price Consideration among the Total Acquired Assets set forth in
this Section 1.4(b) shall be binding on Purchaser and each Purchasing
Affiliate and Seller and each Selling Affiliate for all tax reporting
purposes. Neither party shall take a position on any Tax Return, before any
Taxing Authority charged with the collection of any such Tax, or in any
judicial proceeding, that is in any manner inconsistent with the terms of
such determination and allocation without the consent of the other party,
which consent shall not be unreasonably withheld.
(c) Adjustment of Cash Purchase Price. The Cash Purchase Price shall be
subject to adjustment as follows:
(i) At the Closing, Seller shall deliver to Purchaser a Statement of
Estimated Closing Net Assets of the Business dated as of the Closing Date
(the "Statement of Estimated Closing Net Assets"). The Statement of
Estimated Closing Net Assets shall be prepared by Seller in accordance with
GAAP as modified by the Accounting Policies determined pursuant to Section
14.14 (the "Accounting Policies"), and will include an adjustment for any
compensation payments pursuant to Section 9.1(b), but any Liabilities or
Losses associated with Print Head Drift shall be excluded for all balance
sheet and Cash Purchase Price adjustment purposes. The Statement of
Estimated Closing Net Assets above shall be accompanied by a statement
signed by the President or a Vice President of Seller setting forth the
AMENDED ASSET PURCHASE AGREEMENT
20
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amount, if any, by which the Estimated Closing Net Asset Value is greater
than, or less than, the Target Amount. The Statement of Estimated Closing
Net Assets shall also be accompanied by work papers setting forth the
calculations showing the basis for the determination of such sums. For
purposes of this Agreement, "Target Amount" shall mean Three Hundred Seven
Million Dollars ($307,000,000.00). If the Estimated Closing Net Asset Value
is greater than or equal to Three Hundred Two Million Dollars
($302,000,000.00) and less than or equal to Three Hundred Twelve Million
Dollars ($312,000,000.00), there shall be no adjustment in the Cash
Purchase Price. In the event that the Estimated Closing Net Asset Value is
(A ) less than Three Hundred Two Million Dollars ($302,000,000.00), then
the Cash Purchase Price shall be decreased by an amount equal to the amount
by which the Estimated Closing Net Asset Value is less than Three Hundred
Seven Million Dollars ($307,000,000.00), or (B) greater than Three Hundred
Twelve Million Dollars ($312,000,000.00), then the Cash Purchase Price
shall be increased by an amount equal to the amount by which the Estimated
Closing Net Asset Value exceeds Three Hundred Seven Million
($307,000,000.00).
(ii) Within ninety (90) days after the Closing Date, Purchaser will
prepare and deliver to Seller (X) a statement by which Purchaser accepts
Seller's Estimated Closing Net Asset Value in which case Estimated Closing
Net Asset Value will be deemed to be the Closing Net Asset Value and there
will be no further adjustments to the Cash Purchase Price, or (Y) in the
event that Purchaser does not accept Seller's Estimated Closing Net Asset
Value, a Statement of Closing Net Assets, together with an unqualified
report of KPMG thereon, setting forth the calculation of the Closing Net
Asset Value. The Statement of Closing Net Assets shall be prepared by
Purchaser in accordance with GAAP as modified by the Accounting Policies.
The Statement of Closing Net Assets shall be accompanied by a statement
signed by the Chief Financial Officer or a Vice President of Purchaser
setting forth the amount, if any, by which the Closing Net Asset Value is
greater than, or less than, the Target Amount and the amount, if any, by
which the Closing Net Asset Value is greater than, or less than, the
Estimated Closing Net Asset Value. The Statement of Closing Net Assets
shall also be accompanied by work papers setting forth the calculations
showing the basis for the determination of such sums. Subject to adjustment
pursuant to the resolution of any disputes in accordance with Section
1.4(c)(iv), the Cash Purchase Price shall be finally adjusted as follows:
(A) If the Closing Net Asset Value is greater than or equal to
Three Hundred Two Million Dollars ($302,000,000.00) and less than or
equal to Three Hundred Twelve Million Dollars ($312,000,000.00), there
shall be no adjustment in the Cash Purchase Price (notwithstanding any
adjustments made to the Cash Purchase Price in accordance with Section
1.4(c)(i) and rendering any such adjustments null, void and of no
effect whatsoever);
AMENDED ASSET PURCHASE AGREEMENT
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(B) If the Closing Net Asset Value is less than Three Hundred Two
Million Dollars ($302,000,000.00), then the Cash Purchase Price shall
be decreased by an amount equal to the amount by which the Closing Net
Asset Value is less than Three Hundred Seven Million Dollars
($307,000,000.00) (notwithstanding any adjustments made to the Cash
Purchase Price in accordance with Section 1.4(c)(i) and rendering any
such adjustments null, void and of no effect whatsoever); or
(C) If the Closing Net Asset Value is greater than Three Hundred
Twelve Million Dollars ($312,000,000.00), then the Cash Purchase Price
shall be increased by an amount equal to the amount by which the
Closing Net Asset Value exceeds Three Hundred Seven Million
($307,000,000.00) (notwithstanding any adjustments made to the Cash
Purchase Price in accordance with Section 1.4(c)(i) and rendering any
such adjustments null, void and of no effect whatsoever).
(iii) Purchaser and Seller agree that each of them will, and will
respectively cause KPMG and Deloitte & Touche to, cooperate and assist in
the preparation of the Statement of Closing Net Assets and the calculation
of the Closing Net Asset Value and in the conduct of the audits, reviews,
inventories and inspections to be undertaken in connection with the
preparation of the Statement of Closing Net Assets, including but not
limited to making available such Books and Records, work papers, facilities
and personnel as may be necessary.
(iv) In the event that Seller, in good faith, disputes the Statement
of Closing Net Assets or the calculation of the Closing Net Asset Value,
Seller shall notify Purchaser in writing (the "Dispute Notice") setting
forth in detail the items, amount, nature and basis of such dispute, within
thirty (30) Business Days after delivery of the Statement of Closing Net
Assets, accompanied by a report of Deloitte & Touche stating that such firm
concurs with Seller's assertions in the Dispute Notice. In the event of
such dispute, Seller and Purchaser shall first use their diligent good
faith efforts to resolve such dispute between themselves. If the parties
are unable to resolve any items in dispute within twenty (20) Business Days
after delivery of the Dispute Notice, then such unresolved items in dispute
shall be submitted to an independent nationally recognized accounting firm
other than KPMG, Deloitte & Touche, PWC or Arthur Andersen and with no
material relationship to either Seller or Purchaser, such firm to be
mutually agreed upon by Seller and Purchaser or, if the Seller and
Purchaser fail to agree upon or refuse to select such a firm within ten
(10) calendar days after written request therefor by either of them, such
an independent nationally recognized accounting firm shall be selected by
Seller and Purchaser in accordance with the rules of the American
Arbitration Association then in effect (such accounting firm shall be
referred to as the "Arbitrator"). Within forty-five (45) Business Days, the
Arbitrator shall determine the remaining disputed items and report to the
Seller and Purchaser in writing with respect to such items. The Arbitrator
shall, in connection with the
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resolution of any such dispute, have access to all Books and Records,
documents, records, work papers, facilities and personnel necessary to
perform its functions as arbitrator. The Arbitrator's decision shall be in
writing and shall be final, conclusive and binding on all parties. A
judgment on the determination made by the Arbitrator pursuant to this
Section 1.4(c)(iv) may be entered into and enforced by any court of
appropriate jurisdiction.
(v) The fees and expenses of the Arbitrator in connection with the
resolution of disputes pursuant to Section 1.4(c)(iv) shall be (A) borne
equally by Seller and Purchaser if and to the extent that the Arbitrator
determines Seller and Purchaser should each be awarded one-half of the
total amount of the items in dispute, or (B) borne by Seller and/or
Purchaser in inverse proportion to the amount that the Arbitrator's award
in favor of Seller and/or Purchaser bears to the total amount of the items
in dispute (for illustration purposes for this Section 1.4(c)(v) only, (X)
if the total amount of items in dispute by Seller is $1,000,000.00, and
Seller is awarded $500,000.00 by the Arbitrator, Seller and Purchaser shall
bear the Arbitrator's fees and expenses equally, or (Y) if the total amount
of items in dispute by Seller is $1,000,000.00, and Seller is awarded
$250,000.00 by the Arbitrator, Seller shall bear 75% and Purchaser shall
bear 25% of the Arbitrator's fees and expenses).
(vi) Within five (5) Business Days following the final determination
of the Closing Net Asset Value whether by (A) Purchaser's acceptance of
Seller's Estimated Closing Net Asset Value, or Purchaser's failure to
accept Seller's Estimated Closing Net Asset Value or submit a Statement of
Closing Net Assets within the 90-day period prescribed by Section
1.4(c)(ii), (B) the expiration of the thirty (30) Business Day period for
giving the Dispute Notice, if no Dispute Notice is given, or (C) the
resolution of any disputes pursuant to Section 1.4(c)(iv), the parties
shall make the final post-Closing adjustments to the Cash Purchase Price in
accordance with Section 1.4(c)(ii) and the amount, if any, of any such
adjustment shall be paid to the party entitled to receive same by wire
transfer in immediately available funds to such account as may be
designated by such party.
1.5 Closing.
(a) The Closing will take place at the offices of Stoel Rives LLP, 900 SW
Fifth Avenue, Portland, Oregon, or at such other place as Purchaser and Seller
mutually agree, at 10:00 A.M. local time, on the Closing Date. The closing of
the sales of the Non-United States Purchased Assets described in Section 1.3
pursuant to the Ancillary Agreements (each, a "Foreign Closing"; collectively,
the "Foreign Closings") shall occur at such place as specified in the relevant
Ancillary Agreement or at such other place as Purchaser and Seller mutually
agree, at 10:00 A.M., on the respective Foreign Closing Dates as specified in
this Section 1.5. The Foreign Closings relating to (i) the sale of the
Non-United States Purchased Assets in (A) France, (B) Germany, (C) the United
Kingdom, (D) Italy, (E) The Netherlands, (F) Belgium and (G) Australia and (ii)
the sale of the capital stock and other
AMENDED ASSET PURCHASE AGREEMENT
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equity or ownership interests owned by Seller or a Selling Affiliate in
Tektronix Malaysia Sdn. Bhd. (each, a "Significant Foreign Closing";
collectively, "Significant Foreign Closings") shall occur concurrently with the
Closing. All other Foreign Closings shall occur concurrently with the Closing or
as soon as practicable after the satisfaction of the conditions set forth in
Article 6 or the applicable Ancillary Agreements. With respect to the Closing
and each Foreign Closing, each shall be deemed to be effective as of 12:01 A.M.,
local time, at the places where the Purchased Assets are located on the Closing
Date or on the date on which such Foreign Closing shall occur (the "Foreign
Closing Date"). Seller and Purchaser may mutually agree to terminate this
Agreement with respect to any Foreign Closing which has not occurred by the
anniversary of the Closing Date.
(b) At the Closing or a Foreign Closing, Purchaser will pay, or will cause
the designated Purchasing Affiliate to pay the Cash Purchase Price, as allocated
in accordance with Section 1.4(b) by wire transfer of immediately available
funds to such account of Seller or the Selling Affiliate as Seller may
reasonably direct by written notice delivered to Purchaser by Seller at least
two (2) Business Days before the Closing Date. For the purpose of paying the
Cash Purchase Price all amounts paid to Seller and to each Selling Affiliate
shall be payable in United States dollars unless otherwise provided in the
relevant Ancillary Agreement. Simultaneously, (a) Seller or the relevant Selling
Affiliate will assign and transfer to Purchaser or the relevant Purchasing
Affiliate good and valid title in and to the Total Acquired Assets (free and
clear of all Liens, other than Permitted Liens) by delivery of (i) a General
Assignment and Bill of Sale in form and substance reasonably acceptable to
Purchaser and Seller (the "General Assignment"), duly executed by Seller or the
Selling Affiliate, as the case may be, (ii) special statutory, or grant deeds or
similar instruments in proper statutory form for recording and otherwise in form
and substance reasonably satisfactory to Purchaser conveying title to the Real
Property and (iii) such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance reasonably acceptable to
Purchaser, as shall be effective to vest in Purchaser or the relevant Purchasing
Affiliate good title to the Total Acquired Assets (the General Assignment and
the other instruments referred to in clauses (ii) and (iii) being collectively
referred to herein as the "Assignment Instruments"), and (b) Purchaser or the
relevant Purchasing Affiliate will deliver to Seller or the relevant Selling
Affiliate valid resale certificates or the equivalent thereof where applicable
and will assume from Seller or the relevant Selling Affiliate the due payment,
performance and discharge of the Assumed Liabilities by delivery of (i) an
Assumption Agreement in form and substance reasonably acceptable to Seller and
Purchaser (the "Assumption Agreement"), duly executed by Purchaser or the
relevant Purchasing Affiliate, as the case may be, and (ii) such other good and
sufficient instruments of assumption, in form and substance reasonably
acceptable to Seller and Purchaser, as shall be effective to cause Purchaser or
the relevant Purchasing Affiliate to assume the Assumed Liabilities as and to
the extent provided in Section 1.2(a) (the Assumption Agreement and such other
instruments referred to in clause (ii) being collectively referred to herein as
the "Assumption Instruments"). At the Closing or the applicable Foreign Closing,
there shall also be delivered to Seller and Purchaser the opinions, certificates
and other contracts, documents and instruments required to be
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delivered under Articles 6 and 7.
1.6 Prorations. The following prorations relating to the Purchased Assets
and the ownership and operation of the Business will be made as of the Closing
Date or the applicable Foreign Closing Date, with Seller or the relevant Selling
Affiliate liable to the extent such items relate to any time period prior to the
Closing Date or the applicable Foreign Closing Date, and Purchaser or the
relevant Purchasing Affiliate liable to the extent such items relate to periods
beginning with and subsequent to the Closing Date or the applicable Foreign
Closing Date:
(a) Subject to Section 8.6, Real Property Taxes, assessments and bonds on
or with respect to the Purchased Assets.
(b) Rents, additional rents, operating expense passthroughs, taxes and
other items payable by Seller under the Real Property Leases.
(c) The amount of rents, issues and profits from the Real Property and
charges for sewer, water, telephone, electricity and other utilities relating to
the Real Property and the real property subject to the Real Property Leases.
(d) All other items (excluding personal property taxes and other Taxes)
normally adjusted in connection with similar transactions in similar localities.
Except as otherwise agreed by the parties, the net amount of all such prorations
will be settled and paid on the Closing Date or the applicable Foreign Closing
Date.
1.7 Further Assurances; Post-Closing Cooperation. At any time or from time
to time after the Closing, at Purchaser's reasonable request and without further
consideration, Seller shall, or shall cause the Selling Affiliates to, execute
and deliver to Purchaser or the relevant Purchasing Affiliate such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser or the relevant Purchasing Affiliate, and to
confirm Purchaser's or the Purchasing Affiliates' title to, all of the Purchased
Assets, and, to the full extent permitted by Law, to put Purchaser and the
Purchasing Affiliates in actual possession and operating control of the Business
and the Purchased Assets and to assist Purchaser and the Purchasing Affiliates
in exercising all rights with respect thereto, and otherwise to cause Seller and
Seller's Affiliates to fulfill its and their respective obligations under this
Agreement, the Ancillary Agreements and the Operative Agreements.
(b) (b) Effective on the Closing Date, Seller hereby constitutes and
appoints Purchaser the true and lawful attorney of Seller, and shall cause the
Selling Affiliates to constitute and appoint the relevant Purchasing Affiliates,
with full power of substitution, in the name of Seller, the Selling Affiliates,
Purchaser or the Purchasing Affiliates, but on behalf of and for the benefit of
Purchaser and the Purchasing Affiliates: (i) to demand and
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receive from time to time any and all of the Purchased Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and settle any and
all Actions or Proceedings that Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Purchased
Assets; (iii) to defend or compromise any or all Actions or Proceedings in
respect of any of the Purchased Assets; and (iv) to do all such acts and things
in relation to the matters set forth in the preceding clauses (i) through (iii)
as Purchaser shall deem desirable. Seller hereby acknowledges, and shall cause
each Selling Affiliate to acknowledge, that the appointment hereby made and the
powers hereby granted are coupled with an interest and are not and shall not be
revocable by it or by any Selling Affiliate in any manner or for any reason.
Seller shall deliver to Purchaser at Closing an acknowledged power of attorney
to the foregoing effect executed by Seller and shall cause each Selling
Affiliate to deliver same to Purchaser or to a designated Purchasing Affiliate.
Purchaser shall indemnify and hold harmless Seller from any and all Losses
caused by or arising out of any breach of any Laws by Purchaser or the
Purchasing Affiliates in its or their exercise of such powers of attorney.
(c) Seller and Purchaser agree, and shall respectively cause the Selling
Affiliates and Purchasing Affiliates to agree, for the greater of six (6) years
after the Closing Date (or any later Foreign Closing Date) or sixty (60) days
after the expiration of any applicable statute of limitations, as extended, not
to destroy or otherwise dispose of any Books and Records and other data relating
to the Business in its possession with respect to periods prior to the Closing
and unless such party shall first offer in writing to surrender such Books and
Records and other data to the other party and such other party fails to agree in
writing to take possession thereof during the thirty (30) day period after such
offer is made.
(d) If, in order properly to prepare documents or reports required to be
filed with any Governmental or Regulatory Authorities or its financial
statements or to fulfill its obligations hereunder, it is necessary that a party
requests that it be furnished with information, documents or records relating to
the Business prior to the Closing, and such information, documents or records
are in the possession or control of the other party, such other party shall use
commercially reasonable efforts to furnish or make available such information,
documents or records (or copies thereof) at the recipient's request, cost and
expense. Any information obtained by a party in accordance with Sections 1.7(c)
or (d) shall be held confidential by such party.
(e) Notwithstanding anything to the contrary contained in this Section 1.7,
if the parties are in an adversarial relationship in litigation or arbitration,
the furnishing of information, documents or records in accordance with Sections
1.7(c) or (d) shall be subject to applicable rules relating to discovery.
1.8 Third-Party Consents. To the extent that any Business Contract,
Business License, Real Property Lease or Personal Property Lease is not
assignable without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach
AMENDED ASSET PURCHASE AGREEMENT
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<PAGE>
thereof. Seller and Purchaser shall, and shall respectively cause the Selling
Affiliates and the Purchasing Affiliates to, use commercially reasonable efforts
to obtain the consent of such other party to the assignment of any such Business
Contract, Business License, Real Property Lease or Personal Property Lease to
Purchaser or to a designated Purchasing Affiliate in all cases in which such
consent is or may be required for such assignment; provided, however, that none
of Seller, any Selling Affiliate, Purchaser or any Purchasing Affiliate shall be
required to make any payments to any third parties to obtain any such consents.
If any such consent shall not be obtained, Seller shall, or shall cause the
relevant Selling Affiliate to, cooperate with Purchaser or the relevant
Purchasing Affiliate in any reasonable arrangement designed to provide for
Purchaser or such Purchasing Affiliate the material benefits intended to be
assigned under the relevant Business Contract, Business License, Real Property
Lease or Personal Property Lease including enforcement at the cost and for the
account of Purchaser or the Purchasing Affiliate of any and all rights of Seller
or a Selling Affiliate against the other party thereto arising out of the breach
or cancellation thereof by such other party or otherwise. The provisions of this
Section 1.8 shall not affect the right of Purchaser not to consummate the
transactions contemplated by this Agreement if the condition to its obligations
hereunder contained in Section 6.7 has not been fulfilled.
1.9 Insurance Proceeds. If any of the Purchased Assets are destroyed or
damaged or taken in condemnation, the insurance proceeds or condemnation award
with respect thereto shall be a Purchased Asset. At the Closing or the
applicable Foreign Closing Date, Seller shall, or shall cause the relevant
Selling Affiliate to, pay or credit to Purchaser or the relevant Purchasing
Affiliate any such insurance proceeds or condemnation awards received by it on
or prior to the Closing or the applicable Foreign Closing, as the case may be,
and shall, or shall cause the relevant Selling Affiliate to, assign to or assert
for the benefit of Purchaser or the relevant Purchasing Affiliate all of its
rights against any insurance companies, Governmental or Regulatory Authorities
and others with respect to such damage, destruction or condemnation. As and to
the extent that there is available insurance under policies maintained by Seller
and any Selling Affiliate, or any predecessors and successors in respect of any
Assumed Liability, except for any such insurance proceeds with respect to which
the insured is directly or indirectly self-insured or has agreed to indemnify
the insurer, Seller shall cause such insurance to be applied toward the payment
of such Assumed Liability. The provisions of this Section 1.9 shall not affect
the right of Purchaser not to consummate the transactions contemplated by this
Agreement if the conditions to its obligations hereunder contained in Article 6
have not been fulfilled.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, for itself and on behalf of each of the Selling Affiliates, hereby
represents and warrants to Purchaser as follows:
2.1 Organization of Seller and the Selling Affiliates. Seller and each
Selling
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Affiliate is a corporation duly organized, validly existing and in good standing
(to the extent the concepts of valid existence and good standing exist in the
relevant jurisdiction) under the Laws of the jurisdiction applicable thereto as
set forth in Section 2.1 of the Disclosure Schedule, and has full corporate
power and authority to conduct the Business as and to the extent now conducted
and to own, use and lease the Purchased Assets and Purchased Intellectual
Property. In connection with its conduct of the Business, Seller and each
Selling Affiliate is duly qualified or otherwise authorized to transact business
and is in good standing (to the extent the concept of good standing exists in
the relevant jurisdiction) in each jurisdiction in which such qualification or
authorization is required by applicable Laws. Notwithstanding the foregoing,
there shall be no breach of this Section 2.1 where the failure of the Seller or
the Selling Affiliates to be in good standing (to the extent the concept of good
standing exists in the relevant jurisdiction), in the aggregate, are not
reasonably likely to have a material adverse effect on (a) the Condition of the
Business, or (b) on the timely performance by Seller of the transactions
contemplated by this Agreement.
2.2 Authority. Seller and each Selling Affiliate has full corporate power
and authority to execute and deliver this Agreement, the Ancillary Agreements
and the Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to sell and transfer (pursuant to this
Agreement) the Total Acquired Assets. The execution and delivery by Seller and
each Selling Affiliate of this Agreement, the Ancillary Agreements and the
Operative Agreements to which it is a party, and the performance by Seller and a
Selling Affiliate of its obligations hereunder and thereunder, have been duly
and validly authorized by the respective Boards of Directors of Seller or the
Selling Affiliate, no other corporate action on the part of Seller or a Selling
Affiliate, or their respective shareholders, being necessary. This Agreement has
been duly and validly executed and delivered by Seller and constitutes, and upon
the execution and delivery by Seller and the Selling Affiliates of the Ancillary
Agreements and the Operative Agreements to which it is a party, such Ancillary
Agreements and Operative Agreements will constitute, legal, valid and binding
obligations of Seller and the Selling Affiliates, as the case may be,
enforceable against them in accordance with their respective terms, except as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
2.3 No Conflicts. The execution and delivery by Seller of this Agreement do
not, and the execution and delivery by Seller and the Selling Affiliates of the
Ancillary Agreements and the Operative Agreements to which it is a party, the
performance by Seller and the Selling Affiliates of its and their respective
obligations under such Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the articles of incorporation or by-laws (or other
comparable corporate charter documents) of Seller or of a Selling Affiliate;
AMENDED ASSET PURCHASE AGREEMENT
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(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Section 2.4 of the Disclosure
Schedule, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Seller, a Selling Affiliate or any
of its or their respective Assets and Properties; or
(c) except as disclosed in Section 2.3 of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require Seller
or any Selling Affiliate to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in the creation or imposition of any Lien upon Seller, a Selling
Affiliate or any of their respective Assets and Properties under, (v) result in
or give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (vi) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, any Contract or License to which Seller or a Selling
Affiliate is a party or by which any of its Assets and Properties is bound,
except for such violation, breach, default, loss, requirement, creation, right
or entitlement that could not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Condition of the Business or
could not be reasonably expected, individually or in the aggregate, to
materially impair the ability of Seller or a Selling Affiliate to perform its
obligations under this Agreement or any of the Ancillary Agreements or Operative
Agreements or otherwise materially impair the consummation of the transactions
contemplated by this Agreement or any of the Ancillary Agreements or Operative
Agreements.
2.4 Governmental Approvals and Filings. Except for the HSR Act filing and
other antitrust filings described in Section 4.2 and except as disclosed in
Section 2.4 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Seller or any Selling Affiliate is required in connection with the execution,
delivery and performance of this Agreement, any of the Ancillary Agreements or
any of the Operative Agreements to which it is a party or the consummation of
the transactions contemplated hereby or thereby.
2.5 Books and Records. All of the material Business Books and Records are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are under the exclusive ownership and direct control of
Seller.
2.6 Financial Statements. Prior to the execution of this Agreement, Seller
has delivered to Purchaser true and complete copies of the following financial
statements:
(a) the unaudited statement of net assets to be transferred of the Division
as of May 31, 1997, May 30, 1998, and May 29, 1999, and the related unaudited
statement of operations for each of the fiscal years then ended, copies of each
of which are attached hereto as Section 2.6(a) of the Disclosure Schedule; and
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(b) the unaudited statement of net assets to be transferred of the Division
as of August 28, 1999, and the related unaudited statement of operations data
for the portion of the fiscal year then ended, copies of which are attached
hereto as Section 2.6(b) of the Disclosure Schedule.
Except as disclosed in Section 2.6 of the Disclosure Schedule, (i) all such
financial statements were prepared and, with respect to the Acquisition Balance
Sheet, was prepared from the Books and Records of Seller which are maintained on
a GAAP basis, (ii) all such financial statements and the Acquisition Balance
Sheet fairly present the financial condition and results of operations of the
Division as of the respective dates thereof and for the respective periods
covered thereby, and (iii) all such financial statements and the Acquisition
Balance Sheet were compiled from Business Books and Records regularly maintained
by management and used to prepare the financial statements of Seller in
accordance with the principles stated in Seller's consolidated financial
statements relating to such periods. Seller has maintained the Business Books
and Records in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP, the Business Books and Records fairly
reflect the income, expenses, assets and liabilities of the Business and the
Business Books and Records provided a fair and accurate basis for the
preparation of the Financial Statements delivered to Purchaser in accordance
with this Section 2.6.
2.7 Absence of Changes. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date or the applicable Foreign Closing Date, since the date of the
Acquisition Balance Sheet there has not been any material adverse change, or any
event or development which, individually or together with other such events,
could reasonably be expected to result in a material adverse change, in the
Condition of the Business. Without limiting the foregoing, except as disclosed
in Section 2.7 of the Disclosure Schedule, there has not occurred, between the
date of the Acquisition Balance Sheet and the date of this Agreement, any of the
following:
(a) (i) any increase in the salary, wages or other compensation of any
Employee whose annual salary is, or after giving effect to such change would be,
$100,000 or more; (ii) any establishment or modification of (A) targets, goals,
pools or similar provisions in respect of any fiscal year under any Benefit Plan
or any employment-related Contract or other compensation arrangement with or for
Employees or (B) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan or any employment-related Contract or other
compensation arrangement with or for Employees; or (iii) any adoption, entering
into or becoming bound by any Benefit Plan, employment-related Contract or
collective bargaining agreement, or amendment, modification or termination
(partial or complete) of any Benefit Plan, employment-related Contract or
collective bargaining agreement, except to the extent required by applicable Law
and, in the event compliance with legal requirements presented options, only to
the extent the option which Seller or the relevant Selling Affiliate, as the
case may be, reasonably believed to be the least costly was chosen; except, in
any case under this Section 2.7(a), in the ordinary course of business or as
Seller or any Selling Affiliate otherwise deems reasonably necessary to respond
to
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competitive situations;
(b) (i) incurrences by Seller or a Selling Affiliate of Indebtedness with
respect to the conduct of the Business that was incurred not in the ordinary
course of business consistent with past practices or, with respect to
Indebtedness incurred in the ordinary course of business, is in an aggregate
principal amount exceeding $5,000,000 (net of any amounts discharged during such
period), or (ii) any voluntary purchase, cancellation, prepayment or complete or
partial discharge in advance of a scheduled payment date with respect to, or
waiver of any right of Seller or a Selling Affiliate under, any Indebtedness of
or owing to Seller or such Selling Affiliate with respect to the conduct of the
Business;
(c) any physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of Assets or Properties of Seller or a
Selling Affiliate primarily used or held for use in the conduct of the Business,
taken as a whole, in an aggregate amount exceeding $1,000,000;
(d) any (A) material change in any pricing, credit or allowance, or (B)
change in any investment, accounting, financial reporting, inventory, or Tax
practice or policy of the Business or (C) change in any method of calculating
any bad debt, contingency or other reserve of the Business for accounting,
financial reporting or Tax purposes;
(e) (i) any acquisition or disposition of any Assets and Properties used or
held for use in the conduct of the Business, other than in the ordinary course
of business consistent with past practice; or (ii) any creation or incurrence of
a Lien, other than a Permitted Lien, on any Assets and Properties used or held
for use in the conduct of the Business;
(f) any entering into, amendment, modification, termination (partial or
complete) or granting of a waiver under or giving any consent with respect to
(A) any Contract which is required (or had it been in effect on the date hereof
would have been required) to be disclosed in the Disclosure Schedule pursuant to
Section 2.16(a) or (B) any License, made otherwise than in the ordinary course
of business;
(g) capital expenditures or commitments for additions to property, plant or
equipment used or held for use in the conduct of the Business constituting
capital assets other than in the ordinary course of business;
(h) any transaction with any officer, director, Affiliate or Associate of
Seller or a Selling Affiliate, or any Associate of any such officer, director or
Affiliate (A) outside the ordinary course of business consistent with past
practice or (B) other than on an arm's-length basis;
(i) any entering into of a Contract to do or engage in any of the foregoing
after the date hereof;
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(j) any other material transaction involving or development affecting the
Business or the Total Acquired Assets outside the ordinary course of business
consistent with past practice;
(k) any material acquisitions, sales or other dispositions of (or
commitments for such acquisition, sale or disposition of) any Products, or any
parts, components, supplies or accessories related thereto, that are materially
in excess of standard industry practices, that are other than in the ordinary
course of business or that are other than on an arm's-length basis;
(l) any Epidemic Failures in connection with any Products or any parts,
components, supplies or accessories related thereto.
2.8 No Undisclosed Liabilities. To the Knowledge of Seller, except as
reflected or reserved against in the Acquisition Balance Sheet or as disclosed
in the Disclosure Schedule, there are no material Liabilities against, relating
to or affecting the Business or any of the Total Acquired Assets, other than
Liabilities incurred in the ordinary course of business consistent with past
practice.
2.9 Taxes. Except as disclosed in Section 2.9 of the Disclosure Schedule
(with paragraph references corresponding to those set forth below):
(a) Seller and each Selling Affiliate has duly and timely filed all Tax
Returns required to be filed by or on behalf of or with respect to Seller and
each Selling Affiliate with respect to all Taxes Which May Give Rise To Any
Transferee Tax Liability with the appropriate Taxing Authorities in all
jurisdictions in which such Tax Returns are required to be filed. All such Tax
Returns are true, correct and complete in all material respects. No penalties or
other charges are or will become due with respect to any such Tax Returns as the
result of the late filing thereof.
(b) Seller and each Selling Affiliate: (i) has paid all Taxes Which May
Give Rise To Any Transferee Tax Liability due or claimed to be due from Seller
or any Selling Affiliate by any Taxing Authority in connection with any taxable
period prior to the Closing Date or the applicable Foreign Closing Date,
including any deficiencies arising from any audit (without regard to whether or
not such Taxes are shown as due on any Tax Returns, including any estimated tax
payments or similar charge), or (ii) has established in the Financial Statements
provided to Purchaser adequate reserves (in conformity with generally accepted
accounting principles consistently applied) for the payment of such Taxes.
(c) Seller and each Selling Affiliate that is transferring Real Property or
Real Property Leases to Purchaser or Purchasing Affiliates pursuant to this
Agreement has duly and timely filed all Tax Returns with respect to any Real
Property Taxes required to be filed on or before the Closing Date or the
applicable Foreign Closing Date by or on behalf of or with respect to Seller and
each Selling Affiliate with the appropriate Taxing Authorities in all
jurisdictions in which such Tax Returns are required to be filed regardless of
when the
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Real Property Taxes thereunder are due. All such Tax Returns are true, correct
and complete in all material respects. No penalties or other charges are or will
become due with respect to any such Tax Returns as the result of the late filing
thereof. Seller and each Selling Affiliate has paid all Real Property Taxes due
or claimed to be due from Seller or any Selling Affiliate by any Taxing
Authority with respect to such Real Property for all taxable periods prior to
the Closing Date or the applicable Foreign Closing Date, except for any Real
Property Taxes which are not yet due and payable.
(d) Seller and each Selling Affiliate that is transferring Purchased Assets
other than Real Property pursuant to this Agreement has duly and timely filed
all Tax Returns with respect to any Taxes on such Purchased Assets required to
be filed on or before the Closing Date or the applicable Foreign Closing Date by
or on behalf of or with respect to Seller and each Selling Affiliate with the
appropriate Taxing Authority in all jurisdictions in which such Tax Returns are
required to be filed regardless of when the Taxes on such Purchased Assets are
due. All such Tax Returns are true, correct and complete in all respects. No
penalties or other charges are or will become due with respect to any such Tax
Returns as the result of a late filing thereof. Seller and each Selling
Affiliate that is transferring any Purchased Assets pursuant to this Agreement
has paid all Taxes due or claimed to be due from Seller or any Selling Affiliate
by any Taxing Authority with respect to such Purchased Assets for all taxable
periods prior to the Closing Date or the applicable Foreign Closing Date, except
for any Taxes on such Purchased Assets which are not yet due and payable.
(e) Seller and each Selling Affiliate has no actual or potential Liability
for any Tax of any Person other than Seller and each Selling Affiliate which Tax
could be included in the Assumed Real Property Taxes or is a Tax Which May Give
Rise To Any Transferee Tax Liability.
(f) Seller and each Selling Affiliate has complied in all respects with all
applicable laws, rules and regulations relating to the withholding and payment
of any Taxes Which May Give Rise To Any Transferee Tax Liability, have duly and
timely withheld and/or collected all Taxes Which May Give Rise To Any Transferee
Tax Liability that Seller and each Selling Affiliate has been required to
withhold and/or collect and, to the extent required, have duly and timely paid
such Taxes Which May Give Rise To Any Transferee Tax Liability over to the
proper Taxing Authority.
(g) Any audit, examination or investigation of any Tax Returns of Seller
and of each Selling Affiliate which occurred prior to the date hereof with
respect to any Taxes Which May Give Rise To Any Transferee Tax, has resulted in
no adjustment or changes or has been settled to the satisfaction of the
respective Taxing Authority and, to the Knowledge of Seller, there is no current
audit, examination, or investigation by any Taxing Authority of Seller or any
Selling Affiliate in progress nor has Seller or any Selling Affiliate received
any notice from any Taxing Authority (or otherwise have any knowledge) that any
Taxing Authority intends to conduct such an audit, examination or investigation
relating to any Assumed Real Property Taxes or Taxes Which May Give Rise To Any
Transferee Tax
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Liability. For purposes of this Section 2.9(g), "Knowledge of Seller" shall mean
the actual knowledge of Brian Unruh, Director of Corporate Tax and Acting
Corporate Controller, Lisa Prentice, Director of Operations and Americas and
Pacific Controller, and Sue Kirby, Director of Operations and EAME Controller.
(h) To the Knowledge of Seller, no issue has been raised by any Taxing
Authority in any current or prior examination which, by application of the same
or similar principles, could reasonably be expected to result in a proposed
deficiency for any subsequent taxable period of Seller or any Selling Affiliate
pursuant to this Agreement relating to any Assumed Real Property Taxes or Taxes
Which May Give Rise To Any Transferee Tax Liability. For purposes of this
Section 2.9(h), "Knowledge of Seller" shall mean the actual knowledge of Brian
Unruh, Director of Corporate Tax and Acting Corporate Controller, Lisa Prentice,
Director of Operations and Americas and Pacific Controller, and Sue Kirby,
Director of Operations and EAME Controller.
(i) There is no action, suit, proceeding, or claim pending or, to the
Knowledge of Seller or any Selling Affiliate, threatened in respect of any
Assumed Real Property Taxes or Taxes Which May Give Rise To Any Transferee Tax
Liability.
(j) Neither Seller nor any Selling Affiliate has consented to any waivers
or extensions of any statute of limitations with respect to any taxable year or
other period relating to any Assumed Real Property Taxes or Taxes Which May Give
Rise To Any Transferee Tax Liability. There is no agreement, waiver or consent
providing for an extension of time with respect to the assessment or collection
of any Assumed Real Property Taxes or Taxes Which May Give Rise To Any
Transferee Tax Liability against Seller or any Selling Affiliate.
(k) There are no Tax Liens on any of the Purchased Assets other than with
respect to Real Property Taxes not yet delinquent.
(l) Neither Seller nor any Selling Affiliate is subject to any private
letter rulings of the IRS or comparable rulings of any other Taxing Authority
with respect to any Purchased Assets or Assumed Liabilities.
(m) Neither Seller nor any Selling Affiliate has made any request for a
ruling from the IRS or other Taxing Authority with respect to any Purchased
Assets or Assumed Liabilities which is currently pending.
(n) Neither Seller nor any Selling Affiliate has entered into any closing
agreement with the IRS pursuant to Section 7121 of the Code or comparable
agreement with any other Taxing Authority with respect to any Taxes Which May
Give Rise To Any Transferee Tax Liability.
(o) None of the Non-United States Purchased Assets to be transferred by the
Selling Affiliates is a "United States real property interest," within the
meaning of Section
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897(c) of the Code.
(p) As of the Closing Date or the applicable Foreign Closing Date, Seller
and each of the Selling Affiliates shall have made all payments of VAT (as
defined herein) due and payable with respect to the conduct of Business, shall
have filed all returns and reports required to have been filed prior to such
Closing Date or the applicable Foreign Closing Date and shall have complied with
all applicable provisions relating to VAT.
(q) None of the United States Assets constitutes (i) "tax exempt use
property" within the meaning of Section 168(h)(1) of the Code, or (ii)
"tax-exempt use bond financed property" within the meaning of Section 168(g) of
the Code.
(r) Neither Seller nor any Selling Affiliate that is selling Purchased
Assets pursuant to this Agreement has made any payment, nor are they or any one
of them obligated to make any payment, nor are they or any one of them a party
to an agreement which, upon the satisfaction of certain events or conditions,
will obligate them to make a payment which would be subject to Section 280G of
the Code which payment is included directly or indirectly in the Assumed
Liabilities.
(s) Neither Seller nor any Selling Affiliate has been required to file any
report pursuant to Section 999 of the Code or participated in an international
boycott within the meaning of Section 908 of the Code which is related to the
Business or the Purchased Assets.
(t) Neither Seller nor any Selling Affiliate has made any payment which
constitutes an illegal bribe or kickback within the meaning of Section 162(c)(1)
of the Code which is related to the Business or the Purchased Assets.
(u) As of the Closing Date or the applicable Foreign Closing Date, Seller
and each of the Selling Affiliates shall have made all payments of Payroll Taxes
due and payable with respect to the conduct of the Business, shall have filed
all returns and reports required to have been filed prior to such Closing Date
or the applicable Foreign Closing Date, and shall be in compliance with all
applicable provisions related to Payroll Taxes.
(v) Seller and each Selling Affiliate has duly filed all reports,
disclosures and other required submissions with the U.S. Customs Service and any
comparable foreign governmental or quasi-governmental entity required to be
filed by or on behalf of or with respect to Seller or any Selling Affiliate with
respect to the import or export of any Inventory or other Purchased Assets. To
the Knowledge of Seller, all such reports, disclosure and submissions are true,
correct and complete in all respects. Seller and each Selling Affiliate has paid
any fees, charges, assessment or other amounts due on or before the Closing Date
or the applicable Foreign Closing Date to the U.S. Customs Service and any
comparable foreign governmental or quasi-governmental
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entity ("Customs Duties") with respect to the import or export of any Inventory.
To the Knowledge of Seller, neither the U.S. Customs Service nor any comparable
foreign governmental or quasi-governmental entity has given Seller or any
Selling Affiliate any notice that it intends to take any action to prevent the
sale of any item of Inventory or assess any penalties or other charges against
such Inventory as the result of act or omission of Seller or any Selling
Affiliate prior to the Closing Date or the applicable Foreign Closing Date with
respect to such Inventory. For purposes of this Section 2.9(v), "Knowledge of
Seller" means the actual knowledge of Brian Unruh, Director of Corporate Taxes
and Acting Corporate Controller, and Nancy Grader, Customs and Trade Tax
Manager.
(w) Tektronix Malaysia Sdn. Bhd. has been granted an investment tax
allowance incentive by the Malaysian Industrial Development Authority under the
Investment Incentive Act of 1986 (the "Tax Incentive"). Seller and Tektronix
Malaysia Sdn. Bhd. have fully satisfied each and every term and condition
required for obtaining and maintaining the Tax Incentive, and have not acted or
failed to act in any manner would cause a loss of part or all of the Tax
Incentive or otherwise constitute a breach of any requirement for the Tax
Incentive. To the Knowledge of Seller, such Tax Incentive is in full force and
effect and will continue after the Closing Date or the applicable Foreign
Closing Date.
(x) No claims have been made by any Taxing Authority in any jurisdiction
where Seller or any Selling Affiliate does not file Tax Returns of nexus or any
other basis for making Seller or any Seller Affiliates subject to taxation by
that jurisdiction.
2.10 Legal Proceedings. Except as disclosed in Section 2.10 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the Knowledge of
Seller or a Selling Affiliate, threatened against, relating to or affecting
Seller or a Selling Affiliate with respect to the Business or any of its Assets
and Properties which (i) could reasonably be expected to result in the issuance
of an Order restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement, the
Ancillary Agreements or any of the Operative Agreements or otherwise result in a
material diminution of the benefits contemplated by this Agreement, the
Ancillary Agreements or any of the Operative Agreements to Purchaser and the
Purchasing Affiliates, or (ii) if determined adversely to Seller or to a Selling
Affiliate, could reasonably be expected to result in (x) any injunction or other
equitable relief that would materially interfere with the Business or (y) Losses
by Seller or Selling Affiliates, individually or in the aggregate with Losses in
respect of other such Actions or Proceedings, exceeding $1,000,000;
(b) there are no facts or circumstances Known to Seller or a Selling
Affiliate that could reasonably be expected to give rise to any Action or
Proceeding that would have a material adverse effect on the Condition of the
Business; and
(c) there are no material Orders outstanding against Seller or a Selling
Affiliate with respect to the Business.
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Prior to the execution of this Agreement, Seller has made available to Purchaser
all responses of counsel to auditors' requests for information delivered in
connection with Seller's most recently prepared audited financial statements
(together with any updates provided by such counsel) regarding Actions or
Proceedings pending or threatened against, relating to or affecting the
Business.
2.11 Compliance With Laws and Orders. Except as disclosed in Section 2.11
of the Disclosure Schedule, neither Seller nor any Selling Affiliate (A) is, nor
has any of them at any time within the last five (5) years been, in violation of
or in default under any Law or Order applicable to the Business, except for such
violations or defaults that, individually or in the aggregate, would not have a
material adverse effect on the Condition of the Business, or (B) has received
written notice from any Governmental or Regulatory Authority within the last
five years alleging that Seller or any Seller Affiliate is in violation of or in
default under any Law or Order applicable to the Business, except for such
violations or defaults that, individually or in the aggregate, would not have a
material adverse effect on the Condition of the Business.
2.12 Benefit Plans: ERISA.
(a) Section 2.12(a) of the Disclosure Schedule lists all Benefit Plans and
other Plans sponsored, maintained, contributed to or required to be contributed
to by Seller or any Selling Affiliate for the benefit of any Employee. True and
complete copies of all such Plans (and all summary plan descriptions or other
material communications made to employees) have been made available to
Purchaser. Neither Seller, nor any Selling Affiliate that is an ERISA Affiliate,
has at any time contributed, on behalf of any Affected Employee, to any
"multiemployer plan", as that term is defined in Section 4001(a)(3) of ERISA.
(b) All Benefit Plans, to the extent subject to ERISA, are in substantial
compliance with ERISA. Each Qualified Plan has received a favorable
determination letter from the Internal Revenue Service with respect to "TRA" (as
defined in Section 1 of Revenue Procedure 93-39) and, to the Knowledge of
Seller, there is no circumstance likely to result in revocation of any such
favorable determination letter. All Benefit Plans covering non-U.S. Employees
comply in all material respects with applicable Laws.
(c) All contributions required to be made under the terms of any Benefit
Plan have been timely made or have been reflected on the audited financial
statements or the preliminary financial statements. No Defined Benefit Plan that
is not a "multiemployer plan" has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and there is no outstanding funding waiver with respect to any such
non-multiemployer plan. Neither Seller nor any Selling Affiliate has provided,
or is required to provide, security in connection with any Defined Benefit Plan
pursuant to Section 401(a)(29) of the Code. No transactions contemplated by this
Agreement will result in Liability on the part of Purchaser or any ERISA
Affiliate of Purchaser to the PBGC under Sections 4062, 4063, 4064 or 4069 of
ERISA, and no event or condition exists or has existed which could reasonably be
expected to result in any such
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Liability with respect to Purchaser or such ERISA Affiliate. Seller and Selling
Affiliates have no material unfunded liabilities with respect to any Benefit
Plan that covers non-U.S. employees.
(d) There is no pending or, to the Knowledge of Seller, threatened
litigation relating to the Benefit Plans known or reasonably expected to have a
material adverse effect on the Business. Neither Seller nor any Selling
Affiliate has engaged in a transaction with respect to any Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject Seller or any Selling Affiliate to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
has or would be reasonably expected to have a material adverse effect on the
Business or the Condition of the Business.
2.13 Real Property.
(a) Section 1.1(a)(i) of the Disclosure Schedule contains a true and
correct list of each parcel of real property owned by Seller or a Selling
Affiliate and used or held for use in connection with the Business that
constitute Purchased Assets, and Section 1.1(a)(ii) of the Disclosure Schedule
contains a true and correct list of each parcel of real property leased by
Seller or a Selling Affiliate and used or held for use in connection with the
Business that constitute Purchased Assets. Section 2.13(a) of the Disclosure
Schedule contains a true and correct list of each parcel of real property owned
by Seller or a Selling Affiliate and used or held for use in connection with the
Business and each lease of real property leased by Seller or a Selling Affiliate
and used or held for use in connection with the Business that do not constitute
Purchased Assets.
(b) Except as disclosed in Section 2.13(b) of the Disclosure Schedule,
Seller or the Selling Affiliates, as the case may be, have title to the Real
Property and the Improvements on the Tektronix Malaysia Real Property sufficient
to operate the Business in the manner currently operated thereon, free and clear
of all Liens other than Permitted Liens. Except as disclosed in Section 2.13(b)
of the Disclosure Schedule, Seller or a Selling Affiliate are the only parties
with the right to occupancy or possession of the Real Property and the Tektronix
Malaysia Real Property. Seller and the Selling Affiliates have adequate rights
of ingress and egress with respect to the Real Property, the Tektronix Malaysia
Real Property and the Improvements thereon.
(c) Seller and the Selling Affiliates have a valid and subsisting leasehold
estate in and the right to quiet enjoyment of the real properties subject to the
Real Property Leases and the ground lease for the Tektronix Malaysia Real
Property for the full term thereof. Each Real Property Lease and the ground
lease for the Tektronix Malaysia Real Property is a legal, valid and binding
agreement, enforceable in accordance with its terms, of Seller or a Selling
Affiliate and of each other Person that is a party thereto, and except as set
forth in Section 2.13(c) of the Disclosure Schedule, there is no material
default, nor has Seller or any Selling Affiliate received any notice of any such
default by any party thereto (or any condition or event which, after notice or
lapse of time or both, would constitute such a
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default) thereunder. Neither Seller nor any Selling Affiliate owes any brokerage
commissions with respect to any such Real Property Lease or the ground lease for
the Tektronix Malaysia Real Property. Each Real Property Lease and the ground
lease for the Tektronix Malaysia Real Property is in full force and effect in
all material respects. Except for the Real Property Leases and the ground lease
for the Tektronix Malaysia Real Property, and except as disclosed in Section
1.1(b)(viii) of the Disclosure Schedule, Seller and the Selling Affiliates are
not a party to any other leases or other agreements, written or oral, with
respect to any tenancies or rights to possession of any real property used in
connection with the Business. Neither Seller nor any Selling Affiliate have made
any previous assignment, transfer or other disposition of all or any part of its
interest in the Real Property Leases or the ground lease for the Tektronix
Malaysia Real Property.
(d) Seller has delivered or made available, or will make available within
30 days following the date of this Agreement, or has caused or will cause the
Selling Affiliates to deliver or make available within 30 days following the
date of this Agreement, to Purchaser true and complete copies of (i) all deeds,
leases, mortgages, deeds of trust, certificates of occupancy, title insurance
policies, title reports, surveys and similar documents, and all amendments
thereof, with respect to the Real Property and the Tektronix Malaysia Real
Property, and (ii) all Real Property Leases and the ground lease for the
Tektronix Malaysia Real Property (including any amendments and renewal letters)
and, to the extent reasonably available, all other documents referred to in
clause (i) of this Section 2.13(d) with respect to the real property subject to
the Real Property Leases and the ground lease for the Tektronix Malaysia Real
Property.
(e) Except as disclosed in Section 2.13(e) of the Disclosure Schedule, no
tenant or other party (other than Seller or a Selling Affiliate) in possession
of any of the real properties subject to the Real Property Leases or the ground
lease for the Tektronix Malaysia Real Property has any right to purchase, or
holds any option or right of first refusal to purchase, such properties.
(f) Except as disclosed in Section 2.13(f) of the Disclosure Schedule, the
Improvements (including Improvements on the Tektronix Malaysia Real Property)
are in good operating condition and in a state of good maintenance and repair,
ordinary wear and tear excepted, and are adequate and suitable to operate the
Business in the manner currently operated thereon.
(g) Except for consent by landlord required by any Real Property Lease or
the ground lease for the Tektronix Malaysia Real Property, the execution,
delivery and performance by Seller and by the Selling Affiliates of this
Agreement, the Ancillary Agreements and the Operative Agreements to which it is
a party, and the consummation of the transactions contemplated hereby and
thereby, will not (A) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to any Real
Property Leases or the ground lease for the Tektronix Malaysia Real Property ,
or (B) result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under any Real
Property Leases or the
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ground lease for the Tektronix Malaysia Real Property.
(h) All Licenses (including any licenses from private parties, if
applicable) necessary for the use and operation in all material respects of the
Real Property and the Tektronix Malaysia Real Property and the real properties
subject to the Real Property Leases and the ground lease for the Tektronix
Malaysia Real Property by Seller and the Selling Affiliates as currently being
used and operated for the Business are currently possessed by Seller or the
Selling Affiliates. The Real Property and the real properties subject to the
Real Property Leases and the ground lease for the Tektronix Malaysia Real
Property have been used in all material respects in accordance with (a) all such
approvals, licenses, permits and certificates, (b) all governmental regulations,
and (c) all covenants, conditions, restrictions, easements and agreements of any
kind or nature affecting such properties.
(i) There are no pending or, to the Knowledge of Seller or any Selling
Affiliate, contemplated actions, suits, arbitrations, claims or proceedings, at
law or in equity, reasonably expected to have a material adverse effect on all
or any portion of the Real Property or the Tektronix Malaysia Real Property or
the properties subject to the Real Property Leases or the ground lease for the
Tektronix Malaysia Real Property in which Seller or a Selling Affiliate is or
will be a party by reason of Seller's or a Selling Affiliate's ownership of the
Real Property or the Tektronix Malaysia Real Property or the properties subject
to the Real Property Leases or the ground lease for the Tektronix Malaysia Real
Property, including, without limitation, judicial, municipal or administrative
proceedings in eminent domain, unlawful detainer or tenant evictions,
collections, alleged building code, health and safety or zoning violations,
personal injuries or property damages alleged to have occurred on the Real
Property or the Tektronix Malaysia Real Property or the properties subject to
the Real Property Leases or the ground lease for the Tektronix Malaysia Real
Property or by reason of the condition or use of the Real Property or the
Tektronix Malaysia Real Property or the real properties subject to the Real
Property Leases, and, to the Knowledge of Seller or any Selling Affiliate, no
events have occurred which might give rise to such actions, claims or
proceedings.
2.14 Tangible Personal Property. Seller and the Selling Affiliates are in
possession of and have good title to, or have valid leasehold interests in or
valid rights under Contract to use, all the Tangible Personal Property, which
includes all tangible personal property reflected on the Acquisition Balance
Sheet and tangible personal property acquired since the date of the Acquisition
Balance Sheet, other than tangible personal property disposed of since such date
in the ordinary course of business consistent with past practice. Said Tangible
Personal Property is free and clear of all Liens, other than Permitted Liens and
Liens disclosed in Section 2.14 of the Disclosure Schedule, and is in good
working order and condition, ordinary wear and tear excepted, and its use, to
the Knowledge of Seller, complies with all applicable Laws, except for such
non-compliance that, individually or in the aggregate, would not have a material
adverse effect on the Business or the Condition of the Business, taken as a
whole. Upon the Closing or the applicable Foreign Closing, Seller and the
Selling Affiliates shall convey good title to or the
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rights to use all such Tangible Personal Property to Purchaser or the designated
Purchasing Affiliates.
2.15 Intellectual Property Rights.
(a) Schedule 2.15(a) is a true and complete list of all domestic and
foreign patents and patent applications owned or licensed by Seller that are
material to the manufacture, use or sale of Business Products, use of Business
processes, or the continued operation of the Business in substantially the
manner the Business is operated as of the date hereof (the "Business Patents").
Except as set forth in Schedule 2.15(a), Seller owns or has the right to use the
Business Patents. Except as set forth in Schedule 2.15(a), there are no
proceedings alleging invalidity and, to the Knowledge of Seller, there are no
pending claims or challenges to the validity of any Business Patent owned by
Seller. Except as set forth in Schedule 2.15(a), to the Knowledge of Seller,
each of the Business Patents owned by Seller is, or upon issuance will be, valid
and enforceable and in compliance with all requirements for payment of
registration and/or maintenance fees. Except as set forth in Schedule 2.15(a),
no Business Patent owned by Seller has been or is now involved in any
interference or re-examination proceeding.
(b) Except as set forth in Schedule 2.15(b) and excluding the software
listed in Schedule 2.15(e), Seller owns or has the right to use all works of
authorship subject to copyright protection and all related copyright
registrations that are material to the manufacture, use or sale of Business
Products, use of Business processes, or the continued operation of the Business
in substantially the manner the Business is operated as of the date hereof (the
"Business Copyrights"). To the Knowledge of Seller, there are no cancellation or
other proceedings currently pending or threatened that affect the rights to use
and/or register the Business Copyrights.
(c) Except as set forth in Schedule 2.15(c), Seller owns or has the right
to use all trade secrets that are material to the continued operation of the
Business in substantially the manner the Business is operated as of the date
hereof (the "Business Trade Secrets"). Seller has policies and procedures for
preventing unauthorized disclosure of the Business Trade Secrets that conform to
reasonable and customary practice in the computer printer industry, including
generally having its employees execute, at the time of their employment, an
agreement that includes an obligation not to disclose Seller's confidential
information, and generally obtaining an executed nondisclosure agreement from
other persons to whom the Business Trade Secrets are disclosed. To the Knowledge
of Seller, Seller has complied with these policies and procedures in all
material respects.
(d) Schedule 2.15(d) is a true and complete list of all domestic and
foreign trademarks, trade names, and service marks currently owned or used by
Seller that are material to the continued operation of the Business in
substantially the manner the Business is operated as of the date hereof (the
"Business Trademarks"). Except as set forth in Schedule 2.15(d), Seller owns or
has the right to use the Business Trademarks. Except as set forth in Schedule
2.15(d), there are no proceedings, and to the Knowledge of Seller,
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there are no pending claims or challenges to the validity of any Business
Trademark owned by seller. Except as set forth in Schedule 2.15(d), all the
registered Business Trademarks owned by Seller are currently in compliance with
all requirements for the payment of registration or renewal fees. Except as set
forth in Schedule 2.15(d), no registration or pending application for a Business
Trademark owned by Seller has been or is now involved in any opposition or
cancellation proceeding.
(e) Schedule 2.15(e) lists substantially all software or categories of
software used in the Business that are material to the manufacture, use or sale
of Business Products, use of Business processes, or the continued operation of
the Business in substantially the manner the Business is operated as of the date
hereof (collectively, the "Business Software"). To the Knowledge of Seller,
except as set forth in Schedule 2.15(e), Seller owns or has the right to use the
Business Software.
(f) Schedule 2.15(f) lists substantially all written agreements or
categories of agreements executed by Seller relating to the Business Patents,
the Business Copyrights, the Business Trade Secrets, the Business Trademarks or
the Business Software, in each case to the extent material to the continued
operation of the Business in substantially the manner the Business is operated
as of the date hereof, with the exception of (i) employment agreements or
employee obligation agreements executed by employees in standard form at the
time of their employment without material modification; (ii) invention
assignment and confidential information agreement executed by contract workers
in standard form in connection with their contracted work assignment; and (iii)
customer contracts and confidential information agreements in standard form
without material modification.
(g) Except as set forth in Schedule 2.15(g), to the Knowledge of Seller,
none of the Products manufactured, sold or licensed by, nor any of the processes
used by, the Business infringes any patent, trademark, copyright, trade secret
or other intellectual property right of any third party and, to the Knowledge of
Seller, no person is infringing upon any Business Patent, Business Copyright,
Business Trade Secret or Business Trademark. Except as set forth in Schedule
2.15(g), to the Knowledge of Seller, from and after the Closing Date, Purchaser
will have the right to manufacture, have made, use, sell, license, or otherwise
dispose of, any product or process used by the Business and will have a right to
use all patents, trademarks, copyrights, trade secrets and other intellectual
property rights that are material to the continued operation of the Business in
substantially the manner the Business is operated as of the date hereof.
2.16 Contracts.
(a) Section 2.16(a) of the Disclosure Schedule (with paragraph references
corresponding to those set forth below) contains a true and complete list of
each of the following Contracts or other arrangements to which Seller or a
Selling Affiliate is a party or by which any of the Purchased Assets is bound or
that relate to the conduct of the Business, which Contracts or other
arrangements constitute Purchased Assets:
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(i) (A) all material Contracts (excluding Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term to, or otherwise relating to employment or the termination
of employment of, any Employee (other than offer letters made in the
ordinary course of business and employment agreements in foreign countries
made in the ordinary course of business); and (B) any written or unwritten
material representations, commitments, promises, communications or courses
of conduct (excluding Plans and any such Contracts referred to in clause
(A)) involving an obligation of Seller to make payments in any year, other
than with respect to salary or incentive compensation payments in the
ordinary course of business, to any Employee exceeding $100,000 or to any
group of Employees exceeding $1,000,000 in the aggregate, and arrangements
that are Retained Liabilities under Section 1.2(b)(ix);
(ii) all Business Contracts with any Person containing any provision
or covenant prohibiting or limiting the ability of Seller or a Selling
Affiliate to compete, directly or indirectly, with any Person;
(iii) all partnership, joint venture, shareholders, limited liability
company operating agreements or other similar Contracts with any Person in
connection with the Business;
(iv) all material Contracts with distributors, dealers, value added
resellers, service providers, licensors, licensees, manufacturer's
representatives, sales agencies or franchises with whom Seller deals in
connection with the Business;
(v) all Contracts relating to material research and development or
product development activities in connection with the Business;
(vi) all Contracts relating to the future disposition or acquisition
of any Purchased Assets, other than dispositions or acquisitions in the
ordinary course of business consistent with past practice;
(vii) all collective bargaining, works council or similar labor
Contracts covering any Employee;
(viii) leases of real property in respect of which Seller or a Selling
Affiliate is the lessor or sublessor; and
(ix) all other Contracts (other than Plans, the Real Property Leases
and insurance policies listed in Section 2.18 of the Disclosure Schedule)
with respect to the Business that (A) involve the payment or potential
payment, pursuant to the terms of any such Contract, by or to Seller or a
Selling Affiliate of more than $200,000 annually and (B) cannot be
terminated within ninety (90) days after giving notice of termination
without resulting in any cost or penalty to Seller or a Selling Affiliate,
excluding open purchase orders for less than $200,000.
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(b) Each Contract required to be disclosed in Section 2.16(a) of the
Disclosure Schedule is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, of each party thereto; and, except as
disclosed in Section 2.16(b) of the Disclosure Schedule, neither Seller or a
Selling Affiliate nor, to the Knowledge of Seller or a Selling Affiliate, any
other party to such Contract is, or has received notice that it is, in material
violation or material breach of or material default under any such Contract (or
with notice or lapse of time or both, would be in material violation or material
breach of or material default under any such Contract).
(c) Except as disclosed in Section 2.16(c) of the Disclosure Schedule and
negotiation of Contracts made in the ordinary course of business, neither Seller
nor any Selling Affiliate is engaged in the negotiation of a Contract or other
arrangement in connection with the Business that (i) involve the payment or
potential payment, pursuant to the terms of any such Contract, by or to Seller
or a Selling Affiliate of more than $200,000 annually and (B) cannot be
terminated within ninety (90) days after giving notice of termination without
resulting in any cost or penalty to Seller or a Selling Affiliate.
2.17 Business Licenses. Except as disclosed in Section 2.17 of the
Disclosure Schedule:
(a) Seller or the Selling Affiliates own or validly hold all Business
Licenses that are necessary to conduct the Business, except where the failure to
hold any such License would not have a material adverse effect on the Condition
of the Business or the Total Acquired Assets; and
(b) To the Knowledge of Seller, neither Seller nor any Selling Affiliate
is, nor has any of them received any notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default) under any
Business License.
2.18 Insurance. Section 2.18 of the Disclosure Schedule contains a true and
complete list of all liability, property, workers' compensation and other
insurance policies currently in effect that insure the Business, the Employees
or the Total Acquired Assets (a "Policy" or the "Policies"). Each such Policy is
valid and binding and in full force and effect, no premiums due thereunder have
not been paid and Seller has not received any notice of cancellation or
termination in respect of any such Policy or is not in material default
thereunder. Such Policies are placed with financially sound and reputable
insurers and, in light of the nature of the Business and the Total Acquired
Assets, are in amounts and have coverages that are reasonable and customary for
Persons engaged in such business and having such Assets and Properties. Seller
has not received notice that any insurer under any Policy referred to in this
Section 2.18 is denying Liability with respect to a claim thereunder or
defending under a reservation of rights clause.
2.19 Affiliate Transactions. Except as disclosed in Section 2.19 of the
Disclosure
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Schedule, (i) no officer, director, Affiliate or Associate of Seller or any
Selling Affiliate or any Associate of any such officer, director or Affiliate
(excluding any public companies in which a director of Seller may be an officer)
provides or causes to be provided any material assets, services or facilities
used or held for use in connection with the Business, either outside the
ordinary course of business consistent with past practice or other than on an
arm's-length basis, and (ii) the Business does not provide or cause to be
provided any material assets, services or facilities to any such officer,
director, Affiliate or Associate (excluding any public companies in which a
director of Seller may be an officer), either outside the ordinary course of
business consistent with past practice or other than on an arm's-length basis.
2.20 Employees; Labor Relations. Except as disclosed in Section 2.20 of the
Disclosure Schedule, (a) no Employee is presently a member of a collective
bargaining unit and, to the Knowledge of Seller , there are no threatened or
contemplated attempts to organize for collective bargaining purposes any of the
Employees, and (b) no unfair labor practice complaint or sex, age, race or other
discrimination claim has been brought during the last two (2) years against
Seller or any Selling Affiliate with respect to the conduct of the Business
before the National Labor Relations Board, the Equal Employment Opportunity
Commission or any other Governmental or Regulatory Authority. There has been no
primary work stoppage, strike or other organized work stoppage by employees of
Seller or any Selling Affiliate engaged in the Business in the last two (2)
years. During that period, Seller and the Selling Affiliates have complied with
all applicable Laws relating to the employment of labor, including, without
limitation those relating to wages, hours and collective bargaining, except
where such failure to comply would not have a material adverse effect on the
Condition of the Business. No information is Known to Seller that would lead
Seller to believe that a material number of the Employees as of August 28, 1999,
will or may cease to be Employees, or will refuse offers of employment from
Purchaser or a Purchasing Affiliate, as the case may be.
2.21 Environmental Matters, etc. Seller and the Selling Affiliates have
obtained all Licenses which are required under applicable Environmental Laws in
connection with the conduct of the Business or the Purchased Assets or the use
and occupancy of the Real Property and the Tektronix Malaysia Real Property and
the properties subject to the Real Property Leases and the ground lease for the
Tektronix Malaysia Real Property. Each of such Licenses is in full force and
effect. Seller and the Selling Affiliates have conducted the Business in
compliance with the terms and conditions of all such Licenses and with any
applicable Environmental Laws, except where the failure to comply could not
reasonably be expected to have a material adverse effect on the Condition of the
Business. In addition, except as set forth in Section 2.21 of the Disclosure
Schedule (with paragraph references corresponding to those set forth below):
(a) No Order has been issued, no Environmental Claim has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
Knowledge of Seller or any Selling Affiliate, threatened by any Governmental or
Regulatory Authority with respect to any alleged failure by Seller or any
Selling Affiliate to have any License
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required under applicable Environmental Laws in connection with the conduct of
the Business or with respect to any generation, treatment, storage, recycling,
transportation, discharge, disposal or Release of any Hazardous Material in
connection with the Business or with respect to the use and occupancy of the
Real Property and the Tektronix Malaysia Real Property and the properties
subject to the Real Property Leases and the ground lease for the Tektronix
Malaysia Real Property, and to the Knowledge of Seller or any Selling Affiliate
there are no facts or circumstances in existence which could reasonably be
expected to form the basis for any such Order, Environmental Claim, penalty or
investigation.
(b) Seller and the Selling Affiliates do not own, operate or lease a
treatment, storage or disposal facility on any of the Real Property or the
Tektronix Malaysia Real Property or the properties subject to the Real Property
Leases or the ground lease for the Tektronix Malaysia Real Property requiring a
permit under the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901
et seq., as amended, or under any other comparable state or local Law.
(c) No Hazardous Materials Contamination is present in, on or under any of
the Real Property or properties subject to the Real Property Leases or the
ground lease for the Tektronix Malaysia Real Property or, to the Knowledge of
Seller, any nearby real property which could migrate to any of the Real Property
or the Tektronix Malaysia Real Property or properties subject to the Real
Property Leases or the ground lease for the Tektronix Malaysia Real Property. No
underground storage tanks or surface impoundments for Hazardous Materials are
present in or under any of the Real Property or the Tektronix Malaysia Real
Property or properties subject to the Real Property Leases or the ground lease
for the Tektronix Malaysia Real Property nor were any underground storage tanks
or surface impoundments previously located in or under any of the Real Property
or the Tektronix Malaysia Real Property or properties subject to the Real
Property Leases or the ground lease for the Tektronix Malaysia Real Property.
(d) The Real Property and the Tektronix Malaysia Real Property and
properties subject to the Real Property Leases and the ground lease for the
Tektronix Malaysia Real Property and every part thereof, and all operations and
activities therein and thereon and the use and occupancy thereof, comply with
all applicable Environmental Laws, except where the failure to comply could not
reasonably be expected to have a material adverse effect on the Condition of the
Business. No Hazardous Material has been Released in a quantity reportable
under, or in violation of, any Environmental Law.
(e) Seller and the Selling Affiliates have not transported or arranged for
the transportation of any Hazardous Material in connection with the operation of
the Business or the Real Property or the Tektronix Malaysia Real Property or
real properties subject to the real Property Leases or the ground lease for the
Tektronix Malaysia Real Property to any location that is (i) listed on the NPL
under CERCLA, (ii) listed for possible inclusion on the NPL by the Environmental
Protection Agency in CERCLIS or on any similar foreign, state or local list or
(iii) the subject of enforcement actions by federal, state or local
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Governmental or Regulatory Authorities that may lead to Environmental Claims
against Seller, the Selling Affiliates, the Purchased Assets or the Business.
(f) No oral or written notification of a Release of a Hazardous Material in
connection with the operation of the Business or the use or occupancy of the
Real Property or real properties subject to the Real Property Leases or the
ground lease for the Tektronix Malaysia Real Property has been filed by or on
behalf of Seller or any Selling Affiliate. None of the Real Property, the
Tektronix Malaysia Real Property or properties subject to the Real Property
Leases or the ground lease for the Tektronix Malaysia Real Property, is listed
or proposed for listing on the NPL, CERCLIS or any similar foreign, state or
local list of sites requiring investigation or clean-up.
(g) No Liens have arisen under or pursuant to any Environmental Law on any
Real Property, the Tektronix Malaysia Real Property or properties subject to the
Real Property Leases or the ground lease for the Tektronix Malaysia Real
Property and no foreign, federal, state or local Governmental or Regulatory
Authority action has been taken or, to the Knowledge of Seller or any Selling
Affiliate, is in process that could subject any such site or facility to such
Liens, and Seller or any Selling Affiliate would not be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
such site or facility in any deed to the Real Property on which such site or
facility is located.
(h) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or on behalf of, or that are in
the possession of, Seller or any Selling Affiliate in relation to any Real
Property or the Tektronix Malaysia Real Property or any properties subject to
the Real Property Leases or the ground lease for the Tektronix Malaysia Real
Property which have not been delivered to Purchaser prior to the execution of
this Agreement.
(i) Seller and the Selling Affiliates have complied with all Environmental
Laws relating to product safety, except where the failure to comply could not
reasonably be expected to have a material adverse effect on the Condition of the
Business. To the Knowledge of Seller, Seller and the Selling Affiliates have
provided all required notices, disclosures, and reports relating to product
safety; collected and maintained all required data and records relating to
product safety; complied with all required labeling, handling, and delivery
methods relating to product safety; and performed all required testing and
investigation relating to product safety of Hazardous Materials, used, stored,
distributed or produced by Seller and the Selling Affiliates as required under
any Environmental Law, including but not limited to Hazardous Materials
regulated under the Toxic Substances Control Act , the European Inventory of
Existing Commercial Chemicals, the Canadian Domestic Substances List, the
Federal Hazardous Substances Act, the Sherman Food, Drug and Cosmetic Law, and
any other Laws relating to product safety.
(j) To the Knowledge of Seller, no Product sold, distributed, manufactured,
or otherwise placed in the stream of commerce by Seller or any Selling Affiliate
constitutes a Hazardous Material under any Environmental Law at the end of its
useful life.
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(k) To the Knowledge of Seller or any Selling Affiliate, there are no facts
or circumstances in existence which would cause Seller to expect the occurrence
of an Epidemic Failure in any Products (or in any parts, components, accessories
or supplies related thereto) currently being sold by Seller or any Selling
Affiliate or expected to be launched prior to May 31, 2002.
2.22 Substantial Customers and Suppliers. Section 2.22(a) of the Disclosure
Schedule lists the one hundred (100) largest customers of the Business, on the
basis of revenues for goods sold or services provided for the most
recently-completed fiscal year. Section 2.22(b) of the Disclosure Schedule lists
the one hundred (100) largest suppliers of the Business, on the basis of cost of
goods or services purchased for the most recently-completed fiscal year. Except
as disclosed in Section 2.22(c) of the Disclosure Schedule, none of the ten (10)
largest customers or suppliers has ceased or materially reduced its purchases
from, use of the services of, sales to or provision of services to the Business
from the date of the Acquisition Balance Sheet to the date of this Agreement, or
to the Knowledge of Seller, has threatened to cease or materially reduce such
purchases, use, sales or provision of services after the date hereof. Except as
disclosed in Section 2.22(d) of the Disclosure Schedule, to the Knowledge of
Seller, none of the ten (10) largest customers or suppliers is threatened with
bankruptcy or insolvency.
2.23 Accounts Receivable. Except as set forth in Section 2.23 of the
Disclosure Schedule, the Accounts Receivable (i) arose from bona fide sales
transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) are legal, valid and binding obligations of the respective
debtors enforceable in accordance with their terms, (iii) are free and clear of
any Lien other than Permitted Liens, (iv) have not been pledged as collateral,
(v) are not subject to any valid set-off or counterclaim, (vi) do not represent
obligations for goods sold on consignment, on approval or on a sale-or-return
basis or subject to any other repurchase or return arrangement, (vii) are
collectible in the ordinary course of business consistent with past practice in
the aggregate recorded amounts thereof, net of any applicable reserve reflected
in the Acquisition Balance Sheet, and (viii) are not the subject of any Actions
or Proceedings brought by or on behalf of Seller or any Selling Affiliate.
Section 2.23 of the Disclosure Schedule sets forth a description of any security
arrangements and collateral securing the repayment or other satisfaction of the
Accounts Receivable (the "Security Agreements"). All steps necessary to render
all such security arrangements legal, valid, binding and enforceable, and to
give and maintain for Seller and the Selling Affiliates a perfected security
interest in the related collateral, have been taken.
2.24 Inventory. All of the Inventory consists of a quality and quantity
usable and salable in the ordinary course of business consistent with past
practice, subject to normal and customary allowances in the industry for
spoilage, damage and obsolescence. All items included in the Inventory are the
property of Seller and the Selling Affiliates, free and clear of any Lien other
than Permitted Liens, have not been pledged as collateral, are not held by
Seller or any Selling Affiliate on consignment from others.
2.25 Vehicles. Section 1.1(a)(xi) of the Disclosure Schedule lists
substantially all
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motor vehicles owned or leased by Seller and the Selling Affiliates and used or
held for use in the conduct of the Business. Except as disclosed in Section 2.25
of the Disclosure Schedule, Seller and the Selling Affiliates have good and
valid title to, or have valid leasehold interests in or valid rights under
Contract to use, each Vehicle, free and clear of all Liens other than Permitted
Liens.
2.26 No Guarantees. Except as disclosed in Section 2.26 of the Disclosure
Schedule, none of the Liabilities of the Business or of Seller or any Selling
Affiliate incurred in connection with the conduct of the Business is guaranteed
by or subject to a similar contingent obligation of any other Person, nor has
Seller or any Selling Affiliate guaranteed or become subject to a similar
contingent obligation in respect of the Liabilities of any customer, supplier or
other Person to whom Seller or a Selling Affiliate sells goods or provides
services in the conduct of the Business or with whom Seller or a Selling
Affiliate otherwise has significant business relationships in the conduct of the
Business.
2.27 Entire Business. The sale of the Purchased Assets and the transfer of
the Intellectual Property by Seller and the Selling Affiliates to Purchaser and
the Purchasing Affiliates pursuant to this Agreement and the Technology Transfer
Agreement, respectively, will effectively convey to Purchaser and the Purchasing
Affiliates the entire Business and all of the tangible and intangible property
used primarily by Seller and the Selling Affiliates (whether owned, leased or
held under license by Seller or the Selling Affiliates, by any of their
respective Affiliates or Associates or by others) in connection with the conduct
of the Business as heretofore conducted by Seller and the Selling Affiliates
(except for the Excluded Assets and the matters listed on Section 2.27 of the
Disclosure Schedule) including, without limitation, all tangible and intangible
Assets and Properties of Seller and the Selling Affiliates reflected in the
Acquisition Balance Sheet and Assets and Properties acquired since the date of
the Acquisition Balance Sheet in the conduct of the Business, other than the
Excluded Assets and Assets and Properties disposed of since such date,
consistent with Section 2.7(e). Section 2.27 of the Disclosure Schedule sets
forth all of the material shared facilities, Assets and Properties, Contracts
and services, or a description of the categories of such facilities, Assets and
Properties, Contracts or services, which are used in connection with the
Business and with any other business or other operations of Seller or the
Selling Affiliates or any of their respective Affiliates or Associates (the
"Shared Assets") and will be retained by Seller.
2.28 Brokers. Except for J.P. Morgan & Co., Inc., whose fees, commissions
and expenses are the sole responsibility of Seller, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Seller directly with Purchaser without the intervention of any Person on behalf
of Seller or any Selling Affiliate in such manner as to give rise to any valid
claim by any Person against Purchaser or any Purchasing Affiliate for a finder's
fee, brokerage commission or similar payment.
2.29 Year 2000.
(a) Each of the products, supplies and services sold, licensed or otherwise
made
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available to any third party (the "Products") by the Seller or any Selling
Affiliate and all software, firmware, systems, files, applications, interfaces,
databases and other computer-related materials used in such Products (the
"Software") either are Millennium Compliant or the failure of such Products and
Software to be Millennium Compliant will not result in any Liability to or
obligation of the Seller or any Selling Affiliate.
(b) Seller and the Selling Affiliates have developed and are in the process
of implementing a plan designed to ensure that all hardware, software, firmware,
systems, files, applications, interfaces, databases and other computer-related
materials (other than the Products and Software) used primarily in the Business
(the "Internal Systems") that Seller or any Selling Affiliate owns, possesses or
uses in connection with the Business are or will be Millennium Compliant or will
be replaced with Internal Systems that are Millennium Compliant no later than
October 31, 1999. Seller and the Selling Affiliates in good faith expect that
the implementation of such plan will be accomplished according to the plan. All
remaining tasks to complete remediation and compliance testing for Millennium
Compliance are planned and budgeted within the Division, with required resources
identified and scheduled. In addition, Seller and the Selling Affiliates have
adopted a schedule to complete Millennium Compliance readiness assessments of
its suppliers for Business.
(c) "Millennium Compliant" or "Millennium Compliance" means (i) that
Products, Software and Internal Systems are designed to be used prior to, during
and after the calendar year 2000 A.D. and each will operate during each such
time period without error relating to or caused by date data, including any
error relating to, or the product of, date data which represents, is generated
in or references more than one century ("Century-Based Data"), (ii) that the
Products, Software and Internal Systems will operate prior to, during and after
the calendar year 2000 A.D., both on a stand-alone basis and when interacting or
interoperating with third-party hardware, software and systems, without error
arising out of or relating to Century Based Data and without human intervention,
other than original data entry, and (iii) that neither the occurrence of any
date nor the change of century will adversely affect the processing,
calculating, comparing, sequencing or other use of data by the Products or
Software, including without limitation causing (x) any error relating to or
resulting from Century-Based Data; (y) any abnormal ending or provision of
invalid or incorrect results as a result of any Century-Based Data; and (z) any
error relating to century recognition or calculations accommodating
Century-Based Data, values or formulae.
2.30 Disclosure. To the Knowledge of Seller, all material facts relating to
the Condition of the Business that could reasonably be expected to have a
material adverse effect on the Condition of the Business have been disclosed to
Purchaser in or in connection with this Agreement. No representation or warranty
contained in this Agreement, and no statement contained in the Disclosure
Schedule and the Financial Statements, contains any untrue statement of a
material fact that could reasonably be expected to have a material adverse
effect on the Condition of the Business or omits to state a material fact in a
manner that could reasonably be expected to have a material adverse effect on
the Condition of the Business.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser, for itself and on behalf of each of the Purchasing Affiliates,
hereby represents and warrants to Seller as follows:
3.1 Organization of Purchaser and the Purchasing Affiliates. Purchaser and
each Purchasing Affiliate is a corporation duly organized, validly existing and
in good standing under the Laws of the jurisdiction applicable thereto (to the
extent the concepts of valid existence and good standing exists in the relevant
jurisdiction). Notwithstanding the foregoing, there shall be no breach of this
Section 3.1 where the failure of the Purchaser or the Purchasing Affiliates to
be in good standing (to the extent the concept of good standing exists in the
relevant jurisdiction), in the aggregate, are not reasonable likely to have a
material adverse effect on the timely performance by Purchaser of the
transactions contemplated by this Agreement.
3.2 Authority. Purchaser and each Purchasing Affiliate has full corporate
power and authority to enter into this Agreement, the Ancillary Agreements and
the Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Purchaser and each Purchasing
Affiliate of this Agreement, the Ancillary Agreements and the Operative
Agreements to which it is a party, and the performance by Purchaser and a
Purchasing Affiliate of its obligations hereunder and thereunder, have been duly
and validly authorized by the Boards of Directors of Purchaser or the Purchasing
Affiliate, no other corporate action on the part of Purchaser or a Purchasing
Affiliate, or their respective shareholders being necessary. This Agreement has
been duly and validly executed and delivered by Purchaser and constitutes, and
upon the execution and delivery by Purchaser and the Purchasing Affiliates of
the Ancillary Agreements and the Operative Agreements to which it is a party,
such Ancillary Agreements and Operative Agreements will constitute, legal, valid
and binding obligations of Purchaser and the Purchasing Affiliates, as the case
may be, enforceable against them in accordance with their terms, except as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.3 No Conflicts. The execution and delivery by Purchaser of this Agreement
do not, and the execution and delivery by Purchaser and the Purchasing
Affiliates of the Ancillary Agreements and the Operative Agreements to which it
is a party, the performance by Purchaser and the Purchasing Affiliates of its
and their respective obligations under such Agreements and the consummation of
the transactions contemplated hereby and thereby will not:
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(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws (or
other comparable corporate charter document) of Purchaser or of a Purchasing
Affiliate;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Schedule 3.4 hereto, conflict with
or result in a violation or breach of any term or provision of any Law or Order
applicable to Purchaser, a Purchasing Affiliate or any of its or their
respective Assets and Properties; or
(c) except as disclosed in Schedule 3.3 hereto, (i) conflict with or result
in a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require Purchaser or a Purchasing Affiliate
to obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon Purchaser, a Purchasing Affiliate or any
of its Assets or Properties under, any Contract or License to which Purchaser or
a Purchasing Affiliate is a party or by which any of its Assets and Properties
is bound, except for such violation, breach, default, loss, requirement or
creation that could not reasonably be expected to, individually or in the
aggregate, materially impair the ability of Purchaser or a Purchasing Affiliate
to perform its obligations under this Agreement or any of the Ancillary
Agreements or Operative Agreements or otherwise materially impair the
consummation of the transactions contemplated by this Agreement or any of the
Ancillary Agreements or Operative Agreements. .
3.4 Governmental Approvals and Filings. Except for the HSR Act filing and
other antitrust filings described in Section 5.2 and except as disclosed in
Schedule 3.4 hereto, no consent, approval or action of, filing with or notice to
any Governmental or Regulatory Authority on the part of Purchaser or a
Purchasing Affiliate is required in connection with the execution, delivery and
performance of this Agreement, any of the Ancillary Agreements or the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
3.5 Legal Proceedings. There are no Actions or Proceedings pending or, to
the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or a Purchasing Affiliate or any of their respective Assets and
Properties which could reasonably be expected to result in the issuance of an
Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement, the
Ancillary Agreements or any of the Operative Agreements or otherwise result in a
material diminution of the benefits contemplated by this Agreement, the
Ancillary Agreements or any of the Operative Agreements to Seller and the
Selling Affiliates.
3.6 Brokers. Except for Goldman Sachs & Co., whose fees, commissions and
expenses are the sole responsibility of Purchaser, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Purchaser directly with Seller without the intervention of any Person on behalf
of Purchaser in such manner as to give rise to any valid claim by any Person
against Seller for a finder's fee, brokerage
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commission or similar payment.
ARTICLE 4
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from and
after the date hereof until the Closing or the applicable Foreign Closing and,
with respect to any covenant or agreement by its terms to be performed in whole
or in part after the Closing or the applicable Foreign Closing, as the case may
be, for the period specified herein , if any, Seller will comply, and will cause
the Selling Affiliates to comply, with all covenants and provisions of this
Article 4, except to the extent Purchaser may otherwise consent in writing.
4.1 Regulatory and Other Approvals. From the date hereof until the Closing
or the termination of this Agreement in accordance with Article 12, Seller will,
or will cause the Selling Affiliates to, (a) take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use
all commercially reasonable efforts, as promptly as practicable, to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to Governmental or Regulatory Authorities or any other Person required
of Seller or any Selling Affiliate to consummate the transactions contemplated
hereby and by the Ancillary Agreements and the Operative Agreements, including
without limitation those described in Sections 2.3 and 2.4 of the Disclosure
Schedule, (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as Purchaser or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Purchaser or the designated
Purchasing Affiliates as promptly as practicable in obtaining all consents,
approvals or actions of, making all filings with and giving all notices to
Governmental or Regulatory Authorities or other Persons required of Purchaser or
a Purchasing Affiliate to consummate the transactions contemplated hereby and by
the Ancillary Agreements and the Operative Agreements. Seller will provide, and
will cause the Selling Affiliates to provide, prompt notification to Purchaser
when any such consent, approval, action, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Ancillary Agreements or the Operative Agreements.
4.2 HSR Filings, etc. From the date hereof until the Closing or the
termination of this Agreement in accordance with Article 12, in addition to and
not in limitation of Seller's covenants contained in Section 4.1, Seller will,
or will cause the Selling Affiliates to, (a) take promptly all actions necessary
to make the filings required of Seller or its Affiliates under the HSR Act and
any similar filings under applicable Laws in any jurisdictions in with the
Business is conducted or the Purchased Assets are located or as may be required
by any
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Governmental or Regulatory Authority, (b) comply at the earliest practicable
date with any request for additional information received by Seller or its
Affiliates from the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any Governmental or Regulatory Authority pursuant to
the HSR Act or other applicable Laws and (c) cooperate with Purchaser or its
Affiliates in connection with Purchaser's or its Affiliates' filing under the
HSR Act or other applicable Laws and use reasonable commercial efforts to
resolve any investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission,
the Antitrust Division of the Department of Justice, state attorneys general or
any other Governmental or Regulatory Authority.
4.3 Investigation by Purchaser.
(a) From the date hereof until the Closing or the termination of this
Agreement in accordance with Article 12, Seller will, and will cause the Selling
Affiliates to, (i) provide Purchaser and its officers, directors, employees,
agents, counsel, accountants, financial advisors, consultants and other
representatives (collectively, "Representatives") with reasonable access, upon
reasonable prior notice and during normal business hours, to the key Employees
and such other officers, employees and agents of Seller and the Selling
Affiliates who have any responsibility for the conduct of the Business, to
Seller's and the Selling Affiliates' accountants and to the Total Acquired
Assets, and (ii) furnish Purchaser and such other Representatives with all such
information and data (including without limitation copies of Business Contracts,
Business Licenses, Benefit Plans and other Business Books and Records)
concerning the Business, the Total Acquired Assets and the Assumed Liabilities
as Purchaser or any of such other Persons reasonably may request in connection
therewith.
(b) Seller will, and will cause the Selling Affiliates, to grant Purchaser
and its Representatives access to the Real Property, the Tektronix Malaysia Real
Property, the leased real property at Heerenveen, the Netherlands, in order to
conduct, or to arrange for the conduct of, investigation of the soil (including,
without limitation, surface and subsurface soils), groundwater (including,
without limitation, surface and subsurface waters and wetlands) and any
improvements (including, without limitation, all structures, buildings,
fixtures, sumps, tanks (above and below ground) and clarifiers at the Real
Property, the Tektronix Malaysia Real Property and the leased real property at
Heerenveen, the Netherlands.
4.4 No Solicitations. From the date hereof until the Closing or the
termination of this Agreement in accordance with Article 12, Seller will not,
and will cause the Selling Affiliates and the officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors of Seller, any Selling Subsidiary or any Affiliate or Associate of
either of them not to, take, directly or indirectly, any action to solicit,
initiate, encourage, negotiate, assist or otherwise facilitate (including by
furnishing confidential information with respect to the Business or permitting
access to the Assets and Properties and Books and Records of Seller or any
Selling Affiliate relating to the Business) any offer
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or inquiry from any Person concerning the direct or indirect acquisition of the
Business by any Person other than Purchaser or its Affiliates. If Seller, any
Selling Affiliate or any Affiliate or Associate of either of them (or any such
Person acting for or on their behalf) receives from any Person any offer,
proposal, inquiry or informational request referred to above, Seller will
promptly notify Purchaser in writing thereof. Seller shall, and shall cause the
Selling Affiliates and any Affiliate or Associate of either Seller or the
Selling Affiliates (or any such Person acting for or on their behalf), to
immediately cease and cause to be terminated all activities, discussions or
negotiations, if any, with any Persons conducted prior to the date of this
Agreement with respect to any offer, proposal or inquiry from any Person
concerning the direct or indirect acquisition of the Business by such Person.
4.5 Conduct of Business. Seller will operate, and will cause the Selling
Affiliates to operate, the Business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, Seller will,
and will cause the Selling Affiliates to:
(a) use commercially reasonable efforts to (i) preserve intact the present
business organization, reputation, contractual and other arrangements of the
Business, (ii) keep available (subject to dismissals and retirements in the
ordinary course of business consistent with past practice) the services of the
Employees, (iii) maintain the Purchased Assets in good working order and
condition, ordinary wear and tear excepted, (iv) maintain the goodwill of
customers, suppliers, lenders and other Persons to whom Seller or the Selling
Affiliates sell goods or provides services or with whom Seller or any Selling
Affiliate otherwise has significant business relationships in connection with
the Business and (v) continue all current sales, service, marketing,
promotional, product development and other activities relating to the Business;
(b) except to the extent required by applicable Law, (i) cause the Business
Books and Records to be maintained in the usual, regular and ordinary manner,
and (ii) not permit any change in any pricing, investment, accounting, financial
reporting, inventory, credit, allowance or Tax practice or policy of Seller or a
Selling Affiliate that would adversely affect the Business, the Total Acquired
Assets or the Assumed Liabilities;
(c) use commercially reasonable efforts to maintain in full force and
effect until the Closing or the applicable Foreign Closing, as the case may be,
substantially the same levels of coverage as the insurance afforded under the
Policies listed in Section 2.18 of the Disclosure Schedule; and
(d) comply in all material respects with all laws and Orders applicable to
the Business and promptly following receipt thereof to give Purchaser copies of
any notice received from any Governmental or Regulatory Authority or other
Person alleging any violation of any such Law or Order.
4.6 Financial Statements and Reports; Filings.
(a) Seller will deliver, or will cause the Selling Affiliates to deliver,
to Purchaser
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true and complete copies of such financial statements relating to the Business
as may be prepared or received by Seller or any Selling Affiliate as soon as
such statements are available in the regular course of business (but not later
than the fifteenth day of each month for such statements that are issued on a
monthly basis), or as Purchaser may otherwise reasonably request.
(b) As promptly as practicable, Seller will deliver, and will cause the
Selling Affiliates to deliver, copies of all License applications and other
filings made by Seller or any Selling Affiliate in connection with the operation
of the Business after the date hereof and before the Closing Date or the
applicable Foreign Closing Date with any Governmental or Regulatory Authority.
4.7 Employee Matters. Except as may be required by Law, Seller will
refrain, and will cause the Selling Affiliates to refrain, from directly or
indirectly:
(a) making any representation or promise, oral or written, to any Employee
concerning any Plan or Benefit Plan, except for statements as to the rights or
accrued benefits of any Employee under the terms of any Plan or Benefit Plan;
(b) making any increase in the salary, wages or other compensation of any
Employee whose annual salary is or, after giving effect to such change, would be
$100,000 or more, except, in any case under this Section 4.7(b), in the ordinary
course of business or as Seller or any Selling Affiliate otherwise deems
reasonably necessary to respond to competitive situations;
(c) adopting, entering into or becoming bound by any Plan , any Benefit
Plan , any employment-related Contract or any collective bargaining agreement
with respect to the Business or any of the Employees, or amending, modifying or
terminating (partially or completely) any such Plan, Benefit Plan,
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law and, in the event compliance with legal
requirements presents options, only to the extent that the option which Seller
or the relevant Selling Affiliate reasonably believes to be the least costly is
chosen, except, in any case under this Section 4.7(c), in the ordinary course of
business or as Seller or any Selling Affiliate otherwise deems reasonably
necessary to respond to competitive situations; or
(d) establishing or modifying any (i) targets, goals, pools or similar
provisions in respect of any fiscal year under any Plan , any Benefit Plan, any
employment-related Contract or other compensation arrangement with or for
Employees or (ii) salary ranges, increase guidelines or similar provisions in
respect of any Plan , any Benefit Plan, any employment-related Contract or other
compensation arrangement with or for Employees, except, in any case under this
Section 4.7(d), in the ordinary course of business or as Seller or any Selling
Affiliate otherwise deems reasonably necessary to respond to competitive
situations.
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4.8 Certain Restrictions. From the date of this Agreement until Closing or
the termination of this Agreement, Seller will refrain, and will cause the
Selling Affiliates to refrain from:
(a) acquiring or disposing of any Assets and Properties used or held for
use in the conduct of the Business, other than in the ordinary course of
business consistent with past practice and other acquisitions or dispositions
not exceeding $1,000,000, individually, or $10,000,000, in the aggregate, or
creating or incurring any Lien, other than a Permitted Lien, on any Assets and
Properties used or held for use in the conduct of the Business;
(b) entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to any
Business Contract or any Business License other than in the ordinary course of
business;
(c) violating, breaching or defaulting under, or taking or failing to take
any action that (with or without notice or lapse of time or both) would
constitute a violation or breach of, or default under, any term or provision of
any Business Contract or any Business License, other than such violations,
breaches, defaults, actions or inactions that would not have a material adverse
effect on the Condition of the Business;
(d) incurring, purchasing, canceling, prepaying or otherwise providing for
a complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of Seller or any Selling Affiliate under, any
Liability of or owing to Seller or any Selling Affiliate in connection with the
Business, other than in the ordinary course of business consistent with past
practice;
(e) engaging with any Person in any Business Combination, unless such
Person agrees in writing that such Business Combination is subject to the terms
and conditions of this Agreement;
(f) engaging in any transaction with respect to the Business with any
officer, director, Affiliate or Associate of Seller or any Selling Affiliate, or
any Associate of any such officer, director or Affiliate, either outside the
ordinary course of business consistent with past practice or other than on an
arm's-length basis;
(g) making capital expenditures or commitments for additions to property,
plant or equipment constituting capital assets on behalf of the Business other
than in the ordinary course of business consistent with past practice;
(h) making any material acquisitions, sales or other dispositions of (or
making any commitments for such acquisition, sale or disposition of) any
Products, or any parts, components, supplies or accessories related thereto,
that are materially in excess of standard industry practices, that are other
than in the ordinary course of business or that are other than on an
arm's-length basis; or
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(i) entering into any Contract to do or engage in any of the foregoing.
4.9 Security Deposits. Seller will take, and will cause the Selling
Affiliates to take, all actions necessary to transfer to Purchaser or the
Purchasing Affiliates on the Closing Date or the applicable Foreign Closing Date
all of Seller's and the Selling Affiliates' right, title and interest in and to
the Tenant Security Deposits and the Landlord Security Deposits.
4.10 Delivery of Books and Records, etc.; Removal of Property.
(a) On the Closing Date or the applicable Foreign Closing Date, as the case
may be, Seller will deliver or make available, and will cause the Selling
Affiliates to deliver or to make available, to Purchaser at the locations at
which the Business is conducted all of the Business Books and Records and such
other Total Acquired Assets as are in Seller's or the Selling Affiliates'
possession at other locations, and if, at any time after the Closing or the
applicable Foreign Closing, Seller or any Selling Affiliate discovers in its
possession or under its control any other Business Books and Records or other
Total Acquired Assets, it will promptly deliver same, or cause the Selling
Affiliate to deliver same, to Purchaser.
(b) Within sixty (60) days after the Closing Date or the applicable Foreign
Closing Date, Seller shall remove, or shall cause the Selling Affiliates to
remove, all Assets and Properties not being sold to Purchaser or to a Purchasing
Affiliate hereunder from the Real Property and Improvements. Such removal shall
be at the sole cost and risk of Seller or the Selling Affiliate, including risk
of loss and damage to such Assets and Properties. Purchaser and the Purchasing
Affiliates shall have no Liability to Seller or the Selling Affiliates with
respect to such removal and transportation. Seller shall be responsible for
ensuring that the Real Property and Improvements are returned to the same
condition they were in prior to such removal, including but not limited to all
repairs to the Real Property and Improvements due to damage caused by Seller or
any Selling Affiliate and their respective employees and agents in connection
with the removal of Seller's or the Selling Affiliate's Assets and Properties.
(c) Within thirty (30) days of the date of this Agreement, Seller shall
deliver to Purchaser a true and complete list of all Licenses used or held for
use in the Business and all pending applications for any such Licenses, setting
forth the grantor, the grantee, the description or function and the expiration
and renewal date of each such License.
4.11 Noncompetition.
(a) Seller will, and will cause the Selling Affiliates and each of their
respective Affiliates and Associates, for a period of five (5) years from the
Closing Date or the last Foreign Closing Date, whichever is later, refrain from,
either alone or in conjunction with any other Person, or directly or indirectly
through its present or future Affiliates:
(i) employing, engaging or seeking to employ or engage any Person who
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within the prior twelve (12) months had been an employee of Purchaser or
any of its Affiliates engaged in the Business, unless such employee (A)
resigns voluntarily (without any solicitation from Seller or any of its
Affiliates) or (B) is terminated by Purchaser or any of its Affiliates
after the Closing Date or the applicable Foreign Closing Date;
(ii) causing or attempting to cause (A) any client, customer or
supplier of the Business to terminate or materially reduce its business
with Purchaser or any of its Affiliates or (B) any officer, employee or
consultant of Purchaser or any of its Affiliates engaged in the Business to
resign or sever a relationship with Purchaser or any of its Affiliates;
(iii) disclosing any confidential or secret information relating
primarily to the Business or any client, customer or supplier of the
Business, except, subject to the terms of the Technology Transfer
Agreement, in the ordinary course of Seller's or any of its Affiliates'
business pursuant to appropriate confidentiality agreements or to the
extent required by Law; or
(iv) participating or engaging in (other than through the ownership of
5% or less of any class of securities registered under the Securities
Exchange Act of 1934, as amended), or otherwise lending assistance
(financial or otherwise) to any Person participating or engaged in, any of
the lines of business which comprised the Business on the Closing Date or
the applicable Foreign Closing Date in any jurisdiction in which Seller and
the Selling Affiliates participates or engages in such lines of business on
the Closing Date.
Notwithstanding the foregoing, neither Seller nor a Selling Affiliate shall be
deemed to be engaged, directly or indirectly, in activities in contravention of
this Section 4.11(a) if Seller or a Selling Affiliate acquires a Person engaged
in such activities, provided that the gross revenues of such acquired Person
attributable to such activities do not exceed eight percent (8%) of such
Person's total gross revenues. If Seller or a Selling Affiliate acquires a
Person engaged in such activities whose gross revenues attributable to such
activities exceed eight percent (8%) of such Person's total gross revenues,
Seller shall, or shall cause the Selling Affiliate to, divest itself of that
portion of the Person's business comprising such activities within six months of
its acquisition of such Person and shall not use any of the Intellectual
Property related to the Business or any Tektronix names, trademarks, service
marks or logos in connection therewith. Also notwithstanding the foregoing,
Seller or a Selling Affiliate may be acquired by a Person that engages in such
activities. If Seller or a Selling Affiliate is acquired by a Person engaged in
such activities, Seller shall not, and shall cause the Selling Affiliate not to,
use any of the Tektronix names, trademarks, service marks or logos in connection
with that portion of the Person's business that comprises such activities for so
long as Purchaser and the Purchasing Affiliates have the right to use same in
accordance with the Trademark License Agreement.
(b) The parties hereto recognize that the Laws and public policies of the
various
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states of the United States and other countries may differ as to the validity
and enforceability of covenants similar to those set forth in this Section 4.11.
It is the intention of the parties that the provisions of this Section 4.11 be
enforced to the fullest extent permissible under the Laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such Laws or policies) of any provisions of
this Section 4.11 in any jurisdiction shall not render unenforceable, or impair,
the remainder of the provisions of this Section 4.11 in any other jurisdiction.
Accordingly, if any provision of this Section 4.11shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall be deemed to
apply only with respect to the operation of such provision in the particular
jurisdiction in which such determination is made and not with respect to any
other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law for any
breach of the provisions of this Section 4.11would be inadequate, and Seller
hereby consents, and shall cause the Selling Affiliates to consent, to the
granting by any court of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved and without the necessity of
posting a bond or other form of security, in order that the breach or threatened
breach of such provisions may be effectively restrained.
4.12 Notice and Cure. As soon as practicable after it becomes Known to
Seller or any Selling Affiliate, Seller will notify Purchaser in writing of, and
contemporaneously will provide Purchaser with true and complete copies of any
and all information or documents relating to any event, transaction or
circumstance occurring after the date of this Agreement that causes or will
cause any covenant or agreement of Seller or any Selling Affiliate under this
Agreement, the Ancillary Agreements or the Operative Agreements to be breached
or that renders or will render untrue any representation or warranty of Seller,
for itself or on behalf of the Selling Affiliates, contained in this Agreement,
the Ancillary Agreements or the Operative Agreements as if the same were made on
or as of the date of such event, transaction or circumstance and will use all
commercially reasonable efforts to cure the same before the Closing or the
applicable Foreign Closing. Seller also will notify Purchaser in writing of, and
will use all commercially reasonable efforts to cure, before the Closing or the
applicable Foreign Closing, any violation or breach, as soon as practicable
after it becomes Known to Seller or any Selling Affiliate, of any
representation, warranty, covenant or agreement made by Seller, for itself or on
behalf of any Selling Affiliate, in this Agreement, the Ancillary Agreements or
the Operative Agreements whether occurring or arising before, on or after the
date of this Agreement. No notice given pursuant to this Section 4.12 shall have
any effect on the representations, warranties, covenants or agreements contained
in this Agreement, the Ancillary Agreements or the Operative Agreements for
purposes of determining satisfaction of any condition contained herein or shall
in any way limit Purchaser's right to seek indemnity under Article 11.
4.13 Fulfillment of Conditions. Seller will execute and deliver, or will
cause the Selling Affiliates to execute and deliver, at the Closing or the
applicable Foreign Closing, as the case may be, each Ancillary Agreement and
each Operative Agreement that Seller or any Selling Affiliate is required hereby
to execute and deliver as a condition to the Closing
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or the applicable Foreign Closing, will take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to satisfy each
other condition to the obligations of Purchaser contained in this Agreement (and
will cause the Selling Affiliates to do the same) and will not take or fail to
take any action that could reasonably be expected to result in the
nonfulfillment of any such condition (and will cause the Selling Affiliates to
do the same).
4.14 Environmental Matters. If Purchaser identifies a breach of the
representations or warranties set forth in Sections 2.21(i) or (j) (determined
in all cases as if the terms "material", "materially", "Known to Seller" or
"Knowledge of Seller" were not included therein) prior to Closing, Seller shall
use all commercially reasonable efforts to correct the deficiency prior to
Closing and, to the extent such deficiency is not corrected before Closing,
shall cooperate with Purchaser in correcting the deficiency after Closing.
ARTICLE 5
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times from and
after the date hereof until the Closing or the applicable Foreign Closing, as
the case may be, Purchaser will comply with all covenants and provisions of this
Article 5, except to the extent Seller may otherwise consent in writing.
5.1 Regulatory and Other Approvals. Purchaser will, and will cause the
Purchasing Affiliates to, (a) take all commercially reasonable steps necessary
or desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable, to obtain all consents,
approvals or actions of, to make all filings with and to give all notices to
Governmental or Regulatory Authorities or any other Person required of Purchaser
or the Purchasing Affiliates to consummate the transactions contemplated hereby
and by the Ancillary Agreements and the Operative Agreements, including without
limitation those described in Schedules 3.3 and 3.4 hereto, (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as Seller or a Selling Affiliate or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Seller and the Selling Affiliates
as promptly as practicable in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Seller or a Selling Affiliate to
consummate the transactions contemplated hereby and by the Ancillary Agreements
and the Operative Agreements. Purchaser will provide prompt notification to
Seller when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and will
advise Seller of any communications (and, unless precluded by Law, provide
copies of any such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements or the
Operative Agreements.
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5.2 HSR Filings, etc. In addition to and not in limitation of Purchaser's
covenants contained in Section 5.1, Purchaser will, or will cause the Purchasing
Affiliates to, (a) take promptly all actions necessary to make the filings
required of Purchaser or its Affiliates under the HSR Act and any similar
filings under applicable Laws in any jurisdictions in with the Business is
conducted or the Purchased Assets are located or as may be required by any
Governmental or Regulatory Authority, (b) comply at the earliest practicable
date with any request for additional information received by Purchaser or its
Affiliates from the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any Governmental or Regulatory Authority pursuant to
the HSR Act or other applicable Laws and (c) cooperate with Seller or its
Affiliates in connection with Seller's or its Affiliates' filing under the HSR
Act or other applicable Laws and use reasonable commercial efforts to resolve
any investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by either the Federal Trade Commission, the Antitrust
Division of the Department of Justice, state attorneys general or any other
Governmental or Regulatory Authority; provided, however, that in no event shall
Purchaser or a Purchasing Affiliate be required to (x) divest any of its
business, product lines or assets or license any of its intellectual property,
or (y) take or agree to take any action or become or agree to become subject to
any limitation that Purchaser, in exercising its reasonable judgment, believes
could reasonably be expected to have a material adverse effect on the benefit or
value to Purchaser or the Purchasing Affiliates of the transactions contemplated
by this Agreement if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any applicable Laws.
5.3 Notice and Cure. Purchaser will notify Seller in writing of, and
contemporaneously will provide Seller with true and complete copies of any and
all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing or the applicable Foreign Closing,
any event, transaction or circumstance, as soon as practicable after it becomes
known to Purchaser or any Purchasing Affiliate, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of Purchaser or
any Purchasing Affiliate under this Agreement, the Ancillary Agreements or the
Operative Agreements to be breached or that renders or will render untrue any
representation or warranty of Purchaser contained in this Agreement or the
Operative Agreements or any representation or warranty of any Purchasing
Affiliate contained in the Ancillary Agreements or the Operative Agreements as
if the same were made on or as of the date of such event, transaction or
circumstance. Purchaser also will notify Seller in writing of, and will use all
commercially reasonable efforts to cure, before the Closing or the applicable
Foreign Closing, any violation or breach, as soon as practicable after it
becomes known to Purchaser, of any representation, warranty, covenant or
agreement made by Purchaser or a Purchasing Affiliate in this Agreement, the
Ancillary Agreements or the Operative Agreements to which it is a party, whether
occurring or arising before, on or after the date of this Agreement. No notice
given pursuant to this Section 5.3 shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement, the Ancillary
Agreements or the Operative
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Agreements for purposes of determining satisfaction of any condition contained
herein or shall in any way limit Seller's right to seek indemnity under Article
11.
5.4 Fulfillment of Conditions. Purchaser will execute and deliver, or will
cause the Purchasing Affiliates to execute and deliver, at the Closing or the
applicable Foreign Closing, as the case may be, each Ancillary Agreement and
each Operative Agreement that Purchaser or a Purchasing Affiliate is hereby
required to execute and deliver as a condition to the Closing or the applicable
Foreign Closing, will take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith to satisfy each other
condition to the obligations of Seller contained in this Agreement (and will
cause the Purchasing Affiliates to do the same) and will not take or fail to
take any action that could reasonably be expected to result in the
nonfulfillment of any such condition (and will cause the Selling Affiliates to
do the same).
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Purchased Assets and
to assume and to pay, perform and discharge the Assumed Liabilities are subject
to the fulfillment, at or before the Closing or the applicable Foreign Closing,
as the case may be, of each of the following conditions (all or any of which may
be waived in whole or in part by Purchaser in its sole discretion); provided,
however, that the fulfillment by Seller or the waiver by Purchaser of the
following conditions shall in no way limit Purchaser's right to such indemnity
under Article 11:
6.1 Representations and Warranties. Each of the representations and
warranties made by Seller in this Agreement (other than those made as of a
specified date earlier than the Closing Date or the applicable Foreign Closing
Date) shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualifications) or in all
material respects (in the case of any representation or warranty without any
materiality qualifications) as of the date hereof and the Closing Date or the
applicable Foreign Closing Date as though such representation or warranty was
made on and as of the Closing Date or the applicable Foreign Closing Date, and
any representation or warranty made as of a specified date earlier than the
Closing Date or the applicable Foreign Closing Date shall have been true and
correct in all respects or all material respects, as the case may be, on and as
of such earlier date, it being understood that, for purposes of determining the
accuracy of such representations and warranties (a) any inaccuracy that,
individually or in the aggregate with all such inaccuracies, does not have a
material adverse effect on the Condition of the Business shall be disregarded,
(b) any inaccuracy that results from or relates to general business or economic
conditions shall be disregarded, (c) any inaccuracy that results from or relates
to conditions generally affecting the industry in which the Business competes
shall be disregarded, (d) any inaccuracy that results directly from or relating
directly to the announcement or pendency of the transactions contemplated by
this Agreement shall be disregarded, and (e) any inaccuracy that results
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from or relates to the taking of any action contemplated by, and does not result
in a violation of, this Agreement shall be disregarded.
6.2 Performance. Seller shall have, in all material respects, performed and
complied with each agreement, covenant and obligation required by this Agreement
to be so performed or complied with by Seller at or before the Closing or the
applicable Foreign Closing.
6.3 Officers' Certificates. Seller shall have delivered to Purchaser a
certificate, dated the Closing Date or the applicable Foreign Closing Date and
executed by the Chairman of the Board, the President or any Vice President of
Seller or the Selling Affiliate, as the case may be, in form and substance that
is usual and customary in transactions of this nature and reasonably
satisfactory to Purchaser, certifying, among other things, the accuracy of
Seller's representations and warranties as of the Closing Date, and a
certificate, dated the Closing Date or the applicable Foreign Closing Date, as
the case may be, and executed by the Secretary or any Assistant Secretary of
Seller or the Selling Affiliate, as the case may be, in form and substance that
is usual and customary in transactions of this nature and reasonably
satisfactory to Purchaser, certifying, among other things, the due authorization
of this Agreement, the Ancillary Agreements and the Operating Agreements and the
consummation of the transactions contemplated hereby and thereby, and
incumbency.
6.4 No Material Adverse Change. There shall have been no material adverse
change in the Condition of the Business or the Total Acquired Assets since the
date of the Acquisition Balance Sheet; provided, however, that for the purpose
of determining whether there shall have been any such material adverse change,
(a) any adverse change resulting from general business or economic changes will
be disregarded, (b) any adverse change resulting from conditions generally
affecting the industry in which the Division conducts the Business shall be
disregarded, (c) any adverse change resulting from any action contemplated by
and not resulting in the violation of this Agreement, the Ancillary Agreements
or the Operative Agreements shall be disregarded, and (d) any adverse change
resulting directly and primarily from or relating directly and primarily to the
announcement or pendency of the transactions contemplated by this Agreement, the
Ancillary Agreements and the Operative Agreements shall be disregarded.
6.5 Orders and Laws. There shall not be in effect on the Closing Date or
the applicable Foreign Closing Date any Order or Law restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements
or Operative Agreements or which could reasonably be expected to otherwise
result in a material diminution of the benefits of the transactions contemplated
by this Agreement or any of the Ancillary Agreements or Operative Agreements to
Purchaser, and there shall not be pending or threatened on the Closing Date or
the applicable Foreign Closing Date any Action or Proceeding or any other action
in, before or by any Governmental or Regulatory Authority which could reasonably
be expected to result in the issuance of any such Order or the enactment,
promulgation or
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deemed applicability of any such Law to Purchaser or to a Purchasing Affiliate
or the transactions contemplated by this Agreement or any of the Ancillary
Agreements or the Operative Agreements.
6.6 Regulatory Consents and Approvals. All consents, approvals and actions
of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser, the Purchasing Affiliates, Seller and the Selling
Affiliates to perform their obligations under this Agreement, the Ancillary
Agreements and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall be in form and substance reasonably satisfactory to Purchaser,
(c) shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement, the Ancillary Agreements and the Operative
Agreements, including but not limited to under the HSR Act, shall have occurred.
6.7 Third Party Consents. All consents (or in lieu thereof waivers) to the
performance by Purchaser or the Purchasing Affiliates and Seller or the Selling
Affiliates of their obligations under this Agreement, the Ancillary Agreements
and the Operative Agreements or to the consummation of the transactions
contemplated hereby and thereby as are required under any Contract to which
Purchaser or Seller is a party or by which any of their respective Assets and
Properties are bound, including but not limited to those consents described on
Schedule 6.7(a) of the Disclosure Schedule (a) shall have been obtained, (b)
shall be in form and substance reasonably satisfactory to Purchaser, (c) shall
not be subject to the satisfaction of any condition that has not been satisfied
or waived and (d) shall be in full force and effect, except where the failure to
obtain any such consent (or in lieu thereof waiver) could not reasonably be
expected, individually or in the aggregate with other such failures, to have a
material adverse effect on the Condition of the Business or otherwise result in
a material diminution of the benefits of the transactions contemplated by this
Agreement, the Ancillary Agreements and the Operative Agreements to Purchaser
and the Purchasing Affiliates. Notwithstanding the foregoing, prior to Closing
Seller will deliver a consent with respect to each of the Contracts listed on
Schedule 6.7(b).
6.8 Title Insurance. Purchaser shall have received (a) an owner's standard
coverage policy or policies of title insurance on forms of and issued by one or
more title companies reasonably satisfactory to Purchaser insuring the fee title
of Purchaser to the Real Property located in the United States, with liability
in the amount of the value attributable by Seller and Purchaser to each parcel
of Real Property subject only to Permitted Liens, and Purchaser and Seller shall
have each paid to such title companies one-half of all charges, expenses and
premiums of such title companies in connection with the issuance of such
policies; provided, however, that Purchaser may request that the foregoing
policy or policies be an ALTA extended coverage owner's policy or policies so
long as (i) a survey acceptable to the title company has been obtained, at
Purchaser's expense, (ii) Purchaser pays the cost of the ALTA extended coverage
owner's policy or policies in
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excess of the cost of the owner's standard coverage policy, and (iii) there is
no delay in the Closing Date due to Purchaser's request to obtain an ALTA
extended coverage owner's policy or policies.
6.9 General Assignment, Assignment Instruments. Seller shall have delivered
to Purchaser the General Assignment and the other Assignment Instruments.
6.10 Transition Agreement. Seller and Purchaser shall have entered into the
Transition Agreement in a form that is mutually satisfactory to Purchaser and
Seller and such Agreement shall be in full force and effect on the Closing Date
in accordance with its terms.
6.11 Trademark License Agreement. Seller and Purchaser shall have entered
into the Trademark License Agreement in a form that is mutually satisfactory to
Purchaser and Seller and such Agreement shall be in full force and effect on the
Closing Date in accordance with its terms.
6.12 Technology Transfer Agreement. Seller and Purchaser shall have entered
into the Technology Transfer Agreement in the form attached hereto as Exhibit A
and such Agreement shall be in full force and effect on the Closing Date in
accordance with its terms.
6.13 Ancillary Agreements. The relevant Selling Affiliates and Purchasing
Affiliates shall have entered into the Ancillary Agreements and consummated the
transactions contemplated thereby in connection with each of the Significant
Foreign Closings.
6.14 Malaysian Stock Purchase Agreement. Seller (or the relevant Selling
Affiliate, as the case may be) and Purchaser (or the designated Purchasing
Affiliate, as the case may be) shall have entered into a Stock Purchase
Agreement in form and substance reasonably acceptable to Seller and Purchaser,
that is usual and customary for transactions of such type in Malaysia so as to
effect the sale and transfer of all of the capital stock of Tektronix Malaysia
Sdn. Bhd. to the Purchaser or the designated Purchasing Affiliate in order to
give the parties the benefit of this Agreement and to conform to the Laws,
customs and practices of Malaysia, and shall have consummated the transactions
contemplated thereby.
6.15 Proceedings. All proceedings to be taken on the part of Seller or any
Selling Affiliate in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to Purchaser, and Purchaser shall have received copies of all
such documents and other evidences as Purchaser may reasonably request in order
to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.16 Accounting Policies. Seller and Purchaser shall have agreed on the
Accounting Policies pursuant to Section 14.14.
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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Purchased Assets are
subject to the fulfillment, at or before the Closing or the applicable Foreign
Closing, as the case may be, of each of the following conditions (all or any of
which may be waived in whole or in part by Seller in its sole discretion);
provided, however, that the fulfillment by Purchaser or the waiver by Seller of
the following conditions shall in no way limit Seller's right to seek indemnity
under Article 11:
7.1 Representations and Warranties. Each of the representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualifications) or in all material respects (in the case of any
representation or warranty without any materiality qualifications) as of the
date hereof and the Closing Date or the applicable Foreign Closing Date as
though such representation or warranty was made on and as of the Closing Date or
the applicable Foreign Closing Date, and any representation or warranty made as
of a specified date earlier than the Closing Date or the applicable Foreign
Closing Date shall have been true and correct in all respects or all material
respects, as the case may be, on and as of such earlier date, it being
understood that, for purposes of determining the accuracy of such
representations and warranties, any inaccuracy that (a) does not have a material
adverse effect on the Purchaser's ability to consummate the transactions
contemplated herein shall be disregarded, and (b) results from or relates to the
taking of any action contemplated by, and does not result in a violation of,
this Agreement shall be disregarded.
7.2 Performance. Purchaser shall have performed and complied, in all
material respects, with each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing or the applicable Foreign Closing.
7.3 Officers' Certificates. Purchaser shall have delivered to Seller a
certificate, dated the Closing Date or the applicable Foreign Closing Date and
executed by the Chairman of the Board, the President or any Vice President of
Purchaser or the Purchasing Affiliate, as the case may be, in form and substance
that is usual and customary in transactions of this nature and reasonably
satisfactory to Seller, certifying, among other things, the accuracy of
Purchaser's representations and warranties as of the Closing Date, and a
certificate, dated the Closing Date or the applicable Foreign Closing Date, as
the case may be, and executed by the Secretary or any Assistant Secretary of
Purchaser or the Purchasing Affiliate, as the case may be, in form and substance
that is usual and customary in transactions of this nature and reasonably
satisfactory to Seller, certifying, among other things, the due authorization of
this Agreement, the Ancillary Agreements and the Operating Agreements and the
consummation of the transactions contemplated hereby and thereby, and
incumbency.
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7.4 Orders and Laws. There shall not be in effect on the Closing Date or
the applicable Foreign Closing Date any Order or Law restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements
or the Operative Agreements or which could reasonably be expected to otherwise
result in a material diminution of the benefits of the transactions contemplated
by this Agreement or any of the Ancillary Agreements or Operative Agreements to
Seller, and there shall not be pending or threatened on the Closing Date or the
applicable Foreign Closing Date any Action or Proceeding or any other action in,
before or by any Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such Order or the enactment,
promulgation or deemed applicability of any such Law to Seller or to a Selling
Affiliate or the transactions contemplated by this Agreement or any of the
Ancillary Agreements or the Operative Agreements.
7.5 Regulatory Consents and Approvals. All consents, approvals and actions
of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Seller, the Selling Affiliates, Purchaser and the Purchasing
Affiliates to perform their obligations under this Agreement, the Ancillary
Agreements and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall be in form and substance reasonably satisfactory to Seller, (c)
shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement, the Ancillary Agreements and the Operative
Agreements, including but not limited to under the HSR Act, shall have occurred.
7.6 Third Party Consents. All consents (or in lieu thereof waivers) to the
performance by Seller or the Selling Affiliates and Purchaser or the Purchasing
Affiliates of their obligations under this Agreement, the Ancillary Agreements
and the Operative Agreements or to the consummation of the transactions
contemplated hereby and thereby as are required under any Contract to which
Purchaser or Seller is a party or by which any of their respective Assets and
Properties are bound, including but not limited to those consents listed in
Section 6.7(a) of the Disclosure Schedule, (a) shall have been obtained, (b)
shall be in form and substance reasonably satisfactory to Seller, (c) shall not
be subject to the satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect, except where the failure to
obtain any such consent (or in lieu thereof waiver) could not reasonably be
expected, individually or in the aggregate with other such failures, to result
in a material diminution of the benefits of the transactions contemplated by
this Agreement, the Ancillary Agreements and the Operative Agreements to Seller
and the Selling Affiliates.
7.7 Assumption Agreement; Assumption Instruments. Purchaser shall have
delivered to Seller the Assumption Agreement and the other assumption
Instruments.
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7.8 Transition Agreement. Seller and Purchaser shall have entered into the
Transition Agreement in a form that is mutually satisfactory to Purchaser and
Seller and such Agreement shall be in full force and effect on the Closing Date
in accordance with its terms.
7.9 Trademark License Agreement. Seller and Purchaser shall have entered
into the Trademark License Agreement in a form that is mutually satisfactory to
Purchaser and Seller and such Agreement shall be in full force and effect on the
Closing Date in accordance with its terms.
7.10 Technology Transfer Agreement. Seller and Purchaser shall have entered
into the Technology Transfer Agreement in the form attached hereto as Exhibit A
and such Agreement shall be in full force and effect on the Closing Date in
accordance with its terms.
7.11 Ancillary Agreements. The relevant Selling Affiliates and Purchasing
Affiliates shall have entered into the Ancillary Agreements and consummated the
transactions contemplated thereby in connection with each of the Significant
Foreign Closings.
7.12 Malaysian Stock Purchase Agreement. Seller (or the relevant Selling
Affiliate, as the case may be) and Purchaser (or the designated Purchasing
Affiliate, as the case may be) shall have entered into a Stock Purchase
Agreement, in form and substance reasonably acceptable to Seller and Purchaser,
that is usual and customary for transactions of such type in Malaysia so as to
effect the sale and transfer of all of the capital stock of Tektronix Malaysia
Sdn. Bhd. to the Purchaser or the designated Purchasing Affiliate in order to
give the parties the benefit of this Agreement and to conform to the Laws,
customs and practices of Malaysia, and shall have consummated the transactions
contemplated thereby.
7.13 Proceedings. All proceedings to be taken on the part of Purchaser in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of all such documents
and other evidences as Seller may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.14 Accounting Policies. Seller and Purchaser shall have agreed on the
Accounting Policies pursuant to Section 14.14.
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ARTICLE 8
TAX MATTERS; CLOSING AND POST-CLOSING TAXES; VAT
8.1 General. The parties understand and agree that this Agreement shall be
interpreted, and that the parties shall administer their dealings in relation to
this Agreement, so as to effect the following principles relating to Taxes:
(a) As used in Sections 8.1 through 8.6 and Sections 8.7(d) through (f),
"Seller" shall include Seller and any relevant Selling Affiliate, and
"Purchaser" shall include Purchaser and any Purchasing Affiliate.
(b) Purchaser shall be responsible for (i) all Taxes arising out of the
ownership and operation of the Business and the Total Acquired Assets beginning
on the day after the Closing Date or the applicable Foreign Closing Date, (ii)
the Assumed Real Property Taxes, and (iii) the Sales Taxes (but not VAT)
included in invoices issued to Seller pertaining to assumed Accounts Payable.
(c) Except as set forth in Section 8.1(b), Seller shall be responsible for
all Taxes arising out of the ownership and operation of the Business and the
Total Acquired Assets up to and including the Closing Date or the applicable
Foreign Closing Date. Without limiting the generality of the foregoing, Seller
shall be responsible for (i) Sales Taxes included in Accounts Receivable that
are Purchased Assets, to the extent that no invoice has been raised on such
Account Receivables, (ii) Retained Real Property Taxes, (iii) personal property
Taxes for which the lien date arises prior to the Closing Date or the applicable
Foreign Closing Date, (iv) VAT included in the assumed Accounts Payable, and (v)
any employee-related Taxes. The responsibility of Seller for Taxes, as set forth
above, shall prevail irrespective of the manner in which any payment of Taxes or
obligation to pay Taxes (or the right to any credit, deposit or refund of Taxes)
is reflected in the financial statements of Seller and the Selling Affiliates.
(d) Irrespective of who has legal liability for any Transfer Tax, Seller
and Purchaser shall each be responsible for fifty percent (50%) of any Transfer
Taxes payable in connection with the transfer of the Total Acquired Assets (i)
in accordance with Section 8.5 with respect to Transfer Taxes other than VAT and
(ii) in accordance with Section 8.7 with respect to VAT.
8.2 Return Preparation.
(a) Purchaser shall cause to be filed all Tax Returns required to be filed
with respect to Taxes described in Section 8.1(b) which Tax Returns are due
after the Closing Date or the applicable Foreign Closing Date.
(b) Seller shall cause to be filed all Tax Returns required to be filed
with respect to the Taxes described in Section 8.1(c) regardless of when such
Tax Returns are due,
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including, but not limited to any information returns (e.g., Form 1099s) and any
returns related to employee Taxes. Seller shall cause to be filed all Tax
Returns required to be filed with respect to the Taxes described in Section
8.1(b) if such Tax Returns are due on or before the Closing Date or the
applicable Foreign Closing Date and shall provide Purchaser with a copy of such
Tax Returns. All Tax Returns described in this Section 8.2(b) shall be prepared
in a manner consistent with prior practice.
(c) Notwithstanding Section 8.2 (a) and (b), for any tax period for any
Real Property Taxes which commences prior to the Closing Date or the applicable
Foreign Closing Date and ends after the Closing Date or the applicable Foreign
Closing Date, as the case may be, Purchaser shall cause to be filed all Tax
Returns required to be filed with respect to the Real Property included within
the Purchased Assets. Purchaser shall upon the request of Seller promptly
provide to Seller proof of its compliance with the foregoing. The obligation to
pay such Real Property Taxes shall be allocated (i) to Seller for the period up
to and including the Closing Date or the applicable Foreign Closing Date, and
(ii) to Purchaser for the period subsequent to the Closing Date or the
applicable Foreign Closing Date. Purchaser shall pay such Real Property Taxes in
connection with filing the Tax Returns and Seller shall pay its share of such
Real Property Taxes in accordance with Section 8.6.
(d) The parties shall prepare and file the Tax Returns for the Transfer
Taxes payable in connection with the transfer of the Total Acquired Assets in
accordance with Section 8.5 with respect to Transfer Taxes other than VAT.
8.3 Tax Refunds. The party responsible for any Taxes pursuant to Sections
8.1(b) and (c) shall be entitled to all credits for and deposits and refunds of
such Taxes. Subject to the following:
(a) Any Tax refund received by Seller or any Selling Affiliate (or utilized
as a credit against Taxes due by Seller or any Selling Affiliate) after the
Closing Date or the applicable Foreign Closing Date with respect to the Business
or any Purchased Asset shall be promptly remitted to Purchaser if (i) the Tax
refund relates to a tax period beginning on or after the Closing Date or the
applicable Foreign Closing Date, or (ii) if such Tax refund is for a tax period
ending on or before the Closing Date or the applicable Foreign Closing Date and
was included on the Acquisition Balance Sheet as a Purchased Asset.
(b) Any Tax refund received by Purchaser after the Closing Date or the
applicable Foreign Closing Date with respect to the Business or any Asset shall
be promptly remitted to Seller to the extent that (i) such Tax refund relates to
a tax period ending on or before the Closing Date or the applicable Foreign
Closing Date, and (ii) such Tax refund was not included on the Acquisition Date
Balance Sheet as a Purchased Asset.
(c) Any Tax refund in connection with a Transfer Tax payable in connection
with the transfer of the Total Acquired Assets shall be shared by the parties as
set forth in Section 8.5 with respect to Transfer Taxes other than VAT and in
accordance with
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Section 8.7 with respect to VAT.
8.4 Cooperation with Respect to Tax Matters.
(a) On or before the Closing Date, Seller will provide to Purchaser and its
respective counsel and accountants the following:
(i) reasonable access during normal business hours to the Tax Returns
of Seller (other than income and franchise Tax Returns) related to the
Business and the right to make copies and extracts therefrom;
(ii) a list of all types of Taxes paid and types of Tax Returns filed
by or on behalf of Seller prior to the Closing Date with respect to the
Business and the Total Acquired Assets;
(iii) a list of all persons who have a power of attorney granted by
Seller or any Selling Affiliate prior to the Closing Date with respect to
any matters involving or related to Assumed Real Property Taxes or Taxes
Which May Give Rise To Any Transferee Tax Liability; and
(iv) such details as are reasonably requested by Purchaser of all
assets within the scope of a VAT capital goods scheme in the United Kingdom
or such similar scheme elsewhere.
(b) After the Closing Date or any applicable Foreign Closing Date, if
Seller or Purchaser (each a "party"), in order to properly prepare its Tax
Returns, needs access to Books and Records relating to the Business prior to and
including the Closing Date or any applicable Foreign Closing Date (other than
income or franchise Tax Returns) and such Books and Records are in the
possession and control of another party, such other party shall use commercially
reasonable efforts to furnish or make available such information, documents, or
records (or copies thereof) as promptly as practical to the requesting party at
the requesting party's expense for any out -of -pocket costs. Further, each
party shall make employees available to any other party on a mutually convenient
basis to provide additional information and explanations of any material
provided, relating to the Business and/or the Purchased Assets as is necessary
for the filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. Where there is a
requirement in Seller's jurisdiction to transfer Books and Records relating to
the Business or part thereof to Purchaser and it is permissible in accordance
with the VAT law or practice in that jurisdiction for Seller to make an
application to retain such Books and Records, Seller shall make such application
and inform Purchaser accordingly.
(c) Any information obtained by a party, its counsel or accountants in
accordance with this Section 8.4 shall be held confidential by such party and by
such counsel or accountants.
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8.5 Transfer Taxes. For any Transfer Taxes other than VAT (which is the
subject of Section 8.7):
(a) Seller and Purchaser each shall be responsible for fifty percent (50%)
of any Transfer Taxes payable in connection with the transfer of the Total
Acquired Assets contemplated under this Agreement.
(b) Seller and Purchaser shall each use commercially reasonable efforts to
obtain all available statutory or regulatory clearances or exemptions from
Transfer Taxes with respect to the transfer of the Total Acquired Assets. To the
extent it is determined that clearances or proof of exemption cannot be obtained
from one or more of the relevant Taxing Authorities with respect to the transfer
of specific Total Acquired Assets, Seller and Purchaser shall attempt to reach
agreement on whether Transfer Taxes are due. If agreement can not be made, the
parties agree to obtain and to be bound by the written opinion of a law firm
with a nationally recognized tax practice related to such Transfer Tax or an
internationally recognized firm of independent public accountants with respect
to whether such Transfer Taxes are due. The parties shall agree upon the law or
accounting firm to issue such opinion and Seller and Purchaser shall each bear
fifty percent (50%) of the cost thereof.
(c) Upon a determination by the parties that any Transfer Tax is due with
respect to the transfer of any portion of the Total Acquired Assets, the party
with the primary legal obligation for such Transfer Tax shall be responsible for
the preparation and filing of any Tax Return (the "Responsible Party") related
to such Transfer Tax (the "Transfer Tax Return"). The other party shall provide
the Responsible Party with such assistance in the preparation of the Transfer
Tax Return as the Responsible Party shall reasonably request. The Responsible
Party shall provide the other party with a draft of the Transfer Tax Return for
review and comment no later than seven (7) business days prior the due date for
the Transfer Tax Return and the parties shall promptly discuss any comments from
the other party and agree on a final Transfer Tax Return by no later than four
(4) business days prior to the due date for the Transfer Tax Return. No later
than two (2) business days prior to the due date for the Transfer Tax Return,
the other party shall pay over to the Responsible Party 50% of the amount shown
as due on the Transfer Tax Return in immediately available funds. By no later
than the due date for the Transfer Tax Return, the Responsible Party shall file
the Transfer Tax Return with the appropriate Taxing Authority and remit 100% of
the applicable Transfer Tax. The Responsible Party shall provide proof of filing
and payment to the other party.
(d) If either party receives any refund of any Transfer Tax paid by the
parties pursuant to this Section 8.5, then such party shall promptly remit 50%
of such refund to the other party.
(e) In the event that any Taxing Authority commences any audit, examination
or investigation of any Transfer Tax Return, the party receiving notice of such
audit, examination or investigation shall promptly notify the other party. In
the event that such
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audit, examination or investigation results in a Taxing Authority proposing any
deficiency, the parties shall attempt to reach agreement on whether to contest
such determination. If the parties are unable to agree, the parties agree to be
bound by the written opinion of a law firm with a nationally recognized tax
practice related to such Transfer Tax or an internationally recognized firm of
independent public accountants with respect to whether an appeal of such
determination is more likely than not to succeed. In the event that the parties
determine to proceed with an appeal, the costs of the appeal shall be shared
equally. In the event that the appeal is partially or wholly unsuccessful, the
parties shall each be responsible for 50% of the assessed deficiency in Transfer
Taxes, and such amount shall be paid by the parties in accordance with Section
8.5(c).
8.6 Real Property Taxes. For any Tax Period including the Closing Date or
the applicable Foreign Closing Date, Seller shall make a good-faith estimate of
the total amount of the Real Property Taxes, the Assumed Real Property Taxes and
the excess of the Real Property Taxes over the Assumed Real Property Taxes (such
excess being referred to as the "Retained Real Property Taxes," and such
estimated excess being referred to as the "Estimated Retained Real Property
Taxes"), all as of the Closing Date or the applicable Foreign Closing Date, as
the case may be, based on the most recent ascertainable financial information
and approval of the Business and the Real Property. Such estimates shall be
subject to review by Purchaser. As of the Closing Date or the applicable Foreign
Closing Date, Seller and Purchaser shall determine the total amount of Assumed
Real Property Taxes paid by Seller on or before the Closing Date or the
applicable Foreign Closing Date (the "Seller's Payment") and the total amount of
Estimated Retained Real Property Taxes to be paid by Purchaser after the Closing
Date or the applicable Foreign Closing Date (the "Purchaser's Payment"). At the
Closing or the applicable Foreign Closing, (a) Purchaser and Purchasing
Affiliates shall deliver to Seller and Selling Affiliates an amount in cash
equal to the positive difference, if any, between the Seller's Payment and the
Purchaser's Payment, or (b) Seller and Selling Affiliates shall deliver to
Purchaser an amount in cash equal to the positive difference, if any, between
the Purchaser's Payment and the Seller's Payment. Following the Closing or the
applicable Foreign Closing, from time to time as the actual amount of each of
the Retained Real Property Taxes becomes known, if the Estimated Retained Real
Property Taxes exceed the actual Retained Real Property Taxes or the actual
Retained Real Property Taxes exceeds the Estimated Retained Real Property Taxes,
the amount of the Purchaser's Payment and the difference between the Purchaser's
Payment and the Seller's Payment shall be recalculated and the applicable party
shall deliver to the other party, in cash, an amount reflecting such adjustment.
8.7 VAT.
(a) As used in Sections 8.7(b) and (c), "Purchaser" means the Purchaser or
Purchasing Affiliate liable for a Relevant Tax Payment or entitled to a Relevant
Tax Credit, as the case may be, "Seller" means the Seller or Selling Affiliate
liable for a Relevant Tax Payment or entitled to a Relevant Tax Credit, as the
case may be. Purchaser guarantees each obligation of each Purchasing Affiliate
provided by this Section 8.7; Seller guarantees each obligation of each Selling
Affiliate provided by this Section 8.7.
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(b) All sums stated in this Agreement as being payable by Purchaser to
Seller are exclusive of VAT, which shall be charged in addition, if applicable.
Seller shall issue a valid original VAT invoice to Purchaser on the date of the
appropriate tax point or if that date is not a Business Day on the first
Business Day thereafter. In respect of sums payable by Seller to Purchaser under
this Agreement a valid VAT credit note shall, if appropriate, be issued by
Seller to Purchaser on the date of the appropriate tax point or if that date is
not a Business Day on the first Business Day thereafter. The Responsible Party
(as defined in Section 8.5(c)) shall file the Tax Returns for VAT consistent
with Section 8.5(c).
(c) (i) In this Section 8.7(c) a Relevant VAT Payment is the amount of VAT
required to be paid to a Taxing Authority by Seller or Purchaser in respect of
the transfer of the Business and/or the Total Acquired Assets or any portion
thereof under this Agreement and the Relevant Payment Date is the date on which
the Relevant VAT Payment is required to be made.
(ii) In this Section 8.7(c) a Relevant VAT Credit is the amount of
credit for or rebate of VAT to which Seller or Purchaser is entitled in
respect of the transfer of the Business and/or the Total Acquired Assets or
any portion thereof under this Agreement and the Relevant Credit Date is
the date on which the relevant company enjoys the benefit of the Relevant
VAT Credit. Purchaser and Seller shall use all reasonable endeavors to
ensure that the company entitled to enjoy a Relevant Tax Credit shall take
such reasonable steps as are necessary to secure that the Relevant Credit
Date in respect thereof is the earliest date possible.
(iii) Within two (2) Business Days prior to a Relevant Payment Date
for Seller, Purchaser shall pay to Seller an amount of VAT equal to the
Relevant VAT Payment which is payable on that Relevant Payment Date. On the
Relevant Payment Date, Seller shall pay the Relevant VAT Payment to the
relevant Taxing Authority and Seller shall pay an amount equal to fifty
percent (50%) of the Relevant VAT Payment to Purchaser.
Within two (2) Business Days prior to a Relevant Payment Date for
Purchaser, Seller shall pay to Purchaser an amount of VAT equal to the
Relevant VAT Payment which is payable on that Relevant Payment Date. On the
Relevant Payment Date, Purchaser shall pay the Relevant VAT Payment to the
relevant Taxing Authority and Purchaser shall pay an amount equal to fifty
percent (50%) of the Relevant VAT Payment to Seller.
(iv) Within two (2) Business Days after a Relevant Credit Date for
Purchaser, Purchaser shall pay to Seller an amount equal to fifty percent
(50%) of the Relevant VAT Credit which is credited or received on that
Relevant Credit Date.
Within two (2) Business Days after a Relevant Credit Date for Seller,
Seller shall pay to Purchaser an amount equal to fifty percent (50%) of the
Relevant VAT Credit which is credited or received on that Relevant Credit
Date.
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(v) Either Purchaser or Seller may request a review of the operation
of Sections 8.7(c)(i) to (iv) inclusive, in order to confirm that, taking
an overall view of the amount and timing of all such past payments or
credit and all such estimated future payments and credits, the cost has
been borne equally by them. In the event that either Purchaser or Seller
believes that the said cost has not been borne equally, it may require the
other to enter into negotiations with a review to agreeing a method of
achieving an equal division of cost and in the absence of agreement the
matter shall be referred to the Arbitrator whose decision shall be final
and conclusive and binding on the parties.
(d) Seller and Purchaser shall use their reasonable efforts (which shall
include, without limitation, providing each other with such information or
assistance as the other shall reasonably request) to procure that the transfer
of the Business and the Total Acquired Assets under this Agreement is treated
under Article 5(8) of the Sixth Directive (where applicable) or any other
applicable legislation made pursuant to, or derived from, such Article (such as
Article 5 of the VAT (Special Provisions) Order 1995 in the United Kingdom) or
such other legislation as is applicable in a country which is not a member state
of the European Union as not being a supply of goods or a supply of services for
VAT purposes.
(e) Acting reasonably, Seller and Purchaser shall agree whether or not to
make an application to any relevant Taxing Authority for a confirmatory
declaration that VAT is not chargeable on the transfer of any portion of the
Business and/or the Total Acquired Assets under this Agreement and the relevant
Operative Agreement. If the parties agree to make such an application, Seller
shall procure the submission (as soon as possible following the aforementioned
agreement) to the relevant Taxing Authority of such an application. The costs of
such application shall be borne equally by Seller and Purchaser. If,
notwithstanding the reasonable efforts of Seller, an amount of VAT is determined
by a Taxing Authority to be payable, then Seller shall promptly notify Purchaser
of that determination. In the event of such determination by a Taxing Authority,
Seller and Purchaser shall consult and jointly and reasonably decide whether to
pursue a review of and/or an appeal against such determination. Any costs
involved in such review and/or appeal, and any strategic decisions with respect
to the conduct of such review and/or appeal, shall be shared equally by Seller
and Purchaser, irrespective of which is the formal legal party to the review
and/or appeal.
(f) In the event that Purchaser writes off a debt owing pursuant to a third
party contract which was entered into by Seller and which constitutes an Asset
(a "Debt") as a bad debt, provided VAT bad debt relief is available in the
applicable jurisdiction, Seller shall take the appropriate steps to reclaim from
the relevant Taxing Authority the VAT (if any) paid by Seller to such Taxing
Authority in respect of such Debt and shall immediately pay any such amount of
VAT recovered from the relevant Taxing Authority to Purchaser. If all or part of
such Debt is subsequently recovered, Purchaser shall immediately reimburse
Seller for so much of the amount paid by Seller to the Purchaser under this
Section 8.7(f) as is required to be paid by Seller to such relevant Taxing
Authority. If it is necessary for a
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Debt to be reassigned to Seller in order for a valid VAT bad debt relief claim
to be made, Purchaser and Seller shall take such action as is reasonably
necessary to give effect to such claim.
ARTICLE 9
EMPLOYEE MATTERS
9.1 Offer of Employment.
(a) Within thirty (30) days of the date of this Agreement, Seller shall
provide Purchaser with a list of the names of each Employee as of a date within
thirty (30) days of the date of this Agreement, together with such Employee's
location and position or function, annual base salary or wages and any incentive
or bonus arrangement with respect to such Employee that is in effect on such
date.
(b) Prior to the Closing Date, Purchaser will offer employment, contingent
on Closing, to at least 2,392 Employees selected by Purchaser, which number
shall include all of the Employees located in Heerenveen, such employment to
commence the day following the Closing Date, on terms, taken as a whole,
reasonably comparable to those provided to such Employees by Seller, except as
otherwise provided herein. Seller will take all necessary actions to terminate,
as of the Closing Date, Employees selected by Purchaser. Seller shall pay
Employees selected by Purchaser all compensation, commissions, bonuses, benefits
(including accrued vacation and sick leave) and incentive payments including,
but not limited to, any FY00 incentive program payments and severance payments
accrued through the Closing Date. Seller shall be responsible for any
liabilities arising in connection with or by virtue of the employment by Seller
of the Employees selected by Purchaser up to and including the Closing Date,
including, but not limited to, any liabilities arising in connection with any
Benefit Plan, and the termination of such employment as of the Closing Date.
9.2 Purchaser's Plan Service Credits.
Purchaser shall treat all Employees who accept employment with Purchaser as
new hires for purposes of determining eligibility to participate under
Purchaser's employee benefit plans, including, but not limited to, Purchaser's
Employee Stock Ownership Plan ("ESOP"), Retirement Income Guarantee Plan
("RIGP"), Profit Sharing and Savings Plan ("PSSP"), and Retiree Medical Plan
("RMP") (collectively, "Purchaser's Plans"), provided, however, that to the
extent permitted by applicable Laws, Purchaser shall grant such Employees credit
for years of service with the Seller to the extent necessary under the terms of
the Purchaser's Plans to permit their immediate participation in the Purchaser's
Plans and for all other purposes except for accrual of benefits under such plans
with respect to such service. Other than as may be the result of generally
applicable age-related and service-related waiting period(s) in effect under
Purchaser's Plans on the Closing Date, Purchaser's Plans shall not exclude such
Employees from eligibility to participate in Purchaser's Plans on
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terms substantially equivalent to those generally applicable on the Closing Date
to Purchaser's other eligible employees in the same business division.
9.3 Employee Benefit Programs Service Credits.
Except as set forth in Section 9.2 with respect to Purchaser's Plans, and
to the extent permitted by applicable Laws, Employees who accept employment with
Purchaser shall receive credit for years of service with Seller for the sole
purpose of participation under any benefit program, policy or arrangement
maintained by Purchaser, which programs may include, but are not limited to,
vacation and sick leave. For example, and without limiting the scope of the
foregoing service credit provisions, service with the Seller before the Closing
Date of Employees who accept employment with Purchaser shall be counted the same
as service for the Purchaser for purposes of participation in and calculation of
benefits (but not accrual of vested benefits) under Purchaser's Severance Pay
Plan and any other severance pay plan maintained or offered by Purchaser. If
Purchaser terminates any Employee who accepts employment with Purchaser within
12 months of the Closing Date, other than for cause, it shall provide such
terminated Employee with severance benefits at least comparable to those that
would have been available to such Employee under Seller's standard severance
policies. Purchaser shall have no obligation to assume, continue, or maintain
any benefit program, policy or arrangement maintained by Seller.
9.4 WARN Act.
Purchaser shall be responsible for all obligations, if any, under the
Worker Adjustment Retraining Notification Act ("WARN") and applicable
regulations thereunder with respect to any employment terminations after the
Closing Date of Employees who are hired by Purchaser for employment commencing
the day following the Closing Date, and shall indemnify Seller in the event
Seller is held liable for any failure by Purchaser to comply with Purchaser's
obligations under WARN or this subsection. Seller shall be responsible for all
obligations, if any, under WARN and applicable regulations thereunder with
respect to any employment terminations up to and including the Closing Date and
shall indemnify Purchaser in the event Purchaser is held liable for any failure
by Seller to comply with Seller's obligations under WARN or this subsection.
9.5 Foreign Nationals.
Seller agrees to use reasonable commercial efforts to assist Purchaser, at
Purchaser's expense, in securing any authorization necessary so that Purchaser
may employ any Foreign National offered employment by Purchaser.
9.6 Seller COBRA Compliance.
Seller agrees that Seller shall be responsible for compliance with any
applicable notification and continuation coverage pursuant to the Consolidated
Omnibus Budget
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Reconciliation Act of 1985 ("COBRA") and the regulations issued thereunder as to
any of Seller's employees who do not accept or are not offered employment by
Purchaser.
9.7 Evidence of Insurability.
Purchaser shall take all necessary steps to insure that those Employees
hired by Purchaser for employment commencing the day following the Closing Date
shall not be subject to evidence of insurability requirements with respect to
entry into new insurance coverage under any Plan of Purchaser in connection with
such employment.
9.8 HMO Coverage.
Purchaser shall make reasonable commercial efforts to permit each Employee
hired by Purchaser for employment commencing the day following the Closing Date
to have Health Maintenance Organization ("HMO") insurance coverage after the
Closing Date with the same HMO through which they had coverage in effect on the
Closing Date.
9.9 Direct Transfer of 401(k) Balances.
Seller and Purchaser shall take all necessary steps consistent with
applicable law to provide that certain accounts under Seller's 401(k) Plan
identified in Schedule 2.12(a) shall be transferred in a direct
trustee-to-trustee transfer from Seller's 401(k) Plan to Purchaser's Profit
Sharing and Savings Plan. Accounts transferred pursuant to the preceding
sentence shall be all accounts under Seller's 401(k) Plan (including, to the
extent reasonably feasible as determined by the administrator of Purchaser's
Profit Sharing and Savings Plan, any then-outstanding participant loans) of
Employees who become employees of Purchaser as of the day after the Closing
Date. Such transfer shall be carried out as soon as reasonably practicable after
the Closing Date. With respect to any such transferred participant loans,
Purchaser shall make reasonable arrangements for ongoing repayment of the loans
under Purchaser's Profit Sharing and Savings Plan. Such transfer of currently
outstanding loans under this provision is not intended to obligate Purchaser's
Profit Sharing and Savings Plan to allow participants to take out new loans with
respect to such transferred accounts, or to prevent such new loans if permitted
under generally applicable provisions of Purchaser's Profit Sharing and Savings
Plan.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the Business or any right of any party (whether or not exercised) to
investigate the accuracy of the representations and warranties of the other
party contained in this Agreement, Seller and Purchaser have the right to rely
fully upon the representations,
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warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements of Seller and
Purchaser contained in this Agreement will survive the Closing or the applicable
Foreign Closing (a) indefinitely with respect to the representations and
warranties contained in Sections 2.2, 2.21 (except in the case of Environmental
Claims by third parties which are the subject of Article 10(b) hereinbelow), and
3.2 and the covenants and agreements contained in Sections 1.7, 14.4, and 14.5,
and Article 11 (b) until sixty (60) days after the expiration of all applicable
statutes of limitation (including all periods of extension, whether automatic or
permissive) with respect to matters covered by (i) Section 2.9 and Article 8,
(ii) Section 2.21 (insofar as it relates to Environmental Claims by third
parties), and (iii) Section 2.12 and Article 9 (insofar as they relate to ERISA
or the Code), (c) until three (3) years after the Closing Date in the case of
the representations and warranties contained in Section 2.15, (d) until eighteen
(18) months after the Closing Date or the applicable Foreign Closing Date, as
the case may be, in the case of all other representations and warranties and any
covenant or agreement to be performed in whole or in part on or prior to the
Closing or the applicable Foreign Closing, or (e) with respect to each other
covenant or agreement contained in this Agreement, until sixty (60) days
following the last date on which such covenant or agreement is to be performed
or, if no such date is specified, until the Closing (or the applicable Foreign
Closing) or termination of the Agreement in accordance with Article 12.
Notwithstanding the foregoing, any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with Article 10(b), (c),
(d), or (e) above will continue to survive with respect to a claim for
indemnification if a Claim Notice or Indemnity Notice (as applicable) shall have
been timely given under Article 11 on or prior to such termination date, until
the related claim for indemnification has been satisfied or otherwise resolved
as provided in Article 11.
ARTICLE 11
INDEMNIFICATION
11.1 Tax Indemnification.
(a) Seller, for itself and on behalf of each of the Selling Affiliates,
agrees to be responsible for and to indemnify and hold Purchaser and each
Purchasing Affiliate harmless from and against any and all of the following:
(i) any and all Taxes (other than Transfer Taxes, which are governed
by Article 8) owed by Seller or any Selling Affiliate for any taxable
period prior to or as of the Closing Date or the applicable Foreign Closing
Date which are Taxes Which May Give Rise To Any Transferee Tax Liability
(excluding the Assumed Real Property Taxes);
(ii) any and all Tax Liens on any Asset arising with respect to any
tax
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periods (or portions thereof) ending on or prior to the Closing Date or the
applicable Foreign Closing Date (except the Assumed Real Property Taxes);
(iii) any breach or inaccuracy of any of the representations or
warranties of Seller contained in Section 2.9 hereof, and with respect to
any tax periods (or portions thereof);
(iv) any breach of any covenant of Seller contained in Article 8; and
(v) any liability for Taxes in respect of any indemnity payment made
pursuant to the foregoing Section 11.1(a)(i), (ii), (iii) and (iv) and this
Section 11.1(a)(v) so that Purchaser or Purchasing Affiliate shall have
received such indemnity payment on an after-tax-basis. Any such payment
shall assume that Purchaser and any Purchasing Affiliate is taxable at the
highest marginal statutory rate in effect for the relevant period.
Notwithstanding the foregoing, no indemnity payment shall be due from Seller or
any Selling Affiliate to Purchaser or any Purchasing Affiliate under this
Section 11.1 with respect to the foregoing unless the indemnity payment exceeds
Two Thousand Five Hundred Dollars ($2,500.00) (a "De Minimis Indemnity Amount"),
provided that such limitation shall not apply after the total sum of all De
Minimis Indemnity Amounts exceeds One Hundred Twenty-Five Thousand Dollars
($125,000.00).
(b) All amounts payable as indemnities pursuant to Section 11.1(a) shall be
(i) treated, to the extent permitted by the applicable Laws of the applicable
Taxing Authority, as an adjustment to the Purchase Price, and (ii) payable
within five (5) days after written demand by Purchaser to Seller.
Notwithstanding the foregoing, if, in the case of Section 11.1(a)(i) or (ii),
such Taxes are contested pursuant to Section 11.1(c) hereof and as a result of
such contest, Purchaser's obligation to pay such Taxes is stayed pending the
outcome of such Tax Proceeding, Seller shall be obligated to pay Purchaser such
indemnity upon the earlier of the resolution of the Tax Proceeding or the
termination of the stay.
(c) In the event that any audit or examination shall be instituted, or any
deficiency asserted or assessment made, or any administrative or court
proceeding commenced by the IRS or any other Taxing Authority (a "Tax
Proceeding") with respect to any Taxes described in Section 11.1(a)(i) or (ii)
(an "Indemnifiable Tax"), the party receiving such notice shall promptly cause
written notice of the Tax Proceeding to be forwarded to the other party.
Provided that Seller is not in violation of its obligations under this Section
11.1 and does not contest its obligation to indemnify Purchaser pursuant to
Section 11.1(a), Seller shall have the right to elect, at its sole option and
expense, and subject to the provisions of this Section 11.1(c), to contest the
such Indemnifiable Tax in the name of Seller and/or any applicable Selling
Affiliate in the Tax Proceeding and settle, pay or adjust any amount owed with
respect to such Indemnifiable Tax with counsel of its choice; provided that such
counsel shall be reasonably satisfactory to Purchaser. In the event Seller
elects to contest such
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Indemnifiable Tax in such Tax Proceeding, Seller shall within five (5) days (or
sooner, if the nature of the Tax Proceeding so requires) notify Purchaser of its
intent to do so. Provided that Purchaser shall believe, in its sole discretion,
that the Tax Proceeding may impact any future tax issue related to the Purchased
Assets or Purchaser's operation of the Business, Purchaser shall have (i) the
right to participate fully in the Tax Proceeding, including through separate
counsel of its own choosing at its sole cost and expense, (ii) the right to
receive reasonable advance notice from Seller of any meetings, hearings or
proceedings, and (iii) the right to review in advance and comment on any
pleadings, briefs or other documents to be filed or otherwise disclosed or
provided to the Taxing Authority, their counsel or any court or administrative
agency. Seller shall not consent to any judgment or enter into any settlement,
closing or other agreement with respect to any Tax Proceeding without the prior
written consent of Purchaser (such consent not to be unreasonably withheld,
conditioned or delayed if, and only to the extent, such settlement, closing or
other agreement relates solely to an Indemnifiable Tax and has no binding or
preclusive effect upon Purchaser with respect to any period after the Closing
Date or the applicable Foreign Closing Date).
11.2 Other Indemnification.
(a) Subject to paragraphs (b) and (c) of this Section and the other
Sections of this Article 11, Seller shall indemnify the Purchaser Indemnified
Parties in respect of, and hold each of them harmless from and against, any and
all claims (including, without limitation, Environmental Claims), Liabilities or
Losses (whether absolute, accrued, contingent, fixed or otherwise, whether known
or unknown or due or to become due or otherwise) suffered, incurred or sustained
by any of them or to which any of them becomes subject at any time (whether
before or after Closing or the applicable Foreign Closing Date), resulting from,
arising out of or relating to:
(i) Environmental Matters
(A) nonfulfillment of or failure to perform any covenant or
agreement on the part of Seller, for itself or on behalf of any
Selling Affiliate, contained in this Agreement in respect of any
environmental matters;
(B) any violation of any Law by Seller or any Selling Affiliate
in respect of any environmental matters prior to the Closing or the
applicable Foreign Closing;
(C) any Hazardous Materials Contamination present in, on, under
or at any of the Real Property or properties subject to the Real
Property Leases or any other property owned, leased or occupied by
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Seller or any Selling Affiliate at any time prior to the Closing or
the applicable Foreign Closing, including but not limited to Hazardous
Materials Contamination at, on or under the real property sold to
Venture Properties, Inc. in 1998 and Seller's former manufacturing
facility in Heerenveen, The Netherlands sold in 1996; or
(D) any Environmental Claims arising from events occurring prior
to the Closing or the applicable Foreign Closing, including, without
limitation, Environmental Claims arising from any Hazardous Materials
Contamination at any property owned, leased or occupied by Seller or
any Selling Affiliate or any third party prior to the Closing or the
Applicable Foreign Closing including but not limited to the disposal
of, transportation to, and arrangement for disposal of Hazardous
Materials at Seller's Beaverton, Oregon Treatment, Storage and
Disposal Facility, the Western Processing Superfund Site located in
Kent, Washington and/or any other location;
(ii) any misrepresentation or breach of warranty on the part of
Seller, for itself or on behalf of any Selling Affiliate, (determined in
all cases as if the terms "material," "materially" "Known to Seller" or
"Knowledge of Seller" were not included therein) except that "Known to
Seller" or "Knowledge of Seller" shall be included solely for purposes of
Sections 2.15(a), (b), (c) and (d));
(iii) any Assumed Liabilities (A) assumed pursuant to Section
1.2(a)(xiii) but only with respect to Products sold prior to the Closing
Date and included as an accrued liability in the Statement of Closing Net
Assets, (B) relating to Epidemic Failure of Products assumed pursuant to
Section 1.2(a)(xviii) and included as an accrued liability in the Statement
of Closing Net Assets, excluding Liabilities related to Print Head Drift,
(C) assumed under Section 1.2(a)(i), (iii) or (iv) relating to any Business
Contract, Business License, Real Property Lease or Personal Property Lease,
but only to the extent such obligations were to be performed by Seller or a
Selling Affiliate prior to the Closing Date and were not disclosed in the
Disclosure Schedule or included as an accrued liability in the Statement of
Closing Net Assets or (D) assumed pursuant to Section 1.2(a)(xiv) to the
extent the Assumed Liability constitutes a breach of a representation or
warranty set forth in Section 2.21;
(iv) an Excluded Asset or a Retained Liability;
(v) any Assumed Liabilities assumed pursuant to Section 1.2(a)(xix),
but only to the extent such Losses do not exceed Five Million Dollars
($5,000,000). For purposes of this Section 11.2(a)(v), any such Losses
shall be determined by crediting 50% of all applicable service contract
revenues attributable to a customer against that customer's printhead
repair costs during the
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year that such repair costs are incurred and excluding all non-service
contract repairs charged on a time and materials basis; or
(vi) any Hazardous Materials incorporated into any Product
manufactured, distributed, sold, purchased, transported or possessed by
Seller or any Seller Affiliate prior to the Closing or applicable Foreign
Closing.
Notwithstanding the foregoing, the indemnities provided in this Section
11.2(a) shall not be diminished or affected in any way by any information
contained in the Disclosure Schedules attached to this Agreement, and
provided, however, that any indemnity for claims, Liabilities or Losses
relating to Taxes shall be determined solely in accordance with Section
11.1.
(b) No amounts of indemnity shall be payable in the case of a claim by a
Purchaser Indemnified Party under Sections 11.2(a)(i), (ii), (iii) and (vi),
unless and until the Purchaser Indemnified Parties have suffered, incurred,
sustained or become subject to Losses referred to in such Section in excess of
Ten Million Dollars ($10,000,000.00) in the aggregate, in which event the
Purchaser Indemnified Parties shall be entitled to claim indemnity only for such
amounts in excess of Ten Million Dollars ($10,000,000.00), provided that this
Section 11.2(b) shall not apply to any claims based on fraud; and, provided,
further, that the maximum aggregate amount of the liability of Seller under
Sections 11.2(a)(i), (ii), (iii), (v) and (vi) is $50,000,000.
(c) Any Losses or Liabilities which Purchaser or a Purchaser Indemnified
Party is entitled to receive payment under this Article 11 shall be reduced
dollar for dollar to the extent, but only to the extent, that the Purchaser
Indemnified Party obtains a monetary benefit or value directly related to such
Liability or Loss; provided, however, that the Purchaser shall have no
obligation to seek or maximize any such monetary benefit or value.
(d) Notwithstanding anything in this Section 11.2 to the contrary, in
addition to Sections 11.2(b) and (c), Seller's liability to indemnify any
Purchaser Indemnified Party for Liabilities or Losses due to any claim for
infringement of Intellectual Property shall be subject to the following:
(i) Seller shall indemnify Purchaser Indemnified Parties for any
misrepresentation or breach of warranty on the part of Seller, for itself
or on behalf of any Selling Affiliate, to the extent the Liability or Loss
arises from or relates to the manufacture, use or sale of Products, or use
of processes by Seller or the Selling Affiliate prior to the Closing Date,
regardless of whether the Intellectual Property Infringement is Known to
Seller as of the date of this Agreement.
(ii) Seller shall indemnify Purchaser Indemnified Parties for any
misrepresentation or breach of warranty on the part of Seller, for itself
or on behalf of any Selling Affiliate, to the extent the Liability or Loss
arises from the
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manufacture, use or sale of Products, or use of processes, by Seller or the
Selling Affiliate on or after the Closing Date only if the Intellectual
Property Infringement is Known to Seller as of the date of this Agreement.
For the avoidance of doubt, Seller shall have no indemnification obligation
to Purchaser Indemnified Parties for misrepresentation or breach of
warranty on the part of Seller, for itself or on behalf of any Selling
Affiliate, to the extent the Liability or Loss arises from the manufacture,
use or sale of Products, or use of processes, by Seller or the Selling
Affiliate on or after the Closing Date with respect to Intellectual
Property Infringement if the Intellectual Property Infringement is not
Known to Seller as of the date of this Agreement
(iii) For purposes of this Section 11.2(d), "Known to Seller" means
the actual knowledge of any officer, director, or employee of Seller listed
in Section 13.1 of the Disclosure Schedule as of the date hereof, and shall
not include any imputed knowledge or be deemed to impose any obligation on
Seller to conduct a patent, trademark, or copyright search.
(e) Purchaser shall indemnify Seller Indemnified Parties in respect of, and
hold each of them harmless from and against, any and all claims, Liabilities and
Losses (whether absolute, accrued, contingent, fixed or otherwise, whether known
or unknown or due or to become due or otherwise) suffered, incurred or sustained
by any of them or to which any of them becomes subject at any time (whether
before or after Closing or the applicable Foreign Closing Date), resulting from,
arising out of or relating to (i) any Assumed Liabilities, to the extent the
Purchaser Indemnified Parties are not entitled to indemnification under Sections
11.1 or 11.2, and (ii) the conduct of the Business after Closing.
11.3 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 11.2 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under Section 11.2 is asserted against or sought to
be collected from such Indemnified Party by a Person other than Seller,
Purchaser or any Affiliate of Seller or Purchaser (a "Third Party Claim"), the
Indemnified Party shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice
with reasonable promptness after the Indemnified Party receives notice of such
Third Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Purchaser Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its Liability to the Indemnified Party under Section
11.2 and whether the Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party Claim.
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(i) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Section 11.3(a), then the Indemnifying Party will have the right to defend,
with counsel reasonably satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which shall be done in a reasonable manner and in
good faith or will be settled at the discretion of the Indemnifying Party
(but only with the consent of the Indemnified Party in the case of any
settlement that provides for any relief other than the payment of monetary
damages, which consent shall not be unreasonably withheld). The
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this Section 11.3(a)(i), file any
motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate to
protect its interests; and provided, further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party Claim that the
Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this Section 11.3(a)(i),
and except as provided in the preceding sentence, the Indemnified Party
will bear its own costs and expenses with respect to such participation. So
long as the Indemnifying Party is contesting the Third Party Claim in good
faith and with reasonable diligence, the Indemnified Party shall not pay or
settle the Third Party Claim. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of
a Third Party Claim at any time if it irrevocably waives its right to
indemnity under Section 11.2, as the case may be, with respect to such
Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to Section 11.3(a), or if the Indemnifying Party
gives such notice but fails to contest, in a reasonable manner and in good
faith or settle the Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute Period, then the
Indemnified Party will have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnified Party
in a reasonable manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and proceedings,
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including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this Section 11.3(a)(ii), if
the Indemnifying Party has notified the Indemnified Party that the
Indemnifying Party disputes its Liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the manner provided in
clause (iii) below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this
Section 11.3(a)(ii) or of the Indemnifying Party's participation therein at
the Indemnified Party's request, and the Indemnified Party will reimburse
the Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section
11.3(a)(ii), and the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its Liability to the Indemnified Party with respect to the
Third Party Claim under Section 11.2, the Loss in the amount specified in
the Claim Notice will be conclusively deemed a Liability of the
Indemnifying Party under Section 11.2, and the Indemnifying Party shall pay
the amount of such Loss to the Indemnified Party on demand. If the
Indemnifying Party has disputed its Liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith
to negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved
by arbitration in accordance with Section 11.3(c).
(b) In the event any Indemnified Party should have a claim under Section
11.2 against any Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity Notice, the Loss
in the amount specified in the Indemnity Notice will be conclusively deemed a
Liability of the Indemnifying Party under Section 11.2 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has disputed its Liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration in
accordance with
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Section 11.3(c).
(c) Any dispute submitted to arbitration pursuant to this Section 11.3
shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3) members (hereinafter sometimes called the
"Board of Arbitration") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one (1) member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty (20)
days after their selection, such third member shall thereafter be selected by
the American Arbitration Association upon application made to it for such
purpose by the Indemnified Party. The Board of Arbitration shall meet in San
Francisco, California, or such other place as a majority of the members of the
Board of Arbitration determines more appropriate, and shall reach and render a
decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the expiration of such
thirty (30) day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the member of the Board of Arbitration
appointed by such party, provided, however, that the expenses and fees of the
third member of the Board of Arbitration and any other expenses of the Board of
Arbitration not capable of being attributed to any one member shall be borne in
equal parts by the Indemnifying Party and the Indemnified Party.
ARTICLE 12
TERMINATION
12.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of Seller
and Purchaser;
(b) at any time before the Closing, by Seller or Purchaser, if not then in
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default (i) in the event of a material breach hereof by the non-terminating
party if such non-terminating party fails to cure such breach within twenty (20)
Business Days following notification thereof by the terminating party or (ii)
upon notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party;
(c) at any time after one hundred and eighty (180) days after the date of
this Agreement by Seller or Purchaser upon notification of the non-terminating
party by the terminating party if the Closing and the Significant Foreign
Closings shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party;
provided, however, that if the Closing and the Significant Foreign Closings have
not occurred on or before the 120th day after the date of this Agreement by
reason of the non-satisfaction of any of the conditions set forth in Sections
6.5, 6.6, 6.7, 7.4, 7.5 or 7.6, then such 120-day period shall be extended for
such number of days as may be mutually acceptable to Seller and Purchaser, but
in any event not less than one hundred and eighty (180) additional days;
(d) at any time not later than 45 days after the date of this Agreement by
Purchaser in the event that: (i) Purchaser has obtained an environmental survey
and assessment (including but not limited to any subsurface investigations) of
the soils and groundwater prepared by a firm of licensed engineers (familiar
with the identification of Hazardous Materials), such environmental survey and
assessment to be based upon physical onsite inspections by such firm of some or
all of the Real Property, the Tek Malaysia Real Property and properties subject
to the Real Property Leases used in connection with the Business, as well as a
historical review of the uses of the Business, and it may include subsurface
investigations of the Real Property, and such environmental survey and
assessment indicates that there are liabilities under Environmental Laws that
are not disclosed in Section 2.21 of the Disclosure Schedules that could
reasonably be expected to have a material adverse effect on the Condition of the
Business; (ii) Purchaser has reviewed the litigation disclosed in Section 2.10
of the Disclosure Schedules and the results of this review indicate that the
litigation could reasonably be expected to have a material adverse effect on the
Condition of the Business; or (iii) Purchaser has reviewed the Products being
developed, manufactured, sold or licensed by the Business and the processes used
by the Business to determine whether any of the foregoing infringes a patent,
trademark, copyright, trade secret or other intellectual property right of any
third party, and the results of such review indicate that such infringement
could reasonably be expected to have a material adverse effect on the Condition
of the Business.
Any subsurface investigation under Section 12.1(d)(i) shall be performed in
accordance with the following conditions:
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(A) Ground disturbing activities may occur only in locations
reasonably approved by Seller. Notwithstanding Seller's approval, Purchaser
is solely responsible for identifying and protecting subsurface utilities
and structures. All ground disturbing activities shall be done in a manner
that prevents exacerbation of any Hazardous Materials Contamination that
may exist.
(B) Purchaser will promptly repair any damage to improvements or
landscaping caused by ground disturbing activities and shall promptly
restore the ground surface to existing or better condition.
(C) Purchaser will require its environmental consultant to provide
Seller copies of all reports of such investigation at the same time such
materials are provided to Purchaser.
(D) Purchaser is solely responsible for the proper handling, storage
and disposal of all drill cuttings and produced water (including purge
water). Purchaser shall ensure that all drill cuttings and produced water
are properly transported off site within seven days of the day on which
they are generated. Drill cuttings and purge water may not be disposed of
on Seller's property or stored for more than seven days. Any such materials
stored on Seller's property shall be properly containerized and stored in a
locked box in at a location approved by Seller.
(E) Purchaser shall be solely responsible for the safety and conduct
of its employees, contractors and any other personnel who enter the Real
Property pursuant to these terms. Purchaser shall indemnify, defend,
reimburse and hold harmless Seller from and against any and all claims,
Losses or Liabilities that arise out of Purchaser's entry to the Real
Property. Before entering the Real Property, Purchaser shall provide Seller
certificates of insurance for insurance in the following amounts:
(1) Comprehensive general liability insurance, including an
environmental impairment liability endorsement, with a minimum limit
of $1,000,000 single limit for (i) bodily injury, death and property
damage, including damage to the Property; and (ii) contractual
liability;
(2) Automobile liability insurance with a minimum limit of
$1,000,000 combined single limit for bodily injury, death and property
damage with respect to any vehicles used in connection with the
Activities;
(3) Umbrella liability insurance in excess of (1) and (2) above
in the amount of $4 million; and
(4) Professional liability insurance, including an environmental
impairment liability endorsement, with a minimum limit of $2,000,000
annual aggregate.
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For work performed in the United States, such Certificates with respect to
coverages 1, 2 and 3 above shall name Seller as an additional insured and shall
specify that the insurance is primary insurance to Seller. Such certificates of
insurance may be submitted by Purchaser's contractors, provided that each
contractor that enters the Real Property must be covered by certificates of
insurance meeting these minimum requirements. Purchaser satisfy any applicable
self-insured retention under such insurance; or
(e) at any time within 30 days after Seller has delivered to Purchaser a
revised Section 2.15(e) of the Disclosure Schedule identifying separately the
third-party software agreements to be assigned to Purchaser at the Closing and
the software agreements currently used by the Business but to be retained by
Seller (which revised Disclosure Schedule shall be delivered by Seller within 15
days of the date of this Agreement), by Purchaser in the event that the changes
to the Disclosure Schedule reflected in such revised Disclosure Schedule could
be reasonably expected to have a material adverse effect on the benefits to
Purchaser of the transactions contemplated by this Agreement.
12.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 12.1, this Agreement will forthwith become null and void,
and there will be no Liability or obligation on the part of Seller or Purchaser
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to expenses in Section 14.4
will continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to Sections 12.1(b) or (c), Seller will remain liable to Purchaser for
any breach of this Agreement by Seller existing at the time of such termination,
and Purchaser will remain liable to Seller for any breach of this Agreement by
Purchaser existing at the time of such termination, and Seller or Purchaser may
seek such remedies, including damages and fees of attorneys, against the other
with respect to any such breach as are provided in this Agreement or as are
otherwise available at Law or in equity. In the event this Agreement is
terminated by Purchaser if (a) Seller has breached any of its obligations
pursuant to Section 4.4 or (b) the Board of Directors of Seller or the Board of
Directors of any Selling Affiliate which is a party to an Ancillary Agreement
that is involved in a significant Foreign Closing withdraws or modifies (in a
manner adverse to Purchaser) its approval or recommendation of this Agreement,
the Ancillary Agreements or the Operative Agreements and the transactions
contemplated hereby or thereby, Seller shall pay to Purchaser a termination fee
of Forty Million Dollars ($40,000,000.00) in cash as liquidated damages and the
payment therefrom in accordance with this Section 12.2 shall be in lieu of any
other rights or remedies to which Purchaser may be entitled pursuant to this
Agreement or under applicable law. In lieu of such liquidated damages, Purchaser
may instead pursue other rights or remedies to which Purchaser may be entitled
pursuant to this Agreement or under applicable Law.
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ARTICLE 13
DEFINITIONS
13.1 Definitions.
(a) Defined Terms. As used in this Agreement, the following defined terms
have the meanings indicated below:
"Accounting Policies" shall mean the policies to be agreed upon by Seller
and Purchaser in accordance with Section 14.14.
"Accounts Payable" has the meaning ascribed to it in Section 1.2(a)(ii).
"Accounts Receivable" has the meaning ascribed to it in Section 1.1(a)(iv).
"Accrued Expenses" has the meaning ascribed to it in Section 1.2(a)(v).
"Acquisition Balance Sheet" means the schedule of net assets to be
transferred relating to the Business dated as of August 28, 1999, prepared by
Seller in accordance with GAAP, a copy of which is attached hereto as a part of
Section 2.6(a) of the Disclosure Schedule.
"Actions or Proceedings" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly through one of
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
"Agreement" means this Asset Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with Sections 6.3 and 7.3, as the same shall be amended from time to
time.
"Ancillary Agreements" shall have the meaning ascribed thereto in Section
1.3.
"Arbitrator" shall have the meaning ascribed to it in Section 1.4(c)(iv).
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person,
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including without limitation, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory
and goods, but excluding Intellectual Property, (including any Intellectual
Property that is transferred under the Technology Transfer Agreement).
"Assignment Instruments" has the meaning ascribed to it in Section 1.5(b).
"Associate" means, with respect to any Person, any corporation or other
business organization of which such Person is an officer or partner or is the
beneficial owner, directly or indirectly, of ten percent (10%) or more of any
class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in Section 1.2(a).
"Assumed Real Property Taxes" has the meaning ascribed to it in Section
1.2(a)(vi).
"Assumption Agreement" has the meaning ascribed to it in Section 1.5(b).
"Assumption Instruments" has the meaning ascribed to it in Section 1.5(b).
"Benefit Plan" means any Plan established by Seller, or any predecessor or
ERISA Affiliate of Seller, existing at the Closing Date or the applicable
Foreign Closing Date, as the case may be, to which Seller contributes or has
contributed on behalf of any Employee or under which any Employee or any
beneficiary thereof is covered, is eligible for coverage or has benefit rights.
"Board of Arbitration" has the meaning ascribed to it in Section 11.3(c).
"Books and Records" of any Person means all files, documents, instruments,
papers, books and records relating to the business, operations, condition of
(financial or other), results of operations and Assets and Properties of such
Person, including without limitation financial statements, Tax Returns ,
budgets, reliability and cost data, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock certificates and books, stock
transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"Business" has the meaning ascribed to it in the first recital of this
Agreement.
"Business Books and Records" has the meaning ascribed to it in Section
1.1(a)(xiii).
"Business Combination" means with respect to any Person, any merger,
consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such
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Person.
"Business Contracts" has the meaning ascribed to it in Section 1.1(a)(vii).
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in the States of Oregon and New York are authorized or obligated
to close.
"Business Licenses" has the meaning ascribed to it in Section l.l(a)(x).
"Cash Purchase Price" has the meaning ascribed to it in Section 1.4(a).
"Century-Based Data" has the meaning ascribed to it in Section 2.29(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. ss.300.5.
"Claim Notice" means written notification pursuant to Section 11.3(a) of a
Third Party Claim as to which indemnity under Section 11.2 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 11.2, together with
the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim.
"Closing" means the closing of the transactions contemplated by Section 1.5
with respect to the sale of the Purchased Assets.
"Closing Date" means (a) the fifth Business Day after the day on which the
last of the consents, approvals, actions, filings, notices, opinions or waiting
periods described in or related to the filings described in Sections 6.5 through
6.7 and Sections 7.4 through 7.6 has been obtained, made or given or has
expired, as applicable, or (b) such other date as Purchaser and Seller mutually
agree upon in writing.
"Closing Net Asset Value" shall have the meaning ascribed to it in the
Accounting Policies.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time.
"Condition of the Business" means the business condition (financial or
otherwise), results of operations, Assets and Properties and prospects of the
Business.
"Contract" means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract (whether written or
oral), but
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excluding any Plan.
"Customs Duties" has the meaning ascribed to it in Section 2.9(v).
"De Minimis Indemnity Amount" shall have the meaning ascribed to it in
Section 11.1(a).
"Deferred Tax Assets" means any asset line items for deferred Taxes shown
on the Acquisition Balance Sheet or Seller's Financial Statements.
"Deferred Tax Liability" means any liability line items for deferred Taxes
shown on the Acquisition Balance Sheet or Seller's Financial Statements.
"Defined Benefit Plan" means each Benefit Plan identified as a defined
benefit pension plan in Section 2.12(a) of the Disclosure Schedule, including
but not limited to those which are subject to Part 3 of Title I of ERISA,
Section 412 of the Code or Title IV of ERISA.
"Deloitte & Touche" shall mean Deloitte & Touche LLP.
"Draft Form 8594" has the meaning ascribed to it in Section 1.4(b)(ii).
"Disclosure Schedule" means the record delivered to Purchaser by Seller
herewith and dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by Seller pursuant to this Agreement.
"Dispute Notice" shall have the meaning ascribed to it in Section
1.4(c)(iv).
"Dispute Period" means the period ending thirty (30) days following receipt
by an Indemnifying Party of either a Claim Notice or an Indemnity Notice.
"Division" has the meaning ascribed to it in the first recital of this
Agreement.
"Employee" means each employee, excluding Inactive Employees, of Seller or
a Selling Affiliate who is employed in connection with the Business.
"Environmental Claim" means, any written or oral notice, claim, demand or
other communication (collectively, a "claim") alleging or asserting any
Liability for investigative costs, cleanup costs, Governmental or Regulatory
Authority response costs, damages to natural resources or other property,
personal injuries, fines or penalties arising out of, based on or resulting from
(a) the presence, or Release into the environment, of any Hazardous Material
Contamination at any location, whether or not owned by such Person, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include, without
limitation, any claim by any Governmental or Regulatory Authority for
enforcement, cleanup, removal, response,
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remedial or other actions or damages pursuant to any applicable Environmental
Law, and any claim by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence of Hazardous Materials or violation of applicable Environmental
Laws or arising from alleged injury or threat of injury to health, safety or the
environment. Environmental Claim shall include cleanup, removal, response,
remedial or other actions Purchaser undertakes that are commercially reasonable
to mitigate the risk of a Governmental or Regulatory Authority taking formal
enforcement action with respect to Hazardous Material Contamination.
Environmental Claim shall not include any Losses incurred by Purchaser with
respect to diminution in value or damage to the real property of Purchaser.
"Environmental Law" means any Law or Order relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, Releases or threatened Releases of pollutants, contaminants,
chemicals or industrial, toxic or Hazardous Materials or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, sale, use, treatment, storage, disposal,
discharge, recycling, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or Hazardous Materials or wastes.
"Epidemic Failure" with respect to any Products (other than Products
manufactured by Fuji Xerox Co., Ltd.) shall be deemed to have occurred where,
within eighteen (18) months from the date of delivery of such Products, more
than ten percent (10%) of any production month of such Products fail due to a
common defect, which defect (a) existed at the time of manufacture of such
Products but was not then active, discernible or evident and could not have been
reasonably detected at the time of delivery using quality and acceptance tests
customary in the industry, and (b) results in recurring material failure of such
Products to conform to the functional or reliability requirements set forth in
the specifications applicable to such Products.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is in the same controlled group of
corporations, who is under common control or is otherwise treated as a single
employer with Seller (within the meaning of Section 414(b), (c), (m) or (o) of
the Code) or would be treated as a single employer with Seller under such Code
provisions if the Person were organized in the United States.
"Estimated Closing Net Asset Value" shall have the meaning ascribed to it
in the Accounting Policies.
"Excluded Assets" has the meaning ascribed to it in Section 1.1(b).
"Final Form 8594" has the meaning ascribed to it in Section 1.4(b)(ii).
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"Financial Statements" means the financial statements delivered to
Purchaser pursuant to Sections 2.6 or 4.6.
"Foreign Closing" and "Foreign Closings" have the meanings ascribed to them
in Section 1.5(a).
"Foreign Closing Date" has the meaning ascribed to it in Section 1.5(a).
"Foreign Nationals" means those Employees listed on the list referred to in
Section 9.1 whose employment requires the approval of the United States
Immigration and Naturalization Service or similar agency of another country.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"General Assignment" has the meaning ascribed to it in Section 1.5(b).
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Hazardous Material" means (A) any petroleum or petroleum products
(including crude oil or any fraction thereof, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas useable for fuel or any mixture
thereof), flammable explosives, radioactive materials, asbestos, urea
formaldehyde, radon gas and polychlorinated biphenyls (PCBs); (B) any chemicals
or other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar import under
any Environmental Law; and (C) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority under any Environmental
Law.
"Hazardous Materials Contamination" means the presence of a Hazardous
Materials in the soils or water (including surface water or groundwater ) if
such presence of a Hazardous Materials constitutes a violation of Environmental
Laws or if investigation, monitoring, removal or remedial action is required by
applicable Environmental Laws with respect to the presence of a Hazardous
Materials or could be required by any Governmental or Regulatory Authority under
Environmental Laws, excluding any Hazardous Material present in any building or
improvement or incorporated into any building materials or equipment.
"HSR Act" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
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"Improvements" has the meaning ascribed to it in Section 1.1(a)(i).
"Inactive Employee" means any Employee who has not actively worked for a
period of at least 120 consecutive days prior to the Closing Date.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases or (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article 11.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article 11.
"Indemnity Notice" means written notification pursuant to Section 11.3(b)
of a claim for indemnity under Article 11 by an Indemnified Party, specifying
the nature of and basis for such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such claim.
"Independent Accountant" has the meaning ascribed to it in Section
1.4(b)(i).
"Intangible Personal Property" has the meaning ascribed to it in Section
1.1(a)(ix).
"Intellectual Property" means all patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
mark rights, service names and service name rights, brand names, logos and
slogans, Internet domain names, meta-tags, inventions, processes, formulae,
copyrights and copyright rights, trade dress, business and product names, logos,
slogans, trade secrets, industrial models, processes, designs, plans, proposals,
methodologies, computer programs (including all source codes) and related
documentation, technical data and information, manufacturing, engineering and
technical drawings, know-how, all pending applications for and registrations of
patents, trademarks, service marks and copyrights, and all licenses and rights
with respect to any of the foregoing, that are used in connection with the
Business.
"Intercompany Accounts" means any accounts maintained by Seller or any
Selling Affiliate in which there are recorded or reflected any amounts owed by
Seller to any Selling Affiliate, by any Selling Affiliate to Seller or by any
Selling Affiliate to any other Selling Affiliate attributable to any
intercompany transactions between or among such entities, including but not
limited to any tax-sharing arrangements.
"Internal Systems" has the meaning ascribed to it in Section 2.29(b).
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"Inventory" has the meaning ascribed to it in Section 1.1(a)(iii).
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by Seller (other
than trade receivables generated in the ordinary course of business of the
Seller).
"IRS" means the United States Internal Revenue Service or any successor
agency and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge of Seller" or "Known to Seller" means the actual knowledge of
any officer, director or employee of Seller listed in Section 13.1 of the
Disclosure Schedule, or matters which, with the exercise of reasonable care,
should have been known to any such officer, director or employee of Seller, but
shall not be deemed to impose an obligation on Seller to conduct a patent,
trademark or copyright search.
"KPMG" shall mean KPMG Peat Marwick.
"Landlord Security Deposits" has the meaning ascribed to it in Section
1.2(a)(vii).
"Laws" means all laws, statutes, rules, regulations, ordinances,
Environmental Laws and other pronouncements having the effect of law of the
United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision or of any Governmental or Regulatory
Authority.
"Liability" or "Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
losses, costs and expenses (including without limitation interest, court costs,
fees of attorneys, accountants and other experts or other expenses of litigation
or other proceedings or of any claim, default or assessment).
"Millennium Compliant" or "Millennium Compliance" has the meaning ascribed
to it in Section 2.29(c).
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"Non-United States Purchased Assets" means the Purchased Assets located
outside of the United States of America to be purchased by designated Purchasing
Affiliates as described in Section 1.3.
"NPL" means the National Priorities List under CERCLA.
"Operative Agreements" means, collectively, the General Assignment and the
other Assignment Instruments, the Assumption Agreement and the other Assumption
Instruments.
"Order" means any writ, judgment, decree, injunction, administrative order,
directive or similar order or directive of any Governmental or Regulatory
Authority (in each such case whether preliminary or final).
"Other Purchased Assets" has the meaning ascribed to it in Section
1.1(a)(xvi).
"Payroll Taxes" means any Tax withheld from any employee of the Business or
the legal entity by which he is employed or any Taxes assessed on his employer
arising in connection with the employment of such individual by the Business or
the legal entity by which he is employed.
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA.
"Pension Benefit Plan" means each Benefit Plan which is a pension benefit
plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with respect to a
Liability that is not yet due or delinquent and (iii) any title defect or Lien
which individually or in the aggregate with other such Liens does not materially
adversely impair the value of the property subject to such Lien or the use of
such property in the conduct of the Business.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Personal Property Leases" has the meaning ascribed to it in Section
1.1(a)(vi).
"Plan" means any bonus, incentive compensation, deferred compensation,
material consulting or other personal services arrangement, any flexible time
off ("FTO") arrangement, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock, leave
of absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workmen's
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compensation or other insurance, severance, separation, employment agreement
(other than employment agreements in foreign countries entered into in the
ordinary course of business), or other employee benefit plan, of any kind, or
policies establishing plans described above, whether written or oral, including,
but not limited to, any "employee benefit plan" within the meaning of Section
3(3) of ERISA.
"Policy" or "Policies" has the meaning ascribed to it in Section 2.18.
"Prepaid Expenses" has the meaning ascribed to it in Section 1.1(a)(viii).
"Products" has the meaning ascribed thereto in Section 2.29(a).
"Prorated Real Property Taxes" means (i) the real property taxes arising
out of the operation of the Real Property and Real Property Leases for the
taxable period during which the Closing Date or the applicable Foreign Closing
Date occurs (the "Real Property Taxes") multiplied by (ii) a fraction, the
numerator of which is the number of days remaining in such period beginning on
the day after the Closing Date or the applicable Foreign Closing Date, as the
case may be, and the denominator of which is the total number of days in such
taxable period.
"Purchase Price Consideration" has the meaning ascribed to it in Section
1.4(a).
"Purchased Assets" has the meaning ascribed to it in Section 1.1(a).
"Purchased Intellectual Property" shall mean the Intellectual Property
purchased by Purchaser pursuant to the terms of the Technology Transfer
Agreement.
"Purchaser" has the meaning ascribed to it in the preamble to this
Agreement.
"Purchaser Indemnified Parties" means Purchaser and its Affiliates and
their respective officers, directors, employees and agents.
"Purchaser's Plans" have the meaning ascribed to them in Section 9.2.
"Purchasing Affiliate" or "Purchasing Affiliates" shall have the meaning
ascribed thereto in the third recital to this Agreement.
"Qualified Plan" means each Benefit Plan which is intended to qualify under
Section 401 of the Code.
"Real Property" has the meaning ascribed to it in Section 1.1(a)(i).
"Real Property Leases" has the meaning ascribed to it in Section
1.1(a)(ii).
"Real Property Taxes" means any Taxes arising out of or related to the
ownership of any Real Property or any Real Property Lease.
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"Release" means any release or threat of release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"Representatives" has the meaning ascribed to it in Section 4.3.
"Resolution Period" means the period ending thirty (30) days following
receipt by a Purchaser Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"Retained Liabilities" has the meaning ascribed to it in Section 1.2(b).
"Sales Taxes" means sales, use, VAT and any similar Taxes imposed by any
Taxing Authority on transactions carried on in the regular course of business.
"Security Agreements" has the meaning ascribed to it in Section 2.23.
"Security Deposits" has the meaning ascribed to it in Section 1.2(a)(vii).
"Seller" has the meaning ascribed to it in the preamble to this Agreement.
"Seller Indemnified Parties" means Seller and its Affiliates and their
respective officers, directors, employees and agents.
"Selling Affiliate" or "Selling Affiliates" shall have the meaning ascribed
thereto in the first recital of this Agreement.
"Significant Foreign Closing" and "Significant Foreign Closings" have the
meanings ascribed to them in Section 1.5(a).
"Sixth Directive" means EC Council Directive 77/388 (Sixth Council
Directive of 17 May 1977 on the harmonization of the laws of the Members).
"Software" has the meaning ascribed to it in Section 2.29(a).
"Statement of Closing Net Assets" shall have the meaning ascribed to it in
Section 1.4(c)(ii).
"Statement of Estimated Closing Net Assets" shall have the meaning ascribed
to it in Section 1.4(c)(i).
"Tangible Personal Property" has the meaning ascribed to it in Section
1.1(a)(v).
"Target Amount" has the meaning ascribed to it in Section 1.4(c)(i).
"Tax" or "Taxes" means (i) all taxes, charges, fees, imposts, levies,
duties, or other
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assessments of any kind or nature imposed by any Taxing Authority (including,
without limitation, all gross income, net income, alternative minimum or add-on
tax, gross receipts, capital, sales, use, ad valorem, VAT, transfer, franchise,
financial transactions, profits, real property, personal property, inventory,
capital stock, license, withholding, payroll, employment, social security,
national insurance, unemployment, excise, severance, stamp, occupation, and
estimated taxes, customs duties, fees assessments, and charges of any kind
whatsoever), and (ii) all interest, penalties, fines, additions to or additional
amounts imposed by any Taxing Authority in connection with any tax described in
clause (i).
"Tax Lien" means any Lien for any Tax asserted by any Taxing Authority.
"Tax Proceeding" has the meaning ascribed to it in Section 11.1(c).
"Tax Returns" means all returns, declarations, reports, claims for refund,
estimates, information returns, statements or other similar document relating to
or required to be filed with any Taxing Authority in respect of any Taxes,
including any schedule, or attachment thereto and including any amendment
thereof.
"Taxes Which May Give Rise To Any Transferee Tax Liability" is defined to
mean (i) Taxes imposed by one or more of the Transferee Tax Jurisdictions, or
(ii) Taxes which are material with respect to Seller.
"Taxing Authority" means any U.S. federal, state or local governmental or
quasi- governmental authority or entity, or any foreign governmental or
quasi-governmental authority or entity.
"Tektronix Australia Real Property" has the meaning ascribed to it in
Section 1.1(b)(viii) of the Disclosure Schedule.
"Tektronix Malaysia Real Property" has the meaning ascribed to it in
Section 1.1(b)(viii) of the Disclosure Schedule.
"Tenant Security Deposits" has the meaning ascribed to it in Section
1.1(a)(xii).
"Third Party Claim" has the meaning ascribed to it in Section 11.3(a).
"Total Acquired Assets" has the meaning ascribed to it in Section 1.4(a).
"Total United States Assets" has the meaning ascribed to it in Section
1.4(b)(ii).
"Transfer Taxes" means sales and use taxes, VAT, documentary transfer
taxes, real property transfer taxes, capital taxes assessed on transfer of
stock, recordation, and other similar Taxes imposed on the transfer of Assets
and Properties from Seller or a Selling Affiliate to Purchaser or a Purchasing
Affiliate, and any interest, penalty or fine chargeable in connection with any
such taxes.
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"Transferee Tax Jurisdiction" means Belgium, the United Kingdom, France,
Germany, Spain, Italy, Austria and any other countries that impose liability on
asset purchasers for their predecessor's tax liabilities regardless of whether
fair value is paid for the purchased assets.
"Transferee Tax Liability" means any Liability of Purchaser as the
transferee of the Assets pursuant to this Agreement for Taxes of Seller or any
Selling Affiliate for any tax period through and including the Closing Date or
the applicable Foreign Closing Date (excluding any Assumed Real Property Taxes)
which may be imposed by any Taxing Authority.
"Transferred Employees" shall mean the Employees and Foreign Nationals who
accept an offer of employment from Purchaser or a Purchasing Affiliate and
become employees of the Purchaser or a Purchasing Affiliate immediately after
the Closing or the Applicable Foreign Closing.
"VAT" means value added taxes as provided for in Article 2, EC Council
Directive 67/227 (First Council Directive of 11 April 1967 on the harmonization
of legislation of Member States concerning turnover taxes) and legislation
supplemental thereto and any other tax (wherever and whenever imposed in
substitution thereof or in addition thereto) of a similar nature, including any
interest and penalties thereon.
"Vehicles" has the meaning ascribed to it in Section 1.1(a)(xi).
(b) Construction of Certain Terms and Phrases. Unless the context of this
Agreement otherwise requires, (i) words of any gender include each other gender;
(ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Seller in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
ARTICLE 14
MISCELLANEOUS
14.1 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (certified or registered,
postage prepaid, return receipt requested) to the parties at the following
addresses or facsimile numbers:
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If to Purchaser, to:
Xerox Corporation
800 Long Ridge Road
Stamford, Connecticut 06904
Facsimile No.: (203) 968-3991
Attn: Chief Financial Officer
with a copy to:
Xerox Corporation
800 Long Ridge Road
Stamford, Connecticut 06904
Facsimile No.: (203) 968-4301
Attn: General Counsel
and
Edward A. Perron, Esq.
Pillsbury Madison & Sutro LLP
725 South Figueroa Street, Suite 1200
Los Angeles, CA 90017
Facsimile No.: (213) 629-1033
If to Seller, to:
Tektronix, Inc.
26600 S.W. Parkway Avenue
Wilsonville, OR 97070
Facsimile No.: (503) 685-4104
Attn: General Counsel
with a copy to:
Margaret Hill Noto, Esq.
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, Oregon 97204-1268
Facsimile No.: (503) 220-2480
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the
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address as provided in this Section, be deemed given upon receipt or upon
refusal of receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
14.2 Bulk Sales Act. The parties hereby waive compliance with the bulk
sales act or comparable statutory provisions of each applicable jurisdiction.
14.3 Entire Agreement. This Agreement, the Ancillary Agreements and the
Operative Agreements supersede all prior discussions and agreements between the
parties with respect to the subject matter hereof and thereof and contain the
sole and entire agreement between the parties hereto with respect to the subject
matter hereof and thereof.
14.4 Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each party
will pay its own costs and expenses incurred in connection with the negotiation,
execution, performance and closing of this Agreement, the Ancillary Agreements
and the Operative Agreements and the transactions contemplated hereby and
thereby.
14.5 Public Announcements. At all times at or before the Closing, Seller
and Purchaser will consult with each other with respect to any reports,
statements or releases to the public or generally to the employees, customers,
suppliers or other Persons to whom or from whom Seller sells or purchases goods
or provides or acquires services in connection with the Business, or with whom
Seller otherwise has significant business relationships in connection with the
Business, with respect to this Agreement or the transactions contemplated
hereby. Seller and Purchaser will also obtain the other party's prior approval
of any press release to be issued immediately following the Closing announcing
the consummation of the transactions contemplated by this Agreement. At all
times after the Closing, Seller will not issue or make, and will cause its
Affiliates not to issue or make, any reports, statements or releases to the
public or generally to the employees, customers, suppliers or other Persons to
whom or from whom Seller has sold or purchased goods or provided or acquired
services in connection with the Business, or with whom Seller has sold or
purchased goods or provided or acquired services in connection with the
Business, or with whom Seller otherwise has had significant business
relationships in connection with the Business, with respect to the Business,
this Agreement or the transactions consummated hereby, without Purchaser's
consent, which shall not be unreasonably withheld.
14.6 Sony-Tektronix Corporation. Between signing of this Agreement and the
Closing, the Seller and the Purchaser shall agree on how to transfer to
Purchaser or a Purchaser Affiliate all the employees, assets and business of
Sony - Tektronix Corporation primarily relating to the Business.
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14.7 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
14.8 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
14.9 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under Article 11.
14.10 No Assignment: Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do so will be
void, except (a) for assignments and transfers by operation of Law and (b) that
Purchaser may assign any or all of its rights, interests and obligations
hereunder (including without limitation its rights under Article 14) to one or
more Purchasing Affiliates, provided that any such Purchasing Affiliate agrees
in writing to be bound by all of the terms, conditions and provisions contained
herein, but no such assignment shall relieve Purchaser of its obligations
hereunder. Notwithstanding anything to the contrary set forth in this Agreement,
at Purchaser's option, Purchaser may designate certain Purchasing Affiliates to
purchase and pay for, at the applicable Foreign Closings, certain of the
Purchased Assets and to assume certain of the Assumed Liabilities in accordance
with the terms and conditions of Ancillary Agreements between a Selling
Affiliate and such Purchasing Affiliate in respect of the purchase of such
Purchased Assets or Assumed Liabilities, which agreements shall incorporate by
reference the terms and conditions set forth in this Agreement. Subject to the
foregoing, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
14.11 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
14.12 Invalid Provisions. If any provision of this Agreement is held to be
AMENDED ASSET PURCHASE AGREEMENT
107
<PAGE>
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
14.13 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof; provided, however, that to the extent the parties
dispute the appropriate venue for any action, suit or proceeding arising out of
or in connection with this Agreement, the choice of the Laws of the State of New
York as the governing law applicable to this Agreement shall be disregarded in
the determination of appropriate venue.
14.14 Accounting Policies. Seller and Purchaser will work together to agree
within twenty (20) days of the date of the Agreement on Accounting Policies to
be used in calculating the Statement of Estimated Closing Net Assets. The
Accounting Policies will take into account the accounting policies of Seller and
the accounting policies of Purchaser as normally applied in acquisitions. The
Accounting Policies shall not change the treatment of various items that have
been agreed to in other sections of this Agreement. Purchaser has provided to
Seller its proposed accounting policies developed for the transactions
contemplated by this Agreement prior to the execution hereof; notwithstanding
the foregoing, nothing herein shall be deemed to imply Seller's acceptance of
such accounting policies.
14.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
AMENDED ASSET PURCHASE AGREEMENT
108
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officer of each party as of the date first above written.
XEROX CORPORATION
By: PAUL RICCI
----------------------------------------
Name: Paul Ricci
Title: Vice President, Corporate Development
TEKTRONIX, INC.
By: JAMES F. DALTON
----------------------------------------
Name: James F. Dalton
Title: Vice President
AMENDED ASSET PURCHASE AGREEMENT
109
<PAGE>
Amendment to
Amended Asset Purchase Agreement
The Amended Asset Purchase Agreement dated as of September 22, 1999,
(the "Agreement") between Xerox Corporation, a New York corporation
("Purchaser"), and Tektronix, Inc., an Oregon corporation ("Seller"), is amended
as follows:
The Agreement shall remain in full force and effect, except to the
extent modified by this Amendment. Capitalized terms in this Amendment are as
defined in the Agreement, unless otherwise indicated.
1. Cash Purchase Price. The first sentence of Section 1.4(a) of the
Agreement is amended to change the Cash Purchase Price from Nine Hundred Fifty
Million Dollars ($950,000,000) to Nine Hundred Twenty-Five Million Dollars
($925,000,000).
2. Assumed Litigation. Section 2.10 of the Disclosure Schedule is
amended to add UltraHUE, Inc. v. Tektronix, Inc. (filed in United States
District Court, Western District of Washington (Seattle), #C99-1664R) as pending
litigation that is an Assumed Liability pursuant to Section 1.2(a)(xvi) of the
Agreement.
3. Accounting Policies.
(a) The second sentence of Section 1.4(c)(i) is amended to read as
follows:
"The Statement of Estimated Closing Net Assets shall
be prepared by Seller in accordance with GAAP as
consistently applied by Seller (the "Accounting
Policies"), including, in any event, Seller's
accounting policy involving the pooling of inventory
to determine net realizable value and an adjustment
for any compensation payments pursuant to Section
9.1(b), but (x) any Liabilities or Losses associated
with Print Head Drift and (y) the net assets of
Sony-Tek shall be excluded for all balance sheet and
Cash Purchase Price adjustment purposes."
(b) Sections 6.16, 7.14 and 14.14 of the Agreement are
deleted.
(c) The following definitions set forth in Section 13.1 of
the Agreement are revised as follows:
Amendment 12/10/99
<PAGE>
"Estimated Closing Net Asset Value" shall be the net asset
value of the Business as set forth in the Statement of Estimated
Closing Net Assets.
"Closing Net Asset Value" shall be the net asset value of the
Business as set forth in the Statement of Closing Net Assets.
"Accounting Policies" has the meaning ascribed to it in
Section 1.4(c).
4. Sony-Tek. Seller shall cause its Selling Affiliate, Sony-Tek, to
transfer to Purchaser or a Purchasing Affiliate, following receipt of all
consents, approvals or actions of Governmental or Regulatory Authorities
applicable thereto (or the termination or expiration of any waiting periods
imposed thereby), all Assets and Properties of Sony-Tek used primarily in the
Business that constitute Purchased Assets, and Purchaser or such Purchasing
Affiliate shall assume all liabilities of Sony-Tek that constitute Assumed
Liabilities and hire the 74 employees of Sony-Tek who are primarily engaged in
the Business. Seller shall pay the net asset value to Sony-Tek or to Purchaser
for such Assets and Properties and shall be solely responsible for additional
payments to Sony-Tek, if any. Sony-Tek will continue to operate the Business in
Japan in the ordinary course of business between the Closing Date and the Japan
Closing Date on terms mutually acceptable to Sony-Tek and Purchaser or its
Purchasing Affiliate, with the effect that the economic impact during this
period will be neutral (i.e., no economic upside or downside) to Sony-Tek.
5. Assumed Leases. Section 1.1(a)(ii) of the Disclosure Schedule is
amended to add the leases in the following locations:
1 Rue Voltaire 92300
Levallois, France
Parc Club Du Moulin a Vent
33 Avenue du Docteur Georges Lev 69693
Venissieux, France
Torre Gia Piso 8
Av. Morones Prieto 2805 Pte.
Monterrey, Nuevo Leon
6. Representations and Warranties. The introduction of Article 2 of the
Agreement is amended to read as follows:
"Seller, for itself and on behalf of each of the Selling
Affiliates, hereby represents and warrants to Purchaser as of
the date of this Agreement and as of the Closing Date or the
applicable Foreign Closing Date (except
2
<PAGE>
with respect to those representations and warranties
expressly made as of a specified date other than the Closing
Date or the applicable Foreign Closing Date) as follows:"
The introduction to Article 3 of the Agreement is amended to read as follows:
"Purchaser, for itself and on behalf of each of the
Purchasing Affiliates, hereby represents and warrants to
Seller as of the date of this Agreement and as of the Closing
Date or the applicable Foreign Closing Date (except with
respect to those representations and warranties expressly
made as of a specified date other than the Closing Date or
the applicable Foreign Closing Date) as follows:"
7. Satisfaction of Closing Conditions. Purchaser agrees and
acknowledges that as of the date hereof all of the conditions to its obligations
set forth in Sections 6.1, 6.2, 6.3 (except with respect to the certificate of
the Secretary or Assistant Secretary of Seller or the Selling Affiliate
certifying due authorization of the Agreement, the Ancillary Agreements and the
Operating Agreement and the consummation of the transactions contemplated
thereby and incumbency), 6.4, 6.7 (other than with respect to the consents of
Adobe Systems Inc.) and 6.15 of the Agreement have been satisfied or waived,
except for certain conditions relating to Foreign Closings in Korea, Taiwan,
Germany and Spain, and that the failure to satisfy such conditions shall not
delay or prevent the Closing or any Foreign Closings (other than the Foreign
Closings in Korea, Taiwan, Germany and Spain). Seller agrees that all of the
conditions to its obligations set forth in Sections 7.1, 7.2, 7.3 (except with
respect to the certificate of the Secretary or Assistant Secretary of Purchaser
or the Purchasing Affiliate certifying due authorization of the Agreement, the
Ancillary Agreements and the Operating Agreement and the consummation of the
transactions contemplated thereby and incumbency), 7.6 (other than with respect
to the consents of Adobe Systems Inc.) and 7.13 of the Agreement have been
satisfied or waived, except for certain conditions relating to Foreign Closings
in Korea, Taiwan, Germany and Spain, and that the failure to satisfy such
conditions shall not delay or prevent the Closing or any Foreign Closings (other
than the Foreign Closings in Korea, Taiwan, Germany and Spain).
8. Closing Date.
(a) Purchaser and Seller agree that the Closing Date shall be January
1, 2000. Purchaser and Seller agree that all Foreign Closings shall occur as of
the Closing Date other than the Foreign Closings relating to the sale of
Purchased Assets in Japan, Korea, and Taiwan, and the Foreign Closings in
Germany and Spain, but only if the respective consents, approvals or actions or
required waiting periods imposed by any Governmental or Regulatory Authority
necessary for the Foreign Closings in Germany and Spain have not been granted or
taken or have not terminated or expired by January
<PAGE>
1, 2000. If any such consents, approvals or actions have not been granted or
taken or any such waiting periods necessary for the Foreign Closing in Germany
have not expired or terminated by January 1, 2000, the Foreign Closing in
Germany shall not be considered a Significant Foreign Closing. Purchaser and
Seller agree that they have irrevocably determined that all Closing conditions
set forth in Sections 6.1, 6.2. 6.3 (except with respect to the certificate of
the Secretary or Assistant Secretary of Seller or the Selling Affiliate
certifying due authorization of the Agreement, the Ancillary Agreements and the
Operating Agreement and the consummation of the transactions contemplated
thereby and incumbency), 6.4, 6.7 (other than with respect to the consents of
Adobe Systems Inc.) and 6.15 and Sections 7.1, 7.2, 7.3 (except with respect to
the certificate of the Secretary or Assistant Secretary of Purchaser or the
Purchasing Affiliate certifying due authorization of the Agreement, the
Ancillary Agreements and the Operating Agreement and the consummation of the
transactions contemplated thereby and incumbency), 7.6 (other than with respect
to the consents of Adobe Systems Inc.) and 7.13 of the Agreement have been
satisfied or waived as of the Closing Date and that the occurrence or discovery
of any events after the date hereof, or the failure of any event to occur after
the date hereof, shall not delay or prevent the Closing or those Foreign
Closings, except with respect to the Foreign Closings in Japan, Korea, Taiwan,
Germany and Spain as provided herein. The Closing and the Foreign Closings,
except with respect to the Foreign Closings in Japan, Korea, Taiwan, Germany and
Spain as provided herein, shall be effective as of 12:01 a.m., local time, on
January 1, 2000. Employees hired by Purchaser and Purchasing Affiliates shall
become employees of Purchaser and the Purchasing Affiliates as of 12:01 a.m.,
local time, on January 1, 2000.
(b) On the Closing Date, the Cash Purchase Price shall be satisfied by
Purchaser's and the Purchasing Affiliates' promissory notes dated as of January
1, 2000, and due and payable on January 5, 2000, providing for interest thereon
at the rate of 5.7% per annum. On the due date of said promissory note, payment
shall be wired to the bank accounts of Seller and the Selling Affiliates as
specified pursuant to the Agreement in immediately available funds, except that
with respect to any Foreign Closings where local banks are not open on January
5, 2000, the funds shall be immediately available on the next business day that
the applicable bank is open.
(c) Purchaser and Seller agree to use their best efforts to negotiate
and enter into an agreement to handle the operations in Korea and Taiwan, and in
Germany and Spain, if the Foreign Closings in Germany and Spain do not occur on
the Closing Date, during the interim period between the Closing Date and the
applicable Foreign Closing Date, with the effect that the economic impact of the
operations during this period will be neutral (i.e., no economic upside or
downside) to Seller.
<PAGE>
9. Second Quarter Financial Statements. Seller hereby represents and
warrants to Purchaser that the income statement attached hereto as Exhibit "A"
fairly presents the results of operations of the Division for the three-month
period ended November 27, 1999, in all material respects based upon GAAP as
consistently applied by Seller. In the event that Purchaser notifies Seller on
or before December 15, 1999, that it disputes the accuracy of Seller's
representation and warranty in this Paragraph 9, this Amendment shall terminate
and shall be deemed to be null, void and of no effect whatsoever. The accuracy
of Seller's representation and warranty in this Paragraph 9 does not constitute
a condition to Purchaser's obligation to close. In addition, any breach of
Seller's representation and warranty in this Paragraph 9 shall be subject to the
terms and conditions of the Agreement.
Dated: December 10, 1999
XEROX CORPORATION
By: PAUL RICCI
------------------------------------
Name: Paul Ricci
Title: V.P.
TEKTRONIK, INC.
By: JAMES F. DALTON
------------------------------------
Name: James F. Dalton
Title: V.P.
<PAGE>
EXHIBIT A
CONDENSED STATEMENT OF OPERATIONS
For the three months ended November 27, 1999
Color Printing
and Imaging
Total Sales $ 189,753
Cost of sales 129,415
----------------
Gross profit 80,338
Research and development 13,290
SG&A expenses 38,297
Non-recurring charges -
Business ventures' loss (earnings) -
----------------
Operating income 10,751
<PAGE>
Second Amendment to
Amended Asset Purchase Agreement
The Amended Asset Purchase Agreement dated as of September 22, 1999, (the
"Agreement") between Xerox Corporation, a New York corporation ("Purchaser"),
and Tektronix, Inc., an Oregon corporation ("Seller"), is amended as follows:
The Agreement shall remain in full force and effect, except to the extent
modified by this Amendment. Capitalized terms in this Amendment are as defined
in the Agreement, unless otherwise indicated.
Section 1.3 of the Agreement is replaced in its entirety by the following:
"1.3 Sale of United States Purchased Assets and Non-United States Purchased
Assets Owned by Selling Affiliates and Assumption of Assumed Liabilities by the
Purchasing Affiliates. Tektronix Export, Inc. ("TEI") shall sell its United
States Purchased Assets to Purchaser under terms and conditions identical to the
terms and conditions contained in this Agreement governing the sale by Seller of
its United States Purchased Assets. Seller shall provide Purchaser with a
separate bill of sale and any other commercially reasonable documentation
requested by Purchaser to evidence the sale of TEI's United States Purchased
Assets to Purchaser. Certain of the Non-United States Purchased Assets shall be
sold to the Purchasing Affiliates designated by Purchaser and certain of the
Assumed Liabilities shall be assumed by such Purchasing Affiliates pursuant to
the terms and conditions of separate Asset Purchase Agreements, in form and
substance reasonably acceptable to Seller and Purchaser, so as to effect the
sale, transfer and assignment of the Assets and Properties of the Selling
Affiliates to the Purchasing Affiliates and the assumption of the associated
Assumed Liabilities by the Purchasing Affiliates in order to give the parties
the benefit of this Agreement and to conform to the Laws, customs and practices
of the relevant jurisdiction, as follows:
(a) Seller shall cause its Selling Affiliate, Tektronix Gesellschaft m.b.H.
("Austria Tek") to sell, transfer and assign the Assets and Properties of
Austria Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Xerox Austria G.m.b.H. ("Xerox Austria"), which shall purchase all of
Austria Tek's Assets and Properties and Purchaser shall cause Xerox Austria to
purchase such Assets and Properties and to assume certain Assumed Liabilities
from Austria Tek (the "Austrian Acquisition");
(b) Seller shall cause its Selling Affiliate, Tektronix Australia Pty. Ltd.
("Australia Tek"), to sell, transfer and assign the Assets and Properties of
Australia Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Fuji Xerox
<PAGE>
Co., Ltd. ("FX") and Purchaser shall, or shall cause FX to purchase such Assets
and Properties and to assume certain Assumed Liabilities from Australia Tek (the
"Australia Acquisition");
(c) Seller shall cause its Selling Affiliate, Tektronix N.V. ("Belgium
Tek"), to sell, transfer and assign the Assets and Properties of Belgium Tek
that constitute Non-United States Purchased Assets to Purchasing Affiliate N.V.
Xerox S..A.. ("Xerox Belgium"), which shall purchase all of Belgium Tek's Assets
and Properties and Purchaser shall cause Xerox Belgium to purchase such Assets
and Properties and to assume certain Assumed Liabilities from Belgium Tek (the
"Belgium Acquisition");
(d) Seller shall cause its Selling Affiliate, Tektronix Industria a
Comercio Ltda. ("Brazil Tek"), to sell, transfer and assign the Assets and
Properties of Brazil Tek that constitute Non-United States Purchased Assets to
Purchasing Affiliate Xerox Commercio E. Industria Ltda. ("Xerox Brazil"), and
Purchaser shall cause Xerox Brazil to purchase such Assets and Properties and to
assume certain Assumed Liabilities from Brazil Tek (the "Brazil Acquisition");
(e) Seller shall cause its Selling Affiliate, Tektronix Canada, Inc.
("Canada Tek"), to sell, transfer and assign the Assets and Properties of Canada
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliate
Xerox Canada Ltd. ("Xerox Canada"), and Purchaser shall cause Xerox Canada to
purchase such Assets and Properties and to assume certain Assumed Liabilities
from Canada Tek (the "Canada Acquisition");
(f) Seller shall cause its Selling Affiliate, Tektronix Electronics (China)
Co., Ltd. ("China Tek"), to sell, transfer and assign the Assets and Properties
of China Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Xerox Industry Development (Shanghai) Co. Ltd. ("Xerox Shanghai") and
Purchaser shall, or shall cause Xerox Shanghai to, purchase such Assets and
Properties and to assume certain Assumed Liabilities from China Tek (the "China
Acquisition");
(g) Seller shall cause its Selling Affiliate, Tektronix A/S ("Denmark
Tek"), to sell, transfer and assign the Assets and Properties of Denmark Tek
that constitute Non-United States Purchased Assets to Purchasing Affiliates
Xerox A/S ("Xerox Denmark"), which shall purchase all of Denmark Tek's Assets
and Properties and Purchaser shall cause Xerox Denmark to purchase such Assets
and Properties and to assume certain Assumed Liabilities from Denmark Tek (the
"Denmark Acquisition");
(h) Seller shall cause its Selling Affiliate, Tektronix Oy ("Finland Tek"),
to sell, transfer and assign the Assets and Properties of Finland Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate Xerox Oy
("Xerox Finland"), which shall purchase all of Finland Tek's Assets and
Properties and Purchaser shall
<PAGE>
cause Xerox Finland to purchase such Assets and Properties and to assume certain
Assumed Liabilities from Finland Tek (the "Finland Acquisition");
(i) Seller shall cause its Selling Affiliate, Tektronix S.A. ("France
Tek"), to sell, transfer and assign the Assets and Properties of France Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate Xerox-
Document Services SNC ("Xerox France"), which shall purchase all of France Tek's
Assets and Properties and Purchaser shall cause Xerox France to purchase such
Assets and Properties and to assume certain Assumed Liabilities from France Tek
(the "France Acquisition");
(j) Seller shall cause its Selling Affiliate, Tektronix GmbH ("Germany
Tek"), to sell, transfer and assign the Assets and Properties of Germany Tek
that constitute Non-United States Purchased Assets to Purchasing Affiliates
Xerox Direct Westfalen GmbH (which shall be renamed Xerox Office Printing GmbH
after the Closing) ("Xerox Germany"), which shall purchase all of Germany Tek's
Assets and Properties and Purchaser shall cause Xerox Germany to purchase such
Assets and Properties and to assume certain Assumed Liabilities from Germany Tek
(the "Germany Acquisition");
(k) Seller shall cause its Selling Affiliate, Tektronix Hong Kong Limited
("Hong Kong Tek"), to sell, transfer and assign the Assets and Properties of
Hong Kong Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Xerox (Hong Kong) Limited ("Xerox Hong Kong") Purchasing Affiliate and
Purchaser shall cause Xerox Hong Kong to purchase such Assets and Properties and
to assume certain Assumed Liabilities from Hong Kong Tek (the "Hong Kong
Acquisition");
(l) Seller shall cause its Selling Affiliate, Tektronix (India) Limited
("India Tek"), to sell, transfer and assign the Assets and Properties of India
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliate
Xerox ModiCorp Limited ("Xerox Modi India") and Purchaser shall cause Xerox Modi
India to purchase such Assets and Properties and to assume certain Assumed
Liabilities from India Tek (the "India Acquisition");
(m) Seller shall cause its Selling Affiliate, Tektronix S.p.A. ("Italy
Tek"), to sell, transfer and assign the Assets and Properties of Italy Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate Xerox
S.p.A. ("Xerox Italy") which shall purchase all of Italy Tek's Assets and
Properties and Purchaser shall cause Xerox Italy to purchase such Assets and
Properties and to assume certain Assumed Liabilities from Italy Tek (the "Italy
Acquisition");
(n) Seller shall cause its Selling Affiliate, Tektronix Korea, Ltd. ("Korea
Tek"), to sell, transfer and assign the Assets and Properties of Korea Tek that
constitute Non-United States Purchased Assets to FX and Purchaser shall cause FX
to purchase
<PAGE>
such Assets andProperties and to assume certain Assumed Liabilities from Korea
Tek (the "Korea Acquisition");
(o) Seller shall cause its Selling Affiliate, Tektronix, S.A. de C.V.
("Mexico Tek"), to sell, transfer and assign the Assets and Properties of Mexico
Tek that constitute Non-United States Purchased Assets to Purchasing Affiliate,
Xerox Mexicana, S.A. de C.V. ("Xerox Mexico"), and Purchaser shall cause Xerox
Mexico to purchase such Assets and Properties and to assume certain Assumed
Liabilities from Mexico Tek (the "Mexico Acquisition");
(p) Seller shall cause its Selling Affiliate, Tektronix Holland N.V.
("Holland Tek"), to sell, transfer and assign the Assets and Properties of
Holland Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Xerox (Nederland) BV ("Xerox Netherland"), which shall purchase all of
Holland Tek's Assets and Properties and Purchaser shall cause Xerox Netherland
to purchase such Assets and Properties and to assume certain Assumed Liabilities
from Holland Tek (the "Holland Acquisition");
(q) Seller shall cause its Selling Affiliate, Tektronix Distribution Europe
B.V. ("Europe Tek"), to sell, transfer and assign the Assets and Properties of
Europe Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate Tefea BV (which shall be renamed Xerox Office Printing Distribution BV
after the Closing) ("Xerox Holding Office Printing Holland") which shall
purchase all of Europe Tek's Assets and Properties and Purchaser shall cause
Xerox Holding Office Printing Holland to assume certain Assumed Liabilities from
Europe Tek (the "Dutch Acquisition");
(r) Seller shall cause its Selling Affiliate, Tektronix Norge A/S ("Norway
Tek"), to sell, transfer and assign the Assets and Properties of Norway Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate Xerox AS
("Xerox Norway") which shall purchase all of Norway Tek's Assets and Properties
and Purchaser shall cause Xerox Norway to purchase such Assets and Properties
and to assume certain Assumed Liabilities from Norway Tek (the "Norway
Acquisition");
(s) Seller shall cause its Selling Affiliate, Tektronix Southeast Asia Pte
Ltd. ("Singapore Tek"), to sell, transfer and assign the Assets and Properties
of Singapore Tek that constitute Non-United States Purchased Assets, regardless
of where situated, to Purchaser or its designated Singapore Purchasing Affiliate
and Purchaser shall, or shall cause such designated Singapore Purchasing
Affiliate to, purchase such Assets and Properties and to assume certain Assumed
Liabilities from Singapore Tek (the "Singapore Acquisition");
(t) Seller shall cause its Selling Affiliate, Tektronix Espanola, S.A.
("Spain Tek"), to sell, transfer and assign the Assets and Properties of Spain
Tek that constitute
<PAGE>
Non-United States Purchased Assets to Purchasing Affiliate Xerox Espana, The
Document Company, S.A.U. ("Xerox Spain") which shall purchase all of Spain Tek's
Assets and Properties and Purchaser shall cause Xerox Spain to purchase such
Assets and Properties and to assume certain Assumed Liabilities from Spain Tek
(the "Spain Acquisition");
(u) Seller shall cause its Selling Affiliate, Tektronix AB ("Sweden Tek"),
to sell, transfer and assign the Assets and Properties of Sweden Tek that
constitute Non-United States Purchased Assets to Purchasing Affiliate Xerox AB
("Xerox Sweden"), which shall purchase all of Sweden Tek's Assets and Properties
and Purchaser shall cause Xerox Sweden to purchase such Assets and Properties
and to assume certain Assumed Liabilities from Sweden Tek (the "Sweden
Acquisition");
(v) Seller shall cause its Selling Affiliate, Tektronix International AG
("Switzerland Tek"), to sell, transfer and assign the Assets and Properties of
Switzerland Tek that constitute Non-United States Purchased Assets to Purchasing
Affiliate, Xerox AG ("Xerox Switzerland") which shall purchase all of
Switzerland Tek's Assets and Properties and Purchaser shall cause Xerox
Switzerland and Xerox Channels to purchase such Assets and Properties and to
assume certain Assumed Liabilities from Switzerland Tek (the "Switzerland
Acquisition");
(w) Seller shall cause its Selling Affiliate, Tektronix Taiwan, Ltd.
("Taiwan Tek"), to sell, transfer and assign the Assets and Properties of Taiwan
Tek that constitute Non-United States Purchased Assets to FX which shall
purchase all of Taiwan Tek's Assets and Properties and Purchaser shall cause FX
to purchase such Assets and Properties and to assume certain Assumed Liabilities
from Taiwan Tek (the "Taiwan Acquisition");
(x) Seller shall cause its Selling Affiliate, Tektronix U.K. Limited
("United Kingdom Tek"), to sell, transfer and assign the Assets and Properties
of United Kingdom Tek that constitute Non-United States Purchased Assets to
Purchasing Affiliate Xerox (UK) Limited ("Xerox UK") which shall purchase all of
United Kingdom Tek's Assets and Properties and Purchaser shall cause Xerox UK to
purchase such Assets and Properties and to assume certain Assumed Liabilities
from United Kingdom Tek (the "United Kingdom Acquisition");
(y) Seller shall cause its Selling Affiliate, Tektronix Export Inc.
("TEI"), to sell, transfer and assign the Assets and Properties of TEI that
constitute Non-United States Purchased Assets located in or in transit to (i)
the Netherlands (whether located in the Heerenveen warehouse or elsewhere in the
Netherlands) or other premises in Europe, Africa and the Middle East to Xerox
Channels Limited; (ii) Canada to Xerox Color Printing, Inc., and (iii) Malaysia
to Xerox Export, LLC, or the Purchaser's designated European, Canadian or
Malaysian Purchasing Affiliates, and Purchaser shall,
<PAGE>
or shall cause the aforementioned designated Purchasing Affiliates to, purchase
such Assets and Properties and to assume certain Assumed Liabilities from TEI
(the "TEI Acquisition"); and
(z) Seller shall sell, transfer and assign Non-United States Purchased
Assets which constitute Intangible Personal Property as described in Section
1.1(a)(ix) of this Agreement associated with the Business in Australia, New
Zealand, Korea, Malaysia (excluding any Assets and Properties being transferred
pursuant to the Stock Purchase Agreement referred to in Section 1.1(a)(xiv) of
this Agreement), Singapore, Taiwan, Thailand and Japan to Purchasing Affiliate
FX.
The portion of the Purchase Price Consideration and Cash Purchase Price in
respect of each of the Asset Purchase Agreements referred to in this Section 1.3
shall be as determined in Section 1.4. The Asset Purchase Agreements referred to
in this Section 1.3, together with any other agreements, documents or
instruments executed in connection therewith, are referred to, collectively, in
this Agreement as the "Ancillary Agreements". Seller unconditionally guarantees
any and all Liabilities and obligations of each Selling Affiliate in accordance
with the terms of this Agreement and the Ancillary Agreements to which it is a
party. In the event any Foreign Closing does not occur on the Closing Date,
Seller shall cause its Selling Affiliate to enter into arrangements reasonably
acceptable to the parties hereto with respect to the operation of that portion
of the Business until the consummation of the Foreign Closing or the termination
of this Agreement in respect thereof in accordance with Section 1.5.
Notwithstanding the foregoing, Purchaser shall have the right to designate any
other Purchasing Affiliate or Purchasing Affiliates to take the place of and be
substituted for another Purchasing Affiliate or Purchasing Affiliates at any
time at least ten (10) Business Days prior to the Closing Date or the applicable
Foreign Closing Date and Seller agrees that neither Seller nor any Selling
Affiliate shall refuse to amend the relevant Ancillary Agreements so as to
effect such designation. Further, in the event that a Selling Affiliate owns or
uses Assets and Properties that constitute Purchased Assets in any geographic
territory or jurisdiction other than the one set forth above in connection with
such Selling Affiliate, Purchaser may designate a Purchasing Affiliate in such
other geographic territory or jurisdiction to purchase such Assets and
Properties pursuant to the terms of an Asset Purchase Agreement to be executed
in respect thereof."
<PAGE>
Dated as of December 17, 1999
XEROX CORPORATION
By: BARBARA S. ROSS
-------------------------------------
Name: Barbara S. Ross
Title: Authorized Signatory
TEKTRONIX, INC.
By: JAMES DALTON
-------------------------------------
Name: James Dalton
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> May-27-2000
<PERIOD-END> Nov-27-1999
<CASH> 57,860
<SECURITIES> 0
<RECEIVABLES> 128,637 <F1>
<ALLOWANCES> 0
<INVENTORY> 120,870
<CURRENT-ASSETS> 742,802 <F2>
<PP&E> 525,130
<DEPRECIATION> 271,479
<TOTAL-ASSETS> 1,191,294
<CURRENT-LIABILITIES> 349,743
<BONDS> 150,596
0
0
<COMMON> 142,608
<OTHER-SE> 478,983 <F3>
<TOTAL-LIABILITY-AND-EQUITY> 1,191,294
<SALES> 542,018
<TOTAL-REVENUES> 542,018
<CGS> 297,729
<TOTAL-COSTS> 297,729
<OTHER-EXPENSES> 240,721
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,212
<INCOME-PRETAX> (2,054)
<INCOME-TAX> (78)
<INCOME-CONTINUING> (1,976)
<DISCONTINUED> 8,680
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,704
<EPS-BASIC> 0.14 <F4>
<EPS-DILUTED> 0.14 <F4>
<FN>
<F1> Amount represents net accounts receivable.
<F2> Amount includes net assets of discontinued operations of $341,799.
<F3> Amount includes retained earnings and other comprehensive income.
<F4> Amounts include earnings per common share from discontinued operations of
$0.18.
</FN>
</TABLE>
