EXHIBIT 2.1 ASSET PURCHASE AGREEMENT
Published on February 4, 2003
[EXECUTION COPY]
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ASSET PURCHASE AGREEMENT
By and between
AGERE SYSTEMS INC.
As Seller
And
EMCORE CORPORATION
As Buyer
Dated as of January 21, 2003
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TABLE OF CONTENTS
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Schedules
Schedule 1.1(a) Business Employees
Schedule 1.1(b) Leased Equipment
Schedule 1.3(h) CATV Employees Having Knowledge
Schedule 2.1(g) Licenses
Schedule 2.2(e) Excluded Contracts
Schedule 2.4(a) Retention Payments for Key Employees
Schedule 3.2 Subsidiaries
Schedule 3.4(b) Required Consents
Schedule 3.6 Governmental Permits
Schedule 3.7(a) Leased Premises
Schedule 3.7(c) Environmental Matters
Schedule 3.8 Compliance with Laws
Schedule 3.9 Litigation
Schedule 3.10(b) Benefit Plans
Schedule 3.11 Material Contracts
Schedule 3.12(a) Revenues
Schedule 3.12(b) Financial Information
Schedule 3.12(c) Absence of Certain Changes
Schedule 3.13(b) Intellectual Property
Schedule 3.14(b) Product Claims
Schedule 3.15 Product Warranty
Schedule 3.16 Inventory
Schedule 3.17 Customers and Suppliers
Schedule 5.4(b) Tuition and Relocation Benefits; International Assignees
Schedule 5.4(c) Severance Benefits
Exhibits
Exhibit A Form of Assignment and Bill of Sale and Assumption Agreement
Exhibit B Form of Intellectual Property Agreement
Exhibit C Form of Sublease
Exhibit D Form of Transition Services Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of January 21, 2003
by and between AGERE SYSTEMS INC., a Delaware corporation ("Seller" or "Agere"),
with offices at 1110 American Parkway NE, Allentown, PA 18109 and EMCORE
CORPORATION, a New Jersey corporation ("Buyer"), with offices at 145 Belmont
Drive, Somerset, NJ 08873.
R E C I T A L S
A. WHEREAS, Seller and the Subsidiaries (as hereinafter defined) are, among
other things, engaged through a unit of Seller's Infrastructure Systems Group in
the CATV Business (as hereinafter defined);
B. WHEREAS, the CATV Business is comprised of certain assets and
liabilities that are currently owned by Seller or a Subsidiary or in respect of
which Seller or a Subsidiary is currently obligated, as the case may be;
C. WHEREAS, Seller and the Subsidiaries desire to sell, transfer and assign
to Buyer or a Buyer Designee (as hereinafter defined), and Buyer or a Buyer
Designee desires to purchase from Seller and the Subsidiaries, the Purchased
Assets (as hereinafter defined), and Buyer or a Buyer Designee is willing to
assume, the Assumed Liabilities (as hereinafter defined), in each case as more
fully described and upon the terms and subject to the conditions set forth
herein; and
D. WHEREAS, Seller and/or one or more of the Subsidiaries and Buyer or a
Buyer Designee desire to enter into an Assignment and Bill of Sale and
Assumption Agreement, the Intellectual Property Agreement, each Sublease and the
Transition Services Agreement (each as hereinafter defined and collectively, the
"Collateral Agreements").
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Definitions
1.1 Defined Terms
For the purposes of this Agreement the following words and phrases shall
have the following meanings:
"Affiliate" of any Person means any Person that controls, is controlled by,
or is under common control with such Person. As used herein, the term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities or other interests, by contract or otherwise.
"Assignment and Bill of Sale and Assumption Agreement" means the agreement
in substantially the form set forth as Exhibit A.
"Assumed Contracts" means those Contracts marked as such in Schedule 3.11
and those Contracts not required to be listed on Schedule 3.11 because they do
not meet the dollar threshold amounts or other criteria set forth in Section
3.11(a), but not including any Excluded Contract; provided that no lease
pursuant to which Seller or an Affiliate of Seller is providing services to
Buyer pursuant to the Transition Services Agreement shall be an Assumed
Contract.
"Benefit Plan" means, in respect of any Business Employee, each Pension
Plan, Welfare Plan and employment, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock option, stock
purchase, phantom stock, performance, retirement, thrift, savings, stock bonus,
excess benefit, supplemental unemployment, paid time off, perquisite, fringe
benefit, vacation, sick leave, severance, disability, death benefit,
hospitalization, medical, dental, life insurance, welfare benefit or other plan,
program or arrangement, in each case maintained or contributed to, or required
to be maintained or contributed to, by Seller or its Affiliates, whether or not
such plans, programs, or arrangements are in writing.
"Business Day" means each day that is not a Saturday, Sunday or a day on
which banking institutions are not required to be open in the State of New York.
"Business Employees" means the employees of Seller or the Subsidiaries
employed in the CATV Business and identified on Schedule 1.1(a).
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"Business Records" means all books, records, ledgers, tangible data, disks,
tapes, and other media-storing data and files or other similar information
whether in hardcopy or computer format and whether stored in network facilities
or otherwise, in each case to the extent used or held for use primarily in the
operation or conduct of the CATV Business, including engineering information,
manuals and data, including databases for reference designs, product datasheets,
sales and purchase correspondence, price lists, lists of present and former
customers, information concerning customer contacts, purchasing history,
technical characteristics and other information reasonably required for ongoing
customer relationships, lists of present and former suppliers or vendors,
mailing lists, Contracts, warranty information, catalogs, sales promotion
literature, advertising materials, brochures, bids, records of operation,
accounting and financial records, personnel and employment records, standard
forms of documents, manuals of operations or business procedures, designs,
research materials and product testing reports, and any information relating to
any Tax imposed on any Purchased Assets, but excluding any such items to the
extent (i) they are included in, or primarily related to, the Excluded Assets or
Excluded Liabilities or (ii) any applicable Law prohibits their transfer.
"Buyer Designee" means one or more Affiliates of Buyer identified to Seller
in accordance with Section 2.10 prior to the Closing Date.
"CATV Business" means the worldwide design, engineering, manufacturing,
marketing, sale and distribution of (x) components, modules and subsystems for
cable television and (y) transceivers, transmitters and receivers; FTTx
transceivers and video cards; Satcom modules and components; digital lasers,
receivers and transmitters; and microwave frequency transmitters and receivers
for RF transmission over fiber, in each case as carried on by Seller or a
Subsidiary as of the date hereof at Agere's Irwindale and Alhambra, CA
facilities, but excluding (i) Agere's integrated circuit manufacturing
facilities and any assets related to Agere's integrated circuit products, and
(ii) any assembly and test, billing, order entry, fulfillment, accounting,
collections, sales and other centralized or administrative activities that are
currently provided by centralized functional organizations outside of California
within, or controlled by, Agere, in the case of clauses (i) and (ii) that are
not being transferred hereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq. as amended.
"Closing" means the closing of the transactions described in Article 7.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the agreement between Seller and Buyer
dated November 1, 2002.
"Contracts" means all Third-Party contracts, agreements, leases, subleases,
supply contracts, commitments, purchase orders, sales orders and instruments
used or held for use
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primarily in the operation or conduct of the CATV Business, that will be in
effect on the Closing Date and to which Seller or a Subsidiary is a party,
including, without limitation, any such contracts, agreements, leases,
subleases, supply contracts, commitments, purchase orders, sales orders and
instruments (i) for the lease of machinery, equipment, motor vehicles, furniture
or office equipment, (ii) for the provision of goods or services to the CATV
Business, (iii) for the sale by the CATV Business of goods or performance by the
CATV Business of services and (iv) for the sale and distribution of the products
of the CATV Business, but not the Excluded Contracts.
"Counsel for Buyer" means Skadden, Arps, Slate, Meagher & Flom LLP.
"Counsel for Seller" means a Vice President - Law of Seller.
"Encumbrance" means any lien, claim, charge, encumbrance, security
interest, mortgage, pledge, easement, capital lease, conditional sale or other
title retention agreement, covenant, licenses, adverse claims of ownership or
use, or other restrictions affecting the Purchased Assets, but shall not include
Permitted Encumbrances.
"Environmental Law" means any Law that governs the existence of or provides
a remedy for release of Hazardous Substances, the protection of persons, natural
resources or the environment, the management of Hazardous Substances, or other
activities involving Hazardous Substances including, without limitation, under
CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the
Clean Water Act, 33 U.S.C. Section ss. 1251 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Toxic Substance Control Act, 15 U.S.C. ss. 2601 et
seq., the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., or any other
similar Law, as any such law has been amended or supplemented, and the
regulations promulgated pursuant thereto.
"Environmental Liabilities" means any and all liabilities arising in
connection with or in any way relating to Seller or a Subsidiary (or any
predecessor of Seller or a Subsidiary or any prior owner of all or part of its
business and assets), any property now or previously owned, leased or operated
by such Seller or a Subsidiary, the CATV Business (as currently or previously
conducted), or the Purchased Assets which (i) arise under or relate to any
Environmental Laws and (ii) relate to actions occurring or conditions existing
on or before the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each person (as defined in Section 3(9) of ERISA)
which together with Seller would be deemed to be a single employer within the
meaning of Section 414(b), (c), (m), or (o) of the Code. Any former ERISA
Affiliate of Seller or any Affiliate of Seller shall continue to be considered
an ERISA Affiliate of Seller or any such Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA
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Affiliate of Seller or such Affiliate and with respect to liabilities arising
after such period for which Seller or such Affiliate could be liable under the
Code or ERISA.
"Excluded Contracts" means those Contracts (i) identified in Schedule
2.2(e), (ii) under which performance by Seller or an Affiliate of Seller has
been completed and for which (x) there is no remaining warranty, maintenance or
support obligation, and (y) there is no remaining right to receipt of payment
from the counterparty, (iii) that constitute a General Purchase Agreement, (iv)
under which performance by the counterparty has been completed and for which
there is no remaining payment obligation of such party, (v) the Leases (other
than the obligations to be performed pursuant to the Subleases), (vi) leases for
Leased Equipment that Buyer does not elect to assume, or (vii) that primarily
relate to Excluded Assets or Excluded Liabilities.
"Excluded Taxes" means any liability, obligation or commitment, whether or
not accrued, assessed or currently due and payable, (i) for any Taxes relating
to, pertaining to, or arising out of, the CATV Business or the Purchased Assets
for any Pre-Closing Tax Period, (ii) of Seller or any Affiliate of Seller for
Taxes for any period, (iii) of the Seller or any Affiliate of the Seller for the
unpaid Taxes of any Person under Treas. Reg. ss. 1.1502-6 (or any similar
provision of state, local, or foreign law or regulation), as a transferee or
successor, by contract, or otherwise, and (iv) for any Taxes for which Seller is
liable pursuant to Section 2.9.
"Fixtures and Supplies" means all furniture, furnishings and other tangible
personal property owned by Seller or a Subsidiary and used or held for use
primarily in the operation or conduct of the CATV Business, including, without
limitation, desks, tables, chairs, file cabinets and other storage devices and
office supplies and all warranties and guarantees, if any, express or implied
with respect to the foregoing, including such items located at Agere's Irwindale
and Alhambra, CA facilities but excluding any such items that primarily relate
to Excluded Assets or Excluded Liabilities.
"GAAP" means U.S. generally accepted accounting principles.
"General Purchase Agreements" means Third-Party supply contracts or other
agreements between Seller or an Affiliate of Seller and a Third Party pursuant
to which Seller or an Affiliate purchases or sells products or services from or
to such Third-Party primarily for one or more of Seller's or such Affiliate's
businesses and not used or held for use primarily in the operation or conduct of
the CATV Business.
"Governmental Body" means any legislative, executive or judicial unit of
any governmental entity (foreign, federal, state or local) or any department,
commission, board, agency, bureau, official or other regulatory, administrative
or judicial authority thereof.
"Governmental Permits" means all governmental permits and licenses,
certificates of inspection, approvals or other authorizations required by a
Governmental Body with respect
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to the CATV Business and necessary for the operation or conduct of the CATV
Business as currently conducted under applicable Laws.
"Hazardous Substance" means (i) any hazardous, toxic or dangerous waste,
substance or material defined as such pursuant to any Environmental Law, (ii)
asbestos or PCBs and (iii) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Governmental Body pursuant
to any Environmental Law.
"Intellectual Property Agreement" means the agreement in substantially
the form set forth as Exhibit B.
"Inventory" means all inventory, wherever located, including raw materials,
work in process, recyclable materials, finished products, inventoriable
supplies, and parts and non-capital spare parts owned by Seller or a Subsidiary
and used or held for use primarily in the operation or conduct of the CATV
Business, and any rights of Seller or a Subsidiary to the warranties received
from suppliers and any related claims, credits, rights of recovery and setoff
with respect to such Inventory, but only to the extent such rights are
assignable.
"IRS" means the U.S. Internal Revenue Service.
"Law" means any national, federal, state, provincial or local law, statute,
ordinance, rule, regulation, code, order, judgment, injunction or decree of any
country.
"Lease" means the lease for any of the Leased Premises.
"Leased Equipment" means the vehicles, computers, servers, machinery and
equipment and other similar items including those identified on Schedule 1.1(b)
leased and used or held for use by Seller or a Subsidiary primarily in the
operation or conduct of the CATV Business but shall not include any such items
that are Excluded Assets or Excluded Liabilities.
"Leased Premises" means the real property that is leased by Seller or a
Subsidiary from Third Parties and used by Seller or a Subsidiary primarily in
the conduct of the CATV Business as identified on Schedule 3.7(a).
"Licenses" means all licenses, agreements and other arrangements identified
on Schedule 2.1(g), concerning any Proprietary Information to which Seller or a
Subsidiary is a party to the extent used or held for use primarily in the
operation or conduct of the CATV Business but not (i) the Nonassignable
Licenses, (ii) generally available shrink-wrap software licenses but only to the
extent that they are not assignable, or (iii) any such items primarily related
to Excluded Assets or Excluded Liabilities.
"Nonassignable Licenses" means those Licenses of Proprietary Information
under which Seller or an Affiliate of Seller is the licensee that are (i) not by
their terms assignable
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to Buyer or (ii) related to other businesses of Seller or an Affiliate of Seller
and not used or held for use primarily in the operation or conduct of the CATV
Business.
"Pension Plan" means each "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA).
"Permitted Encumbrances" means any (i) statutory lien for Taxes,
assessments and other governmental charges or liens of carriers, landlords,
warehouseman, mechanics and material men incurred in the ordinary course of
business, which are in each case for sums not yet due and payable or being
contested in good faith by appropriate proceedings and for which appropriate
reserves (if required) are being maintained in accordance with GAAP, (ii) liens
incurred or deposits made in the ordinary course of the CATV Business in
connection with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of tenders, statutory obligations,
surety and appeal bonds and similar obligations, (iii) licenses granted by
Seller or an Affiliate of Seller in connection with sales of products in the
ordinary course of business and (iv) any Encumbrance or minor imperfection in
title or minor encroachments, if any, that, individually or in the aggregate,
are not material in amount, do not materially interfere with the conduct of the
CATV Business or with the use of the Purchased Assets and do not materially
affect the value of the Purchased Assets or the CATV Business.
"Person" means any individual, corporation, partnership, firm, association,
joint venture, joint stock company, trust, unincorporated organization or other
entity, or any government or regulatory, administrative or political subdivision
or agency, department or instrumentality thereof.
"Post-Closing Tax Period" means any Tax period beginning after the Closing
Date, and, in the case of any Straddle Period, the portion of such Straddle
Period beginning the day after the Closing Date.
"Pre-Closing Tax Period" means any Tax period ending on or before the
Closing Date and, in the case of any Straddle Period, the portion of such
Straddle Period ending on the Closing Date.
"Principal Equipment" means all computers, servers, machinery, equipment
(including any related spare parts, dies, molds, tools, and tooling) and other
items used or held for use by Seller or a Subsidiary primarily in the operation
or conduct of the CATV Business, including such items located at Agere's
Irwindale and Alhambra, CA facilities but not the Leased Equipment or any such
items primarily related to Excluded Assets or Excluded Liabilities. Principal
Equipment includes rights to the warranties received from the manufacturers and
distributors of such items and to any related claims, credits, rights of
recovery and setoff with respect to such items, but only to the extent such
rights are assignable.
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"Proprietary Information" means all intellectual property and other
information (whether or not protectable by patent, copyright, mask works or
trade secret rights), (i) including, but not limited to, works of authorship in
any and all media, inventions, discoveries, improvements, patentable subject
matter, patents, patent applications, industrial models, industrial designs,
trade secrets, trade secret rights, software, works, copyrightable subject
matters, copyright rights and registrations, mask works, know-how and show-how,
trademarks, trade names, service marks, emblems, logos, insignia and related
marks, the goodwill of any business symbolized thereby and all common law rights
related thereto, specifications, technical manuals and data, databases,
libraries, blueprints, drawings, designs, techniques, proprietary processes,
product information, business plans and development work-in-process; (ii) all
registrations and applications for the foregoing; and (iii) all rights to obtain
renewals, extensions continuations, continuations-in-part, re-issues, divisions
or similar legal protections related thereto.
"Return" means any return, declaration, report, statement, and any other
document required to be filed in respect of any Tax, including any amendment
thereto.
"Seller Material Adverse Effect" means any condition or event that has a
material and adverse effect upon the (i) assets, business, financial condition
or results of operations of the CATV Business taken as a whole, or (ii) ability
of Seller and its Affiliates to consummate the transactions contemplated by this
Agreement or any Collateral Agreement, other than any condition or event (a)
resulting from conditions in the United States or foreign economies or
securities markets in general or from a war or similar action, (b) resulting
from conditions in the CATV industry in general and not specific to the CATV
Business, (c) resulting primarily from the Seller's public announcement of the
shut-down of its CATV Business or of the transactions contemplated by this
Agreement or any Collateral Agreement, or (d) arising out of or resulting from
actions of Buyer or a Buyer Designee in connection with this Agreement.
"Straddle Period" means any Tax period that begins on or before and ends
after the Closing Date.
"Sublease" means each sublease with respect to a Lease in substantially the
form set forth as Exhibit C.
"Subsidiaries" means the entities listed on Schedule 3.2.
"Taxes" means all taxes of any kind, and all charges, fees, customs,
levies, duties, imposts, required deposits or other assessments, including,
without limitation, all net income, capital gains, gross income, gross receipt,
property, franchise, sales, use, excise, withholding, payroll, employment,
social security, worker's compensation, unemployment, occupation, capital stock,
ad valorem, value added, transfer, gains, profits, net worth, asset,
transaction, and other taxes, and any interest, penalties or additions to tax
with respect thereto, imposed upon any Person by any taxing authority or other
Governmental Body under applicable Law.
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"Third Party" means any Person not an Affiliate of the other referenced
Person or Persons.
"Transition Services Agreement" means the agreement in substantially the
form set forth as Exhibit D.
`WARN Act" means the Worker Adjustment and Retraining Notification Act of
1988.
"Welfare Plan" means each "employee welfare benefit plan" (within the
meaning of Section 3(1) of ERISA).
1.2 Additional Defined Terms
For purposes of this Agreement, the following terms shall have the meanings
specified in the Sections indicated below:
Term Section
"Agere" Preamble
"Agreement" Preamble
"Asset Acquisition Statement" Section 5.3(b)
"Assigned Intellectual Property" Section 3.13(a)
"Assumed Liabilities" Section 2.4
"Buyer" Preamble
"Buyer Savings Plan" Section 5.4(e)
"CATV Intellectual Property" Section 3.13(b)
"Closing Date" Section 7.3
"Collateral Agreements" Recital D
"Excluded Assets" Section 2.2
"Excluded Leased Equipment" Section 5.5(b)
"Excluded Liabilities" Section 2.5
"Indemnified Party" Section 9.3(a)
"Indemnifying Party" Section 9.4(a)
"Licensed Intellectual Property" Section 3.13(a)
"Losses" Section 9.3(a)
"Material Contracts" Section 3.11(a)
"Nonassignable Assets" Section 2.6(c)
"Non-Transferred Employees" Section 5.4(a)
"Purchase Price" Section 2.3
"Purchased Assets" Section 2.1
"Purchased Leased Equipment" Section 5.5(b)
"Required Consents" Section 3.4(b)
"Seller" Preamble
"Seller Name" 5.8(a)
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"Third-Party Claim" Section 9.4(a)
"Transferred Employees" Section 5.4(a)
1.3 Other Definitional and Interpretive Matters
Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
(a) Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement or any Collateral Agreement, the date that is the
starting reference date in calculating such period shall be excluded. If the
last day of such period is a non-Business Day, the period in question shall end
on the next succeeding Business Day.
(b) Gender and Number. Any reference in this Agreement or any Collateral
Agreement to gender shall include all genders, and words imparting the singular
number only shall include the plural and vice versa.
(c) Headings. The provision of a Table of Contents, the division of this
Agreement or any Collateral Agreement into Articles, Sections and other
subdivisions and the insertion of headings are for convenience of reference only
and shall not affect or be utilized in construing or interpreting this
Agreement. All references in this Agreement or any Collateral Agreement to any
"Section" are to the corresponding Section of this Agreement or any Collateral
Agreement, as applicable, unless otherwise specified.
(d) Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
(e) Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(f) Reasonable Commercial Efforts. Reasonable commercial efforts means that
the obligated party is required to make a diligent, reasonable and good faith
effort to accomplish the applicable objective. Such obligation, however, does
not require an expenditure of material funds or the incurrence of a material
liability, in each case inconsistent with past practice, on the part of the
obligated party, nor does it require that the obligated party act in a manner
that would be contrary to normal commercial practices in order to accomplish the
objective. The fact that the objective is or is not actually accomplished is no
indication that the obligated party did or did not in fact utilize its
reasonable commercial efforts in attempting to accomplish the objective.
(g) Schedules and Exhibits. The Schedules and Exhibits attached to this
Agreement shall be construed with and as an integral part of this Agreement to
the same
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extent as if the same had been set forth verbatim herein. Any matter disclosed
by either party on any one Schedule with respect to any representation, warranty
or covenant of such party shall be deemed disclosed for purposes of all other
representations, warranties or covenants of such party to the extent that it is
reasonably apparent from such disclosure that it also relates to such other
representations, warranties or covenants.
(h) Knowledge. The phrases "knowledge", "Seller's knowledge", "to the
knowledge of Seller" and similar phrases concerning a particular subject, area
or aspect of Seller, the Subsidiaries or the CATV Business shall mean the
knowledge of each of the officers of Seller or any Subsidiary and of those CATV
employees of Seller and its Subsidiaries listed on Schedule 1.3(h) whose duties
would, in the normal course of affairs, result in such employees having
knowledge concerning such subject, area or aspect.
2. Purchase and Sale of the CATV Business
2.1 Purchase and Sale of Assets
Upon the terms and subject to the conditions of this Agreement and in
reliance on the representations and warranties contained herein, on the Closing
Date, Seller shall, or shall cause one or more of the Subsidiaries, as
appropriate, to, grant, bargain, sell, transfer, assign, convey and deliver to
Buyer or one or more Buyer Designees, and Buyer or one or more Buyer Designees
shall purchase, acquire and accept from Seller or the applicable Subsidiary, all
of the right, title and interest in, to and under the Purchased Assets that
Seller or the applicable Subsidiary (x) owns or (y) leases, licenses, possesses,
uses and has the right to transfer, wherever located, free and clear of any and
all Encumbrances. For purposes of this Agreement, the term "Purchased Assets"
means all the assets, properties and rights used or held for use by Seller or
the applicable Subsidiary primarily in the operation or conduct of the CATV
Business, whether tangible or intangible, real, personal or mixed, including but
not limited to the assets set forth or described in paragraphs (a) through (l)
below (but excluding the Excluded Assets), whether or not any of such assets,
properties or rights have any value for accounting purposes or are carried or
reflected on or specifically referred to in Seller's or the applicable
Subsidiary's financial statements:
(a) the Principal Equipment;
(b) the Purchased Leased Equipment;
(c) the Fixtures and Supplies;
(d) the Inventory;
(e) the Assigned Intellectual Property;
(f) the Assumed Contracts;
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(g) the Licenses;
(h) the Business Records;
(i) the Governmental Permits but only to the extent that such Governmental
Permits are assignable or transferable to Buyer;
(j) all rights, choses and claims of any kind relating to the CATV
Business, known or unknown, accrued or contingent, arising out of transactions
occurring after the Closing Date;
(k) all prepaid expenses for leased and rented equipment; and
(l) the goodwill of the CATV Business.
Notwithstanding the foregoing, the transfer of the Purchased Assets
pursuant to this Agreement or the Collateral Agreements shall not include the
assumption of any liability arising or accruing prior to the Closing Date
related thereto unless expressly assumed by Buyer or a Buyer Designee pursuant
to Section 2.4 hereof.
2.2 Excluded Assets
Except as specifically set forth in the Collateral Agreements and
notwithstanding anything in Section 2.1 to the contrary, it is hereby expressly
acknowledged and agreed that the Purchased Assets shall not include, and neither
Seller nor any Subsidiary is granting, bargaining, selling, transferring,
assigning, conveying or delivering to Buyer or a Buyer Designee, and neither
Buyer nor any Buyer Designee is purchasing, acquiring or accepting from Seller
or any Subsidiary, any of the rights, properties or assets set forth or
described in paragraphs (a) through (h) below (the rights, properties and assets
expressly excluded by this Section 2.2 or otherwise excluded by the terms of
Section 2.1 from the Purchased Assets being referred to herein as the "Excluded
Assets"), whether or not any of such assets, properties or rights have any value
for accounting purposes or are carried or reflected on or specifically referred
to in Seller's or the applicable Subsidiary's financial statements:
(a) any of Seller's or any Affiliate of Seller's receivables, cash, cash
equivalents, bank deposits or similar cash items, minority investments or
employee receivables;
(b) any (i) confidential personnel records pertaining to any Business
Employee, or (ii) other books and records that Seller or any Affiliate of Seller
is required by Law to retain; provided, however, that Buyer shall have the
right, to the extent permitted by Law, to make copies of any portions of such
retained confidential personnel records and other books and records that relate
to the CATV Business, the Purchased Assets, the Assumed Liabilities or the
Transferred Employees; and (iii) any information management system of Seller or
any Affiliate of Seller other than those used or held for use primarily in the
operation or conduct
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of the CATV Business and contained within computer hardware included as a
Purchased Asset pursuant to Sections 2.1(a) and (b);
(c) any claim, right or interest of Seller or any Affiliate of Seller in or
to any refund, rebate, abatement or other recovery for Taxes, together with any
interest due thereon or penalty rebate arising therefrom, for any Tax period (or
portion thereof) ending on or before the Closing Date;
(d) subject to Section 5.8, any rights to, or the use of, the "Agere" or
"Agere Systems" trademarks;
(e) the Excluded Contracts, the Nonassignable Licenses and the Excluded
Leased Equipment;
(f) any insurance policies or rights of proceeds thereof;
(g) except as specifically provided in Section 5.4, any of the assets of
the Benefits Plans; and
(h) any rights, claims or causes of action of Seller or any Affiliate of
Seller against Third Parties relating to the assets, properties or operations of
the CATV Business of Seller or any Affiliate of Seller arising out of
transactions occurring on or before the Closing Date.
2.3 Purchase Price
In consideration of the grant, bargain, sale, transfer, assignment,
conveyance and delivery by Seller and the Subsidiaries of the Purchased Assets
to Buyer or a Buyer Designee, and in addition to assuming the Assumed
Liabilities, Buyer or a Buyer Designee shall pay to Seller at the Closing, an
aggregate amount equal to TWENTY FIVE MILLION Dollars ($25,000,000) (the
"Purchase Price") in cash by wire transfer of immediately available funds to an
account designated by Seller. Seller shall provide written wire transfer
instructions to Buyer at least two (2) Business Days prior to the Closing.
2.4 Assumed Liabilities
On the Closing Date, in addition to entering into the Subleases, Buyer or
one or more Buyer Designee shall execute and deliver to Seller each Assignment
and Bill of Sale and Assumption Agreement pursuant to which Buyer or any such
Buyer Designee shall accept, assume and agree to pay, perform or otherwise
discharge, in accordance with the respective terms and subject to the respective
conditions thereof, the Assumed Liabilities. For purposes of this Agreement, the
term "Assumed Liabilities" means only the liabilities and obligations set forth
or described in paragraphs (a) through (d) below, whether or not any such
liability or obligation has a value for accounting purposes or is carried or
reflected on or specifically referred to in Seller's or the applicable
Subsidiary's financial statements:
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(a) the liabilities and obligations arising after the Closing Date under
the Assumed Contracts, Licenses and transferred Governmental Permits;
(b) with respect to the CATV Business, any product warranty liabilities
(but not intellectual property warranties or indemnification obligations which
shall constitute Excluded Liabilities) arising from sales of products by the
CATV Business in the ordinary course of business on or before the Closing Date;
(c) the obligations and liabilities with respect to the CATV Business or
the Purchased Assets arising from, or in connection with, the conduct of the
CATV Business or the ownership of the Purchased Assets by Buyer or a Buyer
Designee after the Closing Date; and
(d) the employment-related obligations and liabilities arising as a result
of the Transferred Employees' employment with Buyer or Buyer Designees after the
Closing Date (other than any employee retention payments for key employees
included in the list of Transferred Employees which shall constitute Excluded
Liabilities).
2.5 Excluded Liabilities
Neither Buyer nor any Buyer Designee shall assume or be obligated to pay,
perform or otherwise assume or discharge any liabilities or obligations of
Seller or any Affiliate of Seller, whether direct or indirect, known or unknown,
absolute or contingent, except for the Assumed Liabilities (all of such
liabilities and obligations not so assumed being referred to herein as the
"Excluded Liabilities") and Seller or a Subsidiary shall pay, perform and
discharge all such Excluded Liabilities. For the avoidance of doubt, the parties
agree that the Excluded Liabilities include, but are not limited to, any and all
liabilities or obligations set forth or described in paragraphs (a) through (h)
below, whether or not any such liability or obligation has a value for
accounting purposes or is carried or reflected on or specifically referred to in
Seller's or the applicable Subsidiary's financial statements:
(a) any and all Excluded Taxes;
(b) any and all Environmental Liabilities;
(c) any and all liabilities or obligations arising out of or related to any
Excluded Asset or Excluded Contract;
(d) any and all liabilities or obligations relating to or in connection
with (i) the employment and any termination of such employment by Seller or any
current or former Affiliate of Seller of any employee or former employee of
Seller or any current or former Affiliate of Seller on or before the Closing
Date; (ii) the employment and any termination of such employment by Seller or
any current or former Affiliate of Seller of any Non-Transferred Employee
whether before, on, or after the Closing Date; (iii) any employee's or
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former employee's or his/her dependents' rights or obligations under any fringe
benefit of employment with Seller or any current or former Affiliate of Seller,
including any benefit plan or arrangement of Seller or any current or former
Affiliate of Seller; (iv) any employee retention payments for key employees
included in the list of Transferred Employees as set forth on Schedule 2.5(d);
and/or (v) the WARN Act arising from actions taken by Seller or any Affiliate of
Seller whether before, on, or after the Closing Date;
(e) any and all liabilities or obligations in connection with, or relating
to, any actions, suits, claims or proceedings against the Purchased Assets, the
CATV Business, Seller or any Subsidiary which arise or accrue on or before the
Closing Date;
(f) except as set forth in Section 2.4(b), the obligations and liabilities
with respect to the CATV Business or the Purchased Assets arising from, or in
connection with, the conduct of the CATV Business or the ownership of the
Purchased Assets by Seller or a Subsidiary on or prior to the Closing Date;
(g) any and all benefit liabilities relating to or arising in connection
with Section 4980B of the Code (COBRA) to provide continuation of health care
coverage to employees or former employees of Seller or their dependents arising
from a qualifying event occurring on or before the Closing Date and after the
Closing Date with respect to Non-Transferred Employees; and
(h) any and all liabilities of the Benefit Plans and any benefit plan or
arrangement of Seller and its current or former Affiliates or ERISA Affiliates.
2.6 Further Assurances; Further Conveyances and Assumptions; Consent of
Third Parties
(a) From time to time following the Closing, Seller shall, or shall cause
its Affiliates to, make available to Buyer or a Buyer Designee data and
information in personnel records of Transferred Employees.
(b) From time to time following the Closing, Seller and Buyer shall, and
shall cause their respective Affiliates to, execute, acknowledge and deliver all
such further conveyances, notices, assumptions, releases and acquittances and
such other instruments, and shall take such further actions, as may be necessary
or appropriate to assure fully to Buyer and its Affiliates and each of their
respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Buyer or a Buyer Designee under this Agreement and the Collateral Agreements and
to assure fully to Seller and its Affiliates and each of their respective
successors and assigns, the assumption of the Assumed Liabilities, and to
otherwise make effective the transactions contemplated hereby and thereby
(including (i) transferring to Buyer or a Buyer Designee any asset or liability
contemplated by this Agreement to be a Purchased Asset or an Assumed Liability,
respectively, which was not transferred to Buyer or a Buyer Designee at the
Closing and (ii) transferring back to Seller or a Subsidiary any asset or
liability not
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contemplated by this Agreement to be a Purchased Asset or an Assumed Liability,
respectively, which asset or liability was transferred to Buyer or a Buyer
Designee at the Closing).
(c) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Purchased Asset, including any Contract, Lease, License, Governmental Permit,
certificate, approval, authorization or other right, which by its terms or by
Law is nonassignable without the consent of a Third Party or a Governmental Body
or is cancelable by a Third Party in the event of an assignment ("Nonassignable
Assets") unless and until such consent shall have been obtained. Seller and
Buyer shall, and shall cause their respective Affiliates to, cooperate with
Seller and Buyer, as the case may be, in endeavoring to obtain such consents
promptly. To the extent permitted by applicable Law, in the event consents to
the assignment thereof cannot be obtained, Seller and Buyer shall, and shall
cause their respective Affiliates to, cooperate in a mutually agreeable
arrangement under which (i) Buyer or a Buyer Designee would obtain the benefits
and assume the obligations under such Nonassignable Assets in accordance with
this Agreement including by sub-contracting, sub-licensing, or sub-leasing to
Buyer or a Buyer Designee, or (ii) such Nonassignable Assets would be held, as
of and from the Closing Date, by Seller or the applicable Subsidiary in trust
for Buyer or a Buyer Designee and the covenants and obligations thereunder would
be performed by Buyer or a Buyer Designee in Seller's or such Subsidiary's name
and all benefits and obligations existing thereunder would be for Buyer's or the
applicable Buyer Designee's account. Seller shall, and shall cause its
Affiliates to, also take or cause to be taken at Buyer's or a Buyer Designee's
expense such actions in its name or otherwise as Buyer may reasonably request so
as to provide Buyer or the applicable Buyer Designee with the benefits of the
Nonassignable Assets and to effect collection of money or other consideration
that becomes due and payable under the Nonassignable Assets, and Seller or the
applicable Subsidiary shall promptly pay over to Buyer the applicable Buyer
Designee all money or other consideration received by it in respect to all
Nonassignable Assets.
(d) Buyer and Seller shall, and shall cause their respective Affiliates to,
use their respective reasonable commercial efforts to obtain, or to cause to be
obtained, any consent, substitution, approval, or amendment required to transfer
all obligations under any and all Contracts, Leases, Licenses, Governmental
Permits, certificates, approvals, authorizations or other rights or obligations
or liabilities that constitute Assumed Liabilities or to obtain in writing the
unconditional release of Seller and its Affiliates so that, in any such case,
Buyer and its Affiliates shall be solely responsible for such Assumed
Liabilities.
(e) As of and from the Closing Date, Seller on behalf of itself and its
Affiliates authorizes Buyer, to the extent permitted by applicable Law and the
terms of the Nonassignable Assets, at Buyer's expense, to perform all the
obligations and receive all the benefits of Seller or its Affiliates under the
Nonassignable Assets and appoints Buyer its attorney-in-fact to act in its name
on its behalf or in the name of the applicable Affiliate of Seller and on such
Affiliate's behalf with respect thereto.
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(f) Notwithstanding anything in this Agreement to the contrary, unless and
until any consent or approval with respect to any Nonassignable Asset is
obtained, such Nonassignable Asset shall not constitute a Purchased Asset and
any associated liability shall not constitute an Assumed Liability for any
purpose under this Agreement.
(g) From and after the Closing Date, should Buyer identify any Contract of
the CATV Business that it desires to assume, Buyer and Seller shall, and shall
cause their respective Affiliates to, use their respective reasonable commercial
efforts to obtain, or to cause to be obtained, any consent or similar approval
necessary to transfer all obligations under any and all such Contracts and to
affect the assignment thereof, all in accordance with the principles set forth
herein. Should the requisite consents not be obtained, then the parties shall
follow the procedures set forth in Section 2.6(c) to secure the parties'
intended effects of an assignment and assumption of such Contract.
2.7 Proprietary Information
Unless expressly set forth in this Agreement, the Intellectual Property
Agreement or in any Collateral Agreement, no title, right or license of any kind
is granted to Buyer pursuant to this Agreement with respect to Proprietary
Information of Seller or any Affiliate of Seller, either directly or indirectly,
by implication, by estoppel or otherwise.
2.8 Bulk Sales Law
Both parties hereby waive compliance by Seller and any Subsidiary with the
requirements and provisions of any "bulk-transfer" Laws of any jurisdiction,
including Article 6 of the Pennsylvania Uniform Commercial Code, that may
otherwise be applicable with respect to the sale of any or all of the Purchased
Assets to Buyer or a Buyer Designee.
2.9 Taxes
(a) All (i) recording and filing fees and (ii) transfer, documentary,
sales, use, stamp, registration, value added and other such Taxes incurred in
connection with the transactions contemplated by this Agreement and the
Collateral Agreements shall be paid by the party prescribed by applicable Law as
primarily liable.
(b) All real property Taxes, personal property Taxes and similar ad valorem
obligations levied with respect to the Purchased Assets for a Straddle Period
shall be apportioned between Seller and Buyer based on the number of days of
such Straddle Period, and Seller shall be liable for the proportionate amount of
such Taxes that is attributable to the Pre-Closing Tax Period within such
Straddle Period, and Buyer shall be liable for the proportionate amount of such
Taxes that is attributable to the Post-Closing Tax Period within such Straddle
Period. Any refund, rebate, abatement or other recovery of such Taxes
attributable to the Pre-Closing Tax Period shall be for the account of the
Seller, and any refund, rebate, abatement or other recovery of such Taxes
attributable to the Post-Closing Tax Period shall be for the account of the
Buyer.
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(c) Each of Buyer and Seller or applicable Subsidiary shall provide the
other with such assistance as may reasonably be requested by the other party in
connection with the preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes with respect to the CATV Business,
and each will retain and provide the requesting party with any records or
information which may be relevant to such return, audit or examination,
proceedings or determination. Any information obtained pursuant to this Section
2.9 or pursuant to any other Section hereof providing for the sharing of
information or review of any Tax Return or other schedule relating to Taxes
shall be kept confidential by the parties hereto.
2.10 Buyer Designee
The parties agree that Buyer may assign, in whole or in part, the right to
purchase certain of the Purchased Assets to one or more Buyer Designees or that
one or more Buyer Designees may enter into a Collateral Agreement.
Notwithstanding any such assignment or execution of a Collateral Agreement by a
Buyer Designee, Buyer shall remain liable for, and any such assignment or
execution shall not relieve Buyer of, its obligations hereunder or thereunder.
Any reference to Buyer in this Agreement shall to the extent applicable also be
deemed a reference to the applicable Buyer Designee, except where in context of
this Agreement such use would not be appropriate.
3. Representations and Warranties of Seller
Except as set forth and identified in Schedules attached hereto in
accordance with Section 1.3(g) and delivered by Seller to Buyer prior to the
execution of this Agreement, Seller represents and warrants to Buyer that:
3.1 Organization and Qualification; Subsidiaries
(a) Seller is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has all requisite corporate
power and authority to carry on the CATV Business as currently conducted by it
and to own or lease and operate the Purchased Assets. Seller is duly qualified
to do business and is in good standing as a foreign corporation (in any
jurisdiction that recognizes such concept) in each jurisdiction where the
ownership or operation of the Purchased Assets or the operation or conduct of
the CATV Business requires such qualification, except where the failure to be so
qualified or in good standing, individually or in the aggregate, has not had and
could not reasonably be expected to have a Seller Material Adverse Effect.
(b) Schedule 3.2 sets forth a list of each Subsidiary of Seller that has
title to any Purchased Asset or any Assumed Liability, together with its
jurisdiction of organization. Except as set forth on Schedule 3.2, each entity
is duly organized, validly existing and in good standing (in any jurisdiction
that recognizes such concept) under the Laws of its jurisdiction of organization
and has all requisite corporate or similar power and authority to
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own, lease and operate the Purchased Assets and to carry on its portion of the
CATV Business as presently conducted and is duly qualified to do business and is
in good standing as a foreign corporation or other entity (in any jurisdiction
that recognizes such concept) in each jurisdiction where the ownership or
operation of its properties and assets or the conduct of its business requires
such qualification, except for failures to be so duly organized, validly
existing, qualified or in good standing that, individually or in the aggregate,
have not had and could not reasonably be expected to have a Seller Material
Adverse Effect. The Subsidiaries listed on Schedule 3.2 are the only Affiliates
of Seller that have title to any Purchased Asset or any obligation that is an
Assumed Liability, in each case related to the CATV Business as currently
conducted.
3.2 Authorization
(a) Seller has all requisite corporate power and authority to execute,
deliver and perform this Agreement and the Collateral Agreements to which it
will be a party and to effect the transactions contemplated hereby and thereby,
and the execution, delivery and performance of this Agreement and the Collateral
Agreements to which it will be a party has been duly authorized by all requisite
corporate action.
(b) Each Subsidiary that has title to a Purchased Asset or any Assumed
Liability has all requisite corporate power and authority to execute and deliver
the Collateral Agreements to which it will be a party and to effect the
transactions contemplated thereby and has duly authorized the execution,
delivery and performance of the Collateral Agreements to which it will be a
party by all requisite corporate action.
3.3 Binding Effect
Each of this Agreement and the Collateral Agreements has been duly executed
and delivered by Seller and each Subsidiary that is a party thereto and
constitute valid and legally binding obligations of Seller or such Subsidiary,
enforceable against Seller or such Subsidiary, as applicable, in accordance with
their respective terms, except to the extent that enforcement of the rights and
remedies created hereby and thereby may be affected by bankruptcy,
reorganization, moratorium, insolvency and similar Laws of general application
affecting the rights and remedies of creditors and by general equity principles.
3.4 Non-Contravention; Consents
(a) Assuming that all Required Consents have been obtained, the execution,
delivery and performance of this Agreement by Seller and the Collateral
Agreements by Seller or any Subsidiary that is a party thereto and the
consummation of the transactions contemplated hereby and thereby do not and will
not: (i) result in a breach or violation of, or conflict with, any provision of
Seller's or the applicable Subsidiary's charter, by-laws or similar
organizational document, (ii) violate or result in a breach of or constitute an
occurrence of default under any provision of, result in the right to accelerate,
acceleration or cancellation of any obligation under, or give rise to a right by
any party to terminate or amend its obligations under, any mortgage, deed of
trust, conveyance to secure debt, note,
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loan, indenture, lien, lease, agreement, Contract, license, permit, instrument,
order, judgment, decree or other arrangement or commitment to which Seller or
the applicable Subsidiary is a party or by which it is bound and which relates
to the CATV Business or the Purchased Assets, or (iii) violate any order,
judgment, decree, rule or regulation of any court or any Governmental Body
having jurisdiction over Seller, a Subsidiary, the CATV Business or the
Purchased Assets, other than in the case of clauses (ii) and (iii), any such
violations, breaches, defaults, accelerations or cancellations of obligations or
rights that, individually or in the aggregate, have not had and could not
reasonably be expected to have a Seller Material Adverse Effect.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person is required to be obtained by Seller or a
Subsidiary in connection with the execution, delivery and performance of this
Agreement or the Collateral Agreements or for the consummation of the
transactions contemplated hereby or thereby by Seller or a Subsidiary, except
for (i) consents or approvals of Third Parties that are required to transfer or
assign to Buyer or a Buyer Designee any Purchased Assets or assign the benefits
of or delegate performance with regard thereto set forth in Schedule 3.4(b) (the
"Required Consents") and (ii) such consents, approvals, orders, authorizations,
registrations, declarations or filings the failure of which to be obtained or
made, individually or in the aggregate, have not had and could not reasonably be
expected to have a Seller Material Adverse Effect.
3.5 Title to Property; Principal Equipment; Sufficiency of Assets
(a) Seller or a Subsidiary has, and at the Closing will transfer to Buyer
or a Buyer Designee, good and valid title in and to, the Purchased Assets
purported to be owned by Seller or a Subsidiary free and clear of any
Encumbrance. Seller or a Subsidiary has, and at the Closing will transfer to
Buyer or a Buyer Designee, a valid and binding leasehold interest or license in
and to, the Purchased Assets purported to be leased or licensed by Seller or a
Subsidiary free and clear of any Encumbrance.
(b) Each material, tangible Purchased Asset is in reasonable operating
condition, suitable for the purposes for which it is currently being used, but
is otherwise being transferred on a "where is" and, as to condition, "as is"
basis.
(c) Except for (i) the assets that will be used in connection with
providing services indicated on the schedules to the Transition Services
Agreement, and the (ii) the Excluded Assets, the Purchased Assets and the
Business Employees and the rights to be acquired under this Agreement and the
Collateral Agreements (including the services to be provided pursuant to the
Transition Services Agreement) constitute all property, licenses, assets,
personnel and rights that are used or held for use by Seller or a Subsidiary
primarily in the operation or conduct the CATV Business. In the event this
Section 3.5(c) is breached because Seller or a Subsidiary has in good faith
failed to identify and transfer any assets or properties or provide any services
used or held for use primarily in the CATV Business, Seller or the applicable
Subsidiary shall promptly transfer such properties or assets or
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provides such services to Buyer or a Buyer Designee at no additional cost to
Buyer or a Buyer Designee.
3.6 Permits
Except as set forth on Schedule 3.6, there are no material Governmental
Permits necessary for or used by Seller or a Subsidiary to operate the CATV
Business as now being operated or to use or occupy the Leased Premises, which
Governmental Permits are required by currently effective Laws. Seller or one of
its Subsidiaries owns, holds or possesses in their own name, all Governmental
Permits necessary to own or lease, operate and use the Purchased Assets or own,
use or occupy the Leased Premises and to carry on and conduct the CATV Business
and its operations as presently conducted, except for such Governmental Permits,
the absence of which, individually or in the aggregate, has not had and could
not reasonably be expected to have a Seller Material Adverse Effect. The
Governmental Permits held, owned or possessed by Seller or a Subsidiary are
valid and in full force and effect and no proceeding is recorded, pending or, to
Seller's knowledge, threatened seeking the suspension, modification, limitation
or revocation of any such Governmental Permit. Neither Seller nor any Subsidiary
is in violation of or default under any such Governmental Permits which,
individually or in the aggregate, has had or could reasonably be expected to
have a Seller Material Adverse Effect.
3.7 Real Estate; Environmental Matters
(a) Schedule 3.7(a) contains a complete and accurate list of the Leased
Premises. Buyer has been provided with a complete and correct copy of each Lease
and all amendments thereto. Except as set forth in Schedule 3.7(a), each Lease
is in full force and effect and, to Seller's knowledge, neither Seller nor any
Subsidiary has violated, and the landlord has not waived, any of the material
terms or conditions of any Lease and, to Seller's knowledge, all the material
covenants to be performed by the Seller or a Subsidiary and the landlord under
each Lease prior to the date hereof have been performed in all material
respects.
(b) The use of the Leased Premises, as presently used by the CATV Business,
does not violate any local zoning or similar land use laws or governmental
regulations which violation, individually or in the aggregate, has had or could
reasonably be expected to have a Seller Material Adverse Effect. Neither Seller
nor any Subsidiary is in violation of or in noncompliance with any Law,
covenant, condition, restriction, order or easement affecting any of the Leased
Premises where such violation or noncompliance, individually or in the
aggregate, has had or could reasonably be expected to have a Seller Material
Adverse Effect. There is no condemnation or, to Seller's knowledge, threatened
condemnation affecting any of the Leased Premises.
(c) Except as set forth in Schedule 3.7(c) and in respect of the CATV
Business and the Leased Premises:
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(i) the operations of the CATV Business and the Leased Premises comply
in all material respects with all applicable Environmental Laws;
(ii) Seller and each Subsidiary has obtained all environmental, health
and safety Governmental Permits required by any Environmental Law and necessary
for its operations, and all such Governmental Permits are in good standing, and
Seller and each Subsidiary is in compliance with all terms and conditions of
such permits except where the failure to obtain, maintain in good standing or be
in compliance with, such permits, individually or in the aggregate, has not had
and could not reasonably be expected to have a Seller Material Adverse Effect;
(iii) none of Seller, any Subsidiary or any of the Leased Premises or
the operations of the CATV Business, is subject to any on-going investigation
by, order from, or agreement with, any Person respecting (A) any Environmental
Law, or (B) any remedial action arising from the release or threatened release
of a Hazardous Substance into the environment;
(iv) neither Seller nor any Subsidiary is subject to any judicial or
administrative proceeding, order, judgment, decree or settlement alleging or
addressing a violation of or liability under any Environmental Law;
(v) Seller or each applicable Subsidiary has filed all notices
required to be filed under any Environmental Law indicating past or present
treatment, storage or disposal of a Hazardous Substance or reporting a spill or
release of a Hazardous Substance into the environment except where the failure
to file any such notices, individually or in the aggregate, has not had and
could not reasonably be expected to have a Seller Material Adverse Effect;
(vi) to Seller's knowledge, there is not now nor has there ever been,
on or in any Leased Premise, any aboveground or underground storage tanks;
(vii) neither Seller nor any Subsidiary has received any written
notice, or to Seller's knowledge, other claim to the effect that it is or may be
liable to any Person as a result of the release or threatened release of a
Hazardous Substance;
(viii) to Seller's knowledge, there have been no releases, or
threatened releases of any Hazardous Substances into, on or under any of the
Premises, in any case in such a way as to create any liability (including the
costs of investigation and remediation) under any applicable Environmental Law;
and
(ix) Seller has delivered to Buyer true and complete copies of all
asbestos and other environmental reports disclosing the presence of asbestos,
fiberglass, radon, urea formaldehyde, polychlorinated biphenyls or other
Hazardous Materials on any of the Leased Premises.
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3.8 Compliance With Laws
Except as set forth on Schedule 3.8, with respect to the CATV Business
conducted by Seller and the Subsidiaries, Seller and each Subsidiary is in
compliance with all applicable Laws and all decrees, orders, judgments, writs,
injunctions, permits and licenses of or from Governmental Bodies by which the
CATV Business or the Purchased Assets are bound or affected except for instances
of noncompliance or possible noncompliance that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Seller
Material Adverse Effect.
3.9 Litigation
Except as set forth on Schedule 3.9, there is no material action, suit,
consent decree, proceeding, arbitration or governmental investigation pending
or, to Seller's knowledge, threatened against Seller or any Subsidiary, the CATV
Business or the Purchased Assets, (i) which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby or (ii) with respect to the
CATV Business, the Purchased Assets, the Assumed Liabilities or the Business
Employees.
3.10 Business Employees
(a) Schedule 1.1(a) contains a complete and accurate list of all the
Business Employees as of the date specified in such list (which in any event
shall be no more than ten (10) business days prior to the date hereof), showing
for each Business Employee, the name, title, location, service date, annual
salary or wages as of such date and aggregate annual compensation for Seller's
2002 fiscal year. None of the Business Employees is covered by any union,
collective bargaining agreement or other similar labor agreement, formal or
informal, nor, to Seller's knowledge, has there been any labor union organizing
activities relating to the Business Employees within the past five years.
(b) Except as set forth in Schedule 3.10(b), with respect to the Business
Employees, Seller does not currently maintain, contribute to or have any
liability under any Benefit Plan. With respect to each Benefit Plan identified
on Schedule 3.10(b), Seller has made available to Buyer true and complete copies
of the most recent summary plan or other written description thereof. Each
Benefit Plan listed on Schedule 3.10(b) has been operated in material compliance
with all applicable Laws, including ERISA. Each Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter, or has pending or has time remaining in which to file an
application for such determination, from the IRS, and Seller is not aware of
reason why any such determination letter should be revoked or not issued or
reissued. Any amount that could be received (whether in cash, property, or
vesting of property) as a result of the transaction contemplated by this
Agreement by any officer, director, employee or independent contractor of
Seller, who is a "disqualified individual" (as defined in proposed Treasury
Regulation Section 1.280G-1), under any Contract that will be assumed by the
Buyer, would not be characterized as an "excess parachute payment" (as defined
in Section 280G of the Code).
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(c) With respect to the CATV Business, there is not presently pending or
existing, and, to Seller's knowledge, there is not threatened, (i) any strike,
slowdown, picketing, or work stoppage, (ii) any application for certification of
a collective bargaining agent, or (iii) any controversies pending, or to
Seller's knowledge, threatened between Seller or any Subsidiary and any of its
employees that, individually or in the aggregate, have had or could reasonably
be expected to have a Seller Material Adverse Effect.
3.11 Contracts
(a) Schedule 3.11 contains a complete and accurate list of all existing
Contracts and all amendments thereto and waivers thereunder of Seller or a
Subsidiary that:
(i) involve payments by or to Seller or a Subsidiary either of more
than $100,000 per year or more than $250,000 in the aggregate over the full term
thereof;
(ii) are with Business Employees;
(iii) contain any provision or covenant prohibiting or limiting the
ability of Seller or a Subsidiary or a purchaser of the CATV Business to engage
in any activity relating to or involving the CATV Business (including
geographical restrictions) or to compete, directly or indirectly, with any
Person;
(iv) create or obligate Seller or a Subsidiary or a purchaser of the
CATV Business to (i) provide funds to make any investment in any Person (in the
form of a loan, capital contribution, purchase of securities or otherwise) or
(ii) to participate in any joint venture or similar arrangement with respect to
or affecting the CATV Business or the Purchased Assets;
(v) relate to any material license affecting the CATV Business or the
Purchased Assets; and
(vi) constitute any other agreement, commitment, arrangement or plan
not made in the ordinary course of business that is material to the CATV
Business (clauses (i) through (vi) collectively, the "Material Contracts").
(b) The aggregate remaining payment obligations under non-cancelable
without premium or penalty (according to their terms) Assumed Contracts that are
not required to be listed because they do not meet the dollar threshold amounts
or other criteria set forth in Section 3.11(a) will not exceed $100,000 for
their remaining existing term (not including any extensions or renewals
thereof).
(c) Each Material Contract is valid, binding and enforceable against Seller
or the applicable Subsidiary and, to Seller's knowledge, the other parties
thereto in accordance with its terms and is in full force and effect. Except as
set forth on Schedule 3.11, neither Seller nor any Subsidiary has received any
notice that it is in material default under or in
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breach of or is otherwise delinquent in any material manner in performance under
any Material Contract, and, to Seller's knowledge, each of the other parties
thereto has performed all material obligations required to be performed by it
under, and is not in material default under, any Material Contract and no event
has occurred that, with notice or lapse of time, or both, would constitute such
a material default. Seller or a Subsidiary has made available to Buyer true and
complete copies of all Material Contracts and amendments thereto.
3.12 Revenues; Financial Information; Absence of Certain Changes
(a) Schedule 3.12(a) sets forth a statement of revenues for the CATV
Business for each of the fiscal years ended September 30, 2002, 2001 and 2000.
The statement of revenues is derived from and has been prepared in accordance
with the books and records of Seller and the Subsidiaries (which are accurate
and complete in all material respects) on a consistent basis throughout the
periods covered thereby and (ii) presents fairly the revenues of the CATV
Business for such periods. The revenues of the CATV Business reflected on
Schedule 3.12(a) have been recognized in accordance with GAAP and SAB 101 (as
noted on Schedule 3.12(a)).
(b) The historical financial information relating to the CATV Business set
forth on Schedule 3.12(b) was prepared in good faith by Seller's management and
is based upon reasonable assumptions. Seller is not aware of any fact or set of
circumstances that would lead it to believe that such historical financial
information is incorrect or misleading in any material respect.
(c) Except as set forth in Schedule 3.12(c), since January 1, 2002, the
CATV Business has been conducted in the ordinary course consistent with past
practices and there has not been:
(i) any event, occurrence, development or state of circumstances or
facts which, individually or in the aggregate, has had or could reasonably be
expected to have a Seller Material Adverse Effect;
(ii) any creation or other incurrence of any Encumbrance on any
Purchased Asset other than in the ordinary course of business consistent with
past practices;
(iii) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the CATV Business or any Purchased Asset which,
individually or in the aggregate, has had or could reasonably be expected to
have a Seller Material Adverse Effect;
(iv) any transaction or commitment made, or any contract or agreement
entered into, by Seller or a Subsidiary relating to the CATV Business or any
Purchased Asset (including the acquisition or disposition of any assets) or any
relinquishment by Seller or a Subsidiary of any contract or other right, in
either case, material to the CATV Business,
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other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement and the
Collateral Agreements;
(v) any change in any method of accounting or accounting practice by
Seller or a Subsidiary with respect to the CATV Business;
(vi) any (i) employment, deferred compensation, severance, retirement
or other similar agreement entered into with any Business Employee (or any
amendment to any such existing agreement), (ii) change in compensation or other
benefits payable to any Business Employee pursuant to any severance or
retirement plans or policies thereof; or
(vii) any shipments or sales of quantities of products of the CATV
Business to customers, including distributors, other than in the ordinary course
consistent with their past requirements.
3.13 Intellectual Property
(a) Seller or one of its Affiliates owns solely and has the right to assign
all of the copyrights, know-how, service marks, trademarks, trade secrets and
other intellectual property rights that it is assigning to Buyer pursuant to the
Intellectual Property Agreement (collectively, the "Assigned Intellectual
Property"). Seller or one of its Affiliates owns or has a valid right to grant
the licenses to all of the copyrights, know-how, service marks, trademarks,
trade secrets, patents, patent applications, and other intellectual property
rights that it is licensing to Buyer pursuant to the Intellectual Property
Agreement (collectively, the "Licensed Intellectual Property").
(b) Except as set forth in Schedule 3.13(b), in connection with the
operation of the CATV Business,
(i) to Seller's knowledge, none of Seller or any of its Affiliates has
infringed, misappropriated or otherwise violated any intellectual property
rights or other proprietary rights of any third Person;
(ii) Seller has not received any notice of, and there is no suit, or
proceeding pending against, or, to Seller's knowledge, threatened against, or
any written claim affecting, the CATV Business (x) based upon, or challenging or
seeking to deny or restrict, the rights of Seller or any of its Affiliates in
any of the Assigned Intellectual Property or the Licensed Intellectual Property
(collectively, the "CATV Intellectual Property"), (y) alleging that the use of
the CATV Intellectual Property or any services provided, processes used, or
products manufactured, used, imported, offered for sale or sold with respect to
the CATV Business do or may conflict with, misappropriate, infringe or otherwise
violate any intellectual property rights or other proprietary rights of any
third party, or (z) alleging that Seller or any of its Affiliates infringed,
misappropriated, or otherwise violated any intellectual property rights or other
proprietary rights of any third party in connection with the operation of the
CATV Business; and
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(iii) to Seller's knowledge, (A) the CATV Intellectual Property
constitutes all the material intellectual property rights owned by or licensed
to Seller or one of its Affiliates in connection with the CATV Business and
Buyer's sole remedy for Seller's failure to deliver the CATV Intellectual
Property is as set forth in the Intellectual Property Agreement; (B) there exist
no restrictions on the disclosure, use, license or transfer of the CATV
Intellectual Property (other than the restrictions imposed in the Intellectual
Property Agreement); (C) the consummation of the transactions contemplated by
this Agreement will not alter, impair or extinguish any CATV Intellectual
Property; and (D) excluding patent license agreements with third parties, the
Licenses set forth on Schedule 3.13(b)(iii) constitute all material Licenses of
Seller to the intellectual property rights of third parties that are used in the
CATV Business.
(c) At the Closing, Seller or one of its Affiliates will provide, either by
assignment or license, to Buyer in accordance with the Intellectual Property
Agreement, all of the CATV Intellectual Property owned by Seller or the
applicable Affiliate, which Buyer requires to conduct the CATV Business after
the Closing and to make, have made, use, lease, import, offer to sell or sell
the products, as such products and services existed as of the Closing Date, of
the CATV Business. Seller will transfer clear title to the Assigned Intellectual
Property and provide Licensed Intellectual Property free and clear of any
Encumbrance, excluding patent license agreements with third parties, which would
materially interfere with the license grant.
(d) None of the Assigned Intellectual Property material to the operation of
the CATV Business has been adjudged invalid or unenforceable in whole or part,
and to Seller's knowledge all such Assigned Intellectual Property is valid and
enforceable.
(e) To Seller's knowledge, Seller or an Affiliate of Seller has taken
reasonable actions to maintain and protect the Assigned Intellectual Property,
including payment of applicable maintenance fees and filing of applicable
statements of use other than certain foreign applications which Seller has
dropped in the ordinary course of business.
(f) Seller or one of its Affiliates has taken reasonable steps to maintain
the confidentiality of all confidential intellectual property rights or other
proprietary rights. To Seller's knowledge, there has been no misappropriation of
confidential intellectual property. To Seller's knowledge, reasonable effort has
been made to ensure confidentiality provisions are in place for those Business
Employees having access to confidential intellectual property which is material
to the CATV Business. To Seller's knowledge there is no infringement of the
Assigned Intellectual Property by any third party except as set forth in
Schedule 3.13(f).
(g) Each employee and, to Seller's knowledge, each agent, consultant or
contractor who has materially contributed to or participated in the creation or
development of any copyrightable, patentable or trade secret material to the
CATV Business either: (i) is a party to a "work for hire" agreement, or
substantially similar agreement, under which Seller is deemed to be the original
owner/author of all property rights therein; or (ii) has executed
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as assignment or an agreement to assign in favor of Seller or Seller's
predecessor in interest, as applicable, all right, title and interest in such
material.
(i) Except as set forth on Schedule 3.13(i), neither Seller nor any of
its Affiliates is a party to any third party patent cross-license entered into
solely in connection with the CATV Business.
3.14 Product Liability and Recalls
(a) Each of the products produced or sold by Seller or a Subsidiary in
connection with the CATV Business is, and at all times up to and including the
sale thereof has been, in compliance in all material respects with all
applicable Laws. To Seller's knowledge, there is no material design or
manufacturing defect with respect to any of such products.
(b) Except as set forth in Schedule 3.14(b), since January 1, 2001, there
has been no action, suit, claim, inquiry, proceeding or investigation in any
case by or before any court or Governmental Body pending or, to Seller's
knowledge, threatened against or involving the CATV Business relating to any
product alleged to have been designed, manufactured or sold by the CATV Business
and alleged to have been defective or improperly designed or manufactured, nor
to Seller's knowledge is there any pattern of product failure relating to any
products designed, manufactured or sold by the CATV Business.
(d) Since January 1, 2001, there has been no pending, or to Seller's
knowledge, threatened recall or investigation of any product sold by Seller or a
Subsidiary in connection with the CATV Business.
3.15 Product Warranty
Schedule 3.15 includes copies of the standard terms and conditions of sale
for products of the CATV Business (containing applicable guaranty, warranty and
indemnity provisions). Except as set forth in Schedule 3.15, the products
manufactured by the CATV Business have been sold by the CATV Business in
accordance with the standard terms and conditions of sale. All product warranty
claims included in the Assumed Liabilities shall be governed by the terms of
such warranty provisions.
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3.16 Inventory
The Inventory is, and as of the Closing Date, will be, of quality and
quantity usable or saleable in the ordinary course of the CATV Business, except
in each case for obsolete items and items of below-standard quality that have
been written down to estimated net realizable value in accordance with GAAP.
Schedule 3.16 lists the Inventory as of the date set forth therein and its
value, which is stated at the lower of cost (determined principally on a
first-in, first-out basis) or market. Subject to additions thereto and
subtractions therefrom in the ordinary course of the CATV Business between the
date set forth in Schedule 3.16 and the date hereof, the Inventory indicated on
Schedule 3.16 is true, correct and complete in all material respects.
3.17 Customer and Suppliers
Schedule 3.17 contains a list setting forth the ten (10) largest customers
of the CATV Business, by dollar amount, over each of the 12-month periods ended
September 30, 2002, 2001 and 2000. All purchase and sale orders and other
commitments for purchases and sales made by Seller or a Subsidiary in connection
with the CATV Business have been made in the ordinary course of business in
accordance with past practices, and no payments have been made to any supplier
or their representatives other than payments to such suppliers or their
representatives for the payment of the invoiced price of supplies purchased or
goods sold in the ordinary course of business. To Seller's knowledge and other
than as set forth on Schedule 3.17, none of such customers or suppliers intends
to cancel, terminate, not renew, or discontinue providing goods or services to
or placing orders with the CATV Business.
3.18 Restrictions on the Business
Except for this Agreement, there is no agreement, judgment, injunction,
order or decree materially affecting Seller's or a Subsidiary's conduct of the
CATV Business as currently conducted.
3.19 Brokers
Other than Morgan Stanley & Co., as to which Seller shall have full
responsibility and for which Buyer shall not have any liability, no broker,
investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller or any Affiliate of Seller.
3.20 Taxes
There are no liens for Taxes upon any of the Purchased Assets other than
Permitted Encumbrances. Seller or the applicable Subsidiary has duly and timely
filed all material Tax Returns that it was required to file in connection with
the CATV Business and the Purchased
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Assets; all such Returns were correct and complete in all material respects; and
all Taxes owed with respect to the Purchased Assets and the CATV Business, and
shown as due on any Return, have been paid. None of the Purchased Assets is an
asset or property that is or will be required to be treated as (a) described in
Section 168(f)(8) of the U.S. Internal Revenue Code of 1954 and in effect
immediately before the enactment of the Tax Reform Act of 1986, or (b)
tax-exempt use property within the meaning of Section 168(h)(1) of the Code.
3.21 No Other Representations or Warranties
Except for the representations and warranties contained in this Section 3,
none of Seller, any Affiliate of Seller or any other Person makes any
representations or warranties, and Seller hereby disclaims any other
representations or warranties, whether made by Seller, or any Affiliate of
Seller, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or
any Collateral Agreement, the transactions contemplated hereby or the CATV
Business, notwithstanding the delivery or disclosure to Buyer or its
representatives of any documentation or other information with respect to any
one or more of the foregoing.
4. Representations and Warranties of Buyer
Except as set forth in Schedules attached hereto and delivered by Buyer to
Seller prior to the execution of this Agreement, Buyer represents and warrants
to Seller that:
4.1 Organization and Qualification
Each of Buyer and any Buyer Designee is a corporation or other legal entity
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization and each of Buyer and any
Buyer Designee has all requisite legal power and authority to carry on its
business as currently conducted by it and to own or lease and operate its
properties. Each of Buyer and any Buyer Designee is duly qualified to do
business and is in good standing as a foreign corporation (in any jurisdiction
that recognizes such concept) in each jurisdiction where the ownership or
operation of its assets or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
individually or in the aggregate, has not had and could not reasonably be
expected to have a material adverse effect on Buyer's business taken as a whole
or on Buyer's or any Buyer Designee's ability to consummate the transactions
under this Agreement and the Collateral Agreements.
4.2 Authorization; Binding Effect
(a) Each of Buyer and any Buyer Designee has all requisite corporate power
and authority to execute, deliver and perform this Agreement and the Collateral
Agreements to which it will be a party, as the case may be, and to effect the
transactions contemplated hereby and thereby and the execution, delivery and
performance of this Agreement and the
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Collateral Agreements by Buyer or a Buyer Designee has been duly authorized by
all requisite corporate action.
(b) each of this Agreement and the Collateral Agreements has been duly
executed and delivered by Buyer and each Buyer Designee that is a party thereto
and constitute valid and legally binding obligations of Buyer or such Buyer
Designee enforceable against Buyer or such Buyer Designee in accordance with
their respective terms, except to the extent that enforcement of the rights and
remedies created hereby and thereby may be affected by bankruptcy,
reorganization, moratorium, insolvency and similar Laws of general application
affecting the rights and remedies of creditors and by general equity principles.
4.3 Non-Contravention; Consents
(a) Assuming that the consents specified in Section 4.3(b) below have been
obtained, the execution, delivery and performance of this Agreement and the
Collateral Agreements by Buyer and any Buyer Designee and the consummation of
the transactions contemplated hereby and thereby do not and will not: (i) result
in a breach or violation of any provision of Buyer's or any Buyer Designee's
charter or by-laws or similar organizational document (ii) violate or result in
a breach of or constitute an occurrence of default under any provision of,
result in the acceleration or cancellation of any obligation under, or give rise
to a right by any party to terminate or amend its obligations under, any
mortgage, deed of trust, conveyance to secure debt, note, loan, indenture, lien,
lease, agreement, instrument, order, judgment, decree or other arrangement or
commitment to which Buyer or any Buyer Designee is a party or by which it or its
assets or properties are bound, or (iii) violate any applicable Law, order,
judgment, injunction, decree, rule or regulation of any court or any
Governmental Body having jurisdiction over Buyer or any Buyer Designee or any of
their respective properties, other than in the case of clauses (ii) and (iii),
any such violations, breaches, defaults, accelerations or cancellations of
obligations or rights that, individually or in the aggregate, have not had and
could not be reasonably expected to have a material adverse effect on Buyer's
business taken as a whole or on Buyer's or any Buyer Designee's ability to
consummate the transactions under this Agreement and the Collateral Agreements.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person is required to be obtained by Buyer or
any Buyer Designee in connection with the execution, delivery and performance of
this Agreement or the Collateral Agreements or for the consummation of the
transactions contemplated hereby or thereby, except for (i) any filings required
to be made under the HSR Act and any applicable filings required under foreign
antitrust Laws, and (ii) such consents, approvals, orders, authorizations,
registrations, declarations or filings the failure of which to be obtained or
made, individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on Buyer's business taken as a whole
or on Buyer's or any Buyer Designee's ability to consummate the transactions
under this Agreement and the Collateral Agreements.
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4.4 Brokers
Other than U.S. Bancorp Piper Jaffray, Inc., as to which Buyer shall have
full responsibility and for which Seller shall not have any liability, no
broker, investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer or an Affiliate of Buyer.
4.5 No Inducement or Reliance; Independent Assessment
(a) With respect to the Purchased Assets, the CATV Business and any other
rights or obligations to be transferred hereunder or under the Collateral
Agreements or pursuant hereto or thereto, Buyer has not been induced by and has
not relied upon any representations, warranties or statements, whether express
or implied, made by Seller, any Affiliate of Seller, or any agent, employee,
attorney or other representative of Seller or by any other Person representing
or purporting to represent Seller that are not expressly set forth in this
Agreement or in the Collateral Agreements (including the Schedules and Exhibits
hereto and thereto), whether or not any such representations, warranties or
statements were made in writing or orally, and none of Seller, any Affiliate of
Seller, or any agent, employee, attorney, other representative of Seller or
other Person shall have or be subject to any liability to Buyer or any other
Person resulting from the distribution to Buyer, or Buyer's use of, any such
information, including any information, documents or material made available in
any "data rooms" or management presentations or in any other form in expectation
of the transactions contemplated hereby.
(b) Buyer acknowledges that it has made its own assessment of the present
condition and the future prospects of the CATV Business and is sufficiently
experienced to make an informed judgment with respect thereto. Buyer further
acknowledges that neither Seller nor any Affiliate of Seller has made any
warranty, express or implied, as to the future prospects of the CATV Business or
its profitability for Buyer, or with respect to any forecasts, projections or
CATV Business plans prepared by or on behalf of Seller and delivered to Buyer in
connection with the CATV Business and the negotiation and the execution of this
Agreement.
4.6 Sufficiency of Funds
Buyer has (i) sufficient funds available to pay the Purchase Price and any
expenses incurred by Buyer in connection with the transactions contemplated by
this Agreement or the Collateral Agreements; (ii) the resources and capabilities
(financial or otherwise) to perform its obligations hereunder and under the
Collateral Agreements; and (iii) not incurred any obligation, commitment,
restriction or liability of any kind, absolute or contingent, present or future,
which would impair or adversely affect such resources and capabilities.
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4.7 No Other Representations or Warranties
Except for the representations and warranties contained in this Section 4,
none of Buyer, any Affiliate of Buyer or any other Person makes any
representations or warranties, and Buyer hereby disclaims any other
representations or warranties, whether made by Buyer, any Affiliate of Buyer, or
any of their officers, directors, employees, agents or representatives, with
respect to the execution and delivery of this Agreement or any Collateral
Agreement or the transactions contemplated hereby and thereby, notwithstanding
the delivery or disclosure to Seller or its representatives of any documentation
or other information with respect to any one or more of the foregoing.
5. Certain Covenants
5.1 Access and Information
(a) [Reserved]
(b) After the Closing Date, Seller and Buyer shall provide, and shall cause
their respective Affiliates to provide, to each other and to their respective
officers, employees, accountants, counsel and other representatives, upon
request (subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege), reasonable access for inspection and
copying of all Business Records, Governmental Permits, Licenses, Contracts and
any other information existing as of the Closing Date and relating to the CATV
Business, the Purchased Assets, the Assumed Liabilities or the Transferred
Employees and shall make their respective personnel reasonably available for
interviews, depositions and testimony in any legal matter concerning
transactions contemplated by this Agreement, the operations or activities
relating to the CATV Business, the Purchased Assets, the Assumed Liabilities or
the Transferred Employees and as otherwise may be necessary or desirable to
enable the party requesting such assistance to: (i) comply with any reporting,
filing or other requirements imposed by any Governmental Body; (ii) assert or
defend any claims or allegations in any litigation or arbitration or in any
administrative or legal proceeding other than claims or allegations that one
party to this Agreement has asserted against the other; (iii) prepare any and
all historical or pro forma financial statements related to the CATV Business
for purposes of complying, or preparing to comply, with any rules or regulations
of the Securities and Exchange Commission; or (iv) subject to clause (ii) above,
perform its obligations under this Agreement. The party requesting such
information or assistance shall reimburse the other party for all reasonable and
necessary out-of-pocket costs and expenses, if any, incurred by such party in
providing such information and in rendering such assistance.
(c) The access to files, books and records contemplated by this Section 5.1
shall be during normal business hours and upon reasonable prior notice and shall
be subject to such reasonable limitations as the party having custody or control
thereof may impose to preserve the confidentiality of information contained
therein.
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(d) Buyer, Seller and the Subsidiaries shall preserve all Business Records,
Licenses and Governmental Permits to which they retain title for at least seven
(7) years after the Closing Date.
5.2 [Reserved]
5.3 Tax Reporting and Allocation of Consideration
(a) Seller and Buyer acknowledge and agree that (i) Seller will be
responsible for and will perform all Tax withholding, payment and reporting
duties with respect to any wages and other compensation paid by Seller or a
Subsidiary to any Business Employee in connection with the operation or conduct
of the CATV Business for any Pre-Closing Tax Period, and (ii) Buyer will be
responsible for and will perform all Tax withholding, payment and reporting
duties with respect to any wages and other compensation paid by Buyer to any
Transferred Employee with respect any Post-Closing Tax Period. For the avoidance
of doubt, nothing in this paragraph is intended to modify or adjust the
substantive liability of Buyer and Seller under this Agreement with respect to
the Taxes described in this paragraph.
(b) Seller and Buyer recognize their mutual obligations pursuant to Section
1060 of the Code to timely file IRS Form 8594 (the "Asset Acquisition
Statement") with their respective federal income tax returns. Accordingly,
Seller and Buyer shall, no later than ninety (90) days after the Closing Date,
attempt in good faith to (i) enter into a purchase price allocation agreement
providing for the allocation of the Purchase Price and Assumed Liabilities (and
all other capitalized costs) among the Purchased Assets consistent with the
provisions of Section 1060 of the Code and the Treasury Regulations thereunder,
and (ii) cooperate in the preparation of the Asset Acquisition Statement in
accordance with clause (i) for timely filing with their respective federal
income tax returns. If Seller and Buyer shall have agreed on a purchase price
allocation and an Asset Acquisition Statement, then Seller and Buyer shall file
the Asset Acquisition Statement in the form so agreed and neither Seller nor
Buyer shall take a Tax position which is inconsistent with such Purchase Price
allocation, unless compelled to do otherwise by the IRS.
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5.4 Business Employees
(a) As of the Closing Date, Buyer shall make offers of employment to those
Business Employees listed on Schedule 1.1(a) (including those absent due to
vacation, holiday, illness, leave of absence or short-term disability, but
excluding any Business Employees on long-term disability) that it chooses to
offer employment. Seller and any applicable Subsidiary shall cooperate and
assist in facilitating the Buyer's or a Buyer Designee's offers and will not
take any action, or cause any of the Subsidiaries to take any action, which
would impede, hinder, interfere or otherwise compete with Buyer's or a Buyer
Designee's effort to hire any Business Employees. Business Employees who accept
Buyer's or a Buyer Designee's offer of employment, as of the effective date of
their employment with Buyer, are referred to as "Transferred Employees."
Employment with Buyer or a Buyer Designee of Transferred Employees shall be
effective as of the day following the close of business on the Closing Date,
except that the employment of individuals receiving short-term disability
benefits or on approved leave of absence on the Closing Date will become
effective as of the date they present themselves for work with the Buyer or a
Buyer Designee. Business Employees who do not accept Buyers offer, together with
any other employees of Seller or any Subsidiary shall be referred to as
"Non-Transferred Employees."
(b) Buyer or a Buyer Designee shall provide, or shall cause to be provided,
to Transferred Employees, until at least December 31, 2003, the same salary
offered by Seller or the applicable Subsidiary immediately prior to the Closing
Date as set forth on Schedule 1.1(a ). Buyer or a Buyer Designee shall provide,
or shall cause to be provided, to Transferred Employees employee benefits that,
in the aggregate, are no less favorable than those provided to similarly
situated employees of Buyer or the applicable Buyer Designee. Notwithstanding
the foregoing, nothing in this Section 5.4(b) shall restrict Buyer from
subsequently terminating the at-will employment of any individual Transferred
Employee. Except as expressly set forth in this Section 5.4, no assets of any
Benefit Plan shall be transferred to Buyer or any Affiliate of Buyer. Each
employee benefit plan, program, policy and arrangement of Buyer or an Affiliate
of Buyer, including any Pension Plans, Welfare Plans, vacation plans and
severance plans, shall recognize to the extent permitted by Buyer's or a Buyer
Designee's plans (i) for purposes of satisfying any deductibles, co-pays and
out-of-pocket maximums during the coverage period that includes the Closing
Date, any payment made by any Transferred Employee towards deductibles, co-pays
and out-of-pocket maximums in any health or other insurance plan of Seller or a
Subsidiary and (ii) for purposes of determining eligibility to participate,
vesting and for any schedule of benefits based on service (other than for
benefit accruals under Buyer's or Buyer Designees' pension plans), all service
with Seller or a Subsidiary, including service with predecessor employers that
was recognized by Seller or a Subsidiary and any prior unbridged service with
Seller or a Subsidiary, provided that such service shall not be recognized to
the extent such recognition would result in a duplication of benefits. Buyer or
the applicable Buyer Designee will continue to provide (x) relocation assistance
to those Transferred Employees receiving it as of the Closing Date and (y)
tuition assistance to those Transferred Employees who are receiving such
benefits as of the Closing Date for the current academic session, in each case
as set forth on Schedule 5.4(b). Buyer or the applicable Buyer Designee will
honor the terms
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and conditions of Seller's international assignee program, including
repatriation upon completion of assignment, completion bonuses, Tax equalization
and Tax return preparation, with respect to Transferred Employees who are on
international assignment as of the Closing Date, in each case as set forth on
Schedule 5.4(b), except that these costs shall be allocated between the parties
based on the portion of the international assignment occurring before or on the
Closing Date (which shall be Seller's or the applicable Subsidiary's obligation)
and after the Closing Date (which shall be Buyer's or the applicable Buyer
Designee's obligation).
(c) For the avoidance of doubt, the termination of a Transferred Employee's
employment with Seller in connection with the transactions contemplated by this
Agreement shall not entitle such Transferred Employee to any benefits under
Seller's severance program. Notwithstanding anything to the contrary in this
Agreement, and provided that the affected Transferred Employee executes a
general and special release in a form acceptable to Buyer, Buyer shall provide
severance benefits substantially equivalent to the benefits listed on Schedule
5.4(c) to Transferred Employees whose employment is terminated involuntarily by
Buyer on or before December 31, 2003 other than terminations in circumstances
that would not require payments of severance benefits under Seller's severance
plan.
(d) Buyer agrees that its and its Affiliate's health and welfare plans
shall waive any pre-existing condition exclusion (to the extent Buyer's plans
permit and such exclusion was waived under applicable health and welfare plans
offered to the Transferred Employees by Seller or a Subsidiary) with respect to
Transferred Employees and any proof of insurability. Seller or the applicable
Subsidiary shall remain responsible for any benefits payable under a Benefit
Plan with respect to claims incurred by Business Employees prior to or on the
Closing Date. To the extent Buyer's plans permit, the medical and dental plans
maintained by Buyer and Affiliates of Buyer shall recognize as dependents of the
Transferred Employees any Class 2 dependents recognized by Seller's or the
applicable Subsidiary's medical and dental plans.
(e) As soon as practicable following the Closing Date, Buyer shall cause
one or more defined contribution savings plans intended to qualify under
sections 401(a) and 401(k) of the Code (the "Buyer Savings Plan") to provide for
the receipt of Transferred Employees' lump sum cash distributions, in the form
of an eligible rollover distribution from the Agere Systems Inc. Management
401(k) Plan, provided such rollovers are made at the election of the Transferred
Employees and in accordance with the terms of the Buyer Savings Plan. Seller
shall cause the Agere Systems Inc. Management 401(k) Plan to permit the
Transferred Employees to elect a lump sum cash distribution of benefits accrued
through the Closing Date in accordance with the Code.
(f) Seller shall make and be responsible for incentive compensation
payments, if any, to Transferred Employees for the period from October 1, 2002
to and including the Closing Date in accordance with its short-term incentive
plan in effect for any such period. For the avoidance of doubt, nothing in this
Agreement shall obligate Buyer to be liable for or to assume any portion of
Seller's short-term incentive plan.
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5.5 Leased Equipment
(a) [Reserved]
(b) Within thirty (30) days after the Closing Date, Seller shall provide
Buyer with the costs and other terms applicable to the Leased Equipment and
Buyer shall decide whether such Leased Equipment will (i) transfer to Buyer as
of the date of assumption by Buyer by Buyer assuming the leases for such
equipment in which case such lease agreement shall from and after such time be
deemed an Assumed Contract hereunder, (ii) be acquired by Buyer as of the date
of purchase by Buyer by Buyer paying for the costs of purchasing such equipment
to the applicable Third Party pursuant to the equipment rentals or leases (the
"Purchased Leased Equipment"), or (iii) remain the property and obligation of
Seller or the applicable Subsidiary, including any such items that are used by
Seller or an Affiliate in providing services pursuant to the Transition Services
Agreement which Buyer does not elect to assume or purchase (the "Excluded Leased
Equipment").
5.6 Reasonable Commercial Efforts
Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties agrees to use its reasonable commercial efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including using
reasonable commercial efforts to accomplish the following: (i) the taking of all
acts necessary to cause the conditions to Closing to be satisfied as promptly as
practicable, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Bodies and the making of all necessary
registrations and filings (including filings with Governmental Bodies, if any)
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by any Governmental Body, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the Collateral Agreements or
the consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Body vacated or reversed, and (v) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and the
Collateral Agreements. Seller shall cause each Subsidiary to take, or to refrain
from taking, as applicable, all actions required to be taken or to be refrained
from taking, as applicable, by such Subsidiary hereunder or under the Collateral
Agreements.
5.7 [Reserved]
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5.8 Use of Agere Systems' Name
(a) Buyer and Seller agree as follows:
(i) Except as provided below, immediately after the Closing Date,
Buyer and any Buyer Designee shall cease using "Agere," "Agere Systems" or other
similar mark (the "Seller Name") and any other trademark, design or logo
previously or currently used by Seller or any of its Affiliates (other than
those that are transferred pursuant to the Intellectual Property Agreement) in
all invoices, letterhead, advertising and promotional materials, office forms or
business cards;
(ii) Except as provided below, within three (3) months after the
Closing Date, Buyer shall (A) remove any other trademark, design or logo
previously or currently used by Seller or any of its Affiliates from all
buildings, signs and vehicles of the CATV Business; and (B) cease using the
Seller Name and any other trademark, design or logo previously or currently used
by Seller or any of its Affiliates (other than those that are transferred
pursuant to the Intellectual Property Agreement) in electronic databases, web
sites, product instructions, packaging (except as provided below) and other
materials, printed or otherwise. Notwithstanding the foregoing, Buyer shall not
be restricted in using any packaging materials that are in inventory as of the
Closing Date;
(iii) Buyer shall not be required at any time to remove the Seller
Name and any other trademark, design or logo previously or currently used by
Seller or any of its Affiliates from inventory of the CATV Business that is in
existence as of the Closing Date, nor shall Buyer be required at any time to
remove such Seller Name and any such other trademark, design or logo from
schematics, plans, manuals, drawings, machinery, tooling including hand tools,
and the like of the CATV Business in existence as of the Closing Date to the
extent that such instrumentalities are used in the ordinary internal conduct of
the CATV Business and are neither generally observed by the public nor intended
for use as means to effectuate or enhance sales;
(iv) Notwithstanding the above, Buyer shall have the right to sell
existing inventory and to use existing packaging, labeling, containers,
supplies, advertising materials, technical data sheets and any similar materials
bearing the Seller Name or any other trademark, design or logo previously or
currently used by Seller or any of its Affiliates until the later of (A) one
year after the Closing Date or (B) the depletion of existing inventory;
(v) Buyer shall use Reasonable Efforts (as defined below) to remove
the Seller Name and any other trademark, design or logo previously or currently
used by Seller or any of its Affiliates (other than those that are transferred
pursuant to the Intellectual Property Agreement) from those assets of the CATV
Business (such as, but not limited to, tools, molds, and machines) used in
association with the manufacture of the products of the CATV Business or
otherwise reasonably used in the conduct of the CATV Business after the Closing.
For the purposes of this Section 5.8(a)(v), "Reasonable Efforts" means Buyer
shall remove the Seller Name from such assets but only at such time when such
asset is not operated or otherwise is taken out of service in the normal course
of business due to regular
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maintenance or repair (but only for such repairs or maintenance where such
removal could normally be undertaken, for example, repair or maintenance of a
mold cavity) whichever occurs first; provided that, in no event shall Buyer use
the Seller Name after the date which is one (1) year from the Closing Date.
Buyer shall not be required to perform such removal on such assets that are not
or are no longer used to manufacture the products of the CATV Business or other
parts, or if discontinuance of use of such assets is reasonably anticipated
during such time period, or from assets stored during that period provided that
such marks are removed upon such asset's return to service or prior to their
sale or other disposition.
(vi) Seller hereby grants to Buyer a limited right to use Seller's
Name and associated trademarks, designs and logos as specified in, and during
the periods, if any, specified in clauses (i) - (v) above.
(b) In no event shall Buyer or any Affiliate of Buyer advertise or hold
itself out as Agere or an Affiliate of Agere after the Closing Date.
5.9 Non-Solicitation of Transferred Employees
None of Seller, any of its representatives or any of its Affiliates will at
any time prior to two (2) years from the date hereof, directly or indirectly,
solicit the employment of any Transferred Employee without Buyer's prior written
consent. The term "solicit the employment" shall not be deemed to include
generalized searches for employees through media advertisements, employment
firms or otherwise that are not focused on Transferred Employees. This
restriction shall not apply to any employee whose employment is involuntarily
terminated by Buyer, or its successors, after the Closing. Solicitation of
employment shall be deemed to occur if the Persons who perform such solicitation
have knowledge of the existence of this Agreement or if such Persons have no
knowledge of the existence of this Agreement but Seller's employees with
knowledge of the existence of this Agreement have advance knowledge of any such
solicitation.
5.10 [Reserved]
5.11 Non-Competition
(a) Seller agrees that, as part of the consideration for the payment of the
Purchase Price, for a period of two (2) years immediately following the Closing
Date, neither Seller nor any of its Affiliates will, directly or indirectly, as
a principal, stockholder or otherwise, operate, perform or have any ownership
interest in any business that develops, manufactures, sells, installs or
distributes products in competition with the CATV Business, except that Seller
may (i) purchase or otherwise acquire by merger, purchase of assets, stock,
controlling interest or otherwise any Person or business or engage in any
similar merger and acquisition activity with any Person the primary business of
which is not in competition with the CATV Business, or (ii) invest as a minority
shareholder in any Person. For the purposes of this Section 5.11(a), ownership
of securities of a company whose securities are publicly traded under a
recognized securities exchange not in excess of 10% of any class of such
securities
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shall not be considered to be competition with the CATV Business, and a Person
shall not be considered to be in the "primary business" of competing with the
CATV Business if such Person derives less than 15% of its revenues from products
that compete with the CATV Business. For the avoidance of doubt, the parties
agree that the agreements and limitations set forth in this Section 5.11 shall
not apply to any entity that acquires all or part of Seller in any transaction,
but shall continue to apply to Seller and its Affiliates (as constituted
immediately prior to any such transaction).
(b) Seller acknowledges that the restrictions set forth in Section 5.11(a)
constitute a material inducement to Buyer's entering into and performing this
Agreement. Seller further acknowledges, stipulates and agrees that a breach of
such obligation could result in irreparable harm and continuing damage to Buyer
for which there may be no adequate remedy at law and further agrees that in the
event of any breach of said obligation, Buyer may be entitled to injunctive
relief and to such other relief as is proper under the circumstances.
(c) If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section 5.11, but
this Section 5.11 shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable Law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable Law, a court of competent jurisdiction shall construe and interpret
or reform this Section 5.11 to provide for a covenant having the maximum
enforceable geographic area, time period and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such applicable
Law.
6. Confidential Nature of Information
6.1 Confidentiality Agreement
Buyer agrees that the Confidentiality Agreement shall apply to (a) all
documents, materials and other information that it shall have obtained regarding
Seller or its Affiliates during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before or
after the date of this Agreement), any investigations made in connection
therewith and the preparation of this Agreement and related documents and (b)
all analyses, reports, compilations, evaluations and other materials prepared by
Buyer or its counsel, accountants or financial advisors that contain or
otherwise reflect or are based upon, in whole or in part, any of the provided
information; provided, however, that subject to Section 6.2(a), the
Confidentiality Agreement shall terminate as of the Closing and shall be of no
further force and effect thereafter with respect to information of Seller or its
Affiliates the ownership of which is transferred to Buyer or a Buyer Designee.
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6.2 Seller's Proprietary Information
(a) Except as provided in Section 6.2(b), after the Closing and for a
period of two (2) years following the Closing Date, Buyer agrees that it will
keep confidential all of Seller's and its Affiliates' Proprietary Information
that is received from, or made available by, Seller in the course of the
transactions contemplated hereby, including, for purposes of this Section 6.2,
information about the CATV Business's business plans and strategies, marketing
ideas and concepts, especially with respect to unannounced products and
services, present and future product plans, pricing, volume estimates, financial
data, product enhancement information, business plans, marketing plans, sales
strategies, customer information (including customers' applications and
environments), market testing information, development plans, specifications,
customer requirements, configurations, designs, plans, drawings, apparatus,
sketches, software, hardware, data, prototypes, connecting requirements or other
technical and business information, except for such Proprietary Information the
ownership of which is transferred to Buyer or a Buyer Designee as part of the
Purchased Assets.
(b) Notwithstanding the foregoing, such Proprietary Information shall not
be deemed confidential and Buyer shall have no obligation with respect to any
such Proprietary Information that:
(i) at the time of disclosure was already known to Buyer other than as
a result of this transaction, free of restriction as evidenced by documentation
in Buyer's possession;
(ii) is or becomes publicly known through publication, inspection of a
product, or otherwise, and through no negligence or other wrongful act of Buyer;
(iii) is received by Buyer from a Third Party without similar
restriction and without breach of any agreement;
(iv) to the extent it is independently developed by Buyer; or
(v) is, subject to Section 6.2(c), required to be disclosed under
applicable Law or judicial process.
(c) If Buyer (or any of its Affiliates) is requested or required (by oral
question, interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Proprietary
Information, Buyer will promptly notify Seller of such request or requirement
and will cooperate with Seller such that Seller may seek an appropriate
protective order or other appropriate remedy. If, in the absence of a protective
order or the receipt of a waiver hereunder, Buyer (or any of its Affiliates) is
in the opinion of Buyer's counsel compelled to disclose the Proprietary
Information or else stand liable for contempt or suffer other censure or
penalty, Buyer (or its Affiliate) may disclose only so much of the Proprietary
Information to the party compelling disclosure as is required by
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Law. Buyer will exercise its (and will cause its Affiliates to exercise their)
reasonable commercial efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded to such Proprietary
Information.
6.3 Buyer's Proprietary Information
(a) Except as provided in Section 6.3(b), after the Closing Date and for a
period of two (2) years thereafter, Seller agrees that it will keep confidential
all of Seller's and its Affiliates' Proprietary Information the ownership of
which or exclusive use of which is transferred to Buyer as part of the Purchased
Assets, including, for purposes of this Section 6.3, information about the CATV
Business's business plans and strategies, marketing ideas and concepts,
especially with respect to unannounced products and services, present and future
product plans, pricing, volume estimates, financial data, product enhancement
information, business plans, marketing plans, sales strategies, customer
information (including customers' applications and environments), market testing
information, development plans, specifications, customer requirements,
configurations, designs, plans, drawings, apparatus, sketches, software,
hardware, data, prototypes, connecting requirements or other technical and
business information.
(b) Notwithstanding the foregoing, such Proprietary Information regarding
the CATV Business shall not be deemed confidential and Seller shall have no
obligation with respect to any such Proprietary Information that:
(i) is or becomes publicly known through publication, inspection of a
product, or otherwise, and through no negligence or other wrongful act of
Seller;
(ii) is received by Seller from a Third Party without similar
restriction and without breach of any agreement; or
(iii) is, subject to Section 6.3(c), required to be disclosed under
applicable Law or judicial process.
(c) If Seller (or any of its Affiliates) is requested or required (by oral
question, interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Proprietary Information
regarding the CATV Business, Seller will promptly notify Buyer of such request
or requirement and will cooperate with Buyer such that Buyer may seek an
appropriate protective order or other appropriate remedy. If, in the absence of
a protective order or the receipt of a waiver hereunder, Seller (or any of its
Affiliates) is in the opinion of Seller's counsel compelled to disclose the
Proprietary Information or else stand liable for contempt or suffer other
censure or penalty, Seller (or its Affiliate) may disclose only so much of the
Proprietary Information to the party compelling disclosure as is required by
Law. Seller will exercise its (and will cause its Affiliates to exercise their)
reasonable commercial efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded to such Proprietary
Information.
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6.4 Confidential Nature of Agreements
Except to the extent that disclosure thereof is required to enforce a
party's rights under this Agreement or the Collateral Agreements or under
accounting, stock exchange or federal securities or labor relations Laws
disclosure obligations, both parties agree that the terms and conditions of this
Agreement, the Collateral Agreements and all Schedules, attachments and
amendments hereto and thereto shall be considered Proprietary Information
protected under this Article 6. Notwithstanding anything in this Article 6 to
the contrary, in the event that any such Proprietary Information is also subject
to a limitation on disclosure or use contained in another written agreement
between Buyer and Seller or either of their respective Affiliates that is more
restrictive than the limitation contained in this Article 6, then the limitation
in such agreement shall supersede this Article 6.
7. Closing
At the Closing, the following transactions shall take place:
7.1 Deliveries by Seller or the Subsidiaries
On the Closing Date, Seller shall, or shall cause a Subsidiary to, execute
and deliver to Buyer or a Buyer Designee the following:
(a) the Collateral Agreements;
(b) all consents, waivers or approvals, including, without limitation, the
Required Consents, theretofore required to be obtained by Seller with respect to
the sale of the Purchased Assets, or assignment of the Contracts, or the
consummation of the transactions contemplated by this Agreement or the
Collateral Agreements; and
(c) all such other bills of sale, assignments and other instruments of
assignment, transfer or conveyance as Buyer or a Buyer Designee may reasonably
request or as may be otherwise necessary to evidence and effect the sale,
transfer, assignment, conveyance and delivery of the Purchased Assets to Buyer
or a Buyer Designee or and to put Buyer or a Buyer Designee in actual possession
or control of the Purchased Assets.
7.2 Deliveries by Buyer or a Buyer Designee
On the Closing Date, Buyer shall, or shall cause a Buyer Designee to,
execute and deliver to Seller or a Subsidiary the following:
(a) the Purchase Price;
(b) the Collateral Agreements; and
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(c) all such other documents and instruments as Seller or a Subsidiary may
reasonably request or as may be otherwise necessary or desirable to evidence and
effect the assumption by Buyer or a Buyer Designee of the Assumed Liabilities.
7.3 Closing Date
The Closing shall take place at the offices of Agere, 1110 American Parkway
NE, Allentown, Pennsylvania, on January 21, 2003, or at such other place or time
or on such other date as Seller and Buyer may agree upon in writing (such date
and time being referred to herein as the "Closing Date").
7.4 Contemporaneous Effectiveness
All acts and deliveries prescribed by this Article 7, with respect to the
Closing, regardless of chronological sequence, will be deemed to occur
contemporaneously and simultaneously on the occurrence of the last act or
delivery, and none of such acts or deliveries will be effective until the last
of the same has occurred.
8. [Reserved]
9. Status of Agreements
The rights and obligations of Buyer and Seller under this Agreement shall
be subject to the following terms and conditions:
9.1 [Reserved]
9.2 Survival of Representations and Warranties
The representations and warranties of Buyer and Seller contained in this
Agreement shall survive the Closing solely for purposes of this Article 9 and
such representations and warranties shall terminate at the close of business on
the date that is 12 months after the Closing Date; provided, however, that (i)
the representations and warranties in Section 3.7(c) relating to environmental
matters, in Section 3.10(b) relating ERISA matters and in Section 3.20 relating
Tax matters shall survive the Closing and shall terminate at the close of
business on the 120th day following the expiration of the applicable statute of
limitations with respect to the environmental, Tax or ERISA liabilities in
question (giving effect to any waiver, mitigation or extension thereof) and (ii)
the representation and warranty in Section 3.5(a) with respect to title matters
shall survive indefinitely. Neither Seller nor Buyer shall have any liability
whatsoever with respect to any such representations or warranties after the
applicable expiration date unless properly made prior to their expiration in
accordance with Section 9.4(e). The covenants of Buyer and Seller contained in
this Agreement and the Collateral Agreements that are required to be performed,
in whole or in part, at or after the Closing shall survive the Closing.
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9.3 General Agreement to Indemnify
(a) Seller and Buyer shall indemnify, defend and hold harmless the other
party hereto, and Affiliates thereof, and any director, officer, employee or
agent of such other party or Affiliates thereof (each an "Indemnified Party")
from and against any and all claims, actions, suits, proceedings, liabilities,
obligations, Taxes, losses, and damages, amounts paid in settlement, interest,
costs and expenses (including reasonable attorney's fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (collectively, "Losses") incurred or suffered by any Indemnified
Party to the extent that the Losses arise by reason of, or result from (i)
subject to Section 9.2, any breach or any failure of any representation or
warranty of such party contained in this Agreement to have been true when made
and at and as of the Closing Date, or (ii) the breach by such party of any
covenant or agreement of such party contained in this Agreement to the extent
not waived in writing by the other party.
(b) Seller further agrees to indemnify and hold harmless Buyer and any
Buyer Indemnified Party from and against any Losses incurred by Buyer or any
Buyer Indemnified Party arising out of, resulting from, or relating to: (i) the
Excluded Liabilities; (ii) Buyer's or a Buyer Designee's waiver of any
applicable Bulk Sales Laws; and (iii) any claim, demand or liability relating
to, pertaining to, or arising out of the CATV Business or the Purchased Assets
for any Pre-Closing Tax Period.
(c) Buyer further agrees to indemnify and hold harmless Seller and any
Seller Indemnified Party from and against any Losses incurred by Seller or any
Seller Indemnified Party arising out of, resulting from, or relating to: (i) any
failure of Buyer to discharge any of the Assumed Liabilities; and (ii) any
medical, health or disability claims of any Transferred Employee or such
Transferred Employee's employment with Buyer accruing after the Closing Date;
and (iii) any claim, demand or liability for Taxes relating to, pertaining to,
or arising out of the CATV Business or the Purchased Assets for any Post-Closing
Tax Period.
(d) Amounts payable in respect of the parties' indemnification obligations
shall be treated as an adjustment to the Purchase Price. Buyer and Seller agree
to cooperate in the preparation of a supplemental Asset Acquisition Statement as
required by Section 5.3(b) and Treasury Reg. ss. 1.1060-1(e) as a result of any
adjustment to the Purchase Price pursuant to the preceding sentence. Whether or
not the Indemnifying Party (as defined below) chooses to defend or prosecute any
Third-Party Claim (as defined below), both parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith or as
provided in Section 5.1.
(e) The amount of the Indemnifying Party's liability under this Agreement
shall be net of any applicable insurance proceeds actually received by the
Indemnified Party in respect of the Loss for which indemnity is sought, which
amount shall be offset by any
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increases in insurance premium amounts resulting from the insurer having covered
all or portion of such Loss, and Tax savings, if and when realized that actually
reduce the overall impact of the Losses upon, the Indemnified Party. In
computing the amount of any such Tax savings, the Indemnified Party shall be
deemed to recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of any indemnity payment
hereunder or the incurrence of any payment of any indemnified Loss. The
indemnification obligations of each party hereto under this Article 9 shall
inure to the benefit of the directors, officers and Affiliates of the other
party hereto on the same terms as are applicable to such other party.
(f) Except to the extent arising from fraud, bad faith or intentional
misrepresentation, the Indemnifying Party's liability for all claims made under
Section 9.3(a) shall be subject to the following limitations: (i) the
Indemnifying Party shall have no liability for such claims until the aggregate
amount of the Losses incurred shall exceed $500,000, in which case the
Indemnifying Party shall be liable only for the portion of the Losses exceeding
$500,000, and (ii) the Indemnifying Party's aggregate liability for all such
claims shall not exceed $12,500,000.
(g) The indemnification provided in this Article 9 shall be the sole and
exclusive remedy after the Closing Date for damages available to the parties to
this Agreement for breach of any of the terms, conditions, representations or
warranties contained herein or any right, claim or action arising from the
transactions contemplated by this Agreement; provided, however, this exclusive
remedy for damages does not preclude a party from bringing an action for (i)
specific performance or other equitable remedy to require a party to perform its
obligations under this Agreement or any Collateral Agreement or (ii) fraud or
intentional misrepresentation.
(h) Notwithstanding anything contained in this Agreement to the contrary
except to the extent arising from fraud, bad faith or intentional
misrepresentation, no party shall be liable to the other party for any indirect,
special, punitive, exemplary or consequential loss or damage (including any loss
of revenue or profit) arising out of this Agreement, provided, however, that the
foregoing shall not be construed to preclude recovery by the Indemnified Party
in respect of Losses directly incurred from Third Party Claims. Both parties
shall mitigate their damages.
(i) The rights to indemnification under this Section 9.3 shall not be
subject to set-off for any claim by the Indemnifying Party against any
Indemnified Party, whether or not arising from the same event giving rise to
such Indemnified Party's claim for indemnification.
9.4 General Procedures for Indemnification
(a) The Indemnified Party seeking indemnification under this Agreement
shall promptly notify the party against whom indemnification is sought (the
"Indemnifying Party") of the assertion of any claim, or the commencement of any
action, suit or proceeding by any
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Third Party, in respect of which indemnity may be sought hereunder and shall
give the Indemnifying Party such information available to the Indemnified Party
with respect thereto as the Indemnifying Party may reasonably request, but
failure to give such notice shall not relieve the Indemnifying Party of any
liability hereunder (unless and only to the extent that the Indemnifying Party
has suffered actual and material prejudice by such failure). If the Indemnifying
Party acknowledges in writing its obligation to indemnify the Indemnified Party,
then the Indemnifying Party shall have the right, but not the obligation,
exercisable by written notice to the Indemnified Party within 20 days of receipt
of notice from the Indemnified Party of the commencement of or assertion of any
claim, action, suit or proceeding by a Third Party in respect of which indemnity
may be sought hereunder (a "Third-Party Claim"), to assume at the Indemnifying
Party's expense the defense and control the settlement of such Third-Party Claim
that (i) involves (and continues to involve) solely money damages, or (ii)
involves (and continues to involve) claims for both money damages and equitable
relief against the Indemnified Party that cannot be severed, where the claims
for money damages are the primary claims asserted by the Third Party and the
claims for equitable relief are incidental to the claims for money damages. If
the Indemnifying Party has not acknowledged in writing its obligation to
indemnify the Indemnified Party, then the Indemnified Party shall have the right
to assume and control the defense or the settlement against such Third Party
Claim. In the event that any party exercises its right to undertake any such
defense against any Third Party Claim as provided above, then the other parties
shall cooperate in such defense and make available at such cooperating party
expense all witnesses, pertinent records, materials and information in such
party's possession and control relating thereto as is reasonably required to by
the party conducting the defense.
(b) The Indemnifying Party or the Indemnified Party, as the case may be,
shall have the right to participate in (but not control), at its own expense,
the defense of any Third-Party Claim that the other is defending, as provided in
this Agreement.
(c) The Indemnifying Party, if it has assumed the defense of any
Third-Party Claim as provided in this Agreement, shall not consent to a
settlement of, or the entry of any judgment arising from, any such Third-Party
Claim without the Indemnified Party's prior written consent (which consent shall
not be unreasonably withheld, conditioned or delayed) unless such settlement or
judgment relates solely to monetary damages. The Indemnifying Party shall not,
without the Indemnified Party's prior written consent, enter into any compromise
or settlement that (i) commits the Indemnified Party to take, or to forbear to
take, any action, or (ii) does not provide for a complete release by such Third
Party of the Indemnified Party. The Indemnified Party shall have the sole and
exclusive right to settle any Third-Party Claim, on such terms and conditions as
it deems reasonably appropriate, to the extent such Third-Party Claim involves
equitable or other non-monetary relief against the Indemnified Party, and shall
have the right to settle any Third-Party Claim involving money damages for which
the Indemnifying Party has not assumed the defense pursuant to this Section 9.4
with the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.
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(d) In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement, such Indemnified Party shall send written notice of
such claim to the Indemnifying Party; but failure to give such notice shall not
relieve the Indemnifying Party of any liability hereunder (unless and only to
the extent that the Indemnifying Party has suffered actual and prejudice by such
failure). Such notice shall specify the basis for such claim, the amount
thereof, if known, and the method of computation thereof, all with reasonable
particularity and shall contain a reference to the provisions of this Agreement
in respect of which such a claim shall have been incurred. Such notice shall be
given promptly after the Indemnified Party becomes aware of the basis for each
such a claim. The Indemnifying Party shall, within 20 days after receipt of such
notice of an indemnified Loss, and subject to the limitations set forth in
Section 9.3, (i) pay or cause to be paid to the Indemnified Party the amount of
such Loss specified in such notice which the Indemnifying Party does not
contest, or (ii) notify the Indemnified Party if it wishes to contest the
existence or amount of part or all of such a Loss by stating with particularity
the basis upon which it contests the existence or amount thereof.
(e) Any claim for indemnification must be made in good faith and in writing
(and setting forth in reasonable detail the basis of such determination and to
the extent known, an estimated calculation of the Losses incurred in connection
therewith) by no later than the expiration of the applicable periods set forth
in Section 9.2 above, if any. If an Indemnified Party has made such a valid
claim prior to the expiration of the applicable period set forth in Section 9.2
above, if any, then, subject to the limitations set forth in Section 9.3 above,
the Indemnified Party shall be entitled to recover the full amount of any Losses
even if that amount is not finally determined until after such expiration. Upon
final determination of the amount of the Losses that is the subject of an
indemnification claim, the Indemnifying Party shall be obligated to pay the
amount of such Losses to the Indemnified Party within five (5) business days of
such final determination of the amount of the Losses due by the Indemnifying
Party.
10. Miscellaneous Provisions
10.1 Notices
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given upon receipt if (i) mailed by certified
or registered mail, return receipt requested, (ii) sent by Federal Express or
other express carrier, fee prepaid, (iii) sent via facsimile with receipt
confirmed, or (iv) delivered personally, addressed as follows or to such other
address or addresses of which the respective party shall have notified the
other.
If to Seller, to: Agere Systems Inc.
Attn: Executive Vice President,
Infrastructure Systems
1110 American Parkway NE
Allentown, PA 18109
Facsimile: (610) 712-5336
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With a copy to: Agere Systems Inc.
Attn: Vice President - Law
1110 American Parkway NE
Allentown, PA 18109
Facsimile: (610) 712-1450
If to Buyer, to: EMCORE Corporation
Attn: General Counsel
145 Belmont Drive
Somerset, NJ 08873
Facsimile: (732) 302-9783
With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
Attn: Michael Gisser
300 South Grand Avenue
Los Angeles, CA 90071
Facsimile: (213) 687-5600
10.2 Expenses
Except as otherwise provided in this Agreement, each party to this
Agreement will bear all the fees, costs and expenses that are incurred by it in
connection with the transactions contemplated hereby, whether or not such
transactions are consummated.
10.3 Entire Agreement; Modification
The agreement of the parties, which consists of this Agreement, the
Collateral Agreements, the Schedules and Exhibits hereto and the documents
referred to herein, sets forth the entire agreement and understanding between
the parties and supersedes any prior agreement or understanding, written or
oral, relating to the subject matter of this Agreement, including the
Confidentiality Agreement. No amendment, supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby.
10.4 Assignment; Binding Effect; Severability
This Agreement may not be assigned by any party hereto without the other
party's written consent; provided, that Buyer may transfer or assign in whole or
in part to one or more Buyer Designees its the right to purchase all or a
portion of the Purchased Assets, but no such transfer or assignment will relieve
Buyer of its obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors, legal
representatives and permitted assigns of each party hereto. The provisions of
this Agreement are severable, and in the event that any one or more provisions
are deemed illegal or unenforceable the remaining provisions shall remain in
full force and
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effect unless the deletion of such provision shall cause this Agreement to
become materially adverse to either party, in which event the parties shall use
reasonable commercial efforts to arrive at an accommodation that best preserves
for the parties the benefits and obligations of the offending provision.
10.5 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
10.6 Consent to Jurisdiction
Each of Buyer and Seller irrevocably submits to the exclusive jurisdiction
of (i) the Supreme Court of the State of New York, New York County, and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby (and each agrees that no such action,
suit or proceeding relating to this Agreement or any transaction contemplated
hereby shall be brought by it or any of its Affiliates except in such courts).
Buyer further agrees, and Seller further agrees, that service of any process,
summons, notice or document by U.S. registered mail to such person's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of Buyer and Seller irrevocably and unconditionally waives (and
agrees not to plead or claim), any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York or that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
10.7 Waiver of Jury Trial
Each party hereby waives, and agrees to cause each of its Affiliates to
waive, to the fullest extent permitted by applicable Law, any right it may have
to a trial by jury in respect of any litigation directly or indirectly arising
out of, under or in connection with this Agreement. Each party (i) certifies
that no representative of any other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to
enforce the foregoing waiver and (ii) acknowledges that it and the other parties
hereto have been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications in this Section 10.7.
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10.8 Execution in Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.9 Public Announcement
Prior to the signing of this Agreement, Seller and Buyer shall prepare a
mutually agreeable release announcing the transaction contemplated hereby.
Except for such press release, neither Seller nor Buyer shall, without the
approval of the other, make any press release or other announcement concerning
the existence of this Agreement or the terms of the transactions contemplated by
this Agreement, except as and to the extent that any such party shall be so
obligated by Law, in which case the other party shall be advised and the parties
shall use their reasonable commercial efforts to cause a mutually agreeable
release or announcement to be issued; provided, however, that the foregoing
shall not preclude communications or disclosures necessary to comply with
accounting, stock exchange or federal securities or labor relations Law
disclosure obligations.
10.10 No Third-Party Beneficiaries
Nothing in this Agreement, express or implied, is intended to or shall (a)
confer on any Person other than the parties hereto and their respective
successors or assigns any rights (including Third-Party beneficiary rights),
remedies, obligations or liabilities under or by reason of this Agreement or (b)
constitute the parties hereto as partners or as participants in a joint venture.
This Agreement shall not provide Third Parties with any remedy, claim,
liability, reimbursement, cause of action or other right in excess of those
existing without reference to the terms of this Agreement. Nothing in this
Agreement shall be construed as giving to any Business Employee, or any other
individual, any right or entitlement to employment or continued employment or
any right or entitlement under any Benefit Plan, policy or procedure maintained
by Seller, except as expressly provided in such Benefit Plan, policy or
procedure. No Third Party shall have any rights under Section 502, 503 or 504 of
ERISA or any regulations thereunder because of this Agreement that would not
otherwise exist without reference to this Agreement. No Third Party shall have
any right, independent of any right that exists irrespective of this Agreement,
under or granted by this Agreement, to bring any suit at law or equity for any
matter governed by or subject to the provisions of this Agreement.
10.11 Waiver of Agreement
The failure of either party to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision nor shall it
in any way affect the validity of this Agreement or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
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IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed on its behalf by its duly authorized officer as of the date first
written above.
AGERE SYSTEMS INC.
By: /s/ Sohail A. Khan
Name: Sohail A. Khan
Title: EVP - Infrastructure Systems
EMCORE CORPORATION
By: /s/ Tom Werthan
Name: Tom Werthan
Title: CFO