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AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
BY AND BETWEEN
LUCENT TECHNOLOGIES INC.
AS SELLER
AND
TYCO GROUP S.A.R.L.
AS BUYER
DATED AS OF NOVEMBER 13, 2000
LUCENT TECHNOLOGIES PROPRIETARY
USE PURSUANT TO COMPANY INSTRUCTIONS
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions.......................................................2
1.1 Defined Terms...............................................2
1.2 Other Definitional and Interpretive Matters.................10
2. Purchase and Sale of the Business.................................11
2.1 Purchase and Sale of Assets.................................11
2.2 Excluded Assets.............................................12
2.3 Purchase Price..............................................14
2.4 Assumed Liabilities.........................................15
2.5 Excluded Liabilities........................................16
2.6 Further Assurances; Further Conveyances and
Assumptions; Consent of Third Parties.......................16
2.7 No Licenses.................................................18
2.8 Bulk Sales Law..............................................18
2.9 Taxes.......................................................18
2.10 Buyer Designee..............................................19
3. Representations and Warranties of Seller..........................19
3.1 Organization and Qualification..............................19
3.2 Subsidiaries................................................19
3.3 Authorization; Binding Effect...............................20
3.4 Non-Contravention; Consents.................................20
3.5 Title to Property; Principal Equipment; Sufficiency
of Assets...................................................21
3.6 Permits, Licenses...........................................21
3.7 Real Estate.................................................22
3.8 Compliance With Laws; Litigation............................22
3.9 Business Employees..........................................23
3.10 Contracts...................................................24
3.11 Environmental Matters.......................................24
3.12 Financial Statement; Absence of Changes.....................25
3.13 Intellectual Property.......................................26
3.14 Brokers.....................................................27
3.15 Taxes.......................................................27
3.16 Product Liability and Recalls...............................27
3.17 Product Warranty............................................27
3.18 Inventory...................................................28
3.19 Customer and Suppliers......................................28
3.20 Restrictions on the Business................................28
3.21 No Other Representations or Warranties......................28
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4. Representations and Warranties of Buyer...........................28
4.1 Organization and Qualification..............................29
4.2 Authorization; Binding Effect...............................29
4.3 No Violations...............................................29
4.4 Brokers.....................................................30
4.5 No Other Seller Representations and Warranties..............30
4.6 Sufficiency of Funds........................................31
4.7 No Other Representations or Warranties......................31
5. Certain Covenants.................................................31
5.1 Access and Information......................................31
5.2 Conduct of Business.........................................32
5.3 Tax Reporting and Allocation of Consideration...............34
5.4 Business Employees..........................................34
5.5 Collateral Agreements; Leased Equipment.....................40
5.6 Regulatory Compliance.......................................41
5.7 Contacts with Suppliers, Employees and Customers............41
5.8 Use of Lucent's Name; Brazilian JV Comany Name..............41
5.9 No Hire and Non-Solicitation of Employees...................43
5.10 No Negotiation or Solicitation..............................43
5.11 Non-Competition.............................................43
6. Confidential Nature of Information................................44
6.1 Confidentiality Agreement...................................44
6.2 Seller's Proprietary Information............................44
6.3 Buyer's Proprietary Information.............................46
6.4 Confidential Nature of Agreement............................47
7. Closing...........................................................47
7.1 Deliveries by Seller or the Subsidiaries....................47
7.2 Deliveries by Buyer.........................................48
7.3 Closing Date................................................48
8. Conditions Precedent to Closing...................................49
8.1 General Conditions..........................................49
8.2 Conditions Precedent to Buyer's Obligations.................49
8.3 Conditions Precedent to Seller's Obligations................50
9. Status of Agreements..............................................50
9.1 Effect of Breach............................................50
9.2 Survival of Representations and Warranties..................50
9.3 General Agreement to Indemnify..............................51
9.4 General Procedures for Indemnification......................53
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10. Miscellaneous Provisions..........................................54
10.1 Notices.....................................................54
10.2 Expenses....................................................55
10.3 Entire Agreement; Modification..............................55
10.4 Assignment; Binding Effect; Severability....................55
10.5 Governing Law...............................................55
10.6 Execution in Counterparts...................................56
10.7 Public Announcement.........................................56
10.8 No Third-Party Beneficiaries................................56
11. Termination and Waiver............................................57
11.1 Termination.................................................57
11.2 Effect of Termination.......................................57
11.3 Waiver of Agreement.........................................57
11.4 Amendment of Agreement......................................57
11.5 Disputes; Waiver of Jury Trial..............................58
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SCHEDULES
SCHEDULE 2.1(h) Licenses
SCHEDULE 2.1(j) Governmental Permits
SCHEDULE 2.2(f) Excluded Contracts
SCHEDULE 2.3(b) 9/30/2000 Inventory Statement
SCHEDULE 2.3(d) Allocation of Purchase Price Among Seller, Subsidiaries of
Seller, and Buyer Designees
SCHEDULE 3.2 Subsidiaries
SCHEDULE 3.4(b) Required Consents
SCHEDULE 3.7(a) Assumed Leases; Leased Premises
SCHEDULE 3.7(b) Transferred Premises
SCHEDULE 3.8(a) Compliance with Laws
SCHEDULE 3.8(b) Litigation
SCHEDULE 3.9(a) Business Employees
SCHEDULE 3.9(b) Benefit Plans
SCHEDULE 3.10 Material Contracts
SCHEDULE 3.11 Environmental Matters
SCHEDULE 3.12 Financial Statements
SCHEDULE 3.13(b) Intellectual Property
SCHEDULE 3.16 Product Liability and Recalls
SCHEDULE 3.17 Product Warranty Terms
SCHEDULE 3.19 Customers and Suppliers
SCHEDULE 5.4(m) Labor Agreements
EXHIBITS
EXHIBIT A Form of Assignment and Bill of Sale
EXHIBIT B Form of Assumption Agreement
EXHIBIT C Form of Lease Assignment
EXHIBIT D Form of Sublease
EXHIBIT E Form of Supply Agreement
EXHIBIT F Form of Intellectual Property Agreement
EXHIBIT G Form of Transition Services Agreement
EXHIBIT H Form of Opinion - Buyer's Savings Plan
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AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS ("AGREEMENT") is made
as of November 13, 2000 by and between LUCENT TECHNOLOGIES INC., a Delaware
corporation ("SELLER" or "LUCENT"), and TYCO GROUP S.A.R.L., a company organized
under the laws of Luxembourg ("BUYER").
R E C I T A L S
A. WHEREAS, Seller and the Subsidiaries are, among other things, engaged
through a unit (referred to herein as "POWER SYSTEMS") of its Microelectronics
and Communications Technology Group in the worldwide manufacturing, marketing,
sales and distribution of power supply, power conversion and backup power
equipment for wireless, optical, switching and other equipment that run
communications networks and a full line of power products, including Titania(TM)
power products, for computer manufacturers; and provide custom design,
engineering, installation and technical support related to such power products
(collectively, the "BUSINESS");
B. WHEREAS, the Business is composed of certain assets and liabilities
that are currently part of Seller and the Subsidiaries;
C. WHEREAS, Seller and the Subsidiaries desire to sell, transfer and
assign to Buyer, and Buyer desires to purchase and assume from Seller and the
Subsidiaries, the Purchased Assets (as hereinafter defined), and Buyer 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 desire
to enter into each Assignment and Bill of Sale, each Assumption Agreement, the
Supply Agreement, the Intellectual Property Agreement, the Transition Services
Agreement, each Lease Assignment, each Sublease and each Real Estate Deed
(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:
LUCENT TECHNOLOGIES PROPRIETARY
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1. DEFINITIONS
1.1 DEFINED TERMS
For the purposes of this Agreement, in addition to the words and phrases
that are described throughout the body 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, "CONTROL" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
"AGREEMENT" has the meaning assigned in the preamble hereof.
"ASSET ACQUISITION STATEMENT" has the meaning assigned in Section 5.3(b).
"ASSIGNMENT AND BILL OF SALE" means each agreement in substantially the
form set forth as EXHIBIT A.
"ASSUMED LEASES" means the Leases to be assumed by the Buyer pursuant to a
Lease Assignment or Sublease and identified on SCHEDULE 3.7(a).
"ASSUMED LIABILITIES" means the liabilities and obligations of Seller and
the Subsidiaries assumed by Buyer pursuant to the Assumption Agreement and
Section 2.4.
"ASSUMPTION AGREEMENT" means each agreement in substantially the form set
forth as EXHIBIT B.
"BENEFIT PLAN" means, in respect of any Business Employee, each "employee
benefit plan," as defined in Section 3(3) of ERISA (including any "multiemployer
plan" as defined in Section 3(37) of ERISA) and each employment, severance,
retention, consulting, or similar agreement or arrangement related to
profit-sharing, bonus, stock option, stock purchase, stock ownership, pension,
retirement, severance, deferred compensation, excess benefit, supplemental
unemployment, post-retirement medical or life insurance, welfare or incentive
plan, or sick leave, long-term disability, medical, hospitalization, life
insurance, other insurance plan, or other employee benefit plan, program or
arrangement, qualified or non-qualified, funded or unfunded, maintained or
contributed to by Seller or the Subsidiaries, provided such plans, programs, or
arrangements are in writing.
"BRAZILIAN JV COMPANY" has the meaning assigned in Section 2.1(k).
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"BUSINESS" has the meaning assigned in Recital A hereof.
"BUSINESS DAY" means a day that is not a Saturday, a Sunday or a statutory
or civic holiday in the State of New York or any other day on which the
principal offices of Seller or Buyer are closed or become closed prior to 2:00
p.m. local time.
"BUSINESS EMPLOYEES" means the employees of Seller or the Subsidiaries
employed in the Business and identified on SCHEDULE 3.9(a).
"BUSINESS RECORDS" means all books, records, ledgers and files or other
similar information used primarily in the conduct of the Business, including
price lists, customer lists, vendor lists, mailing lists, warranty information,
catalogs, sales promotion literature, advertising materials, brochures, records
of operation, standard forms of documents, manuals of operations or business
procedures, research materials and product testing reports required by any
national, federal, state, provincial or local court, administrative body or
other Governmental Body of any country, but excluding any such items to the
extent (i) they are included in, or primarily related to, any Excluded Assets or
Excluded Liabilities, or (ii) any applicable Law prohibits their transfer.
"BUYER" has the meaning assigned in the preamble hereof.
"BUYER DESIGNEE" means one or more Affiliates of Buyer identified to
Seller prior to the Closing Date.
"BUYER NONREPRESENTED SAVINGS PLAN" has the meaning assigned in Section
5.4(e).
"BUYER PENSION PLAN" has the meaning assigned in Section 5.4(g).
"BUYER REPRESENTED SAVINGS PLAN" has the meaning assigned in Section
5.4(e).
"BUYER SAVINGS PLAN" has the meaning assigned in Section 5.4(e).
"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.
"CLOSING DATE" means the date of the Closing as determined pursuant to
Section 7.3.
"CLOSING DATE INVENTORY STATEMENT" has the meaning assigned in Section
2.3(b).
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
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"COLLATERAL AGREEMENTS" has the meaning assigned in Recital D hereof.
"CONFIDENTIALITY AGREEMENT" shall mean the agreement between Seller and
Buyer dated June 1, 2000.
"CONTRACTS" means all Third-Party contracts, agreements, leases and
subleases, supply contracts, purchase orders, sales orders and instruments used
or held for use in each case primarily in the conduct of the Business, that will
be in effect on the Closing Date to which Seller or a Subsidiary is a party, (i)
for the lease of machinery and equipment, motor vehicles, or furniture and
office equipment, (ii) for the provision of goods or services, (iii) for the
sale of goods or performance of services by the Business, including teaming
agreements relating thereto, (iv) for the sale and distribution of the products,
and (v) any such contracts, agreements, instruments and leases referred to in
clauses (i) - (iv), inclusive, entered into between the date hereof and
outstanding as of the Closing Date by Seller or a Subsidiary, but "CONTRACTS"
excludes the Excluded Contracts.
"COUNSEL FOR BUYER" means a corporate counsel of Buyer.
"COUNSEL FOR SELLER" means a corporate counsel of Seller.
"DALLAS RECEIVABLES" has the meaning assigned in Section 2.1(l).
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, covenant
or other similar restrictions or third party rights affecting the Purchased
Assets other than Permitted Encumbrances.
"ENVIRONMENTAL LAW" means any foreign, local, county, state or federal
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 ("RCRA"), 42 U.S.C.ss.6901 ET SEQ.,
the Clean Water Act, 33 U.S.C. Sectionss.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 foreign, federal, state, local or county Laws, as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, in
each case as in effect on or prior to the Closing Date or, with respect to
representations and warranties made on the date hereof, on or prior to the
date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"EXCLUDED ASSETS" means the properties and assets of the Business excluded
from the Purchased Assets by Section 2.2.
"EXCLUDED CONTRACTS" means those Contracts (i) identified in SCHEDULE
2.2(f), (ii) under which performance by Seller or an Affiliate has been
completed and for which there is no remaining warranty, maintenance, or support
obligation, (iii) relating to any General Purchase Agreement, and (iv) relating
to Excluded Assets or Excluded Liabilities.
"EXCLUDED LEASED EQUIPMENT" has the meaning assigned in Section 5.5(b).
"EXCLUDED LIABILITIES" means the liabilities and obligations that are not
assumed by Buyer as provided in Section 2.5.
"EXISTING INVENTORY" has the meaning assigned in Section 5.8(a).
"FINANCIAL STATEMENTS" has the meaning assigned in Section 3.12(a).
"FIRST TRANSFER DATE" has the meaning assigned in Section 5.4(g).
"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 conduct of the Business and located on the Premises,
including, without limitation desks, tables, chairs, file cabinets and other
storage devices and office supplies but excluding any such items related to
Excluded Assets or Excluded Liabilities.
"GENERAL PURCHASE AGREEMENTS" shall mean Third-Party supply contracts or
other agreements between Seller or an Affiliate and a Third Party pursuant to
which Seller or an Affiliate purchases products or services from such
Third-Party for any of Seller's or an Affiliate's businesses other than
primarily for the 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 issued to Seller
or a Subsidiary with respect to the Business or the Premises and necessary for
the operation of the Business or the Premises as currently conducted under
applicable Laws.
"HAZARDOUS SUBSTANCE" means (i) any hazardous, toxic or dangerous waste,
substance or material defined as such in (or for the purposes of) any
Environmental Law, including Environmental Laws relating to or imposing
liability or standards or conduct concerning any hazardous, toxic or dangerous
waste, substance or material in effect on the date of this
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Agreement, (ii) asbestos, flammable explosives, radioactive materials, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum
products (including but not limited to waste petroleum and petroleum products),
or methane, 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 or any health and safety or similar law, code, ordinance,
rule or regulation, order or decree, and which may or could pose a hazard to the
health and safety of workers at or users of any properties of Seller or any
Subsidiary or cause damage to the environment.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFIED PARTY" has the meaning assigned in Section 9.3(a).
"INDEMNIFYING PARTY" has the meaning assigned in Section 9.4(a).
"INTELLECTUAL PROPERTY" has the meaning assigned in Section 3.13.
"INTELLECTUAL PROPERTY AGREEMENT" means the agreement in substantially the
form set forth as EXHIBIT F.
"INVENTORY" means all inventory, wherever located, including raw
materials, work in process, recycled materials, finished products, inventoriable
supplies, and non-capital spare parts owned by Seller or a Subsidiary and used
or held for use primarily in the conduct of the 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, but excluding any inventory
related to Excluded Assets or Excluded Liabilities.
"IRS" means the U.S. Internal Revenue Service.
"LAWS" shall mean 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.
"LEASE ASSIGNMENT" means each assignment agreement with respect to a Lease
in substantially the form set forth as EXHIBIT C.
"LEASED EQUIPMENT" means the computers, servers, machinery and equipment
and other similar items leased and used by Seller or a Subsidiary primarily in
the conduct of the Business but excluding any such items related to Excluded
Assets or Excluded Liabilities.
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"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 Business as identified on SCHEDULE 3.7(a).
"LICENSES" means all licenses, agreements and other arrangements
identified on SCHEDULE 2.1(h) under which Seller or a Subsidiary has the right
to use any Proprietary Information of a Third Party to the extent used or held
for use primarily in the conduct of the Business but not the Nonassignable
Licenses or any such items related to Excluded Assets or Excluded Liabilities.
"LOSSES" has the meaning assigned in Section 9.3(a).
"LSP" has the meaning assigned in Section 5.4(e).
"LTSSP" has the meaning assigned in Section 5.4(e).
"LUCENT" has the meaning assigned in the preamble hereof.
"LUCENT OCCUPATIONAL PLAN" has the meaning assigned in Section 5.4(g).
"MARKED ASSETS" has the meaning assigned in Section 5.8(a).
"MARKED INSTRUMENTALITIES" has the meaning assigned in Section 5.8(a).
"MATERIAL ADVERSE EFFECT" means any condition or event that has material
and adverse effect upon the financial condition or results of operations of the
Business taken as a whole, other than any condition or event (i) relating to the
economy in general, (ii) relating to the industries in which the Business
operates in general, (iii) arising out of or resulting from actions of Buyer or
a Buyer Designee in connection with this Agreement.
"MATERIAL CONTRACTS" has the meaning assigned in Section 3.10.
"9/30/2000 INVENTORY STATEMENT" has the meaning assigned in
Section 2.3(b).
"NONASSIGNABLE ASSETS" has the meaning assigned in Section 2.6(c).
"NONASSIGNABLE LICENSES" means those Licenses of Proprietary Information
to which Seller or an Affiliate is the licensee that are (i) not by their terms
assignable to Buyer, or (ii) related to other businesses of Seller or an
Affiliate and not solely to the Business.
"NONREPRESENTED TRANSFERRED EMPLOYEES" means Transferred Employees in the
United States who are not Represented Transferred Employees.
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"OTHER MARKED ASSETS" has the meaning assigned in Section 5.8(a).
"PENSION PLAN" has the meaning assigned in Section 3.9(b).
"PENSION TRANSFER AMOUNT" has the meaning assigned in Section 5.4(h).
"PERMITTED ENCUMBRANCES" means any (i) liens for taxes, assessments and
other governmental charges or of landlords, liens of carriers, warehouseman,
mechanics and material men incurred in the ordinary course of business, in each
case for sums not yet due and payable or due but not delinquent or being
contested in good faith by appropriate proceedings, (ii) liens incurred or
deposits made in the ordinary course of 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, bids, leases government contracts, performance and return of money bonds
and similar obligations, (iii) licenses granted by Seller or an Affiliate in
connection with sales of products in the ordinary course of business, and (iv)
any Encumbrance or minor imperfection in title and minor encroachments, if any,
not material in amount that, individually or in the aggregate, do not materially
interfere with the conduct of the Business or with the use of the Purchased
Assets and do not materially affect the value of the Purchased Assets.
"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.
"POWER SYSTEMS" has the meaning assigned in Recital A hereof.
"PREMISES" means the Leased Premises and the Transferred Premises.
"PRINCIPAL EQUIPMENT" means the computers, servers, machinery and
equipment (including any related spare parts, dies, molds, tools, and tooling)
and other similar items used by Seller or a Subsidiary primarily in the conduct
of the Business but not the Leased Equipment or any such items related to
Excluded Assets or Excluded Liabilities. Principal Equipment includes rights to
the warranties received from the manufacturers and distributors of said items
and to any related claims, credits, rights of recovery and setoff with respect
to said items, but only to the extent such rights are assignable.
"PROPRIETARY INFORMATION" means all information (whether or not
protectable by patent, copyright, mask works or trade secret rights) not
generally known to the public (except for patents), including, but not limited
to, works of authorship, inventions, discoveries, 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,
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trademarks, trade names, service marks, emblems, logos, insignia and related
marks and registrations, specifications, technical manuals and data, libraries,
blueprints, drawings, proprietary processes, product information and development
work-in-process.
"PURCHASE PRICE" has the meaning assigned in Section 2.3(a).
"PURCHASE PRICE ADJUSTMENT" has the meaning assigned in Section 2.3(b).
"PURCHASED ASSETS" has the meaning assigned in Section 2.1.
"PURCHASED LEASED EQUIPMENT" has the meaning assigned in Section 5.5(b).
"REAL ESTATE DEED" means each deed with respect to Transferred Premises.
"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 funds or the incurrence of a liability 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.
"RELEASE" means any past or present spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of a Hazardous Substance into the environment.
"REPRESENTED TRANSFERRED EMPLOYEES" means Transferred Employees in the
United States who are represented by the Communications Workers of America.
"REPRESENTED TRUST" has the meaning assigned in Section 5.4(g).
"REQUIRED CONSENT" has the meaning assigned in Section 3.4(b).
"RETURN" means any return, declaration, report, statement, and any other
document required to be filed in respect of any Tax.
"SECOND TRANSFER DATE" has the meaning assigned in Section 5.4(g).
"SELLER" has the meaning assigned in the preamble hereof.
"SELLER NAME" has the meaning assigned in Section 5.8(a).
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"SELLER'S ADJUSTMENT RESPONSE" has the meaning assigned in Section 2.3(b).
"SENIOR EXECUTIVES" means, in the case of Seller, Robert C. Holder,
Executive Vice President, Corporate Operations of Lucent, and in the case of
Buyer, Edward Federman, Chief Financial Officer of Tyco Electronics Corporation,
or their respective successors.
"SUBLEASE" means each sublease with respect to a Lease in substantially
the form set forth as EXHIBIT D.
"SUBSIDIARY" means each entity listed on SCHEDULE 3.2.
"SUPPLY AGREEMENT" means the agreement in substantially the form set forth
as EXHIBIT E.
"TAXES" means, (A) all taxes of any kind, 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, imposed upon any Person by federal, foreign,
state, or local Law or taxing authority, together with any interest and any
penalties, or additions to tax, with respect to such taxes and (B) any liability
of a Person for the payment of any amount of any type described in clause (A) as
a result of the Person being a transferee or a member of an affiliated or
combined group prior to the Closing.
"THIRD PARTY" means any Person not an Affiliate of the other referenced
Person or Persons.
"THIRD-PARTY CLAIM" has the meaning assigned in Section 9.4(a).
"TRANSFERRED EMPLOYEES" has the meaning assigned in Section 5.4(a).
"TRANSFERRED PREMISES" means the real property that is owned and used by
Seller or a Subsidiary primarily in the conduct of the Business identified on
SCHEDULE 3.7(b).
"TRANSFERRED SAVINGS PLAN PARTICIPANTS" has the meaning assigned in
Section 5.4(e).
"TRANSITION SERVICES AGREEMENT" means the agreement in substantially the
form set forth as EXHIBIT G.
1.2 OTHER DEFINITIONAL AND INTERPRETIVE MATTERS
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Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
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, the date that is the 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.
GENDER AND NUMBER. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.
HEADINGS. The provision of a Table of Contents, the division of this
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 to any "SECTION" are to the corresponding Section of this Agreement
unless otherwise specified.
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.
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.
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 extent as if the same had been set forth verbatim herein.
2. PURCHASE AND SALE OF THE 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 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 possesses and has the right to transfer as the same shall
exist on the Closing Date. For purposes of this Agreement, "PURCHASED ASSETS"
shall mean all the assets, properties and
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rights used by Seller or the applicable Subsidiary, whether tangible or
intangible, real, personal or mixed, set forth or described in Sections 2.1(a)
through 2.1(l), inclusive (except in each case for 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 books or financial statements:
(a) the Assumed Leases;
(b) the Transferred Premises;
(c) the Principal Equipment and the Purchased Leased Equipment;
(d) the Fixtures and Supplies;
(e) the Inventory;
(f) the Intellectual Property;
(g) the Contracts;
(h) the Licenses;
(i) the Business Records;
(j) the Governmental Permits that are identified on SCHEDULE 2.1(j) but
only to the extent that such Governmental Permits are assignable or transferable
to Buyer;
(k) the quotas of Lucent Inepar Sistemas de Energia Ltda. (the
"BRAZILIAN JV COMPANY"); and
(l) the accounts receivable imbedded on Power Systems' SAP that are billed
directly by the Business and not by other Lucent operations (the "DALLAS
RECEIVABLES").
2.2 EXCLUDED ASSETS
Notwithstanding the provisions of Section 2.1, it is hereby expressly
acknowledged and agreed that the Purchased Assets shall not include, and neither
Seller nor any of the Subsidiaries is selling, transferring, assigning,
conveying or delivering to Buyer or a Buyer Designee, and neither Buyer nor a
Buyer Designee is purchasing, acquiring or accepting from Seller or any of the
Subsidiaries, the following (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"):
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(a) any of Seller's or its Affiliate's receivables (except the Dallas
Receivables), cash, bank deposits or similar cash items or employee receivables;
(b) any Proprietary Information of Seller or any Affiliate other than
the Intellectual Property;
(c) any (i) books and records that Seller or any Affiliate is required
by Law to retain or that Seller determines are necessary or advisable to retain;
PROVIDED, HOWEVER, that Buyer shall have the right to make copies of any
portions of such retained books and records that relate to the Business or any
of the Purchased Assets; and (ii) any information management system of Seller or
any Affiliate other than those used primarily in the conduct of the Business and
contained within computer hardware included as a Purchased Asset pursuant to
Section 2.1(c);
(d) any claim, right or interest of Seller or any Affiliate in or to any
refund, rebate, abatement or other recovery for Taxes, together with any
interest due thereon or penalty rebate arising therefrom, the basis of which
arises or accrues in any period prior to the Closing Date;
(e) subject to Section 5.8, all "Lucent Technologies" marked sales and
marketing or packaging materials, samples, prototypes, other similar Lucent
Technologies-identified sales and marketing or packaging materials and any
marketing studies;
(f) the Excluded Contracts and the Nonassignable Licenses;
(g) any insurance policies or rights of proceeds thereof;
(h) the Excluded Leased Equipment;
(i) any of Seller's or any Affiliate's rights, claims or causes of
action against Third Parties relating to the assets, properties, business or
operations of Seller or any Affiliate arising out of transactions occurring
prior to, and including, the Closing Date; and
(j) all other assets, properties, interests and rights of Seller or any
Affiliate not related primarily to the Business.
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2.3 PURCHASE PRICE
(a) In consideration of the 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
$2,500,000,000.00 (the "PURCHASE PRICE") in cash by wire transfer of immediately
available funds to an account designated by Seller's written instructions to
Buyer at least two (2) Business Days prior to Closing.
(b) (i) Attached hereto as SCHEDULE 2.3(b) is a valuation of the
Inventory as of September 30, 2000 (the "9/30/2000 INVENTORY STATEMENT").
(ii) Within one hundred and twenty (120) days after the Closing
Date, Buyer shall submit to Seller a valuation of the Inventory as of the
Closing Date (the "CLOSING DATE INVENTORY STATEMENT") wherein Buyer shall set
forth in reasonable detail Buyer's valuation of the Inventory and its proposed
Purchase Price Adjustment (upward or downward). The Closing Date Inventory
Statement shall be prepared in accordance with GAAP (unless otherwise indicated
or agreed to in writing by Buyer and Seller) and shall use the same methodology
used to prepare the 9/30/2000 Inventory Statement.
(iii) Seller shall review the Closing Date Inventory Statement
promptly upon receipt thereof. If Seller believes that the Closing Date
Inventory Statement is incorrect in any respect, Seller shall deliver to Buyer a
statement without thirty (30) days after Seller's receipt of the Closing Date
Inventory Statement, identifying the specific aspects of the Closing Date
Inventory Statement with which Seller disagrees and the reasons therefor with
supporting detail, and setting forth Seller's valuation of the Inventory and a
proposed Purchase Price Adjustment (the "SELLER'S ADJUSTMENT RESPONSE"). The
Seller's Adjustment Response shall be prepared in accordance with GAAP (unless
otherwise indicated or agreed to in writing by Buyer and Seller) and shall use
the same methodology used to prepare the 9/30/2000 Inventory Statement.
(iv) Within the thirty (30) day period after Buyer's receipt of
Seller's Adjustment Response, the parties shall use reasonable commercial
efforts to resolve mutually their differences with regard to, and agree upon,
the valuation of the Inventory and the Purchase Price Adjustment.
(v) If the parties are able to reach an Agreement with regard to the
valuation of the Inventory and the Purchase Price Adjustment, payment will be
made by either Seller or Buyer, as applicable, to the other within ten (10)
Business Days after such agreement as follows: the Purchase Price shall be
adjusted (x) upward if the value of the Inventory on the Closing Date Inventory
Statement is greater than the value of the Inventory on the 9/30/2000
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Inventory Statement, or (y) downward if the value of the Inventory on the
Closing Date Inventory Statement is less than the value of the Inventory on the
9/30/2000 Inventory Statement, in each case by the absolute difference between
the value of the Inventory on the respective inventory statements (the "PURCHASE
PRICE ADJUSTMENT"). If the Purchase Price is adjusted upward, then Buyer or a
Buyer Designee shall pay the Purchase Price Adjustment to Seller, and if
Purchase Price is adjusted downward, then Seller shall pay the Purchase Price
Adjustment to Buyer or a Buyer Designee.
(vi) If the Parties are unable to resolve mutually their dispute
with regard to the valuation of the Inventory and the Purchase Price Adjustment
within the thirty (30) day calendar period provided for doing so, then the issue
shall be submitted to a mutually agreed auditing firm other than
PricewaterhouseCoopers LLC (the "AUDITOR") to resolve any dispute. The Auditor,
acting as an expert and not as an arbitrator, shall determine the Purchase Price
Adjustment. The determination of the Auditor shall be final, binding and
conclusive on the parties. Buyer and Seller shall provide all documents and
information requested by Auditor promptly and shall use their reasonable efforts
to cause the Auditor to make its determination within thirty (30) days after the
dispute is submitted to it. The fees and expenses of the Auditor shall be borne
by Seller and Buyer equally.
(c) Within thirty (30) days after the Closing Date, Buyer shall pay to
Seller as an addition to the Purchase Price an amount equal to the Dallas
Receivables minus (a) the Warranty Liability of $14,700,000 as of September 30,
2000 and (b) net of allowance for doubtful accounts allocable to the Dallas
Receivables. Any disagreements related to this provision shall be handled as set
forth in Section 2.3(b).
(d) Prior to the Closing Date, Buyer and Seller shall agree to allocate
the Purchase Price as between Seller (or any selling Subsidiary listed on
Schedule 3.2, as appropriate) and Buyer (or any appropriate Buyer Designee).
Such allocation shall be attached to this Agreement prior to Closing as SCHEDULE
2.3(d) and shall be modified after the Closing to reflect any adjustments to the
Purchase Price pursuant to Sections 2.3(b) and (c). Buyer and Seller shall act
in accordance with such allocation (as adjusted) in the preparation, filing and
audit of any Return.
2.4 ASSUMED LIABILITIES
On the Closing Date, Buyer or one or more Buyer Designees shall execute
and deliver to Seller the one or more Assumption Agreements and one or more
Lease Assignments or Subleases 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 liabilities and obligations of Seller or a Subsidiary pursuant to
and under the Assumed Liabilities. "ASSUMED LIABILITIES" shall mean only those
liabilities and obligations set forth in this Section 2.4, whether or not any
such obligation has a value for accounting purposes or is carried or reflected
on or specifically referred to in either Seller's or the applicable Subsidiary's
books or financial statements:
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(a) the vacation, personal days and floating holidays of Transferred
Employees;
(b) the liabilities and obligations arising on or after the Closing Date
under the Assumed Leases and the transferred Contracts, Licenses and Government
Permits;
(c) with respect to the Business, any product warranty liabilities
arising from sales of products in the ordinary course of business;
(d) the Permitted Encumbrances and all other Encumbrances and other
obligations related to the Purchased Assets that are specifically identified in
this Agreement or the Schedules hereto; and
(e) the obligations and liabilities with respect to the Transferred
Employees, the Business or the Purchased Assets, known or unknown, absolute or
contingent, the basis of which arises or accrues on or after the Closing Date.
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 of its Affiliates, 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"). For the avoidance of doubt, the parties agree that the
Excluded Liabilities include, but are not limited to, (i) any violation,
liability, penalty or obligation of Seller or any of its Affiliates (or any
predecessor company that historically operated the Business or conducted other
operations at the Premises) relating to, or arising in connection with, any
Environmental Law, known or unknown, absolute or contingent, the basis of which
arises or accrues on or before the Closing Date (other than any violation,
liability, penalty or obligation caused by a Third Party), (ii) any wages,
salary, bonuses, commissions or retention bonuses relating to Transferred
Employees which accrue on or prior to the Closing Date irrespective of when any
such wages, salary, bonuses, commissions or retention bonuses are paid, and
(iii) any liabilities in connection with, or relating to, any actions, suits,
claims or proceedings against Seller or any Affiliate which arise or accrue on
or before the Closing Date.
2.6 FURTHER ASSURANCES; FURTHER CONVEYANCES AND ASSUMPTIONS;
CONSENT OF THIRD PARTIES
(a) From time to time following the Closing, Seller hereby agrees to
make available, or to cause its Affiliates to make available, to Buyer or Buyer
Designees non-confidential data in personnel records of Transferred Employees as
is reasonably necessary for Buyer or Buyer Designees to transition such
employees into Buyer's or Buyer Designees' records.
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(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 their respective
successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Buyer and/or
its Affiliates under this Agreement and the Collateral Agreements and to assure
fully to Seller and its Affiliates and their successors and assigns, the
assumption of the liabilities and obligations intended to be assumed by Buyer
and/or its Affiliates under this Agreement and the Collateral Agreements, and to
otherwise make effective the transactions contemplated hereby and thereby.
(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 consents shall be given. Seller agrees, or to
cause its Affiliates to use reasonable commercial efforts, with the cooperation
of Buyer and Buyer Designees, where appropriate, to obtain such consents
promptly; PROVIDED, HOWEVER, that such cooperation shall not require Seller or
any of its Affiliates to remain secondarily liable or to make any payment to
obtain any such consent with respect to any Nonassignable Asset. Seller agrees
to use reasonable best efforts in conjunction with Buyer to obtain approval from
the applicable license vendor to the assignment of the seats allocated to the
Business related to the Nonassignable Licenses. Seller agrees not to re-deploy
any such seats allocated to the Business outside of the Business after the date
hereof, and upon the assignment of such seats, if any, Seller shall amend its
licenses (if necessary) reducing the amount of Seller's seats by the number of
seats allocated to the Business. As soon as practicable after the date hereof,
Seller and Buyer agree to jointly negotiate with the appropriate license vendors
of shared mainframe-based software to obtain the approval for the temporary use
of such software in order for Seller and Buyer to perform their respective
obligations under the Transition Services Agreement.
(d) Buyer and Seller agree to use their respective reasonable
commercial efforts to obtain, or to cause to be obtained, any consent,
substitution, approval, or amendment required to novate all obligations under
any and all Contracts or other 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 liabilities and obligations. To the extent permitted
by applicable Law, in the event consents to the assignment thereof cannot be
obtained, such Nonassignable Assets shall be held, as and from the Closing Date,
by Seller or its Affiliates in trust for Buyer and the covenants and obligations
thereunder shall be performed by Buyer in Seller's or one of its
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Affiliate's name and all benefits and obligations existing thereunder shall be
for Buyer's account. Seller shall take or cause to be taken at Buyer's expense
such action in its name or otherwise as Buyer may reasonably request so as to
provide Buyer with the benefits of the Nonassignable Assets and to effect
collection of money or other consideration to become due and payable under the
Nonassignable Assets, and Seller or its Affiliates shall promptly pay over to
Buyer all money or other consideration received by it in respect to all
Nonassignable Assets.
(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.
2.7 NO LICENSES
Unless expressly set forth in the Intellectual Property Agreement, no
title, right or license of any kind is granted to Buyer pursuant to this
Agreement with respect to Seller's or any of its Affiliate's Proprietary
Information, either directly or indirectly, by implication, by estoppel or
otherwise.
2.8 BULK SALES LAW
Buyer hereby waives compliance by Seller and any of the Subsidiaries with
the requirements and provisions of any "bulk-transfer" Laws of any jurisdiction,
including Article 6 of the New York Commercial Code, that may otherwise be
applicable with respect to the sale of any or all of the Purchased Assets to
Buyer.
2.9 TAXES
(a) Buyer shall pay all applicable Taxes (other than real estate
transfer taxes which shall be paid as set forth in the last sentence of this
Section 2.9(a)) and all recording and filing fees that may be imposed, assessed
or payable by reason of the operation or as a result of this Agreement including
the sales, transfers, leases, rentals, licenses, and assignments contemplated
hereby, except for Seller's or any Subsidiary's net income and capital gains
taxes or franchise or other taxes based on Seller's or any Subsidiary's net
income. Buyer and Seller agree to each pay one-half (1/2) of any applicable
real estate transfer taxes that arise as a result of this Agreement.
(b) Buyer shall be responsible for all Taxes attributable to, levied
upon or incurred in connection with the Purchased Assets pertaining to the
period (or that portion of the period) immediately beginning after the Closing
Date. Seller shall be responsible for all
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Taxes attributable to, levied upon or incurred in connection with the Purchased
Assets pertaining to the period (or that portion of the period) prior to or on
the Closing Date.
2.10 BUYER DESIGNEE
The parties agree that Buyer may assign 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
Seller represents and warrants to Buyer that:
3.1 ORGANIZATION AND QUALIFICATION
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 Business as currently conducted 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 conduct of the Business requires such
qualification, except for failures to be so qualified or in good standing, as
the case may be, that could not reasonably be expected to have a Material
Adverse Effect.
3.2 SUBSIDIARIES
SCHEDULE 3.2 sets forth a list of each Subsidiary of Seller that has title
to any asset reasonably expected to be a Purchased Asset or an obligation
reasonably expected to be an Assumed Liability, together with its jurisdiction
of organization and its authorized and outstanding capital stock or other equity
interests as of the date hereof. Except as set forth on SCHEDULE 3.2, each
entity is duly organized and validly existing under the Laws of its jurisdiction
of organization and has all requisite corporate or similar power and authority
to own, lease and operate the Purchased Assets owned by it and to carry on its
portion of the 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 could not
reasonably be expected to have a
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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 Business as currently
conducted.
3.3 AUTHORIZATION; BINDING EFFECT
(a) (i) Seller has all requisite corporate power and authority to
execute and deliver this Agreement and the Collateral Agreements to which it
will be a party and to effect the transactions contemplated hereby and thereby
and has duly authorized the execution, delivery and performance of this
Agreement and the Collateral Agreements to which it will be a party by all
requisite corporate action.
(ii) Each Subsidiary that has title to any asset reasonably expected to
be a Purchased Asset or an obligation reasonably expected to be an 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.
(b) This Agreement has been duly executed and delivered by Seller and
this Agreement is, and the Collateral Agreements to which Seller and each
Subsidiary that has title to any asset reasonably expected to be a Purchased
Asset or an obligation reasonably expected to be an Assumed Liability will be a
party when duly executed and delivered by Seller or such Subsidiary will be,
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 made, 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 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 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 Seller or the applicable Subsidiary is
a party or by which it is bound and which relates to the Business or the
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Purchased Assets, which violation, breach or default could be reasonably
expected to have a Material Adverse Effect, or (iii) violate any order,
judgment, decree, rule or regulation of any court or any Governmental Body
having jurisdiction over Seller, a Subsidiary or the Purchased Assets, and which
violation could be reasonably expected to have a 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 and delivery of this Agreement and
the Collateral Agreements to which Seller or such Subsidiary will be a party or
for the consummation of the transactions contemplated hereby or thereby by
Seller or such Subsidiary, except for (i) any filings required to be made under
the HSR Act and any applicable filings required under foreign antitrust Laws,
(ii) consents or approvals of Third Parties that are required to transfer or
assign to Buyer any Purchased Assets or assign the benefits of or delegate
performance with regard thereto, (iii) those set forth in SCHEDULE 3.4(b) (items
(i), (ii) and (iii) being referred to herein as the "REQUIRED CONSENTS"), and
(iv) such consents, approvals, orders, authorizations, registrations,
declarations or filings where failure of compliance could not reasonably be
expected to have a Material Adverse Effect.
3.5 TITLE TO PROPERTY; PRINCIPAL EQUIPMENT; SUFFICIENCY OF
ASSETS
(a) Seller or a Subsidiary has and at the Closing will have good and
valid title to, or a valid and binding leasehold interest or license in, all
real and personal tangible Purchased Assets free and clear of any Encumbrance
except for Permitted Encumbrances.
(b) Each material item of Principal Equipment is in good operating
condition, in light of its respective age, 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 under the Transition Services Agreement, and (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) include
all assets, personnel and rights that are used in or necessary to conduct the
Business as currently conducted. 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 in the Business, such
breach shall be deemed cured if Seller or the applicable Subsidiary promptly
transfers such properties or assets or provide such services to Buyer or a Buyer
Designee at no additional cost to Buyer or a Buyer Designee.
3.6 PERMITS, LICENSES
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Except as set forth on SCHEDULE 2.1(j), there are no material Governmental
Permits necessary for or used by Seller or a Subsidiary to operate the Business
as now being operated or to use or occupy the 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 use
or occupy the Premises and to carry on and conduct the Business and its
operations as presently conducted, except for such Governmental Permits, the
absence of which could not reasonably be expected to have a Material Adverse
Effect. Neither Seller nor any Subsidiary is in violation of or default under
any such Governmental Permits, which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or which could
reasonably be expected to interfere materially with the consummation of the
transactions contemplated herein.
3.7 REAL ESTATE
(a) SCHEDULE 3.7(a) contains a complete and accurate list of the Leased
Premises and the Assumed Leases. Buyer has been provided with a complete and
correct copy of each Assumed Lease. Except as set forth in SCHEDULE 3.7(a), each
Assumed 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 Assumed Lease and, to Seller's
knowledge, all the material covenants to be performed by the Seller or a
Subsidiary and the landlord under each Assumed Lease prior to the date hereof or
the Closing Date, as applicable, have been performed in all material respects.
(b) SCHEDULE 3.7(b) contains a complete and accurate list of the
Transferred Premises. Seller or a Subsidiary has good and valid title to the
Transferred Premises. Except as set forth on SCHEDULE 3.7(b), none of such
Transferred Premises are subject to any Encumbrance except for Permitted
Encumbrances.
(c) The use of any Leased Premises or Transferred Premises, as presently
used by the Business, does not violate any local zoning or similar land use laws
or governmental regulations which violation could reasonably be expected to have
a Material Adverse Effect. Neither Seller nor any Subsidiary is in violation of
or in noncompliance with any covenant, condition, restriction, order or easement
affecting any Leased Premises or Transferred Premises where such violation or
noncompliance could reasonably be expected to have a Material Adverse Effect.
There is no condemnation or, to the best knowledge of Seller, threatened
condemnation affecting any Leased Premises or Transferred Premises.
3.8 COMPLIANCE WITH LAWS; LITIGATION
(a) Except as set forth on SCHEDULE 3.8(a), with respect to the Business
conducted by it and the Subsidiaries, Seller and each Subsidiary engaged in the
conduct of the Business (including the use and occupation of the Premises) is in
compliance in all material respects
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with all applicable Laws and all decrees, orders, judgments, permits and
licenses of or from Governmental Bodies except for failures to comply that could
not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 3.8(b), there are no actions, suits,
proceedings, arbitrations or governmental investigations pending or, to Seller's
knowledge, threatened against it or the Subsidiaries with respect to the
Business that could be reasonably expected to have a Material Adverse Effect.
3.9 BUSINESS EMPLOYEES
(a) SCHEDULE 3.9(a) contains a complete and accurate list of all the
Business Employees as of October 31, 2000, showing for each Business Employee,
the name, position held, service date, salary or wages and aggregate annual
compensation for Seller's or the applicable Subsidiary's last fiscal year, and
which employees are represented by the Communications Workers of America and the
Confederacion de Trabajadores de Mexico. Except as set forth on SCHEDULE 5.4(m),
none of the Business Employees is covered by any union, collective bargaining or
other similar labor agreements. Seller will update Schedule 3.9(a) to be
accurate as of the Closing Date at least five Business Days prior to the
Closing.
(b) Except as set forth in SCHEDULE 3.9(b), with respect to all Business
Employees, neither Seller nor any Subsidiary currently maintains, contributes to
or has any liability under any Benefit Plan. With respect to each of the Benefit
Plans identified on SCHEDULE 3.9(b), Seller has made available to the Buyer true
and complete copies of the most recent summary plan or other written
description. Each Benefit Plan listed on SCHEDULE 3.9(b) has been operated in
material compliance with applicable law, including ERISA. Each Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA ("PENSION PLAN") and which is intended to be qualified under Section
401(a) of the Code, has received a favorable determination letter from the
Internal Revenue Service with respect to "TRA" (as defined in Section 1 of Rev.
Proc. 93-39), and Seller is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Except as disclosed on
SCHEDULE 3.9(b), neither Seller nor any Subsidiary has any obligations for
retiree health and life benefits under any Benefit Plan or has ever represented,
promised or contracted (whether in oral or written form) to any employee(s) that
such employee(s) would be provided with retiree health or life benefits. 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 the Seller or any
Subsidiary, 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).
(d) As relates to the Business, there is not presently pending or
existing, and to Seller's knowledge there is not threatened, (i) any strike,
slowdown, picketing, or work
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stoppage, (ii) any application for certification of a collective bargaining
agent, or (iii) except as set forth in SCHEDULE 3.8(b), any controversies
pending, or to Seller's knowledge, threatened between Seller or any Subsidiary
and any of their respective employees that could reasonably be expected to have
a Material Adverse Effect.
3.10 CONTRACTS
SCHEDULE 3.10 contains a complete and accurate list of all outstanding
Contracts that would require over the full term thereof payments by or to Seller
or a Subsidiary of more than $250,000 (the "MATERIAL CONTRACTS"). The Material
Contracts include all existing contracts and commitments of Seller or a
Subsidiary that are (i) primarily related to the Business, or (ii) by which the
Purchased Assets may be bound or affected, in each case whether written or oral.
Each of such Material Contracts 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 3.10, neither Seller nor any Subsidiary is in default or
breach of or is otherwise delinquent in performance under any such Material
Contracts which default or breach could reasonably be expected to have a
Material Adverse Effect, and, to Seller's knowledge, each of the other parties
thereto has performed in all material respects all obligations required to be
performed by it under, and is not in default in any material respect under, any
of such Contracts and no event has occurred that, with notice or lapse of time,
or both, would constitute such a default.
3.11 ENVIRONMENTAL MATTERS
Except as set forth in SCHEDULE 3.11 and in respect of the Business and
the Premises:
(a) the operations of the Business and the Premises comply in all
material respects with all applicable Environmental Laws;
(b) Seller and each Subsidiary has obtained all environmental, health
and safety Governmental Permits necessary for its operations, and all such
Governmental Permit 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 could not reasonably be expected to have a Material Adverse Effect;
(c) none of Seller, any Subsidiary or any of the Premises or the
operations of the Business, is subject to any on-going investigation by, order
from or agreement with any Person respecting (i) any Environmental Law, or (ii)
any remedial action arising from the Release or threatened Release of a
Hazardous Substance into the environment;
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(d) 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;
(e) 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 could not reasonably be expected to have a Material Adverse Effect;
(f) there is not now, nor to Seller's knowledge, has there ever
been, on or in any Premise any aboveground or underground storage tanks;
(g) 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;
(h) 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
(i) Seller has delivered to Buyer true and complete copies of all
asbestos and other environmental reports disclosing the presence of asbestos or
other Hazardous Materials on any of the Premises.
3.12 FINANCIAL STATEMENT; ABSENCE OF CHANGES
(a) SCHEDULE 3.12 contains true and complete copies of the following
financial statements of the Business (the "FINANCIAL STATEMENTS"):
(i) audited balance sheets as of September 30, 1999 and June
30, 2000 with a report by PricewaterhouseCoopers LLP;
(ii) audited statements of operations and cash flows for the years
ended September 30, 1998 and 1999 and for the nine months ended June 30, 2000
with a report by PricewaterhouseCoopers LLP; and
(iii) unaudited balance sheet as of June 30, 1999 and unaudited
statements of operations and cash flows for nine months ended June 30, 1999.
(b) The Financial Statements were prepared in accordance with GAAP
(except, in the case of the unaudited financial statements, for normal and
recurring year-end adjustments and the omission of footnotes). The Financial
Statements were prepared on the basis of the books and records of the Business
(in each case, as of the date of such Financial Statements)
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and present fairly, in all material respects, the financial position of the
Business as of the dates thereof and the results of its operations and cash
flows for each of the periods then ended in conformity with GAAP.
(c) The 9/30/2000 Inventory Statement was prepared in accordance with
GAAP and on a basis consistent with prior practices of Seller and fairly
presents the Inventory as of September 30, 2000.
(d) Since June 30, 2000, Seller and the Subsidiaries have conducted and
operated the Business in the ordinary course and the Business has not suffered
any change that could reasonably be expected to have a Material Adverse Effect.
3.13 INTELLECTUAL PROPERTY
(a) Seller or one of the Subsidiaries owns or has a valid right to grant
the licenses in all of the copyrights, know how, patents, service marks,
trademarks, trade secrets and other proprietary intellectual property rights
that it is assigning or licensing to Buyer pursuant to the Intellectual Property
Agreement (collectively, the "INTELLECTUAL PROPERTY").
(b) Except as set forth in SCHEDULE 3.13(b), to the knowledge of the
senior management of the Business and the members of Seller's intellectual
property legal department, none of the products of the Business manufactured and
currently sold by Seller infringe any intellectual property rights owned by any
other Third Party. Except as set forth in SCHEDULE 3.13 (b), to Seller's
knowledge, there are no claims or demands of any Third Party pertaining to the
Intellectual Property being assigned or licensed to Buyer pursuant to the
Intellectual Property Agreement, excluding immaterial assertions of rights which
have not been presented in the form of a specific claim or demand, with respect
to the operation of the Business by Seller or the Subsidiaries as of the date
hereof with respect to the Purchased Assets. Except as set forth in SCHEDULE
3.13(b), to the knowledge of the senior management of the Business and the
members of Seller's intellectual property legal department, no proceedings have
been instituted, are pending, or are threatened which challenge the rights of
Seller or any Subsidiary in respect any of the Intellectual Property, excluding
immaterial assertions of rights which have not been presented in the form of a
specific claim or demand.
(c) At the Closing, Seller or one of the Subsidiaries will provide,
either by assignment or license to Buyer in accordance with the Intellectual
Property Agreement, all of the Intellectual Property which is necessary for
Buyer to conduct the Business as it is presently conducted and to make, have
made, use, lease, import, offer to sell or sell the products, as such products
existed as of the Closing Date, of the Business. Buyer's sole remedy for breach
of this Section 3.13(c) shall be the assignment or licensing by Seller or one of
the Subsidiaries to Buyer, in accordance with the transfers and licenses
provided in the Intellectual Property Agreement, of those components of such
Intellectual Property which are required by Buyer to conduct the Business after
the Closing and to make, have made, use,
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lease, import, offer to sell or sell any products of the Business as to which
ownership or license rights were not adequately conveyed. Notwithstanding the
foregoing, under no circumstances shall Seller be required to grant to Buyer a
license, right, or other permission to use the trademarks "Lucent," "Lucent
Technologies," "Bell Labs" or the Lucent Innovation Ring logo, other than as set
forth in Section 5.8.
3.14 BROKERS
Other than Salomon Smith Barney Inc., the fees and expenses of which will
be paid by Seller, 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.
3.15 TAXES
Seller has paid or will pay when due or finally settled all Taxes relating
to the Business or to the Purchased Assets which are or become due and payable
for all periods up to and including the Closing Date. Seller has properly filed
on a timely basis, or so will file, when due, all Returns relating to the
Business or the Purchased Assets for all periods up to and including the Closing
Date. There are no Encumbrances for Taxes (other than Permitted Encumbrances) on
the Purchased Assets.
3.16 PRODUCT LIABILITY AND RECALLS
(a) Except as set forth in SCHEDULE 3.16, since January 1, 1997, 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 the best
knowledge of Seller, threatened, against or involving the Business relating to
any product alleged to have been designed, manufactured or sold by the Business
and alleged to have been defective or improperly designed or manufactured.
(b) Except as set forth in Schedule 3.16, since January 1, 1997, there
has been no pending, or to the best knowledge of Seller, threatened recall or
investigation of any product sold by Seller in connection with the Business.
3.17 PRODUCT WARRANTY
SCHEDULE 3.17 includes copies of the standard terms and conditions of sale
for the Business (containing applicable guaranty, warranty and indemnity
provisions). Except as set forth in SCHEDULE 3.17, the products manufactured by
the Business have been sold by the Business in accordance with the standard
terms and conditions of sale.
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3.18 INVENTORY
The Inventory as reflected in the Financial Statements and the 9/30/2000
Inventory Statement (i) is stated at the lower of cost (determined principally
on a first-in, first-out basis) or market, and (ii) is of quality and quantity
usable or saleable in the ordinary course of the Business, except for obsolete
items and items of below-standard quality that have been written down in the
Financial Statements to net realizable values.
3.19 CUSTOMER AND SUPPLIERS
SCHEDULE 3.19 contains a list setting forth the 10 largest customers of
the Business, by dollar amount, over the 12 months ended September 30, 2000, and
the 10 largest suppliers of the Business, by dollar amount, over the 12 months
ended September 30, 2000. All purchase and sale orders and other commitments for
purchases and sales made by Seller in connection with the 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 customers or any of their
respective representatives other than payments to such suppliers for the payment
of the invoiced price of supplies purchased or goods sold in the ordinary course
of business.
3.20 RESTRICTIONS ON THE BUSINESS
Except for this Agreement, to the best knowledge of Seller, there is no
agreement, judgment, injunction, order or decree binding upon Seller or any of
its Affiliates affecting Seller's or its Affiliates' conduct of the Business as
currently conducted.
3.21 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Section 3,
none of Seller, any Affiliate 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, or any of their 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 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. Notwithstanding anything to the contrary
herein, no representation or warranty contained in this Section 3 is intended
to, or do, cover or otherwise pertain to any assets that are not included in the
Purchased Assets or any liabilities that are not included in the Assumed
Liabilities.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
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4.1 ORGANIZATION AND QUALIFICATION
Each of Buyer and any Buyer Designee is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, and each of Buyer and any Buyer Designee has all
requisite corporate power and authority to carry on its business as currently
conducted 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 for failures to be so qualified
or in good standing, as the case may be, that could not reasonably be expected
to have a material adverse effect on Buyer's or any Buyer Designee's business
taken as a whole.
4.2 AUTHORIZATION; BINDING EFFECT
(a) Each of Buyer and any Buyer Designee has all requisite corporate
power and authority to execute and deliver this Agreement and the Collateral
Agreements, as the case may be, and to effect the transactions contemplated
hereby and thereby and has duly authorized the execution, delivery and
performance of this Agreement and the Collateral Agreements, as the case may be,
by all requisite action (corporate or other).
(b) This Agreement has been duly executed and delivered by and this
Agreement is, and the Collateral Agreements when duly executed and delivered by
Buyer and any Buyer Designee will be, valid and legally binding obligations of
Buyer and any such Buyer Designee, enforceable against them in accordance with
their 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 NO VIOLATIONS
(a) 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
material mortgage, deed of trust, conveyance to secure debt, note, loan,
indenture, lien, lease, agreement, instrument, order, judgment, decree or other
material arrangement or commitment to which Buyer or any Buyer Designee is a
party or by which it or its assets or properties are bound which violation,
breach or default could be reasonably expected to have a material adverse effect
on Buyer or the applicable Buyer Designee, or (iii) violate any material order,
judgment, decree, rule or
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regulation of any court or any Governmental Body having jurisdiction over Buyer
or any Buyer Designee or any of their respective properties which could be
reasonably expected to have a material adverse effect on Buyer or the applicable
Buyer Designee.
(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 and delivery of this
Agreement and the Collateral Agreements or the consummation of the transactions
contemplated hereby or thereby other than any (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 where failure of compliance would not,
individually or in the aggregate, have a material adverse effect on Buyer's or
any Buyer Designee's ability to consummate the transactions contemplated hereby.
4.4 BROKERS
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 on arrangements made by or on behalf of Buyer or an Affiliate of Buyer.
4.5 NO OTHER SELLER REPRESENTATIONS AND WARRANTIES
(a) With respect to the Purchased Assets, the Business, or 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, or any agent, employee, attorney or
other representative of Seller or by any 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.
(b) Buyer acknowledges that it has made its own assessment of the future
of the Business and is sufficiently experienced to make an informed judgment
with respect thereto. Buyer further acknowledges that neither Seller nor any
Affiliate has made any warranty, express or implied, as to the future of the
Business or its profitability for Buyer, or with respect to any forecasts,
projections or business plans prepared by or on behalf of Seller and delivered
to Buyer in connection with the Business and the negotiation and the execution
of this Agreement.
(c) To the extent reasonably apparent from its context, disclosure by
Seller on any one Schedule delivered pursuant to this Agreement at or prior to
the Closing shall be disclosure as to all such Schedules and, to the extent such
disclosure conflicts with any
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representation or warranty of Seller, Seller shall have no liability for breach
of any such representation or warranty relating to such conflicts.
4.6 SUFFICIENCY OF FUNDS
Each of Buyer and any Buyer Designee (i) has funds available to pay their
respective portions of the Purchase Price and any expenses incurred by Buyer or
any Buyer Designee in connection with the transactions contemplated by this
Agreement; (ii) has the resources and capabilities (financial or otherwise) to
perform hereunder and under the Collateral Agreements; and (iii) has 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.
4.7 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Section 4,
none of Buyer, any Buyer Designee, any Affiliate or any other Person makes any
representations or warranties, and Buyer hereby disclaims any other
representations or warranties, whether made by Buyer, any Buyer Designee, or any
Affiliate, 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, 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) Seller will give, and cause its Affiliates to give, to Buyer and its
Affiliates and to their respective officers, employees, accountants, counsel and
other representatives reasonable access during Seller's or the applicable
Affiliate's normal business hours throughout the period prior to the Closing to
all of Seller's or the applicable Affiliate's properties, books, contracts,
commitments, reports of examination and records directly relating to the
Business or the Purchased Assets (but excluding the Excluded Assets and Excluded
Liabilities and subject to any limitations that are reasonably required to
preserve any applicable attorney-client privilege or Third-Party confidentiality
obligation). Seller shall assist, and cause its Affiliates to assist, Buyer and
its Affiliates in making such investigation and shall cause its counsel,
accountants, engineers, consultants and other non-employee representatives to be
reasonably available to Buyer for such purposes; IT BEING UNDERSTOOD that Buyer
shall reimburse Seller or the applicable Affiliate promptly for reasonable and
necessary out of pocket expenses incurred by Seller or any Affiliate in
complying with any such request by or on behalf of Buyer.
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(b) After the Closing Date, Seller and Buyer will provide, and will
cause their respective Affiliates to provide, to each other and to their
respective officers, employees, counsel and other representatives, upon request
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or Third-Party confidentiality obligation),
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 Business or the Purchased Assets, and
will make their respective personnel reasonably available for interviews,
depositions and testimony in any legal matter concerning transactions,
operations or activities relating to the Business or the Purchased Assets, and
as otherwise may be necessary or desirable to enable the party requesting such
assistance to: (i) comply with reporting, filing or other requirements imposed
by any foreign, local, state or federal court, agency or regulatory 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; or (iii) 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 out-of-pocket costs and expenses incurred by such party in providing such
information and in rendering such assistance. The access to files, books and
records contemplated by this Section 5.1(b) 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.
(c) Buyer agrees to preserve all Business Records, Licenses and
Governmental Permits in accordance with its corporate policies related to
preservation of records. Buyer further agrees that, to the extent Business
Records, Licenses or Governmental Permits are placed in storage, they will be
indexed in such a manner as to make individual document retrieval possible in an
expeditious manner.
5.2 CONDUCT OF BUSINESS
From and after the date of this Agreement and until the Closing Date,
except as otherwise contemplated by this Agreement or the Schedules hereto or as
Buyer shall otherwise consent to in writing, Seller and each of the
Subsidiaries, with respect to the Business:
(a) will carry on the Business in the ordinary course consistent with
past practice including taking or refraining from taking any actions likely to
significantly change its existing relationships with customers, suppliers and
others having business relationships with Power Systems;
(b) will not permit, other than in the ordinary course of business
consistent with past practice or as may be required by Law or a Governmental
Body, all or any of the
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Purchased Assets (real or personal, tangible or intangible) presently and
actively used in the operation of the Business to be sold, licensed or subjected
to any Encumbrance (other than a Permitted Encumbrance);
(c) will not acquire, sell, lease, license, transfer or dispose of any
asset that would otherwise be a Purchased Asset except in the ordinary course of
business consistent with past practice;
(d) will not terminate or materially extend or materially modify any
Material Contract except in the ordinary course of business consistent with past
practice;
(e) will not do any other act which would cause any representation or
warranty of Seller in this Agreement to be or become untrue in any material
respect or intentionally omit to take any action necessary to prevent any such
representation or warranty from being untrue in any material respect at such
time;
(f) will not increase the compensation payable or to become payable to
any of the Business Employees, except for increases in the ordinary course of
business and consistent with past practice, or otherwise enter into or alter any
employment, consulting, or service agreement, except in the ordinary course of
business and consistent with past practice, or enter into any retention
agreements or agreements for enhanced or extraordinary severance with any
Business Employees other than at the request of Buyer;
(g) will not commence, enter into, or alter any profit sharing,
deferred compensation, bonus, stock option, stock purchase, pension, retirement,
or incentive plan or any fringe benefit plan for employees of the Business,
except in the ordinary course of business and consistent with past practice;
(h) will not sever or terminate any Business Employees except for
cause or in the ordinary course of business; or
(i) will not enter into any agreement or commitment with respect to
any of the foregoing.
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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 operating the Business
prior to or on the Closing Date, 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 in
connection with operating the Business after the Closing Date.
(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 each of their respective federal income tax returns.
Accordingly, within thirty (30) days after the parties finalize the Purchase
Price Adjustment pursuant to Section 2.3, Seller and Buyer agree to attempt in
good faith to (i) enter into a Purchase Price allocation agreement providing for
the allocation of the Purchase Price 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 for timely filing in each of their respective federal income tax
returns. If Seller and Buyer agree on a Purchase Price allocation, then neither
Seller nor Buyer shall file any Return taking a position inconsistent with such
allocation.
5.4 BUSINESS EMPLOYEES
(a) As of the Closing Date, Buyer shall make offers of employment to all
Business Employees listed on SCHEDULE 3.9(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). Seller shall
cooperate in facilitating the performance of Buyer's obligation to make such
offers. Business Employees who accept Buyer's offer of employment, as of the
effective date of their employment with Buyer, shall be referred to as
"TRANSFERRED EMPLOYEES".
(b) As of the Closing Date, Buyer shall provide Transferred Employees,
until at least December 31, 2001, a total compensation package of salary and
benefits that, in the aggregate, are substantially similar to that offered by
Seller or its applicable Subsidiary immediately prior to the Closing Date.
Except as otherwise agreed to in this Section 5.4, Buyer shall be under no
obligation to establish any pension plan or any retiree medical, dental, or life
insurance plans for Business Employees. Except as expressly set forth in this
Section 5.4, Seller or its designated Affiliates shall retain or reimburse Buyer
for all liabilities and obligations with respect to benefits accrued under all
benefit plans or arrangements maintained, administered, or contributed to by
Seller or its Affiliates, including any such plans or arrangements applicable to
Business Employees, employees, or former employees (including any beneficiary
thereof). Except as expressly set forth in this Section
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5.4, no assets of any benefit plan or arrangement maintained, administered, or
contributed to by Seller or any Affiliate thereof shall be transferred to Buyer
or any Affiliate thereof. Buyer's benefit plans and policies, including
vacation, retirement, severance and welfare plans, shall recognize (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 benefits accrued under any defined
benefit plan not described in Section 5.4(g)), 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 will continue
to provide relocation assistance to those Transferred Employees receiving it as
of the Closing Date and tuition assistance to those Transferred Employees who
are receiving such benefits as of the Closing Date for the current academic
session. Buyer will honor the terms and conditions of Seller's international
assignee program, including, without limitation, 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, except that these costs shall be allocated between Buyer and
Seller based on the portion of the international assignment occurring before the
Closing Date (which shall be Seller's obligation) and on or after the Closing
Date (which shall be Buyer's obligation). Until at least December 31, 2001,
Buyer shall provide severance benefits to Nonrepresented Transferred Employees
in the United States equivalent to the benefits, if any, that would have been
paid to such Transferred Employees under the terms of the Lucent Management
Separation Plan in effect as of the Closing Date had such employees continued to
participate in such plan.
(c) Employment with Buyer of Transferred Employees shall be effective as
of the Business 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.
(d) Buyer agrees that its health and welfare plans shall waive any
pre-existing condition exclusion (to the extent such exclusion was waived under
applicable health and welfare plans offered to the Transferred Employees by the
Seller or any Subsidiary) and any proof of insurability. Seller agrees to
transfer the cafeteria plan accounts and experience of Transferred Employees to
substantially equivalent plans that exist or will be established by Buyer to the
extent permitted by applicable plan terms and applicable law.
(e) (i) As soon as possible after the Closing Date, Buyer shall cause
one or more defined contribution savings plans intended to qualify under
sections 401(a) and 401(k)
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of the Code (the "BUYER NONREPRESENTED SAVINGS PLAN") to provide for the receipt
of Nonrepresented Transferred Employees' lump sum cash distributions, in the
form of an eligible rollover distribution, which includes outstanding
participant loans, from the Lucent Savings Plan, provided such rollovers are
made at the election of the Nonrepresented Transferred Employees and in
accordance with the terms of the Buyer Nonrepresented Savings Plan. Seller shall
cause the Lucent Savings Plan to permit the Nonrepresented Transferred Employees
to elect a lump sum cash distribution of benefits accrued through the Closing
Date in accordance with the Code.
(ii) As soon as possible following the Closing Date, but in no event
later than 120 days after the Closing Date, Buyer shall cause one or more
defined contribution savings plans intended to qualify under sections 401(a) and
40l(k) of the Code (the "BUYER REPRESENTED SAVINGS PLAN") to provide, for two
years after the Closing Date, an election to retain Lucent common stock or Avaya
Inc. common stock held in the Lucent Stock Fund, Avaya Stock Fund or Employer
Shares Fund within the Lucent Technologies Inc. Long Term Savings and Security
Plan ("LTSSP"). Upon the receipt by Seller of written evidence of (i) the
adoption of the Buyer Represented Savings Plan by Buyer, (ii) the creation of
the trust thereunder, (iii) the submission by Buyer of the Buyer Represented
Savings Plan to the Internal Revenue Service for a favorable determination
letter, and (iv) an opinion of Buyer's counsel satisfactory to Seller,
substantially as set forth in Exhibit H, to the effect that the terms of Buyer
Represented Savings Plan meet the applicable requirements of sections 401(a) and
(k) of the Code, Seller shall direct the trustee of the LTSSP to transfer to the
trust under the Buyer Represented Savings Plan liability for the account balance
of each participant in the LTSSP who is a Represented Transferred Employee (the
"TRANSFERRED SAVINGS PLAN PARTICIPANTS"), together with cash, cash equivalents
or other mutually acceptable property, the value of which on such transfer date
is equal to the liability. Upon completion of the transfer described herein,
Seller and the LTSSP shall be relieved of all liabilities for the payment of the
account balances of the Transferred Savings Plan Participants transferred to the
Buyer Represented Savings Plan. Buyer and Seller shall cooperate in the filing
of any IRS Forms 5310 required by the transfer of assets and liabilities
described herein, and anything contained herein to the contrary notwithstanding,
the transfer of assets and liabilities described herein shall not take place
until the 31st day following the filing of all required Forms 5310.
(f) Buyer agrees that effective as of the Closing Date, it will provide to
all Represented Transferred Employees pension plans and post retirement medical,
dental and life insurance plans in accordance with Section 5.4(m). Such pension
plan shall, as of the Closing Date and through the Second Transfer Date (as
defined in Section 5.4(g)), protect benefit rights and features as required by
the regulations promulgated under Section 411(d)(6) of the Code provided under
the Lucent Occupational Plan referred to in Section 5.4(g). Seller shall remain
responsible for any benefits payable under a Benefit Plan with respect to claims
incurred by Business Employees prior to the Closing Date except to the extent
that the liability for such benefits has been transferred to and assumed by
Buyer and
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the Buyer's plans in accordance with this Section 5.4. The medical and dental
plans maintained by Buyer shall recognize as dependents of the Transferred
Employees any Class 2 dependents recognized by Seller.
(g) In connection with the performance of its obligations under Section
5.4(f), Buyer shall, on or prior to a date (the "FIRST TRANSFER DATE") to be
mutually agreed by Buyer and Seller but in no event more than 30 days after the
Closing Date, establish or amend a defined benefit pension plan ("BUYER'S
PENSION PLAN"), with a trust thereunder (the "REPRESENTED TRUST"), for the
purpose of holding the pension plan liabilities and assets attributable to
Represented Transferred Employees as described herein. On the First Transfer
Date, Seller will transfer or cause to be transferred from the trust under the
Lucent Technologies Inc. Pension Plan (the "LUCENT OCCUPATIONAL PLAN") to the
Represented Trust cash or, to the extent agreed by the parties, marketable
securities in an amount equal to 90% of the estimated Pension Transfer Amount
for the Represented Transferred Employees, which obligation and associated
liability shall be assumed by the Buyer Pension Plan and Represented Trust, plus
interest on the amounts transferred from the Closing Date through the First
Transfer Date at a rate equal to 8% per annum. As of the date six months after
the First Transfer Date or such later date as may be agreed to by the parties
(the "SECOND TRANSFER DATE"), Seller shall transfer or cause to be transferred
from the trust under the Lucent Occupational Plan to the Represented Trust cash
or, to the extent agreed by the parties, marketable securities in an amount
equal to remaining balance of the Pension Transfer Amount, plus interest on the
amounts transferred from the Closing Date through the Second Transfer Date at a
rate equal to 8% per annum. The amount to be transferred as of the Second
Transfer Date shall be reduced by the aggregate amount of any pension benefit
payments made by the Lucent Occupational Plan on behalf of the Buyer Pension
Plan prior to the Second Transfer Date. In the event an amount to be transferred
on the Second Transfer Date is a negative amount, then Buyer shall transfer or
cause to be transferred from the Represented Trust back to the trust under the
Lucent Occupational Plan such amount in cash. Subject to the completion of the
foregoing asset transfers, as of the Closing Date, all of the obligations and
associated liabilities of the Lucent Occupational Plan relating to the
Represented Transferred Employees shall be assumed in full by the Represented
Trust and the Buyer Pension Plan.
(h) For purposes of this Section 5.4, "PENSION TRANSFER AMOUNT" shall mean
the greater of (A) and (B), where (A) shall be the minimum required transfer
amount determined in accordance with the terms of Seller's pension plans and the
requirements of Section 414(1) of the Code, utilizing the "safe harbor" rates
and assumptions set forth in the regulations promulgated under Section 4044 of
ERISA as of the Closing Date, except that the termination and retirement rate
assumptions utilized for purposes of this Section 5.4(h) shall be the
assumptions used by Seller to determine the funding requirements for the 2000
plan year and that no expense load, including any loading charge determined
under the Loading Assumptions set forth in Appendix C to Part 4044 of the PBGC
Regulations, shall be charged, and (B) shall be the sum of (I) and (II) less
(III), where (I) is the accumulated benefit
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obligation under FAS 87 as of the Closing Date with respect to Represented
Transferred Employees, (II) is the accumulated postretirement benefit obligation
for post-retirement medical and dental plans under FAS 106 as of the Closing
Date with respect to Represented Transferred Employees, and (III) is the amount
transferred under Section 5.4(i) with respect to the postretirement medical and
dental plans for Represented Transferred Employees. For purposes of the
preceding sentence, such accumulated benefit obligation and accumulated
postretirement benefit obligation shall be determined on the basis of the plan
provisions in effect on the Closing Date and the actuarial methods and
assumptions (based on the terms and conditions of the United States collective
bargaining agreement in effect as of September 30, 2000) utilized for purposes
of Seller's financial disclosures under FAS 87 and 106 for such plans as of
September 30, 2000. For purposes of Sections 5.4(g), (h), and (i), the term
"Transferred Employee" shall include Business Employees as of the date hereof
who terminate employment with the Seller or any Affiliate thereof between the
date of this Agreement and the Closing Date and who are hired by Buyer or an
Affiliate thereof within the first three months after the Closing Date.
(i) Assets of Seller's VEBAs will be transferred to Buyer's VEBAs as
described in this Section 5.4(i).
This Section 5.4(i) shall govern the transfer of assets from the Lucent
Postretirement Health VEBA for occupational employees to a corresponding Buyer
Postretirement Health VEBA, which Buyer shall establish and submit to the IRS
for a favorable ruling as to its tax-exempt status prior to the Second Transfer
Date. On or prior to the Second Transfer Date, Seller shall determine the
aggregate value, as of the Closing Date, of the accumulated postretirement
benefit obligation of each Lucent plan funded by such Lucent Postretirement
Health VEBA, with respect to all Represented Transferred Employees, and shall
transfer or cause to be transferred cash or, to the extent agreed by the
parties, marketable securities in an amount determined as set forth below. Such
amount shall be equal to the fair market value as of the Closing Date of the
assets of the plan funded by such Lucent VEBA multiplied by a fraction, the
numerator of which shall be the accumulated postretirement health benefit
obligation under FAS 106 for Represented Transferred Employees whose
postretirement health benefit is funded by such VEBA, and the denominator of
which shall be the accumulated postretirement health benefit obligation under
FAS 106 for all participants and dependents whose postretirement health benefit
is funded by such VEBA.
This Section 5.4(i) shall govern the transfer of assets from the Lucent
Postretirement Life VEBA to a corresponding Buyer Postretirement Life VEBA,
which Buyer shall establish and submit to the IRS for a favorable ruling as to
its tax-exempt status prior to the Second Transfer Date. On or prior to the
Second Transfer Date, Seller shall determine the aggregate value, as of the
Closing Date, of the accumulated postretirement benefit obligation of the Lucent
plan funded by such Lucent Postretirement Life VEBA, with respect to all
Represented Transferred Employees, and shall transfer or cause to be transferred
cash in an amount determined as set forth below. Such amount shall be equal to
the accumulated
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postretirement benefit obligation under FAS 106 for Represented Transferred
Employees whose postretirement life benefit is funded by such VEBA. Buyer and
Seller shall adopt, and shall use their reasonable best efforts to cause their
insurers to adopt, procedures to implement such asset transfers in a reasonable
and expeditious manner that is consistent with the underlying group life
insurance contracts and applicable legal requirements.
For purposes of this Section 5.4(i), all determinations shall be made as
of the Closing Date, based on the active and inactive census data as of the
Closing Date. For purposes of determining the accumulated postretirement benefit
obligation, the assumptions and methods used by Lucent in determining the
disclosure of accumulated postretirement benefit obligation under FAS 106 as of
September 30, 2000 shall be used. The amounts to be transferred as described
above shall be adjusted by the aggregate amount of any payments made by a Lucent
VEBA in respect of Represented Transferred Employees (and by the aggregate
amount of any payments made by a Buyer VEBA on behalf of the Lucent VEBA) prior
to such transfer, and increased by interest of 8% per annum on such amounts from
the Closing Date through the date of such transfer. Nothing in this Agreement
shall be interpreted to provide that any assets so transferred have reverted to
Seller or Buyer.
(j) Seller, on or prior to the Second Transfer Date, shall notify Buyer in
writing of Seller's determination of the amounts of assets required to be
transferred in accordance with the provisions of Sections 5.4(g), (h), and (i),
shall provide Buyer with a copy of the actuarial reports relating to the
determination of such amounts, together with such related materials as Buyer may
reasonably request, and, in the case of the transfers of pension assets
contemplated by Section 5.4(g) and (h), shall provide Buyer with a written
determination by Seller's actuary that the amounts of assets proposed to be
transferred are not less than the required amounts determined in accordance with
this Agreement.
(k) Buyer shall notify Seller in writing of Buyer's disagreement with any
determination made by Seller pursuant to Section 5.4(j) as soon as practicable
and in any event within 75 days after the date on which the information
specified in Section 5.4(j) is provided to Buyer. If no such notice is given by
Buyer prior to the expiration of the foregoing period, the determinations
contained in Seller's notice to Buyer shall be conclusive and binding upon the
parties. If Buyer gives written notice to Seller prior to the expiration of the
foregoing period setting forth any objections to the determinations made by
Seller, the parties shall attempt in good faith to reach an agreeme