Exhibit 99.1
CONFORMED COPY
ASSET AND STOCK PURCHASE AGREEMENT
by and between
LUCENT TECHNOLOGIES INC.
as Seller
and
THE FURUKAWA ELECTRIC CO., LTD.
as Buyer
dated as of July 24, 2001
TABLE OF CONTENTS Page
1. DEFINITIONS...............................................................2
1.1 Defined Terms.....................................................2
1.2 Additional Defined Terms.........................................12
1.3 Other Definitional and Interpretive Matters......................14
2. PURCHASE AND SALE OF THE BUSINESS........................................15
2.1 Purchase and Sale of Assets......................................15
2.2 Excluded Assets..................................................17
2.3 Purchase Price...................................................18
2.4 Assumed Liabilities..............................................19
2.5 Excluded Liabilities.............................................19
2.6 Further Assurances; Further Conveyances and Assumptions;
Consent of Third Parties.........................................21
2.7 No Licenses......................................................23
2.8 Bulk Sales Law...................................................23
2.9 Transfer Taxes...................................................23
3. REPRESENTATIONS AND WARRANTIES OF SELLER.................................24
3.1 Organization and Qualification...................................24
3.2 Transferred Entities; Selling Subsidiaries.......................24
3.3 Authorization; Binding Effect....................................25
3.4 Non-Contravention; Consents......................................25
3.5 Title to the Purchased Assets; Principal Equipment;
Sufficiency of Assets; Systemic Defects......................... 26
3.6 Permits..........................................................27
3.7 Real Estate......................................................27
3.8 Compliance with Laws; Litigation.................................29
3.9 Business Employees...............................................29
3.10 Contracts........................................................32
3.11 Environmental Matters............................................33
3.12 Financial Statement; Absence of Changes..........................34
3.13 Intellectual Property............................................35
3.14 Certain Business Practices.......................................36
3.15 Customers and Suppliers..........................................36
3.16 Product Warranties...............................................37
3.17 Affiliated Transactions..........................................37
3.18 Insurance........................................................37
3.19 Product Recalls..................................................37
3.20 Inventory........................................................37
3.21 Brokers..........................................................38
3.22 Certain Tax Matters..............................................38
3.23 Designated Transferred Subsidiaries..............................39
3.24 No Other Representations or Warranties...........................39
4. REPRESENTATIONS AND WARRANTIES OF BUYER..................................40
4.1 Organization and Qualification...................................40
4.2 Authorization; Binding Effect....................................40
4.3 Non-Contravention; Consents......................................40
4.4 Brokers..........................................................41
4.5 No Inducement or Reliance; Independent Assessment................41
4.6 Sufficiency of Funds.............................................42
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5. CERTAIN COVENANTS........................................................42
5.1 Access and Information...........................................42
5.2 Conduct of Business..............................................43
5.3 Buyer Activity on and after the Closing Date.....................46
5.4 Tax Reporting and Allocation of Consideration....................47
5.5 Business Employees...............................................48
5.6 Leased Equipment.................................................59
5.7 Reasonable Best Efforts..........................................59
5.8 Permit Transfer..................................................60
5.9 Advice of Changes................................................61
5.10 Third Party Confidentiality Agreements...........................61
5.11 Use of Lucent's Name.............................................61
5.12 Non-Solicitation of Employees....................................62
5.13 No Negotiation or Solicitation...................................62
5.14 Non-Competition..................................................63
5.15 Title Reports and Surveys; Other Real Estate Matters.............64
5.16 Warranty Claims and Recalls......................................68
5.17 Certain Customer Contracts.......................................68
5.18 Collateral Agreements; Selling Subsidiaries......................69
5.19 Recording of Patents.............................................70
6. CONFIDENTIAL NATURE OF INFORMATION.......................................70
6.1 Confidentiality Agreement........................................70
6.2 Seller's Confidential Information................................70
6.3 Proprietary Information Related to the Business..................72
7. CLOSING..................................................................72
7.1 Deliveries by Seller and/or the Selling Subsidiaries.............72
7.2 Deliveries by Buyer..............................................73
7.3 Closing Date.....................................................73
7.4 Contemporaneous Effectiveness....................................73
8. CONDITIONS PRECEDENT TO CLOSING; TRANSFERRED JV INTERESTS................73
8.1 General Conditions...............................................73
8.2 Conditions Precedent to Buyer's Obligations......................74
8.3 Conditions Precedent to Seller's Obligations.....................75
8.4 Effect of Certain Waivers of Closing Conditions..................75
8.5 Transferred JV Interests.........................................76
9. STATUS OF AGREEMENTS.....................................................77
9.1 Survival of Representations and Warranties.......................77
9.2 Tax Indemnification..............................................78
9.3 General Agreement to Indemnify...................................79
9.4 Procedures Relating to Indemnification of Tax Claims.............81
9.5 General Procedures for Indemnification...........................84
10. TAX MATTERS.............................................................85
10.1 Responsibility for Preparation and Filing of Tax
Returns and Amendments...........................................85
10.2 Cooperation......................................................86
10.3 Refunds and Credits..............................................87
10.4 Section 338 Elections............................................87
10.5 Tax Sharing Agreements...........................................87
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11. MISCELLANEOUS PROVISIONS................................................87
11.1 Notices..........................................................87
11.2 Expenses.........................................................89
11.3 Entire Agreement; Modification...................................89
11.4 Assignment; Binding Effect; Severability.........................89
11.5 Governing Law....................................................89
11.6 Consent to Jurisdiction..........................................90
11.7 Waiver of Jury Trial.............................................90
11.8 Execution in Counterparts........................................90
11.9 Public Announcement..............................................90
11.10 No Third-Party Beneficiaries.....................................91
12. TERMINATION AND WAIVER..................................................91
12.1 Termination......................................................91
12.2 Effect of Termination............................................92
12.3 Waiver of Agreement..............................................92
12.4 Amendment of Agreement...........................................92
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SCHEDULES
Schedule 1.1 Seller's Knowledge
Schedule 1.3 Buyer Permitted Assignees
Schedule 2.1(h) Licenses
Schedule 2.1(j) Governmental Permits
Schedule 2.1(k) Transferred Subsidiary Shares
Schedule 2.1(l) Transferred JV Interests
Schedule 2.2(f) Excluded Contracts
Schedule 3.2(a) Transferred Entities; Selling Subsidiaries
Schedule 3.2(b) Non-Business Activities
Schedule 3.4(b) Seller Required Consents
Schedule 3.5(a) Title to the Purchased Assets
Schedule 3.7(a) Leased Real Property; Assumed Leases; Subleases
Schedule 3.7(b) Owned Real Property; Transferred Real Property; Lease
Agreements
Schedule 3.7(c) Leases; Subleases; License Agreements
Schedule 3.7(d) Facilities
Schedule 3.8(a) Compliance with Laws
Schedule 3.8(b) Litigation
Schedule 3.9(a) Employees
Schedule 3.9(b) Benefit Plans
Schedule 3.10 Material Contracts
Schedule 3.11 Environmental Matters
Schedule 3.12(a) Financial Statements
Schedule 3.12(c) Excluded JV Financial Statements
Schedule 3.12(d) Exceptions to Absence of Changes
Schedule 3.13(b) Intellectual Property Litigation
Schedule 3.13(c) Infringement Notices and Claims
Schedule 3.15 Customers and Suppliers
Schedule 3.16 Product Warranties
Schedule 3.17 Affiliate Contracts
Schedule 3.18 Insurance Policies
Schedule 3.19 Product Recalls
Schedule 3.20 Inventory
Schedule 3.22(e) Transferred Entities not Corporations for U.S. Tax Purposes
Schedule 3.22(f) Notices of Assessment
Schedule 3.22(h) Transferred Entities Members of Affiliated Group
Schedule 4.3(b) Buyer Required Consents
Schedule 5.2 Exceptions to Seller's Conduct of the Business
Schedule 5.2(s) Capital Expenditures
Schedule 5.4(c) Allocation of Purchase Price
Schedule 5.5(l)(i) Collective Bargaining Agreements and Labor Agreements
Schedule 5.5(l)(ii) Assumed Employment Agreements
Schedule 5.5(q) Agreements with Transferred Employees
Schedule 5.5(u) Form of Human Resources Schedules to the Transition
Services Agreement
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Schedule 5.14 Certain Retained Interests
Schedule 5.17(a) Continuing Contracts
Schedule 8.5 Transferred JV Interests Valuation Allocation
EXHIBITS
Exhibit A Supply Agreement Term Sheet
Exhibit B Form of Development Project Agreement
Exhibit C-1 Form of Patent Assignment
Exhibit C-2 Form of Intellectual Property Agreement
Exhibit C-3 Form of Trade Dress Assignment
Exhibit C-4 Form of Trademark Assignment
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Sublease
Exhibit F Form of Lease Agreement
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ASSET AND STOCK PURCHASE AGREEMENT
This ASSET AND STOCK PURCHASE AGREEMENT ("Agreement") is made as of
July 24, 2001, by and between LUCENT TECHNOLOGIES INC., a Delaware
corporation, having an office at ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Seller" or "Lucent"), and THE FURUKAWA ELECTRIC CO., LTD.,
a corporation organized under the laws of Japan ("Buyer").
R E C I T A L S
A. WHEREAS, Seller and the Selling Subsidiaries (directly and
through the Transferred Entities and the Excluded JV Entities) are, among
other things, engaged through Seller's Optical Fiber Solutions Group (referred
to herein as "OFS") in the worldwide design, manufacturing, marketing, sales
and distribution of fiber optic communications system components consisting of
premium and commodity optical fiber, fiber optic cable, specialty fiber
devices and fiber optic apparatus and premises equipment, and provide design,
engineering, installation and technical support related to such products (such
business of OFS as conducted by Seller and the Selling Subsidiaries as of the
date hereof and as contemplated to be conducted, with such additions or
changes thereto as shall occur after the date hereof and prior to the Closing
Date in accordance with this Agreement, is referred herein collectively as the
"Business");
B. WHEREAS, the Business is composed of certain assets and
liabilities that are currently part of, owned by or licensed to Seller and the
Selling Subsidiaries;
C. WHEREAS, Seller desires to sell, transfer and assign, or cause
the Selling Subsidiaries to sell, transfer and assign, to Buyer (and/or to
Buyer's assignees, designees or nominees), and Buyer desires to purchase (or
to cause its Affiliates, Subsidiaries, assignees, designees or nominees to
purchase) from Seller and the Selling Subsidiaries, the Purchased Assets,
including the capital stock of the Transferred Subsidiaries and the equity
interests in the Business Joint Ventures, and Buyer is willing to assume (or
to cause its Affiliates, Subsidiaries, assignees, designees or nominees to
assume) the Assumed Liabilities, in each case as more fully described and upon
the terms and subject to the conditions set forth herein;
D. WHEREAS, Seller and/or one or more of the Selling Subsidiaries
and Buyer (and/or its Affiliates, Subsidiaries, assignees, designees or
nominees) desire to enter into each Assignment and ▇▇▇▇ of Sale, each
Assumption Agreement, the Supply Agreement, the Development Project Agreement,
the Intellectual Property Agreement, the Patent Assignment, the Trade Dress
Assignment, the Trademark Assignment, the Transition Services Agreement, each
Lease Assignment, each Lease Agreement, each Sublease and each Real Estate
Deed (each such agreement and any other agreement or instrument entered into
on or prior to the Closing Date pursuant to the provisions of this Agreement
are hereinafter referred to collectively as the "Collateral Agreements");
E. WHEREAS, the parties hereto acknowledge that, subject to the
restrictions set forth in Section 1.3, as of or prior to the Closing, Buyer
intends to assign its rights and, subject to Buyer's remaining obligated with
respect thereto as provided for herein, its obligations
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hereunder with respect to (1) the premium and commodity optical fiber portion
of the Business (the "Fiber Business") to an entity of which it will be a
partial owner (such entity, the "Fiber JV"), (2) the optical fiber cable
portion of the Business (the "Cable Business") to an entity of which it will
be a partial owner (such entity, the "Cable JV"), (3) the specialty fiber
devices portion of the Business (the "Specialty Business") to an entity of
which it will be, directly or indirectly, the sole owner and (4) the fiber
optic apparatus and premises equipment portion of the Business (the "Apparatus
Business") to a third party or an entity of which it or a third party will be
the sole or partial owner; and
F. WHEREAS, CommScope, Inc., a Delaware corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("CommScope"), Buyer and Seller are parties to an agreement (the
"Financing Agreement") pursuant to which CommScope has agreed with Buyer and
Seller to use its best efforts to obtain financing to become a partial owner
of the Fiber JV and the Cable JV.
NOW, THEREFORE, in consideration of and based on these
premises, the mutual agreements, covenants, representations and warranties
contained herein and in the Collateral Agreements, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and subject to the terms and conditions hereinafter set forth, and intending
to be legally bound hereby, the parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 DEFINED TERMS
For the purposes of this Agreement, in addition to the words and
phrases that are described throughout the body of this Agreement, the
following terms shall have the following meanings:
"Action" means any action, claim, counterclaim, demand, petition,
litigation, accounting, reckoning, suit, arbitration, inquiry, investigation
or other proceeding of any nature (whether criminal, civil, legislative,
administrative, regulatory, prosecutorial or otherwise) by or before any
arbitrator or Governmental Body or similar Person or body.
"Affiliate" of any Person means any Person that controls, is
controlled by, or is under common control with such Person. As used herein,
the term "control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities or other interests, by
contract or otherwise.
"Assignment and ▇▇▇▇ of Sale" means each assignment and ▇▇▇▇ of sale
in customary form as reasonably agreed by Buyer and Seller prior to Closing.
"Assumed Leases" means the leases to be assigned by Seller or a
Selling Subsidiary, and assumed by Buyer, pursuant to a Lease Assignment and
identified on Schedule 3.7(a).
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"Assumption Agreement" means each assumption agreement in customary
form as reasonably agreed by Buyer and Seller prior to Closing.
"Benefit Plan" means each Pension Plan, Welfare Plan and employment,
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock option, stock purchase, phantom stock, performance,
retirement, thrift, savings, stock bonus, excess benefit, supplemental
unemployment, paid time off, perquisite, fringe benefit, vacation, sick leave,
severance, disability, death benefit, hospitalization, medical, dental, life
insurance, welfare benefit or other plan, program or arrangement (whether
written or unwritten), in each case maintained or contributed to, or required
to be maintained or contributed to, by Seller or any of the Selling
Subsidiaries or Transferred Subsidiaries or Subsidiaries of Transferred
Subsidiaries for the benefit of any present or former directors, officers or
employees of Seller or any of the Selling Subsidiaries or Transferred
Subsidiaries or Subsidiaries of Transferred Subsidiaries.
"Business Day" means a day that is not a Saturday, a Sunday or a day
on which banks in the City of New York are authorized or required by Law to
remain closed.
"Business Employees" means the employees of Seller or the Selling
Subsidiaries employed in the Business.
"Business Records" means all books, records (including software
records), ledgers and files or other similar information (in any form or
medium) Related to the Business, including price lists, customer lists, vendor
lists, correspondence, mailing lists, warranty information, catalogs, sales
promotion literature, sales records, invoices, credit records, advertising
materials, brochures, records of operation, standard forms of documents,
manuals of operations or business procedures, photographs, production data,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, research and development files and materials
(to the extent assigned to Buyer pursuant to the Intellectual Property
Agreement), data and laboratory books, invention disclosures (to the extent
assigned to Buyer pursuant to the Intellectual Property Agreement), media
materials and plates, accounting records, litigation files and product testing
reports, but excluding any such items to the extent (i) they are included in,
or primarily related to, the Excluded Assets or Excluded Liabilities, (ii) any
applicable Law prohibits their transfer or (iii) they are confidential
personnel records.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C.ss.ss.9601 et seq., as
amended.
"Closing" means the closing of the transactions described in Article
7.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Confidential Information" means information not generally known by
lawful means outside the business of the Person possessing such information,
including trade secrets, unpublished patent applications and internal business
information (including financial, marketing and other information of a kind
not generally disclosed outside the Person or its Affiliates).
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"Confidentiality Agreement" means the agreement between Seller and
Buyer dated February 22, 2001.
"Contracts" means all contracts, agreements, leases, subleases,
supply contracts, purchase orders, sales orders and arrangements, commitments,
understandings and other instruments Related to the Business, currently in
effect or entered into by Seller, a Selling Subsidiary or a Transferred Entity
between the date hereof and the Closing Date and in effect as of the Closing
Date, but the term "Contracts" shall exclude the Excluded Contracts,
Employment Agreements, Collective Bargaining Agreements, Licenses and
Nonassigned Licenses.
"Debt" means, with respect to any Person, at any particular date,
(a) all indebtedness of such Person for borrowed money, for the deferred
purchase price of property or services, vendor financing arrangement or
similar credit facilities provided by vendors or other Persons having a
commercial relationship with such Person, (b) the face amount of all letters
of credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder and (c) lease obligations of such Person which, in
accordance with GAAP, should be capitalized.
"Designated Transferred Subsidiaries" means Lucent Technologies
Optical Specialty Fibers Inc. and Lucent Technologies Optical Fiber Solutions
Inc.
"Development Project Agreement" means the agreement in substantially
the form set forth as Exhibit B.
"Employees" means the Business Employees and the Transferred
Subsidiary Employees.
"Employment Agreement" means a contract, offer letter or agreement
of Seller, any of the Selling Subsidiaries or any of the Transferred Entities
with or addressed to any Business Employee or Transferred Subsidiary Employee
pursuant to which Seller, any of the Selling Subsidiaries or any of the
Transferred Entities has any actual or contingent obligation to provide
compensation and/or benefits in consideration for past, present or future
services.
"Encumbrance" means any mortgage, pledge, easement, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
charge or other security interest or matter affecting title, preemptive right,
existing or claimed right of first refusal, right of first offer, right of
consent, put right, default, covenant or similar right or restriction or other
adverse claim of any kind or nature whatsoever (including any conditional sale
or other title retention agreement and any financing lease having
substantially the same economic effect as any of the foregoing or other
similar restriction or Third-Party right).
"Environmental Law" means any foreign, U.S. federal, state, county
or local 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 under CERCLA or any other similar
foreign, U.S. federal, state, county or local Law, in each case as in effect
from time to time 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 or, with respect to Excluded Liabilities, as may be
4
or become effective and applicable to those conditions or circumstances giving
rise to those liabilities, whether on, prior to, or after the Closing Date.
"Environmental Liabilities and Costs" means any and all
liabilities and obligations and associated costs and expenses (including all
fees, disbursements and expenses of counsel, experts and consultants)
resulting from or arising out of, related to or incurred or suffered in
connection with (i) the presence, generation, use, processing, storage,
handling, transportation, treatment, disposal, removal or remediation of any
Hazardous Substance on, at, under or migrating from any Owned Real Property or
Leased Real Property on or prior to the Closing Date, (ii) any Environmental
Law, including any violation thereof or obligation to comply therewith, in
each such case, even though any such liability, cost or expense may be imposed
or incurred as a condition of a Governmental Permit or (iii) any facts,
matters, conditions, events or circumstances described in Schedule 3.11 or on
the reports referenced in Schedule 3.11.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means each business or entity which is a member of
a "controlled group of corporations" under "common control" or an "affiliated
service group" with Seller within the meaning of Sections 414(b), (c) or (m)
of the Code, or required to be aggregated with Seller under Section 414(o) of
the Code, or is under "common control" with Seller, within the meaning of
Section 4001(a)(14) of ERISA.
"Excluded Contracts" means (i) those contracts, agreements,
arrangements, commitments, understandings and other instruments identified in
Schedule 2.2(f) and (ii) those contracts, agreements, arrangements,
commitments, understandings and other instruments that primarily relate to
Excluded Assets or Excluded Liabilities.
"Excluded JV Entities" means (i) Beijing Lucent Optical Cable Co.,
Ltd. and (ii) Shanghai Lucent Optical Fiber Co., Ltd., each a Chinese foreign
equity joint venture company with limited liability incorporated and existing
under the laws of the People's Republic of China and each a Subsidiary of
Seller engaged in the operation and conduct of the Business.
"Excluded Taxes" means any liability, obligation or commitment,
whether or not accrued, assessed or currently due and payable, (i) for any
Taxes relating to the Business or the Purchased Assets for any Pre-Closing Tax
Period, (ii) for any Taxes of or imposed on any of the Transferred Entities,
or for which any of the Transferred Entities is liable, for any Pre-Closing
Tax Period, (iii) as a result of Treasury Regulation ss.1.1502-6(a) or any
similar provision of state, local or foreign law for Taxes of Seller or any
other corporation which has been affiliated with Seller at any time (other
than the Transferred Entities) or for Taxes of any corporation (other than the
Transferred Entities) which was affiliated with any of the Transferred
Entities at any time prior to the Closing, (iv) for any Taxes imposed as a
consequence of a transfer pursuant to the last sentence of Section 2.6(b) or
relating to an asset or liability described in Section 2.6(b)(i), (v) for any
Taxes attributable to any internal restructuring of Seller, any Affiliate of
Seller or any of their respective assets or liabilities, and any Taxes
relating to any asset or liability transferred from any Transferred Entity on
or prior to the Closing Date, (vi) for any
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Taxes imposed on Seller or any Affiliate of Seller on gain or income resulting
from the triggering into income of deferred intercompany transactions under
Treasury Regulation ss.1.1502-13 (or similar provision of state, local or
foreign law) or excess loss accounts under Treasury Regulation ss.1.1502-19
(or comparable provision of state, local or foreign law) that occurs as a
result of the transactions contemplated by this Agreement, (vii) for any Taxes
resulting from the direct or indirect transfer of cash, notes or other assets
from Lucent Technologies Denmark Holdings ApS, Lucent Technologies Lycom ApS
or Lucent Technologies Denmark I/S to Seller or any of Seller's Affiliates and
any Taxes arising from or relating to such cash, notes or other assets so
transferred, (viii) for any Taxes of Seller or any Affiliate of Seller (other
than the Transferred Entities) and any Taxes of the affiliated group of
corporations filing consolidated returns for federal income Tax purposes of
which Seller is the common parent and any Taxes of any other affiliated,
consolidated, combined or unitary group of which Seller is the common parent
for Tax purposes and (ix) for any Taxes arising from or relating to any
Excluded Assets or Excluded Liabilities.
"Final Determination" means any final determination of liability in
respect of a Tax that, under applicable Law, is not subject to further appeal,
review or modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the filing of claims
for refunds, amended returns or appeals from adverse determinations).
"Fixtures and Supplies" means all furniture, furnishings and other
tangible personal property owned by Seller or a Selling Subsidiary and Related
to the Business or a Transferred Entity, including desks, tables, chairs, file
cabinets and other storage devices and office supplies, but excluding any such
items that primarily relate to Excluded Assets or Excluded Liabilities.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Body" means any nation or government, any state or
other political subdivision thereof, any legislative, executive or judicial
unit or instrumentality of any governmental entity (foreign, U.S. federal,
state or local) or any department, commission, board, agency, bureau, official
or other regulatory, administrative or judicial authority thereof, or any
entity (including a court or self-regulatory organization) exercising
executive, legislative, judicial, Tax, regulatory or administrative functions
of or pertaining to government.
"Governmental Permits" means all permits and licenses, certificates
of inspection, approvals, consents, waivers, concessions, exemptions, orders,
registrations, notices or other authorizations issued to, or required to be
obtained or maintained by, Seller, a Selling Subsidiary or a Transferred
Entity by a Governmental Body with respect to the Business, the Assumed Leases
or the Premises and necessary for the operation of the Business as currently
conducted under applicable Laws, including any amendment, modification,
limitation, condition or renewal thereof.
"Hazardous Substance" means (i) any regulated, hazardous, toxic or
dangerous waste, emission, substance or material (including gases, liquids and
solids) defined as such in (or for the purposes of) any Environmental Law,
including Environmental Laws relating to or
6
imposing liability or standards or conduct concerning any regulated,
hazardous, toxic or dangerous waste, emission, substance or material in effect
on the Closing Date, (ii) asbestos or polychlorinated biphenyls and (iii) any
other chemical, material or substance, exposure to or emission of which is
prohibited, limited or regulated by any Governmental Body pursuant to any
Environmental Law or any health and safety or similar Law and which poses or
could reasonably be expected to pose a hazard to the health and safety of any
person or property including workers at or users of any properties of Seller,
any Selling Subsidiary or any Transferred Entity, or cause damage to the
environment or natural resources.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Independent Accountant" means a nationally recognized independent
public accounting firm that currently does not audit Buyer or Seller, or an
Affiliate of either Buyer or Seller, as shall be agreed upon by Buyer and
Seller.
"Insurance Proceeds" means those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an
insured, in either case, net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid
or held by or for the benefit of such insured.
"Intellectual Property" means the Proprietary Information owned by
Seller or one of the Selling Subsidiaries that is being assigned or licensed
pursuant to the IP Agreements.
"Intellectual Property Agreement" means the agreement in
substantially the form set forth as Exhibit C-2.
"Interim JV Taxes" means Taxes imposed on a Business Joint Venture
(but not any Taxes imposed on any direct or indirect owner of the Business
Joint Venture or for which any such owner is primarily liable) with respect to
a period (or portion thereof) beginning after the Closing Date and ending on
the date of the Subsequent Closing with respect to such Business Joint
Venture.
"Inventory" means all inventory, wherever located, including raw
materials, work in process, recycled materials, finished products,
inventoriable supplies, parts and noncapital spare parts owned by Seller, a
Selling Subsidiary or a Transferred Entity and used or held for use in the
operation or conduct of the Business, and any rights of Seller, a Selling
Subsidiary or a Transferred Entity to the warranties received from suppliers
and any related claims, credits, rights of recovery and setoff with respect to
such Inventory, but excluding any inventory primarily related to Excluded
Assets or Excluded Liabilities.
"IP Agreements" means the Patent Assignment, Intellectual Property
Agreement, Trade Dress Assignment and Trademark Assignment.
"IRS" means the U.S. Internal Revenue Service.
7
"Law" means any law, statute, ordinance, rule, regulation, code,
order, judgment, Tax ruling, injunction or decree of any Governmental Body.
"Lease Agreement" means an agreement in the form contemplated by
Section 5.15 with respect to Owned Real Property designated on Schedule 3.7(b)
as Owned Real Property, a portion of which is to be leased by Seller or a
Selling Subsidiary, as landlord, to Buyer, as tenant.
"Lease Assignment" means each assignment agreement with respect to a
lease designated as a lease to be assigned to Buyer on Schedule 3.7(a) in a
form to be negotiated by Buyer and Seller in good faith prior to Closing
consistent with the substantive provisions of this Agreement.
"Leased Equipment" means all computer hardware and embedded
software, servers, telecommunications equipment, machinery, equipment,
automobiles, trucks and other vehicles, tools, dies, molds, parts and other
similar items leased by Seller or a Selling Subsidiary and Related to the
Business, or a Transferred Entity, but excluding any such items related to
Excluded Assets or Excluded Liabilities.
"Leased Real Property" means the real property that is leased,
subleased, licensed or occupied by Seller, a Selling Subsidiary or a
Transferred Entity as tenant, subtenant or licensee and Related to the
Business, which real property is identified on Schedule 3.7(a).
"Licenses" means all licenses, agreements and other arrangements
identified on Schedule 2.1(h) under which Seller, a Selling Subsidiary or a
Transferred Entity has the right to use any Proprietary Information of a Third
Party to the extent Related to the Business.
"Material Adverse Change" or "Material Adverse Effect" means any
change, effect, event, occurrence or state of facts that is, or is reasonably
expected to be, materially adverse to the business, operations, assets,
liabilities, condition (financial or other) or results of operations of the
Business, taken as a whole, other than any change, effect, occurrence or state
of facts (i) resulting from conditions in the United States or foreign
economies or securities markets in general, (ii) resulting from conditions in
the fiber optic communications system components industry in general and not
specifically relating to the Business, (iii) directly resulting from the
public announcement of the transactions contemplated by this Agreement or (iv)
resulting from Buyer's failure to consent to Seller's request to take an
action prohibited or omit to take any action required by Section 5.2.
"Nonassigned Licenses" means those licenses, agreements or other
arrangements of Seller or any of its Affiliates with respect to patents or any
other Proprietary Information of any Third Party which are not specifically
identified on Schedule 2.1(h).
"Owned Real Property" means the land that is owned by Seller or a
Selling Subsidiary and Related to the Business, or a Transferred Entity, as
identified on Schedule 3.7(b), together with all structures, facilities,
improvements, fixtures, systems, equipment and items of real property owned by
Seller, a Selling Subsidiary and Related to the Business, or a Transferred
8
Entity, and presently or hereafter located thereon, attached or appurtenant
thereto, and all easements, licenses, rights and appurtenances relating to the
foregoing.
"Patent Assignment" means the agreement in substantially the form
set forth as Exhibit C-1.
"Permitted Encumbrances" means (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, (iii)
licenses granted by Seller or an Affiliate in connection with sales of
products in the ordinary course of business, (iv) in the case of the
Transferred JV Interests, any Encumbrances that may be contained in the
applicable joint venture agreement, limited liability company agreement or
other constitutive document of the relevant Business Joint Venture as in
effect on the date hereof and (v) (a) leases and/or tenancies described on
Schedule 3.7(c), (b) easements, covenants, rights-of-way and other matters of
record, (c) any state of facts (other than tenancies and occupancies by third
parties) that would be disclosed by a current, accurate survey or physical
inspection made prior to the Closing, (d) zoning, building and other similar
restrictions and (e) any matters disclosed on Schedule 3.7(b), provided that
none of the items set forth in clauses (b), (c) and (d) above, individually or
in the aggregate, materially impairs or detracts from, or could reasonably be
expected to materially impair or detract from, the continued use, operation,
utility or value of the applicable property in the Business as presently
conducted and provided further that "Permitted Encumbrances" shall in no event
include any mortgage, security interest, deed of trust or other lien (except
as permitted by subparagraph (i) of this definition) securing Debt or any
other liquidated amount, including the Debt described in Schedule 3.5(a), and
any Encumbrances securing such Debt which encumber or affect the Purchased
Assets shall be released and discharged by Seller at or prior to Closing.
"Person" means any individual, corporation, partnership, firm,
association, joint venture, joint stock company, trust, unincorporated
organization or other entity, or any Governmental Body.
"Post-Closing Tax Period" means, with respect to the Purchased
Assets or the Transferred Entities, any Tax period beginning after the Closing
Date and the portion of any Straddle Period beginning after the Closing Date.
"Premises" means, collectively, the Owned Real Property and the
Leased Real Property included in the Purchased Assets pursuant to a Real
Estate Deed, a Lease Agreement, a Sublease or a Lease Assignment.
"Pre-Closing Tax Period" means, with respect to the Purchased Assets
or the Transferred Entities, any Tax period ending on or before the Closing
Date and the portion of any Straddle Period ending on the Closing Date.
9
"Principal Equipment" means computer hardware and (subject to
Section 2.2(c)(iii)) software, servers, machinery, equipment, automobiles,
trucks and other vehicles, tools, dies, molds, parts and other similar items
Related to the Business (including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other
Person), but excluding any Leased Equipment or any such items constituting
Excluded Assets or Excluded Liabilities. Principal Equipment includes rights
to the warranties received from the manufacturers, sellers and distributors of
said items and to any related claims, credits, rights of recovery and setoff
with respect to said items.
"Proprietary Information" means 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, 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.
"Real Estate Deed" means each bargain and sale deed with covenants
against grantor's acts (or the substantive equivalent thereof in the
applicable jurisdiction) with respect to Transferred Real Property.
"Related to the Business" means used, held for use as of the date
hereof or contemplated to be used by Seller, a Selling Subsidiary or a
Transferred Entity primarily in, or arising primarily from, the operation or
conduct of the Business. Any item or matter that primarily relates to the
Excluded Assets or Excluded Liabilities shall not be "Related to the Business"
for purposes of this Agreement.
"Seller's Knowledge" means only the matters that are known by (i)
the senior management of Lucent or (ii) any of the persons set forth on
Schedule 1.1.
"Selling Subsidiary" means each Affiliate of Seller (other than the
Transferred Entities and the Excluded JV Entities) that is engaged in the
operation or conduct of the Business or has title to any asset that is a
Purchased Asset or an obligation that is an Assumed Liability.
"Straddle Period" with respect to any Transferred Entity or
Purchased Asset means any Tax period that, with respect to such Transferred
Entity or Purchased Asset, includes but does not end on the Closing Date.
"Sublease" means each sublease to be entered into by Seller or a
Selling Subsidiary and Buyer and identified on Schedule 3.7(a), each of which
shall be based on the form set forth as Exhibit E and, except with respect to
the premises and term specified on Schedule 3.7(a) and the requirement that
Buyer pay its proportionate share of the rent and other charges payable under
the Third Party Lease to which it relates, shall be subject to modification as
provided in Section 5.15.
"Subsidiary" means, with respect to any Person, a corporation or
other legal entity (i) more than fifty percent (50%) of whose shares or other
securities entitled to vote for election
10
of directors (or other managing authority) is now or hereafter controlled by
such Person either directly or indirectly; or (ii) that does not have
outstanding shares or securities but more than fifty percent (50%) of whose
ownership interest representing the right to manage such corporation or other
legal entity is now or hereafter owned and controlled by such Person either
directly or indirectly; but any such corporation or other legal entity shall
be deemed to be a Subsidiary of such Person only as long as such control or
ownership and control exists.
"Supply Agreement" means the agreement contemplated by the term
sheet attached as Exhibit A.
"Tax Return" means any return, report, information return or other
statement or document (including any schedule or attachment thereto any
amendment thereof) filed or required to be filed with any federal, state,
local or non-U.S. taxing authority in connection with the determination,
assessment, collection, administration or imposition of any Tax.
"Taxes" means all taxes of any kind, and all charges, fees, customs,
levies, duties, imposts, required deposits or other assessments, including all
net income, capital gains, gross income, gross receipt, property, franchise,
sales, use, excise, withholding, payroll, employment, social security,
worker's compensation, unemployment, occupation, capital stock, ad valorem,
value added, transfer, gains, profits, net worth, asset, transaction, and
other taxes, and any interest, penalties or additions to tax with respect
thereto, imposed upon any Person by any taxing authority or other Governmental
Body under applicable Law, and shall include any liability for any of the
foregoing arising under Treasury Regulation ss.1.1502-6 (or any analogous
provision of state, local or non-U.S. law) or as a transferee or under an
indemnification or other agreement.
"Third Party" means any Person not an Affiliate of the other
referenced Person or Persons.
"Third-Party Lease" means any lease, sublease, license or occupancy
agreement for any of the Leased Real Property under which Seller, a Selling
Subsidiary or a Transferred Entity is the tenant, subtenant, licensee or
occupant.
"Trade Dress Assignment" means the agreement in
substantially the form set forth as Exhibit C-3.
"Trademark Assignment" means the agreement in substantially the form
set forth as Exhibit C-4.
"Transferred Entities" means the Transferred Subsidiaries, the
Business Joint Ventures, any Subsidiary of any Transferred Subsidiary or
Business Joint Venture and any Person in which any Transferred Subsidiary or
Business Joint Venture has a direct or indirect equity interest of not less
than 19% of the vote or value.
"Transferred Real Property" means Owned Real Property designated as
Owned Real Property to be conveyed to Buyer on Schedule 3.7(b).
11
"Transition Services Agreement" means the agreement in substantially
the form set forth as Exhibit D.
"Transferred Subsidiary Employees" means the employees of the
Transferred Subsidiaries and the Subsidiaries of the Transferred Subsidiaries
employed in the Business.
"Welfare Plan" means each "employee welfare benefit plan" (within
the meaning of Section 3(1) of ERISA).
1.2 ADDITIONAL DEFINED TERMS
For purposes of this Agreement, the following terms shall have the
meanings specified in the Sections indicated below:
Term Section
"AAA"...............................................Section 5.15(f)
"Accepted Retained Contracts".......................Section 5.17(b)
"Acquiror"..........................................Section 5.14(b)
"Apparatus Business"......................................Recital E
"Agreement"................................................Preamble
"Asset Acquisition Statement"........................Section 5.4(b)
"Assumed Leased Equipment"..............................Section 5.6
"Assumed Liabilities"...................................Section 2.4
"Assumed Taxes"......................................Section 9.4(c)
"Balance Sheet".....................................Section 3.12(a)
"Business"................................................Recital A
"Business Joint Venture".............................Section 2.1(l)
"Business Loss"......................................Section 2.3(b)
"Buyer"....................................................Preamble
"Buyer Nonrepresented Pension Plan"..................Section 5.5(f)
"Buyer Pension Plans"................................Section 5.5(f)
"Buyer Represented Pension Plan".....................Section 5.5(f)
"Buyer Represented Savings Plan".................Section 5.5(d)(ii)
"Buyer Required Consents"............................Section 4.3(b)
"Cable Business"..........................................Recital E
"Cable JV"................................................Recital E
"Closing Date"..........................................Section 7.3
"COBRA Coverage".....................................Section 3.9(d)
"Collateral Agreements"...................................Recital D
"Collective Bargaining Agreements"...................Section 3.9(a)
"CommScope"...............................................Recital F
"Continuing Contracts".................................Section 5.17
"Controlling Party"..................................Section 9.4(c)
"Denmark Plan"...................................Section 5.5(o)(ii)
"Denmark Transferred Subsidiary".....................Section 3.9(a)
"Discount Rate"......................................Section 5.5(g)
12
"Excluded Assets".......................................Section 2.2
"Excluded JV Financial Statements".................Section 3.12(c)
"Excluded Leased Equipment".............................Section 5.6
"Excluded Liabilities"..................................Section 2.5
"FFE"...........................................Section 5.15(c)(ii)
"Fiber Business"..........................................Recital E
"Fiber JV"................................................Recital E
"Financial Statements"..............................Section 3.12(a)
"Financing Agreement".....................................Recital F
"Financing Documents"..............................Section 5.15(vi)
"First Pension Transfer Amount"......................Section 5.5(f)
"First Transfer Date"................................Section 5.5(f)
"Immediately Transferred Employees"..................Section 5.5(a)
"Indemnified Party"..................................Section 9.3(a)
"Indemnifying Party".................................Section 9.5(a)
"Initial Start Date" ................................Section 5.5(a)
"Legally Permitted".............................Section 5.5(o)(iii)
"Losses".............................................Section 9.3(a)
"LRIP"...........................................Section 5.5(b)(ii)
"LTSSP"..........................................Section 5.5(d)(ii)
"Lucent"...................................................Preamble
"Lucent Occupational Plan"...........................Section 5.5(f)
"Material Contract"....................................Section 3.10
"Mortgage Lender"...............................Section 5.15(c)(vi)
"Neutrality Agreement"...............................Section 3.9(c)
"Nonassignable Assets"...............................Section 2.6(c)
"Non-Controlling Party"..............................Section 9.4(c)
"Nonrepresented Pension Trust".......................Section 5.5(f)
"Nonrepresented Transferred Employees"...............Section 5.5(a)
"Non-U.S. Plans"..................................Section 5.5(o)(i)
"OFS".....................................................Recital A
"PBGC"...............................................Section 3.9(e)
"Pension Plan".......................................Section 3.9(b)
"Pension Transfer Amount"............................Section 5.5(g)
"Permitted Tax Action"...............................Section 5.2(m)
"Property Taxes"..................................Section 9.2(c)(i)
"Purchase Price".....................................Section 2.3(a)
"Purchased Assets"......................................Section 2.1
"Purchased Leased Equipment"............................Section 5.6
"Real Estate Agreements"............................Section 5.15(f)
"Referee"...........................................Section 5.15(f)
"Represented Pension Trust"..........................Section 5.5(f)
"Represented Transferred Employees"..................Section 5.5(a)
"Retained Contracts"................................Section 5.17(b)
"Retiree Welfare Plans"..............................Section 3.9(d)
"Returning Inactive Business Employee"...............Section 5.5(a)
13
"Second Pension Transfer Amount".....................Section 5.5(f)
"Second Transfer Date"...............................Section 5.5(f)
"Seller"...................................................Preamble
"Seller Required Consents"...........................Section 3.4(b)
"Specialty Business"......................................Recital E
"Start Date".........................................Section 5.5(a)
"Subsequent Closing".................................Section 8.5(a)
"Subsequent Start Date"..............................Section 5.5(a)
"Subsequently Transferred Employee"..................Section 5.5(a)
"Tax Claim"..........................................Section 9.4(a)
"Tax Indemnified Party"..............................Section 9.4(a)
"Tax Indemnifying Party".............................Section 9.4(a)
"Tax Savings Actually Realized"......................Section 9.3(f)
"Third-Party Claim"..................................Section 9.5(a)
"Third Party Confidentiality Agreements"...............Section 5.10
"Transfer Taxes"........................................Section 2.9
"Transferred Denmark Employee".......................Section 5.5(t)
"Transferred Employees"..............................Section 5.5(a)
"Transferred Subsidiary".............................Section 2.1(k)
"Transferred Subsidiary Shares"......................Section 2.1(k)
"Transferred JV Interests"...........................Section 2.1(l)
"VEBAs"..............................................Section 5.5(h)
"waiving party".........................................Section 8.4
1.3 Other Definitional and Interpretive Matters
Unless otherwise expressly provided, for purposes of this Agreement,
the following rules of interpretation shall apply:
Business. The parties acknowledge and agree that the equity
interests in the Excluded JV Entities constitute an Excluded Asset hereunder
and that, except as expressly specified, none of the references in this
Agreement to the "Business" shall be deemed to relate to that portion of the
Business that is conducted by the Excluded JV Entities.
Buyer. For purposes of effecting this Agreement and the Collateral
Agreements and consummating the transactions contemplated hereby and thereby,
the parties acknowledge and agree that the Buyer may substitute one or more of
its Affiliates, Subsidiaries, assignees, designees or nominees, in whole or in
part, in place of itself, for performance to and by Buyer under this Agreement
or the Collateral Agreements substantially as contemplated by Schedule 1.3 or
otherwise with the prior written consent of the Seller (not to be unreasonably
withheld); provided that (i) in the event of such substitution, such
Affiliates, Subsidiaries, assignees, designees or nominees shall be obligated
under the terms hereof and under the terms of the Collateral Agreements, as
the case may be, to the extent of such assignment, designation or nomination
and (ii) Buyer shall remain liable to Seller for all obligations under the
terms hereof and the terms of the Collateral Agreements.
14
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.
Contemplated to Be Conducted. The phrase "contemplated to be
conducted" and the term "contemplated" (when used in reference to OFS, the
Business or the Purchased Assets) shall refer to any and all potential or
contemplated products and projects of the Business that are in documented
stages of development as of the date of this Agreement.
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. Any reference in this
Agreement to any "Section" is 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. To the
extent reasonably apparent on its face, without reference to any collateral
document, disclosure by Seller on any Schedule delivered pursuant to this
Agreement shall be disclosed as to all such Schedules. Notwithstanding the
foregoing, in the event a word or phrase defined in this Agreement is given a
different meaning in any Schedule or Exhibit, such different definition shall
apply only to such Schedule or Exhibit defining such word
or phrase independently, and the meaning given such word or phrase in this
Agreement shall control for purposes of this Agreement, and such alternative
meaning shall have no bearing or effect, on the interpretation of this
Agreement.
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 premises, mutual agreements, covenants and
representations and warranties contained herein and in the Collateral
Agreements, on the Closing Date, Seller shall, and shall cause the Selling
Subsidiaries to, grant, sell, transfer, assign, convey and deliver to Buyer,
and Buyer shall
15
purchase, acquire and accept from Seller or the applicable
Selling Subsidiary, as a going concern, all of the right, title and interest
in, to and under, the assets, properties, interests, titles, estates,
remedies, powers, privileges and rights of every nature, kind and description,
tangible and intangible (including goodwill), whether real, personal or mixed,
whether accrued, contingent or otherwise, wherever located and whether now
existing or hereafter acquired (other than the Excluded Assets) Related to the
Business, as the same shall exist on the date hereof and, without limiting the
foregoing, on the Closing Date (collectively, and together with the same as
owned by the Transferred Entities, the "Purchased Assets"), including all of
the items in the following categories:
(a) the tenant's or subtenant's interest under Assumed Leases,
the Lease Agreements and the Subleases;
(b) the Transferred Real Property;
(c) the Principal Equipment, the Assumed Leased Equipment and
the Purchased Leased Equipment;
(d) the Fixtures and Supplies;
(e) the Inventory;
(f) the Intellectual Property;
(g) the Contracts, provided that Buyer shall have the right,
exercisable by written notice to Seller delivered within 90 days after the
Closing, to terminate any Contracts (other than the Collateral Agreements)
between Seller or any wholly-owned (excluding equity securities beneficially
held by any person in order to qualify such person as an officer or director)
Subsidiary of Seller, on the one hand, and another wholly-owned (excluding
equity securities beneficially held by any person in order to qualify such
person as an officer or director) Subsidiary of Seller, on the other, with any
Contract so terminated being deemed an Excluded Contract;
(h) the Licenses and any rights assigned to Buyer pursuant to
the Intellectual Property Agreement;
(i) the Business Records;
(j) the Governmental Permits and applications therefor that are
identified on Schedule 2.1(j), but only to the extent that such Governmental
Permits and applications are assignable or transferable to Buyer;
(k) all the capital stock of each entity identified on Schedule
2.1(k) (such capital stock being referred to herein as the "Transferred
Subsidiary Shares" and each such entity being referred to herein as a
"Transferred Subsidiary"); and
16
(l) all equity interests held by Seller or any Affiliate of
Seller in the joint ventures identified on Schedule 2.1(l) (such equity
interests being referred to as the "Transferred JV Interests" and each such
joint venture being referred to herein as a "Business Joint Venture").
The Purchased Assets shall be sold, assigned, transferred and delivered free
and clear of all Encumbrances, except for (i) any Encumbrances expressly
assumed pursuant to Section 2.4 and (ii) Permitted Encumbrances.
Notwithstanding anything in this Agreement to the contrary, the sale,
assignment, transfer and delivery of the Purchased Assets owned by a
Transferred Entity shall be made through the sale, transfer or conveyance of
the Transferred Subsidiary Shares or the Transferred JV Interests, as the case
may be, and shall not be separately sold, transferred or conveyed.
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 Selling Subsidiaries is granting, selling,
transferring, assigning, conveying or delivering to Buyer, and Buyer is not
purchasing, acquiring or accepting from Seller or any of the Selling
Subsidiaries, the following (collectively, the "Excluded Assets"):
(a) any receivables, cash, cash equivalents, bank deposits or
similar cash items or employee receivables of Seller or any Affiliate of
Seller (including the Transferred Subsidiaries), other than any receivables,
cash, cash equivalents, bank deposits or similar cash items or employee
receivables of the Designated Transferred Subsidiaries and the Business Joint
Ventures, in each case as of the Closing Date;
(b) any Proprietary Information of Seller or any Affiliate of
Seller, other than the Intellectual Property and any rights assigned to Buyer
pursuant to the Intellectual Property Agreement;
(c) any (i) confidential personnel and medical records
pertaining to any Business Employee; (ii) books and records that Seller or any
Affiliate of Seller is required by Law to retain; provided, however, that
Seller shall, and shall cause such Affiliate to, provide Buyer with copies of
any portions of such retained books and records that relate to the Business or
that relate to any of the Purchased Assets, including the Transferred
Entities; and (iii) information management system of Seller or any of its
Affiliates that is used primarily in the conduct of Seller's or such
Affiliate's businesses other than the Business, and is not contained within
computer hardware included as a Purchased Asset pursuant to Section 2.1;
(d) any claim, right or interest of Seller or any Affiliate of
Seller in or to any refund, rebate, abatement or other recovery for Taxes,
together with any interest due thereon or penalty rebate arising therefrom,
for any Pre-Closing Tax Period (determined in a manner consistent with
Sections 9.2(c) and 10.3);
(e) subject to Section 5.11, all "Lucent Technologies" marked
sales and marketing or packaging materials, marked samples, prototypes, other
similar Lucent Technologies identified sales and marketing or packaging
materials and any marketing studies;
17
(f) the Excluded Contracts, Employment Agreements with Business
Employees not assumed by Buyer pursuant to Section 5.5(l)(ii) and the
Nonassigned Licenses (other than any rights assigned to Buyer pursuant to the
Intellectual Property Agreement);
(g) any and all insurance policies and claims and rights
thereunder and proceeds thereof, except as set forth in Section 2.3(b);
(h) the Excluded Leased Equipment;
(i) except as specifically provided in Section 5.5, all the
assets of the Benefit Plans;
(j) any of Seller's or its Affiliates' rights, claims or causes
of action against Third Parties relating to the assets, properties, business
or operations of Seller or any Selling Subsidiary arising out of transactions
occurring prior to the Closing Date;
(k) the equity interests in the Excluded JV Entities; and
(l) all other assets, properties, interests and rights of
Seller or any Affiliate of Seller not Related to the Business.
2.3 PURCHASE PRICE
(a) In consideration of the sale, transfer, assignment,
conveyance and delivery by Seller and the Selling Subsidiaries of the
Purchased Assets to Buyer, and in addition to assuming the Assumed
Liabilities, Buyer shall pay to Seller at the Closing, Two Billion Five
Hundred Twenty-Five Million U.S. Dollars ($2,525,000,000.00) (subject to the
adjustments contemplated by Section 2.3(b) and Section 8.5, the "Purchase
Price") in cash (subject to the terms of the Financing Agreement) 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) If between the date hereof and the Closing Date there is
any loss, destruction or other physical damage to any real property or
personal property (other than substantially immaterial personal property) to
be included in the Purchased Assets at Closing resulting from a fire, accident
or other casualty, whether or not insured, or any taking of any such real
property by condemnation (collectively, a "Business Loss"), then Seller shall
promptly give notice to Buyer of such Business Loss. The Purchase Price shall
be reduced by an amount equal to a binding estimate to be obtained by Seller
from a qualified construction contractor or other expert reasonably
satisfactory to Buyer of the cost required for such contractor or expert on a
fixed-bid basis to restore such real property or personal property
substantially to its condition prior to such Business Loss or the reasonably
estimated value of Seller's or the Selling Subsidiary's or Transferred
Entity's interest in any condemned real property, less the aggregate amount of
Insurance Proceeds paid over or assigned to Buyer in respect thereof on or
prior to the Closing Date. Seller shall also assign to Buyer at the Closing
the right to any business interruption Insurance Proceeds, if any, received by
Seller or any Selling Subsidiary with respect to such Business Loss applicable
to periods subsequent to the Closing.
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2.4 ASSUMED LIABILITIES
On the Closing Date, Buyer shall execute and deliver to Seller
one or more Assumption Agreements and one or more Lease Assignments, Subleases
or other Collateral Agreements pursuant to which Buyer 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 Selling Subsidiary pursuant to and
under the Assumed Liabilities. "Assumed Liabilities" shall mean only the
following liabilities and obligations with respect to the operations of the
Business prior to the Closing Date (provided, however, that in no event shall
the Assumed Liabilities include any Excluded Liabilities):
(a) all liabilities expressly assumed by Buyer pursuant to
Section 5.5;
(b) the liabilities and obligations (other than liabilities and
obligations on account of breaches and violations that may continue beyond the
Closing Date, including such liabilities and obligations necessary to cure,
resolve or satisfy any Actions relating to such
breaches or violations) arising after the Closing Date under the Assumed
Leases, the Lease Agreements, the Contracts, the Licenses and the Governmental
Permits, except, in each case, for any and all liabilities or obligations
accrued, or that should be or should have been accrued for in accordance with
GAAP, applicable to the period prior to the Closing Date;
(c) any product warranty liabilities relating to, resulting
from or arising out of products sold or consigned after the Closing Date;
(d) the Permitted Encumbrances, and all other Encumbrances,
obligations and liabilities related to the Purchased Assets that are expressly
identified as Assumed Liabilities in this Agreement or the Schedules hereto;
and
(e) the obligations and liabilities incurred by Buyer or any of
its Affiliates or Subsidiaries with respect to the Transferred Employees, the
Business or the Purchased Assets, known or unknown, absolute or contingent,
arising after the Closing Date other than (i) as a result of events or
circumstances occurring or existing on or prior to the Closing Date and (ii)
obligations and liabilities expressly retained by Seller pursuant to Sections
2.5 and 5.5.
Notwithstanding anything in this Agreement to the contrary, but
subject to Article 9, although Buyer is not assuming any liabilities or
obligations of the Business Joint Ventures, the parties acknowledge and agree
that all liabilities and obligations of the Business Joint Ventures, whether
arising prior to or after the Closing Date, shall remain liabilities and
obligations of the Business Joint Ventures following the sale, transfer and
conveyance of the Transferred JV Interests pursuant to this Agreement.
2.5 EXCLUDED LIABILITIES
Notwithstanding the provisions of Section 2.4 or any other
provision hereof or any Schedule or Exhibit hereto, and regardless of any
disclosure to Buyer, Buyer shall not assume or be obligated to pay, perform or
otherwise discharge (and Seller shall retain, pay and
19
perform without recourse whatsoever to Buyer) any liabilities, obligations or
commitments of Seller or any Affiliate of Seller, whether direct or indirect,
known or unknown, absolute or contingent other than the Assumed Liabilities
(all of such liabilities, obligations and commitments not so assumed by Buyer
being referred to herein as the "Excluded Liabilities"), including those
described in the following categories:
(a) any liability or obligation related to Excluded Taxes;
(b) any liabilities and obligations relating to, resulting from
or arising out of the Transferred Subsidiaries and their Subsidiaries on or
prior to the Closing Date;
(c) any liabilities and obligations relating to, resulting from
or arising out of Actions that are either pending as of the Closing Date or
that subsequently arise out of circumstances or events occurring or existing,
in whole or in part, on or prior to the Closing Date, including the Actions
listed or referred to on Schedules 3.8(b), 3.13(b) and 3.13(c);
(d) any liabilities and obligations relating to, resulting from
or arising out of Actions, whether founded upon successor or predecessor
liability, negligence, breach of warranty, strict liability, theories of
design defect or failure to warn and/or other similar legal theories, seeking
compensation or recovery (including punitive and exemplary damages) for or
relating to personal injury or property damage caused or allegedly caused by
or related to any products manufactured on or before the Closing Date (for
purposes of this Section 2.5(d) and Section 2.5(j), products for which it
cannot be determined whether they were manufactured before or after the
Closing Date shall be deemed to have been manufactured and sold before the
Closing Date if the personal injury or property damage occurs on or prior to
the first anniversary of the Closing and shall be deemed to have been
manufactured after the Closing Date if the personal injury or property damage
occurs after the first anniversary of the Closing);
(e) any liabilities and obligations relating to, resulting from
or arising out of workers' compensation claims resulting from injury, disease,
disability or otherwise that occurs on or prior to, or relates to
circumstances that exist before, the Closing Date (for purposes of this
Section 2.5(e), an injury, disease, disability or otherwise, any part of which
occurs on or before the Closing Date, shall be deemed to have occurred before
the Closing Date);
(f) any liabilities and obligations relating to, resulting from
or arising out of any violation of Law (whether known or unknown) occurring or
existing, in whole or in part, on or prior to, the Closing Date;
(g) the Environmental Liabilities and Costs;
(h) any liabilities and obligations relating to the Excluded
Assets or not arising from the Business;
(i) any liabilities and obligations relating to, resulting from
or arising out of claims of infringement or other misappropriation of the
intellectual property rights of other Persons with respect to the design,
testing, manufacture, marketing, use, sale, lease or importation of products
on or prior to the Closing Date;
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(j) all liabilities and obligations under Employment Agreements
with Business Employees not assumed by Buyer pursuant to Section 5.5(l)(ii),
Third-Party Leases, Contracts and Licenses that are not assigned or
transferred to Buyer at the Closing Date pursuant to this Agreement, except to
the extent provided in Section 2.6;
(k) any liabilities and obligations for punitive damages
relating to, resulting from or arising out of events, facts or circumstances
existing or occurring on or prior to the Closing Date;
(l) any liabilities and obligations relating to, resulting from
or arising out of accounts payable to any Person on or prior to the Closing
Date and intercompany or intracompany payables to Seller or any of its
Affiliates;
(m) any liabilities for Debt;
(n) any obligations and liabilities relating to Business
Employees that are not expressly assumed by Buyer pursuant to Section 5.5 or
which are retained by Seller pursuant to Section 5.5;
(o) any product warranty liabilities relating to, resulting
from or arising out of products sold or consigned on or prior to the Closing
Date; and
(p) all other obligations and liabilities with respect to the
Transferred Employees, known or unknown, absolute or contingent, arising out
of facts, activities or events first occurring on or prior to the Closing Date
(except as expressly included in Assumed Liabilities or specified in Section
5.5).
On the Closing Date, Seller shall execute and deliver to Buyer one or more
Assumption Agreements, pursuant to which Seller shall accept, assume and agree
to pay, perform or otherwise discharge, in accordance with their respective
terms and subject to the respect conditions thereof, the liabilities and
obligations of the Transferred Subsidiaries and their Subsidiaries pursuant to
and under the Excluded Liabilities.
2.6 FURTHER ASSURANCES; FURTHER CONVEYANCES AND ASSUMPTIONS;
CONSENT OF THIRD PARTIES
(a) From time to time following the date hereof, Seller hereby
agrees to make available, or to cause its Affiliates to make available, to
Buyer such non-confidential data, and such confidential data subject to
reasonable restrictions, in personnel records of Transferred Employees as is
reasonably necessary for Buyer to enable Buyer to transition such employees
into Buyer's records and otherwise comply with its obligations under Section
5.5 of this Agreement.
(b) From time to time, whether before, at or following the
Closing, Seller shall cooperate with and use its reasonable best efforts to
assist Buyer in identifying the assets and liabilities of the Business
primarily relating to each of the Fiber Business, the Cable Business, the
Specialty Business and the Apparatus Business, respectively. Buyer shall
21
reimburse Seller for all out-of-pocket expenses incurred by Seller in
connection with providing such assistance that are beyond the scope or nature
of the expenses Seller would have otherwise incurred if such separation
activities were not necessary. From time to time, whether before, at or
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 successors or assigns, all of the
properties, rights, titles, interests, estates, remedies, powers and
privileges intended to be conveyed to Buyer under this Agreement and the
Collateral Agreements and to assure fully to Seller and its Affiliates, and
their respective successors and assigns, the assumption of the liabilities and
obligations intended to be assumed by Buyer under this Agreement and the
Collateral Agreements, and to otherwise make effective as promptly as
practicable the transactions contemplated hereby and thereby (including (i)
transferring back to Seller or the applicable Selling Subsidiary any asset or
liability not contemplated by this Agreement to be a Purchased Asset or an
Assumed Liability, respectively, which asset or liability was transferred to
Buyer at the Closing and (ii) transferring to Buyer any asset or liability
contemplated by this Agreement to be a Purchased Asset or an Assumed
Liability, respectively, which asset or liability was not transferred to Buyer
at the Closing).
(c) Nothing in this Agreement or the Collateral Agreements nor
the consummation of the transactions contemplated hereby or thereby shall be
construed as an attempt or agreement to assign any Purchased Asset, including
any Contract, Third-Party Lease, License, Business Record, Governmental
Permit, certificate, approval, authorization or other right, that by its terms
or by Law is not capable of being sold, assigned, licensed, sublicensed,
transferred, delivered or subleased without the consent or waiver of a Third
Party or a Governmental Body or is cancelable, in whole or material part, by
such Person in the event of any such sale, assignment, license, sublicense,
transfer, delivery or sublease ("Nonassignable Assets") unless and until such
consent or waiver shall be given. Seller shall (and shall cause its Affiliates
to) use its reasonable best efforts to obtain such consents and waivers
promptly and resolve the impediments to the sale, assignment, license,
sublicense, transfer, delivery or sublease required by this Agreement or the
Collateral Agreements and obtain any other consents and waivers necessary or
advisable to convey to Buyer any of the Purchased Assets; provided, however,
that neither Seller nor any of its Affiliates shall be required to make any
payment to obtain any such consent or waiver with respect to any Nonassignable
Asset. If Seller and Buyer mutually agree that a payment should be made to
obtain a consent or waiver with respect to any Nonassignable Asset, Seller and
Buyer shall bear the expense of such payment equally. Notwithstanding any
provision of this Agreement to the contrary, to the extent that the consents
and waivers referred to in the preceding sentence are not obtained by Seller,
or until the impediments to the sale, assignment, license, sublicense,
transfer, delivery or sublease referred to therein are resolved, Seller shall
(and shall cause its Affiliates to) (i) provide, at the request of Buyer, to
Buyer the benefits of any Nonassignable Asset, (ii) cooperate in any lawful
arrangement designed to provide such benefits to Buyer, without incurring any
additional financial obligation to Buyer and (iii) enforce, at the request of
and for the account of Buyer, any rights of Seller arising from any such
Nonassignable Asset against any Third Party or Governmental Body, including
the right to elect to terminate in accordance with the terms thereof upon the
advice of Buyer. Buyer shall use its reasonable best efforts to assist and
22
cooperate with Seller in the fulfillment of Seller's obligations under this
Section 2.6(c), provided that Buyer shall not be required by this Section
2.6(c) to enter into any arrangement that would impose any additional cost,
expense or liability or that would deprive Buyer of any benefits or profits.
To the extent that Buyer is provided the benefits of any Nonassignable Asset
(whether from Seller or otherwise), Buyer shall perform, at the direction of
Seller and for the benefit of any Third Party or Governmental Body, the
obligations of Seller thereunder or in connection therewith. Notwithstanding
the foregoing, to the extent that any Assumed Liability relates to any
Nonassignable Asset, such Assumed Liability shall be deemed to be an Excluded
Liability until such time as the Nonassignable Asset is assigned to Buyer, or
until Buyer (but solely to the extent that) obtains the benefit of such
Nonassignable Asset under this Section 2.6(c).
(d) Buyer shall use its reasonable best efforts to assist and
cooperate with Seller to seek to obtain any consent, substitution, approval or
amendment required to novate or assign all obligations under any and all
Contracts or other obligations or liabilities that constitute Assumed
Liabilities or to seek to obtain in writing the unconditional release of
Seller and its Affiliates so that, in any such case where a novation or
assignment is obtained, Buyer and its Affiliates or Subsidiaries shall be
solely responsible for such liabilities and obligations after the Closing
Date.
(e) Seller shall cooperate with Buyer and CommScope and their
respective Affiliates and Subsidiaries to obtain, or cause to be obtained, any
financing needed for Buyer to pay the Purchase Price (in accordance with this
Agreement and the Financing Agreement) and any expenses incurred by Buyer and
CommScope in connection with the transactions contemplated by this Agreement
and the Collateral Agreements.
2.7 NO LICENSES
Unless expressly set forth in the Collateral Agreements, 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. Nothing in this Section 2.7 shall affect any title, right or
license (express or implied) of any kind specific to the Inventory being
transferred to Buyer in accordance with this Agreement.
2.8 Bulk Sales Law
In consideration of Seller's agreement to indemnify Buyer and
other Indemnified Parties of Buyer pursuant to Section 9.3(b)(ii), Buyer
hereby waives compliance by Seller and the Selling Subsidiaries with the
requirements and provisions of any bulk sales or bulk transfer or similar Laws
of any jurisdiction, including Article 6 of the New York Commercial Code, that
may otherwise be applicable with respect to the sale or transfer of any or all
of the Purchased Assets to Buyer.
2.9 Transfer Taxes
Unless otherwise specified in this Agreement or the Collateral
Agreements, Buyer and Seller shall share equally all sales, transfer, value
added (to the extent not creditable) and
23
similar Taxes and all recording and filing fees that may be imposed, assessed
or payable by reason of the sales, transfers, leases, rentals, licenses and
assignments required under this Agreement or the Collateral Agreements
("Transfer Taxes"). Transfer Taxes shall not include Seller's or any of its
Affiliate's net income and capital gains Taxes or franchise or other Taxes
based on Seller's or any of its Affiliate's net income.
3. Representations and Warranties of Seller
Seller, on behalf of itself and the Selling Subsidiaries,
represents and warrants to Buyer as follows:
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 operation or 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,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, assets, liabilities, condition
(financial or other) or results of operations of the Business, taken as a
whole.
3.2 Transferred Entities; Selling Subsidiaries
(a) Schedule 3.2(a) sets forth a list of each Transferred
Entity and each Selling Subsidiary, together (in the case of each Transferred
Entity) with such entity's jurisdiction of organization and authorized and
outstanding capital stock or other equity interests as of the date hereof,
specifying Seller's beneficial ownership percentage therein, with economic and
voting interests specified separately in any instance where such interests
differ. Except as set forth on Schedule 3.2(a), each Selling Subsidiary and
each Transferred 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 as
contemplated to be 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 or contemplated 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,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, assets, liabilities, condition
(financial or other) or results of operations of the Business, taken as a
whole. All the Transferred Subsidiary Shares and all the Transferred JV
Interests are validly issued, fully paid and nonassessable and owned of record
and beneficially by the Seller or the Selling Subsidiary identified on
Schedule 3.2(a), and upon delivery of the Transferred Subsidiary Shares and
the Transferred JV Interests and delivery of the Purchase Price as provided
herein, Buyer will acquire good and valid title thereto, free and clear of any
Encumbrances, other than,
24
in the case of the Transferred JV Interests, any Encumbrances that may be
contained in the applicable joint venture agreement, limited liability company
agreement or other constitutive document of the relevant Business Joint
Venture as in effect on the date hereof, true and correct copies of which have
been provided to Buyer. All outstanding shares of capital stock of each
Subsidiary of each Transferred Entity are validly issued, fully paid and
nonassessable and owned of record and beneficially by the Transferred Entity
identified on Schedule 3.2(a). There are no shares of capital stock or other
equity interests of any of the Transferred Entities outstanding other than as
disclosed on Schedule 3.2(a), and there are no outstanding options, warrants,
rights or other securities requiring the issuance or sale of shares of any
capital stock or other equity interests of any Transferred Entity. Other than
the Excluded JV Entities, the entities listed on Schedule 3.2(a) are the only
Affiliates of Seller that have title to, or use, any Purchased Asset or any
obligation that is an Assumed Liability or are otherwise engaged in the
conduct of the Business, in each case with respect to the Business as
currently conducted.
(b) Except as disclosed on Schedule 3.2(b), none of the
Transferred Entities has engaged in any business or other activity other than
the Business.
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 the execution, delivery and performance of this Agreement and the
Collateral Agreements to which it will be a party have been duly authorized by
all requisite corporate action.
(ii) Each Selling Subsidiary 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
the execution, delivery and performance of the Collateral Agreements to which
it will be a party have been duly authorized 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 or
any Selling Subsidiary will be a party, when duly executed and delivered by
Seller or such Selling Subsidiary, will be, valid and legally binding
obligations of Seller or such Selling Subsidiary, enforceable against Seller
or such Selling Subsidiary, as applicable, in accordance with their respective
terms.
3.4 NON-CONTRAVENTION; CONSENTS
(a) Assuming that all Seller Required Consents have been
obtained or made, the execution, delivery and performance of this Agreement by
Seller, and the Collateral Agreements by Seller or any Selling 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 the charter, by-laws or similar organizational document of
Seller, the applicable Selling Subsidiary or any Transferred Entity; (ii)
violate in any material respect or result in a material breach of or
constitute an occurrence of a material default under any provision of, result
in the acceleration or cancellation of any material obligation under, or give
25
rise to a right by any party to terminate or amend in any material respect its
material 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, the
applicable Selling Subsidiary or any Transferred Entity is a party or by which
it is bound or which is Related to the Business or relates to the Purchased
Assets, or result in the creation of any material Encumbrance upon any of the
Purchased Assets; or (iii) violate in any material respect any material Law of
any Governmental Body having jurisdiction over Seller, the applicable Selling
Subsidiary, any Transferred Entity or the Purchased Assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person is required to be
obtained by Seller or any Affiliate of Seller in connection with the execution
and delivery of this Agreement and the Collateral Agreements to which Seller
or any Selling Subsidiary will be a party or for the sale of the Purchased
Assets and the consummation by Seller or such Selling Subsidiary of the
transactions contemplated hereby or thereby, except for (i) any filings
required to be made under the HSR Act; (ii) any applicable filings required
under foreign antitrust Laws and receipt of consents, approvals or clearances
required thereunder (including the receipt of a decision under Article 6(1)(b)
or 8(2) of Council Regulation No. 4064/89 of the European Community, as
amended, if required), as set forth in Schedule 3.4(b); (iii) consents or
approvals of Third Parties that are required to transfer or assign to Buyer
any material Purchased Asset or assign the benefits of or delegate performance
with regard thereto, as set forth in Schedule 3.4(b) (the items in clauses
(i), (ii) and (iii) being referred to herein as the "Seller Required
Consents") and (iv) such consents, approvals, orders, authorizations,
registrations, declarations or filings the failure of which to be obtained or
made, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, assets,
liabilities, condition (financial or other) or results of operations of the
Business, taken as a whole.
3.5 TITLE TO THE PURCHASED ASSETS; PRINCIPAL EQUIPMENT;
SUFFICIENCY OF ASSETS; SYSTEMIC DEFECTS
(a) Except as set forth in Schedule 3.5(a), Seller, a Selling
Subsidiary or a Transferred Entity has, and at the Closing will have, good and
valid title to, or a valid and binding leasehold interest or license in, the
Purchased Assets free and clear of any Encumbrance except for Permitted
Encumbrances.
(b) Each material item of Principal Equipment and Leased
Equipment is in good working order and operating condition and repair,
reasonable wear and tear excepted, is structurally sound and free of any
material defects, and is suitable and sufficient for the uses for which it is
intended or used.
(c) The Purchased Assets and the Business Employees to be
acquired under this Agreement and the Collateral Agreements (including the
services to be provided pursuant to the Transition Services Agreement),
together with the Excluded Assets, include all assets, personnel and rights
that are employed by Seller, the Selling Subsidiaries and the Transferred
Entities in connection with the Business. Except for the Excluded Assets
specified in Sections 2.2(a), 2.2(b), 2.2(f) and 2.2(h), the Purchased Assets
and the Business Employees to be acquired under this Agreement and the
Collateral Agreements (including the services to be provided
26
pursuant to the Transition Services Agreement) are sufficient to conduct the
Business as currently conducted and as contemplated to be conducted. In the
event of an immaterial breach of this Section 3.5(c) due to Seller's or a
Selling Subsidiary's failure to identify and transfer any immaterial assets or
properties or provide any immaterial services used in the Business, such
breach shall be deemed cured if Seller or the applicable Selling Subsidiary
promptly transfers such properties or assets or provides such services to
Buyer at no additional cost to Buyer and Seller promptly reimburses Buyer for
all losses and out of pocket expenses, if any, incurred by Buyer as a result
of such breach.
(d) The products that are Related to the Business, and are
manufactured, assembled or distributed by Buyer after the Closing with exactly
the same designs, specifications, processes and know-how utilized by the
Business prior to the Closing, will not result in the creation of a product
that contains systemic, latent and extraordinary defects which result in an
adverse determination of a cause of action based upon negligence, strict
liability or misrepresentation as such cause of action relates to such
designs, specifications, processes and know-how.
3.6 PERMITS
Except as set forth on Schedule 2.1(j), there are no material
Governmental Permits necessary for or used by Seller or any Selling Subsidiary
or any Transferred Entity to operate the Business as currently conducted or
contemplated to be conducted. Seller, a Selling Subsidiary or a Transferred
Entity owns, holds or possesses in its own name, all material Governmental
Permits that are required by currently effective Laws and necessary to own or
lease, operate and use to their full installed production capacity the
Purchased Assets and to use or occupy the Premises and to carry on and conduct
the Business and its operations as presently conducted, all material portions
of which are valid and in full force and effect. None of Seller, any Selling
Subsidiary or any Transferred Entity is in violation of or default under any
such Governmental Permits in any material respect. As of the date of this
Agreement, no proceeding is pending or, to Seller's Knowledge, threatened to
revoke or limit any such Governmental Permit. To Seller's Knowledge, there is
no Governmental Permit which will be required to be obtained by or transferred
to Buyer in connection with the operation of the Business or ownership and use
of the Purchased Assets and which will be unavailable or may not be obtained
or transferred, despite Buyer's cooperation (as set forth in Section 2.6(c)),
and except as set forth in Schedule 2.1(j), none of the Governmental Permits
set forth in such Schedule 2.1(j) contains any prohibition, restriction,
condition or limitation materially adversely affecting the current or
contemplated operation of the Business.
3.7 Real Estate
(a) Schedule 3.7(a) contains a complete and accurate list and
description of the Leased Real Property, including (i) the address thereof and
a description of each Third-Party Lease which is an Assumed Lease or the
subject of a Sublease by parties and date, (ii) the approximate number of
square feet demised by each Third-Party Lease, (iii) the approximate number of
square feet Related to the Business, (iv) the use of the Assumed Lease,
Sublease and Business Joint Venture space, (v) any structures, improvements,
fixtures or other real property owned by Seller or a Selling Subsidiary and
located on land demised by an Assumed Lease,
27
(vi) the term for the Assumed Leases and the Third Party Leases relating to
the Sublease and to which a Business Joint Venture is a party and (vii)
whether (A) the Third-Party Lease is an Assumed Lease or a Lease to which a
Business Joint Venture is a party, (B) the Leased Real Property demised by a
Third-Party Lease which is Related to the Business will be the subject of a
Sublease, (C) the Leased Real Property demised by a Third-Party Lease which is
Related to the Business will be subject to the Transition Services Agreement
or (D) the Leased Real Property demised by a Third-Party Lease which is
Related to the Business will not be used in the Business after Closing. Buyer
has been provided with a complete and correct copy of or an opportunity to
review each Third-Party Lease listed in Schedule 3.7(a) which is an Assumed
Lease or which will be the subject of a Sublease or to which a Business Joint
Venture is a party, including all amendments, modifications and supplements
thereto. Except as set forth in Schedule 3.7(a), each Third-Party Lease which
is an Assumed Lease or which will be the subject of a Sublease or the
Transition Services Agreement or to which a Business Joint Venture or is a
party is valid, binding and enforceable, in full force and effect, and neither
Seller nor any Selling Subsidiary or Business Joint Venture, nor, to Seller's
Knowledge, any other party to such Third- Party Lease, has violated or waived
any of the material terms or conditions of such Third-Party Lease, and all the
material covenants to be performed by Seller or a Selling Subsidiary or
Business Joint Venture, and, to Seller's Knowledge, any such other party under
such Third-Party Lease prior to the date hereof or the Closing Date, as
applicable, have been or will be performed in all material respects. Subject
to Section 2.6(c), (i) the Third-Party Leases shall remain valid and binding
in accordance with their terms following the Closing and (ii) if the
Third-Party Leases are assigned to Buyer or any of its Affiliates or
Subsidiaries, such Third-Party Leases shall remain valid and binding in
accordance with their terms following such assignment at the Closing.
(b) Schedule 3.7(b) contains a complete and accurate list and
description of the Owned Real Property, including (i) the address of the Owned
Real Property, (ii) the approximate number of square feet contained in any
improvements comprising part of the Owned Real Property, (iii) the approximate
number of square feet Related to the Business, (iv) the use of the Owned Real
Property and (v) whether (A) the Owned Real Property is Transferred Real
Property, (B) any space contained in the Owned Real Property which is Related
to the Business will be the subject of a Lease Agreement and if so, the
premises, term and rent for such Lease Agreement, (C) the Owned Real Property
which is Related to the Business will be subject to the Transition Services
Agreement or (D) the Owned Real Property which is Related to the Business will
not be used in the Business after Closing. Seller, a Selling Subsidiary or a
Transferred Entity has good, valid and marketable fee simple title to the
Transferred Real Property, subject only to the Permitted Encumbrances and
receipt of the Seller Required Consents. Except as set forth on Schedule
3.7(b), (x) there are no pending or, to Seller's Knowledge, threatened
condemnation, eminent domain or similar proceedings with respect to the
Transferred Real Property or the Owned Real Property which will be the subject
of a Lease Agreement and (y) to Seller's Knowledge, neither the Transferred
Real Property or the Owned Real Property which will be the subject of a Lease
Agreement nor the conduct of the Business thereon is in violation in any
material respect of any use or occupancy restriction, limitation, condition or
covenant of record or any zoning or building Law or public utility easement or
servitude which, in the case of clause (x) or (y) above, individually or in
the aggregate, materially impairs or detracts from, or could reasonably be
expected to materially impair or detract from, the continued use, operation
and utility of the Premises to which they relate in the
28
Business as presently conducted. None of the Transferred Real Property or the
Owned Real Property whichwill be subject to the Lease Agreements is subject to
any leases, tenancies or Encumbrances except only for Permitted Encumbrances.
(c) Schedule 3.7(c) contains a complete and accurate list and
description of any leases, subleases, license agreements or other agreements
for the occupancy of the Premises under which Seller or a Selling Subsidiary
is the landlord, sublandlord or licensor. Except as set forth on Schedule
3.7(c), Buyer has been provided with a complete and correct copy of each
lease, sublease, license agreement or other agreement listed in Schedule
3.7(c), including all amendments, modifications and supplements thereto.
(d) For each U.S. and foreign facility Related to the Business
which is the subject of an Assumed Lease, Sublease or Lease Agreement or is
Transferred Real Property, Schedule 3.7(d) (i) lists the location of such
facility (including address and type/nature of facility or office) and (ii)
specifies the ownership or other relationship of such facility, personnel and
assets to Seller or the Selling Subsidiaries.
3.8 COMPLIANCE WITH LAWS; LITIGATION
(a) Except as set forth on Schedule 3.8(a), each of Seller, the
Selling Subsidiaries and the Transferred Entities is in compliance in all
material respects with all Laws applicable to the Business, the Purchased
Assets or the products and services sold by the Business.
(b) Except as set forth on Schedule 3.8(b), as of the date of
this Agreement no material judgment, order, writ, injunction or decree of any
Governmental Body that is Related to the Business is in effect. Except as set
forth on Schedule 3.8(b), there is no material Action or governmental
investigation pending or, to Seller's Knowledge, threatened against Seller or
any of the Selling Subsidiaries relating to the Business, or pending or, to
Seller's Knowledge, threatened against any of the Transferred Entities.
3.9 BUSINESS EMPLOYEES
(a) Schedule 3.9(a) contains a complete and accurate list of
all the Business Employees and Transferred Subsidiary Employees as of the date
specified on such list, showing for each such Employee (i) the position held,
the current base salary or base compensation and the annual bonus for Seller's
or the applicable Selling Subsidiary's or Transferred Entity's last fiscal
year, (ii) such Employee's service recognized by Seller or a Selling
Subsidiary or Transferred Entity for purposes of the Benefit Plans (including
service with predecessor employers, if applicable, and any prior unbridged
service with Seller or a Selling Subsidiary or Transferred Entity), (iii)
whether such Employee is on leave of absence or short- term disability leave
and if so, the nature and expected duration of such leave and (iv) whether
such Employee is represented by the Communications Workers of America. Except
as set forth on Schedule 3.9(a), no Business Employee or Transferred
Subsidiary Employee is covered by any union, collective bargaining or other
similar labor agreement (the "Collective Bargaining Agreements"). Schedules
5.5(l)(i) and (ii) contain a complete and accurate list of, and Seller has
delivered to Buyer a true, correct and complete copy of, all material
Employment Agreements that contain
29
provisions that are not required by applicable Law and all material Collective
Bargaining Agreements (including all material amendments, side letters and
similar documents relating thereto). No Transferred Subsidiary other than
Lucent Technologies Denmark Holdings ApS, Lucent Technologies Lycom ApS,
Lucent Technologies Denmark I/S and their respective Subsidiaries
(individually and collectively, the "Denmark Transferred Subsidiary") or
Subsidiary of any such Transferred Subsidiary employs any individual who is
not a Transferred Subsidiary Employee.
(b) Schedule 3.9(b) contains a complete and accurate list of
all material Benefit Plans and all Employment Agreements with individuals
based in the U.S. Except as previously disclosed to Buyer, there are no
material amendments to any U.S. Benefit Plan that have been adopted or
approved, nor has Seller or any Selling Subsidiary or any Transferred
Subsidiary or any Subsidiary of a Transferred Subsidiary undertaken to make
any such amendments or to adopt or approve any new U.S. Benefit Plan. Except
as set forth in Schedule 3.9(a), with respect to all Business Employees and
Transferred Subsidiary Employees, none of Seller, the Selling Subsidiaries,
the Transferred Subsidiaries and the respective Subsidiaries of the
Transferred Subsidiaries currently maintains, contributes to or has any
liability under any Benefit Plan. No Transferred Subsidiary other than the
Denmark Transferred Subsidiary, and no Subsidiary of any such Transferred
Subsidiary, maintains, contributes to, or has any liability under any Benefit
Plan, which will continue beyond the Closing Date, and no employee of a
Business Joint Venture participates in 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
description or, if no summary plan description exists, a written description
of all material terms and conditions of such Benefit Plan. In addition, the
documents Seller has made available to Buyer with respect to non-U.S. Benefit
Plans are true and complete. Each Benefit Plan listed on Schedule 3.9(b) has
been operated in material compliance with all applicable Laws, including ERISA
to the extent applicable. 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 IRS with respect to "TRA"
(as defined in Section 1 of Rev. Proc. 93-39), each of Seller's VEBAs from
which assets are to be transferred pursuant to Section 5.5 has received a
favorable determination letter from the IRS with respect to its compliance
with Code Section 501(c)(9), and Seller is not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
Except as set forth in Schedule 3.9(b), none of Seller, the Selling
Subsidiaries, the Transferred Subsidiaries and the Subsidiaries of the
Transferred Subsidiaries 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, life or other welfare
benefits. No amount that could be received (whether in cash, property or
vesting of property) as a result of the consummation of the transactions
contemplated by this Agreement by any officer, director, employee or
independent contractor of Seller or any Selling Subsidiary or Transferred
Subsidiary or Subsidiary of a Transferred Subsidiary, who is a "disqualified
individual" (as defined in proposed Treasury Regulation Section 1.280G-1),
under any agreement or arrangement that will be assumed by the Buyer, would be
characterized as an "excess parachute payment" (as defined in Section 280G of
the Code).
30
(c) With respect 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 stoppage; (ii) any application for
certification of a collective bargaining agent; or (iii) any other organizing
activity. With respect to the Business, (A) no labor organization or group of
employees of Seller or any Selling Subsidiary has made a pending demand for
recognition or certification, and there are and have been no representation or
certification Actions seeking a representation proceeding, with the National
Labor Relations Board or any other labor relations tribunal or authority or
under the terms of the Memorandum of Understanding Regarding Neutrality and
Consent Elections (the "Neutrality Agreement") between Seller and the
Communications Workers of America, nor have any such Actions been brought or
filed or threatened to be brought or filed within the past five years, (B)
other than as previously disclosed by Seller to Buyer or with respect to
instances which, in the aggregate, could not reasonably be expected to result
in liabilities that are material to the Business taken as a whole, there are
not now, nor have there been at any time within the last five years, any
actual or threatened organizing activities, strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances, or other
material labor disputes against or involving Seller or any Selling Subsidiary,
Transferred Subsidiary or Subsidiary of a Transferred Subsidiary, (C) other
than as previously disclosed by Seller to Buyer or with respect to instances
which, in the aggregate, could not reasonably be expected to result in
liabilities which are material to the Business taken as a whole, each of
Seller, the Selling Subsidiaries, the Transferred Subsidiaries and the
Subsidiaries of the Transferred Subsidiaries is in compliance in all material
respects with all Collective Bargaining Agreements and with all applicable
Laws, and none of Seller, the Selling Subsidiaries, the Transferred
Subsidiaries and the Subsidiaries of the Transferred Subsidiaries currently is
the subject of an investigation by any Governmental Entity, respecting
employment and employment practices, terms and conditions of employment, wages
and hours and occupational safety and health and (D) other than as previously
disclosed by Seller to Buyer or with respect to instances which, in the
aggregate, could not reasonably be expected to result in liabilities which are
material to the Business taken as a whole, there are no consent decrees,
conciliation agreements or settlement agreements currently pending or in
effect respecting employment and employment practices, terms and conditions of
employment, wages and hours and occupational safety and health.
(d) With respect to each U.S. Pension Plan (whether or not
qualified and whether or not subject to ERISA), each U.S. Benefit Plan
providing for health, life or other welfare benefits to former employees or
beneficiaries or dependents thereof (other than health continuation coverage
as required by Section 4980B of the Code or Part 6 of Title I of ERISA ("COBRA
Coverage") (such Benefit Plans, the "Retiree Welfare Plans"), and Seller's
VEBAs from which assets shall be transferred pursuant to the provisions of
Section 5.5, Seller has delivered to Buyer a true, correct and complete copy
of each such Benefit Plan or VEBA. Any annual financial and actuarial reports,
and any data regarding the liabilities and funding of such plans, which Seller
has made available to Buyer, are true, correct and complete.
(e) With respect to each of the Lucent Occupational Plan and
the LRIP: (i) there does not exist any accumulated funding deficiency within
the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not
waived; (ii) no reportable event within the meaning of Section 4043(c) of
ERISA for which the 30-day notice requirement has not been
31
waived has occurred; and (iii) the Pension Benefit Guaranty Corporation (the
"PBGC") has not instituted proceedings to terminate such plan and, to Seller's
Knowledge, no condition exists that presents a risk that such proceedings will
be instituted or that would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, such plan.
(f) All Benefit Plans subject to the Laws of a jurisdiction
outside of the United States (i) have been maintained in all material respects
in accordance with all applicable requirements and (ii) if they are intended
to qualify for special tax treatment meet all requirements for such treatment,
other than failures which, in the aggregate, could not reasonably be expected
to result in liabilities which are material to the Business taken as a whole.
There are no amendments to any non-U.S. Benefit Plans that have been adopted
or approved nor has Seller or any Selling Subsidiary or any Transferred
Subsidiary or any Subsidiary of a Transferred Subsidiary undertaken to make
any such amendments or to adopt or approve any new non-U.S. Benefit Plan,
other than instances which, in the aggregate, could not reasonably be expected
to result in liabilities which are material to the Business as a whole.
3.10 CONTRACTS
Schedule 3.10 contains a complete and accurate list, as of the
date of this Agreement, of (a) (i) all contracts, arrangements or
understandings with distributors of the Business' products or services, (ii)
all sales agreements between Seller, the Selling Subsidiaries or the
Transferred Entities and their respective customers, including teaming
agreements related thereto, (iii) all contracts, arrangements or
understandings whereby the Business supplies components or products to
original equipment manufacturers, (iv) all service, maintenance or supply
agreements, including teaming agreements relating thereto, (v) all contracts,
arrangements or understandings whereby the Business purchases goods or
services, (vi) all contracts and arrangements Related to the Business pursuant
to which any goods, services, materials or supplies are provided to or from
Seller from or to any of its Affiliates, including leases of machinery and
equipment, motor vehicles, or furniture and office equipment and (vii) all
consulting, agency, or other similar contracts, agreements and other
instruments and arrangements relating to or for the benefit of current, future
or former sales representatives, distributors, dealers, agents, independent
contractors or consultants, in each case under this clause (a), which are
Related to the Business and where the aggregate payments in any calendar year
by or to Seller or any Selling Subsidiary or Transferred Entity under the
contract in question are expected to be in excess of $1,000,000 or where the
contract in question cannot be cancelled by Seller or the applicable Selling
Subsidiary or Transferred Entity on less than 180 days' notice and without any
liability; (b) all notes, mortgages, indentures, letters of credit, guarantees
and other obligations and agreements for or relating to any lending or
borrowing of $500,000 or more pursuant to which any properties or assets of
the Business are pledged or mortgaged as collateral, and any agreement
creating any guarantee or keepwell agreement or other agreement to be liable
for the obligations of another Person; (c) all joint venture or partnership
and material asset purchase or divestiture agreements Related to the Business;
(d) all agreements that materially adversely affect or materially restrict the
right of the Business to compete with any other Person, to sell to or purchase
from any Person or to hire or solicit for hire any Person; and (e) any other
contract, lease, sublease, license, purchase order, sale order, agreement,
instrument or
32
commitment Related to the Business, whether written or oral, other than
Benefit Plans, Collective Bargaining Agreements and Employment Agreements,
which (x) involves payments or receipts in excess of $1,000,000 on an annual
basis with respect to the Business, (y) cannot be cancelled by Seller or the
applicable Selling Subsidiary or Transferred Entity on less than 180 days'
notice and without any liability or (z) is material to the operations or
financial condition of the Business, taken as a whole (each such item that is
required to be set forth on Schedule 3.10, together with the Licenses and
those Nonassigned Licenses in which rights are being assigned, licensed or
sublicensed to Buyer, being referred to as a "Material Contract"). Each
Material Contract is valid, binding and enforceable against Seller or the
applicable Selling Subsidiary or Transferred Entity 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 in Schedule 3.10, neither Seller
nor any Selling Subsidiary or Transferred Entity is in default or breach of or
is otherwise delinquent in performance under any Material Contract in any
material respect, and, to Seller's Knowledge, each of the other parties
thereto has performed in all material respects (including any material
obligations to provide any updates, supplemental information or any other
disclosure obligations of any kind relating thereto) all material obligations
required to be performed by it and is not in default in any material respect
thereunder, no event has occurred that, with notice or lapse of time, or both,
would constitute such a default, and none of Seller, any Selling Subsidiary or
any Transferred Entity has received any notice of such default or breach. None
of Seller, any Selling Subsidiary or any Transferred Entity has released or
waived (explicitly or otherwise) any of its material rights under any Material
Contract. True and correct copies of all Material Contracts and any amendments
and supplements thereto have been made available to Buyer.
3.11 ENVIRONMENTAL MATTERS
Except as set forth in Schedule 3.11 and in respect of the
Business:
(a) the operations of the Business and the design,
configuration, construction, capacity, use, occupancy and condition of the
Premises comply in all material respects with all applicable Environmental
Laws;
(b) Seller, each Selling Subsidiary and each Transferred Entity
has obtained all material environmental, health and safety Governmental
Permits necessary for its operations and for the construction, installation,
use and, where relevant, occupancy of the Premises, the Fixtures and Supplies,
the Principal Equipment and Leased Equipment and the conduct of the Business
and all such Governmental Permits are in good standing, and Seller, each
Selling Subsidiary and each Transferred Entity is in compliance in all
material respects with all terms and conditions of such permits;
(c) none of Seller, any Selling Subsidiary, any Transferred
Entity or any of the Premises included in the Purchased Assets or the
operations of the Business is subject to any ongoing or, to Seller's
Knowledge, threatened Action or investigation by, order from or agreement with
any Person (including any Governmental Body) respecting (i) any Environmental
Law or (ii) any remedial, enforcement, corrective or other action arising from
the release or threatened release of a Hazardous Substance;
33
(d) none of Seller, any Selling Subsidiary or any Transferred
Entity is subject to any pending or, to Seller's Knowledge, threatened Action
or judicial or administrative proceeding, order, judgment, decree or
settlement alleging or addressing a material violation of or material
liability under any Environmental Law;
(e) none of Seller, any Selling Subsidiary or any Transferred
Entity has filed or received any notice under any Law or other governmental
requirement indicating a past or present disposal or release of a Hazardous
Substance at the Premises in violation of Environmental Law, and each has
timely filed or prepared all notices, reports and plans required to be filed
or prepared, as the case may be, under any Environmental Law indicating past
or present manufacturing, processing, use, treatment, storage or disposal of a
Hazardous Substance or reporting a spill or release of a Hazardous Substance;
(f) to Seller's Knowledge, there are not now any aboveground or
underground storage tanks on or in any Premises from which there have been
releases of Hazardous Substances, nor, to Seller's Knowledge, have there ever
been, on or in any Premises, any aboveground or underground storage tanks from
which there have been releases of Hazardous Substances; and
(g) as of the date of this Agreement, none of Seller, any
Selling Subsidiary or any Transferred Entity has received any written notice
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.
3.12 FINANCIAL STATEMENT; ABSENCE OF CHANGES
(a) Schedule 3.12(a) contains true and complete copies of the
following financial statements of the Business, including the Excluded JV
Entities (the "Financial Statements"):
(i) audited balance sheets as of September 30, 1999 and
2000 (the September 30, 2000, balance sheet being referred to as the "Balance
Sheet"), in each case with an audit opinion thereon by PricewaterhouseCoopers
LLP;
(ii) audited statements of operations and cash flows for
the years ended September 30, 1998, 1999 and 2000, in each case with an audit
opinion thereon by PricewaterhouseCoopers LLP; and
(iii) an unaudited balance sheet as of March 31, 2001, and
unaudited statements of operations for six months ended March 31, 2001, each
prepared on the same basis as the audited financial statements dated as of
September 30, 1999, and 2000.
(b) The Financial Statements were prepared in accordance with
GAAP (except, in the case of the unaudited financial statements, for normal,
immaterial 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)
and present fairly, in all material respects, the financial position of the
Business (including the consolidated assets and liabilities of the Excluded JV
Entities, which are
34
an Excluded Asset) as of the dates thereof and the results of its operations
and cash flows (including those of the Excluded JV Entities, which are an
Excluded Asset) for each of the periods then ended in conformity with GAAP.
(c) Schedule 3.12(c) contains true and complete copies of the
audited balance sheets as of September 30, 1998, 1999 and 2000 of each of the
Excluded JV Entities and audited statements of operations and cash flows of
each of the Excluded JV Entities for the years ended September 30, 1998, 1999
and 2000 (collectively, the "Excluded JV Financial Statements"). The Excluded
JV Financial Statements were prepared in accordance with GAAP and present
fairly, in all material respects, the financial position of the respective
Excluded JV Entities as of the dates thereof and the results of operations and
cash flows of the respective Excluded JV Entities for periods then ended in
conformity with GAAP.
(d) Except as set forth in Schedule 3.12(d), since March 31,
2001, Seller, the Selling Subsidiaries and the Transferred Entities have
conducted and operated the Business in the ordinary course consistent with
past practice (except as otherwise contemplated by this Agreement) and there
has been no (i) Material Adverse Change; (ii) sale, lease, or other
disposition of any properties or assets Related to the Business other than in
the ordinary course of business consistent with past practice; (iii) purchase,
lease or other acquisition of any properties or assets Related to the Business
other than in the ordinary course of business consistent with past practice,
or capital expenditures other than in accordance with Seller's capital
expenditure budget for the Business in effect on the date hereof, which has
been previously disclosed to Buyer; (iv) material increase in the compensation
payable or to become payable to any of the employees of the Business except
for normal periodic increases in the ordinary course of business consistent
with past practice; (v) other than as previously disclosed by Seller to Buyer,
adoption or amendment of any Employment Agreement, Benefit Plan or similar
agreement, plan or arrangement that could reasonably be expected to affect the
rights of Transferred Employees and that could reasonably be expected to
result in any material increase in Buyer's liabilities; (vi) change in
accounting methods or principles or cost allocation procedures that affect the
financial statements of the Business in any material respect; or (vii)
agreement or commitment to take any action described in this Section 3.12(d).
3.13 INTELLECTUAL PROPERTY
(a) Seller or one of the Selling Subsidiaries owns or has a
valid right to assign or grant the licenses to the Intellectual Property in
accordance with the IP Agreements.
(b) Except as set forth on Schedule 3.13(b), no material
litigation has been instituted or is pending, or, to Seller's Knowledge, has
been threatened in writing as of the date of this Agreement which challenge
the rights of Seller or any Selling Subsidiary in respect of the Intellectual
Property.
(c) To Seller's Knowledge, Schedule 3.13(c) sets forth a list
as of the date of this Agreement of all notices or claims received by and
suits or proceedings pending or which have been threatened in writing against
Seller, which notices, claims, suits or proceedings assert infringement or
misappropriation of any intellectual property rights of a Third Party as a
result of any activities of OFS.
35
(d) At the Closing, Seller or one of the Selling Subsidiaries
will provide, either by assignment, license or sublicense to Buyer in
accordance with the IP Agreements, all the Proprietary Information as to which
Seller or any Selling Subsidiary has a right to assign, license or sublicense
without paying a royalty or fee, which Buyer requires to conduct the Business
after the Closing (as the Business was conducted prior to the Closing) and to
make, have made, use, lease, import, offer to sell or sell the products and/or
services of the Business (as the Business was conducted prior to the Closing),
as such products and/or services existed as of the Closing Date. Buyer's sole
remedy for breach of this Section 3.13(d) shall be the assignment, licensing
or sublicensing by Seller or one of the Selling Subsidiaries to Buyer at no
additional cost to Buyer, in accordance with the transfers and licenses
provided in the IP Agreements, of those components of such technology which
are required by Buyer to conduct the Business after the Closing and to make,
have made, use, lease, import, offer to sell or sell any products of the
Business, as such products existed as of the date of this Agreement and the
Closing Date, 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
names, marks or other indicia of "Lucent," "Lucent Technologies," "▇▇▇▇ Labs,"
the Lucent Innovation Ring logo or other similar ▇▇▇▇, other that as set forth
in Section 5.11.
3.14 CERTAIN BUSINESS PRACTICES
None of Seller, any Selling Subsidiary, any Transferred
Subsidiary or, to Seller's Knowledge, any Business Joint Venture, nor, to
Seller's Knowledge in the case of the Business Joint Ventures, any director,
officer, employee or agent thereof has (i) used any material funds for
unlawful contributions, gifts, entertainment or other unlawful payments
relating to any political activity or (ii) made any material unlawful payment
to any foreign, domestic or supra- national government official or employee or
to any foreign or domestic political party or campaign or violated in any
material respect any provision of the U.S. Foreign Corrupt Practices Act of
1977, as amended, or the OECD Convention on Combating Bribery of Foreign
Public Officials in Business Transactions.
3.15 CUSTOMERS AND SUPPLIERS
Schedule 3.15 contains a list setting forth (i)(a) the 10
largest customers of the Business, by dollar amount, during the periods set
forth therein, and (b) the amount for which each such customer was invoiced
during the periods set forth therein, and (ii) the 10 largest suppliers of the
Business, by dollar amount, during the periods set forth therein. The Business
does not have any credit or vendor financing attributable to it for any of
these 10 largest customers. All purchases 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. No customer or supplier of the Business
listed on Schedule 3.15 has, since September 30, 2000 through the date of this
Agreement, cancelled or terminated, or provided written notice of an
36
intention to cancel or terminate, its Contract with Seller or the applicable
Selling Subsidiary or Transferred Entity.
3.16 PRODUCT WARRANTIES
Schedule 3.16 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 3.16, the products
manufactured by the Business have been sold by the Business in all material
respects in accordance with the standard terms and conditions of sale.
3.17 AFFILIATED TRANSACTIONS
Schedule 3.17 sets forth a complete and correct list of all
written and binding oral agreements that constitute Contracts between the
Business, on the one hand, and Seller or any of its Affiliates (other than the
Business), on the other hand, other than in respect of the provision by Seller
or its Affiliates of normal corporate overhead services to the Business, all
of which will terminate as of the Closing Date except as provided in the
Transition Services Agreement. All such Contracts were entered into on an
arm's-length basis and have terms no less favorable to the Business than those
available to non-Affiliates of Seller.
3.18 INSURANCE
Schedule 3.18 lists all material insurance policies owned or
held by Seller or any Selling Subsidiary on the date hereof which cover the
Business or the Purchased Assets. All such insurance policies are in full
force and effect, all premiums with respect thereto have been paid to the
extent due, no notice of cancellation or termination has been received with
respect to any such insurance policy and no claim is currently pending under
any such insurance policy involving an amount in excess of $100,000.
3.19 PRODUCT RECALLS
Except as set forth in Schedule 3.19, since September 30, 2000,
there has been no material pending, or to Seller's Knowledge, threatened
material recall or material investigation of any product sold by Seller or any
Selling Subsidiary or Transferred Entity in connection with the Business.
3.20 INVENTORY
Except as set forth on Schedule 3.20, all Inventory (i)
consists of items of a quantity and quality historically usable or saleable in
the ordinary course of business, except for obsolete items that have been
written down to estimated net realizable value in accordance with GAAP, (ii)
is located at facilities of the Business and (iii) has not been consigned to
any Third Party. With the exception of items of below-standard quality that
have been written down to their estimated net realizable value in accordance
with GAAP, the Inventory is in good and proper physical condition, free from
defects in materials and workmanship. Since September 30, 2000, Seller has
sold and continued to replenish Inventory in a normal and customary manner
consistent with past practices.
37
3.21 BROKERS
Other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and JPMorgan, a division
of Chase Securities 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 of Seller.
3.22 CERTAIN TAX MATTERS
(a) All material Tax Returns required to be filed by the Code
or by applicable state, local or non-U.S. Tax laws by or on behalf of the
Transferred Entities or with respect to the Business or the Purchased Assets
have been filed in a timely manner (within any applicable extension periods),
and all such Tax Returns were accurate and complete in all material respects,
(ii) all Taxes shown to be due on such Tax Returns have been timely paid in
full or will be timely paid in full by the due date thereof and (iii) no
material Tax liens have been filed with respect to the capital stock or assets
of the Transferred Entities or with respect to the Purchased Assets and no
material claims are being asserted in writing with respect to any Taxes of the
Transferred Entities or with respect to the Business or the Purchased Assets.
(b) (i) None of the Transferred Entities has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, (ii)
none of the Transferred Entities that are U.S. Persons is a lessor of "tax
exempt use property" within the meaning of Section 168(h) of the Code and none
of the Purchased Assets being sold by Seller or a Selling Subsidiary which is
a U.S. Person is such property and (iii) none of the Transferred Entities is a
party to any lease, and none of the Purchased Assets are subject to any lease,
made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954.
(c) Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code. No Selling Subsidiary that is such a foreign
person is selling any "United States real property interest" as defined in
Section 897(c) of the Code.
(d) In the case of each transfer hereunder that is, for
purposes of the Code, a transfer of an interest that is, or has been treated
as, a partnership interest under the Code, each relevant partnership has made
(or will make) a valid election under Section 754 of the Code that will apply
to such transfer.
(e) Each of the Transferred Entities is a corporation, for U.S.
federal income tax purposes, except as provided in Schedule 3.22(e).
(f) Except as provided in Schedule 3.22(f), (i) none of the
Transferred Entities has received any notice of assessment or proposed
assessment in connection with any Tax Return and there are not pending any Tax
examinations of or Tax claims asserted against the Transferred Entities, (ii)
none of the Transferred Entities has received notice of an audit or
examination by any Tax authority, (iii) there are no material Tax proceedings
presently pending with regard to any Tax Returns or Taxes of any of the
Transferred Entities, and to the Seller's Knowledge, no notice has been
received from any Tax authority of the expected commencement
38
of such a proceeding and (iv) none of the Transferred Entities has extended or
waived the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any Taxes.
(g) The elections to treat Lucent Technologies Denmark Holdings
ApS and Lucent Technologies Lycom ApS as entities the separate existence of
which is disregarded for U.S. federal Tax purposes was, in each case, an
election by a newly formed eligible entity that was effective on the date of
formation, within the meaning of Treasury Regulation ss. 301.7701-3(c)(1)(iv).
(h) Except as set forth on Schedule 3.22(h), none of the
Transferred Entities that are U.S. corporations is nor has any of them (or any
predecessor of any of them) been a member of any affiliated group of
corporations as defined in Code Section 1504.
(i) Seller's basis in the stock of each Transferred Subsidiary
(or any Subsidiary thereof) at all times before the Closing Date and as of the
close of the Closing Date, does not, within the meaning of Treasury Regulation
1.338-8(f)(2), reflect any gain from the prior disposition of any of the
Purchased Assets.
(j) No Purchased Asset which is a section 197 intangible
(within the meaning of Section 197(d) of the Code) was owned or used, in whole
or in part, at any time between and including July 25, 1991 and August 10,
1993, by any Transferred Entity that is a U.S. corporation or any entity of
which such a Transferred Entity that is a U.S. corporation owns a 20% or
greater direct or indirect interest, or by any predecessor entity of any of
the foregoing which would be treated as any of the foregoing for purposes of
applying Section 197(f)(9) of the Code.
(k) None of the Transferred Entities will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any Post-Closing Tax Period as a result of any (A) change in method
of accounting for a Pre-Closing Tax Period under Code Section 481(c) (or any
corresponding or similar provision of state, local or non-U.S. income Tax
law), (B) "closing agreement" as described in Code Section 7121 (or any
corresponding or similar provision of state, local or non-U.S. income Tax
law), (C) installment sale or open transaction disposition or intercompany
transaction made on or prior to the Closing Date, or (D) prepaid amount
received on or prior to the Closing Date.
3.23 DESIGNATED TRANSFERRED SUBSIDIARIES
As of the date hereof, the Designated Transferred Subsidiaries
do not hold any (non-negligible) intangible assets of the Business other than
possible going concern value or manufacturing intangibles.
3.24 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in
this Agreement and the Collateral Agreements, none of Seller, its Subsidiaries
or Affiliates makes any representations or warranties, and Seller hereby
disclaims any other representations or warranties, whether made by
39
Seller or any of its Subsidiaries or Affiliates, 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 thereby 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.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 ORGANIZATION AND QUALIFICATION
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Japan, and Buyer has all requisite corporate
power and authority to carry on its business as currently conducted and to own
or lease and operate its properties. Buyer 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, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement and the Collateral Agreements.
4.2 AUTHORIZATION; BINDING EFFECT
(a) Each of Buyer and any Affiliate or Subsidiary of Buyer that
is a party to any Collateral Agreement has all requisite corporate power and
authority to execute and deliver this Agreement and the Collateral Agreements
and to effect the transactions contemplated hereby and thereby, the execution,
delivery and performance of this Agreement and the Collateral Agreements have
been duly authorized by all requisite corporate action.
(b) This Agreement has been duly executed and delivered by
Buyer and this Agreement is, and each of the Collateral Agreements when duly
executed and delivered by Buyer or any Affiliate or Subsidiary of Buyer will
be, valid and legally binding obligations of Buyer or such Affiliate or
Subsidiary, enforceable against it in accordance with its terms.
4.3 NON-CONTRAVENTION; CONSENTS
(a) Assuming that all Buyer Required Consents have been
obtained or made, the execution, delivery and performance of this Agreement by
Buyer, and the Collateral Agreements by Buyer or any of its Affiliates or
Subsidiaries 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 the charter, by-laws or similar organization
document of Buyer or such Affiliate or Subsidiary; (ii) violate in any
material respect or result in a material breach of or constitute an occurrence
of a material default under any provision of, result in the acceleration or
cancellation of any material obligation under, or give rise to a right by any
party to terminate or amend its obligations material under, any mortgage, deed
of trust, conveyance to secure debt, note, loan, indenture, lien, lease,
agreement, instrument, order,
40
judgment, decree or other arrangement or commitment to which Buyer or such
Affiliate or Subsidiary is a party or by which they or their respective assets
or properties are bound, or result in the creation of any material Encumbrance
upon any of their assets or properties; or (iii) violate in any material
respect any material Law of any Governmental Body having jurisdiction over
Buyer or such Affiliate or such Subsidiary or any of their respective
properties.
(b) Except as set forth on Schedule 4.3(b), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Person (including any Governmental Body) is required to be obtained
by Buyer, or any of its Affiliates or Subsidiaries which is a party to any
Collateral Agreement, in connection with the execution and delivery of this
Agreement and the Collateral Agreements or the consummation by Buyer or such
Affiliate or such Subsidiary of the transactions contemplated hereby or
thereby, except for (i) any filings required to be made under the HSR Act and
any applicable filings required under foreign antitrust Laws, as set forth on
Schedule 4.3(b) (such scheduled consents, approvals, orders, authorizations,
registrations, declarations and filings being referred to herein collectively
as the "Buyer Required Consents"), and (ii) such consents the failure of which
to be obtained or made, could not, individually or in the aggregate,
reasonably be expected to materially impair, delay or prevent the consummation
of the transactions contemplated by this Agreement or the Collateral
Agreements.
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 from Seller or any of its Affiliates 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 INDUCEMENT OR RELIANCE; INDEPENDENT ASSESSMENT
(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 of
Seller, or any agent, employee, attorney or other representative of Seller
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, except as explicitly set forth in
this Agreement, neither Seller nor any of its Affiliates has made any
warranty, express or implied, as to the prospects 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 Buyer's review of the Business and the negotiation and the
execution of this Agreement.
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4.6 SUFFICIENCY OF FUNDS
Subject to the terms of the Financing Agreement, at the
Closing, Buyer or its designees, nominees or assigns (i) will have funds
available to pay the Purchase Price and any expenses incurred by Buyer in
connection with the transactions contemplated by this Agreement; and (ii) will
have the resources and capabilities (financial or otherwise) to perform its
obligations hereunder and under the Collateral Agreements; provided that Buyer
shall not be deemed to be in breach of this Section 4.6 if the failure of
Buyer or its designees, nominees or assigns to have sufficient funds results
from Seller's breach of its obligations under Section 2.6(e).
5. CERTAIN COVENANTS
5.1 ACCESS AND INFORMATION
(a) Seller will give, and cause its Affiliates to give, to
Buyer and to its officers, employees, accountants, counsel and other
representatives reasonable access, including for inspection and copying,
during Seller's or the applicable Affiliate's normal business hours throughout
the period prior to the Closing, to the Premises and Purchased Assets and to
all of Seller's or the applicable Affiliate's properties, personnel, books,
contracts, commitments, reports of examination and records (excluding
confidential portions of personnel and medical records) Related to the
Business, related to the Purchased Assets or the Assumed Liabilities (subject
to any limitations that are reasonably required to preserve any applicable
attorney-client privilege or Third-Party confidentiality obligation, but
subject to Seller's obligation to use reasonable best efforts to develop
alternative means to provide information that is subject to such limitations),
including for the purpose of allowing Buyer to (i) conduct Phase I due
diligence with respect to environmental matters, (ii) conduct a financial
audit of the Business or any part thereof and (iii) divide the assets and
liabilities of the Business among the Fiber Business, the Cable Business, the
Specialty Business and the Apparatus Business. Seller shall assist, and cause
its Affiliates to assist, Buyer 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. No
information or knowledge obtained by Buyer in any investigation pursuant to
this Section 5.1(a) shall affect or be deemed to modify any representation or
warranty made by Seller hereunder.
(b) After the Closing Date, Seller and Buyer will provide,
and will use their respective reasonable best efforts to 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, but
subject to Seller's obligation to use reasonable best efforts to develop
alternative means to provide information that is subject to such limitations),
reasonable access for inspection and copying of all records, files and
information existing as of the Closing Date and Related to the Business or
related to the Purchased Assets, and will make their respective personnel
reasonably available for interviews, depositions and testimony, in connection
with legal or other matters concerning transactions, operations or activities
Related to the Business or related to 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)
42
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 promptly for all reasonable 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 not less than two (2) Business Days'
prior written request 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. Any Confidential Information
provided under this Section 5.1(b) may not be disclosed to any Third Party
without the prior consent of the party initially providing such information.
Subject to Section 6.2, this obligation of confidentiality shall cease to
apply to information that is in, or enters into, the public domain through no
breach hereof by the party receiving such information, or is required to be
disclosed as a matter of Law (provided that the party receiving such
information shall give prior notice to the other party of such requirement and
the right to participate in any Action regarding such disclosure, and
provided, further, that the party receiving such information has sought to
obtain all available confidentiality protection for such information when
disclosed).
(c) Buyer shall preserve all Business Records, Licenses and
Governmental Permits for at least five (5) years after the Closing Date. After
this five-year period and at least forty-five (45) days prior to the planned
destruction of any Business Records, Licenses or Governmental Permits, Buyer
shall notify Seller in writing and shall make available to Seller, upon its
request, such Business Records, Licenses and Governmental Permits.
(d) Prior to the Closing, Seller shall deliver to Buyer: (i)
audited balance sheets (including the notes thereto), as of September 30, 1999
and 2000 (in each case with an opinion thereon by PricewaterhouseCoopers LLP),
for the Fiber Optic Cable (FOC) business of OFS, excluding (1) the Excluded JV
Entities; (2) all of the operations in Denmark (Brondby) and (3) the
unconsolidated joint venture in Yazaki (the "FOC Carve Out Business"); (ii)
audited statement of operation and cash-flow (including the notes thereto) for
the years ended September 30, 1998, 1999 and 2000 (in each case with an audit
opinion thereon by PricewaterhouseCoopers LLP) for the FOC Carve Out Business
in each case prepared in accordance with GAAP. Seller shall use reasonable
best efforts to deliver to Buyer an unaudited balance sheet of the FOC Carve
Out Business as of June 30, 2001 and an unaudited statement of operation and
cash-flow of the FOC Carve Out Business for the nine months ended June 30,
2001, each prepared on the same basis as the audited financial statements of
the FOC Carve Out Business and in accordance with GAAP.
5.2 CONDUCT OF BUSINESS
From and after the date of this Agreement and until the Closing
Date, except as set forth on Schedule 5.2 or as otherwise contemplated by this
Agreement or the Schedules and Exhibits hereto or as Buyer shall otherwise
consent to in writing, Seller and each of the Selling Subsidiaries and each of
the Transferred Subsidiaries and each of their Subsidiaries, with respect to
the Business:
43
(a) will carry on the Business and operate the Premises in the
ordinary course of business consistent with past practice, including taking or
refraining from taking any actions likely to significantly change its existing
relationships with customers, suppliers, licensors, licensees, distributors,
employees and others having business relationships with the Business, and will
use reasonable efforts to keep available the services of the present Business
Employees;
(b) will not permit, other than sales of Inventory in the
ordinary course of business consistent with past practice in arm's-length
Third-Party transactions or as may be required by Law or a Governmental Body,
any of the Purchased Assets (real or personal, tangible or intangible) to be
sold, leased, licensed, abandoned, transferred or otherwise disposed or
subjected to any Encumbrance (other than a Permitted Encumbrance);
(c) will not terminate or materially extend or materially
modify any Material Contract or material Third-Party Lease or License (or
enter into any new agreement of such type) except in the ordinary course of
business consistent with past practice in arm's-length Third-Party
transactions and will continue performance of, in the ordinary course of
business consistent with past practice, its obligations under all Contracts,
Third-Party Leases, Licenses and other obligations to be included as part of
the Purchased Assets;
(d) will maintain in full force and effect its existing
insurance policies Related to the Business;
(e) will not incur or permit the incurrence of any liability
that would (i) constitute an Assumed Liability or (ii) otherwise encumber or
adversely affect the Purchased Assets (other than Permitted Encumbrances
incurred in the ordinary course of business consistent with past practice);
(f) will not enter into any lease of real or personal property
or any renewals thereof involving a term of more than one (1) year or rental
obligation exceeding Fifty Thousand U.S. Dollars ($50,000) per annum in any
single case;
(g) except for normal merit or cost-of-living increases to non-
executive employees, the hiring of new employees to replace key employees
whose annual base pay does not exceed $75,000 and the adoption of Employee
retention arrangements with respect to which Buyer, its Affiliates and the
Transferred Entities will have no cost or other obligation, in each case in
the ordinary course of business consistent with past practice, will not
increase the number of Business Employees and Transferred Subsidiary Employees
by more than 2% from the number as of the date hereof, increase the rate of
compensation for any of the Employees or otherwise enter into or alter any
employment, consulting or managerial services agreement affecting the Business
or Employees;
(h) will not adopt or amend any Benefit Plan in a manner
primarily
affecting Business Employees, except as required by Law, or enter into or
amend any Employment Agreement that is not required by applicable Law or any
Collective Bargaining Agreement;
(i) except for projects contemplated in Seller's capital
expenditure budget for the Business as previously disclosed to Buyer, will not
make any single new commitment or
44
increase any single previous commitment for capital expenditures for the
Business in an amount exceeding One Hundred Thousand U.S. Dollars ($100,000)
and will not otherwise acquire any real property, real property interest or
other asset that would otherwise be a Purchased Asset, except in the ordinary
course of business consistent with past practice in arm's-length Third-Party
transactions;
(j) will not accelerate or delay the sale of the products of
the Business, except in the ordinary course of business in arm's length
Third-Party transactions;
(k) will not sell, assign, transfer, license, abandon or convey
any of the Assigned Patents, Jointly Owned Patents, Assigned Technical
Information or Assigned Software (each as defined in the Intellectual Property
Agreement), except that with respect to the Assigned Patents, Seller will not
be prevented from licensing such Assigned Patents in the course of business to
other than any Person engaged in the manufacture of optical fiber, optical
fiber cable or transmission fiber;
(l) will not make any change in accounting methods or
principles or cost allocation procedures that would affect the financial
statements of the Business, except as required by GAAP;
(m) with respect to the Transferred Entities, will not change
any method of Tax accounting, make any Tax election other than in a manner
consistent with past practice, file any Tax Return other than in a manner
consistent with past practice, or settle any material Tax Claim except for any
action ("Permitted Tax Action") (i) that would not have an adverse effect on
Buyer that is material, (ii) that is generally applicable to any Tax Return
filed by any consolidated or combined group of which the Seller is a common
parent, the effect of which action is primarily on entities other than the
Transferred Entities, (iii) that is required by law as reflected on a "more
likely than not" (or stronger) tax opinion by nationally recognized counsel,
(iv) that is required by law because of a change in underlying facts relating
specifically to the relevant Transferred Entity, (v) which is required by law
to facilitate (or as a result of) the payment of any distribution paid out of
any of the Transferred Subsidiaries or their Subsidiaries that are Danish
entities or (vi) that is specifically approved by Buyer in writing (whose
approval shall not be unreasonably withheld);
(n) will not settle or compromise any material Action, or
waive, release or assign any material claim or waive any right of substantial
value, cancel any debt or claim except in the ordinary course of business in
arm's-length Third-Party transactions or voluntarily suffer any extraordinary
loss;
(o) will not alter in any material respect its practices and
policies relating to the payment and collection, as the case may be, of
accounts payable and accounts receivable relating to the Business or the
Purchased Assets;
(p) will not (i) take or do any other act that would cause any
representation or warranty of Seller, or its Subsidiaries or Affiliates, in
this Agreement or any Collateral Agreement to be or become untrue in any
material respect, (ii) omit to take any action necessary to prevent any such
representation or warranty from being untrue in any material respect or
45
(iii) take any action that would have or could be reasonably expected to
result in (A) individually or in the aggregate, a Material Adverse Effect or
(B) the failure of any of the conditions set forth in Article 8 to be
satisfied;
(q) will comply in all material respects with all Laws
applicable to the Business and all Governmental Permits;
(r) will replenish Inventory in a normal and customary manner
consistent with past practices and will not permit levels of Inventory to fall
below reasonably expected requirements of the Business consistent with past
practices;
(s) will not reduce or delay (i) capital expenditures below 75%
of the amounts set forth on Schedule 5.2(s) (provided that Seller shall
consult with Buyer regarding the allocation of such capital expenditures among
various projects) or (ii) research and development expenditures, other than in
the ordinary course of business consistent with past practice;
(t) will not (i) cause or permit the Designated Transferred
Subsidiaries or the Business Joint Ventures to declare or make any dividend or
distribution, (ii) issue, pledge, encumber or sell any shares of capital stock
or other equity interests in any of the Transferred Entities, or any
securities convertible into any such shares of capital stock or other equity
interests, or any rights, warrants or options to acquire any such shares of
capital stock or other equity interests, (iii) repurchase, redeem or otherwise
acquire any shares of capital stock or other securities of, or other ownership
interests in, any of the Transferred Entities or (iv) amend the certificate of
incorporation or by-laws or comparable organizational documents or amend the
terms of the outstanding securities of any Transferred Entity; and
(u) will not agree, commit or resolve to do any of the
foregoing.
Seller and each of the Selling Subsidiaries shall, with respect
to the Business Joint Ventures, act in their respective capacities as
shareholders and through their respective designees on the board of directors
(or comparable body) of the Business Joint Ventures to vote in favor of or
against, as applicable, the Business Joint Ventures taking any of the
foregoing actions. Additionally, Seller shall not, and shall cause its
Affiliates not to, enter into any transaction, contract, arrangement or
understanding with a Business Joint Venture or any third party holding an
equity interest in a Business Joint Venture that would constitute, or cause, a
breach by the Business Joint Venture of the covenants contained in this
Section 5.2 as if such covenants applied to such Business Joint Venture.
5.3 BUYER ACTIVITY ON AND AFTER THE CLOSING DATE
(a) On (but not after) the Closing Date, Buyer shall cause the
Transferred Subsidiaries to conduct their Business in the ordinary course and
shall not permit any Transferred Subsidiary to effect any extraordinary
transactions (other than any such transactions expressly required by
applicable Law or by this Agreement).
(b) Buyer shall not, with respect to any Pre-Closing Tax
Period, (i) file any amended Tax Return with respect to the Transferred
Entities or (ii) carry back any loss or other Tax attribute of the Transferred
Entities from any Post-Closing Tax Period unless, in each case,
46
Seller shall have consented in writing to such action by Buyer or such action
is required by law or a Final Determination or such action is the sole and
exclusive way under the law to claim the benefit of a loss or other Tax
attribute arising in the Post-Closing Tax Period. Buyer shall not, (x) with
respect to any Pre-Closing Tax Period, take any position with respect to Taxes
of the Business or the Transferred Entities that would have the effect of
shifting income to a Pre- Closing Tax Period (it being agreed and understood,
however, that, subject to clause (y), Buyer shall be entitled to file any
Post-Closing Tax Period Tax Return in any manner it chooses in its sole
discretion, and take any position it chooses with respect to any Post-Closing
Tax Period in its sole discretion) or (y) with respect to any Tax period, take
any position with respect to Taxes of the Business or the Transferred Entities
that is inconsistent with the form of the transaction as provided in Article 2
of this Agreement (except for such inconsistencies as are provided in Schedule
3.22(e)) unless, in each case, required by a Final Determination or Seller
shall have consented in writing to such action by Buyer.
(c) For a period of 6 months following the Closing Date, Buyer
shall not (i) except in the ordinary course of business, materially reduce the
net or gross assets below their level on the Closing Date of any Designated
Transferred Subsidiary or (ii) fail to use a substantial portion of the
existing assets of each Designated Transferred Subsidiary in a trade or
business conducted by such Designated Transferred Subsidiary. Seller agrees
that all of the assets of the Designated Transferred Subsidiaries, to the
extent used following the Closing in substantially the same manner as they are
used on the date of this Agreement, are used in a trade or business as such
terms are used in the immediately preceding sentence.
5.4 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 any
Selling Subsidiary to any Business Employee in connection with the operation
or conduct of 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 the operation or conduct of the
Business after the Closing Date.
(b) Seller shall not take any position with respect to Taxes of
the Business or the Transferred Entities that would have the effect of
shifting income as compared to Seller's past practice to a Post-Closing Tax
Period, except for a position (generally applicable to a Tax Return filed by
the consolidated or combined group of which Seller is the common parent, the
effect of which position is primarily on entities other than the Transferred
Entities) that conforms Seller's Tax reporting to Seller's accounting
reporting under Staff Accounting Bulletin 101.
(c) Seller and Buyer recognize their mutual obligations
pursuant to Section 1060 of the Code timely to file (or, in the case of Buyer,
to cause the applicable U.S. Subsidiary of Buyer to timely file) IRS Form 8594
(the "Asset Acquisition Statement") with their respective federal income Tax
Returns. Accordingly, Seller and Buyer shall, no later than 120 days after the
Closing Date, attempt in good faith to (i) enter into a Purchase Price
allocation agreement based on an initial proposal by the Buyer providing for
the allocation of the Purchase Price
47
among the Purchased Assets consistent with Schedule 5.4(c) and the provisions
of Section 1060 of the Code and the Treasury Regulations thereunder and (ii)
cooperate in the preparation of the Asset Acquisition Statement in accordance
with clause (i) for timely filing with their respective (or, in the case of
Buyer, the applicable U.S. Subsidiary's) federal income Tax Returns. If Seller
and Buyer shall have agreed on a Purchase Price allocation and an Asset
Acquisition Statement, then Seller and Buyer (or Buyer's U.S. Affiliate or
Subsidiary) shall file the Asset Acquisition Statement in the form so agreed
and neither Seller nor Buyer (nor any of their respective Affiliates or
Subsidiaries or successors to or transferees of the Business) shall take a Tax
position for U.S. federal, state or local income Tax purposes which is
inconsistent with such Purchase Price allocation, except as otherwise required
pursuant to a Final Determination. In no event shall Seller or Buyer (or any
of their respective Affiliates or Subsidiaries or successors to or transferees
of the Business) take a position for U.S. federal, state or local income tax
purposes that is inconsistent with Schedule 5.4(c), except as otherwise
required pursuant to a Final Determination.
5.5 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 or leave of absence, but excluding those
absent due to illness or short-term disability or other approved leave of
absence (including under the Family and Medical Leave Act or workers'
compensation)). Business Employees who accept such offer of employment, as of
the effective date of their employment with Buyer or one of its Affiliates,
and Transferred Subsidiary
Employees who remain employed by a Transferred Subsidiary or a Subsidiary of a
Transferred Subsidiary immediately following the Closing Date, shall be
referred to as "Immediately Transferred Employees." In addition, Buyer shall
make offers of employment to any Business Employee who is, as of the Closing
Date, absent due to illness or short-term disability or other approved leave
of absence (including under the Family and Medical Leave Act or workers'
compensation) who is able and willing to return to work within 180 days (or
such longer time as may be required by a Collective Bargaining Agreement)
after the Closing Date (a "Returning Inactive Business Employee"). Each
Returning Inactive Business Employee who accepts such offer and actually
returns to work within 180 days (or such longer time as may be required by a
Collective Bargaining Agreement) after the Closing Date shall be referred to
as a "Subsequently Transferred Employee," and the Immediately Transferred
Employees and the Subsequently Transferred Employees shall be referred to
collectively as the "Transferred Employees." Transferred Employees who are
represented by a union or other collective bargaining group are referred to as
"Represented Transferred Employees"; and Transferred Employees who are not
represented by a union or other collective bargaining group are referred to as
"Nonrepresented Transferred Employees." Notwithstanding any other provision of
this Agreement, any Business Employee or Transferred Subsidiary Employee whose
employment with Seller, the Selling Subsidiaries, the Transferred Subsidiaries
and the Subsidiaries of the Transferred Subsidiaries terminates before the
Closing Date or who is considered, for purposes of retirement benefits under
any Benefit Plan as having retired as a result of the termination of his or
her employment with Seller and the Selling Subsidiaries in connection with the
consummation of the transactions contemplated hereby, shall not be a
Transferred Employee, regardless of whether he or she is hired by Buyer or any
of its Affiliates, and Buyer shall not be obligated to offer employment to
48
any such individual. Employment of Transferred Employees with Buyer shall be
effective as of the Business Day following the close of business on the
Closing Date, except that the employment of Business Employees 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 if such date is within 180 days (or such longer time as may be
required by a Collective Bargaining Agreement); provided, that Buyer's
obligation to employ any Returning Inactive Business Employee shall be subject
to the availability of a comparable position at such time, subject to
applicable Law, and if no such comparable position is available, such
Returning Inactive Business Employee shall receive severance benefits from
Buyer in accordance with Section 5.5(b)(ii) as if Buyer had terminated such
Returning Inactive Business Employee's employment on the date he or she
presented himself or herself for work with the Buyer (and Buyer shall assume
all liabilities relating to its failure to employ any such Returning Inactive
Business Employee in the same position or a comparable position upon such
employee's failed attempt to return to work after presenting himself or her
herself for work in accordance with applicable Law). Employment with Buyer of
Business Employees based in the United States who are non-immigrant visa
holders for whom a change in immigration status is required prior to
commencement of employment with Buyer shall be effective, however, as of the
day following the close of business on the date such change becomes effective;
provided, however, that Seller shall offer to continue to employ such Business
Employees until such change becomes effective for the purpose of providing
services for the benefit of Buyer, and Buyer shall reimburse Seller for all
compensation, employee benefits and other costs incurred or provided by Seller
in continuing to employ such Business Employees and providing such services to
Buyer during such period on a basis to be agreed upon by Seller and Buyer,
which is not inconsistent with the methodologies used in the Transition
Services Agreement. The date on which an Immediately Transferred Employee's
employment with Buyer becomes effective, is referred to as the "Initial Start
Date," for Subsequently Transferred Employees, such date is referred to as the
"Subsequent Start Date," and each such effective date is a "Start Date."
Except as specifically provided in this Section 5.5, Buyer shall indemnify,
defend and hold harmless Seller and its Affiliates from any and all claims,
causes of actions, charges or suits asserted or brought by any Business
Employee arising out of or in connection with the Buyer's employment of or
failure to offer employment to, or Buyer's termination of employment of, any
Business Employee not in accordance with the terms of this Agreement,
including claims for severance or other separation benefits and employment
discrimination claims.
(b) (i) As of the applicable Start Date, and until at least
December 31, 2002, Buyer shall provide Transferred Employees a total
compensation package of salary, bonus opportunity and benefits that, in the
aggregate, is no less favorable than that provided to them by Seller or the
applicable Selling Subsidiary as of the date hereof, including under all
Benefit Plans, or, if less favorable, those provided by Seller or the
applicable Selling Subsidiaries to its similarly situated employees at the
relevant time. Except as expressly set forth in this Section 5.5, no assets of
any Benefit Plan shall be transferred to Buyer. Each employee benefit plan,
program, policy and arrangement of Buyer, including Pension Plans, Welfare
Plans, vacation plans and severance plans, shall recognize (x) 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 Selling Subsidiary and
(y) for
49
purposes of eligibility to participate, early retirement eligibility, early
retirement subsidies, vesting, schedule of benefits and benefit accrual other
than under defined benefit pension plans, all service with Seller or a Selling
Subsidiary, including service with predecessor employers that was recognized
by Seller or a Selling Subsidiary and any prior unbridged service with Seller
or a Selling 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 Initial Start Date and tuition assistance to those
Transferred Employees who are receiving such benefits as of the Initial Start
Date for the current academic session. Buyer shall pay to each Transferred
Employee any fees to which he or she would have been entitled under the Lucent
Work With ME Program; provided, however, he or she and the referred individual
remain employed by Buyer and/or Seller and/or one or more of any of their
respective Affiliates throughout the required period. Buyer will honor the
terms and conditions of Seller's international assignee program, including
repatriation upon completion of assignment, completion bonuses, Tax
equalization and Tax Return preparation, with respect to Transferred Employees
who are on international assignment as of the Closing Date, except that these
costs shall be allocated between Buyer and Seller based on the portion of the
international assignment occurring prior to the Closing Date (which shall be
Seller's obligation) and on or after the Closing Date (which shall be Buyer's
obligation).
(ii) Seller and Buyer intend that the transactions
contemplated by this Agreement shall not constitute a severance or termination
of employment of any Employee prior to or upon the consummation of the
transactions contemplated hereby and that such employees will have continuous
and uninterrupted employment immediately before and immediately after the
Closing Date and their respective Start Dates. Except as specified in Section
5.5(q), Seller shall be solely responsible for all liabilities for severance
pay and benefits, redundancy pay and benefits, termination pay and benefits,
payments and benefits in lieu of notice, indemnity or other payments resulting
from the transactions contemplated by this Agreement or arising on or prior to
the Closing Date, supplemental pension benefits and similar obligations
(whether arising under applicable Law or a Benefit Plan or otherwise) (x) with
respect to Employees that arise as a result of the actual or constructive
termination of their employment with Seller and its Affiliates, (y) with
respect to Business Employees as to whom Buyer complies with Section 5.5(a)
who do not become Transferred Employees and/or (z) that arise out of or result
from actions of Seller and its Affiliates. Notwithstanding anything to the
contrary in this Agreement, until at least December 31, 2002, Buyer shall
provide severance benefits and/or supplemental pension benefits which are no
less favorable than those provided under Seller's Management Separation Plan
and Retirement Income Plan (each as in effect on the date of this Agreement)
(A) to Nonrepresented Transferred Employees in the United States whose
employment with Buyer or any of its Affiliates is terminated after their Start
Dates and on or before December 31, 2002 that are equivalent to the benefits,
if any, that would have been paid to such Transferred Employees had they been
declared "at risk" and terminated employment under the Lucent Management
Separation Plan and the Lucent Retirement Income Plan (the "LRIP"), as in
effect as of the Closing Date and (B) to Nonrepresented Transferred Employees
outside the United States whose employment with Buyer or any of its Affiliates
is terminated after their Start Dates that are equivalent to the benefits they
would have received under the applicable severance plans and policies of
Seller or its Affiliate had such plans and policies, as in effect on the
Closing Date,
50
applied to such termination of employment (but not less than any minimum
statutory severance obligations under local Law).
(c) Buyer agrees that its health and welfare plans in which
Transferred Employees participate on and after their respective Start Dates
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 Selling Subsidiary) and any proof
of insurability in respect of Transferred Employees. 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. Seller shall
remain responsible for any benefits payable under a Benefit Plan with respect
to (i) claims incurred by Business Employees who do not become Transferred
Employees and (ii) claims incurred by Transferred Employees prior to their
respective Start Dates except to the extent that the liability for such
benefits has been transferred to and assumed by Buyer and their benefit plans,
programs, policies and arrangements in accordance with this Section 5.5. The
medical and dental plans maintained by Buyer shall recognize as dependents of
the Transferred Employees any Class 2 dependents recognized by Seller's
medical and dental plans.
(d) (i) As soon as practicable following the Closing Date, but
in no event later than 120 days after the Closing Date, Buyer shall have in
effect one or more defined contribution savings plans intended to qualify
under Sections 401(a) and 40l(k) of the Code that provide coverage to
Nonrepresented Transferred Employees, and shall maintain such plan or plans
for three years after the Closing Date.
(ii) As soon as practicable following the Closing Date,
but in no event later than 120 days after the Closing Date, Buyer shall have
in effect 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") that provides Represented Transferred Employees, for three years after
the Closing Date, with an election to retain Lucent common stock, Avaya Inc.
common stock and, if applicable, Agere Systems Inc. common stock held in the
Lucent Stock Fund, the Avaya Stock Fund, the Agere Stock Fund (if applicable
due to a distribution of Agere common stock by Seller before the Closing Date)
or the Employer Shares Fund within the Lucent Technologies Inc. Long Term
Savings and Security Plan ("LTSSP"); provided that Seller shall not permit,
and shall cause the LTSSP not to permit, Transferred Employees to elect to
acquire any additional shares of such common stock in their accounts in the
LTSSP after the Closing Date. In addition, Buyer and the Buyer Represented
Savings Plan shall not be required (i) to permit Transferred Represented
Savings Plan Participants to acquire additional shares of such common stock in
their accounts under the Buyer Represented Savings Plan, nor (ii) to comply
with the requirements of the preceding sentence to the extent Buyer or any
fiduciary of the Buyer Represented Savings Plan determines that to do so would
be inconsistent with its obligations under ERISA. 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 and (iii) an opinion of
Buyer's counsel to the effect that the terms of Buyer Represented Savings Plan
meet the applicable requirements of Sections 401(a) and 401(k) of the Code and
the related trust thereunder is exempt from tax under Section 501(a) of the
Code, Seller shall direct the trustee of
51
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 both
an Immediately Transferred Employee and a Represented Transferred Employee,
together with cash, cash equivalents or other mutually acceptable property,
the value of which on such transfer date is equal to such liability. A similar
transfer of assets and liabilities from the LTSSP to the Buyer Represented
Savings Plan for Subsequently Transferred Employees who are Represented
Transferred Employees shall be carried out as soon as practicable after the
180th day following the Closing Date. Upon completion of each the transfers
described herein, the LTSSP shall be relieved of, and the Buyer Represented
Savings Plan shall assume liabilities for the payment of the account balances
of the Represented Transferred Employees transferred to the Buyer Represented
Savings Plan in such transfer. 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 IRS
Forms 5310 with respect to such transfer.
(e) Buyer's pension plans and their related trusts (and any
successor to such plans and/or trusts) shall provide (i) that with respect to
assets transferred to Buyer's pension plans in accordance with this Section
5.5, such assets shall be held by the trusts which are a part of Buyer's
pension plans for the exclusive benefit of the participants in such plans;
(ii) that the accrued benefits as of the Closing Date of each Transferred
Employee may not be decreased by amendment or otherwise; (iii) that each
Transferred Employee shall have the right to receive his or her benefit
accrued through the Closing Date under the Lucent Occupational Plan or LRIP,
as the case may be, in any optional form provided under such plans; (iv) that
until December 31, 2002, each Transferred Employee shall accrue benefits
thereunder pursuant to benefit formulas that are no less favorable than those
provided in the Lucent Occupational Plan or LRIP, as the case may be, each as
in effect on the Closing Date or, if less favorable, as in effect at the
relevant time thereafter; and (v) that each Transferred Employee, upon his or
her termination of employment on or before December 31, 2002, shall have the
right to receive a benefit that is no less than the sum of (1) his or her
accrued benefit under Buyer's pension plans as of the expiration of such
period, determined after taking into account any increase in the Transferred
Employee's compensation following the expiration of such period and (2) any
additional benefit accrued following the expiration of such period.
(f) In connection with the performance of its obligations under
Section 5.5(e), 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 180 days
after the Closing Date, establish or amend two or more defined benefit pension
plans (the "Buyer Represented Pension Plan" and the "Buyer Nonrepresented
Pension Plan", collectively referred to as the "Buyer Pension Plans"), with
trusts thereunder (the "Represented Pension Trust" and the "Nonrepresented
Pension Trust"), for the purpose of accepting a transfer of the pension plan
liabilities and assets attributable to Represented Transferred Employees and
Nonrepresented Transferred Employees, respectively, 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 Pension Trust, and from the trust under
the LRIP to the Nonrepresented Pension Trust, cash or, to the extent agreed by
the parties, marketable securities in an amount
52
(the "First Pension Transfer Amount") equal to 90% of the estimated Pension
Transfer Amount for the Represented Transferred Employees and Nonrepresented
Transferred Employees, respectively, plus earnings on the amounts transferred
from the Closing Date through the First Transfer Date at the Discount Rate
(used for purposes of Section 5.5(g)). As of the first administratively
practicable date at least 180 days 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 Pension Trust, and from the trust under
the LRIP to the Nonrepresented Pension Trust, respectively, cash or, to the
extent agreed by the parties, marketable securities in an amount (the "Second
Pension Transfer Amount") equal to (A) the sum of (i) the Pension Transfer
Amount updated to reflect benefit obligations relating to any Subsequently
Transferred Employees, minus the First Pension Transfer Amount, plus (ii)
earnings on the amount described in clause (i) from the Closing Date through
the Second Transfer Date at a rate equal to the Discount Rate, reduced by (B)
the sum of (iii) the aggregate amount of any pension benefit payments made by
the Lucent Occupational Plan on behalf of the Buyer's Represented Pension
Plan, and the LRIP on behalf of the Buyer's Nonrepresented Pension Plan, as
the case may be, from the Closing Date through the Second Transfer Date, plus
(iv) earnings on the amount described in clause (iii) from the Closing Date
through the Second Transfer Date at a rate equal to one-half the Discount
Rate. In the event the Second Pension Transfer Amount is less than zero, then
Buyer shall transfer or cause to be transferred such amount in cash or, to the
extent agreed by the parties, marketable securities, from the Represented
Pension Trust back to the trust under the Lucent Occupational Plan, or from
the Nonrepresented Pension Trust back to the trust under the LRIP, as the case
may be. Subject to the completion of the asset transfers described in this
Section 5.5(f), all of the obligations and associated liabilities of the
Lucent Occupational Plan relating to the Represented Transferred Employees as
of the Closing Date shall be assumed in full by the Represented Pension Trust
and the Buyer Represented Pension Plan, and all the obligations and associated
liabilities of the LRIP relating to the Nonrepresented Transferred Employees
shall be assumed in full by the Nonrepresented Pension Trust and the Buyer
Nonrepresented Pension Plan.
(g) For purposes of this Section 5.5, the "Pension Transfer
Amount" shall be determined separately for the Lucent Occupational Plan and
the LRIP, and shall mean the greater of (A) and (B), where (A) shall be the
minimum required transfer amount determined in accordance with the terms of
the applicable plan 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 5.5(g) shall be the assumptions used by Seller to determine the
funding requirements for the 2000 plan year and 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 projected benefit obligation
under FAS 87 as of the Closing Date with respect to Represented Transferred
Employees (for the Lucent Occupational Plan transfer) and with respect to
Nonrepresented Transferred Employees (for the LRIP transfer), (II) is the
accumulated postretirement benefit obligation for postretirement medical and
dental plans under FAS 106 as of the Closing Date with respect to Represented
Transferred Employees (for the Occupational Plan transfer), and with respect
to Nonrepresented Transferred Employees (for the LRIP transfer) and (III) is
the amount transferred under Section 5.5(h)(i) with respect to the
53
postretirement medical and dental plans for Represented Transferred Employees
(for the Lucent Occupational Pension Plan transfer), and zero (for the LRIP
transfer). For purposes of the preceding sentence, such projected 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 used by Seller for purposes of
Seller's financial disclosures under FAS 87 and FAS 106 for such plans as of
September 30, 2000, except that the discount rate used shall be 7.25%
compounded annually (the "Discount Rate").
(h) Assets of certain of Seller's Voluntary Employees' Benefits
Associations ("VEBAs") will be transferred to Buyer's VEBAs as described in
this Section 5.5(h).
(i) This Section 5.5(h)(i) shall govern the transfer of
assets from the Lucent Postretirement Health VEBA for occupational employees
to one or more corresponding Buyer Postretirement Health VEBAs, 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. If Seller is reasonably
satisfied that the corresponding Buyer Postretirement Health VEBA is tax-
exempt under Section 501(c)(9) of the Code, then 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 Postretirement Health 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 Lucent Postretirement
Health VEBA and their dependents, 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 Lucent Postretirement Health VEBA.
(ii) This Section 5.5(h)(ii) 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. If Seller is reasonably satisfied that the corresponding Buyer
Postretirement Life VEBA is tax-exempt under Section 501(c)(9) of the Code,
then 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 postretirement benefit
obligation under FAS 106 for Represented Transferred Employees whose
postretirement life benefit is funded by such Lucent Postretirement Life 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.
54
For purposes of computing the denominator used in the VEBA
asset transfer calculations set forth in the last sentence of Section
5.5(h)(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, assumptions and
methods used by Lucent in determining the disclosure of accumulated
postretirement benefit obligation under FAS106 as of September 30, 2000,
except that the discount rate used shall be the Discount Rate. 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 their dependents (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 at the Discount Rate 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.
(i) 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
5.5(f), (g), and (h), 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 (including all census information
required to perform an appropriate review), and 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.
(j) Buyer shall notify Seller in writing of Buyer's
disagreement with any determination made by Seller pursuant to Section 5.5(i)
as soon as practicable and in any event within 60 days after the date as of
which all information specified in Section 5.5(i) has been 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 agreement as to all matters in dispute. Buyer shall not
be entitled to object to the determinations of Seller based on any
disagreement as to the rates or assumptions used by Seller so long as such
rates and assumptions are those specified in this Section 5.5. The
determinations of Seller's actuary under Sections 5.5(f), (g), and (h) shall
be conclusive unless Buyer's actuary claims that the proper total of such
amounts differs from Seller's determination by more than 1%. If the parties,
notwithstanding such good faith effort, fail to resolve all matters in dispute
within 30 days after Buyer advises Seller of its objections, and the amount in
dispute is greater than 1% of the total amount determined by Seller's actuary
under Sections 5.5(f), (g), and (h), then any remaining disputed matters shall
be finally and conclusively determined by a qualified independent actuary
selected by Seller and Buyer, which actuary shall not be the regular actuary
of either party. Promptly, but in no event later than 30 days after its
acceptance of its appointment, the actuary shall determine (based solely on
presentations by Seller and Buyer and not by independent review) only those
matters in dispute and shall render a written report as to the disputed
matters and the resulting calculation of the pension or other assets required
to be transferred by Seller in accordance with the provisions of Sections
5.5(f), (g), or
55
(h), which report shall be conclusive and binding upon the parties. The parties
shall share the fees and expenses of the independent actuary equally.
(k) Seller hereby acknowledges that for FICA and FUTA Tax
purposes, Buyer qualifies as a successor employer with respect to the
Transferred Employees. In connection with the foregoing, at Buyer's option,
Seller agrees to follow the "Alternative Procedures" set forth in Section 5 of
Revenue Procedure 96-60. Buyer shall notify Seller of its intention to follow
the "Alternative Procedures" on or immediately after the Closing Date. If the
"Alternative Procedures" are followed, Seller and Buyer understand that Buyer
shall assume Seller's entire obligation to furnish a Form W-2, Wage and Tax
Statement, to the Transferred Employees. In addition to all personnel files
and records relating to the Transferred Employees that Seller shall deliver to
Buyer as of the Closing Date or as otherwise required by this Agreement,
Seller shall timely provide Buyer with any and all other information (and in
such format and media) as it shall reasonably request to properly comply with
the requirements in the preceding sentence, which in no event shall be more
than 10 Business Days from the date of a written request for such information.
(l) (i) Buyer shall assume the Collective Bargaining Agreements
identified in Schedule 5.5(l)(i) effective as of the Initial Start Date,
subject to certain modifications (a) reflecting the identity of Buyer as the
new employer, (b) reflecting the inapplicability of certain provisions of the
Collective Bargaining Agreements to the Transferred Employees resulting from
the Buyer's purchase of only a portion of the Seller's operation, and (c) to
the provisions of the Neutrality Agreement such that the Neutrality Agreement
shall be limited in its scope to only those corporate entities and facilities
listed on Schedule 5.5(l)(i), and shall not apply to any other corporate
entities or facilities even if by its terms it would so apply as a result of
changed circumstances. In the event that any modification set forth in clauses
(a), (b) and (c) of this Section 5.5(l)(i) is not made to the Collective
Bargaining Agreements, Buyer shall not be obligated to assume the Collective
Bargaining Agreements, and the Collective Bargaining Agreements shall be
deemed Excluded Assets.
(ii) Buyer shall assume each Employment Agreement with a
Business Employee that is either required by applicable law or identified in
Schedule 5.5(l)(ii), in each case effective as of the Start Date for the
Business Employee who is party thereto, and provided that such Business
Employee has become a Transferred Employee.
(m) Seller shall make and be responsible for incentive
compensation payments to Nonrepresented Transferred Employees for the period
from October 1, 2000, through the Closing Date in accordance with its
short-term incentive plan in effect for such period.
(n) Seller shall be responsible for and shall defend,
indemnify and hold harmless Buyer for any failure to provide health
continuation coverage (including any penalties, excise taxes or interest
resulting from the failure to provide continuation coverage) required by
Section 4980B of the Code due to any qualifying event with respect to any
Transferred Employee or any dependent thereof that occurs on or before the
Transferred Employee's Start Date. Buyer shall be responsible for and shall
defend, indemnify and hold harmless Seller for any failure to provide health
continuation coverage (including any penalties, excise taxes or interest
resulting from the failure to provide continuation coverage) required by
Section 4980B
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of the Code due to any qualifying event with respect to any
Transferred Employee or any dependent thereof that occurs after the
Transferred Employee's Start Date.
(o) (i) Effective as of the Closing Date, Buyer shall adopt, or
cause to be adopted, plans for the benefit of Transferred Employees employed
outside the United States ("Non-U.S. Plans"). Where applicable Law or rules of
any non-U.S. jurisdiction provide for the transfer of employment of the
Business Employees upon a sale of the Business, (x) Buyer shall assume and
honor all terms and conditions of employment in respect of the Business
Employees to the extent required to accomplish such transfer of employment and
(y) Buyer and Seller agree to take such actions as are reasonably practicable
(including the assumption, if necessary, of potential or actual liabilities
relating to the employment of Business Employees) such that the employment of
the Business Employees will transfer to the Buyer and/or one or more of its
Affiliates and Subsidiaries as a matter of Law on the Initial Start Date.
Buyer shall offer to employ each Business Employee at the same salary or wages
payable by Seller and the Selling Subsidiaries to such Business Employee
immediately prior to the Closing Date and shall maintain terms and conditions
of employment which replicate those provided by Seller and the Selling
Subsidiaries immediately prior to the Closing Date as and to the extent
required by applicable Law (including the E.U. Acquired Rights Directive) or
as a result of negotiation with applicable works councils and/or unions. All
offers of employment made by Buyer and its Affiliates and Subsidiaries shall
be sufficient to avoid statutory severance obligations, other than where such
severance is automatic, in which event such severance shall be borne by
Seller. Buyer shall bear all expenses of any compensation resulting from
negotiations with works councils and/or unions and agreed to by Buyer for
which Seller is not specifically liable under this Agreement. Nothing herein
shall be construed as a representation or guarantee by Seller that Business
Employees will accept Buyer's or its Affiliate's or Subsidiary's offer of
employment or will continue in employment following the Closing Date. Buyer
and Seller agree to comply with all applicable local Laws and collective
agreements pertaining to the subject matter of this Agreement.
(ii) As of the Closing Date, to the extent Legally
Permitted: (A) liabilities of the Non-U.S. Plans of Seller or an Affiliate of
Seller relating to Transferred Employees or Denmark Transferred Employees, as
applicable, shall be assumed by the appropriate Non-U.S. Plans of Buyer (or,
in the case of a Benefit Plan maintained by the Denmark Transferred Subsidiary
(a "Denmark Plan"), by the appropriate Non-U.S. Plans of Seller); and (B) a
portion of any assets of the Non-U.S. Plans of Seller or an Affiliate of
Seller or the Denmark Plan, as applicable, shall be transferred to the
appropriate Non-U.S. Plans of Buyer or Seller, as applicable, in accordance
with this Section 5.5(o)(ii). If a Non-U.S. Plan specifies a transfer basis,
that basis shall be used to compute the asset transfer amount. Otherwise, the
asset transfer amount shall be the amount for each Transferred Employee or
Transferred Denmark Employee, as applicable, that has been individually
funded/insured for that employee if funding/insuring is performed on an
individual-by-individual basis. If neither of the two immediately preceding
sentences apply, the asset transfer amount for each Transferred Employee or
Transferred Denmark Employee, as applicable, shall be the accumulated benefit
obligation multiplied by the present benefit obligation funded percentage,
both determined on the basis of the actuarial methods and assumptions that are
consistent with applicable local convention and custom. Where required, the
parties hereto will use reasonable best efforts to obtain any
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necessary consents to such transfer of assets and liabilities. If such a
transfer is made by Seller or Buyer, Buyer or Seller, as applicable, expressly
agrees that it will not take any direct or indirect action to revert pension
assets for a period of five years following the applicable Closing.
(iii) For purposes of this Section 5.5(o), "Legally
Permitted" means permitted under the laws of the country, the labor union,
works council or collective agreement, including after expiration of any
mandated waiting periods before which expiration working conditions (including
benefits) cannot be changed, and including actions allowed after receiving
consent from individual employees and/or plan trustees, foundation boards and
members and any other organizations having a recognized right to determine or
affect benefits and/or funding of a plan.
(p) Seller shall periodically deliver to Buyer an updated
Schedule 3.9(a), with the last such update being provided within five Business
Days after the Closing Date with information accurate as of the Closing Date.
From and after the date of this Agreement, Seller shall provide Buyer, upon
Buyer's request, with copies of all such Benefit Plans, Employment Agreements
and Collective Bargaining Agreements and amendments thereto that it has not
provided to Buyer before the date of this Agreement. Notwithstanding any other
provisions of this Agreement, Buyer shall not be obligated to comply with any
requirement of Section 5.5(a), (b), (c) or (e) with respect to a Transferred
Employee to the extent Seller has failed to provide, on Schedule 3.9(a) as so
updated, the information necessary for it to do so with respect to such
Transferred Employee. In addition, Seller shall provide to Buyer, upon Buyer's
request, a breakdown of the information provided pursuant to Section 5.5(i)
showing such information on an employee-by-employee basis in such a manner
that Buyer can identify each employee and the information relevant to that
employee.
(q) Buyer shall assume and be responsible for: (i) the accrued
vacation, personal days and floating holidays of Transferred Employees; (ii)
50% of the liabilities and obligations of Seller under the "Senior Leadership
Success Incentive," "Enhanced Retention" and "Transition Bonus" arrangements
with the Transferred Employees as set forth in the agreements listed on
Schedule 5.5(q), which 50% shall not exceed, in the aggregate, $26.925
million; and (iii) the liabilities and obligations of Seller with respect to
benefits of Transferred Employees under Seller's Supplemental Pension Plan; in
each case from and after the applicable Start Date, and in the case of the
accrued vacation and Supplemental Pension Plan liabilities and obligations,
only to the extent such items are reflected on the Balance Sheet. In addition,
Buyer shall assume and be responsible for all other liabilities and
obligations arising out of or relating to the employment of any Transferred
Employee by Buyer after the applicable Start Date.
(r) Except as specifically provided otherwise in this Section
5.5, Seller shall retain and be solely responsible for all obligations and
liabilities under, arising out of or relating to: (i) Benefit Plans; (ii) the
employment on or before the applicable Start Date of any Transferred Employee
by Seller and its Affiliates; (iii) the employment by Seller and its
Affiliates of any individuals (including Business Employees and former
employees of the Business) who do not become Transferred Employees for any
reason.
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(s) No provision of this Section 5.5 requiring the provision of
compensation and benefits (in the aggregate or in particular) shall apply to
Represented Transferred Employees to the extent permitted as a result of any
changes pursuant to collective bargaining. No provision of this Section 5.5
shall be construed to require the provision of compensation and benefits to
Transferred Employees following termination of their employment with Buyer,
other than compensation and benefits that are by their nature provided after
termination of employment (such as severance pay and retirement benefits).
(t) To the extent the Denmark Transferred Subsidiary: (i)
employs any individual who is not a Transferred Subsidiary Employee, the
employment of such individual (a "Transferred Denmark Employee") shall be
transferred to Seller or one of its Affiliates that is not a Transferred
Entity prior to the Closing Date, in a manner that would satisfy the
requirements of Section 5.5(o)(i), if such Transferred Denmark Employee had
been a Business Employee; and (ii) maintains any Benefit Plan, such entity
shall continue to maintain such Benefit Plan following the Closing Date and
shall retain all assets and liabilities thereunder (and Seller and its
Affiliates shall cease to have any liabilities thereunder at such time),
except as specified in Section 5.5(o), true and complete copies of such
Benefit Plan and any related funding information shall be provided to Buyer as
soon as practicable following the date hereof, and any individuals specified
in clause (i) hereof shall cease participation in such Benefit Plan as of the
Closing Date.
(u) The Transition Services Agreement shall include schedules
relating to human resources services substantially in the form attached hereto
in Schedule 5.5(u), with such changes as Seller and Buyer may hereafter agree.
Seller and Buyer shall use reasonable best efforts to finalize such schedules,
together with additional schedules providing for human resources services
(including payroll and benefits where necessary) for Transferred Employees
outside the United States, in order to fulfill their obligations under clauses
(vi) and (vii) of Section 5.7.
5.6 LEASED EQUIPMENT
At least fifteen (15) days prior to the Closing Date, Seller
shall provide Buyer with the costs and other terms applicable to the Leased
Equipment and, on or prior to the Closing Date, Buyer shall decide which of
such Leased Equipment will (i) transfer to Buyer as of the Closing Date by
Seller or the applicable Selling Subsidiary transferring and assigning and
Buyer assuming the leases for such equipment (the "Assumed Leased Equipment"),
(ii) become the property of Buyer as of the Closing Date by Buyer paying for
the costs of purchasing such equipment pursuant to the leases (the "Purchased
Leased Equipment") or (iii) remain the property of Seller or a Subsidiary as
of the Closing Date (the "Excluded Leased Equipment").
5.7 REASONABLE BEST EFFORTS
Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement and the Collateral
59
Agreements, including using reasonable best efforts to accomplish the
following: (i) the taking of all acts necessary to cause the conditions to
Closing to be satisfied as promptly as practicable, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Bodies and the making of all necessary registrations and filings
(including filings with Governmental Bodies, if any) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Body, (iii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Body
vacated or reversed, (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement, (vi) the implementation of
the provisions of Section 5.5 in a manner that avoids the interruption of the
provision of pay and employee benefits from and after the Closing Date, and
(vii) the provision by Seller to Buyer of at least 60 days' advance notice of
any material Benefit Plan changes that impact Employees. For purposes of this
Section 5.7, the reasonable best efforts of Buyer shall include Buyer's
agreement to hold separate and divest any assets of the Business or any
portion of the Business that would not constitute a material portion of the
assets and businesses of Buyer, its Subsidiaries and the Cable JV, taken as a
whole, immediately following the Closing.
5.8 PERMIT TRANSFER
(a) Except for those Governmental Permits that are not
transferable by Law, Seller and the Selling Subsidiaries shall use reasonable
best efforts to cause the issuance or transfer of the Governmental Permits to
Buyer (or Affiliates, Subsidiaries, assignees, designees or nominees of Buyer)
upon the Closing Date in form and substance the same as the Governmental
Permits that were held by Seller or the Selling Subsidiaries, provided that
Buyer may in its discretion elect for any of the Governmental Permits not to
be issued or transferred to Buyer but to be retained or surrendered by Seller
or the Selling Subsidiaries. Seller shall, and shall cause the Selling
Subsidiaries to, give and make all required notices and reports to the
appropriate Governmental Bodies and Persons with respect to the Governmental
Permits that may be necessary for the sale and purchase of the Business and
the ownership, operation and use of the Purchased Assets by Buyer (or its
Affiliates, Subsidiaries, assignees, designees or nominees) after the Closing
Date.
(b) Seller shall, and shall cause the Selling Subsidiaries to,
assist and cooperate with Buyer in obtaining the issuance in the name of Buyer
(or any Affiliate, Subsidiary, assignee, designee or nominee of Buyer) of any
Governmental Permits that is not transferable, and Seller shall, and shall
cause the Selling Subsidiaries to, take all actions reasonably requested by
Buyer to facilitate that issuance, including the preparation of any
Governmental Permit applications or necessary documents, whether for signature
by Seller or by Buyer.
(c) If any Governmental Permits to be transferred or issued to
Buyer hereunder is not transferred or issued to Buyer (or any designated
Affiliate, Subsidiary, assignee,
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designee or nominee of Buyer) on or before
the Closing Date in a manner reasonably satisfactory to Buyer, Seller and the
Selling Subsidiaries shall use reasonable best efforts to implement such
transfer or issuance as promptly as practicable. Pending any delayed transfer
or issuance, Seller and the Selling Subsidiaries undertake to maintain in
force, and authorize Buyer to operate under and utilize, the Governmental
Permits in question, to the extent permitted by Law, for the period from and
after the Closing Date until such Governmental Permits are issued or
transferred to Buyer.
(d) Buyer shall use its reasonable best efforts to assist and
cooperate with Seller in the fulfillment of Seller's obligations under this
Section 5.8.
5.9 ADVICE OF CHANGES
Seller will promptly advise Buyer in writing of (i) any event
known to Seller that would render any representation or warranty of Seller
contained in this Agreement or any Collateral Agreement, if made on or as of
the date of such event or the Closing Date, untrue or inaccurate in any
material respect, (ii) any change, condition or event that has had or could
reasonably be expected to have a Material Adverse Effect or (iii) any failure
of Seller to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder.
5.10 THIRD PARTY CONFIDENTIALITY AGREEMENTS
On or prior to the Closing Date, Seller shall provide Buyer
with originals or true and complete copies of all agreements, contracts and
instruments pursuant to which, since January 1, 2000, in connection with the
proposed sale of the Business or any material portion thereof, Seller or any
of its Affiliates has disclosed on a confidential basis any Confidential
Information of, or relating to, the Business to any Third Party (collectively,
"Third Party Confidentiality Agreements"). Within (2) two Business Days after
the date hereof, Seller shall request that all parties (other than any party
with whom Seller is actively engaged in negotiations with respect to a
potential business combination or other similar transaction) who received
Confidential Information of or relating to the Business return such
Confidential Information in accordance with the provisions of the applicable
Third Party Confidentiality Agreement.
5.11 USE OF LUCENT'S NAME
Buyer agrees that (i) as soon as reasonably practicable after
the Closing, it shall ▇▇▇▇ products and other property, both internally and
externally, with Buyer's name and ▇▇▇▇ and shall remove and cease to ▇▇▇▇
products and other property with the names, marks or other indicia of
"Lucent," "Lucent Technologies," "▇▇▇▇ Labs," the Lucent Innovation Ring logo
or other similar ▇▇▇▇; provided, however, that for a period of six (6) months
following the Closing Date, Buyer may continue to use or dispose of any
Inventory product specifications, manuals and other accompanying materials,
and packaging and shipping materials that bear the ▇▇▇▇ "Lucent," "Lucent
Technologies" or other similar ▇▇▇▇, in a manner consistent with that employed
immediately prior to the Closing, and (ii) it shall not advertise or hold
itself out as Lucent or an Affiliate thereof after the Closing Date. Buyer
shall use its reasonable best efforts to cause the names of all applicable
Transferred Entities to be changed to delete any references to "Lucent" from
such names as promptly as reasonably practicable after the Closing Date.
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5.12 NON-SOLICITATION OF EMPLOYEES
(a) None of Seller, any of its Affiliates or any of their
respective representatives will at any time prior to two (2) years from the
Closing Date, directly or indirectly, solicit the employment of any
Transferred Employee or Transferred Subsidiary Employee or induce or
encourage, or assist others to induce or encourage, any Employee to decline an
employment arrangement with Buyer, in each case without Buyer's prior written
consent. For purposes of this Section 5.12(a), the term "solicit the
employment" shall not be deemed to include generalized searches for employees
through media advertisements, employment firms or otherwise that are not
focused on Persons employed by Buyer and its Affiliates or any successor. This
restriction shall not apply to any Employee whose employment with Buyer or its
successor is involuntarily terminated by Buyer or its successor after the
Closing or who has retired in good standing from Buyer or its successor.
Solicitation of employment shall be deemed to occur if the Persons who perform
such solicitation have knowledge of this Agreement or if such Persons have no
knowledge of this Agreement but Seller's employees with knowledge of this
Agreement have advance knowledge of any such solicitation. Seller shall use
its reasonable best efforts to communicate the restrictions imposed by this
Section 5.12(a) to all Persons who would reasonably be expected to engage in
such solicitations and instruct such Persons to comply with such restrictions.
(b) None of Buyer, any of its Affiliates or any of their
respective representatives will at any time prior to two (2) years from the
Closing Date, directly or indirectly, solicit the employment of any employee
of Seller without Seller's prior written consent. For purposes of this Section
5.12(b), the term "solicit the employment" shall not be deemed to include
generalized searches for employees through media advertisements, employment
firms or otherwise that are not focused on Persons employed by Seller and its
Affiliates or any successor. This restriction shall not apply to any employee
whose employment with Seller is involuntarily terminated by Seller or its
successor after the Closing or who has retired in good standing from Seller or
its successor. Solicitation of employment shall be deemed to occur if the
Persons who perform such solicitation have knowledge of this Agreement or if
such Persons have no knowledge of this Agreement but Buyer's employees with
knowledge of this Agreement have advance knowledge of any such solicitation.
Buyer shall use its reasonable best efforts to communicate the restrictions
imposed by this Section 5.12(b) to all Persons who would reasonably be
expected to engage in such solicitations and instruct such Persons to comply
with such restrictions.
5.13 NO NEGOTIATION OR SOLICITATION
Prior to the Closing Date, Seller and its Affiliates will not
(and Seller will cause each of its employees, officers, directors,
representatives and agents not to) (a) solicit, initiate, consider, entertain,
encourage or accept the submission of any proposal or offer from any Third
Party relating to the direct or indirect acquisition of the Business or
(except to the extent permitted by Section 5.2) any portion of the Purchased
Assets, or (b) participate in any discussions or negotiations (and Seller
shall immediately cease any discussions or negotiations that are ongoing)
regarding, furnish any information with respect to, assist or participate in,
or facilitate in any other manner any effort or attempt by any Third Party to
do or seek any of the
62
foregoing. Seller will notify Buyer promptly (but in any event within
twenty-four (24) hours) if any Third Party makes any proposal, offer, inquiry
or contact with respect to any of the foregoing (including the terms thereof
and the identity of such Third Party).
5.14 NON-COMPETITION
(a) Seller agrees that, for five (5) years after the Closing
Date, it will not, directly or indirectly, engage in any business or other
endeavor of a kind being conducted by Seller and the Selling Subsidiaries as
of and prior to the Closing Date through their ownership of OFS, the Business
or the Purchased Assets, in any area of the world; provided, however, that
neither Seller nor any Selling Subsidiary shall be prevented from:
(i) maintaining and continuing in accordance with current
and past practices the operations of Seller and any Selling Subsidiary that
are not being sold hereunder; provided that such practices do not relate to
the Business;
(ii) continuing to own the shares of capital stock,
partnership or other equity interests in any Person owned by Seller or any
Selling Subsidiary as of the date of this Agreement (subject to Section 8.5,
other than the Transferred Entities) and set forth on Schedule 5.14;
(iii) acquiring shares of capital stock, partnership or
other equity interests in any Person as investments of Seller's pension funds
or funds of any other Benefit Plan of Seller whether or not such Person is
engaged in the same business as the Business;
(iv) subject to Section 5.14(b), acquiring ownership of or
any equity interest in any Person, provided that (i) the annual revenues of
such Person from any business that competes with the Business are not more
than 25% of such Person's total annual revenues and (ii) such equity
investment is made by Seller's venture capital business group in the ordinary
course of business and (x) represents less than 20% of the securities entitled
to vote in the election of directors (or other managing authority) of such
entity and (y) is not in excess of Ten Million Dollars ($10,000,000) in the
aggregate;
(v) selling or reselling fiber optic cable or optical
fiber to satisfy its contractual obligation under a Retained Contract (without
giving effect to any amendments, modifications or waivers made after the date
hereof) and, in the case of an Accepted Retained Contract, only in accordance
with the supply arrangement with Buyer to be entered into pursuant to Section
5.17(b);
(vi) selling or reselling products (A) through
incorporation into finished products other than those manufactured or sold by
the Business, "turnkey" projects or Seller-installed systems or (B) to dispose
of excess and obsolete inventory purchased from Buyer in accordance with the
procedures established in the Supply Agreement; or
(vii) performing any act or conducting any business
contemplated by this Agreement.
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(b) Notwithstanding anything to the contrary contained in
Section 5.14(a), in the event that during the five (5) year non-competition
period Seller completes a business combination transaction with a Person that
is engaged in any business or other endeavor of a kind currently being
conducted by Seller and the Selling Subsidiaries through their ownership of
OFS, the Business or the Purchased Assets, which transaction results in the
holders of voting securities of Seller outstanding immediately prior to the
consummation of such transaction owning less than 50% of the voting power of
the voting securities of Seller or the surviving entity in the transaction or
any parent thereof (any such entity, an "Acquiror") outstanding immediately
after the consummation of such business combination transaction, nothing
contained in this Section 5.14 shall prevent Acquiror or any of its
Subsidiaries or Affiliates from competing with the Business or engaging in any
other activity prohibited or restricted by Section 5.14(a). Notwithstanding
anything to the contrary contained in this Section 5.14(b), nothing in this
Section 5.14(b) shall affect any restrictions contained in the Intellectual
Property Agreement. The parties hereto acknowledge and agree that nothing
contained in this Agreement shall be deemed to require Seller to give notice
to or obtain the consent of Buyer in order to engage in any business
combination transaction of the type described in the preceding sentence or
otherwise. In the event that Seller acquires ownership of or any equity
interest in any Person as described under Section 5.14(a)(iv) or in the event
that Seller is part of a business combination transaction as described in this
Section 5.14(b), Seller and the Acquiror will refrain from using or employing
in any way any of Seller's names, trade names, trademarks, service names,
service marks, brands or any ▇▇▇▇ or name or reference associated with
"Lucent," "Lucent Technologies," "▇▇▇▇ Labs," the Lucent Innovation Ring logo
or other similar ▇▇▇▇ in connection with any business or other endeavor of a
kind currently being conducted by Seller or its Subsidiaries through their
ownership of OFS, the Business or the Purchased Assets for two (2) years after
the Closing Date.
5.15 TITLE REPORTS AND SURVEYS; OTHER REAL ESTATE MATTERS
(a) Seller shall provide to Buyer:
(i) within forty-five (45) days after the date of this
Agreement, (A) with respect to each Transferred Real Property, a preliminary
report on title covering a date not earlier than April 1, 2001, issued by a
title insurance company reasonably acceptable to Buyer, which preliminary
report shall contain a commitment of such title insurance company to issue an
ALTA owner's title insurance policy insuring the fee simple title of Buyer in
such real estate subject only to Permitted Encumbrances and the standard
exceptions to title customarily contained in such title insurance policies and
(B) with respect to the Owned Real Property located in ▇▇▇▇▇▇ ▇▇▇▇, New
Jersey, a title report/commitment dated not earlier than April 1, 2001;
(ii) at Closing, (A) such evidence of Seller's authority
to sell the Transferred Real Property as the title company shall reasonably
require; (B) an ALTA Owner's Affidavit for each Transferred Real Property in
customary form reasonably acceptable to the Seller and (C) such real property
transfer tax and related or similar forms required in connection with
recordation of the Real Estate Deeds and Lease Assignments.
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(b) Buyer shall form foreign Subsidiaries (as required by the
applicable Third Party Lease or applicable law) to enter into Lease
Assignments with respect to foreign Assumed Leases, guaranty the performance
of the Assumed Liabilities under the Assumed Leases and provide any financial
or other information reasonably required by the landlords under the Assumed
Leases. Seller shall request estoppel certificates from landlords in
connection with its requests for consent to the assignment of material Assumed
Leases and shall provide any estoppel certificates it receives to Buyer upon
receipt and in any event at or prior to Closing.
(c) Between the date hereof and the Closing, Buyer and Seller
shall negotiate the Lease Agreements contemplated by Schedule 3.7(b) in good
faith based on the form of Lease Agreement annexed hereto as Exhibit F and the
following principles:
(i) the "basic rent" payable under each Lease Agreement
shall be the "Net Rent" set forth for such Lease Agreement on Schedule 3.7(b);
(ii) the sum of (A) the "Total" of the charges for Core
Property Management and Core Administrative Services, including all charges
for parking, and (B) the "Other Sq. Ft. Charges", including all charges for
furniture, fixtures and/or equipment ("FFE") not carried on the Balance Sheet
(it being understood that any FFE carried on the Balance Sheet is included in
the Purchased Assets and shall be conveyed to Buyer pursuant to this
transaction), in each case to be set forth on Exhibit D to each Lease shall be
equal to the "Oper. Rent" set forth for such Lease Agreement on Schedule
3.7(b), and there will be no other charges for parking or the rental of FFE,
and Buyer will have the right to remove all FFE which is carried on the
Balance Sheet in accordance with the terms of the Lease Agreements and the
Sublease;
(iii) the "Usage Rates" to be set forth on Exhibit D to
each Lease Agreement shall be equal to the Usage Rates established by Seller
or the applicable Subsidiary at the Owned Real Property to which such Lease
Agreement relates and charged to other tenants, if any, and backcharged to the
divisions of Seller or the applicable Subsidiary at such Owned Real Property
as of the date of Closing;
(iv) the term of each Lease Agreement shall be the term
for such Lease Agreement set forth on Schedule 3.7(b);
(v) the premises to be demised by each Lease Agreement
shall be the premises actually occupied by OFS during the three month period
immediately prior to the date hereof, Buyer and Seller acknowledging that the
square footage of the premises to be demised by the Lease Agreements set forth
on Schedule 3.7(b) may have to be adjusted based on an audit of the space
actually occupied by OFS which is currently underway;
(vi) notwithstanding anything else contained in this
Agreement, (A) the forms of the Lease Agreements for the Owned Real Property
located in ▇▇▇▇▇▇ ▇▇▇▇ and Whippany, New Jersey shall (1) be converted into
sublease agreements upon the terms set forth in this Section 5.15 and (2)
shall provide for the Lease Agreements to be subject and subordinate to the
existing mortgages and underlying leases encumbering such Owned Real Property
and (B) any modifications requested by Buyer to the form of Lease Agreement
for such Owned Real Property, other than the modifications provided for in
this Section 5.15(c), shall be subject to the
65
approval of the holder of such existing mortgages and the landlord under such
underlying leases (collectively, the "Mortgage Lender") to the extent that
such approval is required under such mortgages, leases and related documents
(the "Financing Documents"), and neither Seller nor any Subsidiary shall be
obligated to approve or consent to any modifications to such form of Lease
Agreement for either such Owned Real Property that have not been approved by
the Mortgage Lender to the extent so required, it being the intention of the
parties that any Subsidiary which is the landlord under such an underlying
lease shall not have an independent right to approve or consent to any such
modifications if the Financing Documents permit Seller or such Subsidiary to
approve or consent to such modifications without the consent of the holder of
the mortgage or an "independent" manager or director required by the terms of
the Financing Documents;
(vii) subject to the receipt of the consent of the
Mortgage Lender as to the Lease Agreements with respect to the Owned Real
Property located in ▇▇▇▇▇▇ Hill and Whippany, New Jersey, (A) the Lease
Agreements will provide that to the extent that the landlord under a Lease
Agreement exercises any rights it may have to curtail or limit the services
provided to the tenant under such Lease Agreement, the form of Lease Agreement
will require it to curtail or limit the services it provides to Seller and/or
divisions of Seller located from time to time and to the other tenants
currently located at the Owned Real Property to which the Lease Agreement
relates in the same manner, (B) the Lease Agreements will provide that the
landlord may not refuse to approve subleases to CommScope, the Fiber JV and
the Cable JV which are consistent with the transactions contemplated by this
Agreement and (C) the Lease Agreements will not require the tenant to restore
the premises demised thereunder to a condition which existed prior to the
commencement of the Lease Agreement, provided that the Lease Agreements may
require the tenant to assume restoration obligations with respect to tenant
improvements or alterations made during the term of the Lease Agreements and
to repair damage arising from the removal of trade fixtures by the tenant,
including any trade fixtures which were located within the premises demised by
the Lease Agreement prior to the commencement of the Lease Agreement,
provided, however, that if the Mortgage Lender does not consent to the
modification described in clause (C) above for the Lease Agreements relating
to ▇▇▇▇▇▇ ▇▇▇▇ and Whippany, New Jersey, then Seller shall indemnify, defend
and hold Buyer harmless from and against all costs, expenses and other Losses
that Buyer would have avoided if the Mortgage Lender had granted such consent,
provided further that the foregoing indemnification obligation of Seller shall
(1) survive the Closing hereunder, and (2) not be subject to the limitations
or restrictions on Seller's indemnification obligations set forth in Section
9.3 of this Agreement, including those set forth in Section 9.3(g) hereof.
(viii) the form of Lease Agreement annexed hereto as
Exhibit F will be modified as may reasonably be required for the Owned Real
Property located in Campinas, Brazil in order to conform it to the law of and
real estate custom and practice in Brazil in a manner which places Buyer and
Seller in a position as close as is practicable to the economic and legal
position Buyer and Seller would be in if such Owned Real Property were located
in the United States;
(ix) the parties will also negotiate environmental health
and safety agreements for each Lease Agreement, the parties agreeing that it
is important to establish
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procedures and protocols which will ensure compliance with all applicable
environmental, health and safety laws, orders, rules and regulations
applicable to the premises to be demised by the Lease Agreements; and
(x) the form of Lease Agreement annexed hereto as Exhibit
F and the form of Sublease annexed hereto as Exhibit E will be modified for
any applicable Owned Real Property or the Applicable Third Party Lease to be
subject to such Lease Agreement or Sublease, to contain any other
modifications or revisions as may be requested by Buyer or Seller if such
modifications or revisions are reasonable and customary in arm's length leases
or subleases in the applicable geographical region for similar properties
subject to leases or subleases of similar duration and under which similar
rents are payable.
(d) Seller represents and warrants to Buyer that:
(i) the "Oper. Rents" set forth on Schedule 3.7(b) are
based on 100% of the actual and/or reasonably budgeted costs of providing the
services described on Exhibit D to the form of Lease Agreement annexed hereto
as Exhibit F as determined and developed by Seller in accordance with Seller's
historical accounting practices and procedures and the "Proportionate Shares"
set forth or to be set forth in the Lease Agreements;
(ii) such Proportionate Shares are and/or will be
determined in accordance with a consistent standard of measurement such that
the sum of the Proportionate Shares applicable to each Owned Real Property is
substantially equivalent to 100%; and
(iii) the Mortgage Lender has approved existing leases in
substantially the form annexed hereto as Exhibit F in connection with the
underwriting of the financing/synthetic lease transaction involving the Owned
Real Property located in ▇▇▇▇▇▇ Hill and/or Whippany, New Jersey.
(e) Seller, with respect to the Owned Real Property located in
▇▇▇▇▇▇ ▇▇▇▇ and Whippany, New Jersey, shall use commercially reasonable
efforts to secure the approval and/or consent of the Mortgage Lender (to the
extent such approval or consent is required under the applicable Financing
Documents) to any changes to the form of Lease Agreement annexed hereto as
Exhibit F which are agreed upon by Buyer and Seller in accordance with this
Section 5.15 promptly after Buyer and Seller finalize Lease Agreements with
respect to such Owned Real Properties;
(f) In the event that, prior to Closing, in the good faith
judgment of either party, Buyer and Seller have reached an impasse with
respect to any term(s) of the Lease Agreements, the environmental health and
safety agreement referenced above or the Sublease (the "Real Estate
Agreements") except for the premises, term, basic rent, operating rent
(including the CPI escalation provision contained in the form of Lease
Agreement) and any other term required to be included in the Real Estate
Agreements in accordance with this Section 5.15, such party may require such
term(s) to be determined by arbitration as hereinafter provided. The party
desiring arbitration shall give notice to that effect to the other party. The
arbitration shall be conducted in accordance with the rules and regulations of
the American Arbitration Association (the "AAA"). The parties hereto shall
attempt to agree on a single arbitrator (the
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"Referee"). The Referee must be an individual with at least ten years
experience as an executive with real estate responsibility for research and
development/manufacturing facilities at a manufacturing company comparable in
size to or larger than OFS (if it were a separate company). If the parties
cannot agree on the appointment of the Referee within 5 Business Days after
the giving of the notice requesting arbitration, either party may request the
AAA to appoint a Referee meeting the foregoing requirements. If the AAA shall
refuse to appoint such Referee or fail to do so within 5 Business Days of the
request, or if the AAA shall then no longer be in existence, either party
hereto, on behalf of both, may apply to the Supreme Court in the County of New
York for the appointment of such Referee, and the other party shall not raise
any objection as to the Court's full power and jurisdiction to entertain the
application and make such appointment. Within 7 Business Days after the
selection of the Referee, (1) the parties shall submit to the Referee their
respective resolutions of the dispute in question in the form of a written
provision or provisions to be added to or to replace an existing provision in
the applicable Real Estate Agreement, and (2) the parties may submit to the
Referee such evidence as they may deem relevant. Within 5 Business Days
following such 7 Business Day period, the Referee shall select either the
Buyer's or the Seller's resolution and give notice thereof to the Buyer and
the Seller. Under no circumstances may the Referee modify or disregard any
provision of this Section 5.15 and the jurisdiction of the Referee is
restricted accordingly. The Referee's decision shall be final, conclusive on
the parties and enforceable by any court of competent jurisdiction, and the
applicable Real Estate Agreement shall reflect such decision and shall be
executed and delivered by Seller or the applicable Selling Subsidiary and
Buyer at the Closing. Each party shall pay the fees and expenses of such
party's attorneys and witnesses. The fees and expenses of the Referee and all
other expenses of the arbitration shall be borne by the parties equally.
5.16 WARRANTY CLAIMS AND RECALLS
Buyer shall process and approve product warranty claims and
product recalls and perform warranty and recall work required after the
Closing for products sold or consigned by the Business on or prior to the
Closing Date in substantially the same manner as the Business did on or prior
to the Closing Date. Seller shall reimburse Buyer for all reasonable costs and
expenses incurred by Buyer for product warranty claims made against, or
recalls effected by, Seller or any Selling Subsidiary prior to the Closing
Date, and for all reasonable costs and expenses incurred by Buyer in respect
of product warranty claims, product recalls and warranty and recall work, in
each case with respect to products sold or consigned by the Business on or
prior to the Closing Date. Buyer shall submit a quarterly request to Seller
for reimbursement of such warranty and recall costs and expenses, together
with documentation evidencing the same, and Seller shall pay the amount due to
Buyer as promptly as reasonably practicable, but in no event later than ninety
(90) days after receipt of Buyer's request.
5.17 CERTAIN CUSTOMER CONTRACTS
(a) Schedule 5.17(a) sets forth all Contracts, if any, that are
to be transferred and assigned to Buyer relating to contracts, purchase
orders, sales orders and arrangements, commitments, understandings and other
instruments relating to customers of the Business and which will require
performance, delivery or any further actions on the part of Seller or its
Affiliates on or after the Closing ("Continuing Contracts"). Buyer shall
administer all work
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Related to the Business under such Continuing Contracts and Seller shall
perform all work required under such Continuing Contracts for all matters not
Related to the Business (including the manufacture and delivery of products
and goods and performance of services after the Closing Date) in substantially
the same manner as Seller and/or its Affiliates did prior to the Closing Date
or as may be required by the Continuing Contract; provided that Buyer shall
reimburse Seller for all reasonable costs and expenses incurred by Seller in
connection with the foregoing. Seller shall submit a quarterly request to
Buyer for reimbursement of such costs and expenses, together with
documentation evidencing the same, in connection with such work and Buyer
shall pay the amount due to Seller as promptly as reasonably practicable, but
in no event later than ninety (90) days after receipt of Seller's request. If
any Continuing Contracts are identified by Seller after the date hereof,
Seller will promptly notify Buyer and will provide Buyer with a copy thereof.
Regardless of when, whether before or after the Closing, any Continuing
Contract is identified, Seller will comply with its obligations under this
Section 5.17(a) with respect thereto.
(b) Not less than 20 Business Days prior to the Closing Date,
Seller shall provide Buyer with a list of each Excluded Contract in which
Seller has agreed to sell, resell, procure or distribute fiber optic cable
and/or optical fiber (the "Retained Contracts"). Prior to Closing Date Buyer
may elect, in a written notification to Seller, that it intends to accept
certain responsibilities with respect to one or more Retained Contracts (each
of such Retained Contracts, an "Accepted Retained Contract"). With respect to
each Accepted Retained Contract, Seller shall administer all work not Related
to the Business under such Accepted Retained Contract and Buyer shall perform
all work required under such Accepted Retained Contract for all matters
Related to the Business (including the manufacture and delivery of products
and goods and performance of services after the Closing Date) in substantially
the same manner as Seller and/or its Affiliates did prior to the Closing Date
or as may be required by, and in accordance with the terms of, the Retained
Accepted Contract; provided that Seller shall, without further consideration,
pay and remit, or cause to be paid or remitted, to Buyer promptly all money,
rights and other consideration received by it in respect of such performance,
provided further, however, that whether before or after the Closing, in the
event an Accepted Retained Contract is amended (or any party thereunder waives
any rights thereunder), Buyer shall have the right to elect to receive the
money, rights and other consideration that would have been due under such
Accepted Retained Contact without regard to such amendment or waiver.
5.18 COLLATERAL AGREEMENTS; SELLING SUBSIDIARIES
(a) Prior to the Closing Date, Seller and Buyer shall negotiate
in good faith the schedules for the services to be attached to the Transition
Services Agreement to ensure that Buyer receives all services necessary to
operate the Business as currently conducted and as contemplated to be
conducted on an at cost basis for a reasonable transition period (not less
than six months following the Closing Date but not beyond December 31, 2002),
and shall negotiate in good faith the definitive agreements relating to the
other Collateral Agreements contemplated by the term sheets attached as
Exhibits hereto.
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(b) Seller shall cause the Selling Subsidiaries and the
Transferred Entities to perform their respective obligations under this
agreement, including executing and delivering the Collateral Agreements.
5.19 RECORDING OF PATENTS
Not later than August 15, 2001, Seller will record in the
United States Patent and Trademark Office, at its own expense, any assignment,
grant or conveyance, not previously recorded therein, by which it acquired
ownership or any right to convey from a Third Party any of the Assigned
Patents or the Jointly Owned Patents, as each such term is defined in the
Intellectual Property Agreement.
6. CONFIDENTIAL NATURE OF INFORMATION
6.1 CONFIDENTIALITY AGREEMENT
Buyer agrees that the Confidentiality Agreement shall apply to
(a) all documents, materials and other information that it shall have obtained
regarding Seller or its Affiliates during the course of the negotiations
leading to the consummation of the transactions contemplated hereby (whether
obtained before or after the date of this Agreement), any investigations made
in connection therewith and the preparation of this Agreement and related
documents and (b) all analyses, reports, compilations, evaluations and other
materials prepared by Buyer or its counsel, accountants or financial advisors
that contain or otherwise reflect or are based upon, in whole or in part, such
information; provided, however, that subject to Section 6.2(a), the
Confidentiality Agreement shall terminate as of the Closing and shall be of no
further force and effect thereafter with respect to any such information that
is Related to the Business.
6.2 SELLER'S CONFIDENTIAL INFORMATION
(a) Except as provided in Section 6.2(b), 6.2(c) or 6.2(d),
after the Closing, Buyer agrees that it shall treat as the property of Seller
and shall not disclose to any Third Parties (other than Buyer's advisors and
agents who receive the information in confidence) all Confidential Information
with respect to Seller's and its Affiliates' respective businesses (other than
the Business) that is received from, or made available by, Seller or an
Affiliate or employee or representative of Seller or an Affiliate of Seller in
the course of the negotiation or consummation of the transactions contemplated
hereby, including, for purposes of this Section 6.2, Confidential Information
about Seller's and its Affiliates' business plans and strategies, marketing
ideas and concepts (other than as Related to the Business), especially with
respect to unannounced products and services, present and future product
plans, pricing, volume estimates, financial data, product enhancement
information, business plans, marketing plans, sales strategies, customer
information (including customers' applications and environments), market
testing information, development plans, specifications, customer requirements,
configurations, designs, plans, drawings, apparatus, sketches, software,
hardware, data, prototypes, connecting requirements or other technical and
business information, except for such Confidential Information as is assigned
or transferred to Buyer as part of the Purchased Assets, or otherwise in
accordance with this Agreement or the IP Agreements. Buyer shall not use the
foregoing Confidential Information of Seller for any purposes other than those
expressly authorized under
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this Agreement nor disclose such information to any
other Persons except where reasonably required for the uses for which rights
are granted hereunder or as expressly permitted by this Agreement.
(b) Notwithstanding the foregoing, such Confidential
Information shall not be deemed confidential, and Buyer shall have no
obligation with respect to any such Confidential Information that:
(i) at the time of disclosure was already known to Buyer,
other than through the negotiation or consummation of this transaction, free
of restriction;
(ii) is or becomes publicly known, or is readily
ascertainable, through publication, inspection of a product, or otherwise, and
through no negligence or other unlawful act of Buyer;
(iii) is received by Buyer from a Third Party without
similar restriction or breach of any agreement actually known to Buyer;
(iv) to the extent it is independently developed by Buyer
or a Third Party; or
(v) is, subject to Section 6.2(c), required to be
disclosed under applicable Law or judicial process.
(c) If Buyer (or any of its Affiliates) is requested or
required in connection with any judicial or administrative proceedings (by
oral question, interrogatory, request for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information of Seller or its Affiliates, Buyer will promptly notify Seller of
such request or requirement and will cooperate with Seller, to the extent
legally permissible, such that Seller may seek an appropriate protective order
or other appropriate remedy. If, in the absence of a protective order or the
receipt of a waiver hereunder, Buyer (or any of its Affiliates) is on the
advice of counsel legally compelled to disclose the Confidential Information
or else stand liable for contempt or suffer other censure or penalty, Buyer
(or its Affiliate) may, without liability hereunder, disclose only so much of
the Confidential Information to the party compelling disclosure as is required
by Law. Buyer will exercise its (and will cause its Affiliates to exercise
their) reasonable best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded to such Confidential
Information.
(d) Except to the extent that disclosure thereof is required
under accounting, stock exchange or applicable Law (including the U.S. federal
securities laws), the terms and conditions of this Agreement, and all
attachments and amendments hereto and thereto shall be considered Confidential
Information protected under this Article 6. Notwithstanding anything in this
Article 6 to the contrary, in the event that any such Confidential Information
is also subject to a limitation on disclosure or use contained in another
written agreement between Buyer and Seller or a Selling Subsidiary (including
the IP Agreements) that is more restrictive than the limitation contained in
this Article 6, then the limitation in such agreement shall supersede this
Article 6.
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6.3 PROPRIETARY INFORMATION RELATED TO THE BUSINESS
From the date of this Agreement until and after the Closing,
Seller agrees that it shall (and shall cause its Affiliates to) keep
confidential any Confidential Information Related to the Business, and other
information that may be assigned or transferred to Buyer pursuant to this
Agreement or the Collateral Agreements, including information of the type
referred to in Section 6.2(a) but Related to the Business, subject mutatis
mutandis to the same terms and conditions set forth in Sections 6.2(b) through
6.2(d) with respect to the confidentiality obligations of Buyer.
Notwithstanding the foregoing, for purposes of Section 6.2(b), Seller shall be
deemed not to have had knowledge or possession of any Confidential Information
referred to in the preceding sentence prior to the Closing.
7. CLOSING
At the Closing, the following transactions shall take place:
7.1 DELIVERIES BY SELLER AND/OR THE SELLING SUBSIDIARIES
On the Closing Date, Seller shall deliver, or shall cause a
Selling Subsidiary (or in the case of the Lease Agreements, the applicable
Subsidiary of Seller), as applicable, to deliver, to Buyer the following:
(a) duly executed Collateral Agreements;
(b) evidence, reasonably satisfactory to Buyer, of the
obtaining of the Seller Required Consents that have been obtained on or prior
to the Closing Date;
(c) duly endorsed stock certificates with duly endorsed blank
stock powers and all required documentary and transaction stamps, evidencing
the Transferred Subsidiary Shares and, subject to Section 8.5, appropriate
instruments of conveyance relating to the Transferred JV Interests;
(d) a certificate of an appropriate officer of Seller, dated
the Closing Date, certifying the fulfillment of the conditions set forth in
Section 8.2(a) and (b);
(e) all such other bills of sale, assignments and other
instruments of assignment, transfer or conveyance as Buyer may reasonably
request or as may be otherwise necessary or desirable to evidence and effect
the sale, transfer, assignment, conveyance and delivery of the Purchased
Assets to Buyer and to put Buyer in actual possession or control of the
Purchased Assets;
(f) a certificate in form and substance satisfactory to Buyer,
duly executed and acknowledged, certifying that such Seller and each Selling
Subsidiary is exempt from withholding under Section 1445 of the Code; and
(g) duly executed Assumption Agreements as specified in Section
2.5.
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7.2 DELIVERIES BY BUYER
On the Closing Date, Buyer shall deliver, or shall cause (i) a
Subsidiary of Buyer or (ii) assignees, designees or nominees of Buyer, as
applicable, to deliver, to Seller the following:
(a) the Purchase Price as provided in Section 2.3;
(b) duly executed Collateral Agreements;
(c) Lease Agreements in the form contemplated by Section 5.15
for the Owned Real Property to be leased to Buyer or its assignees, designees
or nominees, as the case may be, as set forth on Schedule 3.7(a) (the material
terms of which shall also be as set forth on Schedule 3.7(a));
(d) a certificate of two executive officers of Buyer, dated the
Closing Date, certifying the fulfillment of the conditions set forth in
Sections 8.3(a) and (b);
(e) all such other documents and instruments as Seller may
reasonably request or as may be otherwise necessary or desirable to evidence
and effect the assumption by Buyer or its assignees, designees or nominees, as
the case may be, of the Assumed Liabilities; and
(f) evidence, reasonably satisfactory to Seller, of the
obtaining of the Buyer Required Consents.
7.3 CLOSING DATE
The Closing shall take place at the offices of Counsel to
Seller, located at Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at 10:00 a.m., local time, within five (5) Business Days following the
date on which the last of the conditions specified in Article 8 to be
satisfied or waived has been satisfied or waived, or at such other place or
time or on such other date as Seller and Buyer may agree upon in writing (such
date and time being referred to herein as the "Closing Date").
7.4 Contemporaneous Effectiveness
All acts and deliveries prescribed by this Article 7,
regardless of chronological sequence, will be deemed to occur
contemporaneously and simultaneously on the occurrence of the last act or
delivery, and none of such acts or deliveries will be effective until the last
of the same has occurred.
8. Conditions Precedent to Closing; Transferred JV Interests
8.1 General Conditions
The respective obligations of Buyer and Seller to effect the
Closing of the transactions contemplated hereby are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
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(a) No Injunctions. No order of any court or administrative
agency shall be in effect that enjoins, restrains, conditions, makes illegal
or otherwise prohibits consummation of the transactions contemplated by this
Agreement or the Collateral Agreements, and there shall not be pending any
suit, action or proceeding by any Governmental Body seeking to enjoin,
restrain, condition, make illegal or otherwise prohibit consummation of the
transactions contemplated by this Agreement or the Collateral Agreements.
(b) Antitrust Laws. Any applicable waiting period under the HSR
Act relating to the transactions contemplated by this Agreement and the
Collateral Agreements, including in connection with CommScope's investments in
each of the Fiber JV and the Cable JV and the transactions contemplated by the
Financing Agreement, shall have expired or been terminated, and, if
applicable, the European Commission shall have issued a decision under Article
6(1)(b) or 8(2) of Council Regulation No. 4064/89 of the European Community,
as amended (or shall be deemed to have done so under Article 10(b) thereof),
declaring the transactions contemplated hereby compatible with the EC Common
Market.
(c) Other Governmental Approvals. All other authorizations,
consents, orders or approvals of, or expirations of waiting periods imposed
by, any Governmental Body legally required for the consummation of the
transactions contemplated hereby and in the Collateral Agreements shall have
been obtained or shall have occurred, other than such authorizations,
consents, orders or approvals the failure of which to have been obtained, and
such waiting periods the failure of which to have occurred, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, assets, liabilities, condition (financial
or other) or results of operations of the Business, taken as a whole. With
respect to each Subsequent Closing, if any, all material authorizations,
consents, orders or approvals of, or material declarations or filings with, or
expirations of material waiting periods imposed by, any Governmental Body
legally required for the consummation of the transactions contemplated to be
consummated at such Subsequent Closing shall have been obtained or made or
shall have occurred, other than such authorizations, consents, orders or
approvals the failure of which to have been obtained, and such waiting periods
the failure of which to have occurred, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the business,
operations, assets, liabilities, condition (financial or other) or results of
operations of the Business, taken as a whole.
8.2 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer to effect the Closing of the
transactions contemplated hereby are subject to the fulfillment, prior to or
at the Closing, of each of the following conditions, any of which conditions
may be waived in writing by Buyer in its sole discretion:
(a) Representations and Warranties of Seller. The
representations and warranties of Seller contained in this Agreement or any
Collateral Agreement or in any schedule, exhibit, certificate or document
delivered pursuant to the provisions hereof or thereof or in connection with
the transactions contemplated hereby or thereby shall be true and correct in
all respects (without regard to any qualifications therein as to materiality
or Material Adverse Effect) both when made and at and as of the Closing Date,
as though such representations and warranties were made at and as of the
Closing Date, except to the extent that such
74
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct (to the extent
set forth above) as of such specified date, unless the failure of any such
representations and warranties to be so true and correct, individually or in
the aggregate, at and as of the dates set forth above, could not reasonably be
expected to have a Material Adverse Effect.
(b) Performance by Seller. Seller and/or the applicable Selling
Subsidiary and/or Transferred Entity shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants and conditions required by this Agreement or any Collateral
Agreement to be performed or complied with by it prior to or at the Closing,
including executing the Collateral Agreements.
(c) Downgrade. There shall not have occurred a downgrade in the
credit rating of Seller (i) to any category or gradation below "B-" in the
case of a credit rating by Standard & Poor's Corporation, or (ii) to any
category or gradation below B3 in the case of a credit rating by ▇▇▇▇▇'▇
Investors Service, Inc.
8.3 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to effect the Closing of the
transactions contemplated hereby are subject to the fulfillment, prior to or
at the Closing, of each of the following conditions, any of which conditions
may be waived in writing by Seller in its sole discretion:
(a) Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in this Agreement or any
Collateral Agreement or in any certificate or document delivered pursuant to
the provisions hereof or thereof in connection with the transactions
contemplated hereby or thereby shall be true and correct in all respects
(without regard to any qualifications therein as to materiality or any similar
standard) both when made and at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date, except
to the extent that such representations and warranties are made as of a
specified date, in which case such representations and warranties shall be
true and correct (to the extent set forth above) as of such specified date,
unless the failure of any such representations and warranties to be so true
and correct, individually or in the aggregate, at and as of the dates set
forth above could not reasonably be expected to prevent or materially delay
consummation of the transactions contemplated hereby.
(b) Performance by Buyer. Buyer or its assignees, designees or
nominees shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants and
conditions required by this Agreement or any Collateral Agreement to be
performed or complied with by it or them prior to or at the Closing, including
executing the Collateral Agreements.
8.4 EFFECT OF CERTAIN WAIVERS OF CLOSING CONDITIONS
If prior to the Closing any party (the "waiving party")
receives written notice from the other party of any breach or breaches by such
other party of any representation, warranty or covenant contained in this
Agreement and such other party acknowledges in writing
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that the effect of such breach or breaches, individually or in the aggregate,
is a failure of any condition to the waiving party's obligations set forth in
this Article 8 and the waiving party proceeds with the Closing, the waiving
party shall be deemed to have waived such breach with respect to the matters
specifically identified in such written acknowledgement, and the waiving party
and its successors, assigns and Affiliates shall not be entitled to be
indemnified pursuant to Article 9, to ▇▇▇ for damages or to assert any other
right or remedy for any Losses arising from such condition or breach,
notwithstanding anything to the contrary contained in this Agreement on in any
certificate delivered pursuant hereto.
8.5 TRANSFERRED JV INTERESTS
(a) Schedule 8.5 sets forth, with respect to each Business
Joint Venture, the parties' mutually agreed valuation of the Transferred JV
Interests with respect to such Business Joint Venture. The parties acknowledge
and agree that Seller may not be able to transfer and assign the Transferred
JV Interests or some portion thereof to Buyer at the Closing because of
existing contractual obligations of Seller or the applicable Selling
Subsidiary (or the applicable provisions of the joint venture agreement,
limited liability company agreement or other constitutive document of a
Business Joint Venture). Notwithstanding anything to the contrary contained in
Section 2.3, if Seller is unable to transfer and assign the Transferred JV
Interests relating to any Business Joint Venture at the Closing, Buyer shall
be entitled to hold back a portion of the Purchase Price equal to the value of
such Transferred JV Interests as set forth on Schedule 8.5. If and when any
Transferred JV Interests with respect to which a portion of the Purchase Price
is held back by Buyer in accordance with the preceding sentence are
transferred and assigned to Buyer, Buyer shall pay Seller by wire transfer of
immediately available U.S. Dollars the amount held back with respect to such
Transferred JV Interests within five (5) Business Days after the date on which
such Transferred JV Interests were transferred and assigned to Buyer (each
such event, a "Subsequent Closing"); provided, however, that any Transferred
JV Interests that have not been transferred and assigned to Buyer by the first
anniversary of the Closing Date shall no longer be considered a Purchased
Asset for purposes of this Agreement and, as of such date, the Purchase Price
shall be deemed to be reduced by the value of such Transferred JV Interests as
set forth on Schedule 8.5.
(b) If any Transferred JV Interests are transferred to any
Third Party in accordance with the applicable provisions of any existing
contractual obligations of Seller or any Selling Subsidiary (or the applicable
provisions of the joint venture agreement, limited liability company agreement
or other constitutive document of any Business Joint Venture), then (i) if the
purchase price received by Seller is greater than the value of such
Transferred JV Interests as set forth on Schedule 8.5, Seller shall pay to
Buyer 50% of the amount by which such purchase price exceeds such value and
(ii) if the purchase price received by Seller is less than the value of such
Transferred JV Interests as set forth on Schedule 8.5, Buyer shall pay to
Seller 50% of the amount by which such value exceeds such purchase price. Any
payments required by the preceding sentence shall be made by wire transfer of
immediately available U.S. Dollars within five (5) Business Days after written
notice from Seller is received by Buyer (with such written notice detailing
the material terms and purchase price with respect to any such Transferred JV
Interests); provided that such notice will be sent by Seller as soon as
practicable after the receipt by Seller of the purchase price with respect to
such Transferred JV Interests. Buyer shall be
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entitled to participate in discussions between Seller and any Third Party with
respect to the transfer of any Transferred JV Interests from Seller to such
Third Party as contemplated by this Section 8.5(b). Any Transferred JV
Interests so transferred to any Third Party shall no longer be considered a
Purchased Asset for purposes of this Agreement and, as of the date of such
transfer, the Purchase Price shall be deemed to be reduced by the value of
such Transferred JV Interests as set forth on Schedule 8.5.
(c) Notwithstanding any other provision of this Agreement, the
parties agree that, with respect to any Transferred JV Interests that are
transferred and assigned to Buyer at a Subsequent Closing, all of the terms
this Agreement shall apply mutatis mutandis to such Transferred JV Interests
from the date hereof through such Subsequent Closing as if such Subsequent
Closing were the "Closing" (as defined in Article 7) (including the covenants
contained in Section 5.2, the survival periods of representations and
warranties contained in Section 9.1 and all matters relating to Taxes,
provided that with respect to Interim JV Taxes, (i) Seller shall not be
responsible for Interim JV Taxes arising in the ordinary course of business
(but Seller shall be responsible for audit adjustments for Interim JV Taxes
and for any Interim JV Taxes resulting from any contest or other proceeding
and for any Interim JV Taxes for which Seller would have been responsible had
the Closing for such Business Joint Venture actually occurred on the Closing
Date), (ii) Buyer shall have the right to review and approve (or disapprove)
all Tax Returns relating to Interim JV Taxes, which approval shall not be
unreasonably withheld and in no event shall be withheld to the extent the Tax
Return is in accordance with past practice, (iii) to the extent set forth
herein, Seller shall have the right to control audits and other contests for
Interim JV Taxes (for the avoidance of doubt, treating such Interim JV Taxes
as paid in a Pre-Closing Tax Period, which may be included in a Straddle
Period) and (iv) Seller shall not be entitled to any refund or credit of or
with respect to Interim JV Taxes (other than Interim JV Taxes paid by Seller
pursuant to this proviso).
9. Status of Agreements
The rights and obligations of Buyer and Seller under this
Agreement shall be subject to the following terms and conditions:
9.1 Survival of Representations and Warranties
The representations and warranties of Buyer and Seller
contained in this Agreement shall survive the Closing and such representations
and warranties shall terminate at the close of business on the date that is
two (2) years after the Closing Date; provided, however, that (i) the
representations and warranties set forth in Section 3.13 shall terminate at
the close of business on the date that is three (3) years after the Closing
Date, (ii) the representations and warranties set forth in Sections 3.9, 3.11,
3.22 and 3.23 shall terminate upon the date that is thirty days following the
expiration of the applicable statute of limitations and (iii) the
representations and warranties set forth in Sections 3.1, 3.2, 3.3 and 3.5(a)
shall survive indefinitely. Neither Seller nor Buyer shall have any liability
whatsoever with respect to any such representations or warranties unless a
claim is made hereunder or an action of law or in equity is commenced prior to
expiration of the survival period for such representation or warranty.
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9.2 TAX INDEMNIFICATION
(a) Seller shall indemnify Buyer and its Affiliates (including
the Transferred Entities) and its assignees, designees and nominees, and each
of their respective officers, directors, employees, stockholders, agents,
direct or indirect members, direct or indirect partners and representatives
and hold them harmless from all liability for (i) Excluded Taxes, (ii) Taxes
that would not have arisen but for a breach by Seller of any of its
obligations under this Agreement and then only to the extent appropriate to
reflect the relative fault of Seller, on the one hand, and Buyer, on the other
hand, and (iii) the portion of Transfer Taxes for which Seller is responsible
pursuant to Section 2.9 of this Agreement. Notwithstanding the foregoing,
Seller shall not indemnify and hold harmless Buyer and its Affiliates
(including the Transferred Entities) or any of their respective officers,
directors, employees or agents, from any liability for Taxes to the extent
attributable (under a relative fault standard) to a breach by Buyer of its
obligations under this Agreement.
(b) Buyer shall, and shall cause the Transferred Entities to,
indemnify Seller and its Affiliates and each of their respective officers,
directors, employees, stockholders, agents, direct or indirect members, direct
or indirect partners and representatives and hold them harmless from (i) all
liability for Taxes of the Transferred Entities or relating to the Purchased
Assets for any taxable period ending after the Closing Date (except to the
extent such taxable period is a Straddle Period, in which case Buyer's
indemnity will cover only that portion of any such Taxes that are for the
Post-Closing Tax Period), (ii) the portion of Transfer Taxes for which Buyer
is responsible pursuant to Section 2.9 of this Agreement and (iii) all
liability for Taxes that would not have arisen but for a breach by Buyer of
its obligations under this Agreement and then only to the extent appropriate
to reflect the relative fault of Buyer, on the one hand, and Seller, on the
other hand. Notwithstanding the foregoing, Buyer shall not indemnify and hold
harmless Seller and its Affiliates or any of their respective officers,
directors, employees or agents, from any liability for Taxes to the extent
attributable (under a relative fault standard) to a breach by Seller or its
Affiliates under this Agreement.
(c) In the case of any Straddle Period:
(i) real, personal and intangible property Taxes
("Property Taxes") of the Transferred Entities and relating to the Purchased
Assets allocable to the Pre- Closing Tax Period shall be equal to the amount
of such Property Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days during the Straddle
Period that are in the Pre-Closing Tax Period and the denominator of which is
the number of days in the Straddle Period;
(ii) the Taxes (other than Property Taxes) of the
Transferred Entities and relating to Purchased Assets allocable to the
Pre-Closing Tax Period shall be computed as if such taxable period ended as of
the close of business on the Closing Date; and
(iii) each Transferred Entity that is classified as a
partnership or "flowthrough" entity for (U.S. or non-U.S.) Tax purposes shall
be treated for purposes of this Agreement as if its taxable year ended at the
close of business on the Closing Date and Taxes attributable to the income and
gain of each such entity through the close of business on the
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Closing Date (as determined in a reasonably practicable manner) shall be
considered to be attributable to the Pre-Closing Tax Period.
(d) Notwithstanding any other provision to the contrary, the
rights and obligations provided for in this Section 9.2 shall survive until 60
days after the expiration of all applicable statutes of limitation.
9.3 GENERAL AGREEMENT TO INDEMNIFY
(a) Seller and Buyer shall indemnify, defend and hold harmless
the other party hereto and any employee, representative, agent, director,
direct or indirect member, direct or indirect partner, officer or Affiliate of
such party and such party's named assignees, designees and nominees (each an
"Indemnified Party") from and against any and all Actions, liabilities,
obligations, losses, and damages, amounts paid in settlement, interest, costs
and expenses (including reasonable attorneys' fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (collectively, "Losses") incurred or suffered by any Indemnified
Party arising out of, resulting from or relating to (i) the failure of any
representation or warranty of the Indemnifying Party contained in this
Agreement or any Collateral Agreement to have been true and correct when made
or as of the Closing Date as though such representation or warranty were made
at and as of the Closing Date, or at such different date or period specified
for such representation or warranty or (ii) the breach by the Indemnifying
Party of any covenant or agreement of such Indemnifying Party (including, in
the case of Seller, as a result of the action or failure to act of the Selling
Subsidiaries) contained in this Agreement or any Collateral Agreement to the
extent not waived by the other party hereto.
(b) Seller further agrees to indemnify and hold harmless Buyer
and any other Indemnified Party of Buyer from and against any Losses incurred
or suffered by such Indemnified Party arising out of, resulting from, or
relating to: (i) any of the Excluded Liabilities (other than Taxes indemnified
under Section 9.2); (ii) Seller's failure to comply with the terms and
conditions of any applicable bulk sales or bulk transfer or similar Laws of
any jurisdiction that may be applicable to the sale or transfer of any or all
of the Purchased Assets to Buyer (or its Affiliates or Subsidiaries),
notwithstanding the waiver contained in Section 2.8; and (iii) any liabilities
and obligations that are made the responsibility of Seller and/or any of its
Affiliates under Section 5.5.
(c) Seller further agrees to indemnify and hold harmless Buyer
and its Affiliates from and against any liability which may arise as a result
of Buyer, any Transferred ubsidiary or Subsidiary of a Transferred Subsidiary
or any of their respective Affiliates or the Business being jointly and/or
severally liable on, before or after the Closing, under Code Sections 412,
4971 or 4980B, or ERISA Section 302, Title IV of ERISA or Sections 601 through
609 of Title I of ERISA solely by reason of being considered to have been an
ERISA Affiliate with Seller, any Selling Subsidiary or any of their Affiliates
or ERISA Affiliates.
(d) Buyer further agrees to indemnify and hold harmless Seller
and any other Indemnified Party of Seller from and against any Losses incurred
or suffered by such Indemnified Party arising out of, resulting from, or
relating to: (i) any of the Assumed
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Liabilities; and (ii) any medical, health or disability claims of any
Transferred Employee relating to services rendered or benefits earned after
the Closing Date.
(e) Amounts payable in respect of the parties' indemnification
obligations shall be treated as an adjustment to the Purchase Price. Buyer and
Seller agree to cooperate and use their respective reasonable best efforts in
connection with the preparation of a supplemental Asset Acquisition Statement
as required by Section 5.4 and Treasury Regulation ss. 1.1060-1(e) as a result
of any adjustment to the Purchase Price pursuant to the preceding sentence.
Whether or not the Indemnifying Party chooses to defend or prosecute any
Third-Party Claim, both parties hereto shall cooperate in the defense or
prosecution thereof and shall furnish such records, information and testimony,
and attend such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith or as provided
in Section 5.1.
(f) In the case of a specific Loss giving rise to
indemnification hereunder (other than any Loss which is itself a Tax or a Loss
in respect of a Tax), if an Indemnified Party shall receive any amount of
Insurance Proceeds or any other amount from a Third Party in compensation for
such Loss, or shall actually (and irreversibly) realize in cash any Tax
savings that would not have been so realized but for such Loss ("Tax Savings
Actually Realized") that reduce the overall impact of the Loss upon the
Indemnified Party (i) at any time subsequent to the actual receipt of a
payment in full of indemnification of such Loss hereunder, then such
Indemnified Party shall reimburse the Indemnifying Party for any such
indemnification payment made up to the amount of such Insurance Proceeds or
other amounts actually received or Tax Savings Actually Realized or (ii) at
any time prior to the receipt of any indemnification payment in respect of
such Loss hereunder, then the indemnification to be paid shall be paid net of
the amount of any such Insurance Proceeds or other amounts actually received
or Tax Savings Actually Realized. The amount of any indemnification payment
shall be increased by any Tax cost actually incurred in cash by the
Indemnified party that would not have been incurred but for an indemnification
payment hereunder. In computing the amount of any such Tax savings or Tax
cost, the Indemnified Party shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising
from the receipt of any indemnity payment hereunder or the incurrence of any
payment of any indemnified Loss. Notwithstanding this Section 9.3(f), (x) in
no event shall any Indemnified Party be required (i) to take any action, or
forebear from exercising any right, under this Agreement or the Collateral
Agreements or (ii) to take any action with respect to, make any demand under
or claim any coverage in connection with, any Policy, and (y) nothing herein
shall permit any Indemnifying Party to delay or refrain from making any
payment to any Indemnified Party because of the availability or alleged
availability of any Policy or Insurance Proceeds or Tax savings. The
indemnification obligations of each party hereto under this Article 9 shall
inure to the benefit of the employees, representatives, agents, directors,
officers and Affiliates of the other party hereto on the same terms as are
applicable to such other party.
(g) The Indemnifying Party's liability for all claims made
under Section 9.3(a) shall be subject to the following limitations: (i) the
Indemnifying Party shall have no liability for such claims until the aggregate
amount of the Losses incurred shall exceed 0.5% of the Purchase Price,
provided that if such threshold is exceeded, the Indemnifying Party shall be
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liable for all Losses starting from the first dollar of such Losses (without
giving effect to such threshold) and (ii) the Indemnifying Party's aggregate
liability for all such claims shall not exceed 50% of the Purchase Price. The
Indemnified Party may not make a claim for indemnification under Section
9.3(a) for breach by the Indemnifying Party of a particular representation or
warranty after the expiration of the survival period specified in Section 9.1.
Notwithstanding the above provisions of this Section 9.3(g), the limitations
provided in this Section 9.3(g) shall not apply to (i) any claim for fraud or
intentional misrepresentation, (ii) any claim for breach of any agreement or
covenant contained herein (iii) any claim for breach of those representations
and warranties set forth in the third, fourth and fifth sentences of Section
3.2 or (iv) any claim for breach of any representation or warranty set forth
in Section 3.22 or Section 3.23.
(h) The indemnification provided in this Article 9 shall be the
sole and exclusive remedy after the Closing Date for monetary damages
available to the parties to this Agreement for breach of any of the terms,
conditions, representations or warranties contained herein; provided, however,
this exclusive remedy for damages does not preclude a party from (i) bringing
an action for specific performance or other available equitable remedy for a
breach of a covenant or agreement contained in this Agreement or any
Collateral Agreement or (ii) pursuing remedies under applicable Law for fraud
or intentional misrepresentation.
(i) Notwithstanding anything contained in this Agreement to the
contrary, no party shall be liable to the other party for special,
consequential, punitive or exemplary losses or damages; provided, however, the
foregoing shall not be construed to preclude recovery by the Indemnified Party
in respect of all Losses (x) directly incurred or suffered from Third Party
Claims or (y) for lost profits, incidental or indirect losses or damages.
(j) The Indemnifying Party shall pay to the Indemnified Party
interest, calculated at the interest rate from time to time announced by
Citibank, N.A. as its prime rate, on any expenses or other amounts reasonably
incurred by the Indemnified Party in connection with any claim or Third-Party
Claim made under this Article 9, starting from the later of (i) thirty (30)
days after receipt by the Indemnifying Party of the Indemnified Party's notice
given pursuant to Section 9.5 and (ii) the date such expenses or other amounts
were incurred by the Indemnified Party and ending on the date on which the
Indemnified Party receives indemnity for such losses.
(k) The rights to indemnification under this Section 9.3 shall
not be subject to set-off for any claim by the Indemnifying Party against any
Indemnified Party, whether or not arising from the same event giving rise to
such Indemnified Party's claim for indemnification.
9.4 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS
(a) Notices. If one party is responsible for the payment of
Taxes pursuant to Section 9.2 or 9.3 (the "Tax Indemnifying Party"), and the
other party (the "Tax Indemnified Party") or its Affiliate receives notice of
any deficiency, proposed adjustment, assessment, audit, examination, suit,
dispute or other claim with respect to such Taxes (a "Tax Claim"), the Tax
Indemnified Party shall promptly notify the Tax Indemnifying Party in writing
of such Tax Claim. If notice of a Tax Claim is received by the Tax Indemnified
Party but not given to the Tax Indemnifying Party within a sufficient period
of time to allow such party effectively to
81
contest such Tax Claim, or in reasonable detail to apprize such party of the
nature of the Tax Claim, the Tax Indemnifying Party shall not be liable to the
Tax Indemnified Party (or any of its Affiliates or any of their respective
officers, directors, employees, stockholders, agents or representatives) to
the extent that the Tax Indemnifying Party is actually prejudiced as a result
thereof.
(b) Pre-Closing Taxable Periods. The Seller shall assume and
control (including as to settlements) all proceedings taken in connection with
a Tax Claim for any taxable period that ends on or before the Closing Date
(including selection of counsel) and, without limiting the foregoing, may in
its sole discretion pursue or forego any and all administrative proceedings
with any taxing authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed and ▇▇▇ for a refund or contest the Tax
Claim in any permissible manner; provided, however, that to the extent the Tax
Claim relates to the Business, the Purchased Assets or the Transferred
Entities or is a Tax Claim for which Buyer or any of its Affiliates (including
the Transferred Entities) may be liable, (i) Buyer shall be entitled to
participate fully (at Buyer's expense) in the conduct of such Tax Claim, (ii)
the Seller shall provide Buyer with a timely and reasonably detailed account
of each stage of such Tax Claim and a copy of all documents (or portions
thereof) relating to such Tax Claim which are relevant to any Tax for which
Buyer or any of its Affiliates (including the Transferred Entities) may be
liable, (iii) the Seller shall consult with Buyer before taking any
significant action in connection with such Tax Claim that might adversely
affect Buyer and shall consult with Buyer with respect to any written
submissions in connection with such Tax Claim which are relevant to any Tax
for which Buyer or any of its Affiliates (including the Transferred Entities)
may be liable, (iv) the Seller shall defend such Tax Proceeding in good faith
and diligently as if the taxpayer whose Tax Return is at issue were the only
party in interest in connection with such Tax Claim, and (v) Buyer shall have
the right to participate in any conference with any Tax authority which is
relevant to any Tax for which Buyer or any of its Affiliates (including the
Transferred Entities) may be liable.
(c) Straddle Periods. In the case of a Tax Claim for a
Straddle Period of a Transferred Entity or for Straddle Period Taxes
attributable to the Purchased Assets, Buyer (if the claim for Taxes that are
not Excluded Taxes ("Assumed Taxes") exceeds or reasonably could be expected
to exceed in amount the claim for Excluded Taxes) or otherwise the Seller
(Buyer or Seller, as the case may be, the "Controlling Party") shall be
entitled to control (including as to settlement) all proceedings taken in
connection with the defense of such Tax Claim. In such case, (i) the other
party (the "Non-Controlling Party") shall be entitled to participate fully (at
the Non-Controlling Party's expense) in the conduct of such Tax Claim, (ii)
the Controlling Party shall provide the Non-Controlling Party with a timely
and reasonably detailed account of each stage of such Tax Claim and a copy of
all documents (or portions thereof) relating to such Tax Claim which are
relevant to any Tax for which the Non-Controlling Party (or any of its
Affiliates) may be required to indemnify the Controlling Party or any
Affiliate of the Controlling Party or may otherwise be liable, (iii) the
Controlling Party shall consult with the Non-Controlling Party before taking
any significant action in connection with such Tax Claim that might adversely
affect the Non-Controlling Party and shall consult with the Non-Controlling
Party with respect to any written submissions in connection with such Tax
Claim which are relevant to any Tax for which the Non-Controlling Party (or
any of its Affiliates) may be
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required to indemnify the Controlling Party or any Affiliate of the
Controlling Party or may otherwise be liable, (iv) the Controlling Party shall
defend such Tax Proceeding in good faith and diligently as if the taxpayer
whose Tax Return is at issue were the only party in interest in connection
with such Tax Claim, and (v) the Non-Controlling Party shall have the right to
participate in any conference with any Tax authority which is relevant to any
Tax for which the Non-Controlling Party (or any of its Affiliates) may be
required to indemnify the Controlling Party or any Affiliate of the
Controlling Party or may otherwise be liable. The costs and expenses of
conducting the defense of such Tax Claim shall be reasonably apportioned based
on the relative amounts of the claim for Excluded Taxes and the claim for
Assumed Taxes.
(d) Post-Closing Taxable Periods. Buyer shall assume and
control (including as to settlement) all proceedings taken in connection with
Tax Claims for any taxable period other than any Tax Claim which the Seller is
entitled to control under Section 9.3(b) or (c); provided, however, that the
Seller shall be entitled to control (including as to settlement) except as
provided below that portion of any such Tax Claim for which it is reasonably
expected that the Seller will be required to indemnify Buyer hereunder. If the
Seller is entitled to control a portion of a Tax Claim pursuant to the
preceding sentence, then with respect to the portion of the Tax Claim under
the Seller's control (i) Buyer shall be entitled to participate fully (at
Buyer's expense) in the conduct of such portion of the Tax Claim, (ii) the
Seller shall provide Buyer with a timely and reasonably detailed account of
each stage of such portion of the Tax Claim and a copy of all documents (or
portions thereof) relating to such Tax Claim, (iii) the Seller shall consult
with Buyer before taking any significant action in connection with such Tax
Claim that might adversely affect Buyer and shall consult with Buyer with
respect to any written submissions in connection with such Tax Claim, (iv) the
Seller shall defend such Tax Proceeding in good faith and diligently as if the
taxpayer whose Tax Return is at issue were the only party in interest in
connection with such Tax Claim, (v) Buyer shall have the right to participate
in any conference with any Tax authority, (vi) the Seller shall not enter into
any settlement or compromise without Buyer's prior written consent, which
consent shall not be withheld unless the settlement or compromise could
reasonably be expected to have an adverse effect on Buyer that is material and
(vii) Buyer shall be entitled to compel Seller to settle the issue or issues
under the Seller's control if Buyer believes in good faith (upon written
advise of outside counsel) that Seller has less than a 25% likelihood of
prevailing with respect to such issue (provided, however, that Buyer's right
to compel settlement with respect to any issue shall not be effective if the
Seller delivers to Buyer a written opinion from a neutral nationally
recognized law firm which concludes that Seller has at least a 25% likelihood
of prevailing with respect to that issue).
(e) The Tax Indemnifying Party, the Tax Indemnified Party and
each of their respective Affiliates shall cooperate in contesting any Tax
Claim, which cooperation shall include the retention and (upon a reasonable
request) the provision of records and information which are reasonably
relevant to such Tax Claim, and making employees available on a mutually
convenient basis to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating to such Tax
Claim.
(f) If the Tax Indemnifying Party has not assumed or maintained
the defense of a Tax Claim, or has failed to meet material deadlines imposed
by, or failed to attend material meetings with, the applicable Governmental
Body (and the Tax Indemnified Party could
83
reasonably be expected to be adversely affected), the Tax Indemnified Party
may (after reasonable notice to the Tax Indemnifying Party and the failure of
the Tax Indemnifying Party thereafter to properly pursue the Tax Claim) settle
such Tax Claim at the Tax Indemnified Party's sole discretion. Neither party
shall settle a Tax Claim relating solely to Taxes of a Transferred Entity for
a Straddle Period or Taxes attributable to the Purchased Assets for a Straddle
Period without the other party's prior written consent (which consent shall
not be unreasonably withheld).
9.5 GENERAL PROCEDURES FOR INDEMNIFICATION
(a) The Indemnified Party seeking indemnification (other than
for claims under Section 9.2 or 9.3 relating to Taxes, as to which Section
9.4, and not the remainder of this Section 9.5, shall govern) under this
Agreement shall promptly notify in writing the party against whom
indemnification is sought (the "Indemnifying Party") of the assertion (and
basis) of any claim, or the commencement (and basis) of any Action by any
Third Party in respect of which indemnity may be sought hereunder (a
"Third-Party Claim"), and will give the Indemnifying Party such information
with respect thereto as the Indemnifying Party may reasonably request, but
failure to give such notice shall not relieve the Indemnifying Party of any
liability hereunder (unless and to the extent the Indemnifying Party has
suffered prejudice by such failure). The Indemnifying Party shall have the
right, but not the obligation, exercisable by written notice to the
Indemnified Party within thirty (30) days of receipt of notice from the
Indemnified Party of the commencement of a Third-Party Claim, to assume the
defense, through counsel reasonably acceptable to the Indemnified Party.
Furthermore, the Indemnifying Party shall have sole control of the settlement
of any such Third-Party Claim that (i) involves (and continues to involve)
solely money damages or (ii) involves (and continues to involve) claims for
both money damages and equitable relief against the Indemnified Party that
cannot be severed, where the claims for money damages are the primary claims
asserted by the Third Party and the claims for equitable relief are incidental
to the claims for money damages. Failure by the Indemnifying Party to so
notify the Indemnified Party shall be deemed a waiver by the Indemnifying
Party of its right to assume the defense of such Third-Party Claim.
(b) The Indemnifying Party or the Indemnified Party, as the
case may be, shall have the right to participate in (but not control), at its
own expense, the defense of any Third-Party Claim that the other is defending,
as provided in this Agreement.
(c) The Indemnifying Party, if it has assumed the defense of
any Third-Party Claim as provided in this Agreement, shall not consent to, or
enter into, any compromise or settlement of (which settlement (i) commits the
Indemnified Party to take, or to forbear to take, any action or (ii) does not
provide for a full and complete written release by such Third Party of the
Indemnified Party), or consent to the entry of any judgment that does not
relate solely to monetary damages arising from, any such Third-Party Claim
without the Indemnified Party's prior written consent, which shall not be
unreasonably withheld.
(d) The Indemnifying Party and the Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to this Article IX,
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including, but not limited to, by providing the other party with reasonable
access to employees and officers (including as witnesses) and other
information.
10. Tax Matters
10.1 Responsibility for Preparation and Filing of Tax Returns
and Amendments
(a) For any Straddle Period of the Transferred Entities or
relating to the Purchased Assets, Buyer shall timely prepare and file with the
appropriate authorities all Tax Returns required to be filed after the Closing
Date and shall pay all Taxes due with respect to such Tax Returns; provided
that Seller shall pay to Buyer, at least two Business Days prior to the date
any such Tax is due to the applicable Governmental Body, the amount owed by
Seller pursuant to Section 9.2 or 9.3 with respect to the taxable period
covered by any such Tax Return. To the extent such Tax Returns relate to the
Transferred Entities or the Purchased Assets, they shall be prepared on a
basis consistent with past practice, shall not include any change in any
method of accounting, and shall not include any Tax election that is
inconsistent with past practice, in each case, except for a Permitted Tax
Action. Buyer shall (i) furnish each such Tax Return to Seller for its
approval (which approval shall not be unreasonably delayed or withheld) at
least 30 days prior to the due date for filing such Tax Return and (ii) shall
revise such Tax Return prior to filing (and file the Tax Return as so revised)
to reflect any good faith comments of Seller given to Buyer within 15 days of
Seller's receipt of the draft Tax Return (provided, however, that to the
extent that Buyer does not agree with Seller's comments, the parties shall
endeavor in good faith to resolve such disagreement and, failing that, the
Independent Accountant shall resolve the disagreement prior to the due date,
including extensions, and the Tax Return shall be filed in the manner
determined by the Independent Accountant).
(b) For any taxable period of the Transferred Entities or
relating to the Purchased Assets that ends on or before the Closing Date,
Seller shall timely prepare and Buyer or Seller, as appropriate, shall timely
file with the appropriate authorities all Tax Returns required to be filed.
Seller shall pay all Taxes due with respect to such Tax Returns. To the extent
that they relate to the Transferred Entities, all such Tax Returns shall be
prepared on a basis consistent with past practice, shall not include any
change in any method of accounting, and shall not include any Tax election
that is inconsistent with past practice, in each case except for a Permitted
Tax Action. Any Tax Returns required by law to be filed by Buyer or a
Transferred Entity shall be furnished by Seller to the Buyer or the
appropriate Transferred Entity, as the case may be, for signature and filing
at least five days prior to the due date for filing such Tax Returns and the
Buyer or applicable Transferred Entity, as the case may be, shall promptly
sign and timely file any such Tax Return (provided, however, that neither
Buyer nor any Transferred Entity shall be required to file any Tax Return not
prepared in accordance with this Agreement, and provided further that signing
and filing a Tax Return in accordance with this Section shall not be
considered to be an acknowledgement that such Tax Return complies with the
requirements of this Agreement). Buyer and Seller agree to cause the
Transferred Entities to file all Straddle Period Tax Returns on the basis that
the Straddle Period ended as of the close of business on the Closing Date,
unless the relevant taxing authority will not accept a Tax Return filed on
that basis.
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(c) Seller shall be responsible for filing any amended
consolidated, combined or unitary Tax Returns of or with respect to the
Transferred Entities or the Purchased Assets for taxable years ending on or
prior to the Closing Date. To the extent such Tax Returns are of or with
respect to the Transferred Entities and could affect Buyer or any of its
Affiliates (including the Transferred Entities), such Tax Returns shall be
prepared in accordance with past practice, shall not include any change in
method of accounting and shall not include any Tax election that is
inconsistent with past practice, in each case except for a Permitted Tax
Action. For those jurisdictions in which separate Tax Returns are filed by the
Transferred Entities, any required amended Tax Returns for such taxable years
shall be prepared by Seller in accordance with past practice, shall not
include any change in any method of accounting and shall not include any Tax
election that is inconsistent with past practice, in each case except for a
Permitted Tax Action, and shall be furnished to the Buyer or the Transferred
Entities, as the case may be, for signature and filing at least 30 days prior
to the due date for filing such Tax Returns, and the Buyer or applicable
Transferred Entity, as the case may be, shall promptly sign and timely file
any such amended Tax Return (provided, however, that neither Buyer nor any
Transferred Entity shall be required to file any Tax Return not prepared in
accordance with this Agreement, and provided further that signing and filing a
Tax Return in accordance with this Section shall not be considered to be an
acknowledgement that such Tax Return complies with the requirements of this
Agreement).
(d) Seller shall procure that neither the affiliated group for
federal income Tax purposes of which Seller is the common parent, nor any
other combined, consolidated or unitary group of which any of the Transferred
Entities was a member on or prior to the Closing Date, shall, for the Tax
period ending on September 30, 2001 of the taxable year of Seller (for U.S.
federal income Tax purposes) file an election to amortize research or
experimental expenditures under Code Section 174(b) or Treasury Regulation
ss.1.174-4(b). Further, Seller shall procure that the affiliated group for
federal income Tax purposes of which Seller is the common parent shall not
file any election to relinquish the carryback period under Code Section
172(b)(3) or Treasury Regulation ss.1.1502-21(b)(3)(i), and shall carry back
any net operating loss for any Tax period ending on or before September 30 of
the taxable year of Seller (for U.S. federal income Tax purposes) that
includes the Closing Date to the maximum extent permitted under Code Section
172 and Treasury Regulations thereunder.
(e) Seller shall not make an election pursuant to Treasury
Regulation Section 1.1502-20(g) (or any comparable provision of state or local
Tax law) to reattribute to the consolidated group of which Seller is a member
all or any portion of any net operating loss carryover or net capital loss
carryover attributable to any of the Transferred Entities that is a domestic
corporation for U.S. federal income Tax purposes.
10.2 COOPERATION
Each of Seller, the Transferred Entities and Buyer shall
reasonably cooperate, and shall cause their respective Affiliates, officers,
employees, agents, auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns, including maintaining and making
available to each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable periods.
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10.3 REFUNDS AND CREDITS
Any refunds or credits of Taxes of the Transferred Entities or
relating to the Purchased Assets for any Pre-Closing Tax Period shall be for
the account of Seller (except for any refund or credit resulting from a
carryback that is permitted pursuant to Section 5.3(b)(ii)), provided that
Buyer shall be entitled to retain any such refunds that would otherwise be for
the account of Seller to the extent of the Tax cost to Buyer and its
Affiliates (including the Transferred Entities) of receiving such refunds. Any
refunds or credits of the Transferred Entities or relating to the Purchased
Assets for any Post-Closing Tax Period, and any refund or credit resulting
from a carryback that is permitted pursuant to Section 5.3(b)(ii), shall be
for the account of the Buyer. Any refunds or credits of Taxes of the
Transferred Entities or relating to the Purchased Assets for any Straddle
Period shall be apportioned between Seller and Buyer pursuant to Section
9.2(c) of this Agreement. Any non-U.S. Tax that is deemed paid in a taxable
period pursuant to Section 902 of the Code (or similar provision of state,
local, or non-U.S. law) or that is credited in a taxable period pursuant to
Section 901 of the Code (or similar provision of state, local or non-U.S. law)
shall be considered to be for such taxable period, regardless of when the
underlying non-U.S. Tax was actually paid or accrued. Buyer shall, if Seller
reasonably requests and at Seller's expense, file for and obtain any refunds
or credits, or cause the Transferred Entities to file for and obtain any
refunds or credits, to which Seller is entitled under this Section 10.3.
Seller shall procure that any request for any refund or credit for the Pre-
Closing Tax Period of or with respect to the Transferred Entities shall be
prepared in accordance with the past practice for the underlying Tax Return,
shall not include any change in any method of accounting and shall not include
any Tax election that is inconsistent with past practice, in each case except
for a Permitted Tax Action.
10.4 SECTION 338 ELECTIONS
Buyer shall not make an election under Section 338(g) of the
Code (or any corresponding provisions of state or local Tax law) with respect
to any of the Transferred Subsidiaries or any of their respective Subsidiaries
which, in each case, is not a U.S. corporation.
10.5 TAX SHARING AGREEMENTS
Any Tax-sharing agreement or similar arrangement between
Seller, on the one hand, and any Transferred Entity, on the other hand, shall
be terminated with respect to the Transferred Entity prior to the Closing.
11. MISCELLANEOUS PROVISIONS
11.1 NOTICES
All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt if (i) mailed
by certified or registered mail, return receipt requested, (ii) sent for
over-night delivery by Federal Express or other express carrier, fee prepaid,
(iii) sent via facsimile with receipt confirmed or (iv) delivered personally,
addressed as follows or to such other address or addresses of which the
respective party shall have notified the other.
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If to Seller, to: Lucent Technologies Inc.
Attn: Executive Vice President, Corporate Operations
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Lucent Technologies Inc.
Attn: Vice President - Law
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and: Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer, to: The Furukawa Electric Co., Ltd.
▇-▇ ▇▇▇▇▇▇▇▇▇▇, ▇-▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇ Facsimile:
011-81-3-3286-3016
With a copy to: Masuda & Ejiri
New ATT Building
7th Floor
▇▇-▇, ▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇
Facsimile: 011-81-3-3505-0696
Masuda & Ejiri
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
United States of America
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Hiroyuki Umezono
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
88
and: Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.2 EXPENSES
Except as otherwise provided in this Agreement, each party to
this Agreement will bear all the fees, costs and expenses that are incurred by
it in connection with the transactions contemplated hereby, whether or not
such transactions are consummated.
11.3 ENTIRE AGREEMENT; MODIFICATION
(a) The agreement of Seller and Buyer, which consists of the
Confidentiality Agreement, this Agreement, the Collateral Agreements, the
Schedules and Exhibits hereto and thereto and the documents referred to herein
and therein, sets forth the entire agreement and understanding between the
parties and supersedes any prior agreement or understanding, written or oral,
relating to the subject matter of this Agreement.
(b) No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby, and in accordance with Section 12.3 or 12.4, as the case may be.
11.4 ASSIGNMENT; BINDING EFFECT; SEVERABILITY
This Agreement may not be assigned by any party hereto without
the other party's written consent; provided, however, that Buyer may assign
(i) its right to acquire the Purchased Assets and obligation to assume the
Assumed Liabilities to one or more of its Affiliates, Subsidiaries, assignees,
designees or nominees, as contemplated by and subject to the restrictions set
forth in, Section 1.3, and (ii) this Agreement and any Collateral Agreement to
a purchaser or acquirer of substantially all of the Business or the Purchased
Assets, but any such assignment will not relieve Buyer of any of its
obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and permitted assigns of each
party hereto. The provisions of this Agreement are severable, and, in the
event that any one or more provisions are deemed illegal or unenforceable, the
remaining provisions shall remain in full force and effect unless the deletion
of such provision shall cause this Agreement to become materially adverse to
either party, in which event the parties shall use reasonable best efforts to
arrive at an accommodation that best preserves for the parties the benefits
and obligations of the offending provision.
11.5 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK IRRESPECTIVE
OF THE CHOICE OF LAWS PRINCIPLES OF THE STATE OF NEW
89
YORK, AS TO ALL MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT,
ENFORCEABILITY, PERFORMANCE AND REMEDIES.
11.6 CONSENT TO JURISDICTION
Buyer irrevocably submits, and Seller irrevocably submits, and
agrees to cause the Selling Subsidiaries to irrevocably submit to, the
exclusive jurisdiction of the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby (and each
agrees that no such action, suit or proceeding relating to this Agreement or
any transaction contemplated hereby shall be brought by it or any of its
Affiliates except in such court). Buyer further agrees, and Seller further
agrees, and agrees to cause the Selling Subsidiaries to agree, that service of
any process, summons, notice or document by U.S. registered mail to such
person's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Buyer irrevocably and unconditionally waives
(and agrees not to plead or claim), and Seller irrevocably and unconditionally
waives (and agrees not to plead or claim), and agrees to cause the Selling
Subsidiaries to irrevocably and unconditionally waive (and not to plead or
claim), any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
United States District Court for the Southern District of New York or that any
such action, suit or proceeding brought in any such court has been brought in
an inconvenient forum.
11.7 WAIVER OF JURY TRIAL
Each party hereby waives, and agrees to cause each of its
Affiliates to waive, to the fullest extent permitted by applicable Law, any
right it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Agreement. Each
party (i) certifies that no representative of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it
and the other party hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section
11.7.
11.8 EXECUTION IN COUNTERPARTS
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.9 PUBLIC ANNOUNCEMENT
Upon signing of this Agreement, Seller and Buyer shall prepare
a mutually agreeable press release announcing the transaction contemplated
hereby. Except for such press release, neither Seller nor Buyer shall, without
the approval of the other, make any press release or other public announcement
(including statements to Business Employees) concerning the
90
existence of this Agreement or the terms of the transactions contemplated by
this Agreement, except as and to the extent that any such party shall be so
obligated by Law or stock exchange disclosure requirements (subject to Section
6.2), in which case the other party shall be advised and the parties shall use
their reasonable best efforts to cause a mutually agreeable release or
announcement to be issued.
11.10 NO THIRD-PARTY BENEFICIARIES
Nothing in this Agreement, express or implied, is intended to
or shall (a) confer on any Person other than the parties hereto and their
respective successors, designees or assigns any rights (including Third-Party
beneficiary rights), remedies, obligations or liabilities under or by reason
of this Agreement (except for Indemnified Parties as provided in Article 9),
or (b) constitute the parties hereto as partners or as participants in a joint
venture. This Agreement shall not provide Third Parties with any remedy,
claim, liability, reimbursement, cause of action or other right in excess of
those existing without reference to the terms of this Agreement (except for
Indemnified Parties as provided in Article 9). Nothing in this Agreement shall
be construed as giving to any Business Employee, or any other individual, any
right or entitlement under any Benefit Plan, policy or procedure maintained by
Seller or Buyer. No Third Party shall have any rights under Section 502, 503
or 504 of ERISA or any regulations thereunder because of this Agreement that
would not otherwise exist without reference to this Agreement. No Third Party
shall have any right, independent of any right that exists irrespective of
this Agreement, under or granted by this Agreement, to bring any suit at law
or equity for any matter governed by or subject to the provisions of this
Agreement (except for Indemnified Parties as provided in Article 9).
12. TERMINATION AND WAIVER
12.1 TERMINATION
This Agreement may be terminated at any time prior to the
Closing Date by:
(a) Mutual Consent. The mutual written consent of Buyer and
Seller;
(b) Failure of Buyer Condition. Buyer upon written notice to
Seller if any of the conditions to the Closing set forth in Section 8.2 shall
have become incapable of fulfillment and shall not have been waived in writing
by Buyer;
(c) Failure of Seller Condition. Seller upon written notice to
Buyer if any of the conditions to the Closing set forth in Section 8.3 shall
have become incapable of fulfillment and shall not have been waived in writing
by Seller;
(d) Court or Administrative Order. Buyer or Seller, if there
shall be in effect a final, non-appealable injunction or order of a court or
administrative agency of competent jurisdiction prohibiting the consummation
of the transactions contemplated hereby; or
(e) Delay. Buyer or Seller, if the Closing shall not have
occurred by January 24, 2002; provided, however, that the party seeking
termination pursuant to clause (b), (c) or (e)
91
is not then in breach in any material respect of any of its representations,
warranties, covenants or agreements contained in this Agreement.
12.2 EFFECT OF TERMINATION
(a) In the event of the termination of this Agreement in
accordance with Section 12.1, this Agreement shall become void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders, except for the obligations of the parties hereto as
provided in Article 6 and Sections 11.2, 11.9 and this Section 12.2, and
except that, notwithstanding anything in this Agreement to the contrary,
neither Seller nor Buyer shall be relieved or released from any liabilities or
damages arising out of its willful and material breach of any provision of
this Agreement.
(b) Furthermore, in the event that this Agreement is terminated
as provided herein:
(i) Buyer shall return all documents and other material
received from Seller or any Affiliate of Seller or any representative of
Seller or any Affiliate of Seller relating to the Business or the transactions
contemplated by this Agreement, whether obtained before or after the execution
of this Agreement, to Seller; and
(ii) Seller shall return all documents and other material
received from Buyer or any Affiliate of Buyer or any representative of Buyer
or any Affiliate of Buyer relating to Buyer or the transactions contemplated
by this Agreement, whether obtained before or after the execution of this
Agreement, to Buyer.
12.3 WAIVER OF AGREEMENT
Any term or condition hereof may be waived at any time prior to
the Closing Date by the party hereto which is entitled to the benefits thereof
by action taken by its Board of Directors or its duly authorized officer or
employee; provided, however, that such action shall not be effective unless it
shall be evidenced by a written instrument duly executed on behalf of such
party by its duly authorized officer or employee. The failure of either party
to enforce at any time any provision of this Agreement shall not be construed
to be a waiver of such provision nor shall it in any way affect the validity
of this Agreement or the right of such party thereafter to enforce each and
every such provision. No waiver of any right in or breach of this Agreement
shall be held to constitute a waiver of any other right or subsequent breach.
12.4 AMENDMENT OF AGREEMENT
This Agreement may be amended with respect to any provision
contained herein at any time prior to the Closing Date by action of the
parties hereto taken by their Boards of Directors or by their duly authorized
officers or employees; provided, however, that such amendment shall not be
effective unless it shall be evidenced by a written instrument duly executed
on behalf of each party by its duly authorized officer or employee.
92
IN WITNESS WHEREOF, each party has caused this Agreement to be
duly executed on its behalf by its duly authorized officer as of the date
first written above.
LUCENT TECHNOLOGIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President/Law
THE FURUKAWA ELECTRIC CO., LTD.
By: /s/ Junnosuke Furukawa
-------------------------------------
Name: Junnosuke Furukawa
Title: President & CEO
[Signature page to Asset and Stock Purchase Agreement]
