EXECUTION COPY
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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
PURSUANT TO SECTION 363
OF THE BANKRUPTCY CODE
dated as of
February 22, 2001
among
QUINTUS CORPORATION,
certain wholly-owned subsidiaries of
QUINTUS CORPORATION
and
AVAYA INC.
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.01. Acquired Assets.................................................2
SECTION 1.02. Excluded Assets.................................................4
SECTION 1.03. Assumed Liabilities.............................................4
SECTION 1.04. Excluded Liabilities............................................4
SECTION 1.05. Purchase Price..................................................6
ARTICLE 2
THE CLOSING
SECTION 2.01. Closing.........................................................6
SECTION 2.02. Deliveries at Closing...........................................6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
SECTION 5.01. Conduct of the Business........................................24
SECTION 5.02. Marketing Period...............................................27
SECTION 5.03. Bankruptcy Court Approvals.....................................27
SECTION 5.04. Access and Information.........................................29
SECTION 5.05. Books and Records..............................................30
SECTION 5.06. All Reasonable Efforts.........................................30
SECTION 5.07. Further Assurances.............................................30
SECTION 5.08. Public Announcements...........................................31
SECTION 5.09. Notices of Certain Events......................................31
SECTION 5.10. Name Change....................................................32
SECTION 5.11. Permits........................................................32
SECTION 5.12. Transfer Taxes.................................................32
SECTION 5.13. Consents.......................................................32
SECTION 5.14. Excess Liabilities.............................................33
SECTION 5.15. Acton, Massachusetts Real Property and Facility................33
ARTICLE 6
EMPLOYEES AND BENEFITS
SECTION 6.01. Employees and Offers of Employment.............................33
SECTION 6.02. Company Employee Benefit Plans.................................34
PAGE
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SECTION 6.03. Buyers Benefit Plans...........................................34
ARTICLE 7
TAX MATTERS
SECTION 7.01. Tax Cooperation................................................35
SECTION 7.02. Tax Reporting..................................................35
ARTICLE 8
CONDITIONS PRECEDENT
SECTION 8.01. Conditions Precedent to Obligation of Company and Buyer........36
SECTION 8.02. Conditions Precedent to Obligation of Company..................36
SECTION 8.03. Conditions Precedent to Obligation of Buyer....................37
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination....................................................38
SECTION 9.02. Effect of Termination..........................................39
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.01. Notices.......................................................40
SECTION 10.02. Survival of Representations and Warranties....................41
SECTION 10.03. Amendments; No Waivers........................................42
SECTION 10.04. Expenses......................................................42
SECTION 10.05. Successors and Assigns........................................42
SECTION 10.06. Governing Law.................................................42
SECTION 10.07. Jurisdiction..................................................42
SECTION 10.08. WAIVER OF JURY TRIAL..........................................43
SECTION 10.09. Counterparts; Effectiveness...................................43
SECTION 10.10. Descriptive Headings; Certain Terms...........................43
SECTION 10.11. Entire Agreement..............................................43
SECTION 10.12. Severability; Validity; Parties of Interest...................43
SECTION 10.13. Bulk Sales....................................................43
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ARTICLE 11
DEFINITIONS
PAGE
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SECTION 11.01. Defined Terms.................................................44
EXHIBITS
EXHIBIT A - Reserved
EXHIBIT B - Reserved
EXHIBIT C - Bidding Procedures
EXHIBIT D - Term Sheet for Credit Agreement
EXHIBIT E - Disclosure Documents
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 22, 2001, among Quintus
Corporation, a Delaware corporation ("Company"), Mustang.com, Inc., a
California corporation ("Mustang.com") and Acuity Corp., a Delaware corporation
("Acuity"), each of which is a wholly owned subsidiary of Company, and all of
which are collectively with Company referred to herein as the "Sellers") and
Avaya Inc., a Delaware corporation ("Buyer").
WHEREAS, Company, among other things, designs, develops, manufactures,
sells and services comprehensive e-customer relationship management solutions;
WHEREAS, the Board of Directors of Company has determined that it is
necessary to file, and to cause each other Seller to file for reorganization
relief under Chapter 11 of Title 11 of the United States Code, Section 101 et
seq., as amended (the "Bankruptcy Code") by filing a case (the "Chapter 11
Case") in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"); and
WHEREAS, the Board of Directors of Company has determined that it is in
the best interests, subject to the terms and conditions of this Agreement, of
Company to pursue an order of the Bankruptcy Court to sell, convey, assign and
transfer to Buyer substantially all of the assets and contracts and unexpired
leases constituting the business of Company together with the obligations and
liabilities in the manner and subject to the terms and conditions set forth in
this Agreement and in accordance with Sections 363 and 365 and other applicable
provisions of the Bankruptcy Code;
WHEREAS, certain assets of Sellers will be sold to Buyer, and the
contracts and unexpired leases will be assumed and assigned to Buyer pursuant
to an order of the Bankruptcy Court approving such sale under Section 363 of
the Bankruptcy Code and approving such assumption and assignment under Section
365 of the Bankruptcy Code, and upon the terms and subject to conditions of
this Agreement; and
WHEREAS, Buyer has agreed to advance to Company certain amounts, with
respect to any advances after the commencement of the Chapter 11 Case, pursuant
to Section 364 of the Bankruptcy Code and subject to the approval of the
Bankruptcy Court, upon the terms and subject to the conditions set forth in the
Term Sheet attached hereto as Exhibit D (the "Credit Agreement Term Sheet") and
such other customary and reasonable terms and conditions as the parties shall
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agree, all of which shall be set forth in a mutually agreeable form of credit
agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the respective
representations, warranties, covenants and agreements set forth herein and
other consideration the receipt of and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.01. Acquired Assets. (a) Section 363 Assigned Assets. Pursuant
to Section 363 of the Bankruptcy Code and on the terms of and subject to the
conditions precedent set forth in Article 8 of this Agreement, at the Closing
Company shall, and shall cause each other Seller and Foreign Subsidiary to,
sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase
and accept from Sellers and Foreign Subsidiaries, all of Sellers' and Foreign
Subsidiaries' right, title and interest in, to and under all of the assets,
property, rights and claims of Sellers and Foreign Subsidiaries as of the date
hereof, and all of such assets, rights and claims acquired after the date
hereof, which have not been subsequently disposed of in the ordinary course of
business, of every kind and description, wherever located, real, personal or
mixed, whether tangible or intangible other than Excluded Assets (collectively,
the "Section 363 Assigned Assets"). For the avoidance of doubt, the Section 363
Assigned Assets shall include:
(i) all of Sellers' and Foreign Subsidiaries' cash and cash
equivalents on hand and in banks;
(ii) all computers, servers, machinery, equipment, vehicles
(including, to the extent assignable, rights to the warranties received
from the manufacturers and distributors of any of the foregoing and to any
related claims, credits, rights of recovery and setoff with respect to any
of the foregoing), furniture, furnishings and other personal property and
interests therein;
(iii) all inventories (including any raw materials, work-in-progress,
parts, finished products, and inventoriable supplies) and any rights of
Sellers and Foreign Subsidiaries to the warranties received from
suppliers, and, to the extent assignable, any related claims, credits,
rights of recovery and set off with respect to the foregoing;
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(iv) all of the outstanding capital stock of, or other voting
securities or ownership interests in any Person (other than any Seller or
any Foreign Subsidiary) owned by Company;
(v) all accounts, notes and other receivables;
(vi) all prepaid expenses, credits, deferred charges, advance
payments and security deposits (other than any security deposits made by
third party bidders in the course of the proceedings contemplated by
Section 5.04) including but not limited to ad valorem taxes, leases and
rentals;
(vii) all transferable governmental licenses, permits or other
authorizations including all applications therefor;
(viii) all books, records, files and papers, whether in hard copy or
computer format;
(ix) all goodwill associated with the Business or the Acquired
Assets, together with the right to represent to third parties that Buyer
is the successor to the Business; and
(x) the note receivable from Paul Bartlett to Company dated April 27,
2000 in the principal amount of $4,880,700 plus interest accrued thereon.
Notwithstanding the foregoing, the Section 363 Assigned Assets shall not
include any executory contracts or unexpired leases, which are dealt with
exclusively in Section 1.01(b), nor shall they include the Excluded Assets, as
provided in Section 1.02.
(b) Section 365 Assumed Rights. (i) Pursuant to Section 365 of the
Bankruptcy Code, at the Closing, Company shall, and shall cause each other
Seller to, assume and assign to Buyer, and Buyer shall accept from Sellers, all
of Sellers' rights under and title and interest in all of Sellers' executory
contracts (including the option provided for in Section 5.16 of this Agreement)
and unexpired leases entered into prior to the date hereof, which are listed on
Schedule 1.01(b) (collectively, the "Section 365 Assumed Rights").
(ii) Buyer agrees to use all reasonable efforts and to take all
reasonable actions, including the cure of defaults the costs of which
shall be borne by Sellers and providing adequate assurances of future
performance, mutually agreed by Buyer and Company in writing to be
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necessary or advisable, or determined to be necessary by the Bankruptcy
Court, in order to permit the assumption and assignment of the Section 365
Assumed Rights to Buyer; provided that nothing contained herein shall
obligate Buyer to take any action other than the payment of money in an
amount determined by Buyer in its sole discretion (which amount shall be
credited against the Purchase Price if approved in advance in writing by
Company, which approval shall not unreasonably be withheld). Subject to
the foregoing, Company agrees to use all reasonable efforts and to take
all other reasonable actions necessary or advisable, or determined to be
necessary by the Bankruptcy Court, in order to permit the assumption and
assignment to Buyer of the Section 365 Assumed Rights.
(c) Intellectual Property Rights and Permits. For the avoidance of doubt,
the assets so transferred shall, to the fullest extent permissible under
Sections 363 and 365 of the Bankruptcy Code, include all right, title and
interest of Sellers in, to and under the Intellectual Property owned by Sellers
and licenses of Intellectual Property to Sellers as well as in, to and under
any permits, licenses and authorizations issued by any domestic, foreign or
supranational governmental body, agency, official or authority.
SECTION 1.02. Excluded Assets. Notwithstanding the foregoing, Buyer
expressly understands and agrees that (i) the Purchase Price and any other
amounts received in respect of, and all rights of Company arising under, any of
this Agreement, any order of the Bankruptcy Court relating to this Agreement,
or the transactions contemplated hereby, (ii) all claims, credits, causes of
action or rights under any insurance policies of Sellers related to any
Excluded Liabilities, (iii) any claims or causes of action of Sellers relating
to the Existing Claims (as defined below), (iv) any books and records which
Company concludes (based upon advice of counsel) is privileged or confidential
material in connection with the Existing Claims; provided that a copy of such
books and records redacted to eliminate such privileged or confidential
material shall be provided to Buyer, (v) any books and records of Sellers
required by law to be retained by Sellers, (vi) the notes of Alan Anderson and
Susan Salvesen referred to in Schedule 3.14 item 24 of the Company Disclosure
Schedule, (vii) the real property of Company located in Acton, Massachusetts
and referred to in Section 5.15 (collectively, the "Excluded Assets"), and
(viii) the capital stock of Mustang.com, Acuity and, subject to Section 5.16,
the Foreign Subsidiaries shall be excluded from the Acquired Assets, provided
that Buyer shall be entitled at its own cost and expense to examine and make
copies of such books and records retained under Section 1.02(a)(v).
SECTION 1.03. Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Buyer shall assume from
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Sellers and thereafter pay, perform or discharge in accordance with their terms
all of the liabilities and obligations in Schedule 1.03, but excluding any
Excluded Liabilities (the "Assumed Liabilities"). No more than 3 business days
prior to the Closing Date, Company shall deliver to Buyer a schedule in
reasonable detail showing Company's estimate of the Assumed Liabilities as of
the Closing Date. Buyer shall have the right, to review this schedule of
Assumed Liabilities, and the parties agree to discuss in good faith any
comments or questions that Buyer may have with respect to such schedule. From
and after the Closing, Buyer shall have the right to confirm the accuracy of
the schedule for a period of 5 business days after the Closing. If, based on
such review, Buyer believes that the Assumed Liabilities as of the Closing Date
exceed $30,000,000, the parties agree to discuss in good faith Buyer's
comments, and any disputes that the parties cannot resolve within 2 business
days will be resolved expeditiously before the Bankruptcy Court. If the Assumed
Liabilities as of the Closing Date, as reflected on the schedule prepared by
Company or as revised upon resolution of any comments by Buyer, exceed
$30,000,000, then the provisions of Section 5.14 shall apply.
SECTION 1.04. Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing or commitment (written or oral) to the contrary,
other than the Assumed Liabilities Buyer is not assuming any liabilities,
obligations or commitments of Sellers (or any predecessors of Sellers or any
prior owners of all or part of their businesses and assets) whether known or
unknown, absolute, accrued, contingent or otherwise (whether or not related to
the Business or the Acquired Assets). For the avoidance of doubt, the Excluded
Liabilities shall include:
(i) any liability or obligation for Designated Chapter 11 Costs and
any contracts related thereto;
(ii) any and all claims, actions, causes of action and liabilities of
any type, whether known or unknown, whether disputed or undisputed,
whether fixed or contingent, whether liquidated or unliquidated (including
all costs incurred in defending such claims, actions, causes of action and
liabilities) related to the factual matters asserted in the cases set
forth on Schedule 1.04(a)(ii) (the "Existing Claims");
(iii) any obligation of Sellers with respect to indemnification of
any officer, director, employee or other agent or representative of
Sellers arising out of facts, events or circumstances occurring or
existing prior to the Closing Date;
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(iv) any liability or obligation relating to an Excluded Asset,
including the mortgages on the real estate facilities described in Section
5.15;
(v) any and all claims, actions, causes of action and liabilities of
any type, whether known or unknown, relating to payments of an aggregate
of $4.7 million purportedly in satisfaction of a receivable determined to
have arisen based upon falsified documentation and currently reflected as
a liability on the Company Balance Sheet, as described in the Company
Disclosure Documents;
(vi) any Taxes, other than Taxes accrued by the Company at or prior
to the Closing;
(vii) any environmental condition of any real or personal property
existing on or prior to the Closing Date whether arising under
Environmental Laws (or in connection with the Release or threatened
Release of any Contaminant); and
(viii) any and all claims, actions, causes of actions and liabilities
of any type, whether known, unknown, relating to stock options, the
employee stock purchase plan and any transaction bonuses described in
Schedule 3.14(a)(3) (the "Excluded Employee Liabilities").
All such liabilities and obligations shall be retained by and remain
obligations and liabilities of the applicable Seller (all such liabilities and
obligations not being assumed being herein referred to as the "Excluded
Liabilities").
SECTION 1.05. Purchase Price. (a) In consideration for the Acquired
Assets, Buyer shall pay to Company at the Closing the amount in cash equal to
$30,000,000, subject to adjustment pursuant to Section 5.15, and, if
applicable, Section 5.14 (the "Purchase Price"). The Purchase Price shall be
paid as provided in Section 2.02(b).
(b) The Purchase Price (plus Assumed Liabilities to the extent properly
taken into account under Section 1060 of the Code) shall be allocated among the
Acquired Assets acquired by Buyer as agreed upon by Buyer and Company within 90
days after the Closing. Buyer and Company agree to be bound by such allocation
and to file, in accordance with Section 1060 of the Code, all Tax Returns and
reports with respect to the transactions contemplated by this Agreement,
including, but not limited to, all federal, state and local Tax Returns on the
basis of such allocation. Buyer and Company agree to file any additional
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information return required to be filed pursuant to Section 1060 of the Code
and to treat the adjusted allocation in the manner described above.
ARTICLE 2
THE CLOSING
SECTION 2.01. Closing. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Davis Polk
& Wardwell located at 1600 El Camino Real, Menlo Park, California 94025 at
10:00 a.m. P.S.T. as promptly as practicable after the date hereof but in no
event later than three business days after the conditions set forth in Article
8 shall have been satisfied or waived, or at such other time, date and place as
shall be fixed by agreement between Company and Buyer (the date of the Closing
being herein referred to as the "Closing Date").
SECTION 2.02. Deliveries at Closing. (a) At the Closing, Sellers shall
deliver to Buyer such deeds, bills of sale, assignments of leases and
contracts, and any other instruments of conveyance that are necessary or
appropriate to effectuate the transfer of the Acquired Assets to Buyer, and
such other documents, instruments or certificates required to be delivered as a
condition precedent to Buyer's obligations under this Agreement or as Buyer or
its counsel may reasonably request.
(b) At the Closing, Buyer shall deliver to Company (i) the Purchase Price,
by wire transfer of same day funds and cancellation of obligations for any
funds advanced by Buyer to Company as contemplated by the Credit Agreement Term
Sheet or Section 9.01(iv), if any, and (ii) such duly executed instruments as
are necessary or appropriate to effectuate the assumption of the Assumed
Liabilities by Buyer, and such other documents, instruments or certificates
required to be delivered as a condition precedent to Company's obligations
under this Agreement, or as Company or its counsel may reasonably request.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer, jointly and severally, as of
the date hereof and as of the Closing Date except as otherwise provided herein
and except as specifically disclosed in the Company Disclosure Schedules, that
each of the statements contained in this Article 3 are true and complete. Each
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exception set forth in the Company Disclosure Schedule and each other reference
to this Agreement set forth in the Company Disclosure Schedule (i) is
identified by reference to, or has been grouped under a heading referring to, a
specific individual section of this Agreement, (ii) shall be deemed an
exception or qualification to the entire section of this Agreement so
referenced, regardless of any subsections within such section and, except as
otherwise specifically stated with respect to such exception, relates only to
such section.
SECTION 3.01. Corporate Existence and Power. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not reasonably be expected
have, individually or in the aggregate, a Material Adverse Effect on Company.
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Company has heretofore delivered to Buyer true and
complete copies of the certificate of incorporation and bylaws of Company as
currently in effect.
SECTION 3.02. Corporate Authorization. The execution, delivery and
performance by Sellers of this Agreement and the consummation by Sellers of the
transactions contemplated hereby are within Sellers' corporate powers and have
been duly authorized by all necessary corporate action on the part of Sellers.
This Agreement has been duly and validly executed by Sellers and will
constitute a valid and binding obligation of Sellers enforceable in accordance
with its terms, subject to the entry of the Section 363/365 Order, except for
the provisions of Section 9.01 with respect to the Topping Fee which shall
become the binding obligation of Sellers upon the entry of the Interim Order,
and except as enforceability against Sellers may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium, and other laws of similar
application affecting creditors' rights generally from time to time in effect
and to general equitable principles.
SECTION 3.03. Governmental Authorization. (a) The execution, delivery and
performance by Company of this Agreement and the consummation by Sellers of the
transactions contemplated hereby require no approval by, action by or in
respect of, or filing with, any federal, state, local or foreign government,
any court, administrative, regulatory or other governmental agency, commission
or authority or any non-governmental self-regulatory agency, commission or
authority, domestic, foreign or supranational other than (i) consents,
approvals or
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authorizations of, or declarations or filings with, the Bankruptcy Court, (ii)
compliance with any applicable requirements of the HSR Act, and (iii) any
approvals, actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement hereby and the
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under, or result in the
creation of any Lien upon any of the properties or assets of Company or any
Subsidiary under (i) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to Company or any Subsidiary or
their respective properties or assets, other than (A) such violations,
defaults, rights of termination, cancellation or acceleration or losses of
benefits as would not be given effect under the Bankruptcy Code or (B) as
disclosed pursuant to Section 3.04 or (ii) subject to the governmental filings
and other matters referred to in Section 3.03(a), any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Company or any
Subsidiary or their respective properties or assets, other than, in the case of
paragraph (a), any such conflicts, violations, defaults, rights, losses or
liens that individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
SECTION 3.04. Required and Other Consents. Schedule 3.04 sets forth each
material agreement, contract, lease or other instrument binding upon Company
that will constitute an Assumed Liability, and each material agreement,
contract, lease or other instrument binding upon any Subsidiary of Company,
which requires the consent or other action by any Person as a result of the
execution, delivery and performance of this Agreement, except any such
contract, lease or other instruments binding upon Sellers that can be assumed
and assigned without such consent or action under the Bankruptcy Code.
SECTION 3.05. Subsidiaries. (a) Each Subsidiary of Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Each such Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is
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necessary, except for those jurisdictions where failure to be so qualified
would not reasonably be expected to have, individually or in the aggregate,
have a Material Adverse Effect on Company. All Subsidiaries of Company and
their respective jurisdictions of incorporation are identified on Schedule
3.05. Company has heretofore delivered to Buyer true and complete copies of the
charter and bylaws (or other similar organizational documents) of each
wholly-owned Subsidiary as currently in effect. Except as set forth in Schedule
3.05, the Company and each of its Subsidiaries do not own any equity interests
in any other Person.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of Company, is owned by Company,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities or
ownership interests other than any such restriction on Company pursuant to the
Bankruptcy Code that shall not be binding on Buyer after the Closing). There
are no outstanding (i) securities of Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary of Company or (ii)
warrants, calls, options or other rights to acquire from Company or any of its
Subsidiaries, or other obligation of Company or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of Company
(the items in clauses (i) and (ii) being referred to collectively as the
"Company Subsidiary Securities").
SECTION 3.06. Disclosure Documents. Company has delivered to Buyer the
Company Disclosure Documents and will deliver to Buyer any Company SEC
Documents filed after the date hereof promptly upon such filing. The Company
Disclosure Documents comply or will comply in all material respects with the
requirements of the forms on which such documents were or are to be filed or
prepared and, taken together, do not and will not contain as of the date hereof
or upon which such documents are filed any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made or
will be made, not misleading.
SECTION 3.07. Financial Statements. The unaudited consolidated financial
statements and consolidated interim financial statements of Company included or
to be included in the Company Disclosure Documents (the "Company Financial
Statements"), comply or will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been or will be prepared in
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accordance with GAAP (except, in the case of unaudited interim statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in accordance with GAAP applied on a consistent basis in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited interim statements, to normal recurring year-end audit
adjustments).
SECTION 3.08. Absence of Certain Changes. Since the Balance Sheet Date,
the Business has been conducted in the ordinary course consistent with past
practices and there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Company or any of
its Subsidiaries, or any repurchase, redemption or other acquisition by Company
or any of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Company or any of its
Subsidiaries;
(b) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital contributions
to or investments in its wholly-owned Subsidiaries made in the ordinary course
of business consistent with past practices;
(c) any damage, destruction or other loss (whether or not covered by
insurance) or condemnation or other taking affecting the Business or the assets
of Company or any of its Subsidiaries that has had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on Company;
(d) any transaction or commitment made, or any contract or agreement
entered into, by Company or any of its Subsidiaries relating to the Acquired
Assets or Business (including the acquisition or disposition of any assets) or
any relinquishment by Company or any of its Subsidiaries of any contract or
other right, in either case, material to Company, other than transactions and
commitments in the ordinary course of business consistent with past practices
and those contemplated by this Agreement;
(e) any (i) employment, deferred compensation, severance, retirement or
other similar agreement entered into with any director, officer or employee of
Company or any Subsidiary (or any amendment to any such existing agreement),
(ii) grant of any severance or termination pay to any director, officer or
employee of Company or any Subsidiary, or (iii) change in compensation or other
benefits payable to any director, officer or employee of Company or any
Subsidiary
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pursuant to any severance or retirement plans or policies thereof, in each case
other than in the ordinary course of business consistent with past practices,
provided that Company may incur financial obligations and liabilities pursuant
to Approved Employee Orders.
(f) any material labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of Company or any of its Subsidiaries, or any material
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(g) any material Tax election made or changed, any annual tax accounting
period changed, any method of tax accounting adopted or changed, any material
amended Tax returns or claims for material Tax refunds filed, any material
closing agreement entered into, any material Tax claim, audit or assessment
settled, or any right to claim a material Tax refund, offset or other reduction
in Tax liability surrendered;
(h) except insofar as may have been required by a change in GAAP, any
change in accounting methods, principles or practices by Company;
(i) failure to protect or keep the Company Intellectual Property Rights in
effect;
(j) except as disclosed in the Company Disclosure Documents, any event or
occurrence or change, financial or otherwise, in the Acquired Assets, Business
or Assumed Liabilities that has had or would reasonably be expected to have a
Material Adverse Effect;
(k) except as disclosed in the Company Disclosure Documents, (i) any
granting by Company or any Subsidiary to any current or former director,
officer or other employee of Company or Subsidiary of any increase in
compensation, bonus or other benefits, except for normal increases in cash
compensation in the ordinary course of business consistent with past practice
or as was required under any employment agreements in effect as of the date of
the Audited Balance Sheet included in the Company Disclosure Documents, (ii)
any granting by Company or any Subsidiary to any such current or former
director, officer or employee of any increase in severance or termination pay,
except in the ordinary course of business consistent with past practice, or
(iii) any entry by Company or any Subsidiary into, or any amendments of, any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director, officer or
employee;
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(l) any material amendment or termination, other than in the ordinary
course of business consistent with past practice, of any agreement to which
Company or any Subsidiary is a party and which contract is or should be set
forth on the Company Disclosure Schedule;
(m) any undertaking or commitment to undertake capital expenditures
exceeding $50,000 for any single project or related series of projects, other
than commitments or expenditures related to the completion of and move into
Company's new headquarters facility in Dublin, California for which there have
not been any undertakings or commitment to undertake capital expenditures
exceeding $150,000 for any single project or related series of projects;
(n) any sale, lease (as lessor), transfer or other disposition of,
mortgage, pledge, or imposition of any Lien on, any of the assets reflected on
the Audited Balance Sheet or any assets acquired by Company or any of its
Subsidiaries after the date of such Audited Balance Sheet, except for inventory
and personal property sold or otherwise disposed of for fair value in the
ordinary course of its business consistent with past practice; or
(o) any resolution, agreement or understanding to take any act similar to
those set forth in this Section 3.08, except as contemplated by this Agreement.
SECTION 3.09. No Undisclosed Material Liabilities. There are no
liabilities or obligations of Company or any of its Subsidiaries of any kind,
other than:
(a) liabilities or obligations specifically identified and described in
the Company Disclosure Documents;
(b) liabilities not required under GAAP on a basis consistent with
preceding accounting periods to be shown in the Company Financial Statements;
(c) liabilities incurred in the ordinary course of business since the
Balance Sheet Date;
(d) liabilities relating to the Existing Claims;
(e) liabilities relating to the Excluded Assets;
(f) liabilities under this Agreement or the transactions contemplated
hereby; or
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(g) undisclosed liabilities which, individually or in the aggregate, are
not material to Company.
SECTION 3.10. Compliance with Laws and Court Orders. (a) Each of Company
and its Subsidiaries has complied in all material respects with, and is not in
violation of, in any material respect, any law, ordinance or governmental rule
or regulation (collectively, "Laws") to which it or its business is subject;
(b) Each of Company and its Subsidiaries has obtained all licenses,
permits, certificates or other governmental authorizations (collectively
"Authorizations") necessary for the ownership or use of the Acquired Assets and
the Business other than Authorizations (i) which are ministerial in nature and
which Company or such Subsidiary has no reason to believe would not be issued
in due course and (ii) which, the failure of Company or such Subsidiary to
possess, would, after the Closing, subject Buyer to penalties or other fines in
excess of $75,000 in the aggregate ("Immaterial Authorizations");
(c) Neither Company nor any of its Subsidiaries has received notice of
violation of, or knows of any violation of, any Laws to which it or its
business is subject or any Authorization necessary for the ownership or use of
its assets and properties or the conduct of its business (other than Immaterial
Authorizations).
SECTION 3.11. Litigation. Except for the matters listed on Schedule 3.11,
there is no action, suit, investigation or proceeding (or any basis therefor)
pending against, or, to the knowledge of Company, threatened against or
affecting, Company, any of its Subsidiaries, any present or former officer,
director or employee of Company or any of its Subsidiaries or any other Person
for whom Company or any of such Subsidiary may be liable or any of their
respective properties before any court or arbitrator or before or by any
governmental body, agency or official, domestic, foreign or supranational,
that, if determined or resolved adversely in accordance with the plaintiff's
demands, would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
SECTION 3.12. Finders' Fees. There is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of Company or any of its Subsidiaries who might be entitled to any fee
or commission from Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
SECTION 3.13. Tax Matters. (a) Except to the extent, if any, constrained
by the pendency of the Chapter 11 Case or reserved for on the Company Financial
Statements, Company has filed all Tax Returns that have been required to be
filed
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and timely paid all Taxes payable by it for the Pre-Closing Tax Period which
will have been required to be paid on or prior to the date hereof, the
non-payment of which would result in a Lien on any Acquired Asset (that would
not be released pursuant to the Section 363/365 Order), or would otherwise
reasonably be expected to have a Material Adverse Effect, and such Tax Returns
are complete and accurate in all material respects and disclose all Taxes
required to be paid in respect of the Company or the Acquired Assets with
respect to the Pre-Closing Tax Period.
(b) Company has established, in accordance with GAAP applied on a basis
consistent with that of preceding periods, adequate reserves for the payment of
all Taxes which arise from or with respect to the Acquired Assets or the
operation of the Business and are incurred in or attributable to the
Pre-Closing Tax Period (that would not be released pursuant to the Section
363/365 Order), the non-payment of which would result in a Lien on any Acquired
Asset, or would otherwise reasonably be expected to have a Material Adverse
Effect.
(c) Except as reserved for on the Company Financial Statements, there is
no claim, action, audit, assessment, suit or other proceeding now pending or
threatened expressly asserting that Company is liable for any Tax in any
jurisdiction.
SECTION 3.14. Employee Benefit Plans. (a) Schedule 3.14(a) lists each
material "employee benefit plan", as such term is defined in Section 3(3) of
ERISA and each material employment, severance or other similar contract and any
material arrangement, policy, plan or arrangement providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is entered into,
maintained or contributed to, as the case may be, by Company or any of its
Subsidiaries or ERISA Affiliates and (ii) covers any employee of Company. Such
contracts, plans and arrangements are hereinafter referred to collectively as
the "Benefit Arrangements."
(b) With respect to each Benefit Arrangement, Company has provided (or
will prior to Closing provide) (i) a true and complete copy of such plan
document and trust agreement and group annuity contract relating thereto (or,
in the case of unwritten plans, descriptions thereof), (ii) the most recently
filed Form 5500 and (iii) the most recent summary plan description for each
Benefit Arrangement for which such summary plan description is required. Each
Benefit Arrangement has been maintained in substantial compliance with its
terms and
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with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement except where any
such failure to do so would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(c) No Benefit Arrangement is (i) a Multiemployer Plan or (ii) subject to
Title IV of ERISA.
(d) Each Benefit Arrangement which is intended to be qualified under
Section 401(a) of the Code has received an opinion, determination, advisory or
notification letter from the Internal Revenue Service that it is so qualified
or has remaining a period of time to obtain such a letter from the IRS, and no
event has occurred since the date of such determination that would reasonably
be expected to result in the revocation of, or adversely affect, such
qualification. Company has furnished to Buyer copies of the most recent
Internal Revenue Service determination, opinion, or notification letters with
respect to each such Plan.
(e) With respect to the employees of the Business, there are no employee
post-retirement medical or health plans in effect, except as required by
Section 601 of ERISA and Buyer shall have no responsibility for any such
retiree benefits other than as set forth in Article 6.
(f) Except as set forth on Schedule 3.14(f), no Transferred Employee will
become entitled to any retirement, severance or similar benefit solely as a
result of the transactions contemplated hereby.
(g) There is no contract, agreement, plan or arrangement covering any
Transferred Employee that, individually or collectively, would give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Code Section 280G.
(h) Schedule 3.14(h) sets forth a true and complete list of the names,
titles, and annual salaries of all employees of the business of Company whose
annual base salary exceeds $100,000.
(i) Since the Balance Sheet Date and other than as set forth in Schedule
3.14(i), there has not been any adoption or amendment in any material respect
by Company, any of its Subsidiaries or any Affiliate of any Benefit
Arrangement, or any material change in any actuarial or other assumption used
to calculate funding obligations with respect to any Benefit Arrangement, or
any change in the manner in which contributions to any Benefit Arrangement are
made or the basis on which such contributions are determined.
-16-
SECTION 3.15. Environmental Matters. (a) Except as disclosed on Schedule
3.15:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no action, claim, suit, proceeding or,
to Company's knowledge, investigation or review is pending or, to the
knowledge of Company, is threatened by any governmental entity or other
Person in connection with the Company, any of its Subsidiaries or any of
their respective assets or operations relating to or arising out of any
Environmental Law or otherwise relating to or arising out of any Release
or threatened Release of any Contaminant nor, to the knowledge of the
Company, is there any basis therefor;
(ii) Company and each of its Subsidiaries is in compliance with all
Environmental Laws and all Environmental Permits in all material respects;
and
(iii) except as would not reasonably be expected to have a Material
Adverse Effect, there are no liabilities of or relating to Company or any
of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law or otherwise relating to or arising out of any
Release or threatened Release of any Contaminant, and there are no facts,
conditions, situations or set of circumstances that would reasonably be
expected to result in or be the basis for any such liability, and neither
the Company nor its Subsidiaries are subject to any decree, judgment or
settlement relating to the violation of any Environmental Law.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which Company has knowledge in relation
to the current or prior Business of Company or any of its Subsidiaries or any
property or facility now or previously owned or leased by Company or any of its
Subsidiaries that has not been delivered to Buyer at least five days prior to
the date hereof.
(c) Neither Company nor any of its Subsidiaries owns, leases or operates
or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey or Connecticut.
(d) For purposes of this Section 3.15, the terms "Company" and
"Subsidiaries" shall include any entity that is, in whole or in part, a
predecessor of Company or any of its Subsidiaries.
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SECTION 3.16. Material Contracts. (a) Except for the contracts disclosed
in Schedule 3.16(a), Company or any of its Subsidiaries is not a party to or
bound by:
(i) any written debt instrument, including, without limitation, any
loan agreement, line of credit, promissory note, security agreement or
other evidence of indebtedness, where Company or any of its Subsidiaries
is a lender, borrower or guarantor, other than such instruments (A) with
an outstanding principal amount not in excess of $150,000 or (B) entered
into subsequent to the date of this Agreement in the ordinary course
consistent with past practice and Section 5.01;
(ii) any written contract or commitment that would materially
restrict any assignee of the Business or the Acquired Assets from engaging
in any industry or any line of business in any location;
(iii) any written contract or commitment in excess of $25,000 to
which Company or any of its Subsidiaries is a party for any charitable
contribution;
(iv) any written agreement in excess of $150,000 to which Company or
any of its Subsidiaries is a party with respect to any assignment,
discounting or reduction of any receivables of Company or such Subsidiary
reflected in the Company Disclosure Documents as of the Balance Sheet
Date;
(v) any written joint venture or partnership agreement to which
Company or any of its Subsidiaries is a party requiring payments by
Company in excess of $150,000;
(vi) any written distributorship, sales agency, sales representative,
reseller or marketing agreement to which Company or any of its
Subsidiaries is a party, pursuant to which Company or any of its
Subsidiaries have made or received aggregate payments exceeding $150,000
calculated on a cash basis during the 24 month period ended December 31,
2000;
(vii) any value added reseller, original equipment manufacturing,
technology transfer, source code license or other license or any other
agreement containing the right to sublicense software and/or technology,
in each case, to which Company or any of its Subsidiaries is a party
pursuant to which Company or any of its Subsidiaries have made or
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received aggregate payments exceeding $150,000 calculated on a cash basis
during the 24 month period ended December 31, 2000, other than agreements
related to "off-the-shelf" software;
(viii) any agreement, option or commitment or right with, or held by,
any third party to acquire any assets or properties, or any interest
therein, of Company or any of its Subsidiaries, having a value in excess
of $150,000, except for contracts for the sale of licenses or inventory,
machinery or equipment in the ordinary course of business;
(ix) any license of Intellectual Property by any third party to the
Company or any of its Subsidiaries that Company or any of its Subsidiaries
could not readily replace without a material impact on Company or such
Subsidiary or that is not generally commercially available;
(x) any written employment contract involving annual compensation in
excess of $100,000 entered into by the Company or any of its Subsidiaries;
(xi) any other agreement, commitment, arrangement or plan not made in
the ordinary course of business that is material to the Business; and
(xii) any outstanding leases, both capital and operating, or
licenses, pursuant to which Company or any of its Subsidiaries has (A)
obtained the right to use or occupy any real or tangible personal property
under arrangements where the remaining obligation is more than $150,000,
exclusive of any renewal rights or (B) granted to any other Person the
right to use any material item of machinery, equipment, furniture, vehicle
or other personal property of Company or any of its Subsidiaries having an
original cost of $150,000 or more.
(b) Except as set forth on Schedule 3.16(a) of the Company Disclosure
Schedule, (i) there are no oral contracts or commitments of the types described
in Section 3.16(a), (ii) there are no contracts or commitments between Company
or any of its Subsidiaries and any Affiliate, (iii) there are no contracts,
commitments or arrangements (including with any employee) which require the
payment of any compensation upon the occurrence of any change of control, (iv)
there are no contracts to which Company or any of its Subsidiaries is a party
which would create rights for any Person against Buyer or any of its Affiliates
(other than rights against Company as in effect on the Closing Date) and (v)
except as set forth in response to Section 3.14, there are no contracts or
arrangements, except this
-19-
Agreement, which provide for payment of any compensation, penalty or liquidated
damages to any party solely as a result of the transactions contemplated hereby
or in the event of the termination of such contract or arrangement on or
following the Closing Date, which amount would not have been payable upon such
termination but for the consummation of the transactions contemplated hereby.
SECTION 3.17. Intellectual Property. (a) Subject to Section 3.04, Company
and its Subsidiaries own, or are validly licensed or otherwise have the right
to use, all Intellectual Property, material to the conduct of the Business (the
"Company Intellectual Property Rights"). Schedule 3.17(a) of the Company
Disclosure Schedule contains a list of all such registered Company Intellectual
Property Rights owned by Company (other than trade secrets and computer
programs which are licensed to Company or any of its Subsidiaries and are
generally commercially available).
(b) Except as disclosed on Schedule 3.17(b) of the Company Disclosure
Schedule: neither Company nor any of its Subsidiaries has infringed upon or any
Intellectual Property or other proprietary information of any other Person;
neither Company nor any of its Subsidiaries has received any written charge,
complaint, claim, demand or notice alleging any such infringement,
misappropriation or violation (including any claim that Company or any of its
Subsidiaries must license or refrain from using any Company Intellectual
Property Rights or other proprietary information of any other Person) which has
not been settled or otherwise fully resolved except, in each case, for such
infringement, misappropriation or violation as would not be material to the
conduct of the Business.
(c) Subject to Section 3.04, except as disclosed on Section 3.17(c) of the
Company Disclosure Schedule, assuming that Buyer continues to operate the
business of Company and its Subsidiaries as presently conducted, and without
taking into account any of Buyer's agreements or intellectual property rights,
then Buyer's use of the Company Intellectual Property Rights or other
proprietary information which is material to the conduct of the business of
Company and its Subsidiaries will not infringe upon, misappropriate or
otherwise come into conflict with the Company Intellectual Property Rights or
other proprietary information of any other Person except, in each case, for
such infringement, misappropriation or violation as would not be material to
the conduct of the Business.
(d) Each employee, agent, consultant, officer, director or contractor who
has contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of Company, any of
its
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Subsidiaries or any predecessor in interest thereto either: (i) is a party to
an agreement, a copy of which has been made available to Buyer, under which
Company or one of its Subsidiaries is deemed to be the original owner/author of
all property rights therein; or (ii) has executed an assignment or an agreement
to assign in favor of Company, such Subsidiary or such predecessor in interest,
as applicable, all right, title and interest in such material, a copy of which
assignment or agreement to assign has been made available to Buyer.
(e) Except as set forth on Schedule 3.17, (i) Company and its Subsidiaries
have not sold, assigned, transferred, licensed or sublicensed, or entered into
any contract to sell, assign, transfer or sublicense their Company Intellectual
Property Rights other than in the ordinary course of business consistent with
past practices and (ii) Company and its Subsidiaries have not entered into any
contract or other arrangement pursuant to which Company or such Subsidiary has
agreed or is obligated to license, transfer or place in escrow the source code
for any of its products (prior or current), other than escrow agreements
restricting the use of source code after release to maintenance of the
end-user's installation or the distributor's installed base.
(f) To the knowledge of Company no officer, director or employee of
Company or any of its Subsidiaries, has any interest in any Company
Intellectual Property Rights (other than as a stockholder of Company) that is
material to the business or operations of Company).
(g) Except as disclosed on Schedule 3.17(g), none of the material
development activities relating to Company Intellectual Property Rights were
undertaken or performed outside of the United States.
SECTION 3.18. Valid Title. Upon consummation of the Section 363/365 Sale
upon the terms and subject to the conditions described herein, Sellers shall
have transferred good and valid title to the Section 363 Assigned Assets, free
and clear of any claims or Liens of Persons other than Buyer except for any
Permitted Exceptions. Subject to Section 3.04, and except for Section 365
Assumed Rights that are not, individually or in the aggregate, material to the
conduct of the Business, upon consummation of the Section 363/365 Sale upon the
terms and subject to the conditions described herein, Sellers shall have
transferred good and valid title to the Section 365 Assumed Rights, free and
clear of any claims or Liens of Persons other than Buyer except for any
Permitted Exceptions. Subject to Section 3.04, other than Section 365 Assumed
Rights that are not, individually or in the aggregate, material to the conduct
of the Business, and other than the Excluded Assets, the Acquired Assets
constitute all the assets, properties, rights and interests used by Company in
the Business as conducted at all times since December 31, 2000. Subject to
Section 3.04, other than Section 365 Assumed
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Rights that are not, individually or in the aggregate, material to the conduct
of the Business, and other than the Excluded Assets, no assets, properties,
rights and interests of any kind whatsoever are necessary to conduct the
Business, exclusive of working capital.
SECTION 3.19. Employment Matters. Within three business days of the date
of this Agreement, Company shall deliver to Buyer a true and correct copy of
the organizational chart of Company, identifying all officers and their
functional responsibilities within Company and all of the other employees of
Company reporting directly or indirectly primarily to such officers. Each of
Company and its Subsidiaries has complied in all material respects with all
applicable laws, rules and regulations respecting employment and employment
practices, terms and conditions of employment, wages and hours, and neither
Company nor any Subsidiary is liable for any arrears of wages or any Taxes or
penalties for failure to comply with any such laws, rules or regulations,
except for such failures to comply or liabilities as would not reasonably be
expected to have a Material Adverse Effect on Company; (b) there are no
controversies pending or, to the knowledge of Company, threatened between
Company or any Subsidiary and any of their respective employees, which
controversies have or would reasonably be expected to reasonably be expected to
have a Material Adverse Effect; (d) neither Company nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to Persons employed by Company or any such Subsidiary, nor, to the
knowledge of Company, are there any activities or proceedings of any labor
union to organize any such employees; (e) there are no unfair labor practice
complaints pending against Company or any of its Subsidiaries before the
National Labor Relations Board or any current union representation questions
involving employees of Company or any Subsidiary; (f) there is no strike,
slowdown, work stoppage or lockout existing, or, to the knowledge of Company,
threatened, by or with respect to any employees of Company or any Subsidiary;
(g) except as set forth on Schedule 3.19(g) of Company Disclosure Schedule, no
charges are pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to Company or any Subsidiary; (h) there are
no claims pending against Company or any Subsidiary before any workers'
compensation board which would reasonably be expected to have a Material
Adverse Effect; (i) neither Company nor any of its Subsidiaries has received
notice that any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws intends to conduct an investigation of
or relating to Company or any Subsidiary and, to the best knowledge of Company,
no such investigation is in progress; and (j) to the knowledge of Company, the
relationship of Company and its Subsidiaries with their employees is generally
satisfactory.
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SECTION 3.20. Absence of Default. Except as set forth in Schedule 3.21 of
Company Disclosure Schedule, each of the leases, contracts and other agreements
listed or required to be listed in Item 3.16 of the Company Disclosure Schedule
that create obligations on any Person in excess of $150,000 constitutes a valid
and binding obligation of Company, assuming such agreements are binding and
valid on the counterparties, and, to Company's knowledge is in full force and
effect. Each of Company and its Subsidiaries has fulfilled and performed in all
material respects its obligations under each such lease, contract or other
agreement to which it is a party to the extent such obligations are required by
the terms thereof to have been fulfilled or performed through the date hereof
(except for any such lease, contract or other agreement which, by its terms,
will expire prior to the Closing Date) and neither Company nor any such
Subsidiary is alleged in writing to be, in breach or default under, nor is
there or is there alleged in writing to be any basis for termination of, any
such lease, contract or other agreement. To the knowledge of Company, no other
party to any such lease, contract or other agreement has breached or defaulted
thereunder. No act or omission of Company has occurred which, with the passage
of time or the giving of notice or both, would constitute a material default or
breach by Company or, to the knowledge of Company, by any such other party.
Company is not currently renegotiating any such lease, contract or other
agreement or paying liquidated damages in lieu of performance thereunder.
Complete and correct copies of each such lease, contract or other agreement and
any amendments thereto have heretofore been made available to Buyer.
SECTION 3.21. Disclosure. None of the representations or warranties of
Company contained herein and none of the information contained in the Company
Disclosure Schedule and none of the other information or documents furnished or
made available to Buyer by Sellers, when taken as a whole, contains, or at the
Closing will contain, any untrue statement of a material fact or omits, or at
the Closing will omit, to state a material fact required to be stated herein or
therein necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading in any material
respect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company, as of the date hereof and as of
the Closing Date except as otherwise provided herein, except as disclosed in
the Buyer Disclosure Schedules, as follows:
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SECTION 4.01. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a material adverse effect on Buyer, its
financial condition or results of operations or materially impair Buyer's
ability to perform its obligations under this Agreement or to consummate the
transactions contemplated by this Agreement.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action. Assuming this
Agreement constitutes a valid and binding obligation of Company, this Agreement
constitutes a valid and binding agreement of Buyer, enforceable against Buyer
in accordance with its terms, except as enforceability against Buyer may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium, and
other laws of similar application affecting creditors' rights generally from
time to time in effect and to general equitable principles.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby require no approval or action by or in respect
of, or filing with, any governmental body, agency, official or authority,
domestic, foreign or supranational, other than consents, approvals or
authorizations of the Bankruptcy Court, compliance with any applicable
requirements of the HSR Act, any approvals, actions or filings the absence of
which would not be reasonably expected to have, individually or in the
aggregate, a material adverse effect on Buyer or materially to impair the
ability of Buyer to consummate the transactions contemplated by this Agreement.
SECTION 4.04. Non-Contravention. The execution, delivery and performance
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby do not and will not contravene, conflict with, or result in
any violation or breach of any provision of the certificate of incorporation or
bylaws of Buyer, assuming compliance with the matters referred to in Section
4.03, contravene, conflict with, or result in any violation or breach of any
provision of any law, rule, regulation, judgment, injunction, order or decree
except for such contraventions, conflicts and violations that would not be
reasonably expected to have, individually or in the aggregate, a material
adverse effect on Buyer or materially to impair the ability of Buyer perform
its obligation
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under this Agreement or to consummate the transactions contemplated by this
Agreement.
SECTION 4.05. Finders' Fees. Except for J.P. Morgan H&Q, whose fees will
be paid by Buyer, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Company or any of its
Affiliates upon consummation of the transactions contemplated by this
Agreement.
SECTION 4.06. Financing. Buyer has sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to pay the
Purchase Price and to pay all fees and expenses related to the Section 363/365
Sale.
ARTICLE 5
COVENANTS
SECTION 5.01. Conduct of the Business. (a) From the date hereof until the
Closing, Company shall (and shall cause each of its Subsidiaries to):
(i) maintain its existence in good standing;
(ii) maintain the general character of its business and properties
and conduct its business in the ordinary and usual manner consistent with
past practices, except as expressly permitted by this Agreement;
(iii) maintain business and accounting records consistent with past
practices; and
(iv) use all reasonable efforts (A) to preserve its business intact,
(B) to keep available to Company the services of its present officers and
employees, and (C) to preserve for Company or such Subsidiary the goodwill
of its suppliers, customers and others having business relations with
Company or such Subsidiary.
(b) Unless otherwise provided for herein or approved by Buyer in writing,
from the date hereof until the Closing, Company shall not (and shall not permit
any of its Subsidiaries to):
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(i) declare, set aside, make or pay any dividend or other
distribution, payable in cash, property or otherwise with respect to any
of its capital stock;
(ii) redeem, purchase or otherwise acquire, directly or indirectly,
any of its capital stock;
(iii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except for indebtedness contemplated by the
Credit Agreement Term Sheet or similar commercially available financing;
(iv) except as otherwise contemplated by this Agreement, (A) acquire
(including, without limitation, by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership, other business
organization or any division thereof or any material amount of assets; (B)
enter into any contract or agreement other than in the ordinary course of
business, consistent with past practice; (C) authorize any capital
commitment which is in excess of $50,000 or capital expenditures which
are, in the aggregate, in excess of $50,000, except as contemplated in
Schedule 3.08(g) of the Company Disclosure Schedule; or (D) enter into or
amend any contract, agreement, commitment or arrangement with respect to
any matter set forth in Section 5.01(b)(iii) or this Section 5.01(b)(iv);
(v) except as otherwise contemplated by this Agreement, sell, lease,
license, mortgage, pledge or subject to Lien or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets (including securitizations), other than sales or licenses of goods
in the ordinary course of business consistent with past practice;
(vi) enter into, agree to enter into or amend any employment
agreement except for new hires in the ordinary course of business;
(vii) assume, guarantee or otherwise become responsible for the
obligations of any other Person or agree to so do;
(viii) except as set forth in Schedule 5.01(b)(vii) of the Company
Disclosure Schedule, take any action, other than in the ordinary course of
business and consistent with past practice, with respect to accounting
policies or procedures (including, without limitation, procedures with
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respect to the payment of accounts payable and collection of accounts
receivables); with respect to any Taxes that will be Assumed Liabilities,
make any Tax election or settle or compromise any material federal, state,
local or foreign income Tax liability;
(ix) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, reflected or reserved
against in the Company Balance Sheet or otherwise in the ordinary course
of business and consistent with past practice, of such liabilities in the
ordinary course of business and consistent with past practice;
(x) except in connection with the sale, licensing or other
distribution of Company's products in the ordinary course of business and
consistent with past practice, sell, assign, transfer, license,
sublicense, pledge or otherwise encumber any of the Intellectual Property
Rights;
(xi) except as required by law or as contemplated hereby, enter into,
adopt or amend in any material respect or terminate any Benefit
Arrangement or any other agreement, plan or policy involving Company or
its Subsidiaries, and one or more of its directors, officers or employees,
or materially change any actuarial or other assumption used to calculate
funding obligations with respect to any pension plan, or change the manner
in which contributions to any pension plan are made or the basis on which
such contributions are determined;
(xii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially
increase benefits or compensation expenses of Company or its Subsidiaries,
or as contemplated hereby or by the terms of any employment agreement in
existence on the date hereof, increase the cash compensation of any
director, executive officer or other key employee or pay any benefit or
amount not required by a plan or arrangement as in effect on the date of
this Agreement to any such Person; or
(xiii) announce an intention, commit or agree to do any of the
foregoing.
SECTION 5.02. Marketing Period. In addition to the marketing efforts
carried out to date, from and after the date of the Interim Order, Company
shall solicit "higher or better" offers for the Business, pursuant to the
bidding procedures set forth on Exhibit C hereto or to such additional
procedures for soliciting "higher or better" offers, which procedures are
approved by the
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Bankruptcy Court in the Interim Order (the "Bidding Procedures"). Except as
provided for in the Bidding Procedures, Company shall not amend, waive, modify
or supplement in any material respect the Bidding Procedures. If Company
determines in the good faith exercise of its business judgment that a Competing
Transaction provides a greater net benefit to the estates of Sellers, after
deduction (in the case of bids other than that of Buyer) of the Topping Fee and
of $500,000 (the maximum amount of the fees and expenses of Buyer to be paid by
Company herein), and such Competing Transaction is approved by the Bankruptcy
Court, Company shall have the right to enter into an agreement providing for
the Competing Transaction and to terminate this Agreement pursuant to Section
9.01(a)(ii).
SECTION 5.03. Bankruptcy Court Approvals. (a) Company hereby confirms that
it is critical to the process of arranging an orderly sale of Company's assets
to proceed by selecting Buyer to enter into this Agreement in order to present
the Bankruptcy Court with arrangements for obtaining the highest realizable
prices for such assets and that, without Buyer's having committed substantial
time and effort to such process, the estates of Company would have to employ a
less orderly process of sale and thereby both incur higher costs and risk
attracting lower prices. Company further confirms that the undertaking of Buyer
to pay the Purchase Price while allowing this Agreement to be subject to
competitive bidding gives the estate the assurance of a minimum purchase price,
and restricts Buyer's options in a manner that no reasonable Person would
consent absent assurance of payment of the Topping Fee and expenses set forth
herein. Accordingly, the contributions of Buyer to the process have
indisputably provided very substantial benefit to the estate of Company.
Company acknowledges that Buyer would not have invested the effort in
negotiating and documenting the transaction provided for herein and incurring
duties to pay its outside advisors and to commit to pay the Purchase Price if
Buyer was not entitled to the Topping Fee plus reasonable fees and
disbursements of its advisors incurred as a result of Buyer's attempt to
purchase the Acquired Assets as provided in this Agreement, if Buyer is not the
successful bidder for the Acquired Assets.
(b) As promptly as practicable after the date hereof, Company shall file
and serve motions with the Bankruptcy Court seeking
(i) an order (the "Interim Order")
(A) approving the Topping Fee and all other payments to Buyer
arising under this Agreement as joint and several obligations of
Company having priority as an administrative expense in their cases
before the Bankruptcy Court,
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(B) approving the Bidding Procedures relating to the sale of the
Acquired Assets under Sections 363 and 365 of the Bankruptcy Code,
and the adequacy of notice to creditors and parties in interest for
the approval of the transactions contemplated hereby and thereby, and
(C) setting a date for a hearing on the asset sale; and
(ii) an order (the "Section 363/365 Sale Order")
(A) authorizing Company to sell the Acquired Assets to Buyer
pursuant to this Agreement and Sections 363 and 365 of the Bankruptcy
Code, free and clear of all Liens in or on the Acquired Assets
(including any and all "claims and interests" in the Acquired Assets
within the meaning of Section 363(f) of the Bankruptcy Code), other
than Liens and claims related to the Assumed Liabilities and
Permitted Exceptions and otherwise free and clear of claims and
liabilities, such that Buyer shall not, among other things, incur any
liability with respect to any Existing Claim, Excluded Liability or
otherwise as a successor to the business of Company, and
(B) authorizing, among other things, Company, pursuant to
Section 365 of the Bankruptcy Code, to assume and to assign to Buyer
the Section 365 Assumed Rights, which shall include provisions, upon
notice to all licensors of Intellectual Property and all governmental
and other entities that have issued permits, licenses or
authorizations to Company, for their assignment to Buyer under
Section 365 of the Bankruptcy Code free and clear of claims,
obligations and defaults which occurred on or prior to the effective
time of such assignment.
(c) Company shall use commercially reasonable efforts to obtain the
Interim Order no later than February 28, 2001, and the Section 363/365 Order no
later than March 31, 2001. The Interim Order and the Section 363/365 Order
shall be in forms reasonably acceptable to Buyer and Company, and the motions
relating to the Interim Order and the Section 363/365 Order shall be in form
and substance satisfactory to Buyer.
(d) Subject to the Interim Order, Company shall promptly make any filings,
take all actions, and use all reasonable efforts to obtain any and all other
approvals and orders necessary or appropriate for consummation of the
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PAGE>
transactions contemplated hereby, subject to their obligations to comply with
any order of the Bankruptcy Court.
(e) If an appeal is taken, or a stay pending appeal is requested or
reconsideration is sought, from either the Interim Order or the Section 363/365
Order, Company shall immediately notify Buyer of such appeal or stay request
and shall provide to Buyer within one business day a copy of the related notice
of appeal or order of stay or application for reconsideration. Company shall
also provide Buyer with written notice and copies of any other or further
notice of appeal, motion or application filed in connection with any appeal
from or application for reconsideration of, either of such orders and any
related briefs. Company shall use all reasonable efforts to defend against such
appeals or requests for stay or modification.
(f) Company shall notify, as is required by the Bankruptcy Code, all
parties entitled to notice of the Section 363/365 Motion, the Interim Motion,
the Interim Order and/or the Section 363/365 Order, as modified by orders in
respect of notice which may be issued at any time and from time to time by the
Bankruptcy Court.
SECTION 5.04. Access and Information. After entry of the Interim Order,
Company shall afford to Buyer and to Buyer's financial advisors, legal counsel,
accountants, consultants, financing sources and other authorized
representatives reasonable access during normal business hours throughout the
period prior to the Closing Date to the books, records, properties and
personnel of Company and, during such period, shall furnish as promptly as
practicable to Buyer any and all such information as Buyer may reasonably may
request, including all pleadings and other documents or schedules filed with
the Bankruptcy Court, provided that (a) such access does not unreasonably
interfere with the normal operations of Company or its business, (b) Company
need not disclose any information that Company concludes (based upon advice of
counsel) is privileged or confidential in connection with the Existing Claims,
and (c) all requests for information and access to Company's facilities, and
all proposed contacts with Company personnel shall be approved in advance
(which approval shall not unreasonably be withheld) by its Chief Executive
Officer, General Counsel or Chief Financial Officer.
SECTION 5.05. Books and Records. (a) Buyer agrees to make copies of all
the business records and files being transferred to Buyer pursuant to this
Agreement and to retain such copies for seven years after the Closing.
(b) From and after the Closing under this Agreement, Buyer shall allow
Company and any of its directors, officers, employees, counsel,
representatives, accountants and auditors (collectively, the "Company
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Representatives") access to Transferred Employees and all business records and
files of Company or its business that are transferred to Buyer in connection
herewith, which are reasonably required by such Company Representatives in
order to complete the Chapter 11 Case and resolve the Existing Claims, during
regular business hours and upon reasonable notice at Company's former offices
or elsewhere as reasonably required and the Company Representatives shall have
the right to meet with such Transferred Employees and to make copies of any
such records and files; provided, however, that any such access or copying
shall be had or done in such a manner so as not to unreasonably interfere with
the normal conduct of Buyer's business or operations. This Section 5.05 shall
cease to be enforceable upon the later of (i) the date Company completes the
Chapter 11 Case and (ii) the 9 month anniversary of the Closing.
SECTION 5.06. All Reasonable Efforts. Subject to the terms and conditions
herein, except as provided by the Bankruptcy Code, the Bankruptcy Rules or any
other orders entered or approvals or authorizations granted by the Bankruptcy
Court in the Chapter 11 Case, including any order contemplated hereby, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations, to consummate the
transactions contemplated by this Agreement. In further and not in limitation
of the foregoing, each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within 10 business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take such actions as may be reasonably
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable, provided that nothing
contained herein shall be interpreted or construed as requiring Buyer to sell,
dispose of, transfer or license any of its assets or properties or to take any
other action which Buyer concludes in its sole discretion would be detrimental
to Buyer or its business in order to facilitate such expiration or termination.
SECTION 5.07. Further Assurances. In addition to the provisions of this
Agreement, from time to time after the Closing Date, Company and Buyer will use
all reasonable efforts to execute and deliver such other instruments of
conveyance, transfer or assumption, as the case may be, and take such other
action as may be reasonably requested to implement more effectively the
conveyance and transfer of the Acquired Assets to Buyer and the assumption of
the Assumed Liabilities by Buyer. Without limiting the generality of the
foregoing, at Buyer's request, Company shall file appropriate motions in the
Bankruptcy Court for the assumption and assignment to Buyer of any executory
contracts and leases which
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were not identified in an exhibit to the Section 363/365 Order, and Company
shall take such steps, as shall be required to assure that Buyer shall assume
such agreements under Section 365 of the Bankruptcy Code free and clear of all
claims, obligations and defaults which occurred as of or prior to the effective
time of such assignment. Buyer and Company hereby irrevocably consent to the
personal and subject-matter jurisdiction of the Bankruptcy Court for all
purposes necessary to effectuate this Section. Company will seek to include in
any plan of reorganization in the Chapter 11 Case supported by it, provision
for retained jurisdiction of the Bankruptcy Court to effectuate this Section
5.07, and will use all reasonable efforts to oppose any plan of reorganization
which fails to include such provisions.
SECTION 5.08. Public Announcements. Buyer and Company shall consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby, and except
as may be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 5.09. Notices of Certain Events. (a) Company shall promptly notify
Buyer of damage or destruction by fire or other casualty of any material
Acquired Asset or if any material Acquired Asset becomes the subject of any
proceeding or, to the knowledge of Company, threatened proceeding for the
taking thereof or any part thereof or of any right relating thereto by
condemnation, eminent domain or other similar governmental action.
(b) The Company shall give prompt notice to Buyer, and Buyer shall give
prompt notice to the Company, of (i) the occurrence, or non-occurrence, of any
event which would be likely to cause (A) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect,
(B) any covenant, condition or agreement contained in this Agreement not to be
complied with or satisfied, or (C) termination rights to be triggered under
Article 9; and (ii) any failure of the Company or Buyer, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided that the delivery of any notice pursuant
to this Section 5.10(b) shall not limit or otherwise affect the remedies
available to the party receiving such notice.
SECTION 5.10. Name Change. Within 45 days after the Closing, Company
agrees to use all reasonable efforts to cause Company to cease doing business
under any name using the word "Quintus," and, if practicable without seeking
stockholder approval, to change Company's legal name to some name not using the
word "Quintus."
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SECTION 5.11. Permits. Prior to the Closing Date, Company shall use all
reasonable efforts to obtain consents to the transfer of such permits which are
transferable to Buyer at or prior to Closing. Without limiting the requirements
of Section 8.03, prior to and after the Closing, Company shall cooperate with
Buyer with respect to the transfer of all permits.
SECTION 5.12. Transfer Taxes. To the fullest extent permitted by Section
1146(c) of the Bankruptcy Code and other applicable law, the making or delivery
of any instrument of transfer pursuant hereto shall not be taxed under any law
imposing a stamp tax or similar tax, and the instruments transferring the
Acquired Assets to Buyer shall contain the following endorsement:
"Because this [instrument] has been authorized pursuant to Order of
the United States Bankruptcy Court for the District of Delaware
relating to a plan of reorganization of the Grantor, it is exempt
from transfer taxes, stamp taxes or similar taxes pursuant to 11
U.S.C. ss.1146(c)."
If sales, use or other similar transfer Taxes are assessed in the United
States at Closing or at any time thereafter solely as a result of the transfer
of any other Acquired Assets pursuant to this Agreement, such Taxes incurred as
a result of the transactions contemplated hereby shall be paid by Company. If
sales, use or other similar Taxes are assessed in any jurisdiction outside the
United States at Closing or at any time thereafter solely as a result of the
transfer of any Acquired Assets of any Foreign Subsidiary pursuant to this
Agreement, such Taxes shall be paid (i) by Company, to the extent such Taxes
would have been payable if Buyer had purchased all of the outstanding stock of
Company's Foreign Subsidiaries (rather than purchasing assets and liabilities
of such Foreign Subsidiaries as set forth in Article 1) and (ii) by Buyer for
the balance of such Taxes. Buyer and Company shall cooperate in providing each
other with any appropriate resale exemption certifications and other similar
documentation.
SECTION 5.13. Consents. Company shall use all reasonable efforts to obtain
the consents pertaining to the Assigned Assets listed on Schedule 3.04;
provided that Company shall not make any agreement or understanding adversely
affecting the Business or the Assigned Assets after the Closing as a condition
for obtaining any such consent except with the prior written authorization of
Buyer.
SECTION 5.14. Excess Liabilities. At the Closing, if Company's liabilities
described in paragraph 1 of Schedule 1.03 exceed $30,000,000, Buyer may elect
not to assume such liabilities of Company to the extent required to reduce such
liabilities assumed to $30,000,000.
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SECTION 5.15. Acton, Massachusetts Real Property and Facility. Buyer has
advised that it does not desire to acquire Company's real estate facilities at
Acton, Massachusetts. The parties agree that (i) the Acton real estate will be
an Excluded Asset and (ii) as promptly as reasonably practical after the date
hereof, the parties will negotiate and enter into a three-year lease of the
Acton real estate from Company to Buyer at market rental and on market terms,
such lease to be effective at the Closing of the transactions contemplated by
this Agreement. As promptly as reasonably possible after negotiation of that
lease, (i) Company shall select a real estate appraiser knowledgeable about the
Acton real estate market, (ii) Buyer shall select a real estate appraiser
knowledgeable about the Acton real estate market and (iii) the appraisers so
selected shall select a third real estate appraiser knowledgeable about the
Acton real estate market, and such appraisers shall independently provide
appraisals of the fair market value of the Acton real estate, which appraisals
shall take into account the three-year lease of the property to Buyer and the
mortgages on the property. The cost of these appraisals will be split equally
between Buyer and Company. The parties agree that (x) the average of the three
appraisals shall be considered the fair market value of the Acton real estate
for purposes of this Agreement, (y) in recognition of the fact that the Acton
real estate will be an Excluded Asset, the Purchase Price shall be reduced by
80% of the average of the three quotes and (z) Company will have the right to
sell the Acton real estate, subject to the lease, for its own account.
SECTION 5.16. Buyer Option to Take Stock of Foreign Subsidiaries.
Notwithstanding the provisions of Sections 1.01 and 1.02, Buyer shall have the
option, upon written notice to Company at least five days prior to the Closing
Date, to purchase all outstanding shares of capital stock of either or both
Foreign Subsidiaries in lieu of the assets and liabilities of such Subsidiary,
provided that if such option is exercised with respect to a Foreign Subsidiary
and any liability of such Foreign Subsidiary would otherwise count toward the
$30,000,000 limit set forth on Schedule 1.03, such liabilities shall continue
to be so counted and such stock shall be deemed Acquired Assets.
SECTION 5.17. Employee Retention. Buyer agrees to make offers of
employment to employees in Company's Engineering, Worldwide Customer Support
Services and Worldwide Sales and Distribution organizations including cash
incentives in an aggregate amount of at least $10,000,000 and equity incentives
consisting of options to purchase shares of Buyer common stock with an
aggregate Black-Scholes value of $10,000,000, and Buyer and Company agree to
use all reasonable efforts to induce such employees to accept such offers of
employment.
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SECTION 5.18. Taxes. Company agrees to use all reasonable efforts to
account for Taxes that will be Assumed Liabilities separately from other
Assumed Liabilities, and to deliver a schedule of such Taxes to Buyer at the
Closing.
ARTICLE 6
EMPLOYEES AND BENEFITS
SECTION 6.01. Employees and Offers of Employment. (a) On or prior to the
Closing Date, Buyer shall offer employment to all employees of the Business;
provided, that Buyer may terminate at any time after the Closing Date the
employment of any employee who accepts such offer; provided, however, that
Buyer is solely responsible for any WARN Act notification and any liability
under the WARN Act for any failure to notify employees, if any, relating to any
termination of any of the employees on or after the Closing as a result of
actions taken by Buyer. For purposes of the foregoing, Buyer acknowledges the
prior terminations of employment by Company, including the reduction in force
in December 2000. Any such offers shall be at salary or wage and benefit levels
that are substantially comparable in the aggregate to the wage, benefits and
severance protection made available by Buyer to similarly situated employees of
Buyer, provided that nothing herein shall prevent Buyer from modifying the
salary, wages and benefits at any time after the Closing Date. The employees
who accept and commence employment with Buyer are hereinafter collectively
referred to as the "Transferred Employees." Company will not take, and will
cause each of its Subsidiaries not to take, any action which would impede,
hinder, interfere or otherwise compete with Buyer's effort to hire any
Transferred Employees.
(b) For a period of six months following the Closing Date, Buyer shall
provide severance benefits no less favorable than those set forth on Schedule
3.14. In addition, Buyer agrees that it shall assume the obligations of Company
under the Executive Severance Plan and Retention Bonus Programs described in
Schedule 3.14(a)(1) and (2).
SECTION 6.02. Company Employee Benefit Plans. Accrued benefits or account
balances of Transferred Employees under the Benefit Arrangements shall be fully
vested as of the Closing Date.
SECTION 6.03. Buyers Benefit Plans. (a) Buyer or one of its Affiliates
will recognize all service of the Transferred Employees with Company (or their
predecessors) or any of their Affiliates, for purposes of eligibility to
participate in and to vest under those employee benefit plans, in which the
Transferred Employees are enrolled by Buyer or one of its Affiliates
immediately after the
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Closing Date. Buyer shall cause all pre-existing condition exclusions under any
medical and dental plans made available by Buyer to Transferred Employees to be
waived in respect of such Employees. Buyer will in good faith determine whether
to take into account expenses incurred by Transferred Employees under Company's
medical and dental plans during the year that includes the Closing Date for
purposes of satisfying deductible and coinsurance requirements and satisfaction
of out-of-pocket provisions of Buyer's medical and dental plans in which
Transferred Employees participate for such year, provided that the foregoing
shall not require Buyer to do so.
(b) Company's 401(k) Plan shall be terminated immediately prior to the
Closing Date. Such termination shall be effected in accordance with applicable
law and regulations, and Company shall make or cause to be made, any required
filings in connection therewith. Buyer or one of its Affiliates shall take such
actions as may be necessary to make available to the Transferred Employees the
opportunity to roll over eligible rollover distributions from the Company
401(k) Plan to a defined contribution plan maintained by Buyer or one of its
Affiliates. Buyer or one of its Affiliates may require, as a condition to the
acceptance of any such eligible rollover distribution, evidence satisfactory to
Buyer of the qualified status of the 401(k) Plan, including a copy of a
favorable determination letter from the Internal Revenue Service. Company may
require, as a condition to the transfer of such eligible rollover distribution,
transfer evidence satisfactory to Company of the qualified status of Buyer's
defined contribution plan, including a copy of a favorable determination letter
from the Internal Revenue Service. Each of the parties hereto shall pay its own
expenses in connection with such transfer. Neither Buyer nor any of its
Affiliates shall assume any other obligations or liabilities arising under or
attributable to Company's 401(k) Plan, the same to be retained or assumed by
Company.
(c) Buyer shall make COBRA continuation coverage available under Buyer's
group health plans or Company's group health plans, as applicable, to the
extent permitted by such plans, the underlying insurance policies and
applicable law to each former employee of Company whose employment with Company
was terminated prior to Closing and each of their qualified beneficiaries whose
qualifying event occurred prior to or in connection with the Closing. For
purposes of this paragraph, the foregoing terms shall have the meanings given
to them under IRS regulations under Code Section 4980B.
(d) Buyer shall make COBRA continuation coverage available under Buyer's
group health plans to each Transferred Employee whose employment with Buyer or
its Affiliates is terminated after the Closing and each of their qualified
beneficiaries whose qualifying event occurred after the Closing Date.
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For purposes of this paragraph, the foregoing terms shall have the meanings
given to them under IRS regulations under Code Section 4980B.
ARTICLE 7
TAX MATTERS
SECTION 7.01. Tax Cooperation. Buyer and Company agree to furnish or cause
to be furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Business and the Acquired Assets
(including access to books and records) as is reasonably necessary for the
filing of all Tax Returns, the making of any election relating to Taxes, the
preparation for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax. Buyer shall
retain all books and records with respect to Taxes pertaining to the Business,
the Acquired Assets or the transactions contemplated hereby for a period of at
least seven years following the Closing Date. Company shall retain any records
retained by Company related to Taxes until liquidation. Each party shall
provide the other with at least thirty days prior written notice before
destroying or transferring custody of any such books and records, during which
period the party receiving such notice can elect to take possession, at its own
expense, of such books and records.
SECTION 7.02. Tax Reporting. Buyer will in good faith determine whether to
prepare and furnish to each Transferred Employee a combined Form W-2 which
shall reflect all wages and compensation paid to such employees for that
portion of the calendar year in which the Closing Date occurs during which such
employees were employed by Company as well as that portion of the year employed
by Buyer (if any), with Buyer treated as a "successor employer" for purposes of
Taxes imposed under the United States Federal Unemployment Tax, United States
Federal Insurance Contribution Act and any other employment related Tax;
provided that nothing in the foregoing shall require Buyer to do so. If Buyer
does the foregoing, Buyer shall send to the appropriate Social Security
Administration office a duly completed Form W-3 and accompanying copies of the
duly completed Form W-2.
ARTICLE 8
CONDITIONS PRECEDENT
SECTION 8.01. Conditions Precedent to Obligation of Company and Buyer. The
respective obligations of each party to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction of the following
conditions:
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(a) the Section 363/365 Order shall have been entered by the
Bankruptcy Court and such order shall not have been stayed, modified,
reversed or amended; and
(b) the waiting period, if any, under the HSR Act shall have expired
or been terminated.
SECTION 8.02. Conditions Precedent to Obligation of Company. The
obligation of Company to effect the transactions contemplated by this Agreement
shall be subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional conditions:
(a) Buyer shall have performed and complied in all material respects
with all agreements and conditions contained in this Agreement that are
required to be performed or complied with by them prior to or at the
Closing.
(b) Each of the representations and warranties of Buyer contained in
Section 4 of this Agreement to the extent it is qualified by Material
Adverse Effect shall be true and correct and each of the representations
and warranties of Buyer to the extent it is not so qualified by Material
Adverse Effect shall be true and correct except for breaches of such
representations and warranties that would not have a material adverse
effect on Buyer, its financial condition and results of operations, and
its ability to perform its obligations under this Agreement and consummate
the transactions contemplated by this Agreement, in each case, on and as
of the Closing with the same effect as though such representations and
warranties were made on and as of the Closing except for changes permitted
by this Agreement and except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be as of such earlier date. The
Company shall have received a certificate dated the Closing Date and
signed by the President or a Vice-President of Buyer, certifying that the
conditions specified in clauses (a) and (b) of this Section 8.02 have been
satisfied.
SECTION 8.03. Conditions Precedent to Obligation of Buyer. The obligation
of Buyer to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver at or prior to the Closing Date of the
following additional conditions:
(a) Company shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement
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that are required to be performed or complied with by them prior to or at
the Closing.
(b) Each of the representations and warranties of Sellers contained
in Section 3 of this Agreement to the extent it is qualified by Material
Adverse Effect shall be true and correct and each of the representations
and warranties of Company to the extent it is not so qualified by Material
Adverse Effect (except for the representations and warranties set forth in
Section 3.17, which shall be true and correct) shall be true and correct
except for breaches of such representations and warranties that would not
reasonably be expected to have a Material Adverse Effect (disregarding any
materiality qualification therein), in each case, on and as of the Closing
with the same effect as though such representations and warranties were
made on and as of the Closing except for changes permitted by this
Agreement and except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be as of such earlier date. The Buyer
shall have received a certificate dated the Closing Date and signed by the
President or a Vice-President of Company, certifying that the conditions
specified in clauses (a) and (b) of this Section 8.03 have been satisfied.
(c) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court
or other governmental authority of competent jurisdiction or other legal
or prohibition (collectively, "Restraints") shall be in effect with
respect to the transactions contemplated hereby, and there shall not be
pending any suit, action or proceeding by any governmental authority (i)
preventing the consummation of the Closing or (ii) which otherwise is
reasonably likely to have a Material Adverse Effect; provided, that each
of the parties shall have used all reasonable efforts to prevent the entry
of any such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(d) No event or events shall have occurred that constitutes or would
reasonably be expected to constitute a Material Adverse Effect on the
Business, the Assigned Assets or Assumed Liabilities.
(e) Company shall have received all necessary consents, in form and
substance satisfactory to Buyer, from the other parties to each agreement,
contract, lease or other instrument set forth on Schedule 8.03.
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(f) Company shall have delivered to Buyer all documents and
instruments reasonably satisfactory to Buyer necessary to transfer the
Assigned Assets and Business and to assume the Assumed Liabilities.
(g) Buyer shall have received a certificate from Company certifying
that Company has never been and is not a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code pursuant to Treas. Reg. Sec. 1.897-2(h) and Treas. Reg. Sec.
1.1445-2(c)(3)(i) at the Closing.
(h) Buyer shall have received letters accepting employment with Buyer
from (i) not less than 50% of the employees in Company's Engineering
organization, (ii) not less than 50% of the employees in Company's
Worldwide Customer Support Services organization and (iii) not less than
50% of the employees in Company's Worldwide Sales and Distribution
organization, in each case, based upon the number of persons accepting
such positions and the number of employees in each such organization on
the date hereof, and each such letter shall be in full force and effect
and shall not have been rescinded, provided that this condition shall not
be applicable if Buyer has failed to satisfy its obligations under Section
5.17.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated:
(i) by mutual written agreement of Company and Buyer prior to the
Closing Date;
(ii) by Company or Buyer if a Competing Transaction is approved by
the Bankruptcy Court whether or not in accordance with the Bidding
Procedures;
(iii) at any time before the Closing, (A) by Buyer if any of the
conditions set forth in Sections 8.01 or Section 8.03 shall have become
incapable of fulfillment or cure and shall not have been waived by Buyer,
provided that Buyer is not then in breach of this Agreement, or (B) by
Company if any of the conditions set forth in Section 8.01 or Section 8.02
shall have become incapable of fulfillment or cure and shall not have been
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waived by Company, provided that Company is not then in breach of this
Agreement.
(iv) at any time after April 30, 2001, (A) by Company if the Closing
fails to occur on or before such date, unless such failure is due to the
action or inaction of Company, or (B) by Buyer if the Closing fails to
occur on or before such date, unless such failure is due to the action or
inaction of Buyer, provided that Buyer, by written notice to Company, may
extend such date to a date not later than May 31, 2001, and provided
further that in the event Buyer so extends such date, Buyer shall also
extend to Company such additional amounts for working capital pursuant to
the terms set forth in the Credit Agreement Term Sheet as shall be
reasonably necessary to fund the operations of Company until Closing,
provided that the amounts advanced hereunder shall not exceed $5,000,000
in the aggregate (exclusive of any amounts advanced as contemplated by the
Credit Agreement Term Sheet);
(v) by Buyer, at any time within 14 days after the earliest of (a)
March 15, 2001 if the Interim Order has not been entered by the Bankruptcy
Court, (b) the date the Bankruptcy Court denies the Interim Order and (c)
the date the Interim Order is stayed or materially modified in a manner
not reasonably acceptable to Buyer; if Buyer fails to terminate this
Agreement within 14 days of such date, Buyer shall be deemed to have
waived their rights under this Section 9.01(a)(v);
(vi) at any time after April 30, 2001, by Buyer or Company if by such
date the Section 363/365 Order has not been entered;
(vii) by Company if the Closing has not occurred as the result of
Buyer's failure to consummate the transactions contemplated by this
Agreement within 10 days after the satisfaction of the conditions set
forth in Sections 8.01 and 8.03, provided that Company is willing and able
to close;
(viii) by Buyer if the Closing has not occurred as the result of
Company's failure to consummate the transactions contemplated by this
Agreement within 10 days after the satisfaction of the conditions set
forth in Section 8.01 and 8.02, provided that Buyer is willing and able to
close;
(ix) by Buyer in the event of a material breach of the covenants
contained in Section 5.02; or
(x) by either Buyer or Company if the other party is in material
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breach of its covenants in this Agreement and fails to cure such breach
within 15 days of notice of such breach by the non-breaching party,
provided that no party may terminate the Agreement under this clause (x)
if such party is in material breach of its obligations under this
Agreement.
SECTION 9.02. Effect of Termination. If this Agreement is terminated under
Section 9.01, written notice thereof will forthwith be given to the other
parties and this Agreement will thereafter become void and have no further
force and effect and, except for those provisions that expressly survive the
termination of this Agreement, all further obligations of Company and Buyer to
each other under this Agreement will terminate without further obligation or
liability of Company or Buyer to the other, except that:
(a) each of the parties will treat all documents, workpapers and other
materials of any other party which were obtained in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement;
(b) if this Agreement is terminated by Company pursuant to Section
9.01(vii) or (x), provided that Company either has satisfied or is reasonably
likely to satisfy the conditions set forth in this Agreement which are within
Company's control to satisfy, Buyer shall pay Sellers' actual and reasonable
legal expenses, and shall be liable to Company for any damages resulting from
such breach; and
(c) if this Agreement is terminated pursuant to Section 9.01(ii), or if
this Agreement is terminated by Buyer pursuant to Section 9.01(viii), (ix) or
(x) and within six months thereafter a sale of substantially all of the
Acquired Assets or any significant portion thereof in a single transaction or a
series of transactions or recapitalization or reorganization plan is
consummated, Company shall pay Buyer the Topping Fee plus Buyer's actual and
reasonable expenses (including fees and expenses of counsel and advisors), but
not to exceed $500,000 in addition to the Topping Fee;
(d) if this Agreement is terminated by Buyer pursuant to Section
9.01(a)(viii) or 9.01(a)(ix), provided that Buyer either has satisfied or is
reasonably likely to satisfy the conditions set forth in this Agreement which
are within Buyer's control to satisfy, then Company shall pay Buyer's actual
and reasonable legal expenses, and shall be liable to Buyer for any damages
resulting from such breach.
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ARTICLE 10
GENERAL PROVISIONS
SECTION 10.01. Notices. All notices, requests, and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given
If to Company, to
Quintus Corporation
4120 Dublin Boulevard
Dublin, CA 94568
Telecopy: (925) 479-2111
Attention: Chief Executive Officer
with copies (which shall not constitute notice) to:
Pachulski, Stang, Ziehl, Young & Jones P.C.
919 North Market Street, Suite 1600
Wilmington, DE 19801
Telecopy: (302) 652-4400
Attention: Laura Davis Jones, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94025
Telecopy: 650-752-2111
Attention: David W. Ferguson, Esq.
and
If to Buyer, to
Avaya Inc.
211 Mount Airy Road
Basking Ridge, NJ 07920-0012
Telecopy: (separately provided)
Attention: Chief Financial Officer
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with the copy (which shall not constitute notice) to:
Avaya Inc.
211 Mount Airy Road
Basking Ridge, NJ 07920-0012
Telecopy: (separately provided)
Attention: General Counsel
or such other address or facsimile number as such party may hereafter specify
for the purposes by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 10.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall survive beyond the
Closing or the termination of this Agreement until a plan of reorganization in
the Chapter 11 Case shall have been approved by the Bankruptcy Court not
subject to any further appeal and such plan shall have become effective.
SECTION 10.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Closing if, but only if, such amendment
or waiver is in writing and is signed, in the case of an amendment by each
party to this Agreement or, in the case of a waiver, by each party against whom
the waiver is to be effective, provided that after the entry of the Section
363/365 Order and without further approval of the Bankruptcy Court, no such
amendment or waiver shall reduce the amount or change the kind of consideration
to be received in exchange for the Acquired Assets.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.04. Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
SECTION 10.05. Successors and Assigns. The provisions of this
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Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that Buyer may
transfer or assign, in whole or from time to time in part, to one or more of
its Affiliates, the right to purchase all or a portion of the Acquired Assets
pursuant hereto, but no such transfer or assignment will relieve Buyer of its
obligations hereunder or prejudice the rights of Company pursuant hereto.
SECTION 10.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard
to the conflict of laws rules of such state.
SECTION 10.07. Jurisdiction. Buyer and Company irrevocably and
unconditionally consent to submit to the jurisdiction of the Bankruptcy Court
for any litigation arising out of or relating to this Agreement and the
transactions contemplated thereby (and agree not to commence any litigation
relating thereto except in the Bankruptcy Court).
SECTION 10.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 10.09. Counterparts; Effectiveness. (a) This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
(b) This Agreement shall become effective when each party hereto shall
have received counterparts thereof signed by all the other parties hereto.
SECTION 10.10. Descriptive Headings; Certain Terms. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references to "$" or
dollars shall be to United States dollars and all references to "days" shall be
to calendar days unless otherwise specified.
SECTION 10.11. Entire Agreement. This Agreement (including the Exhibits,
and the other documents and instruments referred to herein) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties or any of them, with respect to the
subject matter of this Agreement.
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SECTION 10.12. Severability; Validity; Parties of Interest. If any
provision of this Agreement or the application thereof to any person or
circumstance is held by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable. Upon
such holding, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby shall be consummated as originally contemplated to the fullest extent
possible. Nothing in this Agreement, express or implied, is intended to confer
upon any person not a party to this Agreement any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
SECTION 10.13. Bulk Sales. Buyer hereby waives compliance by Company with
any bulk sales or other similar laws in any applicable jurisdiction in respect
of the transactions contemplated by this Agreement.
ARTICLE 11
DEFINITIONS
SECTION 11.01. Defined Terms. As used herein, the terms below shall have
the following meanings.
"Acquired Assets" means all of the assets being acquired under this
Agreement pursuant to Section 1.01 and Section 5.16, including the Section 363
Assigned Assets and the Section 365 Assumed Rights.
"Affiliate" means, with respect to any designated Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such designated Person. For purposes hereof, the term "controlled" shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management of and policies of such designated Person, whether
through the ownership of voting securities, by contract or credit arrangement
or otherwise.
"Agreement" has the meaning set forth in the Preamble.
"all reasonable efforts" means prompt, substantial and persistent efforts
as a prudent Person desirous of achieving a result would use in similar
circumstances; provided that Sellers or Buyer, as applicable, shall be required
to expend only such resources as are commercially reasonable in the applicable
circumstances.
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"Approved Employee Orders" means the orders approved by the Bankruptcy
Court and agreed to in writing by Buyer with respect to employees and benefits
of Company.
"Assumed Liabilities" has the meaning set forth in Section 1.03.
"Balance Sheet" shall mean Company's unaudited balance sheet at December
31, 2000.
"Balance Sheet Date" shall mean December 31, 2000.
"Bankruptcy Code" has the meaning set forth in the Preamble.
"Bankruptcy Court" has the meaning set forth in the Preamble.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedures, as
amended.
"Benefit Arrangements" has the meaning set forth in Section 3.14(a).
"Bidding Procedures" has the meaning set forth in Section 5.02.
"Business" means the business of Company including the design,
development, manufacture, sale and service of comprehensive e-customer
relationship management solutions.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Disclosure Schedules" means the disclosure schedules of Buyer,
dated as of the date hereof, to this Agreement, which shall constitute a part
of this Agreement.
"Chapter 11 Case" has the meaning set forth in the Preamble.
"Claim" has the meaning set forth in Section 101(5) of the Bankruptcy
Code.
"Closing" has the meaning set forth in Section 2.01.
"Closing Date" has the meaning set forth in Section 2.01.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the Preamble.
"Company Disclosure Documents" means (a) the Company SEC Documents and (b)
Company's forms of Annual Report on Form 10-K/A for the fiscal year ended March
31, 2000, Quarterly Report on Form 10-Q/A for the three months ended June 30,
2000, Quarterly Reports on Form 10-Q for the three month periods ended
September 30, 2000 and December 31, 2000, each as attached hereto as Exhibit E
and with the effect such documents would have had if they had been filed with
the SEC prior to the date hereof.
"Company Disclosure Schedule" means the disclosure schedules of Company,
dated as of the date hereof, to this Agreement, which shall constitute a part
of this Agreement.
"Company Employee Liabilities" means all liabilities, obligations and
commitments arising out of or related to the employment (or termination of
employment) by Company of all employees of Company, including, but not limited
to, any obligation or liability for (a) accrued but unpaid wages, salary,
incentive or bonus compensation, vacation benefits and pay, or other
compensation, (b) all claims for severance or other termination benefits, (c)
all workers compensation claims, and (d) all claims under the agreements,
arrangements and other policies promulgated by Company pursuant to the Approved
Employee Orders, provided that the Company Employee Liabilities shall not
include the Excluded Employee Liabilities.
"Company Financial Statements" has the meaning set forth in Section 3.07.
"Company Intellectual Property Rights" has the meaning set forth in
Section 3.17.
"Company Representatives" has the meaning set forth in Section 5.05(b).
"Company SEC Documents" means (i) Company's annual report on Form 10-K for
its fiscal year ended March 31, 2000, its quarterly report on Form 10-Q for its
fiscal quarter ended June 30, 2000, its proxy or information statements
relating to meetings of, or actions taken without a meeting by, the
stockholders of Company held since March 31, 2000, and all of its other
reports, statements, schedules and registration statements filed or to be filed
prior to the Closing under the 1934 Act since March 31, 2000, in each case
including all amendments and supplements thereto through the date hereof.
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"Company Subsidiary Securities"has the meaning set forth in Section 3.05.
"Competing Transaction" means any transfer or other disposition or
retention under a Chapter 11 plan of reorganization or order of the Bankruptcy
Court pursuant to Section 363 and Section 365 of all or substantially all of
the Acquired Assets or any significant portion thereof, in a single transaction
or series of related transactions, provided that the Buyer has not theretofore
terminated this Agreement pursuant to Section 9.01 hereof, and provided further
that the Bankruptcy Court shall have theretofore entered the Interim Order.
"Confidentiality Agreement" means the agreement, dated as of February 2,
2001, as amended on February 14, 2001, among Company and Buyer with respect to
confidentiality and non-solicitation obligations, as the same may be amended.
"Contaminants" means any pollutant, contaminant, waste or chemical or any
toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substance, waste or material (including, but not limited to, petroleum), and
includes but is not limited to any of those terms as defined in Environmental
Law.
"Credit Agreement Term Sheet" has the meaning set forth in the Preamble
hereto.
"Delaware Law" means the Delaware General Corporation Law, as amended.
"Designated Chapter 11 Costs" means all out of pocket fees and expenses
incurred or owed in connection with the administration of the Chapter 11 Case
including the U.S. Trustee fees, the fees and expenses of attorneys,
accountants, financial advisors, consultants and other professionals retained
by Company, the Creditors' Committee, the postpetition lenders or the
prepetition lenders incurred or owed in connection with the administration of
the Chapter 11 Case (but specifically excluding ordinary course professionals
as authorized by the Bankruptcy Court), and all out of pocket expenses of
Company in connection with the transactions contemplated under this Agreement.
"employee benefit plan" has the meaning set forth in Section 3.14(a).
"Environmental Laws" means any federal, state, local or foreign law
(including common law), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit or governmental restriction or any agreement
with any governmental authority or other third party, relating to the
environment,
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human health and safety or Contaminants.
"Environmental Permits" means all permits, licenses, franchises,
identification numbers, certificates, approvals and other similar
authorizations of governmental authorities relating to or required by
Environmental Laws and affecting, or relating in any way to, the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414 of
the Code.
"Excluded Assets" has the meaning set forth in Section 1.02.
"Excluded Employee Liabilities" has the meaning set forth in Section
1.04(a)(viii).
"Excluded Liabilities" has the meaning set forth in Section 1.04.
"Existing Claims" has the meaning set forth in Section 1.04(a)(ii).
"Foreign Subsidiaries" means Quintus Call Center Solutions, B.V., a
Netherlands corporation and Quintus Call Center Solutions Co., a Canadian
corporation.
"GAAP" means generally accepted accounting principles in the United
States.
"Hazardous Substances" means any pollutant, contaminant, waste or chemical
or any toxic, radioactive, ignitable corrosive, reactive or otherwise hazardous
substance, waste or material or any substance, waste or material having any
constituent elements displaying any of the foregoing characteristics including
petroleum, its derivatives, by-products and other hydrocarbons, and any
substance, waste or material regulated under any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"including" shall always be read as "including without limitation".
"Intellectual Property" means all trademarks, service marks, trade
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names, logos, computer software, mask work, invention, patent, trade secret,
copyright, technology, processes, inventions, proprietary data, formulae,
research and development data, computer software programs, know-how (including
any registrations or applications for registration of any of the foregoing) or
any other similar type of proprietary intellectual property right.
"Interim Order" has the meaning set forth in Section 5.03(b)(i).
"Interim Order Motion" means the motion filed by Company in the Bankruptcy
Case seeking entry of the Interim Order.
"Lien" means any interest in the Acquired Assets by a Person other than
Company, including any mortgage, lien, pledge, charge, security interest,
encumbrance or other adverse claim of any kind in respect of any Acquired
Asset.
"Material Adverse Effect" means any event, condition or matter in respect
of the operation of the Business, the Acquired Assets and the Assumed
Liabilities that: (i) in the aggregate will result in or have a material
adverse effect on the Business, Assumed Liabilities, Acquired Assets, financial
condition or results of operations of the Business taking into account that
current circumstances of Company, provided, however, that in no event shall any
change, event, violation, inaccuracy, circumstance or effect that results from:
(x) changes affecting the industry in which such entity operates generally; (y)
changes affecting the United States economy generally or (z) provided the
condition set forth in Section 8.03(h) is satisfied or not applicable solely as
a result of Buyer's failure to comply with provisions of Section 5.17, loss of
employees of Company prior to Closing, constitute a Material Adverse Effect;
(ii) materially impairs the ability of Company to perform its obligations under
this Agreement; or (iii) prevents or materially delays the consummation of the
transactions contemplated by this Agreement.
"Multiemployer Plan" means any employee benefit plan that is a
multiemployer plan, as defined in Section (37) of ERISA.
"Permitted Exceptions" means encumbrances incurred in the ordinary course
of business that are not yet due and payable or are being contested in good
faith, that cannot be released or cured under the Bankruptcy Code pursuant to a
sale of assets under Sections 363 or 365 of the Bankruptcy Code or other
applicable provisions of the Bankruptcy Code and that do not in the aggregate
materially detract from the value of such asset or materially impair the use
and operation of such asset in the Business as currently conducted.
"Person" means an individual, corporation, partnership, limited liability
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company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Pre-Closing Tax Period" means (1) any Tax period ending on or before the
Closing Date and (2) with respect to a Tax Period that commences before but
ends after the Closing Date, the portion of such period up to and including the
Closing Date.
"Purchase Price" has the meaning set forth in Section 1.05(a).
"Release"means any presence, release, discharge, disposal, spill,
emission, leaking, pumping, injection, deposit, dispersal, leaching, migration
or escape on, at, to or from the indoor or outdoor environment (including, but
not limited to structures, surface water, air, soil or groundwater).
"Section 363 Assigned Assets" has the meaning set forth in Section
1.01(a).
"Section 365 Assumed Rights" has the meaning set forth in Section 1.01(b).
"Section 363/365 Motion" means the motion filed by Company in the
Bankruptcy Case seeking entry of the Section 363/365 Order.
"Section 363/365 Order" has the meaning set forth in Section 5.03(b)(ii).
"Section 363/365 Sale" means the sale by Sellers and the purchase by Buyer
of the Assigned Assets and the assumption by Buyer of the Assumed Liabilities
pursuant to the Section 363/365 Order.
"Seller" has the meaning set forth in the recitals.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Tax" and, with correlative meaning, "Taxes" means (1) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, registration,
recording, documentary, conveyancing, gains, withholding on amounts paid to or
by Company, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax,
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governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any governmental authority (a "Taxing Authority") responsible for
the imposition of any such tax (domestic or foreign), or (2) liability for the
payment of any amounts of the type described in (1) as a result of being a
member of an affiliated, combined or unitary group or party to any agreement or
any express or implied obligation to indemnify any other Person.
"Tax Return" means any return, filing, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
"Transferred Employees" has the meaning set forth in Section 6.01(a).
"Topping Fee" means the fee payable by Company to Buyer pursuant to the
Interim Order in the amount of $1,300,000 upon the consummation of a Competing
Transaction.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of
1988.
The remainder of the page is intentionally blank. Next page is the
signature page.
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IN WITNESS WHEREOF, Company and Buyer have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, as of the
date first above written.
AVAYA INC.
By: /s/Garry K. McGuire, Sr.
-------------------------------
Name: Garry K. McGuire, Sr.
Title: Chief Financial Officer
QUINTUS CORPORATION
By: /s/Paul Bartlett
-------------------------------
Name: Paul Bartlett
Title: Chief Executive Officer
MUSTANG.COM, INC.
By: /s/Paul Bartlett
-------------------------------
Name: Paul Bartlett
Title: President
ACUITY CORP.
By: /s/Paul Bartlett
-------------------------------
Name: Paul Bartlett
Title: President