EXECUTION VERSION
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BETWEEN
ACTERNA, LLC
(the "SELLER")
and
TOLLGRADE COMMUNICATIONS, INC.
(the "BUYER")
FEBRUARY 13, 2003
TABLE OF CONTENTS
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PAGE
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ARTICLE I ASSET PURCHASE........................................................................1
1.1 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES; EXCLUDED ASSETS
AND EXCLUDED LIABILITIES..............................................................1
1.2 PURCHASE PRICE........................................................................6
1.3 POST CLOSING PURCHASE PRICE ADJUSTMENT AND EARN-OUT PAYMENT...........................7
1.4 ALLOCATION...........................................................................13
1.5 THE CLOSING..........................................................................13
1.6 CONSENTS TO ASSIGNMENT...............................................................15
1.7 FURTHER ASSURANCES...................................................................17
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................17
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER......................................17
2.2 AUTHORITY............................................................................17
2.3 NONCONTRAVENTION.....................................................................18
2.4 FINANCIAL STATEMENTS.................................................................18
2.5 ABSENCE OF CERTAIN CHANGES...........................................................19
2.6 UNDISCLOSED LIABILITIES..............................................................20
2.7 TAX MATTERS..........................................................................20
2.8 ACQUIRED ASSETS......................................................................21
2.9 REAL PROPERTY........................................................................21
2.10 INTELLECTUAL PROPERTY................................................................21
2.11 CONTRACTS............................................................................23
2.12 LITIGATION...........................................................................25
2.13 EMPLOYMENT MATTERS...................................................................25
2.14 EMPLOYEE BENEFITS....................................................................26
2.15 LEGAL COMPLIANCE.....................................................................27
2.16 PERMITS..............................................................................27
2.17 BUSINESS RELATIONSHIPS WITH AFFILIATES...............................................27
2.18 BROKERS' FEES........................................................................27
2.19 INSURANCE............................................................................27
2.20 NO MATERIAL ADVERSE CHANGE...........................................................27
2.21 INVENTORIES..........................................................................27
2.22 CUSTOMERS AND SUPPLIERS..............................................................28
2.23 BACKLOG..............................................................................28
2.24 WARRANTIES...........................................................................28
2.25 PRODUCT LIABILITY....................................................................29
2.26 NO FRAUDULENT INTENT.................................................................29
2.27 DISCLOSURE...........................................................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................................29
3.1 ORGANIZATION.........................................................................29
3.2 AUTHORITY............................................................................29
3.3 NONCONTRAVENTION.....................................................................30
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3.4 LITIGATION...........................................................................30
3.5 FINANCING............................................................................30
3.6 SOLVENCY.............................................................................30
3.7 DUE DILIGENCE........................................................................31
3.8 BROKERS' FEES........................................................................31
ARTICLE IV EMPLOYEES AND EMPLOYEE BENEFITS......................................................31
4.1 DEFINITION OF ACTIVE EMPLOYEES.......................................................31
4.2 EMPLOYMENT OF ACTIVE EMPLOYEES BY THE BUYER..........................................31
4.3 EMPLOYEE RELATED OBLIGATIONS AND LIABILITIES.........................................32
4.4 NO TRANSFER OF ASSETS................................................................33
4.5 COLLECTIVE BARGAINING MATTERS........................................................33
4.6 GENERAL EMPLOYEE PROVISIONS..........................................................33
ARTICLE V OTHER POST-CLOSING COVENANTS.........................................................33
5.1 ACCESS TO INFORMATION; RECORD RETENTION; COOPERATION.................................33
5.2 USE OF NAME FOR TRANSITION PERIOD....................................................35
5.3 USE OF RETAINED MARKS IN TRANSFERRED TECHNOLOGY......................................36
5.4 PAYMENT OF EXCLUDED LIABILITIES......................................................36
5.5 PAYMENT OF ASSUMED LIABILITIES.......................................................36
5.6 OTHER EQUIPMENT......................................................................36
5.7 RESTRICTIVE COVENANTS................................................................37
5.8 RELEASES OF SECURITY INTERESTS.......................................................38
5.9 REMOTE INVENTORY.....................................................................39
5.10 BUSINESS ORDER BACKLOG MATTERS.......................................................39
5.11 QUALIFICATIONS.......................................................................39
ARTICLE VI INDEMNITY AND SURVIVAL...............................................................39
6.1 THE BUYER'S INDEMNITY................................................................39
6.2 THE SELLER'S INDEMNITY...............................................................40
6.3 THIRD PARTY CLAIMS; PROCEDURE........................................................41
6.4 DIRECT CLAIMS........................................................................42
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND TIME LIMITATION ON
INDEMNIFICATION......................................................................42
6.6 LIMITATION ON INDEMNITY..............................................................43
6.7 OVERALL LIMITATION ON LIABILITY......................................................44
6.8 SCOPE OF REPRESENTATIONS AND WARRANTIES OF THE PARTIES...............................44
6.9 ESCROW...............................................................................44
6.10 NO RIGHT OF OFFSET...................................................................44
ARTICLE VII MISCELLANEOUS........................................................................44
7.1 PRESS RELEASES AND ANNOUNCEMENTS.....................................................44
7.2 NO THIRD PARTY BENEFICIARIES.........................................................45
7.3 ACTION TO BE TAKEN BY AFFILIATES.....................................................45
7.4 ENTIRE AGREEMENT.....................................................................45
7.5 SUCCESSION AND ASSIGNMENT............................................................45
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7.6 NOTICES..............................................................................45
7.7 AMENDMENTS AND WAIVERS...............................................................46
7.8 SEVERABILITY.........................................................................46
7.9 EXPENSES.............................................................................46
7.10 SPECIFIC PERFORMANCE.................................................................46
7.11 GOVERNING LAW........................................................................47
7.12 SUBMISSION TO JURISDICTION...........................................................47
7.13 BULK TRANSFER LAWS...................................................................47
7.14 DISCLOSURE SCHEDULE..................................................................47
7.15 CONSTRUCTION.........................................................................47
7.16 WAIVER OF JURY TRIAL.................................................................48
7.17 INCORPORATION OF EXHIBITS AND SCHEDULES..............................................48
7.18 COUNTERPARTS AND FACSIMILE SIGNATURE.................................................48
EXHIBITS
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Exhibit A - Form of Bill of Sale
Exhibit B - Form of Trademark Assignment
Exhibit C - Form of Copyright Assignment
Exhibit D - Form of Patent Assignment
Exhibit E - Form of Sublease
Exhibit F - Form of Escrow Agreement
Exhibit G - Form of Assignment and Assumption Agreement
Exhibit H - Form of Interoperability Agreement
Exhibit I - Opinion of Seller's General Counsel
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (the "AGREEMENT") is entered into as of
February 13, 2003 between Acterna, LLC, a Delaware limited liability company
(the "SELLER"), and Tollgrade Communications, Inc., a Pennsylvania corporation
(the "BUYER"). The Seller and the Buyer are referred to individually herein as a
"PARTY" and collectively herein as the "PARTIES."
INTRODUCTION
1. The Seller is engaged in the business of manufacturing, distributing,
developing and selling status and performance monitoring systems for the cable
industry (the "BUSINESS"); and
2. The Buyer desires to purchase from the Seller, and the Seller desires
to sell to the Buyer, the assets of the Seller relating to the Business (other
than assets excluded pursuant hereto), subject to the assumption of related
liabilities and upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
ASSET PURCHASE
1.1 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES; EXCLUDED
ASSETS AND EXCLUDED LIABILITIES.
(a) TRANSFER OF ASSETS. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing (as defined in
SECTION 1.5(a)), the Seller shall sell, convey, assign, transfer and deliver to
the Buyer, and the Buyer shall purchase and acquire from the Seller, free and
clear of all Security Interests (as defined in SECTION 2.3), all of the Seller's
right, title and interest in and to the following assets, properties and rights
that relate to the Business, other than Excluded Assets (as defined in SECTION
1.1(b)) (collectively, the "ACQUIRED ASSETS"):
(i) all inventory, spare parts, supplies, works in progress, raw
materials, finished products, replacement and component parts used or held for
use in connection with the Business and listed on SCHEDULE 1.1(a)(i)
(collectively, the "INVENTORIES"), including Inventories held at any location
controlled by the Seller and Inventories previously purchased and in transit to
the Seller;
(ii) all computers, equipment, furniture, furnishings, fixtures,
machinery, vehicles, tools and tooling equipment and other tangible personal
property used or held for use exclusively in connection with the Business, and
all warranties and guarantees, if
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any, express or implied, existing for the benefit of the Business in connection
therewith, all as listed on SCHEDULE 1.1(a)(ii);
(iii) the rights under all contracts, purchase orders,
agreements, licenses, commitments, instruments, understandings and arrangements
relating to the Business, whether written or oral, in each case as amended,
supplemented, waived or otherwise modified (each, a "CONTRACT"), including, but
not limited to, those Contracts listed on SCHEDULE 1.1(a)(iii), except as
provided in SECTION 1.1(b)(ii) and SECTION 1.6 (the "ASSIGNED CONTRACTS");
(iv) any and all: (A) United States and foreign patents
(including design patents, industrial designs and utility models) and patent
applications (including patent disclosures, reissues, divisions,
continuations-in-part and extensions), inventions and improvements thereto
listed on SCHEDULE 1.1(a)(iv); (B) United States and foreign trademarks, service
marks, certification marks, trade names, domain names, trade dress and
registrations and applications for registrations thereof listed on SCHEDULE
1.1(a)(iv); (C) United States and foreign copyrights and registrations thereof
listed on SCHEDULE 1.1(a)(iv); (D) inventions, processes, designs, formulae,
trade secrets, manufacturing, engineering and technical drawings, product
industrial models, specifications, technical information, technology, know-how,
processes, quality control data, databases and other confidential business
information, including, without limitation, current customer lists and current
vendor lists, in each case, to the extent that each item relates to the
Business; PROVIDED HOWEVER, if any of the foregoing items are also utilized by
the Seller in a manner or capacity unrelated to the Business, the Seller shall
retain a joint ownership interest in and shall retain as many copies as it
chooses of such items and shall be entitled to possess and use such items
consistent with Seller's rights and obligations under this Agreement; (E) the
computer software, including all source code and object code versions thereof
used in the Business held by the Seller, in any and all forms and media, whether
recorded on paper, magnetic media or other electronic or non-electronic media
(including data and recorded documentation, user manuals, training materials,
flow charts, diagrams, descriptive tests and programs computer printouts,
underlying tapes, computer databases and similar items) and computer
applications and operating programs listed in SCHEDULE 1.1(a)(iv); (F) licenses
of any of the foregoing as listed in SCHEDULE 1.1(a)(iv); and (G) all
intellectual property developed for or on behalf of Seller pursuant to that
certain contract, dated August 19, 1999, with Cadence Design Systems Inc. (the
"CADENCE AGREEMENT"), but excluding any of the Seller's intellectual property or
related rights that are Excluded Assets (collectively, "INTELLECTUAL PROPERTY");
and all rights thereunder or in respect thereof, including, without limitation,
all rights to sue for and remedies against past, present and future infringement
of all Intellectual Property, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all tangible
embodiments thereof, other than rights in readily and commercially available
software in which the Seller is prohibited from assigning its rights (together
with all Intellectual Property rights included in the other clauses of this
SECTION 1.1, collectively the "SELLER INTELLECTUAL PROPERTY");
(v) the products under research or development prior to or on the
Closing Date (as defined in SECTION 1.5(a)) listed on SCHEDULE 1.1(a)(v), and
all right, title and interest of the Seller in or to any prototypes,
enhancements, improvements, or other tangible work product, technology or
process developed, created or otherwise acquired in connection with
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the design, research and development, implementation, market research or
marketing of products relating to the Business;
(vi) all licenses, permits, franchises or authorizations listed
on SCHEDULE 1.1(a)(vi) issued by any Governmental Entity (as defined below)
(collectively, "LEGAL PERMITS") relating to the development, use or maintenance
of the operations of the Business, to the extent that the transfer of such Legal
Permits is permitted by applicable Laws (as defined below) (for purposes of this
Agreement, "GOVERNMENTAL ENTITY" means any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority, agency, instrumentality or regulatory body; and "LAWS" means any and
all (A) statutes, laws, rules, regulations, ordinances, codes or orders of any
Governmental Entity, (B) Legal Permits, and (C) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental Entity);
(vii) all goods and services and all other economic benefits to
be received subsequent to the Closing arising out of prepayments and payments by
the Seller to the extent that they are for the benefit or account of the
Business and made prior to the Closing and all credits, prepaid expenses,
deferred charges, security deposits and other prepaid items to the extent that
they are for the benefit of the Business;
(viii) all books and records (other than stock record books and
corporate minute books and records), accounts, manuals, ledgers, files,
documents, correspondence, studies, reports and other printed or written
materials in the possession of the Seller, in each case, to the extent that such
item relates to the Business, in any form or medium, wherever located,
including, without limitation, procurement and customer specifications,
advertising materials, catalogs, price lists, mailing lists, lists of present
and prospective customers, customer service records, credit records,
distribution lists, photographs, production data, sales and promotional
materials and records, purchasing materials and records, quality control records
and procedures, blueprints, media materials and personnel records, subject to
any restrictions imposed by applicable Laws on the transfer of employee files
and other materials related to classified programs PROVIDED HOWEVER, that if any
of the foregoing items have been used by the Seller in a manner unrelated to the
Business, then Seller shall retain a joint ownership interest in and shall be
entitled to possess and use such items in a manner consistent with Seller's past
use of such items and consistent with its obligations under this Agreement;
(ix) all rights to causes of action, lawsuits, judgments, claims
and demands of the Seller exclusively relating to the Business or primarily
relating to the ownership, use, function or value of any Acquired Asset, whether
by way of counterclaim or otherwise;
(x) all guarantees, warranties, indemnities or similar rights in
favor of the Seller relating primarily to the Business or the Acquired Assets;
(xi) all rights to insurance claims, related refunds and proceeds
arising from or related to the Acquired Assets and the Assumed Liabilities (as
defined in SECTION 1.1(c)) prior to the Closing Date; and
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(xii) all goodwill associated with the Business and the Acquired
Assets, together with the right to represent to third parties that the Buyer is
the successor to the Business.
(b) EXCLUDED ASSETS. Notwithstanding anything to the contrary in this
Agreement, the Acquired Assets shall not include any of the following assets,
all of which shall be retained by Seller (each, an "EXCLUDED ASSET"):
(i) all cash and cash equivalents or similar investments, bank
accounts, commercial paper, certificates of deposit, Treasury bills and other
marketable securities;
(ii) all assets, properties or rights listed on, or arising under
any Contracts listed on, SCHEDULE 1.1(b)(ii) (the "RETAINED SHARED ASSETS"); it
being acknowledged and agreed that Retained Shared Assets shall not include
assets that (A) are necessary for the ongoing operation and support of the
Seller Intellectual Property, (B) cannot be obtained from any other source or
supplier regardless of cost, (C) are non-replaceable, and (D) no other item can
be substituted for such assets as a functional equivalent;
(iii) all rights to insurance claims, related refunds and
proceeds arising from or related to the Excluded Assets and Excluded Liabilities
(as defined in SECTION 1.1(d));
(iv) all rights which accrue or will accrue to the benefit of the
Seller under this Agreement or the Ancillary Agreements (as defined in SECTION
1.5(b));
(v) all rights relating to refunds or recoupment of Taxes (as
defined in SECTION 2.7) of the Seller, including rights under any legal or
administrative proceedings relating thereto, whether or not yet commenced;
(vi) all actions, claims, causes of action, rights of recovery,
choses in action and rights of setoff of any kind arising before, on or after
the Closing relating to the items set forth above in this SECTION 1.1(b) or to
any Excluded Liabilities;
(vii) all obligations pursuant to and all actions, claims, causes
of action, damages, rights to recovery, rights of setoff, and any other
settlements, compromises, recoveries and other proceeds from and relating to the
Cadence Agreement (the "CADENCE LAWSUIT"), it being understood and agreed that
all Intellectual Property developed pursuant to the Cadence Agreement is being
transferred to the Buyer pursuant to Section 1.1(a)(iv)(g) hereof;
(viii) all corporate records, including but not limited to,
stockholder records, stock records, stock transfer journals, and board of
directors and stockholder minutes;
(ix) all books, records, accounts, ledgers, files, documents,
correspondence, studies, Tax Returns (as defined in SECTION 2.7), payroll and
financial information, reports and other printed or written materials related
exclusively to any Excluded Assets or Excluded Liabilities;
(x) all notes receivable, accounts receivable and other
receivables, whether or not billed, and other evidences of indebtedness of, and
rights to receive payment from
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any person or entity (including, without limitation, any parent, subsidiary or
affiliate of the Seller) held by the Seller, whether or not related to the
Business or the Acquired Assets; and
(xi) the Material Contracts listed on SCHEDULE 2.11 which (A)
relate to SECTION 2.11(a)(viii) and SECTION 2.11(a)(ix) of this Agreement and
(B) are credit facilities with the lenders and/or equity investors of Seller and
its Affiliates (as such term is hereinafter defined).
(c) ASSUMED LIABILITIES. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing, the Buyer shall
assume and agree to pay, perform and discharge only the following liabilities
and obligations of the Seller (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated and whether due or to become
due), (the "ASSUMED LIABILITIES") in each case to the extent related exclusively
or primarily to the Business or the Acquired Assets:
(i) all liabilities and obligations under the Assigned Contracts
(other than payments owing under such Assigned Contracts that were incurred
prior to the Closing Date, except for Warranty Obligations (as defined below),
and other liabilities and obligations arising out of or relating to the Seller's
breach of an Assigned Contract if such breach occurred prior to the Closing
Date);
(ii) all liabilities and obligations under the Legal Permits
transferred pursuant to SECTION 1.1(a)(vi) (other than liabilities and
obligations arising out of or relating to the Seller's breach or violation of
such Legal Permits if such breach occurred prior to the Closing Date);
(iii) all liabilities and obligations in respect of the Business
and Acquired Assets arising or incurred by the Buyer on and after the Closing
Date;
(iv) all liabilities and obligations arising or incurred by the
Buyer on account of the sale of any services and products of the Business
manufactured and/or sold by the Buyer on and after the Closing Date;
(v) all liabilities and obligations for any Taxes relating to the
Business or Acquired Assets attributable to periods ending after the Closing
Date; All Taxes levied with respect to the Acquired Assets or the Business for a
taxable period which includes (but does not end on) the Closing Date shall be
apportioned between Buyer and Seller based on the number of days included in
such period through and including the Closing Date, in the case of Taxes to be
paid by the Seller, and the number of days included in such period after the
Closing Date, in the case of Taxes to be paid by the Buyer (the "APPORTIONED
TAXES"). If either party receives any notice indicating that any such
Apportioned Taxes are due, then it shall present that notice to the other party
together with a statement setting forth the amount of such Apportioned Taxes
actually attributable to the pre-Closing and post-Closing periods together with
such supporting evidence as is reasonably necessary and available to calculate
such amount. The applicable party shall promptly discharge and pay any such
Apportioned Taxes for which it is responsible.
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(vi) all liabilities and obligations arising out of or relating
to Deferred Items (as defined in SECTION 1.6) subject to SECTION 1.6 hereof;
(vii) subject to SECTION 1.1(c)(viii) below, all liabilities and
obligations of the Seller under the warranty agreements or similar
understandings for the repair, replacement, rework or return of any product or
service of the Business or the purchase price thereof that have been given prior
to the Closing Date, and all liabilities or obligations resulting from a claim
for breach of warranty in respect of any product or service of the Business that
arises on or after the Closing Date, in each case as listed on SCHEDULE
1.1(c)(vii) (the "WARRANTY OBLIGATIONS");
(viii) all liabilities and obligations arising out of or relating
to any product liability claim arising on and after the Closing Date and which
relates to any Business product(s) shipped by Buyer following the Closing Date
(whether such Business product was manufactured for or on behalf of Seller or
for or on behalf of Buyer) or Business service provided by the Buyer following
the Closing Date, including, without limitation, injury to or death of persons
or damage to or destruction of property that directly results from any defect or
imperfection in any product or service of the Business; and
(ix) all liabilities and obligations relating to the Loaned
Property (as such term is hereinafter defined) relating to periods following the
Closing Date.
(d) EXCLUDED LIABILITIES. The "Excluded Liabilities" shall remain the
sole responsibility of and shall be retained, paid, performed and discharged
solely by the Seller. "EXCLUDED LIABILITIES" shall mean every liability and/or
obligation of the Seller other than the Assumed Liabilities, including, without
limitation, (a) liabilities and obligations relating to Lawsuits (as such term
is hereinafter defined) to the extent that such liabilities and obligations are
not caused by the actions or inactions of Buyer, (b) all liabilities and
obligations relating to the Cadence Agreement, (c) the employee-related
liabilities retained by Seller pursuant to Article IV hereof, and (d) the
Seller's liability for Apportioned Taxes as described in Section 1.1(c)(v)
hereof.
1.2 PURCHASE PRICE. In consideration for the sale and transfer of the
Acquired Assets, the Buyer shall assume the Assumed Liabilities as provided in
SECTION 1.1(c) and shall pay to the Seller the amount of (a) Fourteen Million
Three Hundred Thousand U.S. Dollars ($14,300,000) subject to adjustment as set
forth in SECTION 1.3(a)); and (b) the Earn-Out Payment (as defined in SECTION
1.3(b)(v)(a)), if any (as adjusted, the "PURCHASE PRICE"). In accordance with
SECTION 1.5(b), at the Closing, the Purchase Price, prior to the purchase price
adjustment set forth in SECTION 1.3(a), shall be delivered by the Buyer to the
Seller as follows: (a) Thirteen Million Eight Hundred Thousand U.S. Dollars
($13,800,000) by wire transfer; and (b) Five Hundred Thousand U.S. Dollars
($500,000) paid to the escrow agent under and pursuant to the Escrow Agreement
(as defined in SECTION 1.5(b)(vi)). The portion of the Purchase Price paid to
the escrow agent shall be held in escrow for (x) the payment of any amounts as
to which the Buyer Indemnified Parties (as defined in SECTION 6.2) are entitled
to indemnification by the Seller; and (y) any purchase price adjustment in
SECTION 1.3(a). Any adjustment to the Purchase Price and the calculation and
payment of the Earn-Out Payment shall be made in accordance with SECTION 1.3(b).
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1.3 POST CLOSING PURCHASE PRICE ADJUSTMENT AND EARN-OUT PAYMENT.
(a) Post Closing Purchase Price Adjustment
(i) Within sixty (60) days after the Closing Date, the Buyer will
prepare and deliver to the Seller an audited special purpose statement of the
assets and liabilities of the Business as of the close of business on the
Closing Date, which shall include line items for "Inventory (net)", "Equipment
(net)", "Warranty Accrual", and "Deferred Revenue" (the "CLOSING NET ASSETS
STATEMENT"). The date on which the Closing Net Assets Statement is delivered to
the Seller is referred to herein as the "NET ASSETS DELIVERY DATE". The Closing
Net Assets Statement will be prepared in accordance with generally accepted
accounting principles ("GAAP"). The amount of assets shown on the Closing Net
Assets Statement minus the amount of liabilities shown on the Closing Net Assets
Statement is referred to herein as "NET ASSETS". The Buyer will retain
PricewaterhouseCoopers to review and prepare the Closing Net Assets Statement
and to render its audited report thereon stating that the Closing Net Assets
Statement has been prepared in accordance with the terms of this SECTION
1.3(a)(i). Such report of PricewaterhouseCoopers will be delivered to the Seller
together with the Closing Net Assets Statement. The Seller will, upon reasonable
request of the Buyer, cause its employees and representatives to assist the
Buyer and its representatives in the preparation of the Closing Net Assets
Statement and to assist PricewaterhouseCoopers in connection with its review and
preparation of the Closing Net Assets Statement and its issuance of the audited
report thereon; PROVIDED, HOWEVER, that such assistance will not unreasonably
interfere with the normal work duties of such employees. The Seller will cause
the Buyer, the Buyer's representatives and PricewaterhouseCoopers to be provided
with access at all reasonable times, following reasonable notice, to the
properties, books and records of the Seller related to the Business for such
purposes; PROVIDED, HOWEVER, that such access will not unreasonably interfere
with the normal work duties of the employees of the Seller. The Buyer and the
Seller shall each pay one-half (1/2) of all fees and costs charged by
PricewaterhouseCoopers necessary to prepare the Closing Net Assets Statement.
(ii) The Closing Net Assets Statement will be deemed to be the
final, binding and conclusive Closing Net Assets Statement (the "FINAL CLOSING
NET ASSETS STATEMENT") for all purposes at, and at all times after, the close of
business on the thirtieth (30th) day after the Net Assets Delivery Date unless
the Seller delivers to the Buyer written notice of its disagreement (a "NET
ASSETS NOTICE OF DISAGREEMENT") prior to the close of business on the thirtieth
(30th) day after the Net Assets Delivery Date specifying in reasonable detail
the nature of the Seller's objections to the Closing Net Assets Statement. To be
assertable in a Net Assets Notice of Disagreement, an objection by the Seller
with respect to any individual item on the Closing Net Assets Statement must
assert that the Closing Net Assets Statement was not prepared in accordance with
the terms of SECTION 1.3(a)(i) with respect to such item and relate to an
adjustment equal to or greater than Twenty Five Thousand U.S. Dollars ($25,000).
The Seller hereby waives the right to assert any objection to the Closing Net
Assets Statement that is not asserted in a Net Assets Notice of Disagreement
delivered by the Seller to the Buyer prior to the close of business on the
thirtieth (30th) day after the Net Assets Delivery Date. If a Net Assets Notice
of Disagreement is delivered by the Seller to the Buyer within such thirty (30)
day period, then the Closing Net Assets Statement (as adjusted, if necessary)
will be deemed to be the Final Closing Net Assets Statement for all purposes on
the earlier of (x) the date the Buyer and the
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Seller resolve in writing all differences they have with respect to the Closing
Net Assets Statement, or (y) the date the disputed matters are resolved in
writing by the Unaffiliated Firm (as defined below). In the event that disputed
matters are resolved by the Unaffiliated Firm (as set forth below in accordance
with the terms hereof), the Final Closing Net Assets Statement will consist of
the applicable amounts from the Closing Net Assets Statement (or amounts
otherwise agreed to in writing by the Buyer and the Seller) as to items that
have not been submitted for resolution to the Unaffiliated Firm, and the amounts
determined by the Unaffiliated Firm as to items that were submitted for
resolution by the Unaffiliated Firm.
(iii) During the twenty (20) day period following the delivery of
a Net Assets Notice of Disagreement (the "NET ASSETS RESOLUTION PERIOD"), the
Buyer and the Seller will seek in good faith to resolve any differences they may
have with respect to matters specified in the Net Assets Notice of Disagreement.
If, at the end of the Net Assets Resolution Period, the Buyer and the Seller
have not reached agreement on such matters, the Buyer and the Seller will
jointly engage a single arbitrator from the firm of Ernst & Young, LLP (or, if a
representative of such firm is unable or unwilling to act in such capacity, a
single arbitrator from the firm of KPMG, LLP) (the "UNAFFILIATED FIRM") to
resolve all matters which remain in dispute with respect to the Closing Net
Assets Statement by arbitration in accordance with the procedures set forth in
this SECTION 1.3(a)(iii). In connection with such engagement, each of the Buyer
and the Seller agrees to execute, if requested by the Unaffiliated Firm, an
engagement letter on terms reasonably satisfactory to each of the Buyer and the
Seller including customary indemnities. Each of the Buyer and the Seller may
submit in writing to the Unaffiliated Firm a position statement together with
any applicable supporting documentation it desires (each, a "NET ASSETS POSITION
STATEMENT") with respect to each of the Buyer's proposed adjustments that remain
in dispute following the Net Assets Resolution Period. Net Assets Position
Statements, if any, shall be delivered to the Unaffiliated Firm, with a copy to
the other Party hereto (at the same time as it is provided to the Unaffiliated
Firm), no later than the later of (x) the third (3rd) Business Day (as such term
is hereinafter defined) following the date the Unaffiliated Firm accepts its
engagement hereunder, or (y) the thirtieth (30th) day following the end of the
Net Assets Resolution Period. For purposes of this Agreement a "BUSINESS DAY"
shall be any day other than (i) a Saturday or Sunday, or (ii) a day on which
banking institutions located in New York, New York are permitted or required by
law, executive order or governmental decree to remain closed. Promptly after
such engagement of the Unaffiliated Firm, the Buyer or the Seller will provide
the Unaffiliated Firm with a copy of this Agreement, the Closing Net Assets
Statement, the Net Assets Notice of Disagreement and, if applicable, the Net
Assets Position Statements. The Unaffiliated Firm will have the authority to
request in writing such additional written submissions from either the Buyer or
the Seller as it deems appropriate; PROVIDED, HOWEVER, that a copy of any such
submission will be provided to the other Party at the same time as it is
provided to the Unaffiliated Firm. Neither Party will make (or permit any of its
parents, subsidiaries, affiliates, employees or representatives to make) any
additional submission to the Unaffiliated Firm except pursuant to such a written
request by the Unaffiliated Firm. Neither Party will communicate (or permit any
of its parents, subsidiaries, affiliates, employees or representatives to
communicate) with the Unaffiliated Firm without providing the other Party a
reasonable opportunity to participate in such communication with the
Unaffiliated Firm (other than with respect to written submissions in response to
the written request of the Unaffiliated Firm). The Unaffiliated Firm will have
thirty (30) days to review the documents provided to it
-8-
pursuant to this SECTION 1.3(a)(iii). Within such thirty (30) day period, the
Unaffiliated Firm will furnish simultaneously to both parties its written
determination with respect to each of the adjustments in dispute submitted to it
for resolution. The Unaffiliated Firm will resolve the differences regarding the
Closing Net Assets Statement based solely on the information provided to the
Unaffiliated Firm by the Buyer and the Seller pursuant to the terms of this
Agreement (and not independent review). The Unaffiliated Firm's authority will
be limited to resolving disputes with respect to whether the Closing Net Assets
Statement was prepared in accordance with SECTION 1.3(a)(i) with respect to the
individual items on the Closing Net Assets Statement in dispute (it being
understood that the Unaffiliated Firm will have no authority to make any
adjustments to any financial statements or amounts other than amounts set forth
in the Closing Net Assets Statement that are in dispute). In resolving any
disputed item, the Unaffiliated Firm may not assign a value to such item greater
than the greatest value for such item asserted by either Party or less than the
smallest value for such item asserted by either Party.
(iv) The decision of the Unaffiliated Firm will be, for all
purposes, conclusive, non-appealable, final and binding upon the Seller, the
Buyer and each of their parents, subsidiaries or affiliates. Such decision will
be subject to specific performance pursuant to SECTION 7.10, and judgment may
also be entered thereon as an arbitration award pursuant to the Federal
Arbitration Act, 9 U.S.C. ss.ss. 1-16, in any court of competent jurisdiction
specified in SECTION 7.12. The fees of the Unaffiliated Firm will be borne
equally by the Buyer and the Seller. Unless otherwise set forth herein, each
Party will bear the fees, costs and expenses of its own accountants and all of
its other expenses in connection with matters contemplated by this SECTION
1.3(a).
(v) (A) Upon the Closing Net Assets Statement being deemed the
Final Closing Net Assets Statement in accordance with SECTION 1.3(a), the
Purchase Price will be adjusted, up or down, as follows:
(I) if the amount of Net Assets shown on the Final Closing
Net Assets Statement (the "NET ASSET AMOUNT") is less than One Million Three
Hundred Thousand U.S. Dollars ($1,300,000) (the "BASELINE AMOUNT"), the Purchase
Price will be reduced by the amount by which the Net Asset Amount is less than
the Baseline Amount and such amount by which the Purchase Price is reduced will
be paid by the Seller to the Buyer or drawn from the amounts deposited pursuant
to the Escrow Agreement (without a replenishment of such amounts held in escrow)
in accordance with SECTION 1.3(a)(v)(b) below; and
(II) if the Net Asset Amount is greater than the Baseline
Amount, the Purchase Price will be increased by the amount by which the Net
Asset Amount is greater than the Baseline Amount and such amount by which the
Purchase Price is increased will be paid by the Buyer to the Seller within three
(3) Business Days after the Closing Net Assets Statement is deemed the Final
Closing Net Assets Statement in accordance with SECTION 1.3(a).
(B) Any payment required under SECTION 1.3(a)(v) will bear
interest from the later of the Net Assets Delivery Date or delivery date of the
Net Assets Notice of Disagreement to the date of payment (calculated based on
actual days elapsed in a three hundred sixty-five (365) day year) at a rate per
annum equal to the six (6) month LIBOR rate published in the Wall Street
Journal, Eastern Edition, on the Closing Date. Any such payment
-9-
will be made (together with such interest), by wire transfer of immediately
available funds to a bank account designated by the Buyer or the Seller, as the
case may be, within three (3) Business Days after the date that the Closing Net
Assets Statement is deemed to be the Final Closing Net Assets Statement in
accordance with SECTION 1.3(a)(v). In the event the Seller is required to make a
payment to the Buyer under this SECTION 1.3(a)(v), the Buyer may give notice of
such amount under the Escrow Agreement and cause the escrow agent thereunder to
pay over such amounts to Buyer, and Seller shall not object thereto. Giving such
notice under the Escrow Agreement will not constitute an election of remedies or
limit the Buyer in any manner in the enforcement of any remedies available to
it.
(b) Earn-Out Payment
(i) No later than March 1, 2004, the Buyer will prepare and
deliver to the Seller a statement identifying all of the Business Net Revenues
(as defined below) for the period commencing on February 1, 2003 and ending on
December 31, 2003 (the "BUSINESS NET REVENUES STATEMENT"). The date on which the
Business Net Revenues Statement is delivered to the Seller is referred to herein
as the "NET REVENUES DELIVERY DATE". The Business Net Revenues Statement shall
identify the Business Net Revenues categorized by the Business customer, the
Business products purchased by such customer, the amount of the orders and the
dates the Business products were ordered and invoiced. The Buyer shall timely
deliver all such invoices to Business customers in a manner consistent with
Buyer's standard billing and invoicing practices and shall not delay the
issuance of such invoices or defer or forgive payment of any amounts that would
otherwise be due from Business customers under such invoices. The Buyer shall
make available (at the Buyer's offices and during reasonable business hours
mutually agreed to between the parties) to the Seller and Seller's
representatives all reasonable documentation necessary to review and confirm the
Business Net Revenues Statement. For the purpose of this Agreement, "BUSINESS
NET REVENUES" shall mean all sales made from the period beginning February 1,
2003 and ending December 31, 2003 to any person or entity of (i) Business
products acquired as part of the transactions contemplated by this Agreement and
(ii) transponder products of the Buyer sold as part of the NetMentor
application, resulting in revenues recognizable under GAAP, less aged
receivables in excess of one hundred twenty (120) days, credits, returns,
allowances, discounts in the ordinary course of business, insurance, freight and
taxes, as determined in accordance with GAAP. The Buyer and Seller shall each
pay one-half (1/2) of all third party fees and costs necessary to prepare the
Business Net Revenues Statement.
(ii) The Business Net Revenues Statement will be deemed to be the
final, binding and conclusive Business Net Revenues Statement (the "FINAL
BUSINESS NET REVENUES STATEMENT") for all purposes at, and at all times after,
the close of business on the thirtieth (30th) day after the Net Revenues
Delivery Date unless the Seller delivers to the Buyer written notice of its
disagreement (a "NET REVENUES NOTICE OF DISAGREEMENT") prior to the close of
business on the thirtieth (30th) day after the Net Revenues Delivery Date
specifying in reasonable detail the nature of the Seller's objections to the
Business Net Revenues Statement. To be assertable in a Net Revenues Notice of
Disagreement, an objection by the Seller with respect to any individual item on
the Business Net Revenues Statement must (A) assert that the Business Net
Revenues Statement was not prepared in accordance with the terms of SECTION
1.3(b)(i) to the extent that such an assertion can be made based on the
information available to
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Seller and (B) relate to an adjustment equal to or greater than Twenty Five
Thousand U.S. Dollars ($25,000). The Seller hereby waives the right to assert
any objection to the Business Net Revenues Statement that is not asserted in a
Net Revenues Notice of Disagreement delivered by the Seller to the Buyer prior
to the close of business on the thirtieth (30th) day after the Net Revenues
Delivery Date. If a Net Revenues Notice of Disagreement is delivered by the
Seller to the Buyer within such thirty (30) day period, then the Business Net
Revenues Statement (as adjusted, if necessary) will be deemed to be the Final
Business Net Revenues Statement for all purposes on the earlier of (x) the date
the Buyer and the Seller resolve in writing all differences they have with
respect to the Business Net Revenues Statement, or (y) the date the disputed
matters are resolved in writing by the Unaffiliated Firm. In the event that
disputed matters are resolved by the Unaffiliated Firm, the Business Net
Revenues Statement will consist of the applicable amounts from the Business Net
Revenues Statement (or amounts otherwise agreed to in writing by the Buyer and
the Seller) as to items that have not been submitted for resolution to the
Unaffiliated Firm, and the amounts determined by the Unaffiliated Firm as to
items that were submitted for resolution by the Unaffiliated Firm.
(iii) During the twenty (20) day period following the delivery of
a Net Revenues Notice of Disagreement (the "NET REVENUES RESOLUTION PERIOD"),
the Buyer and the Seller will seek in good faith to resolve any differences they
may have with respect to matters specified in the Net Revenues Notice of
Disagreement. If, at the end of the Net Revenues Resolution Period, the Buyer
and the Seller have not reached agreement on such matters, the Buyer and the
Seller will jointly engage the Unaffiliated Firm to resolve all matters which
remain in dispute with respect to the Business Net Revenues Statement by
arbitration in accordance with the procedures set forth in this SECTION
1.3(b)(iii). In connection with such engagement, each of the Buyer and the
Seller agrees to execute, if requested by the Unaffiliated Firm, an engagement
letter on terms reasonably satisfactory to each of the Buyer and the Seller
including customary indemnities. Each of the Buyer and the Seller may submit in
writing to the Unaffiliated Firm a position statement together with any
applicable supporting documentation it desires (each, a "NET REVENUES POSITION
STATEMENT") with respect to each of the Buyer's calculations of the Business Net
Revenues that remain in dispute following the Net Revenues Resolution Period.
Net Revenues Position Statements, if any, shall be delivered to the Unaffiliated
Firm, with a copy to the other Party hereto (at the same time as it is provided
to the Unaffiliated Firm), no later than the later of (x) the third (3rd)
Business Day following the date the Unaffiliated Firm accepts its engagement
hereunder, or (y) the thirtieth (30th) day following the end of the Net Revenues
Resolution Period. Promptly after such engagement of the Unaffiliated Firm, the
Buyer or the Seller will provide the Unaffiliated Firm with a copy of this
Agreement, the Business Net Revenues Statement, the Net Revenues Notice of
Disagreement and, if applicable, the Net Revenues Position Statements. The
Unaffiliated Firm will have the authority to request in writing such additional
written submissions from either the Buyer or the Seller as it deems appropriate;
PROVIDED, HOWEVER, that a copy of any such submission will be provided to the
other Party at the same time as it is provided to the Unaffiliated Firm. Neither
Party will make (or permit any of its parents, subsidiaries, affiliates,
representatives or employees to make) any additional submission to the
Unaffiliated Firm except pursuant to such a written request by the Unaffiliated
Firm. Neither Party will communicate (or permit any of its parents,
subsidiaries, affiliates, representatives or employees to communicate) with the
Unaffiliated Firm without providing the other Party a reasonable opportunity to
participate in
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such communication with the Unaffiliated Firm (other than with respect to
written submissions in response to the written request of the Unaffiliated
Firm). The Unaffiliated Firm will have thirty (30) days to review the documents
provided to it pursuant to this SECTION 1.3(b)(iii). Within such thirty (30) day
period, the Unaffiliated Firm will furnish simultaneously to both parties its
written determination with respect to each of the adjustments in dispute
submitted to it for resolution. The Unaffiliated Firm will resolve the
differences regarding the Business Net Revenues Statement based solely on the
information provided to the Unaffiliated Firm by the Buyer and the Seller
pursuant to the terms of this Agreement (and not independent review). The
Unaffiliated Firm's authority will be limited to resolving disputes with respect
to whether the Business Net Revenues Statement was prepared in accordance with
SECTION 1.3(b)(i) with respect to the individual items on the Business Net
Revenues Statement in dispute (it being understood that the Unaffiliated Firm
will have no authority to make any adjustments to any amounts other than amounts
set forth in the Business Net Revenues Statement that are in dispute). In
resolving any disputed item, the Unaffiliated Firm may not assign a value to
such item greater than the greatest value for such item asserted by either Party
or less than the smallest value for such item asserted by either Party.
(iv) The decision of the Unaffiliated Firm will be, for all
purposes, conclusive, non-appealable, final and binding upon the Seller, the
Buyer and each of their parents, subsidiaries or affiliates. Such decision will
be subject to specific performance pursuant to SECTION 7.10, and judgment may
also be entered thereon as an arbitration award pursuant to the Federal
Arbitration Act, 9 U.S.C. ss.ss. 1-16, in any court of competent jurisdiction
specified in SECTION 7.12. The fees of the Unaffiliated Firm will be borne
equally by the Buyer and the Seller. Unless otherwise set forth herein, each
Party will bear the fees, costs and expenses of its own accountants and all of
its other expenses in connection with matters contemplated by this SECTION
1.3(b).
(v) (A) Upon the Business Net Revenues Statement being deemed the
Final Business Net Revenues Statement in accordance with SECTION 1.3(B), the
following payment (the "EARN-OUT PAYMENT") will be made by the Buyer to the
Seller: if the amount of the Business Net Revenues exceeds Thirteen Million
Seven Hundred Fifty Thousand U.S. Dollars ($13,750,000);), the Earn-Out Payment
shall be equal to One U.S. Dollar ($1) for each dollar that the Business Net
Revenues exceed Thirteen Million Seven Hundred Fifty Thousand U.S. Dollars
($13,750,000); PROVIDED, HOWEVER, that in no event shall the aggregate amount of
the Earn-Out Payment exceed Two Million Four Hundred Thousand U.S. Dollars
($2,400,000).
(B) Under no circumstances shall the Seller be entitled to
any Earn-Out Payment in the event the Business Net Revenues set forth on the
Business Net Revenues Statement do not exceed Thirteen Million Seven Hundred
Fifty Thousand U.S. Dollars ($13,750,000);
(C) Any payment required under SECTION 1.3(b)(v) will be
made, by wire transfer of immediately available funds to a bank account
designated by the Seller, within three (3) Business Days after the date that the
Business Net Revenues Statement is deemed to be the Final Business Net Revenues
Statement in accordance with SECTION 1.3(b)(v).
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1.4 ALLOCATION. The Buyer and the Seller agree to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets for all
purposes (including financial accounting and Tax purposes) in accordance with an
allocation of the Purchase Price (the "ALLOCATION") to be agreed upon by the
Parties no later than thirty (30) days following the Closing Date. After the
Closing, the Parties shall make consistent use of the Allocation for all Tax
purposes and in all filings, declarations and reports with the IRS in respect
thereof, including the reports required to be filed under Section 1060 of the
Internal Revenue Code. The Buyer shall prepare and deliver IRS Form 8594 to the
Seller within forty-five (45) days after the Closing Date to be filed with the
IRS.
1.5 THE CLOSING.
(a) TIME AND LOCATION. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place by facsimile, commencing at
10:00 a.m., local time, on the date hereof (the "CLOSING DATE").
(b) ACTIONS AT THE CLOSING. At the Closing:
(i) the Seller shall execute and deliver the Bill of Sale
attached hereto as EXHIBIT A;
(ii) the Seller shall execute and deliver the Trademark
Assignment attached hereto as EXHIBIT B;
(iii) the Seller shall execute and deliver a Copyright Assignment
attached hereto as EXHIBIT C;
(iv) the Seller shall execute and deliver a Patent Assignment
attached hereto as EXHIBIT D;
(v) the Acterna Corporation and the Buyer shall execute and
deliver the Sublease attached hereto as EXHIBIT E;
(vi) the Seller, the Buyer and the escrow agent shall execute and
deliver the Escrow Agreement attached hereto as EXHIBIT F;
(vii) the Seller and the Buyer shall execute and deliver such
other instruments of conveyance as the Buyer may reasonably request in order to
effect the sale, transfer, conveyance and assignment to the Buyer of good and
valid ownership of the Acquired Assets owned by the Seller;
(viii) the Seller and the Buyer shall execute and deliver to the
Seller the Assignment and Assumption Agreement attached hereto as EXHIBIT G;
(ix) the Buyer and the Seller shall execute and deliver such
other instruments as the Seller may reasonably request in order to effect the
assumption by the Buyer of the Assumed Liabilities;
-13-
(x) the Buyer and the Seller shall execute and deliver an
Interoperability Agreement whereby the Parties shall agree to maintain the
interoperability between the status and performance monitoring products of the
Business acquired by the Buyer hereunder and the Seller's return path monitoring
products, for a period of not less than two (2) years from the Closing Date, in
substantially the form attached hereto as EXHIBIT H;
(xi) the Seller shall transfer to the Buyer all the books,
records, files and other data (or copies thereof) within the possession of the
Seller relating to the Acquired Assets and reasonably necessary for the
continued operation of the Business by the Buyer;
(xii) the Buyer shall (A) pay to the Seller Thirteen Million
Eight Hundred Thousand U.S. Dollars ($13,800,000) in cash by wire transfer of
immediately available funds into an account designated by the Seller; and (B)
deposit Five Hundred Thousand U.S. Dollars ($500,000) of the Purchase Price with
the escrow agent under and pursuant to the Escrow Agreement;
(xiii) subject to SECTION 1.6 hereof, the Seller shall deliver to
the Buyer, or otherwise put the Buyer in possession and control of, (A) all of
the Acquired Assets of a tangible nature free and clear of all Security
Interests; and (B) the original execution copies, if available or required by
applicable Laws, or copies of all of the Acquired Assets that are embodied in
writing;
(xiv) the Seller shall deliver (or cause to be delivered) to the
Buyer the following certificates, instruments and documents:
(A) all Third Party Consents listed on SCHEDULE 2.11(b) of
the Disclosure Schedule, other than Third Party Consents that are Deferred Items
subject to SECTION 1.6;
(B) releases of all Security Interests on the Acquired
Assets;
(C) a certificate dated as of a date not earlier than seven
(7) days prior to the date hereof as to the good standing of the Seller, and
evidence of payment of all Taxes by the Seller, in the State of Delaware and in
jurisdictions where the Business is conducted;
(D) a legal opinion from the Seller's General Counsel
attached hereto as EXHIBIT I;
(E) a certificate of the Secretary or another executive
officer of the Seller certifying as to the incumbency of officers, the adoption
of authorizing resolutions and other matters that are reasonably necessary in
connection with the Closing; and
(F) the Legal Permits required for the operation of the
Business, all of which shall have been validly transferred to Buyer, other than
Legal Permits that are Deferred Items subject to SECTION 1.6.
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(xv) the Parties shall have delivered to each other copies of all
registrations, filings and notices with or to Governmental Entities in
connection with the transactions contemplated hereby (the "GOVERNMENTAL
FILINGS"), all of which Governmental Filings are listed in SECTION 1.5(b)(xvii)
of the Disclosure Schedule, other than Governmental Filings that are Deferred
Items subject to SECTION 1.6.
(xvi) the Parties shall execute and deliver to each other a
cross-receipt evidencing the transactions referred to above.
The agreements and instruments referred to in clauses (iii) through (xvi) above
are referred to herein as the "ANCILLARY AGREEMENTS."
1.6 CONSENTS TO ASSIGNMENT. (a) Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign or
transfer any Contract, Material Contract, lease, authorization, license or Legal
Permit, or any claim, right or benefit arising thereunder or resulting therefrom
or to undertake to make a Governmental Filing, if an attempted assignment or
transfer thereof or an undertaking to make a filing, without the consent,
approval or acknowledgment of a third party thereto or of the issuing
Governmental Entity, as the case may be, would constitute a breach thereof.
SCHEDULE 1.6(a) of the Disclosure Schedule sets forth a list of all Contracts,
Material Contracts, leases, authorizations, licenses or Legal Permits to be
transferred to the Buyer pursuant to the transactions contemplated by this
Agreement (the "DEFERRED ITEMS") for which such a consent, approval,
acknowledgment or filing (a "DEFERRED CONSENT") has not been obtained or for
which an attempted assignment or transfer thereof would be ineffective or would
affect the rights thereunder so that the Buyer would not receive all of the
rights thereunder. The Parties hereto acknowledge and agree that, subject to
Section 1.6(b) hereof, each Deferred Item shall be withheld from sale pursuant
to this Agreement without any reduction in the Purchase Price.
(b) SCHEDULE 1.6(b) of the Disclosure Schedule sets forth a list of
certain of the Deferred Items, the Deferred Consents relating to which shall be
obtained by Seller and delivered to Buyer no later than thirty (30) days
following the Closing Date (the "SHORT TERM DEFERRED CONSENTS") and a list of
certain of the Deferred Items, the Deferred Consents relating to which shall be
obtained by Seller and delivered to Buyer no later than sixty (60) days
following the Closing Date (the "LONG TERM DEFERRED CONSENTS"). From and after
the Closing, the Seller and the Buyer will cooperate, in all reasonable
respects, to obtain the Short Term Deferred Consents and the Long Term Deferred
Consents within the time periods applicable thereto, provided that, except as
otherwise set forth herein, the Seller shall not be required to make any
payments or agree to any material undertakings in connection therewith. Until
the Short Term Deferred Consents and the Long Term Deferred Consents are
obtained, the Seller and the Buyer will cooperate, in all reasonable respects,
to provide to the Buyer the benefits under the applicable Deferred Item (with
the Buyer entitled to all the gains and responsible for all the losses, Taxes,
liabilities and/or obligations thereunder to the extent such losses, Taxes,
liabilities and/or obligations are not caused by the action or inaction of
Seller). In particular, the Buyer and the Seller shall provide (by entering into
oral or written arrangements, including, but not limited to, through subleasing
or subcontracting, if permitted) to the Parties the economic and operational
equivalent of obtaining the Short Term Deferred Consents and the Long Term
Deferred Consents and performance under the Bundled Contracts and assigning or
transferring
-15-
each such contract, lease, authorization, license or permit, including
enforcement for the benefit of the Buyer of all claims or rights arising
thereunder, and the performance by the Buyer of the obligations thereunder.
(c) The Parties acknowledge and agree that certain of the Deferred
Items consist of Contracts which relate to both products and/or services of the
Business acquired hereunder and products and/or services of other portions of
the Seller's business (the "BUNDLED CONTRACTS"), and such Bundled Contracts are
listed on SECTION 1.6(c) of the Disclosure Schedule. Notwithstanding that the
Bundled Contracts are classified as Retained Shared Assets hereunder, the intent
of the Parties is to cause such Bundled Contracts to be replicated or otherwise
severed such that the Buyer will obtain the rights and obligations pertaining to
the portion of the Bundled Contracts relating to the Business and the Seller
shall retain the rights and obligations of the Bundled Contracts relating to
matters other than the Business. In lieu of obtaining a Deferred Consent
relating to a Bundled Contract, each of the Seller and the Buyer shall have the
right to use its commercially reasonable efforts to obtain separate agreements
relating to the subject matter of the Bundled Contracts with the counterparties
thereto on substantially equivalent terms and conditions as the applicable terms
and conditions set forth in the Bundled Contract. In the event that the Parties
elect to negotiate separate agreements with the counterparties of one or more
Bundled Contracts, the Parties shall reasonably cooperate with each other in
coordinating and effecting such negotiations and shall use their commercially
reasonable efforts to have in place such separate contracts on or before the
date by which the Short Term Deferred Consent or the Long Term Deferred Consent,
as the case may be relating to such Bundled Contract, must have been obtained
pursuant to Section 1.6(b) hereof.
(d) The Seller shall promptly provide to the Buyer each Deferred
Consent received by the Seller, and the Deferred Item to which such Deferred
Consent relates shall be deemed to be transferred to the Buyer, without the
necessity of the execution or delivery of further instrument(s) of transfer, as
of the date such Deferred Consent is delivered to the Buyer.
(e) The Seller shall provide to the Buyer such information as the
Buyer shall reasonably request relating to (i) the status of the process of
obtaining the Deferred Consents, and (ii) the rights and responsibilities of
each party to a Deferred Item. Without limiting the generality of the foregoing,
the Seller shall provide to the Buyer, at such times and in such a manner as the
Buyer shall reasonably request, information relating to sales orders (including,
but not limited to, prices, quantities, shipment terms and times and payment
terms) applicable to Buyer pursuant to the Deferred Items. The Seller shall use
its best efforts to collect, for the benefit of the Buyer and on or before the
due date for payment thereunder, all remuneration due pursuant to the terms of a
Deferred Item. The Seller shall remit to the Buyer, within five (5) Business
Days of receipt by the Seller, the portion of such remuneration due to the Buyer
for the Business products and/or services provided by the Buyer pursuant to such
Deferred Item. Seller shall also remit to the Buyer, within five (5) Business
Days of demand therefor, payment for all losses, Taxes, liabilities and/or
obligations pursuant to a Deferred Item to the extent such losses, Taxes,
liabilities and/or obligations are caused by the action or inaction of Seller.
Any payment required to be made pursuant to this SECTION 1.6(e) shall be made by
wire transfer to an account designated by the Buyer to the Seller.
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1.7 FURTHER ASSURANCES. At any time and from time to time after the
Closing Date, as and when requested by any Party hereto and at such Party's
expense, the other Party or Parties shall promptly execute and deliver, or cause
to be executed and delivered, all such documents, instruments and certificates
and shall take, or cause to be taken, all such further or other actions as are
necessary to evidence and effectuate the transactions contemplated by this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that the statements
contained in this ARTICLE II are true and correct as of the date hereof, except
as set forth in the Disclosure Schedule provided by the Seller to the Buyer on
the date hereof (the "DISCLOSURE SCHEDULE"). The Disclosure Schedule shall be
arranged in sections and subsections corresponding to the numbered and lettered
sections and subsections contained in this ARTICLE II. With respect to any
representation, warranty or statement of the Seller in this Agreement that is
qualified by or to the Seller's knowledge, such knowledge ("KNOWLEDGE") shall be
deemed to exist if, at the time as of which such representation, warranty or
statement was made, (i) David Breiter, David Holly and Tom Hill had actual
knowledge after due inquiry of the fact or matter to which such qualification
applies (the "KNOWLEDGEABLE PERSONS"); or (ii) the Knowledgeable Persons could
be expected to discover or otherwise become aware of the fact or matter in the
ordinary course of business. For purposes of this Agreement, "BUSINESS MATERIAL
ADVERSE EFFECT" means any change, effect or circumstance that is materially
adverse to the business, financial condition or results of operations of the
Business (other than changes, effects or circumstances that are the result of
economic factors affecting the economy as a whole or that are the result of
factors generally affecting the industry or specific markets in which the
Business competes); PROVIDED, HOWEVER, that a Business Material Adverse Effect
shall not include any adverse change, effect or circumstance (i) arising out of
or resulting primarily from actions contemplated by the Parties in connection
with this Agreement or the Ancillary Agreements, or (ii) that is attributable to
the announcement or performance of this Agreement or the transactions
contemplated by this Agreement.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) SECTION 2.1(a) of the Disclosure Schedules contains a complete and
accurate list of Seller's jurisdiction of incorporation and other jurisdictions
in which the Business is conducted and qualified to do business.
(b) The Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to conduct business under the laws of each jurisdiction where the
Business is conducted, except where any such failure to be qualified would not
reasonably be expected to result in a Business Material Adverse Effect.
2.2 AUTHORITY. The Seller has all requisite power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which it is a party
and to perform its obligations hereunder and thereunder. The execution and
delivery by the Seller of this Agreement and such Ancillary Agreements and the
consummation by the Seller of the transactions contemplated
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hereby and thereby have been validly authorized by all necessary action on the
part of the Seller. This Agreement and such Ancillary Agreements are validly
executed and delivered by the Seller and, assuming this Agreement and each such
Ancillary Agreements constitute the valid and binding obligations of the Buyer,
constitute valid and binding obligations of the Seller, enforceable against the
Seller in accordance with their terms.
2.3 NONCONTRAVENTION. Except as set forth SECTION 2.3 of the on the
Disclosure Schedules, neither the execution and delivery by the Seller of this
Agreement or the Ancillary Agreements to which the Seller is a party, nor the
consummation by the Seller of the transactions contemplated hereby or thereby:
(a) conflict with or violate any provision of the organizational
documents of the Seller,
(b) require on the part of the Seller any filing with, or any permit,
authorization, consent or approval of, any Governmental Entity except for any
filing, permit, authorization, consent or approval that would not reasonably be
expected to result in a Business Material Adverse Effect;
(c) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of obligations under, create in any party the right to terminate or modify, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness or Security Interest (as defined
below) to which the Seller is a party or by which the Seller is bound or to
which any of the Acquired Assets are subject except for (i) any conflict,
breach, default, acceleration or right to terminate or modify that would not
reasonably be expected to result in a Business Material Adverse Effect or (ii)
any notice, consent or waiver the absence of which would not reasonably be
expected to result in a Business Material Adverse Effect; or
(d) violate any Laws or any other order, writ, injunction or decree
specifically naming, or statute, rule or regulation applicable to, the Business,
Acquired Assets or Assumed Liabilities or assets, except for any violation that
would not reasonably be expected to result in a Business Material Adverse
Effect.
For purposes of this Agreement, "SECURITY INTEREST" means any mortgage,
pledge, security interest, encumbrance, charge or other lien, whether arising by
contract or by operation of law, except for purchase money security interests
set forth in Section 2.3(d) of the Disclosure Schedule, which such purchase
money security interests shall be discharged by Seller, and written evidence of
such discharge and the recording thereof shall be provided to Buyer, within ten
(10) days of the Closing Date.
2.4 FINANCIAL STATEMENTS. SECTION 2.4 of the Disclosure Schedules includes
true, correct and complete copies of the unaudited Statement of Assets and
Liabilities of the Seller as of and for the period ended September 30, 2002 (the
"NET ASSETS STATEMENT"). The Net Assets Statement has been prepared in
accordance with the books and records of the Seller and, in accordance with
GAAP. Although the Net Assets Statement is not audited, presents fairly and
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accurately the financial position, assets and liabilities of the Business and
the results of its operations, and changes in its financial position, for the
period indicated.
2.5 ABSENCE OF CERTAIN CHANGES. Except as contemplated by this Agreement,
between September 30, 2002 and the date of this Agreement, there have not been
any changes in the financial condition or results of operations of the Business,
except for changes that would not reasonably be expected to result in a Business
Material Adverse Effect. Except as contemplated by this Agreement and except as
set forth on SECTION 2.5 of the Disclosure Schedule, since September 30, 2002,
the Seller has conducted the Business in the ordinary course consistent with
prior practice and has not taken any of the following actions (or permitted any
of the following events to occur) with respect to the Business:
(a) sold, assigned or transferred any portion of the assets used in or
useful to the Business in a single transaction or series of related transactions
in an amount in excess of $25,000, except in the ordinary course of business;
(b) granted or amended any rights to severance benefits, "stay pay" or
termination pay to any director, officer or other employee of the Business or
increased benefits payable or potentially payable to any such director, officer
or other employee of the Business under any previously existing severance
benefits, "stay-pay" or termination pay arrangements, in each case (i) except as
required by Law, (ii) except for grants or amendments that are substantially
consistent with the past practice of the Business, and (iii) except for
obligations that will not constitute an Assumed Liability;
(c) made any capital expenditures or commitments in an amount in
excess of $75,000, except in the ordinary course of business or in accordance
with the Business' capital budget included in SECTION 2.5(c) of the Disclosure
Schedule;
(d) acquired any operating business, whether by merger, stock purchase
or asset purchase, except for any such business which did not become part of the
Business;
(e) incurred or guaranteed any indebtedness for borrowed money, except
in the ordinary course of business;
(f) entered into any employment, compensation or deferred compensation
agreement (or any amendment to any such existing agreement) with any officer or
other employee of the Business whose annual base salary exceeds One Hundred
Fifty Thousand U.S. Dollars ($150,000), except in the ordinary course of
business;
(g) materially amended the terms of any existing Business Benefit Plan
(as defined in SECTION 2.14(a)), except as required by Law;
(h) materially changed its accounting principles, methods or
practices, except in each case to conform to changes in GAAP;
(i) entered into any contract or agreement relating exclusively to the
Business outside the ordinary course of business;
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(j) made any modification to any Material Contracts or Legal Permits;
(k) entered into or assumed any Material Contract relating to the
Business;
(l) allowed the levels of raw materials, supplies or other materials
included in the Inventories to vary materially from the levels customarily
maintained;
(m) subjected any of the Acquired Assets to any Security Interest; or
(n) entered into any agreement or commitment with respect to any of
the matters referred to in paragraphs (a) through (m) of this SECTION 2.5.
2.6 UNDISCLOSED LIABILITIES. To the Knowledge of the Seller, the Business
does not have any liability or obligation of a nature which is material to the
Business or which has or would have a Business Material Adverse Effect, except
for (a) liabilities shown on the Balance Sheet, (b) liabilities which have
arisen since September 30, 2002 in the ordinary course of business, (c)
contractual and other liabilities which are not required by GAAP to be reflected
on a balance sheet, and (d) the Excluded Liabilities.
2.7 TAX MATTERS.
(a) The Seller has filed or had filed on its behalf all Tax Returns
(as defined below) that it was required to file (separately or as part of a
consolidated, combined or unitary group) and all such Tax Returns were true,
correct and complete, except for any error or omission that would not reasonably
be expected to result in a Business Material Adverse Effect. The Seller has paid
(or had paid on its behalf) all Taxes (as defined below) that have become due
and payable for all periods covered by the Tax Returns and any interim payments
which may have been required under Law since the date of such Tax Returns,
except where the failure to make such payment would not reasonably be expected
to result in a Business Material Adverse Effect. To the Seller's Knowledge, no
Governmental Entity, located in a jurisdiction where the Seller does not file
Tax Returns, has claimed that the Business or Acquired Assets are subject to
taxation in such jurisdiction. No Taxes are currently under audit by any
Governmental Entity, and neither the IRS, nor any other Governmental Entity is
now asserting or, to the Knowledge of the Seller, threatening to assert against
the Seller any deficiency or claim for additional Taxes or any adjustment of
such Taxes. All Taxes that the Seller is or was required by Laws to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity, except for any such Taxes with
respect to which the failure to withhold, collect or pay would not have a
Business Material Adverse Effect. For purposes of this Agreement, "Taxes" means
all taxes, including, without limitation, income, gross receipts, ad valorem,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, social security charges and franchise taxes imposed by
the United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements, forms or other information
required to be supplied to a Governmental Entity responsible for the imposition
of Taxes in connection with Taxes.
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(b) There are no Security Interests on the Acquired Assets that have
arisen in connection with any failure to pay any Tax.
2.8 ACQUIRED ASSETS. The Seller has good and valid title to, a good and
valid leasehold interest in or a good and valid license or right to use, all of
the Acquired Assets, free and clear of all Security Interests. Except as set
forth on SECTION 2.8 OF the Disclosure Schedules, the Acquired Assets comprise
all assets required for the continued conduct of the Business by the Buyer after
the Closing in the manner the Business is now being conducted by the Seller and
has been conducted by the Seller in the twelve (12) month period preceding the
Closing Date. The Acquired Assets, taken as a whole, constitute all properties
and assets relating to or used or held for use in connection with the Business
during the past twelve (12) months (except for Inventories sold, cash disposed
of, or accounts receivable collected, expenses prepaid, contracts and agreements
fully performed, or properties or assets replaced, in each case in the ordinary
course of business, and except for the Excluded Assets). To the Knowledge of the
Seller, there are no facts or conditions affecting the Acquired Assets which
would, individually or in the aggregate, interfere with the use, occupancy or
operation thereof as currently used, occupied or operated, or their adequacy for
such use. The Acquired Assets, taken as a whole, are in good working order and
condition, subject to normal wear and tear and sufficient for the operation of
the Business in the same manner Seller has operated the Business during the
twelve (12) month period preceding the Closing Date.
2.9 REAL PROPERTY. Except as set forth on SECTION 2.9 of the Disclosure
Schedules, the Seller does not own or lease any real property.
2.10 INTELLECTUAL PROPERTY.
(a) SECTION 2.10(a) of the Disclosure Schedule sets forth a true,
correct and complete list of all Seller Intellectual Property that is (i) owned
by Seller (the "Owned Seller Intellectual Property"), and (ii) licensed or
otherwise made available for use to Seller by third parties (the "Licensed
Seller Intellectual Property").
(b) The Seller is the sole owner of all Owned Seller Intellectual
Property. Seller has a license or the right to use, pursuant to license,
sublicense, agreement or permission, all Licensed Seller Intellectual Property.
The Seller Intellectual Property is (i) free and clear of all Security
Interests, and (ii) except as set forth in SECTION 2.10(b) of the Disclosure
Schedules, not subject to any requirement of any past, present or future royalty
payments, license fees, charges or other payments or restrictions, except for
claims by third parties against licensors or vendors of Commercial Software (as
defined in SECTION 2.10(g)) to the Seller. Except as set forth on SECTION
2.10(b) of the Disclosure Schedules, the Seller Intellectual Property comprises
all of the Intellectual Property used, held for use or material to the Business.
Immediately after the Closing, the Buyer will own all Owned Seller Intellectual
Property, free from any Security Interest and on the same terms and conditions
as in effect prior to the Closing. Immediately after the Closing, the Buyer will
have a good and valid license, or the right to use all Licensed Seller
Intellectual Property, free from any Security Interest and on the same terms and
conditions as in effect prior to the Closing.
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(c) SECTION 2.10(c) of the Disclosure Schedules sets forth all
Contracts or written or oral agreements and arrangements relating to the Seller
Intellectual Property pursuant to which (i) the Seller has licensed, sublicensed
or otherwise granted the right of use of Seller Intellectual Property to third
parties, and (ii) the Seller has been granted a license or the right to use the
Licensed Seller Intellectual Property, including, but not limited to, license
arrangements and other contracts limiting the use of, any Licensed Seller
Intellectual Property upon the lapse of time, the giving of notice or the
occurrence of a contingency, except for the licenses for Commercial Software.
All of the agreements and arrangements set forth in SECTION 2.10(c) of the
Disclosure Schedule (i) are in full force and effect and enforceable in
accordance with their terms, and no default exists or is threatened thereunder
by the Seller, or, to the Knowledge of the Seller, by any other person or
entity, except where such default would not reasonably be likely to have a
Business Material Adverse Effect (ii) are free and clear of all Security
Interests, and (iii) do not contain any change in control or other terms or
conditions that will become applicable or inapplicable as a result of the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except where such terms or conditions would not reasonably
be likely to have a Business Material Adverse Effect. The Seller has delivered
to the Buyer true, correct and complete copies of all written Contracts,
licenses and arrangements (including amendments, supplements, waivers and other
modifications) set forth on SECTION 2.10(c) of the Disclosure Schedule and
written summaries of all oral agreements or arrangements set forth on SECTION
2.10(c) of the Disclosure Schedule. SECTION 2.10(c) sets forth a true, correct
and complete description of all royalties, license fees, charges and other
amounts payable by, on behalf of, to or for the account of the Seller in respect
of any Seller Intellectual Property.
(d) Except as set forth on SECTION 2.10(d) of the Disclosure Schedule,
to the Seller's Knowledge, the use of the Seller Intellectual Property in
connection with the Business does not infringe upon or otherwise conflict with
any intellectual property rights of any person or entity, except for claims by
third parties against licensors or vendors of Commercial Software to the Seller
that would not reasonably be expected to have a Business Material Adverse
Effect, and the Seller has no Knowledge of any such claim or any reasonable
basis upon which such a claim could be made. To the Seller's Knowledge, the
Seller Intellectual Property is not being infringed and is not being used or
available for use by any person or entity without a license or permission from
the Seller.
(e) Except as set forth in SECTION 2.10(e) of the Disclosure Schedule,
no claim or demand of any person or entity has been made against the Seller or,
to the Knowledge of the Seller, threatened, nor is there any litigation that is
pending or threatened that (i) challenges the rights of the Seller in respect of
any Seller Intellectual Property, (ii) asserts that the Seller Intellectual
Property is infringing or otherwise in conflict with any intellectual property
or related right of any third party, (iii) claims that any default exists under
any agreement or arrangement related to the Seller Intellectual Property set
forth on SECTION 2.10(c) of the Disclosure Schedules or (iv) asserts that the
Seller is required to pay any royalty, license fee, charge or other amount with
regard to any Seller Intellectual Property, in each case except for claims or
demands that, individually or in the aggregate, would not reasonably be likely
to have a Business Material Adverse Effect. To the Knowledge of the Seller, none
of the Seller Intellectual Property is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, tribunal, arbitrator or
other Governmental Entity.
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(f) The Seller has the necessary number of valid licenses to all
software that is utilized by the Business and that is not owned by the Seller
("COMMERCIAL SOFTWARE"), and the use by the Seller of such Commercial Software,
including, without limitation, all modifications and enhancements thereto
(whether created by the Seller or by a Third Party), is in compliance with the
terms and provisions of such licenses, other than minor noncompliance that could
not, individually or in the aggregate, reasonably be expected to have a Business
Material Adverse Effect. SECTION 2.10(f) of the Disclosure Schedule sets forth a
full and complete list of all Commercial Software utilized by the Seller in
connection with the conduct of the Business except for mass marketed,
"shrinkwrap" software having a retail price of less than One Thousand Dollars
($1,000) per copy.
(g) Except as set forth in SECTION 2.10(g) of the Disclosure Schedule,
there are, and immediately after the Closing will be, no contractual
restrictions or limitations pursuant to any orders, decisions, injunctions,
judgments, awards or decrees of any Governmental Entity on the Buyer's right to
use the name and mark "Cheetah" or "NetMentor" in the conduct of the Business as
presently carried on by the Seller or as such Business may be extended by the
Buyer. No parent, subsidiary or affiliate of the Seller is engaged directly or
indirectly in any business under the name and mark "Cheetah" (or other name and
mark confusingly similar thereto).
(h) Except for general purpose code, no portion of the source or
object code comprising the NetMentor software is contained in the source or
object code of any of the Excluded Assets or Retained Shared Assets, including,
but not limited to, Seller's Vision 360 product. For purposes of this provision,
"general purpose code" means source or object code that consists of reusable,
nonproprietary programming components which, individually or in the aggregate,
(i) constitute only a minimal portion of the source or object code of NetMentor,
(ii) do not provide or constitute the unique functionality of the program(s) in
which they are used, and (iii) have no commercial value.
2.11 CONTRACTS.
(a) SECTION 2.11 of the Disclosure Schedule lists all Contracts
relating to Business within the categories below, by which the Business or any
of the Acquired Assets are bound or affected or to which the Seller, any
predecessor-in-interest of Seller or any Affiliate of Seller (individually, a
"SELLER CONTRACTING PARTY," and collectively, the "SELLER CONTRACTING PARTIES")
is a party or by which any Seller Contracting Party is bound in connection with
the Business or the Acquired Assets (excluding any Contracts relating to
Excluded Assets or Excluded Liabilities) (the "MATERIAL CONTRACTS"):
(i) any Contract (or group of related Contracts with the same party)
for the lease of personal property from or to third parties providing for lease
payments the remaining unpaid balance of which is in excess of Twenty-Five
Thousand U.S. Dollars ($25,000) or over the last twelve (12) months has involved
the aggregate or contingent payment by the Seller in excess of One Hundred
Thousand U.S. Dollars ($100,000);
(ii) any Contract (or group of related Contracts with the same party)
for the purchase of products or services under which the undelivered balance of
such products and services is in excess of Twenty-Five Thousand U.S. Dollars
($25,000) or over the last
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twenty-four (24) months has involved the aggregate payment or contingent payment
by the Seller in excess of Twenty-Five Thousand U.S. Dollars ($100,000);
(iii) any Contract (or group of related Contracts with the same party)
which involves a payment to be made to a Seller Contracting Party in excess of
Twenty Five Thousand U.S. Dollars ($25,000), or over the last twenty-four (24)
months has involved, the aggregate payment or potential payment to a Seller
Contracting Party in excess of One Hundred Thousand U.S. Dollars ($100,000),
either pursuant to a Contract with a customer of the Business or pursuant to any
other Contract for the sale of goods and services outside of the ordinary course
of business;
(iv) leases, asset purchase agreements or other acquisition or
divestiture Contracts, including, but not limited to, any Contracts relating to
the sale, lease or disposal of any Acquired Assets and Contracts involving
continuing indemnity or other obligations;
(v) any Contract establishing a partnership, joint venture or similar
arrangement for sharing profits or expenses (including, but not limited to, any
joint research and development and joint marketing Contracts);
(vi) any Contract (or group of related Contracts with the same party)
under which a Seller Contracting Party has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness the
outstanding balance of which is more than Fifty Thousand U.S. Dollars ($50,000)
or under which a Seller Contracting Party has imposed a Security Interest on any
of its assets, tangible or intangible, relating to the Business;
(vii) any Contract (A) that prohibits the Business from freely
engaging in business anywhere in the world, and (B) that would reasonably be
expected to result in a Business Material Adverse Effect;
(viii) (A) any Contract with a Potential Employee (as defined in
SECTION 4.2(a)) providing annual base compensation at a rate in excess of
Seventy-Five Thousand U.S. Dollars ($75,000); and (B) other Contracts
memorializing employment, consulting, agency or collective bargaining
arrangements or Contracts with any current or former unaffiliated sales
representative, manufacturer's representative, contract manufacturer,
distributor, dealer, agent, independent contractor, consultant, parent,
subsidiary or affiliate of the Seller involving Twenty-Five Thousand U.S.
Dollars ($25,000) or more;
(ix) any severance, "stay pay" or termination Contract with a
Potential Employee of the Business;
(x) licenses, licensing arrangements and other Contracts providing in
whole or in part for the use of, or limiting the use of, any Seller Intellectual
Property other than readily available Commercial Software;
(xi) capitalized lease or sale leaseback or conditional sale
Contracts;
(xii) Contracts not in the ordinary course of business; and
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(xiii) any other Contracts that are material to the Business.
PROVIDED, HOWEVER, that no Contract referred to in paragraphs (i) through (xiii)
above need be disclosed unless the applicable Seller Contracting Party currently
has, or may in the future have, any rights or obligations thereunder (including,
without limitation, any indemnification rights).
(b) The Seller has made available to the Buyer a true, correct and
complete copy of each Material Contract listed in SECTION 2.11 of the Disclosure
Schedule, together with all amendments or supplements thereto, and accurate
descriptions of all material terms of all oral Material Contracts. All Material
Contracts are in full force and effect and enforceable by the applicable Seller
Contracting Party in accordance with their terms. None of the Seller Contracting
Parties and, to Seller's Knowledge, no other party to any Material Contract has
breached or defaulted thereunder, and no event has occurred that, with notice or
lapse of time, would constitute a breach or default under any Material Contract,
except for a breach or default that would not reasonably be expected to have a
Business Material Adverse Effect. Except as provided for in SECTION 1.6 of this
Agreement and as set forth in SECTION 2.11(b) of the Disclosure Schedule, no
permit, consent, approval, waiver, agreement, license or notice to, from or of
any third party, including but not limited to, Governmental Entities ("THIRD
PARTY CONSENTS") is required under any Material Contract as a result of or in
connection with, and the enforceability of any Material Contract will not be
affected in any manner by, the execution, delivery and performance of this
Agreement or any of the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby.
2.12 LITIGATION. Except as set forth on SECTION 2.12 of the Disclosure
Schedules, there is no action, claim, demand, suit, proceeding, arbitration or
investigation pending or, to the Knowledge of the Seller, threatened against or
relating to the Seller, in connection with the Acquired Assets or the Business
(or against any Active Employee) (each, a "LAWSUIT"), except for any Lawsuit
that, if resolved adversely to the Seller, would not reasonably be expected to
have a Business Material Adverse Effect.
2.13 EMPLOYMENT MATTERS.
(a) Each Potential Employee (as defined in SECTION 4.1) whose annual
rate of compensation exceeds One Hundred Thousand U.S. Dollars ($100,000) per
year has entered into a confidentiality agreement with the Seller. SECTION
2.13(a) of the Disclosure Schedules contains a list of all Potential Employees
who are a party to a non-competition agreement with the Seller. Copies of the
form of such non-competition agreements have previously been delivered to the
Buyer, and the versions of such non-competition agreements executed by the
Potential Employees listed on SCHEDULE 2.13(a) conform in all material respects
to the form of non-competition agreement previously provided to the Buyer.
(b) The Seller is not a party to or bound by any collective bargaining
agreement relating to the Business, nor has the Seller, with respect to the
Business, experienced, since January 1, 2001, any material strikes, grievances,
claims of unfair labor practices, union organizing campaigns or other collective
bargaining disputes.
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2.14 EMPLOYEE BENEFITS.
(a) SECTION 2.14(a) of the Disclosure Schedules contains a complete
and accurate list of all Employee Benefit Plans (as defined below) maintained,
or contributed to, with respect to the Business by the Seller or any ERISA
Affiliate (as defined below) for the benefit of the Business Employees (and
their beneficiaries) that are material to the Business (the "BUSINESS BENEFIT
PLANS"). For purposes of this Agreement, "EMPLOYEE BENEFIT PLAN" means (i) any
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) other than a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a
"MULTIEMPLOYER PLAN"), (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), and (iii) to the extent applicable to more than one (1)
employee, any other written or oral plan, agreement or arrangement involving
compensation, including, without limitation, insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation, or fringe benefits, but excluding
any Employee Benefit Plan required to be maintained or contributed to under
foreign Law. For purposes of this Agreement, "ERISA AFFILIATE" means any entity
which is a member of (i) a controlled group of corporations (as defined in
Section 414(b) of the Internal Revenue Code of 1986, as amended (the "CODE")),
(ii) a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (iii) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of the Code),
any of which includes the Seller. Complete and accurate copies of all Business
Benefit Plans and all material related trust agreements, insurance contracts and
summary plan descriptions have been made available to the Buyer.
(b) The Business Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Business Benefit Plans are qualified and
the plans and the trusts related thereto are exempt from federal income Taxes
under Sections 401(a) and 501(a), respectively, of the Code, or the period for
obtaining such a determination letter has not yet closed.
(c) Neither the Seller nor any ERISA Affiliate, with respect to the
Business, has ever maintained or been required to contribute to any Employee
Benefit Plan subject to Title IV of ERISA or to any Multiemployer Plan.
(d) No act or omission has occurred and no condition exists with
respect to any Business Benefit Plan maintained by the Seller, any of its
Affiliates or any ERISA Affiliate that would subject the Seller or the Buyer to
any fine, penalty, Tax or liability of any kind imposed under ERISA or the Code
(other than liabilities for benefits accrued under Business Benefit Plans for
Business Employees and their beneficiaries), except for any fine, penalty, Tax
or liability that would not reasonably be expected to result in a Business
Material Adverse Effect.
(e) Except as would not reasonably be expected to result in a Business
Material Adverse Effect, there are no unfunded obligations under any Business
Benefit Plan providing welfare benefits after termination of employment to any
Business Employee (or to any
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beneficiary of any such employee), excluding continuation of health coverage
required to be continued under Section 4980B of the Code or other similar
applicable Laws.
2.15 LEGAL COMPLIANCE. The Seller (with respect to the Business) is in
compliance with all applicable Laws currently in effect with respect to the
Business and the Acquired Assets, except where non-compliance with such Laws
would not reasonably be expected to have a Material Adverse Effect. The Seller
has not received written notice of any pending action, suit, proceeding,
hearing, investigation, claim, demand or notice relating to the Business
alleging any failure to so comply.
2.16 PERMITS. SECTION 2.16 of the Disclosure Schedules lists all Legal
Permits relating to the Business. To the Knowledge of the Seller, (a) each Legal
Permit listed in the Disclosure Schedule is in full force and effect and the
Seller is not in violation of or default under any Legal Permit, and (b) no
suspension or cancellation of any such Legal Permit has been threatened in
writing.
2.17 BUSINESS RELATIONSHIPS WITH AFFILIATES. SECTION 2.17 of the Disclosure
Schedules lists any agreements with respect to the Business whereby any
Affiliate (as hereinafter defined), other than the Seller, directly or
indirectly (a) owns any property or right, tangible or intangible, which is used
in and material to the Business, (b) has any material claim or cause of action
against the Business, or (c) owes any money to, or is owed any money by, the
Business. For purposes of this SECTION 2.17, the term "AFFILIATE" shall have the
meaning assigned to it in Rule 12b-2 of the Securities Exchange Act of 1934.
2.18 BROKERS' FEES. The Seller does not have any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement (other than Casas, Benjamin & White,
LLC, whose fees and expenses shall be paid by the Seller) that would constitute
an Assumed Liability.
2.19 INSURANCE. SECTION 2.19 of the Disclosure Schedules lists each
material insurance policy (including, but not limited to, fire, theft, casualty,
comprehensive general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) relating primarily or exclusively to the Business to which
the Seller is a party, all of which are in full force and effect. To the
Knowledge of the Seller, there is no claim pending under any such policy as to
which coverage has been questioned, denied or disputed by the underwriter of
such policy, and the Seller is otherwise in compliance in all material respects
with the terms of such policies. The Seller has not received written notice of
any actual or threatened termination of any such policy.
2.20 NO MATERIAL ADVERSE CHANGE. Since the date of the Net Assets
Statement, there has not been a Business Material Adverse Effect, and, to
Seller's Knowledge, no fact or circumstance exists that may result in such a
Business Material Adverse Effect.
2.21 INVENTORIES. All Inventories reflected in the Net Assets Statement
have been recorded in accordance with GAAP, applied on a consistent basis. The
Inventory, taken as a whole, consists of a quality and quantity consistent with
Seller's Inventory levels during the twelve (12) month period preceding the
Closing and all items of Inventory are in good working
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order and condition, are saleable in the ordinary course of business, except for
obsolete and below-standard Inventory not in excess of that occurring in the
ordinary course of business and all of which has been written off or down to
fair market value. No write-down in Inventories has been made during the past
twelve (12) months the reserve for which is not reflected on the Net Assets
Statement.
2.22 CUSTOMERS AND SUPPLIERS.
(a) SECTION 2.22(a) of the Disclosure Schedule identifies the names
and addresses of the twenty (20) largest Business customers of the Seller based
on the aggregate value of goods and services ordered from the Seller by such
customers during the twelve (12) month period ended November 15, 2002. Except as
set forth on the Disclosure Schedule, to the Knowledge of the Seller, since
November 15, 2002, no Business customer listed on SCHEDULE 2.22(a) of the
Disclosure Schedule has ceased or reduced substantially its business with the
Seller and Seller has received no written or oral notice from a Business
customer listed on SECTION 2.22(a) of the Disclosure Schedule of: (i)
termination or an intention to terminate the relationship with the Business; or
(ii) a substantial reduction of, or an intention to substantially reduce, its
business with the Seller.
(b) SECTION 2.22(b) of the Disclosure Schedule identifies the names
and addresses of the twenty (20) largest Business suppliers to the Seller based
on the aggregate value of raw materials, supplies, merchandise and other goods
and services ordered by the Seller from such suppliers during the twelve (12)
month period ended November 15, 2002. Except as set forth on the Disclosure
Schedule, to the Knowledge of the Seller, since November 15, 2002, Seller has
received no oral or written notice from a Business supplier list on SCHEDULE
2.22(b) of the Disclosure Schedule indicating that it will not, or has an
intention to not, sell raw materials, supplies, merchandise and other goods or
services to the Business at any time after the Closing Date on terms and
conditions substantially similar to those used in its current sales to the
Seller, subject to general and customary price increases.
2.23 BACKLOG. Seller represents that, to its Knowledge, the attached
SCHEDULE 2.23, showing orders that are placed but unshipped (placed but
unshipped orders herein defined as the "Backlog") is accurate in all material
respects. All Backlog is subject to cancellation by the purchaser at any time
prior to shipment. Except as specifically otherwise provided in SECTION 5.10,
Seller makes no representation regarding the intent of any purchaser to cancel,
delay or otherwise change any Backlog, or any of the terms or conditions
thereof. The Seller further represents that, to its Knowledge, either (i) Seller
currently has the Inventory to fill the Backlog or, alternatively, (ii) assuming
the Seller's vendors fulfill their obligations to Seller, Seller will have
available sufficient Inventory to fill the Backlog.
2.24 WARRANTIES. SCHEDULE 1.1(c)(vii) contains a true, correct and complete
list of the Warranty Obligations, including (i) the standard terms and
conditions for each of the products or services of the Business; (ii) the person
or entity to which each of the Warranty Obligations apply; (iii) the products or
services to which the Warranty Obligations apply; (iv) the remaining duration of
the Warranty Obligations; (v) whether the Warranty Obligations are embodied in a
stand-alone contract or in the Seller's standard terms and conditions; and (vi)
whether and how the Warranty Obligations deviate from the Seller's standard
terms and conditions. Except as
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required by Law or as provided for in the Contracts set forth on the Disclosure
Schedule, no product manufactured, sold, or delivered by, or service rendered by
or on behalf of, the Business is subject to any Warranty Obligations that
provide for special, punitive, consequential or other indirect damages or
awards. Except as set forth on SECTION 2.24 of the Disclosure Schedule, there
are no pending or, to the Knowledge of the Seller, threatened claims with
respect to any such Warranty Obligations.
2.25 PRODUCT LIABILITY. Except for the Warranty Obligations and except as
set forth on the SECTION 2.25 of Disclosure Schedule, to the best of its
Knowledge, Seller has no liability or obligation arising out of any injury to
individuals or property, whether based on strict liability, negligence, breach
of warranty (express or implied), breach of contract or otherwise as a result of
the ownership, possession, or use of any product or component designed,
manufactured, sold, leased, or delivered in connection with the Business.
2.26 NO FRAUDULENT INTENT. Seller represents and warrants that neither the
execution and delivery of this Agreement, nor the performance of any actions
required hereunder or described herein is being consummated by Seller with or as
a result of any actual intent to defraud any entity to which Seller is now or
will hereafter become indebted.
2.27 DISCLOSURE. No representation or warranty by or on behalf of the
Seller contained in this Agreement nor any of the statements or certificates
furnished at the Closing by or on behalf of the Seller to the Buyer or its
representatives in connection herewith or pursuant hereto contains any untrue
statement of a material fact, or omits any material fact required to make the
statements contained herein or therein in light of the circumstances, not
misleading. There is no material fact (other than matters of a general economic
or political nature which do not affect the Business uniquely) known to the
Seller that has not been disclosed in writing by the Seller to the Buyer that
might reasonably be expected to have or result in a Business Material Adverse
Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this ARTICLE III are true and correct as of the date hereof. With
respect to any representation, warranty or statement of the Buyer in this
Agreement that is qualified by or to the Buyer's knowledge, such knowledge shall
be deemed to exist if, at the time as of which such representation, warranty or
statement was made, (i) Sara Antol is actually aware of the fact or matter to
which such qualification applies; or (ii) the Buyer, or any of its officers,
directors or employees could be expected to discover or otherwise become aware
of the fact or matter in the ordinary course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or
warranty contained in this Agreement.
3.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
3.2 AUTHORITY. The Buyer has all requisite corporate power and authority
to execute and deliver this Agreement and the Ancillary Agreements to which it
is a party and to perform its obligations hereunder and thereunder. The
execution and delivery by the Buyer of this
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Agreement and such Ancillary Agreements and the consummation by the Buyer of the
transactions contemplated hereby and thereby have been validly authorized by all
necessary corporate action on the part of the Buyer. This Agreement, and such
Ancillary Agreements are validly executed and delivered by the Buyer and,
assuming this Agreement and each such Ancillary Agreement constitute the valid
and binding obligation of the Seller, constitute valid and binding obligations
of the Buyer, enforceable against the Buyer in accordance with their terms.
3.3 NONCONTRAVENTION. Neither the execution and delivery by the Buyer of
this Agreement or the Ancillary Agreements to which the Buyer is a party, nor
the consummation by the Buyer of the transactions contemplated hereby or
thereby:
(a) conflict with or violate any provision of the charter or bylaws of
the Buyer or any resolution adopted by the board of directors or the
shareholders of the Buyer;
(b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity;
(c) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of obligations under, create in any party any right to terminate or modify, or
require any notice, consent or waiver under, any contract or agreement to which
the Buyer is a party or by which the Buyer is bound; or
(d) violate any order, writ, injunction or decree specifically naming,
or statute, rule or regulation applicable to, the Buyer or any of its properties
or assets.
3.4 LITIGATION. There are no actions, suits, claims or legal,
administrative or arbitration proceedings pending against, or, to the Buyer's
knowledge, threatened against, the Buyer which would adversely affect the
Buyer's performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
3.5 FINANCING. The Buyer has and, on and after the Closing will have,
sufficient sources of financing in order to consummate the transactions
contemplated by this Agreement and to fulfill all of its obligations hereunder
including but not limited to payment of the Purchase Price at Closing and
payment of the Earn Out Payment to Seller.
3.6 SOLVENCY. Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer or any of its affiliates in order to effect the transactions
contemplated by this Agreement, the Buyer shall be able to pay its debts as they
become due and shall own property having a fair saleable value greater than the
amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities). Immediately after giving effect to the
transactions contemplated by this Agreement and the closing of any financing to
be obtained by the Buyer or any of its affiliates in order to effect the
transactions contemplated by this Agreement, the Buyer shall have adequate
capital to carry on its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions
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contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer in order to effect the transactions contemplated by this Agreement
with the intent to hinder, delay or defraud either present or future creditors
of the Buyer or the Seller.
3.7 DUE DILIGENCE BY THE BUYER. The Buyer acknowledges that it has
conducted to its satisfaction an independent investigation of the financial
condition, results of operations, assets, liabilities, properties and projected
operations of the Business and, in making its determination to proceed with the
transactions contemplated by this Agreement, the Buyer has relied solely on the
results of its own independent investigation and the representations and
warranties of the Seller set forth in ARTICLE II, including the Disclosure
Schedule and other Schedules hereto. Such representations and warranties by the
Seller constitute the sole and exclusive representations and warranties of the
Seller to the Buyer in connection with the transactions contemplated hereby, and
the Buyer acknowledges and agrees that the Seller is not making any
representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including any implied warranty as to
condition, merchantability, or suitability as to any of the assets of the
Business and it is understood that the Buyer takes the Acquired Assets and the
Business as is and where is (subject to the benefit of the representations
warranties set forth in this Agreement). The Buyer further acknowledges and
agrees that any cost estimates, projections or other predictions that may have
been provided to the Buyer or any of its employees, agents or representatives
are not representations or warranties of the Seller or any of its parents,
subsidiaries or affiliates.
3.8 BROKERS' FEES. The Buyer does not have any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement (other than Parker/Hunter
Incorporated, whose fees and expenses shall be paid by the Buyer).
ARTICLE IV
EMPLOYEES AND EMPLOYEE BENEFITS
4.1 DEFINITION OF ACTIVE EMPLOYEES. For the purpose of this Agreement, the
term "Active Employees" shall mean all employees employed on the Closing Date by
the Seller in the Business as currently conducted, including employees on a
leave of absence, including, but not limited to, family and medical leave,
military leave, short-term or long-term disability or sick leave or other leave.
All Active Employees are listed on SECTION 4.1 of the Disclosure Schedules,
along with their position, their annual rate of compensation and their status.
4.2 EMPLOYMENT OF ACTIVE EMPLOYEES BY THE BUYER.
(a) The Buyer shall have the right, but not the obligation, to extend
offers of employment to those Active Employees that Buyer deems, in its sole
discretion, essential to the operation of the Business. SECTION 4.2 of the
Disclosure Schedules contains a list of Active Employees to whom the Buyer
anticipates it will make an offer of employment that will be effective on or
after the Closing Date (the "POTENTIAL EMPLOYEES"); provided however, that
nothing in this Agreement or otherwise shall obligate Buyer to make offers of
employment to, or to actually employ, the Potential Employees. An Active
Employee or a Potential Employee who accepts employment with the Buyer shall
sometimes be referred to herein as a "Hired
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Employee". Effective immediately prior to the Closing Date, the Seller shall
terminate the employment of each such Potential Employee, and Seller shall
terminate the employment of each Active Employee who becomes a Hired Employee
following the Closing Date, such termination to be effective immediately prior
to such Active Employee becoming a Hired Employee. Seller hereby releases all
Potential Employees from, and Seller covenants and agrees that it will not
enforce or seek to enforce, any noncompetition agreements any Potential
Employees have entered into with Seller.
(b) It is understood and agreed that employment offered by the Buyer
to the Potential Employees will be "at will" and may be terminated by the Buyer
or by the Hired Employee at any time for any reason (subject to any written
commitments to the contrary made by the Buyer and an employee and Laws). Nothing
in this Agreement shall be deemed to prevent or restrict in any way the right of
the Buyer to terminate, reassign, promote or demote any of the Hired Employees
after the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such Hired Employees.
4.3 EMPLOYEE RELATED OBLIGATIONS AND LIABILITIES.
(a) The Seller shall retain and be solely and exclusively responsible
for the performance and discharge of all employment-related obligations and
liabilities (including but not limited to, workers' compensation and
occupational disease benefits, salaries, wages, bonuses, vacation days, leave
time, health and welfare benefits, including retiree medical benefits,
compliance with COBRA and all Laws concerning health and safety requirements,
employment and employment practices, and wages and hours) relating to (i) the
Active Employees who do not become Hired Employees and (ii) the Hired Employees,
but only to the extent such obligations and liabilities arise out of employment
with the Seller and are attributable solely and exclusively to any period on or
before the Closing Date (collectively, the "SELLER EMPLOYEE OBLIGATIONS"). The
manner in which Seller performs and discharges the Seller Employee Obligations
shall be within Seller's sole discretion. After the Closing Date, the Buyer
shall be solely and exclusively responsible for the performance and discharge of
all employment-related obligations and liabilities relating to the Hired
Employees but only to the extent that such obligations and liabilities arise out
of employment with the Buyer and are attributable solely and exclusively to any
period following the Closing Date (collectively, the "BUYER EMPLOYEE
OBLIGATIONS"). The manner in which Buyer performs and discharges the Buyer
Employee Obligations shall be within Buyer's sole discretion.
(b) Except as otherwise provided in this ARTICLE IV or as otherwise
required by applicable Law, each Hired Employee shall cease to participate in or
accrue further benefits under the Business Benefit Plans at the later of
immediately prior to the Closing or the time such Hired Employee becomes an
employee of Buyer. Buyer will recognize the prior service of any Hired Employees
(as recognized by the Seller) as if such service had been with the Buyer only
for the purposes of (i) eligibility for participation and vesting under Buyer's
401(k) plan, and (ii) eligibility for participation in Buyer's medical, dental
insurance and other welfare plans currently offered by the Buyer. The Seller
shall be liable for any claims made or incurred by Active Employees and their
beneficiaries (including the Hired Employees and their beneficiaries) under the
Business Benefit Plans, and Buyer shall have no obligation therefor or
thereunder.
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4.4 NO TRANSFER OF ASSETS. The Seller will not make any transfer of
pension or other employee benefit plan assets to the Buyer.
4.5 COLLECTIVE BARGAINING MATTERS. The Buyer will set its own initial
terms and conditions of employment for the Potential Employees and others it may
hire, including, but not limited to, work rules, benefits and salary and wage
structure, all as permitted by Law. The Buyer is not obligated to assume, and
Buyer shall not assume, any collective bargaining agreements under this
Agreement. The Seller shall be solely liable for any severance payment required
to be made to its employees due to the transactions contemplated by this
Agreement.
4.6 GENERAL EMPLOYEE PROVISIONS.
(a) The Seller and the Buyer have provided or shall provide to each
other with such plan documents and summary plan descriptions, employee data or
other information as may be reasonably required to carry out the arrangements
described in this ARTICLE IV.
(b) The Buyer shall not have any responsibility, liability or
obligation, whether to Active Employees, former employees, their beneficiaries
or to any other person or entity, with respect to any employee benefit plans,
practices, programs or arrangements (including the establishment, operation or
termination thereof and the notification and provision of the Consolidated
Omnibus Budget Reconciliation Act of 1986 coverage extension) maintained by the
Seller or its Affiliates, including, but not limited to, the Business Benefit
Plans, and Seller shall be solely and exclusively responsible for the same,
including any termination thereof or withdrawal liability.
(c) The Seller shall comply with any and all obligations arising
under the WARN Act relating to the termination of the Hired Employees, including
any such obligations that may be triggered by the transactions contemplated by
this Agreement.
ARTICLE V
OTHER POST-CLOSING COVENANTS
5.1 ACCESS TO INFORMATION; RECORD RETENTION; COOPERATION.
(a) ACCESS TO INFORMATION. Subject to compliance with contractual
obligations and applicable Laws regarding classified information and security
clearance, following the Closing, each Party shall afford to each other Party
and to such Party's authorized accountants, counsel and other designated
representatives, during normal business hours, in a manner so as to not
unreasonably interfere with the conduct of business, (i) reasonable access and
duplicating rights to all non-privileged records, books, contracts, instruments,
documents, correspondence, computer data and other data and information
(collectively, "INFORMATION") within the possession or control of such Party
relating to the Business, and (ii) reasonable access to the personnel of such
Party. Requests may be made under this SECTION 5.1(a) for financial reporting
and accounting matters, preparing financial statements, preparing and filing of
any Tax Returns, prosecuting any claims for refund, defending any Tax claims or
assessment, preparing securities law or securities exchange filings,
prosecuting, defending or settling any litigation or insurance
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claim, performing obligations under this Agreement and the Ancillary Agreements,
and all other proper business purposes.
(b) PREPARATION OF THE SELLER FINANCIAL STATEMENTS. Without limitation
of the provisions of Section 5.1(a), following the Closing, the Buyer shall
provide to the Seller all information relating to the Business reasonably
required for the Seller to prepare the financial statements of the Seller and
its Affiliates. In connection with the preparation of such financial statements,
the Buyer shall provide the Seller (and its auditors) with reasonable access to
the Business, its financial management and any accountant's work papers, and all
financial books, accounts and records relating to the Business. On or before
April 7, 2003, the Seller shall deliver to the Buyer drafts of such financial
statements (audited or otherwise) that the Seller and the Buyer, in consultation
with their respective audit teams at PricewaterhouseCoopers, determine are
necessary to enable the Buyer to fully and promptly comply with its reporting
obligations under the federal securities laws, and the final versions of such
financial statements shall be delivered to the Buyer on or before April 14,
2003. The parties acknowledge and agree that such financial statements shall
include the following: (i) audited Statements of Assets Acquired and Liabilities
Assumed of the Business and the Statements of Net Sales, Cost of Sales and
Direct Operating Expenses of the Business as of and for the fiscal years ending
March 31, 2001 and March 31, 2002; (ii) an unaudited Statement of Assets
Acquired and Liabilities Assumed as of December 31, 2002; and (iii) Statements
of Net Sales, Cost of Sales, and Direct Operating Expenses of the Business for
the six month ended December 31, 2002 (unaudited) and the comparable period
ended December 31, 2001 (unaudited). All of the above shall be prepared in
accordance with GAAP and with the books and records of the Seller, and shall
present fairly the financial position, assets and liabilities of the Business
and the results of its operations, and changes in its financial position, for
the period indicated. The fees necessary to prepare and deliver the above
financial statements (including, without limitation, the fees of
PricewaterhouseCoopers) incurred pursuant to this Section 5.1(b) shall be borne
equally by the Buyer and the Seller.
(c) REIMBURSEMENT. A Party making Information or personnel available
to another Party under SECTION 5.1 shall be entitled to receive from such other
Party, upon the presentation of invoices therefor, payments for such reasonable
amounts relating to supplies, disbursements and other out-of-pocket expenses, as
may reasonably be incurred in making such Information or personnel available;
PROVIDED, HOWEVER, that no such reimbursements shall be required for the salary
or cost of fringe benefits or similar expenses pertaining to employees of the
providing Party.
(d) RETENTION OF RECORDS. Except as may otherwise be required by Law
or agreed to in writing by the Parties, each Party shall use reasonable
commercial efforts to preserve, until four (4) years after the Closing Date, all
Information in its possession or control pertaining to the Business prior to the
Closing. Notwithstanding the foregoing, in lieu of retaining any specific
Information, any Party may offer in writing to the other Party or Parties to
deliver such Information to the other Party or Parties, and if such offer is not
accepted within ninety (90) days of the giving thereof, the offered Information
may be disposed of at any time.
(e) CONFIDENTIALITY. Each Party shall hold, and shall use reasonable
commercial efforts to cause their respective parents, subsidiaries and
affiliates, consultants and advisors to
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hold, in strict confidence all Information concerning the other furnished to it
by the other Party or Parties or their representatives pursuant to this SECTION
5.1 (except to the extent that such Information (i) is or becomes generally
available to the public other than as a result of any action or inaction by the
receiving Party, (ii) was within the possession of the receiving Party prior to
it being furnished to the receiving Party by or on behalf of the disclosing
Party pursuant hereto, provided that the source of such information was not
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to any person or entity with respect to
such information, or (iii) is or becomes available on a non-confidential basis
to the receiving Party from a source other than the disclosing Party, provided
that the source of such information was not bound by a confidentiality agreement
with or other contractual, legal or fiduciary obligation of confidentiality to
any person or entity with respect to such Information), and each Party shall not
release or disclose such Information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors,
unless compelled to disclose such Information by judicial or administrative
process or by other requirements of Law or so as not to violate the rules of any
stock exchange; PROVIDED, HOWEVER, that in the case of disclosure compelled by
judicial or administrative process, the receiving Party shall (to the extent
permitted by applicable Laws) notify the disclosing Party promptly of the
request and the documents requested thereby so that the disclosing Party may
seek an appropriate protective order or other appropriate remedy. If, in the
absence of a protective order or other remedy or the receipt of a waiver
hereunder, a Party is, in the written opinion of its counsel, compelled to
disclose any Information to any tribunal or other entity or else stand liable
for contempt or suffer other censure or penalty, such Party may so disclose the
Information without liability hereunder; PROVIDED, HOWEVER, that, such Party
gives written notice to the other Party of the Information to be disclosed
(including copies of the relevant portions of the relevant documents) as far in
advance of its disclosure as is practicable, uses all reasonable efforts to
limit any such disclosure to the precise terms of such requirement, and
cooperates with the disclosing Party to obtain an appropriate protective order
or other reliable assurance that confidential treatment will be accorded to such
Information by the tribunal or other entity.
5.2 USE OF NAME FOR TRANSITION PERIOD.
(a) Following the Closing, except as otherwise provided herein, the
Buyer shall have no rights to use any trademarks, trade names, logos or any
contraction, abbreviation or simulation of the Seller (the "RETAINED MARKS") and
will not hold itself out as having any affiliations with the Seller.
(b) Notwithstanding the provisions of SECTION 5.2(a), after the
Closing Date, the Buyer may:
(i) for a period of three (3) months, utilize sales promotional
aids, literature and other printed material of the Business, provided such
material clearly and prominently displays the following statement or a statement
of similar import, the form of which shall be approved by the Seller (which such
approval shall not be unreasonably withheld, delayed or conditioned): "[THE
BUYER PRODUCT NAME], formerly a product of [SELLER NAME]." Promptly following
the Closing Date, the Buyer will implement and deliver to the Seller a written
plan to eliminate the use of all such material within such three (3) month
period;
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(ii) continue to use the Retained Marks following the Closing
Date on Inventories existing on the Closing Date, provided that the products in
such Inventories are not modified or enhanced in any manner; and (iii) disclose
to its customers and potential customers that it is conducting the Business as a
successor to the Seller from and after the Closing Date.
(c) The licenses to use the Retained Marks set forth in this SECTION
5.2 shall not prohibit the Seller or any of its parents, subsidiaries or
affiliates from using the Retained Marks (or any similar name or logo) during
the term of the respective license or thereafter in any manner. The Buyer agrees
that its use of the Retained Marks shall be consistent with the past practices
of the Seller and its direct and indirect subsidiaries in connection with their
business and operations and, with respect to such use, the Buyer shall adhere to
substantially similar quality standards to which the Seller and its direct and
indirect subsidiaries adhered immediately prior to the Closing.
5.3 USE OF RETAINED MARKS IN TRANSFERRED TECHNOLOGY. The Seller and the
Buyer shall cooperate and use reasonable commercial efforts to provide to the
Buyer for inclusion in its web site, as promptly as practicable following the
Closing, all text, images and other content contained in all web sites relating
to the Business maintained by the Seller (or its parents, subsidiaries or
affiliates). Subject to the provisions of SECTION 5.2, prior to including any
such text, images or other content in its web site, the Buyer shall remove all
references to the Retained Marks from any such text, images or other content.
The Seller (or its parents, subsidiaries or affiliates) shall retain ownership
of all domain names listed on SCHEDULE 5.3 and neither the Buyer nor any of its
affiliates shall have any right or license to any such domain name. To the
extent the Business utilized any internet protocol address space allocated to
the Seller, such internet protocol address space shall remain the property of
the Seller, and no rights or licenses are granted to the Buyer with respect
thereto.
5.4 PAYMENT OF EXCLUDED LIABILITIES. In the event that the Buyer (or its
parent, subsidiary or affiliate) inadvertently pays or discharges, after the
Closing, any Excluded Liabilities, the Seller shall reimburse the Buyer (or its
parent, subsidiary or affiliate) for the amount so paid or discharged within
thirty (30) days of being presented with written evidence of such payment or
discharge.
5.5 PAYMENT OF ASSUMED LIABILITIES. In the event that the Seller (or its
parent, subsidiary or affiliate) inadvertently pays or discharges, after the
Closing, any Assumed Liabilities, the Buyer shall reimburse the Seller (or its
parent, subsidiary or affiliate) for the amount so paid or discharged within
thirty (30) days of being presented with written evidence of such payment or
discharge.
5.6 OTHER EQUIPMENT. The Buyer shall, on and after the Closing Date, have
the right to exclusively use all equipment, instruments and any other items that
were loaned or given ("LOANED PROPERTY") to Seller prior to the Closing Date by
any of the Business customers or any other person or entity, to the extent such
use is permitted by any such Business customer, person or entity. On and after
the Closing Date, the Seller shall cease the use of such equipment,
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instruments and other items, and provide the Buyer with the sole benefit of the
aforementioned items.
5.7 RESTRICTIVE COVENANTS.
(a) NON-COMPETITION. During the period commencing on the Closing Date
and ending on the third (3rd) anniversary thereof (the "RESTRICTION PERIOD"),
the Seller and its successors and assigns shall not, and Seller shall cause its
and their respective parents, subsidiaries and affiliates, and the employees of
each of them, not to, (i) engage or aid any person or entity to engage, directly
or indirectly, anywhere in the world, in any business that competes with the
monitoring of element status within a hybrid fiber-coax ("HFC") broadband
communications network, specifically, the following: (A) status monitoring of
inside or outside plant elements including, but not limited to, optical nodes,
power supplies, amplifiers, transmitters, receivers and related equipment, only
as it pertains to the operational health or physical status of such equipment,
excluding customer premise equipment (B) monitoring of the physical environment,
(C) automated FCC proof of performance testing for the purpose of generating
reports to be filed with the FCC, (D) element management system software related
to all of the above-listed monitoring applications, including developments in
Seller's Vision 360 application suite that would provide the above functions,
and (E) service offerings related to all of the above-listed monitoring
applications, (a "COMPETITIVE BUSINESS"), provided, however, that the Seller
shall not be precluded from (A) developing, manufacturing or distributing
products which transmit, acquire or collect signal data that is contained,
carried or transmitted over the HFC broadband communications network and (B) if
an element provides information specific to the analog or digital signals or
data being transmitted, received, or transported on the HFC plant or the signal
environment, developing, manufacturing, or distributing products which collect,
analyze or utilize such information, or (ii) own an interest in, manage,
operate, join, control or participate in or be associated with as a partner,
member, shareholder, co-venturer, employee, director, officer, agent,
consultant, lender or otherwise, any other person or entity that engages in a
Competitive Business, provided, however, that nothing in this Agreement shall
prohibit the Seller from acquiring an entity (or all or a portion of its assets)
which may be engaged in a Competitive Business, provided that the provisions of
this Section 5.7(a) shall apply to the affected assets Seller acquired in such
acquisition. Notwithstanding the foregoing, nothing set forth above shall
prevent the Seller from (x) manufacturing, distributing, or selling its Phasor
or PathTrak return path monitoring products for the cable industry or (y)
maintaining the interoperability of Seller's products, including, but not
limited to, (i) the Phaser and PathTrak products, and (ii) Acterna's Vision 360
Product family working in conjunction with other systems, including, but not
limited to, the Scientific Atlanta TNCS system, to process and manage status
monitoring output, with the products of a Competitive Business; provided,
however, that, in the geographic territory (the "RESTRICTED TERRITORIES") in
which current customers of the Business have deployed NetMentor, Seller shall
not (A) by itself or in concert with any such Competitive Business, market or
otherwise promote such interoperability to the customers of the Business as of
the Closing Date or (B) enter into any reseller or other similar arrangement
with any such Competitive Business with respect to such interoperability.
Notwithstanding the foregoing, if, during the Restriction Period, the Seller
wishes to develop and promote interoperability in the Restricted Territories to
customers of the Business with respect to features or functionalities of
products of a Competitive Business which become available or are developed after
the Closing Date (the "EVOLUTIONARY Interoperability"), the Seller shall first
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seek to develop and maintain the Evolutionary Interoperability with the Buyer.
In such event, the Seller shall deliver written notice (the "SELLER NOTICE") of
its intent to promote and develop the Evolutionary Interoperability to the
Buyer. If (i) within 30 days of the date of the Seller Notice, the Seller has
not received a written commitment (the "BUYER COMMITMENT") from the Buyer to
actively participate in such development and (ii) within 60 days of the date of
the Seller Notice, the Buyer does not in commit in writing to a product plan
(the "PRODUCT PLAN") for the Evolutionary Interoperability, the Seller shall be
permitted to promote and develop the Evolutionary Interoperability free of any
of the restrictions in this Agreement. In addition, if Buyer does not actively
fulfill its obligations under the Product Plan, the Seller shall be permitted to
promote and develop the Evolutionary Interoperability free of any of the
restrictions in this Agreement.
(b) NO HIRE/NON-SOLICITATION COVENANTS. During the Restriction Period,
the Seller shall not, and shall cause their respective parents, subsidiaries and
affiliates not to, anywhere in the world, directly or indirectly, for its own
account or for the account of any other person or entity, (i) hire any natural
person who is or was, at any time during the twelve (12) months preceding the
Closing Date, employed by or otherwise engaged to perform services for the
Buyer. During the Restriction Period, the Buyer shall not, and shall cause their
respective parents, subsidiaries and affiliates not to, anywhere in the world,
directly or indirectly, for its own account or for the account of any other
person or entity, (i) except for the Potential Employees and employees of the
Seller whose employment Seller has terminated, solicit for employment or hire
any natural person who is or was, at any time during the twelve (12) months
preceding the Closing Date, employed by or otherwise engaged to perform services
or sell products of the Seller.
(c) REMEDIES. In accordance with SECTION 7.10 of this Agreement, the
Seller acknowledges and agrees that the Buyer, in addition to any other rights
and remedies the Buyer may have at law or in equity, shall be entitled to an
order of specific performance, injunction, restraining order or such other
interim or permanent equitable relief (without the requirement to post bond)
restraining a breaching party from committing any violation of the covenants and
obligations contained in this SECTION 5.7.
(d) If any provision of this SECTION 5.7 shall be adjudged to be
excessively broad as to duration, geographical scope, activity or subject, or
are held to be unreasonable, arbitrary, or against public policy, the Parties
hereto intend that such provision shall be deemed modified to the minimum degree
necessary to make such provision valid and enforceable under applicable Laws and
that such modified provision shall thereafter be enforced to the fullest extent
possible.
5.8 RELEASES OF SECURITY INTERESTS. Subject to Seller's obligations
pursuant to the final paragraph of SECTION 2.3 hereof, following the Closing
Date, the Buyer shall prepare and file, or cause to be prepared and filed, all
Form UCC-3 termination statements required to evidence the release of Security
Interests on the Acquired Assets. All costs associated with such
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preparation and filing shall be borne equally by the Buyer and the Seller, and
the Seller shall pay, by wire transfer to an account designated by the Buyer,
its share of the cost of such preparation and filing within five (5) Business
Days of the Buyer's request for such payments. Such request shall be accompanied
by reasonable supporting documentation showing the costs associated with such
preparation and filing. In the event that the cost of preparing and filing the
Form UCC-3 termination statements required to evidence the release of the
Security Interests on the Acquired Assets shall exceed Thirty Thousand U.S.
Dollars ($30,000), the Buyer shall notify the Seller thereof.
5.9 REMOTE INVENTORY. The Seller shall, at its sole cost and expense,
deliver or cause to be delivered all Acquired Assets located at the Seller's
Indianapolis, Indiana facility either to the premises being sublet from the
Seller in Bradenton, Florida or to one or more contract manufacturers. Such
delivery shall occur within ten (10) Business Days of the Buyer's request
therefor, and the Seller shall be responsible for, and shall reimburse the Buyer
for, damage to such Acquired Assets as a result of or in the course of such
delivery to the extent that such damage is caused by the Seller, its employees,
agents, representatives, contractors and independent contractors. In the event
that the Seller fails to deliver, or cause to be delivered, such Acquired Assets
as required by this SECTION 5.9, the Buyer shall have the right to arrange for
such delivery at the Seller's sole cost and expense, and the Seller shall pay or
reimburse the Buyer for the costs thereof within five (5) Business Days of the
Buyer's demand therefor.
5.10 BUSINESS ORDER BACKLOG MATTERS. From and after the Closing Date, the
Seller shall not, on its own initiative, cancel or terminate, or permit any
Affiliate of Seller to, on its own initiative, cancel or terminate any portion
of the Backlog which consists of orders for products and/or services of the
Business acquired hereunder by Seller or any Affiliate of Seller ("Affiliate
Orders"); provided, however, that Seller or an Affiliate of Seller may cancel,
terminate, delay or otherwise alter an Affiliate Order, in whole or in part, to
the extent that (i) the customer of the Seller or an Affiliate of the Seller
cancels, terminates, delays or otherwise alters such Affiliate Order, in whole
or in part, (orally or in writing) and (ii) the Seller provides to the Buyer (A)
written or oral notice thereof and (B) reasonable opportunity to contact such
customer to confirm such cancellation, termination, delay or other alteration.
Notwithstanding the proviso in the immediately preceding sentence, Seller
acknowledges and agrees that the Affiliate Order listed on Section 5.10 of the
Disclosure Schedule shall not be canceled, terminated, delayed or otherwise
altered and the products shipped thereunder shall not be returnable except for
returns relating to valid warranty claims for defective products provided to the
Seller pursuant to such purchase order.
5.11 QUALIFICATIONS. Seller shall, within ten (10) days following the
Closing Date, take all actions necessary, including, but not limited to, filing
necessary reports and paying any amounts of money which may be required to be
paid, to cause Seller to be qualified to do business in those United States
jurisdictions in which the Business was operated prior to the Closing Date and
in which Seller was not so qualified, and reflected on Schedule 2.11(a) of the
Disclosure Schedule.
ARTICLE VI
INDEMNITY AND SURVIVAL
6.1 THE BUYER'S INDEMNITY. From and after the Closing, the Buyer shall
indemnify and hold harmless the Seller and its respective officers, directors,
shareholders, employees, agents, successors and permitted assigns ("SELLER
INDEMNIFIED PARTIES") from and against any claim, liability, loss, loss of
value, deficiency, penalty, interest, fine, assessment, cost, damage or
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expense (including, without limitation, court costs and reasonable attorneys'
and experts' fees and expenses) (a "CLAIM") arising out of or resulting from:
(a) the breach of, or the failure to perform or satisfy any of, the
representations, warranties and covenants made by the Buyer in this Agreement,
in any certificate delivered by the Buyer to the Seller in connection with this
Agreement, any exhibit or schedule (or supplements made thereto) attached to
this Agreement, any matter set forth on the Disclosure Schedule, or any transfer
instrument or any other certificate, document, writing or instrument delivered
by the Buyer pursuant to this Agreement, including, without limitation, the
Ancillary Agreements;
(b) the failure of the Buyer to pay, perform and discharge the Assumed
Liabilities; or
(c) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been made, by
a person or entity with the Buyer in connection with the transaction
contemplated in this Agreement.
The Buyer shall reimburse the Seller Indemnified Parties for any legal or
other expenses reasonably incurred by the Seller Indemnified Parties in
connection with defending a Third Party Claim (as defined in SECTION 6.3) as
such expenses are incurred.
6.2 THE SELLER'S INDEMNITY. From and after the Closing, the Seller shall
indemnify and hold harmless the Buyer and its respective officers, directors,
shareholders, employees, agents, successors and permitted assigns (the "BUYER
INDEMNIFIED PARTIES") from and against any Claim arising out of or resulting
from:
(a) the breach of, or the failure to perform or satisfy any of, the
representations, warranties and covenants made by the Seller in this Agreement,
in any certificate delivered in connection with this Agreement, any exhibit or
schedule (or supplements made thereto) attached to this Agreement, any matter
set forth in the Disclosure Schedule or any transfer instrument or any other
certificate, document, writing or instrument delivered by the Seller pursuant to
this Agreement, including, without limitation, the Ancillary Agreements:
(b) the failure of the Seller to pay, perform or discharge the
Excluded Liabilities;
(c) the ownership or operation of the Acquired Assets or the Business
prior to the Closing Date (other than the Assumed Liabilities);
(d) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been made, by
any person or entity with the Seller in connection with the transactions
contemplated in this Agreement;
(e) any failure of the Seller to comply with applicable bulk sales
Laws; and
(f) all Lawsuits to the extent that liabilities and obligations
resulting therefrom are not caused by the actions or inactions of Buyer.
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The Seller shall reimburse the Buyer Indemnified Parties for any legal or
other expenses incurred by the Buyer Indemnified Parties in connection with
defending a Third Party Claim (as defined in SECTION 6.3) as such expenses are
incurred; provided however, that the Seller shall be obligated to pay an
Indemnity Claim (as defined in SECTION 6.3(a)) through disbursement of amounts
held in escrow under the Escrow Agreement only after the procedures set forth in
SECTION 6.3(b) have been complied with in full.
6.3 THIRD PARTY CLAIMS; PROCEDURE.
(a) INDEMNIFIED PARTIES. As used in this Article, the term
"INDEMNIFIED PARTY" shall mean any Seller Indemnified Party or any Buyer
Indemnified Party, as the case may be, which is asserting a claim for indemnity
pursuant to SECTION 6.1 or SECTION 6.2 of this Agreement ("INDEMNITY CLAIM").
Any Party against whom an Indemnity Claim is asserted by an Indemnified Party
pursuant to this ARTICLE VI is referred to herein as an "INDEMNIFYING PARTY." In
the event that a person who is not a Buyer Indemnified Party or a Seller
Indemnified Party (a "THIRD PARTY") asserts any Claims or seeks to collect any
Claim from an Indemnified Party (a "THIRD PARTY CLAIM"), such Indemnified Party
shall give prompt written notice to the Indemnifying Party of such event (a
"THIRD PARTY CLAIM NOTICE"). A Third Party Claim Notice shall specify, to the
extent known by the Indemnified Party, the nature of and specific basis for any
Third Party Claims or the nature of and specific basis of any suit, action,
investigation or proceeding set forth therein, the amount or the good faith
estimated amount thereof to the extent then practicable and the basis of the
Indemnified Party's request for indemnification under this Agreement.
(b) THIRD PARTY CLAIMS; PROCEDURE. In the event that any Indemnified
Party seeks indemnification hereunder based on a Third Party Claim, the
Indemnifying Party shall have the right (without prejudice to the right of the
Indemnified Party to employ separate counsel at its own expense and to
participate in the defense of such Third Party Claim and in any compromise,
settlement or strategic decision relating thereto) to defend or prosecute such
Third Party Claim at its own expense through counsel of its own choosing if the
Indemnifying Party gives notice thereof to the Indemnified Party within thirty
(30) days after receipt of the Third Party Claim Notice or such shorter time
period as required so that the interests of the Indemnified Party would not be
materially prejudiced as a result of the failure to have received such notice
(the "ELECTION PERIOD"). Notwithstanding the preceding sentence, the Indemnified
Party is hereby authorized during the Election Period to file any motion, answer
or other pleading that shall be necessary or appropriate to protect its rights
or the rights of the Indemnifying Party. If (i) the Election Period expires or
(ii) the Indemnifying Party notifies the Indemnified Party during the Election
Period that the Indemnifying Party does not elect to defend or prosecute the
Third Party Claim for which the Indemnified Party would be entitled to
indemnification hereunder, then the Indemnified Party shall be entitled
prosecute or defend the Third Party Claim and recover from the Indemnifying
Party all of the reasonable costs and expenses (including reasonable attorney's
fees) associated therewith. Notwithstanding the assumption of the defense of any
Third Party Claim by the Indemnified Party pursuant to this paragraph, the
Indemnifying Party shall have the right to approve the terms of settlement of
any Third Party Claim, which approval shall not be unreasonably delayed or
withheld.
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(c) COOPERATION. The Parties agree reasonably to cooperate with one
another and their respective counsel in contesting and defending any Third Party
Claim in any manner the other party may reasonably request (including furnishing
evidence and testimony and granting reasonable access to the pertinent books,
records and personnel (to the extent such personnel are available) in their
possession or control) so as to not unreasonably expose the other to undue risk
of loss or, if appropriate and related to the Claim in question, in making (i)
any counterclaim against the Third Party asserting the Claims, or (ii) any cross
complaint against any Person.
(d) NO SETTLEMENT. Notwithstanding anything in this SECTION 6.3 to the
contrary, the Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld or
delayed), (i) settle or compromise any Third Party Claim or consent to the entry
of any judgment with respect to such Third Party Claim that does not include as
an unconditional term thereof the delivery by the Third Party claimant or
plaintiff to the Indemnified Party of a written release from all liability in
respect to such Third Party Claim, (ii) settle or compromise any Third Party
Claim in any manner that may materially and adversely affect the Indemnified
Party, or (iii) settle or compromise any Claim in a manner that will require the
Indemnified Party to pay any money, except as contemplated by SECTION 6.3(b).
6.4 DIRECT CLAIMS. In the event that the Indemnified Party has a Claim,
including an Indemnity Claim hereunder, that does not involve a Third Party
Claim, or knowledge of facts that could give rise to such a Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"DIRECT CLAIM NOTICE") describing in reasonable detail the nature of the Claim,
an estimate of the amount of damages attributable to such Claim and the basis
for the request for indemnification under this Agreement. If the Indemnifying
Party does not notify the Indemnified Party within fifteen (15) days from its
receipt of the Direct Claim Notice that it disputes such Indemnity Claim, the
Indemnity Claims specified in the Direct Claim Notice will be deemed payable by
the Indemnifying Party hereunder. If the Indemnifying Party has timely disputed
such Indemnity Claim, the Parties shall negotiate in good faith for a thirty
(30) day period after receipt of the Direct Claim Notice to resolve such
Indemnity Claim. If no resolution is reached within such thirty (30) day period,
the dispute regarding the Indemnity Claim shall be resolved by litigation in a
court of competent jurisdiction.
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND TIME LIMITATION ON
INDEMNIFICATION. All of the representations and warranties set forth in this
Agreement shall survive the Closing and the consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing and without
limiting any other rights and remedies available to the parties, any assertion
by any Indemnified Party that an Indemnifying Party is liable for
indemnification under the terms of this ARTICLE VI must be made in writing and
must be given to the Indemnifying Party on or prior to the date that is fifteen
(15) months after the Closing Date; PROVIDED, HOWEVER, that the foregoing time
limitation shall not apply to assertions by an Indemnified Party that an
Indemnifying Party is liable for indemnification under the terms of this ARTICLE
VI based on breaches of the representations and warranties set forth in SECTIONS
2.2, 2.7, 2.8 or 2.12 or indemnification pursuant to SECTIONS 6.1(b) and (c) and
SECTIONS 6.2(b) through (h). The survival periods set forth in this SECTION 6.5
shall not be deemed in any way to limit the obligations of the Parties to
perform the covenants and agreements set forth in this Agreement, including, but
not limited to, the covenants and agreements set forth in ARTICLES IV and V
hereof,
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and to pay and discharge the obligations related thereto and the obligations
related to the Assumed Liabilities, in the case of Buyer, and the Excluded
Liabilities, in the case of the Seller.
6.6 LIMITATION ON INDEMNITY.
(a) INDEMNITY BASKET OF THE BUYER AND THE SELLER. Notwithstanding any
other provision of this Agreement to the contrary, the Buyer and the Seller
acknowledge and agree that an Indemnifying Party shall not be liable to an
Indemnified Party in respect of any Indemnity Claim made pursuant to SECTION 6.1
or SECTION 6.2 hereunder until the amount of Claims comprising the Indemnity
Claim(s), individually or in the aggregate, exceeds Twenty Five Thousand U.S.
Dollars ($25,000) (the "INDEMNITY BASKET"), provided however, that if such
Indemnity Claims exceed Twenty Five Thousand U.S. Dollars ($25,000), an
Indemnifying Party shall be liable and the Indemnified Party may recover, on a
first dollar loss basis for all such Claims, subject to the Indemnity Cap (as
defined in SECTION 6.6(b)). The Indemnity Basket shall (i) be Five Thousand U.S.
Dollars ($5,000) for any Indemnity Claims by Buyer Indemnified Parties to the
extent such Indemnity Claims are based on a breach of the representations and
warranties made in SECTIONS 2.7(b) and 2.8, (ii) not apply to Indemnity Claims
by Buyer Indemnified Parties under SECTION 6.2(a)(but only to the extent such
Indemnity Claims are based on a breach of the representations and warranties
made in SECTIONS 2.2, 2.7(a), and 2.12) or under SECTIONS 6.2(b) through (f),
and (iii) not apply to Indemnity Claims by Buyer Indemnified Parties arising
from fraud, willful or criminal misconduct of the Seller Indemnified Parties
(collectively, the "SELLER INDEMNITY BASKET EXCLUSIONS"). The Seller shall be
responsible for the full amount of all Claims arising from the Seller Indemnity
Basket Exclusions, and the amount of such Claims shall be included in the
determination as to whether the Indemnity Basket is met for all other Indemnity
Claims by Buyer Indemnified Parties. The Indemnity Basket shall not apply to
Indemnity Claims by Seller Indemnified Parties (x) under SECTIONS 6.1(b) through
(C), or (y) arising from fraud, willful or criminal misconduct by the Buyer
Indemnified Parties (collectively, the "BUYER INDEMNITY BASKET EXCLUSIONS"). The
Buyer shall be responsible for the full amount of all Claims arising from the
matters addressed in the Buyer Indemnity Basket Exclusions, and the amount of
such Claims shall be included in the determination as to whether the Indemnity
Basket is met for all other Claims by Seller Indemnified Parties.
(b) INDEMNITY CAP OF THE BUYER AND THE SELLER. The Buyer and the
Seller acknowledge and agree that in no event shall an Indemnifying Party ever
be required to indemnify an Indemnified Party for Indemnity Claims made pursuant
to SECTION 6.1 or SECTION 6.2 of this Agreement, in any amount exceeding: (i)
Twenty Percent (20%) of the Purchase Price, in the aggregate, in the case of
Indemnity Claims by the Buyer Indemnified Parties; and (ii) Twenty Percent (20%)
of the Purchase Price, in the aggregate, in the case of Indemnity Claims by the
Seller Indemnified Parties (each, an "INDEMNITY CAP"). The respective Indemnity
Caps shall not apply to Claims arising from or relating to the Seller Indemnity
Basket Exclusions and the Buyer Indemnity Basket Exclusions, and none of such
Claims shall be used to determine whether the applicable Indemnity Cap has been
met. Each Party agrees to use its best efforts to mitigate any Claim. Whenever
an Indemnifying Party is required to indemnify and hold harmless an Indemnified
Party from and against, or to reimburse an Indemnified Party for, a Claim, such
Indemnifying Party will, subject to the provisions of this ARTICLE VI, pay the
Indemnified Party the amount of such Claim reduced by the net proceeds of any
insurance policy received by the Indemnified Party with respect to such Claim.
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6.7 OVERALL LIMITATION ON LIABILITY. Anything in this Agreement to the
contrary notwithstanding, the maximum aggregate liability for any Claims,
whether or not such Claims are Indemnity Claims and whether arising in contract
or tort, shall not exceed (a) Thirty Percent (30%) of the Purchase Price in the
case of Claims payable by the Seller, and (b) Thirty Percent (30%) of the
Purchase Price in the case of Claims payable by the Buyer (each, an "Aggregate
Liability Cap"); provided, however, that the applicable Aggregate Liability Cap
shall not apply to (x) Claims of the Buyer Indemnified Parties arising from or
relating to the Seller Indemnity Basket Exclusions, and (y) Claims of the Seller
Indemnified Parties arising from or relating to the Buyer Indemnity Basket
Exclusions.
6.8 SCOPE OF REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Except as and
to the extent expressly set forth in this Agreement (together with the schedules
attached hereto and the items delivered pursuant to this Agreement), the Parties
make no representations or warranties whatsoever, and disclaim all liability and
responsibility for any representation, warranty, statement made or information
communicated (orally or in writing) to the other Party including, but not
limited to, any opinion, information or advice that many have been provided to
any Party by any officer, stockholder, director, employee, advisor, legal
counsel or any other agent, consultant or representative of such Party.
6.9 ESCROW. Upon notice to the Seller specifying in reasonable detail the
basis therefor and subject to compliance with the procedures for indemnification
set forth in SECTION 6.3, the Buyer may give notice of an Indemnity Claim in
such amount under the Escrow Agreement, and the Buyer shall be entitled to
payment of such amounts from the escrowed funds being held pursuant to such
Escrow Agreement. Giving a notice of an Indemnity Claim under the Escrow
Agreement will not constitute an election of remedies or limit the Buyer in any
manner in the enforcement of any remedies that may be available to it. Subject
to compliance with the indemnification procedures set forth in SECTION 6.3, to
the extent that the Seller is required indemnify a Buyer Indemnified Party for
an Indemnity Claim, payment shall be made to the Buyer Indemnified Party from
amounts held in escrow under the Escrow Agreement until the funds held in escrow
are fully exhausted, it being understood and agreed that, subject to the
applicable Indemnity Cap, Seller's indemnification obligation shall not be
limited to the amounts held in escrow pursuant to the Escrow Agreement.
6.10 NO RIGHT OF OFFSET. Under no circumstances may Buyer set off or seek
to satisfy all or any part of any Claim that Buyer suffers or incurs in
connection with this Agreement by withholding amounts due under the Earn-Out
Payment.
ARTICLE VII
MISCELLANEOUS
7.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue (and each Party
shall cause its parents, subsidiaries and affiliates not to issue) any press
release or public disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Party or Parties; PROVIDED,
HOWEVER, that any Party may make any public disclosure it believes in good faith
is required by Law, regulation or stock exchange rule (in which case the
disclosing Party shall advise the other Party and the other Party shall, if
practicable, have the right to review such press release or announcement prior
to its publication).
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7.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns and, to the extent specified herein, their
respective parents, subsidiaries and affiliates.
7.3 ACTION TO BE TAKEN BY AFFILIATES. The Parties shall cause their
respective parents, subsidiaries or affiliates to comply with all of the
obligations specified in this Agreement to be performed by them.
7.4 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) and the Confidentiality Agreement constitute the entire agreement among
the Buyer, on the one hand, and the Seller, on the other hand. This Agreement
supersedes any prior agreements or understandings among the Buyer, on the one
hand, and the Seller, on the other hand (including, without limitation, that
certain Letter of Intent dated January 3, 2003, as amended by letter dated
January 17, 2003 by and between the Parties, and any representations or
statements made by or on behalf of the Seller or any of their respective
parents, subsidiaries or affiliates to the Buyer, whether written or oral, with
respect to the subject matter hereof, other than the Confidentiality Agreement.
The Confidentiality Agreement, insofar as it covers information relating
exclusively or primarily to the Business, shall terminate effective as of the
Closing, but shall remain in effect insofar as it covers other information
disclosed thereunder.
7.5 SUCCESSION AND ASSIGNMENT. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the Seller (in the case of an assignment by the Buyer) or
the Buyer (in the case of an assignment by the Seller), which written approval
shall not be unreasonably withheld or delayed. This Agreement shall be binding
upon and inure to the benefit of the Parties and their permitted successors and
permitted assigns.
7.6 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four (4)
Business Days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one (1) Business Day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, in
each case to the intended recipient as set forth below:
IF TO THE BUYER: COPY TO:
--------------- --------
Tollgrade Communications, Inc. Babst, Calland, Clements and Zomnir, P.C.
493 Nixon Road Two Gateway Center, 7th Floor
Cheswick, PA 15024 Pittsburgh, PA 15222
Facsimile: (412) 820-1539 Facsimile: (412) 394-6576
Attention: Sara M. Antol, Esq. Attention: Christian A. Farmakis, Esq.
-45-
IF TO THE SELLER: COPY TO:
--------------- --------
Acterna, LLC Akin Gump Strauss Hauer & Feld, LLP
12410 Milestone Center Drive 1676 International Dr., Penthouse
Germantown, MD 20876 McLean, VA 22102
Facsimile: Facsimile: (703) 891-7501
Attention: Rick Goshorn Attention: Eric W. Cowan, Esq.
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, facsimile, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the Party for
which it is intended. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
to it by giving the other Parties notice in the manner herein set forth.
7.7 AMENDMENTS AND WAIVERS. The Parties may mutually amend or waive any
provision of this Agreement at any time. No amendment or waiver of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by all of the Parties. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
7.8 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
7.9 EXPENSES. Except as otherwise specifically provided to the contrary in
this Agreement, each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
7.10 SPECIFIC PERFORMANCE. The Seller acknowledges and agrees that the
Buyer would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached by the Seller. Accordingly, in addition to any other right or
remedy to which the Buyer may be entitled at law or in equity, the Seller agrees
that the Buyer may be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Seller and the matter (without posting any bond or other
-46-
undertaking). The rights and remedies of the Parties to this Agreement are
cumulative and not alternative.
7.11 GOVERNING LAW. This Agreement and any disputes hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than those of the State
of Delaware.
7.12 SUBMISSION TO JURISDICTION. Each Party (a) submits to the exclusive
jurisdiction of any state or federal court located in Allegheny County,
Commonwealth of Pennsylvania in any action or proceeding arising out of or
relating to this Agreement, (b) agrees that all claims in respect of such action
or proceeding may be heard and determined only in any such court, (c) waives any
claim of inconvenient forum or other challenge to venue in such court, and (d)
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each Party agrees to accept service of any
summons, complaint or other initial pleading made in the manner provided for the
giving of notices in SECTION 7.6. Nothing in this SECTION 7.12 however, shall
affect the right of any Party to serve such summons, complaint or initial
pleading in any other manner permitted by law.
7.13 BULK TRANSFER LAWS. The Buyer acknowledges that the Seller will not
comply with the provisions of the bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
7.14 DISCLOSURE SCHEDULE. The information in the Disclosure Schedule
constitutes (i) exceptions to particular representations, warranties, covenants
and obligations of the Seller as set forth in this Agreement or (ii)
descriptions or lists of assets and liabilities and other items referred to in
this Agreement. If there is any inconsistency between the statements in this
Agreement and those in the Disclosure Schedule (other than an exception
expressly set forth as such in the Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in this
Agreement will control.
7.15 CONSTRUCTION.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
(b) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
(d) Any reference herein to an Article, section or clause shall be
deemed to refer to an Article, section or clause of this Agreement, unless the
context clearly indicates otherwise.
-47-
(e) All references to "$", "DOLLARS" or "US$" refer to currency of the
United States of America.
7.16 WAIVER OF JURY TRIAL. To the extent permitted by applicable Laws, each
Party hereby irrevocably waives all rights to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the transactions contemplated
hereby or the actions of any Party in the negotiation, administration,
performance and enforcement of this Agreement.
7.17 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
7.18 COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
ACTERNA, LLC
By: /s/John Ratliff
-----------------------------------------
Name: John Ratliff
---------------------------------------
Title: Chief Financial Officer
--------------------------------------
TOLLGRADE COMMUNICATIONS, INC.
By: /s/Christian L. Allison
-----------------------------------------
Name: Christian L. Allison
---------------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------
[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]
-49-
EXHIBIT A -- FORM OF BILL OF SALE
BILL OF SALE
This Bill of Sale dated as of February 13, 2003 is executed and delivered
by Acterna, LLC, a Delaware limited liability company (the "SELLER"), to
Tollgrade Communications, Inc., a Pennsylvania corporation (the "BUYER"). All
capitalized terms used in this Bill of Sale and not otherwise defined herein
shall have the respective meanings ascribed to them in that certain Purchase and
Sale Agreement dated as of February 13, 2003, by and between the Seller and the
Buyer (the "AGREEMENT").
WHEREAS, pursuant to the Agreement, the Seller has agreed to sell, convey,
assign, transfer and deliver to the Buyer, and the Buyer has agreed to purchase
and acquire, all of the Seller's right, title claim and interest in and to the
assets, properties and rights of the Seller described in the Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth in the
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller hereby agrees as
follows:
1. The Seller hereby sells, conveys, assigns, transfers and delivers to
the Buyer, its successors and assigns, all of the Seller's right, title, claim
and interest in the Acquired Assets, free and clean of all security interests,
to have and to hold unto the Buyer, its successors and assigns, to and for its
or their own use forever.
2. This sale, conveyance, assignment and transfer has been executed and
delivered by the Seller in accordance with the Agreement and is expressly made
subject to those liabilities, obligations and commitments which the Buyer has
expressly assumed and agreed to perform, pay and discharge pursuant to that
certain Assignment and Assumption Agreement by and between the Seller and the
Buyer of even date herewith.
3. This Bill of Sale shall be governed by and construed in accordance
with the internal laws of the State of Delaware without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of laws of any
jurisdiction other than those of the State of Delaware.
A-1
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Bill of Sale
to be duly executed under seal as of and on the date first above written.
ACTERNA, LLC
By:__________________________________
Name:________________________________
Title:_______________________________
ACCEPTED:
TOLLGRADE COMMUNICATIONS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
A-2
EXHIBIT B -- FORM OF TRADEMARK ASSIGNMENT
TRADEMARK ASSIGNMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, Acterna, LLC (the "Seller"), hereby assigns to Tollgrade
Communications, Inc., a Pennsylvania corporation having a place of business at
493 Nixon Road, Cheswick, Pennsylvania 15024 (the "BUYER"), all of the Seller's
right, title and interest in and to the below-identified trademark registrations
and trademark applications (together with the goodwill associated therewith),
including all rights to sue for past infringement, the same to be held and
enjoyed by the Buyer, its successors and assigns:
U.S REGISTERED AND/OR U.S. APPLICATION SUBMITTED:
- ------------------------------------------------
- Cheetahsoft
- Cheetah Technologies
- Cheetah
International Class 009
Electrical and scientific apparatus for use with broadband network to
test performance, monitor status and manage broadband network
equipment; DATE OF FIRST USE: November 28, 1990; DATE OF FIRST USE IN
COMMERCE: November 28, 1990; REGISTERED: February 6, 1996;
REGISTRATION No. 1,954,952.
- ObjectArchitect
- Visual Integrator
- NetMentor
NO APPLICATION SUBMITTED:
- ------------------------
- Expertarchitect
- Return Path Analyst
- Superior Electronics Group
- CheetahNET
- CheetahTEST
- CheetahLINK
- Cheetah Vision
- Voyager Partner Program
- Battery Analyst
- Proof Analyst
- RPS
- LC-1000
- PC-1000
- HE-1000
- CMA
- CSC-16
- GPM-4
B-1
- CMM-3
- CMX
- HEC
- HEC-3
- HEC-3E
- HEC-3P
- HEC-3M
- Powercept
- CheetahDOS
Executed as of the 13th day of February, 2003.
ACTERNA, LLC
By:__________________________________
Name:________________________________
Title:_______________________________
State of ______________)
County of ____________)
Then personally appeared the above named ___________________ and
acknowledged the foregoing act to be his or her free act and deed, before me,
this _____ day of _______________, 2003.
______________________________________
Notary Public
My commission expires: _______________
B-2
EXHIBIT C -- FORM OF COPYRIGHT ASSIGNMENT
COPYRIGHT ASSIGNMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, Acterna, LLC (the "Seller"), hereby assigns to Tollgrade
Communications, Inc., a Pennsylvania corporation having a place of business at
439 Nixon Road, Cheswick, Pennsylvania 15024 (the "BUYER"), all of the Seller's
right, title and interest in and to the copyright applications, copyright
registrations, and rights, set forth on the attachment to this Copyright
Assignment, including all rights to sue for past infringement, the same to be
held and enjoyed by the Buyer, its successors and assigns.
Executed as of the 13th day of February, 2003.
ACTERNA, LLC
By:_______________________________
Name:_____________________________
Title:____________________________
State of ______________)
County of ____________)
Then personally appeared the above named ___________________ and
acknowledged the foregoing act to be his or her free act and deed, before me,
this _____ day of _______________, 2002.
_________________________________
Notary Public
My commission expires: __________
C-1
EXHIBIT D - FORM OF PATENT ASSIGNMENT
PATENT ASSIGNMENT
For good and valuable consideration, receipt of which is acknowledged, the
undersigned, Acterna, LLC has agreed to assign and transfer and do hereby assign
and transfer unto Tollgrade Communications, Inc., a Pennsylvania corporation,
having its principal office at 493 Nixon Road, Cheswick, Pennsylvania, its
successors and assigns, the entire right, title and interest in and to the
following applications (including, but not limited to, the inventions
represented thereby), in and to any division, continuation or
continuation-in-part, of said applications, and in and to any and all Letters
Patent and reissues and extensions thereof, of the United States of America and
countries foreign thereto (including the right to apply for Letters Patent in
foreign countries in its own name and to claim any priority rights for such
foreign applications to which such applications are entitled under international
conventions, treaties or otherwise), which have been or may be granted on any of
the foregoing to be held and enjoyed as fully and exclusively as they would have
been by Acterna, LLC had this assignment and transfer not been made:
1. Expired Patent Application Serial No. 09/689,984 for
Matched-Filter-Frequency-Shift-Keyed Receiver using Degenerate Digital Signal
Processing Techniques dated October 13, 2000.
2. Implementation of a Degenerate Matched Filter Frequency Shift Keyed
(FSK) Receiver Using Degenerate DSP Techniques (Application Date: 10/15/99);
Serial No. 60/159,684.
The undersigned does further agree for itself and its successors and
assigns to execute and deliver without further consideration any further
applications, assignments and documents, and to perform such other acts as the
undersigned lawfully may, that may be deemed necessary by the said Tollgrade
Communications, Inc., its successors, assigns and nominees, fully to secure its
interest as aforesaid and to obtain or maintain Letters Patent in any and all
countries;
And the undersigned hereby authorize and request the Commissioner of
Patents to issue any and all Letters Patent which may be granted upon any of the
said applications, to the said Tollgrade Communications, Inc., as the assignee
of the entire interest therein.
IN WITNESS WHEREOF, Acterna, LLC has caused this instrument to be
executed on the day and year set forth below.
ACTERNA, LLC
Dated: February 13, 2003
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-1
STATE OF _________________ )
) SS
COUNTY OF _______________ )
On this _____ day of __________________, 2003, before me personally
appeared the above named _______________________ personally known to me, and
known by me to be the person described in and who executed the foregoing
instrument on behalf of Acterna, LLC, and acknowledged that he/she executed the
same on behalf of Acterna, LLC.
_____________________________________
Notary Public
My Commission Expires:_______________
D-2
EXHIBIT E -- FORM OF SUBLEASE
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Agreement") is made and entered into as of
this 13th day of February, 2003, by and between ACTERNA CORPORATION, a Delaware
corporation ("Sublessor"), and TOLLGRADE COMMUNICATIONS, INC., a Pennsylvania
corporation ("Sublessee").
WITNESSETH:
WHEREAS, Sublessor is the sub-lessee of that certain real property situated
at 2501 63rd Avenue East, Bradenton, Florida 34203 (the "Premises"), more
particularly described in that certain Lease Agreement dated as of August 23,
2000, by and between Superior Electronics Group, Inc. as Landlord ("Master
Landlord") and Sublessor as Tenant (the "Master Lease"); and
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated
February 13, 2003, by and between Sublessor and Sublessee (the "Purchase and
Sale Agreement"), Sublessor has conveyed to Sublessee a portion of Sublessor's
business, including certain operations and assets that are housed and located
(respectively) throughout the Premises; and
WHEREAS, pursuant to the Purchase and Sale Agreement, Sublessor desires to
sublease a portion of the Premises to Sublessee, and Sublessee desires to
sublease a portion of the Premises from Sublessor, as set forth herein, for a
period of time following the consummation of the transaction contemplated by the
Purchase and Sale Agreement.
NOW, THEREFORE, in consideration of the premises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, Sublessor and Sublessee, intending to be legally
bound hereby, agree as follows:
AGREEMENT:
1. SUBLET-PREMISES; ASSOCIATED RIGHTS.
1.1 Sublessor hereby subleases to Sublessee those portions of the Premises
that were used in the Business (as such term is defined in the Purchase and Sale
Agreement) and/or housed the Acquired Assets (as such term is defined in the
Purchase and Sale Agreement) as of the date of consummation of the Purchase and
Sale Agreement (the "Sublet-Premises"), and Sublessee hereby subleases the
Sublet-Premises from Sublessor, for the Term (as defined in SECTION 2 hereof),
and upon all the terms and conditions set forth in this Agreement. Sublessor and
Sublessee shall jointly use and occupy the Sublet-Premises during the Term.
Sublessor and Sublessee shall reasonably cooperate with each other in such joint
use and occupation of the Sublet-Premises, and neither of them shall interfere
with the use or occupancy of the Sublet-Premises by the other.
E-1
1.2 During the Term, Sublessee shall also have a non-exclusive right to
use, for the conduct of the Business, and as Sublessee may require:
(a) all of the common areas of the Premises, other areas of the
Premises, access to which is necessary or convenient for the use by Sublessee of
the Sublet-Premises, and such of the parking spaces serving the Premises that
Sublessor has a right to use under the Master Lease;
(b) all of the utilities, facilities and services serving the
Sublet-Premises to which Sublessor has a right under the Master Lease or that
Sublessor has installed in and/or maintains with respect to the Sublet-Premises,
including, without limitation, telephone, facsimile, video and data lines and
services, cable television, electrical current, hot and cold water, HVAC,
restrooms, elevator service, security, janitorial services, building services
and maintenance;
(c) such telephones, facsimile machines, copiers, scanners,
projectors, blackboards, kitchen equipage, computer equipment and servers and
other office equipment as Sublessor maintains in the Premises;
(d) premise voice systems, voice messaging systems, data (LAN and WAN)
lines and access to the Internet, in each case available at the Premises;
(e) data network access services via dialup and/or VPN;
(f) access to and use of computer networks and systems, including, but
not limited to, network file, print, e-mail services and systems or applications
(including, but not limited to, customer support systems and enterprise resource
planning systems) available at the Premises;
(g) voice, data, server, desktop and other support for the systems and
facilities provided to Sublessee hereunder;
(h) access to local IT resource(s) as needed by Sublessee in
connection with the transition of IT services from Sublessor to Sublessee; and
(i) such other equipment, facilities and services of Sublessor used in
or useful to the operation of the Business as Sublessee shall require during the
Term.
2. TERM; TERMINATION.
2.1 The initial term of this Agreement (the "Initial Term") shall
commence on the date of this Agreement (the "Commencement Date"), and shall end
at midnight on the seventy-fifth (75th) day following the Commencement Date,
unless this Agreement is sooner terminated pursuant to any provision hereof.
Upon the expiration of the Initial Term, Sublessee shall have the right to renew
the term of this Agreement for an additional period, if any, (the "Renewal
Term") equal to the amount of time Sublessor occupies the premises under the
Master
E-2
Lease following the expiration of the Initial Term, such Renewal Term not to
exceed thirty (30) days. During the Renewal Term, Sublessee shall pay to
Sublessor rent at the applicable rate set forth in the Master Lease for the
Sublet-Premises or the portion thereof being occupied by Sublessee during the
Renewal Term. In the event that Sublessee exercises its Renewal Term option
hereunder, Sublessor shall provide to Sublessee ten (10) days advance written
notice of date Sublessor shall cease to occupy the premises under the Master
Lease. The Initial Term and the Renewal Term, if any, shall be referred to
collectively herein as the "Term". Sublessee shall vacate the Sublet-Premises at
the end of the Term.
2.2 Notwithstanding any other provision of this Agreement, Sublessee
may at its sole discretion, but shall not be obligated to, terminate this
Agreement at any time during the Term, effective upon such date as Sublessee may
establish by written notice to Sublessor.
3. RENT AND SECURITY DEPOSIT.
Sublessee's occupancy of the Sublet-Premises and enjoyment of other rights
hereunder shall be free of rent, security deposit and fee for, during and with
respect to the Term provided however that Sublessee shall be responsible for
payment of its pro-rata share of the actual, reasonable costs and charges
associated with the rights granted in 1.2(c) to 1.2(i) to extent such costs and
charges are not included within the rent payable by Sublessor pursuant to the
Master Lease. The Sublessor shall provide Sublessee with a calculation and
itemization of such costs and charges, together with support evidence and
Subleasee shall pay the undisputed amounts thereof within thirty (30) days after
receipt of such materials.
4. USE; IMPROVEMENTS; BUILDING SERVICES AND REPAIRS.
4.1 Sublessee shall use and occupy the Sublet-Premises only in the
conduct of the Business and in accordance with the terms and conditions of the
Master Lease, provided that a copy of the Master Lease is furnished Sublessee
reasonably in advance of this Agreement.
4.2 Sublessee accepts the Sublet-Premises in its condition existing
as of the date of this Agreement. Sublessee acknowledges that Sublessor has made
no representation or warranty as to the suitability of the Sublet-Premises for
the conduct of the Business or for any other purpose. Sublessee shall be solely
responsible for the installation of its own improvements, if any, in the
Sublet-Premises after the Commencement Date; PROVIDED, however, that Sublessee
shall conform to the obligations, if any, of the Master Lease pertaining
thereto.
5. MASTER LEASE.
5.1 This Agreement is and shall be at all times subject and
subordinate to the Master Lease and all matters to which the Master Lease is or
shall become subordinate.
5.2 Sublessor represents, warrants and covenants that (a) the Master
Lease is in full force and effect on the date first set forth above; (b) no
default exists on the part of any party to the Master Lease and no conditions
exist which, with notice or the passage of time, would constitute a default
thereof; (c) the unexpired portion of the term of the Master Lease is
E-3
not less than the Initial Term hereof; and (d) Sublessor shall perform all of
its obligations under and shall act in all ways necessary to maintain the Master
Lease in full force and effect throughout the Initial Term.
5.3 Sublessee shall indemnify, defend and hold Sublessor free and
harmless of and from all liability, judgments, costs, damages, fines, penalties,
claims or demands, including, but not limited to, reasonable attorneys' fees and
disbursements, arising out of (a) Sublessee's breach of this Agreement; or (b)
Sublessee's negligence or willful misconduct.
5.4 Sublessor shall indemnify, defend and hold Sublessee free and
harmless of and from all liability, judgments, costs, damages, fines, penalties,
claims or demands, including, but not limited to, reasonable attorneys' fees and
disbursements, arising out of (a) Sublessor's breach of this Agreement; or (b)
Sublessor's negligence or willful misconduct.
6. NO ENCUMBRANCES; NO ASSIGNMENT OR SUBLEASE OF SUBLET-PREMISES.
Sublessee and Sublessor, for themselves, their successors, legal
representatives and assigns, expressly covenant that they shall not assign,
transfer, mortgage or otherwise encumber this Agreement. Sublessee shall not
further sublet the Sublet-Premises or permit any part thereof to be occupied by
any third party. Any action of Sublessee or Sublessor in contravention of this
SECTION 6 shall be null and void.
7. NOTICES.
7.1 All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered four (4) business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one (1) business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
IF TO SUBLESSEE: WITH A COPY TO:
---------------- ---------------
Tollgrade Communications, Inc. Babst, Calland, Clements and Zomnir, P.C.
493 Nixon Road Two Gateway Center, 7th Floor
Cheswick, PA 15024 Pittsburgh, PA 15222
Facsimile: (412) 820-1539 Facsimile: (412) 394-6576
Attention: Sara M. Antol, Esq. Attention: Christian A. Farmakis, Esq.
IF TO SUBLESSOR: WITH A COPY TO:
---------------- ---------------
Acterna Corporation Akin Gump Strauss Hauer & Feld, LLP
12410 Milestone Center Drive 1676 International Dr., Penthouse
Germantown, MD 20876 McLean, VA 22102
Facsimile: Facsimile: (703) 891-7501
Attention: Attention: Eric W. Cowan, Esq.
E-4
8. LAWS AND JURISDICTION.
This Agreement shall be governed by, interpreted under, and construed
and enforced in accordance with the laws of the State of Florida applicable to
agreements made and to be performed wholly within the State of Florida.
9. ENTIRE AGREEMENT.
This Agreement and the collateral agreements executed in connection
with the consummation of the Purchase and Sale Agreement contain the entire
agreement between the parties with respect to the subject matter hereof and
supercede all prior agreements, written or oral, with respect thereto. This
Agreement may not be modified, changed, amended or supplemented, nor may any
obligations hereunder be waived, except by written instrument signed by the
party(ies) against which such action is charged. The parties do not intend to
confer any benefit hereunder on any person, firm or corporation other than the
parties hereto.
10. WAIVER.
No waiver of any breach of any agreement or provision contained in
this Agreement shall be deemed a waiver of any proceeding or succeeding breach
thereof, or of any other agreement or provision herein contained. No extension
of time for performance of any obligations or acts shall be deemed an extension
of time for performance of any other obligations or acts contained herein.
11. BROKERS.
Sublessor and Sublessee each warrant that they have no dealings with
any broker or agent in connection with this Agreement, and Sublessor and
Sublessee each covenant to hold harmless and indemnify the other from and
against any and all cost, expense or liability for any compensation, commissions
and charges claimed by any broker or agent with respect to either's dealings in
connection with this Agreement or negotiation thereof.
12. FURTHER AGREEMENT.
Sublessor and Sublessee each agree to do such further acts, deeds and
things, and execute and deliver such additional agreements and instruments, as
the other may reasonably require to consummate, evidence or confirm the
transaction(s) contemplated hereby or contained herein in the manner
contemplated by this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
E-5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
ATTEST: SUBLESSOR:
ACTERNA CORPORATION
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
ATTEST: SUBLESSEE:
TOLLGRADE COMMUNICATIONS, INC.
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
E-6
EXHIBIT F -- FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
this 13th day of February, 2003, by and among ACTERNA, LLC, a Delaware limited
liability company ("Seller"), TOLLGRADE COMMUNICATIONS, INC., a Pennsylvania
corporation ("Buyer"), and ALLFIRST TRUST COMPANY NATIONAL ASSOCIATION, a
national association with trust powers ("Escrow Agent"). Capitalized words,
terms and phrases used but not otherwise defined herein shall have the meanings
ascribed to such words, terms and phrases in the Purchase and Sale Agreement (as
defined below).
WITNESSETH:
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated
February 13, 2003, by and between Seller and Buyer (the "Purchase and Sale
Agreement"), Buyer has agreed to purchase from Seller certain assets from and to
assume certain liabilities of Seller; and
WHEREAS, it is a condition to the consummation of the Purchase and Sale
Agreement that Buyer, Seller and Escrow Agent execute and deliver this
Agreement; and
WHEREAS, Buyer and Seller desire Escrow Agent to perform certain services
as required pursuant to the consummation of transactions contemplated by the
Purchase and Sale Agreement, and Escrow Agent desires to perform such services,
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
AGREEMENT:
SECTION 1. ESTABLISHMENT OF ESCROW. (a) Buyer is depositing with Escrow
Agent Five Hundred Thousand U.S. Dollars ($500,000) (such amount, as may be
increased by any earnings thereon and as reduced by any disbursements pursuant
to the terms hereof, is hereinafter referred to as the "Escrow Fund") as part of
the Purchase Price under the Purchase and Sale Agreement. Escrow Agent
acknowledges receipt of the Escrow Fund. The Escrow Fund shall be used, (i) for
the payment of any amounts as to which the Buyer Indemnified Parties (as defined
in Section 6.2 of the Purchase and Sale Agreement) are entitled to
indemnification by Seller upon compliance with the procedures for
indemnification set forth in Section 6.3 through Section 6.5 of the Purchase and
Sale Agreement and subject to the limitations on indemnity set forth in Section
6.6; and (ii) to undertake Purchase Price adjustments described in Section
1.3(a) of the Purchase and Sale Agreement and in accordance with the procedures
set forth therein (collectively, the "Obligations").
(b) Escrow Agent hereby agrees to act as the escrow agent under
this Agreement and to hold, safeguard and disburse the Escrow Fund on the terms
and subject to the conditions herein contained. The Escrow Fund and all earnings
thereon shall be held by Escrow Agent in a separate account maintained for the
foregoing purpose, on the terms and subject to the
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conditions of this Agreement. Amounts held in the Escrow Fund shall not be
available to, and shall not be used by, Escrow Agent to set off any obligations
of any of the parties owing to Escrow Agent in any capacity, except as expressly
provided in this Agreement.
SECTION 2. INVESTMENT OF FUNDS. Except as Buyer and Seller may from time
to time jointly instruct Escrow Agent in writing, the Escrow Fund initially
shall be placed in a non-interest-bearing account or accounts and shall
thereafter be invested in ARK Money Market Funds, Corporate Class II, Prime Cash
Management Portfolio, until disbursement of the entire Escrow Fund.
SECTION 3. CLAIMS AGAINST THE ESCROW FUND. Upon compliance with the
terms of this Agreement, including, but not limited to, the conditions set forth
in SECTION 1(a)(I) hereof (and the procedures for indemnification set forth in
Section 6.3 through Section 6.5 of the Purchase and Sale Agreement) and SECTION
1(a)(II) hereof (and the procedures for adjustments of the Purchase Price
pursuant to Section 1.3(a) of the Purchase and Sale Agreement), as applicable,
Buyer shall deliver the Certificate of Instruction (as defined below) to Escrow
Agent, and Escrow Agent shall disburse to Buyer amounts from the Escrow Fund (to
the extent thereof) equal to any or all of the unpaid Obligations in accordance
with the procedures set forth below. Subject to the remainder of this SECTION 3,
if, on or before the Release Date (as defined in SECTION 4(a) hereof), a Buyer
Indemnified Party shall have, or reasonably believe it will have, a claim
against the Escrow Fund which such claim relates to an indemnifiable event or
adjustment of the Purchase Price pursuant to the Purchase and Sale Agreement,
the Buyer Indemnified Party shall notify the Escrow Agent and the Seller of its
request for such payment by delivery of a certificate signed by an officer of
the Buyer in substantially the form of EXHIBIT A attached hereto (the
"CERTIFICATE OF INSTRUCTION"). For a period of three (3) business days after the
Escrow Agent's and Seller's receipt of the Certificate of Instruction, the
Seller shall have the opportunity to object to the disbursement of the amounts
from the Escrow Fund by delivery to Escrow Agent and the Buyer Indemnified
Parties of a certificate signed by an officer of Seller in substantially the
form of EXHIBIT B attached hereto (the "CERTIFICATE OF OBJECTION"), certifying
to the Escrow Agent and Buyer Indemnified Parties, within such three (3) day
period, that full and complete curative action (such curative action to include,
but not be limited to, payment of money by Seller) has been taken with respect
to the matter giving rise to the claim against the Escrow Fund, and upon receipt
of the Certificate of Objection, the Escrow Agent shall not disburse any portion
of the Escrow Fund to the Buyer Indemnified Party. If such full and complete
curative action is not complete within the three (3) day period, then Buyer
shall so notify Escrow Agent and Seller by delivery of a certificate signed by
an officer of Buyer in substantially the form of EXHIBIT C attached hereto (the
"CERTIFICATE OF FURTHER INSTRUCTION"), and upon receipt of the Certificate of
Further Instruction, the Escrow Agent shall promptly disburse to the Buyer
Indemnified Party the amount(s) specified in the Certificate of Instruction.
SECTION 4. RELEASE OF ESCROW FUND; TERMINATION OF ESCROW. (a) Subject to
the provisions of SECTION 4(b) hereof, on May 13, 2004 (or, if such day is not a
business day, the next succeeding business day) (the "Release Date"), Escrow
Agent shall pay and distribute any and all funds remaining in the Escrow Fund to
Seller.
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(b) The amounts referred to in SECTION 4(A) above shall be paid
unless (i) any Indemnity Claims by a Buyer Indemnified Party are then pending,
in which case an amount equal to the aggregate dollar amount of such claims (as
shown in the notice(s) of such claims) shall be retained by Escrow Agent in the
Escrow Fund; or (ii) Buyer has given notice to Escrow Agent specifying in
reasonable detail the nature of any other Indemnity Claim that Buyer or Buyer
Indemnified Parties may have pursuant to the Purchase and Sale Agreement with
respect to which Buyer is unable to specify the amount of damages, in which case
the entire Escrow Fund shall be retained by Escrow Agent until Buyer is able to
ascertain such damages with reasonable specificity, and when Buyer ascertains
such damages, Buyer shall so notify Seller and Escrow Agent in writing.
SECTION 5. DUTIES OF ESCROW AGENT. (a) Escrow Agent shall not be
required to invest any funds held hereunder except as directed in this
Agreement.
(b) Escrow Agent shall not be liable hereunder, except for its
own gross negligence or willful misconduct, and except with respect to claims
based upon such gross negligence or willful misconduct that are successfully
asserted against Escrow Agent, the other parties hereto shall indemnify and hold
harmless Escrow Agent (and any successor to Escrow Agent) from and against any
and all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms hereof,
including, without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund, or any loss of interest incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto has full power and authority to instruct Escrow Agent on behalf of that
party unless written notice to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of legal counsel
with respect to any matter relating to this Agreement and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
but is serving only as escrow holder and only having possession thereof. Any
payments of income from the Escrow Fund shall be subject to withholding
regulations then in force with respect to United States taxes. Buyer and Seller
shall provide Escrow Agent with appropriate Internal Revenue Service Forms W-9
for tax identification number certification.
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(f) Escrow Agent (and any successor to Escrow Agent) may at any
time resign as the escrow agent under this Agreement by delivering the Escrow
Fund to any successor to Escrow Agent jointly designated by the other parties
hereto in writing, or to any court of competent jurisdiction, whereupon Escrow
Agent shall be discharged of and from any and all further obligations arising in
connection with this Agreement. The resignation of Escrow Agent shall take
effect on the appointment of a successor to Escrow Agent (including a court of
competent jurisdiction).
(g) In the event of any disagreement between Seller and Buyer
resulting in adverse claims or demands being made in connection with the Escrow
Fund, or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until
Escrow Agent shall have received (i) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund, or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Fund, in which events Escrow Agent shall disburse the Escrow Fund in accordance
with such order or agreement. Any court order shall be accompanied by a legal
opinion by legal counsel for the presenting party, reasonably satisfactory to
Escrow Agent, to the effect that the order is final and non-appealable. Escrow
Agent shall act on such court order and legal opinion without further question.
(h) Seller and Buyer shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent hereunder in
such amounts as are usually and customarily charged by Escrow Agent, and hereby
agree to reimburse Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by Escrow Agent in the performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its legal
counsel). Any such compensation and reimbursement to which Escrow Agent is
entitled shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer.
(i) No printed or other matter in any language (including,
without limitation, notices, reports and promotional material) that mentions
Escrow Agent's name or the rights, powers, or duties of Escrow Agent shall be
issued by the other parties hereto or on such parties' behalf unless Escrow
Agent shall first have given its specific written consent thereto.
(j) The provisions of SECTIONS 5(b) and (e) hereof shall survive
the expiration or earlier termination of this Agreement or the resignation or
replacement of Escrow Agent.
SECTION 6. LIMITED RESPONSIBILITY. This Agreement expressly sets forth
all the duties of Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Agreement
against Escrow Agent. Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Agreement.
SECTION 7. OWNERSHIP FOR TAX PURPOSES. For purposes of federal and other
taxes based on income, Seller and Buyer shall be treated as each having an
undivided one-half (1/2) interest in the Escrow Fund. Seller and Buyer shall
report all income, if any, that is earned on, or derived from, the Escrow Fund
as their income, in the foregoing proportions, in the taxable year or years in
which such income is properly includible and shall pay any taxes attributable
thereto.
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SECTION 8. TERMINATION. This Agreement shall terminate on the later to
occur of the Release Date or the date all of the Escrow Funds are disbursed in
accordance with the terms of this Agreement, unless earlier terminated by the
written consent of the parties to this Agreement.
SECTION 9. NOTICES. All notices, consents, waivers and other
communications under this Agreement must be in writing and shall be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) one (1) business day following transmission by telecopier (with
written confirmation of receipt), provided that a copy is also mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and/or telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
IF TO BUYER: WITH A COPY TO:
------------ ---------------
Tollgrade Communications, Inc. Babst, Calland, Clements and Zomnir, P.C.
493 Nixon Road Two Gateway Center, 7th Floor
Cheswick, PA 15024 Pittsburgh, PA 15222
Facsimile: (412) 820-1539 Facsimile: (412) 394-6576
Attention: Sara M. Antol, Esq. Attention: Christian A. Farmakis, Esq.
IF TO SELLER: WITH A COPY TO:
------------- ---------------
Acterna, LLC Akin Gump Strauss Hauer & Feld, LLP
12410 Milestone Center Drive 1676 International Dr., Penthouse
Germantown, MD 20876 McLean, VA 22102
Facsimile: Facsimile: (703) 891-7501
Attention: Attention: Eric W. Cowan, Esq.
IF TO ESCROW AGENT:
Allfirst Trust Company National Association
25 S. Charles St.
16th Floor
Baltimore, MD 21201
Facsimile: (410) 244-4236
Attention: Sharon Surguy
SECTION 10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall be deemed to constitute one and the same instrument.
F-5
SECTION 11. SECTION HEADINGS. The headings of sections in this Agreement
are provided for convenience only and shall not affect its construction or
interpretation.
SECTION 12. WAIVER. The rights and remedies of the parties hereto are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement shall operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege shall preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other parties; (b) no waiver that may be
given by a party shall be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party shall be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
SECTION 13. EXCLUSIVE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements among the parties hereto with respect to the
subject matter hereof and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by a written agreement executed by all of the parties
hereto.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflicts of law principles.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
ATTEST: SELLER:
ACTERNA, LLC
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
ATTEST: BUYER:
TOLLGRADE COMMUNICATIONS, INC.
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
ATTEST: ESCROW AGENT:
ALLFIRST TRUST COMPANY,
NATIONAL ASSOCIATION
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
F-7
EXHIBIT A
CERTIFICATE OF INSTRUCTION
TO
ALLFIRST TRUST COMPANY NATIONAL ASSOCIATION
AS ESCROW AGENT
The undersigned, Tollgrade Communications, Inc., a Pennsylvania corporation
("Buyer"), pursuant to Section 3 of that certain Escrow Agreement dated as of
February 13, 2003, by and among Acterna, LLC, a Delaware limited liability
company ("Seller"), Buyer, and Allfirst Trust Company National Association, a
national association with trust powers ("Escrow Agent") (terms defined in said
Escrow Agreement have the same meanings when used herein), hereby:
(a) certifies that (i) Buyer has sent to Seller a written notification, a
copy of which is attached hereto, of a claim for payment pursuant to that
certain Purchase and Sale Agreement dated February 13, 2003, by and between
Seller and Buyer (the "Purchase and Sale Agreement"), (ii) [the amount of
$_____________________] [an amount in excess of the balance of the Escrow Fund]
is payable to Buyer by Seller pursuant to Seller's obligations under the
Purchase and Sale Agreement, and (iii) Buyer has sent a copy of this Certificate
of Instruction to the Seller; and
(b) instructs Escrow Agent to [make such payment] [pay the balance of the
Escrow Fund] to Buyer from the Escrow Fund by a wire transfer of immediately
available funds to Buyer's account at _________________________ (Account No.
_________________), within two (2) business days following the date of this
certificate.
WIRE INSTRUCTIONS:
- -----------------
ABA #:
ACCT.:
ACCT Name:
REF:
ATTN:
TOLLGRADE COMMUNICATIONS, INC.
Date: ____________________________ By: ___________________________
Name: ___________________________
Title: ___________________________
F-8
EXHIBIT B
CERTIFICATE OF OBJECTION
TO
ALLFIRST TRUST COMPANY NATIONAL ASSOCIATION
AS ESCROW AGENT
The undersigned, Acterna, LLC, a Delaware limited liability company
("Seller"), pursuant to Section 3 of that certain Escrow Agreement dated as of
February 13, 2003, by and among Seller, Tollgrade Communications, Inc., a
Pennsylvania corporation ("Buyer"), and Allfirst Trust Company National
Association, a national association with trust powers ("Escrow Agent") (terms
defined in said Escrow Agreement have the same meanings when used herein),
hereby:
(a) certifies that full and complete curative action has been taken
with respect to the matter giving rise to the claim against the Escrow Fund that
is specified in that certain Certificate of Instruction from Buyer to Escrow
Agent dated ________________, 200__; and
(b) accordingly objects to disbursement of funds from the Escrow Fund
by Escrow Agent as claimed in such Certificate of Instruction.
ACTERNA, LLC
Date: ____________________________ By: ___________________________
Name: ___________________________
Title: ___________________________
F-9
EXHIBIT C
CERTIFICATE OF FURTHER INSTRUCTION
TO
ALLFIRST TRUST COMPANY NATIONAL ASSOCIATION
AS ESCROW AGENT
The undersigned, Tollgrade Communications, Inc., a Pennsylvania corporation
("Buyer"), pursuant to Section 3 of that certain Escrow Agreement dated as of
February 13, 2003, by and among Acterna, LLC, a Delaware limited liability
company ("Seller"), Buyer, and Allfirst Trust Company National Association, a
national association with trust powers ("Escrow Agent") (terms defined in said
Escrow Agreement have the same meanings when used herein), hereby:
(a) notifies Escrow Agent that full and complete curative action has not
been taken by Seller with respect to the matter giving rise to the claim against
the Escrow Fund that is specified in that certain Certificate of Instruction
from Buyer to Escrow Agent dated ________________, 200__; and
(b) instructs Escrow Agent to make the payment to Buyer from the Escrow
Fund that is specified in such Certificate of Instruction, within two (2)
business days following the date of this certificate.
TOLLGRADE COMMUNICATIONS, INC.
Date: ____________________________ By: ____________________________
Name: ____________________________
Title: ____________________________
F-10
EXHIBIT G -- FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement) is made and
entered into as of this 13th day of February, 2003, by and between ACTERNA, LLC,
a Delaware limited liability company ("Acterna"), and TOLLGRADE COMMUNICATIONS,
INC., a Pennsylvania corporation ("Tollgrade").
WITNESSETH:
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated
February 13th, 2003, by and between Sublessor and Sublessee (the "Purchase and
Sale Agreement"), Tollgrade has agreed to purchase from Acterna the Acquired
Assets (as such term is defined in the Purchase and Sale Agreement) and to
assume certain liabilities of Acterna. Capitalized words, terms and phrases used
but not otherwise defined herein shall have the meanings ascribed to such words,
terms and phrases in the Purchase and Sale Agreement.
WHEREAS, in connection with the consummation of the transactions
contemplated by the Purchase and Sale Agreement, Acterna has agreed to assign to
Tollgrade, and Tollgrade has agreed to assume from Acterna, all of Acterna's
right, title and interest in and to the Assigned Contracts, all other intangible
components of the Acquired Assets, and the Assumed Liabilities (the "Assigned
Rights and Assumed Liabilities").
NOW, THEREFORE, in consideration of the premises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Tollgrade and Acterna, intending to be legally bound
hereby, agree as follows:
AGREEMENT:
SECTION 1. ASSIGNMENT. Acterna hereby sells, assigns, transfers and
conveys absolutely to Tollgrade, its successors and assigns, all of Acterna's
right, title and interest in, to and under the Assigned Rights and Assumed
Liabilities, together with all rights, benefits and privileges of Acterna
thereunder and all revenues and profits arising therefrom, subject to the
covenants, conditions, agreements, terms, obligations, restrictions and other
provisions set forth herein and in the Purchase and Sale Agreement.
SECTION 2. ASSUMPTION. Tollgrade hereby purchases such right, title and
interest and accepts such assignment, transfer and conveyance and assumes and
agrees to perform, discharge and comply with all of Acterna's obligations under
the Assigned Rights and Assumed Liabilities from and after the date hereof.
SECTION 3. AMENDMENT. This Agreement may not be amended, modified or
supplemented, nor may any provisions hereof be waived, except by a written
instrument signed by each of the parties hereto.
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SECTION 4. SUCCESSORS AND ASSIGNS. The covenants and agreements set
forth herein shall be binding upon, and inure to the benefit of, the respective
successors and assigns of the parties hereto.
SECTION 5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 6. COUNTERPARTS. This Agreement may be executed by the parties
in separate counterparts, each of which shall be an original when so executed
and delivered, but all of which counterparts together shall constitute one and
the same instrument.
SECTION 7. FURTHER ASSURANCES. Acterna and Tollgrade shall cooperate
with each other with respect to the subject matter of this Agreement, and each
party shall take such further actions and execute such further instruments or
documents as the other party reasonably shall request from time to time to
implement the purposes of this Agreement.
SECTION 8. ENTIRE AGREEMENT. This Agreement and the collateral
agreements executed in connection with the consummation of the Purchase and Sale
Agreement contain the entire agreement between the parties with respect to the
subject matter hereof and supercede all prior agreements, written or oral, with
respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
G-2
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the day and year first set forth above.
ATTEST: ACTERNA, LLC
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
ATTEST: TOLLGRADE COMMUNICATIONS, INC.
By: ____________________________ By: ___________________________
Name: ____________________________ Name: ___________________________
Title: ___________________________
G-3
EXHIBIT H -- FORM OF INTEROPERABILITY AGREEMENT
THIS INTEROPERABILITY AGREEMENT (this "Agreement") is made and entered into
as of this 13th day of February, 2003 by and between TOLLGRADE COMMUNICATIONS,
INC., a Pennsylvania corporation with its principal place of business at 493
Nixon Road, Cheswick, Pennsylvania 15024 ("Tollgrade"), and ACTERNA, LLC, a
Delaware limited liability company having its principal office at 12410
Milestone Center Drive, Germantown, Maryland 20876 ("Company") (each a "Party"
and collectively, the "Parties").
WITNESSETH:
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated of even
date herewith (the "Purchase and Sale Agreement"), Tollgrade acquired from the
Company certain assets relating to status and performance monitoring system
products previously sold by the Company to the cable industry under the product
family name of "NetMentor" (the "Tollgrade Products");
WHEREAS, Company continues to own, manufacture and sell certain products
relating to return path monitoring systems for the cable industry with the
product family name of "Phasor" and "PathTrak" (the "Company Products"); and
WHEREAS, Company and Tollgrade have determined that it would be mutually
beneficial to develop, test and continue to maintain interoperability between
the Tollgrade Products and the Company Products.
NOW, THEREFORE, in consideration of the mutual covenants contained and
referenced herein, the Parties, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
SCOPE
-----
SECTION 1.1 OBLIGATION. Subject to the terms of this Agreement and during
the Term hereof (as that term is defined in SECTION 6.1 hereof), (a) Tollgrade
shall take all actions necessary and appropriate to maintain, develop, produce,
market, sell and support Tollgrade Products (as modified, changed, released or
enhanced from time to time) that are interoperable with the Company Products;
and (b) the Company shall take all actions necessary and appropriate to
maintain, develop, produce, market, sell and support the Company Products (as
modified, changed, released or enhanced from time to time) that are
interoperable with the Tollgrade Products. The Parties acknowledge and agree
that in order to accomplish the above obligations, it may be necessary for each
Party to undertake certain development activities on their respective products.
At all times, all such development activities shall be performed at each Party's
sole cost and expense; PROVIDED, HOWEVER, in no event shall each Party be
required to expend more than Fifty Thousand U.S. Dollars ($50,000) annually (the
"Cap") in furtherance of such development activities. Notwithstanding the
foregoing, the Parties may agree, on a case by case basis, to expend amounts in
excess of the Cap during a particular year.
H-1
SECTION 1.2 LICENSE. Subject to the terms of this Agreement and during
the Term hereof, each of Tollgrade and Company hereby grant to the other a
limited, non-exclusive right and license to use each other's Licensed Know-How
(as that term is defined below) solely for the purpose of maintaining,
developing, producing, marketing, selling and supporting a version or versions
of the Tollgrade Products and the Company Products that shall be interoperable
with each other. As used in this Agreement, "Licensed Know-How" shall mean all
technical information, interface components, intellectual property (as described
in SECTION 5.4 hereof), hardware, software, firmware, discoveries, inventions,
copyrights, trade methods, technology, designs, plans, drawings, business
secrets, samples, schematics, blueprints, formulations, test instructions and
processes relating thereto that each Party may make available to the other from
time to time.
SECTION 1.3 DESIGN AND DEVELOPMENT; MILESTONES; LOANED MATERIALS. In
order for the Tollgrade Products and the Company Products to continue to be
interoperable with each other, each Party shall, at its sole cost and expense
and during the Term: (a) establish test beds in the facilities of the other
Party for the purposes of maintaining, developing and testing interoperability
between the Tollgrade Products and the Company Products; (b) deliver to the
other Party and install at its facilities such equipment, hardware, software and
documentation (including, but not limited to, prototypes of the Tollgrade
Products and the Company Products and production models) as may be necessary to
achieve and maintain interoperability between the Tollgrade Products and the
Company Products; (c) promptly provide further releases of and upgrades, updates
and enhancements to same; and (d) provide the receiving Party such technical
support as is reasonably necessary to complete the design and development of
mutually agreed upon features and functions, and testing, implementation,
support and maintenance of interoperability. All such equipment, hardware,
software and documentation, including all further releases, upgrades, updates
and enhancements to same, shall be deemed loaned for the duration of this
Agreement, and shall be referred to herein as the "Loaned Materials". Each Party
may use the Loaned Materials of the other for purposes of design and development
of mutually agreed upon features and functions, and testing, implementation,
support and maintenance of interoperability. Notwithstanding the foregoing, the
Parties specifically acknowledge and agree that the Loaned Materials shall not
include source code, protocols or proprietary logic.
SECTION 1.4 TREATMENT AND MAINTENANCE OF LOANED MATERIALS. For so long as
each Party has the right to retain Loaned Materials in accordance with this
Agreement, the originating Party shall provide, at its sole cost and expense,
all standard maintenance and support services relating thereto. For so long as
each Party retains the Loaned Materials in accordance with this Agreement, the
retaining Party shall: (a) not remove the Loaned Materials or any components
thereof from the facility at which they have been installed without the prior
written consent of the originating Party; (b) not demonstrate or make the Loaned
Materials available to any third party whatsoever without the prior written
consent of the originating Party; (c) maintain the Loaned Materials in the same
condition as when received, reasonable wear and tear excepted; (d) not sell,
assign, sublicense, pledge, or otherwise dispose of, or encumber or suffer a
lien or encumbrance upon or against any interest in any Loaned Materials or
components thereof; (e) not incorporate the Loaned Materials into any product of
either Party other than the Tollgrade
H-2
Products and the Company Products; and (f) not reverse engineer, disassemble, or
otherwise copy or make derivative use of the Loaned Materials.
SECTION 1.5 MAINTENANCE OF INTEROPERABILITY. The Parties shall negotiate
a process for maintaining the interoperability of the Tollgrade Products and the
Company Products for the Term of this Agreement, including, without limitation,
(a) communicating changes to the product specifications of products which are
required to be interoperable hereunder in advance of general release, agreeing
upon product changes, and providing further releases, upgrades, updates and
enhancements for evaluation prior to releasing changes to the marketplace; (b)
maintaining the role of the Project Managers (as that term is defined in SECTION
2.1 hereof) for on-going communications of product changes that could impact
interoperability; and (c) conducting an annual interoperability review.
SECTION 1.6 NO OBLIGATION TO PURCHASE OR SELL PRODUCTS. This Agreement
shall not bind or obligate either Party to purchase any products from or sell
any products to the other Party.
SECTION 1.7 NO LIMITATION ON INTEROPERABILITY WITH THIRD PARTY PRODUCTS.
Except for the interoperability contemplated hereunder, this Agreement shall not
be construed to limit the right of either Party to market or offer
interoperability to or with products of third parties.
SECTION 1.8 SALES OF TOLLGRADE'S RETURN PATH SWITCH. During the Term of
this Agreement, Tollgrade shall sell to the Company Tollgrade's Return Path
Switch product ("RPS") on terms and prices equal to the terms and prices upon
which Tollgrade sells the RPS to its best customer.
SECTION 1.9 USE OF SOFTWARE. Company shall make available to Tollgrade at
all reasonable times during the Term of this Agreement, the Software listed on
EXHIBIT A attached hereto and made a part hereof (the "Software"), as such
software resides on the computer equipment of the Company. The Company and
Tollgrade acknowledge and agree that (a) the Company shall not be deemed to be
in default hereunder if the terms of a license agreement relating to the
Software forbids the Company from making available to Tollgrade such Software;
and (b) Tollgrade shall not be in default hereunder if it is prevented from
fulfilling its obligations pursuant to this Agreement if such Software is
unavailable for use by Tollgrade, it being understood and agreed that, in each
of the above-described cases, no release of software source code shall occur
pursuant to ARTICLE 7 hereof.
ARTICLE 2
PROJECT MANAGERS
----------------
SECTION 2.1 DESIGNATION OF PROJECT MANAGERS. The Parties hereby appoint
the following individuals to act as project managers ("Project Managers") for
the undertakings contemplated by this Agreement, and to manage the overall
relationship between the Parties pursuant to this Agreement:
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For Tollgrade: Jim Price
Telephone: (412) 820-1485
(Address as set forth in SECTION 7.1 hereof)
For Company: Michael Wright
Telephone: (317) 788-9351
(Address as set forth in SECTION 7.1 hereof)
SECTION 2.2 CHANGING PROJECT MANAGERS. Each Party in its sole discretion
may change its Project Manager by providing written notice to the other Party in
accordance with the provisions of ARTICLE 8 hereof.
ARTICLE 3
COSTS AND EXPENSES
------------------
SECTION 3.1 RESPECTIVE RESPONSIBILITY. Subject to the Cap, each Party
shall be solely responsible for the costs and expenses associated with the
development work required of that Party, and shall pay its own costs and
expenses related to travel, accommodations, meals, and all other costs incurred
pursuant to its performance of this Agreement.
ARTICLE 4
RELATIONSHIP OF THE PARTIES
---------------------------
SECTION 4.1 INDEPENDENT CONTRACTORS. The relationship of the Parties
shall be as independent contractors, and nothing contained in this Agreement
shall be construed to create or imply a joint venture, partnership,
principal-agent or employment relationship between the Parties. Neither Party,
nor their respective employees or agents, shall be eligible for or entitled to
any benefits, perquisites or privileges given or extended to the employees of
the other Party. Without limitation of the foregoing, the Parties acknowledge
and agree that neither Party or its respective employees or agents: (a) is or
shall hold itself forth as a sales agent for, or representative of, the other
Party; or (b) shall accept purchase orders from third parties for the products
of the other Party (including, but not limited to, the Tollgrade Products and
the Company Products) or otherwise make representations or commitments on behalf
of the other Party.
ARTICLE 5
CONFIDENTIAL INFORMATION; INTELLECTUAL PROPERTY
SECTION 5.1 TREATMENT OF CONFIDENTIAL INFORMATION. Each of Tollgrade and
Company agree to hold the other's ideas, inventions, proprietary information,
trade secrets, know-how and confidential business information, including,
without limitation, the Tollgrade Licensed Know-How, the Company Licensed
Know-How, the Loaned Materials, and any other information provided to each other
relating to the Tollgrade Products or the Company Products (the "Confidential
Information") in confidence, and each Party shall not use or disclose such
Confidential Information to any third party whatsoever (including, without
limitation, any parent, subsidiary, affiliate or successor, or any other party
related directly or indirectly to said Party),
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except as provided in this Agreement. The Parties shall use their best efforts
to have all Confidential Information in writing and suitably identified as
confidential or proprietary.
SECTION 5.2 EXCEPTIONS. Not included within the restrictions set forth in
SECTION 5.1 hereof shall be information: (a) published or otherwise made
available to the public other than by a breach of this Agreement; (b) rightfully
received from an independent third party (i.e., not including any parent,
subsidiary, affiliate or successor, or any other party related directly or
indirectly to said receiving Party) without restrictions on disclosures; (c)
approved in writing for release by the originating Party; (d) furnished to a
third party by the disclosing Party without a similar restriction on the third
party's right to publish or disseminate; or (e) disclosed pursuant to a valid
court order, PROVIDED that the originating Party receives timely prior written
notification of such court order and is afforded a reasonable opportunity to
stop such disclosure or obtain a protective order pertaining thereto.
SECTION 5.3 RETURN OF CONFIDENTIAL INFORMATION. Upon expiration or
termination of this Agreement, the receiving Party shall turn over to the
originating Party all originals and copies of all plans, specifications,
drawings, documents, and other writings and recorded materials of every kind
(including, without limitation, any materials stored in electronic media)
embodying the originating Party's Confidential Information; and shall not
thereafter reassemble or disclose any Confidential Information from memory.
SECTION 5.4 RETENTION OF RIGHTS IN INTELLECTUAL PROPERTY. Except for the
license specifically described in ARTICLE 1 hereof, (a) the Parties shall each
retain all right, title and interest in, to and under their respective
intellectual property rights, including but not limited to, all technical
information, interface components, intellectual property (including any existing
patents owned by or licensed to either Party which that Party has a right to
license, and any patents granted pursuant to applications now pending, including
any and all reissues and patent applications to be filed in the United States or
other countries), hardware, software, firmware, discoveries, inventions,
copyrights, trade secrets, trade methods, technology, designs, plans, drawings,
business secrets, samples, schematics, blueprints, formulations, test
instructions and processes, including but not limited to Confidential
Information; and (b) no rights therein shall be transferred or conferred by this
Agreement or any action contemplated herein. Each Party may freely use, enjoy,
license, dispose of, or otherwise exploit any of its respective rights, titles
and interests in, to and under its own intellectual property, including but not
limited to Confidential Information, in its sole discretion.
SECTION 5.5 JOINT DEVELOPMENTS. Ownership of intellectual property
resulting from any joint development related uniquely to the Tollgrade Products
or the Tollgrade Licensed Know-How shall belong to Tollgrade, and ownership of
intellectual property resulting from any joint development related uniquely to
the Company Products or the Company Licensed Know-How shall belong to Company.
Intellectual property resulting from joint development that does not result
uniquely from either Party's product, the Tollgrade Licensed Know-How or the
Company Licensed Know-How shall be jointly owned by both Parties, and the
Parties shall negotiate in good faith a joint development and ownership
agreement with respect thereto.
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SECTION 5.6 INJUNCTIVE RELIEF. The Parties acknowledge and agree that a
remedy of damages may be inadequate to protect the interests of the Parties in
their respective Confidential Information in the event of breach or threatened
breach of this ARTICLE 5. Accordingly, each Party acknowledges the availability
and propriety of injunctive or other equitable relief to either Party with
respect to any Confidential Information disclosed hereunder, in addition to any
other remedy at law that may be available to the disclosing Party. The
prevailing Party in any action or proceeding to interpret or enforce the rights
and duties set forth in this ARTICLE 5 shall be entitled to recover that Party's
actual attorneys' fees and expenses and all other costs and expenses incurred in
connection with such action or proceeding and the enforcement of any judgment or
order obtained.
SECTION 5.7 SURVIVAL OF OBLIGATIONS. The protections and restrictions of
this ARTICLE 5 pertaining to use, disclosure or non-disclosure of Confidential
Information shall survive the expiration or termination of this Agreement.
ARTICLE 6
TERM; TERMINATION
SECTION 6.1 TERM. Unless earlier terminated as provided in SECTION 6.2,
the term of this Agreement shall commence as of the date first set forth above
and shall continue for a period of two (2) years, unless the Parties mutually
agree in writing to extend such period (the "Term").
SECTION 6.2 TERMINATION. In the event that either Party fails to perform
or observe any term, obligation, covenant, provision or condition of this
Agreement, then, upon reasonable notice and an opportunity to cure, the
non-breaching Party shall have the right to immediately terminate this
Agreement; PROVIDED, HOWEVER, that this SECTION 6.2 shall not affect the
immediate availability of the injunctive or other equitable relief set forth in
SECTION 5.6 hereof in the event of breach or threatened breach of the provisions
of ARTICLE 5 hereof. Without limitation of the foregoing, either Party shall
also have the right to terminate this Agreement immediately upon the occurrence
of (a) a breach by either Party of the non-disclosure obligations hereunder and
(b) a default by the other Party under the Purchase and Sale Agreement beyond
any notice and cure periods applicable thereto. In addition to the rights set
forth in this SECTION 6.2 the Parties, upon a breach of this Agreement, may
exercise any rights and remedies available at law or in equity.
SECTION 6.3 RETURN OF LOANED MATERIALS. Following the expiration or
termination of this Agreement, in addition to the obligations set forth in
ARTICLE 5 hereof regarding return of Confidential Information, each Party shall
promptly return to the originating Party all of its Loaned Materials, including
all copies thereof in whatever form held, at the originating Party's expense.
SECTION 6.4. SURVIVAL OF LICENSES WITH RESPECT TO EXISTING PRODUCTS.
Notwithstanding the expiration or termination of this Agreement, the licenses
granted pursuant to SECTION 1.2 hereof, shall continue in force and effect with
respect to any such interoperable units of the Tollgrade Products and the
Company Products developed, produced, marketed and sold during the Term of this
Agreement.
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ARTICLE 7
ESCROW ARRANGEMENT
------------------
SECTION 7.1 DEPOSIT IN ESCROW. The Parties acknowledge and agree that:
(a) the Tollgrade Products contain software including, without limitation,
certain interface software necessary to make them interoperable with the Company
Products ("Tollgrade Software"); and (b) the Company Products contain software
including, without limitation, certain interface software necessary to make them
interoperable with the Tollgrade Products ("Company Software"). Within ten (10)
days following the execution of this Agreement and every six (6) months
thereafter, Tollgrade and Company shall each deposit with DSI Technology Escrow
Services (the "Escrow Agent") the source code for the Tollgrade Software and the
Company Software, and all relevant commentary, explanation and other
documentation, as well as instructions to compile the source code, plus all
revisions to the source code encompassing all corrections, changes,
modifications and enhancements made to the Tollgrade Software and the Company
Software by Tollgrade and Company respectively (the "Escrow Material"). The
Parties acknowledge and agree that the Escrow Agent may require a separate
escrow agreement to be executed by the Parties. If such is the case, the escrow
agreement shall be mutually acceptable to the Parties; provided, however, that
such escrow agreement shall contain the same provisions as those set forth in
this ARTICLE 7.
SECTION 7.2 TERM OF ESCROW. The Escrow Material shall remain in escrow
during the entire Term of this Agreement, and at the end of the Term, the Escrow
Material will be released to the applicable Party.
SECTION 7.3 ESCROW RELEASE DEFAULT. An escrow release event ("Escrow
Release Event") shall be deemed to have occurred under this Article 7 upon the
occurrence of any of the following:
(a) a termination pursuant to Section 6.2(a) of this Agreement; or
(b) if (i) either Party has filed a voluntary or involuntary
proceeding in bankruptcy in which the subject Party is the named debtor; an
assignment by either Party for the benefit of its creditors; the
appointment of a receiver for either Party; or any other proceeding
involving insolvency or the protection of or from creditors (an "Insolvency
Event"); and (ii) in each such case, (A) such Insolvency Event causes a
Party to commit a material breach of a material provision under this
Agreement, and (B) such breach cannot be cured within 45 days; or
(c) if either Party has ceased its on-going business operations, or
the sale, licensing, maintenance or other support of the Tollgrade Products
or the Company Products; or
(d) if either Party refuses to provide written confirmation of its
intent to perform, upon written request from the other Party.
Upon the occurrence of an Escrow Release Event, the non-breaching Party
shall give written notice by certified mail to the Escrow Agent and the other
Party of the occurrence of an
H-7
Escrow Release Event hereunder. Unless, within fifteen (15) days thereafter, the
breaching Party files with the Escrow Agent its affidavit executed by an
executive officer clearly refuting each area of claimed Escrow Release Event or
showing that the Escrow Release Event has been cured, then Escrow Agent shall
upon the sixteenth (16th) day deliver to the non-breaching Party the Escrow
Material and all revisions and additions thereto. Should the Parties disagree on
whether an Escrow Release Event has occurred, the disagreement shall be decided
immediately by arbitration in Pittsburgh, Pennsylvania, in accordance with the
commercial rules of the American Arbitration Association. The award of the
arbitrator shall be final and binding and may be entered as a judgment in any
court of competent jurisdiction.
SECTION 7.4 USE OF ESCROW MATERIALS. In the event of a release of the
Escrow Materials pursuant to SECTION 7.3 above, the non-breaching Party shall
use the breaching Party's Escrow Material solely for the purpose of maintaining,
developing, producing, marketing, selling and supporting versions of (a) the
Tollgrade Products that are interoperable with the Company Products (if Company
is the breaching Party); or (b) the Company Products that are interoperable with
the Tollgrade Products (if Tollgrade is the breaching Party). In all events,
each Party, or its successors or assigns, shall remain the owner of the Escrow
Material. Each Party's right to use the Escrow Materials shall be that of a
non-exclusive licensee only.
SECTION 7.5 FEES OF ESCROW AGENT. All fees of the Escrow Agent shall be
borne equally by the Parties.
SECTION 7.6 TESTING. Each Party may, upon written request to the other
Party and the Escrow Agent, conduct tests of the other Party's Escrow Material,
under the non-requesting Party's supervision and at the Escrow Agent's location,
to confirm the conditions of the Escrow Material. Any direct costs associated
with the testing of the Escrow Material, including direct expenses of the
non-requesting Party, shall be borne by the requesting Party.
ARTICLE 8
NOTICES
SECTION 8.1 NOTICES. All notices and other communications between the
Parties provided for in this Agreement shall be in writing and shall be deemed
to have been duly given and received when delivered by hand, facsimile, mailed
first class, postage prepaid, or overnight express mail to the following
addresses:
If to Tollgrade:
Tollgrade Communications, Inc.
493 Nixon Road
Cheswick, PA 15024
Facsimile: (412) 820-1530
Attention: Christian L. Allison, Chief Executive Officer
H-8
With a copy (which shall not of itself constitute notice) to:
Sara M. Antol, General Counsel
Tollgrade Communications, Inc.
(address as above)
If to Company:
Acterna, LLC
12410 Milestone Center Drive
Germantown, MD 20876
Facsimile: 240-404-1199
Attention: Rick Goshorn
With a copy (which shall not of itself constitute notice) to:
Akin Gump Strauss Hauer & Feld, LLP
1676 International Drive, Penthouse
McLean, VA 22102
Facsimile: 703-891-7501
Attention: Eric W. Cowan, Esq.
or such other address or facsimile number as to which notice has been duly
given in accordance with this SECTION 8.1.
ARTICLE 9
ASSIGNMENT
----------
SECTION 9.1 ASSIGNABILITY. Neither this Agreement nor any other rights or
obligations of either Party hereunder may be assigned, delegated, sublicensed,
or otherwise transferred (by asset sale, stock sale, merger, consolidation, or
any other means of transfer whether by operation of law or otherwise) by either
Party to any other party, including, without limitation, any parent, subsidiary,
affiliate or successor, or any other party related directly or indirectly to
said Party, without the prior written consent of the other Party hereto.
Notwithstanding the foregoing, in the event either Party enters into a
transaction that transfers or conveys to a third party (by asset sale, stock
sale, merger, consolidation, or any other means of transfer whether by operation
of law or otherwise) ownership rights to one or more of the products in the line
of Company Products or the line of the Tollgrade Products, the transferring
Party shall be required to assign this Agreement and all rights and obligations
hereunder to such successor third party unless the non-transferring Party
provides written notice specifically prohibiting the other Party from assigning
this Agreement to such third party.
H-9
ARTICLE 10
GOVERNING LAW; JURISDICTION
---------------------------
SECTION 10.1 GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the Commonwealth of Pennsylvania, without
regard to its conflicts of law provisions.
SECTION 10.2 JURISDICTION. With the exception of the Parties' agreement to
arbitrate pursuant to SECTION 7.3, the Parties agree to submit to the exclusive
jurisdiction of any state or federal court sitting in Allegheny County,
Pennsylvania, with respect to legal disputes pertaining to the subject matter of
this Agreement.
ARTICLE 11
PUBLICITY
----------
SECTION 11.1 PROMOTION OF PRODUCTS. During the Term, each Party shall have
the right to advertise, publicize and promote to its respective customers and to
the public that the Company Products and the Tollgrade Products are
interoperable with each other.
SECTION 11.2 TRADEMARK RIGHTS. When advertising, publicizing and promoting
the interoperability of the Tollgrade Products and the Company Products in
accordance with the foregoing SECTION 11.1, Company shall have the right to use
the following trademarks of Tollgrade: "Cheetah", "NetMentor" and "Tollgrade";
and Tollgrade shall have the right to use the following Company's trademarks:
"Acterna", "Phasor" and "PathTrak"; provided, however, the "(R)" symbol is
affixed thereto, if a registered trademark, or the "(TM)" symbol is affixed
thereto, if the trademark has not been approved for registration, and such use
features written acknowledgment that the trademarks so employed are solely owned
by the Party having the right thereto. Neither Party shall use the
aforementioned trademarks for any other purpose other than that which is set
forth in this ARTICLE 11.
ARTICLE 12
DISCLAIMER OF WARRANTIES;
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 12.1 DISCLAIMER OF WARRANTIES. EACH OF TOLLGRADE AND COMPANY
SPECIFICALLY DISCLAIM ANY AND ALL WARRANTIES RELATING TO THE INCORPORATION OF
ITS LICENSED KNOW-HOW INTO THE PRODUCTS OF THE OTHER PARTY, WHETHER EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, MARKETABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SECTION 12.2 NO REPRESENTATIONS OR WARRANTIES ON PRODUCTS OF OTHER PARTY.
Neither Party shall make any representations or warranties to third parties with
respect to the products of the other Party without that Party's prior written
consent.
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SECTION 12.3 LIMITATION OF LIABILITY. EXCEPT WITH RESPECT TO BREACH OF THE
DUTIES AND OBLIGATIONS SET FORTH IN ARTICLE 5 HEREOF, AND EXCEPT WITH RESPECT TO
EITHER PARTY'S BREACH OF THE RESTRICTIONS OF THE LICENSES GRANTED HEREIN, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF REVENUE OR PROFIT),
WHETHER ARISING FROM OR BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), INDEMNITY OR OTHER CAUSE OR BASIS WHATSOEVER.
SECTION 12.4 INDEMNIFICATION BY TOLLGRADE. Tollgrade shall, at its sole
expense, defend and hold Company, its officers, directors, shareholders,
employees, agents, affiliates, successors and assigns, free and harmless from
all losses, costs and damages in respect to any claim, action or suit of any
third party arising out of (a) any representations or warranties made by
Tollgrade as to the suitability of the Company Products for use with the
equipment or system of a third party; or (b) any infringement upon any patent or
proprietary rights of a third party based on the use of the Tollgrade Products
or the Tollgrade Licensed Know-How.
SECTION 12.5 INDEMNIFICATION BY COMPANY. Company shall, at its sole
expense, defend and hold Tollgrade, its officers, directors, shareholders,
employees, agents, affiliates, successors and assigns, free and harmless from
all losses, costs and damages in respect to any claim, action or suit of any
third party arising out of (a) any representations or warranties made by Company
as to the suitability of the Tollgrade Products for use with the equipment or
system of a third party; or (b) any infringement upon any patent or proprietary
rights of a third party based on the use of the Company Products or the Company
Licensed Know-How.
ARTICLE 13
ENTIRE AGREEMENT; COUNTERPARTS
------------------------------
SECTION 13.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supercedes all prior written agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein. No supplement, modification or waiver of any provision of this Agreement
shall be binding unless executed in writing by the Party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions, nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided therein.
SECTION 13.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REST OF PAGE LEFT INTENTIONALLY BLANK FOR SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Parties hereto have caused this Interoperability
Agreement to be executed by their duly authorized representatives as of the date
first set forth above.
TOLLGRADE COMMUNICATIONS, INC. ACTERNA, LLC
By: __________________________ By: ____________________________
Name: __________________________ Name: ____________________________
Title: __________________________ Title: ____________________________
H-12
EXHIBIT A - SOFTWARE
SW OPS RETAINED
- ---------------------------------------- -------------------------------------- --------------------------------------
SOFTWARE TOTAL REQUIRED ACTERNA AVAILABLE TO TRANSFER
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
OFFICE SOFTWARE
- ---------------------------------------- -------------------------------------- --------------------------------------
MS Office 97 80 80
- ---------------------------------------- -------------------------------------- --------------------------------------
MS 2000 pro 16 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Office 2000 sb 2 2
- ---------------------------------------- -------------------------------------- --------------------------------------
MS Win 2000 Professional 40 0
Upgrade from 97
- ---------------------------------------- -------------------------------------- --------------------------------------
MS Win 98 23 23
- ---------------------------------------- -------------------------------------- --------------------------------------
Win NT 4.0 Pro 35 35
- ---------------------------------------- -------------------------------------- --------------------------------------
MS project 25 6
- ---------------------------------------- -------------------------------------- --------------------------------------
Win NT/2k Cals 98 98
- ---------------------------------------- -------------------------------------- --------------------------------------
Visio v5 14 14
- ---------------------------------------- -------------------------------------- --------------------------------------
Lotus 80 0
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
TRACKING
- ---------------------------------------- -------------------------------------- --------------------------------------
MAX MRP 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Max for Win 12 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Great Plain backoffice
for Siebel lot 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Siebel Front 1 1
- ---------------------------------------- -------------------------------------- --------------------------------------
SeaGate Info lot of 50 lot
- ---------------------------------------- -------------------------------------- --------------------------------------
Crystal Reports win 7 7
- ---------------------------------------- -------------------------------------- --------------------------------------
Track 12 12
- ---------------------------------------- -------------------------------------- --------------------------------------
UniTime 1 1
- ---------------------------------------- -------------------------------------- --------------------------------------
ABRA 6.14 1 1
- ---------------------------------------- -------------------------------------- --------------------------------------
Track Wed lot of 8 lot
- ---------------------------------------- -------------------------------------- --------------------------------------
Clear Quest 6 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Clear Case 6 0
- ---------------------------------------- -------------------------------------- --------------------------------------
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SW DEV RETAINED
- ---------------------------------------- -------------------------------------- --------------------------------------
SOFTWARE TOTAL REQUIRED ACTERNA AVAILABLE TO TRANSFER
- ---------------------------------------- -------------------------------------- --------------------------------------
DEVELOPMENTAL
- ---------------------------------------- -------------------------------------- --------------------------------------
Crystal Reports 8.0 Dev 1 1
- ---------------------------------------- -------------------------------------- --------------------------------------
Microsoft FrontPage 6 2
- ---------------------------------------- -------------------------------------- --------------------------------------
PQ Drivelmage Pro 10 10
- ---------------------------------------- -------------------------------------- --------------------------------------
Exceed 4 4
- ---------------------------------------- -------------------------------------- --------------------------------------
Volo View 10 5
- ---------------------------------------- -------------------------------------- --------------------------------------
PC Anywhere v10 10 0
- ---------------------------------------- -------------------------------------- --------------------------------------
MS Office Publisher 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
AutoCad 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Adobe PageMaker 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Adobe FrameMaker 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Adobe Illustrator 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Adobe Acrobat Reader 98 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Alter Maxplus 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Mathcad 2000 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Mathlab 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Corel Draw 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Doc to help 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Acrobat Suite 4.0 6 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Orcad Capture 5 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Orcad layout 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Photo Shop 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Pro-E 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Robo Help 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Orcad Pspice 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Sx-Key 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
UV Device Eraser 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
FlexLM Licensing SW 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Labview 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Visual Basic 6.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
AdventNet2.1 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Beyond Compaare 2.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Epilogue 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Erwin Logic works 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Forte Developer 6 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Install Anywhere 4.5 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Install Shield 5.5 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Install shield 6.2 Pro 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
InteliJ 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Manfield publishing Kedit 1 0
1.5.3.0
- ---------------------------------------- -------------------------------------- --------------------------------------
H-14
- ---------------------------------------- -------------------------------------- --------------------------------------
SOFTWARE TOTAL REQUIRED ACTERNA AVAILABLE TO TRANSFER
- ---------------------------------------- -------------------------------------- --------------------------------------
DEVELOPMENTAL
- ---------------------------------------- -------------------------------------- --------------------------------------
Microsoft visual Studio 6.0 E 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
MSDN 10 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Nero CD Burn 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
NuMega BoundsChecker 6.0 1 1
- ---------------------------------------- -------------------------------------- --------------------------------------
NeMega DevPartner for Visual C++ 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Oracle 8.1.5.0.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Oracle 8.1.7.0.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Orbix 3.0.1 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
OrbixWed 3.2 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
QNX 4.22 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rainbow Sentinel Protection 4.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OC 1.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OC 6.1 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Ware Stringray OC6.1 custome 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OG 1 0
7 .0.0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray 7.0.1 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OG 8.1 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OT 6.02 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OT 7.1 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray OT Pro 6.0.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Rogue Wave Stringray Studio 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Serial IO v5.2 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Sun Solaris 2.6.0 1 CPU 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Sun Solaris 2.8.0.4 CPU 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Sun Workshop C++ compiler 4.2.0 1 0
- ---------------------------------------- -------------------------------------- --------------------------------------
TOAD 5 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Together 6.0 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Visual Cafe 4.1 2 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Voyager 3.1 3 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Wind/U 4.3 0 0
- ---------------------------------------- -------------------------------------- --------------------------------------
Wind/U4.4 4 0
- ---------------------------------------- -------------------------------------- --------------------------------------
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EXHIBIT I - FORM OF OPINION OF SELLER'S GENERAL COUNSEL
February 13, 2003
Tollgrade Communications, Inc.
493 Nixon Road
Cheswick, PA 15024
RE: Purchase and Sale Agreement by and between Acterna, LLC and Tollgrade
Communications, Inc. and Related Transactions
Ladies and Gentlemen:
I am the General Counsel of Acterna Corporation and have advised Acterna,
LLC (the "Seller"), Acterna Corporation's wholly owned subsidiary, in connection
with the preparation, execution and delivery of that certain Purchase and Sale
Agreement dated of even date herewith (the "Acquisition Agreement") by and
between the Seller and Tollgrade Communications, Inc. (the "Buyer"). This
opinion letter ("Opinion Letter") is being delivered to the Buyer pursuant to
Section 1.5(b)(xiv)(D) of the Acquisition Agreement.
In so acting, I, or attorneys under my supervision, have examined such
originals or copies of:
(a) the Acquisition Agreement;
(b) the Interoperability Agreement between the Seller and the Buyer
dated February 13, 2003;
(c) the Assignment and Assumption Agreement between the Seller and the
Buyer dated February 13, 2003;
(d) the Sublease Agreement between the Seller and the Buyer, dated
February 13, 2003;
(e) the Escrow Agreement between the Seller, the Buyer and Allfirst
Trust Company, National Association, as Escrow Agent, dated February 13, 2003;
and
(f) the Bill of Sale of the Seller dated February 13, 2003.
The items listed in (b) through (f) are referred to herein as the
"Ancillary Agreements". In addition, I or attorneys acting under my supervision,
have examined originals
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or copies of such statutes, corporate records and other documents, opinions and
instruments and have made such other investigations as I have deemed necessary
in connection with the opinions hereinafter set forth. Capitalized terms used in
this Opinion Letter that are not otherwise defined herein shall have the
meanings assigned to them in the Acquisition Agreement.
Subject to the qualifications set forth in this Opinion Letter, I express
the following opinions:
1. The Seller is a limited liability company duly formed and presently
subsisting under the laws of the State of Delaware.
2. The Seller has the full power and authority to (a) carry on the
Business as it is now being conducted; and (b) execute, deliver and perform the
Acquisition Agreement and each of the Ancillary Agreements.
3. The Seller has taken all actions necessary to authorize the execution,
delivery and performance of the Acquisition Agreement and each of the Ancillary
Agreements and has duly executed and delivered each of them.
4. The Acquisition Agreement and each of the Ancillary Agreements are
legal, valid and binding obligations of the Seller, enforceable against the
Seller in accordance with their respective terms, except to the extent that
enforceability may be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing.
5. Except as specifically disclosed in the Disclosure Schedules to the
Acquisition Agreement, the execution and delivery by the Seller of the
Acquisition Agreement and each of the Ancillary Agreements do not, and the
performance by the Seller of its obligations thereunder will not require the
approval of, or filing with, any third party, including, but not limited to, any
of Seller's lenders or any governmental authority, or any law (including any
rule or regulation thereunder) of any governmental authority. As used in this
Opinion Letter, the term "governmental authority" means any legislative,
judicial, administrative or regulatory body of the United States or the states
in which the Business is or should be qualified to do business.
6. The execution and delivery by the Seller of the Acquisition Agreement
and each of the Ancillary Agreements do not, and the performance by the Seller
of its obligations thereunder will not (a) result in a violation of the
Certificate of Organization, operating agreement, or any other organizational
document of the Seller, or (b) constitute a breach of or result in a default
under any of the Assigned Contracts or any other agreement or instrument to
which the Seller is a party or by which the Seller or any of the Acquired Assets
are bound.
7. During the course of my representation of the Seller in connection
with the transactions contemplated by the Acquisition Agreement and the
Ancillary Agreements, nothing has come to my attention which would lead me to
believe that there is any litigation or proceeding pending at law or in equity
or before any governmental authority involving the
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possibility of any judgment, order or decision which might materially impair the
ability of Seller to perform the Acquisition Agreement or any of the Ancillary
Agreements or might materially adversely affect the normal operation of the
Business or might result in liability for material damages or might have a
material adverse effect on the right, title or interest of the Seller in or to
the Acquired Assets.
This Opinion Letter and the opinions set forth herein are intended solely
for the Buyer in connection with the transactions contemplated by the
Acquisition Agreement, and may not be relied upon or used by any other person or
for any other purpose without my prior written consent. No part of this Opinion
Letter or the opinions set forth herein may be incorporated, quoted or otherwise
referred to in any other document or communication or filed with or otherwise
furnished to any third party.
In conducting my examination, I have assumed the genuineness of all
signatures, the legal capacity of all individual signatories, the accuracy of
all documents submitted to me as originals and the conformity to originals of
all documents submitted to me as certified, reproduced or facsimile copies. I
have also assumed the due authorization, execution and delivery of the
Acquisition Agreement and each Ancillary Agreement and the other documents that
I examined by the parties signing them, other than the Seller.
I express no opinion regarding the Acquisition Agreement or any Ancillary
Agreement or any right, power, privilege, remedy or interest intended to be
created thereunder, insofar as: (a) any of the rights, powers, privileges,
remedies and interests of a party thereunder may be limited (i) by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar
laws affecting the rights, powers and remedies of creditors generally, (ii) by
rules or principles of equity affecting the enforcement of obligations
generally, whether at law, in equity or otherwise, or (iii) by the exercise of
discretionary or equitable powers of any court or other authority before which
may be brought any proceeding seeking equitable or other remedies, including
(without limitation) specific performance, injunctive relief, indemnification
and contribution; (b) the rights, powers, privileges, remedies and interests of
any party under the Acquisition Agreement or any Ancillary Agreement or
applicable law may be exercised or otherwise enforced in bad faith or a
commercially unreasonable manner; and (c) any term or provision of any
Transaction Document provides for an absolute and unconditional obligation to
perform under such the Acquisition Agreement or any Ancillary Agreement even
though such agreement is terminated or if performance thereunder would
constitute a penalty.
I am licensed to practice law only in the State of Wisconsin and do not
hold myself out to be an expert on the laws of any other jurisdiction other than
the State of State of Wisconsin and the Federal law of the United States of
America. My opinions expressed herein are limited to the laws of the State of
Wisconsin, the general corporate laws of the State of Delaware and the federal
law of the United States of America that in my experience are normally
applicable to transactions of the type.
This Opinion is limited to the matters expressly set forth herein and no
opinion should be inferred as to any other matters. In addition, this Opinion is
issued on, and limited to,
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the date hereof and I do not in any event undertake to advise you of any changes
of law, facts or circumstances occurring or coming to my attention subsequent to
the date hereof.
Very truly yours,
By:
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