Agreement for Purchase and Sale of Assets - Centigram Communications Corp., Mitel Inc. and Mitel Corp.
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this "Agreement") is
made as of April 15, 1998 (the "Effective Date"), by and among:
Centigram Communications Corporation, a corporation organized under the
laws of Delaware, U.S.A. with its principal offices at San Jose, California
("Seller"), on behalf of itself and as attorney-in-fact for all its majority
controlled subsidiaries;
Mitel, Inc., a corporation incorporated under the laws of Delaware,
U.S.A. with its principal offices at Herndon, Fairfax County, Virginia ("Mitel,
Inc."), with respect to the acquisition of certain Purchased Assets and the
assumption of certain Assumed Obligations;
Mitel Corporation, a corporation organized under the laws of Canada
with its principal offices at Kanata, Ontario ("Mitel Corp."), with respect to
the acquisition of certain Purchased Assets and the assumption of certain
Assumed Obligations;
Mitel Corp. and Mitel, Inc. are sometimes referred to herein
collectively as "Buyer."
W I T N E S S E T H:
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires
to purchase and acquire from Seller, certain assets associated with the CPE
Business (as defined below), all upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, Buyer desires to enter into irrevocable licenses to use
certain intellectual property rights of Seller in connection with the design,
development, manufacture, license and sale of Products (as defined below) and in
connection with the commercial exploitation of technology, either directly
and/or indirectly, associated with the CPE Business;
WHEREAS, Buyer desires to assume certain liabilities associated with
the CPE Business upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, in connection with the sale of assets and licenses described
above, Seller will permit Buyer to interview and Buyer will make offers of
employment to certain employees of Seller who work in the CPE Business pursuant
to the terms hereof;
NOW, THEREFORE, in consideration of the facts stated in the above
recitals and of the mutual agreements and covenants hereinafter set forth, and
for good and valuable consideration, the receipt, sufficiency and adequacy of
which is hereby acknowledged, the parties hereby agree as follows:
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AGREEMENT
1. CERTAIN DEFINITIONS.
The following terms shall have the following meanings:
1.1 "Accounts Receivable" shall mean the bona fide claims of Seller
against debtors for sales, services and other charges that have been outstanding
for less than sixty-one (61) days, excluding all such claims against VoicePlus,
Inc. or Government Telecommunications, Inc. and, at the discretion of Buyer, all
credits or offsets to such claims.
1.2 "Acquired Technology" means the technology and other assets related
to the product known as Caleveras described in Schedule 1.2 as such product is
developed up to the Closing Date, including without limitation all of the
following pertaining thereto: source code, object code (including
manufacturing-ready masters), software, firmware, hardware, flow charts,
specifications, program descriptions, program listings, layouts, schematics,
blueprints, engineering and design drawings, technical support and quality
assurance information, diagrams and other documentation depicting or specifying
the designs and components of such technology and other assets existing as of
the Closing Date, and all tools, compilers, programs, test routines, databases
developed by or for Seller and used by Seller in connection with the
development, maintenance, diagnosis, support or enhancement of such technology
existing as of the Closing Date. Notwithstanding anything herein to the
contrary, Acquired Technology does not include the technology and other assets
listed as "Excluded Technology" on Schedule 1.2.
1.3 "Business Assets" means the Purchased Assets and the Licensed
Assets (as each such term is defined below).
1.4 "Business Materials" means all business, accounting and financial
records and analysis, logs, books, records, files, supplier lists and files,
product component lists, sales literature and sales aids, pictures, negatives,
camera ready proofs, product catalogs, product sheets and product documentation,
product displays, advertising materials and manuals (to the extent available, in
hard copy, electronic format and film), computer and electronic data processing
software programs, materials and correspondence relating to the Business Assets,
all copies of all sales and customer records relating to the Business Assets and
the Seller's personnel tax withholding and payroll records for all New Hires.
Notwithstanding anything herein to the contrary, Business Materials does not
include the assets listed as "Excluded Business Materials" on Schedule 1.4.
1.5 "Contracts" means: (i) contracts, agreements, leases, licenses and
open purchase orders placed with Seller relating to the CPE Business, warranties
extended and representations made to Seller by third parties, and rights,
remedies, setoffs, allowances, rebates, discounts and credits granted to Seller
by third parties relating to the CPE Business, together with claims, causes of
action and rights of Seller now existing or hereafter arising out of such
contracts or the performance thereof, warranties and representations made to
Seller by third parties under such
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contracts, and rights, remedies, setoffs, allowances, rebates, discounts and
credits granted to Seller by third parties in relation to such contracts; and
(ii) rights granted to Seller to use or to allow Seller's customers to use any
Intellectual Property Rights of a third party in the Business Assets or to
modify or incorporate such Intellectual Property Rights into the Business
Assets, including the end-user licenses and associated rights related to
"off-the-shelf" commercial software products, whether shrink wrap or not, used
in connection with the CPE Business.
1.6 "CPE Business" means Seller's business of designing, developing,
manufacturing, testing, marketing, selling, leasing, licensing, distributing,
modifying, installing, servicing, supporting, maintaining, repairing or
commercially exploiting customer premises voice-mail and unified messaging
products systems that are not intended solely to interoperate with a central
office and are either stand-alone and/or interoperable with customer premises
equipment (e.g., key systems, hybrid systems, private automatic branch exchanges
and/or telephone enabled services) and/or used in computer telephony integration
applications resident in customers' or potential customers' premises.
Notwithstanding anything herein to the contrary, "CPE Business" shall not
include any business related to any voice-mail, unified messaging product, or
other enhanced service product that is used by direct or indirect customers or
potential customers of Seller to resell shared services to other end users.
1.7 "Customer List Assets" means all of Seller's customer data bases,
customer lists, customer registration cards (whether current or prior) and
customer account histories for customers or prospective customers of the CPE
Business, and all other marketing, promotional and sales data and materials,
whether stored in written form, magnetic or electronic media or in any other
form, that pertain to the CPE Business (including but not limited to documents
related to Seller's "Partners Program" that pertain to the CPE Business).
1.8 "Derivative Work" means any translation, adaptation, modification,
extension, upgrade, improvement, compilation, abridgment or other form in which
a work may be recast, transformed or adapted where such Derivative Work would
infringe any Intellectual Property Rights in such work.
1.9 "Equipment" shall mean those assets listed on Schedule 1.9.
1.10 "Encumbrances" shall mean any mortgages, pledges, liens, rights of
possession, security interests, and other encumbrances known to Seller.
1.11 "Intellectual Property Rights" means all intangible, intellectual,
proprietary and industrial property rights worldwide including but not limited
to: (A) all trademarks, trade names, service marks and names, logos and slogans,
together with the goodwill related thereto, including all registrations and
applications therefor; (B) all copyrights (including audiovisual copyrights),
moral rights, mask works and design rights and any registrations or applications
therefor; (C) all inventions, discoveries, technology and know-how; (D) trade
secrets and vendor lists; (E) patents, patent applications, invention
disclosures and patent rights, including any and all reissues, divisions,
continuations, continuations-in-part, extensions, filing priorities and
reexaminations; (F) all rights to sue for any past, present, or future
infringement of any of the
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foregoing rights and the right to all income, royalties, damages, and payments
now or hereafter payable with respect to any of the foregoing rights; (G) all
confidential and proprietary information related to any of (A) to (F) above; and
(H) all rights to secure renewals, reissuances and extensions of (A) to (F)
above.
1.12 "Inventory" shall mean products and component pieces owned by
Seller as of the Closing as identified on Schedule 1.12 hereto.
1.13 "Licensed Assets" means the Licensed Technology, the Licensed
Business Materials and the Licensed Customer List Assets (as those terms are
defined below and in Section 2.6 hereof).
1.14 "Licensed Technology" means the assets and technology related to
the Products and software programs further described on Schedule 1.14 existing
as of the Closing Date including software, operating systems, applications, and
programs in both source code and object code form (including manufacturing-ready
masters), firmware, hardware, development up to the Closing Date, flow charts,
specifications, program descriptions, program listings, layouts, schematics,
blueprints, engineering and design drawings, technical support and quality
assurance information, diagrams and other documentation depicting or specifying
the designs and components of all such technology, libraries, reports, drafts,
models, prototypes, test and other data and programs, and all documentation and
information included in the development, design and manufacturing of the
Products existing as of the Closing Date, including works in progress and future
releases and related documentation existing as of the Closing Date, and all
tools, compilers, programs, test routines, databases developed by or for Seller
and used by Seller in connection with the development, maintenance, diagnosis,
support or enhancement of the Products existing as of the Closing Date, and
including all of Seller's trademarks, trade names, service marks and names,
logos and slogans which are associated with the Products and the CPE Business
and which do not include the "Marks," as that term is defined in Section 2.6(g)
hereof. Licensed Technology does not include the technology listed as "Excluded
Licensed Technology" on Schedule 1.14. Notwithstanding anything to the contrary
herein, Marks shall not be included in Licensed Technology.
1.15 "Permitted Encumbrances" means those Encumbrances listed in
Schedule 1.15.
1.16 "Products" means the Products of Seller on Schedule 1.16, and the
version 5.04c, 6.0d and 6.1b products to be delivered pursuant to Section 9.10
hereof.
1.17 "$" or "Dollars" shall mean U.S. dollars.
2. ACQUISITION OF ASSETS.
2.1 Agreement to Sell and Purchase Assets. Subject to the terms and
conditions of this Agreement, and in reliance on the representations, warranties
and covenants set forth in this Agreement,
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(i) Seller agrees to sell, assign, transfer and convey to
Mitel, Inc. at the Closing, and Mitel, Inc. agrees to purchase and acquire from
Seller at the Closing, all of Seller's right, title and interest in and to all
of the US Purchased Assets (as defined in Section 2.2); and
(ii) Seller agrees to sell, assign, transfer and convey to
Mitel Corp. at the Closing, and Mitel Corp. agrees to purchase and acquire from
Seller at the Closing, all of Seller's right, title and interest in and to all
of the Canada Purchased Assets (as defined in Section 2.3).
(iii) Subject to the last sentence of Section 16.7 hereof,
Buyer reserves the right to designate one or more wholly-owned subsidiaries to
purchase and acquire from Seller at Closing any portion, or all, of the US
Purchased Assets or the Canada Purchased Assets.
The US Purchased Assets and the Canada Purchased Assets are sometimes
referred to herein collectively as the "Purchased Assets."
2.2 US Purchased Assets. For purposes of this Agreement, "US Purchased
Assets" means all Customer List Assets pertaining solely to the CPE Business
(and not to any other business of Seller) listed on Schedule 2.2, the Contracts
listed in Schedule 2.2 (the "US Acquired Contracts"), the Business Materials
pertaining solely to the CPE Business (and not to any other business of Seller)
listed in Schedule 2.2, the Inventory listed in Schedule 2.2, the Accounts
Receivable listed in Schedule 2.2 and the Equipment listed in Schedule 2.2.
2.3 Canada Purchased Assets. For purposes of this Agreement, "Canada
Purchased Assets" means all Acquired Technology, including all Intellectual
Property rights therein, the Customer List Assets pertaining solely to the CPE
Business (and not to any other business of Seller) listed in Schedule 2.3, the
Contracts listed in Schedule 2.3 (the "Canada Acquired Contracts"), the Business
Materials pertaining solely to the CPE Business (and not to any other business
of Seller) listed in Schedule 2.3, the Inventory listed in Schedule 2.3, the
Accounts Receivable listed in Schedule 2.3 and the Equipment listed in Schedule
2.3.
2.4 Purchased Assets Transfer; Passage of Title; Delivery.
(a) Title Passage and Delivery. Upon the Closing, title to the
US Purchased Assets shall pass to Mitel, Inc. and such US Purchased Assets shall
be delivered to Mitel, Inc. as reasonably directed by Mitel, Inc. at Mitel,
Inc.'s expense; and title to the Canada Purchased Assets shall pass to Mitel
Corp. and such Canada Purchased Assets shall be delivered to Mitel Corp. as
reasonably directed by Mitel Corp. at Mitel Corp.'s expense. Subject to the
foregoing, all software and intangible deliverables included in the Business
Assets and all other Business Assets that can be delivered electronically, shall
be delivered to Buyer electronically to Buyer's facilities identified to Seller
by Buyer.
(b) Instruments of Conveyance. The execution of this Agreement
shall operate as an effective conveyance, assignment and transfer of the
Purchased Assets at the Closing as contemplated herein. However, in order to
effectuate more fully and completely the assignment, transfer and conveyance of
the Purchased Assets pursuant to the terms and conditions hereof, Seller shall
at the Closing deliver or cause to be delivered to Buyer such bills
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of sale, assignments and instruments of conveyance as reasonably requested by
Mitel, Inc. or Mitel Corp., as the case may be, sufficient to convey to each of
them good and marketable title to the U.S. Purchased Assets and the Canada
Purchased Assets required to be delivered pursuant to Section 2.1, respectively.
2.5 Assignment of Third Party Agreements.
(a) Consents Required as Condition to Closing. Upon the
Closing, Seller shall assign Seller's rights or sublicense sufficient rights to
Mitel, Inc., or Mitel Corp., as the case may be, under the US Acquired Contracts
and the Canada Acquired Contracts (collectively, the "Acquired Contracts"), and
other third party agreements listed in Schedule 2.5 identified as "Third Party
Agreements"(collectively, the "Third Party Agreements") or shall make such other
arrangements as are provided in Schedule 2.5. Before the Closing, unless waived
by Mitel, Inc., or Mitel Corp., as the case may be, in writing, Seller shall
obtain the consent of each third party whose consent is required as a condition
to Closing as designated under the heading "Required Consents" in Schedule 2.5
(collectively, the "Required Consents").
(b) Reasonable Efforts to Obtain Other Consents; Cooperation.
Seller shall use its commercially reasonable efforts until eighteen (18) months
following the Closing to obtain the consent of all third parties whose consent
is required in connection with the assignment or sublicense to Buyer of the
Third Party Agreements but is not a Required Consent. Buyer shall reimburse
Seller for all costs and expenses incurred in connection with this Section 2.5,
over and above Twenty-Five Thousand Dollars ($25,000). Seller hereby consents to
Buyer, during the period prior to Closing, contacting the other party to each
Third Party Agreement to seek consent to the assignment or sublicense of such
agreement or to negotiate a new agreement directly between such third party and
Mitel, Inc. or Mitel Corp., as the case may be.
(c) No Deemed Assignment. Nothing in this Agreement shall be
construed as an assignment, sublicense, transfer or conveyance of, or an attempt
to assign, sublicense, transfer or convey, any Third Party Agreement or any
rights thereunder if:
(i) such Third Party Agreement is not assignable,
sublicensable, transferable or conveyable without the consent of a third party
(if such consent has not been obtained) or such assignment, sublicense, transfer
or conveyance or attempted assignment, sublicense, transfer or conveyance would
constitute a breach of such Third Party Agreement (the "Non-Transferable Third
Party Agreements"); or
(ii) the remedies for the enforcement of such Third
Party Agreement available to Seller would not pass to Mitel, Inc. or Mitel Corp.
as the case may be (also, the "Non-Transferable Third Party Agreements").
Seller, to the extent permitted by applicable laws, shall be deemed to have
promised to assign, sublicense, transfer or convey all Non-Transferable Third
Party Agreements to Mitel, Inc. or Mitel Corp., as the case may be, as of the
Closing Date and shall be deemed to have completed the assignment, sublicense,
transfer and conveyance of each Non-Transferable Third Party
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Agreement, as the case may be, to the extent required by this Agreement
immediately upon such Non-Transferable Third Party Agreement ceasing to be a
Non-Transferable Third Party Agreement. In order, however, that the full value
of any Non-Transferable Third Party Agreement may be realized for the benefit of
Buyer, Buyer may, at its option and at its own expense as agent for and in the
name of Seller, or as otherwise agreed by the parties, acting reasonably, take
all such actions and do or cause to be done all such things which are necessary
or advisable in order that the rights and obligations of Seller in connection
with such Non-Transferable Third Party Agreements may be performed in such
manner that the value of the Non-Transferable Third Party Agreements shall be
preserved and shall inure to the exclusive benefit of Buyer, and that any
collection of monies due and payable under the Non-Transferable Third Party
Agreements shall be received by Buyer from and after the Closing Date. Seller
shall promptly pay over to Buyer any monies collected by or paid to or for
Seller in respect of any Non-Transferable Third Party Agreement. Nothing in this
Agreement shall be construed as the assignment, sublicense, transfer,
conveyance, novation or delivery of any Non-Transferable Third Party Agreement
until such time as delivery is actually consummated, whether by execution of an
assignment or sublicense in relation thereto or by manifest and clear expression
of delivery.
2.6 Agreement to License.
(a) Licensed Technology. The parties acknowledge that certain
assets related to the CPE Business also are essential to other business
conducted by Seller. Accordingly, effective as of the Closing Date, and except
as set forth in Section 8.5 below, Seller hereby grants to: (i) Mitel, Inc. an
exclusive (except as set forth in Sections 2.6(b) and (c) below), perpetual,
irrevocable, non-terminable, non-rescindable, freely assignable (subject to the
conditions set forth in Section 2.6(d)) license for the territory of the United
States to (A) use, make, have made, copy, publish, publicly display and perform,
transmit, modify, improve, prepare Derivative Works based on, market,
distribute, lease and sell the Licensed Technology, and (B) sublicense to third
parties any or all of the foregoing rights; and (ii) Mitel Corp. an exclusive
(except as set forth in Sections 2.6 (b) and (c) below), perpetual, irrevocable,
non-terminable, non-refundable, freely assignable (subject to the conditions set
forth in Section 2.6(d)) license for the territory of any country throughout the
world excluding the United States, to (A) use, make, have made, copy, publish,
publicly display and perform, transmit, modify, improve, prepare Derivative
Works based on, market, distribute, lease and sell the Licensed Technology, and
(B) sublicense to third parties any or all of the foregoing rights. Buyer shall
fully comply with all reasonable written trademark guidelines provided by Seller
with respect to any trademarks licensed to Buyer under Section 2.6(a).
(b) Restriction. For a period of three (3) years after the
Closing Date, the license rights granted to Buyer by Seller in Section 2.6(a)
above shall be restricted for use in the CPE Business. After this three (3) year
period, this restriction shall no longer apply and Buyer shall have no field of
use restrictions whatsoever with respect to its exercise of the rights granted
to it in Section 2.6(a).
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(c) Exclusive License. For a period of three (3) years after
the Closing Date, the license rights granted to Buyer by Seller in Section
2.6(a) above shall be exclusive to Buyer for use in the CPE Business.
Thereafter, Buyer shall be the sole licensee of the rights granted in Section
2.6(a) for use in the CPE Business and a non-exclusive licensee of the rights
granted in Section 2.6(a) for any and all other purposes whatsoever and Seller
shall have the right to exercise the rights set forth in Section 2.6(a) for use
in the CPE Business, provided that Seller shall only license or distribute the
Licensed Technology for use in the CPE Business as Seller branded products and
shall only grant third parties rights to license or distribute the Licensed
Technology in the CPE Business as Seller branded products.
(d) Assignment Restrictions. Buyer may assign any or all of
the rights set forth in Section 2.6(a) only: (i) to a third party that has
agreed in writing to be bound by the terms and conditions of this Agreement,
including without limitation the confidentiality obligations herein, and (ii) if
Buyer remains liable under this Agreement. Seller may assign or transfer any or
all of its rights in the Licensed Assets only: (I) to a third party that has
agreed in writing to be bound by the terms and conditions of this Agreement,
including without limitation the confidentiality obligations herein, and (II) if
Seller remains liable under this Agreement.
(e) Licensed Business Materials and Licensed Customer List
Assets. Effective as of the Closing Date, Seller hereby grants to: (i) Mitel
Corp. a non-exclusive, perpetual, irrevocable, non-terminable, non-rescindable,
freely assignable (subject to the conditions set forth in Section 2.6(d))
nonexclusive license for any country throughout the world excluding the United
States to (A) use, copy and modify the Business Materials relating to the CPE
Business but not pertaining solely to the CPE Business (the "Licensed Business
Materials") and the Customer List Assets relating to the CPE Business but not
pertaining solely to the CPE Business ("Licensed Customer List Assets"), and (B)
sublicense all of the foregoing rights to subsidiaries of Mitel Corp. for the
business purposes of Mitel Corp. and its subsidiaries relating to the
exploitation of the Business Assets; and (ii) Mitel, Inc. a non-exclusive,
perpetual, irrevocable, non-terminable, non-rescindable, freely assignable
(subject to the conditions set forth in Section 2.6(d)) nonexclusive license for
the United States to (A) use, copy and modify the Licensed Business Materials
and Licensed Customer List Assets for the business purposes of Mitel, Inc.
relating to the exploitation of the Business Assets, and (B) sublicense all of
the foregoing rights to subsidiaries of Mitel, Inc. for the internal business
purposes of Mitel, Inc. and its subsidiaries relating to the exploitation of the
Business Assets.
(f) Third Party Infringement.
(i) Notification. Subject to the provisions of this
Section 2.6(f), in the event that Seller or Buyer reasonably believes that any
Intellectual Property Rights in the Licensed Assets is infringed or
misappropriated by a third party or is subject to a declaratory judgment action
arising from such infringement, Seller or Buyer (as the case may be) shall
promptly notify the other party hereto.
(ii) Action by Primary Party. Buyer shall have the
primary right (but not the obligation) to institute, prosecute, and control any
action or proceeding with respect to
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such infringement of such Intellectual Property Rights in the Licensed Assets
and to enforce such Intellectual Property Rights, or defend any declaratory
judgment action with respect thereto (for purposes of this Section 2.6(f), an
"Enforcement Action"), if the primary economic benefit of such action or
proceeding falls upon the CPE Business; otherwise Seller shall have the primary
right (but not the obligation) to institute, prosecute, and control any
Enforcement Action.
(iii) Action by Secondary Party . If the party having
such primary right shall fail to bring such action or proceeding within a period
of six (6) months after receiving written notice from the other party or
otherwise having knowledge of such infringement, the other party shall have the
right to bring and control any such action.
(iv) Joining Parties and Assistance. If either party
brings any such action or proceeding as set forth in this Section 2.6 (f) (the
"Initiating Party"), the parties agree that the other party (the "Non-Initiating
Party") will, if necessary or if the Non-Initiating Party chooses, be joined as
a party plaintiff, and, whether joined as a party or not, the Non-Initiating
Party shall give the Initiating Party reasonable assistance and authority to
file and to prosecute such suit. Each party hereby appoints the officers of the
other party as each party's attorney-in-fact for this limited purpose.
(v) Necessary Participation by Non-Initiating Party.
If the Non-Initiating Party chooses not to participate any more than as required
to fulfill its obligations under Section 2.6(f)(iv) above, the Initiating Party
shall retain one hundred percent (100%) of any damages the Initiating Party
recovers for any such proceedings including any settlement, provided however
that (A) the Initiating Party shall first reimburse the Non-Initiating Party for
the Non-Initiating Party's reasonable costs to participate in such action as
required under Section 2.6(f) above out of any recovery which exceeds the
Initiating Party's reasonable costs for such action.
(vi) Elective Participation by Non-Initiating Party.
The Non-Initiating Party may instead elect to be liable to the Initiating Party
for a percentage of the Initiating Party's costs and expenses (including
attorneys' and professional fees) of such Enforcement Action and be liable for a
percentage of any award for attorneys' fees against the Initiating Party. The
percentage liability of the Non-Initiating Party shall be either: (A) a
percentage to be agreed upon by the parties in good faith based on the
proportion of harm to each party of the infringement or (B) if the parties
cannot so agree, fifty percent (50%). In such case, any recovery received as a
result of such Enforcement Action would be used first to reimburse both parties
in direct proportion to their contribution as set forth above for costs and
expenses (including attorneys' and professional fees) incurred in connection
with such Enforcement Action, and the remainder of the recovery would be shared
between the parties in the proportion determined above.
(vii) Settlement. If and only if the Non-Initiating
Party elects to participate as set forth in Section 2.6(f)(vi) above, any
settlement or consent judgment or other voluntary final disposition of a suit
under this Section 2.6(f) may be entered into only with the joint consent of the
Initiating Party and the Non-Initiating Party (which consent shall not be
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unreasonably withheld). Otherwise, the Initiating Party may enter into a
settlement, consent judgment or other voluntary final disposition without the
consent of the other party.
(g) Patent Prosecution and Maintenance. Seller shall notify
Buyer of any decisions relating to the prosecution of any patents and patent
applications included in the Licensed Technology, including any decision to
abandon or withdraw same from U.S. or foreign prosecution. If Seller elects not
to seek to prosecute any such patent or patent applications in any country or to
seek protection only in certain countries, Buyer shall have the right to seek
such protection, at its expense, on said patent and patent application in any
and all nonelected countries; provided that Buyer shall have no right to seek
protection with respect to any invention which Seller elects to maintain as a
trade secret. Title to all applications filed on any invention included in the
Licensed Technology and all patents issuing thereon will vest in Seller subject
to a license to Buyer under said applications and patents under the terms of
Section 2.6. Seller will promptly provide Buyer with a copy of each application
so filed and, upon request, copies of all official papers relating thereto.
(h) Ownership. Buyer shall own all right, title and interest
in and to any Derivative Work of the Licensed Assets which is made by or for
Buyer.
(i) Trademark License. Effective as of the Closing and for a
period of six (6) months thereafter, Buyer may use all of Seller's trademarks,
trade names, service marks and names, logos and slogans listed on Schedule 2.6
(i) ("Marks"). Buyer acknowledges that all use of the Seller's Marks will inure
to the benefit of Seller. Seller reserves the right to modify Marks or
substitute alternative marks for any or all of the Marks, if any such Mark is
subject to any claim by a third party, upon thirty (30) days prior written
notice. During the six (6) month period and for a reasonable amount of time
thereafter, Buyer shall cooperate upon Seller's request and at Seller's expense,
to provide full information and reasonable assistance to Seller in registering
and maintaining the Marks, including without limitation providing evidence of
use of the Marks as reasonably required to renew registrations or defend actions
for cancellations. Except as set forth in this Section 2.6(i), nothing contained
in this Agreement shall grant to Buyer any right, title or interest in or to
Marks whether or not specifically recognized or perfected under applicable laws,
and Buyer irrevocably assigns to Seller all such right, title and interest, if
any, in any Marks. At no time shall Buyer challenge or assist others to
challenge the Marks or the registration thereof or attempt to register any
trademarks, trade names, service marks and names, logos or slogans confusingly
similar to the Marks. All representations of Marks that Buyer intends to use
that are not substantially similar to representations of Marks used by Seller
shall first be submitted to Seller for approval (not to be unreasonably
withheld) of design, color, and other details. In addition, Buyer shall fully
comply with all reasonable written trademark guidelines provided by Seller.
(j) Reservation of Rights. Except as set forth in this Section
2.6 and in Section 9.7 below, Seller shall retain all right, title, and interest
in and to the Licensed Assets.
(k) No Implied License. Nothing herein shall be construed as
granted by implication, estoppel, or otherwise, any license or other right to
any intellectual property right of
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Seller other than the Licensed Assets or to grant Buyer any right or license
other than those expressly granted in this Section 2.6.
2.7 Updates. Following the Closing Date, the parties may cooperate in
sharing bug fixes to the Licensed Technology and may provide each other with
minor modifications and bug fixes to the Licensed Technology ("Updates"). Any
Updates provided by Buyer to Seller or Seller to Buyer are hereby licensed to
the other under a nonexclusive, irrevocable, non-terminable, non-rescindable,
worldwide, freely assignable (subject to the conditions set forth in Section
2.6(d) above) license to use, make, have made, copy, publish, publicly display
and perform, transmit, modify, improve, prepare Derivative Works based on,
market, distribute, lease and sell the Updates. The Updates shall be provided by
either party to the other "AS IS" without any warranty of any kind.
3. PURCHASE PRICE.
3.1 Consideration for Purchase of Purchased Assets. In consideration of
the sale, transfer, conveyance and assignment of the Purchased Assets to Buyer
and the license of the Licensed Assets to Buyer, pursuant to the terms set forth
herein, Buyer shall, on the Closing Date, pay to Seller via check or wire
transfer the sum of (i) Twenty-Two Million Dollars ($22,000,000) plus (ii)
ninety-five percent (95%) of the value of the Accounts Receivable as set forth
on the certificate delivered from Seller to Buyer pursuant to Section 12.4(b)
hereto plus (iii) the value of the Inventory as set forth on the certificate
delivered from Seller to Buyer pursuant to Section 12.4(b) hereto (the "Closing
Cash Payment"). The aggregate value of the Accounts Receivable indicated in such
certificate and the aggregate amount paid at Closing for the Accounts Receivable
shall be referred to herein as the "A/R 95% Value." The Closing Cash Payment
shall be made free and clear of and without reduction for any Canadian taxes.
3.2 Allocation of Purchase Price. Prior to the Closing, Seller and
Buyer shall agree upon an allocation of the purchase price among the Business
Assets and such agreement shall be reduced to a writing executed by Buyer and
Seller that shall be delivered by Buyer and Seller to each other at the Closing
(the "Purchase Price Allocation Agreement"). Any subsequent adjustments to the
allocable Purchase Price shall be reflected in the Purchase Price Allocation
Agreement in a manner consistent with Treasury Regulation ss.1.1060-lT(f). The
Purchase Price Allocation Agreement will reflect that substantially all of the
portion of the purchase price in excess of the agreed fair market value of
tangible properties, Accounts Receivable, and Inventory included in the Business
Assets is allocable to the Acquired Technology and Licensed Assets included in
the Business Assets and that there is no goodwill or other similar value
included in the Business Assets. Each party agrees not to take any position that
is adverse to or inconsistent with the Purchase Price Allocation Agreement in
any tax return or other similar filing made by such party with any governmental
taxing authority, including the United States Internal Revenue Service unless
otherwise required by an applicable taxing authority. Nothing herein contained
shall impose on either party the duty or obligation to contest any action which
any taxing authority may take or any adjustment or change in such allocation
which any taxing authority may make or propose. Seller and Buyer shall each be
responsible for the preparation of their own Section 1060 statements and forms
in accordance with applicable tax laws, and each shall
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execute and deliver to each other such statements and forms as are reasonably
requested by the other party.
4. OBLIGATIONS ASSUMED.
4.1 Assumption of Assumed Obligations. Except as set forth herein, upon
consummation of, and effective as of, the Closing Date, Buyer will assume and
become responsible for all liabilities and obligations of the CPE Business
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including, without limitation, (a) all
liabilities of the Seller under the agreements, contracts, leases, licenses and
other arrangements related to the CPE Business (whether or not Assumed Contracts
or Required Consents), (b) all liabilities arising as a result of any injury to
individuals or property as a result of the ownership, possession or use of any
product related to the CPE Business (including injury arising as a result of the
incapability of any such product to fully perform at dates after the year 2000),
(c) all liabilities arising as result of any infringement of, violation upon,
misappropriation of or conflict with any Intellectual Property Right of any
third party by any Business Asset, (d) all liabilities arising as a result of
any failure of Seller to comply with any applicable law or regulation
(including, but not limited to environmental and tax laws) relating to the CPE
Business and (e) all liabilities arising as a result of any claim, action, suit,
arbitration, mediation or investigation related to the CPE Business. The
liabilities, debts and obligations assumed by Buyer hereunder are collectively
referred to herein as the "Assumed Obligations." Notwithstanding anything herein
to the contrary, Assumed Obligations shall not include any Non-Assumed
Liabilities (as defined in Section 4.4 below).
4.2 Assumption by Subsidiaries of Buyer. Subject to the last sentence
of Section 16.7 hereof, the Assumed Obligations shall be assumed by Mitel Corp.
and Mitel Inc. as set forth in Schedule 4.2. Subject to the last sentence of
Section 16.7 hereof, Buyer reserves the right to designate one or more
wholly-owned subsidiaries to assume a portion, or all, of the Assumed
Obligations upon the consummation of, and effective as of, the Closing Date.
4.3 Further Instruments. The execution of this Agreement shall operate
as an effective assumption of the liabilities assumed by Buyer hereunder.
However, in order to effectuate more fully and completely the assumption of such
liabilities pursuant the terms and conditions hereof, Buyer shall at the Closing
deliver or cause to be delivered to Seller such assumptions and other
instruments as reasonably requested by Seller sufficient to document the
assumption of liabilities contemplated hereby.
4.4 Liabilities and Obligations Not Assumed. All liabilities, debts and
obligations of Seller not assumed by Buyer hereunder are hereinafter referred to
as the "Non-Assumed Liabilities." Non-Assumed Liabilities shall be comprised of
only the following: (a) any liabilities, debts or obligations not related to the
CPE Business, (b) any liabilities, debts or obligations of Seller solely to the
extent that they arise from Seller's general and administrative overhead or
corporate governance functions, (c) any liabilities, debts or obligations
arising from Seller's employment or termination of any person other than an
Employee, including but not
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limited to liabilities, debts or obligations for such persons related to any
employee benefit plans of Seller whether or not under the Employee Retirement
Income Security Act of 1974, as amended, or related to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), or the Federal Worker
Adjustment and Retraining Act, (e) any liabilities, debts or obligations of
Seller arising from breaches of fiduciary duties of Seller owed to stockholders
of Seller or from violations by Seller of rules or regulations promulgated under
the Securities Exchange Act of 1934, as amended, as determined by final
non-appealable judgment of a court of competent jurisdiction, (f) all of
Seller's accounts payable accrued on Seller's accounting books and records as of
the Closing, (g) either (i) penalties assessed by governmental entities arising
from a specific finding or findings of willful or intentional wrongdoing, and/or
(ii) punitive, treble and/or exemplary damages payable by Seller arising from
any final, non-appealable judgments of a court of competent jurisdiction holding
Seller has committed an intentional tort or fraud or willful infringement or
willful misappropriation (other than (A) such damages or penalties related to
claims for infringement or misappropriation described in the fifth paragraph of
Section 7.8 of the Seller Schedule of Exceptions or Schedule 4.4 hereto that
relate to Acquired Technology, (B) such damages or penalties related to claims
described in the first paragraph of Section 7.8 of the Seller Schedule of
Exceptions whether or not related to Acquired Technology or (C) any damages
related to claims described in this Section 4.4(g) that arose after the seventh
anniversary of the Closing Date). The parties agree however, that nothing
contained in this Section 4.4(g) shall relieve Buyer of the responsibility for
any compensatory damages arising from any final, non-appealable judgment.
Following the Closing Date Seller shall have no ongoing obligations with respect
to the compensation or benefits accruing after the Closing with respect to any
New Hire and Buyer shall have responsibility for such compensation and benefits.
Where a lack of certainty may exist as to whether any judgment is an Assumed
Obligation or a Non-Assumed Liability, the parties agree that each shall request
that a special instruction be given to the fact-finder to eliminate any such
uncertainty.
4.5 No Obligations to Third Parties. The execution and delivery of this
Agreement shall not be deemed to confer any rights upon any person or entity
other than the parties hereto, or make any person or entity a third party
beneficiary of this Agreement, or to obligate the parties to any person or
entity other than the parties to this Agreement. Assumption by Buyer of any
liabilities or obligations of Seller pursuant to this Agreement or any Buyer
Closing Document shall in no way expand the rights or remedies of third parties
against Buyer as compared to the rights and remedies such parties would have
against Seller if the Closing were not consummated.
4.6 Subrogation Rights. Notwithstanding anything in to the contrary
herein, Buyer's duty to Seller with respect to the Assumed Obligations shall be
conditioned on the terms and conditions of those certain Assumption Agreements,
copies of which are attached hereto as Exhibit A and Exhibit B and the terms of
which are incorporated by herein reference.
5. CLOSING.
5.1 Closing Date. The consummation of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Obligations contemplated
hereby (the "Closing") will take place at the offices of Fenwick & West LLP at
Two Palo Alto Square, Palo Alto, CA,
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subject to the last sentence of this Section 5.1, at the earliest practicable
date after all of the conditions to closing set forth in this Agreement have
been satisfied or waived in writing, or at such other time or date (the "Closing
Date"), and at such other place, or by such other means of exchanging documents,
as may be agreed to by the parties hereto. It is the parties intent on that the
Closing not occur at any time during the last two weeks of any fiscal quarter of
Seller.
5.2 Termination of License Agreement. Immediately effective upon the
Closing, the License Agreement, effective April 1, 1995, between Mitel Corp. and
Seller, shall terminate and be of no further force or effect. Neither Buyer nor
Seller shall be liable to the other for damages of any kind on account of such
termination.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller that all of the
following statements are true, accurate and correct:
6.1 Organization, Good Standing and Qualification. Mitel Corp. and
Mitel, Inc. are each corporations duly organized, validly existing and in good
standing under the laws of the jurisdiction in which they were organized and
each corporation has all requisite corporate power and authority to carry on its
business as now conducted and to enter into this Agreement and the transactions
contemplated hereby and thereby.
6.2 Authorization. All corporate action on the part of Mitel Corp. and
Mitel, Inc., and their respective officers and directors necessary for the
authorization, execution and delivery of this Agreement and the Buyer Closing
Documents, the performance of all obligations of Buyer hereunder and thereunder,
has been taken. This Agreement constitutes, and the Buyer Closing Documents when
executed and delivered, will constitute, valid and legally binding obligations
of Buyer enforceable in accordance with their respective terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. The execution,
delivery and performance by Buyer of this Agreement and each of the Buyer
Closing Documents has been duly and validly approved by the Board of Directors
of each of Mitel, Inc. and Mitel Corp. No approval of the stockholders of Mitel,
Inc. or Mitel Corp. is required to effect the transactions contemplated by this
Agreement or the Buyer Closing Documents.
6.3 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental entity on the part of Buyer is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR").
6.4 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against Buyer that questions the validity of
this Agreement or the Buyer
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Closing Documents, or the right of Buyer to enter into this Agreement or the
Buyer Closing Documents or to consummate the transactions contemplated hereby or
thereby.
6.5 Compliance with Other Instruments and Laws. The execution, delivery
and performance of this Agreement and the Buyer Closing Documents by Buyer and
the consummation of the transactions contemplated hereby and thereby do not and
will not result in a violation or default in any material respect of: (a) any
provision of the Buyer's charter documents, or (b) any judgment, order, writ, or
decree to which Buyer is a party and that would have a material adverse effect
on Buyer. Buyer is not in violation or default in any material respect of any
provision of its charter documents, or of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound that could
reasonably be expected to have a material adverse effect on Buyer's business,
or, to its knowledge, of any provision of any federal or state statute, rule or
regulation applicable to Buyer that could reasonably be expected to have a
material adverse effect on Buyer.
6.6 Brokerage and Finder's Fees. Neither Buyer nor any of its
subsidiaries has employed any broker, finder or agent, or agreed to pay or
incurred any brokerage fee, finder's fee or commission with respect to the
transactions contemplated by this Agreement, or dealt with anyone purporting to
act in the capacity of a broker, finder or agent with respect thereto as a
result of which any claim for a fee can be asserted against Seller.
6.7 Changes in Control. None of Mitel, Inc., Mitel Corp. or any agent
or affiliate thereof is in discussions or negotiations with any party concerning
a transaction of the kind contemplated by Section 16.6 hereof.
7. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer that, except as set
forth in a Schedule of Exceptions to this Agreement (the "Seller Schedule of
Exceptions"), all of the following statements are true, accurate and correct.
7.1 Organization, Good Standing and Qualification; Control of Other
Entities. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own and use its assets, to carry on its business as now
conducted and to enter into this Agreement and the transactions contemplated
hereby. Seller is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the Purchased Assets. Seller does not possess voting control
directly or indirectly, over any other corporation, association or business
entity, other than subsidiaries that are majority-owned by Seller.
7.2 Authorization and Validity. All corporate action on the part of
Seller, its officers and directors necessary for the authorization, execution
and delivery of this Agreement and the Seller Closing Documents, the performance
of all obligations of Seller hereunder and thereunder, has been taken or will be
taken prior to the Closing. This Agreement has been, and
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at the Closing, the Seller Closing Documents will be, duly executed and
delivered by Seller. This Agreement constitutes, and, upon Seller's execution of
each of the Seller Closing Documents, each of the Seller Closing Documents will
constitute, a legal, valid and binding obligation of Seller enforceable against
Seller in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally; and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. The execution, delivery and performance by
Seller of this Agreement and each of the Seller Closing Documents have been duly
and validly approved and authorized by the Board of Directors of Seller. No
approval of the stockholders of Seller is required to effect the transactions
contemplated by this Agreement or the Seller Closing Documents.
7.3 No Conflict. The execution, delivery and performance of this
Agreement and the Seller Closing Documents by Seller and the consummation of the
transactions contemplated hereby and thereby do not and will not: (a) result in
a violation or default in any material respect of any provision of Seller's
charter documents, (b) result in a violation or default in any material respect
of any judgment, order, writ or decree applicable to Seller or, to Seller's
knowledge, to any of the Business Assets, (c) constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
breach, violation or default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any of the Acquired
Contracts, or (d) result in the creation of any Encumbrance on any of the
Business Assets, except where the existence of such Encumbrance would not have a
material adverse effect on the CPE Business taken as a whole.
7.4 Consents. No consent, approval, order or authorization of or
registration, qualification, designation, declaration or filing with, any
governmental entity on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
compliance with the HSR Act.
7.5 Title to and Condition of Purchased Assets; Accounts Receivable;
Inventory; Sufficiency of Business Assets.
(a) Title and Condition of Purchased Assets. To the knowledge
of Seller, Seller owns all the Purchased Assets required to be delivered
pursuant to Section 2.1 hereof and has good and marketable title in and to all
of such Purchased Assets, free and clear of all Encumbrances, except for
Permitted Encumbrances and where failure to hold such title would not have a
material adverse effect on the CPE Business taken as a whole. To Seller's
knowledge, Seller has all necessary rights in the Licensed Assets to grant Buyer
the rights described in Section 2.6 above except where failure to possess such
rights would not have a material adverse effect on the CPE Business taken as a
whole. To the knowledge of Seller, title to all such Purchased Assets is freely
transferable from Seller to Buyer free and clear of all Encumbrances (other than
Permitted Encumbrances) without obtaining the consent or approval of any person,
except where failure to hold such title or the existence of such Encumbrance
would not have a material adverse effect on the CPE Business taken as a whole.
To the knowledge of Seller, all of the tangible personal property included in
the Purchased Assets is in good working condition and
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repair, ordinary wear and tear excepted, and is suitable for the purposes for
which it is presently used, except where failure of such assets to be in such
condition would not have a material adverse effect on the CPE Business taken as
a whole. The current location of all material tangible Purchased Assets (other
than inventory) is set forth in Schedule 7.5. Schedule 7.5 indicates the
original cost, depreciation and current book value of each item of Equipment
(excluding any reserves associated with such assets).
(b) Sufficiency of Business Assets. To Seller's knowledge as
of the date hereof, Seller has identified all Required Consents and other
contracts to which Seller is a party that are necessary or required to enable
Buyer, following the Closing, to conduct and operate the CPE Business
substantially as it has been conducted and operated during the most recent 12
months without any material adverse affect to the CPE Business taken as a whole.
7.6 List of Agreements. As of the date hereof, to Seller's knowledge,
true and complete copies of all material agreements pertaining to the CPE
Business and to which Seller is a party whether written or oral (collectively,
"CPE Agreements") have been made available to Buyer. To the knowledge of Seller
except as would not have a material adverse effect on the CPE Business taken as
a whole, as of the date hereof, all CPE Agreements are valid, in full force and
effect, and enforceable in accordance with their respective terms, and no party
has repudiated or claimed a breach of any provision thereof and no breach or
default thereunder will result from this Agreement, any of the Seller Closing
Documents, or any of the transactions contemplated hereby or thereby. To the
knowledge of Seller except as would not have a material adverse effect on the
CPE Business taken as a whole, neither Seller nor any other party to any CPE
Agreement is in material breach or default in performance of any of their
respective obligations thereunder, and no event exists which, with the giving of
notice or lapse of time or both, would constitute a material breach, default or
event of default on the part of Seller or, on the part of any other party, to
any Agreement that is continuing unremedied.
7.7 No Restrictive Agreements. As of the date hereof, to Seller's
knowledge, except as would not cause a material adverse effect on the CPE
Business taken as a whole, Seller is not a party to, and no Business Asset is
bound or affected by, any judgment, injunction, order, decree, contract,
covenant or agreement (noncompete or otherwise) that restricts or prohibits
Seller in any material respect from freely engaging in the CPE Business as now
conducted or proposed to be conducted by Seller through the Closing Date or from
competing in any material respect in the voice mail and unified messaging
applications business anywhere in the world (including without limitation any
contracts, covenants or agreements restricting the geographic area in which
Seller may sell, license, market, distribute or support any Business Assets)
7.8 Litigation. As of the date hereof to Seller's knowledge, except as
would not cause a material adverse effect on the CPE Business taken as a whole,
there is no claim, action, suit, arbitration, mediation or, to Seller's
knowledge, investigation, pending, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency that: (i)
could reasonably be expected to contest or challenge Seller's authority, right
or ability to sell, lease, license or convey any of the Purchased Assets (or any
Intellectual Property Right thereto) or the right to any Licensed Assets to
Buyer hereunder or otherwise perform
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Seller's obligations under this Agreement or any of the Seller Closing
Documents; (ii) challenges or contests Seller's right, title or ownership of any
of the Purchased Assets (or any Intellectual Property Right thereto) or the
Seller's right to any Licensed Assets (or any Intellectual Property Right
thereto) or seeks to impose an Encumbrance on, or a transfer of title or
ownership of, any Purchased Asset (or any Intellectual Property Right thereto)
or the right to any Licensed Assets (other than sale of inventory by Seller in
the ordinary course); (iii) asserts that any Purchased Asset (or any
Intellectual Property Rights thereto), or any Licensed Technology (or any
Intellectual Property Right thereto) or any other Licensed Asset owned by Seller
(or any Intellectual Property Right thereto) or any action taken by any
employee, consultant or contractor of Seller, or any other subsidiary of Seller
with respect to any Purchased Asset (or any Intellectual Property Rights
thereto) or any Licensed Asset (or any Intellectual Property Right thereto),
infringes or misappropriates any intellectual property rights of any third
party; or (iv) seeks to enjoin, prevent or materially hinder operation of the
CPE Business, the sale, license, marketing or distribution of any of the
Products or the consummation of any of the transactions contemplated by this
Agreement or any of the Seller Closing Documents; or (v) would impair or have an
adverse effect on the CPE Business (or any Intellectual Property Rights
thereto). As of the date hereof, to Seller's knowledge except as would not have
a material adverse effect on the CPE Business taken as a whole, there are no
judgments, decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator pending or binding against
Seller which affect any of the Business Assets or Buyer's ability to hire any
Employee.
7.9. Compliance with Laws. To Seller's knowledge, except as would not
have a material adverse effect on the CPE Business taken as a whole, Seller has,
in all material respects, complied with and has not received any notices of
violation with respect to, any United States or non-U.S., federal, state or
local statute, law or regulation (including, but not limited to, environmental
and tax laws) applicable to the CPE Business or any of the Purchased Assets, any
Licensed Technology (or any Intellectual Property Right thereto) or any other
Licensed Asset owned by Seller (or any Intellectual Property Right thereto).
7.10 Employees.
(a) Employee List. Set forth in Schedule 7.10 is a complete
and accurate list as of the date hereof all the employees of Seller or
subsidiaries of Seller who work exclusively in, or are necessary for the conduct
of the CPE Business ("Employees"). Schedule 7.10 also contains a complete and
accurate list as of the date hereof of all consultants and contractors currently
hired, retained or engaged by Seller or any other subsidiary of Seller to
perform any work or services related to the Products and/or the CPE Business
(collectively "Consultants" and each individually a "Consultant").
(b) Employment and Consulting Agreements. Schedule 7.10
includes a complete and accurate list as of the date hereof of all oral or
written employment contracts or agreements with or related to any Employee (if
any) known to Seller that are (or will prior to the Closing be) in effect (other
than offer letters providing for "at will" employment) and (ii) all
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consulting or similar agreements known to Seller related to any Consultant that
are (or will prior to the Closing be) in effect.
(c) No Representation to Employees. To Seller's knowledge,
except as would not cause a material adverse affect on the CPE Business taken as
a whole, Seller has made no representation to any employee, consultant or
contractor of Seller or any other affiliate of Seller that Buyer can or will
terminate the employment of its employees only upon certain terms or conditions
or only on certain grounds or that such employment is anything other than "at
will".
(d) No Terminations Planned; No Restrictions. As of the date
hereof, Seller has not received any notice, nor, to Seller's knowledge is there
any reason to believe, that any executive or key employee necessary for the
conduct of the CPE Business without causing a material adverse affect on the CPE
Business taken as a whole, has any plans to terminate his or her employment with
Seller. To Seller's knowledge, as of the date hereof, no such executive or key
employee is subject to any oral or written agreement, or order that impedes or
might impede such executive or key employee from devoting his or her full
business time to the affairs of Seller prior to the Closing Date and, if such
person becomes an employee of Buyer, to the affairs of Buyer after the Closing
Date.
7.11 Customers. To Seller's knowledge as of the date hereof, Schedule
7.11 is an accurate and complete list, with respect to CPE Business, of (i) all
outstanding product development obligations involving costs to the provider in
excess of Fifteen Thousand Dollars ($15,000) individually, (ii) all non-standard
support obligations under such Contracts, and all credits granted to, or other
adjustments made for, the customer to be applied against future payments or
purchases that involve amounts in excess of Fifteen Thousand Dollars ($15,000)
individually and (iii) all commitments by Seller to any of its customers which
are not embodied in the Contracts (including without limitation any material
commitment to repair, replace or upgrade any Acquired Technology or to deliver a
new or replacement product) that involve amounts in excess of Fifteen Thousand
Dollars ($15,000) individually.
7.12 Supplier Relationships. As of the date hereof, to Seller's
knowledge: Seller has good commercial working relationships with its suppliers
for the CPE Business and since July 1, 1997, no supplier accounting for ten
percent (10%) or more of Seller's purchases of supplies related to the CPE
Business has canceled or otherwise terminated its relationship with Seller,
decreased or limited materially its materials made available for supply to
Seller from the corresponding period in the prior year, or overtly threatened to
take any such action.
7.13 Product Liability. As of the date hereof to Seller's knowledge,
Seller has no liability, debt or obligation (and to Seller's knowledge as of the
date hereof there is no basis for any present or future action, suit or
governmental proceeding) arising out of any injury to individuals or property as
a result of the ownership, possession or use of any Product related to the CPE
Business delivered by Seller or any subsidiary of Seller to a Customer of Seller
prior to the Closing Date which would have a material adverse effect on the CPE
Business taken as a whole. To Seller's knowledge, Seller has used commercially
reasonable efforts as of the date
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hereof to disclose to customers that currently use any of the Products related
to the CPE Business of the possibility, the Products may not be capable of fully
performing in accordance with their current specifications, documentation and
warranties at dates after the Year 2000, and the possible consequences
therefrom.
7.14 Intellectual Property Rights.
(a) Ownership. To Seller's knowledge, except as would not have
a material adverse effect on the CPE Business taken as a whole, Seller is the
sole and exclusive owner of all Intellectual Property Rights in the Business
Assets, except for those Intellectual Property Rights identified on Schedule
7.14 as being licensed to Seller by third parties. To Seller's knowledge, except
as would not have a material adverse effect on the CPE Business taken as a
whole, Seller has taken all customary steps to maintain and protect all
Intellectual Property Rights in the Business Assets. Schedule 7.14 discloses all
third parties (other than employees of Seller), that have had access to the
source code for any of the Business Assets.
(b) No Infringement. To Seller's knowledge, except as would
not have a material adverse effect on the CPE Business taken as a whole, the
Business Assets have not infringed or violated and currently do not infringe or
violate upon, misappropriate or otherwise conflict with, any Intellectual
Property Rights of any third party and no third party has asserted or threatened
to assert against Seller any claim of infringement or misappropriation of any
such rights. To Seller's knowledge, except as would not have a material adverse
effect on the CPE Business taken as a whole, the transfer of the Business Assets
to Buyer will not infringe upon any such rights of any third party. To Seller's
knowledge, except as would not have a material adverse effect on the CPE
Business taken as a whole: no third party has interfered with, infringed upon,
misappropriated, any of the Intellectual Property Rights in the Business Assets.
(c) Recorded Intellectual Property Rights and Licenses. To
Seller's knowledge, as of the date hereof, Schedule 7.14 identifies: (i) each
patent, copyright, mask work, trademark or service mark (or registration
thereof) which has been granted or registered and issued to Seller in any
jurisdiction, (ii) each pending patent application or application for
registration of a copyright, mask work, trademark, service mark or similar right
which Seller has made in any jurisdiction. To Seller's knowledge, Seller has
made available to Buyer correct and complete copies of all such patents, patent
applications, copyrights, mask work registrations and applications, and has made
available to Buyer correct and complete copies of all other written
documentation evidencing ownership of each such item.
(d) Product Compliance. The Acquired Technology has been
developed to be capable of fully performing in accordance with specifications
and functionality set forth in Schedule 7.14 at chronological dates after the
Year 2000, without any adverse change or effect, and without the need to modify
or alter such software in any respect. To Seller's knowledge, as of the date
hereof, Seller's Series 4, 5, and 6 voicemail products as well as Seller's Voice
Gateway products are all U.L. approved and compliant with F.C.C. parts 15 and
68, all Canadian Standard Association regulations, and all other similar
applicable regulations of the United
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States, Canada, and any other country known to Seller into which such products
were sold at any time prior to the Closing.
7.15 Brokerage and Finder's Fees. Neither Seller nor any of its
subsidiaries has employed any broker, finder or agent, or agreed to pay or
incurred any brokerage fee, finder's fee or commission with respect to the
transactions contemplated by this Agreement, or dealt with anyone purporting to
act in the capacity of a broker, finder or agent with respect thereto as a
result of which any claim for a fee can be asserted against Buyer or the
Purchased Assets, except for First Analysis Securities Corporation, whose fees
and expenses shall be paid by Seller.
7.16 Disclosure. To Seller's knowledge, there is no fact which can
reasonably be expected to have a material adverse effect on the business,
condition, affairs, prospects or operations of the CPE Business taken as a whole
which has not been set forth in this Agreement, Schedules hereto or the Seller
Schedule of Exceptions.
8. COVENANTS OF BUYER.
8.1 Confidential Information.
(a) Seller Confidential Information. For purposes of this
Agreement, "Confidential Information" means all copies of financial information,
marketing and sales information, pricing, marketing plans, business plans,
financial and business projections, manufacturing processes and procedures,
formulae, methodologies, inventions, product designs, product specifications,
customer lists, customer data, drawings, and other confidential and/or
proprietary information. All Confidential Information of Seller disclosed to
Buyer in the course of negotiating or performing the transactions contemplated
by this Agreement ("Seller Confidential Information") will be held in confidence
and not used or disclosed by Buyer until the expiration of five (5) years after
the Closing Date, except for Confidential Information that constitutes source
code, customer lists or trade secrets which will be held in confidence and not
used or disclosed by Buyer in perpetuity. All Seller Confidential Information
not included in the Business Assets will be promptly destroyed by Buyer or
returned to Seller upon Seller's written request to Buyer; provided, however,
that from and after the Closing, Seller Confidential Information shall not
include any information or assets included in the Purchased Assets. Buyer's
employees, affiliates and stockholders will not be given access to Seller's
Confidential Information except on a "need to know" basis. Buyer shall take
reasonable precautions to protect the Seller Confidential Information from
disclosure, including such measures as Buyer takes with respect to its own
confidential information. It is agreed that Seller Confidential Information will
not include any information that: (a) Buyer can demonstrate was known to Buyer
prior to receipt of such information from Seller; (b) is disclosed to Buyer by a
third party having the legal right to disclose such information and who owes no
obligation of confidence to Seller; (c) is now, or later becomes part of the
general public or industry knowledge, other than as a result of a breach of this
Agreement by Buyer; or (d) Buyer can demonstrate was independently developed by
Buyer without the use of any Seller Confidential Information. The standard of
proof for the determination of the existence of the breach of any obligations
contained in this Section 8.1 shall be "clear and convincing evidence," and not
"preponderance of the evidence."
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(b) Confidential Information Related to Licensed Assets. From
and after the Closing, Buyer will maintain the confidentiality of any
Confidential Information included in or relating to the Licensed Assets and
Buyer shall take such actions and precautions as it takes to protect its own
confidential information, including but not limited to the use of customary
non-disclosure agreements, to ensure that such Confidential Information is not
disclosed by Buyer's employees, affiliates or stockholders.
8.2 Transfer Taxes. Buyer shall pay and promptly discharge, and hold
Seller harmless from any loss or expense associated with, any value added tax
and any documentary transfer tax (including stamp tax) imposed on or levied with
respect to the transactions contemplated by this Agreement. Buyer shall promptly
pay or reimburse Seller for all sales, use, value added, excise, transfer or
other similar tax (other than any taxes based upon Seller's income or capital
gains) imposed on Seller with respect to the sale of the Purchased Assets to
Buyer under this Agreement for which Seller will not receive a refund or credit,
upon receipt of documentation reasonably requested by Buyer. The parties shall
cooperate with each other to the extent reasonably requested and legally
permitted to minimize any such taxes.
8.3 Further Assurances. From and after the Closing Date, Buyer shall
promptly execute and deliver such further assignments, endorsements and other
documents as Seller may reasonably request for the purpose of effecting the
transfer of Seller's title to the Purchased Assets to Mitel, Inc. or Mitel
Corp., as the case may be, and/or carrying out the provisions and intent of this
Agreement and the Buyer Closing Documents.
8.4 Cooperation in Connection with Pending Litigation. Until three
years following the Closing, Buyer agrees to cooperate in Seller's defense of
any litigation pending related to the Non-Assumed Liabilities or other matters
as required by law or as otherwise reasonably requested by Seller. Thereafter,
Buyer shall cooperate in Seller's defense of any litigation pending related to
the Non-Assumed Liabilities or other matters as reasonably requested by Seller.
Seller shall reimburse Buyer for all costs and expenses incurred by Buyer in
connection with this Section 8.4
8.5 Covenant Not to Compete. For a period of three (3) years after the
Closing Date, neither Buyer nor its majority-controlled subsidiaries shall
engage, participate in or finance, directly or indirectly, as owner, partner,
agent, joint venturer, consultant, licensor, or in any other capacity
whatsoever, carry on, through a corporation, partnership, other business entity,
or arrangement or any other medium, in the development, distribution,
manufacturing, marketing, licensing or selling of any voice-mail, unified
messaging product, or other enhanced service product that is used by direct or
indirect customers or potential customers of Seller to resell shared services to
other end users anywhere in the world. Buyer expressly acknowledges that it
could be extremely difficult to measure the damages that might result from any
breach of these covenants, and that any breach of these covenants will result in
irreparable injury to the Seller for which money damages could not adequately
compensate. If a breach or threatened breach of these covenants occurs, then
Seller shall be entitled, in addition to all other rights and remedies that it
may have at law or in equity, to seek injunctions enjoining and restraining
Buyer and all other persons involved therein from any actual or threatened
breach. If Seller must resort
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to arbitration or litigation to enforce any of these covenants that has a fixed
term, then such term shall be extended for a period of time equal to the period
during which a breach of such covenant was occurring, beginning on the date of a
final court order (without further right of appeal) holding that such a breach
occurred or, if later, the last day of the original fixed term of such covenant.
The parties hereto agree that the duration and geographic scope of the
non-competition provision set forth in this Section 8.5 are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the parties hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that could not
render it unenforceable. The parties intend that this non-competition provision
shall be deemed to be a series of separate covenants, one for each and every
political subdivision of each and every country in the world. Notwithstanding
anything to the contrary herein, Buyer shall be permitted to manufacture,
market, license and sell its GX5000 product (with or without incorporating any
of the Business Assets) in the independent telco market; provided, however that
any such permitted GX5000 product shall have no more than 3,500 lines.
Notwithstanding anything to the contrary herein, in the event Seller requests
permission of Buyer to pursue a business opportunity in writing that it believes
may breach its obligations set forth in this Section 8.5, Buyer shall promptly,
and in any event within three (3) business days of receiving such request, grant
or deny in writing such permission in its reasonable discretion. If such request
is granted, no Seller action taken to pursue the business opportunity described
in the written request shall be deemed to be a breach any of its obligations set
forth in this Section 8.5.
8.6 Covenant Not to Solicit. Except as provided by law, for a period of
two (2) years after the Closing Date, Buyer shall not solicit any then employee
of Seller to terminate his employment with Seller to become an employee of Buyer
(other than through general solicitation or advertisement). Notwithstanding
anything to the contrary contained herein, in the event Buyer hires such a
then-employee within the two year period after the Closing Date, Buyer shall,
within 10 days, pay to Seller an amount equal to twenty percent (20%) of the
then-employee's aggregate salary received during the last 12 month period of
employment with Seller.
8.7 Accounts Receivable Holdback Payment. Within ten (10) business days
after the six month anniversary of the Closing Date, Buyer shall pay to Seller
an amount, if any, equal to the cash received by Buyer for any Accounts
Receivable during the period commencing on the Closing Date and ending six
months thereafter less the A/R 95% Value.
8.8 Collection of Seller's Accounts Receivable. For one (1) year after
the Closing Date, Buyer shall cooperate in the collection of any accounts
receivable that were not included in the Accounts Receivable. Any such amounts
collected by Buyer (other than amounts collected from Government
Telecommunications, Inc.), less an amount equal to five percent (5%) of any
amounts collected which shall be retained by Buyer, shall be forwarded to Seller
as promptly as practicable together with a notice setting forth in reasonable
detail the nature of the accounts receivable so collected. Buyer shall in no
case be obligated to commence, or threaten to commence, adjudication proceedings
of any kind to collect any Accounts Receivable.
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8.9 Survival of Covenants. Each of the covenants set forth in Sections
8.2 through 8.8 shall survive the Closing. The covenant set forth in Section 8.1
shall survive the Closing and shall survive the termination of this Agreement
for any reason.
9. COVENANTS OF SELLER.
Seller covenants and agrees with Buyer as follows:
9.1 Carry on Business in Normal Manner. From the date of this Agreement
to the Closing Date, Seller agrees to use reasonable efforts to protect and
preserve the Business Assets free of all Encumbrances (other than Permitted
Encumbrances) and to preserve the goodwill of its customers, suppliers and
others having business relations with the CPE Business. Without limiting the
generality of the foregoing, without Buyer's prior written consent, Seller shall
not:
(a) engage in any transaction that would have a material
adverse effect on the CPE Business taken as a whole;
(b) sell, transfer, convey, assign, lease, license or
otherwise dispose of any of the Business Assets, or cancel, rescind, waive,
release, fail to renew or forgive any material contracts or claims of Seller
pertaining to the CPE Business except, in each case, in the ordinary course of
Seller's business consistent with Seller's past practices; or
(c) mortgage, pledge, subject to a lien, or grant a security
interest in, or otherwise encumber, any of the Business Assets.
(d) transfer any Key Employee or Required Employee (as each
term is defined in Section 10.1 below) (each, an "Employee") to any other
division or position of employment within Seller or any other subsidiaries of
Seller;
(e) terminate the employment of any Employee without the prior
written consent of Buyer which shall not be unreasonably withheld;
(f) encourage any Employee not to accept any offer of
employment by Buyer made pursuant to Article 10 hereof;
(g) change the base salaries or bonus programs of any Employee
or establish a bonus plan or any new employee benefits for any Employee without
Buyer's prior written approval unless such change applies to substantially all
of the employees of Seller; or
(h) re-locate any material tangible Purchased Assets (other
than inventory) from the location(s) shown for such Purchased Assets on Schedule
7.5.
9.2 Access to Customers and Information. From the date of the Agreement
to the Closing Date, Seller will afford to (i) Buyer reasonable access to and
the opportunity to meet and interview each Employee for the purpose of
negotiating offers of employment contingent upon the consummation of the sale
and transfer of the Business Assets to Buyer and the other
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transactions contemplated hereby and (ii) the representatives of Buyer access to
customers of the CPE Business (iii) the representatives of Buyer, including its
counsel and auditors, access to all information with respect to the CPE Business
(except for attorney-client privileged information and independent accountants
working papers) to the end that Seller shall not impede Buyer's efforts to make
such a full investigation of customers of the CPE Business, and of the Business
Assets in advance of the Closing Date as Buyer shall reasonably desire. In
addition, the officers of Seller will confer with representatives of Buyer and
will furnish to Buyer, either orally or by means of such records, documents and
memoranda as are available or reasonably capable of preparation, such
information pertaining to the CPE Business as Buyer may reasonably request, and
Seller will furnish to Buyer's auditors all consents and authority that they may
reasonably request in connection with any examination of Buyer.
9.3 Further Assurances. Subject to the terms hereof, from and after the
Closing Date, Seller shall promptly execute and deliver to Buyer any and all
such further assignments, endorsements and other documents as Buyer may
reasonably request for the purpose of effecting the transfer of Seller's title
to the Purchased Assets to Mitel, Inc. or Mitel Corp., as the case may be,
and/or carrying out the provisions and intent of this Agreement and the Seller
Closing Documents. In addition, subject to the terms hereof, from the Closing
Date until six (6) months thereafter, Seller shall at Buyer's expense, take all
further actions in its power reasonably necessary to ensure that Buyer receives
the Business Assets sufficient to conduct and operate the CPE Business as
operated by Seller on the Effective Date.
9.4 Confidential Information.
(a) Buyer Confidential Information. Confidential Information
of Buyer disclosed to Seller in the course of negotiating or performing the
transaction contemplated by this Agreement ("Buyer Confidential Information")
will be held in confidence and not used or disclosed by Seller until the
expiration of five (5) years after the Closing Date, except for Confidential
Information that constitutes source code, customer lists or trade secrets which
will be held in confidence and not used or disclosed by Buyer in perpetuity, and
will be promptly destroyed by Seller or returned to Buyer upon Buyer's written
request to Seller. Seller's employees, affiliates and stockholders will not be
given access to Buyer Confidential Information except on a "need to know" basis.
Seller shall take reasonable precautions to protect the Buyer Confidential
Information from disclosure, including such measures as Seller takes with
respect to its own confidential information. It is agreed that, for purposes of
this Section 9.4, Confidential Information will not include information that:
(a) Seller can demonstrate was known to Seller prior to receipt of such
information from Buyer; (b) is disclosed to Seller by a third party having the
legal right to disclose such information and who owes no obligation of
confidence to the Buyer; (c) is now, or later becomes part of the general public
or industry knowledge, other than as a result of a breach of this Agreement by
Seller; or (d) Seller can demonstrate was independently developed by Seller
without the use of any Buyer Confidential Information. The standard of proof for
the determination the existence of the breach of any obligations contained in
this Section 9.4 shall be "clear and convincing evidence," and not
"preponderance of the evidence."
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(b) Confidential Information Related to Purchased Assets. From and
after the Closing, Seller will not retain, use or disclose any Confidential
Information included in the Purchased Assets and Seller shall take such actions
and precautions as are necessary, including those requested by Buyer (which may
include seeking injunctive relief), to ensure that such Confidential Information
is not retained, used or disclosed by Seller's employees, affiliates or
stockholders.
(c) Confidential Information Related to Licensed Assets. From and after
the Closing, Seller will maintain the confidentiality of any Confidential
Information included in or relating to the Licensed Assets and Seller shall take
such actions and precautions as it takes to protect its own Confidential
Information, including but not limited to the use of customary non-disclosure
agreements, to ensure that such Confidential Information is not disclosed by
Seller's employees, affiliates or stockholders.
9.5 Mail and Communications. Following the Closing, Seller will
promptly deliver to Buyer the original of any mail or other communication
received by Seller pertaining to the CPE Business, a copy of which may be
retained by Seller if such communication pertains to any Licensed Assets.
9.6 Cooperation in Litigation. Subject to the rights contained in
Article 13 hereof, in the event of any litigation against Buyer that relates to
the CPE Business, Seller agrees to cooperate in Buyer's defense of such
litigation as required by law or as otherwise reasonably requested by Buyer,
including making Seller's retained employees reasonably available to the extent
that doing so would not unduly interfere with Seller's business. Subject to the
rights contained in Article 13 hereof, Buyer shall reimburse Seller for all
costs and expenses incurred in connection with this Section 9.6.
9.7 Covenant Not to Compete. For a period of three (3) years after the
Closing Date, neither Seller nor its majority-controlled subsidiaries shall
engage, participate in or finance, directly or indirectly, as owner, partner,
agent, joint venturer, consultant, licensor, or in any other capacity
whatsoever, carry on, through a corporation, partnership, other business entity
or arrangement or any other medium, in the development, distribution,
manufacture, marketing, licensing or selling of customer premises voice-mail and
unified messaging products systems that are not intended to solely interoperate
with a central office and are either stand-alone and/or interoperable with
customer premises equipment (e.g., key systems, hybrid systems, private
automatic branch exchanges and/or telephone enabled services) and/or used in
computer telephony integration applications resident in customers' or potential
customers' premises anywhere in the world. Seller expressly acknowledges that it
could be extremely difficult to measure the damages that might result from any
breach of these covenants, and that any breach of these covenants will result in
irreparable injury to the Buyer for which money damages could not adequately
compensate. If a breach or threatened breach of these covenants occurs, then
Buyer shall be entitled, in addition to all other right and remedies that it may
have at law or in equity, to seek injunctions enjoining and restraining Seller
and all other persons involved therein from any actual or threatened breach. If
Buyer must resort to arbitration or litigation to enforce any of these covenants
that has a fixed term, then such term shall be extended for a period of
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time equal to the period during which a breach of such covenant was occurring,
beginning on the date of a final court order (without further right of appeal)
holding that such a breach occurred or, if later, the last day of the original
fixed term of such covenant. The parties hereto agree that the duration and
geographic scope of the non-competition provision set forth in this Section 9.7
are reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that could not render it unenforceable. The parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every political subdivision of each and every country in the
world. Notwithstanding anything to the contrary herein, in the event Buyer
requests permission of Seller to pursue a business opportunity in writing that
it believes may breach its obligations set forth in this Section 9.7, Seller
shall promptly, and in any event within three (3) business days of receiving
such request, grant or deny in writing such permission in its reasonable
discretion. If such request is granted, no Buyer action taken to pursue the
business opportunity described in the written request shall be deemed to be a
breach any of its obligations set forth in this Section 9.7.
9.8 Covenant Not to Solicit. Except as provided by law, for a period of
two (2) years after the Closing Date, Seller shall not solicit any then-employee
of Buyer (including any New Hire) to terminate his employment with Buyer to
become an employee of Seller (other than through general solicitation or
advertising). Notwithstanding anything to the contrary contained herein, in the
event Seller hires such a then-employee within the two year period after the
Closing Date, Seller shall pay to Buyer an amount equal to twenty percent (20%)
of the then-employee's aggregate salary received during the last 12 month period
of employment with Buyer.
9.9 Nonsolicitation of Acquisition Proposals.
(a) From and after the date of this Agreement until the
termination of this Agreement or the Closing, Seller shall not, and shall use
its best efforts to see that its directors do not, and shall not permit its
officers, employees, representatives, investment bankers, agents and affiliates
to, directly or indirectly, (i) solicit, initiate or engage in discussions or
negotiations with any person, encourage submission of any inquiries, proposals
or offers by, or take any other action intended or designed to facilitate the
efforts of any person, other than Buyer, relating to the acquisition of the CPE
Business, the Acquired Technology or the Purchased Assets (or any material
portion thereof) (with any such efforts by any such person or persons, including
a firm proposal to make such an acquisition to be referred to as an "Acquisition
Proposal"), (ii) provide non-public information with respect to Seller, or
afford any access to the properties, books or records of Seller, to any person
other than Buyer, relating to a possible Acquisition Proposal by any person
other than Buyer (other than to generally disclose or describe the provisions of
this Section 9.4), (iii) make or authorize any statement, recommendation or
solicitation in support of any possible Acquisition Proposal by any person,
other than by Buyer, (iv) enter into an agreement with any person, other than
Buyer, providing for an Acquisition Proposal or (v) accept any Acquisition
Proposal. Seller, its directors, officers, employees, representatives,
investment bankers, agents and affiliates, shall immediately cease any and all
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existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(b) Seller shall be responsible for any breach of this Section
by any of its subsidiaries or affiliated entities and its and their directors,
officers, employees, representatives, investment bankers, agents and affiliates.
(c) Seller expressly acknowledges that it could be extremely
difficult to measure the damages that might result from any breach of the
covenants contained in this Section 9.9, and that any breach of these covenants
will result in irreparable injury to the Buyer for which money damages could not
adequately compensate. If a breach or threatened breach of these covenants
occurs, then Buyer shall be entitled, in addition to all other right and
remedies that it may have at law or in equity, to seek injunctions, mandatory or
otherwise, enjoining and restraining Seller and all other persons involved
therein from any actual or threatened breach.
9.10 Development and Delivery of Versions 5.04c, 6.0d and 6.1b. From
and after the date of this Agreement, Seller agrees to use its best efforts to
develop and deliver to Buyer software in market ready condition with the
specifications and functionality described on Schedule 9.10 under "Version
5.04c," "Version 6.0d" and "Version 6.1b" as soon as practicable but in any
event on or before September 30, 1998. To Seller's knowledge, such software will
be capable of fully performing in accordance with such specifications and
functionality at all chronological dates after the Year 2000, without any
adverse change or effect, and without the need to modify or alter such software
in any respect. To Seller's knowledge, such software shall be U.L. approved and
complaint with F.C.C. parts 15 and 68, all Canadian Standard Association
regulations, and all other applicable regulations of the United States, Canada,
and any other country known by Seller into which Seller has sold Products prior
to the Closing.
9.11 Access to Certain Hardware. For a period ending six months after
the Closing, Seller agrees to use its commercially reasonable efforts to provide
Buyer with supplies of the hardware listed on Schedule 9.11 hereto to the extent
that Buyer is unable to obtain such hardware from third parties at commercially
reasonable terms. Buyer shall provide forecasts of its expected requirements at
least thirty (30) days prior to the scheduled delivery date.
9.12 Bulk Sales. Buyer hereby agrees to waive the requirement, if any,
that the Seller comply with any bulk transfer law which may be applicable to the
transactions contemplated by this Agreement.
9.13 Survival of Covenants. Each of the covenants set forth in Sections
9.3 through 9.12, inclusive (other than Section 9.9), shall survive the Closing.
The covenants set forth in Section 9.4 above shall, in addition, survive the
termination of this Agreement for any reason.
10. EMPLOYEE MATTERS.
10.1 Obligation to Offer Employment.
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(a) Key Employees. Schedule 10.1 contains a current list of
the five employees of Seller who Buyer deems to be particularly important to the
CPE Business (the "Required Employees") and each other employee of Seller whom
Buyer desires to employ following the Closing Date (the "Key Employees").
(b) Offers of Employment; Releases. Within ten (10) days from
the date hereof, Buyer shall contact each Employee at reasonable times and
places and shall make offers of employment with Buyer for a position with Buyer
substantially similar to those such employee has with Seller on the date hereof.
Such offers of employment shall also contain terms and conditions regarding
salary, bonus and material employee benefit plans as favorable to each such
person as those such Employee has with Seller on the date hereof. Buyer shall
also deem the duration of each such person's employment at Seller to be time
during which such employee has been employed at Buyer for purposes of employee
policies and benefit plans. In each case such offers of employment shall be
contingent on consummation of the transactions contemplated by this Agreement.
Buyer shall not take any action that would reasonably give rise to a judgment of
constructive termination by the Required Employees or Key Employees. Each
Required Employee or Key Employee from whom Buyer receives a written acceptance
of an offer of employment by Buyer (a "Written Acceptance") shall be hired by
Buyer effective as of the next business day following the Closing Date and is
hereafter referred to as a "New Hire". Seller hereby consents to the hiring of
such New Hires by Buyer and waives, with respect to the employment by Buyer of
such New Hires, any claims or rights Seller may have against any such New Hire
under any non-competition, confidentiality or employment agreement with respect
to the CPE Business, and agrees to pay compensation and benefits for New Hires
through the Closing Date in accordance with its then existing policies and
obligations. Such offers of employment as may be extended by Buyer to Required
Employees and Key Employees who are on a workers' compensation-related or
disability leave or a Family Medical Leave Act leave or other statutory leave
shall be conditioned upon their return from such leave in accordance with
Seller's leave of absence policy. Buyer agrees to use commercially reasonable
efforts to obtain the execution of a written release by New Hire of Seller from
any liability related to such New Hire's employment with Seller.
(c) Employee Compensation. Buyer shall be liable for all
expenses, contracts, agreements, commitments, and other liabilities with respect
to (i) the employment by Buyer or termination of employment by Buyer or Seller
of any Employee, including the employment or termination of a New Hire after the
Closing Date; (ii) any claims of discrimination under local, state or federal
law, or the termination by Seller of Employees who do not accept employment with
Buyer; (iii) any other claims or obligations arising out of the terms and
conditions of employment of any person by Buyer whether for salary, wages,
bonuses, profit sharing, commissions, severance, vacation pay, sick pay or
otherwise; (iv) any duties or obligations of Buyer or administrators under any
existing or future employee benefit plans or arrangements maintained by Buyer
with respect to its employees; or (v) any present or future obligations or
liabilities of Buyer to prior, existing or future employees of Buyer.
10.2 Employment Taxes. Seller shall be responsible for any withholding
or employment Taxes with respect to any Employees which accrue or become payable
during the
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period of such Employee's employment or service with Seller or any subsidiary of
Seller. Buyer shall be responsible for any taxes which arise out of the
termination of an Employee's employment with Seller or any subsidiary of Seller
and for filing all United States and non-U.S. federal, state and local
employment tax returns with respect to Employees attributable to periods of
employment or service with Seller or any affiliate of Seller.
10.3 Termination of Employment. Seller agrees to comply with the
provisions of any United States, or other applicable non-U.S. federal, state or
local statute or regulation regarding termination of employment, plant closing
or layoffs and to perform all obligations required by Seller with respect to the
cessation of any operations of the CPE Business or reductions in workforce or
the termination, re-assignment, re-location or change in position of any
Employee related thereto prior to, on or after the Closing Date, as a result of
such Employee not being offered employment by Buyer in relation to the
transactions contemplated herein or otherwise.
10.4 COBRA and Insurance Coverage. Buyer shall be responsible for any
COBRA coverage continuation notices or similar employee benefit type notices
required to be provided with respect to any Employees under applicable laws.
10.5 No Rights Conferred Upon Employees. Nothing in this Article 10 or
any other provision of this Agreement shall confer any rights or remedies on any
employee (including without limitation any Employee or New Hire) and no employee
(including without limitation any Employee or New Hire) shall be a third party
beneficiary with respect to any covenant, representation or agreement in this
Agreement.
10.6 Survivability. Each of the agreements and covenants set forth in
this Article 10 shall survive the Closing.
11. CONDITIONS TO CLOSING.
11.1 Good Faith Efforts to Obtain Satisfaction of Conditions. Subject
to the other provisions hereof, Seller and Buyer covenant and agree to use their
diligent good faith efforts (so long as such efforts are not commercially
unreasonable) to obtain the satisfaction of the conditions specified in this
Agreement, including obtaining any required third party consents to the
assignment of Acquired Contracts and Required Contracts. Notwithstanding
anything herein to the contrary, it is the intention of the parties hereto that
the Closing not occur at any time during the last two weeks of any fiscal
quarter of Seller.
11.2 Conditions to Buyer's Obligations. The obligations of Buyer
hereunder shall be subject to the satisfaction and fulfillment of each of the
following conditions, except that Buyer may expressly waive any or all of the
conditions in writing:
(a) No Material Adverse Change. There shall have been no
material adverse effect in or with respect to the CPE Business taken as a whole
and Buyer and Sub will have received a certificate to such effect, dated as of
the Closing Date, executed by a duly authorized officer of Seller. For all
purposes of this Agreement, impairments to the value of the CPE
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Business or the Business Assets resulting from (i) general changes in economic
conditions, (ii) conduct of the Buyer or (iii) announcement or pendency of the
transactions contemplated by this Agreement or statements, shall not be deemed
to constitute a material adverse effect.
(b) Compliance. As of the Closing Date, Seller shall have
complied in all material respects with, and shall have fully performed, in all
material respects, all conditions, covenants and obligations of this Agreement
imposed on Seller and required to be performed or complied with by Seller at, or
prior to, the Closing Date except where such failure will not have a material
adverse effect on the CPE Business taken as a whole.
(c) Closing Deliveries. Seller shall have delivered, and Buyer
shall have received, the deliveries described in Sections 12.3 and 12.4 hereof.
(d) Consent and Releases. Seller shall have received all
consents and releases from third parties required under the Required Consents
listed on Schedule 2.5 or shall have made alternative arrangements acceptable to
Buyer, which shall not unreasonably withhold its acceptance.
(e) HSR. Any applicable waiting periods under HSR with respect
to the transactions contemplated by this Agreement shall have expired. Neither
the U.S. Federal Trade Commission nor the Antitrust Division of the U.S.
Department of Justice shall have (i) required any party to divest itself of any
assets in order to consummate such transactions, or (ii) taken any actions to
prohibit the consummation of such transaction.
(f) No Litigation. There shall not be an injunction, judgment,
order, decree or ruling in effect preventing consummation of the transactions
contemplated by this Agreement.
(g) Acceptance of Offers. Provided that the Buyer has complied
in all material respects with its obligations under Section 10.1(b) hereto,
Buyer shall have received written acceptances of offers of employment by Buyer
as provided in Section 10.1(b) from (i) the first two (2) individuals listed on
Schedule 10.1, (ii) at least one (1) other Required Employee and (iii) at least
sixty-five percent (65%) of the Key Employees to whom Buyer has extended an
offer of employment pursuant to Section 10.1(b) hereto.
11.3 Conditions to Seller's Obligations. The obligations of Seller
hereunder shall be subject to the satisfaction and fulfillment of each of the
following conditions, except that Seller may expressly waive any or all of the
conditions in writing:
(a) Compliance. As of the Closing Date, Buyer shall have
complied in all material respects with, and shall have fully performed, the
terms, conditions, covenants and obligations of this Agreement imposed on Buyer
to be performed or complied with by Buyer at, or prior to, the Closing Date.
(b) Closing Deliveries. Buyer shall have delivered, and Seller
and shall have received, the deliveries described in Sections 12.3 and 12.4
hereof.
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(c) HSR. Any applicable waiting periods under HSR with respect
to the transactions contemplated by this Agreement shall have expired. Neither
the U.S. Federal Trade Commission nor the Antitrust Division of the U.S.
Department of Justice shall have (i) required any party to divest itself of any
assets in order to consummate such transactions, or (ii) taken any actions to
prohibit the consummation of such transaction.
(d) No Litigation. There shall not be an injunction, judgment,
order, decree, or ruling in effect preventing or delaying consummation of any of
the transactions contemplated by this Agreement.
(e) Consent and Releases. Buyer shall have received all
consents and releases from third parties required to be obtained to consummate
the transactions contemplated hereby or shall have made alternative arrangements
acceptable to Seller, which shall not unreasonably withhold its acceptance.
12. CLOSING OBLIGATIONS.
12.1 Buyer Closing Documents. At the Closing, Mitel Corp. or Mitel,
Inc., as appropriate, shall cause to be delivered to Seller the following
documents (the "Buyer Closing Documents") signed by an authorized officer of the
applicable entity:
(a) Assumption Agreements. The Assumption Agreements in
substantially the form attached hereto as Exhibit A and Exhibit B, respectively
(the "Assumption Agreements");
(b) Officer's Certificate. A certificate signed by an
authorized executive officer of each of Mitel Corp. and Mitel, Inc., to the
effect that the representations and warranties of such entity made in this
Agreement are true and correct as of the Closing Date , in each case except for
changes contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct as of such particular date) and
that such entity has fully performed in all material respects all of its
pre-closing commitments hereunder;
(c) Board Resolutions. A certified copy of the resolutions of
the board of directors of each of Mitel Corp. and Mitel, Inc. authorizing the
execution and delivery by such entity of this Agreement, and all related
agreements, and the consummation of the transactions contemplated hereby and
thereby;
(d) Sublease Agreements. The sublease agreements in
substantially the form attached hereto as Exhibit C (the "Sublease Agreement").
12.2 Other Buyer Closing Deliveries. At the Closing, in addition to the
Buyer Closing Documents, Mitel Corp., Mitel, Inc. or Buyer, as appropriate,
shall cause to be delivered to Seller the following:
(a) Cash. The Closing Cash Payment;
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(b) Good Standing Certificates. Good standing certificates for
Mitel Corp., Mitel, Inc. and Buyer from their respective jurisdictions of
incorporation;
(c) Cohabitation Agreement. The Cohabitation Agreement
substantially in the form attached as Exhibit D hereto (the "Cohabitation
Agreement");
(d) Amendment to Distribution Agreement. The Amendment to that
certain Mitel Corporation Distribution Agreement, effective April 1, 1995,
substantially in the form attached as Exhibit E hereto (the "Distribution
Agreement Amendment"); and
(e) Legal Opinion. A written opinions of Fenwick & West, Des
Burne, inside counsel of Mitel Corp., and Ed Silberhorn, inside counsel to
Mitel, Inc., addressed to Seller and dated the Closing Date in substantially the
form attached as Exhibit F, Exhibit G and Exhibit H, respectively, hereto.
12.3 Seller Closing Documents. At the Closing, Seller shall cause to be
delivered to Mitel Corp. or Mitel, Inc., as appropriate, the following documents
(the "Seller Closing Documents") signed by an authorized officer of Seller on
behalf of Seller:
(a) Assignment Agreements. Assignment Agreements in the form
of Exhibit I and Exhibit J attached hereto;
(b) Assumption Agreements. The Assumption Agreements;
(c) Officer's Certificate. A certificate signed by an
authorized executive officer of Seller, to the effect that the representatives
and warranties of Seller made in this Agreement are true and correct as of the
Closing Date except as would not cause a material adverse effect on the CPE
Business taken as a whole in each case except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct except as would not cause a material adverse effect on the CPE
Business taken as a whole as of such particular date) and that Seller has fully
performed in all material respects all of its pre-closing commitments hereunder;
(d) Board Resolutions. A certified copy of the resolutions of
the board of directors of Seller authorizing the execution and delivery by
Seller of this Agreement, and all related agreements, and the consummation of
the transactions contemplated hereby and thereby;
(e) Sublease Agreements. The Sublease Agreements.
(f) Cohabitation Agreement. The Cohabitation Agreement.
(g) Distribution Agreement Amendment. The Distribution
Agreement Amendment.
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12.4 Other Seller Closing Deliveries. At the Closing, in addition to
the Seller Closing Documents, Seller shall deliver or cause to be delivered to
Mitel Corp., Mitel, Inc.. or Buyer, as appropriate, the following:
(a) Purchased Assets. The Purchased Assets;
(b) Accounts Receivable and Inventory. A certificate setting
forth (i) the Accounts Receivable outstanding at the Closing Date that, as
mutually agreed upon by Buyer and Seller, includes no Accounts Receivable that
have payment or any other terms that were agreed to between the date of this
Agreement and the Closing Date and that are outside the terms customarily
extended by the Seller prior to the date of this Agreement identifying the name,
address, phone number and contact person of the customer, the amount of the
outstanding balance and the date since the amount has been outstanding and (ii)
a list of the number of each class of Inventory, the location thereof and the
book value thereof. The particular units of such classes of product or
components set forth in such certificate and which shall constitute "Inventory"
shall be selected in good faith by Seller and Buyer. The Inventory in the
certificate described in the preceding sentence will be prepared in a manner
consistent with Seller's past practice, in accordance with Seller's business and
accounting records, and in accordance with GAAP.
(c) Good Standing Certificates. Good standing certificates for
Seller from the Secretaries of State and taxing authorities of the States of
Delaware and California;
(d) Consents. All Required Consents; and
(e) Legal Opinion. A written opinions of Wilson Sonsini
Goodrich & Rosati, Fish & Richardson and Flehr, Hohbach, Test, Albritton &
Herbert addressed to Buyer and dated the Closing Date in substantially the form
attached as Exhibit K, Exhibit L and Exhibit M, respectively, hereto.
13. SURVIVAL OF WARRANTIES AND INDEMNIFICATION.
13.1 Survival of Representations and Warranties. All representations
and warranties made by Seller herein, or in any certificate, schedule or exhibit
delivered pursuant hereto other than those set forth in Sections 7.1, 7.2, 7.3
or 7.5 hereof, shall terminate at the Closing. All representations and
warranties made by Seller pursuant to Section 7.1, 7.2, 7.3 or 7.5 hereof shall
survive the Closing for a period of 180 days (at which point they shall
terminate). All representations and warranties made by Buyer herein, or in any
certificate, schedule or exhibit delivered pursuant hereto shall survive the
Closing for a period of three years.
13.2 Indemnified Losses. For the purpose of this Agreement, "Loss"
shall mean and include any and all liability, loss, damage, claim, expense,
cost, fine, fee or penalty including, without limitation, those resulting from
any and all actions, suits, proceedings, demands, assessments, judgments, award
or arbitration, together with reasonable costs and expenses including the
reasonable attorneys' fees and other legal costs and expenses relating thereto.
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13.3 Indemnification by Seller. Subject to the provisions and
limitations set forth in this Section 13, Seller agrees to defend, indemnify and
hold harmless Buyer, any parent or subsidiary of Buyer and any director, officer
or employee of Buyer or of any parent or subsidiary of Buyer (collectively the
"Buyer Indemnitees") from and against any Loss which arises out of or results
from:
(a) any breach of any covenant of Seller made herein or in the
Seller Closing Documents;
(b) any inaccuracy or untruth of any representation or
warranty of Seller made in Sections 7.1, 7.2, 7.3 or 7.5 hereof or in the Seller
Closing Documents;
(c) the Non-Assumed Liabilities;
(d) any demand, claim, debt, suit, cause of action or
proceeding made or asserted by a stockholder, creditor, receiver, or trustee in
bankruptcy of Seller asserting that the transfer of the Purchased Assets to
Buyer hereunder constitutes a bulk sale, bulk transfer, fraudulent conveyance,
fraudulent transfer, or constitutes a preference under any applicable state or
federal law, including but not limited to the United States Bankruptcy Code;
provided, however, that nothing in this Section 13 shall impose on Seller any
duty to indemnify Buyer Indemnitees for any Loss arising or resulting from the
Assumed Obligations.
13.4 Indemnification by Buyer. Subject to the provisions and
limitations set forth in this Section 13, Buyer agrees to defend, indemnify and
hold harmless Seller, any parent or subsidiary of Seller and any director,
officer or employee of Seller or of any parent, subsidiary or affiliate of
Seller (collectively, the "Seller Indemnitees") from and against and in respect
of any Loss which arises out of or results from:
(a) any breach by Buyer of any covenant made herein or in any
Buyer Closing Documents;
(b) any inaccuracy or untruth of any representation or
warranty of Buyer made herein or in the Buyer Closing Documents;
(c) the Assumed Obligations; or
(d) Buyer's distribution, after the Closing, of the Products,
except to the extent the Loss arises out of Section 13.3 hereto;
provided however, that nothing in this Section 13 shall impose on Buyer any duty
to indemnify Seller Indemnities for any Loss arising or resulting from the
Non-Assumed Liabilities.
13.5 Procedures for Indemnification. If any action, suit or proceeding
shall be commenced by a third party against, or any claim or demand be asserted
against, Seller or Buyer, as the case may be, in respect of which Seller or
Buyer is entitled to demand indemnification
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under Section 13 of this Agreement, then, the party seeking indemnification
("Indemnitee") shall promptly notify the other party ("Indemnitor") in writing
to that effect and with reasonable particularity. The failure of the Indemnitee
to notify the Indemnitor within a reasonable time of the commencement of such
action or such claim or demand shall relieve the Indemnitor of its obligations
pursuant to this Section 13 only to the extent that such failure is prejudicial
to the Indemnitor's ability to favorably settle or defend such action, claim or
demand. The Indemnitor shall have, subject to the following sentence, the right
to assume the control of the defense, compromise or settlement of such action,
suit, proceeding or claim, including the selection of counsel, subject to the
right of the Indemnitee to participate (at its own expense and with counsel of
its choice) in the defense, compromise or settlement of such action, suit,
proceeding, claim or demand, and in connection therewith the Indemnitee shall
cooperate fully in all respects with the Indemnitor in any such defense,
compromise or settlement. The Indemnitor will not compromise or settle any such
action, suit, proceeding, claim or demand (or concede any matter related to the
determination of whether a loss arises or relates to an Assumed Obligation or a
Non-Assumed Liability) without the prior written consent of the Indemnitee,
which consent will not be unreasonably withheld or delayed; provided, however,
that for any dispute for which uncertainty exists as to whether a Loss will be
an Assumed Obligation or a Non-Assumed Liability (other than disputes between
Buyer and Seller), Indemnitee shall have the right to approve of Buyer's
counsel, which approval shall not unreasonably be withheld. So long as the
Indemnitor is defending, in good faith any such action, suit, proceeding, claim
or demand asserted by a third party against the Indemnitee, the Indemnitee shall
not settle or compromise such action, suit, proceeding, claim or demand (or
concede any matter related to the determination of whether a loss arises or
relates to an Assumed Obligation or a Non-Assumed Liability) without the prior
written consent of the Indemnitor, which consent will not be unreasonably
withheld or delayed. The Indemnitee shall make available to the Indemnitor or
its agents all records and other materials in the Indemnitee's possession
reasonably required for contesting any such third party claim or demand. If the
Indemnitor shall (a) fail to promptly and adequately defend any such action,
suit, proceeding, claim or demand, or (b) if there is an inherent conflict
between the legal or factual positions of Indemnitor and Indemnitee, then the
Indemnitee may defend, through counsel of its own choosing (at Indemnitee's own
expense), such action, suit, proceeding, claim or demand and in the case of
clause (a) of this sentence (so long as Indemnitee gives the Indemnitor at least
ten (10) days' notice of the terms of the proposed settlement thereof and
permits the Indemnitor to then undertake the defense thereof if Indemnitor
reasonably objects to the proposed settlement) to settle such action, suit,
proceeding, claim or demand and to recover from the Indemnitor the amount of
such Losses. Notwithstanding anything to the contrary herein, for any dispute
for which uncertainty exists as to whether a Loss will be an Assumed Obligation
or a Non-Assumed Liability (other than disputes between Buyer and Seller), Buyer
shall pay for fifty percent (50%) of Seller's reasonable attorney's fees and
other legal costs and expenses.
13.6 Period for Making Claims. A claim for indemnification under this
Section 13:
(a) must be brought, if at all, at any time within six (6)
months after the Closing Date, with respect to any claim or claims for
indemnification under Section 13.3(b); and
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(b) may be brought at any time within any applicable statute
of limitations with respect to any claim or claims for indemnification under the
provisions of this Section 13 other than Sections 13.3(b).
13.7 Exclusion. The limitations set forth in Section 13.6 shall not
apply to any claim for indemnification based on this Section 13 which arises out
of or results from the fraud or willful misconduct of Buyer or Seller.
14. TERMINATION.
14.1 Mutual Agreement. This Agreement may be terminated by the mutual
written agreement of the parties hereto. In such event, Buyer shall have no
further obligation or liability to Seller and Seller shall have no further
obligation or liability to Seller.
14.2 Termination by Reason of Breach. This Agreement may be terminated
by any party if any time prior to the Closing there shall occur a material
breach of any of the representations, warranties or covenants of the other party
or the failure by the other party to perform any condition or obligation
hereunder of such severity as would excuse the non-breaching party's obligation
to close under Section 11, and such breach or failure is not remedied within
fifteen (15) days after delivery of written notice thereof to the breaching
party.
14.3 Closing Date. Unless otherwise specifically agreed to in writing
by the parties hereto, this Agreement may be terminated by either Seller or
Buyer, if the Closing shall not have occurred prior to August 12, 1998;
provided, however, that the right to terminate this Agreement under this Section
14.3 shall not be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur prior to such date.
14.4 Illegality. This Agreement may be terminated by any party hereto
if a governmental entity of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action, in any case having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby, which order, decree, ruling or other action is final and
nonappealable.
15. ARBITRATION.
15.1 Arbitration. Except for the parties rights to seek injunctive
relief under Sections 8.5, 9.7 and 9.9 any dispute hereunder ("Dispute") shall
be settled by means of the procedures set forth in this Section 15. Each party
shall give notice to the other party of any Dispute. Promptly upon delivery of
such notice, a designated senior officer for each of Buyer and Seller (which
representative may be changed by a party by means of a notice delivered to the
other party) shall meet and attempt in good faith to resolve the Dispute on a
mutually satisfactory basis. If such parties are unable to resolve the Dispute
within 60 days after delivery of the notice of a Dispute, then the Dispute shall
be settled by arbitration in San Jose, California, and, except as herein
specifically stated, in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA Rules") then in effect. However, in all
events, these arbitration
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provisions shall govern over any conflicting rules which may now or hereafter be
contained in the AAA Rules. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that could be available in any judicial proceeding instituted
to resolve a Dispute. The parties shall use their best efforts to select an
arbitrator within 30 days and to resolve the Dispute within 60 days.
15.2 Compensation of Arbitrator. Any such arbitration will be conducted
before a single arbitrator who will be compensated for his or her services at a
rate to be determined by the parties or by the American Arbitration Association,
but based upon reasonable hourly or daily consulting rates for the arbitrator in
the event the parties are not able to agree upon his or her rate of
compensation.
15.3 Selection of Arbitrator. In the absence of agreement by the
parties, the American Arbitration Association will have the authority to select
an arbitrator from a list of arbitrators who are lawyers familiar with contract
law; provided, however, that such lawyers cannot work for a firm then performing
services for any party hereto.
(a) Payment of Costs. Seller and Buyer will each pay fifty
percent (50%) of the initial compensation to be paid to the arbitrator in any
such arbitration and fifty percent (50%) of the costs of transcripts and other
normal and regular expenses of the arbitration proceedings; provided, however,
that the prevailing party in any arbitration will be entitled to an award of
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the losing party, and the arbitrator will be
authorized to make such determinations.
(b) Burden of Proof. For any Dispute submitted to arbitration,
the burden of proof will be as it would be if the claim were litigated in a
judicial proceeding.
(c) Award. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.
(d) Terms of Arbitration. The arbitrator chosen in accordance
with these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
(e) Exclusive Remedy. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any Dispute arising out of this Agreement.
16. MISCELLANEOUS.
16.1 Announcements; Publicity. As soon as possible after the Effective
Date, Seller and Buyer shall issue a joint press release acceptable to both with
respect to the transactions
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contemplated by this Agreement. Without the prior written consent of the other,
which consent shall not be unreasonably withheld, prior to the Closing, neither
Seller nor Buyer shall make any other public announcement regarding the
transactions; and with respect to any announcement that any of the parties is
required by the Securities Act or regulations thereunder, the Ontario Securities
Act, the Toronto Stock Exchange, the Nasdaq Stock Market, or the New York Stock
Exchange to issue, such party shall, to the extent possible under the
circumstances, review the necessity for and the timing and content of, the
announcement with the other party before issuing the announcement.
16.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall bear its own
expenses (including without limitation attorneys' fees) in connection with the
negotiation and consummation of the transaction contemplated hereby.
16.3 Notices. Any notice required or permitted to be given under this
Agreement shall be deemed given if in writing and personally delivered or sent
by certified or registered United States mail, postage prepaid, or sent by
nationally recognized overnight express courier, fees prepaid, and addressed as
follows:
(a) If to Seller:
Centigram Communications Corporation
91 East Tasman Drive
San Jose, CA 95134
Attention: President
Telephone: (408) 944-0250
Facsimile: (408) 428-3511
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94306
Attention: Steve Bochner
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
(b) If to Buyer, to each of:
Mitel, Inc.
205 Van Buren Street, Suite 400
Herndon, VA 20170
Attention: Law Department
Telephone: 703-318-7020
Facsimile: 703-904-0569
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Mitel Corp. 350 Legget Drive
P.O. Box 13089
Kanata, Ontario, Canada K2K 1X3
Attention: Law Department
Telephone: (613) 592-2122
Facsimile: (613) 591-2301
With a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Kevin Kelso
Telephone: (650) 494-0600
Facsimile: (650) 857-0361
16.4 Entire Agreement; Captions. This Agreement, the Exhibits and
Schedules hereto (which are incorporated herein by reference) and the agreements
to be executed and delivered in connection herewith on the date hereof or on the
Closing Date, together constitute the entire agreement and understanding between
the parties and there are no other agreements or commitments with respect to the
transactions contemplated herein. This Agreement supersedes any term sheet,
prior offer, agreement or understanding between the parties with respect to the
transactions contemplated hereby. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
16.5 Amendment; Waiver. Any term or provision of this Agreement may be
amended only by a writing signed by Seller and Buyer. The observance of any term
or provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound by such waiver. No waiver by a party of any
breach of this Agreement will be deemed to constitute a waiver of any other
breach or any succeeding breach.
16.6 Transfer of Control. In the event that a party hereto shall (a)
sell all or substantially all of its assets or (b) shall merge or consolidate
with any corporation and shall not be the surviving corporation in such
transaction, then, in the event of clause (a) hereto, the purchase of such
assets, and in the event of clause (b) hereto, the surviving corporation in such
transaction shall assume the obligations of such party pursuant to Sections 2.6,
8, 9 and 13 hereto.
16.7 Assignment; Joint and Several Buyer Liability. This Agreement may
not be assigned by any party hereto without the prior written consent of each
other party; except as set forth in Section 2.6 hereof and except that, subject
to the last sentence of this Section 16.7, Buyer may assign in whole or in part
this Agreement (and/or all related agreements) to one or more parent, subsidiary
or affiliate entities, or Buyer or Seller may assign this Agreement by
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operation of law or in connection with any merger, consolidation or sale of all
or substantially all such entity's assets, and Seller may, prior to the Closing,
designate an entity controlled by or under common control with Seller to be the
recipient of the consideration to be delivered to Seller under Section 3.1
hereof. Notwithstanding anything herein to the contrary or any assignment
permitted under Section 2.1(iii), Section 4.2, this Section 16.7, or otherwise,
each of Mitel, Inc. and Mitel Corp. shall be jointly and severally liable for
all obligations of Buyer herein.
16.8 Time of Essence. Time is of the essence with regard to all dates
and time periods set forth or referred to in this Agreement.
16.9 Benefit and Burden. This Agreement shall be binding upon, shall
inure to the benefit of, and be enforceable by and against, the parties hereto
and their respective successors and permitted assigns.
16.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California (excluding
application of any choice of law doctrines that could make applicable the law of
any other state or jurisdiction) and, where appropriate, applicable federal law.
16.11 Severability. If any provision of this Agreement is for any
reason and to any extent deemed to be invalid or unenforceable, then such
provision shall not be voided but rather shall be enforced to the maximum extent
then permissible under then applicable law and so as to reasonably effect the
intent of the parties hereto, and the remainder of this Agreement will remain in
full force and effect.
16.12 Attorneys' Fees. Should a suit or arbitration be brought to
enforce or interpret any provision of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees to be fixed in amount by the
court or the arbitrator(s) (including without limitation costs, expenses and
fees on any appeal). The prevailing party will be entitled to recover its costs
of suit or arbitration, as applicable, regardless of whether such suit or
arbitration proceeds to a final judgment or award.
16.13 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring of disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. For purposes of this Agreement the term "knowledge" means
with respect to a party hereto, with respect to any matter in question, that any
of the Chief Executive Officer, Chief Financial Officer, General Counsel or
Controller of such party, has actual knowledge of such matter.
16.14 Execution. For the convenience of the parties, this Agreement may
be executed in counterparts, each of which shall be deemed an original but both
of which together
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shall constitute one and the same instrument, and this Agreement may be executed
and delivered by facsimile.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement by their duly authorized representatives as of the date first set
forth above.
SELLER:
CENTIGRAM COMMUNICATIONS CORPORATION
Signature: /s/ Robert L. Puette
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Name: Robert L. Puette
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Title: President & CEO
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BUYER:
MITEL, INC.
Signature: /s/ Jean-Jacques Carrier
------------------------
Name: Jean-Jacques Carrier
-----------------------------
Title: Treasurer
-----------------------------
MITEL CORPORATION
Signature: /s/ John B. Millard
------------------------
Name: John B. Millard
-----------------------------
Title: President & CEO
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[SIGNATURE PAGE TO AGREEMENT FOR PURCHASE AND SALE OF ASSETS]
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