Exhibit 2.1
AMENDED AND RESTATED ASSET SALE AGREEMENT
BY AND AMONG
NORTEL NETWORKS CORPORATION
NORTEL NETWORKS LIMITED
NORTEL NETWORKS INC.
AND
THE OTHER ENTITIES IDENTIFIED HEREIN AS SELLERS
AND
CIENA CORPORATION
DATED AS OF NOVEMBER 24, 2009
TABLE OF CONTENTS
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ARTICLE I INTERPRETATION |
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3 |
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SECTION 1.1. DEFINITIONS |
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3 |
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SECTION 1.2. INTERPRETATION |
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35 |
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ARTICLE II PURCHASE AND SALE OF ASSETS |
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36 |
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SECTION 2.1. PURCHASE AND SALE |
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36 |
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SECTION 2.2. PURCHASE PRICE |
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47 |
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SECTION 2.3. CLOSING |
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56 |
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SECTION 2.4. DESIGNATED PURCHASER(S) |
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59 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER |
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60 |
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SECTION 3.1. ORGANIZATION AND CORPORATE POWER |
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60 |
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SECTION 3.2. AUTHORIZATION; BINDING EFFECT; NO BREACH |
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60 |
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SECTION 3.3. AVAILABILITY OF FUNDS |
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61 |
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SECTION 3.4. ADEQUATE ASSURANCE OF FUTURE PERFORMANCE |
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61 |
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SECTION 3.5. PURCHASERS ACKNOWLEDGMENTS; EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES |
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61 |
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SECTION 3.6. BROKERS |
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63 |
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SECTION 3.7. REPRESENTATIONS AND WARRANTIES RELATING TO THE SHARES |
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63 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS |
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65 |
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SECTION 4.1. ORGANIZATION AND CORPORATE POWER |
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65 |
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SECTION 4.2. AUTHORIZATION; BINDING EFFECT; NO BREACH |
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66 |
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SECTION 4.3. TITLE TO TANGIBLE ASSETS; SUFFICIENCY OF ASSETS |
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66 |
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SECTION 4.4. MATERIAL CONTRACTS |
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67 |
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SECTION 4.5. INTELLECTUAL PROPERTY |
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69 |
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SECTION 4.6. LITIGATION |
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72 |
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SECTION 4.7. FINANCIAL STATEMENTS |
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72 |
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SECTION 4.8. COMPLIANCE WITH LAWS; CONSENTS |
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73 |
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SECTION 4.9. REAL PROPERTY |
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73 |
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SECTION 4.10. LABOR AND EMPLOYEE BENEFITS MATTERS |
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74 |
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SECTION 4.11. BROKERS |
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76 |
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SECTION 4.12. TAXES |
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76 |
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SECTION 4.13. ENVIRONMENTAL MATTERS |
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77 |
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SECTION 4.14. UNDISCLOSED LIABILITIES |
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78 |
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SECTION 4.15. RELIANCE ON EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT |
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78 |
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SECTION 4.16. REPRESENTATIONS AND WARRANTIES BY THE OTHER SELLERS |
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80 |
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ARTICLE V COVENANTS AND OTHER AGREEMENTS |
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81 |
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SECTION 5.1. U.S. BANKRUPTCY ACTIONS |
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81 |
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SECTION 5.2. CANADIAN BANKRUPTCY ACTIONS |
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82 |
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TABLE OF CONTENTS
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SECTION 5.3. CONSULTATION; NOTIFICATION; COOPERATION; SOLICITATION |
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83 |
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SECTION 5.4. PRE-CLOSING COOPERATION |
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84 |
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SECTION 5.5. ANTITRUST AND OTHER REGULATORY APPROVALS |
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85 |
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SECTION 5.6. PRE-CLOSING ACCESS TO INFORMATION |
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88 |
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SECTION 5.7. PUBLIC ANNOUNCEMENTS |
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90 |
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SECTION 5.8. FURTHER ACTIONS |
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90 |
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SECTION 5.9. CONDUCT OF BUSINESS |
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91 |
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SECTION 5.10. TRANSACTION EXPENSES |
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93 |
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SECTION 5.11. CONFIDENTIALITY |
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93 |
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SECTION 5.12. DISCLOSURE SCHEDULES AND CERTAIN INFORMATION |
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95 |
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SECTION 5.13. CERTAIN PAYMENTS OR INSTRUMENTS RECEIVED FROM THIRD PARTIES |
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95 |
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SECTION 5.14. NON-ASSIGNABLE CONTRACTS |
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96 |
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SECTION 5.15. BUNDLED CONTRACTS |
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96 |
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SECTION 5.16. POST-CLOSING ASSISTANCE FOR LITIGATION |
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98 |
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SECTION 5.17. TANGIBLE ASSET REMOVAL |
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99 |
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SECTION 5.18. TERMINATION OF OVERHEAD AND SHARED SERVICES AND INTERCOMPANY LICENSING ARRANGEMENTS |
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99 |
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SECTION 5.19. FINANCING |
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100 |
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SECTION 5.20. INSURANCE MATTERS |
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100 |
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SECTION 5.21. SELLERS DEPOSITS, GUARANTEES AND OTHER CREDIT SUPPORT OF THE BUSINESS |
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102 |
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SECTION 5.22. USE OF SELLERS TRADEMARKS |
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103 |
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SECTION 5.23. ACCESSIBLE INFORMATION |
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103 |
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SECTION 5.24. MAINTENANCE OF BOOKS AND RECORDS |
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103 |
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SECTION 5.25. CERTAIN ANCILLARY AGREEMENTS |
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104 |
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SECTION 5.26. ADDITIONAL FINANCIAL STATEMENTS |
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105 |
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SECTION 5.27. SECURITIES COMPLIANCE |
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106 |
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SECTION 5.28. TRANSITION SERVICES |
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106 |
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SECTION 5.29. STANDSTILL PERIOD |
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106 |
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SECTION 5.30. HAZARDOUS MATERIALS AT THE CARLING PROPERTY |
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107 |
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SECTION 5.31. MONTREAL PREMISES AND OTHER REAL ESTATE |
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108 |
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SECTION 5.32. RIGHT TO EXCLUDE |
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108 |
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SECTION 5.33. AUTHORIZATION OF SHARES |
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109 |
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SECTION 5.34. PATENT ASSIGNMENTS |
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109 |
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SECTION 5.35. INDIA |
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109 |
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SECTION 5.36. NO VOTE |
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109 |
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SECTION 5.37. DEPOSIT |
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110 |
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ARTICLE VI TAX MATTERS |
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110 |
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SECTION 6.1. TRANSFER TAXES |
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110 |
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SECTION 6.2. WITHHOLDING TAXES |
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112 |
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SECTION 6.3. TAX CHARACTERIZATION OF PAYMENTS UNDER THIS AGREEMENT |
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112 |
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TABLE OF CONTENTS
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SECTION 6.4. APPORTIONMENT OF TAXES |
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113 |
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SECTION 6.5. TAX RECORDS |
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115 |
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SECTION 6.6. COOPERATION |
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116 |
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SECTION 6.7. NORTH AMERICAN TAX ESCROW |
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116 |
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SECTION 6.8. EMEA TAX ESCROW |
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118 |
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SECTION 6.9. ITALIAN TAX ESCROW |
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119 |
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ARTICLE VII EMPLOYMENT MATTERS |
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122 |
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SECTION 7.1. EMPLOYMENT OBLIGATIONS WITH RESPECT TO NON-UNION EMPLOYEES |
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122 |
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SECTION 7.2. EMPLOYMENT OBLIGATIONS WITH RESPECT TO UNION EMPLOYEES |
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127 |
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SECTION 7.3. EXCLUDED EMPLOYEE LIABILITIES |
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127 |
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SECTION 7.4. OTHER EMPLOYEE COVENANTS |
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128 |
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SECTION 7.5. CANADIAN PENSION PLANS |
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130 |
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SECTION 7.6. SOLE BENEFIT OF SELLERS AND PURCHASER |
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132 |
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ARTICLE VIII REGISTRATION AND SALE OF CONVERTIBLE NOTES |
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132 |
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SECTION 8.1. SHELF REGISTRATION |
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132 |
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SECTION 8.2. OFFERINGS |
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134 |
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SECTION 8.3. PIGGYBACK REGISTRATION |
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135 |
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SECTION 8.4. NO INCONSISTENT AGREEMENTS |
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136 |
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SECTION 8.5. REGISTRATION PROCEDURES |
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137 |
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SECTION 8.6. COOPERATION BY MANAGEMENT |
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141 |
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SECTION 8.7. REGISTRATION EXPENSES AND LEGAL COUNSEL |
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142 |
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SECTION 8.8. INDEMNIFICATION |
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142 |
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SECTION 8.9. TRADING LIMITATION |
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144 |
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SECTION 8.10. AGENT OF SELLERS |
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144 |
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SECTION 8.11. LIQUIDATED DAMAGES |
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144 |
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ARTICLE IX CONDITIONS TO THE CLOSING |
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145 |
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SECTION 9.1. CONDITIONS TO EACH PARTYS OBLIGATION |
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145 |
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SECTION 9.2. CONDITIONS TO SELLERS OBLIGATION |
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146 |
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SECTION 9.3. CONDITIONS TO PURCHASERS OBLIGATION |
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146 |
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ARTICLE X TERMINATION |
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147 |
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SECTION 10.1. TERMINATION |
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147 |
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SECTION 10.2. TERMINATION PAYMENTS |
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148 |
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SECTION 10.3. EFFECTS OF TERMINATION |
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149 |
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ARTICLE XI MISCELLANEOUS |
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150 |
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SECTION 11.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OR COVENANTS |
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150 |
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SECTION 11.2. REMEDIES |
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150 |
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SECTION 11.3. THIRD-PARTY BENEFICIARIES |
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150 |
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SECTION 11.4. CONSENT TO AMENDMENTS; WAIVERS |
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151 |
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SECTION 11.5. SUCCESSORS AND ASSIGNS |
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151 |
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TABLE OF CONTENTS
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SECTION 11.6. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL |
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151 |
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SECTION 11.7. NOTICES |
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152 |
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SECTION 11.8. EXHIBITS; SELLERS DISCLOSURE SCHEDULE |
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155 |
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SECTION 11.9. COUNTERPARTS |
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155 |
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SECTION 11.10. NO PRESUMPTION |
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155 |
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SECTION 11.11. SEVERABILITY |
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155 |
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SECTION 11.12. ENTIRE AGREEMENT |
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156 |
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SECTION 11.13. AVAILABILITY OF EQUITABLE RELIEF |
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156 |
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SECTION 11.14. BULK SALES LAWS |
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157 |
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SECTION 11.15. MAIN SELLERS AS REPRESENTATIVES OF OTHER SELLERS |
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157 |
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SECTION 11.16. OBLIGATIONS OF SELLERS |
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157 |
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SECTION 11.17. EXECUTION BY OTHER SELLERS |
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157 |
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iv
EXHIBITS
Exhibit A Other Sellers
Exhibit B EMEA Sellers
Exhibit C Canadian Debtors; U.S. Debtors; Israeli Company; Non-Debtor Sellers; EMEA
Debtors
Exhibit D Original EMEA Asset Sale Agreement
Exhibit D-1 Deed of Amendment
Exhibit E EMEA Amendment Agreement
Exhibit F Intellectual Property License Agreement
Exhibit G Knowledge of the Purchaser
Exhibit H Intentionally Omitted
Exhibit I Loaned Employee Agreement
Exhibit J Intentionally Omitted
Exhibit K Intentionally Omitted
Exhibit L-1 Lab 10 Lease Agreement
Exhibit L-2 Carling Property Non-Disturbance Agreements
Exhibit M Intentionally Omitted
Exhibit N Intentionally Omitted
Exhibit O Intentionally Omitted
Exhibit P Trademark License Agreement
Exhibit Q Transition Services Agreement
Exhibit R Intentionally Omitted
Exhibit S Intentionally Omitted
Exhibit T Intentionally Omitted
Exhibit U Intentionally Omitted
Exhibit V Form of Assignment of Patent Rights
Exhibit W Form of Assignment of Trademark Rights
Exhibit X Restricted Seller Revenue
Exhibit Y Real Estate Terms and Conditions
Exhibit Z Flextronics Back-to-Back Supply Agreement Term Sheet
Exhibit AA Deposit Escrow Agreement
Exhibit 1.1 Contract Manufacturing Inventory Agreements (Term Sheet)
Exhibit 2.1.1 Sellers and Purchaser
Exhibit 2.2.1(b)(ii) Related Share Adjustment Table
Exhibit 2.2.1(b)(iii) Conversion Rate Table
Exhibit 5.1(a) Forms of U.S. Bidding Procedures Order and U.S. Sale Order
Exhibit 5.2.1 Form of Canadian Sales Process Order
Exhibit 5.2.2 Form of Canadian Approval and Vesting Order
Exhibit 5.9 Purchasers Representatives for Interim Covenants Consents
Exhibit 5.12 Purchasers Representatives for Sellers Disclosure Schedule and Certain
Information Updates
2
SELLERS DISCLOSURE SCHEDULE
Section 1.1(a) Contract Manufacturers
Section 1.1(b) Persons Having Knowledge
Section 1.1(d) Nortel Accounting Principles
Section 1.1(e) Owned Equipment
Section 1.1(g) Permitted Encumbrances
Section 1.1(h) Products
Section 1.1(i) Seller Contracts
Section 1.1(j) Services
Section 1.1(k) Patents
Section 1.1(l) Trademarks
Section 1.1(m) Seconded Employees
Section 2.1.1(g) Seller Consents
Section 2.1.2(n) Excluded Assets
Section 2.1.3(c) Assumed Intellectual Property Liabilities
Section 2.1.3(i) Assumed Specified Employee Liabilities
Section 2.1.4(n) Other Excluded Liabilities
Section 2.1.5(a) 365 Vendor Contracts
Section 2.1.5(b) 365 Customer Contracts
Section 2.1.6(a) Other Vendor Contracts
Section 2.1.6(b) Non-Assignable Contracts with Suppliers
Section 2.1.6(c) Designated Other Customer Contracts
Section 2.1.6(d) Designated Non-Assignable Customer Contracts
Section 2.1.7(a) Cure Costs
Section 2.1.7(b) Payment of Cure Costs
Section 2.1.7(c) Customer Contract Cure Costs
Section 2.2.3(d) Manner for Exclusion of Sellers
Section 2.2.7(a) Allocations for Shares
Section 4.3(c)(i) Inbound License Agreements and Patent Cross Licenses
Section 4.3(c)(ii) Other Assets and Rights
Section 4.4(a) Material Customer and Supplier Contracts
Section 4.4(b) Material Seller Contracts
Section 4.5(b) Transferred Intellectual Property
Section 4.5(h) Infringement
Section 4.5(j)(i) Patent Cross Licenses
Section 4.5(j)(ii) Inbound License Agreements
Section 4.5(j)(iii) Outbound License Agreements
Section 4.5(k) Open Source Software
Section 4.6 Litigation
Section 4.7 Financial Statements
Section 4.8 Compliance with Laws
Section 4.9(a)(i) Owned Real Property
Section 4.9(a)(ii) Leased Real Property
Section 4.9(a)(iii) 6-Month Locations
Section 4.9(a)(iv) Short-Term Licensed Property
Section 4.9(a)(v) Locations where Owned Assets Located
Section 4.10(a)(i) Seller Employee Plans
Section 4.10(b) Employee Information
Section 4.10(c) Strike, Material Grievance, Work Stoppage
Section 4.10(d) Collective Labor Agreements
Section 4.10(e) Multiemployer Plans
Section 4.12(c) Deficiency for Material Amount of Taxes
Section 5.9 Conduct of Business in the Ordinary Course Exceptions
Section 5.15 Bundled Contracts
Section 5.21(a) Security Deposits
Section 5.28 Covenants in respect of Transition Services
Section 5.35 India
Section 7.1.1(a) Employees Transferring by Operation of Law
Section 7.1.1(c) Countries with Ten or More Employees
Section 7.1.2(b)(ii)(B) Accrued Amounts Owing to Specified Transferred Employees
Section 7.1.2(b)(iv) Australia Long Service Leave and Sick Leave
Section 11.15(a)(i) Appointment of NNC as Representative
Section 11.15(a)(ii) Appointment of NNL as Representative
Section 11.15(a)(iii) Appointment of NNI as Representative
2
AMENDED AND RESTATED ASSET SALE AGREEMENT
This Amended and Restated Asset Sale Agreement is dated as of November 24, 2009, among Nortel
Networks Corporation, a corporation organized under the laws of Canada (NNC), Nortel Networks
Limited, a corporation organized under the laws of Canada (NNL), Nortel Networks Inc., a
corporation organized under the laws of Delaware (NNI and, together with NNC and NNL, the Main
Sellers), the affiliates of the Main Sellers listed in Exhibit A hereto (the Other
Sellers and, together with the Main Sellers, the Sellers) and Ciena Corporation, a corporation
organized under the laws of Delaware (the Purchaser).
WHEREAS, the Sellers and the affiliates of the Main Sellers listed in Exhibit B hereto (the
EMEA Sellers) beneficially own and operate, respectively, the Business (as defined below);
WHEREAS, on the Petition Date (as defined herein), NNC, NNL and the Other Sellers listed in
part 1 of Exhibit C hereto (together, the Canadian Debtors) filed with the Canadian Court (as
defined below) an application for protection under the Companies Creditors Arrangement Act (the
CCAA) (the proceedings commenced by such application, the CCAA Cases) and were granted certain
initial creditor protection pursuant to an order issued by the Canadian Court on the same date,
which also appointed Ernst & Young Inc. as Monitor in connection with the CCAA Cases and has been
extended by further order of the Canadian Court from time to time, most recently on July 30, 2009,
as the same may be amended and restated from time to time by the Canadian Court.
WHEREAS, NNI and the Other Sellers listed in part 2 of Exhibit C hereto (the U.S. Debtors)
are debtors-in-possession under the U.S. Bankruptcy Code (as defined below) which commenced cases
under Chapter 11 of the U.S. Bankruptcy Code on the Petition Date by filing voluntary petitions for
relief in the U.S. Bankruptcy Court for the District of Delaware (the Chapter 11 Cases);
WHEREAS, the EMEA Debtors (as defined below) on the Petition Date filed applications with the
English Court (as defined below), pursuant to the Insolvency Act of 1986, as amended (the
Insolvency Act) and the European Unions Council Regulation (EC) No. 1346/2000 on Insolvency
Proceedings (the proceedings commenced by such applications, the EMEA Cases) and the English
Court appointed Alan Bloom, Stephen Harris, Christopher Hill and Alan Hudson of Ernst & Young LLP
as joint administrators of all the EMEA Debtors (other than Nortel Networks (Ireland) Limited, for
which David Hughes of Ernst & Young Chartered Accountants and Alan Bloom serve as joint
administrators) (the Joint Administrators) under the Insolvency Act;
WHEREAS, the entity listed under the heading Israeli Company in part 3 of Exhibit C hereto
(the Israeli Company) on January 18, 2009 filed an application with the Tel-Aviv-Jaffa District
Court, pursuant to the Israeli Companies Law, 1999, and the regulations relating thereto
(collectively, the Israeli Companies Law) for a stay of proceedings, and the Israeli Court
appointed Yaron Har-Zvi and Avi D. Pelossof (the Joint Israeli Administrators) on January 19,
2009, as joint administrators of the Israeli Company under the Israeli Companies Law;
WHEREAS, on May 28, 2009, the Commercial Court of Versailles, France ordered the commencement
of secondary proceedings and the appointment of a French administrator in respect of Nortel
Networks S.A.;
WHEREAS, on July 14, 2009, Nortel Networks (CALA) Inc. commenced a case under Chapter 11 of
the U.S. Bankruptcy Code by filing a voluntary petition for relief in the U.S. Bankruptcy Court for
the District of Delaware;
WHEREAS, the Other Sellers listed in part 4 of Exhibit C hereto (the Non-Debtor Sellers) are
not subject to any Bankruptcy Proceedings (as defined below) as of the date hereof;
WHEREAS, the Sellers have agreed to transfer to the Purchaser and/or the Designated Purchasers
(as defined below) and the Purchaser has agreed to purchase and assume, and cause the Designated
Purchasers to purchase and assume, including, to the extent applicable, pursuant to Sections 363
and 365 of the U.S. Bankruptcy Code and pursuant to the Canadian Approval and Vesting Order, the
Assets and the Assumed Liabilities (each as defined below) from the Sellers upon the terms and
conditions set forth hereinafter;
WHEREAS, the Sellers and the Purchaser previously entered into that certain Asset Sale
Agreement, dated as of October 7, 2009 (the Original Asset Sale Agreement), pursuant to which the
Purchaser was selected as the stalking horse bidder for the purposes of the Auction (as defined
below);
WHEREAS, simultaneously with the execution of the Original Asset Sale Agreement, the EMEA
Sellers, the Joint Administrators, the Joint Israeli Administrators and the Purchaser entered into
a separate agreement in the form set forth in Exhibit D hereto (the Original EMEA Asset Sale
Agreement) providing for the sale to the Purchaser (or the EMEA Designated Purchasers (as defined
therein)) of the EMEA Assets (as defined below), the Original EMEA Asset Sale Agreement being
amended by a Deed of Amendment dated October 20, 2009 in the form set forth in Exhibit D-1 hereto;
WHEREAS, on November 20-22, 2009, the Auction was held, during which time the Sellers and the
Purchaser agreed to modify a number of terms in connection with the Sellers selection of the
Purchaser as the Successful Bidder (as defined below) at the Auction;
WHEREAS, the Purchaser and the Sellers desire to amend and restate the Original Asset Sale
Agreement in its entirety to incorporate the terms agreed to in connection with the Sellers
selection of the Purchaser as the Successful Bidder at the Auction;
WHEREAS, simultaneously with the execution of this Agreement, the EMEA Sellers, the Joint
Administrators, the Joint Israeli Administrators and the Purchaser are entering into an amendment
agreement to amend further the Original EMEA Asset Sale Agreement to incorporate the terms agreed
to in connection with the Sellers selection of Purchaser as the Successful Bidder at the Auction
(the EMEA Amendment Agreement a form of which is set forth in Exhibit E hereto);
2
WHEREAS, the Parties (as defined below) acknowledge and agree that the purchase by the
Purchaser (and the Designated Purchasers, if any) of the Assets and the EMEA Assets, the license
of Intellectual Property rights under the Intellectual Property License Agreement and the Trademark
License Agreement (each as defined below), and the assumption by the Purchaser and the Designated
Purchasers of the Assumed Liabilities and the EMEA Assumed Liabilities (as defined below) are being
made at arms length and in good faith and without intent to hinder, delay or defraud creditors of
the Sellers and their Affiliates and each Seller acknowledges that the consideration to be paid is
fair value and reasonably equivalent value for the acquisitions by the Purchaser and the Designated
Purchasers of the Assets and the EMEA Assets, the license of Intellectual Property rights under the
Intellectual Property License Agreement and the Trademark License Agreement and the assumption by
the Purchaser and the Designated Purchasers of the Assumed Liabilities and the EMEA Assumed
Liabilities, as set forth hereunder and in the EMEA Asset Sale Agreement; and
WHEREAS, in addition, at the Closing, the Purchaser, certain Sellers (or affiliates of the
Sellers) and certain EMEA Sellers will enter into the following ancillary agreements (together, the
Ancillary Agreements) (i) the Local Sale Agreements, (ii) the Real Estate Agreements,
(iii) the Intellectual Property License Agreement, (iv) the Transition Services Agreement, (v) the
Trademark License Agreement, (vi) the Loaned Employee Agreement; (vii) the Subcontract Agreement,
(viii) the Contract Manufacturing Inventory Agreements, (ix) the Carling Property Lease Agreements,
(x) the Patent Assignments, (xi) the Trademark Assignments, (xii) the Indenture (unless the Cash
Election Option has been exercised in full), (xiii) if requested by the Purchaser in accordance
with the terms hereof, the Flextronics Back-to-Back Supply Agreement and (xiv) such other
back-to-back supply agreements as are requested by the Purchaser in accordance with the terms
hereof, and, subject to the negotiation prior to Closing of each such agreement to the mutual
satisfaction of each party thereto, in their sole and absolute discretion, will enter into the
Mutual Development Agreement, the Seller Supply Agreement, the NETAS Distribution Agreement; the
NGS Distribution Agreement, the EFA Development Agreement, and the LGN/Korea Distribution Agreement
(each as defined below).
NOW, THEREFORE, in consideration of the respective covenants, representations and warranties
made herein, and of the mutual benefits to be derived hereby (the sufficiency of which is
acknowledged), the Parties agree as follows:
ARTICLE I
INTERPRETATION
SECTION 1.1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth below:
2008 Revenues has the meaning set forth in Section 2.2.3(b).
365 Contracts has the meaning set forth in Section 2.1.5(b).
365 Customer Contract List has the meaning set forth in Section 2.1.5(b).
365 Customer Contracts has the meaning set forth in Section 2.1.5(b).
3
365 Vendor Contract List has the meaning set forth in Section 2.1.5(a).
365 Vendor Contracts has the meaning set forth in Section 2.1.5(a).
6 Month Location has the meaning set forth in Section 4.9(a).
Accounting Arbitrator has the meaning set forth in Section 2.2.4.1(b).
Action means any litigation, action, audit, hearing, investigation, suit (whether civil,
criminal, administrative or investigative), charge, binding arbitration, Tax audit or other legal,
administrative or judicial proceeding.
Additional Adverse Bankruptcy Proceeding has the meaning set forth in Section 2.2.3(a).
Additional Premises Lease Agreement means the lease agreement between NNTC on the one hand
and the Purchaser or Designated Purchaser on the other hand in respect of the leasing of those
parts of the Lab 2 Building of the Carling Property as more particularly defined in the Real Estate
Terms and Conditions.
Additional Statements has the meaning set forth in Section 8.1(a)(i).
Adjustment Amount has the meaning set forth in Section 2.2.4.2(a).
Adverse International Injunction has the meaning set forth in Section 2.2.3(a).
Affiliate means, as to any Person, any other Person that directly or indirectly through one
or more intermediaries Controls, or is under common Control with, or is Controlled by, such Person;
provided, however, that no EMEA Seller or Subsidiary of an EMEA Seller shall be
deemed an Affiliate of any Seller.
Aggregate Principal Amount has the meaning set forth in Section 2.2.1(a).
Agreement means this Amended and Restated Asset Sale Agreement, the Sellers Disclosure
Schedule and all Exhibits and Schedules attached hereto and thereto and all amendments hereto and
thereto made in accordance with Section 11.4.
Alternative Arrangements has the meaning set forth in Section 5.15(b).
Alternative Transaction means the sale, transfer or other disposition, directly or
indirectly, including through an asset sale, stock sale, merger, amalgamation, plan of arrangement
or other similar transaction, of all or a substantial portion of the Business, or all or a
substantial portion of the Assets and the EMEA Assets, in each case, in a transaction or a series
of transactions with a Successful Bidder (as such term has been defined in Exhibit 5.1(a), which
may include multiple bidders whose bids are combined) other than the Purchaser and/or its
Affiliates; provided, however, that an Alternative Transaction shall not include:
(i) the retention of the Business or all or any portion of the Assets and the EMEA Assets, by all
or part of the Sellers and/or the EMEA Sellers (or their successor entities emerging from the
Bankruptcy
4
Proceedings) pursuant to a stand-alone plan of reorganization or plan of arrangement approved
by any Bankruptcy Court, or (ii) the sale, transfer or other disposition, directly or indirectly,
of any portion of the Assets or the EMEA Assets (other than as a going concern) in connection with
the closure, liquidation or winding-up of any of the Sellers.
Ancillary Agreements has the meaning set forth in the recitals to this Agreement.
Antitrust Approvals means the HSR Approval and the Competition Act Approval.
Antitrust Laws means the Competition Act, the HSR Act, the EC Merger Regulation, and any
competition, merger control and anti-trust Law of the European Union, any applicable European Union
member states and EFTA states, and any other applicable supranational, national, federal, state,
provincial or local Law designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolizing or restraining trade or lessening competition of any other
country or jurisdiction, to the extent applicable to the transactions contemplated by this
Agreement (and/or by the EMEA Asset Sale Agreement).
ARD Transferring Employee has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
Assets has the meaning set forth in Section 2.1.1.
Assigned Contracts means all Seller Contracts except: (i) the Excluded 365 Contracts, (ii)
the Excluded Other Vendor Contracts, (iii) the Excluded Non-Assignable Supply Contracts, (iv) the
Non-Assigned Contracts and (v) leases, subleases, licenses and other occupancy agreements in
respect of any Real Property, unless an assignment of such contract is contemplated by the Real
Estate Terms and Conditions.
Assumed and Assigned Contracts has the meaning set forth in Section 2.1.5(b).
Assumed Liabilities has the meaning set forth in Section 2.1.3.
Auction has the meaning set forth in the U.S. Bidding Procedures and Sale Motion.
Audited Financial Statements has the meaning set forth in Section 5.26.
Balance Sheet Date has the meaning set forth in Section 4.7.
Bankruptcy Consents has the meaning set forth in Section 4.1(a).
Bankruptcy Court means the U.S. Bankruptcy Court, the Canadian Court, the English Court and
any other court before which Bankruptcy Proceedings are held.
5
Bankruptcy Laws means the U.S. Bankruptcy Code, the CCAA, the Insolvency Act and the other
applicable bankruptcy, insolvency, administration or similar Laws of any jurisdiction where
Bankruptcy Proceedings are held.
Bankruptcy Proceedings means the Chapter 11 Cases, the CCAA Cases, the EMEA Cases and, in
each case, any proceedings thereunder, as well as any other voluntary or involuntary bankruptcy,
insolvency, administration or similar judicial proceedings concerning any of the Sellers or the
EMEA Sellers that are held from time to time.
Base Cash Purchase Price has the meaning set forth in Section 2.2.1(a).
Break-Up Fee has the meaning set forth in Section 10.2(a).
Bundled Contract has the meaning set forth in Section 5.15(a).
Business means the optical networking solutions and carrier ethernet switching segments of
NNCs Metro Ethernet Networks business through which the Sellers and the EMEA Sellers,
individually, jointly or in collaboration with, or pursuant to Contracts with, Third Parties: (a)
design, develop and cause the manufacture, assembly and testing of the Products; (b) market, sell,
distribute and supply the Products; and (c) provide the Services, all as conducted as at the date
of this Agreement, but excludes:
|
(i) |
|
any financial, information technology, legal, marketing, human
resource operations (including supply management and technical and product
support), real estate or other corporate or related functions supporting or
utilized by such activities, unless such functions are exclusively dedicated to
the support of the activities described in (a) through (c), in which event such
functions are included; |
|
|
(ii) |
|
Overhead and Shared Services (other than Transferred Overhead
and Shared Services); and |
|
|
(iii) |
|
any products and/or services provided by businesses or
business segments of any of the Sellers or the EMEA Sellers, other than those
specified in (a) through (c) above. |
Business Day means a day on which the banks are opened for business (Saturdays, Sundays,
statutory and civic holidays excluded) in (i) New York, New York, United States, (ii) Toronto,
Ontario, Canada, and (iii) London, England, United Kingdom.
Business Information means, as of the Closing Date, all books, records, files, research and
development log books, ledgers, documentation, sales literature or similar documents in the
possession or under control of the Sellers and to the extent that such information relates to the
Business, including policies and procedures, Owned Equipment manuals and materials and procurement
documentation; provided, that, to the extent any of the foregoing is also used in any
business or business segment of any Seller other than the Business, then such portion of the
Business Information as used in such business or business segment of any Seller other than the
Business shall be segregated and shall not form part of Business
6
Information, provided further that, where such segregation shall be
impracticable, Business Information shall be limited to copies of the foregoing. Business
Information shall not include any Employee Records or Tax records.
Canadian Approval and Vesting Order has the meaning set forth in Section 5.2.2.
Canadian Approval and Vesting Order Motion has the meaning set forth in Section 5.2.2.
Canadian Court means the Ontario Superior Court of Justice (Commercial List).
Canadian DB Replacement Plan has the meaning set forth in Section 7.5.3.
Canadian Debtors has the meaning set forth in the recitals to this Agreement.
Canadian Non-Union DC Replacement Plan has the meaning set forth in Section 7.5.1.
Canadian Sales Process Order has the meaning set forth in Section 5.2.1(a).
Canadian Sales Process Order Motion has the meaning set forth in Section 5.2.1(a).
Canadian Sellers means each of the Sellers that are organized under the laws of Canada (or
any province of Canada).
Canadian Union DC Replacement Plan has the meaning set forth in Section 7.5.4.
Canadian Union Retiree means any individual who was employed by any of the Sellers or any of
their Affiliates in Canada in respect of the Business and whose terms and conditions of employment
were governed by a Collective Labor Agreement.
Carling Property means the Premises as defined in the Carling Property Lease Agreements.
Carling Property Escrow Amount means, pursuant to the Carling Property Lease Agreements, an
initial amount in immediately available funds equal to $33,500,000 which amount shall secure
exclusively the break-fee, if any, payable by the Sellers to the Purchaser in respect of the early
termination of the Carling Property Lease Agreements by the Sellers in the exercise of the Sellers
early termination rights thereunder.
Carling Property Lease Agreements means, collectively, the Lab 10 Lease Agreement and the
Additional Premises Lease Agreement, and non-disturbance agreements from any existing mortgagees
registered on title to the Carling Property in the form attached as Exhibit L-2 hereto, each of the
foregoing agreements to be entered into and delivered on or before Closing by each of the parties
to such agreements substantially in the forms aforesaid.
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Cash Purchase Price has the meaning set forth in Section 2.2.1(a).
Cash Replacement Election has the meaning set forth in Section 2.2.1(a).
CCAA has the meaning set forth in the recitals to this Agreement.
CCAA Cases has the meaning set forth in the recitals to this Agreement.
CCAA Service List means the Canadian Debtors service list as posted on the Monitors
website (http://www.ey.com/ca/nortel) as the same may be updated from time to time in the context
of the CCAA Cases.
CERCLA has the meaning set forth in Section 4.13(c).
Chapter 11 Cases has the meaning set forth in the recitals to this Agreement.
CIP Accounts Receivable means all uninvoiced accounts receivable relating to the Business
with respect to Contracts in progress, but only to the extent that such accounts receivable have
not been invoiced because of milestones, deliverables or other commitments arising pursuant to such
Contracts which have not yet been satisfied or fulfilled and excluding all EMEA CIP Accounts
Receivable.
Claim has the meaning set forth in Section 101(5) of the U.S. Bankruptcy Code.
Claim Notice has the meaning set forth in Section 6.7(b).
Closing has the meaning set forth in Section 2.3.1.
Closing Accrued Vacation and Service Award Amount means, as of the Closing Date, (i) the
amount of compensation with respect to the accrued and unused vacation with respect to each
Specified Transferred Employee and each EMEA Transferring Employee (including all Taxes required to
be withheld on behalf of the applicable Specified Transferred Employee and EMEA Transferring
Employee by his or her respective employer) calculated by taking, with respect to each such
employee (A) an amount equal to the number (not less than zero) of such employees accrued and
unused vacation hours as of the Closing Date multiplied by such employees hourly rate of pay (with
such hourly rate of pay derived by dividing such employees annual base salary by the number of
standard work hours per year for such employee), and (ii) in respect of Transferred Employees in
Australia with five (5) years or more of service as an employee of Sellers, the EMEA Sellers or
their respective Affiliates as of the Closing Date, the amounts specified in Section 7.1.2(b)(iv)
of the Sellers Disclosure Schedules in respect of long service leave multiplied by the applicable
percentage as set forth in the Nortel Accounting Principles, plus, without duplication, the
aggregate amount of employer Taxes required to be paid in connection with all such amounts.
Closing CIP Accounts Receivable Amount means, as of the Closing Date, the amount accrued for
CIP Accounts Receivable and EMEA CIP Accounts Receivable as of the Closing Date in accordance with
GAAP applied in a manner consistent with the Nortel Accounting Principles (to the extent consistent
with GAAP).
8
Closing Date has the meaning set forth in Section 2.3.1.
Closing Date Net Working Capital Transferred has the meaning set forth in Section
2.2.4.1(a).
Closing Inventory Amount means, as of the Closing Date, the book value of the Owned
Inventory and the EMEA Owned Inventory, net of applicable provisions, that would be required to be
reflected on a balance sheet of the Business as of such date prepared in accordance with GAAP
applied in a manner consistent with the Nortel Accounting Principles (to the extent consistent with
GAAP).
Closing KPD Provision means, as of the Closing Date, the provision for Known Product Defects
accrued by the Business in accordance with GAAP applied in a manner consistent with the Nortel
Accounting Principles (to the extent consistent with GAAP).
Closing Net Deferred Revenues means, as of the Closing Date, (x) deferred revenues for
services to be performed or products to be provided by the Business after the Closing Date but for
which an account receivable has been recorded prior to the Closing Date minus (y)
associated deferred costs to the extent incurred by the Business prior to the Closing Date in
connection with such products or services, in each case, that would be required to be reflected on
a balance sheet of the Business as of such date prepared in accordance with GAAP applied in a
manner consistent with the Nortel Accounting Principles (to the extent consistent with GAAP).
Closing Other Accrued and Contractual Liabilities means, as of the Closing Date, (i) such
current Assumed Liabilities and current EMEA Assumed Liabilities of a type accrued on the Business
historic Financial Statements under the heading Other Accrued and Contractual Liabilities
(including Accrued Known Project Losses, Accrued Liquidated Damages, Accrued Marketing Program
Liabilities, Accrued Product Credits (including, for the avoidance of doubt, all credits for
EMEA Products or EMEA Services to be assumed by the Purchaser pursuant to Section 2.4.2(B)(4) of
the EMEA Asset Sale Agreement) and Accrued Training Credits, but excluding COS Accruals and
Representative Fees), that would be required to be reflected on a balance sheet of the Business
as of such date prepared in accordance with GAAP applied in a manner consistent with the Nortel
Accounting Principles (to the extent consistent with GAAP).
Closing Retirement Obligation Amount means, as of the Closing Date, the amount of the actual
unfunded obligations accrued in any period preceding the Closing Date that will be assumed by the
Purchaser, a Designated Purchaser or an EMEA Designated Purchaser at Closing (if any) whether
pursuant to this Agreement or by operation of Law under a plan providing retirement or retiree
welfare benefits of any Seller or EMEA Seller, and under any plan providing jubilee benefits
(anniversary bonuses) of Nortel GmbH, in all cases determined in accordance with GAAP applied in a
manner consistent with the Nortel Accounting Principles (to the extent consistent with GAAP), and
using reasonable actuarial assumptions consistent with the assumptions most recently used for
determining unfunded obligations for the applicable plan prior to the date hereof. For purposes of
this definition, an unfunded obligation shall be deemed to be under (A) with respect to any Seller
or EMEA Seller, a plan providing retirement or retiree welfare benefits to the extent it is
required to be accounted for under FAS 87 (paragraphs 11, 72
9
and 73) or FAS 106 (paragraphs 16 and 85), as applicable, and (B) with respect to Nortel GmbH,
a plan providing jubilee benefits (anniversary bonuses) to the extent it is required to be
accounted for under FAS 112. Notwithstanding the foregoing, an unfunded obligation shall not be
taken into account to the extent that it is a Liability in respect of which there is, and to the
extent of, a separate Purchase Price adjustment that is expressly provided for, if any, under this
Agreement or the EMEA Asset Sale Agreement.
Closing Statement has the meaning set forth in Section 2.2.4.1(a).
Closing Warranty Provision means, as of the Closing Date, the provision for potential claims
by customers under the Warranty Obligations to be recognized and measured by the Business in
accordance with GAAP applied in a manner consistent with the Nortel Accounting Principles (to the
extent consistent with GAAP).
COBRA means the continuation coverage required by Section 4980B of the Code or any similar
Law.
Code means the United States Internal Revenue Code of 1986, as amended.
Collective Labor Agreement means any written agreement that a Person has entered into with
any union or collective bargaining agent with respect to terms and conditions of employment of such
Persons employees.
Commissioner means the Commissioner of Competition appointed under the Competition Act or
any person duly authorized to exercise the powers and perform the duties of the Commissioner of
Competition.
Common Stock means shares of common stock, par value $0.01 per share, of the Purchaser.
Common Stock VWAP means, for any Trading Day, the per share volume-weighted average price as
displayed under the heading Bloomberg VWAP on Bloomberg page CIEN.Q <equity> AQR (or any
successor thereto) in respect of the period from the scheduled opening of trading until the
scheduled close of trading of the primary trading session on such Trading Day (or if such
volume-weighted average price is unavailable, the market value of one share of Common Stock on such
Trading Day, determined using a volume-weighted average method, by a nationally recognized
independent investment banking firm retained for such purpose that is mutually acceptable to
Purchaser and Sellers). The Common Stock VWAP will be determined without regard to after hours
trading or any other trading outside of the regular trading session trading hours.
Competing Transaction has the meaning set forth in Section 5.29(a).
Competition Act means the Competition Act (Canada), as amended, and the regulations
promulgated in connection therewith.
Competition Act Approval means that: (a) the Commissioner shall have issued an advance
ruling certificate pursuant to Section 102 of the Competition Act in respect of the transactions
contemplated by this Agreement; or (b)(i) the applicable waiting period has
10
expired, been terminated pursuant to Section 123 of the Competition Act or compliance with
Part IX of the Competition Act has been waived pursuant to Section 113(c) of the Competition Act,
and (ii) the Commissioner or his/her authorized representative shall have advised the Purchaser in
writing that the Commissioner does not intend to make an application under Section 92 of the
Competition Act with respect to the transactions contemplated by this Agreement, and neither the
Commissioner nor any of his/her authorized representatives shall have rescinded or amended such
advice.
Confidentiality Agreement means collectively, the confidentiality agreement between the
Purchaser, NNC and its subsidiaries and the Joint Administrators dated March 27, 2009, the clean
team confidentiality agreement between the Purchaser and its subsidiaries and NNL and its
subsidiaries, dated April 15, 2009, the second clean team confidentiality agreement between the
Purchaser and its subsidiaries and NNL and its subsidiaries, dated May 8, 2009, and the third clean
team confidentiality agreement between the Purchaser and its subsidiaries and NNL and its
subsidiaries, dated June 19, 2009.
Consent means any approval, authorization, consent, order, license, permission, permit,
qualification, exemption or waiver by, or notice to (including the expiry of any related notice or
waiting period), any Government Entity or other Third Party.
Contract means any written binding contract, agreement, subcontract, purchase order, work
order, sales order, indenture, note, bond, instrument, lease, mortgage, ground lease, commitment,
covenant or undertaking.
Contract Manufacturing Inventory Agreements means the agreements between the Purchaser
and/or any Designated Purchasers, on the one hand, the relevant Sellers, on the other hand, and the
contract manufacturers of the Business listed in Section 1.1(a) of the Sellers Disclosure Schedule
that the relevant Parties will use commercially reasonable efforts to execute on or before the
Closing in the form that shall be negotiated in good faith pursuant to Section 5.25 and the term
sheet attached as Exhibit 1.1.
Control, including, with its correlative meanings, Controlled by and under common Control
with, means, in connection with a given Person, the possession, directly or indirectly, of the
power to either (i) elect more than fifty percent (50%) of the directors of such Person or (ii)
direct or cause the direction of the management and policies of such Person, whether through the
ownership of securities, contract or otherwise.
Conversion Price has the meaning set forth in Section 2.2.1(a).
Convertible Note Recipient Sellers means each of the Canadian Sellers, the UK Sellers and
the U.S. Sellers.
Convertible Notes has the meaning set forth in Section 2.2.1(a).
Convertible Securities has the meaning set forth in Section 8.2(d).
Covered Assets and Persons has the meaning set forth in Section 5.20(a).
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Cure Cost has the meaning set forth in Section 2.1.7(b) of the Sellers Disclosure Schedule.
Customer Contract means any Seller Contract pursuant to which a Seller provides Products
and/or Services to the counterparty.
Customer Contract Cure Cost has the meaning set forth in Section 2.1.7(c) of the Sellers
Disclosure Schedule.
Daily Trading Limit as of any date shall mean the lesser of (i) 10% of the average reported
daily trading volume of the shares of Common Stock on NASDAQ for the 20 consecutive Trading Days
immediately preceding such date and (ii) 10% of the reported daily trading volume of the shares of
Common Stock for the trading date immediately preceding such date.
Deficit Amount has the meaning set forth in Section 2.2.4.2(b)(ii).
Demand Note has the meaning set forth in Section 2.2.7(b).
Deposit Amount has the meaning set forth in Section 5.37.
Deposit Escrow Agent has the meaning set forth in Section 5.37.
Deposit Escrow Agreement has the meaning set forth in Section 5.37.
Designated Non-Assignable Contracts has the meaning set forth in Section 2.1.6(d).
Designated Non-Assignable Customer Contracts has the meaning set forth in Section 2.1.6(d).
Designated Non-Assignable Supply Contracts has the meaning set forth in Section 2.1.6(b).
Designated Other Customer Contracts has the meaning set forth in Section 2.1.6(c).
Designated Other Vendor Contracts has the meaning set forth in Section 2.1.6(a).
Designated Purchaser has the meaning set forth in Section 2.4.
Determination Date has the meaning set forth in Section 2.2.4.1(b).
Distribution Agent means the Person that will act as distribution agent for the Sellers and
the EMEA Sellers hereunder, to be notified by the Main Sellers to the Purchaser and the Escrow
Agent by and not later than January 25, 2010.
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Domain Name means an alphanumeric name that identifies a specific computer or website on the
Internet, and all rights in and to such domain name, including any registrations therefor with a
domain name registrar.
DTC has the meaning set forth in Section 8.5(a)(x).
E&O Inventory has the meaning set forth in Section 5.9(a).
EC Merger Regulation means Council Regulation (EC) No. 139/2004 of January 20, 2004 on the
control of concentrations between undertakings, as amended.
EFA Development Agreement means the agreement between the Purchaser and LG Nortel Co. Ltd.
for development services related to ethernet fiber access (EFA) to be provided by the Purchaser to
LG Nortel Co. Ltd., such agreement to be effective on Closing, that the relevant Parties will use
commercially reasonable efforts to negotiate before the Closing pursuant to Section 5.25.
Effective Hire Date means the day on which the employment of an Employee commences or
continues with the Purchaser or its Affiliates as provided in this Agreement.
Effective Period has the meaning set forth in Section 8.1(a).
EMEA Asset Sale Agreement means the Original EMEA Asset Sale Agreement as amended on October
20, 2009 and the date hereof.
EMEA Assets has the meaning attributed to that term in the EMEA Asset Sale Agreement.
EMEA Assumed Liabilities has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
EMEA Business has the meaning attributed to that term in the EMEA Asset Sale Agreement.
EMEA Cases has the meaning set forth in the recitals to this Agreement.
EMEA CIP Accounts Receivable has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
EMEA Debtors means those entities listed under the heading EMEA Debtors in part 5 of
Exhibit C hereto.
EMEA Designated Purchaser has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
EMEA Employee means an employee of any of the EMEA Sellers engaged in the EMEA Business.
13
EMEA Excluded Liabilities has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
EMEA Excluded Taxes has the meaning set forth in Section 6.8(a).
EMEA Intellectual Property has the meaning set forth in Section 4.5(a).
EMEA Owned Inventory has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
EMEA Purchaser Party has the meaning set forth in Section 6.8(a).
EMEA Sellers has the meaning set forth in the recitals to this Agreement.
EMEA Tax Claim has the meaning set forth in Section 6.8(b).
EMEA Tax Claim Notice has the meaning set forth in Section 6.8(b).
EMEA Tax Escrow Amount means $2,500,000, which amount shall secure the EMEA Sellers
obligations under Section 6.8.
EMEA Transferring Employee has the meaning ascribed to the term Transferring Employee in
the EMEA Asset Sale Agreement.
Employee means an employee of any of the Sellers or their Affiliates (excluding the EMEA
Sellers) engaged in the Business (excluding the EMEA Business), in each instance as listed in
Section 4.10(b) of the Sellers Disclosure Schedule.
Employee Data has the meaning set forth in Section 7.4(b).
Employee Information has the meaning set forth in Section 4.10(b).
Employee Records means books, records, files, or other documentation with respect to
Employees.
Employee Transfer Date means with respect to each jurisdiction where Employees, other than
Inactive Employees, Visa Employees and Seconded Employees, will become Transferred Employees in
accordance with this Agreement, 12:01 a.m. local time in such jurisdiction immediately following
the Closing.
English Court means the High Court of Justice of England and Wales.
Environment means soil, land, surface or subsurface strata, waters (including navigable
ocean, stream, pond, reservoirs, drainage, basins, wetland, ground and drinking), sediments,
ambient air (including indoor), noise, plant life, animal life and all other environmental media or
natural resources.
Environmental Laws means any applicable Laws relating to pollution or protection of the
Environment, human health and safety, including those relating to the presence,
14
use, manufacturing, refining, production, generation, handling, transportation, treatment,
recycling, transfer, storage, disposal, distribution, importing, labeling, testing, processing,
discharge, release, control, or other action or failure to act involving cleanup of any Hazardous
Materials, including without limitation and by way of example only the following laws as in effect
now and as of the Closing Date: (i) Clean Air Act (42 USC 7401, et seq.); (ii) Clean Water Act (33
USC 1251, et seq.); (iii) Resource Conservation and Recovery Act (42 USC 6901, et seq.); (iv)
Comprehensive Environmental Response, Compensation and Liability Act (41 USC 9601, et seq.); (iv)
Toxic Substances Control Act (15 USC 2601, et seq.).
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Escrow Agent has the meaning ascribed to such term in the Escrow Agreement.
Escrow Amount means the portion of the Cash Purchase Price to be paid to the Escrow Agent on
the Closing Date in accordance with Section 2.3.2(b) and, subject to adjustment in accordance with
Section 2.1.7(b) of the Sellers Disclosure Schedule, such amount will consist of (i) the Working
Capital Escrow Amount, (ii) the Carling Property Escrow Amount, (iii) the Tax Escrow Amount, (iv)
the EMEA Tax Escrow Amount and (v) the Italian Tax Escrow Amount.
Escrow Agreement means a joint instruction Escrow Agreement to be entered into on or prior
to Closing with respect to the deposit, investment and disbursement of the Escrow Amount and the
Transition Services Escrow Amount and requiring that any amounts to be distributed thereunder shall
require the written instruction of one or more the Main Sellers and the Purchaser which shall be
given in accordance with this Agreement or the applicable Transaction Document to which any portion
of the Escrow Amount and the Transition Services Escrow Amount relates and otherwise on terms and
conditions reasonably satisfactory to each of the Purchaser, the Sellers, the EMEA Sellers and the
Escrow Agent.
Estimated Adjustment Amount has the meaning set forth in Section 2.2.2(b).
Estimated Closing Date Net Working Capital Transferred has the meaning set forth in Section
2.2.2(a).
Excess ARD Employees Amount has the meaning ascribed to such term in the EMEA Asset Sale
Agreement.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Excluded 365 Contract has the meaning set forth in Section 2.1.5(d).
Excluded Assets has the meaning set forth in Section 2.1.2.
Excluded Employee Liabilities has the meaning set forth in Section 7.3.
Excluded Liabilities has the meaning set forth in Section 2.1.4.
15
Excluded Non-Assignable Supply Contracts has the meaning set forth in 2.1.6(b).
Excluded Other Seller has the meaning set forth in Section 5.32(a).
Excluded Other Vendor Contracts has the meaning set forth in Section 2.1.6(a).
Excluded Taxes has the meaning set forth in Section 6.7(a).
Executory Contract means an executory contract for the purposes of Section 365 of the U.S.
Bankruptcy Code.
Existing 2017 Senior Notes means the 0.875% Convertible Senior Notes due 2017 issued by the
Purchaser that are outstanding as of the date hereof.
Expense Reimbursement has the meaning set forth in Section 10.2(a).
Expense Reimbursement Notice has the meaning set forth in Section 10.2(a).
Extra Services has the meaning set forth in Section 5.28 of the Sellers Disclosure Schedule.
Filing Party has the meaning set forth in Section 6.4(b)(ii).
Final Order means an order of any Bankruptcy Court, any court of competent jurisdiction or
other Government Entity (i) as to which no appeal, notice of appeal, motion to amend or make
additional findings of fact, motion to alter or amend judgment, motion for rehearing or motion for
new trial has been timely filed or, if any of the foregoing has been timely filed, it has been
disposed of in a manner that upholds and affirms the subject order in all material respects without
the possibility for further appeal or rehearing thereon; (ii) as to which the time for instituting
or filing an appeal, motion for rehearing or motion for new trial shall have expired; and (iii) as
to which no stay is in effect; provided, however, that, with respect to an order
issued by the U.S. Bankruptcy Court, the filing or pendency of a motion under Federal Rule of
Bankruptcy Procedure 9024 or Federal Rule of Civil Procedure 60 shall not cause an order not to be
deemed a Final Order unless such motion shall be filed within ten (10) days of the entry of the
order at issue.
Financial Statements has the meaning set forth in Section 4.7.
Flextronics Back-to-Back Supply Agreement means the agreement between the relevant Sellers
and the Purchaser and/or any Designated Purchasers which may be executed, if required, on or before
Closing on the terms set forth in the Flextronics Back-to-Back Supply Agreement Term Sheet attached
as Exhibit Z hereto and such other terms as the Main Sellers and the Purchaser may reasonably
agree.
Freely Tradeable means, with respect to a Convertible Note, a Convertible Note that at any
time of determination (i) may be sold to the public in accordance with Rule 144 under the
Securities Act by a holder of such Convertible Note where no conditions of Rule 144
16
under the Securities Act are then applicable (other than the holding period requirement of
paragraph (d) of Rule 144 under the Securities Act so long as such holding period requirement is
satisfied at such time of determination), including without limitation, the volume limitations set
forth in Rule 144(e) under the Securities Act and (ii) does not bear any restrictive legends
relating to the Securities Act.
GAAP means United States generally accepted accounting principles, consistently applied.
Government Entity means any U.S., Canadian, United Kingdom, foreign, domestic,
supra-national, multi-national, federal, territorial, provincial, state, municipal or local
governmental authority, quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, bureau, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision, department or branch of any
of the foregoing, including the European Commission.
GST means goods and services tax payable under Part IX of the Excise Tax Act (Canada).
Hazardous Materials means (a) petroleum, petroleum products, asbestos in any form that is
friable or polychlorinated biphenyls and (b) any chemical, waste, material, pollutant, contaminant
or other substance, whether solid, liquid or gaseous, the presence of which is regulated by any
Government Entity or which requires investigation or remediation under any Environmental Laws.
Handling of Hazardous Materials means the production, use, generation, Release, storage,
treatment, formulation, processing, labeling, distribution, introduction into commerce,
registration, transportation, reclamation, recycling, disposal, discharge, or other handling or
disposition of Hazardous Materials.
HSR Act means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and any rules and regulations promulgated in connection therewith.
HSR Approval means expiration of all applicable waiting periods under the HSR Act (including
any voluntary agreed extensions) or earlier termination thereof.
ICA Approval means that: (i) if required pursuant to Part IV of the Investment Canada Act,
the Purchaser shall have received confirmation in writing from the responsible Minister under the
Investment Canada Act that he/she is satisfied or is deemed to be satisfied that the transactions
contemplated in this Agreement that are subject to the provisions of the Investment Canada Act are
likely to be of net benefit to Canada, on terms and conditions satisfactory to the Purchaser,
acting reasonably; and (ii) the responsible Minister shall not have issued a notice to the
Purchaser pursuant to Section 25.2(1) of the Investment Canada Act or an order pursuant to Section
25.3(1) of the Investment Canada Act. If either a notice pursuant to Section 25.2(1) or an order
pursuant to Section 25.3(1) has been issued, the Purchaser shall also have received (a)
confirmation in writing from the responsible Minister either that no order will be made under
Section 25.3(1) or that no further action will be taken or (b) a copy of an order
17
under Section 25.4(1)(b) authorizing the transaction, provided that order is on terms
and conditions satisfactory to the Purchaser, acting reasonably.
Inactive Employees means Employees (other than Employees whose employment transfers to the
Purchaser or a Designated Purchaser by operation of Law) who have accepted the Purchasers or
Designated Purchasers offer of employment as provided in Section 7.1.1 and are on any Sellers
approved leave of absence as of the Employee Transfer Date.
Identified Employees has the meaning set forth in Section 7.1.1(a).
IFSA means the Interim Funding and Settlement Agreement dated June 9, 2009 among NNL, NNL,
the Joint Administrators and the other parties thereto.
Inbound License Agreements has the meaning set forth in Section 4.5(j)(ii).
Included Services has the meaning set forth in Section 5.28 of the Sellers Disclosure
Schedule.
Increase Amount has the meaning set forth in Section 2.2.4.2(b)(i).
Indebtedness of any Person at any date means (a) indebtedness for borrowed money, (b)
indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) leases that are
capitalized in accordance with GAAP under which such Person is the lessee, (d) reimbursement
obligations of such Person with respect to letters of credit or performance bonds that are drawn
prior to Closing, (e) obligations in respect of the deferred purchase price of property or services
(other than current trade payables incurred on a basis consistent with past practices), (f)
obligations (under conditional sale or other title retention agreements, (g) obligations (including
without limitation, breakage costs) under interest rate cap agreements, interest rate swap
agreements, foreign currency exchange contracts or other hedging contracts and (h) any guarantee of
the obligations of another Person with respect to any of the foregoing.
Indenture means the indenture providing for the issuance of the Convertible Notes.
Independent Auditor means Deloitte & Touche LLP or, in the case such firm cannot carry-out
its duties for whatever reason, such other auditing firm of international reputation that is (i)
jointly selected by the Primary Parties, or (ii) in case the Primary Parties cannot agree on any
such firm, selected by Deloitte & Touche LLP at the request of the first Primary Party to move.
Indemnitee has the meaning set forth in Section 8.8(b).
Indemnitor has the meaning set forth in Section 8.8(b).
Initial Shelf Registration Statement has the meaning set forth in Section 8.1(a).
Insolvency Act has the meaning set forth in the recitals to this Agreement.
18
Intellectual Property means any and all intellectual property, whether protected or arising
under the laws of the United States, Canada or any other jurisdiction, including all intellectual
property rights in respect of any of the following: (a) Trademarks; (b) Patents; (c) copyrights
and works of authorship (including any registrations therefor or applications for registration);
(d) mask works; (e) trade secrets, know-how and confidential technical or business information; (f)
industrial design or similar rights; and (g) any Software and technology.
Intellectual Property License Agreement means the agreement to be entered into between NNL,
on the one hand, and the Purchaser (or the relevant Designated Purchasers), on the other hand, on
or prior to the Closing in the form attached hereto as Exhibit F.
Investment Canada Act means the Investment Canada Act, as amended, and the regulations
promulgated in connection therewith.
Israeli Companies Law has the meaning set forth in the recitals to this Agreement.
Israeli Company has the meaning set forth in the recitals to this Agreement.
Italian Excluded Taxes has the meaning set forth in Section 6.9(a).
Italian Purchaser Party has the meaning set forth in Section 6.9(a).
Italian Tax Claim has the meaning set forth in Section 6.9(b).
Italian Tax Claim Notice has the meaning set forth in Section 6.9(b).
Italian Tax Escrow Amount means $5,000,000, as such amount is adjusted in accordance with
Section 6.9, which amount shall secure Nortel Italys obligations under Section 6.9.
Joint Administrators has the meaning set forth in the recitals to this Agreement.
Joint Israeli Administrators has the meaning set forth in the recitals to this Agreement.
KEIP shall mean the Nortel Networks Corporation Key Executive Incentive Plan approved by the
U.S. Bankruptcy Court in the District of Delaware on March 5, 2009, and approved by the Canadian
Court on March 6, 2009 and March 20, 2009, with such further amendments and/or supplements as may
be approved by the Canadian Court and/or the U.S. Bankruptcy Court from time to time.
KERP shall mean the Nortel Networks Corporation Key Employee Retention Plan approved by the
U.S. Bankruptcy Court in the District of Delaware on March 5, 2009, and approved by the Canadian
Court on March 6, 2009, with such further amendments and/or supplements as may be approved by the
Canadian Court and/or U.S. Bankruptcy Court from time to time.
19
Knowledge or aware of or notice of or a similar phrase shall mean, with reference to the
Sellers, the actual knowledge of those Persons listed on Section 1.1(b) of the Sellers Disclosure
Schedule, and, with reference to the Purchaser, the actual knowledge of those Persons listed on
Exhibit G.
Known Product Defects means those defects of Products and/or Services that have been sold by
the Business and which are known by the Sellers as of the Closing Date.
Lab 10 Lease Agreement means the lease agreement between NNTC on the one hand and the
Purchaser or Designated Purchaser on the other hand in respect of the leasing of the whole of the
Lab 10 Building as more particularly defined in the Lab 10 Lease Agreement to be entered into on or
before Closing in the form attached hereto as Exhibit L-1.
Law means any U.S., Canadian, United Kingdom, foreign, domestic, supra-national federal,
territorial, state, provincial, local or municipal statute, law, common law, ordinance, rule,
regulation, order, writ, injunction, directive, judgment, decree or policy or guideline having the
force of law.
Leased Real Property has the meaning set forth in Section 4.9(a).
Leases has the meaning set forth in Section 4.9(a).
LGN Joint Venture means LG-Nortel Co. Ltd., which was established in November 2005 as a
joint venture between NNL and LG Electronics Inc. for the purpose of jointly developing and
marketing certain telecommunications equipment and network solutions.
LGN/Korea Distribution Agreement means the agreement to be entered into between the
Purchaser and/or one or more Designated Purchasers designated by it and the LGN Joint Venture that
the relevant Parties will use commercially reasonable efforts to negotiate before the Closing
pursuant to Section 5.25.
Liabilities means debts, liabilities and obligations, whether accrued or fixed, direct or
indirect, absolute or contingent, asserted or unasserted, liquidated or unliquidated, matured or
unmatured, known or unknown or determined or undeterminable, including those arising under any Law
or Action and those arising under any contract, agreement, arrangement, commitment or undertaking
or otherwise, including any Tax liability.
Licensed Intellectual Property means the Intellectual Property being licensed to the
Purchaser or the relevant Designated Purchasers under the Intellectual Property License Agreement
and the Trademark License Agreement.
Lien means any lien (statutory or otherwise), mortgage, pledge or security interest,
hypothecation, deed of trust, deemed trust, option, right of use, right of first offer or first
refusal, servitude, encumbrance, easement, encroachment, right-of-way, restrictive covenant on real
property, real property license, charge, prior claim, lease, conditional sale arrangement or other
similar restriction of any kind, but does not include any prior Intellectual Property license
granted by any of the Sellers.
Liquidity Date has the meaning set forth in Section 2.2.1(c).
20
Loaned Employee Agreement means the agreement between the relevant Sellers, on the one hand,
and the Purchaser and/or any Designated Purchasers, on the other hand, to be executed on or before
the Closing attached hereto as Exhibit I.
Local Sale Agreements has the meaning set forth in Section 2.1.8.
Losses means all losses, damages and reasonable and documented out-of-pocket costs and
expenses.
Main Sellers has the meaning set forth in the preamble to this Agreement.
Market Value as of any date shall mean the arithmetic average of the Common Stock VWAP
during the ten (10) Trading Days immediately prior to, but not including, such date.
Material Adverse Effect means any event, change or circumstance that, individually or in the
aggregate, has had, or would reasonably be expected to have a material adverse effect on the
assets, liabilities, operations, results of operations or condition (financial or otherwise) of the
Business to be transferred hereunder and under the EMEA Asset Sale Agreement, taken as a whole, but
in each case shall not include the effect of events, changes and circumstances to the extent
arising from (a) changes in the industries and markets in which the Business operates, except to
the extent such changes disproportionately affect the Business, (b) macroeconomic factors, interest
rates, currency exchange rates, general financial market conditions, acts of God, war, terrorism or
hostilities, (c) changes in Law, generally accepted accounting principles or official
interpretations of the foregoing, (d) compliance with this Agreement, including any effect on the
Business resulting from failure to take any action to which the Purchaser refused consent under
this Agreement, (e) the transactions contemplated hereby or any announcement hereof or the identity
of the Purchaser, (f) the attrition of customers or employees prior to the Closing Date, (g) the
pendency of the Bankruptcy Proceedings and any action approved by the Bankruptcy Courts, or (h) the
failure of the Business to achieve internal or external financial forecasts or projections, by
itself; provided, however, that in the case of clauses (f) and (h), the reason for
the customer attrition or the failure of the Business to achieve internal or external financial
forecasts or projections shall not be excluded as a result of such clauses.
Material Contracts has the meaning set forth in Section 4.4(b).
Monitor means Ernst & Young Inc., in its capacity as the Canadian Court-appointed Monitor in
connection with the CCAA Cases.
Montreal Landlord has the meaning set forth in the Real Estate Terms and Conditions.
Montreal Lease Termination Penalty has the meaning set forth in the Real Estate Terms and
Conditions.
Montreal Premises means that portion of the third and fourth floors of the North Tower of
the building municipally known as 2351 Alfred Nobel Blvd., St. Laurent,
21
Quebec that is used by the Business as of the date hereof or any alternate or additional
premises in such building if contemplated by the Montreal Premises Restructured Lease or Montreal
Premises Sublease, as the case may be.
Montreal Premises Amended Lease has the meaning set forth in the Real Estate Terms and
Conditions.
Montreal Premises Lease means that certain lease dated June 27, 2007 in respect of the
Montreal Premises by and between BREOF/Belmont Ban L.P., acting through its general partner
BREOF/Belmont Ban G.P. Limited, as landlord, and NNL, as tenant, as amended by a first lease
amending agreement dated October 8, 2008.
Montreal Premises Restructured Lease has the meaning set forth in the Real Estate Terms and
Conditions.
Montreal Premises Sublease has the meaning set forth in the Real Estate Terms and
Conditions.
Montreal Premises Sublease Consent has the meaning set forth in the Real Estate Terms and
Conditions.
Mutual Development Agreement means the agreement between the Purchaser and/or any Designated
Purchasers, on the one hand, and the relevant Sellers, on the other hand, relating to the
development (i) by the Purchaser and/or any Designated Purchasers of new features of certain of
products used by the Sellers and/or (ii) by the relevant Sellers of new features of certain of the
Products that the relevant Parties will use commercially reasonable efforts to negotiate before the
Closing pursuant to Section 5.25.
NETAS means Nortel Networks NETAS Telekomunikasyon A.S., a company incorporated in Turkey
and having its principal place of business at Alemdag Caddesi, Umraniye 34768, Istanbul, Turkey.
NETAS Distribution Agreement means the agreement between the Purchaser and/or one or more
Designated Purchasers and NETAS relating to the sale of Products by the Purchaser to NETAS for
resale in Turkey that the relevant Parties will use commercially reasonable efforts to negotiate
before the Closing pursuant to Section 5.25.
Net Working Capital Transferred has the meaning set forth in Section 2.2.4.1(a).
New York Courts has the meaning set forth in Section 11.6(b).
NGS means Nortel Government Solutions Incorporated, a corporation organized under the laws
of Delaware with offices at 12730 Fair Lakes Circle, Fairfax, Virginia.
NGS Distribution Agreement means the agreement between the Purchaser and/or one or more
Designated Purchasers and NGS relating to the sale of Products by the Purchaser to NGS that the
relevant Parties will use commercially reasonable efforts to negotiate before the Closing pursuant
to Section 5.25.
22
NNC has the meaning set forth in the preamble to this Agreement.
NNI has the meaning set forth in the preamble to this Agreement.
NNL has the meaning set forth in the preamble to this Agreement.
NNTC has the meaning set forth in Section 6.5(b).
Non-ARD Transferring Employee has the meaning attributed to that term in the EMEA Asset Sale
Agreement.
Non-Assignable Contracts has the meaning set forth in Section 5.14(a).
Non-Assigned Contracts means the Non-Assignable Contracts, to the extent all applicable
Consents to assignment thereof to the Purchaser or a Designated Purchaser have not been granted
prior to the Closing Date, provided that if such Consents are granted within one (1) year
after the Closing Date, such Non-Assignable Contracts will cease to be Non-Assignable Contracts as
of the effective date of such Consents, and shall then be assigned by the relevant Seller to the
Purchaser or a Designated Purchaser in accordance with this Agreement.
Non-Convertible Note Recipient Sellers means each of the Sellers and EMEA Sellers other than
the Convertible Note Recipient Sellers.
Non-Debtor Sellers has the meaning set forth in the recitals to this Agreement.
Non-Exclusive Supply Contract means any supply Contract to which any Seller is a party that
relates to the Business and also relates to one or more other businesses of the Sellers.
Non-Filing Party has the meaning set forth in Section 6.4(b)(ii).
Non-Solicitation Period means the twenty-four (24) month period immediately following the
Closing Date.
Non-Union Employee means an Employee whose terms and conditions of employment are not
governed by a Collective Labor Agreement.
Nortel Accounting Expenses has the meaning set forth in Section 8.7.
Nortel Accounting Principles means the accounting principles employed in the preparation of
the Financial Statements, as set forth in Section 1.1(d) of the Sellers Disclosure Schedule.
Nortel Italy means Nortel Networks SpA (in administration).
Nortel Plan has the meaning set forth in Section 7.5.1.
Occupancy Agreement has the meaning set forth in the Real Estate Terms and Conditions.
23
Offer has the meaning set forth in Section 7.1.1(a).
Offer Consideration Period has the meaning set forth in Section 7.1.1(a).
Offering Limitation means that the underwriter selected by the Purchaser in an underwritten
offering pursuant to a Piggyback Registration advises the Purchaser in writing that in its opinion
the number of Shares or aggregate principal amount of Convertible Notes requested to be included in
such offering by the Sellers and the EMEA Sellers exceeds the number of shares of Common Stock or
aggregate principal amount of Convertible Securities (as applicable) which can be sold in such
offering without adversely affecting the price, timing, distribution or marketability of the
offering.
Omitted Patent Cross License has the meaning set forth in Section 4.5(j)(i).
Ontario Court has the meaning set forth in Section 11.6(b).
Open Source Software means Software that is made available under a license agreement that:
(i) conditions use, modification or distribution of any Software program, or any Software
integrated with or derived from such Software program, or into which such Software program is
incorporated, on the disclosure, licensing or distribution of the source code of such Software
program (or such Software); or (ii) otherwise materially limits the licensees freedom of action
with regard to seeking compensation in connection with sublicensing, licensing or distributing such
Software program or Software.
Optional Redemption Price has the meaning set forth in Section 2.2.1(b).
Order means any award, writ, injunction, judgment, order or decree entered into, issued,
made or rendered by any Government Entity.
Ordinary Course means the ordinary course of the Business (excluding the EMEA Business)
through the date hereof consistent with past practice since the filing of the Bankruptcy
Proceedings, as such practice may be modified from time to time to the extent necessary to reflect
the Bankruptcy Proceedings.
Original Asset Sale Agreement has the meaning set forth in the recitals to this Agreement.
Original EMEA Asset Sale Agreement has the meaning set forth in the recitals to this
Agreement.
Other Seller Contracts means Seller Contracts other than 365 Contracts.
Other Sellers has the meaning set forth in the preamble to this Agreement.
Other Vendor Contract means any Other Seller Contract that is not a Customer Contract.
Outbound License Agreements has the meaning set forth in Section 4.5(j)(iii).
24
Overhead and Shared Services means corporate or shared services provided to or in support of
the Business that are general corporate or other overhead services and are provided to both (a) the
Business and (b) other businesses or business segments of any Seller, including travel and
entertainment services, temporary labor services, office supplies services (including copiers and
faxes), personal telecommunications services, computer hardware and software services, fleet
services, energy/utilities services, procurement and supply arrangements, treasury services, public
relations, legal, compliance and risk management services (including workers compensation),
payroll services, sales and marketing support services, information technology and
telecommunications services, accounting services, tax services, human resources and employee
relations management services, employee benefits services, credit, collections and accounts payable
services, logistics services, property management services, environmental support services and
customs and excise services, in each case including services relating to the provision of access to
information, operating and reporting systems and databases and including all hardware and software
or other intellectual property necessary for or used in connection therewith.
Owned Equipment means (a) those items of tangible personal property owned by the Sellers
that are held or used primarily in connection with the Business and that are located at the Carling
Property, the Montreal Premises or any Real Property which is the subject of a Real Estate
Agreement, (b) those items of tangible personal property owned by the Sellers that are personally
assigned to, a Transferred Employee, (c) those other items of tangible personal property owned by
the Sellers not included in clause (a) or (b) above that are held or used exclusively in the
Business and (d) those other items of tangible personal property owned and paid for by the Sellers
not included in clauses (a), (b) or (c) above and that are listed in Section 1.1(e) of the Sellers
Disclosure Schedule excluding, in each case, any Owned Inventory and any Intellectual Property
provided, however that the Owned Equipment shall not include any items of tangible personal
property that are Excluded Assets described on Section 2.1.2(n) of the Sellers Disclosure Schedule.
Owned Inventory means any inventories of raw materials, manufactured and purchased parts,
work-in-process, packaging, stores and supplies, unassigned finished goods inventories (which are
finished goods not yet assigned to a specific customer order), excess or obsolete inventory,
assets on loan, and merchandise in each case owned and paid for by the Sellers and held or used
exclusively in connection with the Business, including any of the above items which is owned by the
Sellers but remains in the possession or control of a contract manufacturer or another Third Party
provided, however that the Owned Inventory shall not include any inventories that are
Excluded Assets described on Section 2.1.2(n) of the Sellers Disclosure Schedule.
Owned Real Property has the meaning set forth in Section 4.9(a).
Partial Allocation has the meaning set forth in Section 2.2.6(b).
Party or Parties means individually or collectively, as the case may be, the Sellers and
the Purchaser.
Patent Assignments means written assignments of the Patents included in the Transferred
Intellectual Property, appropriate for filing with the patent office of the jurisdiction
25
in which each such Patent is registered. Such assignments shall be substantially in the form
of Exhibit V, except for any such variations as are legally necessary or customary in patent
assignments in the local jurisdiction where a Patent is registered.
Patent Cross Licenses means all Contracts between the Sellers or their Affiliates and a
Third Party under which the Sellers or such Affiliates, as applicable, both (i) grant a license
under patents and/or patent applications owned by (or licensed to) them, and (ii) receive from the
counter-party a license under patents and/or patent applications owned by (or licensed to) such
counter-party (but other than inbound or outbound license agreements where the only grant back from
the licensee is under improvements on the licensed Intellectual Property) in such case, to the
extent the scope of such licenses include Patents licensed under the Intellectual Property License
Agreement or assigned pursuant to the terms of this Agreement or that are otherwise used in the
Business.
Patents includes all national (including the United States and Canada) and multinational
statutory invention registrations, patents, patent applications, provisional patent applications,
industrial designs, industrial models, including all reissues, divisions, continuations,
continuations-in-part, extensions and re-examinations, and all rights therein provided by
multinational treaties or conventions.
Permitted Encumbrances means (i) statutory Liens for Taxes or governmental assessments,
charges or claims the payment of which is not yet due, or, if due, for Taxes the validity of which
is being contested in good faith by appropriate proceedings, provided that in each case
adequate reserves have been established to the extent required by GAAP, and which Tax Liens and the
associated amount of Taxes (other than Real Property Tax Liens for assessments, charges or claims)
are set forth in Section 1.1(g) of the Sellers Disclosure Schedule; (ii) mechanics, carriers,
workers, repairers, landlords, warehouses and similar Liens arising or incurred in the Ordinary
Course for sums not yet delinquent or overdue; (iii) any Liens imposed by any Bankruptcy Court in
connection with the Bankruptcy Proceedings that are to be discharged at Closing pursuant to the
terms of the Canadian Approval and Vesting Order and the U.S. Sale Order; (iv) any other Liens set
forth in Section 1.1(g) of the Sellers Disclosure Schedule; and (v) present zoning, entitlement,
building and land use regulations, covenants, minor defects of title, easements, rights of way,
development agreements, restrictions and other similar charges or encumbrances which do not impair,
individually or in the aggregate, in any material respect the use of the related assets in the
Business as currently conducted.
Person means an individual, a partnership, a corporation, an association, a limited or
unlimited liability company, a joint stock company, a trust, a joint venture, an unincorporated
organization or other legal entity or Government Entity.
Petition Date means January 14, 2009, except with respect to Nortel Networks (CALA) Inc. in
which case Petition Date shall mean July 14, 2009.
Piggyback Notice has the meaning set forth in Section 8.3(a).
Piggyback Registration has the meaning set forth in Section 8.3(a).
26
Plan of Record means the Products under development as included in Section 1.1(h) of the
Sellers Disclosure Schedule.
Post-Closing Taxable Period means any Taxable period beginning after the Closing Date.
Pre-Closing Taxable Period means any Taxable period ending on or prior to the Closing Date.
Primary Party means each of (i) the Main Sellers and (ii) the Purchaser.
Prime Rate has the meaning set forth in Section 2.2.4.2(b)(i).
Products means those products that are (i) manufactured by or on behalf of and marketed by
the Business, or (ii) in the Plan of Record, all as set forth in Section 1.1(h) of the Sellers
Disclosure Schedule.
Provider has the meaning set forth in the Transition Services Agreement.
Purchase Price has the meaning set forth in Section 2.2.1(a).
Purchaser has the meaning set forth in the preamble to this Agreement.
Purchaser Employee Plan means any employee benefit plan within the meaning of Section 3(3)
of ERISA, whether or not subject thereto, and any other employee benefit plan, agreement or
arrangement, including any profit sharing plan, savings plan, bonus plan, performance awards plan,
incentive compensation plan, deferred compensation plan, stock purchase plan, stock option plan,
vacation plan, leave of absence plan, employee assistance plan, automobile
leasing/subsidy/allowance plan, meal allowance plan, redundancy or severance plan, relocation plan,
change in control plan, family support plan, pension plan, supplemental pension plan, retirement
plan, retirement savings plan, post-retirement plan, medical, health, hospitalization or life
insurance plan, disability plan, sick leave plan, retention plan, education assistance plan,
expatriate assistance plan, compensation arrangement, including any base salary arrangement,
overtime, on-call or call-in policy, death benefit plan, or any other similar plan, program,
agreement, arrangement or policy that is maintained or otherwise contributed to, or required to be
maintained or contributed to, by or on behalf of the Purchaser or any of its Subsidiaries or
Affiliates with respect to their employees employed in those countries where they will employ
Transferred Employees pursuant to this Agreement.
Purchaser Party has the meaning set forth in Section 6.7(a).
Qualified Expenditures has the meaning set forth in Section 6.5(b).
Real Estate Agreements means (i) the Carling Property Lease Agreements; (ii) as to the
Montreal Premises, either the Montreal Premises Amended Lease, the Montreal Premises Restructured
Lease (and any consent, assignment and assumption agreement in respect thereof, if applicable,
between the Montreal Landlord, the Sellers, the Purchaser or any Designated Purchaser, as the case
may be) or the Montreal Premises Sublease, as applicable in accordance with the Real Estate Terms
and Conditions and the Montreal Premises Sublease
27
Consent, as applicable; (iii) the leases; subleases and license agreements between the
relevant Sellers on the one hand, and the Purchaser or any Designated Purchasers, on the other
hand, as provided by the Real Estate Terms and Conditions; and (v) any other ancillary agreements
entered into in connection with, or to otherwise give effect to the occupancies contemplated by,
the aforesaid agreements, in each such case to be executed and delivered on or prior to Closing, in
accordance with and as provided by, the Real Estate Terms and Conditions.
Real Estate Terms and Conditions means the Real Estate Terms and Conditions attached hereto
as Exhibit Y, the provisions of which are hereby incorporated into this Agreement by reference.
Real Property has the meaning set forth in Section 4.9(a).
Recognized Dealer has the meaning set forth in Section 8.9
Records Custodian means Deloitte & Touche LLP or in case such firm is unable to carry out
its duties for whatever reason, such other auditing firm of international reputation that is
acceptable to each of the Purchaser and the Main Sellers, each acting reasonably.
Registrable Securities has the meaning set forth in Section 8.1(a).
Registration Default has the meaning set forth in Section 8.11.
Registration Default Period has the meaning set forth in Section 8.11.
Registration Statement means each registration statement, including each Shelf Registration
Statement, under the Securities Act, of the Purchaser that covers any of the Registrable Securities
pursuant to this Agreement, including any information deemed to be part of and included in such
registration statement pursuant to the rules of the SEC and all amendments and supplements to such
registration statement and including all post-effective amendments to, all exhibits of, and all
materials incorporated by reference or deemed to be incorporated by reference in, such registration
statement, amendment or supplement.
Regulation D has the meaning set forth in Section 3.7(c).
Regulatory Approvals means the Antitrust Approvals and the ICA Approval.
Rejecting Employee has the meaning set forth in Section 7.1.1(h).
Rejecting Employees Liability Limit has the meaning set forth in Section 7.1.1(h).
Release means any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration at, into or onto the Environment, including movement
or migration through or in the Environment, whether sudden or non-sudden and whether accidental or
non-accidental, or any release, emission or discharge as those terms are defined in any applicable
Environmental Laws.
28
Respective Affiliates has the meaning set forth in Section 11.15(c).
Restricted Assets has the meaning set forth in Section 2.2.3(a).
Restricted Employee has the meaning set forth in Section 2.2.3(b).
Restricted Liabilities has the meaning set forth in Section 2.2.3(b).
Restricted Seller has the meaning set forth in Section 2.2.3(b).
Restricted Technical Records means the Livelink database or any other similar database
containing all necessary documents with respect to the technical aspects of the Qualified
Expenditures of NNTC or NNL in their 2007 and subsequent taxation years.
SEC has the meaning set forth in Section 3.7(g).
SEC Filings has the meaning set forth in Section 3.7(g).
Seconded Employee means Employees who are located in, or employed by the Sellers in any of
the countries set forth in Section 1.1(m) of the Sellers Disclosure Schedule in which a Designated
Purchaser is not ready to employ the Employees as of the Closing Date as determined in good faith
by Purchaser and who having accepted an Offer or who transfer by operation of Law would otherwise
be Transferred Employees on the Employee Transfer Date.
Securities Act means the Securities Act of 1933, as amended.
Security Deposits has the meaning set forth in Section 5.21(a).
Seller Consents has the meaning set forth in Section 2.1.1(g).
Seller Contracts means (i) those Contracts of a Seller that relate exclusively to the
Business (excluding licenses of Intellectual Property) and (ii) the Contracts listed in Section
1.1(i) of the Sellers Disclosure Schedule.
Seller Employee Plan means any employee benefit plan within the meaning of Section 3(3) of
ERISA, whether or not subject thereto, and any other employee benefit plan, agreement or
arrangement, including any profit sharing plan, savings plan, bonus plan, performance awards plan,
incentive compensation plan, deferred compensation plan, stock purchase plan, stock option plan,
vacation plan, leave of absence plan, employee assistance plan, automobile
leasing/subsidy/allowance plan, meal allowance plan, redundancy or severance plan, relocation plan,
family support plan, pension plan, supplemental pension plan, retirement plan, retirement savings
plan, post retirement plan, medical, health, hospitalization or life insurance plan, disability
plan, sick leave plan, retention plan, education assistance plan, expatriate assistance plan,
change in control plan, compensation arrangement, including any base salary arrangement, overtime,
on-call or call-in policy, death benefit plan, or any other similar plan, program, agreement,
arrangement or policy that is maintained or otherwise contributed to, or required to be maintained
or contributed to, by or on behalf of the Sellers or any of their Subsidiaries or Affiliates
(excluding any EMEA Sellers) with respect to Employees.
29
Seller Insurance Policies has the meaning set forth in Section 5.20(a).
Seller Supply Agreement means the agreement between the relevant Sellers or the purchaser of
the Sellers Enterprise business, on the one hand, and the Purchaser and/or any Designated
Purchasers, on the other hand, relating to the purchase and sale of certain hardware and Software
products related to the Sellers Carrier Ethernet business, that the relevant Parties will use
commercially reasonable efforts to negotiate before the Closing pursuant to Section 5.25.
Sellers has the meaning set forth in the preamble to this Agreement.
Sellers Disclosure Schedule means the disclosure schedule delivered by the Sellers to the
Purchaser on the date hereof.
Sellers Trademarks has the meaning set forth in Section 5.22.
Service Readiness Date has the meaning set forth in Section 5.28 of the Sellers Disclosure
Schedule.
Services means those services that are provided by or on behalf of the Sellers in connection
with the Business to customers as set forth in Section 1.1(j) of the Sellers Disclosure Schedule.
Shares means the shares of Common Stock issued or issuable upon conversion of the
Convertible Notes.
Shelf Offering has the meaning set forth in Section 8.2(a).
Shelf Registration Statement has the meaning set forth in Section 8.1(a).
Shelf Take-Down Notice has the meaning set forth in Section 8.2(a).
Short-Term Licensed Property has the meaning set forth in Section 4.9(a).
Software means any and all (i) computer programs, whether in source code or object code,
(ii) computerized databases and compilations, and (iii) all user manuals and architectural and
design specifications, training materials and other documentation relating to any of the foregoing.
Solicitation Period has the meaning set forth in Section 5.3(f).
Specified Employee Liabilities has the meaning set forth in Section 2.1.3(i).
Specified Transferred Employees has the meaning set forth in Section 7.1.2(b)(ii)(A).
Sponsored Reorganization Plan means a plan of reorganization under Section 1129 of the
Bankruptcy Code providing for the retention by all or part of the Sellers (or their successor
entities emerging from the Bankruptcy Proceedings) of all or substantially all of the
30
Assets and the EMEA Assets taken as a whole, that is filed or otherwise sponsored by one or
more of the Third Party creditors of the Sellers.
Straddle Period has the meaning set forth in Section 6.4(b)(i).
Subcontract Agreement means one or more agreements between the relevant Sellers, on the one
hand, and the Purchaser and/or any Designated Purchasers, on the other hand, to be executed on or
before the Closing in a form mutually agreed to by the Parties so as to pass through the benefits
and burdens of the underlying Contract with customers as if the Purchaser or the applicable
Designated Purchaser were party thereto.
Subsidiary of any Person means any Person Controlled by such first Person.
Substituted Convertible Notes has the meaning set forth in Section 2.2.7(b).
Successful Bidder has the meaning set forth in the U.S. Bidding Procedures Order.
Succession Tax Lien has the meaning given to that term in the EMEA Asset Sale Agreement.
Succession Tax Liabilities has the meaning given to that term in the EMEA Asset Sale
Agreement.
Tax means (a) any domestic or foreign federal, state, local, provincial, territorial or
municipal taxes or other impositions by or on behalf of any Government Entity, including the
following taxes and impositions: net income, gross income, individual income, capital, value added,
goods and services, gross receipts, sales, use, ad valorem, business rates, transfer, franchise,
profits, business, environmental, real property, personal property, service, service use,
withholding, payroll, employment, unemployment, severance, occupation, social security, excise,
stamp, stamp duty reserve, customs, and all other taxes, fees, duties, assessments, deductions,
withholdings or charges of the same or of a similar nature, however denominated, together with any
interest and penalties, additions to tax or additional amounts imposed or assessed with respect
thereto, whether or not disputed and (b) any obligation to pay Taxes of a Third Party or Affiliate,
whether by contract, as a result of transferee or successor liability, as a result of being a
member of an affiliated, consolidated, combined or unitary group for any period or otherwise.
Tax Authority means any local, municipal, governmental, state, provincial, territorial,
federal, including any U.S., Canadian, U.K. or other fiscal, customs or excise authority, body or
officials anywhere in the world with responsibility for, and competent to impose, collect or
administer, any form of Tax.
Tax Claim has the meaning set forth in Section 6.7(b).
Tax Credit Purchaser has the meaning set forth in Section 6.5(b).
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Tax Escrow Amount means $10,000,000, as such amount is adjusted in accordance with Section
6.7, which amount shall secure the Sellers obligations under Section 6.7.
Tax Indemnitee has the meaning set forth in Section 2.2.7(c).
Tax Return means all returns, reports (including elections, declarations, schedules,
estimates and information returns) and other information filed or required to be filed with any Tax
Authority relating to Taxes, including any amendments thereto.
Third Party means any Person that is neither a Party nor an Affiliate of a Party, but for
the purposes of Section 5.6(e)(ii)(B), includes an Affiliate that is a joint venture between such
Person and a Person who is not an Affiliate of such Person.
Third Party Beneficiaries has the meaning set forth in Section 11.3.
Third Party Provisions has the meaning set forth in Section 11.3.
TIA has the meaning specified in Section 8.5(a)(xiv).
Trademark Assignments means written assignments of the Trademarks included in the
Transferred Intellectual Property, in the case of registered Trademarks appropriate for filing with
the trademark office of the jurisdiction in which each such Trademark is registered. Such
assignments shall be substantially in the form of Exhibit W, except for any such variations as are
legally necessary or customary in Trademark assignments in the local jurisdiction where a Trademark
is registered.
Trademarks means, together with the goodwill associated therewith, all trademarks, service
marks, trade dress, logos, distinguishing guises and indicia, trade names, corporate names,
business names, domain names, whether or not registered, including all common law rights, and
registrations, applications for registration and renewals thereof, including, but not limited to,
all marks registered in the United States Patent and Trademark Office, the trademark offices of the
states and territories of the United States of America, and the trademark offices of other nations
throughout the world (including the Canadian Intellectual Property Office), and all rights therein
provided by multinational treaties or conventions.
Trademark License Agreement means the trademark license agreement between the relevant
Sellers, on the one hand, and the Purchaser and/or any Designated Purchasers, on the other hand, in
respect of certain Trademarks used in respect of the Products and/or Services to be entered into on
or before the Closing in the form attached hereto as Exhibit P.
Trading Day shall mean any scheduled trading day in New York City on which there is no
material market disruption event, as determined by a nationally recognized independent investment
banking firm retained for such purpose that is mutually acceptable to the Purchaser and the
Sellers.
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Transaction Documents means this Agreement, the EMEA Asset Sale Agreement, the Ancillary
Agreements and all other ancillary agreements to be entered into, or documentation delivered by,
any Party and/or any Designated Purchaser pursuant to this Agreement or any Local Sale Agreement.
Transfer means, directly or indirectly, to sell, transfer, assign, pledge, hedge, encumber,
hypothecate or similarly dispose of, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge, hedge, encumbrance,
hypothecation or similar disposition.
Transfer Taxes means all goods and services, sales, excise, use, transfer, gross receipts,
documentary, filing, recordation, value-added, stamp, stamp duty reserve, and all other similar
taxes, duties or other like charges, however denominated (including any real property transfer
taxes and conveyance and recording fees), together with interest, penalties and additional amounts
imposed with respect thereto. For the avoidance of doubt, Transfer Taxes shall not include
withholding Taxes.
Transfer Tax Determination has the meaning set forth in Section 2.2.6(b).
Transfer Tax Reduction Determination has the meaning set forth in Section 6.1(b).
Transfer Tax Return has the meaning set forth in Section 6.1(d).
Transferred Employee means (i) those Employees who accept an offer of employment by, and
commence employment with, the Purchaser or a Designated Purchaser in accordance with the terms of
Section 7.1 or Section 7.2, and (ii) those Employees whose employment transfers by operation of
Law.
Transferred Employee Plans means those Seller Employee Plans that are (x) established or
maintained in accordance with a Collective Labor Agreement that is transferred to the Purchaser or
a Designated Purchaser under the terms of Section 7.2, and transferred (or the liabilities of which
are transferred) to the Purchaser or Designated Purchaser pursuant to this Agreement or by
operation of Law or (y) transferred (or the liabilities of which are transferred) to the Purchaser
or Designated Purchaser pursuant to this Agreement or by operation of Law.
Transferred Intellectual Property means (i) the Patents listed in Section 1.1(k) of the
Sellers Disclosure Schedule, which the Sellers will update to reflect any Patent applications filed
between the date hereof and the Closing with respect to which the Sellers determine in good faith
is used predominantly in the Business, (ii) the Trademarks set forth in Section 1.1(l) of the
Sellers Disclosure Schedule, and (iii) the Intellectual Property (other than Patents and
Trademarks) owned by any of the Sellers that is exclusively used in connection with the Business as
of the Closing Date, including the Software (including previous versions being utilized or
supported as of the date hereof and versions in development) exclusively used in the Business.
Transferred Overhead and Shared Services means Overhead and Shared Services to be provided
to or in support of the Business post-Closing by Transferred Employees.
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Transition Services Agreement means the agreement between the relevant Sellers, and the
relevant EMEA Sellers on the one hand, and the Purchaser and/or any Designated Purchasers, on the
other hand, to be executed on or prior to the Closing, in the form attached hereto as Exhibit Q.
Transition Services Escrow Amount has the meaning set forth in the Transition Services
Agreement.
Trustee means the trustee under the Indenture.
TSA Arbitrator has the meaning set forth in Section 5.28 of the Sellers Disclosure Schedule.
TSA Sellers means the Main Sellers, Nortel Networks UK Limited, Nortel Networks (Ireland)
Limited and the Other Sellers.
UK Sellers means Nortel Networks UK Limited (in administration).
Unaudited September 30, 2008 Financial Statements has the meaning set forth in Section 5.26.
Union Employee means an Employee whose terms and conditions of employment are covered by a
Collective Labor Agreement as specified in Section 4.10(d) of the Sellers Disclosure Schedule.
U.S. Bankruptcy Code means Title 11 of the United States Code.
U.S. Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware.
U.S. Bankruptcy Rules means the U.S. Federal Rules of Bankruptcy Procedure.
U.S. Bidding Procedures and Sale Motion has the meaning set forth in Section 5.1(a).
U.S. Bidding Procedures Order has the meaning set forth in Section 5.1(a).
U.S. Debtor Contract means any Seller Contract to which a U.S. Debtor is a party.
U.S. Debtors has the meaning set forth in the recitals to this Agreement.
U.S. Sale Hearing means the hearing before the U.S. Bankruptcy Court to consider approval of
the relief set forth in the U.S. Sale Order.
U.S. Sale Order has the meaning set forth in Section 5.1(a).
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U.S. Sellers means each of the Sellers that are organized under the laws of any state or
commonwealth of the United States.
VAT has the meaning set forth in the EMEA Asset Sale Agreement.
Visa Employees means Employees (other than Employees whose employment transfers by operation
of Law) who are identified as having and requiring a visa or permit in Section 4.10(b) of the
Sellers Disclosure Schedule and whose employment with the Purchaser or a Designated Purchaser
cannot commence or continue on the Employee Transfer Date solely due to the Purchasers or a
Designated Purchasers inability to obtain the required visa or permit with respect to such
Employees employment on the Employee Transfer Date.
WARN Act means the Worker Adjustment and Retraining Notification Act of 1988, as amended, or
any similar Law.
Warranty Obligations means the warranty obligations relating to Products and Services
assumed by the Purchaser and/or a Designated Purchaser and/or an EMEA Designated Purchaser pursuant
to Sections 2.1.3(b) and 2.1.3(e) of this Agreement and clause 2.4.2(B)(2) of the EMEA Asset Sale
Agreement, excluding those warranty obligations that relate to Known Product Defects.
Working Capital Escrow Amount means an amount in immediately available funds equal to
$5,000,000, which amount shall secure Sellers and the EMEA Sellers obligations hereunder to pay
the Deficit Amount, if any.
SECTION 1.2. Interpretation.
1.2.1. Gender and Number. Any reference in this Agreement to gender includes all genders
and words importing the singular include the plural and vice versa.
1.2.2. Certain Phrases and Calculation of Time. In this Agreement (i) the words
including and includes mean including (or includes) without limitation, (ii) the terms
hereof, herein, and herewith and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified, (iii) except as
used in Section 11.17, the terms the date hereof, the date of this Agreement and words of
similar import shall, unless otherwise stated, be construed to refer to the date of the Original
Asset Sale Agreement, and (iv) in the computation of periods of time from a specified date to a
later specified date, unless otherwise expressly stated, the word from means from and including
and the words to and until each mean to but excluding. If the last day of any such period is
not a Business Day, such period will end on the next Business Day.
When calculating the period of time within which, prior to or following which any act or
event is required or permitted to be done, notice given or steps taken, the date which is the
reference date in calculating such period is excluded from the calculation. If the last day of any
such period is not a Business Day, such period will end on the next Business Day.
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1.2.3. Headings, etc. The inclusion of a table of contents, the division of this
Agreement into Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect or be used in the construction or interpretation of this Agreement.
1.2.4. Currency. All monetary amounts in this Agreement and the other Transaction
Documents, unless otherwise specifically indicated, are stated in United States currency. All
calculations and estimates to be performed or undertaken, unless otherwise specifically indicated,
are to be expressed in United States currency. All payments required under this Agreement shall be
paid in United States currency in immediately available funds, unless otherwise specifically
indicated herein. Where another currency is to be converted into United States currency it shall
be converted on the basis of the exchange rate published in the Wall Street Journal, Eastern
Edition, for the day in question.
1.2.5. EMEA. The EMEA Sellers, the Joint Administrators, the Joint Israeli
Administrators and the Purchaser will enter into the EMEA Asset Sale Agreement providing, inter
alia, for the sale to the Purchaser (or the EMEA Designated Purchasers) of the EMEA Business. For
greater certainty, (i) nothing in this Agreement shall be considered or construed in any manner as
a sale or transfer of the EMEA Business, the EMEA Assets or the EMEA Employees (except to the
extent that any of the Assets owned by the Sellers are used or held for use in the EMEA Business),
and (ii) no reference to Sellers herein, including any reference to the Sellers in any
representation in Article IV hereof shall include the EMEA Sellers (except to the extent that the
EMEA Sellers are expressly included) in the applicable provision of this Agreement. By entering
into both this Agreement and the EMEA Asset Sale Agreement the Purchaser would be purchasing the
entire optical networking solutions and carrier ethernet switching division of the Sellers and the
EMEA Sellers Metro Ethernet Networks business.
1.2.6. Recitals. The recitals to this Agreement form an integral part of this
Agreement for all purposes.
1.2.7. Statutory References. Unless otherwise specifically indicated, any reference
to a statute in this Agreement refers to that statute and to the regulations made under that
statute as in force from time to time.
1.2.8. Amendment and Restatement of Original Asset Sale Agreement. The Original
Asset Sale Agreement is hereby amended and restated in accordance with the provisions of this
Agreement and this Agreement replaces and supersedes the Original Asset Sale Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.1. Purchase and Sale.
2.1.1. Assets. Upon and subject to the terms and conditions of this Agreement, at
the Closing, the Purchaser shall, and shall cause the relevant Designated Purchasers to, purchase
or be assigned and assume from the relevant Sellers (as set forth in Exhibit 2.1.1), and each
Seller shall transfer or assign to the Purchaser or the relevant Designated Purchasers (as set
forth in Exhibit 2.1.1), all of its right, title and interest in and to the following assets other
than
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the Excluded Assets (such assets, excluding the Excluded Assets, the Assets) (x) in the case
of Assets that are transferred or assigned by U.S. Debtors, free and clear of all Liens and Claims
(other than the Permitted Encumbrances of a type described in clause (v) of the definition thereof,
Assumed Liabilities and Liens created by or through the Purchaser, the Designated Purchasers or any
of their Affiliates or, with respect to the Transferred Intellectual Property, as expressly
provided in Section 2.1.1(e) below) pursuant to Sections 363 and 365 of the U.S. Bankruptcy Code,
(y) in the case of Assets that are transferred or assigned by the Canadian Debtors, free and clear
of all Liens (other than the Permitted Encumbrances of a type described in clause (v) of the
definition thereof, Assumed Liabilities and Liens created by or through the Purchaser, the
Designated Purchasers or any of their Affiliates or, with respect to the Transferred Intellectual
Property, as expressly provided in Section 2.1.1(e) below) pursuant to the Canadian Approval and
Vesting Order, when granted, and (z) in the case of Assets that are transferred or assigned by the
Other Sellers, free and clear of all Liens (other than the Permitted Encumbrances, Assumed
Liabilities and Liens created by or through the Purchaser, the Designated Purchasers or any of
their Affiliates or, with respect to the Transferred Intellectual Property, as expressly provided
in Section 2.1.1(e) below):
(a) the Owned Inventory as of the Closing Date;
(b) the Owned Equipment as of the Closing Date;
(c) the Assigned Contracts in force as at the Closing Date;
(d) the Business Information existing as at the Closing Date, subject to, in the case of
the Business Information used in connection with a service provided to the Purchaser under the
Transition Services Agreement, a license to the Sellers to use such Business Information
solely for the purpose of providing any services thereunder, for so long as such services are
provided under the Transition Services Agreement, and thereafter, such Business Information
will be delivered to the Purchaser subject to a mutually agreed plan to deliver electronic
Business Information to the Purchaser, and further subject to Section 2.1.2(g);
(e) the Transferred Intellectual Property as of the Closing Date, subject to the licenses
granted under such Intellectual Property prior to the date hereof or coming into existence
after the date hereof, but prior to the Closing Date, and not in violation of Section 5.9(c),
together with all claims against Third Parties for infringement, misappropriation or other
violation of Law with respect to any of the Transferred Intellectual Property, whether for any
past, present or future infringement, misappropriation or other violation;
(f) all rights as of the Closing under all warranties, representations and guarantees made
by suppliers, manufacturers and contractors to the extent related to the Assets described
above;
(g) the Consents of Government Entities and pending applications therefor listed in
Section 2.1.1(g) of the Sellers Disclosure Schedule (the Seller Consents);
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(h) the Employee Records with respect to Employees whose employment transfers to the
Purchaser or a Designated Purchaser by operation of Law;
(i) any Tax records required by Law to be transferred to the Purchaser; and
(j) the CIP Accounts Receivable.
2.1.2. Excluded Assets. Notwithstanding anything in this Section 2.1.2 or elsewhere
in this Agreement or in any of the Transaction Documents to the contrary, the Sellers shall retain
their respective right, title and interest in and to, and the Purchaser and the Designated
Purchasers shall have no rights with respect to the right, title and interest of the Sellers in and
to, the following assets (collectively, the Excluded Assets):
(a) cash and cash equivalents, accounts receivable (including intercompany receivables but
excluding CIP Accounts Receivable), bank account balances and all petty cash of the Sellers;
(b) subject to Section 5.20, any refunds due from, or payments due on, claims with the
insurers of any of the Sellers in respect of losses arising prior to the Closing Date;
(c) all rights to Tax refunds, credits or similar benefits relating to the Assets or the
Business allocable to a Pre-Closing Taxable Period or to the portion of a Straddle Period
ending on and including the Closing Date, except to the extent expressly transferred by this
Agreement to the Purchaser or a Designated Purchaser;
(d) any Security Deposits of the Sellers (including those relating to Assigned Contracts)
except to the extent such Security Deposits are assigned to the Purchaser or a Designated
Purchaser in accordance with Section 5.21;
(e) other than the Assigned Contracts, any rights of the Sellers under any contract,
arrangement or agreement (including, for the avoidance of doubt, and without limiting any
rights under, the Subcontract Agreement, the Excluded 365 Contracts, the Non-Assigned
Contracts, the Bundled Contracts and the Excluded Other Vendor Contracts);
(f) the minute books, stock ledgers and Tax records of the Sellers other than the Tax
records included in Section 2.1.1(i);
(g) (i) any books, records, files, documentation or sales literature other than the
Business Information, (ii) any Employee Records other than those required to be delivered to
the Purchaser pursuant to Article VII and other than those that constitute Assets pursuant to
Section 2.1.1(h), and (iii) such portion of the Business Information that the Sellers are
required by Law (including Laws relating to privilege or privacy) to retain (provided
that copies of such information shall be provided to the Purchaser to the extent permitted by
applicable Law or such agreement) and/or not to disclose;
(h) except for the Transferred Intellectual Property and any rights transferred or
licensed under the other Transaction Documents, Intellectual Property of any
38
Seller (including the Sellers names) or any Affiliates of any Seller or Intellectual
Property owned by a Third Party;
(i) all rights of the Sellers under this Agreement and the Ancillary Agreements;
(j) all of the rights and claims of the U.S. Debtors available to the U.S. Debtors under
the U.S. Bankruptcy Code, of whatever kind or nature, as set forth in Sections 544 through 551,
inclusive, 553, 558 and any other applicable provisions of the U.S. Bankruptcy Code, and any
related claims and actions arising under such Sections by operation of Law or otherwise,
including any and all proceeds of the foregoing;
(k) all records prepared in connection with the sale of the Business, other than those
records that relate exclusively to the sale of the Business to the Purchaser and the Designated
Purchasers (other than those records containing personal communication or notes relating to
same which shall be Excluded Assets). For greater certainty, any records relating to
negotiations with Third Parties in connection with the sale of the Business shall be Excluded
Assets other than any confidentiality agreements with Third Parties executed in connection with
the sale of the Business which are otherwise being assigned to the Purchaser in accordance with
the provisions of this Agreement;
(l) all stock or other equity interests in any Person;
(m) any business, asset, product or service run, owned, managed and/or provided by NETAS,
the LGN Joint Venture or any other joint venture (or similar arrangement) of the Sellers and
the EMEA Sellers unless expressly included in this Agreement;
(n) any assets set forth on Section 2.1.2(n) of the Sellers Disclosure Schedule; and
(o) any and all other assets and rights of the Sellers not specifically included in
Section 2.1.1.
In addition to the above, the Sellers shall have the right to retain, following the Closing, copies
of any book, record, literature, list and any other written or recorded information constituting
Business Information to which the Sellers in good faith determine they are reasonably likely to
need access for bona fide business or legal purposes, which retained Business Information shall be
held in accordance with Section 5.11.
2.1.3. Assumed Liabilities. Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing, the Purchaser shall, and shall cause the relevant Designated
Purchasers to, assume and become responsible for, and perform, discharge and pay when due (in
accordance with their respective terms and subject to the respective conditions thereof), the
following Liabilities (the Assumed Liabilities) and no others:
(a) all Liabilities arising after the Closing Date to the extent related to the operation
of the Business (excluding the EMEA Business) by the Purchaser following the
39
Closing, including (i) all Liabilities incurred after the Closing Date with respect to the
ownership and operation of the Assets, (ii) all Liabilities incurred after the Closing Date
related to Actions or claims brought against the Business (excluding the EMEA Business), and
(iii) all Liabilities arising after the Closing Date under any products liability Laws or
similar Laws concerning defective products manufactured or sold by the Business (excluding the
EMEA Business) following the Closing Date;
(b) (i) all Liabilities arising from or in connection with the performance of the Assigned
Contracts (or breach thereof) after the Closing Date and (ii) all Liabilities, whether arising
before, on or after the Closing Date, with respect to (A) any Cure Costs payable by the
Purchaser pursuant to Section 2.1.7(b) of the Sellers Disclosure Schedule, (B) any obligation
to buy back from the relevant resellers the Products sold by the Business (excluding the EMEA
Business) to its resellers under the Seller Contracts (to the extent such Contracts are
Assigned Contracts), (C) any obligations under any warranty liabilities relating to the
Products and Services which have been supplied under any Assigned Contract including warranties
in respect of Known Product Defects and (D) all liabilities and obligations of a type accrued
on the Business historic Financial Statements under the heading Other Accrued and Contractual
Liabilities to the extent reflected in the final calculation of Net Working Capital
Transferred;
(c) all Liabilities resulting from any licensing assurances, declarations, agreements or
undertakings relating to the Transferred Intellectual Property that the Sellers may have
granted or committed to Third Parties including standard-setting bodies, that are set forth on
Section 2.1.3(c) of the Sellers Disclosure Schedule, it being understood that the Sellers or
their Affiliates may have made other licensing assurances, declarations or undertakings to
various standard-setting bodies concerning the Transferred Intellectual Property, the
Liabilities for such other assurances, declarations or undertakings are not assumed hereunder
but are being referenced merely to provide notice thereof;
(d) all Liabilities for, or related to, any obligation for, any Tax that the Purchaser or
any Designated Purchaser bears under Article VI;
(e) all obligations under any warranty liabilities, including warranties with respect to
Known Product Defects, relating to Products and Services which have been supplied under any
Bundled Contract subcontracted to the Purchaser or any Designated Purchaser under the
Subcontract Agreement;
(f) except to the extent otherwise expressly set forth in Article VII, all Liabilities
related to or arising from or in connection with: (i) the Purchasers or any Designated
Purchasers (or any of their Affiliates) employment or termination of employment (whether or
not arising under or in respect of any Purchaser Employee Plan) of Transferred Employees after
Closing; (ii) Purchasers or a Designated Purchasers failure to offer employment to any
Employee that constitutes a violation of applicable Law; (iii) the failure of the Purchaser or
any Designated Purchaser to satisfy its obligations with respect to the Employees, including
the Transferred Employees, as set out in Article VII;
(g) all Liabilities that relate to or arise from or in connection with any Purchaser
Employee Plan;
40
(h) any obligation to provide continuation coverage pursuant to COBRA or any similar Laws
under any Purchaser Employee Plan that is a group health plan (as defined in Section
5000(b)(1) of the Code) to Transferred Employees and/or their qualified beneficiaries with
respect to a qualifying event occurring on or after such Transferred Employees Effective Hire
Date;
(i) all Liabilities related to the Transferred Employees set forth on Section 2.1.3(i) of
the Sellers Disclosure Schedule (the Specified Employee Liabilities); and
(j) all Liabilities related to Transferred Employees expressly assumed by the Purchaser or
a Designated Purchaser as set out in Article VII.
2.1.4. Excluded Liabilities. Notwithstanding any provision in this Agreement to the
contrary, the Purchaser shall not assume and shall not be obligated to assume or be obliged to pay,
perform or otherwise discharge any Liability of the Sellers, and the Sellers shall be solely and
exclusively liable with respect to all Liabilities of the Sellers, other than the Assumed
Liabilities (collectively, the Excluded Liabilities). For the purpose of clarity, and without
limitation of the generality of the foregoing, the Excluded Liabilities shall include, without
limitation, each of the following liabilities of the Sellers:
(a) all Indebtedness of the Sellers and their Affiliates;
(b) all guarantees of Third Party obligations by the Sellers and reimbursement obligations
to guarantors of the Sellers obligations or under letters of credit;
(c) any Liability of the Sellers or their directors, officers, stockholders or agents
(acting in such capacities), arising out of, or relating to, this Agreement or the transactions
contemplated by this Agreement, whether incurred prior to, at or subsequent to the Closing
Date, including, without limitation, other than as specifically set forth herein, including
with respect to the Assumed Liabilities, all finders or brokers fees and expenses and any and
all fees and expenses of any representatives of the Sellers;
(d) other than as specifically set forth herein, any Liability relating to events or
conditions occurring or existing in connection with, or arising out of, the Business as
operated prior to the Closing Date, or the ownership, possession, use, operation or sale or
other disposition prior to the Closing Date of the Assets (or any other assets, properties,
rights or interests associated, at any time prior to the Closing Date, with the Business)
including, without limitation, any liability with respect to Customer Contract Cure Costs or
any Cure Cost payable by the Sellers pursuant to Section 2.1.7(b) and Section 2.1.7(c) of the
Sellers Disclosure Schedule;
(e) other than as specifically set forth in Article VII, the Assumed Liabilities, or as
specifically set forth in the Loaned Employee Agreement, any Liability to any Person at any
time employed by the Sellers or to any such Persons spouse, children, other dependents or
beneficiaries, with respect to incidents, events, exposures or circumstances occurring at any
time during the period or periods of any such Persons employment by the Sellers and arising
from or related to such Persons employment by the
41
Sellers whenever such claims mature or are asserted, including, without limitation (except
as otherwise specifically set forth in Article VII, the Assumed Liabilities or the Loaned
Employee Agreement), all Liabilities arising (i) under the Seller Employee Plans, (ii) under
any employment, wage and hour restriction, equal opportunity, discrimination, plant closing or
immigration and naturalization Laws, (iii) under any collective bargaining Laws, agreements or
arrangements or (iv) in connection with any workers compensation or any other employee health,
accident, disability or safety claims;
(f) any Liability relating to any real properties owned, operated or otherwise controlled
by the Sellers or their Affiliates (including the Real Property) to the extent arising from
events or conditions occurring or existing prior to the Closing Date, including, without
limitation, where connected with, arising out of or relating to: (i) Releases, Handling of
Hazardous Materials or violations of Environmental Laws or (ii) claims relating to employee
health and safety, including claims for injury, sickness, disease or death of any Person;
(g) any Liability of the Sellers under Title IV of ERISA;
(h) any pension or retirement Liability of the Sellers;
(i) all Liabilities for, or related to, any obligation for any Tax that the Sellers bear
under Article VI, and, for the avoidance of doubt, the Parties intend that no Purchaser or
Designated Purchaser shall have any transferee or successor liability for any Tax Sellers bear
under Article VI;
(j) all Actions pending against the Sellers on or before the Closing Date or to the extent
relating to the Business or the Assets prior to the Closing Date even if instituted after the
Closing Date;
(k) any Liability incurred by the Sellers or their respective directors, officers,
stockholders, agents or employees (acting in such capacities) after the Closing Date;
(l) except as provided in Section 2.1.3(b), all liabilities for accounts payable;
(m) any Liability relating to or arising out of the ownership or operation of an Excluded
Asset or the operation by the Sellers of any business other than the Business, whether before,
on or after the Closing Date; and
(n) those Liabilities set forth on Section 2.1.4(n) of the Sellers Disclosure Schedule.
2.1.5. Assumption and/or Assignment or Rejection of 365 Contracts.
(a) On or before the date of the U.S. Bidding Procedures Order hearing, the Sellers shall
provide to the Purchaser Section 2.1.5(a) of the Sellers Disclosure Schedule which shall set
forth a list of all U.S. Debtor Contracts (other than Customer Contracts) that are Executory
Contracts or unexpired leases entered into before the Petition Date. On or
42
before three (3) days before the date of the Auction, the Purchaser will provide to the
Main Sellers a list (the 365 Vendor Contract List) of those U.S. Debtor Contracts from
Section 2.1.5(a) of the Sellers Disclosure Schedule, that the Purchaser has elected to have the
relevant U.S. Debtor assume and assign to the Purchaser or a Designated Purchaser at Closing
pursuant to Section 365 of the U.S. Bankruptcy Code (Contracts that may be included on the 365
Vendor Contract List, the 365 Vendor Contracts). Any time prior to January 15, 2010, the
Purchaser may, by written notice to the Sellers, remove any 365 Vendor Contract from the 365
Vendor Contract List, in which event such 365 Vendor Contract shall cease to be an Assumed and
Assigned Contract and shall instead be an Excluded 365 Contract for all purposes hereunder.
(b) On or before the date of the U.S. Bidding Procedures Order hearing, the Sellers shall
provide to the Purchaser Section 2.1.5(b) of the Sellers Disclosure Schedule which shall set forth
a list (the 365 Customer Contract List) of all Customer Contracts of a U.S. Debtor that are
Executory Contracts and were entered into before the Petition Date and that the relevant U.S.
Debtor will assume and assign to the Purchaser or a Designated Purchaser at Closing pursuant to
Section 365 of the U.S. Bankruptcy Code (Contracts that may be included on the 365 Customer
Contract List, the 365 Customer Contracts and, together with the 365 Vendor Contracts, the
Assumed and Assigned Contracts (as referred to herein from time to time as 365 Contracts)).
(c) The U.S. Debtors shall seek the approval of the U.S. Bankruptcy Court to the
assumption and/or assignment of the Assumed and Assigned Contracts as part of the U.S. Sale
Order in accordance with Section 5.1.
(d) Any U.S. Debtor Contracts that are Executory Contracts or unexpired leases that the
Purchaser elects not to have assigned pursuant to Section 2.1.5(a) shall be referred to as an
Excluded 365 Contract and shall not be an Assigned Contract hereunder.
2.1.6. Assignment of Other Vendor Contracts and Other Customer Contracts.
(a) On or before a date that is thirty (30) days from the date hereof, the Sellers shall
provide to the Purchaser Section 2.1.6(a) of the Sellers Disclosure Schedule which shall set
forth a list of Other Vendor Contracts (other than Non-Assignable Contracts). On or before
December 31, 2009, the Purchaser shall notify the Sellers of (i) any Other Vendor Contracts
(other than Non-Assignable Contracts) that the Purchaser wants the relevant Seller to assign to
the Purchaser or a Designated Purchaser at the Closing (the Designated Other Vendor Contracts)
and (ii) any Other Vendor Contracts (other than Non-Assignable Contracts) that Purchaser does not
want the relevant Seller to assign to the Purchaser or a Designated Purchaser at the Closing (the
Excluded Other Vendor Contracts). On or before January 15, 2010 the Purchaser may by written
notice to the Main Sellers, modify the lists of Designated Other Vendor Contracts and Excluded
Other Vendor Contracts for all purposes hereunder.
(b) On or before a date that is thirty (30) days from the date hereof, the Sellers shall
provide to the Purchaser Section 2.1.6(b) of the Sellers Disclosure Schedule
43
which shall set forth a list of Non-Assignable Contracts with suppliers of products or
services to the Business. On or before December 31, 2009, the Purchaser shall notify the Sellers
of (i) any Non-Assignable Contracts with suppliers of products or services to the Business that
the Purchaser wants the relevant Seller to attempt to assign to the Purchaser or a Designated
Purchaser at the Closing (the Designated Non-Assignable Supply Contracts) and (ii) any
Non-Assignable Contracts with suppliers of products or services to the Business that the
Purchaser does not want the relevant Seller to assign to the Purchaser or a Designated Purchaser
at the Closing (the Excluded Non-Assignable Supply Contracts). On or before January 15, 2010,
the Purchaser may by written notice to the Main Sellers, modify the lists of Designated
Non-Assignable Contracts and Excluded Non-Assignable Contracts for all purposes hereunder.
(c) On or before a date that is thirty (30) days from the date hereof, the Sellers shall
provide to the Purchaser Section 2.1.6(c) of the Sellers Disclosure Schedule which shall set
forth a list of those Customer Contracts other than 365 Customer Contracts and other than
Non-Assignable Contracts to be assigned by the relevant Seller to the Purchaser or a Designated
Purchaser at Closing (the Designated Other Customer Contracts).
(d) On or before a date that is thirty (30) days from the date hereof, the Sellers shall
provide to the Purchaser Section 2.1.6(d) of the Sellers Disclosure Schedule which shall set
forth a list of Non-Assignable Contracts (other than 365 Contracts) with customers of the
Business which the relevant Seller will attempt to assign to the Purchaser or a Designated
Purchaser at Closing (the Designated Non-Assignable Customer Contracts and together with the
Designated Non-Assignable Supply Contracts, the Designated Non-Assignable Contracts).
(e) The Parties shall use commercially reasonable efforts to obtain all Consents required to
permit the assignment to the Purchaser or a Designated Purchaser of the Designated Non-Assignable
Contracts; provided, however, that the Sellers shall be under no obligation to
compromise any right, asset or benefit or to expend any amount or incur any Liability in seeking
such Consents and, for greater certainty, the failure to obtain any or all of such Consents shall
not in itself entitle the Purchaser to terminate this Agreement or fail to complete the
transactions contemplated hereby or entitle the Purchaser to any adjustment to the Purchase
Price.
(f) Subject to Section 2.1.10 and Section 5.14, all the Designated Other Vendor Contracts,
Designated Other Customer Contracts and the Designated Non-Assignable Contracts in force at the
Closing shall be assigned to the Purchaser or a Designated Purchaser at the Closing pursuant to
Section 2.1.1(c).
(g) For those Designated Non-Assignable Customer Contracts for which the Sellers are
unable to obtain any required Consent on or before January 25, 2010, the relevant Sellers shall
use commercially reasonable efforts to enter into one or more Subcontract Agreements between
the Sellers and the Purchaser with respect to such Designated Non-Assignable Customer
Contracts; provided that (x) the Sellers shall not renew any Designated Non-Assignable
Customer Contract once it has expired unless both the relevant Seller and Purchaser agree, (y)
the Sellers shall have the right, any time after the
44
date that is one year after the Closing Date, to exercise any right to terminate any
Designated Non-Assignable Customer Contract, and (z) the Sellers shall be under no obligation
to compromise any right, asset or benefit or to expend any amount or incur any Liabilities in
order to comply with its obligations under this sentence.
2.1.7. Cure Costs; Adequate Assurance.
(a) On or before the date of the U.S. Bidding Procedures Order hearing, the Sellers shall
provide to the Purchaser Section 2.1.7(a) of the Sellers Disclosure Schedule which shall set
forth a list of all of the following: (i) each 365 Vendor Contract and the aggregate amount of
Cure Costs, in the Sellers estimate, owed to each counterparty to such 365 Vendor Contract,
(ii) each exclusive Other Vendor Contract that, in the Sellers estimate, is subject to Cure
Costs in excess of $100,000 and the aggregate amount of Cure Costs, in the Sellers estimate,
owed with respect to such Other Vendor Contract, and (iii) each supplier to the Business who
supplies products or services pursuant to Non-Exclusive Supply Contracts who, in the Sellers
estimate, is owed Cure Costs thereunder in excess of $100,000 and the aggregate amount of Cure
Costs, in the Sellers estimate, owed to each such supplier.
(b) Section 2.1.7(b) of the Sellers Disclosure Schedule sets forth the manner in which
Cure Costs shall be paid under this Agreement and certain agreements of the Parties with
respect thereto.
(c) Section 2.1.7(c) of the Sellers Disclosure Schedule sets forth the manner in which
Customer Contract Cure Costs shall be paid under this Agreement and certain agreements of the
Parties with respect thereto.
(d) This Agreement may be terminated by the Purchaser at any time prior to Closing in
accordance with clause (C) of Section 2.1.7(b)(I) of the Sellers Disclosure Schedule, and in
the event of such termination, the Purchaser shall be entitled to a termination payment of
$21,392,000.
(e) Prior to the U.S. Sale Hearing, the Purchaser shall provide adequate assurance of its
and the relevant Designated Purchasers future performance under each Assumed and Assigned
Contract to the parties thereto (other than the U.S. Debtors) in satisfaction of Section
365(f)(2)(B) of the U.S. Bankruptcy Code.
2.1.8. Local Sale Agreements. Subject to the terms and conditions hereof, if
reasonably requested in writing by the Purchaser or the Sellers to effect the Closing on the terms
hereof, the relevant Sellers shall, and the Purchaser shall, and shall cause the relevant
Designated Purchasers to, enter into such agreements or instruments, including bills of sale and/or
assignment and assumption agreements (the Local Sale Agreements), providing for (i) the sale,
transfer, assignment or other conveyance to the Purchaser and relevant Designated Purchasers, in
accordance with the requirements of applicable local Law, of any Assets located in the specified
countries reasonably requested by the Sellers or the Purchaser, and (ii) the assumption by the
Designated Purchasers of any Assumed Liability that the Purchaser intends to allocate to them.
Such Local Sale Agreements shall promptly be negotiated in good faith
45
between the Main Sellers and the Purchaser. In the event of a conflict between this Agreement
and the Local Sale Agreements, this Agreement shall prevail.
2.1.9. EMEA Asset Sale Agreement. Notwithstanding anything to the contrary in this
Agreement, except to the extent expressly incorporated by reference into the EMEA Asset Sale
Agreement, none of the EMEA Sellers or the directors of any of them, the Joint Administrators or
the Joint Israeli Administrators shall assume, or be deemed to assume, any obligation or liability
whatsoever under this Agreement and nothing in this Agreement shall apply to, or govern, the sale,
assignment, transfer, retention or assumption of assets, rights, properties or Liabilities of, or
by, any EMEA Seller, the Joint Administrators or the Joint Israeli Administrators in any manner
whatsoever. The only assets, rights, properties and Liabilities of the EMEA Sellers, the Joint
Administrators or the Joint Israeli Administrators that are being sold, assigned or transferred to,
and assumed by, the Purchaser or the EMEA Designated Purchasers, and the terms and conditions
thereof, and except as expressly set forth in this Agreement as made by the Sellers, and not, for
the avoidance of doubt, the EMEA Sellers, the representations with respect thereto are solely as
expressly set forth in the EMEA Asset Sale Agreement. Except as provided in the EMEA Asset Sale
Agreement, neither the Purchaser nor any Designated Purchaser shall be entitled to make any claim
under this Agreement, or assert any right hereunder, against any Person other than the Sellers,
their successors or assigns.
2.1.10. Non-Assignable Assets. Notwithstanding anything in this Agreement to the
contrary, if the requisite Consent has not been obtained on or prior to Closing, then, unless such
Consent is subsequently obtained, this Agreement shall not constitute an agreement to sell,
transfer or assign, directly or indirectly, any Asset, or any obligation or benefit arising
thereunder if an attempted direct or indirect sale, transfer or assignment thereof, without the
Consent of a Third Party, including a Government Entity, would constitute a breach, default,
violation or other contravention of the rights of such Third Party or would be ineffective with
respect to any party to a Contract concerning such Asset. For greater certainty, failure to obtain
any such Consent shall not entitle the Purchaser to terminate this Agreement or fail to complete
the transactions contemplated hereby or entitle the Purchaser to any adjustment of the Purchase
Price. In the case of Consents, Contracts and other commitments included in the Assets (i) that
cannot be transferred or assigned without the consent of Third Parties, which consent has not been
obtained prior to the Closing, the Sellers shall, at the Purchasers sole out-of-pocket cost,
reasonably cooperate with the Purchaser in endeavoring to obtain such Consent and, if any such
Consent is not obtained, the Sellers shall, following the Closing, at the Purchasers sole
out-of-pocket cost, cooperate with the Purchaser in all reasonable respects to provide to the
Purchaser with the benefit of such Consent, Contract or other commitment, or (ii) that are
otherwise not transferable or assignable, the Sellers shall, following the Closing, at the
Purchasers sole out-of-pocket cost, reasonably cooperate with the Purchaser to provide to the
Purchaser with the benefit of such Consent, Contract or other commitment. The obligation of the
Sellers to provide such reasonable cooperation under this Section 2.1.10 shall terminate on the
date that is one (1) year following the Closing Date and after such time period, the Sellers shall
have no further obligation to so cooperate nor shall the Sellers bear any liability for the failure
to obtain such Consents within such one year period.
46
SECTION 2.2. Purchase Price.
2.2.1. Purchase Price.
(a) Pursuant to the terms and subject to the conditions set forth in this Agreement, in
consideration of the purchase, sale, assignment and conveyance of the Sellers and EMEA
Sellers right, title and interest in, to and under the Assets and the EMEA Assets,
respectively, pursuant to the terms hereof and pursuant to the terms of the EMEA Asset Sale
Agreement, respectively, and of the rights granted by certain Sellers and the EMEA Sellers
under the Intellectual Property License Agreement and the Trademark License Agreement, the
Purchaser, on its own behalf and as agent for the relevant Designated Purchasers, shall (i)
assume and become obligated to pay, perform and discharge, when due, the Assumed Liabilities
and the EMEA Assumed Liabilities, (ii) subject to adjustment following the Closing in
accordance with Section 2.2.4.2, pay to the Distribution Agent an amount of cash (the Cash
Purchase Price) equal to Five Hundred Thirty Million dollars ($530,000,000) (the Base Cash
Purchase Price) less the Escrow Amount and as adjusted pursuant to Sections 2.2.2 and 2.2.4
and Section 5.28 of the Sellers Disclosure Schedule or as otherwise expressly provided herein,
in the Real Estate Terms and Conditions or in the EMEA Asset Sale Agreement, and (iii) subject
to Section 2.2.7, issue to the Distribution Agent, as agent for the Sellers and the EMEA
Sellers, $239,000,000 aggregate principal amount (the Aggregate Principal Amount) of 6.0%
Senior Notes due June 15, 2017 (the Convertible Notes, and together with the Cash Purchase
Price, as adjusted, the Purchase Price) convertible at the holders option into Common Stock
at a conversion price equal to $16.4625 (the Conversion Price), subject to adjustments
contemplated in the Indenture; provided, however, that the Purchaser may, by
written notice to the Sellers on or before the Closing Date, elect to increase the Cash
Purchase Price and the Base Cash Purchase Price payable pursuant to clause (ii) above by up to
the Aggregate Principal Amount in lieu of issuing the corresponding face amount of the
Convertible Notes (such election, if exercised, the Cash Replacement Election);
provided further, that if the Market Value of the Common Stock on the date of
the notice of such election (or in the case the replacement is made with the proceeds of a
simultaneous convertible security offering the most recent closing price per share of the
Common Stock on the NASDAQ Global Select Market at the time such convertible security offering
is priced) is equal to or greater than $17.00 per share of Common Stock, then in lieu of
increasing the Cash Purchase Price by the Aggregate Principal Amount such increase will equal
the Optional Redemption Price corresponding to such Aggregate Principal Amount.
(b) Except as provided in Section 2.2.1(a), the Convertible Notes shall be issued on terms
substantially the same as the terms of the Existing 2017 Senior Notes as set forth in the
indenture with respect thereto except that (i) references to quotation on an automated over the
counter trading market contained in the Fundamental Change definition of the 2017 Existing
Senior Notes indenture will be omitted in the equivalent definition in the documentation for
the Convertible Notes, (ii) the related share adjustment amount table (with conforming changes
to minimum and maximum adjustment amounts described elsewhere) is replaced by the table
attached hereto as Exhibit 2.2.1(b)(ii), (iii) following the Closing but prior to the Liquidity
Date, the Purchaser may redeem the Convertible Notes at any time for cash at a redemption price
per $1,000 principal amount of Convertible Notes equal to the greater of (a) $1,050.00 and (b)
the product of (x) the closing
47
price per share of the Common Stock on the NASDAQ Global Select Market on the date of
notice of such redemption (or in the case of redemption with the proceeds of a simultaneous
convertible bond offering the most recent closing price per share of the Common Stock on the
NASDAQ Global Select Market at the time such convertible bond offering is priced) multiplied by
(y) the Conversion Rate (as defined in the Indenture) applicable to the Convertible Notes on
such date, as increased by a number of additional shares determined by reference to the number
of such additional Shares, the most recent closing price per share of the Common Stock on the
NASDAQ Global Select Market at the time the simultaneous convertible security offering is
priced and the time of such redemption as set forth in the table attached hereto as Exhibit
2.2.1(b)(iii) (using the date of notice of redemption or the date of pricing of such
simultaneous convertible security offering as the referenced effective date and the closing
price per share of the Common Stock on The NASDAQ Global Select Market), multiplied by (z) .95,
plus, in each case, accrued and unpaid interest from the date of issuance (the Optional
Redemption Price), and (iv) the indenture with respect to the Convertible Notes will reflect
the post-Closing offer requirement set forth in Section 2.2.1(c) below.
(c) In the event that the Purchaser completes any capital raising transaction through the
issuance and sale of debt or equity securities for cash during the period after the date hereof
through and including the Closing Date, the Purchaser shall be required to exercise the Cash
Replacement Election to the extent of the net proceeds of such capital raising transaction. In
the event that the Purchaser completes any capital raising transaction through the issuance and
sale of debt or equity securities for cash during the period following the Closing Date but
prior to the earlier of the date on which the Initial Shelf Registration Statement becomes
effective or the date on which the Registrable Securities are otherwise Freely Tradeable (such
date, the Liquidity Date), the Purchaser shall be required to offer to use the net proceeds
therefrom to replace the Convertible Notes for an amount equal to the Optional Redemption
Price.
(d) Notwithstanding Sections 2.2.1(a), (b) and (c) above, in the event that the Market
Value of the Common Stock (rounded to the nearest whole cent) as of the Closing Date is less
than $13.17, the interest rate on the Convertible Notes shall be increased as follows:
|
|
|
|
|
Market Value |
|
Interest Rate |
More than $13.16 |
|
|
6.00 |
% |
$13.00-$13.16 |
|
|
6.25 |
% |
$12.75-$12.99 |
|
|
6.50 |
% |
$12.50-$12.74 |
|
|
6.75 |
% |
$12.25-$12.49 |
|
|
7.00 |
% |
$12.00-$12.24 |
|
|
7.25 |
% |
$11.75-$11.99 |
|
|
7.50 |
% |
$11.50-$11.74 |
|
|
7.75 |
% |
Less than $11.49 |
|
|
8.00 |
% |
48
2.2.2. Estimated Cash Purchase Price.
(a) For purposes of determining the amount of cash to be paid as the Cash Purchase Price
by the Purchaser to the Sellers at the Closing pursuant to Section 2.2.1, at least three (3)
Business Days prior to the Closing Date but no more than ten (10) Business Days prior to the
Closing Date, the Main Sellers shall deliver to the Purchaser their good faith estimate of the
Closing Date Net Working Capital Transferred (the Estimated Closing Date Net Working Capital
Transferred) setting forth in reasonable detail the Main Sellers calculation thereof. The
Main Sellers calculation of the Estimated Closing Date Net Working Capital shall be subject to
the review and approval of the Purchaser, which approval shall not be unreasonably withheld.
The Main Sellers shall cooperate with the Purchaser and shall provide such information as may
be reasonably requested in connection with such review.
(b) The Estimated Adjustment Amount, which may be positive or negative, shall mean (i)
the Estimated Closing Date Net Working Capital Transferred, minus (ii) $167,000,000.
If the Estimated Adjustment Amount is a positive number, then the Cash Purchase Price shall be
increased on the Closing Date by the Estimated Adjustment Amount, and if the Estimated
Adjustment Amount is a negative number, then the Cash Purchase Price shall be decreased on the
Closing Date by the absolute value of the Estimated Adjustment Amount.
(c) The Parties agree that the Cash Purchase Price to be paid at Closing shall also be
decreased in accordance with clause 3.5 and Schedule 8 of the EMEA Asset Sale Agreement.
2.2.3. Additional Adverse Bankruptcy Proceedings; Adverse International Injunctions;
Excluded Entities.
(a) Other than as set forth in Section 2.2.3(d), if at any time prior to the Closing Date,
(i) any Seller that is a Non-Debtor Seller as of the date hereof shall have commenced voluntary
or involuntary bankruptcy, insolvency, administration or judicial proceedings similar to the
Bankruptcy Proceedings in any country or other jurisdiction (each such proceeding, an
Additional Adverse Bankruptcy Proceeding) or (ii) there shall be in effect any Law or Order
of any court or other Government Entity in any country or other jurisdiction (other than the
U.S., Canada or the United Kingdom) prohibiting in such jurisdiction the consummation of the
transactions contemplated hereby or any pending proceeding by any such Government Entity
seeking such prohibition (such Law, Order or proceeding, an Adverse International
Injunction), then (A) the Main Sellers shall promptly notify the Purchaser of such Additional
Adverse Bankruptcy Proceeding or such an Adverse International Injunction, as applicable, and,
to the extent the Main Sellers are aware of the same, identify the Assets or assets of a Person
that are subject to such Additional Adverse Bankruptcy Proceeding or Adverse International
Injunction (the Restricted Assets), (B) the Parties shall, in respect of the Restricted
Assets, use their commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, and cooperate with each other in order to do, all things
necessary, proper or advisable under applicable Law to transfer, sell and assign all of the
Sellers right, title and interest in the Restricted Assets to the Purchaser or a Designated
Purchaser, as applicable, as
49
contemplated hereby on the Closing Date on the terms and conditions set forth herein,
notwithstanding the Additional Adverse Bankruptcy Proceeding or Adverse International
Injunction, as applicable; provided, however, nothing contained herein shall
require the Purchaser or any Designated Purchaser to take any action in violation of applicable
Law or any Order or which would subject the Purchaser or any Designated Purchaser to any
material liability other than the Assumed Liabilities or to incur any material out-of-pocket
cost.
(b) If, ten (10) Business Days prior to Closing, it has become apparent to the Parties
that such Additional Adverse Bankruptcy Proceeding or Adverse International Injunction will or
may prevent one or more Sellers (each a Restricted Seller) from assigning the Restricted
Assets to the Purchaser or a Designated Purchaser, as applicable, as of the Closing Date, then,
as of the Closing Date, such Restricted Assets shall automatically be deemed Excluded Assets
hereunder, the Sellers shall be excused from delivering the Restricted Assets and, without
prejudice to all other obligations of the Purchaser and the other Sellers hereunder, the
Purchaser shall be relieved from its rights and obligations to acquire such Restricted Assets,
to assume any Assumed Liabilities in respect thereof (the Restricted Liabilities) or to make
offers to, or employ, any Employee who is employed by any Seller who is subject to such
Additional Adverse Bankruptcy Proceeding or Adverse International Injunction or who devotes
more than 50% of his or her working time to the business of any such Sellers (each a
Restricted Employee). The Purchase Price, including the Cash Purchase Price paid to the
Sellers at the Closing, shall be reduced, with respect to such Restricted Assets and Restricted
Liabilities, by an amount equal to the product of (x) the sum of the revenues for the one year
period ended on December 31, 2008 (the 2008 Revenues) for all Restricted Sellers as set forth
on Exhibit X, times (y) 0.4088; provided, however, if the sum of the 2008
Revenues for all Restricted Sellers and all EMEA Sellers that are designated Restricted Sellers
pursuant to the EMEA Asset Sale Agreement as set forth on Exhibit X exceeds $120,000,000, the
Purchase Price, including the Cash Purchase Price paid to the Sellers at the Closing, shall be
reduced, with respect to such Restricted Assets and Restricted Liabilities, by an amount equal
to the product of (x) the sum of the 2008 Revenues for all Restricted Sellers as set forth on
Exhibit X, times (y) 0.5314.
(c) Subject to Section 5.4 and Section 5.5, for a period of thirty (30) days following the
Closing, the Sellers and the Purchaser shall, in respect of the Restricted Assets, continue to
use their commercially reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, and cooperate with each other in order to do, all things necessary, proper
or advisable under applicable Law to assign the Restricted Assets of the relevant Restricted
Seller to the Purchaser or a Designated Purchaser, as promptly as reasonably practicable within
such period; provided, however, nothing contained herein shall require the
Purchaser or any Designated Purchaser to take any action in violation of applicable Law or any
Order or which would subject the Purchaser or a Designated Purchaser to any material liability
other than the Assumed Liabilities or to incur any material out-of-pocket cost. In the event
that the Sellers are unable to cause the Adverse International Injunction to be terminated or
to otherwise complete the transaction in accordance with the proviso above on or before the
date that is 30 days after the Closing Date, neither the Purchaser nor any Designated Purchaser
shall have any further obligation
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with respect to the Restricted Assets, Restricted Liabilities or the Restricted Employees.
To the extent the Restricted Assets are assigned to the Purchaser or a Designated Purchaser,
as applicable, the Purchaser or a Designated Purchaser shall assume the related Restricted
Liabilities and make offers to and employ as provided in Article VII the Restricted Employees,
then as of the transfer date: (i) the Restricted Assets, the Restricted Liabilities and the
Restricted Employees shall be deemed respectively Assets, Assumed Liabilities and Transferred
Employees hereunder; and (ii) the Purchaser shall pay to the Distribution Agent, as an
adjustment to the Purchase Price hereunder, by wire transfer to the account designated by the
Distribution Agent pursuant to Section 2.3.2(b) an amount in cash equal to the amount that the
Purchase Price was reduced pursuant to subsection (b) above with respect to such Restricted
Seller.
(d) Section 2.2.3(d) of the Sellers Disclosure Schedule sets forth the manner in which
certain Sellers or Affiliates of any Seller (and their Assets, and Liabilities) may be excluded
from the transactions contemplated by this Agreement.
(e) The Purchase Price, including the Cash Purchase Price, shall also be adjusted in
accordance with clause 3.5 and Schedule 8 of the EMEA Asset Sale Agreement.
2.2.4. Purchase Price Adjustment.
2.2.4.1 Closing Statement; Dispute Resolution
(a) As promptly as practicable (and in any event within 90 days after the Closing), the
Purchaser shall prepare and deliver to the Main Sellers and the EMEA Sellers an unaudited
statement (the Closing Statement) setting forth in reasonable detail the Net Working Capital
Transferred of the Business as of the Closing Date (the Closing Date Net Working Capital
Transferred) and each component thereof. Following the Closing, the Purchaser shall provide
the Main Sellers and their representatives access to the records and employees of the Business
to the extent relevant for the preparation of the Closing Statement and shall cause the
employees of the Business to cooperate with the Main Sellers in connection with their review of
the Closing Statement. Net Working Capital Transferred as of the Closing Date shall mean an
amount equal to (i) the Closing Inventory Amount, plus (ii) the Closing CIP Accounts
Receivable Amount, minus (iii) the Closing Warranty Provision, minus (iv) the
Closing KPD Provision, minus (v) the Closing Net Deferred Revenues, minus (vi)
the Closing Other Accrued and Contractual Liabilities, minus (vii) the Closing Accrued
Vacation and Service Award Amount, minus (viii) the Closing Retirement Obligation
Amount, minus (ix) the Excess ARD Employees Amount.
(b) If the Main Sellers disagree with the calculation of Closing Date Net Working Capital
Transferred, they shall notify the Purchaser of such disagreement in writing, setting forth in
reasonable detail the particulars of such disagreement, within thirty (30) days after their
receipt of the Closing Statement. In the event that the Main Sellers do not provide such a
notice of disagreement within such thirty (30) day period, the Main Sellers shall be deemed to
have accepted the Closing Statement and the calculation of the Closing Date Net Working Capital
Transferred delivered by the Purchaser, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely provided, the
Purchaser and the Main Sellers shall use commercially reasonable efforts for a period of thirty
(30) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculations of Closing
51
Date Net Working Capital Transferred. If, at the end of such period, they are unable to
resolve such disagreements, then the Independent Auditor as arbitrator (or such other
independent accounting firm of recognized national standing as may be mutually selected by the
Purchaser and the Main Sellers) (the Accounting Arbitrator) shall resolve any remaining
disagreements. The Accounting Arbitrator shall determine as promptly as practicable, but in
any event within thirty (30) days of the date on which such dispute is referred to the
Accounting Arbitrator, whether the Closing Statement was prepared in accordance with the
standards set forth in Section 2.2.4.1 and (only with respect to the remaining disagreements
submitted to the Accounting Arbitrator) whether and to what extent (if any) Closing Date Net
Working Capital Transferred require adjustment. The fees and expenses of the Accounting
Arbitrator shall be paid inverse pro rata by the Primary Parties based on the final position of
each of the Primary Parties as submitted to the Accounting Arbitrator relative to the
Accounting Arbitrators final determination. The determination of the Accounting Arbitrator
shall be final, conclusive and binding on the Parties. The date on which Closing Date Net
Working Capital Transferred is finally determined in accordance with this Section 2.2.4.1 is
hereinafter referred as to the Determination Date.
2.2.4.2. Purchase Price Adjustment
(a) The Adjustment Amount, which may be positive or negative, shall mean the Closing
Date Net Working Capital Transferred, minus the Estimated Closing Date Net Working
Capital Transferred. If the Adjustment Amount is a positive number, then the Base Cash
Purchase Price shall be increased by the Adjustment Amount, and if the Adjustment Amount is a
negative number, the Base Cash Purchase Price shall be decreased by the absolute value of the
Adjustment Amount. The Adjustment Amount shall be paid in accordance with Section 2.2.4.2(b)
below.
(b) Adjustment Payments.
(i) If the Adjustment Amount is a positive number (such amount, the Increase
Amount), then, promptly following the Determination Date, and in any event within
five (5) Business Days of the Determination Date:
(A) the Purchaser shall pay to the Distribution Agent the Increase Amount, as
finally determined, together with interest thereon from the Closing Date to the date
of payment at the prime rate of interest published in the Money Rates column of
the Eastern Edition of the Wall Street Journal (or the average of such rates if more
than one rate is indicated) on the Closing Date (the Prime Rate); and
(B) the Parties shall cause the Escrow Agent to pay to the Distribution Agent
the full Working Capital Escrow Amount, together with interest thereon from the
Closing Date to the date of payment at the Prime Rate.
Any cash payment of the Increase Amount shall be paid in cash by wire transfer of
immediately available funds to the bank account(s) designated in writing by the
Distribution Agent.
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(ii) If the Adjustment Amount is a negative number (the absolute value of such
amount, the Deficit Amount), then, promptly following the Determination Date, and
in any event within five (5) Business Days of the Determination Date:
(A) the Parties shall cause the Escrow Agent to pay to the Purchaser, on its
own behalf and in its capacity as agent for the Designated Purchasers and EMEA
Designated Purchasers, the lesser of (x) the Deficit Amount, as finally determined,
together with interest thereon from the Closing Date to the date of payment at the
Prime Rate, and (y) the Working Capital Escrow Amount;
(B) in the event that the Deficit Amount exceeds the Working Capital Escrow
Amount, the Sellers shall cause the Distribution Agent to pay to the Purchaser, on
its own behalf and in its capacity as agent for the Designated Purchasers and EMEA
Designated Purchasers, an amount equal to the amount by which the Deficit Amount, as
finally determined, together with the interest thereon from the Closing Date to the
date of payment at the Prime Rate, exceeds the Working Capital Escrow Amount; and
(C) to the extent that there is any Working Capital Escrow Amount remaining
after payment of the Deficit Amount, such amount shall be returned to the
Distribution Agent in accordance with the terms of the Escrow Agreement.
Any cash payment of the Deficit Amount shall be paid in cash by wire transfer of
immediately available funds to the bank account(s) designated in writing by the
Purchaser or the Distribution Agent, as applicable.
2.2.5. Escrows.
(a) At the Closing, each of the Main Sellers, the EMEA Sellers or an authorized
representative of the EMEA Sellers and the Purchaser shall enter into the Escrow Agreement with
the Escrow Agent in respect of the Working Capital Escrow Amount, the Transition Services
Escrow Amount, the Carling Property Escrow Amount, the Tax Escrow Amount, the EMEA Tax Escrow
Amount, the Italian Tax Escrow Amount and the matters set forth on Section 2.1.7(b) of the
Sellers Disclosure Schedule.
(b) Each of the Main Sellers, the EMEA Sellers or an authorized representative of the EMEA
Sellers and the Purchaser hereby undertake to promptly execute and deliver to the Escrow Agent,
in accordance with the Escrow Agreement, instructions to pay to the Sellers or the Purchaser,
as applicable, funds from the escrow account established pursuant to the Escrow Agreement any
time that such Person becomes entitled to such payment from the escrow account pursuant to the
terms of the Escrow Agreement and (i) Section 2.2.4.2 in respect of the Working Capital Escrow
Amount, (ii) the terms of the Transition Services Agreement in respect of the Transition
Services Escrow Amount, (iii)
the terms of the Carling Property Lease Agreements in respect of the Carling Property
Escrow Amount, (iv) Section 6.7 in respect of the Tax Escrow Amount, (v) Section 6.8 in respect
of the EMEA Tax Escrow Amount, (vi) Section 6.9 in respect of the Italian Tax Escrow Amount and
(vii) the terms of Section 2.1.7(b) of the Sellers Disclosure Schedule.
53
2.2.6. Purchase Price Allocation.
(a) The Parties and the EMEA Sellers shall (i) first allocate to the tangible Assets, the
tangible EMEA Assets, the CIP Accounts Receivable and the EMEA CIP Accounts Receivable, a
portion of the Purchase Price as adjusted in accordance with the terms of this Agreement and
the EMEA Asset Sale Agreement (and, to the extent properly taken into account under the
applicable Tax Laws, the Assumed Liabilities and the EMEA Assumed Liabilities), if any, equal
to the net book value of such tangible Assets, tangible EMEA Assets, the CIP Accounts
Receivable and the EMEA CIP Accounts Receivable as of the Closing Date and (ii) then allocate
the balance of the Purchase Price, as adjusted in clause (i) of this Section 2.2.6(a), to the
intangible Assets and the intangible EMEA Assets.
(b) To the extent necessary to file Transfer Tax Returns, the Parties and the EMEA Sellers
shall negotiate in good faith to determine an allocation of the Purchase Price (and, to the
extent properly taken into account under the applicable Tax Laws, the Assumed Liabilities),
among the Assets and the EMEA Assets in accordance with the principles of Section 1060 of the
Code and the Treasury regulations promulgated thereunder and other applicable Tax Laws, which
allocation shall be subject to the principles of Section 2.2.6(a) (such allocation, a Partial
Allocation). If the Parties and the EMEA Sellers do not reach agreement on a Partial
Allocation after negotiating in good faith, the Partial Allocation shall be submitted to the
Accounting Arbitrator, which shall prepare a final Partial Allocation; provided,
however, that if a different Partial Allocation is required by a Government Entity
(including for this purpose an allocation required, approved or authorized pursuant to a
Bankruptcy Proceeding), then the Partial Allocation shall be modified as necessary to be
consistent with the required allocation (but in all cases shall be subject to the principles of
Section 2.2.6(a)). Notwithstanding the preceding sentence, if the Parties have not reached
agreement on the Partial Allocation and the Accounting Arbitrator has not submitted its
determination on or before the date that a Transfer Tax Return is required to be filed with the
relevant Tax Authority (giving effect to any valid extensions), then such Transfer Tax Return
shall be timely filed in the manner that the Party with primary responsibility for the payment
of the Transfer Taxes under this Agreement reasonably determines (the Transfer Tax
Determination), provided that such Transfer Tax Determination shall have a reasonable
prospect of being sustained, and shall, upon receiving the Accounting Arbitrators later
determination and to the extent permitted under applicable Law, the filing Party shall promptly
file, or cause to be filed, an amended return in accordance therewith. The Purchaser agrees to
indemnify and hold harmless the Sellers and their respective officers and directors from any
Losses arising out of or resulting from the Transfer Tax Determination, including without
limitation, any Tax, interest, penalty or sanction. The Parties agree to be bound by the
final Partial Allocation accepted by the Parties or prepared by the Accounting Arbitrator (as
modified to be consistent with the allocation required by a Government Entity, described
above), as applicable. The Parties and the EMEA Sellers agree to act in accordance with the
allocations contained in such final
Partial Allocation for all purposes relating to Transfer Taxes (including the preparation,
filing and audit of any Transfer Tax Returns).
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2.2.7. Certain Payment Mechanics and Allocations for the Convertible Notes.
(a) Notwithstanding anything to the contrary in this Agreement, but subject to Section
2.2.7(b) unless, prior to the Closing, the Purchaser notifies the Sellers in writing that this
Section 2.2.7 shall not apply or unless the Purchaser exercises the Cash Replacement Election
in full, (i) a portion of the Purchase Price payable to the Distribution Agent, as agent for
the U.S. Sellers, as consideration for the U.S. Sellers right, title and interest in, to and
under the Assets transferred by such U.S. Sellers to the Purchaser or a Designated Purchaser
hereunder will include that portion of the Convertible Notes being delivered pursuant to
Section 2.2.1 set forth on Section 2.2.7(a)(i) of the Sellers Disclosure Schedule and any
remaining portion of the Purchase Price payable to the Distribution Agent as agent for the U.S.
Sellers hereunder shall be paid to the Distribution Agent in cash as part of the Cash Purchase
Price, (ii) a portion of the Purchase Price payable to the Distribution Agent, as agent for the
UK Sellers, as consideration for the UK Sellers right, title and interest in, to and under the
EMEA Assets transferred by such UK Sellers to the Purchaser or an EMEA Designated Purchaser
under the EMEA Asset Sale Agreement will include that portion of the Convertible Notes being
delivered pursuant to Section 2.2.1 set forth on Section 2.2.7(a)(ii) of the Sellers Disclosure
Schedule and any remaining portion of the Purchase Price payable to the Distribution Agent as
agent for the UK Sellers hereunder shall be paid to the Distribution Agent in cash as part of
the Cash Purchase Price, (iii) a portion of the Purchase Price payable to the Distribution
Agent, as agent for the Canadian Sellers, as consideration for the Canadian Sellers right,
title and interest in, to and under the Assets transferred by such Canadian Sellers to the
Purchaser or a Designated Purchaser hereunder will include that portion of the Convertible
Notes being delivered pursuant to Section 2.2.1 set forth on Section 2.2.7(a)(iii) of the
Sellers Disclosure Schedule and any remaining portion of the Purchase Price payable to the
Distribution Agent as agent for the Canadian Sellers hereunder shall be paid to the
Distribution Agent in cash as part of the Cash Purchase Price, and (iv) the Purchase Price
payable as consideration for the right, title and interest in, to and under the Assets or EMEA
Assets of any Non-Convertible Note Recipient Seller transferred to Purchaser, a Designated
Purchaser or an EMEA Designated Purchaser will not include any Convertible Notes and shall
consist entirely of cash paid to the Distribution Agent as part of the Cash Purchase Price.
Neither the initial allocation of Common Stock to the U.S. Sellers, UK Sellers and Canadian
Sellers, nor the allocation of a portion of the Convertible Notes in accordance with this
Section 2.2.7(a) is intended by the Sellers, the EMEA Sellers or the Purchaser to establish, or
otherwise serve as evidence of, the absolute or relative value of the Assets or the EMEA Assets
sold by, or the Assumed Liabilities or the EMEA Assumed Liabilities assumed by the Purchaser, a
Designated Purchaser or an EMEA Designated Purchaser from, any such Seller or EMEA Seller
hereunder or under the EMEA Asset Sale Agreement for any purpose.
(b) In lieu of paying any portion of the Purchase Price payable to one or more of the
Convertible Note Recipient Sellers in Convertible Notes in accordance with Section 2.2.7(a),
the Purchaser may, or may cause the relevant Designated Purchaser or EMEA Designated Purchaser
to, deliver to the Distribution Agent, as agent for such
Convertible Note Recipient Seller, a non-interest bearing, redeemable promissory note in
form and substance reasonably satisfactory to the Purchaser and such Convertible Note
55
Recipient
Seller (each a Demand Note) issued by the Purchaser, the relevant Designated Purchaser or
EMEA Designated Purchaser to the Distribution Agent, as agent for such Convertible Note
Recipient Seller, in an initial principal amount equal to the aggregate principal amount of the
Convertible Notes otherwise deliverable to the Distribution Agent, as agent for such
Convertible Note Recipient Seller, in accordance with Section 2.2.7(a) (the Substituted
Convertible Notes). The Demand Note shall either be (i) redeemable upon demand by the
Distribution Agent, the Convertible Note Recipient Seller or the Purchaser, by delivery by the
Purchaser to the Distribution Agent, as agent for such Convertible Note Recipient Seller,
Convertible Notes having an aggregate initial principal amount equal to the aggregate principal
amount of the Substituted Convertible Notes or (ii) subject to put and call options allowing
the Distribution Agent, the Convertible Note Recipient Seller or the Purchaser, as applicable,
to exercise such option and exchange the Demand Note for Convertible Notes having an aggregate
initial principal amount equal to the aggregate principal amount of the Substituted Convertible
Notes; provided, that the delivery of such Demand Note shall be deemed to satisfy the
Purchasers obligations with respect to issuance of the Substituted Convertible Notes under
this Agreement only if, immediately following the Closing and on the Closing Date, the
Purchaser tenders to the Distribution Agent, as agent for the applicable Convertible Note
Recipient Seller, in satisfaction of, or as consideration for the acquisition of, such Demand
Note, Convertible Notes having an aggregate initial principal amount equal to the aggregate
principal amount of the Substituted Convertible Notes.
(c) Without limiting the obligations of the Purchaser to pay Transfer Taxes in accordance
with Section 6.1 of this Agreement or clause 11 (Tax) of the EMEA Asset Sale Agreement, and
without limiting any other remedy available to the Sellers, the EMEA Sellers, the Joint
Administrators or the Joint Israeli Administrators (collectively, the Tax Indemnitees and
individually, a Tax Indemnitee) under this Agreement or the EMEA Asset Sale Agreement, but
without duplication, the Purchaser shall indemnify the Tax Indemnitees for any Taxes imposed
upon or payable by a Tax Indemnitee or for the fair value of any loss of Tax attributes arising
in connection with the transactions contemplated or necessitated by this Section 2.2.7,
including, without limitation, with respect to the delivery or redemption of a Demand Note, the
issuance, delivery or receipt of Substituted Convertible Notes, the exercise of put or call
options and any other transfer or disposition of the Convertible Notes, Demand Notes or
Substituted Convertible Notes or rights in and to any of the foregoing, but not including any
Taxes that would have been imposed upon or payable by a Tax Indemnitee on the assumption that
Section 2.2.7 of this Agreement did not apply.
SECTION 2.3. Closing.
2.3.1. Closing Date. The completion of the purchase and sale of the Assets and the
assumption of the Assumed Liabilities (the Closing) shall occur simultaneously with closing of
the transaction contemplated by the EMEA Asset Sale Agreement and shall take place at the offices
of Ogilvy Renault LLP in Toronto, Canada commencing at 9:00 a.m. local time on the date which is
the later of (i) February 1, 2010, (ii) the date that is the earlier of (x) ten (10) Business Days
after the Service Readiness Date and (y) April 30, 2010, and (iii) five (5)
Business Days after the day upon which all of the conditions set forth under Article IX (other
than conditions to be satisfied at the Closing, but subject to the waiver or fulfillment of those
56
conditions) have been satisfied or, if permissible, waived by the Main Sellers and/or the Purchaser
(as applicable), or on such other place, date and time as shall be mutually agreed upon in writing
by the Purchaser and the Main Sellers (the day on which the Closing takes place being the Closing
Date).
Legal title, equitable title and risk of loss with respect to the Assets will transfer to the
Purchaser or the relevant Designated Purchaser, and the Assumed Liabilities will be assumed by the
Purchaser and the relevant Designated Purchasers, at the Closing.
2.3.2. Closing Actions and Deliveries. At the Closing:
(a) the Sellers and the Purchaser shall, and the Purchaser shall cause the Designated
Purchasers to, enter into the Ancillary Agreements to which it is contemplated that they will
be parties, respectively, to the extent such agreements have not yet been entered into (except,
with respect to Real Estate Agreements, as otherwise provided in the Real Estate Terms and
Conditions) and subject to Section 5.25;
(b) the Purchaser shall deliver or cause to be delivered (i) to the Distribution Agent, an
amount in cash equal to the Base Cash Purchase Price (as adjusted in accordance with Sections
2.2.2 and 2.2.3) less the Escrow Amount by wire transfer in immediately available funds to an
account or accounts designated at least two (2) Business Days prior to the Closing Date by the
Distribution Agent in a written notice to the Purchaser, (ii) to the Escrow Agent, an amount
equal to the Escrow Amount to be held and disbursed in accordance with the Escrow Agreement,
this Agreement and the Carling Property Lease Agreements, (iii) as directed by the Sellers, the
amount owing pursuant to Section 4(a)(ii) of the Transition Services Agreement, and (iv)
subject to Section 2.2.7, to the Distribution Agent one or more stock certificates representing
the Shares issued to the Distribution Agent;
(c) immediately following delivery of the amount described in Section 2.3.2(b), at the
Closing the Sellers shall deliver or cause to be delivered to the Escrow Agent by wire transfer
of immediately available funds, an amount equal to the Transition Services Escrow Amount to be
held and disbursed in accordance with the Escrow Agreement, this Agreement and the Transition
Services Agreement; and
(d) each Party shall deliver, or cause to be delivered, to the other any other documents
reasonably requested by such other Party in order to effect, or evidence the consummation of,
the transactions contemplated herein.
(e) Purchasers Deliveries. The Purchaser shall deliver or cause to be delivered to the
Sellers:
(i) an assumption agreement, in form mutually acceptable to the Primary
Parties, pursuant to which the Purchaser shall assume the Assumed Liabilities, duly
executed by the Purchaser;
57
(ii) a certificate, in form reasonably acceptable to the Sellers, executed by a
duly authorized senior officer of the Purchaser certifying that the conditions set
forth in Section 9.2(a) and Section 9.2(b) have been satisfied;
(iii) executed counterparts of each Ancillary Agreement to be entered into at
Closing;
(iv) such other assignments and other good and sufficient instruments of
assumption and transfer, in form reasonably acceptable to the Sellers, as the
Sellers may reasonably request to transfer and assign the Assumed Liabilities to the
Purchaser;
(v) in respect of the Montreal Premises, (X) such agreements or other
instruments in respect of the Montreal Premises as are required to effect the
transactions contemplated by Article I of the Real Estate Terms and Conditions
consistent with the Purchasers decision relating thereto, together with, if
applicable based upon the decision not to receive an assignment of and assume the
Montreal Premises Amended Lease, (Y) the Montreal Lease Termination Penalty payable
to NNL, or if directed by NNL, to the Montreal Landlord in accordance with the Real
Estate Terms and Conditions. For the avoidance of doubt, any such amount shall not
be construed or deemed to constitute any portion of the Purchase Price; and
(vi) an irrevocable notice dated as of the Closing Date, in a form reasonably
acceptable to the Sellers, exercising the call option with respect to each Demand
Note issued by the Purchaser, a Designated Purchaser or an EMEA Designated
Purchaser.
(f) Sellers Deliveries. The Sellers shall deliver or cause to be delivered to the
Purchaser:
(i) one or more bills of sale and/or deeds of transfer, in form reasonably
acceptable to the Purchaser, duly executed by the applicable Sellers;
(ii) executed counterparts of each Ancillary Agreement to be entered into at
Closing;
(iii) one or more instruments of assignment, in form reasonably acceptable to
the Purchaser, duly executed by the applicable Sellers, with respect to assignment
and transfer of the Assets, together with executed Consents from landlords in
respect of Leases forming part of the Assigned Contracts, and such other documents
relating to such Consents required from such landlords;
(iv) a certificate, in form reasonably acceptable to the Purchaser, executed by
a duly authorized senior officer of each Main Seller certifying that the conditions
set forth in Section 9.3(a) and Section 9.3(b) have been satisfied;
58
(v) copies of the U.S. Sale Order and the Canadian Approval and Vesting Order;
(vi) the Sellers shall deliver an affidavit of NNI and Nortel Networks (CALA)
Inc. certifying as to their non-foreign status, which affidavit complies with the
requirements of Section 1445 of the Code;
(vii) NNL and NNC shall each deliver, in form reasonably acceptable to the
Purchaser, an original, valid, complete, correct and properly executed IRS Form
W-8BEN with Part II completed claiming entitlement to the benefits under Article XII
of the income tax treaty between the United States and Canada;
(viii) such other bills of sale, deeds, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer, in form reasonably
satisfactory to the Purchaser, as the Purchaser may reasonably request to vest in
the Purchaser all the right, title and interest of the Sellers in, to or under any
or all the Assets; and
(ix) such agreements or other instruments in respect of the Montreal Premises
as are required to effect the Purchasers decision contemplated by the Real Estate
Terms and Conditions with respect thereto.
SECTION 2.4. Designated Purchaser(s).
(a) The Purchaser shall be entitled to designate, in accordance with the terms and subject
to the limitations set forth in this Section 2.4, one or more wholly-owned Subsidiaries to (i)
purchase specified Assets (including specified Assigned Contracts), (ii) assume specified
Assumed Liabilities, (iii) employ specified Transferred Employees on and after the Closing Date
and/or (iv) to be made a party to any Real Estate Agreement (any Subsidiary of the Purchaser
that shall be properly designated by the Purchaser in accordance with this clause, a
Designated Purchaser); it being understood and agreed, however, that any such right of the
Purchaser to designate a Designated Purchaser is conditioned upon (x) such Designated Purchaser
being able to perform the covenants under Section 2.1.7 and Article VII and demonstrate
satisfaction of the requirements of Section 365 of the U.S. Bankruptcy Code, including the
provision of adequate assurance for future performance, with respect to the Assumed and
Assigned Contracts and (y) any such designation not creating any net Liability (including any
Liability relating to Taxes other than Taxes for which Purchaser is liable pursuant to Article
VI and taking into account any savings of, or reduction in Taxes of any Seller or its
Affiliates that would result from the use of such Designated Purchaser) for the Sellers or
their Affiliates that would not have existed had the Purchaser purchased the Assets. No such
designation shall relieve the Purchaser of any of its obligations hereunder, and the Purchaser
and each Designated Purchaser shall be jointly and severally liable for any obligations assumed
by any of them hereunder. For the avoidance of doubt, the Purchaser and each Designated
Purchaser shall not be liable for any Excluded Liabilities, including any Excluded Liabilities
for Taxes imposed on the Purchaser or a Designated Purchaser under applicable Law.
59
(b) The above designation shall be made by the Purchaser by way of one or more written
notices, together with corresponding updates to the list under the heading Designated
Purchasers in Exhibit 2.1.1, to be delivered to the Sellers with respect to each jurisdiction,
on or before the date necessary to comply with any regulatory requirements or the Purchasers
obligations under this Agreement, in each case without resulting in any material delay to the
Closing (but in no event later than fifteen (15) Business Days before the Closing Date), which
written notice shall contain the legal name of the Designated Purchaser, the jurisdiction of
its incorporation or formation and the actual (and if there is any intention to change such
residence on or prior to Closing, proposed) jurisdiction of Tax residence and shall indicate
which Assets, Assumed Liabilities and Transferred Employees the Purchaser intends such
Designated Purchaser(s) to purchase, assume and/or employ, as applicable, hereunder (to the
extent such information necessary to comply with the obligation under this subsection (b) is
actually available or has been made available to the Purchaser), and include a signed
counterpart to this Agreement in a form acceptable to the Main Sellers, agreeing to be bound by
the terms of this Agreement and authorizing the Purchaser to act as such Designated
Purchaser(s) agent for all purposes hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 3.1. Organization and Corporate Power.
(a) The Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. Each Designated Purchaser other than the Purchaser is
duly organized, validly existing and in good standing under the Laws of the jurisdiction in
which it is organized. Each of the Purchaser and the Designated Purchasers has the requisite
corporate or other organizational power and authority necessary to enter into, deliver and
perform its obligations pursuant to each of the Transaction Documents to which it is or will
become a party and to consummate the transactions contemplated thereby.
(b) Each of the Designated Purchasers is duly qualified or licensed to do business and to
own or lease and operate its properties and assets, including the Assets, and is in good
standing as applicable in each jurisdiction in which the nature of its properties or the
character of its business requires it to so qualify or be licensed, except to the extent that
the failure to be so qualified or licensed would not materially hinder, delay or impair the
Purchasers or any such Designated Purchasers ability to carry out its obligations under, and
to consummate the transactions contemplated by, this Agreement and the Ancillary Agreements to
which it is or will become a party.
SECTION 3.2. Authorization; Binding Effect; No Breach.
(a) The execution, delivery and performance of each Transaction Document to which the
Purchaser or any of the Designated Purchasers is a party and the consummation of the
transaction contemplated thereby have been duly and validly authorized by all corporate or
other organizational action by the Purchaser and the relevant
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Designated Purchasers, as applicable. This Agreement has been duly and validly executed
and delivered by the Purchaser and each other Transaction Document required to be executed and
delivered by the Purchaser or a Designated Purchaser at the Closing will be duly and validly
executed and delivered by the Purchaser or such Designated Purchaser, as applicable, at the
Closing. This Agreement and the other Transaction Documents constitute, with respect to the
Purchaser or Designated Purchaser that is a party thereto, a legal, valid and binding
obligation of the Purchaser or such Designated Purchaser, as applicable, enforceable against
such Person in accordance with its respective terms.
(b) The execution, delivery and performance by each of the Purchaser and the Designated
Purchasers of the Transaction Documents to which the Purchaser or such Designated Purchaser is,
or on the Closing Date will be, a party and the consummation of the transactions contemplated
thereby do not and will not conflict with or result in a breach of the terms, conditions or
provisions of, constitute a default under, result in a violation of, or require any Consent
(other than the Regulatory Approvals and the Bankruptcy Consents) or other action by or
declaration or notice to any Person pursuant to (i) the articles, charter, by-laws or other
governing documents of the Purchaser or the relevant Designated Purchaser, (ii) any agreement,
indenture or other instrument to which the Purchaser or the relevant Designated Purchaser is
bound or (iii) any Laws to which the Purchaser, the Designated Purchaser, or any of their
assets is subject, except in the case of (ii) and (iii) above to the extent that the failure to
be so qualified or licensed would not, individually or in the aggregate, materially hinder,
delay or impair the Purchasers or any such Designated Purchasers ability to carry out its
obligations under, and to consummate the transactions contemplated by, this Agreement and the
Ancillary Agreements to which it is or will become a party.
SECTION 3.3. Availability of Funds. The Purchaser has as of the date hereof, and
will have as of the Closing, sufficient funds to enable the Purchaser to pay the Base Cash Purchase
Price in full at Closing and all related fees and expenses.
SECTION 3.4. Adequate Assurance of Future Performance. To the extent required by any
Bankruptcy Laws or other Laws, the Purchaser will be able to provide, at Closing or on such earlier
date as is designated by the U.S. Bankruptcy Court, adequate assurance of its and/or the relevant
Designated Purchasers future performance under each Assumed and Assigned Contract to the parties
thereto (other than the U.S. Debtors) in satisfaction of Section 365(f)(2)(B) of the U.S.
Bankruptcy Code, and no other or further assurance will be necessary thereunder with respect to any
Assumed and Assigned Contract.
SECTION 3.5. Purchasers Acknowledgments; Exclusivity of Representations and
Warranties. The Purchaser acknowledges and agrees that:
(a) The Purchaser is experienced and sophisticated with respect to transactions of the
type contemplated by this Agreement and the other Transaction Documents. In consultation with
experienced counsel and advisors of its choice, the Purchaser has conducted its own independent
review and analysis of the Business, the Assets, the EMEA Assets, the Assumed Liabilities, the
EMEA Assumed Liabilities and the rights and obligations it is acquiring and assuming under this
Agreement and the other Transaction Documents. The Purchaser acknowledges that it and its
representatives have
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been permitted such access to the books and records, facilities, equipment, contracts and
other properties and assets of the Business as it has requested to complete its review, and
that it and its representatives have had an opportunity to meet with the officers and other
employees of the Sellers, the EMEA Sellers and the Business to discuss the Business.
(b) The Purchaser acknowledges and agrees that:
(i) except for the representations and warranties expressly set forth in this
Agreement and the other Transaction Documents, the Purchaser has not relied on any
representation or warranty from the Sellers, the EMEA Sellers or any Affiliate of
any such Person or any employee, officer, director, accountant, financial, legal or
other representative of the Sellers or the EMEA Sellers in determining whether to
enter into this Agreement;
(ii) except for the representations and warranties expressly set forth in this
Agreement and the other Transaction Documents, none of the Sellers, the EMEA Sellers
or any employee, officer, director, accountant, financial, legal or other
representative of the Sellers, the EMEA Sellers or any Affiliate of any such Person
has made any representation or warranty, express or implied, as to the Business (or
the value or future thereof), the Assets or the EMEA Assets (including any implied
representation or warranty as to the condition, merchantability, suitability or
fitness for a particular purpose of any of the Assets or the EMEA Assets, including
under the International Convention on Contracts for the Sale of Goods (Geneva
Convention)) and any other applicable sale of goods Laws), the Assumed Liabilities,
the EMEA Assumed Liabilities or any Affiliate of any such Person or the accuracy or
completeness of any information regarding any of the foregoing that the Sellers, the
EMEA Sellers or any other Person furnished or made available to the Purchaser and
its representatives (including any projections, estimates, budgets, offering
memoranda, management presentations or due diligence materials);
(iii) except for the representations and warranties expressly set forth in this
Agreement and the other Transaction Documents, and subject to the terms of the
Bankruptcy Consents, the Purchaser or any Designated Purchaser takes the Assets on
an as is and where is basis;
(iv) the enforceability of this Agreement against the Sellers is subject to
receipt of the Bankruptcy Consents; and
(v) notwithstanding anything to the contrary contained herein, the Purchasers
obligations to consummate the transactions contemplated by this Agreement are not
conditioned or contingent in any way upon the receipt of financing from any Person.
(c) Except for the representations and warranties expressly set forth in this Agreement
and the other Transaction Documents, THE PURCHASER ACKNOWLEDGES THAT THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES OF NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS,
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OR REGARDING THE SCOPE, VALIDITY OR ENFORCEABILITY OF ANY TRANSFERRED INTELLECTUAL
PROPERTY OR LICENSED INTELLECTUAL PROPERTY RIGHTS.
SECTION 3.6. Brokers. Except for fees and commissions or other similar payments that
will be paid or otherwise settled or provided for by the Purchaser, no broker, finder, agent or
investment banker is entitled to any brokerage, finders or other similar fee or commission in
connection with the transactions contemplated by this Agreement and the other Transaction Documents
based upon arrangements made by or on behalf of the Purchaser or any of its Affiliates for which
the Sellers are or will become liable, and the Purchaser shall indemnify and hold harmless the
Sellers from any claims with respect to any such fees and commissions.
SECTION 3.7. Representations and Warranties Relating to the Shares.
(a) As of October 31, 2009, the authorized capital stock of the Purchaser consists of
290,000,000 shares of common stock, of which 92,038,360 shares are issued and outstanding and
20,000,000 shares of preferred stock, of which no shares are issued and outstanding. As of
October 31, 2009, except for 5,538,342 shares issuable under outstanding stock options,
3,716,169 restricted stock units outstanding, 3,469,262 shares reserved for issuance under
stock purchase plans and 20,647,130 shares reserved for issuance in connection with convertible
notes, there are no options, warrants or other agreements obligating the Purchaser to issue or
sell any shares of capital stock of, or other equity interests in the Purchaser. Except as
disclosed in the SEC Filings, there are no outstanding obligations of the Purchaser to
repurchase, redeem or otherwise acquire any shares of its capital stock. All of the issued and
outstanding shares of capital stock of the Purchaser have been duly authorized and validly
issued in accordance with applicable Laws and are fully paid and non-assessable and not subject
to preemptive rights. Except for (i) the $500,000,000 principal amount of 0.875% convertible
notes due June 15, 2017, (ii) the $298,000,000 principal amount of 0.25% convertible senior
notes due May 1, 2013, (iii) other Indebtedness which does not exceed $50,000,000, individually
or in the aggregate, disclosed in the SEC Filings, and (iv) other Indebtedness incurred in the
ordinary course of business since July 31, 2009 which does not exceed $10,000,000, individually
or in the aggregate, as of the date hereof, the Purchaser has no outstanding Indebtedness that
is senior to, or pari passu with, the Convertible Notes.
(b) The issued and outstanding shares of common stock of the Purchaser are listed for
trading solely on the NASDAQ Stock Market, and no order ceasing or suspending trading in any
securities of the Purchaser has been issued and, to the Knowledge of the Purchaser, no
proceedings for such purpose are threatened or pending.
(c) All of the Shares will be, when issued, duly authorized, validly issued, fully paid
and non-assessable, free and clear of all Liens and not subject to any pre-emptive rights or
restrictions on transfer (other than restrictions arising under U.S. securities Laws or the
securities Laws of any state of the United States or any other jurisdiction), and prior to the
Closing Date the Purchaser shall have reserved for issuance such number of shares of Common
Stock as are issuable upon conversion of the Convertible Notes. None of the Purchaser or any
of its affiliates (as defined in Rule 501(b) of Regulation D (Regulation D) under the
Securities Act) has, directly or through an agent, engaged in any
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form of general solicitation or general advertising (as those terms are used in Regulation
D) in connection with the offering of the Convertible Notes or the Shares under the Securities
Act or in any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act; the Purchaser has not entered into any contractual arrangement with respect to
the distribution of the Convertible Notes or the Shares except for this Agreement; and the
Purchaser will not enter into any such arrangement, except in connection with a capital raising
transaction to generate proceeds to exercise the Cash Replacement Election or otherwise as
contemplated by Article VIII.
(d) The Purchaser does not have a shareholder rights plan or poison pill or similar
plan.
(e) The Purchaser is a well-known seasoned issuer (as defined in Rule 405 under the
Securities Act), including not being an ineligible issuer (as defined in Rule 405 under the
Securities Act). The Purchaser is eligible to file an automatic shelf registration statement.
(f) The Purchaser is not a reporting issuer as such term is defined in the Securities
Act (Ontario) or the equivalent under securities legislation in any other province or territory
of Canada and to the Knowledge of the Purchaser, after giving effect to the issue of the
Shares, residents of Canada do not own directly or indirectly more than ten percent (10%) of
the outstanding shares of Common Stock of the Purchaser and do not represent in number more
than ten percent (10%) of the total number of owners directly or indirectly of the outstanding shares of Common Stock of the Purchaser.
(g) The Purchaser has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission (the SEC)
during the period since November 1, 2008 through and including the date hereof (such reports,
schedules, forms, statements and other documents together with any documents furnished during
such period by the Purchaser to the SEC on a voluntary basis on Current Reports on Form 8-K but
excluding any exhibits required to be filed with any of the foregoing in accordance with Item
601 of Regulation S-K, the SEC Filings). As of its filing date, each SEC Filing (i) complied
in all material respects with the applicable requirements of the Exchange Act, and (ii) did
not, at the time they were filed, contain any untrue statements of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were made, not
misleading. As of the date hereof, there are no outstanding or unresolved comments from the
staff of the SEC with respect to any of the SEC Filings. Each of the financial statements
(including the related notes) of the Purchaser included or incorporated by reference in the SEC
Filings were prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC and the requirements of Regulation S-X under
the Securities Act) and each fairly presents, in all material respects, the consolidated
financial position of the Purchaser and its consolidated Subsidiaries as of the respective
dates thereof and their consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and recurring year-end audit
adjustments and the absence of footnotes). To the extent required, each SEC Filing filed with
the SEC by the Purchaser
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during the twelve (12) month period prior to the date hereof, was accompanied by the
certifications required to be filed or submitted by the Purchasers chief executive officer and
chief financial officer pursuant to the Sarbanes-Oxley Act of 2002.
(h) The Purchaser maintains a system of internal control over financial reporting (within
the meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act) designed to provide
reasonable assurances regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
(i) The Purchaser shall not, and shall cause its affiliates (as defined in Rule 405 under
the Securities Act) not to, purchase, resell or otherwise transfer any Convertible Notes unless
and until the Convertible Notes are Freely Tradeable.
(j) The issuance of the Convertible Notes and the Shares will not require the approval of
shareholders or any securityholders of the Purchaser pursuant to NASDAQ Listing Rule 5635 or
require any other action or consent pursuant to any applicable exchange rules, regulations,
interpretations or Laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except (a) for disclosure in any section of the Sellers Disclosure Schedule of any facts or
circumstances, whether or not such disclosure is specifically associated with or purports to
respond to one or more of such representations or warranties, if it is reasonably apparent on its
face from the Sellers Disclosure Schedule that such disclosure is applicable, (b) as expressly
contemplated by this Agreement or (c) other than with respect to Section 4.7, to the extent
relating to the Excluded Assets or the Excluded Liabilities, each of the Main Sellers jointly and
severally represents and warrants to the Purchaser as set forth in this Article IV:
SECTION 4.1. Organization and Corporate Power.
(a) Each Seller is duly organized, validly existing and in good standing under the Laws of
the jurisdiction in which it is organized. Subject to entry of the U.S. Bidding Procedures
Order and the U.S. Sale Order in the case of the U.S. Debtors and the Canadian Sales Process
Order and Canadian Approval and Vesting Order in the case of the Canadian Debtors and receipt
of such other Consents from the U.S. Bankruptcy Court and the Canadian Court in connection with
the transactions contemplated hereby and by the other Transaction Documents (collectively, the
Bankruptcy Consents), each of the Sellers has the requisite corporate or other organizational
power and authority necessary to enter into, deliver and perform its obligations pursuant to
each of the Transaction Documents to which it is or will become a party and to consummate the
transactions contemplated thereby.
(b) Each of the Sellers is duly qualified or licensed to do business and to own or lease
and operate its properties and assets, including the Assets, as applicable in each jurisdiction
in which the nature of its properties or the character of its business relating to the Business
(excluding the EMEA Business) requires it to so qualify or be licensed, except
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to the extent that the failure to be so qualified would not have, or reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.2. Authorization; Binding Effect; No Breach.
(a) Subject to the Bankruptcy Consents, the execution, delivery and performance of this
Agreement and such other Transaction Documents by each Seller and the consummation by such
Seller of the transactions contemplated herein and therein have been duly and validly
authorized by all corporate or other organizational action by such Seller. This Agreement has
been duly and validly executed and delivered by each Seller and each other Transaction Document
required to be executed and delivered by a Seller at the Closing will be duly and validly
executed and delivered by such Seller at the Closing. Subject to the Bankruptcy Consents, and
assuming the due authorization, execution and delivery by the Purchaser, this Agreement and the
other Transaction Documents constitute, with respect to each Seller that is party thereto, a
legal, valid and binding obligation of such Seller enforceable against it in accordance with
its terms.
(b) The execution, delivery and performance by each Seller of the Transaction Documents to
which such Seller is, or on the Closing Date will be, a party and the consummation of the
transactions contemplated thereby do not and will not conflict with or result in a breach of
the terms, conditions or provisions of, result in a loss of benefits or constitute a default
under, result in a violation of, result in the creation or imposition of any Lien upon any of
the Assets, cause any acceleration of or give any Person the right to accelerate any obligation
of such Seller under, or require any Consent (other than the Regulatory Approvals and the
Bankruptcy Consents) or other action by or declaration, filing or notice to any Person pursuant
to (i) the articles, charter, by-laws or other governing documents of any Seller, (ii) any
agreement, indenture, or other instrument to which any Seller is a party or to which any of its
assets is subject or (iii) any Laws to which any of the Sellers or any of the Assets are
subject, except, in the case of (ii) and (iii) above, for such defaults, violations, actions
and notifications that would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 4.3. Title to Tangible Assets; Sufficiency of Assets.
(a) Except for Permitted Encumbrances, the Owned Inventory and the Owned Equipment is
owned beneficially by one or more of the Sellers, free and clear of all Liens, and those
Sellers have good and marketable title thereto.
(b) All tangible assets included in the Assets are in satisfactory operating condition for
the uses to which they are being put, subject to ordinary wear and tear and ordinary
maintenance requirements, except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(c) Assuming the assignment or novation of all Seller Contracts and all Non-Assignable
Contracts to the Purchaser or a Designated Purchaser, the Assets, the EMEA Assets and the
rights of, or to be acquired by, the Purchaser and/or the Designated Purchasers under this
Agreement and the EMEA Asset Sale Agreement, together with the rights to be provided to the
Purchaser and/or the Designated Purchasers under the other
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Transaction Documents, considered together, include such material assets and material
rights (other than Inbound License Agreements and Patent Cross Licenses set forth on Section
4.3(c)(i) of the Sellers Disclosure Schedule) as are necessary and sufficient to conduct the
Business substantially in the manner conducted as of the date hereof other than (x) those
assets and rights that are used to provide the Overhead and Shared Services and are not
otherwise used in the Business and (y) those assets and rights disclosed on Section 4.3(c)(ii)
of the Sellers Disclosure Schedule. For the avoidance of doubt, any effects arising from or
out of the failure of the Purchaser to hire all of the Employees will not, or be deemed to,
constitute a breach of this Section 4.3(c).
SECTION 4.4. Material Contracts.
(a) Section 4.4(a) of the Sellers Disclosure Schedule sets forth, as of the date hereof:
(i) in respect of any customer of the Business which, in the most recent
completed fiscal year of the Main Sellers resulted in, or is reasonably expected by
the Main Sellers in 2009 to result in, the payment to or receipt by the Business of
more than $10,000,000 per annum from such customer taken on an aggregate basis, a
true and complete list of every written contract with such customer (other than
purchase orders issued thereunder) that relates to the Business and to which a
Seller is a party; and
(ii) in respect of any supplier of the Business which, in the most recent
completed fiscal year of the Main Sellers resulted in, or is reasonably expected by
the Main Sellers in 2009 to result in, the payment by the Business of more than
$10,000,000 per annum to such supplier, taken on an aggregate basis, a true and
complete list of every written contract with such supplier (other than purchase
orders issued thereunder) that relates to the Business and to which a Seller is a
Party.
(b) Section 4.4(b) of the Sellers Disclosure Schedule sets forth, as of the date hereof, a
true and complete list of every Seller Contract, in each case other than purchase orders and
invoices (which shall be deemed to be a part of the Seller Contract under which such purchase
order or invoice is issued) that:
(i) in respect of the Business, is (x) a non-competition agreement or other
agreement which otherwise materially restricts the Seller party thereto from
engaging in any business activity anywhere in the world or (y) an exclusive
distribution agreement (whether such agreement is exclusive by geography, product
type or otherwise);
(ii) creates a material joint venture or partnership in respect of the Business
or which otherwise involves the sharing of profits, losses, costs or liabilities in
respect of the Business with any other Person;
(iii) is a research and development Contract that, in respect of the Business,
involves consideration or expenditures, in the most recent completed
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fiscal year of the Main Sellers (or is reasonably expected by the Main Sellers
under the terms of such Contract in 2009 to be) in excess of $2,000,000 or requiring
such expenditures of more than $2,000,000 in the aggregate after the date hereof;
(iv) is a distribution or reseller Contract that, in respect of the Business,
involves the sale or distribution of Products, in the most recent completed fiscal
year of the Main Sellers that is (or is reasonably expected by the Main Sellers
under the terms of such Contract in 2009 to be) valued at more than $10,000,000;
(v) is a distribution or reseller Contract that, in respect of the Business,
contains any express inventory repurchase requirement (whether contingent or
otherwise);
(vi) is a Contract between the Business and the Sellers or any of their
Affiliates (other than agreements related to Overhead and Shared Services or
agreements which will be terminated prior to or at Closing);
(vii) relates to Indebtedness (including personal property leases) in excess of
$1,000,000 to be assumed by the Purchaser or a Designated Purchaser;
(viii) has a take or pay or requirements provisions committing the Seller
party thereto to purchase, in respect of the Business, goods or services in excess
of $10,000,000 in 2009 or any calendar year thereafter;
(ix) contains any material obligation secured by a Lien on any material Asset
(other than a Permitted Encumbrance or any encumbrance that will be released prior
to or at Closing); or
(x) involves capital expenditures in respect of the Business in excess of
$2,000,000 after the date hereof.
The Customer Contracts and the Seller Contracts set forth in Section 4.4(a) and Section 4.4(b),
together with such Seller Contracts exclusive to the Business as are entered into, pursuant to
Section 5.9, after the date hereof that would have been required to be set forth in Section 4.4(a)
and Section 4.4(b) of the Sellers Disclosure Schedule had they been in effect as of the date
hereof, are collectively referred to in this Agreement as the Material Contracts.
(c) The Seller Contracts listed on Section 1.1(i) of the Sellers Disclosure Schedule
together with the Bundled Contracts listed in Section 5.15 of the Sellers Disclosure Schedule
include all of the customer and supplier Contracts of the Sellers that in the most recent
completed fiscal year of the Main Sellers resulted in, or is reasonably expected by the Main
Sellers under its terms in 2009 to result in, the payment or receipt by the Business of more
than $2,000,000 per annum in the aggregate.
(d) Other than with respect to Bundled Contracts, the Sellers have made available to the
Purchaser or its representatives pursuant to the clean team confidentiality agreement between
the Purchaser and its subsidiaries and NNL and its subsidiaries, dated
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April 15, 2009 and the second clean team confidentiality agreement between the Purchaser
and its subsidiaries and NNL and its subsidiaries, dated May 8, 2009, copies of all of the
Material Contracts in the Sellers possession which the Purchaser has requested (as such copies
exist in the Sellers contract database(s)) and the Sellers have no specific Knowledge that the
copies provided are incomplete in any material respect. With respect to Bundled Contracts, the
Sellers have made available to the Purchaser copies of such Bundled Contracts to the extent
that they relate to the Business which the Purchaser has requested (as such copies exist in the
Sellers contract database(s)) and the Sellers have no specific Knowledge that the copies
provided are incomplete in any material respect. Each Material Contract is in full force and
effect and is a legal, valid and binding obligation of each Seller party thereto and
enforceable against the Seller party thereto, and to the Knowledge of the Sellers, the other
parties thereto, in accordance with its terms and conditions, in each case except as such
enforceability may be limited by bankruptcy, insolvency or other similar Laws affecting the
enforcement of creditors rights generally (and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at Law).
(e) To the Knowledge of the Sellers, neither any Seller nor any other party thereto, is in
material violation, breach of or default under a Material Contract, and no event has occurred
that with notice or lapse of time, or both, would constitute a material violation, breach of or
default under a Material Contract by any Seller, or to the Sellers Knowledge, any other party
thereto. Except as disclosed in Section 4.4(a) or Section 4.4(b) of the Sellers Disclosure
Schedule, the Sellers (or any Affiliate of the Sellers other than the EMEA Sellers) have not
been notified in writing that any of them is in breach or default under any Material Contract,
nor have the Sellers or any of their respective Affiliates (other than the EMEA Sellers) been
notified in writing of such other partys intention to terminate any Seller Contract.
SECTION 4.5. Intellectual Property.
(a) The Transferred Intellectual Property, the Intellectual Property transferred by the
EMEA Asset Sale Agreement (the EMEA Intellectual Property), the Licensed Intellectual
Property and the Intellectual Property licensed to the Sellers and/or their Affiliates (other
than any joint venture between any Seller or EMEA Seller or their Affiliates and any Third
Party, whether or not such joint venture is controlled by the Sellers, the EMEA Sellers or
their Affiliates), including the EMEA Sellers, under the Inbound License Agreements and the
Patent Cross Licenses include all the material Intellectual Property owned or controlled by any
of the Sellers or EMEA Sellers or their respective Affiliates (other than any joint venture
between any Seller or EMEA Seller or their Affiliates and any Third Party, whether or not such
joint venture is controlled by the Sellers, the EMEA Sellers or their Affiliates) that covers
or is used in connection with the conduct and operation of the Business, except any
Intellectual Property included in Overhead and Shared Services. No Seller or EMEA Seller
licenses or uses any Intellectual Property that is owned or licensed by any joint venture
between any Seller or EMEA Seller and any Third Party and that is material to the Business
other than any Intellectual Property that will be licensed to Purchaser at the Closing pursuant
to the Intellectual Property License Agreement. For the purposes of this Section 4.5,
controlled has the meaning set forth in the Intellectual Property License Agreement.
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(b) An accurate, true and complete list of all the Transferred Intellectual Property
registered in the name of the Sellers is set forth in Section 4.5(b) of the Sellers Disclosure
Schedule. To the Knowledge of the Sellers, the EMEA Sellers do not have any Patents or
Trademarks or other Intellectual Property registered in their names that are included in either
Transferred Intellectual Property or Licensed Intellectual Property.
(c) The list identified in Section 4.5(b) of the Sellers Disclosure Schedule will include:
(1) for each issued Patent and Patent application, the Patent number or application serial
number for each jurisdiction in which such Patent is filed, and date issued and filed; (2) for
each registered Trademark, the application serial number or registration number, by country,
province and state; (3) for any Domain Names, the registration date and name of registry; and
(4) for each copyright registration or application, the number and date of such registration or
application by country, province and state.
(d) To the Knowledge of the Sellers, the Transferred Intellectual Property and EMEA
Intellectual Property that is material to the Business is subsisting and in full force and
effect. The foregoing will not be construed as a warranty that any Patent or Trademark will
issue or be registered based on any application.
(e) The Transferred Intellectual Property and EMEA Intellectual Property are not subject
to any Liens other than Permitted Encumbrances. The Sellers own all right, title, and interest
in and to each item of Transferred Intellectual Property and the EMEA Sellers own all right,
title, and interest in and to each item of EMEA Intellectual Property. To the Knowledge of the
Sellers, none of the Transferred Intellectual Property or EMEA Intellectual Property is subject
to any outstanding order, judgment or stipulation restricting the use, transfer or exploitation
thereof by the Sellers and their Affiliates in any material respect.
(f) To the Knowledge of the Sellers, the Sellers and their Affiliates and the EMEA Sellers
hold sufficient rights in the Licensed Intellectual Property to grant the licenses of the
Licensed Intellectual Property contemplated to be granted by the Sellers and their Affiliates
and the EMEA Sellers in the Intellectual Property License Agreement.
(g) The Sellers have no Knowledge that any Third Party infringes upon, misappropriates or
violates the Transferred Intellectual Property.
(h) To the Knowledge of the Sellers, except as set forth in Section 4.5(h) of the Sellers
Disclosure Schedule, no Seller or EMEA Seller has received any written assertions since January
1, 2007 that (i) any Sellers or its Affiliates (including any EMEA Seller or its Affiliates)
operations of the Business, including such Sellers or its Affiliates (including any EMEA
Seller or its Affiliates) use, performance, licensing, copying, distribution, sale, offer for
sale, lease, manufacture, having made, importation, or any other exploitation of the Products
sold by the Business or of the Services rendered by the Business infringes, misappropriates or
violates in any material respect any Intellectual Property right or moral right of any Third
Party; or (ii) the use or exploitation of any of Transferred Intellectual Property or EMEA
Intellectual Property infringes or violates in any material respect any Intellectual Property
of or was misappropriated from a Third Party.
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(i) To the Knowledge of the Sellers, as of the date hereof, there has been no assertion or
claim made in writing to the Sellers or their Affiliates or the EMEA Sellers or their
Affiliates since January 1, 2007 asserting invalidity, misuse or unenforceability of any
Transferred Intellectual Property or EMEA Intellectual Property or challenging the Sellers or
their Affiliates (including any EMEA Seller or its Affiliates) right to use, right to
transfer, or ownership of any Transferred Intellectual Property or EMEA Intellectual Property;
in each case, excluding any such assertions or claims that would not reasonably be expected to
result in any invalidity, unenforceability, loss or other material impairment of any rights or
interest in the subject Intellectual Property.
(j)
(i) To the Knowledge of the Sellers, Section 4.5(j)(i) of the Sellers
Disclosure Schedule sets forth a complete and accurate list of all Patent Cross
Licenses, indicating for each Patent Cross License, the title and the parties
thereto, except to the extent a Patent Cross License prohibits disclosure of its
existence without consent of the relevant Third Party, which consent the Sellers
were unable to reasonably obtain, in which case such Patent Cross License has been
omitted from Section 4.5(j)(i) of the Sellers Disclosure Schedule (an Omitted
Patent Cross License). No royalties or other amounts are due or payable by or on
behalf of Nortel under any such Omitted Patent Cross Licenses, nor will any such
royalties or other amounts be due or payable by Purchaser under any Omitted Cross
License in connection with entering into this Agreement.
(ii) To the Knowledge of the Sellers, Section 4.5(j)(ii) of the Sellers
Disclosure Schedule sets forth a complete and accurate list of all material
Contracts (other than Patent Cross Licenses) granting to the Sellers or any of their
Affiliates or the EMEA Sellers or their Affiliates any license under or to any
Intellectual Property owned by a Third Party that is, as of the date hereof,
incorporated in or used in connection with the design, development, testing,
manufacturing, sale, distribution, support or servicing of any Products or the
provision of Services (collectively, the Inbound License Agreements), indicating
for each Inbound License Agreement whether such Contract is included in the
definition of Seller Contracts hereunder, and the title and the parties thereto.
(iii) To the Knowledge of the Sellers, Section 4.5(j)(iii) of the Sellers
Disclosure Schedule sets forth a complete and accurate list of all Contracts in
effect (other than (x) Patent Cross Licenses, (y) non-exclusive object code licenses
granted to end users or other purchasers of Products or non-exclusive licenses
granted by the Sellers or their Affiliates or the EMEA Sellers to customers,
distributors or suppliers in connection with the manufacture or sale of products or
Services and (z) any non-exclusive license granted to any purchaser of any
subsidiary or assets of a business unit of the Sellers, the EMEA Sellers or their
respective Affiliates the sale of which was consummated prior to January 1, 2007)
under which the Sellers or their Affiliates or the EMEA Sellers or their Affiliates
grant a license to a Third Party under Transferred Intellectual Property
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(collectively, the Outbound License Agreements), indicating the title and the
parties thereto.
(iv) To the Knowledge of the Sellers, there is no outstanding dispute or
disagreement with respect to (1) any Inbound License Agreement, (2) any Outbound
License Agreement or (3) any Patent Cross License, in each case, that materially
affects any of the Intellectual Property rights granted to the Purchaser herein. To
the Knowledge of the Sellers, the Sellers have made available to Purchaser or its
counsel true and complete copies of each Inbound License Agreement, Outbound License
Agreement and Patent Cross License (excluding Omitted Patent Cross Licenses).
(k) To the Knowledge of the Sellers, Section 4.5(k) of the Sellers Disclosure Schedule
sets forth a true and complete list of any Open Source Software incorporated into any of the
Products and describes (i) the specific Open Source Software used, (ii) the specific Open
Source Software version, (iii) the licensor(s) of the specific Open Source Software, and (iv)
the Products or portions thereof into which such Open Source Software is incorporated.
(l) To the Knowledge of the Sellers, the conduct of the Business, including the design,
development, testing, manufacturing, sale, distribution, support or servicing of any Products
or the use or exploitation of any Transferred Intellectual Property, EMEA Intellectual Property
or Licensed Intellectual Property or the provision of any Services by any Seller or its
Affiliates or the EMEA Sellers or their Affiliates in connection with any of the foregoing,
does not infringe upon, misappropriate or otherwise violate in any material respect any
Intellectual Property of any Third Party.
(m) Notwithstanding any provision herein to the contrary, this Section 4.5 consists of the
sole representation and warranty in this Agreement regarding non-infringement, non-violation
and non-misappropriation of Intellectual Property.
SECTION 4.6. Litigation. As of the date hereof, except for the Bankruptcy
Proceedings and except as set forth in Section 4.6 of the Sellers Disclosure Schedule, there is no
Action pending or, to the Knowledge of the Sellers, threatened before any Government Entity or
arbitration tribunal against any Seller involving the Business (excluding the EMEA Business) or the
Assets or that seeks to restrain or prohibit or otherwise challenge the consummation, legality or
validity of the transactions contemplated hereby or that has had, or otherwise would reasonably be
expected to have a Material Adverse Effect. To the Knowledge of the Sellers, except for the
Bankruptcy Proceedings, there is no outstanding Order to which the Sellers are subject in respect
of the Business (excluding the EMEA Business) or the Assets, nor are any of the Sellers in default
with respect to any such Order.
SECTION 4.7. Financial Statements. Section 4.7 of the Sellers Disclosure Schedule
sets forth the unaudited combined (i) balance sheet of the Business as of December 31, 2008 (the
Balance Sheet Date) and December 31, 2007, (ii) statements of earnings and cash flows of the
Business for each of the fiscal years ended December 31, 2008 and December 31, 2007, (iii) balance
sheet of the Business as of June 30, 2009 and (iv) statements of earnings and cash flows of the
Business for the six (6) months ended June 30, 2009 (collectively, the
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Financial Statements). The Financial Statements were prepared in accordance with GAAP
(subject to normal year-end adjustments, the effect of which are not material in nature, and except
for the omission of certain footnotes and other presentation items required by GAAP with respect to
audited financial statements) using the Nortel Accounting Principles, and fairly present in all
material respects the combined financial position, results of operations and cash flows of the
Business as of the date thereof and for the periods covered thereby.
SECTION 4.8. Compliance with Laws; Consents.
(a) Except as set forth in Section 4.8 of the Sellers Disclosure Schedule, no Seller is in
violation of any Law applicable to the operation of the Business or the Assets, except for such
violations as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and none of the Sellers has received any written notice or written
claims from any Government Entity within the twelve (12) months preceding the date hereof
relating to any material non-compliance of the Business or the Assets with any applicable Law
nor are there, to the Knowledge of the Sellers, any such notice or claims threatened or
pending, except where such notices or claims would not, individually or in the aggregate,
materially hinder, delay or impair the performance by the Sellers of any of their obligations
under the Transaction Documents.
(b) (i) All of the Consents of Government Entities necessary for, or otherwise material
to, the conduct of the Business (excluding the EMEA Business) as conducted on the date hereof,
have been duly obtained and are in full force and effect and (ii) the relevant Sellers are in
compliance with the terms of each of such Consents, in each case except for such violations as
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. None of the Sellers has received any notice or written claims from any Government
Entity relating to any material non-compliance of the Business (excluding the EMEA Business) or
the Assets with such Consents nor are there, to the Knowledge of the Sellers, any such notice
or claims threatened or pending, except where such claims would not, individually or in the
aggregate, materially hinder, delay or impair the performance by the Sellers of any of their
obligations under the Transaction Documents.
SECTION 4.9. Real Property.
(a) Section 4.9(a)(i) of the Sellers Disclosure Schedule lists, as of the date hereof, all
real property which is owned by the Sellers in respect of which a real property lease or
license between the applicable Seller and the Purchaser or one or more Designated Purchasers
shall be entered into on Closing on terms set forth in the Real Estate Terms and Conditions
(collectively, the Owned Real Property). Section 4.9(a)(ii) of the Sellers Disclosure
Schedule lists, as of the date hereof, all leases, subleases, space licenses or other occupancy
agreements (collectively, Leases) of real property (the Leased Real Property) to be
assigned to the Purchaser or one or more Designated Purchasers on Closing on the terms set
forth in the Real Estate Terms and Conditions. Section 4.9(a)(iii) of the Sellers Disclosure
Schedule lists, as of the date hereof, those Leases in respect of which an Occupancy Agreement
is to be entered into on Closing on the terms set forth in the Real Estate Terms and Conditions
(collectively, the 6 Month Locations). Section 4.9(a)(iv) of the Sellers Disclosure Schedule
lists, as of the date hereof, those Leases in respect of which a short-term license is to be
entered into on Closing on the terms set forth
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in the Real Estate Terms and Conditions (collectively, the Short-Term Licensed Property
and together with the Owned Real Property, the Leased Real Property and the 6 Month Locations,
the Real Property). Section 4.9(a)(v) of the Sellers Disclosure Schedule lists, as of the
date hereof, those locations where any Owned Assets used in carrying the Business are located.
The Sellers have provided true, complete and correct copies of the Leases with respect to the
Real Property to the Purchaser, including any amendments thereto. There are no written or oral
subleases, licenses, concessions, occupancy agreements or other contractual obligations
granting to any other Person the right of use or occupancy of any part of the Real Property
which is occupied for purposes of the Business, or which will be occupied for purposes of the
Business on or after Closing in accordance with the segregation, consolidation and demising
plans contemplated by the Real Estate Terms and Conditions, save and except with respect to
such rights retained by the Sellers or granted to the purchasers of other Nortel business
segments which are co-located at such premises, the effect of which would not have a material
adverse effect on the lease, license or occupancy by the Purchaser or any Designated Purchaser
of such part of the Real Property to be occupied for the purposes of the Business.
(b) The Sellers have received all Consents that are necessary in connection with the Sellers
occupancy, ownership or leasing of the Real Property, and the present use of the Real Property by
the Sellers does not violate the Consents applicable thereto, except where the (A) failure to
receive or (B) violation of a Consent would not have a Material Adverse Effect.
(c) Except to the extent that any Cure Cost is payable with respect to any Lease with respect
to a breach of such Lease prior to the Petition Date, and except for the Bankruptcy Proceedings,
(i) no Seller is in material breach or default of its obligations under any Lease, (ii) no
condition exists that with notice or lapse of time or both would constitute a material default by
any Seller under any Lease and (iii) to the Knowledge of the Sellers, no other party to any Lease
is in breach or default thereunder, except in each case, as would not, individually or in the
aggregate, reasonably be expected to result in the termination of such Lease or otherwise have a
Material Adverse Effect.
(d) The Sellers have not received written notice of any threatened (i) condemnation,
eminent domain, expropriation or similar proceeding affecting the Real Property, (ii)
proceeding to change the zoning classification of any portion of the Real Property or (iii)
imposition of any special assessments for public betterments affecting the Real Property, which
in each of clauses (i), (ii) and (iii) would materially and adversely impact the use of the
Real Property for the purposes for which it is being used as of the date hereof.
SECTION 4.10. Labor and Employee Benefits Matters.
(a) Section 4.10(a)(i) of the Sellers Disclosure Schedule contains an accurate and
complete list, by country, of (i) all material Seller Employee Plans and (ii) all employment
agreements or other commitments for employment or engagement by the Sellers or their Affiliates
with respect to Employees that deviate in any material respect from the standard form offer
letter for the applicable jurisdiction or provide for retention, severance or change in control
payments or benefits to the Employees, excluding in each
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case Seller Employee Plans. The Sellers have provided the Purchaser with a true and
complete copy of the plan document or summary plan description of each material Seller Employee
Plan or, if such plan document or summary plan description does not exist, an accurate written
summary of such Seller Employee Plan. The Sellers have provided the Purchaser or its Affiliate
with a true and complete copy of the standard form (or where such individual agreement is
materially different from the standard form, the individual written agreement) of such
employment, retention, change in control or severance agreements between the Sellers (or any
Affiliate of Sellers (excluding EMEA Sellers)) and any Employee.
(b) The information contained in Section 4.10(b) of the Sellers Disclosure Schedule in
respect of the Employees (the Employee Information) is accurate in all material respects as
of the date hereof, and sets forth with respect to each Employee (except where that is not
permissible under applicable data privacy Laws): (i) unique identifier, (ii) service date,
(iii) job title/position, (iv) annual base salary and annual incentive plan target amount, (v)
work location, (vi) visa type, if any and expiry date, (vii) the applicable Collective Labor
Agreement, works council or other applicable labor organization, if any, (viii) leave status,
reason for the leave, the start date of the leave and expected return date, (ix) vacation
accrual rate, (x) status as full-time or part-time, (xi) home country of residence, (xii) Job
Complexity Indicator, (xiii) country of payroll, (xiv) sales indicator, (xv) Exempt/Non-Exempt
status (U.S. only), (xvi) payment currency, (xvii) department/function, to the extent
applicable, (xviii) work schedule and (xix) whether such Employee has any individual written
agreement that provides for length of notice or severance payment required to terminate his or
her employment in excess of that required by applicable Law or pursuant to a Seller Employee
Plan disclosed in Section 4.10(a)(i) of the Sellers Disclosure Schedule as a result of which
there could be a payment to such employee in excess of $50,000 in addition to such payment
required by applicable Law or such Seller Employee Plan.
(c) Except as set forth in Section 4.10(c) of the Sellers Disclosure Schedule, there has
not been for a period of twelve (12) consecutive months prior to the date hereof, nor is there
existent or, to the Sellers Knowledge, has there been threatened, any strike, material
grievance, slowdown, lockout, picketing or work stoppage against the Sellers by or on behalf of
the Employees.
(d) Section 4.10(d) of the Sellers Disclosure Schedule identifies and lists all of the
Collective Labor Agreements and works councils or similar labor organizations in effect with
respect to the Employees and in the case of Collective Labor Agreements that have expired,
whether notice to bargain has been given and the status of the bargaining process. For a
period of twelve (12) consecutive months prior to the date hereof, no petition has been filed
or proceedings instituted by a union, works council, collective bargaining agent, employee or
group of employees with any Government Entity seeking recognition of a collective bargaining
agent with respect to any Employees, and, to the Sellers Knowledge, no such organizational
effort is currently being made or has been threatened by or on behalf of any union, works
council, employee, group of employees or collective bargaining agent to organize any Employees.
The Sellers have provided the Purchaser with a true and complete copy of each Collective Labor
Agreement listed in Section 4.10(d) of the Sellers Disclosure Schedule.
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(e) There are no Transferred Employee Plans and, except as set forth in Section 4.10(e) of
the Sellers Disclosure Schedule, there are no Seller Employee Plans that are multiemployer
plans within the meaning of Section 3(37) of ERISA, and none of the Sellers or any of their
ERISA Affiliates has, within the past six (6) years, ever maintained, contributed to or
participated in, any such multiemployer plans.
(f) None of the Sellers or any of their Affiliates (excluding the EMEA Sellers) have, with
respect to the Business, any Liability to provide retiree welfare benefits to any Person for
any reason, except as may be required by COBRA, a Seller Employee Plan listed in Section
4.10(a)(i) of the Sellers Disclosure Schedule or applicable Law.
SECTION 4.11. Brokers. Except for fees and commissions or other similar payments
that will be paid or otherwise settled or provided for by the Sellers, no broker, finder, agent or
investment banker is entitled to any brokerage, finders or other similar fee or commission in
connection with the transactions contemplated by this Agreement and the other Transaction Documents
based upon arrangements made by or on behalf of the Sellers or any of their Affiliates for which
the Purchaser is or will become liable, and the Sellers shall indemnify and hold harmless the
Purchaser from any claims with respect to any such fees and commissions.
SECTION 4.12. Taxes. Except as set forth in the corresponding sections of the
Sellers Disclosure Schedules, if any, or with respect to any Taxes, Liens and Claims of the Sellers
that will be discharged on the Closing Date as provided for in the U.S. Sales Order and the
Canadian Approval and Vesting Orders;
(a) There are no Liens for Taxes on any Asset (other than Permitted Encumbrances).
(b) The Sellers have timely filed with the appropriate Tax Authorities all material Tax
Returns required to be filed with respect to the Assets and the Business (excluding the EMEA
Business) and all such Tax Returns are true, correct and complete in all material respects.
All material Taxes due and payable with respect to the Assets and the Business (excluding the
EMEA Business) have been timely paid.
(c) No deficiency for any material amount of Taxes has been claimed, proposed or assessed
by any Tax Authority against any Seller and there is no pending audit, examination or other
proceeding involving any Seller in respect of any material amount of Taxes, (i), in the case of
each Seller not listed on Section 4.12(c)(i) of the Sellers Disclosure Schedule, relating to
any Asset or the Business (excluding the EMEA Business) and (ii) in the case of each Seller
listed on Section 4.12(c)(ii) of the Sellers Disclosure Schedule, relating to each such Seller.
(d) No Seller has entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the assessment, payment or
collection of material Taxes relating to any Asset or the Business (excluding the EMEA
Business).
(e) None of the Assets located within the United States or which is owned by a U.S. Debtor
(i) is property required to be treated as being owned by another
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person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of
1986, (ii) constitutes tax-exempt use property within the meaning of Section 168(h)(1) of the
Code and (iii) is tax-exempt bond financed property within the meaning of Section 168(g) of
the Code.
(f) The Sellers have, in accordance with applicable Law, invoiced, collected, withheld,
reported and remitted to the appropriate Government Entity (within the time prescribed) all
material: (i) Transfer Taxes which are due and payable or collectible by the Sellers; (ii)
withholding, payroll or employment taxes, and other deductions at source as required by
applicable Law; and (iii) all non-resident withholding Taxes as required by applicable Law.
(g) Any Seller that is selling any Asset that constitutes taxable Canadian property as
defined under the Income Tax Act (Canada) is not a non-resident of Canada within the meaning of
the Income Tax Act (Canada).
(h) No Seller that is not a United States person, as such term is defined in Section
7701(a)(30) of the Code, is transferring pursuant to this Agreement any United States real
property interest, as such term is defined in Section 897(c)(1) of the Code.
SECTION 4.13. Environmental Matters. Except as disclosed in the Sellers Disclosure
Schedule, if any:
(a) The Business (excluding the EMEA Business) is and since January 1, 2005, has been in
material compliance with, all applicable Environmental Laws and all material licenses, permits
and approvals issued under Environmental Laws.
(b) All material licenses, permits and approvals required under Environmental Laws
required to own or operate the Business (excluding the EMEA Business) have been obtained, and
remain in full force and effect.
(c) None of the Sellers has received any written request for information, or been notified
in writing that it is a potentially responsible party, under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA), or any similar state,
local or foreign laws that relates in any respect to the Business (excluding the EMEA Business)
or any facility used by the Business (excluding the EMEA Business) as of the date hereof.
(d) There are no writs, injunctions, decrees, orders or judgments to which any of the
Sellers is a party that are outstanding, and there are no material actions, suits, claims,
orders, proceedings or investigations to which any of the Sellers is a party that are pending
or, to the Knowledge of the Sellers, threatened, relating to the compliance of the Sellers
with, or the liability of the Sellers under, any Environmental Laws in connection with the
Business (excluding the EMEA Business) or any facility used by the Business (excluding the EMEA
Business) as of the date hereof.
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(e) None of the real property currently owned, leased or operated by the Sellers in
respect of the Business (excluding the EMEA Business), is listed or, to the Knowledge of the
Sellers, proposed for listing on the National Priorities List under CERCLA, or on the
Comprehensive Environmental Response, Compensation and Liability Information System maintained
by the United States Environmental Protection Agency, as updated through the Closing Date, or
any similar state or foreign list of sites requiring investigation or cleanup.
(f) To the Knowledge of the Sellers, there has heretofore been no material Release of any
Hazardous Material in connection with the Business (excluding the EMEA Business) or the
operations of the Business (excluding the EMEA Business).
(g) The Sellers have made available to, or provided the Purchaser with, true and correct
copies of all material environmental assessment reports (including Phase I or Phase II reports)
and any other material environmental studies in the possession of the Sellers relating to the
Business (excluding the EMEA Business) or its operations.
SECTION 4.14. Undisclosed Liabilities. There are no Assumed Liabilities or EMEA
Assumed Liabilities of a type that would be required to be included on a balance sheet of the
Business prepared in accordance with GAAP (or reflected in the notes thereto) except Liabilities
that (i) in the aggregate are adequately provided for in the Financial Statements; (ii) have been
incurred in the Ordinary Course since the date of the last balance sheet included in the Financial
Statements; (iii) have been incurred in connection with this Agreement or the transactions
contemplated hereby; or (iv) which (not including Liabilities referred to in clauses (i) through
(iii) above) would not have a Material Adverse Effect.
SECTION 4.15. Reliance On Exemption From Registration Under Section 4(2) of the
Securities Act.
(a) The Distribution Agent is receiving the Convertible Notes (and, in the event of their
conversion thereof, the Shares) in its capacity as agent for the Sellers and the EMEA Sellers,
and does not exercise independent voting or investment power over the Convertible Notes (and,
in the event of their conversion thereof, the Shares). The Convertible Notes and the Shares
are being acquired by the Sellers and the EMEA Sellers for investment only and not with a view
to distribution, except as contemplated by this Agreement. The Sellers and the EMEA Sellers
have been advised and understand that the issuance of the Convertible Notes (and, in the event
of their conversion thereof, the Shares) to the Distribution Agent has not been registered
under the Securities Act or under the blue sky or similar Laws of any jurisdiction and that
the Convertible Notes and the Shares may be resold only in a transaction registered under the
Securities Act and in accordance with such blue sky or similar Laws as may be applicable, or,
subject to the terms and conditions of this Agreement, if an exemption from registration is
available. The Sellers and the EMEA Sellers have been advised and understand that the
Purchaser, in issuing the Convertible Notes (and, in the event of their conversion thereof, the
Shares), is relying upon, among other things, the representations and warranties of the Sellers
herein in concluding that such issuance is not a public offering and is exempt from the
registration requirements of the Securities Act.
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(b) Each of the Sellers and the EMEA Sellers is an accredited investor as that term is
defined in Rule 501(a) of Regulation D under the Securities Act and is able to bear the risk of
its investment in the Convertible Notes (and, in the event of their conversion thereof, the
Shares). Each of the Sellers and the EMEA Sellers have such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and risks of
acquiring the Convertible Notes (and, in the event of their conversion thereof, the Shares).
(c) Each of the Sellers and the EMEA Sellers understand that no United States federal or
state agency has passed on or made any recommendation or endorsement of the Convertible Notes
and the Shares or the fairness or suitability of an investment in the Convertible Notes and the
Shares nor have such authorities passed upon or endorsed the merits thereof.
(d) Each of the Sellers and the EMEA Sellers understand that the Convertible Notes and the
Shares are restricted securities and must be held until an exemption from registration under
the Securities Act is available and all of the requirements of such exemption have been met or
unless and until the resale of such Convertible Notes and the Shares is registered under the
Securities Act or subject to the terms and conditions of this Agreement and the applicable U.S.
securities Laws, an exemption from registration is available.
(e) The Sellers and the EMEA Sellers have been furnished with all materials relating to
the business, finances and operations of the Purchaser and its subsidiaries and materials
relating to the offer and transfer of the Convertible Notes and the Shares which have been
requested by them. The Sellers and the EMEA Sellers and their advisors, if any, have been
afforded the opportunity to ask such questions of the Purchaser as they deem appropriate for
purposes of the investment contemplated hereby. Each of the Sellers and the EMEA Sellers
understands that beneficial ownership of the Convertible Notes and the Shares involves a high
degree of risk and that each may lose its entire investment in the Convertible Notes and the
Shares and that each can afford to do so without material adverse consequences to its financial
condition. In choosing to acquire beneficial ownership over any Convertible Notes and the
Shares, none of the Sellers or the EMEA Sellers is relying on any information provided by the
Purchaser and its subsidiaries, except to the extent provided herein.
(f) The Sellers, the EMEA Sellers and their respective Ultimate Parent Entities
(including all entities under the control of such Ultimate Parent Entities) within the meaning
of the HSR Act are acquiring, and will hold, the Convertible Notes and the Shares solely for
the purposes of investment within the meaning of Section 18a(c)(9) of the HSR Act. As of the
Closing, neither the Sellers and the EMEA Sellers nor their respective Ultimate Parent
Entities (including all entities under the control of such Ultimate Parent Entities) within
the meaning of the HSR Act, shall hold more than ten million (10,000,000) shares of Common
Stock.
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SECTION 4.16. Representations and Warranties by the Other Sellers.
Except as set forth in the Sellers Disclosure Schedule, each Other Seller severally but not
jointly will, as of the date such Other Seller will execute this Agreement pursuant to Section
11.17, represent and warrant to the Purchaser as follows:
4.16.1. Organization and Corporate Power.
(a) Such Other Seller is duly organized and validly existing under the Laws of the
jurisdiction in which it is organized. Subject to the receipt of the Bankruptcy Consents, at
the time it executes this Agreement, such Other Seller will have the requisite corporate or
other organizational power and authority necessary to enter into, deliver and perform its
obligations pursuant to each of the Transaction Documents to which it is or, at the Closing
Date, will become a party.
(b) Such Other Seller is qualified to do business and to own, lease or operate its
properties and assets, including the Assets, as applicable in each jurisdiction in which the
nature of its properties or the character of its business relating to the Business (excluding
the EMEA Business) requires it to so qualify, except to the extent that the failure to be so
qualified would not have or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
4.16.2. Authorization; Binding Effect; No Breach.
(a) Subject to the Bankruptcy Consents, the execution, delivery and performance by such
Other Seller of the Transaction Documents to which such Other Seller will be a party will have
been duly and validly authorized by all corporate or other organizational action by such Other
Seller. Subject to the Bankruptcy Consents, and assuming due authorization, execution and
delivery by the Purchaser, the Transaction Documents to which such Other Seller will be a party
will constitute a legal, valid and binding obligation of such Other Seller, enforceable against
it in accordance with its terms, except to the extent that such enforceability may be limited
by applicable principles of equity regarding the availability of remedies (whether in
proceeding at law or in equity).
(b) The execution, delivery and performance by such Other Seller of the Transaction
Documents to which such Other Seller will be a party will not conflict with or result in a
breach of the terms, conditions or provisions of, constitute a default under, result in a
violation of, result in the creation or imposition of any Lien upon any of the Assets, or
(subject to the receipt of Consents in connection with the Assigned Contracts and other
Consents expressly provided for herein) require any Consent of any Person (other than the
Regulatory Approvals and the Bankruptcy Consents) or other action by or declaration, filing or
notice to any Person pursuant to (i) the articles, charter, by-laws or other governing
documents of such Other Seller, (ii) any Material Contract to which the such Other Seller is a
party or to which any of its assets is subject, (iii) any Laws to which such Other Seller, or
any of the Assets owned by such Other Seller is subject, except, in the case of (ii) and (iii)
above, for such defaults, violations, actions and notifications that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
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ARTICLE V
COVENANTS AND OTHER AGREEMENTS
SECTION 5.1. U.S. Bankruptcy Actions. On the timetables and subject to the terms set
forth below, the Sellers who are U.S. Debtors shall (i) file with the U.S. Bankruptcy Court one or
more motions and proposed orders as set forth below, (ii) notify, as required by the U.S.
Bankruptcy Code, the U.S. Bankruptcy Rules, and any order of the U.S. Bankruptcy Court, all parties
entitled to notice of such motions and orders, as modified by orders in respect of notice which may
be issued at any time and from time to time by the U.S. Bankruptcy Court, and such additional
parties as the Purchaser may reasonably request, and (iii) subject to the provisions of this
Agreement, including the provisions of Section 10.1, and the U.S. Order, if entered, use
commercially reasonable efforts to obtain U.S. Bankruptcy Court approval of such orders.
(a) As promptly as practicable, but in no event later than the second (2nd)
Business Day after the date hereof, the U.S. Debtors shall file with the U.S. Bankruptcy Court
a motion (the U.S. Bidding Procedures and Sale Motion) and two (2) proposed orders
substantially in the forms set forth in Exhibit 5.1(a) (as attached as exhibits to the U.S.
Bidding Procedures and Sale Motion and as may be modified pursuant to Section 5.1(c) and
Section 5.1(d), the U.S. Bidding Procedures Order and the U.S. Sale Order) seeking approval
by the U.S. Bankruptcy Court of, respectively, (i) as for the U.S. Bidding Procedures Order, a
process for the sale of the Business, the provision of the Solicitation Period as set forth in
Section 5.3(f) and the provision of the Break-Up Fee and Expense Reimbursement as set forth in
Section 10.2, and (ii) as for the U.S. Sale Order, pursuant to Sections 105, 363 and 365 of the
U.S. Bankruptcy Code, the sale of the Assets to the Purchaser or a Designated Purchaser and the
assumption by the U.S. Debtors and assignment to the Purchaser or a Designated Purchaser of the
Assumed and Assigned Contracts.
(b) The Sellers who are U.S. Debtors shall use their reasonable best efforts to cause the
U.S. Bankruptcy Court to (i) schedule a hearing to consider the U.S. Bidding Procedures and
Sale Motion and (ii) enter the U.S. Bidding Procedures Order within two (2) Business Days of
the hearing referred to in clause (i) of this sentence.
(c) The U.S. Bidding Procedures Order and the bidding procedures approved therein shall
not be materially amended by the Sellers without the prior approval of the Purchaser in its
reasonable discretion; provided, however, it shall not be deemed unreasonable
for the Purchaser to withhold its consent to any change to the U.S. Bidding Procedures Order
that conflict with any express provisions of this Agreement, including without limitation
Section 5.1(g) below.
(d) Material failure to adhere to the U.S. Bidding Procedures Order by the Sellers from
and after the entry thereof shall constitute a breach of this Agreement and entitle the
Purchaser to all rights and remedies set forth herein with respect to such breach, subject to
the Sellers cure right set out in Section 10.1(b)(ii).
(e) The U.S. Sale Order shall contain the provisions (it being understood that certain of
such provisions must constitute findings of fact or conclusions of Law to be
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made by the U.S. Bankruptcy Court as part of the U.S. Sale Order) set forth in the form of
Exhibit 5.1(a) attached hereto, without modification thereto unless the Purchaser expressly
consents in writing to such modification in its reasonable discretion.
(f) The Sellers shall request that the U.S. Bankruptcy Court schedule, subject to the
availability of the U.S. Bankruptcy Court, a U.S. Sale Hearing on the fourth (4th)
Business Day following the conclusion of the Auction and shall use their reasonable best
efforts to cause the U.S. Bidding Procedures and Sale Motion to be heard on that date or the
earliest date thereafter permitted by the Bankruptcy Courts schedule.
(g) Notwithstanding anything to the contrary herein or in the U.S. Bidding Procedures
Order, under no circumstances (i) will the Purchaser be required to remain obligated under this
Agreement (as amended, at the Auction or otherwise) as the Alternate Bidder (as such term is
defined in the U.S. Bidding Procedures Order) if any Alternative Transaction is selected by the
Sellers at the Auction or (ii) will the Purchaser be required to pay any deposit as a condition
of participating in the Auction or otherwise.
SECTION 5.2. Canadian Bankruptcy Actions.
5.2.1. Canadian Sales Process Order.
(a) Within five (5) days of execution of this Agreement, the Canadian Debtors shall serve
on the CCAA Service List and file with the Canadian Court a motion (the Canadian Sales Process
Order Motion) in form and substance acceptable to the Sellers and the Purchaser, each acting
reasonably, seeking an order approving the execution, delivery and performance of this
Agreement, including payment of the Break-Up Fee and Expense Reimbursement and a process for
the sale of the Business. The Canadian Sales Process Order Motion, as served and filed, shall
include a copy of the order in the form set forth in Exhibit 5.2.1 with such amendments as the
Canadian Debtors and the Purchaser may agree (the Canadian Sales Process Order). Any
amendment to the form of the Canadian Sales Process Order, after the Canadian Sales Process
Order Motion has been served, shall be subject to the prior written approval of the Purchaser
in its reasonable discretion.
(b) The Canadian Debtors shall use their reasonable best efforts to cause the Canadian
Court to (i) schedule and hear the Canadian Sales Process Order Motion within seven (7) days of
filing the Canadian Sales Process Order Motion, and (ii) the Canadian Debtors shall enter the
issued order forthwith after its issuance.
5.2.2. Canadian Approval and Vesting Order. As promptly as practicable, but in no event
later than three (3) Business Days following completion of the Auction (although,
provided that service shall take place at least one (1) Business Day prior to the
Canadian Approval and Vesting Order Motion unless consented to by the Purchaser), the Canadian
Debtors shall serve on the CCAA Service List with such reasonable additions as are requested by
the Purchaser and file with the Canadian Court a motion (the Canadian Approval and Vesting Order
Motion) in form and substance acceptable to the Sellers and the Purchaser, each acting
reasonably, seeking an order approving this Agreement and the transactions contemplated herein.
The Canadian Approval and Vesting Order Motion, as
served and filed, shall include a copy of the order in the form set forth in Exhibit 5.2.2 with
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such amendments as the Canadian Debtors and the Purchaser may agree (the Canadian Approval and
Vesting Order). Any amendment to the form of the Canadian Approval and Vesting Order, after the
Canadian Approval and Vesting Order Motion has been served, shall be subject to the prior written
approval of the Purchaser.
SECTION 5.3. Consultation; Notification; Cooperation; Solicitation.
(a) The Purchaser and the U.S. Debtors shall cooperate with filing and prosecuting the
U.S. Bidding Procedures and Sale Motion, a draft of which shall be delivered by the Sellers to
the Purchaser no later than one (1) day after the date hereof, and obtaining entry of the U.S.
Bidding Procedures Order and the U.S. Sale Order, and the U.S. Debtors shall deliver to the
Purchaser prior to filing, and as early in advance as is practicable to permit adequate and
reasonable time for the Purchaser and its counsel to review and comment, copies of all proposed
pleadings, motions, responses to objections, notices, statements, schedules, applications,
reports and other material papers to be filed by the U.S. Debtors in connection with such
motions and relief requested therein and any challenges thereto.
(b) The Purchaser and the Canadian Debtors shall cooperate with filing and prosecuting the
Canadian Sales Process Order Motion and the Canadian Approval and Vesting Order Motion, and
obtaining issuance and entry of the Canadian Sales Process Order and the Canadian Approval and
Vesting Order, and the Canadian Debtors shall deliver to the Purchaser prior to filing, and as
early in advance as is practicable to permit adequate and reasonable time for the Purchaser and
its counsel to review and comment, copies of all of the Canadian Debtors proposed pleadings,
motions, responses to objections, notices, statements schedules, applications, reports and
other material papers to be filed by the Canadian Debtors in connection with such motions and
relief requested therein and any challenges thereto.
(c) If the U.S. Sale Order or any other order of the U.S. Bankruptcy Court relating to
this Agreement shall be appealed by any Person (or a petition for certiorari or motion for
rehearing, re-argument or stay shall be filed with respect thereto), the U.S. Debtors agree to,
and to cause their Subsidiaries to, use their reasonable best efforts, to defend against such
appeal, petition or motion, and the Purchaser agrees to cooperate in such efforts. Each of the
Parties hereby agrees to use its reasonable best efforts to obtain an expedited resolution of
such appeal; provided, however, that, subject to the conditions set forth
herein, nothing contained in this Section shall preclude the Parties from consummating, or
permit the Parties not to consummate, the transactions contemplated hereby if the U.S. Sale
Order shall have been entered and shall not have been stayed, modified, revised or amended, in
which event the Purchaser and the relevant Designated Purchasers shall be able to assert the
benefits of Section 363(m) of the U.S. Bankruptcy Code and, as a consequence of which, such
appeal shall become moot.
(d) If the Canadian Approval and Vesting Order or any other order of the Canadian Court
relating to this Agreement shall be appealed by any Person (or a petition for certiorari or
motion for rehearing, re-argument or stay shall be filed with respect thereto),
the Canadian Debtors agree to, and to cause their Affiliates (other than the EMEA Sellers
and their respective Subsidiaries) to, take all commercially reasonable steps, and use their
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reasonable best efforts to defend against such appeal, petition or motion, and the Purchaser
agrees to cooperate in such efforts. Each of the Parties hereby agrees to use its reasonable
best efforts to obtain an expedited resolution of such appeal; provided,
however, that, subject to the conditions set forth herein, nothing in this
Section shall preclude the Parties from consummating, or permit the Parties not to consummate,
the transactions contemplated hereby if the Canadian Approval and Vesting Order shall have been
entered and shall not have been stayed, modified, revised or amended.
(e) Prior to Closing, the Sellers shall, from time to time, at the request of the
Purchaser, request such further Order or Orders from the Canadian Court or the U.S. Bankruptcy
Court as the Sellers and the Purchaser both agree, each acting reasonably, are required in
order to give effect to this Agreement and the transactions contemplated hereby. The terms of
such requested Orders shall be satisfactory to the Sellers and the Purchaser, each acting
reasonably. Upon any such request each of the Purchaser and the Sellers, acting reasonably,
shall cooperate with each other, as necessary or as may be reasonably requested, in order to
obtain such further Order or Orders.
(f) From the date of the later of (i) the entry of the U.S. Bidding Procedures Order or
(ii) the entry of the Canadian Sales Process Order, until the conclusion of the Auction (the
Solicitation Period), the Sellers are permitted to cause their authorized representatives and
Affiliates to initiate contact with, solicit or encourage submission of any inquiries,
proposals or offers by, any Person (in addition to the Purchaser and its Affiliates, agents and
authorized representatives) in connection with any Competing Transaction. In addition, during
such Solicitation Period, the Sellers shall have the right to respond to any inquiries or
offers to purchase all or any part of the Business and perform any and all other acts related
thereto which are required under the Bankruptcy Code or other applicable Law, including
supplying information relating to the Business and Assets to prospective buyers. The Sellers
shall contemporaneously, or as soon as possible thereafter, provide the Purchaser with any
information concerning the Business or Assets provided to any prospective purchasers not
previously provided to the Purchaser. The Main Sellers shall provide the Purchaser with a
copy of any Qualified Bid received by the Sellers on the day that the determination is made
that such bid is a Qualified Bid but in no event later than 48 hours prior to the commencement
of the Auction and otherwise in accordance with the U.S. Bidding Procedures Order. In the
event that the time at which the final Qualified Bid to be delivered is less than 48 hours from
the scheduled time for commencement of the Auction, either the Sellers or the Purchaser, may,
by written notice, require that the scheduled commencement date and time of the Auction be
delayed until such time the Purchaser has had possession of the Qualified Bids for 48 hours
prior to commencement of the Auction. Nothing herein shall limit the Sellers ability to
consummate a Sponsored Reorganization Plan.
SECTION 5.4. Pre-Closing Cooperation.
(a) Prior to the Closing, upon the terms and subject to the conditions of this Agreement,
each of the Parties shall use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, and cooperate with each other in order
to do, all things necessary, proper or advisable under applicable Law to consummate the
transactions contemplated by this Agreement as soon as practicable, including (i) the
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preparation and filing of all forms, registrations and notices required to be filed to
consummate the Closing and the taking of such actions as are necessary to obtain any requisite
Consent, provided that the Sellers shall not be obligated to make any payment or
deliver anything of value to any Third Party (other than filing and application fees to
Government Entities, all of which shall be paid or reimbursed by the Purchaser) in order to
obtain any Consent; (ii) taking reasonable actions to defend any Actions filed against such
Party by or before any Government Entity challenging this Agreement or the consummation of the
Closing (or to cooperate with the other Party in the case of any such Action filed against such
other Party); and (iii) using reasonable efforts to cause to be lifted or rescinded any
injunction, decree, ruling, order or other action of any Government Entity adversely affecting
the ability of the Parties to consummate the Closing; provided, that such reasonable
efforts described in clauses (ii) and (iii) above shall not require either Party to take, or
agree to take any action, that would reasonably be expected to materially and adversely impact
the Business or any other business of such Party.
(b) Each Primary Party shall promptly notify the other Primary Party of the occurrence, to
such partys knowledge, of any event or condition, or the existence, to such partys knowledge,
of any fact, that would reasonably be expected to result in any of the conditions set forth in
Article IX not being satisfied.
(c) The Purchaser hereby covenants and agrees until the Closing Date or the earlier
termination of this Agreement in accordance with Article X:
(i) not to pay any dividend or make any cash distribution on or in respect of
its outstanding common stock or take any other action that would trigger the
adjustment of the Conversion Rate (as defined in the Indenture) pursuant to Section
6.5(a) of the Indenture; and
(ii) that except with respect to any matter expressly contemplated by this
Agreement, it will not acquire or agree to acquire by amalgamating, merging or
consolidating with, purchasing a substantial equity interest in or a substantial
portion of the assets of or otherwise, any business or Person which acquisition or
other transaction would reasonably be expected to prevent or materially delay the
transactions contemplated by this Agreement; provided, however,
notwithstanding anything to the contrary herein, nothing in this clause (iii) shall
prevent or otherwise restrict the Purchaser from being acquired or agreeing to be
acquired (whether by merger, consolidation, tender offer or otherwise) by any other
Person.
SECTION 5.5. Antitrust and Other Regulatory Approvals.
(a) In furtherance and not in limitation of the provisions of Section 5.4, each of the
Parties has prior to the date of this Agreement prepared and filed: (i) a request for an
advance ruling certificate pursuant to Section 102 of the Competition Act, and if
deemed advisable by the Purchaser, acting reasonably, a pre-merger notification filing
under the Competition Act; (ii) an appropriate filing of a Notification and Report Form
pursuant to the HSR Act; and (iii) all other necessary documents, registrations, statements,
petitions,
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filings and applications for ICA Approval and any other Consent of any other
Government Entities required to satisfy the condition set forth in Section 9.1(a).
(b) If a Party or any of its Affiliates receives a request for information or documentary
material from any Government Entity with respect to this Agreement or any of the transactions
contemplated by this Agreement (and/or by the EMEA Asset Sale Agreement), then such Party shall
endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other Party, an appropriate response in compliance with such
request.
(c) The Parties shall keep each other apprised of the status of matters relating to the
completion of the transactions contemplated by this Agreement (and/or by the EMEA Asset Sale
Agreement) and work cooperatively in connection with obtaining the requisite Regulatory
Approvals of each applicable Government Entity, including:
(i) cooperating with each other in connection with filings required under the
applicable Antitrust Laws or any Laws regulating foreign investment of any
jurisdiction in connection with the transactions contemplated by this Agreement
(and/or by the EMEA Asset Sale Agreement) and each Antitrust Approval, and liaising
with each other in relation to each step of the procedure before the relevant
Government Entities and as to the contents of all communications with such
Government Entities. In particular, and except for any filings made pursuant to the
Investment Canada Act, no Party will make any notification or other filing with or
to any Government Entity in relation to the transactions contemplated hereunder
without first providing the other Party or its outside counsel on an outside counsel
only basis with a copy of such notification in draft form (except with respect to
any documents relating to Item 4(c) of the notification form required by the HSR
Act) and giving such other party or its outside counsel a reasonable opportunity to
discuss its content before it is filed with the relevant Government Entities, and
such first Party shall consider and take account of all reasonable comments timely
made by the other Party or its outside counsel in this respect. For the avoidance
of doubt, draft filings, materials or information provided under this section or
under any other provision of this Agreement to the other Partys counsel on an
outside counsel only basis shall only be given to outside counsel of the recipient
and will not be disclosed by such outside counsel to employees, officers or
directors of the recipient without the advance written consent of the Party
providing such draft filing or materials;
(ii) furnishing to the other party or its outside counsel in a timely fashion
all information within its possession that is required for any application or other
filing to be made by the other party pursuant to the applicable Antitrust Laws or
any Laws regulating foreign investment of any jurisdiction in connection with the
transactions contemplated by this Agreement (and/or by the EMEA Asset Sale
Agreement); provided, however, that no such information shall be
required
to be provided by a Party if it determines, acting reasonably, that the
provision of such information would jeopardize any attorney-client or other legal
privilege (it being understood, however, that the Parties shall cooperate in any
reasonable
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efforts and requests that would enable otherwise required disclosure to
the other Party or its outside counsel to occur without so jeopardizing the
privilege);
(iii) promptly notifying each other of any communications from or with any
Government Entity with respect to the transactions contemplated by this Agreement
(and/or by the EMEA Asset Sale Agreement) and ensuring that each of the parties or
its outside counsel (as determined by the Purchaser in its reasonable discretion in
the case of meetings or appearances related to ICA Approval), where acceptable to
the Government Entity, is represented at any meetings with or other appearances
before any Government Entity with respect to the transactions contemplated by this
Agreement (and/or by the EMEA Asset Sale Agreement); and
(iv) consulting and cooperating with one another and the other Partys outside
counsel in connection with all analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of any
party hereto in connection with proceedings under or relating to the Antitrust Laws
or any Laws regulating foreign investment of any jurisdiction in connection with the
transactions contemplated by this Agreement (and/or by the EMEA Asset Sale
Agreement).
(d) In addition, and subject to Section 5.5(e), the Purchaser shall, and shall cause each
of the Designated Purchasers to, use its reasonable efforts to satisfy (or cause the
satisfaction of) the conditions precedent to the Purchasers obligations hereunder as set forth
in Section 9.1(a) to the extent the same is within its control and to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things necessary, proper or
advisable under all applicable Laws to consummate the transactions contemplated by this
Agreement (and/or by the EMEA Asset Sale Agreement), including using its reasonable efforts to
obtain all Regulatory Approvals, and any other Consent of a Government Entity required to be
obtained in order for the Parties to consummate the transactions contemplated by this Agreement
(and/or by the EMEA Asset Sale Agreement).
(e) The obligations of the Purchaser pursuant to Section 5.5(d) shall include committing,
and causing the Designated Purchasers to commit, to any and all undertakings, divestitures,
licenses or hold separate or similar arrangements with respect to their respective assets
and/or the Assets and/or the EMEA Assets and/or to any and all arrangements for the conduct of
any business and/or to any termination of any and all existing relationships and contractual
rights and obligations as a condition to obtaining any and all Consents from any Government
Entity necessary to consummate the transactions contemplated by this Agreement (and/or by the
EMEA Asset Sale Agreement), including taking, and causing the Designated Purchasers to take,
any and all Consents from any Government Entity necessary to consummate the transactions
contemplated hereby, including taking any and all actions necessary in order to ensure the
receipt of the necessary Consents and Regulatory Approvals; provided, however,
that nothing in this Agreement or
the EMEA Asset Sale Agreement shall require or be construed to require the Purchaser, any
Designated Purchaser, any EMEA Designated Purchaser or any of their respective Subsidiaries to
commit to any undertaking, divestiture, license or hold separate or similar arrangement or
conduct of business arrangement or to terminate any relationships, rights or
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obligations or to
do any other act, to the extent such commitment, termination or action would be reasonably
likely to be materially adverse to the Business or the Purchaser, or financial condition or
prospects of the Business or the Purchaser.
(f) For the avoidance of doubt, the covenants under this Section 5.5 shall not apply to
any action, effort, filing, Consent, proceedings, or other activity or matter relating to the
Bankruptcy Courts, the Bankruptcy Proceedings and/or the Bankruptcy Consents, and the ICA
Approval.
SECTION 5.6. Pre-Closing Access to Information.
(a) Prior to the Closing, the Sellers shall, and shall cause their Subsidiaries (other
than the EMEA Sellers) to, (i) give the Purchaser and its authorized representatives, upon
reasonable advance notice and during regular business hours, reasonable access to all books,
records, personnel, officers and other facilities and properties of the Business (excluding the
EMEA Business), (ii) permit the Purchaser to make such copies and inspections thereof, upon
reasonable advance notice and during regular business hours, as the Purchaser may reasonably
request, (iii) grant the Purchaser and its representatives reasonable access to each of the
facilities of the Business where Assets are located for purposes of completing an updated
inventory of the fixed assets of the Business for purposes of completing an appraisal of the
value thereof, and (iv) cause the officers of the Sellers to (A) after each month-end promptly
(and in any event within thirty (30) days thereafter) furnish the Purchaser with copies of the
Sellers standard Business review of orders and revenue as is regularly prepared in the
Ordinary Course, and (B) after each quarter-end promptly (and in any event within thirty (30)
days thereafter) furnish the Purchaser with an unaudited quarter-end balance sheet for the
Business as of the end of such quarter, and unaudited combined statements of earnings and cash
flows of the Business for the three (3) month period then ended; provided,
however, that (1) any such access shall be conducted at the Purchasers expense, in
accordance with Law (including any applicable Antitrust Laws and Bankruptcy Laws), at a
reasonable time, under the supervision of the Sellers personnel and in such a manner as to
maintain confidentiality and not to unreasonably interfere with the normal operations of the
businesses of the Sellers and their Affiliates, and (2) the Sellers will not be required to
provide to the Purchaser access to or copies of any Tax records except as otherwise provided
herein.
(b) In order to facilitate the Purchasers entry into new supply arrangements effective as
of the Closing, the Sellers shall make available to the Purchaser unredacted copies of all
Contracts with suppliers of the Business, or in the case of any Non-Exclusive Supply Contracts,
unredacted copies of any portion thereof that are applicable to the Business (other than
pricing/cost information or other competitively sensitive information the sharing of which
Sellers or their representatives reasonably determine may violate applicable Law), promptly
following the date hereof (or in the event that any such Contract is subject to confidentiality
restrictions promptly following the receipt of any
required consent which the Sellers will cooperate with the Purchaser to obtain as promptly
as practicable). So long as the Purchaser is the winning bidder in the Auction, the Sellers
shall provide such information not provided in accordance with the preceding sentence upon the
later of the entry of the U.S. Sale Order, the receipt of the HSR Approval and the receipt of
the Competition Act Approval. Any such disclosures shall be made to any employees or
88
representatives of the Purchaser who are designated by the Purchaser, who reasonably require
access to such information for any reasonable business purpose related to the acquisition of
the Business by the Purchasers and who have executed the applicable Clean Room Agreements,
provided, however, that employees of the Purchaser shall not have access to
such information unless they are not involved in making decisions regarding pricing or the
other material competitive terms offered to any customer of a competing business to the
Business, and if the transaction does not close, agree not to be employed in such a role for an
agreed-upon minimum period of time.
(c) In connection with the procedures set forth in Section 5.15 with respect to the
Bundled Contracts, the Sellers will provide unredacted copies of any portion of any Bundled
Contracts that relates to the Business (other than pricing information and other competitive
sensitive information the sharing of which the Sellers or their representatives reasonably
determine may violate applicable Law) promptly following the date hereof, and so long as the
Purchaser is the winning bidder in the Auction, will provide such information upon the later of
the entry of the U.S. Sale Order, the receipt of the HSR Approval and the receipt of the
Competition Act Approval. Any such disclosures shall be made to any employees or
representatives of the Purchaser who are designated by the Purchaser, who reasonably require
access to such information for any reasonable business purpose related to the acquisition of
the Business by the Purchasers and who have executed the applicable Clean Room Agreements,
provided, however, that employees of the Purchaser shall not have access to
such information unless they are not involved in making decisions regarding pricing or the
other material competitive terms offered to any customer of a competing business to the
Business, and if the transaction does not close, agree not to be employed in such a role for an
agreed-upon minimum period of time.
(d) Promptly following the date hereof, the Sellers will provide to Purchaser a correct
and complete list of table values from the Sellers SAP HR system for the following fields: (i)
job, (ii) organization/HR Department, and (iii) location. Within twenty (20) days following
the date hereof, the Sellers will provide to the Purchaser a set of test files from the
Sellers SAP HR system, which shall include actual employee data (including at least one person
per country), but excluding in such data any information revealing the identity of any
Employees (including names, addresses, tax identification numbers and any other information
that would allow the Purchaser to individually identify any Employee). Such test files shall
be in the same format as the format that will be subsequently provided to the Purchaser by the
Sellers when actual payroll data is transferred from the Sellers to the Purchaser. Within
three (3) Business Days following the completion of the Auction, the Sellers will provide the
following additional information with respect to each of the Employees whose information was
provided in Section 4.10(b) of the Sellers Disclosure Schedule: (i) full name, (ii) work e-mail
address, (iii) work telephone number, (iv) specific recurring allowances paid to employees (if
applicable), (v) supervisor and (vi)
pay schedule. Within three (3) Business Days following the notification from Purchaser to
Sellers of any Identified Employee pursuant to Section 7.1.1, the Sellers will provide
Purchaser with the Identified Employees home address. Additionally, provided that
Purchaser provides Seller with proof that an Identified Employee has consented to its release
and, if applicable, transfer across boundaries, the Sellers will provide the Purchaser with the
following additional information with respect to such Identified Employees as soon as
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practicable following the receipt by Seller of such proof: (ix) tax identification number, (x)
date of birth, and (xi) gender. In addition, upon Purchasers reasonable request, the Sellers
will promptly provide Purchaser with aggregate census data with respect to gender and age
(using five-year bands) of the Identified Employees employee population (without individually
identifying any Identified Employee).
(e) Notwithstanding anything contained in this Agreement or any other agreement between
the Purchaser and the Sellers executed on or prior to the date hereof, the Sellers shall not
have any obligation to make available to the Purchaser or its representatives, or provide the
Purchaser or its representatives with, (i) any Tax Return filed by the Sellers or any of their
Affiliates or predecessors or (ii) any other information, if in each case under subsection (i)
and (ii), making such information available would (A) jeopardize any attorney-client or other
legal privilege or (B) potentially cause the Sellers to be found in contravention of any
applicable Law or contravene any fiduciary duty or agreement (including any confidentiality
agreement with a Third Party to which the Sellers or any of their Affiliates are a party)
between Sellers and a Third Party, it being understood that the Sellers shall cooperate in any
reasonable efforts and requests for waivers that would enable otherwise required disclosure to
the Purchaser to occur without so jeopardizing privilege or contravening such Law, duty or
agreement.
(f) Promptly following the date of the U.S. Sale Order, the Sellers agree to provide the
Purchaser with access to such documentation, records and databases to the extent reasonably
required to review and assess the Sellers use of Open Source Software incorporated into any of
the Products or Services.
SECTION 5.7. Public Announcements. The initial press release relating to this
Agreement shall be a joint press release, the text of which shall be agreed to by the Purchaser and
the Sellers acting reasonably. Unless otherwise required by applicable Law or by obligations of
the Parties or their Affiliates pursuant to any listing agreement with or rules of any securities
exchange, the Parties hereto shall consult with each other before issuing any other press release
or otherwise making any public statement with respect to this Agreement, the transactions
contemplated hereby or the activities and operations of the other Party and shall not issue any
such release or make any such statement without the prior written consent of the other Party (such
consent not to be unreasonably withheld or delayed).
SECTION 5.8. Further Actions. From and after the Closing Date, each of the Parties
shall execute and deliver such documents and other papers and take such further actions as may
reasonably be required to carry out the provisions of this Agreement and the other Transaction
Documents to which they are a party and give effect to the transactions contemplated herein and
therein, including the execution and delivery of such assignments, deeds and other documents as may
be necessary to transfer any Assets as provided in this
Agreement, including the assignment of any Assigned Contract; provided, that subject
to Section 5.5, the Sellers shall not be obligated to make any payment or deliver anything of value
to any Third Party (other than filing and application fees to Government Entities, all of which
shall be paid or reimbursed by the party required to pay such fees under the Agreement) in order to
obtain any Consent to the transfer of Assets or the assumption of Assumed Liabilities.
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SECTION 5.9. Conduct of Business. The Sellers covenant that, subject to any
limitation imposed as a result of being subject to the Bankruptcy Proceedings and except as (i) the
Purchaser may approve otherwise in writing as set forth below (such approval not to be unreasonably
withheld or delayed), (ii) set forth in Section 5.9 of the Sellers Disclosure Schedule, (iii)
otherwise contemplated or permitted by this Agreement or another Transaction Document, (iv)
required by Law (including any applicable Bankruptcy Laws or by any order of a Bankruptcy Court),
or (v) relates solely to Excluded Assets or Excluded Liabilities, the Sellers shall and shall cause
their Affiliates to (A) conduct the Business and maintain the Owned Equipment in the Ordinary
Course, (B) use efforts that are commercially reasonable in the context of the Bankruptcy
Proceedings and taking into account employee attrition to continue operating the Business
(excluding the EMEA Business) as a going concern, and to maintain the business organizations of the
Business (excluding the EMEA Business) intact and (C) abstain from any of the following actions:
(a) sell or otherwise dispose of material Assets, other than sales of inventory
(including, without limitation, inventory that has been designated as excess or obsolete
(E&O Inventory)) on a basis consistent with past practice;
(b) incur any Lien on any Assets, other than Liens that will be discharged at or prior to
Closing and Permitted Encumbrances;
(c) (i) grant any license or sublicense of any rights under or with respect to any
Transferred Intellectual Property other than licenses to suppliers, resellers and customers in
the Ordinary Course and licenses or sublicenses granted in accordance with the Intellectual
Property License Agreement (if such agreement were in effect as of the date hereof), or (ii)
enter into any exclusive license agreement that would restrict the Business or the Assets after
the Closing in any material respect or which is in conflict with the provisions of this
Agreement or that would be in conflict with the Intellectual Property License Agreement if it
were in effect as of the date hereof;
(d) increase the rate of cash compensation or other fringe, incentive, equity incentive,
pension, welfare or other employee benefits payable to the Employees, other than normal
periodic increases consistent with past practice or as required by applicable Law, Contracts or
Seller Employee Plans in effect as of the date hereof, or pursuant to the KEIP or KERP
(provided that the Sellers provide the Purchaser with notice of amendments,
modifications, supplements or replacements to the KEIP as may be approved by the Canadian Court
or to the KERP as may be approved by the Canadian Court or the U.S. Bankruptcy Court), or
increases to welfare benefits that apply to substantially all similarly situated employees
(including the Employees) of the Sellers or the applicable Affiliates of the Sellers, or (ii)
except as otherwise expressly permitted under Section 5.9,
enter into, or increase the benefits or any payments under, any employment, deferred
compensation, severance or other similar agreement or arrangement with any Employee;
(e) voluntarily terminate or waive any material right under, or materially amend any
Material Contract or any Bundled Contract material to the Business (other than as necessary to
effect the unbundling of any Bundled Contract required with respect to any other business or
business segment of the Sellers), unless such Contract has become an
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Excluded Other Vendor
Contract, an Excluded 365 Vendor Contract or a Non-Assigned Contract;
(f) waive, release, assign, settle or compromise any material claim, litigation or
arbitration relating to the Business to the extent that such waiver, release, assignment,
settlement or compromise imposes any binding obligation, whether contingent or realized, on the
Business that will bind the Designated Purchasers after the Closing Date and is materially
adverse to the Business;
(g) fail to make any budgeted capital expenditures with respect to the Business (excluding
the EMEA Business) or make any unbudgeted capital expenditure with respect to the Business
(excluding the EMEA Business) in excess of $100,000 individually or $250,000 in the aggregate;
(h) enter into any Material Contract for or relating to the Business that cannot be
assigned to the Purchaser;
(i) fail to maintain tangible property which, individually or in the aggregate, is
material to the Business and which is included in the Assets, consistent with past practice
since the filing of the Bankruptcy Proceedings;
(j) enter into, or agree to enter into, any sale-leaseback transactions with respect to
the Business;
(k) take any action, other than actions that an employer in bankruptcy would take, to
cause any employee of the Sellers who would otherwise be an Employee as of the Closing not to
be such an employee (other than termination for cause or termination of Employees who failed to
receive an offer of employment from the Purchaser or a Designated Purchaser pursuant to this
Agreement provided the Sellers make a reasonable effort to provide notice to the Purchaser
prior to such employment termination);
(l) fail to maintain the material Consents with respect to the Business (excluding the
EMEA Business);
(m) on or before the Closing Date, make or rescind any material election in relation to
Taxes that would materially and adversely impact the Purchaser after the Closing;
(n) grant any lease, sublease, license, sublicense or other occupancy rights under or with
respect to any portion of Real Property used in the Business (except
with respect to such rights granted to the purchasers of other Nortel business segments
which are co-located at such premises and the effect of which would not have a material adverse
effect on the lease, license or occupancy by the Purchaser or any Designated Purchaser of such
Real Property) or terminate or surrender or agree to release any Lease, in whole or in part,
which is identified in the Real Estate Terms and Conditions except in accordance with the Real
Estate Terms and Conditions;
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(o) construct, or permit to be constructed any capital improvements or major alterations
at any portion of the Real Property used for the Business (excluding the EMEA Business, except
with respect to any capital improvements or major alterations at any portion of the Real
Property required in connection with the purchase by purchasers of other Nortel business
segments), or as otherwise contemplated in the Real Estate Terms and Conditions;
(p) enter into any Collective Labor Agreement affecting Transferred Employees except as
required by applicable Law; or
(q) enter into any Contract not to compete in any line of business or geographic area that
would reasonably be expected to bind the Purchaser or any of its Affiliates after the Closing
in any material respect;
(r) enter into any Contract granting an indemnity in respect of intellectual property
infringement or misappropriation other than in the Ordinary Course that would bind the
Purchaser or any of its Affiliates after the Closing in any material respect, except for those
Contracts that will not be, or that the Purchaser may elect not to have, assigned to the
Purchaser hereunder; or
(s) authorize, or commit or agree to take, any of the foregoing actions.
If a Seller desires to take any action described in this Section 5.9, the Main Sellers may, prior
to any such action being taken, request the Purchasers consent via an electronic mail or facsimile
sent to the individual(s) at the addresses listed on Exhibit 5.9. The Purchaser shall respond to
such notice in writing by 11:59 p.m. (New York time) on the second Business Day after the day of
delivery of such electronic mail or facsimile. The failure of the Purchaser to respond within such
two (2) Business Days shall not be deemed to be consent to such action.
The Purchaser acknowledges and agrees that: (i) prior to the Closing Date, the Sellers shall
exercise, consistent with the terms and conditions of this Agreement, control and supervision of
the Business (excluding the EMEA Business) and the EMEA Sellers shall exercise, consistent with the
terms and conditions of the EMEA Asset Sale Agreement, the EMEA Business and (ii) notwithstanding
anything to the contrary set forth in this Agreement, no consent of the Purchaser shall be required
with respect to any matter set forth in Section 5.9 or elsewhere in this Agreement to the extent
the requirement of such consent would, upon advice of the Purchasers counsel, violate any Law.
SECTION 5.10. Transaction Expenses. Except as otherwise provided in this Agreement
or the Ancillary Agreements, each of the Purchaser and the Sellers shall bear its own
costs and expenses (including brokerage commissions, finders fees or similar compensation,
and legal fees and expenses) incurred in connection with this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby.
SECTION 5.11. Confidentiality.
(a) The Parties acknowledge that the Confidentiality Agreement remains in full force and
effect in accordance with its terms, which are incorporated herein
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by reference, and the
Parties agree to be bound thereby in the same manner and to the same extent as if the terms had
been set forth herein in full, except that the Sellers shall be at liberty to disclose the
terms of this Agreement to any court or to any liquidator or in connection with any auction
process with respect to the Business or the Assets approved by the Bankruptcy Court and show
appropriate figures in their administration records, accounts and returns; provided,
that after the completion of the transactions contemplated herein, the Purchasers
confidentiality obligations under this Section 5.11 and the confidentiality agreement between
the Purchaser, NNC and its subsidiaries and Alan Bloom dated March 27, 2009, with respect to
information and data relating to the Business and/or the Assets shall terminate.
For greater certainty, the Purchasers confidentiality obligations under the third clean team
confidentiality agreement between the Purchaser and its subsidiaries and NNL and its
subsidiaries, dated June 19, 2009, shall not terminate after the completion of the transactions
contemplated herein.
(b) Subject to the requirements of the Bankruptcy Laws or as may be imposed by the
Bankruptcy Court or as otherwise required by applicable Law, from and after the Closing:
(i) the Sellers shall, and shall cause their Affiliates to, hold in confidence all confidential
information (including trade secrets, customer lists, marketing plans and pricing information)
of the Sellers relating to the Business or the Assets; (ii) in the event that the Sellers or an
Affiliate thereof shall be legally compelled to disclose any such information, the Sellers
shall provide the Purchaser with prompt written notice of such requirement so that the
Purchaser may seek a protective order or other remedy; and (iii) in the event that such
protective order or other remedy is not obtained, the Sellers or their Affiliates shall furnish
only such information as is legally required to be provided.
(c) It is acknowledged by the Purchaser and the Sellers that in the course of attempting
to sell the Assets, one or more of the Sellers has entered into several confidentiality
agreements with Third Parties in respect of information relating to the Assets and has
disclosed such information to certain of those Third Parties.
(d) Each Seller shall assign to the Purchaser, at or prior to, and with effect from and
after the Closing, all of its rights under any such confidentiality agreement made by such
Seller with any Third Party but only as such confidentiality agreements relate to the Assets
and the Business and only to the extent that such agreements permit such assignments without
the consent of any Third Party. To the extent such agreements do not permit any assignment
without the consent of any Third Party, at the Purchasers request and the Purchasers expense,
provided that the Sellers receive an indemnity from the Purchaser in form and substance
satisfactory to the Sellers, to the extent permitted by applicable Laws and the terms of such
confidentiality agreements, shall appoint the Purchaser as such Sellers
representative and agent in respect of confidential information relating to the Business
and Assets under such confidentiality agreements and any amounts recovered or expenses incurred
in enforcing those confidentiality agreements in respect of the Sellers shall accrue to the
benefit of or be for the account of the Purchaser.
(e) Notwithstanding anything to the contrary contained in this Section 5.11, nothing
contained in this Agreement shall be construed as precluding, prohibiting, restricting or
otherwise limiting the ability of the Sellers, the Sellers Affiliates or their respective
representatives to: (i) make permitted disclosures under Section 5.7 or as
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otherwise permitted
under this Agreement; (ii) make any disclosures that are required by applicable Law; (iii) use
or disclose information that is not exclusive to the Business to the extent necessary to
operate the other business segments of the Sellers or their Affiliates or otherwise engage in
any manner in any business activities unrelated to the Business; (iv) perform any retained
Contracts, whether or not exclusively related to the Business; or (v) make customary
disclosures, subject to customary confidentiality agreements, regarding information that is not
exclusive to the Business and is primarily related to other business segments of the Sellers in
connection with acquiring, merging or otherwise combining with, or being acquired by, or
selling all or part of their assets to, any Person (whether in a single transaction or a series
of related transactions or whether structured as an acquisition of assets, securities or
otherwise). Notwithstanding anything to the contrary contained in this Section 5.11, nothing
contained in this Agreement shall be construed as precluding, prohibiting, restricting or
otherwise limiting the ability of the Purchaser, the Purchasers Affiliates or their respective
representatives to: (i) make permitted disclosures under Section 5.7 or as otherwise permitted
under this Agreement or (ii) make any disclosures that are required by applicable Law.
SECTION 5.12. Disclosure Schedules and Certain Information.
(a) The Sellers shall submit to the Purchaser via electronic mail or facsimile sent to the
individual(s) at the addresses listed in Exhibit 5.12, every two (2) weeks, written updates to
Section 4.10(b) of the Sellers Disclosure Schedule with respect to additions, deletions or
other status changes of Employees or, after finalization of the Identified Employees, only with
respect to Identified Employees. The Sellers shall submit to the Purchaser at least three (3)
Business Days prior to the Closing Date, written updates to the Sellers Disclosure Schedules in
respect of Article IV disclosing any events or developments that occurred or any information
learned between the date of this Agreement and the Closing Date that reflect any matters
hereafter arising which, if existing, occurring or known to the Sellers at the date hereof,
would have been required to be set forth or described in the Sellers Disclosure Schedule in
relation to Article IV.
(b) The Sellers shall give prompt notice to the Purchaser, and the Purchaser shall give
prompt notice to the Sellers, upon obtaining knowledge of the occurrence or nonoccurrence of
any event that, individually or in the aggregate, would make the timely satisfaction of the
conditions set forth in Article IX impossible or unlikely.
(c) The delivery of any update or notice pursuant to this Section 5.12 shall not cure any
breach of any representation or warranty requiring disclosure of such
matter or otherwise limit or affect the remedies available hereunder to any party
receiving such notice.
SECTION 5.13. Certain Payments or Instruments Received from Third Parties. To the
extent that, after the Closing Date, (a) the Purchaser or any Designated Purchaser receives any
payment or instrument that is for the account of a Seller according to the terms of this Agreement
or relates primarily to any business or business segment of the Sellers other than the Business,
the Purchaser shall, and shall cause the Designated Purchasers to promptly deliver such amount or
instrument to the relevant Seller, and (b) any of the Sellers receives any payment that is for the
account of the Purchaser or any of the Designated Purchasers
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according to the terms of this
Agreement or relates primarily to the Business, the Main Sellers shall, and shall cause the Other
Sellers to promptly deliver such amount or instrument to the Purchaser or the relevant Designated
Purchasers. All amounts due and payable under this Section 5.13 shall be due and payable by the
applicable Party in immediately available funds, by wire transfer to the account designated in
writing by the relevant Party. Notwithstanding the foregoing, each Party hereby undertakes to use
reasonable best efforts to direct or forward all bills, invoices or like instruments to the
appropriate Party.
SECTION 5.14. Non-Assignable Contracts.
(a) To the extent that any Seller Contract or any Seller Consent is not capable of being
assigned under Section 365 of the U.S. Bankruptcy Code (or, if inapplicable, pursuant to other
applicable Laws or the terms of such Contract or Consent) to the Purchaser or a Designated
Purchaser at the Closing without the Consent of the issuer thereof or the other party thereto
or any Third Party (including a Government Entity) (collectively, the Non-Assignable
Contracts), this Agreement will not constitute an assignment thereof, or an attempted
assignment, unless any such Consent is obtained.
(b) For the purposes of this Agreement (including Section 5.14(a) and all representations
and warranties of the Sellers contained herein), the relevant Sellers shall be deemed to have
obtained all required Consents in respect of the assignment of any 365 Vendor Contract and 365
Customer Contract if, and to the extent that, pursuant to the U.S. Sale Order, the Sellers are
authorized to assume and assign to the Purchaser or Designated Purchasers such Seller Contract
pursuant to Section 365 of the U.S. Bankruptcy Code and any applicable Cure Cost has been, or
will be, satisfied as provided in Section 2.1.7. In furtherance thereof, the U.S. Bidding
Procedures Order shall contain procedures, in form and substance acceptable to the Purchaser,
for obtaining U.S. Bankruptcy Court approval that all 365 Contracts other than the
Non-Assignable Contracts can and shall be assigned to the Purchaser on the Closing Date.
SECTION 5.15. Bundled Contracts.
(a) Section 5.15 of the Sellers Disclosure Schedule lists each Contract that the Sellers
or their Affiliates have entered into prior to the date hereof providing for the sale or
provision of Products and/or Services and the sale or provision of other products and services
of the Sellers or their Affiliates (each, a Bundled Contract).
(b) During the period from the date hereof until the Auction, the Sellers and their
Affiliates shall cooperate (consistent with applicable Laws and any confidentiality
restrictions requiring consent of Third Parties) with the Purchaser in developing a strategy
with respect to transitioning each customer of the Business that is party to a Bundled Contract
by, among other things, making available those employees who are responsible for managing the
customer relationship with each such customer, by providing unredacted copies of all Contracts
to which any Seller is a party (or in the case of Bundled Contracts, the portions of such
Bundled Contracts as are applicable to the Business) with each of the top 40 customers of the
Business by revenue for the year ended December 31, 2008 (other than pricing information and
other competitive sensitive information the sharing of which Sellers or their representatives
reasonably determine may violate applicable Law) and such
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other information as the Purchaser
may reasonably request, which disclosures shall be subject to the Confidentiality Agreement.
On or before the date that is five (5) Business Days after the date of the Auction, the
Purchaser shall notify the Sellers of those counterparties to Bundled Contracts with which the
Purchaser elects to attempt to negotiate alternative arrangements (effective as of and
conditioned upon the Closing) (Alternative Arrangements) directly with such counterparty to
such Bundled Contract, including without limitation, such counterpartys purchase or sale of
items under an existing Contract between such counterparty and the Purchaser or the entry into
a new contract covering the Products and Services. Promptly following the later of (x) the
entry of the U.S. Sale Order and (y) the receipt of HSR Approval and Competition Act Approval,
the Sellers and their Affiliates shall (i) provide such competitive sensitive information as
was redacted pursuant to the first sentence of this subsection (b) in such a manner, and
subject to, Section 5.6(c) so as not to violate any applicable Law and (ii) cooperate with the
Purchaser with respect to the negotiation of any such Alternative Arrangements, including
without limitation, by making introductions to customers with whom the Purchaser does not have
an existing customer relationship, by, subject to applicable Law, participating in telephone
calls and meetings with such customers and by providing such forecast and other information as
is necessary to assist the Purchaser negotiate such Alternative Arrangements. The Purchaser
agrees that any Alternative Arrangements it reaches with counterparties shall, effective as of
the occurrence of the Closing, expressly release each Seller that is a party to the affected
Bundled Contract from any obligations and Liabilities under such Bundled Contract from and
after the Closing Date as they relate to the Products and Services sold or provided after the
Closing Date.
(c) With respect to those Bundled Contracts other than those which the Purchaser has
elected to negotiate Alternative Arrangements, promptly following the later of (i) the entry of
the U.S. Sale Order and (ii) the receipt of HSR Approval and Competition Act Approval, the
Purchaser and the Sellers shall cooperate to jointly contact each party thereto including
without limitation, by making such contacts (by phone or in person) as may be reasonably
requested by Purchaser and by sending a joint letter, in form and substance satisfactory to
each of Sellers and Purchaser notifying the counterparty to each such Bundled Contract of the
transactions and requesting the counterparty to agree to amend such Bundled Contract from and
after the Closing Date so as to delete all obligations and Liabilities therefrom as they relate
to the Products and the Services and enter into a new Contract (effective as of, and
conditioned upon the occurrence of, the Closing) with the
applicable customer and which only relates to Products and Services, in which event such
new Contract shall be deemed to be a Seller Contract, provided, however, that
the Sellers shall be under no obligation to compromise any right, asset or benefit or to expend
any amount or incur any Liabilities in obtaining such arrangements, and the failure to enter
into such arrangements shall not entitle the Purchaser to terminate this Agreement, fail to
complete the transactions contemplated hereby or reduce the Purchase Price payable hereunder
(except as otherwise provided in Section 2.2.1); provided, further, that
without the express written consent of Purchaser, Sellers shall not agree to amend the material
terms of any Bundled Contract as a condition of such counterparty agreeing to amend the Bundled
Contract in the manner set forth in this subsection (c) and if so requested, Sellers shall
notify Purchaser and, unless Purchaser consents to such amendment, Sellers shall not enter into
a new Contract with such customer as set forth in this subsection (c) but shall instead enter
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into a Subcontract Agreement with respect to such Bundled Contract as provided in subsection
(d) below. Each of the Sellers and the Purchaser shall notify the other Party if any customer
has contacted such Party with regard to the matters set forth in this Section 5.15 and shall
keep such other Party reasonably informed regarding the content of any discussions with the
customer.
(d) For those Bundled Contracts for which the arrangements mentioned in Section 5.15 (a) -
(c) have not been entered into by January 25, 2010 or such later date as the Parties may
mutually agree, the Sellers and the Purchaser shall use commercially reasonable efforts to
enter into one or more Subcontract Agreements between the Sellers and the Purchaser or the
applicable Designated Purchaser with respect to such Bundled Contracts on such terms as are
reasonably satisfactory to each of them; provided that (x) nothing in this Section 5.15
shall require the Sellers to renew any Bundled Contract once it has expired, (y) the Sellers
shall have the right, any time after the date that is one (1) year after the Closing Date, to
exercise any right to terminate any Bundled Contract, and (z) the Sellers shall be under no
obligation to compromise any right, asset or benefit or to expend any amount or incur any
Liabilities in order to comply with its obligations under this sentence.
SECTION 5.16. Post-Closing Assistance for Litigation.
(a) After the Closing, the Purchaser shall, upon the request of the Sellers and at the
Sellers cost (including reimbursement of reasonable out of pocket expenses of the Purchaser
and the Designated Purchasers and payment of a reasonable per diem to the Purchaser or a
Designated Purchaser which per diem shall be based on the total compensation of the affected
Transferred Employees at the time), require the Transferred Employees to make themselves
reasonably available at reasonable times and cooperate in all reasonable respects with the
Sellers and their Affiliates in the preparation for, and defense of, any lawsuit, arbitration
or other Action (whether disclosed or not disclosed in the Sellers Disclosure Schedule) filed
or claimed against the Sellers or any of their Affiliates or any of the respective agents,
directors, officers and employees of the Sellers and their Affiliates, whether currently
pending or asserted in the future, concerning the operation or conduct of the Business prior to
the Closing Date; provided, however, that the obligations of the Purchaser
hereunder shall only extend to the Transferred Employees who remain employed by the Purchaser
or a Designated Purchaser as of the date of the Sellers request and shall not
apply to former employees no longer employed by the Purchaser or a Designated Purchaser as
of such date and shall not require the Purchaser or a Designated Purchaser to continue the
employment of any such employee.
(b) After the Closing, the Sellers shall, upon the request of the Purchaser, and at the
Purchasers cost (including reimbursement of reasonable out of pocket expenses of the Sellers
and payment of a reasonable per diem to the Sellers which per diem shall be based on the total
compensation of the affected employees at the time), require their employees that were not
Transferred Employees to make themselves reasonably available and cooperate in all reasonable
respects with the Purchaser and the Designated Purchasers and their Affiliates in the
preparation for, and defense of, any lawsuit, arbitration or other Action filed or claimed
against the Purchaser, any of the Designated Purchasers, any of their Affiliates or any of the
respective agents, directors, officers and employees of any of the
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foregoing, whether currently
pending or asserted in the future, concerning the operation or conduct of the Business prior to
the Closing Date; provided, that the obligations of the Sellers or their Affiliates
under this Section 5.16(b) shall only extend to the employees of such Sellers or Sellers
Affiliates as of the date of the Purchasers request and shall not apply to former employees no
longer employed by such Sellers or Sellers Affiliates as of such date and shall not require
such Sellers or Sellers Affiliates to continue the employment of any such employee.
SECTION 5.17. Tangible Asset Removal. Except as otherwise set forth in the Real
Estate Terms and Conditions and the Real Estate Agreements, the Purchaser shall, and shall cause
the relevant Designated Purchasers to remove all tangible Assets from all premises owned or leased
by the Sellers or their Affiliates that are not being leased, subleased or licensed to the
Purchaser or any Designated Purchaser in accordance with the Real Estate Terms and Conditions
within sixty (60) days after the Closing Date; provided, however, that in the event
that the Sellers notify the Purchaser in writing that the Sellers desire, or are required, to
vacate earlier, (i) the Sellers shall have the right by written notice to the Purchaser to require
the Purchaser to remove all tangible Assets from all premises owned or leased by the Sellers or
their Affiliates prior to the date that is thirty (30) days after the Closing Date or (ii) the
Sellers may remove and store all tangible Assets at the Sellers sole cost and expense until the
date that is sixty (60) days after the Closing Date. The Sellers shall cooperate with such
efforts, including by providing access to such facilities during normal business hours or where
necessary to minimize disruption to the Business and to the other businesses of the Sellers, to
provide reasonable access during non-working hours for the purpose of facilitating such removal.
SECTION 5.18. Termination of Overhead and Shared Services and Intercompany Licensing
Arrangements.
(a) The Purchaser acknowledges and agrees that, except as otherwise expressly provided in
the Transition Services Agreement, effective as of the Closing Date (i) all Overhead and Shared
Services provided to the Business (excluding the EMEA Business and except the Transferred
Overhead and Shared Services) shall cease and (ii) the Sellers or their Affiliates shall have
no further obligation to provide any Overhead and Shared Services to the Business (excluding
the EMEA Business).
(b) The Sellers shall, on or before Closing, provide the Purchaser with reasonable
evidence confirming that Nortel Networks S.A. has agreed:
(i) not to assert its Intellectual Property and exclusive license rights, if
any, in a manner that could restrict or conflict with the ability of the Purchaser
or its successors, assigns, licensees, sub-licensees or customers to operate in the
field of the Business and its natural evolutions; and
(ii) to the fullest extent permitted under French Law, to relinquish, waive and
terminate all its Intellectual Property and license rights (including any
enforcement rights) to the extent (but only to the extent) that they relate to the
Intellectual Property that is sold or licensed to the Purchaser in connection with
the sale of the Business.
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(c) The Sellers (other than NNL) shall, on or before Closing, provide the Purchaser with
Appropriate License Termination agreements (as defined in the IFSA) executed by each of them
and shall use commercially reasonable efforts to obtain and provide the Purchaser with
Appropriate License Termination agreements from each of their Affiliates who are not Sellers.
SECTION 5.19. Financing. Notwithstanding anything to the contrary set forth herein,
the Purchaser acknowledges and agrees that (i) its obligations to consummate the transactions
contemplated by this Agreement are not conditioned or contingent in any way upon receipt of any
financing and the failure to consummate the transactions contemplated herein as a result of the
failure to obtain financing shall constitute a breach of this Agreement by the Purchaser (including
its obligations pursuant to Section 2.3).
SECTION 5.20. Insurance Matters.
(a) The Purchaser acknowledges and agrees that coverage of the assets, tangible or
intangible property, Liabilities, ownership, activities, businesses, operations, current and
former shareholders, and current and former directors, officers, employees and agents of, the
Business (excluding the EMEA Business) (collectively, the Covered Assets and Persons) under
all current or previous insurance policies of the Sellers and their Affiliates, including,
without limitation, all environmental, directors and officers Liability, fiduciary Liability,
employed lawyers, property and casualty flood, ocean marine, contaminated products and all
other insurance policies or programs arranged or otherwise provided or made available by the
Sellers or their Affiliates that cover (or covered) any of the Covered Assets and Persons at
any time prior to the Closing (the Seller Insurance Policies) shall cease as of the Closing
Date and the Covered Assets and Persons will be deleted in all respects as insured (or
additional insured, as the case may be) under all Seller Insurance Policies. Except as
expressly provided herein, the Sellers shall retain any rights to, including any right to any
proceeds received in respect of, any claim pending as of the date hereof or made after the date
hereof under any Seller Insurance Policy, even if such claims relates to the capital assets or
properties of the Business (excluding the EMEA Business).
(b) If after the Closing Date the Purchaser or the Sellers (or any of their respective
Affiliates) reasonably require any information regarding claim data or other information
pertaining to a claim or an occurrence reasonably likely to give rise to a claim (including any
pre-Closing claims under the Seller Insurance Policies that are to be covered under the
retrospective component of the new insurance policy) in order to give notice to or make filings
with insurance carriers or claims adjustors or administrators or to adjust, administer or
otherwise manage a claim, then the Sellers or the Purchaser, as the case may be, shall cause
such information to be supplied to the other (or their designee), to the extent such
information is in their possession and control or can be reasonably obtained by the Sellers or
the Purchaser (or their respective Affiliates), as applicable, promptly upon a written request
therefore. If the Purchaser desires access to, and utilization of, claims data or information
maintained by an insurance company or other Third Party in respect of any claim (including any
pre-Closing claims under any Seller Insurance Policies that are covered under the retrospective
component of the new insurance policies), the Purchaser shall be exclusively responsible for
acquiring from such insurance company or Third Party, at the
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Purchasers sole cost and expense,
the rights necessary to permit them to obtain access to and utilization of such claims data or
information. If any Third Party requires the consent of the Sellers or any of their Affiliates
to the disclosure of such information, such consent shall not be unreasonably withheld.
(c) Prior to Closing, the Sellers shall maintain the Seller Insurance Policies, or in the
event any such policies are cancelled or otherwise terminated, shall obtain other substantially
comparable insurance policies that have the same coverage limits and deductibles or
self-retention amounts. In respect of insurance claims relating to the Owned Equipment
(excluding for the purposes of this Section 5.20(c), any fixtures and improvements forming part
of the Carling Property) or the premises subject to a Real Estate
Agreement (except for the Carling Property) occurring prior to Closing, the following
provisions shall apply:
(i) The Sellers shall make and diligently pursue any applicable insurance
claims related to damage or destruction to any Owned Equipment wherever located.
(ii) If and to the extent that any Owned Equipment, wherever located, is
destroyed or damaged prior to Closing, and is not replaced or repaired or restored
to its condition prior to such damage or destruction, then at Closing, the Sellers
shall pay to the Purchaser the amount of any net insurance proceeds received (or
which would have been received had the Sellers maintained the Seller Insurance
Policies) in respect of such Owned Equipment that have not been applied to repair,
replacement or restoration, as applicable, and assign any such claim and the rights
to receive the proceeds of any such claim that has not yet been finally adjusted.
In the event that insurance proceeds would have been available but for the Sellers
failure to maintain the Seller Insurance Policies, or due to the rights of any
superior lender, then in such event, the Purchase Price shall be reduced by an
amount equal to the cost of repair, or, if destroyed or damaged beyond repair, by an
amount equal to the cost of replacing the Owned Equipment so damaged or destroyed
with equipment of comparable age and condition.
(iii) Except in respect of the Carling Property, if and to the extent that any
leasehold improvements at any premises subject to a Real Estate Agreement are
destroyed or damaged prior to Closing, then to the extent of the receipt of
insurance proceeds relating to such damage or destruction by the Sellers or which
would have been received had the Sellers complied with the Seller Insurance
Policies, or tenants insurance requirements under the applicable Lease, as
applicable (but excluding any proceeds related to business interruption insurance or
related to any part of any premises in the applicable building not forming part of
the premises subject to a Real Estate Agreement) the Sellers shall be responsible to
the extent required under the terms of the applicable Lease, to utilize such
insurance proceeds received to restore the applicable improvements and leasehold
improvements in accordance with the provisions of the applicable Lease. To the
extent that any Real Property which is the subject of a Real Estate Agreement is
destroyed or damaged after Closing, the applicable terms of the
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applicable Real
Estate Agreement shall apply; and to the extent that the subject Real Estate
Agreement provides that it is the responsibility of the landlord to repair or
restore any destruction or damage to real or personal property, the Sellers shall
make and diligently pursue any applicable claims against the landlord related to
such damage or destruction.
(d) If and to the extent that the Carling Property is destroyed or damaged prior to
Closing and the Purchaser does not elect to terminate this Agreement pursuant to Section
10.1(f), hereof, then to the extent of the Sellers receipt of insurance proceeds relating to
such damage or destruction or which would have been received had the Seller
maintained the Seller Insurance Policies, (but excluding any proceeds related to business
interruption insurance), and subject to the rights of any superior landlord or mortgagee in
respect of the Carling Property, the Sellers shall be responsible to the extent required under
the terms of the Carling Property Lease Agreements (as if such Lease Agreements were in effect
prior to Closing and as if the landlord were required to restore tenant improvements in the
same manner as other improvements) to restore the applicable improvements and fixtures to a
condition substantially comparable to the condition prior to such damage or destruction. In
the event that (i) insurance proceeds are not immediately available to the Sellers on Closing
for purposes of the repair and restoration of the Carling Property (including any fixtures and
tenant improvements forming a part thereof); or (ii) insurance proceeds would have been
available but for the Sellers failure to maintain the Seller Insurance Policies, or due to the
rights of any superior landlord or mortgagee, the Purchaser may withhold from the Purchase
Price due on Closing and pay into the Escrow Account an amount equivalent to the aggregate cost
of repairing such damage and restoring the Carling Property (including any fixtures and
improvements forming a part thereof) to a condition substantially comparable to the condition
prior to such damage or destruction (such cost to be determined by an independent and qualified
architect or engineer mutually acceptable to the Sellers and Purchaser, each acting
reasonably). The provisions of Article II.C of the Real Estate Terms and Conditions shall
apply mutatis mutandis in respect of these escrow amounts and the completion of the repair and
restoration works. To the extent that the Carling Property is destroyed or damaged after
Closing, the terms of the Carling Property Lease Agreements shall apply.
SECTION 5.21. Sellers Deposits, Guarantees and Other Credit Support of the Business.
(a) Following the Closing, the Purchaser shall, or shall cause the applicable Designated
Purchaser to, cooperate with the Sellers to procure the return and/or release by the applicable
counterparty, as soon as reasonably practicable, of any lease security deposits given by the
Sellers under any Leases that are Assigned Contracts or any deposits, bonds or other security
posted in connection with Assigned Contracts and that are set forth in Section 5.21(a) of the
Sellers Disclosure Schedule (which such Section of the Sellers Disclosure Schedule may be updated
by the Sellers upon notice to the Purchaser up until three (3) Business Days prior to the Closing
Date) (the Security Deposits), including where required by the applicable counterparty,
offering to post such Security Deposits on terms and conditions no less favorable than offered to
such Seller by such counterparty. Except as required by the immediately preceding sentence, the
Purchaser shall in no event be required to provide any replacement financial security or any
financial security or other deposits with
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respect to any premises leased pursuant to any lease or
sublease arrangement with any Seller, all of which shall be the sole responsibility of the
Seller.
(b) The Purchaser shall, or shall cause the applicable Designated Purchaser to, hold the
Sellers and their Affiliates harmless from and against any and all Losses suffered by the Sellers
and their Affiliates resulting from, or relating to, the failure of the Purchaser or the
applicable Designated Purchaser, as the case may be, to procure the return and/or release of the
Security Deposits to the relevant Seller in accordance with Section 5.21(a); provided,
however, that (i) the Purchaser shall have no liability to the Sellers and
their Affiliates pursuant to this Section 5.21(b) unless the Sellers and their Affiliates
assign to the Purchaser all of the Sellers and their Affiliates right, title and interest in
the unreturned Security Deposits and (ii) the Purchasers liability to the Sellers and their
Affiliates shall be limited, in each case, to the amount of such Security Deposits.
SECTION 5.22. Use of Sellers Trademarks. Except as expressly provided in the
Trademark License Agreement, as of the Closing Date, the Purchaser shall not have the right to use
the name Nortel or any Trademarks owned by the Sellers or any of their Affiliates or any other
mark employing the word Nortel or any part or variation of any of the foregoing or any
confusingly similar Trademarks to any of the foregoing (collectively, the Sellers Trademarks).
SECTION 5.23. Accessible Information. After the Closing, the Purchaser shall have
the right to reasonably request from the Main Sellers copies of all books, records, files,
documentation and sales literature (other than Tax records and Employee Records, except as provided
in Sections 5.6(d) and 7.4(d)) in the possession or under control of the Sellers and held or used
in the Business (other than records to the extent prohibited by applicable Law), to which the
Purchaser in good faith determines it needs access for bona fide business or legal purposes. The
Sellers shall use commercially reasonable efforts to, or cause their Respective Affiliates to use
commercially reasonable efforts to, provide such copies to the Purchaser (at the Purchasers
expense) as soon as reasonably practicable; provided, that the Sellers shall be allowed to
redact any such requested document in order to delete any information and data relating to business
segments of any such Seller and its Respective Affiliates not included in the Business;
provided, further, that nothing herein shall require the Sellers to (i) disclose
any information to the Purchaser if such information disclosure would jeopardize any
attorney-client or legal privilege or (ii) contravene any applicable Law, fiduciary duty or
agreement (including any confidentiality agreement to which the Sellers or any of their Affiliates
is a party); it being understood, that the Sellers shall cooperate in any reasonable
efforts and requests for waivers that would enable otherwise required disclosure to the Purchaser
to occur without so jeopardizing privilege or contravening such Law, duty or agreement).
SECTION 5.24. Maintenance of Books and Records. After the Closing, each Primary
Party shall, and shall cause its Affiliates to, preserve, until at least the third (3rd)
anniversary of the Closing Date (or, in the case of Tax records (including VAT records), such later
date as may be required by Law), all pre-Closing Date records to the extent relating to the
Business possessed or to be possessed by such Person. After the Closing Date and up until at least
the third (3rd) anniversary of the Closing Date, upon any reasonable request from any
Primary Party or its representatives, the other Primary Party shall, and/or shall cause the Person
holding such records to, (a) provide to the requesting Primary Party or its representatives
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reasonable access to such records during normal business hours and (b) permit the requesting
Primary Party or its representatives to make copies of such records, in each case at no cost to the
requesting Primary Party or its representatives (other than for reasonable out-of-pocket expenses).
In addition, in the event that the financial statements of the Business are audited for any period
prior to the Closing Date, upon execution of a customary access letter if required, the requesting
Primary Party and its representatives (including their outside accountants) shall be granted access
to all relevant documents and information in connection with the requesting Primary Party
completing the audit of its accounts for the 2009 fiscal year; provided, however,
that nothing herein shall require the non-requesting Primary Party to disclose any information
to the requesting Primary Party if such disclosure would jeopardize any attorney-client or other
legal privilege or contravene any applicable Law, fiduciary duty or agreement (it being understood
that the non-requesting Primary Party shall cooperate in any reasonable efforts and requests for
waivers that would enable otherwise required disclosure to the requesting Primary Party to occur
without so jeopardizing privilege or contravening such Law, duty or agreement). Such records may
be sought under this Section 5.24 for any reasonable purpose, including to the extent reasonably
required in connection with accounting, litigation, federal securities disclosure or other similar
needs of the requesting Primary Party (other than claims between the Primary Parties or any of
their respective Subsidiaries under this Agreement or any Ancillary Agreement). Notwithstanding
the foregoing, any and all such records may be destroyed by the non-requesting Primary Party if the
non-requesting Primary Party sends to the requesting Primary Party written notice of its intent to
destroy such records, specifying in reasonable detail the contents of the records to be destroyed;
(i) such records may then be destroyed after the 60th day following such notice unless
the requesting Primary Party notify the destroying party that the requesting Primary Party desire
to obtain possession of such records, in which event the non-requesting Primary Party shall
transfer or cause to be transferred the records to the requesting Primary Party and the requesting
Primary Party shall pay all reasonable expenses of the non-requesting Primary Party in connection
therewith, and (ii) neither Primary Party shall be required to provide the other Party access to,
or copies of any of its Tax records.
SECTION 5.25. Certain Ancillary Agreements. The Primary Parties shall use their
commercially reasonable efforts to:
(a) promptly negotiate in good faith with the relevant contract manufacturers and finalize
the terms of the Contract Manufacturing Inventory Agreements based on the term sheet attached
hereto as Exhibit 1.1;
(b) promptly negotiate in good faith with the LGN Joint Venture with respect to the
LGN/Korea Distribution Agreement;
(c) promptly negotiate in good faith with NETAS with respect to the NETAS Distribution
Agreement;
(d) negotiate in good faith with the relevant counterparties with respect to the NGS
Distribution Agreement and the EFA Development Agreement;
(e) negotiate in good faith with respect to any Subcontract Agreement;
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(f) on or before the Closing and subject to the completion prior to Closing of the
negotiation of each such agreement to the mutual satisfaction of each party thereto, enter into
the Contract Manufacturing Inventory Agreements, the LGN/Korea Distribution Agreement and the
NETAS Distribution Agreement, the Mutual Development Agreement, the Seller Supply Agreement,
the NGS Distribution Agreement and the EFA Development Agreement, each as negotiated and
finalized pursuant to this Section 5.25; and
(g) negotiate, or to cause to be negotiated, in good faith on commercially reasonable
terms and taking into account options available to the Primary Parties, appropriate commercial
arrangements, including a potential Seller Supply Agreement and Mutual Development Agreement,
in order to address interdependencies to the extent any bilateral relationships with other
businesses, business segments or divisions (or former businesses, business segments or
divisions) of certain Sellers for the supply of products are required to be in place in order
to fulfill customer commitments existing as of the Closing Date and which will continue
thereafter.
Notwithstanding the foregoing, the Primary Parties shall have no obligation to enter into any
of the agreements described in this Section 5.25 unless each of them are satisfied, in their sole
and absolute discretion with the terms thereof and it shall not be a breach of this Agreement to
fail to enter into such agreements before, on or after the Closing Date; provided
however, that the Parties acknowledge that the failure to enter into any such Agreement
shall not be deemed a failure of any condition precedent to any Partys obligations hereunder. In
the event that the Purchaser is unable prior to the Closing to negotiate terms and conditions for
the Seller Supply Agreement that are satisfactory to it in its sole discretion, the Purchaser may
by written notice to the Sellers given by January 18, 2010 elect to require that the Sellers
purchase such amount of the components and other products intended to be supplied under the Seller
Supply Agreement and such components and other products shall be transferred to the Purchaser as
part of the Owned Inventory hereunder.
SECTION 5.26. Additional Financial Statements. The Sellers shall use commercially
reasonable efforts to cause KPMG (as their independent accountants) to complete the audit of the
combined carve-out (A) balance sheets for the Business at December 31, 2007 and 2008, (B) related
statements of earnings and cash flows of the Business for the fiscal years ended December 31, 2007
and 2008, and (C) balance sheet for the Business at September 30, 2009, and (D) the related
statements of earnings and cash flows of the Business for the nine (9) month period ending on
September 30, 2009 and (E) only if the Closing Date is February 12, 2010 or later, a balance sheet
for the Business at December 31, 2009 and related statements of earnings and cash flows of the
Business for the fiscal year ended December 31, 2009 (any such balance sheets and statements of
earnings and cash flows, collectively, the Audited Financial Statements) and to deliver to the
Purchaser as promptly as practicable, and in any event within three (3) Business Days of receipt
thereof the Audited Financial Statements. The Sellers shall use commercially reasonable efforts to
prepare and furnish the Purchaser with any other financial and other pertinent information
regarding the Business as may be reasonably requested by the Purchaser, including all financial
statements (including, to the extent required, unaudited combined carve-out financial statements of
the Business as of the end of and for the nine (9) month period ended September 30, 2008, the
"Unaudited September 30, 2008 Financial Statements) and financial data, in each case of the type
required by Regulation S-X and Regulation S-K under the Securities Act or in order for the
Purchaser to comply with its financial
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reporting obligations as established by the SEC under the
Exchange Act. The Sellers shall provide the Purchaser and its representatives with such
cooperation and information as they shall reasonably request in connection with the Purchasers
compliance with its obligations under Section 8.1(a) hereof, or in order for the Purchaser to
comply with its obligations as established by the SEC under the Securities Act and the Exchange
Act.
SECTION 5.27. Securities Compliance. The Purchaser shall notify NASDAQ of the listing of
the Shares as required by the NASDAQ listing rules prior to the Closing Date.
SECTION 5.28. Transition Services. Section 5.28 of the Sellers Disclosure Schedule
addresses certain matters related to the Transition Services Agreement and the services to be
performed by certain Affiliates of the Sellers for the Purchaser. The Parties agree that the terms
and conditions set forth in Section 5.28 of the Sellers Disclosure Schedule are incorporated by
reference herein and form a part of this Agreement.
SECTION 5.29. Standstill Period.
(a) From the date of this Agreement until the entry of the U.S. Bidding Procedures Order,
and from the date of the conclusion of the Auction until the Closing Date or termination of
this Agreement, neither any Seller nor any Affiliate of any Seller shall, directly or
indirectly through any of its authorized representatives, (i) solicit, initiate or encourage or
engage in discussions or negotiations with respect to any proposal or offer from any Person
(other than the Purchaser or its Affiliates) relating to in each case any acquisition,
divestiture, recapitalization, business combination or reorganization of or involving all or a
substantial part of the business and operations of the Business (a Competing Transaction),
(ii) furnish any information with respect to, or participate in, or assist, any effort or
attempt by any Person to do or seek a Competing Transaction, (iii) execute any letter of intent
or agreement providing for a Competing Transaction, or (iv) seek or support Bankruptcy Court
approval of a motion or Order inconsistent with the transactions contemplated herein,
provided, however, that nothing contained herein shall prohibit the Sellers
from providing any Person with the bidding procedures for the sale of the Business and related
documents, answering questions about the bidding procedures for the sale of the Business,
announcing the execution of this Agreement or the Auction or selecting an Alternate Bid (as
such term is defined in the U.S. Bidding Procedures Order) at Auction and obtaining approval of
such Alternate Bid as an alternate bid; and provided that nothing herein shall limit
the Sellers ability to negotiate, file, seek approval of or consummate a Sponsored
Reorganization Plan prior to the completion of the Auction.
(b) Notwithstanding the foregoing, the Sellers may provide continued access to written due
diligence materials about the Business in an electronic data room (including written responses
to requests for information made after the date hereof), to only such Person or Persons that
(i) have access to such electronic data room as of the date hereof, and (ii) have satisfied the
requirements of paragraph (a) of the Participation Requirements of the U.S. Bidding
Procedures Order within ten (10) Business Days from the date hereof, it being understood that,
during such ten (10) Business Day period, the Sellers will be allowed to (x) request such
Persons to enter into amendments to their existing confidentiality agreements in order to
render them compliant with the requirements of the bidding procedures for the sale of the
Business, (y) discuss and negotiate such amendments
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with those Persons, and (z) execute such
amendments, and each such action shall not constitute a breach of this Section 5.29,
provided, however, that the Sellers must provide the Purchaser at least
equivalent access to all such written due diligence materials.
(c) Without prejudice to any other methods or actions that may result in the cure of any
breach of this Section 5.29, the Parties acknowledge and agree that in the event that any
officer or other employee of any Seller acting alone (without the assistance of outside
advisors) in violation of a corporate policy approved by the board of directors of NNC takes an
action that constitutes a breach of Section 5.29(a)(i) but does not constitute a breach of any
other clause of this Section 5.29, such breach shall be deemed cured in the event such action
ceases and one or more of the Sellers notifies the counterparty or counterparties to the
potential Competing Transaction in writing that the Sellers will not undertake such Competing
Transaction, in each case no later than the fifth (5th) day after the Sellers become
aware of such breach (for such purposes excluding the knowledge of the employee or officer
whose action constitutes such breach), provided that such action that constituted the
breach did not involve substantive negotiations regarding the terms of such Competing
Transaction.
SECTION 5.30. Hazardous Materials at the Carling Property.
(a) The Sellers acknowledge that the Purchaser and any Designated Purchaser did not cause
or contribute to, and shall not be liable or responsible for, any currently or formerly
existing Hazardous Materials contamination in, under, at, near or migrating from, to or through
the Carling Property prior to or at the Closing Date.
(b) The Sellers that own and lease the Carling Property and the Purchaser agree that the
relevant Sellers and the Purchaser or a Designated Purchaser shall include in the Carling
Property Lease Agreements: (i) an acknowledgement that the Purchaser or a Designated Purchaser
did not cause or contribute to, and shall not be liable or responsible for, the currently or
formerly existing Hazardous Materials contamination in, under, at, near or migrating from, to
or through the Carling Property prior to or at the commencement of the Carling Property Lease
Agreements; (ii) an indemnity by the relevant Sellers in favor of the Purchaser and any
Designated Purchaser for (A) any Liabilities, including any Order, arising (directly or
indirectly) out of or relating to any currently or formerly existing Hazardous Materials
contamination in, under, at, near or migrating from, to or through the Carling Property prior
to or at the commencement of the Carling Property Lease Agreements and (B) if and to the extent
caused by Sellers, any Liabilities, including any Order, arising (directly or indirectly) out
of or relating to any Hazardous Materials contamination in, under, at, near or migrating from,
to or through the Carling Property; and (iii) an indemnity by the Purchaser or Designated
Purchaser, as the case may be, in favor of the Sellers for, if and to the extent caused by the
Purchaser or Designated Purchaser, as the case may be, any Liabilities, if and to the extent
caused by the Purchaser or Designated Purchaser, as the case may be, including any Order,
arising (directly or indirectly) out of or relating to any Hazardous Materials contamination
in, under, at, near or migrating from, to or through the Carling Property after the
commencement of the Carling Property Lease Agreements.
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SECTION 5.31. Montreal Premises and Other Real Estate. Before, on and after the
Closing Date, the Parties shall take such actions as are contemplated by, and comply with, the Real
Estate Terms and Conditions which shall be incorporated herein by reference. Without limiting the
foregoing, at the Closing, the Purchaser and/or a Designated Purchaser and each
applicable Seller shall enter into an Occupancy Agreement with respect to each Critical
Location (identified in the Real Estate Terms and Conditions) and shall enter into a license
agreement with respect to each Short-Term Licensed Property location which the Purchaser shall be
licensed to occupy following the Closing Date, in each case on the terms and conditions specified
in the Real Estate Terms and Conditions.
SECTION 5.32. Right to Exclude.
(a) At any time prior to the date of the Auction, the Purchaser may elect, by written
notice to the Main Sellers, but without any effect on the Purchase Price or the Purchasers
obligation to offer employment to at least the numbers of Employees set out in Section 7.1.1,
to designate as Excluded Assets all of the assets, interests and rights of any Other Seller
other than any Other Seller with respect to which it has previously made an election under
Section 2.2.3 if it is the case that, absent such election, by consummating the transactions
contemplated hereby, the Purchaser or a Designated Purchaser would be reasonably likely to
succeed to Liabilities of such Other Seller that are not Assumed Liabilities hereunder, or
Liabilities of such Other Seller would be reasonably likely to be transferred to, or assumed
by, the Purchaser or a Designated Purchaser, whether by operation of Law or otherwise
(including, without limitation, any Liability for Taxes) (any such Other Seller so designated
by the Purchaser, an Excluded Other Seller. For the avoidance of doubt, if the Purchaser
makes an election under this Section 5.32 with respect to any Excluded Other Seller, the
provisions of Section 2.2.3 shall not apply to such Excluded Other Seller. Upon designation of
any Excluded Other Seller, the assets, interests and rights of such Excluded Other Seller shall
be Excluded Assets and any Liabilities of such Excluded Other Seller or otherwise relating to
such Excluded Assets shall be Excluded Liabilities, and such Excluded Other Seller shall not be
a Party to this Agreement, shall not be an Other Seller, and shall have no rights or
obligations hereunder, provided that each Excluded Other Seller shall remain bound by
the provisions of Article XI. In addition to the foregoing, following the designation of an
Excluded Other Seller by the Purchaser, no sublease and no license or other arrangement
pursuant to the Real Estate Terms and Conditions shall be required to be entered into with
respect to any premises related to such Excluded Other Sellers operations prior to the date of
the Purchasers election. For the avoidance of doubt, the designation of assets, interests or
rights in any country as Excluded Assets shall not in any way prevent the Purchaser or any of
its Affiliates from engaging in the Business (defined as if such assets, interests or rights
were not Excluded Assets) in such country either before or after the Closing. If a TSA Seller
becomes an Excluded Other Seller pursuant to this Section 5.32, such entity shall not be
required to be a party to the Transition Services Agreement. For the avoidance of doubt, the
failure of any TSA Seller to become party to the Transition Services Agreement shall not in any
way diminish the obligations of the remaining TSA Sellers to provide, or to cause one or more
of the Providers to provide, all Services (as defined in the Transition Services Agreement).
Notwithstanding anything herein to the contrary, the Parties agree that neither the Included
Services nor the Extra Services shall include any service currently provided by an Excluded
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Seller unless such service can reasonably be provided by the TSA Sellers without materially
changing or burdening the operations of the TSA Sellers.
(b) The Main Sellers agree that, as of the Closing, (i) neither any Seller nor any
Sellers Affiliate will be a party to any Contract with any Excluded Seller that will restrict
the Purchaser or a Designated Purchaser, in any material respect, from engaging after the
Closing in any business activity relating to the Business in the country where such Excluded
Seller is located or organized; and (ii) the Sellers and their Affiliates will cease to supply
Products or Services or provide other assistance to an Excluded Seller with respect to
the Business (except to the extent required in order to allow such Excluded Seller to
continue to perform any obligations under (x) a contract with one of its customers existing as
of the date hereof, or (y) a contract with one of its customers entered into after the date
hereof but before Closing that was entered into in the Ordinary Course, in each case which such
Excluded Seller is required by such contract to perform until the earliest of (A) the
expiration of such contract (without giving effect to any extension of the term thereof other
than at the option of the counterparty thereto), (B) the earliest date on which such Excluded
Seller has the right to terminate such contract without penalty or (C) the date on which such
contract is terminated by the counterparty thereto; provided that the Purchaser and its
Affiliates shall be under no obligation to make Products or Services (or any other products or
services) available to the Sellers or their Affiliates or provide other assistance in
connection therewith) and the Purchaser and its Affiliates will have no obligation to supply
Products or Services (or any other products or services) or provide other assistance to the
Excluded Sellers; provided that, notwithstanding clauses (i) and (ii) above, the
Purchaser or a Designated Purchaser will, if requested to do so, perform any Subcontract
Agreement that it enters into pursuant to Section 5.15(c) at the request of an Excluded Seller
and the Sellers may be a conduit through which the Purchaser supplies Products or Services to
an Excluded Seller.
SECTION 5.33. Authorization of Shares. The Purchaser will, at all times, duly authorize
and reserve for issuance the Shares.
SECTION 5.34. Patent Assignments. Prior to the Closing Date, the Purchaser shall
notify the Sellers in writing of any defects in title affecting any of the transferred Patents and
the Sellers shall take, as soon as reasonably practicable thereafter, all reasonable steps
necessary to ensure that NNL is the assignee on record in the relevant government registry or
patent office, as applicable, for all transferred Patents and to correct all material defects in
title affecting any of the transferred Patents that are still in force in the relevant
jurisdiction.
SECTION 5.35. India. Section 5.35 of the Sellers Disclosure Schedule addresses certain
matters related to the transfer of assets that are used by Nortel Networks Singapore Pte. Limited,
Nortel Networks India International Inc. and Nortel Networks (India) Private Limited in the
Business in India. The Parties agree that the terms and conditions set forth in Section 5.35 of
the Sellers Disclosure Schedule are incorporated by reference herein and form a part of this
Agreement.
SECTION 5.36. No Vote. The Purchaser will not take any action that would result in a
requirement for the approval of shareholders or any securityholders of the Purchaser pursuant to
NASDAQ Listing Rule 5635 or require any other action or consent pursuant to any
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applicable exchange
rules, regulations, interpretations or Laws in connection with the issuance of the Convertible
Notes or the Shares upon the conversion thereof.
SECTION 5.37. Deposit. On or before November 25, 2009, the Purchaser shall deposit
Thirty-Eight Million Four Hundred Fifty Thousand dollars ($38,450,000) (the Deposit Amount) with
Citibank, N.A. (the Deposit Escrow Agent) pursuant to the terms and conditions of the Deposit
Escrow Agreement substantially in the form attached as Exhibit AA hereto (the Deposit Escrow
Agreement). Notwithstanding anything to the contrary set forth
herein or the Deposit Escrow Agreement, the Deposit Amount shall not become a part of the
Sellers or the EMEA Sellers estate until such time as the Deposit Escrow Agent receives joint
written instructions from the Parties and Nortel Networks UK Limited instructing the Deposit Escrow
Agent to disburse the Deposit Amount to the Distribution Agent or the Main Sellers. At the
Closing, the Purchaser shall be entitled to a credit for the amount of the Deposit Amount against
the Base Cash Purchase Price and the Parties and Nortel Networks UK Limited shall jointly instruct
the Deposit Escrow Agent to disburse the Deposit Amount to the Distribution Agent. The Deposit
Amount shall be returned and/or disbursed in accordance with the U.S. Bidding Procedures Order,
this Agreement and the Deposit Escrow Agreement. In the event that all of the conditions to the
Purchasers obligations to Closing are satisfied and Purchaser fails to consummate the transactions
contemplated hereby and by the Deposit Escrow Agreement and the Main Sellers terminate this
Agreement pursuant to, and in accordance with Section 10.1(b)(ii), the Main Sellers and the EMEA
Sellers shall be entitled to the Deposit Amount (less any interest earned thereon which shall be
disbursed to the Purchaser) and within two (2) Business Days of such termination, the Parties shall
jointly instruct the Deposit Escrow Agent to disburse the Deposit Amount to the Distribution Agent.
ARTICLE VI
TAX MATTERS
SECTION 6.1. Transfer Taxes.
(a) The Parties agree that the Purchase Price is exclusive of any Transfer Taxes. The
Purchaser shall (on behalf of itself and the Designated Purchasers) promptly pay directly to the
appropriate Tax Authority all applicable Transfer Taxes that are properly imposed upon or payable
or collectible or incurred in connection with the purchase by the Purchaser (or a Designated
Purchaser) of the Assets under this Agreement and in connection with the other Transaction
Documents including, for greater certainty, any stamp, documentary, recording, filing and similar
Taxes that may be imposed upon or payable or collectible or incurred in connection with the
execution of this Agreement and any other Transaction Documents; provided that if any such
Taxes are required to be collected, remitted, or paid by the Sellers or any Subsidiary of the
Sellers or any agent thereof (as requested by the Sellers or any Subsidiary of the Sellers), they
shall be paid by the Purchaser to the Sellers or any Subsidiary of the Sellers or any such agent,
as applicable, at the Closing, as applicable, or thereafter as requested of or by the Sellers.
For greater certainty, the Purchaser shall remain liable in respect of any Transfer Taxes for
which it is liable under the terms hereof regardless of the date that the Assets purchased under
this Agreement are removed by the Purchaser or its agents from the premises of the Sellers or any
of the Sellers suppliers. Upon request from a Seller, the Purchaser shall provide to such Seller
an original receipt (or other such evidence as
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shall be reasonably satisfactory to such Seller)
evidencing the payment of Transfer Taxes by the Purchaser to the applicable Tax Authority under
this Section 6.1(a).
(b) If the Purchaser or any Designated Purchaser wishes to claim or elect any exemption
relating to, or a reduced rate of, Transfer Taxes, in connection with this Agreement or the
other Transaction Documents (other than the EMEA Asset Sale Agreement, with respect to which
Transfer Taxes are separately addressed therein), the Purchaser or any Designated Purchaser, as
the case may be, acting reasonably and in good
faith, shall be solely responsible for determining that such exemption, reduction or
election (a Transfer Tax Reduction Determination) applies. In such case, the Purchaser or
the Designated Purchaser, as the case may be, shall provide the Sellers prior to Closing with
its permit number, GST or other similar registration numbers and/or any appropriate certificate
of exemption, election and/or other document or evidence to support the claimed entitlement to
such exemption by the Purchaser or such Designated Purchaser, as the case may be, it being
understood that Purchaser shall remain responsible for any Transfer Taxes whether or not shown
due on such Tax Return and shall indemnify and hold harmless the Sellers and their respective
officers and directors from any Losses arising out of or resulting from the Transfer Tax
Reduction Determination, including without limitation, any Tax, interest, penalty or sanction.
The Sellers shall, if applicable, agree to make a joint election under Section 167 of the
Excise Tax Act (Canada) and other similar Canadian provincial sales tax elections. If the
Purchaser or any Designated Purchaser pays any Transfer Taxes pursuant to this Section 6.1 and
a Seller thereafter becomes entitled to a refund for, or a reduction in Liability for, Transfer
Taxes payable by such Seller in respect of such Transfer Taxes paid by the Purchaser or a
Designated Purchaser, then such Seller shall promptly reimburse the Purchaser or Designated
Purchaser for an amount equal to such refund or reduction (including any interest paid in
connection with such refund or reduction and net of reasonable out of pocket expenses incurred
in obtaining such refund or reduction).
(c) Each of the Sellers shall cooperate with the Purchaser and its Affiliates in complying
with the reporting requirements relating to any Transfer Taxes under applicable Law with
respect to this Agreement and the Transaction Documents, and shall make reasonable efforts to
cooperate to the extent necessary to obtain any exemption from, or any reduction in amount or
rate of, Transfer Taxes sought by Purchaser or any Designated Purchaser. For the avoidance of
doubt, such cooperation shall include any applicable Seller using reasonable efforts to obtain
and/or furnish to the Purchaser or any Designated Purchaser any applicable information that is
reasonably requested by Purchaser or any Designated Purchaser in connection with its efforts to
obtain any exemption or reduction in amount or rate of Transfer Taxes, including through the
provision of invoices, receipts or other documentation requested by Purchaser or any Designated
Purchaser to document the payment of or establish the entitlement to a recovery or refund of,
such Transfer Taxes or the eligibility of the transactions to qualify as a transfer of a going
concern under applicable Law. Each Seller that is required by Law to collect VAT in
connection with this Agreement and the Transaction Documents shall, prior to and on the Closing
Date, be registered for VAT purposes in any jurisdiction applicable to such Seller.
(d) Each Tax Return with respect to Transfer Taxes (a Transfer Tax Return) imposed upon
or payable or collectible or incurred in connection with the purchase by the Purchaser (or a
Designated Purchaser) of the Assets under this Agreement
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shall be prepared by the Party that
customarily has primary responsibility for filing such Transfer Tax Return pursuant to
applicable Law. Any Transfer Tax Returns prepared by the Sellers pursuant to this Section
6.1(d) shall be made available to the Purchaser at least five (5) Business Days before such Tax
Returns are due to be filed. The Purchaser shall be entitled to review and comment on any
Transfer Tax Return prepared by the Sellers prior to making any payment in respect thereof, and
the Sellers shall incorporate any reasonable
comments received from Purchaser at least three (3) Business Days before such Tax Returns
are due to be filed, it being understood that the Purchaser shall remain responsible for any
Transfer Taxes whether or not shown due on such Tax Return. Subject to Section 6.1(a), the
Purchaser shall pay to the Sellers the amount of any Transfer Taxes payable in respect of
Transfer Tax Returns to be filed by the Sellers pursuant to this Section 6.1(d) at least one
(1) Business Day before such Transfer Tax becomes due and payable.
(e) With respect to any provision of this Article VI that by its terms applies to another
Transaction Document, such provision shall not apply to the other Transaction Document to the
extent that such other Transaction Document contains a contrary provision or contains a
provision that is inconsistent with the relevant provision of this Article VI. A reference to
a Transaction Document in this Article VI shall not include the EMEA Asset Sale Agreement or
the schedules thereto.
SECTION 6.2. Withholding Taxes. Subject to Section 2.4, the Purchasers and Designated
Purchasers shall be entitled to deduct and withhold from the Purchase Price and other payments made
under this Agreement and the Transaction Documents (other than the Transition Services Agreement,
with respect to which withholding Taxes are separately addressed therein) such amounts as the
Purchaser or Designated Purchasers, as the case may be, are required to deduct and withhold under
the Code or under any provision of state, local or foreign Tax Law, with respect to the making of
such payment. To the extent such amounts are so withheld by the Purchaser or a Designated
Purchaser, as the case may be, such withheld amounts shall be treated for all purposes of this
Agreement and the Transaction Documents as having been paid to the relevant Seller in respect of
whom such deduction and withholding was made by such Purchaser or Designated Purchaser. If any of
the Parties learns of any obligation to deduct and withhold from the Purchase Price and other
payments made under this Agreement or the Transaction Documents (other than the Transition Services
Agreement, with respect to which withholding Taxes are separately addressed therein) on or prior to
the Closing Date, then (i) in the case of a Seller, such Seller shall promptly provide reasonable
notice of such obligation to the Purchaser, and (ii) in the case of the Purchaser, the Purchaser
shall promptly provide reasonable notice of such obligation to the Sellers. The Parties shall
cooperate in good faith to minimize the amounts that the Purchaser or Designated Purchasers, as the
case may be, are required to deduct and withhold. In connection therewith, the Parties shall
cooperate to obtain any applicable forms, certificates, or other documentation or information that
is reasonably requested by a Party to obtain any exemption from, or reduced rate of, withholding on
any payments made pursuant to this Agreement and the other Transaction Documents.
SECTION 6.3. Tax Characterization of Payments Under This Agreement. The Sellers and
the Purchaser agree to treat all payments made either to or for the benefit of the other Party
under this Agreement (other than any interest payments) as adjustments to the Purchase Price for
Tax purposes and that such treatment shall govern for purposes hereof to the extent permitted under
applicable Tax Law.
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SECTION 6.4. Apportionment of Taxes.
(a) Except as otherwise provided in this Article VI, (i) the Main Sellers shall and shall
cause the Other Sellers, as the case may be, to bear all Taxes of any kind
relating to the Assets or the conduct or operation of the Business (excluding the EMEA
Business), in each case, for all Tax periods or portions thereof ending on or before the
Closing Date and (ii) the Purchaser shall and shall cause the Designated Purchasers to bear all
Taxes of any kind relating to the Assets or the conduct or operation of the Business (excluding
the EMEA Business) for all Tax periods or portions thereof beginning after the Closing Date.
The Sellers shall pay, when due, all Taxes apportioned to the Sellers under this Section 6.4(a)
that could result in a liability of a Purchaser or Designated Purchaser as a successor or
transferee or a Lien on any of the Assets in the hands of the Purchaser or Designated
Purchaser. For purposes of the preceding sentence, a Tax shall be considered due when required
to be paid after assessment (it being understood that Sellers shall have the right to pursue
any action for reconsideration or appeal that under applicable law tolls the time for the
payment of the disputed Tax and prevents the Tax Authority from availing itself of its
collection remedies); provided that no Tax shall be considered due for purposes of this
subsection to the extent payment thereof is excused under applicable Bankruptcy Law.
(b)
(i) For purposes of this Agreement, any Taxes for a Straddle Period (a Tax
period that includes, but does not end on, the Closing Date) shall be apportioned
between the Sellers, on the one hand, and the Purchaser and the Designated
Purchasers, on the other hand, based on the portion of the period ending on and
including the Closing Date and the portion of the period beginning after the Closing
Date, respectively. The amount of any Taxes based on or measured by income or
receipts of the Business (excluding the EMEA Business) shall be allocated between
the Pre-Closing Taxable Period and the Post-Closing Taxable Period on a
closing-of-the-books basis. The amount of other Taxes shall be allocated between
portions of a Straddle Period in the following manner: (a) in the case of a Tax
imposed in respect of property (excluding, for the avoidance of doubt, any income
Tax) and that applies rateably to a Straddle Period, the amount of Tax allocable to
a portion of the Straddle Period shall be the total amount of such Tax for the
period in question multiplied by a fraction, the numerator of which is the total
number of days in such portion of such Straddle Period and the denominator of which
is the total number of days in such Straddle Period, and (b) in the case of sales,
value-added and similar transaction-based Taxes (other than Transfer Taxes allocated
under Section 6.1), such Taxes shall be allocated to the portion of the Straddle
Period in which the relevant transaction occurred.
(ii) In the case where the parties do not file their own separate Tax Return
for any Straddle Period under applicable Law, the party legally obligated to file
any Tax Return for a Straddle Period (the Filing Party) shall timely and
accurately prepare and file such Tax Return and timely pay all Taxes due and payable
on such Tax Return. Promptly upon the filing of any Tax Return for a Straddle
Period, the party filing such Tax Return shall provide a copy of such Tax
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Return to
the Purchaser or Sellers, as the case may be, of the Assets to which such Tax Return
relates, (the Non-Filing Party) along with a calculation of the allocation of the
Taxes shown to be due on such Tax Return between the Filing
Party and the Non-Filing Party pursuant to this Section 6.4(b). Within ten
(10) Business Days of the receipt of such Tax Return, the Non-Filing party shall,
unless it timely objects to the calculation of the apportioned Tax based upon the
principles set forth in this Section 6.4(b), pay to the Filing Party the amount
shown in the calculation to be due by the Non-Filing Party. If the Non-Filing Party
objects to the calculation of the apportioned Tax as prepared by the Filing Party in
writing within ten (10) Business Days of the receipt of such Tax Return, the Filing
Party and the Non-Filing Party shall negotiate in good faith a resolution of the
calculation and the Non-Filing Party shall promptly pay to the Filing Party the
amount of the apportioned Tax as finally resolved. If after five (5) Business Days
of negotiation, the Parties cannot agree upon the apportioned Tax amount, they shall
promptly submit the matter to the Accounting Arbitrator for final resolution as
promptly as practical and the Accounting Arbitrators decision shall be final and
binding upon the Parties as to the amount of any disputed apportioned Tax, and the
Non-Filing Party shall promptly pay to the Filing Party the amount of the disputed
apportioned Tax as determined by the Accounting Arbitrator. The costs of the
Accounting Arbitrator shall be borne by the Party whose position is less correct in
the judgment of the Accounting Arbitrator.
(c) Prior to, on and after the Closing Date, each of the Sellers shall reasonably
cooperate with the Purchaser and its Affiliates (i) to obtain any applicable forms,
certificates, or other information and (ii) to comply with clearance procedures established
under applicable Law in the jurisdictions in which the Assets are being transferred hereunder
to establish, quantify, reduce or eliminate the extent to which the Purchaser or any Designated
Purchaser could be liable for any Taxes of the Sellers that are Excluded Liabilities, including
by reason of a Lien being filed on the Assets or as a result of such Purchaser or Designated
Purchaser having liability as a transferee or successor under applicable Law; provided
that such cooperation shall not include a liquidation or restructuring of a Seller or any
business of a Seller, and provided further that such cooperation would not: (i) in the
Sellers opinion, acting reasonably and in good faith, result in the imposition on the Sellers
of any directors or officers liability or Tax liability (other than any amount necessary to
pay any Taxes of the Sellers that are Excluded Liabilities that Sellers are required to pay (as
being due) under Section 6.4(a) at the time such cooperation is provided and any interest,
penalties and additions to Tax thereon) that is not fully and promptly reimbursed by the
Purchaser and its Affiliates; or (ii) cause any of the Sellers to bear any other out-of-pocket
cost or expense that is not fully and promptly reimbursed by the Purchaser and its Affiliates;
and provided further that such cooperation would not violate applicable Law, including
Bankruptcy Laws as applied to the relevant Seller(s) and any order or other legal obligation of
a Seller arising out of the Bankruptcy Proceedings. For the avoidance of doubt, such
cooperation shall include taking actions necessary to comply with Tax clearance procedures
established under applicable Law in Argentina and Hong Kong.
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SECTION 6.5. Tax Records.
(a) Notwithstanding the provisions of Section 5.6(a), Section 5.23 and Section 5.24, but
subject to the provisions of Section 5.6(e) (i) after the date of the Auction, the Purchaser
and the Designated Purchasers, on the one hand, and the Sellers, on the other
hand, will make available to the other, as reasonably requested, and to any Tax Authority,
all information, records or documents relating to Taxes with respect to the Assets, Assumed
Liabilities or the Business (excluding the EMEA Business) for all periods prior to and
including the Closing Date (including Straddle Periods), and will preserve such information,
records or documents until the expiration of any applicable statute of limitations or
extensions thereof, and (ii) in the event that one party reasonably needs access to the records
in the possession of a second party relating to the Assets, Assumed Liabilities or the Business
(excluding the EMEA Business) for purposes of preparing Tax Returns or complying with any Tax
audit request, subpoena or any other investigative demand by any Tax Authority or for any other
legitimate Tax-related purpose not injurious to the second party, the second party will allow
Representatives of the other party access to such records during regular business hours and the
second partys place of business for the sole purpose of obtaining information for use as
aforesaid and will permit such other party to make extracts and copies thereof as may be
necessary or convenient. The obligation to cooperate pursuant to this Section 6.5(a) shall
terminate at the time the relevant applicable statute of limitations expires (giving effect to
any extension thereof).
(b) On or prior to Closing, the Sellers shall cause copies of Restricted Technical Records
to be placed into escrow with the Records Custodian, who shall hold such Restricted Technical
Records for ten (10) years in accordance with an escrow agreement between the Purchaser, the
Sellers and the Records Custodian, in form satisfactory to the Purchaser and the Main Sellers.
The escrow agreement will provide for access to the copies of the Restricted Technical Records
only by the relevant Canadian Tax Authority or by Tax advisors of any purchaser (Tax Credit
Purchaser) of the scientific research and experimental development tax credits of the Sellers
under the Income Tax Act (Canada), and only if such advisors have executed an appropriate
confidentiality agreement in form satisfactory to the Purchaser. The access permitted by the
escrow agreement shall be only for the limited purpose of defending any audit, claim or action
by any Canadian Tax Authority in respect of the characterization of expenditures by NNL or
Nortel Networks Technology Corporation (NNTC) as qualified expenditures on scientific
research and experimental development for purposes of the applicable provisions of the Income
Tax Act (Canada) (Qualified Expenditures).
(c) The Purchaser shall use reasonable efforts to make available to the relevant Taxing
Authority or Tax advisors of the Tax Credit Purchaser, those former employees of NNL or NNTC,
as the case may be, with direct knowledge of the Qualified Expenditures who are then employed
by the Purchaser and whose cooperation is necessary for the purpose of defending any audit,
claim or action by any Taxing Authority of the characterization of expenditures by NNL or NNTC,
as the case may be, as Qualified Expenditures, and provided such advisors have executed an
appropriate confidentiality agreement satisfactory to the Purchaser.
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(d) The Purchaser shall have no obligation to provide any access under this provision
unless the Seller (if there is no Tax Credit Purchaser in respect of the request for access) or
the Tax Credit Purchaser pays all the Purchasers reasonable expenses in connection with the
foregoing provisions, including a reasonable per diem rate for access to
former employees of NNL or NNTC, as the case may be (based on the total compensation of
the employee at the time access is provided).
SECTION 6.6. Cooperation.
(a) The Sellers and the Purchaser shall reasonably cooperate with each other in connection
with the conduct of any Tax audit, investigation, dispute, or appeal relating to any
Pre-Closing Taxable Period.
(b) Notwithstanding the provisions of Section 5.6, but subject to the provisions of
Section 5.6(e) and, solely with respect to the subject matter addressed therein, subject to
Section 6.5(a), from and after the date hereof through the Closing Date, (i) the Sellers shall
reasonably cooperate with the Purchaser and its Affiliates to develop and provide such
information as is reasonably requested and reasonably necessary to permit the Purchaser and its
Affiliates to identify and timely comply with their respective obligations under applicable Tax
Laws arising out of this Agreement and the other Transaction Documents and (ii) the Sellers
shall reasonably cooperate with the Purchaser and its Affiliates to structure and carry out the
transactions between the Sellers, on the one hand, and the Purchaser and its Affiliates, on the
other hand, contemplated by this Agreement and the other Transaction Documents in a
tax-efficient manner (including, without limitation, to limit withholding Taxes and
irrecoverable VAT with respect to the transactions contemplated by this Agreement and the
Transaction Documents); provided that any such cooperation to be provided in (i) and
(ii) above would not include a liquidation or restructuring of a Seller or any business of a
Seller, would not result in the imposition on any Seller of any additional Tax Liability or
cause any Seller to bear any additional out-of-pocket cost or expense, in each case which is
not fully and promptly reimbursed by the Purchaser and its Affiliates and such cooperation
would not violate applicable law, including Bankruptcy Laws as applicable to the relevant
Seller(s) and any order or other legal obligation of a Seller arising out of the Bankruptcy
Proceedings
SECTION 6.7. North American Tax Escrow.
(a) In the event that any Tax Authority shall (A) make any claim against any Purchaser,
Designated Purchaser, or any of their Affiliates (a Purchaser Party) for any Taxes that are
Excluded Liabilities of any Seller or (B) have in its favor a Lien on any of the Assets arising
out of the non-payment of any Taxes that are Excluded Liabilities of a Seller (any Taxes
described in (A) and (B) above hereby are referred to collectively as Excluded Taxes), such
Purchaser Party shall be entitled to recover all Losses arising out of or in connection with
such Excluded Taxes promptly (in accordance with the following provisions) by obtaining cash
from the Tax Escrow Amount in an amount equal to the aggregate amount of such Losses, provided
that (i) the aggregate amount to be recovered under this Section 6.7 in respect of such Losses
shall not exceed the Tax Escrow Amount (plus any accrued interest on the Tax Escrow Amount);
and (ii) the only Losses recoverable under this Section 6.7 shall be Losses incurred by a
Purchaser Party after the earlier of the
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date on which a Tax Authority has made a claim
described in (A) above or registered or imposed a Lien described in (B) above, as applicable.
(b) If a claim for Losses under Section 6.7(a) (a Tax Claim) is to be made by a
Purchaser Party, the Purchaser shall give written notice (a Claim Notice) on behalf of such
Purchaser Party to the Main Sellers promptly after such Purchaser Party becomes aware that a
Tax Authority has made a claim against it for any Excluded Taxes or that such Taxes have given
rise to a Lien described in clause (B) of subsection (a) above, as applicable, stating, with
reasonable specificity, the basis for the Tax Claim, and including a copy of all relevant
documents received from the relevant Tax Authority. In the event that any Purchaser Party is
entitled to recover the amount of any such Losses from the Tax Escrow Amount, the Purchaser and
the Main Sellers shall issue joint written instructions to the Escrow Agent authorizing
distribution of the amount of such Losses to such Purchaser Party and such Purchaser Party
shall be responsible for paying over to the relevant Tax Authority the amount of Excluded Taxes
distributed to it from the Tax Escrow Amount to the extent it has not already done so at the
time of the distribution of such amount from such fund and shall provide Sellers with such
written evidence as is reasonably requested in writing to confirm that payment to the relevant
Tax Authority has been duly made.
(c) Upon delivery by the Sellers to the Purchaser prior to Closing of a certificate or
other documentation issued by the Hong Kong Inland Revenue Department reasonably satisfactory
in form and content to the Purchaser confirming that Nortel Networks (Asia) Limited has no
outstanding Tax Liabilities, the Tax Escrow Amount payable on Closing to the Escrow Agent shall
be reduced by $5,000,000.
(d) Upon delivery by the Sellers to the Purchaser after Closing of a certificate or other
documentation issued by the Hong Kong Inland Revenue Department reasonably satisfactory in form
and content to the Purchaser confirming that Nortel Networks (Asia) Limited has no outstanding
tax liabilities, and provided that a Purchaser Party has not served a valid Claim Notice to the
Main Sellers before that time in respect of a Tax Claim relating to Excluded Taxes of Nortel
Networks (Asia) Limited, the Purchaser and the Main Sellers shall deliver to the Escrow Agent
joint written instructions to release to the
Distribution Agent, on behalf of the Sellers and the EMEA Sellers, $5,000,000 out of the
Tax Escrow Amount (or such lesser amount remaining therein at that time).
(e) On the date that is the first Business Day after the third anniversary of the Closing
Date, the Purchaser and the Main Sellers shall deliver to the Escrow Agent joint written
instructions to release to the Distribution Agent, on behalf of the Sellers and the EMEA
Sellers, any remaining portion of the Tax Escrow Amount (including any accrued interest
thereon) in excess of an amount equal to the aggregate of all Tax Claims which have been
asserted prior to such date evidenced by one or more Claim Notices and which remain pending and
unresolved on such date. Thereafter, as soon as reasonably practicable after the final
resolution of any such Tax Claims, the Purchaser and the Main Sellers shall issue joint written
instructions to the Escrow Agent to release to the Distribution Agent, on behalf of the Sellers
and the EMEA Sellers, any remaining portion of the Tax Escrow Amount (including any accrued
interest thereon).
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(f) In the event that a Claim Notice is served, the Purchaser shall take such steps as are
commercially reasonable to mitigate or otherwise defend the assessment(s) made by the relevant
Tax Authority. In the event that a payment is made to a Purchaser Party pursuant to this
Section 6.7, and subsequently a Purchaser Party becomes entitled to and receives a refund of
Excluded Taxes (in whole or in part), then the Purchaser shall, or shall cause the relevant
Purchaser Party to, promptly pay to the Distribution Agent, on behalf of the Sellers and the
EMEA Sellers, an amount equal to such refund (including any interest paid in connection with
such refund), net of reasonable out-of-pocket expenses incurred by the Purchaser Party in
obtaining such refund, unless (i) such refund is received prior to the third anniversary of the
Closing Date or (ii) at the time the refund is received, the Tax Escrow Amount is less than
the sum of the Tax Claims that are evidenced by one or more Claim Notices and which remain
pending and unresolved on such date, then, in each case, the Purchaser Party shall pay the net
amount of such refund to the Escrow Agent to be added to the Tax Escrow Amount.
(g) Notwithstanding anything to the contrary in this Agreement (including, without
limitation, the provisions of Section 11.1 of this Agreement as applied to provisions other
than those contained in this Article VI), recourse to the Tax Escrow Amount under this Section
6.7 shall be the sole and exclusive remedy available to the Purchaser and any Designated
Purchaser following the Closing in respect of any liability for Taxes that are Excluded
Liabilities of a Seller or any liability for Taxes that give rise to any Lien on any Assets.
SECTION 6.8. EMEA Tax Escrow.
(a) In the event that any Tax Authority shall make any claim against Purchaser or any EMEA
Designated Purchaser or any of their Affiliates (an EMEA Purchaser Party) for (A) any Taxes
that are EMEA Excluded Liabilities of any EMEA Seller or (B) any Succession Tax Liabilities or
(C) any Succession Tax Lien (any Taxes described in (A) and (B) and (C) above hereby are
referred to collectively as EMEA Excluded Taxes), such EMEA Purchaser Party shall be entitled
to recover all Losses arising out of or in connection with such EMEA Excluded Taxes promptly
(in accordance
with the following provisions) by obtaining cash from the EMEA Tax Escrow Amount in an
amount equal to the aggregate amount of such Losses, provided that: (i) the aggregate amount to
be recovered under this Section 6.8 in respect of such Losses shall not exceed the EMEA Tax
Escrow Amount (plus any accrued interest on the EMEA Tax Escrow Amount); (ii) the only Losses
recoverable under this Section 6.8 shall be Losses incurred by an EMEA Purchaser Party after a
Tax Authority has made a claim described in (A), (B) or (C) above, as applicable; and (iii) no
claim shall be allowed by any EMEA Purchaser Party in respect of Italian Excluded Taxes other
than pursuant to Section 6.9 below.
(b) If a claim for Losses under subsection (a) (an EMEA Tax Claim) is to be made by an
EMEA Purchaser Party, the Purchaser shall give written notice (an EMEA Tax Claim Notice) on
behalf of such EMEA Purchaser Party to the Joint Administrators promptly after such EMEA
Purchaser Party becomes aware that a Tax Authority has made a claim against it for any EMEA
Excluded Taxes or that such Taxes have given rise to any Succession Tax Lien for which recovery
is sought under this Section 6.8, stating, with reasonable specificity, the basis for the EMEA
Tax Claim and the amount
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of EMEA Excluded Taxes claimed, and including a copy of all relevant documents received from the
relevant Tax Authority. In the event that any EMEA Purchaser Party is entitled to recover the
amount of any such Losses from the EMEA Tax Escrow Amount, the Purchaser and the Joint
Administrators shall issue joint written instructions to the Escrow Agent authorizing
distribution of the amount of such Loss to such EMEA Purchaser Party and such EMEA Purchaser
Party shall be responsible for paying over to the relevant Tax Authority the amount of such
EMEA Excluded Taxes distributed to it from the EMEA Tax Escrow Amount to the extent it has not
already done so at the time of the distribution of such amount from such fund, and shall
provide the Joint Administrators with such written evidence as is reasonably requested in
writing to confirm that payment to the relevant Tax Authority has been duly made.
(c) On the date that is the first Business Day after the third anniversary of the Closing
Date, the Purchaser and the Joint Administrators shall deliver to the Escrow Agent joint
written instructions to release to the Distribution Agent, on behalf of the Sellers and EMEA
Sellers, any remaining portion of the EMEA Tax Escrow Amount (including any accrued interest
thereon) in excess of an amount equal to the aggregate of all EMEA Tax Claims which have been
asserted prior to such date evidenced by one or more EMEA Tax Claim Notices and which remain
pending and unresolved on such date. Thereafter, as soon as reasonably practicable after the
final resolution of all such EMEA Tax Claim(s), the Purchaser and the Joint Administrators
shall issue joint written instructions to the Escrow Agent to release to the Distribution
Agent, on behalf of the Sellers and EMEA Sellers, the remaining portion of the EMEA Tax Escrow
Amount (including any accrued interest thereon).
(d) In the event that an EMEA Claim Notice is served, the Purchaser shall take such steps
as are commercially reasonable to mitigate or otherwise defend the assessment(s) made by the
relevant Tax Authority. In the event that a payment is made to an EMEA Purchaser Party
pursuant to this Section 6.8, and subsequently an EMEA Purchaser Party or any Affiliate becomes
entitled to and receives a refund of amounts in respect of EMEA Excluded Taxes, then the
Purchaser shall or shall procure that the relevant EMEA Purchaser Party shall promptly pay to
Distribution Agent, on behalf of the Sellers and EMEA Sellers, an amount equal to such refund
(including any interest paid in connection with such refund), net of reasonable out-of-pocket
expenses incurred by the EMEA Purchaser Party in obtaining such refund, unless (i) such refund
is received prior to the third anniversary of the Closing Date or (ii) at the time the refund
is received, the EMEA Tax Escrow Amount is less than the sum of the EMEA Tax Claims that are
evidenced by one or more EMEA Tax Claim Notices and which remain pending and unresolved on such
date, then, in each case, the Purchaser Party shall pay the net amount of such refund to the
Escrow Agent to be added to the EMEA Tax Escrow Amount.
SECTION 6.9. Italian Tax Escrow.
(a) In the event that any Tax Authority in Italy shall make any claim against the
Purchaser or any EMEA Designated Purchaser or any of their Affiliates (an
Italian Purchaser Party) for (A) any Taxes that are EMEA Excluded Liabilities of any
EMEA Seller or (B) any Succession Tax Liabilities or (C) any Succession Tax Lien (any such
Taxes are hereby are referred as Italian Excluded Taxes), such Italian Purchaser
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Party shall be entitled to recover all Losses arising out of or in connection with such Italian Excluded
Taxes promptly (in accordance with the following provisions) by obtaining cash from the Italian
Tax Escrow Amount in an amount equal to the aggregate amount of such Losses, provided that: (i)
the aggregate amount to be recovered under this Section 6.9 in respect of such Losses shall not
exceed the Italian Tax Escrow Amount (plus any accrued interest on the Italian Tax Escrow
Amount); and (ii) the only Losses recoverable under this Section 6.9 shall be Losses incurred
by an Italian Purchaser Party after a Tax Authority in Italy has made a claim.
(b) If a claim for Losses under subsection (a) (an Italian Tax Claim) is to be made by
an Italian Purchaser Party, the Purchaser shall give written notice (an Italian Tax Claim
Notice) on behalf of such Italian Purchaser Party to the Joint Administrators promptly after
such Italian Purchaser Party becomes aware that a Tax Authority in Italy has made a claim
against it for Italian Excluded Taxes or that such Taxes have given rise to any Succession Tax
Lien for which recovery is sought under this Section 6.9, stating, with reasonable specificity,
the basis for the Italian Tax Claim and the amount of Italian Excluded Taxes claimed, and
including a copy of all relevant documents received from the relevant Tax Authority. In the
event that any Italian Purchaser Party is entitled to recover the amount of any such Losses
from the Italian Tax Escrow Amount, the Purchaser and the Joint Administrators shall issue
joint written instructions to the Escrow Agent authorizing distribution of the amount of such
Loss to such Italian Purchaser Party and such Italian Purchaser Party shall be responsible for
paying over to the relevant Tax Authority the amount of such Italian Excluded Taxes distributed
to it from the Italian Tax Escrow Amount to the extent it has not already done so at the time
of the distribution of such amount from such fund, and shall provide the Joint Administrators
with such written evidence as is reasonably requested in writing to confirm that payment to the
relevant Tax Authority has been duly made.
(c) On the date that is the first Business Day after the third anniversary of the Closing
Date, the Purchaser and the Joint Administrators shall deliver to the Escrow Agent joint
written instructions to release to the Distribution Agent, on behalf of the Sellers and EMEA
Sellers, any remaining portion of the Italian Tax Escrow Amount (including any accrued interest
thereon) in excess of an amount equal to the aggregate of all Italian Tax Claims which have
been asserted prior to such date evidenced by one or more Italian Tax Claim Notices and which
remain pending and unresolved on such date. Thereafter, as soon as reasonably practicable
after the final resolution of all such Italian Tax Claim(s), the Purchaser and the Joint
Administrators shall issue joint written instructions to the Escrow Agent to release to the
Distribution Agent, on behalf of the Sellers and EMEA Sellers, the remaining portion of the
Italian Tax Escrow Amount (including any accrued interest thereon).
(d) In the event that an Italian Claim Notice is served, the Purchaser shall take such
steps as are commercially reasonable to mitigate or otherwise defend the assessment(s) made by
the relevant Tax Authority. In the event that a payment is made to an Italian Purchaser Party
pursuant to this Section 6.9, and subsequently an Italian Purchaser Party or any Affiliate becomes entitled to and receives a refund of amounts in respect of
Italian Excluded Taxes, then the Purchaser shall or shall procure that the relevant Italian
Purchaser Party shall promptly pay to Distribution Agent, on behalf of the Sellers and
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EMEA Sellers, an amount equal to such refund (including any interest paid in connection with such
refund), net of reasonable out-of-pocket expenses incurred by the Italian Purchaser Party in
obtaining such refund, unless (i) such refund is received prior to the third anniversary of the
Closing Date (other than where, prior to such refund being received, the provisions at Section
6.9(f) have applied) or (ii) at the time the refund is received, the Italian Tax Escrow Amount
is less than the sum of the Italian Tax Claims that are evidenced by one or more Italian Tax
Claim Notices and which remain pending and unresolved on such date, then, in each case, the
Purchaser Party shall pay the net amount of such refund to the Escrow Agent to be added to the
Italian Tax Escrow Amount.
(e) Upon delivery by Nortel Italy to the Purchaser prior to Closing of a certificate,
ruling or other documentation issued by the Tax Authorities in Italy (including but not limited
to a response to the Interpellation addressed to the regional department of the Revenue Office
of Lombardy as submitted by Nortel Italy on 4 August 2009) reasonably satisfactory in form and
content to the Purchaser (acting in good faith), and, if such certificate, ruling or other
documentation does not address Succession Tax Liens, such other written evidence as is
reasonably satisfactory in form and content to the Purchaser (acting in good faith) addressing
Succession Tax Liens, together confirming either:
(i) that Nortel Italy does not have any liabilities for Tax that could become
Succession Tax Liabilities or Succession Tax Liens; or
(ii) that it is not possible (whether as a result of Bankruptcy Proceedings or
otherwise) for liabilities for Tax of Nortel Italy to become Succession Tax
Liabilities or Succession Tax Liens,
then the Italian Escrow Amount payable on Closing to the Escrow Agent shall be reduced to nil.
(f) Upon delivery by Nortel Italy to the Purchaser after Closing of a certificate, ruling
or other documentation issued by the Tax Authorities in Italy (including but not limited to a
response to the Interpellation addressed to the regional department of the Revenue Office of
Lombardy as submitted by Nortel Italy on 4 August 2009) reasonably satisfactory in form and
content to the Purchaser (acting in good faith) and, if such certificate, ruling or other
documentation does not address Succession Tax Liens, such other written evidence as is
reasonably satisfactory in form and content to the Purchaser (acting in good faith) addressing
Succession Tax Liens, together confirming either:
(i) that Nortel Italy does not have any liabilities for Tax that could become
Succession Tax Liabilities or Succession Tax Liens; or
(ii) that it is not possible (whether as a result of Bankruptcy Proceedings or
otherwise) for liabilities for Tax of Nortel Italy to become Succession Tax
Liabilities or Succession Tax Liens,
then the Purchaser and Joint Administrators shall deliver to the Escrow Agent joint written
instructions to release to the Distribution Agent, on behalf of the Sellers and the EMEA
Sellers, any remaining portion of the Italian Tax Escrow Amount (including any accrued
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interest thereon) in excess of an amount equal to the aggregate of all Italian Tax Claims which have
been asserted prior to such date evidenced by one or more Italian Tax Claim Notices and which
remain pending and unresolved on such date, provided that as soon as reasonably practicable
after the final resolution of each such Italian Tax Claim, the Purchaser and the Joint
Administrators shall issue joint written instructions to the Escrow Agent to release to the
Distribution Agent, on behalf of the Sellers and EMEA Sellers, the remaining portion of the
Italian Tax Escrow Amount referable to that Italian Tax Claim (including any accrued interest
thereon).
ARTICLE VII
EMPLOYMENT MATTERS
SECTION 7.1. Employment Obligations with Respect to Non-Union Employees.
Except for the provisions of Section 7.1.1(a) and the first three (3) sentences of Section
7.1.2(b)(ii)(B), the provisions of this Section 7.1 shall apply only with respect to Non-Union
Employees. Subject to the clarificatory wording in 7.1.1(a) and the provisions relating to the
Closing Accrued Vacation and Service Award Amount, the Excess ARD Employees Amount and the Closing
Retirement Obligation Amount, the provisions of this Agreement shall not apply to EMEA Employees.
7.1.1. Employment Terms.
(a) Within thirty (30) days following the completion of the Auction, the Purchaser shall
notify the Sellers of the identity of the Employees on Section 4.10(b) of the Sellers
Disclosure Schedule by unique identifier (the Identified Employees) to whom the Purchaser or
a Designated Purchaser intends to provide a written offer of employment or notice of continued
employment in accordance with applicable Law (each an Offer and collectively, the Offers);
provided that, promptly after the date hereof, the relevant Sellers have permitted the
Purchaser with access to such information as the Purchaser reasonably requires in accordance
with Section 5.6(d) and Section 7.4(c) in order to make such identifications (except as
prohibited by Law). As soon as reasonably practicable following the latest of the granting of
the U.S. Sale Order and the Canadian Approval and Vesting Order, but in any event no later than
the time required to provide the Offer Consideration Period described below, the Purchaser
shall, or shall cause a Designated Purchaser to, extend a minimum of Two Thousand (2,000)
Offers, which number shall include all EMEA Transferring Employees, whose employment shall be
governed by the EMEA Asset Sale Agreement (for the avoidance of doubt, no Offers will be
required to be made to ARD Transferring Employees whose contracts of employment will transfer
to the Purchaser by operation of Law, but the number of EMEA Transferring Employees will be
included within the minimum number set forth above, and the terms of Offers made to Non-ARD
Transferring Employees will be governed by the EMEA Asset Sale Agreement), plus a sufficient
number of Employees equal to, in total, such minimum number, with employment of such Employee
who is not an EMEA Employee to take effect as of the Effective Hire Date, as defined below.
Such Offers to Employees (who are not EMEA Employees) shall be contingent (i) in the discretion of the Purchaser, on each such Employee passing a
background check and, if such Employee is located in the United States, drug screening, in all
cases, to the extent permitted and consistent with applicable Law and except with respect
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to Union Employees, and (ii) in the case of Inactive Employees, upon their return to active status
(other than Employees set forth on Section 7.1.1(a) of the Sellers Disclosure Schedule whose
employment transfers automatically by operation of Law to the Purchaser or a Designated
Purchaser) with the Purchaser or one of its Affiliates within two (2) years following the date
of the commencement of the leave or such longer period as provided under applicable Law. The
Offers shall be made prior to the Closing in compliance with Section 7.1.1 and shall provide
each such Employee with a consideration period prior to the Closing that is no less than two
(2) weeks with respect to Employees located in Japan and with respect to Employees located in
other countries, one week, or such longer period as required by applicable Law (the Offer
Consideration Period). The Sellers shall have the right to review any form Offer with respect
to a particular jurisdiction (and any Offer that deviates in any material respect from the form
Offer with respect to the relevant country) made pursuant to Section 7.1.1 prior to it being
sent to any Employee. As soon as reasonably practicable following the Sellers receipt from
the Purchaser of the notice containing the Identified Employees (as required pursuant to the
first sentence of this Section 7.1.1(a)) but in all events prior to Closing, the Sellers shall
take any and all action permitted under applicable Law legally necessary to cause the
termination of employment, effective prior to the Closing, of each Employee set forth on
Section 4.10(b) who is not an Identified Employee but only to the extent such employment would
otherwise transfer to the Purchaser or a Designated Purchaser by operation of Law.
(b) For Employees employed in Canada and the United States, the Offers shall be in
accordance with applicable Law and provide terms and conditions of employment as of such
Employees Effective Hire Date that will consist of (i) either the same annual base salary
(whether on a salary, wage or hourly rate basis) and annual incentive plan target amount for
such Employee as set out in the Employee Information or a substantially comparable overall
compensation package (taking into account any equity-based compensation that may be offered by
Purchaser or its Affiliates to such Employee) to such annual base salary and annual incentive
plan target amount set out in the Employee Information, (ii) a location of employment
reasonably close to such Employees current location as set out in the Employee Information,
and (iii) employee benefits that are substantially comparable in the aggregate to (A) employee
benefits received by such Employee from the Sellers as of the date hereof or (B) employee
benefits provided by the Purchaser (or any of its Affiliates) to its similarly situated
employees.
(c) For all Employees set forth in Section 4.10(b) of the Sellers Disclosure Schedule
(other than Employees in Canada and the United States) in any country set forth on Section
7.1.1(c) of the Seller Disclosure Schedule where the number of Employees in such country is ten
(10) or more, the Purchasers Offer to Employees in such country shall be in accordance with
applicable Law and on terms and conditions not less favorable in the aggregate than those terms
and conditions received by the Employees as of the date hereof as disclosed in Section 4.10(a)
and Section 4.10(b) of the Sellers Disclosure Schedule, subject to certain adjustments to
conform to the Purchasers (or its Affiliates) standard employment policies where legally
possible; provided, that, following the Employee Transfer Date, nothing shall prohibit the Purchaser or any Designated Purchaser
from making changes to such terms and conditions of employment that are generally applicable
and broadly based across the Purchasers or Designated Purchasers employee
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population in the particular country; provided, further that in no event other than as required
by applicable Law, shall the Purchaser or a Designated Purchaser be required to (i) provide
defined benefit pension plans, or (ii) take into account defined benefit pension benefits, post
retirement health and welfare benefits, severance or retention, the KEIP or KERP, equity
compensation, non-qualified deferred compensation plans, non-qualified retirement plans or
retirement allowance plans of the Sellers or any of their Affiliates when determining whether
terms and conditions of employment are no less favorable in the aggregate.
(d) For Employees other than Employees referred to in Section 7.1.1(b) or Section
7.1.1(c), the Purchasers Offer to such Employee shall be in accordance with applicable Law and
on such terms and conditions of employment reasonably competitive with those received by
similarly situated employees in the local market.
(e) Employees whose employment transfers automatically by operation of Law to the
Purchaser or a Designated Purchaser will have their terms and conditions of employment governed
by such applicable Laws, but at a minimum shall receive terms and conditions of employment that
are no less favorable than those employees in Section 7.1.1(c) or Section 7.1.1(d), as
applicable, based on the number of the Sellers Employees in the country where such Employees
are employed, except with respect to Employees located in the Province of Quebec, Canada, as
indicated in the Employee Information, who shall be treated in accordance with 7.1.1(b).
(f) Any Employee who accepts an Offer and commences employment with the Purchaser or a
Designated Purchaser pursuant to this Agreement, and any Employees whose employment transfers
by operation of Law, shall each be deemed to be a Transferred Employee for all purposes of this
Agreement. Inactive Employees shall remain employed by the relevant Seller until their release
in the Ordinary Course to return to active status with the Purchaser or one of its Affiliates
within two (2) years following the date of the commencement of the leave or such longer period
as provided under applicable Law. Visa Employees and Seconded Employees shall remain employed
by the relevant Seller under the terms and conditions of the Loaned Employee Agreement. The
Purchaser or a Designated Purchaser shall use commercially reasonable efforts beginning
immediately after the date of the Auction to obtain, prior to the Closing Date, and beyond if
necessary, at Purchasers cost, such visas or permits as are required for Purchaser or a
Designated Purchaser to employ any Visa Employee who accepts an Offer effective as of the
Effective Hire Date. The Purchaser or Designated Purchaser shall use commercially reasonable
efforts beginning promptly following the notification to Sellers of the Identified Employees
(as provided for in Section 7.1.1(a)) to resolve, as soon as reasonably practicable following
such notification, at the Purchasers cost, any impediments to Purchasers or Designated
Purchasers employment of Employees in countries set forth in Section 1.1(m) of the Sellers
Disclosure Schedule.
(g) The Effective Hire Date for Employees is (i) the Employee Transfer Date for those
Employees other than Inactive Employees, Seconded Employees and Visa Employees, (ii) 12:01 a.m.
on the first Business Day following the release to return to active
employment from leave for all Inactive Employees and (iii) the date specified in the
Loaned Employee Agreement with respect to Visa Employees and Seconded Employees, as applicable.
As of the Effective Hire Date and, except as otherwise provided herein, for a
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period of not less than twelve (12) months after the Closing Date, the employment of Non-Union Employees
shall be, at a minimum, on the terms and conditions set forth in Section 7.1.
(h) With respect to all Employees (other than EMEA Employees and Union Employees) to whom
the Purchaser extends an Offer pursuant to Section 7.1.1 but who do not accept or who reject
such an Offer (each, a Rejecting Employee), the Purchaser shall reimburse the Sellers for
payments made by Sellers in an aggregate amount up to $2,000,000 in respect of pay in lieu of
notice (including WARN Act notice) and/or severance liability relating to such Rejecting
Employees (the Rejecting Employees Liability Limit); provided that any such payments
shall have been made by the Sellers as required by applicable Law or the Seller Employee Plans
listed in Section 4.10(a)(i) of the Sellers Disclosure Schedule or pursuant to a Contract in
effect as of the date hereof, and a copy of which will be delivered to the Purchaser at the
time such liability is incurred. Notwithstanding anything to the contrary in this Agreement,
the Sellers shall retain, and neither the Purchaser nor any of its Affiliates shall assume any
Liability whatsoever related to or arising from the Rejecting Employees in respect of pay in
lieu of notice (including WARN Act notice) and/or severance liability, including without
limitations, any Liability relating to or arising from Claims with respect to a change in the
terms of employment made with respect to any Rejecting Employee in the Province of Quebec) to
the extent such Liabilities exceed the Rejecting Employees Liability Limit.
7.1.2. Employee Benefits.
(a) The Purchaser or a Designated Purchaser shall, and shall cause its relevant Affiliates
to, recognize the service date of each Transferred Employee as set out in the Employee
Information for all purposes other than benefit accrual under any defined benefit pension plan,
and except as would result in a duplication of benefits.
(b) Without limiting the generality of the foregoing, the Purchaser shall, or shall cause
its relevant Affiliates to, provide the following benefits to Transferred Employees:
(i) For the period beginning on the Closing Date and ending on the date that is
twelve (12) months from the Closing Date, the Purchaser shall, or shall cause its
relevant Affiliates to, provide Transferred Employees with severance payments and
severance benefits that are substantially similar to the severance payments and
severance benefits provided to similarly situated employees of the Purchaser or the
Designated Purchaser.
(ii)
(A) The Sellers shall pay the amount of compensation with respect to the
accrued and unused vacation hours that is due and owing to the Transferred Employees
(other than Transferred Employees whose accrued and unused
vacation is specified in Section 7.1.2(b)(ii)(B) of the Sellers Disclosure
Schedule (the Specified Transferred Employees)), up to their Effective Hire Date,
to such Transferred Employees by the date required under applicable Law. The
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Purchaser will, and will cause the relevant Designated Purchasers to, make
commercially reasonable efforts to accommodate time off requests of such Transferred
Employees until such time as they accrue sufficient paid time off under the
Purchaser Employee Plans to address their vacation plans.
(B) Section 7.1.2(b)(ii)(B) of the Sellers Disclosure Schedule sets forth the
amount of accrued and unused vacation hours that are due and owing to the Specified
Transferred Employees as of the date hereof and updated by the Sellers as of the
Closing Date. The Purchaser shall, or shall cause its relevant Affiliates to, grant
each Specified Transferred Employee paid time off in an amount equal to such accrued
unused vacation hours for such Specified Transferred Employee as set forth in
Section 7.1.2(b)(ii)(B) of the Sellers Disclosure Schedule. If such Specified
Transferred Employee terminates employment with the Purchaser or an Affiliate of the
Purchaser prior to receiving such paid time off, as described above, the Purchaser
shall pay such Specified Transferred Employee an amount equal to any such unused
paid time off upon such employment termination. Under the vacation policy of the
Purchaser or an Affiliate of the Purchaser, the vacation accrual rate of each
Transferred Employee on and after the Effective Hire Date shall be equal to either,
in the sole discretion of the Purchaser or its Affiliate, the Transferred Employees
vacation accrual rate (i) as reflected in the Employee Information or (ii) under the
vacation policy of the Purchaser or its relevant Affiliate applicable to similarly
situated employees after taking into account such Transferred Employees service, if
applicable, as provided in Section 7.1.2(a). For the avoidance of doubt, such
vacation accrual rate applicable to Specified Transferred Employees shall not be
decreased by the Purchaser or its Affiliates as a result of the obligation in this
Section 7.1.2(b)(ii)(B) that the Purchaser or its Affiliates grant such Employees
accrued and unused vacation hours due and owing as of the Closing Date.
(iii)
(A) With respect to each Transferred Employee (and his or her eligible
dependents, as applicable) in Canada and the United States, the Purchaser or the
relevant Purchasers Affiliates shall (x) waive any eligibility periods, evidence of
insurability or pre-existing condition limitations and (y) honor any deductibles,
co-payments, co-insurance or out-of-pocket expenses paid or incurred by such
employee, including with respect to his or her dependents, under comparable Seller
Employee Plans during the Purchaser Employee Plan year in which the relevant
Effective Hire Date occurs, provided that such employee provides
documentation of such expenses paid or incurred to the Purchaser or its Affiliates,
and in each case to the extent waived or honored under the Seller Employee Plans in
which such Transferred Employee participated immediately prior to the Closing and to
the extent doing so will not result in the duplication of benefits.
(B) With respect to each Transferred Employee (and his or her eligible
dependents, as applicable) in all countries other than those described in Section
7.1.2(b)(iii)(A), the Purchaser or the relevant Purchasers Affiliates shall use
commercially reasonable efforts to cause the Purchaser Employee Plans to (x)
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waive any eligibility periods, evidence of insurability or pre-existing condition
limitations and (y) honor any deductibles, co-payments, co-insurance or
out-of-pocket expenses paid or incurred by such employee, including with respect to
his or her dependents, under comparable Seller Employee Plans during the Purchaser
Employee Plan year in which the relevant Effective Hire Date occurs,
provided that such employee provides documentation of such expenses paid or
incurred to the Purchaser or its Affiliates, and in each case to the extent waived
or honored under the Seller Employee Plans in which such Transferred Employee
participated immediately prior to the Closing and to the extent doing so will not
result in the duplication of benefits.
(iv) The Purchaser or Designated Purchaser shall provide each Transferred
Employee employed in Australia, with the benefit of the amount set forth in Section
7.1.2(b)(iv) of the Sellers Disclosure Schedule of long service leave and sick
leave, at such time, if any, as payment of such amount is due and owing to each such
Transferred Employee under applicable Law, taking into account in the calculation of
such total payment due, the service of such Transferred Employee as set forth in the
Employee Information together with such Transferred Employees service with the
Purchaser on and after the Closing Date. Section 7.1.2(b)(iv) of the Sellers
Disclosure Schedule shall be updated no later than ten (10) Business Days prior to
the Closing Date to reflect additions or deletions of Identified Employees or other
status changes that are not prohibited under Section 5.9.
SECTION 7.2. Employment Obligations with Respect to Union Employees. The provisions of this Section 7.2 shall apply to Union Employees. As of the Closing Date the
Purchaser or its relevant Affiliate will be bound by the terms and obligations of the Collective
Labor Agreements specified in the Employee Information with respect to the employment of the
relevant Union Employees who are Transferred Employees as a successor, assign or purchaser of the
relevant Seller. With respect to all Union Employees who are not Identified Employees, the
Purchaser shall reimburse the Sellers for payments made by Sellers in respect of severance
liability pursuant to the Collective Labor Agreement or as required by applicable Law relating to
such Union Employees; provided, that, the Sellers agree to use commercially reasonable efforts to
mitigate the Liabilities associated with the termination of such Union Employees by providing, upon
notice from the Purchaser identifying any Union Employee who will not be an Identified Employee,
working notice to such Union Employees and, in the case of Union Employees located in the province
of Quebec, written notice, and the Minister of Employment and Social Solidarity in the case of a
mass or group termination in all material respects in accordance with applicable Law.
SECTION 7.3. Excluded Employee Liabilities. For purposes of clarity, the Sellers shall retain, and neither the Purchaser nor any of the
Designated Purchasers or Purchaser Employee Plans shall assume, any of the following Liabilities of
the Sellers or Seller Employee Plans (the Excluded Employee Liabilities):
(a) Liabilities related to the Seller Employee Plans or any employee plans or arrangements
related to former employees of the Business (excluding the EMEA Business), including the
Sellers or any of their Affiliates (excluding the EMEA Sellers) or
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Seller Employee Plans obligations to make payments or provide benefit accrued under any Seller Employee Plan, except
with respect to the Specified Employee Liabilities or as specified in the Loaned Employee
Agreement;
(b) Any obligation to provide continuation coverage pursuant to COBRA under any Seller
Employee Plan that is a group health plan (as defined in Section 5000(b)(1) of the Code) to
the Employees and/or their qualified beneficiaries with respect to a COBRA qualifying event
that occurs prior to such Employees Effective Hire Date including, for avoidance of doubt, an
Employees termination of employment from the Sellers or their Affiliates;
(c) Liabilities related to the stock or other equity interests in the Seller or any of its
Affiliates;
(d) Except with respect to the Assumed Liabilities and as provided for in Article VII,
Liabilities relating to (i) any Employees or a former employees employment or termination of
employment with any of the Sellers or their Affiliates, including any severance or similar
obligations that may arise as a result of the transfer of an Employees employment to the
Purchaser or one of its Affiliates or as a result of the Employees refusal of the Purchasers
Offer and any Liabilities that relate to the Inactive Employees, Visa Employees and Seconded
Employees employment or termination of employment with any of the Sellers or their Affiliates,
except as otherwise provided in the Loaned Employee Agreement, (ii) an applicant with respect
to potential employment with any of the Sellers or their Affiliates, (iii) the purported class
action filed in Ontario Superior Court of Justice under Court file number 08-CV41878CP, (iv)
any Action arising on or prior to the Closing filed by any Person in connection with any
Employees employment or the termination thereof with the Sellers, or (v) any Action arising
prior to, on or after the Closing relating to or filed by any of the Employees set forth in
Section 4.10(b) who are not Identified Employees in connection with any such Employees
employment or termination of employment with the Sellers; and
(e) Any Liabilities with respect to Canadian Union Retirees.
SECTION 7.4. Other Employee Covenants.
(a) After the date hereof, and subject to each Partys disclosure obligations imposed by Law
or by Government Entities and each Partys obligations hereunder, the Purchaser shall not, and
shall procure that the Designated Purchasers and any of the Purchasers Affiliates shall not,
issue any announcement or communication to their respective employees or the Employees, prior to
consultation with, and the approval of, the Main Sellers (not to be unreasonably withheld or
delayed) with respect to this Agreement or any of the transactions contemplated hereby. If requested, the non-requesting Party shall cooperate
with the requesting Party in respect of the development and distribution of any announcement and
communication to the employees of the Sellers, including Employees, with respect to this Agreement
or any of the transactions contemplated hereby.
(b) The Purchaser undertakes to keep the Employee Data and any additional information
provided to the Purchaser by the Sellers with respect to individually
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identifiable Employees (collectively, Employee Data) in confidence and agrees that, until the relevant Employee
Transfer Date with respect to those Employees who become Transferred Employees, and at all times
with respect to those Employees who do not become Transferred Employees:
(i) the Purchaser shall, and shall cause the Designated Purchasers to, restrict
the disclosure of the Employee Data only to such of its employees, agents and
advisors as is reasonably necessary for the purposes of complying with its
obligations pursuant to this Agreement;
(ii) the Employee Data shall not be used except for the purposes of complying
with the obligations of the Purchaser and the Designated Purchasers pursuant to this
Agreement and shall be returned to the Sellers or destroyed, at the Sellers
election, if this Agreement is terminated; and
(iii) the Purchaser shall, and shall cause the Designated Purchasers to, comply
with such additional obligations as may be reasonably required in any particular
jurisdiction to comply with any applicable data privacy Laws.
(c) The Purchaser and the Sellers shall cooperate with each other to provide for an
orderly transition of the Transferred Employees from the Sellers to the Purchaser or the
Designated Purchasers, as applicable (including the providing of any information by the Sellers
to the Purchaser as may be reasonably requested by Purchaser for purposes of complying with its
obligations pursuant to Article VII), subject to Section 5.6(d), and to minimize the disruption
to the respective businesses of the Parties resulting from the transactions contemplated
hereby.
(d) Within sixty (60) days following the relevant Effective Hire Date, except to the
extent prohibited by applicable data privacy Laws and subject to consent by such employee to be
obtained by the Purchaser or Designated Purchaser in his or her Offer (including any consent,
if required, to transfer Employee Records across geographical boundaries), or as otherwise
required by Law, the Sellers shall provide the Purchaser or the Designated Purchaser with the
Employee Records (or a copy thereof) of Transferred Employees other than those Employee Records
that constitute Assets pursuant to Section 2.1.1(h) hereof. Further, after the Effective Hire
Date, the Purchaser may request in writing an individual Employee Record in relation to a
reasonably contemplated employment termination by the Purchaser and, except to the extent
prohibited by applicable data privacy Laws and subject to consent by such employee to be
obtained by the Purchaser or Designated Purchaser in his or her Offer (including any consent,
if required, to transfer Employee Records across geographical boundaries), the Seller shall
provide such individual Employee Record within two (2) Business Days. With respect to such
Employee Records provided by the Sellers to the Purchaser or Designated Purchasers, in the event that the
Sellers reasonably need access to such records for purposes of complying with a subpoena or in
connection with any pending or threatened Action, the Purchaser or Designated Purchaser will
allow the Sellers reasonable access to such records for the sole purpose of obtaining
information for use as aforesaid and will permit the Sellers to make copies thereof as may be
necessary or convenient.
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(e) During the Non-Solicitation Period the Sellers shall not, without the advance written
consent of the Purchaser, either directly or indirectly solicit for employment or hire any
Transferred Employee unless the employment of such employee is involuntarily terminated by the
Purchaser or Designated Purchaser prior to such action by the Sellers; provided,
however, that nothing in this Section 7.4(e) shall prevent the Sellers from (i)
conducting generalized employment searches, including placing bona fide public advertisements,
that are not specifically targeted at such Transferred Employees, or (ii) hiring such
Transferred Employees identified through such generalized employment searches.
(f) During the Non-Solicitation Period, the Purchaser and the Designated Purchasers shall
not, without the Sellers advance written consent, either directly or indirectly solicit for
employment (i) any of the employees of the Sellers who are not Employees, unless the employment
of such employee is involuntarily terminated by the Sellers prior to such action by the
Purchaser or the Designated Purchasers, (ii) any Employees who have rejected their Offer or
objected to their transfer of employment to the Purchaser or Designated Purchasers pursuant to
this Agreement, or (iii) any Employees to whom the Purchaser or any Designated Purchaser have
not made an Offer; provided, however, that nothing in this Section 7.4(f) shall
prevent the Purchaser or the Designated Purchasers from (A) conducting generalized employment
searches, including placing bona fide public advertisements, that are not specifically targeted
at such employees or former employees of the Sellers, or (B) hiring such employees or former
employees identified through such generalized employment searches; provided,
further, that, with respect to any Employee described in clauses (ii) and (iii) above
who becomes employed with the Purchaser or a Designated Purchaser (other than by operation of
Law) during the ninety-day period following the Closing Date, the Purchaser and the Designated
Purchasers shall be required to reimburse the Sellers, if applicable, for any pay in lieu of
notice (including WARN Act notice) and/or severance payments to the extent paid by the Sellers
to such Employee.
(g) Neither the Sellers nor any of their Affiliates shall enforce against any Transferred
Employee any, non-compete, non-solicit or similar contractual obligations, or otherwise assert,
with respect to any such Transferred Employee or the Purchaser or any of its Affiliates, claims
that would otherwise prohibit or restrict such Transferred Employees employment with the
Purchaser or any of its Affiliates in the Business.
SECTION 7.5. Canadian Pension Plans.
7.5.1. Non-Union Defined Benefit. As of the relevant Effective Hire Date, each Non-Union Employee who has any entitlement to
defined benefits under the Nortel Networks Limited Managerial and Non-Negotiated Pension Plan (the
Nortel Plan), whether such Non-Union Employee was accruing such benefits as of such Effective
Hire Date or whether accrual had ceased prior to such date, shall cease to participate actively in
such Seller Employee Plan. The Purchaser shall cause all such Non-Union Employees who become
Transferred Employees to participate in a defined contribution registered pension plan (the
Canadian Non-Union DC Replacement Plan) to be established by the relevant Designated Purchaser
effective as of the day after the Closing Date. The Purchaser shall cause the Canadian Non-Union
DC Replacement Plan to recognize the prior service of such Transferred Employees with the Seller
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for the purposes of eligibility to participate, vesting and entitlement to benefits. The Canadian
Non-Union DC Replacement Plan shall contain an employer contribution formula of at least 1% of the
salary of such Transferred Employees, subject to any applicable Tax Law. The Designated Purchaser
shall maintain the Canadian Non-Union DC Replacement Plan in respect of such Transferred Employees
(A) for at least five (5) years after the Closing Date or their respective employment termination
dates with the Designated Purchaser or (B) until the wind-up of the Nortel Plan, whichever is
earlier, without any adverse amendment. For greater certainty, there shall be no transfer of assets
or liabilities from the Nortel Plan to the Canadian Non-Union DC Replacement Plan or any other
Purchaser Employee Plan in respect of defined benefit accruals.
7.5.2. Non-Union Defined Contribution. As of the relevant Effective Hire Date, each Non-Union Employee who participates only in the
defined contribution component of the Nortel Plan shall cease to participate actively in, and
accrue benefits under, such Seller Employee Plan. The Purchaser shall cause all such Non-Union
Employees to participate in the Canadian Non-Union DC Replacement Plan beginning as of the relevant
Effective Hire Date. The Purchaser shall cause the Canadian Non-Union DC Replacement Plan to
recognize the prior service of such Transferred Employees with the Seller for the purposes of
eligibility to participate, vesting and entitlement to benefits. The Canadian Non-Union DC
Replacement Plan shall contain an employer contribution formula of at least 1% of the salary of
such Transferred Employees, subject to any applicable Tax Law.
7.5.3. Union Defined Benefit. As of the relevant Effective Hire Date, each Union Employee who was accruing defined benefits
under the Nortel Networks Negotiated Pension Plan shall cease to participate actively in, and
accrue benefits under, such Seller Employee Plan. The Purchaser shall cause all such Union
Employees who become Transferred Employees to participate in a defined benefit registered pension
plan (the Canadian DB Replacement Plan) to be established by the relevant Designated Purchaser
effective as of the day after the Closing Date and which shall contain a benefit formula which is
no less favorable than the formula in the Nortel Networks Negotiated Pension Plan and which shall
otherwise comply with the applicable Collective Labor Agreement. The Purchaser shall cause the
Canadian DB Replacement Plan to recognize the prior service of such Transferred Employees with the
Seller for the purposes of eligibility to participate, vesting and entitlement to benefits, but not
for the purpose of benefit accrual. For greater certainty, there shall be no transfer of assets or
liabilities from the Nortel Networks Negotiated Pension Plan to the Canadian DB Replacement Plan or any other Purchaser Employee
Plan.
7.5.4. Union Defined Contribution. As of the relevant Effective Hire Date, each Union Employee who participates in the defined
contribution component of the Nortel Networks Negotiated Pension Plan shall cease to participate
actively in, and accrue benefits under, such plan. The Purchaser shall cause all such Union
Employees who become Transferred Employees to participate in a defined contribution registered
pension plan (the Canadian Union DC Replacement Plan) to be established by the Purchaser
effective as of the day after the Closing Date and which shall comply with the applicable
Collective Labor Agreement. The Purchaser shall cause the Canadian Union DC Replacement Plan to
recognize the prior service of such Transferred Employees with the Seller for the purposes of
eligibility to participate, vesting and entitlement to benefits.
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SECTION 7.6. Sole Benefit of Sellers and Purchaser. The terms and provisions of this Article VII are for the sole benefit of the Parties. Nothing
contained herein, express or implied (i) shall be construed to establish, amend, or modify any
Seller Employee Plan, any Purchaser Employee Plan, or any other benefit plan, program, agreement or
arrangement, (ii) shall alter or limit the ability of the Purchaser, the Sellers, or any of their
respective Affiliates to amend, modify or terminate any Seller Employee Plan, any Purchaser
Employee Plan (other than as provided in Section 7.5), or any other benefit or employment plan,
program, agreement or arrangement after the Closing Date, (iii) is intended to confer or shall
confer upon any current or former employee any right to employment or continued employment, or
constitute or create an employment agreement with any Transferred Employee, or (iv) is intended to
confer or shall confer upon any individual or any legal representative of any individual (including
employees, retirees, or dependents or beneficiaries of employees or retirees and including
collective bargaining agents or representatives) any right as a third-party beneficiary of this
Agreement.
ARTICLE VIII
REGISTRATION AND SALE OF CONVERTIBLE NOTES
SECTION 8.1. Shelf Registration.
(a) In the event that, at issuance, the Convertible Notes and all Shares issuable upon
conversion thereof (the Registrable Securities) are not freely transferable by the
Distribution Agent without restrictions under the Securities Act, provided that the Sellers
have complied with their obligations to deliver the information, including the Audited
Financial Statements and Unaudited September 30, 2008 Financial Statements, as may be required
by and within the time periods specified in Section 5.26, on or prior to the later of (x) the
30th calendar day following the Closing and (y) sixty (60) days following the
receipt of such information and financial statements from the Sellers as are required by the
rules and regulations promulgated under the Securities Act in connection with the filing and
effectiveness of the Shelf Registration Statement referred to below, the Purchaser shall
prepare and file an automatic shelf registration statement on Form S-3 (or other applicable
form) (together with any amendments or supplements thereto, the Initial Shelf
Registration Statement), to permit the immediate resale of the Registrable Securities under
the Securities Act by the Sellers and shall use its commercially reasonable efforts to cause
the Initial Shelf Registration Statement or any shelf registration statement filed to replace
the Initial Registration Statement to permit the resale of the Registrable Securities should
the Initial Shelf Registration Statement no longer be effective (together with any amendments
or supplements thereto, and collectively with the Initial Shelf Registration Statement, the
Shelf Registration Statement) to remain continuously effective until the later of (i) one
year after the Closing and (ii) when the sale by the Sellers of the Registrable Securities are
no longer subject to the volume limitations set forth in Rule 144(e) under the Securities Act
(such period, the Effective Period); provided that the Purchaser may by written
notice to the Distribution Agent immediately suspend the use of the Shelf Registration
Statement for:
(i) any period starting on the date on which additional financial statements
for the Business with respect to any interim period that begins after the date of
the latest period covered by the Audited Financial Statements but ends
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prior to the Closing Date and that are not then included in the Shelf Registration Statement and
any financial statements for the corresponding period of the preceding fiscal year
that, in each case, are required by the rules and regulations promulgated under the
Securities Act to be included or incorporated by reference in the Shelf Registration
Statement (the Additional Statements) and ending three (3) Business Days after the
date on which the Sellers have provided such Additional Statements to the Purchaser.
The Purchaser shall provide the Main Sellers and their representatives reasonable
access to the records and employees of the Business to the extent relevant for the
preparation and delivery of any Additional Statements and shall cause the employees
of the Business to provide the Main Sellers with such cooperation as they shall
reasonably request in connection with their preparation and delivery of any
Additional Statements;
(ii) any period starting on the date that the Purchasers board of directors (or
a committee thereof) concludes that any previously issued financial statements
included in, or incorporated by reference into, such Shelf Registration Statement
should no longer be relied upon because of an error in such financial statements as
addressed in Accounting Principles Board Opinion No. 20, as may be modified,
supplemented or succeeded, and ending on the date on which the Purchaser takes
corrective action necessary to permit sales under the Shelf Registration Statement to
resume; and
(iii) a period not to exceed twenty (20) consecutive days in any one instance
and for a period not to exceed forty-five (45) days in any six (6) month period,
without regard to any period of suspension pursuant to the immediately preceding
clauses, at any time that the Purchaser becomes engaged in a material business
activity or negotiation or any other event has occurred or is anticipated, which
activity, negotiation or event is not disclosed in that prospectus and that the
Purchasers board of directors (or a committee thereof) reasonably believes after
consultation with counsel should be disclosed therein under applicable Law and
determines in good faith that such disclosure would be premature or would
adversely affect the Purchaser or its business or prospects; provided, however,
that the Purchaser may not suspend the use of the Shelf Registration Statement
pursuant to this clause (iii) during the sixty (60) consecutive Trading Day period
commencing on the effective date of the Shelf Registration Statement.
The Purchaser will use its reasonable best efforts to ensure that the use of the Shelf
Registration Statement may be resumed immediately following any such period of suspension
(including by taking such corrective actions as referred to in clause (ii) above).
(b) At its expense, the Purchaser will use reasonable best efforts during the Effective
Period to:
(i) prepare and file with the SEC such amendments and supplements to the Shelf
Registration Statement and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with respect to the
disposition of the Registrable Securities covered by the Shelf Registration
Statement;
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(ii) furnish such number of prospectuses and any amendments or supplements
thereto, as the Distribution Agent, the Sellers or the EMEA Sellers from time to
time may reasonably request;
(iii) promptly amend the Shelf Registration Statement onto a form the Purchaser
is then eligible to use or file a new registration statement on such form and to
keep such registration statement effective in accordance with the requirements
otherwise applicable under this Agreement if the Purchaser ceases to be a WKSI;
(iv) make and keep adequate current public information with respect to the
Purchaser available in accordance with Rule 144 under the Securities Act; and
(v) file with the SEC in a timely manner all reports and other documents
required of the Purchaser under the Securities Act and the Exchange Act.
SECTION 8.2. Offerings.
(a) At any time that a Shelf Registration Statement covering Registrable Securities
pursuant to Section 8.1 is effective, if the Sellers and the EMEA Sellers deliver a notice to
the Purchaser (a Shelf Take-Down Notice) stating that the Sellers and the EMEA Sellers intend
to effect an offering of all or part of the Registrable Securities included by the Sellers and
the EMEA Sellers on the Shelf Registration Statement (a Shelf Offering) and stating the
number or dollar amount of the Registrable Securities to be included in such Shelf Offering,
then the Purchaser shall amend or supplement the Shelf Registration Statement as may be
necessary in order to enable such Registrable Securities to be distributed pursuant to the
Shelf Offering as contemplated by the Shelf Take-Down Notice.
(b) The Sellers and the EMEA Sellers may withdraw their Registrable Securities from a
Shelf Offering at any time by providing the Purchaser with written notice. Upon receipt of
such written notice, the Purchaser shall cease all efforts to secure registration.
(c) In connection with an underwritten public Shelf Offering, the Sellers and the EMEA
Sellers shall have the right to select an internationally recognized investment banking firm
reasonably acceptable to the Purchaser as the lead or managing underwriter.
(d) In connection with any underwritten public offering made pursuant to a Registration
Statement, the Purchaser will not effect any public sale or distribution of any shares of its
Common Stock (or securities convertible into or exchangeable or exercisable for its Common
Stock (Convertible Securities)) for its own account (other than (x) a registration statement
(i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection
with an exchange offer or any employee benefit or dividend reinvestment plan or (y) pursuant
to such underwritten offering), during the period commencing on, and continuing for not more
than 60 days (or such shorter period as the managing underwriter(s) may permit) after the
effective date of such Registration Statement
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pursuant to which such underwritten offering shall be made or, in the case of a Shelf Registration Statement, the period commencing on, and
continuing for not more than 60 days (or such shorter period as the managing underwriter(s) may
permit) after the Purchasers notice of a distribution in connection with such offering, or, in
either case, on such earlier date as the Sellers and the EMEA Sellers give notice to the
Purchaser that they decline to proceed with any such offering, except (i) for the issuance of
shares of Common Stock upon the conversion, exercise or exchange, by the holders thereof, of
Convertible Securities pursuant to the terms of such Convertible Securities, (ii) pursuant to
the terms of any other agreement to issue shares of Common Stock or any Convertible Securities
in effect on the date of the notice of a proposed Transfer, including any such agreement in
connection with any previously disclosed acquisition, merger, consolidation or other business
combination, and (iii) in connection with Transfers to dividend reinvestment plans or to
employee benefit plans in order to enable any such employee benefit plan to fulfill its funding
obligations in the ordinary course, unless the managing underwriter(s) agree otherwise.
Notwithstanding the foregoing, the provisions of this Section 8.2(d) shall be subject to the
provisions of Section 8.1(a), and if the Purchaser exercises its rights of postponement
pursuant to Section 8.1(a) with respect to any proposed underwritten public offering, the
provisions of this Section 8.2(d) shall not apply unless and until such time as the Purchaser
notifies the Sellers and the EMEA Sellers of the termination of such
postponement and the Sellers and the EMEA Sellers notify the Purchaser of their intention
to continue with such proposed offering.
SECTION 8.3. Piggyback Registration.
(a) If at any time after the issuance of Convertible Notes, the Purchaser proposes or is
required to file a registration statement under the Securities Act with respect to an offering
of shares of Common Stock or Convertible Securities for its own account (other than (i) a
registration statement filed pursuant to Section 8.1(a), (ii) a registration statement on Form
S-4 or S-8 or any successors thereto, or (iii) a registration statement solely relating to an
offering and sale to employees or directors of the Purchaser pursuant to any employee stock
plan or other employee benefit plan arrangement), then the Purchaser shall give prompt written
notice of such proposed filing at least ten (10) days before the anticipated filing date (the
Piggyback Notice) to the Distribution Agent. The Piggyback Notice shall offer the Sellers
and the EMEA Sellers the opportunity to include in such registration statement the number of
Shares (with respect to an offering of shares of Common Stock) or the aggregate principal
amount of Convertible Notes (with respect to an offering of Convertible Securities) as they may
request (a Piggyback Registration). Subject to Section 8.3(b), the Purchaser shall include
in each such Piggyback Registration all Shares or Convertible Notes (as applicable) with
respect to which the Purchaser has received a written request for inclusion therein within five
(5) days after notice has been given to the Distribution Agent. The Sellers and the EMEA
Sellers shall be permitted to withdraw all or part of any Registrable Securities from a
Piggyback Registration at any time up to the pricing date.
(b) If any of the shares of Common Stock or Convertible Securities to be registered
pursuant to the registration giving rise to the Sellers and the EMEA Sellers rights under
this Section 8.3 are to be sold in an underwritten public offering, the Sellers and the EMEA
Sellers shall be permitted to include all Registrable Securities requested to be
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included in such registration in such offering on the same terms and conditions as any other shares of
Common Stock or Convertible Securities of the Purchaser included therein; provided, that if
such offering is subject to an Offering Limitation, then there shall be included in such
offering: (i) first, the number of shares of Common Stock or Convertible Securities the
Purchaser proposes to sell, and (ii) second, the number of Registrable Securities requested to
be included in such registration by the Sellers and the EMEA Sellers that in the opinion of the
underwriter selected by the Purchaser can be sold without adversely affecting the price,
timing, distribution or marketability of such offering.
(c) The Purchaser may select the lead underwriter and co-manager or co-managers to
administer any offering of Registrable Securities pursuant to a Piggyback Registration;
provided, however, that if the Sellers and the EMEA Sellers Registrable Securities that are
expected to be included in any such offering constitute, in the Purchasers reasonable
judgment, at least 25% of the shares of Common Stock or aggregate principal amount of
Convertible Securities expected to be transferred in such offering, the Sellers and the EMEA
Sellers shall have the right to appoint one co-manager (reasonably acceptable to the Purchaser)
for such offering, who shall participate in such offering on the same terms as the co-managers
appointed by the Purchaser.
(d) In the event that the Purchaser gives the Distribution Agent notice of its intention
to effect an offering pursuant to a Piggyback Registration and subsequently declines to proceed
with such offering, the Sellers and the EMEA Sellers shall have no rights in connection with
such offering. The Sellers and the EMEA Sellers shall participate in any offering of
Registrable Securities pursuant to a Piggyback Registration in accordance with the same plan of
distribution for such Piggyback Registration as the Purchaser.
(e) No registration of Shares effected pursuant to a request under this Section 8.3 shall
relieve the Purchaser of its obligations under Section 8.1 or 8.2.
SECTION 8.4. No Inconsistent Agreements. Nothing herein shall restrict the authority of the Purchaser to grant to any Person the rights
to obtain registration under the Securities Act of any equity securities of the Purchaser, or any
securities convertible into or exchangeable or exercisable for such securities; provided, however,
that the Purchaser shall not grant any such rights with respect to the Common Stock or Convertible
Securities that conflicts with the rights of the Sellers or the EMEA Sellers under this Agreement;
provided that in the event that Purchaser issues any Common Stock or Convertible Securities
in connection with any acquisition of any other Person, the Purchaser may grant such other Person
registration rights (including the rights in Section 8.3(b) which shall be deemed modified hereby)
that are pari passu with the Sellers.
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SECTION 8.5. Registration Procedures.
(a) The Purchaser is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Article VIII in a manner to permit the sale of such
Registrable Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Purchaser shall cooperate in the sale of the securities and
shall, as expeditiously as possible:
(i) Before filing a Registration Statement or any prospectus (including any
issuer free writing prospectus related thereto) or any amendments or supplements
thereto, furnish or otherwise make available to the Sellers, the EMEA Sellers, their
counsel and the managing underwriter(s), if any, copies of all such documents
proposed to be filed, which documents will be subject to the reasonable review and
comment of such counsel (provided that any comments made on behalf of the
Sellers, the EMEA Sellers or the managing underwriter(s), if any, are provided to
the Purchaser promptly upon receipt of the documents but in no event later than
three (3) Business Days after receipt of such documents by the Sellers and the EMEA
Sellers), and the managing underwriters, if any, and such other documents reasonably
requested by such counsel, including any comment letter from the SEC, and, if
requested by such counsel, provide such counsel reasonable opportunity to
participate in the preparation of such Registration Statement and each prospectus
included therein (including any issuer free writing prospectus related thereto) and
such other opportunities to conduct a reasonable investigation within the meaning of
the Securities Act, including reasonable access to the Purchasers books and
records, officers, accountants and other advisors. The Purchaser shall not file any
such Registration Statement or prospectus (including any issuer free writing prospectus related thereto) or
any amendments or supplements thereto with respect to any registration pursuant to
which the Sellers, the EMEA Sellers, their counsel, or the managing underwriter(s),
if any, shall reasonably object, in writing, on a timely basis, unless, in the
opinion of the Purchaser, such filing is necessary to comply with applicable Law.
(ii) Notify the Sellers, the EMEA Sellers and the managing underwriter(s), if
any, promptly (A) when a prospectus or any prospectus supplement, issuer free
writing prospectus or post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when the same has become
effective, (B) of any request by the SEC or any other Government Entity for
amendments or supplements to the Registration Statement or related prospectus or
issuer free writing prospectus or for additional information, (C) of the issuance by
the SEC of any stop order suspending the effectiveness of any registration statement
of the Purchaser or the initiation of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Purchaser contained in any
agreement related to the Registrable Securities (including this Agreement and any
underwriting agreement contemplated hereunder) cease to be true and correct, (E) of
the receipt by the Purchaser of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
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Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, and (F) of the happening of any event that makes any
statement made in such Registration Statement or related prospectus or issuer free
writing prospectus untrue in any material respect or that requires the making of any
changes in such Registration Statement, prospectus, documents or issuer free writing
prospectus so that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading, and
that in the case of any prospectus or issuer free writing prospectus, it will not
contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(iii) Use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction at the reasonably earliest
practical date.
(iv) If requested by the managing underwriter(s), if any, or the Sellers and
the EMEA Sellers, promptly include in a prospectus supplement, post-effective
amendment or issuer free writing prospectus such information as the managing
underwriter(s), if any, or the Sellers and the EMEA Sellers may reasonably request
in order to permit the intended method of distribution of such securities and make
all required filings of such prospectus supplement, such post- effective amendment or issuer free writing prospectus as soon as practicable
after the Purchaser has received such request.
(v) Furnish or make available to the Sellers, the EMEA Sellers and each
managing underwriter, if any, without charge, such number of conformed copies of the
Registration Statement and each post-effective amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or deemed
to be incorporated therein by reference, and all exhibits, unless requested in
writing by the Sellers, the EMEA Sellers, counsel or managing underwriter(s)), and
such other documents, as the Sellers, the EMEA Sellers or such managing
underwriter(s) may reasonably request, and upon request a copy of any and all
transmittal letters or other correspondence to or received from the SEC or any other
Government Entity relating to such offering.
(vi) Deliver to the Sellers, the EMEA Sellers and the managing underwriter(s),
if any, without charge, as many copies of the prospectus or prospectuses (including
each form of prospectus and any issuer free writing prospectus related to any such
prospectuses) and each amendment or supplement thereto as such Persons may
reasonably request in connection with the distribution of the Registrable
Securities; and the Purchaser, subject to Section 8.5(b), hereby consents to the use
of such prospectus and each amendment or supplement thereto by each of the Sellers,
the EMEA Sellers and the managing underwriter(s), if any, in connection with the
offering and sale of the Registrable
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Securities covered by such prospectus and any such amendment or supplement thereto.
(vii) Prior to any public offering of Registrable Securities, use its
commercially reasonable efforts to register or qualify or cooperate with the
Sellers, the EMEA Sellers, the managing underwriter(s), if any, and their respective
counsel in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as any Seller, EMEA Seller or managing underwriter(s) reasonably requests in
writing and to keep each such registration or qualification (or exemption therefrom)
effective during the Effective Period and to take any other action that may be
necessary or advisable to enable the Sellers and the EMEA Sellers to consummate the
disposition of such Registrable Securities in such jurisdiction; provided,
however, that the Purchaser will not be required to (i) qualify generally to
do business in any jurisdiction where it is not then so qualified or (ii) take any
action that would subject it to general service of process in any such jurisdiction
where it is not then so subject.
(viii) Cooperate with the Sellers, the EMEA Sellers and the managing
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates (not bearing any legends) representing Registrable Securities to be
sold after receiving a written representation from the Sellers and the EMEA Sellers
that the Registrable Securities represented by the certificates so delivered by the
Sellers and the EMEA Sellers will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriter(s), if any,
or the Sellers and the EMEA Sellers may request at least two (2) Business Days prior
to any sale of Registrable Securities.
(ix) Upon the occurrence of any event contemplated by Section 8.5(a)(ii)(B)
through Section 8.5(a)(ii)(F), at the request of the Sellers and the EMEA Sellers,
prepare and file with the SEC a supplement or post-effective amendment to such
Registration Statement, prospectus or issuer free writing prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.
(x) Prior to the effective date of the Registration Statement, provide a CUSIP
number for the Registrable Securities (if the Registrable Securities do not already
have a CUSIP number) and make the Registrable Securities eligible for settlement and
transfer through the facilities of The Depository Trust Company (DTC).
(xi) So long as the Common Stock is listed on any United States securities
exchange, quotation system or market, use its commercially reasonable
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efforts to cause all of the Shares to be listed on such exchange, quotation system or market.
(xii) Provide and cause to be maintained a transfer agent or registrar, as
applicable, for all Registrable Securities covered by such Registration Statement
from and after a date not later than the effective date of such Registration
Statement.
(xiii) Enter into such agreements (including an underwriting agreement in form,
scope and substance as is customary in underwritten offerings) and take all such
other actions reasonably requested by the Sellers, the EMEA Sellers or by the
managing underwriter(s), if any, to expedite or facilitate the disposition of such
Registrable Securities, and in connection therewith, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Sellers, the EMEA
Sellers and the managing underwriter(s), if any, with respect to the business of the
Purchaser and its Subsidiaries, and the Registration Statement, prospectus and
documents, if any, incorporated or deemed to be incorporated by reference therein,
in each case, in form, substance and scope as are customarily made by the Purchaser
in its underwritten offerings, and, if true, confirm the same if and when requested,
(ii) use its commercially reasonable efforts to furnish to the Sellers and the EMEA
Sellers opinions of counsel to the Purchaser and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriter(s), if any, and counsel to the Sellers and the EMEA Sellers),
addressed to the Sellers, the EMEA Sellers and each of the managing underwriter(s),
if any, covering the matters customarily covered in opinions provided by the Purchaser in its
underwritten offerings and such other matters as may be reasonably requested by such
counsel and managing underwriter(s), (iii) use its commercially reasonable efforts
to obtain cold comfort letters and updates thereof from the independent registered
public accounting firm of the Purchaser (and, if necessary, any other independent
registered public accounting firm of any Subsidiary of the Purchaser or of any
business acquired by the Purchaser for which financial statements and financial data
are, or are required to be, included in the Registration Statement) who have
certified the financial statements included in such Registration Statement,
addressed to the Sellers and the EMEA Sellers (unless such accountants shall be
prohibited from so addressing such letters by applicable standards of the accounting
profession) and to each of the managing underwriter(s), if any, such letters to be
in customary form and covering matters of the type customarily covered in cold
comfort letters in connection with the Purchasers underwritten offerings, (iv) if
an underwriting agreement is entered into, the same shall contain indemnification
provisions substantially to the effect set forth in Section 8.8 hereof with respect
to all parties to be indemnified pursuant to said Section except as otherwise agreed
by the Sellers, the EMEA Sellers and the managing underwriter(s) and (v) deliver
such documents and certificates as may be reasonably requested by the Sellers, the
EMEA Sellers, their counsel and the managing underwriter(s), if any, to evidence the
continued
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validity of the representations and warranties made pursuant to clause (i)
above and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Purchaser. The above
shall be done at each closing under such underwriting or similar agreement, or as
and to the extent required thereunder.
(xiv) Not later than the effective date of the Shelf Registration Statement,
cause the Indenture to be qualified under the Trust Indenture Act of 1939 (as
amended, the TIA); and, in connection therewith, cooperate with the Trustee to
effect such changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and execute, and use its
reasonable best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to be
filed with the SEC to enable the Indenture to be so qualified in a timely manner.
(xv) If requested by the lead manager for any underwritten offering of any
Convertible Notes, the Purchaser shall at its own expense, use its best efforts to
(a) if the Convertible Notes have been rated prior to such underwritten offering,
confirm such ratings will apply to the Convertible Notes to be offered in such
underwritten offering, or (b) if the Convertible Notes were not previously rated,
cause the Convertible Notes to be offered in such offering to be rated by such
rating agencies, as requested by the managing underwriters of such underwritten
offering.
(b) Each of the Parties will treat all notices of proposed transfers and registrations,
and all information relating to any periods of suspension of the Shelf
Registration Statement under Section 8.1(a) received from the other party with the
strictest confidence (and in accordance with the provisions of Section 5.11) and will not
disseminate such information. Nothing herein shall be construed to require the Purchaser or
any of its Affiliates to make any public disclosure of information at any time. In the event
the Purchaser has notified the Sellers and the EMEA Sellers of any occurrence of any event
contemplated by Section 8.5(a)(ii)(B) through Section 8.5(a)(ii)(F) then the Sellers and the
EMEA Sellers shall not deliver such prospectus or issuer free writing prospectus to any
purchaser and will forthwith discontinue disposition of any Registrable Securities covered by
such Registration Statement, prospectus or issuer free writing prospectus unless and until a
supplement or post-effective amendment to such prospectus or issuer free writing prospectus has
been prepared and filed as set forth in Section 8.5(a)(ix) or until the Purchaser advises the
Sellers and the EMEA Sellers in writing that the use of such prospectus or issuer free writing
prospectus may be resumed.
SECTION 8.6. Cooperation by Management. The Purchaser shall make available members of the management of the Purchaser and its
Affiliates for reasonable assistance in the selling efforts relating to any offering of the
Registrable Securities, to the extent customary for such offering (including, without limitation,
to the extent customary, senior management attendance at due diligence meetings with prospective
investors or underwriters and their counsel and if requested by the lead underwriter with respect
to any underwritten offering road shows at a time that does not unreasonably interfere with the
operation of the business
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either by conference call or, if in person, at a location acceptable to
the Purchaser acting reasonably), and for such assistance as is reasonably requested by the
Sellers, the EMEA Sellers and their counsel in the selling efforts relating to any such offering;
provided, however, that management need only be made available for one offering in
any 6-month period.
SECTION 8.7. Registration Expenses and Legal Counsel. The Purchaser shall pay all reasonable fees and expenses incident to the performance of or
compliance with its obligations under this Article VIII, including (i) all registration and filing
fees (including fees and expenses (A) with respect to filings required to be made with all
applicable securities exchanges and/or the Financial Industry Regulatory Authority, Inc., and (B)
of compliance with securities or blue sky laws including any fees and disbursements of counsel
for the underwriter(s) in connection with blue sky qualifications of the Registrable Securities
pursuant to Section 8.5(a)(viii), (ii) printing expenses (including expenses of printing
certificates for Registrable Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing underwriter(s), if any,
or by the Sellers and the EMEA Sellers), (iii) messenger, telephone and delivery expenses of the
Purchaser, (iv) fees and disbursements of counsel for the Purchaser, (v) expenses of the Purchaser
incurred in connection with any road show and (vi) fees and disbursements of all independent
registered public accounting firms (including, without limitation, the expenses of any special
audit and cold comfort letters required by or incident to this Agreement) and any other persons,
including special experts, retained by the Purchaser other than the fees and expenses of KPMG or
any other accounting firm in connection with the preparation or audit of the Audited Financial
Statements or the Additional Statements or any comfort given thereon (Nortel Accounting
Expenses). For the avoidance of doubt, the Purchaser shall not be required to pay underwriting
discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable Securities pursuant to any
Registration Statement, the fees and expenses of counsel for the underwriter selected by the
Sellers and the EMEA Sellers, the Nortel Accounting Expenses or any other expenses of the Sellers
and the EMEA Sellers. In addition, the Purchaser shall bear all of its internal expenses
(including all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in connection with the
listing of the Common Stock issuable upon conversion of Convertible Notes on any securities
exchange or inter-dealer quotation system and the fees and expenses of any Person, including
special experts, retained by the Purchaser.
SECTION 8.8. Indemnification.
(a) As a condition to any Sellers or EMEA Sellers inclusion in a Registration Statement
as a selling shareholder, such Seller or EMEA Seller shall, severally and not jointly,
indemnify the Purchaser, each person, if any, who controls the Purchaser within the meaning of
the Securities Act or the Exchange Act, and each officer or director of the Purchaser, against
all losses, claims, damages or liabilities (including any loss, damage, claim or liability
under the Securities Act, the Exchange Act, state securities laws or otherwise) arising out of
or based upon any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading and each agrees, severally and not jointly, to
reimburse the Purchaser and each such officer, director
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and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or defending such
loss, claim, damage, liability or action, provided, however, that any Seller or
EMEA Seller shall only be liable hereunder in any such case if and only to the extent that any
such loss, claim, damage, liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Registration Statement,
preliminary prospectus or final prospectus, or any such amendment or supplement, in reliance
upon and in conformity with information pertaining to such Seller or EMEA Seller, as such, as
furnished in writing to the Purchaser by or on behalf of the Sellers or the EMEA Sellers,
respectively, specifically for use in the preparation thereof, provided,
further, however, that the liability of each of the Sellers and the EMEA
Sellers hereunder shall not in any event exceed the net proceeds received by such Seller or
EMEA Seller from the sale of Registrable Securities covered by such Registration Statement.
The Purchaser will indemnify and hold harmless each of the Sellers and the EMEA Sellers selling
Registrable Securities registered on such Registration Statement and each other person, if any,
who controls any of them within the meaning of the Securities Act or Exchange Act, and each
officer, director or agent of any of them, against any losses, claims, damages or liabilities
(including any loss, damage, claim or liability under the Securities Act, the Exchange Act or
state securities Laws) or otherwise to the extent such losses, claims, damages or liabilities
arise out of or based upon any untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and the Purchaser will reimburse each such Seller and EMEA Seller
and each such officer, director, agent and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action, provided, however, that the Purchaser will not be liable hereunder
in any such case to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus or final prospectus or any such
amendment or supplement, in reliance upon and in conformity with information pertaining to any
of the Sellers or the EMEA Sellers, as such, as furnished in writing to the Purchaser by or on
behalf of any of them specifically for use in the preparation thereof. The Purchaser shall
bear all costs and expenses associated with the registration of the Registrable Securities as
specified in Article VIII and the preparation and filing of such Registration Statement, the
Purchasers outside counsel, NASDAQ and blue sky registration and filing fees and transfer
agents and registrars fees and legal fees and disbursements of counsel to the Sellers or the
EMEA Sellers.
(b) If the indemnification provided for in Section 8.8(a) is unavailable to a Person
intended to be indemnified under Section 8.8(a) (an Indemnitee) in respect of any losses,
damages, claims or liabilities referred to herein, then, as a condition to any Sellers or EMEA
Sellers inclusion in such Registration Statement as a selling shareholder, the Person who was
to provide the indemnity under Section 8.8(a) (an Indemnitor), in lieu of indemnifying such
Indemnitee hereunder, shall contribute to the amount paid or payable by such Indemnitee as a
result of such losses, damages, claims or liabilities in such proportion as is appropriate to
reflect the relative fault of the Indemnitor and the Indemnitee
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and the Persons acting on behalf of or controlling the Indemnitor or the Indemnitee in connection with the statements or
omissions or violations which resulted in such losses, damages, claims or liabilities, as well
as any other relevant equitable considerations. If the indemnification described in Section
8.8(a) is unavailable to an Indemnitee, the relative fault of the Indemnitor and the Indemnitee
and Persons acting on behalf of or controlling the Indemnitor or the Indemnitee shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnitor or the Indemnitee or the Persons acting on behalf of or
controlling the Indemnitor or the Indemnitee and their relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Indemnitor
shall not be required to contribute pursuant to this Section 8.8(b) if there has been a
settlement of any proceeding affected without its written consent. No claim against the assets
of the Sellers or the EMEA Sellers shall be created by this Section 8.8(b), except as and to
the extent permitted by applicable Law. Notwithstanding the foregoing, no Seller or EMEA
Seller shall be required to make a contribution in excess of the net amount received by such
Seller or EMEA Seller from the sale of the Registrable Securities in the offering giving rise
to such liability.
SECTION 8.9. Trading Limitation. The Sellers and EMEA Sellers agree that (i) none of them will transfer any Convertible Notes
or the right to receive the Convertible Notes other than (w) to the Sellers, the EMEA Sellers or
their respective subsidiaries, (x) distributions to the Sellers or the EMEA Sellers creditors and
other stakeholders, either directly or indirectly through a liquidating trust or other
similar vehicle, whether pursuant to a plan of compromise and/or arrangement, plan of
reorganization, plan of liquidation, scheme of arrangement, or otherwise, (y) through a block
trade or a broadly marketed offering effected through an internationally recognized convertible
bond dealer (Recognized Dealer) in accordance with Section 8.1 or (z) outside the context of
clause (y), with the consent of the Purchaser, to a Recognized Dealer in accordance with applicable
securities laws, which consent of the Purchaser shall not be unreasonably withheld or delayed (it
being understood that such consent may be withheld unless such Recognized Dealer provides Purchaser
with reasonable assurances that the Convertible Notes will not ultimately be placed in an
unreasonably concentrated manner); and (ii) to the extent the Convertible Notes have been converted
into Common Stock, the aggregate amount of Shares sold for the account of the Sellers and EMEA
Sellers collectively, whether pursuant to a Registration Statement or otherwise, shall not exceed
the Daily Trading Limit.
SECTION 8.10. Agent of Sellers. The Sellers, the EMEA Sellers or any of them may act through the Distribution Agent in
connection with the exercise of any rights or the performance of any actions or obligations under
this Article VIII.
SECTION 8.11. Liquidated Damages.
In the event that (i) the Purchaser has not filed the Shelf Registration Statement on or
before the date on which such registration statement is required to be filed pursuant to Section
8.1(a), or (ii) any Shelf Registration Statement required by Section 8.1(a) hereof is filed and
declared effective but shall thereafter either be withdrawn by the Purchaser in violation of its
obligations in Section 8.1 (a), or shall become subject to an effective stop order issued pursuant
to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement
without being succeeded immediately by an additional registration statement filed and declared
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effective (each such event referred to in clauses (i) and (ii), a Registration Default and each
period during which a Registration Default has occurred and is continuing, a Registration Default
Period), then, as liquidated damages for such Registration Default, subject to the provisions of
Section 11.13, liquidated damages shall accrue on the Aggregate Principal Amount at a per annum
rate of 0.25% for the first 90 days of the Registration Default Period, and at a per annum rate of
0.50% thereafter for the remaining portion of the Registration Default Period.
ARTICLE IX
CONDITIONS TO THE CLOSING
SECTION 9.1. Conditions to Each Partys Obligation. The Parties obligation to effect, and, as to the Purchaser, to cause the relevant Designated
Purchasers to effect, the Closing is subject to the satisfaction or the express written waiver of
the Primary Parties, at or prior to the Closing, of the following conditions:
(a) Regulatory Approvals. All Regulatory Approvals shall have been obtained.
(b) No Injunctions or Restraints. There shall not be in effect any Law or Order of any
court or other Government Entity in the U.S., Canada or the United Kingdom (in respect of the
transactions contemplated under the EMEA Asset Sale Agreement) prohibiting the consummation of
the transactions contemplated hereby and there shall not be any proceeding pending by any
Government Entity in the U.S., Canada or the United Kingdom seeking such prohibition.
(c) Bidding Procedures Order and Canadian Sales Process Order. The U.S. Bidding
Procedures Order and the Canadian Sales Process Order shall have been entered and shall not
have been stayed as of the Closing Date and such orders shall have become Final Orders.
(d) U.S. Sale Order and Canadian Approval and Vesting Order. The U.S. Sale Order and the
Canadian Approval and Vesting Order shall have been entered and shall not have been stayed and
(x) such orders shall have become Final Orders, (y) following Closing any such appeal of either
such Order shall become moot under applicable Law or (z) any ruling or order by the court in
respect of the issue on appeal could not reasonably be expected to have a material adverse
effect on the Purchaser or the Business taken as a whole.
(e) Satisfaction of Conditions under EMEA Asset Sale Agreement. The conditions to Closing
of the EMEA Asset Sale Agreement set out in clauses 15.1, 15.2 and 15.3 thereof (other than the
condition regarding the satisfaction of the conditions hereunder) shall have been satisfied or
waived in accordance with the terms of the EMEA Asset Sale Agreement.
(f) Consummation of Closing under EMEA Asset Sale Agreement. The transaction contemplated
by the EMEA Asset Sale Agreement shall be completed simultaneously with the Closing hereunder.
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SECTION 9.2. Conditions to Sellers Obligation. The Sellers obligation to effect the Closing shall be subject to the fulfillment (or express
written waiver by the Main Sellers), at or prior to the Closing, of each of the following
conditions:
(a) No breach of Representations and Warranties. Each of the representations and
warranties set forth in Article III (other than the representations and warranties set forth in
Section 3.7 if the Purchaser exercises the Cash Replacement Election in full), disregarding all
materiality and material adverse effect qualifications contained therein, shall be true and
correct (i) as if restated on and as of the Closing Date or (ii) if made as of a date specified
therein, as of such date, except, in each case, for any failure to be true and correct that has
not had or would not reasonably be expected to have individually or in the aggregate (i) a
material adverse effect on the Purchasers ability to consummate the transactions contemplated
hereby or (ii) a material adverse effect on the assets, liabilities, results of operations or
condition (financial or otherwise) of the Purchaser and its subsidiaries taken as a whole.
(b) No breach of Covenants. The material covenants, obligations and agreements contained
in this Agreement to be complied with by the Purchaser on or before the Closing shall not have
been breached in any material respect.
(c) Notification of NASDAQ for Listing. The Purchaser has submitted a notification of
listing of the Shares to NASDAQ, such listing to be effective as of the Closing Date, subject
to the filing of required documentation, notice of issuance and/or other usual requirements at
least fifteen (15) days prior to the Closing Date and has not received any notification of
objection from NASDAQ with respect to such listing.
(d) Purchasers Deliveries. Each of the deliveries required to be made by the Purchaser
pursuant to Sections 2.3.2(b), and 2.3.2(e) shall have been so delivered.
SECTION 9.3. Conditions to Purchasers Obligation. The Purchasers obligation to effect, and to cause the relevant Designated Purchasers to
effect, the Closing shall be subject to the fulfillment (or express written waiver by the
Purchaser), at or prior to the Closing, of each of the following conditions:
(a) No breach of Representations and Warranties. Each of the representations and
warranties set forth in Article IV, disregarding all materiality and Material Adverse Effect
qualifications contained therein, shall be true and correct (i) as if restated on and as of the
Closing Date or (ii) if made as of a date specified therein, as of such date, except in each
case for any failure to be true and correct that has not had or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) No breach of Covenants. The material covenants, obligations and agreements contained
in this Agreement to be complied with by the Sellers on or before the Closing shall not have
been breached in any material respect, provided that a failure by the Sellers to
achieve First Day Ready (as defined in Section 5.28 of the Sellers Disclosure Schedule) on or
before April 30, 2010 shall not fall within the scope of this condition.
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(c) Sellers Deliveries. Each of the deliveries required to be made by the Sellers
pursuant to Section 2.3.2(f) shall have been so delivered except if such deliverable is a
Non-Assigned Contract in respect of which a Consent is outstanding.
(d) Financial Statements. The Sellers shall have delivered to the Purchaser at least five
(5) days prior to the Closing Date, the Audited Financial Statements and Unaudited September
30, 2008 Financial Statements as required by and pursuant to Section 5.26 hereof and the
Audited Financial Statements and Unaudited September 30, 2008 Financial Statements shall be
consistent in all material respects with the Financial Statements for such periods that are
included in the Financial Statements (other than to the extent such differences arise from the
differences between the carve-out accounting guidelines promulgated by the SEC and the
principals used to allocate corporate overhead used by the Sellers in preparing the Financial
Statements).
(e) Carling Property. The premises in Lab 10 of the Carling Property to be leased to the
Purchaser in accordance with the Carling Property Lease Agreements shall not have been
destroyed or substantially damaged.
ARTICLE X
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of the Primary Parties;
(b) by either Primary Party, upon written notice to the other:
(i) if the Closing does not take place on or before April 30, 2010.
(ii) in the event of a material breach by such other Primary Party of such
other Primary Partys representations, warranties, agreements or covenants set forth
in this Agreement, which breach (x) would result in a failure of the conditions to
Closing set forth in Section 9.1(a), Section 9.2(a), Section 9.2(b), Section 9.3(a)
or Section 9.3(b), as applicable, and (y) is not cured within 30 days from receipt
of a written notice from the non-breaching Primary Party;
(iii) if the U.S. Bidding Procedures Order and the Canadian Sales Process Order
are not entered by the respective courts by October 19, 2009 in the case of any
termination pursuant to this clause (iii) by the Purchaser or October 30, 2009 in
the case of any termination pursuant to this clause (iii) by the Main Sellers,
provided however, that the Main Sellers shall only have the right to
terminate pursuant to this Section 10.1(b)(iii) if they are not otherwise in breach
of Section 5.1 or Section 5.2;
(iv) if the U.S. Sale Order and Canadian Approval and Vesting Order are not
entered into by December 17, 2009;
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(v) upon the entry of an order by the Bankruptcy Court authorizing an
Alternative Transaction;
(vi) if the EMEA Asset Sale Agreement is terminated in accordance with its
terms;
(vii) if a Government Entity in the U.S., Canada or the United Kingdom issues a
ruling or Final Order prohibiting the transactions contemplated hereby; or
(viii) if the Auction is not completed by December 11, 2009;
(c) by the Purchaser in the event that the Sellers fail to consummate the Closing in
breach of Section 2.3, within ten (10) Business Days of a written demand by the Purchaser to
consummate the Closing;
(d) by the Purchaser if any of the Sellers withdraw or seek authority to withdraw the
Canadian Approval and Vesting Order Motion or the U.S. Bidding Procedures and Sale Motion, or
publicly announce any stand-alone plan of reorganization or plan of arrangement in respect of
the Business or liquidation or winding up of all or substantially all of the Assets or the EMEA
Assets or any of the Sellers or the EMEA Sellers (or support any such plan filed by any other
Person);
(e) by the Main Sellers upon the entry of an order by the Bankruptcy Court authorizing a
Sponsored Reorganization Plan; or
(f) by the Purchaser if premises in Lab 10 of the Carling Property to be leased to the
Purchaser in accordance with the Carling Property Lease Agreements is destroyed or
substantially damaged,
provided, however, that the right to terminate this Agreement pursuant to Section
10.1(b)(i), Section 10.1(b)(ii), Section 10.1(b)(iii), Section 10.1(b)(iv), Section 10.1(b)(vi) and
Section 10.1(b)(viii) shall not be available to any Party whose breach hereof has been the
principal cause of, or has directly resulted in, the event or condition purportedly giving rise to
a right to terminate this Agreement under such clauses; and further provided
however, that a Party shall not be permitted to terminate under Section 10.1(b)(ii) if such
Party is then itself in material breach of this Agreement.
SECTION 10.2. Termination Payments.
(a) In the event that this Agreement is terminated by either Primary Party pursuant to
Section 10.1(b)(v) or by the Purchaser pursuant to Section 10.1(b)(ii), Section 10.1(c) or
Section 10.1(d) or by the Main Sellers pursuant to Section 10.1(b)(iii), Section 10.1(b)(iv),
Section 10.1(b)(viii) or Section 10.1(e) or in the event that the EMEA Asset Sale Agreement is
terminated by the Purchaser pursuant to clause 15.4.4 or clause 15.4.5 of the EMEA Asset Sale
Agreement, then the Sellers shall pay to the Purchaser in immediately available funds, (i)
within two (2) Business Days following such termination (other than with respect to any
termination pursuant to Section 10.1(b)(v)) or (ii) within two (2) Business Days following the
consummation of an Alternative Transaction that is
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consummated at any time on or prior to the date that is twelve (12) months following any
termination pursuant to Section 10.1(b)(v), a cash fee equal to $10,696,000 (the Break-Up
Fee). Additionally, if this Agreement is terminated by either Party pursuant to Section 10.1
(other than Section 10.1(a) or by Sellers pursuant to Section 10.1(b)(ii) or pursuant to
Section 10.1(b)(vi) to the extent that no EMEA Expense Reimbursement (as defined in the EMEA
Asset Sale Agreement) is payable under the EMEA Asset Sale Agreement), the Sellers shall pay to
the Purchaser an amount in cash equal to the total amount of all reasonable and documented
fees, costs and expenses incurred by the Purchaser in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated hereby, including
all filing and notification fees, and all fees and expenses of the Purchaser and its Affiliates
in an amount not to exceed $3,565,333 (the Expense Reimbursement). The Sellers acknowledge
and agree that the Expense Reimbursement is a reasonable amount given the size and complexity
of the transactions contemplated by this Agreement. The Expense Reimbursement shall be paid by
wire transfer or other means acceptable to the Purchaser not later than two (2) Business Days
following the receipt by the Main Sellers of a written notice from the Purchaser describing the
fees and expenses which constitute the Expense Reimbursement in reasonable detail (the Expense
Reimbursement Notice).
(b) Notwithstanding anything to the contrary in this Agreement, the payment of any fees
payable pursuant to Section 10.2(a) shall be the sole and exclusive remedy of the Purchaser,
whether at Law or in equity, under this Agreement in the event this Agreement is terminated in
accordance with Article X and the Purchaser is paid such fees.
(c) The Sellers obligation to pay the Expense Reimbursement and the Break-Up Fee pursuant
to this Section 10.2 shall survive termination of this Agreement and shall, to the extent owed
by the U.S. Debtors, constitute an administrative expense of the U.S. Debtors under Section
503(b) of the U.S. Bankruptcy Code.
(d) Notwithstanding anything to the contrary herein, the Sellers obligation to pay the
Break-Up Fee and Expense Reimbursement pursuant to this Section 10.2 is expressly subject to
entry of the U.S. Bidding Procedures Order and the Canadian Sales Process Order.
SECTION 10.3. Effects of Termination. If this Agreement is terminated pursuant to
Section 10.1:
(a) all further obligations of the Parties under or pursuant to this Agreement shall
terminate without further liability of any Party to the other except for the provisions of (i)
Section 5.7 (Public Announcements), (ii) Section 5.10 (Transaction Expenses), (iii) Section
5.11 (Confidentiality), (iv) Section 7.4(b)(ii) (Other Employee Covenants), (v) Section 10.1
(Termination) (vi) Section 10.2 (Termination Payments), (vii) Section 10.3 (Effects of
Termination) and (vii) Article XI (Miscellaneous); provided, that neither the
termination or anything in this Section 10.3 shall relieve any Party hereto from liability for
any breach of this Agreement occurring before the termination hereof and thereof;
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(b) except as required by applicable Law, the Purchaser shall return to the Sellers or
destroy all documents, work papers and other material of any of the Sellers relating to the
transactions contemplated hereby, whether so obtained before or after the execution hereof; and
(c) the provisions of the Confidentiality Agreement will continue in full force and
effect.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Survival of Representations and Warranties or Covenants.
(a) No representations or warranties, covenants or agreements of the Sellers or the Other
Sellers in this Agreement shall survive beyond the Closing Date, except for covenants and
agreements that by their terms are to be satisfied after the Closing Date, which shall survive
until satisfied in accordance with their terms. For the avoidance of doubt, the covenants of
the Sellers in Section 5.26, Article VI and Article VIII shall survive until fully discharged.
(b) No representations or warranties, covenants or agreements of the Purchaser in this
Agreement shall survive beyond the Closing Date, except the representations and warranties,
covenants and agreements of the Purchaser set forth in Section 3.1, Section 3.2, Section 3.5,
Section 3.7 (unless the Purchaser exercises the Cash Replacement Election in full), Section
5.27 and Section 5.36 shall survive beyond the Closing Date, as shall any covenants and
agreements set forth in Article VI and Article VIII and covenants and agreements of the
Purchaser that by their terms are to be satisfied after the Closing Date, which shall survive
until satisfied in accordance with their terms.
SECTION 11.2. Remedies. No failure to exercise, and no delay in exercising, any
right, remedy, power or privilege under this Agreement or the documents referred to in this
Agreement by any Party will operate as a waiver of such right, remedy, power or privilege, nor will
any single or partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of such right, remedy, power or privilege or the exercise of
any other right, remedy, power or privilege. To the maximum extent permitted by applicable Law, (a)
no waiver that may be given by a Party shall be applicable except in the specific instance for
which it is given and (b) no notice to or demand on one Party shall be deemed to be a waiver of any
right of the Party giving such notice or demand to take further action without notice or demand.
SECTION 11.3. Third-Party Beneficiaries. The acknowledgements, rights, undertakings,
representations or warranties contained in this Agreement and expressed to be for the benefit of
the EMEA Sellers, the Joint Administrators or the Joint Israeli Administrators (including the
provisions of Section 2.2, Section 3.7, Section 5.4(c), Section 5.27, Section 5.37, Section 6.8,
Section 6.9, Section 5.28 of the Sellers Disclosure Schedule (other than subsection (k)) and
Article VIII) (collectively, the Third Party Provisions) shall inure to, are expressly intended
to be for the benefit of, and shall be enforceable by, each of the EMEA Sellers, the Joint
Administrators or the Joint Israeli Administrators (and their applicable successors or
representatives) (the Third Party Beneficiaries), as applicable, and shall be binding on the
Purchaser and its successors and assigns. In the event that any Party or any of its successors or
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assigns (a) consolidates with or merges into any other Person and shall not be the continuing
or surviving corporation or entity in such consolidation or merger, or (b) transfers all or a
majority of its properties and assets to any Person, then, and in each such case, proper provision
shall be made so that the successors and assigns of such Party, assumes the obligations thereof
contained in the Third Party Provisions or otherwise in this Agreement. Except as provided in this
Section 11.3, this Agreement is for the sole benefit of the Parties and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any other Person any legal
or equitable right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 11.4. Consent to Amendments; Waivers. No Party shall be deemed to have
waived any provision of this Agreement or any of the other Transaction Documents unless such waiver
is in writing, and then such waiver shall be limited to the circumstances set forth in such written
waiver. This Agreement and the Ancillary Documents shall not be amended, altered or qualified
except by an instrument in writing signed by all the parties hereto or thereto, as the case may be.
Notwithstanding the foregoing provisions of this Section 11.4, (a) no Third Party Beneficiary
shall be deemed to have waived any Third Party Provision unless such waiver is in writing, and then
such waiver shall be limited to the circumstances set forth in such written waiver and (b) no Third
Party Provision shall be amended, altered or qualified except by an instrument in writing signed by
all the parties hereto and the Third Party Beneficiaries affected by such amendment, alteration or
qualification.
SECTION 11.5. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Parties and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder may be assigned (whether
directly or indirectly) by any Party without the prior written consent of the other Party, which
consent may be withheld in such partys sole discretion, except for (i) direct assignment by any
Seller to an Affiliate (provided that the applicable Seller remains liable jointly and
severally with its assignee Affiliate for the assigned obligations), (ii) direct assignment by the
Purchaser to a Designated Purchaser (provided that the Purchaser remains liable jointly and
severally with its assignee Designated Purchaser for the assigned obligations), (iii) direct
assignment by a U.S. Debtor to a succeeding entity following such U.S. Debtors emergence from
Chapter 11, and (iv) direct assignment by any of the Canadian Debtors pursuant to any plan of
arrangement approved by the Canadian Court, which will not require the consent of the Purchaser.
SECTION 11.6. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) Any questions, claims, disputes, remedies or Actions arising from or related to this
Agreement, and any relief or remedies sought by any Parties, shall be governed exclusively by
the Laws of the State of New York without regard to the rules of conflict of laws of the State
of New York or any other jurisdiction.
(b) To the fullest extent permitted by applicable Law, each Party: (i) agrees that any
claim, action or proceeding by such Party seeking any relief whatsoever
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arising out of, or in
connection with, this Agreement, or the transactions contemplated hereby shall be brought only
in (a) either the U.S. Bankruptcy Court, if brought prior to the entry of a final decree
closing the Chapter 11 Cases or the Canadian Court, if brought prior to the termination of the
CCAA Cases and (b) in the United States District Court for the
Southern District of New York or, if that court lacks subject matter jurisdiction, the
Supreme Court of the State of New York, County of New York (collectively, the New York
Courts) or the Superior Court of Justice for the Province of Ontario (Ontario Court), if
brought after entry of a final decree closing the Chapter 11 Cases and termination of the CCAA
Cases, and shall not be brought in each case, in any other court in the United States of
America, Canada or any court in any other country; (ii) agrees to submit to the jurisdiction of
the U.S. Bankruptcy Court, the Canadian Court, the New York Courts and the Ontario Court, as
applicable, pursuant to the preceding clauses (i)(a) and (b) for purposes of all legal
proceedings arising out of, or in connection with, this Agreement or the transactions
contemplated hereby; (iii) waives and agrees not to assert any objection that it may now or
hereafter have to the laying of the venue of such action brought in any such court or any claim
that any such action brought in such court has been brought in an inconvenient forum; (iv)
agrees that the mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 11.7 or any other manner as may be permitted by
Law should be valid and sufficient service thereof; and (v) agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in any other jurisdictions by
suit on the judgment and in any other manner provided by applicable Law.
(c) Section 11.6(b) shall not limit the jurisdiction of (i) the Accounting Arbitrator set
forth in Section 2.2.4.1(b) with respect to all disputes hereunder which the Parties have agreed
to be arbitrated by the Accounting Arbitrator, or (ii) the TSA Arbitrator set forth in Section
5.28(m)(i) of Section 5.28 of the Sellers Disclosure Schedule with respect to all disputes
thereunder which the Parties have agreed to be arbitrated by the TSA Arbitrator, although claims
described in the foregoing may be asserted in the courts referred to in Section 11.6(b) for
purposes of enforcing the jurisdiction and judgments of the Accounting Arbitrator and the TSA
Arbitrator.
(d) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE ANCILLARY AGREEMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.6.
SECTION 11.7. Notices. All demands, notices, communications and reports provided for
in this Agreement shall be in writing and shall be either sent by facsimile transmission with
confirmation to the number specified below or personally delivered or sent by
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reputable overnight
courier service (delivery charges prepaid) to any Party at the address specified below, or at such
address, to the attention of such other Person, and with such other copy, as the recipient Party
has specified by prior written notice to the sending Party pursuant to the provisions of this
Section 11.7.
If to the Purchaser to:
Ciena Corporation
1201 Winterson Road
Linthicum, Maryland 21090
Attention: David Rothenstein,
Senior Vice President and General Counsel
Facsimile: +1-410-865-8001
With copies (that shall not constitute notice) to:
Latham & Watkins LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
Attention: David S. Dantzic
Joseph A. Simei
Facsimile: +1-202-637-2201
and
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario M5L 1B9
Attention: Brian M. Pukier
Facsimile: +1-416-947-0866
If to the Main Sellers or the Sellers, to:
Nortel Networks Corporation
5945 Airport Road
Suite 360
Mississauga, ON L4V 1R9
Attention: Anna Ventresca
General Counsel Corporate and Corporate Secretary
Facsimile: +1-905-863-7739
and
Nortel Networks Limited
5945 Airport Road
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Suite 360
Mississauga, ON L4V 1R9
Attention: Anna Ventresca
General Counsel Corporate and Corporate Secretary
Facsimile: +1-905-863-7739
and
Nortel Networks Inc.
Legal Department
220 Athens Way, Suite 300
Nashville, Tennessee 37228
Attention: Lynn C. Egan
Assistant Secretary
Facsimile: +1-615-432-4067
With copies (that shall not constitute notice) to:
Nortel Networks Inc.
Legal Department
220 Athens Way, Suite 300
Nashville, Tennessee 37228
Attention: Robert Fishman
Senior Counsel
Facsimile: +1-347-427-3815 & +1-615-432-4067
and
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Attention: Daniel S. Sternberg
Facsimile: +1-212-225-3999
and
Ogilvy Renault LLP
200 Bay Street
Suite 3800, P.O. Box 84
Royal Bank Plaza, South Tower
Toronto, Ontario M5J 2Z4
Attention: Michael J. Lang
Facsimile: +1-416-216-3930
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and
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
211 Commerce Street
Nashville, Tennessee 37201
Attention: Robert J. Looney
Facsimile: +1-615-744-5647
Any such demand, notice, communication or report shall be deemed to have been given pursuant
to this Agreement when delivered personally, when confirmed if by facsimile transmission, or on the
calendar day after deposit with a reputable overnight courier service, as applicable.
SECTION 11.8. Exhibits; Sellers Disclosure Schedule.
(a) The Sellers Disclosure Schedule and the Exhibits attached hereto constitute a part of
this Agreement and are incorporated into this Agreement for all purposes as if fully set forth
herein.
(b) For purposes of the representations and warranties of the Sellers contained in this
Agreement, disclosure in any Section of the Sellers Disclosure Schedule of any facts or
circumstances shall be deemed to be adequate response and disclosure of such facts or
circumstances with respect to all representations or warranties by the Sellers calling for
disclosure of such information, whether or not such disclosure is specifically associated with
or purports to respond to one or more of such representations or warranties, if it is
reasonably apparent from the Sellers Disclosure Schedule that such disclosure is applicable.
The inclusion of any information in any Section of the Sellers Disclosure Schedule or other
document delivered by the Sellers pursuant to this Agreement shall not be deemed to be an
admission or evidence of the materiality of such item, nor shall it establish a standard of
materiality for any purpose whatsoever.
SECTION 11.9. Counterparts. The Parties may execute this Agreement in two or more
counterparts (no one of which need contain the signatures of all Parties), each of which will be an
original and all of which together will constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier or electronic mail
attachment shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 11.10. No Presumption. The Parties agree that this Agreement was negotiated
fairly between them at arms length and that the final terms of this Agreement are the product of
the Parties negotiations. Each Party represents and warrants that it has sought and received
experienced legal counsel of its own choosing with regard to the contents of this Agreement and the
rights and obligations affected hereby. The Parties agree that this Agreement shall be deemed to
have been jointly and equally drafted by them, and that the provisions of this Agreement therefore
should not be construed against a Party on the grounds that such Party drafted or was more
responsible for drafting the provisions.
SECTION 11.11. Severability. If any provision, clause, or part of this Agreement, or
the application thereof under certain circumstances, is held invalid, illegal or incapable of
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being enforced in any jurisdiction, (i) as to such jurisdiction, the remainder of this Agreement or the
application of such provision, clause or part under other circumstances, and (ii) as for any other
jurisdiction, any provision of this Agreement, shall not be affected and shall remain in full force
and effect, unless, in each case, such invalidity, illegality or unenforceability in such
jurisdiction materially impairs the ability of the Parties to consummate the transactions
contemplated by this Agreement. Upon such determination that any clause or other provision is
invalid, illegal or incapable of being enforced in such jurisdiction, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in a mutually acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest extent possible even in such
jurisdiction.
SECTION 11.12. Entire Agreement.
(a) This Agreement, the EMEA Asset Sale Agreement, the Ancillary Agreements and the
Confidentiality Agreement set forth the entire understanding of the
Parties relating to the subject matter thereof, and all prior or contemporaneous
understandings, agreements, representations and warranties, whether written or oral, are
superseded by this Agreement, the Ancillary Agreements and the Confidentiality Agreement, and
all such prior or contemporaneous understandings, agreements, representations and warranties
are hereby terminated. In the event of any irreconcilable conflict between this Agreement and
any of the Ancillary Agreements or the Confidentiality Agreement, the provisions of this
Agreement shall prevail, regardless of the fact that certain Ancillary Agreements, such as the
Local Sale Agreement, may be subject to different governing Laws (unless the Ancillary
Agreement expressly provides otherwise).
(b) For the sake of clarity, the provisions of the EMEA Asset Sale Agreement have been
drafted separately from the provisions in the body of this Agreement to reflect differing
market practices in the countries of jurisdiction of the EMEA Sellers. Unless the context
specifically requires, the provisions contained in the body of this Agreement and the
provisions of the EMEA Asset Sale Agreement shall be interpreted independently and without
reference to each other.
SECTION 11.13. Availability of Equitable Relief. Each Party agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement that it is required to
perform were not performed in accordance with their specific terms or were otherwise breached.
Accordingly, subject to the limitations set forth in this Section 11.13 and Section 10.2(a), each
Party shall be entitled to equitable relief to prevent or remedy breaches of this Agreement prior
to the Closing, and for any breach of Section 5.36, Section 8.1, Section 8.2, Section 8.3, Section
8.4, Section 8.5 and Section 8.6 following the Closing, without the proof of actual damages,
including in the form of an injunction or injunctions or orders for specific performance in respect
of such breaches. Each Party agrees to waive any requirement for the security or posting of any
bond in connection with any such equitable remedy. Each Party further agrees that the only
permitted objection that it may raise in response to any action for equitable relief is that it
contests the existence of a breach or threatened breach of the provisions of this Agreement. For
avoidance of doubt, under no circumstances shall the Sellers be liable for punitive damages or
indirect, special, incidental, or consequential damages arising out of or in connection with this
Agreement or the transactions contemplated hereby or any breach or alleged breach of any of the
terms hereof, including damages alleged as a result of tortious conduct.
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SECTION 11.14. Bulk Sales Laws. Each Party waives compliance by the other Party with
any applicable bulk sales Law.
SECTION 11.15. Main Sellers as Representatives of Other Sellers.
(a) For all purposes of this Agreement:
(i) each Other Seller listed in Section 11.15(a)(i) of the Sellers Disclosure
Schedule hereby irrevocably appoints NNC as its representative;
(ii) each Other Seller listed in Section 11.15(a)(ii) of the Sellers Disclosure
Schedule hereby irrevocably appoints NNL as its representative; and
(iii) each Other Seller listed in Section 11.15(a)(iii) of the Sellers
Disclosure Schedule hereby irrevocably appoints NNI as its representative.
(b) Pursuant to Section 11.15(a), each of NNC, NNL and NNI shall expressly have the power
to, in the name and on behalf of each of its Respective Affiliates (as defined below), (i) make
all decisions and carry out any actions required or desirable in connection with this
Agreement, (ii) send and receive all notices and other communications required or permitted
hereby, and (iii) consent to any amendment, waivers and modifications hereof.
(c) For the purposes of this Agreement, Respective Affiliates means: (i) with respect to
NNC, each Other Seller listed in Section 11.15(a)(i) of the Sellers Disclosure Schedule; (ii)
with respect to NNL, each Other Seller listed in Section 11.15(a)(ii) of the Sellers Disclosure
Schedule, and (iii) with respect to NNI, all the other U.S. Debtors and each Other Seller
listed in Section 11.15(a)(iii) of the Sellers Disclosure Schedule.
(d) Each Respective Affiliate shall indemnify the Main Seller that acts as representative
of such Respective Affiliate pursuant to this Section for, and hold it harmless against, any
loss, liability or expense, including reasonable attorneys fees, incurred by such Main Seller
without gross negligence, bad faith or willful misconduct, for serving in the capacity of
representative of such Respective Affiliate hereunder.
SECTION 11.16. Obligations of Sellers. When references are made in this Agreement to
certain Sellers causing Other Sellers or other Affiliate(s) to undertake (or to not undertake)
certain actions, or agreements are being made on behalf of certain Other Sellers or other
Affiliates, Sellers for purposes of such clause shall be deemed to mean, respectively, NNI (in
the case of a U.S. Debtor) and NNL (in the case of a Canadian Debtor other than NNC and a
Non-Debtor Seller).
SECTION 11.17. Execution by Other Sellers. The Purchaser hereby acknowledges that
the Other Sellers are not executing this Agreement as of the date hereof. This Agreement shall be
binding on all parties that have executed this Agreement from the time of such execution,
regardless of whether all Sellers have done so. Between the date hereof and the Closing Date, the
Main Sellers hereby agree that they shall cause each Other Seller to execute a
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counterpart to this
Agreement as promptly as practicable but in no event later than the day that is sixty (60) days
after the date hereof, agreeing to be bound as a Seller under this Agreement and authorizing NNC,
NNL or NNI, as applicable, to act as its representative under Section 11.15.
[Remainder of this page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, the Parties have duly executed this Asset Sale Agreement as of the date
first written above.
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CIENA CORPORATION |
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/s/ Gary B. Smith |
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Gary B. Smith |
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President and Chief Executive Officer |
Signature Page Asset Sale Agreement
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NORTEL NETWORKS CORPORATION |
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Per: |
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/s/ Pavi Binning |
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Pavi Binning |
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Executive Vice-President, Chief Financial Officer and Chief Restructuring Officer |
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Per: |
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/s/ Anna Ventresca |
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Anna Ventresca |
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General Counsel Corporate and Corporate Secretary |
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NORTEL NETWORKS LIMITED |
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Per: |
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/s/ Pavi Binning |
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Pavi Binning |
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Executive Vice-President, Chief Financial Officer and Chief Restructuring Officer |
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Per: |
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/s/ Anna Ventresca |
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Anna Ventresca |
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General Counsel Corporate and Corporate Secretary |
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NORTEL NETWORKS INC. |
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Per: |
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/s/ Anna Ventresca |
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Anna Ventresca |
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Chief Legal Officer |
Signature Page Asset Sale Agreement