Attached files
Exhibit 2.1
ASSET
PURCHASE AGREEMENT
BY
AND AMONG
PLANTRONICS,
INC.,
PLANTRONICS
B.V.
AND
AUDIO
TECHNOLOGIES ACQUISITION, LLC
Execution
Date: October 2, 2009
TABLE
OF CONTENTS
Page
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ARTICLE
I DEFINITIONS
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1
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1.1
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Definitions
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1
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ARTICLE
II THE PURCHASE AND SALE OF ACQUIRED ASSETS
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13
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2.1
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Purchase
and Sale
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13
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2.2
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Assumption
of Certain Liabilities; Excluded Liabilities
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15
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2.3
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Contract
Consents
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16
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2.4
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Acquisition
Consideration
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16
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2.5
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Net
Asset Value Adjustment.
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16
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2.6
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Allocation
of Consideration
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19
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2.7
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Transfer
Taxes
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19
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2.8
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Purchase
of Acquired Assets as Among Purchaser and Other Purchasers
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19
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ARTICLE
III IP LICENSES
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20
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3.1
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Patent
Licenses
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20
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3.2
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IPR
Licenses
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20
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3.3
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Sellers
Licensed Marks
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21
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3.4
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Existing
Product and Ingredient Brand Purchaser Licensed Marks.
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21
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3.5
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Transferability.
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22
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ARTICLE
IV THE CLOSING
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22
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4.1
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Closing
Date
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22
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4.2
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Transactions
To Be Effected at the Closing
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22
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4.3
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Taking
of Necessary Action; Further Action
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23
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ARTICLE
V REPRESENTATIONS AND WARRANTIES OF SELLERS
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23
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5.1
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Organization,
Standing and Power
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23
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5.2
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Authority,
Conflicts, Consents
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24
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5.3
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Changes
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24
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5.4
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Tax
Matters
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25
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5.5
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Restrictions
on Business Activities
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25
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5.6
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Title
to Properties; Absence of Liens and Encumbrances; Condition of
Property
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25
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5.7
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Intellectual
Property
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26
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5.8
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Agreements,
Contracts and Commitments
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28
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5.9
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Governmental
Authorization
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29
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5.10
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Litigation
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29
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5.11
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Employee
Matters and Benefit Plans
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29
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5.12
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Labor
Matters
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31
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5.13
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Compliance
with Laws
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31
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5.14
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Sufficiency
of Assets
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32
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5.15
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Brokers
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32
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5.16
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Financial
Matters
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32
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-i-
5.17
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Related
Party Transactions
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33
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5.18
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Customers
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33
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5.19
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Suppliers
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33
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5.20
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Environmental
Matters
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33
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5.21
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Real
Property
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34
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5.22
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Certain
Payments
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35
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5.23
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Insurance
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35
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5.24
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No
Other Representations or Warranties
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35
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ARTICLE
VI REPRESENTATIONS AND WARRANTIES OF PURCHASER
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36
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6.1
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Organization,
Standing and Power
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36
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6.2
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Authority
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36
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6.3
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Financing
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37
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6.4
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Solvency
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37
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6.5
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Breach
of Sellers Representations and Warranties
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37
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6.6
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No
Other Representations or Warranties
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37
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ARTICLE
VII CONDUCT PRIOR TO CLOSING
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37
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7.1
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Conduct
of Business
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37
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7.2
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Procedures
for Requesting Consent
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40
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ARTICLE
VIII ADDITIONAL AGREEMENTS
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40
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8.1
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Access
to Information
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40
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8.2
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Confidentiality
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41
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8.3
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Expenses
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41
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8.4
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Public
Disclosure
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41
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8.5
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Altec
Customer and Channel Partner Communication
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42
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8.6
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Reasonable
Efforts
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42
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8.7
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Notification
of Certain Matters
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42
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8.8
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Employee
Matters
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43
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8.9
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Post-Closing
Assurances
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47
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8.10
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Prohibition
on Solicitation of Other Acquisition Offers
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47
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8.11
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Purchaser’s
Non-Competition Covenant
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48
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8.12
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Non-Solicitation
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48
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8.13
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Tax
Matters
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49
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8.14
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Further
Agreements
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50
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8.15
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Preservation
of Records
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50
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8.16
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Use
of Name
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51
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8.17
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Sellers’
Non-Competition Covenant
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51
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8.18
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Oracle
Clone Implementation
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51
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8.19
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Oracle
Software License
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52
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8.20
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Asset
Purchase Agreement for Transfer for China Assets and Second Closing Escrow
Amount.
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53
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8.21
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Purchaser
BV and Purchaser WOFE
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53
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8.22
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Post-Closing
Amounts.
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53
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-ii-
8.23
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Retained
Altec Inventory
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55
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ARTICLE
IX CONDITIONS TO THE ACQUISITION
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55
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9.1
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Conditions
to Obligations of Each Party to Effect the Acquisition
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55
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9.2
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Additional
Conditions to Obligations of Sellers
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55
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9.3
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Additional
Conditions to the Obligations of Purchaser
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56
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ARTICLE
X SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
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58
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10.1
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Survival
of Representations and Warranties
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58
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10.2
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Indemnification
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59
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10.3
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Escrow
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64
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ARTICLE
XI TERMINATION, AMENDMENT AND WAIVER
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65
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11.1
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Termination
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65
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11.2
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Procedure
Upon Termination
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66
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11.3
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Effect
of Termination
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66
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11.4
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Amendment
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66
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11.5
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Extension;
Waiver
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66
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ARTICLE
XII GENERAL PROVISIONS
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67
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12.1
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Notices
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67
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12.2
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Interpretation
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68
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12.3
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Counterparts
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68
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12.4
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Entire
Agreement; Assignment
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68
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12.5
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Severability
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68
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12.6
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Governing
Law; Mediation/Arbitration
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69
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12.7
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Rules
of Construction
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69
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12.8
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Successors
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69
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INDEX
OF EXHIBITS
Exhibits
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Description
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Exhibit
A-1
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Asset
Schedule
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Exhibit
A-2
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Assumed
Liabilities Schedule
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Exhibit
A-3
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Excluded
Liabilities Schedule
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Exhibit
B
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Forms
of Assignments for Transferred Intellectual Property Rights and
Trademarks
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Exhibit
C
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Transition
Services Agreement
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Exhibit
D
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Bill
of Sale
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-iii-
Exhibit
E
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Real
Property Deeds
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Exhibit
F
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Assignment
and Assumption Agreement
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-iv-
ASSET
PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (the “Agreement”) is made
and entered into as of October 2, 2009 by and among Audio Technologies
Acquisition, LLC, a Delaware limited liability company (“Purchaser”),
Plantronics, Inc., a Delaware corporation (“Parent”) and
Plantronics B.V., a private limited liability company organized under the laws
of the Netherlands (“BV” and, together
with Parent, the “Sellers” and each a
“Seller”).
RECITALS
A. The
Boards of Directors of each of the Sellers and the manager and sole member of
Purchaser believe it is in the best interests of each entity and their
respective stockholders or equity holders, as applicable, that Purchaser acquire
(the “Acquisition”) certain
of Sellers’ assets and assume certain of Sellers’ liabilities, collectively
constituting the Business and, in furtherance thereof, have approved the
Acquisition.
B.
Sellers and Purchaser desire to make certain representations and
warranties and other agreements in connection with the Acquisition.
NOW,
THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and other agreements set forth herein, and for other good
and valuable consideration, the parties to this Agreement hereby agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
“Accounts Receivable”
means accounts and notes receivable of Sellers, including, without limitation,
accounts and notes receivable that are attributable to the
Business.
“Accrued Warranty”
means amounts reserved for warranty obligations arising from sales of Altec
Products prior to the Closing Date.
“Acquired Assets” has
the meaning set forth in Section 2.1(a).
“Acquisition Proposal”
has the meaning set forth in Section 8.10.
“Acquisition” has the
meaning set forth in the recitals to this Agreement.
“Affiliate” when used
with respect to any Person from time to time, means any other Person at such
time directly or indirectly controlling, controlled by or under common control
with, such Person. As used in this definition of Affiliate, “control”
means (i) the direct or indirect ownership of more than 50 percent of the total
voting securities or other evidences of equity ownership interest of such Person
or (ii) the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Agreed Principles”
has the meaning set forth in Section 2.5(a).
“Altec Inventory”
means all raw materials, work-in-process, finished goods, supplies, packaging
materials, parts, goods for sale and other inventories, including prepaid goods,
whether or not in transit on the Closing Date that are or intended to be used
for Altec Products and that are owned by Sellers or their Affiliates, except for
Retained Altec Inventory.
“Altec Products” means
the products set forth in Section 13 of the Asset Schedule.
“Assigned Leases” has
the meaning set forth in Section 2.1(a)(xiii).
“Asset Schedule” means
the schedule of assets of the Business attached as Exhibit A-1
hereto.
“Assumed Liabilities”
has the meaning set forth in Section 2.2(a).
“Assumed Liabilities
Schedule” means the schedule of Liabilities attached as Exhibit A-2
hereto.
“Backbeat Marks” means
the Marks set forth in Section 2 of the Asset Schedule.
“Business” means the
operations of Sellers as conducted on the Closing Date related to the design,
manufacture, use and support of the Altec Products. For the absence
of doubt, it is agreed that the Business does not include the design,
manufacture or sale of headsets or components thereof or any products that have
a microphone for communication use.
“Business Day” means
each day that is not a Saturday, Sunday or other day on which banking
institutions located in New York, New York are authorized or obligated by law or
executive order to close.
“Business Employee Benefit
Plan” has the meaning set forth in Section 5.11(b).
“Business Employees”
means those employees employed by Sellers primarily in the Business and listed
in Section 5.11(a)(i) of the Disclosure Letter and those employees hired by
Sellers to work primarily in the Business after the date of this Agreement in
the Ordinary Course of Business.
“Business Licensed
Field” means products used for “speakers” for: computers; docking
applications for MP3 players and smart phones and, in addition to the foregoing
speaker products, headphone products. The Business Licensed Field
shall also include products that combine the functionality for any or all of the
foregoing products.
-2-
“Change in Control”
means a merger, acquisition or sale of substantially all of the assets of
Purchaser or Sellers, as applicable.
“Claim” has the
meaning set forth in Section 10.2(d)(i).
“Claimant” has the
meaning set forth in Section 10.2(d)(i).
“Closing” has the
meaning set forth in Section 4.1.
“Closing Date” has the
meaning set forth in Section 4.1.
“Closing Net Asset
Value” has the meaning set forth in Section 2.5(a).
“Closing Purchase
Price” has the meaning set forth in Section 2.4(b).
“Closing Statement”
has the meaning set forth in Section 2.5(a).
“COBRA” means the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” means the U.S.
Internal Revenue Code of 1986, as amended.
“Confidential
Information” has the meaning set forth in Section 8.2.
“Conflict” has the
meaning set forth in Section 5.2(b).
“Contra Accounts
Receivable” means the accounts and their general ledger account number as
maintained in Oracle by Sellers set forth in Schedule 2.5(a) with the purpose as
further described in Schedule 2.5(a).
“Contracts” means all
agreements, contracts, indentures, notes, bonds, mortgages, loans, instruments,
leases, commitments, obligations, purchase orders and license, royalty or
development agreements.
“Customer” means any
Person (including distributors, OEMs and resellers) that purchases an Altec
Product or related services from Sellers.
“Customer Contract”
means any Contract between any Seller and any Customer with respect to the sale
or provision of Altec Products and/or related services.
“Damages” means all
demands, claims, claims for reimbursement, actions or causes of action,
assessments, damages, losses, costs, expenses, liabilities, deficiencies,
judgments, awards, fines, sanctions, penalties, interest (including prejudgment
interest), charges and amounts paid in settlement, including the reasonable
costs, fees and expenses of attorneys, experts, accountants, appraisers,
consultants, witnesses, investigators and agents and all such costs, fees and
expenses incurred in defending against any of the foregoing or in enforcing this
Agreement or the other Operative Documents, but shall not include amounts
recoverable as lost profits or based on a multiple of earnings, consequential,
incidental or indirect damages or punitive damages, except as provided in
Section 10.2(c)(iii) below.
-3-
“Disclosure Letter”
has the meaning set forth in the preamble to Article V.
“Employment Offer” has
the meaning set forth in Section 8.8(a).
“Environmental Laws”
means any statute, code, law (including common law), regulation, ruling,
decision, judgment, or order relating to pollution, protection of the
environment or exposure of any individual to Hazardous Materials, including laws
and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, registration, distribution, labeling, recycling, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials (including compliance with any product take-back or product
content requirements).
“Environmental
Liabilities” means all Liabilities of any kind or nature with respect to
the Business, the Acquired Assets, the Owned Real Property or the Leased Real
Property (and also including any other real property owned, leased or otherwise
occupied at any time for the Business) arising out of, or relating in any manner
to Environmental Laws or the recycling, storage, use, treatment, manufacture,
handling, purchase, treatment, sale, distribution, release, disposal, emission,
investigation, removal or remediation of any Hazardous Materials or any product
or waste containing any Hazardous Materials.
“ERISA Affiliate”
means any entity, trade or business that is a member of a group described in
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that
includes Sellers, or that is a member of the same “controlled group” as Sellers
pursuant to Section 4001(a)(14) of ERISA.
“ERISA” means the
Employment Retirement Income Security Act of 1974, as amended.
“Escrow Agent” has the
meaning set forth in Section 10.3
“Escrow Agreement” has
the meaning set forth in Section 10.3
“Escrow Fund” has the
meaning set forth in Section 10.3
“Excluded Assets” has
the meaning set forth in Section 2.1(b)
“Excluded Contract”
means any Contract that is not a Transferred Contract.
“Excluded Liabilities”
has the meaning set forth in Section 2.2(b).
-4-
“Excluded Liabilities
Schedule” means the schedule of Liabilities attached as Exhibit A-3
hereto.
“Final Net Asset
Value” has the meaning set forth in Section 2.5(e).
“Fixed Assets” means
the furniture, fixtures, machinery and equipment listed in Section 10 of the
Asset Schedule.
“GAAP” means United
States generally accepted accounting principles as of the date
hereof.
“Governmental Entity”
means any government or governmental or regulatory body thereof, or political
subdivision thereof, whether federal, state, local or foreign, or any agency,
commission or instrumentality or authority thereof, or any court or arbitrator
(public or private).
“Hazardous Materials”
means chemicals, pollutants, contaminants, wastes, hazardous and toxic
substances defined as or included in the definition of “hazardous wastes,”
“hazardous materials,” “extremely hazardous wastes,” “extremely hazardous
substances,” “toxic substances,” “toxic chemicals,” “toxic pollutants,” or words
of similar import under any Environmental Law, including without limitation any
radioactive and biological materials, asbestos-containing materials (ACM)
petroleum and petroleum products or any fraction thereof.
“Houlihan Lokey” means
Houlihan Lokey Howard & Zukin Capital, Inc.
“Indemnified Party”
means a Seller Indemnified Party or a Purchaser Indemnified Party, as
applicable.
“Indemnitor” has the
meaning set forth in Section 10.2(d)(i).
“Independent
Accountant” means a nationally recognized certified public
accounting firm mutually agreed to by Parent and Purchaser; provided, however,
that the individuals providing services as Independent Accountant in connection
with this Agreement shall not have provided services to Sellers or
Purchaser at any time within the prior five (5) years.
“Infrastructure
Contract” means any Contract to which a Seller is a party pursuant to
which a third Person provides or licenses Infrastructure Technology or related
services to a Seller or the Business, including, for example, telecommunications
services.
“Infrastructure
Technology” means any Technology that is used in the general operation of
the Business, including network or telecommunications Software and equipment,
accounting Software, IT systems, desktop computer Software, database Software,
general software development or control systems, tools or environments, and that
is shared in connection with Sellers’ operations unrelated to the Business as of
the Closing Date.
“Intellectual Property
Rights” means all intellectual property and other similar proprietary
rights in any jurisdiction, whether registered or unregistered, including rights
in, arising out of, or associated therewith: (i) all United States and foreign
utility and design patents, utility models and registered designs and
applications therefor, and all reissues, divisions, reexaminations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof, and
equivalent or similar rights anywhere in the world in inventions and discoveries
(“Patents”);
(ii) trade secret rights and all other rights in or to confidential business or
technical information (“Trade Secrets”);
(iii) all copyrights, copyright registrations and applications therefor and all
other similar or equivalent rights corresponding thereto throughout the world
(“Copyrights”);
(iv) trademarks, service marks, trade dress rights and similar
designation of origin and rights therein (“Marks”); (v) all
rights in WWW addresses, uniform resource locators and domain names and
applications and registrations therefor (“Internet
Properties”); and (vi) any similar, corresponding or equivalent rights to
any of the foregoing anywhere in the world.
-5-
“Intercompany
Agreements” has the meaning set forth in Section 5.17.
“International Business
Employees” means any Business Employee whose employment is primarily
subject to the laws of any non-United States jurisdiction.
“Inventory Reserves”
means all reserves related to excess or obsolete Altec Inventory on the Closing
Date.
“Law” means any
foreign, federal, state or local law (including common law), statute, code,
ordinance, rule, regulation or Order.
“Legally Mandated
Benefits” has the meaning set forth in Section 5.11(b).
“Liabilities” means
any liability, loss, damage, adverse claim, fine, penalty, debt or obligation of
any nature, whether direct or indirect, asserted or unasserted, matured or
unmatured, determined or determinable, disputed or undisputed, accrued or
unaccrued, absolute, fixed, or contingent, liquidated, unliquidated or otherwise
and whether due or to become due, and whether known or unknown and whether in
contract, tort, strict liability or otherwise.
“Licensed-Back Marks”
means those Transferred Marks listed as Licensed-Back Marks in Section 1 of the
Asset Schedule.
“Licensed Intellectual
Property Rights” or “Licensed IPR” means Licensed Patents, Backbeat Marks
and any other Intellectual Property Rights of Sellers, other than the
Transferred IPR or the Transferred Unregistered IPR, that were acquired by
Parent in the acquisition of Altec Lansing Technologies, Inc. on August 18,
2005, or developed or acquired by the Business after such date while operating
as a wholly owned subsidiary or division of Parent.
“Licensed Patents”
means those Patents listed in Section 3 of the Asset Schedule and in the case of
any applications listed on such Section 3 of the Asset Schedule any Patents that
may issue to any Seller from such listed applications.
-6-
“Liens” means any
mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge,
security interest, claim, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, and any covenant, restriction or condition
affecting title to real property, including any Contract granting any of the
foregoing incurred prior to the Closing except for Permitted Liens.
“Litigation” has the
meaning set forth in Section 5.10.
“Makers Claims” means claims brought by the
third-party contract manufacturers (“Makers”) who sell finished goods inventory
to the Business relating to matters such as disputes over whether inventory or
obligations of the Maker to its suppliers should be subject to reimbursement by
Business and for which Sellers, after assessment of such claim, record a
liability for the estimated value of any potential future
settlement.
“Material Adverse
Effect” means any change, result, occurrence, fact, event, violation,
inaccuracy, effect or circumstance (whether or not constituting a breach of a
representation, warranty or covenant set forth in this Agreement) (each, an
“Effect”) that,
individually or taken together with all other Effects that have occurred prior
to the date of determination of the occurrence of the Material Adverse Effect,
is or would reasonably be likely to be materially adverse to the (i) Acquired
Assets, (ii) the operations, condition (financial or otherwise) or results of
operations of the Business or (iii) the ability of the Sellers to consummate the
transactions contemplated by this Agreement or to perform their obligations
under this Agreement, in each case, taken as a whole, provided that none of the
following shall be deemed, either alone, or in combination, to constitute a
Material Adverse Effect or shall be taken into account when determining whether
a Material Adverse Effect has occurred or may, would or could occur: any Effect
resulting from or arising out of (a) an adverse change in the
relationship of the Sellers with employees, customers, suppliers,
distributors, resellers and the like, including the termination of such
relationship, due to the public announcement of the entering into of this
Agreement or the other Operative Documents or the pendency of the transactions
contemplated hereby or thereby, (b) any actions taken, or failure to
take action, in each case, in compliance with the terms of this Agreement or to
which Purchaser has following the date of this Agreement expressly approved,
consented to or requested, (c) general economic or political conditions in the
United States or in the foreign countries in which the Business operates (which
Effect, in each case, does not disproportionately affect the Business as
compared to similarly situated businesses doing business in the applicable
country to any material extent), (d) general conditions in the industry in which
the Business is conducted (which Effect, in each case, does not
disproportionately affect the Business as compared to similarly situated
businesses in such industry to any material extent), or (e) any natural disaster
or any acts of terrorism, sabotage, military action, war (whether or not
declared), weather condition, pandemics and other force majeure events or any
escalation or worsening thereof.
“Mediation/Arbitration
Rules” has the meaning set forth in Section 12.6.
“Milford Property”
means that certain Owned Real Property owned by Parent in Milford, Pennsylvania
and described in Section 4 of the Asset Schedule.
-7-
“NDA” means
collectively the Confidentiality Agreement entered into as of May 20, 2009 by
and between Houlihan Lokey on behalf of Parent and Prophet Equity
L.P.
“Net Asset Value” has
the meaning set forth in Section 2.5(a).
“Operative Documents”
means this Agreement and the agreements, instruments and certificates delivered
in connection with this Agreement, including the Transition Services
Agreement.
“Order” means any
order, injunction, judgment, award, decree, ruling, writ, determination,
assessment or arbitration award of a Governmental Entity.
“Ordinary Course of
Business” means the ordinary course of business for the Business
consistent with past practice of the Sellers’ operation of the
Business.
“Other Purchasers”
means Affiliates of Purchaser, if any, who shall have executed any Operative
Document.
“Owned Condominium”
means that certain Owned Real Property owned by Parent in Milford, Pennsylvania
and described in Section 4 of the Asset Schedule.
“Permits” means all
permits, licenses, franchises, approvals and authorizations by Governmental
Entities related primarily to the Business including those listed in Section 5
of the Asset Schedule.
“Permitted Liens”
means (i) statutory or common law Liens in favor of carriers, workmen,
warehousemen, mechanics and materialmen to secure claims for non-employee labor,
materials or suppliers; (ii) Liens for Taxes, assessments and governmental
charges or levies that are not yet due and payable or that are being contested
in good faith and for which adequate reserves have been established in the
Financial Statements in accordance with GAAP, (iii) Liens imposed by applicable
Law, (iv) Liens imposed on the underlying fee interest in leased property; (v)
Liens of record that affect any Owned Real Property that are disclosed in
policies of title insurance that have been delivered or made available to
Purchaser; (vi) zoning, entitlement, building and other land use regulations
imposed by Governmental Entities having jurisdiction over the Owned Real
Property and Leased Real Property which are not violated by the current use and
operation thereof; and/or (vii) Liens that do not materially interfere with the
use or operation of the property subject thereto for the purposes for which it
is currently used.
“Person” means any
corporation, partnership, joint venture, limited liability company,
organization, entity (including any Governmental Entity), association, business
trust or natural person.
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“Post-Closing Period”
means any taxable period or portion of a period that begins after the Closing
Date.
“Post-Closing Period
Taxes” means Taxes relating to the Business or Acquired Assets that are
attributable to the Post-Closing Period, including any Taxes attributable to the
Straddle Period that are allocated to the Post-Closing Period in accordance with
the definition of Pre-Closing Period Taxes below.
“Pre-Closing Period”
means any taxable period or portion of a period that ends on or before the
Closing Date.
“Pre-Closing Period
Taxes” means Taxes relating to the Business or Acquired Assets that are
attributable to the Pre-Closing Period; provided that with
respect to the Straddle Period, Taxes and Tax items will be allocated between
the Pre-Closing Period and the Post-Closing Period by closing the books at the
end of the Closing Date, except that Taxes and Tax items of a periodic nature,
such as property taxes or other similar tax imposed on an annual basis, shall be
allocated by apportioning a pro rata portion of such Taxes to each day in the
relevant Straddle Period.
“Purchase Price” has
the meaning set forth in Section 2.4(a).
“Purchaser BV” means a
private limited liability company to be formed under the laws of the Netherlands
which will be an Other Purchaser when formed.
“Purchaser Indemnified
Parties” has the meaning set forth in Section 10.2(a).
“Purchaser Officer’s
Certificate” has the meaning set forth in Section 9.2(c).
“Purchaser
Representatives” means Purchaser’s accountants, legal counsel and other
agents, advisors and representatives.
“Purchaser WOFE” has
the meaning set forth in Section 8.20.
“Registered IPR” means
(i) Patents and applications therefor; (ii) Mark registrations and applications
to register Marks; (iii) registered Copyrights and applications for Copyright
registration; and (iv) Internet Property registrations.
“Release” means any
release, spill, emission, leaking, injection, deposit, disposal, discharge or
migration into the environment.
“Restricted Parties”
means the parties listed in Section 8.11(b) of
the Disclosure Letter and any Affiliate of such parties.
“Retained Altec
Inventory” means all raw materials, work-in-process, finished goods,
supplies, packaging materials, parts, goods for sale and other inventories,
including prepaid goods, whether or not in transit on the Closing Date that are
or intended to be used for Altec Products and that are owned by Sellers or their
Affiliates which would otherwise be Altec Inventory except for the fact that it
is located in or is, in the Ordinary Course of Business, en route to Japan or
Brazil as of the Closing Date.
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“Retained Business”
means any business operations or activities of Sellers (or its successors) now
or in the future (other than those businesses, operations and activities of
Sellers constituting the Business as of the Closing Date) which, for the
avoidance of doubt, shall include, without limitation the design, development,
sale, marketing or manufacture of communications headsets and products that have
a microphone for communication use.
“Retained Business
Employee” means those employees employed by any Seller primarily in the
Business and listed in Section 5.11(a)(ii) of the Disclosure
Letter.
“Retained Contra AR
Reserves” means the reserves defined on Schedule 2.5(a), comprising
account numbers 11148, 11220, 11250, Part 2 of account 11200 and accounts 11141
and 11142.
“Second Closing Escrow
Amount” means $125,000.
“Seller
Authorizations” means each Permit issued to a Seller by a Governmental
Entity and related primarily to the Business which is required for the operation
of the Business as presently conducted or the ownership of the Acquired
Assets.
“Seller Indemnified
Parties” has the meaning set forth in Section 10.2(b).
“Seller Severance
Arrangements” has the meaning set forth in Section 5.11(a).
“Sellers’ knowledge”
or “knowledge of
Seller” means the actual knowledge of Barbara Scherer, Vicki Marion,
Craig Berghahn, Carla Nolan or Jules Egyud and the knowledge that such Persons
would have after making reasonable inquiry of the employees of Sellers having
administrative or managerial responsibility for the matter at
issue.
“Sellers’ Licensed
Field” means the following products: headsets; handsets; telephones of
all types; speaker phones; headphones; products used for unified communication
applications and products that combine the functionality of any or all of the
foregoing products.
“Sellers’ Music First
Products” means headset products of Sellers that include a microphone or
voice component.
“Shared Contracts”
means all Contracts to which a Seller or a Subsidiary of a Seller is a party and
which relates to both the Business and the Retained Business, but which is not a
Transferred Contract other than leases for real property.
“Shared Technology”
means all Technology other than Infrastructure Technology or Technology that is
an Excluded Asset, owned by any Seller that is used or held for use as of the
Closing Date by both the Business and the Retained Business and which is capable
of being copied without material cost or unreasonable effort (for example
Software or documents) and which, if material, is listed on Section 6
of the Asset Schedule.
“Software” has the
meaning set forth in the defined term “Technology.”
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“Straddle Period”
means any taxable period that begins before and ends after the Closing
Date.
“Subsidiary” means any
Person of which (i) a majority of the outstanding share capital, voting
securities or other equity interests are owned, directly or indirectly, by a
Seller or (ii) a Seller is entitled, directly or indirectly, to appoint a
majority of the board of directors or managers or comparable supervisory body of
such Person.
“Supplemental Seller-Retained
Contra AR” means a Liability of $2,500,000 for deductions customers are
expected to make against the Accounts Receivable, which Sellers expect to settle
with such customers.
“Target Net Asset
Value” means twenty one million five hundred thousand dollars
($21,500,000).
“Tax” or Taxes” has the
meaning set forth in Section 5.4(a).
“Tax Returns” means
all federal, state, local and foreign returns, estimates, information statements
and reports relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“Technology” means any
and all of the following tangible items or things, in any format, but
specifically excluding any Intellectual Property Rights therein or thereto: (i)
hardware, product prototypes, test fixtures, models, electronic components,
blueprints and schematics, other tangible technology associated with the design,
manufacture testing and maintenance of hardware; (ii) computer software and
code, design tools and related documentation, (“Software”); (iii)
databases and data collections; and (v) any media on which any of the foregoing
is recorded, and any other tangible embodiments or copies of any of the
foregoing.
“Total Consideration”
has the meaning set forth in Section 2.4(a).
“Total Escrow Amount”
means two million five hundred thousand dollars ($2,500,000).
“Trading” means
Plantronics Trading (Suzhou) Co., Ltd., a wholly-owned foreign enterprise
organized under the laws of the People’s Republic of China.
“Transfer Regulations”
means any Law, Order or authority governing the employment of the International
Business Employees.
“Transfer Taxes” means
all sales, use, value-added, gross receipts, excise, registration, documentary,
stamp duty, transfer or other similar taxes, customs duties or governmental
fees.
“Transferred Contra Accounts
Receivable Reserves” means the reserves defined on Schedule 2.5(a) as
comprising account numbers 11149, 11152, 11210 and Part 1 of account number
11200, less Supplemental Seller-Retained Contra AR in the amount of
$2,500,000.
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“Transferred
Contracts” means the Contracts set forth in Section 7 of the Asset
Schedule, that, in either case (i) are transferable by a Seller to Purchaser in
accordance with this Agreement without the consent of a third Person or (ii) if
consent of a third Person is required, for which consent has been obtained prior
to Closing.
“Transferred Intellectual
Property Rights” or “Transferred IPR”
means the Transferred Marks, the Transferred Patents and other Registered IPR
listed in Section 8 and Section 9, as applicable, of the Asset
Schedule.
“Transferred Marks”
means the registered Marks listed in Section 9(a) of the Asset Schedule (“Transferred Registered
Marks”) and the common law, unregistered Marks listed in Section 9(b) of
the Asset Schedule (“Transferred Unregistered
Marks”).
“Transferred Patents”
means those Patents listed in Section 8 of the Asset Schedule and, in the case
of any applications listed on such Section 8 of the Asset Schedule, any Patents
that may issue from such listed applications.
“Transferred
Technology” means all Technology (other than Infrastructure Technology or
any other Excluded Assets) owned by a Seller as of the Closing Date that was
acquired by Parent in the acquisition of Altec Lansing Technologies Inc. on
August 18, 2005, or developed or acquired by the Business after such date while
operating as a wholly owned subsidiary or division of Parent, including any
tangible embodiments of know-how or trade secrets used primarily in the
Business.
“Transferred Unregistered
IPR” means the Trade Secrets of the Sellers listed in Section 14(a) of
the Asset Schedule and the copyrights of Sellers that subsist in the works of
authorship listed in Section 14(b) of the Asset Schedule.
“Transition Service
Agreement” means an agreement attached in substantially the form attached
hereto as Exhibit
C.
“Transitioning
Employees” have the meaning set forth in Section 8.8(a).
“WARN” means the
Worker Adjustment and Retraining Notification Act of 1988, as
amended.
“Welfare Benefits” has
the meaning set forth in Section 8.8(e)(iii).
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ARTICLE
II
THE
PURCHASE AND SALE OF ACQUIRED ASSETS
2.1 Purchase and
Sale. Upon the
terms and subject to the conditions of this Agreement, Sellers hereby agree to
sell, assign, transfer, convey and deliver to Purchaser effective as of the
Closing, and Purchaser hereby agrees to purchase, assume and acquire, effective
as of the Closing:
(a)
all rights (but only those Intellectual Property Rights as specifically
listed below), title and interest of any Seller on the Closing Date in the
following assets (“Acquired Assets”),
except to the extent such assets constitute Excluded Assets:
(i)
the Transferred Technology;
(ii) copies
of the Shared Technology;
(iii) the
Transferred Intellectual Property Rights, including the rights of any Seller to
recover past damages for the infringement of any such Intellectual Property
Rights and in the case of the Transferred Marks, the goodwill of the Business
appurtenant thereto;
(iv) the
name Altec
Lansing;
(v) the
Transferred Contracts;
(vi) the
Transferred Unregistered IPR;
(vii) Permits
to the extent legally transferable by Sellers;
(viii) the
Altec Inventory;
(ix) the
Fixed Assets;
(x)
to the extent not Transferred Technology or Fixed Assets, equipment
owned by Sellers and used exclusively by Business Employees;
(xi) copies
of (A) books and records (other than income Tax Returns) pertaining to the
Business or Acquired Assets, including but not limited to all books of account,
journals and ledgers, files, correspondence, memoranda, maps, plats, suppliers
lists, catalogs, promotional materials, machinery diagrams and plans, personnel
and payroll files of Transitioning Employees if such transfer is authorized in
writing by such Transitioning Employees, and (B) all books, records and other
materials pertaining to the Business or Acquired Assets provided by Sellers to
Purchaser in connection with Purchaser’s due diligence investigation of the
Business and Acquired Assets or otherwise in connection with the negotiation and
execution of this Agreement or the effectuation of the transactions contemplated
hereby, excluding in each case such books, records and materials that primarily
relate to the Excluded Liabilities or the Retained Business;
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(xii) all
of Sellers’ rights, claims, counterclaims, cross claims, credits, causes of
action, rights of set-off against third parties, rebates or refunds to the
extent arising from Acquired Assets, the Business or the Assumed Liabilities,
including, but not limited to, unliquidated rights under manufacturers’ and
vendors’ warranties;
(xiii) the
leasehold interests of Sellers as listed in Section 11 of the Asset Schedule
(the “Assigned
Leases”), including the leasehold interests of Sellers in the real
property listed in Section 11(a) of the Asset Schedule (the “Assigned Real Property
Lease”);
(xiv) the
Milford Property;
(xv) the
Owned Condominium;
(xvi) all
rights of any Seller under non-disclosure or confidentiality, non-compete,
non-solicitation agreements, assignment agreements or similar agreements with
former employees, employees and agents of any Seller or with third parties to
the extent relating to the Business or the Acquired Assets (or any portion
thereof), to the extent transfer or assignment is permitted pursuant to the
terms of such agreements and as allowed by applicable Law;
(xvii) The
goodwill appurtenant to the aforementioned Acquired Assets; and
(xviii) except
to the extent such assets are Excluded Assets, all other assets of Sellers used
exclusively in, or related primarily to, the Business, including the assets
listed in Section 12 of the Asset Schedule.
(b)
Sellers will retain and not transfer to Purchaser any asset that is
not an Acquired Asset (the “Excluded
Assets”). Without in any way limiting the generality of the
foregoing, the Excluded Assets shall include the following:
(i)
all rights of Sellers under this Agreement and the other Operative
Documents;
(ii) except
as provided in Section 2.1(a)(xi), all records prepared by Sellers in connection
with the Acquisition;
(iii) all
cash on hand and cash equivalents of Sellers;
(iv) all
Accounts Receivable outstanding on the Closing Date, including all amounts in
the Accounts Receivable sub-ledger of Sellers for accounts 11110, 11120, 11122
and 11130 as maintained by Sellers;
(v) all
rights, claims, counterclaims, cross claims, credits, causes of action, rights
of set-off arising from the Excluded Liabilities (including Tax refunds and
credits relating to Pre-Closing Period Taxes);
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(vi) all
other furniture, fixtures, machinery and equipment other than the Fixed
Assets;
(vii) all
Excluded Contracts and any rights of Sellers under such Excluded
Contracts;
(viii) all
assets and other rights sold or otherwise disposed of not in violation of any
provisions of this Agreement during the period from the date hereof until the
Closing;
(ix) all
Intellectual Property Rights that are not Transferred Intellectual Property
Rights or Transferred Unregistered IPR;
(x)
the Infrastructure Technology except to the extent specifically
listed as an Acquired Asset;
(xi)
personnel and payroll files related to any current or former Business
Employee, unless the transfer of such file has been authorized in writing by any
individual Transitioning Employee;
(xii) all
assets listed on Schedule 2.1(b)(xii);
(xiii)
all assets of Sellers not used exclusively or primarily in the Business
unless specifically listed as an Acquired Asset; and
(xiv) all
interests of Sellers in real property and any leasehold interests in real
property of Sellers, other than the Assigned Real Property Lease, the Milford
Property and the Owned Condominium.
(c) It
is understood that the Transferred Unregistered IPR is transferred “as is” and,
notwithstanding anything to the contrary set forth herein, Sellers make no
representation or warranty that such Transferred Unregistered IPR is valid or
enforceable.
2.2 Assumption of Certain
Liabilities;
Excluded Liabilities.
(a) On
the terms and subject to the conditions set forth in this Agreement, at the
Closing, Purchaser shall assume, effective as of the Closing, only the
Liabilities of Sellers described on the Assumed Liabilities Schedule (the “Assumed
Liabilities”):
(b) Notwithstanding
the foregoing, Purchaser shall not assume, succeed to, or be liable for, nor
shall the Acquired Assets be subject to, and the Sellers shall retain, any
Excluded Liabilities. For purposes of this Agreement, the “Excluded Liabilities”
shall include the Liabilities set forth on the Excluded Liabilities Schedule and
all other Liabilities of Sellers that are not Assumed Liabilities:
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(c) Sellers
agree to pay, perform and discharge prior to the Closing, all Liens in respect
of the Acquired Assets except for Permitted Liens.
2.3 Contract Consents
.
(a) Consents. Sellers
shall use reasonable commercial efforts (without the expenditure, in the
aggregate, of significant personnel resources or any out-of-pocket payments to
third parties to obtain third-party consents) to obtain consent to assignment of
the Contracts set forth on Section 2.3(a) of the Disclosure Letter (the “Business Contracts”)
necessary to transfer to Purchaser at the Closing those Contracts that would be
Transferred Contracts were such consent to be obtained. Purchaser
shall cooperate with Sellers as reasonably required (without the expenditure, in
the aggregate, of significant personnel resources or any out-of-pocket payments
to third parties to obtain third-party consents) to obtains such
consents.
(b) Requirement to Close;
Representations and Warranties. The failure by Sellers to
assign at Closing any Business Contract or relevant portion thereof because a
consent necessary to effect such assignment has not been obtained shall not (i)
except to the extent such failure would result in the failure of Sellers to
satisfy the conditions set forth in Section 9.3 of this Agreement, relieve any
of the parties hereto from its respective obligations to consummate the
transactions contemplated by this Agreement or (ii) be deemed to be a breach of
any representation or warranty of Sellers hereunder.
2.4 Acquisition
Consideration.
(a) The
aggregate consideration for the purchase and sale of the Acquired Assets shall
be (i) subject to Section 2.5, Section 8.22(a) and Section 10.3 below, eighteen
million dollars ($18,000,000) (the “Purchase Price”), and
(ii) the assumption of the Assumed Liabilities (together with the Purchase
Price, the “Total
Consideration”)
(b) Fifteen
million five hundred thousand dollars ($15,500,000) (the “Closing Purchase
Price”) less the Total Escrow Amount and less the Second Closing Escrow
Amount shall be paid in cash or immediately available funds to Parent on the
Closing Date by electronic wire transfer to an account or accounts of Parent
designated by Sellers at least three (3) days prior to the Closing
Date. On December 26, 2009, two million five hundred thousand dollars
($2,500,000) of the Purchase Price, which is the Supplemental Seller-Retained
Contra AR, will be paid to Parent in the manner and according to the terms set
forth in Section 8.22(a).
2.5 Net Asset Value
Adjustment.
(a) No
later than twenty (20) days after the Closing Date, Parent shall cause to be
prepared and delivered to Purchaser the Closing Statement (as defined below) and
a certificate based on such Closing Statement setting forth Parent’s calculation
of the Net Asset Value (as defined below). The closing statement (the
“Closing
Statement”) shall present the Net Asset Value as of the close of business
on the Closing Date (“Closing Net Asset
Value”). “Net Asset Value”
means the sum of the following:
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(i)
the amount of Altec Inventory, minus
(ii) the
amount of the Inventory Reserves, minus
(iii) the
amount of Contra Accounts Receivable, plus
(iv) the
amount of Fixed Assets, minus
(v) the
amount of Accrued Warranty, minus
(vi) the
amount of Makers Claims.
in each
case as determined in accordance with GAAP consistently applied with the same
degree of conservatism applied by Parent in the preparation of its Audio
Entertainment Group segment financial statements (the “Agreed
Principles”).
(b) If
Purchaser disagrees with Parent’s calculation of the Closing Net Asset Value
delivered pursuant to Section 2.5(a), Purchaser may, within thirty-five (35)
days after delivery of the Closing Statement, deliver a notice to Parent
disagreeing with such calculation and setting forth Purchaser’s calculation of
such amount. Any such notice of disagreement shall specify those
items or amounts as to which Purchaser disagrees, and Purchaser shall be deemed
to have agreed with all other items and amounts contained in the Closing
Statement and the calculation of Net Asset Value delivered pursuant to Section
2.5(a). If Purchaser does not deliver a notice of disagreement within
the thirty-day period specified in the first sentence of this Section 2.5(b),
then Purchaser shall be deemed to have agreed to the Closing
Statement.
(c) If
a notice of disagreement shall be duly delivered pursuant to Section 2.5(b),
Purchaser and Parent shall, during the fourteen (14) days following such
delivery, use their commercially reasonable efforts to reach agreement on the
disputed items or amounts in order to determine, as may be required, the amount
of Closing Net Asset Value, which amount shall not be more than the amount
thereof shown in Parent’s calculation delivered pursuant to Section 2.5(a) nor
less than the amount thereof shown in Purchaser’s calculation delivered pursuant
to Section 2.5(b). If the parties so resolve all disputes, the
computation of Closing Net Asset Value, as amended to the extent necessary to
reflect the resolution of the dispute, shall be conclusive and binding on the
parties. If during such period, Purchaser and Parent are unable to
reach an agreement, they shall promptly thereafter cause the Independent
Accountant to review this Agreement and the disputed items or amounts for the
purpose of calculating Closing Net Asset Value (it being understood that in
making such calculation, the Independent Accountant shall be functioning as an
expert and not as an arbitrator). Promptly upon referral of the dispute to the
Independent Accountant, (i) Parent shall submit the Closing Statement and its
calculation of the Net Asset Value and Purchaser shall submit its calculation of
the Net Asset Value and its notice of disagreement, in both cases together with
all supporting documentation and work papers, (ii) each party shall reasonably
cooperate with the Independent Accountant and promptly respond to any requests
for additional information or documents, (iii) each party shall execute the
Independent Accountant’s standard form of engagement letter, (iv) each party
will be afforded the opportunity to present to the Independent Accountant any
material relating to the determination of the matters in dispute and to discuss
such determination with the Independent Accountant; and (v) the Independent
Accountant shall consider only those items or amounts in the Closing Statement
and Purchaser’s calculation of Closing Net Asset Value as to which Parent and
Purchaser have disagreed. The Independent Accountant shall deliver to
Purchaser and Parent, as promptly as practicable (but in any case no later than
thirty days from the date of engagement of the Independent Accountant), a report
setting forth such calculation, which amount shall not be more than the amount
thereof shown in Parent’s calculation delivered pursuant to Section 2.5(a) nor
less than the amount thereof shown in Purchaser’s calculation delivered pursuant
to Section 2.5(b). Such report shall be conclusive and binding on the
parties. The fees, costs and expenses of the Independent Accountant’s
review and report shall be allocated to and borne by Purchaser and Parent based
on the inverse of the percentage that the Independent Accountant’s determination
(before such allocation) bears to the total amount of the total items in dispute
as originally submitted to the Independent Accountant. For example,
should the items in dispute total in amount to $1,000 and the Independent
Accountant awards $600 in favor of Parent’s position, 60% of the costs of its
review would be borne by Purchaser and 40% of the costs would be borne by
Sellers.
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(d) Purchaser
and Parent shall, and shall cause their respective representatives to, cooperate
and assist in the calculation of Closing Net Asset Value and in the conduct of
the review referred to in this Section 2.5, including the making available to
the extent reasonably necessary of books, records, work papers and
personnel.
(e) If
Target Net Asset Value exceeds Final Net Asset Value (as defined below), Parent
shall pay to Purchaser, in the manner and with interest as provided in Section
2.5(f), the amount of such excess (the “Asset Shortfall”) as
an adjustment to the Purchase Price. If Final Net Asset Value exceeds
Target Net Asset Value, Purchaser shall pay to Parent in the manner and with
interest as provided in Section 2.5(f), the amount of such excess (the “Excess Assets”) as an
adjustment to the Purchase Price and shall direct the Escrow Agent to release
$1,000,000 of the Total Escrow Amount from the Escrow Fund to Parent in
accordance with Section 10.3 hereof and the Escrow Agreement. “Final Net Asset
Value” means Closing Net Asset Value (i) as shown in Parent’s calculation
delivered pursuant to Section 2.5(a) if no notice of disagreement with respect
thereto is duly delivered pursuant to Section 2.5(b); or (ii) if such a notice
of disagreement is delivered, (A) as agreed by Purchaser and Parent pursuant to
Section 2.5(c) or (B) in the absence of such agreement, as shown in the
Independent Accountant’s calculation delivered pursuant to Section 2.5(c); provided, that in no
event shall Final Net Asset Value be more than Parent’s calculation of Closing
Net Asset Value delivered pursuant to Section 2.5(a) or less than Purchaser’s
calculation of Closing Net Asset Value delivered pursuant to Section
2.5(b).
(f) Any
payment pursuant to Section 2.5(e) shall
be made at a mutually convenient time and place within three (3) Business Days
after Final Net Asset Value has been determined by wire transfer by Purchaser or
Parent, as the case may be, of immediately available funds to the account of
such other party as may be designated in writing by such other
party. The amount of any payment to be made pursuant to Section 2.5(e) shall
bear interest from and including the Closing Date to but excluding the date of
payment at a rate per annum equal to the rate of interest published by The Wall
Street Journal, Eastern Edition, from time to time as the “prime rate” at the
large U.S. money center banks during the period from the Closing Date to the
date of payment. Such interest shall be payable at the same time as
the payment to which it relates and shall be calculated daily on the basis of a
year of 365 days and the actual number of days elapsed.
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2.6 Allocation of
Consideration. Sellers and Purchaser recognize their mutual
obligations pursuant to Section 1060 of the Code to timely file IRS Form 8594
with their respective federal income Tax Returns. Within sixty (60)
days after Closing, Purchaser shall submit to Sellers in writing a proposed
allocation of the Total Consideration (and the assumed liabilities, to the
extent properly taken into account) among the Acquired Assets consistent with
the provisions of Section 1060 of the Code and the Treasury Regulations
thereunder and this Section 2.6 for Sellers’ review and comment. If
Sellers and Purchaser agree on a final allocation, it shall be conclusive and
binding upon Purchaser and Sellers for all purposes, including Transfer Taxes,
and the parties agree that all Tax Returns and all financial statements shall be
prepared in a manner consistent with such allocation, and neither Sellers nor
Purchaser shall take a Tax position that is inconsistent with such allocation,
unless required by the IRS or any other applicable taxing
authority. Any subsequent adjustments to the Total Consideration
shall be reflected in a revised allocation consistent with Section 1060 of the
Code and the Treasury Regulations thereunder.
2.7 Transfer
Taxes. All Transfer Taxes and any other real property closing
costs imposed or levied in connection with or attributable to this Agreement and
the transactions contemplated hereby shall be borne solely by
Purchaser. To the extent Sellers are responsible for the preparation
and filing of any Transfer Tax Return, Sellers shall prepare and provide
Purchaser such Transfer Tax Return no later than ten (10) Business Days prior to
the due date of such Tax Return and Purchaser shall remit to Sellers within five
Business Days thereof the amount of the Transfer Taxes shown to be due on such
Tax Return, provided, that, if Purchaser disagrees with the amount of the
Transfer Tax shown to be due, Purchaser and Sellers shall cooperate in
determining the correct amount of Transfer Taxes actually due and
owing. The parties shall cooperate with each other to the extent
reasonably requested and legally permitted to minimize any Transfer
Taxes. To the extent that a withholding obligation with respect to
Transfer Taxes is imposed in connection with the transactions contemplated by
this Agreement, such Transfer Taxes shall be borne solely by Purchaser and shall
not reduce the Purchase Price.
2.8 Purchase of Acquired Assets
as Among Purchaser and Other Purchasers. Notwithstanding any
other provision of this Agreement, the parties hereto acknowledge and agree that
each Other Purchaser will be purchasing and assuming at the Closing only those
Acquired Assets and Assumed Liabilities identified as being purchased and
assumed by such Other Purchaser identified on Schedule 2.8 which shall be
delivered by Purchaser to Sellers prior to the Closing (which will contain the
name and address of each Other Purchaser), and all other Acquired Assets and
Assumed Liabilities not so identified will be purchased and assumed at the
Closing by Purchaser, without prejudice to Purchaser’s obligations to Sellers
hereunder.
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ARTICLE
III
IP
LICENSES
3.1 Patent
Licenses.
(a) Licensed
Patents. Effective as of the Closing, Sellers hereby grant to
Purchaser under Sellers’ rights in the Licensed Patents, a world-wide,
royalty-free, fully paid-up, perpetual, irrevocable, non-terminable,
non-exclusive, non-sublicensable, non-transferable (except as provided below)
right and license, to make, have made, use Sellers’ products in the Business
Licensed Field and otherwise practice the subject matter of the Licensed Patents
in the Business Licensed Field.
(b) Transferred
Patents. Effective as of the Closing, Purchaser hereby grants
to Sellers, under Purchaser’s rights in the Transferred Patents, and Sellers
shall retain, a world-wide, royalty-free, fully paid-up, perpetual, irrevocable,
non-terminable, non-exclusive, non-sublicensable, non-transferable (except as
provided below) right and license in to make, have made, use Sellers’ products
in Sellers’ Licensed Field, and otherwise practice the subject matter of the
Transferred Patents in the Sellers’ Licensed Field.
(c) No
party hereto shall exercise any rights, including the make and have made rights
granted to it under Section 3.1(a)
or Section
3.1(b) in a manner that is intended to or would have the effect of
sublicensing the rights licensed to it hereunder to any third
Person.
(d) Further Assurances Regarding
Licensed Patents. If it is determined within 180 days of the
Closing that a Patent owned by a Seller as of the Closing would, absent a
license, be infringed by the conduct of the Business as of the Closing or the
making, using, selling, offering for sale, or importing of any currently
shipping Altec Product as of the Closing, then such Patent shall be added to
Section 3 of the Asset Schedule as a Licensed Patent.
3.2 IPR
Licenses.
(a) Effective
as of the Closing, Sellers hereby grant to Purchaser under Sellers’ rights in
the Licensed IPR (other than Licensed Patents and Backbeat Marks), a world-wide,
royalty-free, fully paid-up, perpetual, irrevocable, non-terminable,
non-exclusive, transferable and sublicensable right and license to use the
Acquired Assets for any and all purposes in the Business Licensed Field
including to (i) make, have made, use, sell, offer to sell, import, distribute,
copy, publish, publicly perform and display, prepare derivative works from and
otherwise exploit (x) any Altec Product and the Acquired Assets and to provide
any service or product currently provided by the Business and (y) any product or
service that is derived from the Altec Products or the Business by Purchaser in
the continuation of the Business in the future, and (ii) otherwise to operate
and continue the Business.
(b) Effective
as of the Closing, Purchaser hereby grants to Sellers under Purchaser’s rights
in the Transferred Unregistered IPR, and Sellers shall retain, with respect to
the Transferred Unregistered IPR, a world-wide, royalty-free, fully paid-up,
perpetual, irrevocable, non-terminable, non-exclusive, transferable and
sublicensable right and license to use the Transferred Unregistered IPR for any
and all purposes, except as may be limited by Section 8.17 to (i) make, have
made, use, sell, offer to sell, import, distribute, copy, publish, publicly
perform and display, prepare derivative works from and otherwise exploit (x) any
Seller product or asset and to provide any service or product currently provided
by the Sellers’ business and (y) any product or service that is derived from
such product or the Sellers’ business by Sellers in the continuation of their
business in the future, and (ii) otherwise to operate and continue their
business.
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3.3 Sellers Licensed
Marks.
(a) Subject
to Section 3.3(b) below, Sellers hereby grant to Purchaser, effective as of the
Closing Date, for a term of three (3) years from such date, a non-exclusive,
paid up, royalty free, non-sublicensable, non-transferable (except as provided
below) license under Sellers’ rights in the Backbeat Marks to use such Marks,
on, with, and in connection with the marketing, offering, sale and promotion of,
the Altec Products in substantially the same manner and in the same territories
as such Backbeat Marks are used by Sellers as of the Closing Date.
(b) Purchaser
shall maintain the quality of the products with which such Backbeat Marks are
used at least at the same level maintained by Sellers prior to the
Closing. Without limiting the foregoing, Purchaser shall not use the
Backbeat Marks in a manner that detracts from the goodwill associated with such
trademarks or in a manner contrary to the reasonable instructions and policies
of Sellers. Sellers shall have the right, upon reasonable notice to
audit Purchaser’s use of the Backbeat Marks and the quality of the Sellers’
products bearing such marks. All goodwill associated with the use of
such Backbeat Marks shall inure to the sole benefit of
Sellers. Purchaser shall fully indemnify, defend and hold harmless
Sellers and their affiliates against any and all claims, damages, losses and
liabilities, as incurred, resulting from Purchaser’s sale of products bearing
the Backbeat Marks.
3.4 Existing Product and
Ingredient Brand Purchaser Licensed Marks.
(a) Subject
to Section 3.4(b), Purchaser hereby grants to Sellers, and Sellers shall retain,
effective as of the Closing Date, under Purchaser’s rights in the Licensed-Back
Marks:
(i) for
a term of two (2) years from the Closing Date, a non-exclusive, paid up, royalty
free, non-sublicensable, non-transferable license to use the Licensed-Back Marks
with, on, and in connection with the marketing, offering, sale and promotion of,
those products of Sellers that are offered for sale by Sellers as of the Closing
Date; and
(ii) a
perpetual, non-exclusive, paid up, royalty free, non-sublicensable,
non-transferable (except as provided below) license to use the Licensed-Back
Marks with, on, and in connection with the marketing, offering, sale and
promotion of, Sellers’ Music First Products, provided that (x) such product and
promotional materials also include a trademark or brand owned by Sellers (a
“Seller Mark”),
(y) such Seller Mark is give equal or greater prominence on such Sellers’ Music
First Product or promotional materials as the Licensed-Back Marks, and (z) such
product and material note that the Licensed-Back Marks are owned by
Purchaser.
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(b) Sellers
shall maintain the quality of the products with which such Licensed-Back Marks
are used at least at the same level maintained by Sellers prior to the
Closing. Without limiting the foregoing, Sellers shall not use the
Licensed-Back Marks in a manner that detracts from the goodwill associated with
such trademarks or in a manner contrary to the reasonable instructions and
policies of Purchaser. Purchaser shall have the right, upon
reasonable notice, to audit Sellers’ use of the Licensed-Back Marks and the
quality of Sellers’ products bearing such marks. All goodwill
associated with the use of such Licensed-Back Marks shall inure to the sole
benefit of Purchaser. Sellers shall fully indemnify, defend and hold
harmless Purchaser and its affiliates against any and all claims, damages,
losses and liabilities, as incurred, resulting from Sellers’ sale of products
bearing the Licensed-Back Marks.
3.5 Transferability. To
the extent that the licenses granted in this Article III are stated to be
non-transferable, the rights granted thereunder shall not be transferable by the
licensee except (i) in connection with the Change in Control of the licensee, or
(ii) the sale of all, or substantially all, of the assets of the licensee to
which the license relates, subject, in the case of Purchaser, to Section 8.11(b)
hereof.
ARTICLE
IV
THE
CLOSING
4.1 Closing
Date. The closing of the sale and transfer of the Acquired
Assets (hereinafter called the “Closing”) shall take
place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California 94304 at 10:00 a.m. local
time on the later to occur of (a) October 26, 2009 and (b) the second Business
Day immediately following the satisfaction or waiver of the conditions set forth
in Article IX (other than those conditions that by their nature are to be
satisfied at Closing, but subject to satisfaction or waiver of such conditions),
or at such other time, date and place as shall be fixed by agreement of Sellers
and Purchaser (such date of the Closing being herein referred to as the “Closing
Date”).
4.2 Transactions To Be Effected
at the Closing. At the Closing:
(a) Sellers
shall (i) deliver to Purchaser each document, certificate and agreement
contemplated by Section 9.3 hereof (ii) deliver to Purchaser such appropriately
executed deeds, bills of sale, documents, certificates, consents, assignments
and other instruments of transfer relating to the Acquired Assets in form
reasonably satisfactory to Purchaser as shall be necessary to transfer to and
vest in Purchaser all of Sellers’ right, title and interest in, to and under all
of the Acquired Assets, free and clear of any and all Liens (other than
Permitted Liens), together with any necessary transfer declarations or other
filings (and in recordable form if reasonably required by Purchaser), (iii) use
commercially reasonable efforts to deliver such other documents as Purchaser may
reasonably request to demonstrate satisfaction of the conditions and compliance
with the agreements set forth in this Agreement, and (iv) take such steps as may
be required to place Purchaser in actual possession and operating control of the
Acquired Assets;
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(b) Purchaser
shall (i) deliver to Sellers each document, certificate and agreement
contemplated by Section 9.2 hereof, (ii) deliver to Sellers payment of the
Closing Purchase Price in the manner provided in Section 2.4(a) less the Total
Escrow Amount and the Second Closing Escrow Amount and (iii) use commercially
reasonable efforts to deliver such other documents as Sellers may reasonably
request to demonstrate satisfaction of the conditions and compliance with the
agreements set forth in this Agreement; and
(c) The
parties hereto shall execute and deliver to each other such other documents,
agreements, certificates and instruments required to be delivered on or prior to
the Closing Date pursuant to the terms of this Agreement.
4.3 Taking of Necessary Action;
Further Action. If, at any time after the Closing Date,
subject to Section 2.3 hereof, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest Purchaser with full right,
title and possession to the Acquired Assets, Sellers shall take all such lawful
and reasonably necessary and/or desirable action consistent with this Agreement,
provided, that such actions shall be at no additional cost to
Sellers.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Subject
to the disclosures and exceptions set forth in the disclosure letter delivered
by Sellers to Purchaser simultaneously with the execution and delivery of this
Agreement (the “Disclosure Letter”),
each section of which Disclosure Letter qualifies the correspondingly numbered
section of the representation and warranty contained in this Article V (it being
understood and hereby agreed that any disclosure in the Disclosure Letter
relating to one section or subsection shall also apply to any other sections and
subsections if and to the extent that it is reasonably apparent on the face of
such disclosure that such disclosure also relates to such other sections or
subsections), Sellers represent and warrant to Purchaser, as
follows:
5.1 Organization, Standing and
Power. Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Trading
is a wholly-owned foreign enterprise duly incorporated, validly existing and in
good standing (to the extent such concept is recognized) under the laws of
People’s Republic of China. BV is a private limited liability company
duly organized, validly existing and in good standing (to the extent such
concept is recognized) under the laws of the Netherlands. Each Seller
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each
Seller is duly qualified to do business and is in good standing (to the extent
such concepts are recognized) in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than such failure that individually or in
the aggregate would not be material to the operation of the
Business. Each Seller has delivered or made available to Purchaser
true, complete and correct copies of its Certificate of Incorporation and Bylaws
or comparable organizational documents as in effect on the date
hereof. Other than Trading and BV, which are direct or indirect
wholly-owned Subsidiaries of Parent, as of the Closing, no Subsidiary will own
any of the Acquired Assets.
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5.2 Authority, Conflicts,
Consents.
(a) Each
Seller has all requisite power and authority to execute and deliver this
Agreement and the other Operative Documents and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the
other Operative Documents, the performance by each Seller that is a party
thereto of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby have been duly authorized and
approved by all necessary corporate action (or similar action) on the part of
each such Seller. This Agreement and each of the other Operative
Documents has been, or will have been at the Closing, duly executed and
delivered by each Seller that is a party thereto and constitutes, or will
constitute as of the Closing, the legal, valid and binding obligations of each
such Seller, enforceable against it in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors.
(b) None
of the execution and delivery by Sellers of this Agreement and the other
Operative Documents, the performance by each Seller of its obligations hereunder
and thereunder or the consummation of the transactions contemplated hereby and
thereby will conflict with, or result in any violation or breach of, or conflict
with or default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation, modification or acceleration
of any obligation or loss of any benefit, or give rise to any obligation of any
Seller to make any payment under, or to the increased, additional, accelerated
or guaranteed rights or entitlements of any Person under, or result in the
creation of any Liens upon any of the properties or assets of Sellers (any such
event, a “Conflict”) under, (i)
any provision of the certificate of incorporation or bylaws or equivalent
organizational documents of any Seller, or (ii) any material Transferred
Contract, Permit, concession, franchise, Order or Law applicable to the Acquired
Assets or the Business, the Licensed Patents or the Licensed IPR (other than
Licensed Patents and Backbeat Marks).
(c) No
consent, waiver, approval, Order, Permit or authorization of, or registration,
declaration or filing with, or notification to any Person or Governmental Entity
is required by or with respect to any Seller in connection with (i) the
execution and delivery of this Agreement or the other Operative Documents, the
performance by each Seller of its obligations hereunder and thereunder or the
consummation of the transactions contemplated hereby and thereby or (ii) the
continuing validity and effectiveness following the Closing of any Seller
Authorization.
5.3 Changes. Except
as set forth in Section 5.3 of the Disclosure Letter, and except for actions
taken by Sellers with the written consent of Purchaser pursuant to Section 7.1,
since June 27, 2009, (a) Sellers have conducted the Business only in the
Ordinary Course of Business, and (b) there has not been, occurred or arisen any
circumstance or event or action taken by any Seller with respect to the Business
and the Acquired Assets which would be prohibited if it were to exist or occur
or be taken during the period covered by Section 7.1 of this
Agreement.
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5.4 Tax
Matters.
(a) Definition of
Taxes. For the purposes of this Agreement, “Tax” or,
collectively, “Taxes,” means (i) any
and all federal, state, local and foreign taxes, and similar assessments and
governmental charges, duties, impositions and liabilities, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts.
(b) To
the extent relevant to the Business and the Acquired Assets, Sellers have duly
and timely filed within the time period for filing or any extension granted with
respect thereto all material Tax Returns which are required to be filed, paid
all Taxes due and payable and complied in all material respects with all
applicable Laws relating to the payment and withholding of
Taxes. There are no pending (or to Sellers’ knowledge, threatened)
audits, examinations, assessments, asserted deficiencies or written claims for
Taxes or actions or proceedings with respect to Taxes or Tax Returns of any
Seller. No Seller is currently the beneficiary of any extension of
time within which to file a Tax Return, and no Seller has waived any statute of
limitations with respect to the assessment or collection of any
Taxes. There are no Liens, other than Permitted Liens, on the
Acquired Assets attributable to Taxes. To the extent required under
applicable Law, all of the Acquired Assets have been properly listed and
described on the property tax rolls for all periods prior to and including the
Closing Date, and no portion of the Acquired Assets constitutes omitted property
for property tax purposes. None of the Acquired Assets is tax-exempt
use property within the meaning of Section 168(h) of the Code. No
Seller is a foreign person within the meaning of Code section 1445 and the
Treasury Regulations thereunder.
5.5 Restrictions on Business
Activities. There is no Contract or Order relating to the
Business to which any Seller or any of its Affiliates is party (or, to the
knowledge of Sellers, any threatened Order) which could reasonably be expected
to have the effect of prohibiting, restricting or impairing in any material
respect the use of any Acquired Assets or the scope, geographic location or
conduct of the Business or any other activities of Purchaser after the Closing
or the solicitation or hiring of any person for employment in the Business
(excluding any such restriction on the solicitation or hiring applicable to
Sellers but not Purchaser).
5.6 Title to Properties; Absence
of Liens and Encumbrances; Condition of Property.
(a) Sellers
own and have, and at the Closing Purchaser will acquire, good and valid title
(to the extent such concept is applicable) to, or, in the case of leased assets,
valid leasehold interests in, all of the Acquired Assets free and clear of any
Liens other than Permitted Liens.
(b) The
tangible assets in the Acquired Assets necessary for the operation of the
Business as currently conducted are in operating condition and have been
maintained in accordance with reasonable commercial practices in all material
respects. The Acquired Assets do not include any equity interest in
any Person.
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(c) Section
5.6(c) of the Disclosure Letter sets forth all leases of personal property
(“Personal Property
Leases”) involving annual payments in excess of $25,000 relating to
personal property that is an Acquired Asset. All of the items of
personal property under the Personal Property Leases are in good operating
condition (ordinary wear and tear excepted), and such property is in all
material respects in the condition required of such property by the terms of the
lease applicable thereto during the term of the lease. Sellers have
delivered to Purchaser true, correct and complete copies of the Personal
Property Leases, together with all amendments, modifications or supplements
thereto.
(d) Each
Seller has a valid, binding and enforceable leasehold interest under each of the
Personal Property Leases under which it is a lessee. Each of the
Personal Property Leases is in full force and effect and no Seller has received
or given any notice of any default under any of the Personal Property Leases
and, to the knowledge of Sellers, no other party is in default thereof, and no
party to the Personal Property Leases has exercised any termination rights with
respect thereto.
5.7 Intellectual
Property.
(a) The
Transferred Intellectual Property Rights and the Transferred Unregistered IPR
are owned by Sellers and will be assigned to Purchaser free and clear of all
material Liens, other than Permitted Liens in accordance with the terms hereof;
and Sellers have sufficient rights in the Licensed Patents, the Licensed IPR and
the Backbeat Marks to grant the licenses granted herein in accordance with the
terms hereof.
(b) Section
5.7(b) of the Disclosure Letter sets forth a true and correct list of all
Transferred Intellectual Property Rights that are Registered IPR (such
Registered IPR, the “Transferred Registered
IPR”), the jurisdiction in which such Registered IPR is registered or
filed, and the applicable application or registration number. Sellers
have provided Purchaser with access to such in information as Sellers
have regarding the actions that need to be taken with respect to the
registration, renewal or maintenance of the Transferred Registered
IPR in the 120 days following the date hereof.
(c) Section
5.7(c) of the Disclosure Letter sets forth the filings and other steps necessary
to transfer ownership of the Transferred Registered IPR
to Purchaser.
(d) To
the knowledge of Sellers, the conduct of the Business during a twelve (12) month
period preceding the Closing Date, including the making, using, selling,
offering for sale, or importing of the currently shipping Altec Products, did
not infringe any Intellectual Property Rights or misappropriate any Trade
Secrets of any third Person in a manner that would have a Material Adverse
Effect. There is no pending, or to the knowledge of Sellers
threatened, assertion or claim and there has been no such assertion or claim in
the last twelve (12) months asserting that any Seller’s use or exploitation of
any Transferred Technology or the conduct of the Business infringes upon,
misappropriates, violates or conflicts in any way with the Intellectual Property
Rights of any third Person.
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(e) To
the knowledge of Sellers, there is no unauthorized use, infringement or
misappropriation of any Transferred IPR or the Transferred Unregistered IPR,
including by any employee or former employee of the Business that has had or is
reasonably likely to have a Material Adverse Effect.
(f)
Section 5.7(f) of the Disclosure Letter sets forth a true and
correct list of all Contracts pursuant to which a third Person has licensed to a
Seller any Intellectual Property Right or Technology that is material to the
development of the currently shipping Altec Products, or is otherwise material
to the Business (“Inbound IP
Contracts”), other than (i) inbound “shrink-wrap” and similar commercial
licenses, (ii) Contracts for commercially available Intellectual Property Rights
or Technology for which a Seller has paid, or is obligated to pay, a third
Person less than $100,000, and (iii) Contracts with respect to the
Infrastructure Technology that is an Excluded Asset.
(g) Section
5.7(g) of the Disclosure Letter sets forth a true and correct list of all
Contracts pursuant to which a third Person has obtained a license to any
material Transferred Intellectual Property Rights (“Outbound IP
Contracts”), other than (i) Customer Contracts, (ii) non-exclusive
“end-user” agreements and licenses, (iii) licenses granted by a Seller to
manufacturers, third party service or maintenance providers, or suppliers of
Altec Products or components therefore, (iv) product distribution, resale or
licensing agreements entered into in the Ordinary Course of Business, (v) other
non-exclusive licenses granted by a Seller in the Ordinary Course of Business,
and (vi) other Contracts pursuant to which a Seller has licensed Intellectual
Property Rights that are not material to the Altec Products or the
Business.
(h) Sellers
have taken steps that are reasonably required to protect the confidential
information and trade secrets of Sellers with respect to the Business and any
Seller’s rights therein and to protect the confidential information and trade
secrets provided by any other person to Sellers. Sellers have a
policy requiring all employees and consultants engaged in the creation or
development of Technology for the Business to execute an industry-standard
confidentiality and invention assignment agreement (and example of which has
been provided to Purchaser) and has used reasonable commercial efforts to
implement such policy.
(i)
There is no pending or, to the knowledge of Sellers, threatened
assertion or claim, and there has been no such assertion or claim in the last 12
months, challenging the validity or enforceability of, or contesting any
Seller’s rights with respect to, any of the material Transferred
IPR.
(j)
Section 13 of the Asset Schedule contains a true and
correct list of all Altec Products currently sold or offered for sale as of the
date hereof; and (ii) all products of the Business to the extent developed for
release within six months of the date hereof but which have not been sold or
offered for sale prior to the date hereof.
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(k) To
the knowledge of Sellers, no Transitioning Employee or independent contractor of
any Seller related to the Business is: (i) bound by or otherwise subject to any
Contract restricting him or her from performing his or her duties for the
Business; or (B) in breach of any Contract with any former employer or other
Person concerning the Transferred Intellectual Property Rights or
confidentiality as a result of his or her employment or activities with such
Seller relating to the Business.
(l)
No Transferred Intellectual Property Rights have been adjudged
invalid or unenforceable, and no Seller has knowledge of any facts or
circumstances (including for example with respect to inequitable conduct or
misuse) that such Seller reasonably believes would cause any of such
Transferred Intellectual Property Rights to be invalid or
unenforceable. No claim by any third party contesting the ownership
of any Transferred Intellectual Property Right, or the validity or
enforceability of same, is currently outstanding or, to the knowledge of
Sellers, is threatened.
(m) No
employee, officer, director, or shareholder of any Seller has any claim, right
(whether or not currently exercisable) or interest to or in any Transferred
Intellectual Property Right.
5.8 Agreements, Contracts and
Commitments.
(a) Section
5.8(a)(i) of the Disclosure Letter sets forth a list of all of the Transferred
Contracts and Section 5.8(a)(ii) of the Disclosure Letter sets forth a list of
all of the Shared Contracts, in each case, to which a Seller is a party as of
the date hereof. Taken together, the Transferred Contracts and the
Shared Contracts constitute all of the Contracts to which a Seller is a party
related to the Business.
(b) Sellers
have made available to Purchaser complete and correct copies of all written
Transferred Contracts, together with all amendments thereto, and accurate
descriptions of all material terms of all oral Transferred
Contracts.
(c) (x)
each Transferred Contract is a legal, valid and binding obligation of each
Seller that is a party thereto and, to the knowledge of Sellers, is a legal,
valid and binding obligation of each of the other parties thereto (subject, in
each case, to Laws of general application relating to bankruptcy, insolvency and
the relief of debtors ad rules of Law governing specific performance, injunctive
relief or other equitable remedies and to general principles of equity), and
each Transferred Contract is in full force and effect, and (assuming receipt of
any required consent) will continue in full force and effect following the
Closing, in each case without any breach of any terms or conditions thereof or
the forfeiture or impairment of any rights thereunder, (y) each Seller has
performed all material obligations required to be performed by it under each
Transferred Contract to which it is a party and is not (with or without the
lapse of time or the giving of notice, or both) in material breach or default
thereunder and (z) to the knowledge of Sellers, each other party to each
Transferred Contract has performed all material obligations required to be
performed by such party thereunder, and is not (with or without the lapse of
time or the giving of notice, or both) in material breach or default thereunder.
No party to any of the Transferred Contracts has given notice of any intent to
exercise any termination rights with respect thereto and no party has given
notice of any significant dispute with respect to any Transferred
Contract.
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5.9 Governmental
Authorization. Section 5.9 of the Disclosure Letter accurately
lists the material Seller Authorizations, which Seller Authorizations are in
full force and effect, and, to the knowledge of Sellers, constitute all Permits
required to permit Sellers to operate or conduct the Business as currently
conducted, except where the failure to have any Permit would not be material to
Sellers’ ability to continue in operation of the Business. Sellers
currently have all Permits which are necessary for the operation of the Business
as presently conducted, other than those the failure of which to possess is
immaterial. Except as would not be material to the operation of the
Business, there is no Litigation pending or, to the knowledge of Sellers,
threatened regarding, and no event has occurred that has resulted in or after
notice or lapse of time or both would reasonably be expected to result in,
revocation, suspension, adverse modification, non-renewal, impairment,
restriction, termination or cancellation of, or order of forfeiture or
substantial fine with respect to, any of such Seller
Authorizations. To Sellers’ knowledge, no Seller is in material
default or material violation of any of such Seller
Authorizations. To Sellers’ knowledge, none of the Seller
Authorizations will be impaired or adversely affected by the consummation of the
transactions contemplated by this Agreement.
5.10 Litigation. There
is no material claim (including counterclaim), action, lawsuit, mediation,
arbitration or similar dispute resolution proceeding, investigation, inquiry,
review or other judicial, administrative or other proceeding, at law or in
equity, by or before any Governmental Entity (“Litigation”) pending,
or to Sellers’ knowledge, threatened, against, or with respect to, a Seller or
any of their respective officers, directors or key employees (in their
capacities as such), or to which a Seller is a party, related to or otherwise
affecting the Acquired Assets or the Business. The Business, the
Acquired Assets and the Licensed IPR are not subject to any Order.
5.11 Employee Matters and Benefit
Plans.
(a) Section
5.11(a) of the Disclosure Letter contains, as of the date hereof (i) a complete
and accurate list of all Business Employees showing for each Business Employee
(including employees on leave of absence), the employee identification number,
location, position held, salary or wages, and aggregate annual compensation for
calendar year 2008, and if applicable, the type of leave of absence, as of
September 30, 2009, (ii) a complete and accurate list of each Business Employee
Benefit Plan (as defined below), and (iii) a complete and accurate list of each
agreement or arrangement between a Seller and any Business Employees which
provides for severance pay, retention payments (or any similar payment of
consideration upon the completion of the transactions contemplated herein and/or
upon termination of employment), whether written or unwritten, but excluding any
agreement or arrangement required by any Governmental Entity or by any
applicable Law to be provided, provided that the material terms of such
agreements or arrangements are determined by such Governmental Entity or
applicable Law (the “Seller Severance
Arrangements”). Sellers have provided or made available to
Purchaser true and complete copies of all Business Employee Benefit Plans and
Seller Severance Arrangements. Sellers have provided or made
available to Purchaser (i) true and complete copies of the terms and conditions
of employment relating to all International Business Employees, subject to the
Transfer Regulations, and (ii) details of all benefits, incentives (including
share/share options) and bonus schemes in which the International Business
Employees participate as of the date of this Agreement, except Legally Mandated
Benefits.
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(b) “Business Employee Benefit
Plan” shall mean any plan, program, policy, practice, contract, agreement
or other arrangement providing for compensation, deferred compensation,
retirement or pension, bonus awards, performance awards, retention or other
change in control awards, incentive compensation, stock or stock-related awards,
profit sharing, savings, health, life insurance, dental, disability, accident,
group insurance, vacation, holiday, sick leave, fringe benefits or other
employee benefits or remuneration of any kind, whether written or unwritten or
otherwise, funded or unfunded, including without limitation, each “employee
benefit plan,” within the meaning of Section 3(3) of ERISA and any plans that
would be “employee benefit plans” within the meaning of Section 3(3) of ERISA if
they were subject to ERISA (such as foreign plans and plans for directors)
which, in each case, currently is or ever has been sponsored, maintained,
entered into, contributed to, or required to be contributed to, by a Seller or
Affiliate of a Seller for the benefit of any Business Employee or officer,
employee, consultant or similar representative providing services with respect
to the Business, or with respect to which a Seller or Affiliate of a Seller has
or may have any current or future material liability or obligation but excluding
any Seller Severance Agreement and, further excluding any benefit required by
any Governmental Entity or by any applicable law to be provided, provided that
the material terms of such agreement or arrangement are determined by such
Governmental Entity or applicable Law (“Legally Mandated
Benefits”).
(c) With
respect to any “employee benefit plan,” within the meaning of Section 3(3) of
ERISA, that is sponsored, maintained or contributed to, or has been sponsored,
maintained or contributed to within six years prior to the date of this
Agreement, by a Seller or any of its ERISA Affiliates, (i) no withdrawal
liability, within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (ii) no liability to the Pension
Benefit Guaranty Corporation has been incurred by any such entity, which
liability has not been satisfied, (iii) no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or Section 412
of the Code has been incurred, and (iv) no condition exists or event or
transaction has occurred with respect to any such plan which could result in any
Seller incurring any material liability, fine or penalty.
(d) Neither
any Seller nor any of their respective ERISA Affiliates contributes or has an
obligation to contribute to, and has not within six years prior to the date of
this Agreement contributed to or had an obligation to contribute to, or had any
liability, with respect to (i) a multiemployer plan within the meaning of
Section 3(37) of ERISA or (ii) any defined benefit plan within the meaning of
Section 3(35) of ERISA that is subject to Title IV of ERISA or Section 412 of
the Code or (iii) a “welfare benefit plan” within the meaning of Section 3(1) of
ERISA that provides post-termination or retiree life insurance, health or other
welfare benefits (other than as incidental benefits under any Business Employee
Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of
the Code) to any Person, except as may be required by COBRA or any similar
Law.
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(e) Sellers
have not engaged (i) engaged in any transaction in violation of Section 406(a)
or (b) of ERISA or Section 4975 of the Code with respect to any Business
Employee Benefit Plan for which no exemption exists under Section 408 of ERISA
or Section 4975(c) of the Code or Section 4975(d) of the Code or that would
result in a civil penalty being imposed under subsections (i) or (l) of Section
502 of ERISA or (ii) failed to comply with the requirements of COBRA, which
would, in either case, to the knowledge of Sellers, result in any Liability to
Purchaser.
(f) Each
Seller has complied in all material respects with all of its obligations (in
respect of which it would be expected to comply by any regulatory or other body
to which it is subject) due to or in connection with the International Business
Employees or any body representing the International Business Employees,
including without limitation: (i) paying all material sums due to or in relation
to the International Business Employees up to and including the Closing Date
(whether arising under common law, statute, equity or otherwise), including all
salaries, wages, employee bonus or commissions, expenses, national insurance and
pension contributions and tax liability; and (ii) complying in all material
respects with its obligations under the Transfer Regulations.
(g) As
of the Closing Date, each International Business Employee is lawfully employed
and entitled to work for a Seller.
5.12 Labor
Matters.
(a) (i)
No Seller has agreed to recognize any labor union, collective bargaining
representative, works council, or other form of employee representative; (ii) no
labor union, collective bargaining representative, works council, or other form
of employee representative has been certified as the bargaining representative
of any of the Business Employees; (iii) to the knowledge of Sellers, no union
organizing campaign or representation petition is currently pending with respect
to any of the Business Employees; and (iv) no Seller is a party to any Contract
with any labor union, collective bargaining representative, works council, or
other employee representative. There is no pending or, to the
knowledge of Sellers, threatened labor dispute, strike or work stoppage against
a Seller, which may interfere with the Business.
(b) Each
Seller has complied in all material respects with applicable Laws and Orders
with respect to employment (including applicable Laws regarding wage and hour
requirements, immigration status, discrimination in employment, employee health
and safety, and collective bargaining) with respect to the Business Employees,
except for such noncompliance as has not had and would not have, individually or
in the aggregate, a Material Adverse Effect.
5.13 Compliance with
Laws. Each Seller has complied in all material respects with
and is not in material violation of, and has not received any written notices of
or been charged with any violation, with respect to, any Law or Order with
respect to the conduct of the Business or the Business Employees or with respect
to the ownership or operation of the Acquired Assets. To Sellers’
knowledge, no Seller is under investigation with respect to the violation of any
Laws with respect to the Acquired Assets or the Business and, to Sellers’
knowledge, there are no facts or circumstances which could form the basis for
any such violation. No Seller has violated in any material respect
any Law concerning the export or re-export of any Altec Products or the
prohibited boycott of any country as it relates to the Acquired Assets or the
Business.
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5.14 Sufficiency of
Assets. Other than the Excluded Assets, the Acquired Assets
and the Intellectual Property Rights that are the subject of Sellers’ licenses
to Purchaser in Article III constitute all of the assets owned or held for use
by Sellers as of the Closing Date that are necessary to enable Purchaser,
following the Closing, to continue to operate the Business in substantially the
same manner as such Business was conducted by Sellers prior to the Closing Date
taking into account the services to be provided to Purchaser pursuant to the
Transition Services Agreement. Sellers are not entering into the transactions
contemplated hereby with intent to hinder, delay or defraud either present or
future creditors. After the Closing, Sellers will not have
unreasonably small capital for their business and for the debts they are likely
to incur and shall be able to pay their debts and obligations as they become
due. Nothing in this Section 5.14 is intended to constitute a
representation or warranty regarding non-infringement of any third party's
Intellectual Property Rights or otherwise constitute a representation or
warranty with respect to any matters addressed in Section 5.7
hereof.
5.15 Brokers. Except
for any obligation Sellers may have to Houlihan Lokey in connection with the
transactions contemplated under this Agreement, which shall be paid by Sellers,
no Seller or any Affiliates of a Seller have taken action, that would give rise
to any claim by any Person for brokerage commissions, finder’s fees or similar
payments by Purchaser or a Seller relating to this Agreement or the transactions
contemplated hereby.
5.16 Financial
Matters. Section 5.16(a) of the Disclosure Letter sets forth
the net revenue and the operating income from the Business, determined in a
manner consistent with GAAP applied on a consistent basis throughout the periods
involved, including, without limitation, from the sale of the Altec Products,
for the twelve-month period ended March 28, 2009 and for the three-month period
ended June 27, 2009 (collectively, the “Financial
Statements”), which net revenue and operating income (loss) calculations
have been derived in good faith by Sellers from Parent’s condensed consolidated
statement of operations and comprehensive income (loss) for such period which
has been prepared in accordance with GAAP (other than the absence of footnotes
and similar presentations) and such calculations fairly present, in all material
respects, the net revenue and operating income of the Business for the periods
presented. Net revenue and operating income from the Business for
such period, if prepared on a stand-alone basis, would not differ materially and
adversely from such net revenue and operating income set forth in Section 5.16
of the Disclosure Letter. All books, records and accounts of Parent
are accurate and complete and are maintained in all material respects in
accordance with good business practice and all applicable
Laws. Parent maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) require the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Parent, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of Parent are being made only in accordance with appropriate
authorizations of management and the board of directors of Parent and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the assets of
Parent.
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5.17 Related Party
Transactions. No Seller has made any loan to, or entered into
any other transaction outside of a general employment relationship with, any of
the officers and employees of the Business. There is no material
agreement, contract, or transaction between the Business and any other business
or division of any Seller or any Affiliate of any Seller (“Intercompany
Agreements”).
5.18 Customers. Section
5.18 of the Disclosure Letter sets forth the 10 largest customers of the
Business by revenue for the fiscal year ended March 28, 2009 (the “Significant
Customers”). Sellers have not received written notification
that any Significant Customer intends to terminate or materially adversely
change its relationship with Sellers with respect to the Business and, to
Sellers’ knowledge, there is no reason why any Significant Customer would not
continue such business relationship with Purchaser after the
Closing.
5.19 Suppliers. Section
5.19 of the Disclosure Letter sets forth the material suppliers to the Business
for the fiscal year ended March 28, 2009 (the “Significant
Suppliers”). Sellers have not received written notification
that any Significant Supplier intends to terminate or adversely change its
relationship with Sellers with respect to the Business and, to Sellers’
knowledge, there is no reason why any Significant Supplier would not continue
such business relationship with Purchaser after the Closing.
5.20 Environmental
Matters.
(a) The
ownership, use and operation of the Acquired Assets and Business by Sellers, are
and, to Sellers’ knowledge, will be on the Closing Date, in material compliance
with applicable Environmental Laws and there are no outstanding failures to
comply with Environmental Laws with respect to the ownership, use and operation
of the Acquired Assets by prior owners and operators that are reasonably likely
to result in material Environmental Liability to the Sellers, the Business or
Purchaser and its Affiliates after the Closing Date; (b) Sellers have received
all material Environmental Permits required to allow it to own and operate the
Acquired Assets and the Business, such Environmental Permits are valid and in
effect and Sellers are in material compliance with such Environmental Permits;
(c) no Seller has received any written communication relating to any actual or
potential violation of, or potential Environmental Liability under,
Environmental Law relating to the Business or the Acquired Assets; (d) to
Sellers’ knowledge, no Seller has ever disposed of, sent or arranged for the
transportation of Hazardous Materials on or from the Assigned Real Property
Lease, the Milford Property or the Owned Condominium to any other site, which,
pursuant to CERCLA or any similar or analogous state law, has been placed or is
proposed to be placed (by the United States Environmental Protection Agency (the
“EPA”) or
similar state authority) on the “National Priorities List” or any similar state
list, as such lists are in effect as of the Closing Date and no Seller has been
identified by the EPA or any similar state authority as a potentially
responsible party under CERCLA or any similar or analogous state law with
respect to the Business; (e) to Sellers’ knowledge, no Hazardous Material that
was generated at the Assigned Real Property Lease, the Milford Property or the
Owned Condominium or transported to or from the Assigned Real Property Lease,
the Milford Property or the Owned Condominium by or on behalf of any Seller, has
been found at any site (other than the Assigned Real Property Lease, the Milford
Property or the Owned Condominium) with respect to which a Person has conducted
or has ordered that any Seller conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; (f) except as would not
be reasonably likely to result in material Environmental Liability to the
Sellers, the Business or Purchaser or its Affiliates after the Closing Date and
except for Hazardous Materials or products containing Hazardous Materials held
for use in the operation of the Business by Sellers and maintained in accordance
with Environmental Laws, there are no Hazardous Materials, present, used or
stored on, the Assigned Real Property Lease, the Milford Property or the Owned
Condominium; (g) to Sellers’ knowledge, no Release or threatened Release of
Hazardous Materials has occurred or is occurring and no condition exists at, on,
upon, into or from the Assigned Real Property Lease, the Milford Property or the
Owned Condominium for which Environmental Law requires notice to any Person,
further investigation, or any response action; (h) to Sellers’ knowledge, there
have been and are no Releases of Hazardous Materials at, on, upon, into or from
any real property in the immediate vicinity (i.e. contiguous real property) of
the Assigned Real Property Lease, the Milford Property or the Owned Condominium
which could reasonably be expected to come to be located at, on, upon or under
the Assigned Real Property Lease, the Milford Property or the Owned Condominium;
and (i) Sellers have identified and made available to Purchaser all material
environmental investigations, studies, audits, tests or similar environmental
analyses conducted by or for or in the possession of, any Seller in relation to
the Acquired Assets or the Business.
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5.21 Real
Property.
(a) Section
5.21(a) of the Disclosure Letter lists all real property and interests in real
property, including improvements thereon and easements appurtenant thereto,
owned by any Seller that is used primarily in the operation of the Business
(“Owned Real
Property”). There are no pending, or, to the knowledge of
Sellers, threatened condemnation or eminent domain actions or proceedings, or
any special assessments or other activities of any Governmental Entity or other
public or quasi-public body that are reasonably likely to adversely affect the
Owned Real Property. Section 5.21(b) of the Disclosure Letter lists
all real property and interests in real property currently leased, subleased or
licensed by or from any Seller that is used primarily in the operation of the
Business (the “Leased
Real Property”). Sellers have provided or otherwise made
available to Purchaser true, correct and complete copies of all leases, lease
guaranties, subleases, and other Contracts for the leasing, use or occupancy of,
or otherwise granting a right in the Leased Real Property, including all
amendments, terminations and modifications thereof (the “Leases”); and there
are no other Leases for real property affecting the Leased Real
Property. All such Leases are valid and effective in accordance with
their respective terms except as such enforceability may be subject to laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors and rules of law governing specific performance, injunctive relief, or
other equitable remedies. There is not, under any of such Leases, any
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default) by any Seller, nor to the knowledge
of Sellers, by any other party thereto. There are no other parties
occupying, or with a right to occupy, the Leased Real Property other than
Sellers.
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(b) There
does not exist any actual or, to the knowledge of Sellers, threatened or
contemplated condemnation or eminent domain proceedings that affect the Owned
Real Property or the Leased Real Property or any part thereof, and Sellers have
not received any notice, oral or written, of the intention of any Governmental
Entity to take all or any part thereof.
(c) Sellers
have not received any written notice from any insurance company that has issued
a policy with respect to the Owned Real Property or the Leased Real Property
requiring performance of any structural or other material repairs or material
alterations to such property.
5.22
Certain
Payments. Neither any Seller nor, to the knowledge of Sellers,
any director, officer, employee, or other Person associated with or acting on
behalf of any of them, has directly or indirectly, with regards to the Business,
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business for a Seller, (ii) to pay for favorable treatment for business
secured by a Seller, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of a Seller, or (iv) in
violation of any Law, or (b) established or maintained any fund or asset with
respect to a Seller that has not been recorded in the books and records of a
Seller.
5.23 Insurance. Sellers
have insurance policies in full force and effect in connection with the Business
(a) for such amounts as are sufficient for all requirements of Law and all
Contracts to which any Seller is a party or by which it is bound and (b) which
are in such amounts, with such deductibles and against such risks and losses, as
are reasonable for the business, assets and properties of Sellers.
5.24 No Other Representations or
Warranties. Except for the representations and warranties
contained in this Article V, Purchaser acknowledges that no Seller, the
Affiliates of any Seller nor any other Person makes any other express or implied
representation or warranty with respect to the Business, the Acquired Assets,
the Transferred Intellectual Property Rights, the Assumed Liabilities or
otherwise, including, without limitation, as to (a) the physical condition or
usefulness for a particular purpose of the real or tangible personal property
included in the Acquired Assets, (b) the use of the Acquired Assets and Business
Intellectual Property Rights and the operation of the Business by Purchaser
after the Closing in any manner other than as used and operated by Sellers, or
(c) the probable success or profitability of the ownership, use or operation of
the Business by Purchaser after the Closing. Neither Sellers nor any
other Person will have or be subject to any liability or indemnification
obligation to Purchaser or any other Person resulting from the distribution to
Purchaser, or Purchaser’s use of, any such information, including the
confidential memorandum or other material prepared by Houlihan Lokey related to
the Business and any information, document, or material made available to
Purchaser or its counsel in certain “data rooms” (electronic or otherwise) or
management presentations in expectation of the transactions contemplated by this
Agreement.
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ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Sellers, on behalf of itself, Purchaser BV (when
formed) and Purchaser WOFE (when formed) as follows:
6.1 Organization, Standing and
Power.
(a) Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. Purchaser has the
requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Purchaser is duly qualified to do business and is in good standing in the State
of Delaware and each jurisdiction in which the nature of the business conducted
by Purchaser or the ownership or leasing of its properties make such
qualification necessary, other than such failures that individually or in the
aggregate could be reasonably expected to prevent or materially delay or impair
the ability of Purchaser to perform its obligations under this Agreement and the
other Operative Documents.
(b) When
formed, Purchaser BV will be a private limited liability company duly organized,
validly existing and in good standing (to the extent such concept is recognized)
under the laws of the Netherlands and will have all requisite corporate power
and authority necessary to own, lease and operate the properties it will purport
to own, lease or operate and to carry on its business as it is currently
contemplated to be conducted.
(c) When
formed, the Purchaser WOFE will be a wholly owned foreign enterprise duly
organized, validly existing and in good standing (to the extent such concept is
recognized) under the laws of the People’s Republic of China and will have all
requisite corporate power and authority necessary to own, lease and operate the
properties it will purport to own, lease or operate and to carry on its business
as it is currently contemplated to be conducted.
6.2 Authority.
(a) Purchaser
has, and when formed, each of Purchaser BV and Purchaser WOFE will have, all
requisite corporate power and authority to execute and deliver this Agreement
and the other Operative Documents to which such entity is a party and to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Operative Documents, the performance by Purchaser of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser. Each of this Agreement and
the other Operative Documents has been, or will have been at the Closing, duly
executed and delivered by Purchaser, and, if applicable Purchaser BV or
Purchaser WOFE, and constitutes, or will constitute as of the Closing, the valid
and binding obligation of Purchaser, Purchaser BV or Purchaser WOFE, as
applicable, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors.
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(b) The
execution and delivery of this Agreement and the other Operative Documents does
not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any provision of the organizational
documents of, Purchaser or, when formed, Purchaser BV or Purchaser
WOFE.
(c) No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Purchaser
in connection with the execution and delivery of this Agreement and the other
Operative Documents, the performance by Purchaser of its obligations hereunder
and thereunder or the consummation of the transactions contemplated hereby and
thereby, except for such filings as may be required under the antitrust or
competition laws of any foreign jurisdiction, U.S. export control laws and Exon
Florio regulations.
6.3 Financing. Purchaser
has sufficient financial resources so as to enable Purchaser to satisfy its
obligations under this Agreement without recourse to outside
financing.
6.4 Solvency. As
of the Closing Date, Affiliates of Purchaser will have contributed capital of no
less than five million dollars ($5,000,000) to Purchaser and its
Affiliates. Assuming the accuracy of the representations and
warranties contained in Article V, immediately after giving effect to the
transactions contemplated by this Agreement, none of Purchaser or its
Affiliates, taken as a whole, will have unreasonably small capital to carry on
its business as presently conducted or the Business or as presently proposed to
be conducted, including its ability to satisfy its obligations under this
Agreement and the Operative Agreements.
6.5 Breach of Sellers
Representations and Warranties. None of Purchaser nor
Purchaser Representatives have any knowledge of any breach of or inaccuracy in
the representations and warranties made by Sellers in Article V of this
Agreement.
6.6 No Other Representations or
Warranties. Except for the representations and warranties
contained in this Article VI, neither Purchaser nor any other Person makes any
other express or implied representation or warranty on behalf of
Purchaser.
ARTICLE
VII
CONDUCT
PRIOR TO CLOSING
7.1 Conduct of
Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Closing Date, Parent agrees, and Parent shall cause BV to, with respect to the
Business (except to the extent that Purchaser shall otherwise consent in
writing, which consent shall not be unreasonably withheld) (a) carry on the
Business only in the Ordinary Course of Business; (b) continue to pay its debts
and Taxes when due, to pay or perform other obligations when due, (c) use
commercially reasonable efforts to preserve intact the business operations and
goodwill of the Business and all present relationships with Persons that have
existing agreements or business dealings with any Seller with respect to the
Business, (d) maintain (i) all of the Acquired Assets that are tangible assets
in their current condition, ordinary wear and tear excepted, and (ii) insurance
upon all of the Acquired Assets in such amounts and of such kinds comparable to
that in effect on the date of this Agreement; (e) (i) maintain the books,
accounts and records of Sellers in the Ordinary Course of Business, (ii)
continue to collect accounts receivable and pay accounts payable utilizing
normal procedures and without discounting or accelerating payment of such
accounts, and (iii) comply in all material respects with all contractual and
other obligations of Sellers; and (f) comply in all material respects with all
applicable Laws. Without limiting the generality of the foregoing,
except as set forth in Section 7.1 of the Disclosure Letter, Sellers shall not,
without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld:
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(a) enter
into any commitment or transaction or enter into, modify or renew any Contract
related primarily to the operation of the Business which is not in the Ordinary
Course of Business;
(b) (1)
transfer to any third Person ownership of, or otherwise grant licenses to, any
Transferred IPR, other than pursuant to Customer Contracts entered into in the
Ordinary Course of Business or (2) enter into any Inbound IP
Contract;
(c) enter
into any Contracts (1) pursuant to which a third Person is granted exclusive
marketing or exclusive distribution rights with respect to any Altec Products,
(2) which by its terms restrains, restricts, limits or materially impedes the
ability of the Business or the ability of the Purchaser to (x) compete with any
Person or (y) conduct the Business or any line of business in any geographic
region after Closing, (3) which would require the payment of $100,000 or more by
Sellers and cannot be terminated by Purchaser without penalty within thirty (30)
days after Closing, or (4) other than Customer Contracts, which cannot be
assigned to Purchaser;
(d) terminate,
amend, restate, supplement, abandon, waive any rights under or otherwise modify
in any material respect (except in the Ordinary Course of Business in the case
of Customer Contracts), or violate the material terms of any of the Transferred
Contracts or any Permit;
(e) commence
any Litigation related primarily to the Business other than any Litigation to
enforce any Intellectual Property Rights or to collect accounts receivable or
enforce any Customer Contracts that would be Transferred Contracts;
(f)
acquire any material properties or assets that would be Acquired
Assets or sell, assign, lease, transfer, convey, license or otherwise dispose of
any of the Acquired Assets other than (i) sales of Inventory in the Ordinary
Course of Business; (ii) sales of obsolete or worn-out equipment no longer used
in the Business, (iii) non-exclusive licenses in connection with the sales of
Altec Products to Customers in the Ordinary Course of Business, or (iv)
manufacturing or assembly related licenses in the Ordinary Course of
Business;
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(g) grant
any Lien, or permit or suffer to exist any Lien other than a Permitted Lien, in
any of the Acquired Assets or cancel or compromise any material debts or waive
any material claims or rights of Sellers pertaining to the Business of the
Acquired Assets;
(h) fail
to maintain the Acquired Assets in good operating condition (ordinary wear and
tear excepted);
(i)
enter into any Intercompany Agreement;
(j)
fail to maintain Inventory at a level sufficient to serve the
then-current requirements of the Business consistent with the Business’ past
Inventory management practices in the Ordinary Course of Business;
(k) adopt,
amend, modify or terminate any bonus, profit sharing, sales incentive,
incentive, employment, severance, change in control, retirement, welfare or
other plan, contract or commitment for the benefit of any of the Business
Employees, except to the extent it would not result in any liability to
Purchaser or is required by applicable Law;
(l)
increase the base salary or wage rate of any Business Employee
except in the Ordinary Course of Business;
(m) terminate
any Business Employee or hire any employees to work primarily in the Business
except in the Ordinary Course of Business;
(n) (1)
issue, create, incur, assume, guarantee, endorse or otherwise become liable or
responsible with respect to (whether directly, contingently or otherwise) any
indebtedness related to the Acquired Assets or the Business except for any
indebtedness that would not become an obligation of Purchaser or the Business or
create a Lien on the Acquired Assets following the Closing; or (2) modify the
terms of any indebtedness or other Liability related to the Acquired Assets or
the Business;
(o) in
each case to the extent it could bind or adversely affect Purchaser post
Closing, (1) make, change or revoke any Tax election, settle or compromise any
Tax claim or liability or enter into a settlement or compromise, or change (or
make a request to any taxing authority to change) any aspect of its method of
accounting for Tax purposes, or (2) prepare or file any Tax return (or any
amendment thereof) unless such Tax return shall have been prepared in a manner
consistent with past practice and Sellers shall have provided Purchaser a copy
thereof (together with supporting papers) at least three (3) Business Days prior
to the due date thereof for Purchaser to review and approve (such approval not
to be unreasonably withheld or delayed);
(p) enter
into or agree to enter into any merger or consolidation with, any corporation or
other entity, to the extent affecting the Acquired Assets or the
Business;
(q) take
any action which would adversely affect the ability of the parties to consummate
the transactions contemplated by this Agreement; or
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(r)
agree in writing or otherwise to do anything (1) prohibited by this
Section 7.1, (2) which would make any of the representations and warranties of
Sellers in this Agreement or any of the other Operative Documents untrue or
incorrect in any material respect or could result in any of the conditions to
the Closing not being satisfied or (3) that would be reasonably expected to have
a Material Adverse Effect.
7.2 Procedures for Requesting
Consent. If Sellers desire to take an action which would be
prohibited pursuant to Section 7.1 hereof without the written consent of
Purchaser, prior to taking such action Sellers may request such written consent
by sending an e-mail or facsimile to each of the following
individuals:
Ross
Gatlin
Telephone:
(817) 898-1501
Facsimile:
(817) 898-1509
E-mail
address: rgatlin@prophetequity.com
George
Stelling
Telephone:
(817) 898-1502
Facsimile:
(817) 898-1509
E-mail
address: gstelling@prophetequity.com
Pelham
Smith
Telephone:
(817) 898-1508
Facsimile:
(817) 898-1509
E-mail
address: psmith@prophetequity.com
Any of
the parties set forth above may grant consent on behalf of Purchaser to the
taking of any action which would otherwise be prohibited pursuant to Section 7.1
by e-mail or such other notice that complies with the provisions of Section
12.1.
ARTICLE
VIII
ADDITIONAL
AGREEMENTS
8.1 Access to
Information.
(a) Subject
to Purchaser’s obligations set forth in Section 8.2, and subject to any
applicable law that restricts Sellers from disclosing information related to the
Business Employees, as reasonably determined by Sellers, and any contractual
obligations that restrict disclosure of third-party contracts, Sellers shall
afford Purchaser and the Purchaser Representatives, reasonable access to the
Business Employees, properties, facilities (including all owned and
leased real property and the buildings, structures, fixtures, appurtenances, and
improvements erected, attached or located thereon), books, contracts,
commitments, records and information, including existing internal financial
statements, business plans and projections, to the extent relating to the
Business, during normal business hours upon reasonable notice during the period
prior to the Closing Date or termination of this Agreement pursuant to its
terms. Sellers agree to provide to Purchaser and the Purchaser Representatives
copies of all information reasonably requested by Purchaser, including, without
limitation, existing internal financial statements, business plans and
projections, to the extent relating to the Business upon
request. Prior to the Closing, Sellers shall use commercially
reasonable efforts to keep Purchaser generally informed as to all material
matters involving the operations of the Business.
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(b) No
information or knowledge obtained by the officers, employees and authorized
agents and representatives of Purchaser (including counsel and accountants
pursuant to this Section 8.1 will affect or be deemed to modify any
representation or warranty made by Sellers herein.
8.2 Confidentiality. Each
of the parties hereto hereby agrees to keep such information or knowledge
obtained in any investigation pursuant to Section 8.1, or pursuant to the
negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby confidential in accordance with the terms and
conditions contained in the NDA. If this Agreement is, for any
reason, terminated prior to the Closing, the NDA shall continue in full force
and effect in accordance with its terms. Sellers will treat and hold
confidential any information concerning the businesses and affairs of the
Business that is not now or subsequently (other than by virtue of Sellers’
violation of this Section 8.2) generally available to the public (the “Confidential
Information”) for a period of five (5) years after the Closing
Date. Except as set forth in Section 8.17, nothing set forth herein
or in the NDA shall restrict or limit Sellers’ use of any Confidential
Information known to or retained by Sellers following the Closing, including
Confidential Information embodied by the Acquired Assets, in any manner and for
any purpose; provided that Sellers shall treat any Confidential Information
constituting Transferred Technology in the same manner that Sellers treat their
own similar confidential information.
8.3 Expenses. All
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including without limitation any brokerage or
finder’s fees, expenses, and/or commissions or investment banking fees and
expenses or other such similar fees, and expenses, and any legal, audit, and
investor relations fees and expenses) shall be paid by the party incurring such
fees and expenses, whether or not the Acquisition is consummated.
8.4 Public
Disclosure. Sellers and Purchaser, and each of their
designated employees and representatives, shall consult with each other before
issuing any press releases or otherwise making any public statement relating to
the Acquisition and this Agreement and will not issue any such press release or
make such statement prior to receiving consent of the other party (such consent
not to be unreasonably withheld) prior to its release unless, in the sole
judgment of Purchaser or Parent, as applicable, disclosure is otherwise required
by applicable Law or the applicable rules of any stock exchange on which
Parent’s securities are listed, including any applicable listing agreement;
provided, that to the extent required by applicable Law, the party intending to
make such release or statement shall use its commercially reasonable efforts
consistent with such applicable Law or the applicable rules of any stock
exchange on which Parent’s securities are listed, including any applicable
listing agreement to consult with the other party with respect to the timing and
content thereof. Each of Purchaser and Sellers agrees that the terms
of this Agreement shall not be disclosed or otherwise made available to the
public and that copies of this Agreement shall not be publicly filed or
otherwise made available to the public, except where such disclosure,
availability or filing is required by applicable Law or the applicable rules of
any stock exchange on which Parent’s securities are listed, including any
applicable agreement and only to the extent required by such Law or any listing
agreement with a national securities exchange.
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8.5 Altec Customer and Channel
Partner Communication. Sellers and Purchaser and their
respective representatives shall cooperate in communicating to the Altec
customers and employees relevant details of the transaction and plans for the
Altec Products to the extent allowable by law.
8.6 Reasonable
Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use its reasonable efforts to take
promptly, or cause to be taken, all reasonable actions, and to do promptly, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to provide all notices to, and obtain all
necessary waivers, consents, approvals, Orders, Permits, authorizations,
declarations and notices, including without limitation, those set forth in
Section 8.6 of the Disclosure Letter under applicable Law and to effect all
necessary registrations and filings under applicable Law and to remove any legal
injunctions, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement. Notwithstanding anything to the
contrary in this Agreement, neither Purchaser nor any of its Affiliates shall be
required to expend, in the aggregate, significant personnel resources or any
out-of-pocket payments to third parties to obtain any consent, waiver or
approval.
8.7 Notification of Certain
Matters. Sellers shall give notice to Purchaser, and Purchaser
shall give notice to Sellers, as promptly as reasonably practicable upon
becoming aware of any of the following:
(a) any
fact, change, condition, circumstance or the occurrence or non-occurrence of any
event, that has caused or may reasonably be expected to cause any representation
or warranty of such party or its Affiliates in this Agreement to be untrue or
inaccurate at the Closing Date in any material respect;
(b) any
failure of such party or its Affiliates to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder;
(c) change
or event, or series of changes or events having or reasonably expected to have a
Material Adverse Effect on it or that would be reasonably be expected to cause
any of the conditions in Article IX not to be satisfied or to cause the
satisfaction thereof to be materially delayed;
(d) the
receipt of any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
and
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(e) any
Litigation commenced or, to the knowledge of Purchaser or to the knowledge of
Sellers, threatened against Purchaser or Sellers that seeks to prohibit or
prevent consummation of the transactions contemplated by this
Agreement;
provided, however, that the
delivery of any notice pursuant to this Section 8.7 shall not limit or otherwise
affect any remedies available to the party receiving such notice and neither the
notice nor the event or occurrence giving rise to the notice shall affect or
modify any representation or warranty set forth in this Agreement or any other
Operative Document, or the conditions to the Acquisition set forth in Article
IX. Each of the parties to this Agreement shall use all commercially
reasonable efforts to effectuate the transactions contemplated hereby and to
fulfill or cause to be fulfilled the conditions to closing under this
Agreement. Each party hereto, at the reasonable request of another
party hereto, shall execute and deliver such other instruments and do and
perform such other acts and things as may be reasonably necessary or desirable
for effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
8.8 Employee
Matters.
(a) Employment
Offers. Except as otherwise provided by Section 8.8(b), each
of the Business Employees shall be offered employment by Purchaser within ten
(10) Business Days after the date of this Agreement, to be effective as of the
Closing (or, if the Business Employee is on a medical leave of absence and is
receiving benefits under Sellers’ short or long-term disability plans and
Purchaser would not be able to provide similar disability benefits to such
Business Employee during the leave of absence, effective from and after the date
such Business Employee returns to active employment) (the “Employment Offer”),
which offers may be conditioned upon the occurrence of the Closing. Business
Employees who accept Employment Offers and actually (i) commence employment with
Purchaser on the Closing Date, or (ii) on the Closing Date are on a leave
previously approved by a Seller or authorized by applicable law (the “Transitioning
Employees”) shall become employees of Purchaser effective on the Closing
Date (or, with respect to any Business Employees on a leave of absence, on the
date such Business Employee returns to active employment) and their employment
with a Seller or any Subsidiaries shall cease on the same date. Except as
otherwise provide by Section 8.8(b), each offer of employment shall provide for
the Business Employee (to the extent such Business Employee becomes a
Transitioning Employee), to receive compensation and employee benefits that are
in the aggregate at least substantially comparable to the compensation and
employee benefits provided to similarly situated employees in the same industry
and geographic region as the Business or that are substantially equivalent, in
the aggregate, to the compensation and employee benefits provided to similarly
situated employees of Purchaser and its Affiliates. Sellers agree to
cooperate in good faith with Purchaser to achieve the acceptance of all of the
Employment Offers. Sellers agree to promptly notify Purchaser in the
event that, prior to the Closing Date, any Business Employee who received an
Employment Offer (i) ceases for any reason to be employed by a Seller or any of
their respective Subsidiaries, or (ii) notifies a Seller of his or her intention
to terminate employment with a Seller or any of their respective Subsidiaries or
to reject an Employment Offer.
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(b) International Business
Employees. The parties acknowledge and agree that (i) the
transactions contemplated by this Agreement may constitute a relevant transfer
of employment from a Seller or its Subsidiaries to Purchaser for the purposes of
the Transfer Regulations, (ii) the transactions contemplated by this Agreement
may not operate so as to terminate any of the contracts of employment of any
International Business Employee, and (iii) the employment agreements of the
International Business Employees that are subject to automatic transfer pursuant
to the Transfer Regulations may be transferred to Purchaser with effect from the
Closing Date. In the case of International Business Employees, each
offer of employment shall provide for the International Business Employee (to
the extent such International Business Employee becomes a Transitioning
Employee), to receive compensation and employee benefits that are in the
aggregate at least substantially comparable to the compensation and employee
benefits provided to the Transitioning Employees immediately prior to the
Closing and that are compliant with the Transfer Regulations. In addition,
Purchaser agrees that with respect to employees in China it will recognize the
seniority of each International Business Employee (to the extent such
International Business Employee becomes a Transitioning Employee).
(c) Cooperation with Respect to
Transitioning Employees. Sellers shall reasonably assist
Purchaser in communicating with each of the Business
Employees. Representatives of Sellers shall inform the Business
Employees of the Acquisition prior to the Closing Date, except as otherwise
required by the Transfer Regulations. Purchaser shall cooperate with
Sellers with respect to any communications required by the Transfer Regulations,
including, but not limited to, communications to any International Business
Employees, employee representatives, works councils or Governmental Entities,
and shall provide any information that Sellers may reasonably request in writing
in order to comply with the Transfer Regulations. Effective as of the
Closing, Sellers shall waive any covenants not to compete, confidentiality
provisions or other similar restrictions that may be applicable to Business
Employees but only to the extent such covenants, provisions or restrictions
relate to the Business and would prohibit the Business Employees from accepting
employment with Purchaser thereof or continuing in such employment without
violating any such covenants, provisions or restrictions.
(d) Tax
Reporting. Sellers and Purchaser
agree that, pursuant to the “Alternative Procedures” provided in Section 5 of
Revenue Procedure 2004-53, with respect to the filing and furnishing of Internal
Revenue Service Forms W-2, W-3 and 941 for the full calendar year in which the
Closing occurs, (i) Sellers and the Purchaser shall report on a
“predecessor-successor” basis, as set forth therein, (ii) Sellers shall be
relieved from furnishing Forms W-2 to any Transitioning Employees, and (iii)
Purchaser shall assume the obligations of Sellers to furnish Forms W-2 to such
Transitioning Employees and Forms W-2 and W-3 with respect to Transitioning
Employees to the Social Security Administration; provided, Sellers shall
transfer to Purchaser all Forms W-4 and W-5 with respect to the Transitioning
Employees, and such other data relating to Transitioning Employees as shall be
necessary for Purchaser to assume and satisfy such obligations
accurately and in accordance with the law.
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(e) Benefits.
(i) Sellers
will pay in full all wages, salaries, commissions, bonuses, or other
compensation (not including severance or termination pay) for all services
performed by Transitioning Employees from the date of this Agreement through the
Closing Date, including, without limitation, the payment of any accrued vacation
or paid time-off for such Transitioning Employees as a result of such
Transitioning Employees' separation from employment with a Seller or a
Subsidiary effective at Closing.
(ii) Effective
as of the Closing Date, Transitioning Employees shall cease all active
participation in the Business Employee Benefit Plans. As of the
Closing Date, the Transitioning Employees shall be eligible to participate in
Purchaser’s benefit programs on the same basis as similarly situated employees
of Purchaser. Following the Closing, Purchaser will give each
Transitioning Employee credit for prior service with Sellers or a Subsidiary for
purposes of (1) eligibility and vesting (but not benefit accrual) under any
applicable employee benefit plans of Purchaser in which such Transitioning
Employee becomes eligible to participate at or following the Closing, provided that if
Sellers maintain a comparable Business Employee Benefit Plan, service shall be
credited solely to the extent that such service was or would have been credited
for such purposes under such comparable plan, (2) determination of benefits
levels under any vacation policy in which such Transitioning Employee becomes
eligible to participate at or following the Closing, and (3) such other purposes
as may be required by applicable laws. Purchaser shall give credit under those
applicable employee benefit plans of Purchaser that are group health plans and
in which Transitioning Employees become eligible to participate at or following
the Closing, for all co-payments made, amounts credited toward deductibles and
out-of-pocket maximums to the extent made, credited or incurred during the
calendar year in which the Closing occurs, and with respect to all welfare
benefit plans maintained by Purchaser in which Transitioning Employees may
become eligible, time accrued against applicable waiting periods by
Transitioning Employees (including their eligible dependents).
(iii) Claims
of Business Employees and their eligible beneficiaries and dependents for
medical, dental, prescription drug, life insurance, and/or other welfare
benefits (“Welfare
Benefits”) incurred before the Closing shall be the sole responsibility
of Sellers and the Business Employee Benefit Plans. Claims of
Transitioning Employees and their eligible beneficiaries and dependents for
Welfare Benefits that are incurred from and after the Closing (or, if the
Transitioning Employee is on a medical leave of absence and is receiving
benefits under Sellers’ short or long-term disability plans and Purchaser would
not be able to provide similar disability benefits to such Transitioning
Employee during the leave of absence, effective from and after the date such
Transitioning Employee returns to active employment) shall be based on terms of
Purchaser’s plans that provide for Welfare Benefits and shall be the sole
responsibility of Purchaser. For purposes of this paragraph, a
medical/dental claim shall be considered incurred on the date when the
medical/dental services are rendered or medical/dental supplies are provided,
and not when the condition arose or when the course of treatment
began.
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(iv) For
the remainder of the calendar year in which the Closing occurs, Purchaser shall
take all actions reasonably necessary and legally permissible to maintain or
cause to be maintained health care and dependent care flexible spending accounts
established under Section 125 of the Code (“Purchaser FSA”) under which the
Transitioning Employees may contribute pre-tax dollars and be reimbursed for
qualifying health and dependent care expenses. Subject to Sellers’
obligations under this Section 8.8(e)(iv), Purchaser shall further take all
actions necessary and legally permissible to amend the Purchaser FSA to provide
that (1) the Transitioning Employees shall be credited immediately following the
Closing Date under the Purchaser FSA with the amounts available for
reimbursement equal to such positive or negative amounts as were credited under
the applicable Seller’s health care and dependent care flexible spending
accounts (“Seller FSA”) with respect to such Persons immediately before the
Closing Date; (2) Purchaser shall honor and give effect under the Purchaser FSA
to any elections made by Transitioning Employees under the Seller FSA for the
calendar year in which the Closing occurs, except as such elections may be
superseded by an election made by a Transitioning Employee following the Closing
Date pursuant to the terms of the Purchasers FSA; and (3) the Purchaser FSA
shall reimburse medical expenses incurred by the Transitioning Employees at any
time during the Seller FSA’s plan year (including claims incurred prior to the
Closing Date but unpaid as of the Closing Date), up to the amount of the
Transitioning Employee’s election and reduced by amounts previously reimbursed
by Sellers. In addition, Sellers shall take all actions necessary and
legally permissible to amend the Seller FSA to provide that the Transitioning
Employees shall cease to be eligible for reimbursement from the Seller FSA as of
the Closing Date, except to the extent that any Transitioning Employee elects
continuation of coverage under the Seller FSA as permitted by Section 4980B of
the Code and Section 601 et seq. of ERISA. Within ten (10) Business
Days following the Closing, Sellers shall provide Purchaser with a list of each
Transitioning Employee who as of the Closing Date is a participant in the Seller
FSA, which list shall include an accounting with respect to each listed
individual as follows: the total annual goal amount elected, the amount
contributed as of the Closing Date and the amount reimbursed as of the Closing
Date. As soon as practicable following the Closing Date, Sellers
shall pay to Purchaser the net balance of the total Transitioning Employee
contributions minus the total Transitioning Employee reimbursements if the
balance is a positive number, and Purchaser shall pay such amount to Sellers if
the balance is a negative number.
(v) Claims
for workers’ compensation benefits arising out of occurrences prior to the
Closing Date shall be the responsibility of Sellers. Claims for
workers’ compensation benefits for Transitioning Employees arising out of
occurrences on or after the Closing Date shall be the responsibility of
Purchaser.
(vi) COBRA
Responsibility. Sellers shall provide continuation health care
coverage as required under COBRA to all individuals who are M&A qualified
beneficiaries (within the meaning assigned to such term under Q&A-4 of
Treasury regulation Section 54.4980B-9) with respect to the sale of the Acquired
Assets for the duration of the period to which such individuals are entitled to
such coverage. Provided, however, that beginning as of the Closing,
the Purchaser shall be responsible for providing the notices and making
available the health care continuation coverage, all as required by law under
the COBRA Continuation Coverage regulations, for all of (i) the Transitioning
Employees and former Transitioning Employees and their respective covered
dependents, whose qualifying events (as defined in Code Section 4980B) occur on
or after the Closing.
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(vii) No Third-Party
Beneficiaries. Notwithstanding anything to the contrary in
this Section 8.8, the parties expressly acknowledge and agree that: (i) this
Agreement is not intended to create a contract between Purchaser or any of its
Affiliates, on the one hand, and any Business Employee, on the other hand, and
no Business Employee may rely on this Agreement as the basis for any breach of
contract claim against Purchaser or any of its Affiliates or Subsidiaries; (ii)
nothing in this Agreement shall be deemed or construed to require Purchaser or
any of its Affiliates to continue to employ any particular Business Employee for
any period after Closing; (iii) nothing in this Agreement shall be construed to
create a right in any Business Employee to employment with Purchaser or any
Affiliate of Purchaser; (iv) nothing in this Agreement shall be deemed or
construed to limit the right of Purchaser or any of its Affiliates to terminate
the employment of any Transitioning Employee during any period after Closing;
and (v) nothing in this Agreement shall modify or amend any plan of Purchaser or
any of Purchaser’s Affiliates or other agreement, plan, program, or
document.
8.9 Post-Closing
Assurances. After the Closing, each party agrees to execute
and deliver such other instruments and do and perform such other acts and things
as may be reasonably necessary or desirable for effecting completely the
transactions contemplated hereby. In the event and for so long as any
party hereto is actively contesting or defending against any Litigation in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business, each of the other parties will reasonably cooperate with such
party and such party’s counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification therefor under
Article X).
8.10 Prohibition on Solicitation
of Other Acquisition Offers. Sellers shall not directly or
indirectly through any of their Affiliates, officers, directors, employees,
financial advisors, legal counsels, representatives or agents (collectively, the
“Seller Representatives”), and shall instruct the Seller Representatives not to,
(i) solicit, initiate, undertake, authorize, recommend, propose or encourage any
inquiries or proposals that constitute or could reasonably be expected to lead
to, a proposal or offer for the sale, assignment, transfer or conveyance of the
Business or a material amount of the Acquired Assets other than the Acquisition
contemplated by this Agreement (an “Acquisition
Proposal”) or any sale of any Seller, or (ii) facilitate, encourage,
solicit, initiate or engage in negotiations or discussions concerning any
Acquisition Proposal, (iii) furnish or cause to be furnished, to any Person, any
non-public information in connection with an Acquisition Proposal, or (iv)
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. Sellers shall notify Purchaser orally immediately and in
writing promptly upon receipt by any Seller or any Seller Representative, and
immediately communicate to Purchaser the terms of, any Acquisition Proposal or
any request for non-public information in connection with an Acquisition
Proposal and keep Purchaser informed, on a current basis, of the status of any
such discussions. Such written notice shall indicate the identity of the Person
making the Acquisition Proposal and the material terms of such Acquisition
Proposal. Without limiting the foregoing, immediately after the
execution and delivery of this Agreement, Sellers will, and will cause its
Affiliates, and the Seller Representatives to, cease and terminate any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any possible Acquisition Proposal. Sellers agree not
to release any third party from the confidentiality and standstill provisions of
any agreement to which any Seller is a party.
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8.11 Purchaser’s
Non-Competition
Covenant.
(a) Purchaser
agrees that for a period of ten (10) years from the Closing Date, neither
Purchaser nor any of its Affiliates shall, without the express written approval
of Parent, engage in or otherwise have a material direct or indirect interest in
any Seller Competing Business. For purposes of this Section 8.11, a
business shall be deemed to be a “Seller Competing
Business” if it is primarily engaged in developing, manufacturing, or
selling communications headsets, including any products that have a microphone
for communication use, provided, however, that Purchaser may engage in the
business of manufacturing and selling corded music-first stereo headphones with
a mic (also known as headsets) not intended for use with a personal computer if
Purchaser obtains the prior written consent of Parent, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, neither Purchaser nor
any Affiliate of a Purchaser shall be precluded from (1) having a passive
investment representing less than 2% of the voting power in an election of
directors or similar managers of any entity that is engaged in a Seller
Competing Business, (2) acquiring, merging with or acquiring by means of any
other business combination (including an asset purchase agreement) an entity the
primary business of which is not a Seller Competing Business, or (3) subject to
Section 8.11(b) below, being acquired by means of any business combination
(including an asset purchase agreement) by any Person.
(b) Notwithstanding
anything to the contrary contained herein, for a period of five (5) years after
the Closing Date, Purchaser shall not (i) sell or transfer the Business or (ii)
sell, transfer or license any Acquired Assets, to any Restricted
Party.
8.12 Non-Solicitation.
(a) Sellers
agree that for a period of two (2) years from and after the Closing Date they
shall not, and they shall cause each of their respective Affiliates not to,
without the prior written consent of Purchaser, directly or indirectly, solicit
to hire (or cause or seek to cause to leave the employ of Purchaser or any of
its Subsidiaries) (i) any Transitioning Employee or (ii) any Person employed by
Purchaser who became known to or who was identified to Sellers in connection
with the transactions contemplated by this Agreement, unless, in the case of
clause (i) or (ii) above, such Person ceased to be an employee of Purchaser
prior to such action by any Seller or any of its Affiliates, or, in the case of
such Person’s voluntary termination of employment with Purchaser or any
Subsidiary of Purchaser, at least three (3) months prior to such action by any
Seller or any of its Affiliates, provided, that, the foregoing shall not apply
to directors of the Sellers other than in their capacity as such.
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(b) Purchaser
agrees that for a period of two (2) years from and after the Closing Date it
shall not, and it shall cause its Affiliates not to, without the prior written
consent of Parent, directly or indirectly, solicit to hire (or cause or seek to
cause to leave the employ of any Seller or any Subsidiary) (i) any Person
employed by a Seller or any Subsidiary immediately following the Closing or (ii)
any Person employed by a Seller and any Subsidiary who became known to or who
was identified to Purchaser in connection with the transactions contemplated by
this Agreement (including any Person involved in the provision of services, with
respect to whom the restriction set forth in this Section 8.12(b) shall apply
for a period of three (3) months following the Closing), unless, in the case of
clause (i) or (ii) above, such Person ceased to be an employee of a Seller or
any Subsidiary prior to such action by Purchaser or any of its Affiliates, or,
in the case of such Person’s voluntary termination of employment with a Seller
or any Subsidiary, at least three (3) months prior to such action by Purchaser
or any of its Affiliates.
(c) Notwithstanding
the foregoing, the restrictions set forth in Sections 8.12(a) and 8.12(b) shall
not apply to (i) bona fide public advertisements for employment placed by any
party and not specifically targeted at the employees of any other party or (ii)
an employee’s contact of any party on his or her own initiative without any
direct or indirect solicitation by or encouragement from such
party.
8.13 Tax
Matters.
(a) Tax Return Filing; Audit
Responsibilities; Cooperation.
(i) Except
as set forth in Section 8.13(a)(ii) below, Purchaser shall control and be
responsible for the filing of all Tax Returns required to be filed with respect
to the use or ownership of the Acquired Assets after the Closing
Date. All such Tax Returns shall be completed in accordance with best
practice and applicable law. Purchaser shall make all payments
required with respect to any such Tax Return.
(ii) Sellers
shall control and be responsible for the preparation and filing of all Tax
Returns required to be filed with respect to the use or ownership of the
Acquired Assets after the Closing Date that are either (x) Tax Returns involving
a combined, consolidated, unitary or similar group that includes Sellers or any
Affiliate thereof, or (y) do not relate to the use or ownership of the Acquired
Assets during any Post-Closing Period. All such Tax Returns shall be
completed in accordance with applicable law. Sellers shall make all
payments required with respect to any such Tax Return.
(iii) In
the event that Sellers or the Purchaser is liable under this Agreement for any
Taxes paid by the other party with respect to any Tax Return, prompt
reimbursement shall be made to such other party.
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(iv) Any
net refunds and credits attributable to the payment of Pre-Closing Period Taxes
shall be for the account of Sellers. Any net refunds and credits
attributable to the payment of Post-Closing Period Taxes shall be for the
account of Purchaser.
(b) Cooperation. To
the extent relevant to the Acquired Assets, each party shall (i) provide the
other with such assistance as may reasonably be required in connection with the
preparation of any Tax Return and the conduct of any audit or other examination
by any taxing authority or in connection with judicial or administrative
proceedings relating to any liability for Taxes and (ii) retain and provide the
other with all records or other information that may be relevant to the
preparation of any Tax Return, or the conduct of any audit or examination, or
other proceeding relating to Taxes for so long as the applicable statute of
limitations has not expired.
8.14 Further
Agreements. Prior or simultaneous with the Closing, Parent and
Purchaser will enter into one or more agreements with respect to the following
reasonably acceptable to Sellers:
(a) Supply and Reseller
Agreement. An agreement under which Purchaser will (i) supply
to Parent the Altec Products set forth on Schedule 8.14(a)(i) (the “Wireless Carrier
Products”) and Schedule 8.14(a)(ii) (the “B2B Products”) on
reasonable terms and conditions and most favored nation pricing, (ii) not cease
to manufacture and supply such products to Parent without giving Parent at least
six (6) months prior written notice, the right to make a life-time purchase and
the right to continue to directly purchase such products from Purchaser’s
suppliers of such products, (iii) grant Parent the exclusive right to resell the
Wireless Carrier Products to any wireless carrier in the United States (“U.S. Wireless
Carriers”) until June 30, 2010, or such later date as the parties may
agree and (iv) grant Parent the exclusive right to resell the B2B Products to
commercial distributors.
(b) EOL
Products. In the event that Purchaser determines that it will
no longer produce, market, sell or manufacture (or have manufactured) an Altec
Product listed on Schedule 8.14(b) (the “EOL Products”),
Purchaser shall notify Parent no less than six (6) months prior to Purchaser
ceasing to produce or manufacture such EOL Product. Such notice shall
identify the EOL Product and the date that Purchaser intends to cease production
of such EOL Product. Upon receipt of such notice, Parent will have
the right to make a life-time purchase and the right to continue to directly
purchase such EOL Products from Purchaser’s suppliers of such EOL
Products.
8.15 Preservation of
Records. Sellers and Purchaser agree that each of them shall
preserve and keep the records held by them or their Affiliates relating to the
Business for a period of seven years from the Closing Date and shall make such
records and personnel available to the other as may be reasonably required by
such party in connection with, among other things, any insurance claims by,
Litigation against or governmental investigations of Sellers or Purchaser or any
of their Affiliates or in order to enable Sellers or Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby. In the event
Sellers or Purchaser wishes to destroy (or permit to be destroyed) such records
after that time, such party shall first give ninety (90) days prior written
notice to the other and such other party shall have the right at its option and
expense, upon prior written notice given to such party within that ninety-day
period, to take possession of the records within 180 days after the date of such
notice.
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8.16 Use of
Name. Sellers hereby agree that upon the Closing, Purchaser is
acquiring, and shall have the sole right to the use of, the name “Altec Lansing”
or similar names, and any service marks, trademarks, trade names, d/b/a names,
fictitious names, identifying symbols, logos, emblems, signs or insignia related
thereto or containing or comprising the foregoing, or otherwise used in the
Business, including any name or mark confusingly similar thereto (collectively,
the “Altec
Marks”). Except in accordance with Article III of this
Agreement or in the course of selling the Retained Inventory, Sellers shall not,
and shall not permit any Affiliate to, use such name or any variation or
simulation thereof or any of the Altec Marks.
8.17 Sellers’ Non-Competition
Covenant. Sellers agree that for a period of two (2) years
from the Closing Date, neither Sellers nor any of their Affiliates shall,
without the express written approval of Purchaser, develop, manufacture, sell or
otherwise have a material direct or indirect interest in a business that
develops, manufactures or sells any Purchaser Competing Products. For
purposes of this Section 8.17, a product shall be deemed to be a “Purchaser Competing
Product” if it is (a) a speaker (including, without limitation, a speaker
used with a computer, MP3 player, iPod, music –enabled mobile phone/smartphone
or in other home audio, wireless or networked audio or Pro Audio application)
provided, however, that Sellers may develop, manufacture or sell a speaker that
includes a microphone and is primarily designed for voice or voice and video
communications; and (b) stereo headphones of any kind, except those that
incorporate a microphone for voice communications (also referred to as stereo
headsets). Notwithstanding the foregoing, neither Sellers nor any
Subsidiary of Sellers shall be precluded from (1) having a passive investment
representing less than 2% of the voting power in an election of directors or
similar managers of any entity that is engaged in the development, manufacture
or sale of a Purchaser Competing Product, (2) acquiring, merging with or
acquiring by means of any other business combination (including an asset
purchase agreement) an entity the primary business of which is not engaged in
the development, manufacture or sale of a Purchaser Competing Product,
(3) being acquired by means of any business combination (including an
asset purchase agreement) by any Person that is engaged in the development,
manufacture or sale of a Purchaser Competing product, or (4) selling the
Retained Altec Inventory.
8.18 Oracle Clone
Implementation.
(a) Prior
to the Closing, Sellers shall have completed the creation and configuration of,
a duplicate instance of Sellers’ Oracle (as defined below) operating system as
it exists as of the date of this Agreement, including, at the sole cost of
Purchaser, any server hardware associated with the operation and the back up of
the new operating system (the “Oracle
Clone”). Sellers shall provide Purchaser and Purchaser’s
Representatives with: (i) copies of all documentation, data and other materials
(including but not limited to user requirements, technical specifications,
testing and system design methodologies, test cases, test data, test results,
process flows, and issue logs) related to the implementation of the Oracle Clone
(collectively, the “Oracle Clone Implementation
Tools”), (ii) access to the Oracle Clone in accordance with the Sellers’
change management process, including but not limited to access to all system
software and hardware, associated data warehousing systems, related reports, and
EDI feeds used in connection with operation of the Business. Upon
receiving the Oracle Clone Implementation Tools and the required access to the
Oracle Clone, Purchaser will perform due diligence and testing (the “Oracle Clone
Testing”) with respect to the Oracle Clone which is pursuant to a testing
plan (the “Clone
Testing Plan”) that is (x) mutually agreed upon by Purchaser and Sellers
and (y) reasonably necessary to verify the suitablity for the Oracle Clone for
operation of such Oracle Clone in connection of the
Business. Purchaser covenants to perform the Oracle Clone Testing
pursuant to the Clone Testing Plan as efficiently as reasonably
practicable.
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(b) Purchaser
shall provide new test cases and one or more suggested Oracle General
Ledger/Data Warehouse/Report mapping structures to Sellers pursuant to the Clone
Testing Plan and Sellers will provide support to the Purchaser in accordance
with the Transition Services Agreement. Sellers shall allow
Purchaser’s Representatives to undertake mapping design and implementation of
the Oracle Clone directly under supervision of Parent’s Chief Information
Officer (CIO) and Purchaser, at the sole expense of Purchaser.
(c) If the
results of the Oracle Clone Testing do not substantially comply with the Clone
Testing Plan in the reasonable judgment of Purchaser, Purchaser shall notify
Sellers in writing within one (1) Business Day of such discovery and shall
specifically identify the items (the “Identified Oracle
Items”) that do not comply with the Clone Testing
Plan. Sellers and Purchaser or Purchaser’s Representatives will use
commercially reasonable efforts to resolve the Identified Oracle Items to the
reasonable satisfaction of Purchaser within seven (7) Business Days of the
receipt of any such notice. Purchaser’s Representatives shall provide all
reasonable and necessary assistance to Sellers with regard to the resolution of
any such Identified Oracle Items. Purchaser acknowledges and agrees
that Sellers’ ability to resolve the Identified Oracle Items may be adversely
affected by Oracle response times and the performance of the Oracle
software.
8.19 Oracle Software
License.
(a) Prior
to the Closing, Sellers shall have secured the consent of Oracle Corporation
(“Oracle”) to
the assignment to Purchaser of a license from Oracle for Purchaser’s use of the
Oracle Clone (the “Purchaser Oracle Software
License”) which Purchaser Oracle Software License shall contain the terms
set forth on Schedule 8.19 hereto.
(b) With
respect to the Purchaser Oracle Software License and completion and installation
of the Oracle Clone, Purchaser shall be solely responsible for all purchase,
maintenance, support and licensing costs payable to Oracle in respect of the
Oracle Clone or otherwise, including, without limitation, any and all licensing
fees and expenses with respect to the WebLogic database and application server.
Purchaser recognizes and agrees that it must obtain all required licenses
necessary to install, access, modify and run the Oracle Clone on or before the
Closing Date. No later than June 30, 2010, Sellers shall transfer to Purchaser
all right and title to, and sole possession of, the Oracle Clone in its entirety
and shall provide such resources contemplated by the Transition Services
Agreement in respect of such transfer, and Purchaser shall pay all fees,
expenses and costs associated with such resources pursuant to the Transition
Services Agreement. Purchaser agrees to pay for any costs related to
the migration of software and hardware to new location designated by
Purchaser.
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8.20 Asset Purchase Agreement for
Transfer for China Assets and Second Closing Escrow Amount.
(a) On
the Closing Date, Purchaser shall deposit with the Escrow Agent, in immediately
available funds, to the account designated by the Escrow Agent, an amount of
cash equal to the Second Closing Escrow Amount to be held by the Escrow Agent in
accordance with the terms of an escrow agreement (the “China Assets Escrow
Agreement”), which will be executed at the Closing, by and among Trading,
Purchaser and/or Purchaser WOFE and the Escrow Agent.
(b) Parent
covenants and agrees to cause Trading to, enter into an asset purchase agreement
(the “China
Agreement”) in form and substance customary in the People’s Republic of
China and reasonably acceptable to Purchaser and Sellers, with a wholly-owned
foreign entity to be formed by Purchaser under the laws of the People’s Republic
of China ( “Purchaser
WOFE”), for the transfer of the assets set forth in Section 15 of the
Asset Schedule (the “China Assets”),
within ten (10) Business Days after Purchaser notifies Sellers that Purchaser
WOFE has been formed. Immediately prior to the closing of the
purchase and sale of the China Assets pursuant to the China Agreement, the
Second Closing Escrow Amount (plus any interest paid on such Second Closing
Escrow Amount in accordance with the China Assets Escrow Agreement) shall be
released to Purchaser WOFE and Purchaser WOFE shall, as soon as practicable
thereafter, pay to Trading the purchase price for the China Assets as set forth
in the China Agreement.
8.21 Purchaser BV and Purchaser
WOFE.
(a) Purchaser
and its Affiliates shall take all action necessary to form Purchaser BV under
the laws of the Netherlands and to form Purchaser WOFE under the laws of the
People’s Republic of China as soon as reasonably practicable after the date
hereof. As soon as practicable after Purchaser BV is formed, Purchaser BV shall
become a party to this Agreement.
(b) Purchaser
and its Affiliates shall take all action necessary to cause Purchaser BV and
Purchaser WOFE perform their respective obligations under this Agreement and to
consummate the transactions contemplated hereby upon the terms and subject to
the conditions set forth in this Agreement and, in the case of the China WOFE,
the China Agreement.
8.22 Post-Closing
Amounts.
(a) Deductions
Against Accounts Receivable (“AR”) of Parent. Following the Closing,
customers of Purchaser may deduct amounts from AR retained by
Parent. The parties shall account for and provide proper payment for
these deductions in accordance with the procedures set forth in Schedule
8.22(a). On December 26, 2009, cash in the amount of $2,500,000 will
be paid by Purchaser to Sellers to the extent Sellers have settled deductions in
this amount with customers related to the obligations pursuant to the Contra AR
liabilities assumed by Purchaser.
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(b) Deductions Against AR of
Purchaser. Following the Closing, customers of Purchaser may
deduct amounts owed by Parent in respect of Excluded Liabilities from AR of
Purchaser. The parties shall account for and to provide proper
payment for these deductions in accordance with the procedures set forth in
Schedule 8.22(b).
(c) Cash Received by Parent
Related to Purchaser’s AR. Following the Closing, the parties
anticipate that customers of Purchaser may send payment to Parent which is
otherwise owed to Purchaser. The parties shall provide for proper documentation
of and payment for these payments in accordance with the procedures set forth in
Schedule 8.22(c).
(d) Dispute
Resolution. In the event that the parties are unable to agree
on the amounts owed pursuant this Section 8.22, including the schedules
referenced herein, the parties shall make a good faith attempt to resolve any
dispute arising out of or relating to this Section 8.22, including the schedules
referenced herein, through informal negotiation between appropriate
representatives from each of the parties. If at any time either party
feels that such negotiations are not leading to a resolution of the dispute,
such party may send written notice (a “Dispute Notice”) to
the other party describing the dispute and requesting a meeting (whether in
person or via teleconference) of the senior executives from each
party. Within five (5) Business Days after such Dispute Notice has
been delivered, each party shall select appropriate senior executives (e.g.,
director or V.P. level) of each party who shall have the authority to resolve
the matter and such senior executives shall meet to attempt in good faith to
negotiate a resolution of the dispute prior to pursuing other available
remedies. During the course of such negotiations, all reasonable requests for
information pertinent to the dispute made by one party from the other shall be
honored as promptly as practicable. If the parties are unable to resolve such
disputed charges within thirty (30) days of delivery of the Dispute Notice, the
aggrieved party may elect, by written notice to the other party within ten (10)
days following the end of such thirty (30) day period, to refer the dispute to
an Independent Accountant for resolution. As promptly as possible
following such referral, (i) each party shall submit its calculations of the
amounts due, if any, and all supporting documentation, (ii) each party shall
reasonably cooperate with the Independent Accountant and promptly respond to any
requests for additional information or documents, (iii) each party shall execute
the Independent Accountant’s standard form of engagement letter, and (iv) each
party will be afforded the opportunity to present to the Independent Accountant
any material relating to the determination of the matters in dispute and to
discuss such determination with the Independent Accountant. The
Independent Accountant shall deliver to Purchaser and Parent, as promptly as
practicable (but in any case no later than thirty days from the date of
engagement of the Independent Accountant), a report setting forth a resolution
of the matters described in the Dispute Notice, including a calculation of the
amounts, if any, due to either party. Such report shall be conclusive
and binding on the parties. The fees, costs and expenses of the
Independent Accountant’s review and report shall be allocated to and borne by
Purchaser and Parent based on the inverse of the percentage that the Independent
Accountant’s determination (before such allocation) bears to the total amount of
the total items in dispute as originally submitted to the Independent
Accountant. For example, should the items in dispute total in amount
to $1,000 and the Independent Accountant awards $600 in favor of Parent’s
position, 60% of the costs of its review would be borne by Purchaser and 40% of
the costs would be borne by Sellers.
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(e) Right of
Set-Off. Notwithstanding anything to the contrary contained in
this Agreement or the other Operative Agreements, any amounts currently due and
payable by Sellers to Purchaser hereunder or under the Operative
Agreements may be reduced or set-off by the amount of any other
amounts owed and currently due and payable by Purchaser to Sellers hereunder or
under the Operative Agreements.
8.23 Retained Altec
Inventory. Purchaser shall not sell the products that comprise
the Retained Altec Inventory in Japan or Brazil until a Seller notifies
Purchaser that all of such Retained Altec Inventory has been sold or that
Sellers no longer wish to sell such Retained Altec Inventory.
ARTICLE
IX
CONDITIONS
TO THE ACQUISITION
9.1 Conditions to Obligations of
Each Party to Effect the Acquisition. The respective
obligations of each party to this Agreement to effect the Acquisition shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) No Injunctions or
Restraints; Illegality. No Order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition or restricting the conduct, use or operations of
the Acquired Assets or the Business by a Seller or Purchaser shall be in effect;
nor shall any proceeding brought by a U.S. federal Governmental Entity seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Acquisition, which makes the consummation of the Acquisition
unlawful.
9.2 Additional Conditions to
Obligations of Sellers. The obligations of Sellers to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Sellers to the extent permitted by applicable Law:
(a) Representations and
Warranties. The representations and warranties of Purchaser in
this Agreement shall be true and correct (without reference to any materiality
qualifications contained in any Purchaser representation or warranty) on and as
of the Closing Date as though such representations and warranties were made on
and as of such time and except where the failure to be so true and correct,
individually or in the aggregate, could not reasonably be expected to prevent or
delay, in any material respect, the ability of Purchaser to perform its
obligations under this Agreement and the other Operative Documents or to
consummate the transactions contemplated hereby or thereby.
(b) Covenants. Purchaser
shall have performed and complied in all material respects with all covenants,
obligations, agreements and conditions of this Agreement required to be
performed and complied with by it on or prior to the Closing Date.
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(c) Compliance Certificate of
Purchaser. Sellers shall have been provided with a certificate
dated as of the Closing Date and executed on behalf of Purchaser by an executive
officer of Purchaser to the effect that, as of the Closing Date the conditions
set forth in Section 9.2(a) and Section 9.2(b) have been duly satisfied (the
“Purchaser Officer’s
Certificate”).
(d) Further
Agreements. Purchaser shall have executed and delivered the
agreements provided for in Section 8.14.
(e) Assignment and Assumption
Agreement. Purchaser shall have executed and delivered an
assignment and assumption agreement in substantially the form attached hereto
as Exhibit
F.
(f)
Escrow
Agreements. Purchaser shall have executed and delivered the
Escrow Agreement and the China Escrow Agreement.
9.3 Additional Conditions to the
Obligations of Purchaser. The obligations of Purchaser to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Purchaser to the extent permitted by applicable Law:
(a) Representations and
Warranties. The representations and warranties of Sellers in
this Agreement shall be true and correct (without reference to any Material
Adverse Effect or other materiality qualifications contained in
any representation or warranty of Sellers) on and as of the Closing
Date as though such representations and warranties were made on and as of such
time and except where the failure to be so true and correct, individually or in
the aggregate, could not reasonably likely be expected to, (i) prevent or delay,
in any material respect, the ability of Sellers to perform their obligations
under this Agreement and the other Operative Documents or to consummate the
transactions contemplated hereby or thereby or (ii) result in a Material Adverse
Effect.
(b) Covenants. Sellers
shall have performed and complied in all material respects with all covenants,
obligations, agreements and conditions of this Agreement required to be
performed and complied with by them on or prior to the Closing
Date.
(c) Compliance Certificate of
Sellers. Purchaser shall have been provided with a certificate
dated as of the Closing Date and executed on behalf of Sellers by an executive
officer of Parent that states that, as of the Effective Time the conditions set
forth in Section 9.3(a), Section 9.3(b) and Section 9.3(d) have been duly
satisfied (the “Seller
Officer’s Certificate”).
(d) Material Adverse
Effect. There shall not have occurred any Material Adverse
Effect.
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(e) Customers and
Suppliers. Sellers and Purchaser shall have completed due
diligence calls in accordance with the plan agreed upon by Sellers and
Purchaser, and Purchaser shall be reasonably satisfied with the input received
on such due diligence calls, with (i) customers that represented at least 60% of
the gross revenue of the Business for the fiscal year ended March 28, 2009, and
(ii) suppliers that represented at least 60% of the revenue paid to suppliers of
the Business for the fiscal year ended March 28, 2009.
(f) Consents. Sellers
shall have obtained or made any consent, approval, Order or authorization of, or
registration, declaration or filing with, any Governmental Entity required to be
obtained or made in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby and (ii) Sellers
shall have obtained (and delivered copies thereof to the Purchaser) all
consents, waivers and approvals, each in a form reasonably acceptable to
Purchaser, for the assignment of written Transferred Contracts attributable to
(A) customers of the Business that represented at least $60 million of gross
revenue of the Business for the fiscal year ended March 28, 2009, and (B) all
suppliers and customers of the Business attributable to, or whose services are
utilized in connection with, the operation of Sellers’ Oracle operating system
used in the Business.
(g) Good Standing/Tax Clearance
Certificates. Purchaser shall have received (i) a long-form
certificate of good standing dated not more than five (5) Business Days prior to
the Closing Date with respect to Parent issued by the Secretary of State of the
State of Delaware and the Secretary of the Commonwealth of the Commonwealth of
Pennsylvania and (ii) Tax clearances dated not more than five (5) Business Days
prior to the Closing Date with respect to Parent in customary form and substance
of such Taxing Authority issued by the relevant Taxing Authority in the
Commonwealth of Pennsylvania and the State of California.
(h) Liens. Sellers
shall have delivered all instruments and documents (including payoff letters)
necessary to release any and all monetary Liens on the Acquired Assets,
including appropriate UCC financing statement amendments (termination
statements).
(i) Permits. Purchaser
shall have obtained the issuance, reissuance or transfer of all material Permits
(including Environmental Permits) required under Law (including Environmental
Laws) to conduct the operations of the Business as of the Closing Date, to the
extent such Permits are transferable.
(j) Execution of
Assignments. The applicable Seller or Sellers shall have
delivered or caused to be delivered to Purchaser the assignments of the
Transferred Intellectual Property Rights in substantially the forms attached
hereto as Exhibit
B, and such other instruments of conveyance and assignment as are
reasonably necessary to transfer title to the Acquired Assets to
Purchaser.
(k) Transition Services
Agreement. The applicable Seller or Sellers shall have
executed and delivered the Transition Services Agreement in substantially the
form attached hereto as Exhibit
C.
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(l) Bill of
Sale. Sellers shall have executed and delivered a bill of sale
in substantially the form attached hereto as Exhibit
D.
(m) Real Property
Deeds. Parent shall have delivered to Purchaser real property
deeds in the form attached hereto as Exhibit E for the
Milford Property and the Owned Condominium.
(n) Assignment and Assumption
Agreement. Sellers shall have executed and delivered an
assignment and assumption agreement in substantially the form attached hereto
as Exhibit
F.
(o) Further
Agreements. The applicable Seller or Sellers shall have
executed and delivered the agreements provided for in Section
8.14.
(p) Escrow
Agreements. Sellers shall have executed and delivered the
Escrow Agreement and the China Escrow Agreement.
(q) FIRPTA. Parent
shall have provided Purchaser with an affidavit of non-foreign status of Parent
that complies with the Treasury Regulations under Section 1445 of the
Code.
(r) Title Policies.
Purchaser shall have received an irrevocable commitment provided by a title
company reasonably acceptable to Purchaser to issue a 2006 form owner’s policy
of title insurance for each parcel of Owned Real Property (in the form of a
proforma title policy in form and substance similar to any current title
policies held by a Seller excluding any survey endorsement, with any the cost of
endorsements desired by Purchaser to be paid by Sellers and Purchaser (50-50)),
with the premium for such policy and endorsements having been paid in full by
Parent.
(s) Oracle
Clone. (i) Purchaser shall have received the Purchaser Oracle
Software License and (ii) Sellers shall have delivered the Oracle Clone which
shall have been verified to be suitable for the operation of the Oracle Clone in
accordance with the Clone Testing Plan.
(t) Intellectual
Property. Purchaser (i) shall have completed a reasonable due
diligence investigation with respect to Intellectual Property Rights and
Technology matters, and (ii) shall be satisfied that any matters discovered in
such diligence do not materially detract from the value of the Business or the
transactions contemplated hereby.
ARTICLE
X
SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Survival of Representations
and Warranties. The representations and warranties of the
parties contained in this Agreement, the Operative Documents (unless otherwise
stated therein) or in any certificate delivered pursuant to this Agreement will
survive the Closing and continue in full force and effect until the one (1) year
anniversary of the Closing (the “General Expiration Date”);
provided, that
(a) the representations and warranties of (x) Sellers set forth in Sections 5.1,
5.2(a), 5.6(a), and 5.15 (collectively, the “Specified
Representations”) shall survive the Closing indefinitely, (y) Sellers set
forth in Sections 5.4, 5.11 and 5.20 (collectively, the Extended
Representations”) shall survive the Closing until ninety (90) days following the
expiration of the applicable statute of limitations with respect to the
particular matter that is the subject matter thereof, and (z) Purchaser set
forth in Sections 6.1 and 6.2 shall survive the Closing indefinitely and (b) any
claim with respect to any fraudulent and intentional and willful breach or any
representation will survive and can be made by an indemnified party
indefinitely. The period for which a representation or warranty survives the
Closing is referred to herein as the Survival Period. In addition, no claims
will be allowed to be made by Sellers or Purchaser under the provisions of this
Article X with respect to any breach of a representation and warranty, unless
notice of such claim shall have been made in respect thereof on or prior to 5:00
p.m. Pacific Time on the date of the expiration of the applicable Survival
Period. If written notice of a claim meeting the requirements of
Section 10.2(d)
below has been given prior to the applicable Survival Period by a party in whose
favor such representations and warranties were made, then the relevant
representations and warranties and the right to indemnification for breach
thereof shall survive as to such claim, until the claim has been finally
resolved. Notwithstanding any other provision of this Agreement, the
expiration of any Survival Period hereunder shall not be construed in a manner
that would make any Excluded Liability an Assumed Liability for purposes of this
Agreement, nor shall it make an Assumed Liability an Excluded Liability for
purposes of this Agreement.
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10.2 Indemnification.
(a) Indemnification by
Parent. Subject to the qualifications and limitations in this
Article X, if the Closing is consummated, from and after the Closing, Parent
shall indemnify and defend and hold Purchaser, its Affiliates, and their
respective directors, officers, equity holders, members, partners, attorneys,
employees, representatives, agents, successors and assigns (collectively, the
“Purchaser Indemnified
Parties”) harmless against and with respect to and pay the applicable
Purchaser Indemnified Party the amount of, any and all Damages asserted against,
imposed upon or incurred by Purchaser Indemnified Parties as a result of any of
the following:
(i) any
inaccuracy in, or breach of any representation or warranty of, any of Sellers in
this Agreement or in any other Operative Documents as of the date hereof and at
and as of the Closing Date as if made on the Closing Date, except to the extent
that any such representation or warranty relates to a specific date, in which
case the failure of such representation or warranty to be true and correct as of
such date;
(ii) any
failure by any Seller to carry out, perform, satisfy and discharge any of its
covenants or agreements under this Agreement or the Operative
Documents;
(iii) any
failure by Parent to pay the Asset Shortfall, if any, in accordance with Section
2.5(e) and (f) hereof; and
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(iv) any
Excluded Asset or any Excluded Liability.
THE
INDEMNITY OBLIGATIONS IN THIS SECTION 10.2 ARE INTENDED TO ALLOCATE LIABILITY
FOR, WITHOUT LIMITATION, (I) ANY CLAIMS RESULTING FROM THE NEGLIGENCE OR ALLEGED
NEGLIGENCE OF ANY INDEMNIFIED PARTY AND (II) STATUTORY AND COMMON LAW NEGLIGENCE
AND STRICT LIABILITY CLAIMS AS WELL AS NEGLIGENCE, STRICT LIABILITY, AND ALL
OTHER CLAIMS ARISING UNDER ENVIRONMENTAL LAWS, INCLUDING CERCLA.
(b) Indemnification by
Purchaser. Subject to the qualifications and limitations in
this Article X, if the Closing is consummated, from and after the Closing,
Purchaser shall indemnify and defend and hold Sellers and their respective
directors, officers, equity holders, attorneys, employees, representatives,
agents, successors and assigns (collectively, the “Seller Indemnified
Parties”) harmless against and with respect to, any and all Damages
asserted against, imposed upon or incurred by any Seller Indemnified Party as a
result of any of the following:
(i)
any inaccuracy in, or breach of any representation or warranty of Purchaser in
this Agreement or in any Operative Documents;
(ii) any
failure by Purchaser to carry out, perform, satisfy and discharge any of its
covenants or agreements under this Agreement or the Operative
Documents;
(iii) any
Assumed Liabilities;
(iv)
any failure by Purchaser to pay the Excess Assets, if any, in accordance
with Section 2.5(e) and (f) hereof;
(v) any
failure by Purchaser to pay amounts due to Sellers in accordance with Section
8.22(a) hereof; and
(vi) any
liability or obligation with respect to the Purchaser’s use of the Acquired
Assets or its conduct of the Business after the Closing Date.
THE
INDEMNITY OBLIGATIONS IN THIS SECTION 10.2 ARE INTENDED TO ALLOCATE LIABILITY
FOR, WITHOUT LIMITATION, (I) ANY CLAIMS RESULTING FROM THE NEGLIGENCE OR ALLEGED
NEGLIGENCE OF ANY INDEMNIFIED PARTY AND (II) STATUTORY AND COMMON LAW NEGLIGENCE
AND STRICT LIABILITY CLAIMS AS WELL AS NEGLIGENCE, STRICT LIABILITY, AND ALL
OTHER CLAIMS ARISING UNDER ENVIRONMENTAL LAWS, INCLUDING CERCLA.
(c) Limitation and Calculation
of Damages.
(i) Notwithstanding
any other provision in this Agreement to the contrary, any and all Damages for
which indemnification is provided hereunder shall be reduced to take into
account any insurance proceeds recovered or recoverable in respect of such
Damages (net of any cost of recovery or increased premiums resulting therefrom),
the indemnified party agreeing to use reasonable efforts to recover all
available insurance proceeds); provided, no claimant under this Article X shall
be required to delay making a claim or recovery for indemnification under this
Article X pending any insurer’s action in respect of an insurance claim. In the
event that an insurance or other recovery is made by any Indemnified Party with
respect to any Damages for which any such Person has been indemnified hereunder,
then a refund equal to the net amount of the recovery shall be made promptly to
the indemnifying party, provided that if such
recovery is received prior to the termination of the Escrow Fund, pursuant to
the Escrow Agreement such amounts shall be returned to the Escrow
Fund.
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(ii) For
purposes of Sections 10.2(a)(i) and 10.2(b)(i) hereof, all representations and
warranties and all covenants and agreements shall be deemed not qualified by any
references therein to materiality or Material Adverse Effect for purposes of
calculation of Damages.
(iii) Except
to the extent payable by an Indemnified Party in respect of a Third Party Claim,
in no event shall an Indemnified Party be entitled to recover or make a claim
for any amounts in respect of consequential, incidental or indirect damages,
lost profits or punitive damages and, in particular, no "multiple of profits" or
"multiple of cash flow" or other valuation methodology shall be used in
calculating the amount of any Damages. In addition, no Indemnified
Party shall have a right to recover Damages hereunder in respect of any claim if
such claim would not have arisen but for a change in legislation or accounting
policies or a change in interpretation of applicable law as determined by a
court or pursuant to an administration rule making
decision. Furthermore, except in connection with a Third Party Claim,
no Indemnified Party shall have the right to make a claim for Damages to the
extent such Damages are primarily possible or potential Damages that the
Indemnified Party believes may be asserted rather than Damages that have, in
fact, been paid or incurred by the Indemnified Party making the
Claim. Attorney and accountant fees and disbursements incurred by the
Indemnified Party for which they are entitled to recovery pursuant to this
Article X shall be reasonable and based only on time actually spent, which shall
be charged at no more than such professional's standard hourly
rate.
(d) Procedure for
Indemnification. Subject to Section 2.5 which sets forth the
procedures for determining and resolving the Net Asset Value, the procedure for
indemnification shall be as follows:
(i) The
party claiming indemnification (the “Claimant”) shall,
within thirty (30) days (or earlier, if reasonably necessary to timely answer a
lawsuit) after its discovery of any claim for which indemnification is or may be
provided and will or may be sought as provided in this Agreement (the “Claim”), give notice
to the party or parties from whom indemnification is sought (“Indemnitor”) of its
Claim, specifying in reasonable detail the factual basis for the Claim to the
extent known and, to the extent known, the amount of the
Claim. Notwithstanding the preceding sentence, the failure by
Claimant to provide notice of any Claim within the period specified, or any
delay in providing such notice, shall not affect or impair the obligations of
Indemnitor hereunder, except and only to the extent that Indemnitor has been
materially adversely affected by such failure or delay.
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(ii) With
respect to Claims between the parties, following receipt of notice from Claimant
of a Claim, Indemnitor shall have forty-five (45) days to make any investigation
that Indemnitor deems necessary or desirable of the Claim. For
purposes of this investigation, Claimant agrees to use reasonable best efforts
to make available to Indemnitor and its authorized representatives the
information relied upon by Claimant to substantiate the Claim. If
Claimant and Indemnitor cannot agree as to the validity and amount of the Claim
within the forty-five (45) day period (or any mutually agreed upon extension
thereof), Claimant shall arbitrate such dispute as contemplated in Section
10.2(h) herein.
(iii) With
respect to any Claim by a third Person (a “Third Party Claim”)
as to which Claimant is entitled to indemnification hereunder, Indemnitor shall
have the right, exercisable by written notice to Claimant within thirty (30)
days after receipt of written notice from Claimant of the commencement or
assertion of any such Third Party Claim, at its own expense, to accept full
responsibility for such Third Party Claim and assume control of the defense of
such Third Party Claim, and Claimant shall cooperate fully with Indemnitor, and
have the right to participate with Indemnitor, with the right to reimbursement
for actual out-of-pocket expenses incurred by Claimant as a result of any such
request by the Indemnitor for Claimant’s cooperation. If Indemnitor
elects to assume control or otherwise participate in the defense of any Third
Party Claim, Indemnitor has the duty to diligently defend the Third Party
Claim. If Indemnitor assumes such defense, Claimant shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by Indemnitor, it being understood
that the Indemnitor shall control such defense; provided, however, that
Indemnitor shall bear the reasonable fees and expenses of such separate counsel
if (i) representation of both parties would, in the reasonable opinion of
counsel for Claimant, be inappropriate due to a conflict of interest, or (ii)
Indemnitor shall not have employed counsel within a reasonable time after
Claimant has given notice of a Third Party Claim in compliance with this Section
10.2(d). Indemnitor shall be liable for the reasonable fees and
expenses of counsel employed by Claimant for any period during which Indemnitor
has not assumed the defense thereof. If Indemnitor does not elect to
assume control of any Third Party Claim within thirty (30) days of its receipt
of notice of the Third Party Claim (or any extended period mutually agreed upon
in writing by the parties) or after assuming control does not in good faith
defend such Third Party Claim, Claimant shall have the right to undertake the
defense, compromise or settlement of the Third Party Claim for the account of
Indemnitor. In no event shall Indemnitor be liable or otherwise have
any obligation with respect to any settlement, compromise or determination of
any Third Party Claim agreed to by Claimant without the prior written consent of
Indemnitor (which consent will not be withheld unreasonably). The
Indemnitor shall be authorized to consent to a settlement of, or the entry of
any judgment arising from, any Third Party Claim, without the consent of any
Claimant, but only if the Indemnitor shall (1) pay or cause to be paid all
amounts arising out of such settlement or judgment concurrently with the
effectiveness of such settlement; (2) not encumber any of the assets of any
Claimant or agree to any restriction or condition that would apply or adversely
affect any Claimant or to the conduct of any Claimant’s business; and (3)
obtain, as a condition of any settlement or other resolution, a complete release
of any Claimant potentially affected by such Third Party Claim.
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(iv) The
defending party shall have reasonable access to the books, records and personnel
which are pertinent to the defense and which are in control of the other
party. The parties agree to furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested by the other party in connection
with defending any Third Party Claim.
(e) Limitations and Conditions
Applicable to Purchaser. The right of the Purchaser
Indemnified Parties to obtain indemnification from Parent pursuant to Section
10.2(a) of this Agreement is subject to the following limitations:
(i)
Purchaser Indemnified Parties shall not be entitled to indemnification from
Parent pursuant to Section 10.2(a)(i) until the aggregate Damages for which
Parent is liable under Section 10.2(a)(i) exceed $100,000 whereupon the
Purchaser Indemnified Parties shall be entitled to indemnification by Parent for
all Damages in excess of the first $100,000 of Damages, provided, that, the
foregoing limitation shall not apply to (x) the failure to be true and correct
of any of the Specified Representations or the Extended Representations, or (y)
any Claim arising out of any fraudulent or intentional and knowing
misrepresentation by Sellers. For the avoidance of doubt, the
foregoing limitations shall not apply with respect to Claims arising from or
relating to those matters referred to in Section 10.2(a)(ii), 10.2(a)(iii) or
10.2(a)(iv).
(ii) Parent
shall not be obligated to indemnify Purchaser Indemnified Parties for aggregate
Damages under Section 10.2(a)(i)in excess of $1,500,000 (whether or not such
Damages are paid from the Escrow Fund) (the “Cap”), provided,
that, there shall be no Cap with respect to (x) the failure to be true and
correct of any of the Specified Representations or the Extended Representations
or (y) any Claim arising out of any fraudulent or intentional and knowing
misrepresentation by Sellers. For the avoidance of doubt, the Cap shall not
apply with respect to Claims arising from or relating to those matters referred
to in Sections10.2(a)(ii), 10.2(a)(iii) or 10.2(a)(iv), provided, that, Parent
shall not be obligated to indemnify Purchaser Indemnified Parties for aggregate
Damages pursuant to this Agreement in excess of the Purchase Price.
(iii) Purchaser
Indemnified Parties shall not be entitled to recover Damages in respect of any
Claim or otherwise obtain reimbursement or restitution more than once with
respect to any Claim hereunder.
(f) Limitations and Conditions
Applicable to Sellers. The right of Seller Indemnified Parties
to obtain indemnification from Purchaser pursuant to Section 10.2(b) of this
Agreement is subject to the following limitations:
(i)
Seller Indemnified Parties shall not be entitled to indemnification from
Purchaser pursuant to Section 10.2(b)(i) until the aggregate Damages for which
Purchaser is liable under Section 10.2(b)(i) exceed $100,000, whereupon Seller
Indemnified Parties shall be entitled to indemnification by Purchaser for all
Damages in excess of the first $100,000 of Damages, provided, that, the
foregoing limitation shall not apply to any Claim arising out of any fraudulent
or intentional and knowing misrepresentation by Purchaser. For the avoidance of
doubt, the foregoing limitation shall not apply with respect to all Claims
arising from or relating to those matters referred to in Sections 10.2(b)(ii),
10.2(b)(iii), 10.2(b)(iv), 10.2(b)(v) or 10.2(b)(vi).
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(ii) Purchaser
shall not be obligated to indemnify Seller Indemnified Parties for aggregate
Damages under Section 10.2(b)(i) in excess of $1,500,000 (the “Seller
Cap”). provided, that, the Seller Cap shall not apply to any
Claims arising out of any fraudulent or intentional and knowing
misrepresentation by Purchaser. For the avoidance of doubt, the Seller Cap shall
not apply with respect to Claims arising from or relating to those matters
referred to in Sections 10.2(b)(ii), 10.2(b)(iii), 10.2(b)(iv), 10.2(b)(v) or
10.2(b)(vi), provided, that, Purchaser shall not be obligated to indemnify
Seller Indemnified Parties for aggregate Damages pursuant to this Agreement in
excess of the Purchase Price.
(iii) Seller
Indemnified Parties shall not be entitled to recover Damages in respect of any
Claim or otherwise obtain reimbursement or restitution more than once with
respect to any Claim hereunder.
(g) Remedies
Exclusive. After the Closing, as to any Claim with respect to
the matters set forth in Sections 10.2(a)(i) and 10.2(b)(i), the indemnification
remedies provided in this Section 10.2 shall be the exclusive monetary remedy
therefor and shall preclude assertion by any party of any other rights or the
seeking of any other monetary remedies against another party in connection
therewith; provided, however, that nothing
in this Section 10.2(g) shall limit rights or remedies expressly provided for in
this Agreement or any other Operative Document for fraud, intentional and
knowing misrepresentation, or deceit.
(h) Mediation/Arbitration. Any
controversy involving a Claim by an indemnified party pursuant to this Article X
shall be finally and exclusively settled by the mediation/arbitration provisions
of Section 12.6 hereof; provided, however, that in
regards to any Claim by a third Person as to which Claimant is entitled to
indemnification, if such third Person has filed a complaint in court to make
such Claim against an indemnified party pursuant to this Article X, such
indemnified party may implead (without resort to mediation or arbitration) any
of the other parties to this Agreement solely for the purpose of resolving the
subject matter of the Claim initiated by the third
Person. Thereafter, any remaining dispute with respect to such Claim
shall again be subject to the provision.
(i)
Tax
Treatment. The Parties shall report any indemnification
payment made pursuant to this Article X as a purchase price adjustment unless
otherwise required by law.
(j)
Notwithstanding anything to the contrary in this Agreement, to the
extent the parties waive full satisfaction of the conditions set forth in
Article IX, an Indemnified Party may not recover Damages incurred by the
Indemnified Party or be entitled to any other remedy based on or related to any
matter or event that caused the conditions set forth in Article IX not to be
satisfied without modification or qualification.
10.3 Escrow. On
the Closing Date, Purchaser shall, on behalf of Sellers, pay to Comerica Bank as
agent to Purchaser and Parent (the “Escrow Agent”), in
immediately available funds, to the account designated by the Escrow Agent, an
amount equal to the Total Escrow Amount, in accordance with the terms of this
Agreement and the Escrow Agreement, which will be executed at the Closing, by
and among Purchaser, Parent and the Escrow Agent (the “Escrow
Agreement”). The Escrow Amount (plus any interest paid on such
Escrow Amount in accordance with the Escrow Agreement) (collectively, the “
Escrow Fund”) shall
be available to compensate the Purchaser Indemnified Parties for any claims by
such parties for any Damages suffered or incurred by them and for which they are
entitled to recovery under this Article
X. Subject to any dispute resolution procedures set forth in
this Agreement or the Escrow Agreement, any payment Parent is obligated to make
to any Purchaser Indemnified Parties pursuant to this Article X shall be
paid by release of funds to the Purchaser Indemnified Parties from the Escrow
Fund by the Escrow Agent within ten (10) Business Days after the date notice of
any sums due and owing is given to Parent (with a copy to the Escrow Agent
pursuant to the Escrow Agreement) by the applicable Purchaser Indemnified Party
and shall accordingly reduce the Escrow Amount. Within five (5)
Business Days after the Final Net Asset Value has been finally determined in
accordance with Section 2.5 hereof, the Escrow Agent shall release to Parent
from the Escrow Fund $1,000,000 less the amount of the Asset Shortfall, if any,
to the extent not paid by Parent in accordance with Section
2.5(e). On the twelve (12) month anniversary of the Closing Date, the
Escrow Agent shall release the remaining amounts in the Escrow Fund (to the
extent not utilized to pay Purchaser for any indemnification claim) to Sellers,
except that the Escrow Agent shall retain an amount (up to the total amount then
held by the Escrow Agent) equal to the amount of claims for indemnification
under this Article
X asserted prior to the twelve (12) month anniversary of the Closing Date
but not yet resolved (“Unresolved Indemnity
Claims”). The portion of the Escrow Fund retained for
Unresolved Indemnity Claims shall be released by the Escrow Agent (to the extent
not utilized to pay Purchaser for any such claims resolved in favor of
Purchaser) upon their resolution in accordance with this Article X and the
Escrow Agreement.
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ARTICLE
XI
TERMINATION,
AMENDMENT AND WAIVER
11.1 Termination. Except
as provided below, this Agreement may be terminated and the Acquisition
abandoned at any time prior to the Closing Date:
(a) by
mutual written consent of Sellers and Purchaser; and
(b) by
Purchaser or Sellers if: (i) the Closing has not occurred by October 26, 2009
(the “End
Date”); provided, however, that the
right to terminate this Agreement under this Section 11.1(b) shall not be
available to any party whose failure or whose Affiliate’s failure to perform any
material covenant contained in this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; (ii) there shall
be a final nonappealable Order of a Governmental Entity of competent
jurisdiction in effect restraining, enjoining or otherwise preventing
consummation of the Acquisition; it being agreed that, subject to the last
sentence of Section 8.6 above, the parties hereto shall promptly appeal any
adverse determination which is not nonappealable (and pursue such appeal with
reasonable diligence); or (iii) there shall be any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Acquisition
that would make consummation of the Acquisition illegal.
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(c) By
Sellers, if prior to the Closing Date there shall have been a breach of any of
the representations, warranties, covenants or agreements on the part of
Purchaser contained in this Agreement or if any representation or
warranty of Purchaser shall have become untrue, in either case, such that the
conditions set forth in Section 9.2(a) or (b) would not be satisfied and such
breach is incapable of being cured or, if capable of being cured, shall not have
been cured, shall not have been cured prior to the End Date; or
(d) By
Purchaser, if prior to the Closing Date there shall have been a breach of any of
the representations, warranties, covenants or agreements on the part of Sellers
contained in this Agreement, or if any representation or warranty of Sellers
shall have become untrue, in either case such that the conditions set forth in
Sections 9.3(a)
or (b) would
not be satisfied and such breach is incapable of being cured or, if capable of
being cured, shall not have been cured by the End Date.
11.2 Procedure Upon
Termination. In the event of termination and abandonment by
Purchaser or Sellers, or both, pursuant to Section 11.1 hereof,
written notice thereof shall forthwith be given to the other party or parties,
and this Agreement shall terminate, and the Acquisition shall be abandoned,
without further action by Purchaser or Sellers.
11.3 Effect of
Termination. In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Purchaser or Sellers, or their respective
officers, directors, stockholders or equity owners, provided that each party
shall remain liable for any breaches of this Agreement prior to its termination;
and provided further that, the provisions of this Article XI, Article XII and
Sections 8.2, 8.3 and 8.4 of this Agreement shall remain in full force and
effect and survive any termination of this Agreement.
11.4 Amendment. Subject
to applicable law, the parties hereto may amend this Agreement at any time by
execution of an instrument in writing signed by Purchaser and
Sellers.
11.5 Extension;
Waiver. At any time prior to the Closing Date, Sellers and
Purchaser, as applicable may to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of Sellers
and Purchaser, as applicable, with respect to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of such
party. Delay in exercising any right under this Agreement shall not
constitute a waiver of such right.
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ARTICLE
XII
GENERAL
PROVISIONS
12.1 Notices. All
notices, requests, demands, waivers and other communications required or
permitted hereunder shall be in writing and shall in any event be deemed to be
given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S.
Postal Service or other applicable postal service, if mailed by first class
registered or certified mail, return receipt requested, postage prepaid, (b)
upon delivery, if delivered by hand, by recognized expedited delivery service,
(c) one (1) Business Day after the Business Day of deposit with Federal Express
or similar overnight courier, freight prepaid or (d) one (1) Business Day after
the Business Day of facsimile transmission, if delivered by facsimile
transmission with copy by first class registered or certified mail, return
receipt requested, postage prepaid. Notices shall be addressed to the
address set forth below (or at such other address as a party may designate by
notice to the other party pursuant to the provisions above):
(a) if
to Sellers, to:
Plantronics,
Inc.
345
Encinal Street
Santa
Cruz, California 95061-1802
Attention:
General Counsel
Facsimile
No.: (831) 426-2965
with
copies to:
Wilson
Sonsini Goodrich & Rosati, Professional Corporation
650 Page
Mill Road
Palo
Alto, California 94304-1050
Attention:
Katharine A. Martin
Selwyn
B. Goldberg
Facsimile
No.: (650) 493-6811
(b) if
to Purchaser, to:
Audio
Technologies Acquisition, LLC
181 Grand
Avenue, Suite 201
Southlake,
Texas 76092
Attention:
Ross Gatlin
Facsimile
No.: (817) 898-1509
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with
copies to:
Haynes
and Boone, LLP
2323
Victory Avenue, Suite 700
Dallas,
Texas 75219
Attention:
Dennis R. Cassell
Facsimile
No.: (214) 200-0788
12.2 Interpretation . The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.” The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
12.3 Counterparts. This
Agreement may be executed in one or more counterparts (including by means of
facsimile), all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
12.4 Entire Agreement;
Assignment. This Agreement, the schedules and exhibits hereto,
and the documents and instruments and other agreements among the parties hereto
referenced herein: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) except with respect to the rights of Purchaser
Indemnified Parties and Seller Indemnified Parties hereunder, are not intended
to confer upon any other Person any rights or remedies hereunder; and (c) shall
not be assigned by operation of law or otherwise, without the prior written
consent of Sellers and Purchaser, provided that Purchaser may, subject to
Section 8.11(b) assign this Agreement in connection with a sale of substantially
all of the Business. Any purported assignment in violation of the
foregoing shall be null and void ab initio and of no force or
effect.
12.5 Severability. In
the event that any provision of this Agreement or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to negotiate in good faith
to modify this Agreement to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
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12.6 Governing Law;
Mediation/Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Subject to the provisions of Article X with respect to
indemnification in respect of any Claim, any claim or dispute arising out of or
related to this Agreement, the interpretation, making performance, breach or
termination thereof, shall be first, sent to non-binding
mediation among the parties, and second, failing a final
resolution in mediation, finally and exclusively settled by binding arbitration,
with such mediation or arbitration to be governed as follows: (i) mediation or
arbitration shall be held in Newcastle County, Delaware; (ii) such mediation or
arbitration shall be made in accordance with the then current Streamlined
Arbitration Rules and Procedures of JAMS; (iii) judgment upon the award rendered
by the mediator or arbitrator may be entered in any court having jurisdiction
thereof, (iv) such mediation or arbitration shall be conducted by a
mediator/arbitrator chosen by mutual agreement of Purchaser, on the one hand,
and Sellers on the other; failing such agreement in the case of an arbitration,
the arbitration shall be conducted by three independent arbitrators, one of whom
shall be chosen by the Purchaser, one of whom shall be chosen by Sellers, and
such two arbitrators shall mutually select a third arbitrator, with any decision
of two such arbitrators shall be binding on Purchaser and Sellers; (v) the
mediator/arbitrator(s) shall have the authority to grant any equitable and legal
remedies that would be available in any judicial proceeding instituted under
Delaware substantive law to resolve a dispute; (vi) judgment on the award
rendered by the mediator/arbitrator(s) may be entered in any court having
jurisdiction thereof; (vii) each party shall pay its own costs and expenses
(including counsel fees) of any such mediation or arbitration except that the
arbitrator(s) can compel one party to pay all or a portion of the other party’s
costs and expenses; (viii) the parties agree that, any provision of applicable
law notwithstanding, they will not request, and the mediator/arbitrator(s) shall
have no authority to award damages based on amounts recoverable as lost profits
or based on a multiple of earnings, incidental damages, indirect damages,
special damages, punitive damages or consequential damages, against any party;
and (ix) the parties hereto expressly waive all rights whatsoever to file an
appeal against or otherwise to challenge any award by the mediator/arbitrator(s)
hereunder, provided that the foregoing shall not limit the rights of either
party to bring a proceeding in any applicable jurisdiction to conform, enforce
or enter judgment upon such award (and the rights of the other party, if such
proceeding is brought, to contest such confirmation, enforcement or entry of
judgment) (for purposes of this Agreement, the mediation/arbitration rules
described above in sections (i) through (ix) above shall be the “Mediation/Arbitration
Rules”).
12.7 Rules of
Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
12.8 Successors. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs and assigns.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, Purchaser and Sellers have caused this Agreement to be signed
by their duly authorized respective officers, all as of the date first written
above.
PURCHASER:
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AUDIO
TECHNOLOGIES ACQUISITION, LLC
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By:
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Name:
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Title:
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Address:
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SIGNATURE
PAGE TO ASSET PURCHASE AGREEMENT
SELLERS:
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PLANTRONICS,
INC.
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By:
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Name:
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Title:
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Address:
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PLANTRONICS
B.V.
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By:
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Name:
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Title:
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Address:
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SIGNATURE
PAGE TO ASSET PURCHASE AGREEMENT