ASSET PURCHASE AGREEMENT

 

 

TABLE OF CONTENTS

 

	PAGE
ARTICLE 1
DEFINITIONS
Section 1.01.  Definitions	1
Section 1.02.  Other Definitional and Interpretative Provisions	17
ARTICLE 2
PURCHASE AND SALE
Section 2.01.  Purchase and Sale	18
Section 2.02.  Excluded Assets	20
Section 2.03.  Assumed Liabilities	22
Section 2.04.  Excluded Liabilities	23
Section 2.05.  Assignment of Contracts and Rights	26
Section 2.06.  Purchase Price; Allocation of Purchase Price	27
Section 2.07.  Closing	28
Section 2.08.  Closing Balance Sheet; Purchase Price Adjustment	30
Section 2.09.  GST and QST Elections	34
Section 2.10.  Irish Purchased Assets	34
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01.  Corporate Existence and Power	34
Section 3.02.  Corporate Authorization; Binding Effect	34
Section 3.03.  Governmental Authorization	35
Section 3.04.  Subsidiary Capital Structure	36
Section 3.05.  Noncontravention	36
Section 3.06.  Financial Information; Undisclosed Liabilities	37
Section 3.07.  Absence of Certain Changes	37
Section 3.08.  Material Contracts	38
Section 3.09.  Government Contracts	40
Section 3.10.  Litigation	41
Section 3.11.  Compliance with Laws and Court Orders	41
Section 3.12.  Properties	42
Section 3.13.  Title to Purchased Assets; Sufficiency	42
Section 3.14.  Intellectual Property	42
Section 3.15.  Taxes	45
Section 3.16.  Finders’ Fees	45
Section 3.17.  Personnel	46
Section 3.18.  Labor Matters	48
Section 3.19.  Environmental Compliance	49
Section 3.20.  Permits	51
Section 3.21.  Customers and Suppliers	52

 

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Section 3.22.  Certain Obligations	52
Section 3.23.  Product Warranty	52
Section 3.24.  Illegal Payments	52
Section 3.25.  Affiliates Transactions	53
Section 3.26.  Exclusivity of Representations	53
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01.  Corporate Existence and Power	53
Section 4.02.  Corporate Authorization; Binding Effect	53
Section 4.03.  Government Authorization	54
Section 4.04.  Noncontravention	54
Section 4.05.  Financing	55
Section 4.06.  Investigation by Buyer; Seller’s Liability	55
Section 4.07.  Litigation	55
Section 4.08.  Finders’ Fees	55
Section 4.09.  Taxes	56
ARTICLE 5
COVENANTS OF SELLER
Section 5.01.  Conduct of the Business	56
Section 5.02.  Exclusive Dealings	58
Section 5.03.  Access to Information	58
Section 5.04.  Competitive Activity; Confidentiality	59
Section 5.05.  Title Insurance; Memorandum of Lease, Estoppel Certificates	61
Section 5.06.  Insurance Proceeds	62
Section 5.07.  Release of Liens	62
Section 5.08.  Transferred New York Tower Sites	62
Section 5.09.  Sales of SONY Excluded Assets	63
ARTICLE 6
COVENANTS OF BUYER
Section 6.01.  Confidentiality	63
Section 6.02.  Access	64
Section 6.03.  Cooperation on SONY Litigation	65
Section 6.04.  Post-Closing Obligations for Leases	66
Section 6.05.  Replacement of Certain Obligations	66
ARTICLE 7
COVENANTS OF BUYER AND SELLER
Section 7.01.  Reasonable Best Efforts; Further Assurances	68
Section 7.02.  Certain Filings	69
Section 7.03.  Public Announcements	70
Section 7.04.  Notification of Certain Matters	70

 

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Section 7.05.  Intellectual Property	70
Section 7.06.  WARN Act	73
Section 7.07.  Nonsolicitation	73
Section 7.08.  Certain Matters	74
ARTICLE 8
TAX MATTERS
Section 8.01.  Allocation of Taxes to Seller	74
Section 8.02.  Allocation of Taxes to Buyer	75
Section 8.03.  Allocation of Straddle Period Taxes	76
Section 8.04.  Tax Returns; Payment of Taxes; Carrybacks	76
Section 8.05.  Tax Contests	77
Section 8.06.  Indemnification	78
Section 8.07.  Refunds	80
Section 8.08.  Assistance And Cooperation	81
Section 8.09.  Tax Records	81
Section 8.10.  Dispute Resolution	81
Section 8.11.  Payment	81
Section 8.12.  Adjustment	82
Section 8.13.  Termination Of Tax Allocation Agreements	82
Section 8.14.  CFC Legal Proceedings	82
ARTICLE 9
EMPLOYEE BENEFITS
Section 9.01.  U.S. Business Employees and Employee Benefits	83
Section 9.02.  Canadian Business Employees. Transfer and Terms and Conditions of Employment	87
Section 9.03.  Irish Business Employees	88
Section 9.04.  Other Business Employees	89
Section 9.05.  Benefits Obligations	90
Section 9.06.  Indemnity	91
Section 9.07.  Transferred Employees	92
Section 9.08.  Consultations	92
Section 9.09.  Assistance and Cooperation	92
Section 9.10.  No Third Party Beneficiaries	92
Section 9.11.  Wage Reporting	93
ARTICLE 10
CONDITIONS TO CLOSING
Section 10.01.  Conditions to Obligations of Buyer and Seller	93
Section 10.02.  Conditions to Obligation of Buyer	93
Section 10.03.  Conditions to Obligation of Seller	94
Section 10.04.  Frustration of Closing Conditions	94

 

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ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.01.  Survival	94
Section 11.02.  Indemnification by Seller	95
Section 11.03.  Indemnification by Buyer	96
Section 11.04.  Damages Net of Insurance, Etc.	97
Section 11.05.  Procedures; Third Party Claims	97
Section 11.06.  Calculation of Damages	99
Section 11.07.  Environmental Indemnity for Transferred New York Tower Sites	99
Section 11.08.  Environmental Procedures	99
Section 11.09.  Parent Guarantee	100
Section 11.10.  Exclusive Remedy/Waiver	101
ARTICLE 12
TERMINATION
Section 12.01.  Grounds for Termination	101
Section 12.02.  Effect of Termination	102
ARTICLE 13
MISCELLANEOUS
Section 13.01.  Notices	102
Section 13.02.  Amendments and Waivers	104
Section 13.03.  Disclosure Schedule References	104
Section 13.04.  Expenses	104
Section 13.05.  Successors and Assigns	104
Section 13.06.  Governing Law	104
Section 13.07.  Jurisdiction	104
Section 13.08.  WAIVER OF JURY TRIAL	105
Section 13.09.  Counterparts; Effectiveness; Third Party Beneficiaries	105
Section 13.10.  Entire Agreement	106
Section 13.11.  Bulk Sales Laws	106
Section 13.12.  No Strict Construction	106
Section 13.13.  Severability	106
Section 13.14.  Specific Performance	106
Section 13.15.  Payment in U.S. Dollars	106

 

Exhibits:
Exhibit A	Assignment and Assumption Agreement
Exhibit B	Sublease Agreement
Exhibit C	Transition Services Agreement
Exhibit D	Agreed Principles

 

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Exhibit E	Working Capital Limit Calculations
Exhibit F	Subcontract
Exhibit G	Guarantee of Seller Parent

 

Schedules:

Disclosure Schedules

 

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injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person or such Person’s assets or properties, as amended unless expressly specified otherwise.

 

“ Assignment and Assumption Agreement ” means an assignment and assumption agreement to be entered into by Seller or its Affiliate, as applicable, and Buyer (or, subject to Section 13.05, Buyer’s designated Affiliate(s)) at the Closing in substantially the form of Exhibit A attached hereto.

 

“ Assumed Intercompany Payables ” means the trade payables incurred in the ordinary course of business due and payable by the Business to Seller and its Affiliates, but only to the extent included in the calculation of Final Closing Working Capital.

 

“ Assumed Intercompany Receivables ” means the trade receivables incurred in the ordinary course of business due and owing to the Business from Seller and its Affiliates, but only to the extent included in the calculation of Final Closing Working Capital.

 

“ Autoliv Agreement ” means the Asset Purchase Agreement between Autoliv ASP, Inc. and Seller dated July 28, 2008.

 

“ Benefit Plan ” means each “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA) and each other bonus, stock option, stock purchase, equity, severance, retention, salary continuation, pension, retirement income, profit sharing, employment, consulting, collective bargaining, change-in-control, fringe benefit, vacation pay, sick leave, deferred compensation, perquisite, tuition reimbursement, incentive or other employee compensation or benefit plan, agreement, arrangement, program, policy or trust funding vehicle, whether written or unwritten, contributed to or maintained by Seller or any of its Affiliates in connection with the Business or for the benefit of any Business Employee, or with respect to which the Business may have any Liability.  For the avoidance of doubt, for purposes hereof a “collective bargaining” plan or arrangement shall not include any works council, national union or similar body or organization, or the statutory obligations pertaining thereto.

 

“ Business Confidential Information ” means all confidential information that relates to the Business.

 

“ Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

 

“ Business Employee ” means each individual (A) who is employed by Seller or any of its Affiliates and is primarily employed in the Business as of the date hereof and remains so employed as of the date immediately prior to the Closing Date, including any such individual on short-term disability, pregnancy or

 

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parental leave or any other authorized leave of absence immediately prior to the Closing Date; or (B) who is currently not an employee of Seller or its Affiliates, receives an offer of employment to be primarily employed in the Business in the ordinary course of business consistent with past practice after the date hereof or has been made such an offer prior to the date hereof and commences his or her employment prior to, on or after the Closing Date ( provided that, with respect to any such individual with an annual base salary in excess of $125,000, Buyer has provided written consent to such employment).  Each individual who is employed by Seller or any of its Affiliates and is primarily employed in the Business as of the date identified on Schedule 1.01(a)(i)(a) is identified on such Schedule.  Schedule 1.01(a)(i)(b) identifies those employees who, notwithstanding anything to the contrary in this Agreement, shall not be deemed to be Business Employees. The term “Business Employee” shall exclude any other employee, any Former Employee and, except in the case of the Irish Business Employees and subject to any obligations of Buyer or an Affiliate of Buyer under Applicable Law (including the Transfer Regulations), any individual who was, immediately prior to the Closing Date, on long-term disability, unauthorized leave of absence or lay-off with or without recall rights.

 

“ Canadian Business Employee ” means any Business Employee based in Canada and ordinarily working in Canada.

 

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and any rules or regulations promulgated thereunder.

 

“ Closing Cash ” means the aggregate bank balance of cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, and any evidence of Indebtedness issued or guaranteed by any Governmental Authority of the Business as of the Closing, calculated in a manner consistent with the Agreed Principles.  For the avoidance of doubt, book overdrafts (outstanding checks in excess of cash balances in bank) will be included in accounts payable.

 

“ Closing Date ” means the date of the Closing.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

“ Commercially Reasonable Manner ” means a commercially reasonable, cost-effective method for investigation, remediation, removal, corrective action, containment, monitoring and/or other response action, determined from the perspective of a reasonable business person acting without regard to the availability of indemnification under this Agreement to achieve compliance with Environmental Laws in effect as of the time such actions are being performed (and with respect to the Leased Real Property, to achieve compliance with any Real Property Lease as in effect as of the Closing Date or, if less restrictive, as

 

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amended thereafter), including the reasonable use of risk-based remedies, institutional or engineering controls or deed restrictions; provided that such remedies, controls or restrictions do not prevent or inhibit any commercial or industrial use (as applicable) of the Real Property at the time such actions are being performed and provided , further , that, with respect to any Leased Real Property, the applicable lessor consents to any such remedies, controls or restrictions to the extent such consent is required by the relevant Real Property Lease or any Applicable Law.

 

“ Contest ” means any audit, court proceeding or other dispute with respect to any Tax matter that affects the Subsidiary, the Non-Entity Business or the Purchased Assets.

 

“ Contract ” means any contract, agreement, lease, license, commitment, sale or purchase order or other legally binding proposal, arrangement or understanding, in each case, whether written or oral.

 

“ Divested Business ” means (i) with respect to Seller and its Affiliates, any business unit or product line included in the Retained Business and (ii) with respect to Buyer and its Affiliates, any business unit or product line included in the Business, in each case, which is sold, conveyed or otherwise transferred to any other Person whether by a stock sale, an asset sale, or a merger or consolidation.

 

“ DTX Patents and DTX Trademarks ” means those Patents and Trademarks identified as such on Schedule 1.01(a)(ii).

 

“ Due Diligence Materials ” means any of the information, including replacement and other cost estimates and financial and other projections, made available to Buyer, its Affiliates or its representatives and set forth in materials contained in the virtual data room related to the transactions contemplated hereby and established by Seller through the Intralinks datasite, in presentations by the management of the Business, in “break-out” discussions with the management of the Business, in Seller’s responses to questions submitted by or on behalf of Buyer, its Affiliates or its representatives, and in materials prepared by or on behalf of Seller for purposes of the transactions contemplated hereby.

 

“ Environment ” means soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air, indoor air or indoor air quality.

 

“ Environmental Conditions ” means any (i) violation of or Liability under any Environmental Law, (ii) Release of any Hazardous Substance at, on, in, under or migrating to or from any location, or (iii) disposal, transportation, treatment, storage, reclamation or recycling, or arrangement for any of the foregoing, in the case of each of clauses (i), (ii) and (iii), in connection with or relating to the Business, the Purchased Assets or the Real Property.

 

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“ Environmental Laws ” means any Applicable Law or any agreement with any Governmental Authority relating to the Environment, to public or workplace health or safety to the extent relating to Hazardous Substances, or to the manufacture, distribution, handling, transport, treatment, storage, disposal, discharge, emission, Release or threatened Release of any Hazardous Substance.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

“ ERISA Affiliate ” of any entity means any other entity, trade or business which, together with such entity, trade or business, would be treated as a single employer under Section 414 of the Code.

 

“ Excess Transfer Taxes ” means the amount of Transfer Taxes in excess of the amount of Transfer Taxes that would have been incurred in connection with the sale of the Business if, in lieu of a sale of the assets of M/A-COM, the shares of M/A-COM had been sold by Seller to Buyer.

 

“ Excluded Environmental Liabilities ” means all Liabilities arising under any Environmental Law or relating to the Release of Hazardous Substances to the extent (i) arising in connection with any real property or facility owned, leased or operated by the Business prior to the Closing Date, other than any Real Property or Purchased Asset, or (ii) arising out of the pre-Closing disposal, transportation, treatment, storage, reclamation or recycling, or arrangement for any of the foregoing, of Hazardous Substances at or to any third-party waste disposal, treatment, storage, reclamation or recycling site by or in connection with the Business.

 

“ Excluded Marks ” means any name, mark or symbol that includes, is identical to or is confusingly similar to, any of the trademarks, service marks, domain names, trade names or other indicia of origin set forth on Schedule 1.01(a)(vi) or any other trademark, service mark, domain name, trade name or other indicia of origin characterized as an Excluded Asset.

 

“ Excluded Services ” means tax, legal, treasury, internal audit, financial reporting, public relations, investor relations, Tyco Electronics’s marketing and branding, environmental consultancy, fleet management, risk management, real estate management, business development and export compliance.

 

“ FAR ” means the U.S. Federal Acquisition Regulation, codified as amended at 48 C.F.R. Chapter 1.

 

“ Final Determination ” means, with respect to any Taxes, (i) the expiration of the statute of limitations on both assessments and refunds of such Taxes or (ii) the final settlement of Taxes through agreement of the parties to an administrative or judicial proceeding or by an administrative or judicial decision from which no appeal can be taken or the time for taking any such appeal has expired.

 

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“ Former Employee ” means any former employee of the Business as of the date immediately prior to the Closing Date, including retirees and, subject to Applicable Law (including the Transfer Regulations), individuals on long-term disability.  For the avoidance of doubt and subject to the same, the term “Former Employee” shall include any Business Employee who terminates his or her employment with Seller or any of its Affiliates after the date hereof and prior to the Closing Date.

 

“ GAAP ” means generally accepted accounting principles in the United States in effect as of the date hereof or, with respect to any financial statements, the date such financial statements were prepared.

 

“ Government Contract ” means any Contract entered into by Seller or any of its Affiliates for the provision by the Business of goods or services to (i) a U.S. federal Governmental Authority; (ii) a prime contractor to a U.S. federal Governmental Authority; or (iii) any subcontractor relating to a Contract to which a U.S. federal Governmental Authority is a party.

 

“ Government Contract Bid ” means any offer, bid, proposal or quote to obtain a Government Contract.

 

“ Governmental Authority ” means any transnational, domestic or foreign federal, state, provincial or local governmental authority, department, court, agency or official, including any political subdivision thereof or arbitral tribunal whose decisions have the same force and effect as law.

 

“ GST ” means the Goods and Services Tax imposed pursuant to Part IX of the Excise Tax Act (Canada) and any related interest.

 

“ Hazardous Substances ” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics including petroleum, its derivatives, by-products and other hydrocarbons, asbestos, asbestos-containing materials and polychlorinated biphenyls and any substance, waste or material regulated under any environmental law.

 

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

“ Income Taxes ” means all Taxes based upon, measured by or calculated with respect to (i) gross or net income or gross or net receipts or profits (including any capital gains Taxes, minimum Taxes and any Taxes on items of tax preference, but not including sales, use, goods and services, value added, real or personal property transfer or other similar Taxes), (ii) multiple bases (including corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based upon, measured by or calculated with respect to is described in clause (i) above or (iii) withholding Taxes (other than

 

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sales or use Taxes) measured by, or calculated with respect to, any payments or distributions (other than wages).

 

“ Income Tax Return ” means any Tax Return relating to Income Taxes.

 

“ Indebtedness ” of any Person means, without duplication:  either (i) any Liability of any Person (1) for borrowed money (including the current portion thereof), (2) under any reimbursement obligation relating to a letter of credit, bankers’ acceptance or note purchase facility, (3) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation), (4) for all or any part of the deferred purchase price of property or services (other than trade payables and deferred revenues), including any “earnout” or similar payments, or (5) under interest rate swap, hedging or similar agreements (other than under an Amendment to Master Purchase Agreement dated December 1, 2008, by and among Hitachi Kokusai Electric, Inc., Goyo Electronics Co, Ltd., and M/A-COM, Inc.) or (ii) any Liability of others described in the preceding clause (i) that such Person has guaranteed, that is recourse to such Person or any of its assets or that is otherwise its Liability or that is secured in whole or in part by the assets of such Person.  For purposes of this Agreement, Indebtedness includes any and all accrued interest, success fees, prepayment premiums, make-whole premiums or penalties and fees or expenses (including attorneys’ fees) associated with the prepayment or retirement of any Indebtedness.  Notwithstanding anything to the contrary contained herein, the following shall not be considered Indebtedness: (i) any Liability under any lease required to be classified as a capitalized lease obligation in accordance with GAAP or (ii) any Liability under any Parent Guarantee, Seller Surety Bond, Parent LofC and Related Obligation or Contract.

 

“ Information Systems ” means all computer hardware, databases and data storage systems, computer, data, database and communications networks (other than the Internet, public switched telephone network and other public communication networks), architecture interfaces and firewalls (whether for data, voice, video or other media access, transmission or reception) and other apparatus used to create, store, transmit, exchange or receive information in any form.  For the avoidance of doubt, Information Systems shall not include any Software.

 

“ Intellectual Property Rights ” means all of the following U.S., state and foreign intellectual property:  (i) patents, applications for patents, and invention disclosures (“ Patents ”); (ii) trademarks, service marks, brand names, trade names, certification marks, trade dress, domain names and uniform resource locators, and other indications of origin, the goodwill associated with the foregoing and registrations, and applications to register, the foregoing, and all common-law rights relating thereto (“ Trademarks ”); (iii) trade secrets, inventions (whether patentable or not), industrial designs, discoveries, improvements, ideas, formulae, methods, techniques, processes, proprietary information, customer lists, Software (and related documentation), technical information, rights in data collections, know-how and confidential information ( “Know-How” ); (iv) copyright rights,

 

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whether registered or not; and registrations or applications for registration of copyrights; (v) database rights; (vi) mask works and design rights; (vii) other intellectual or industrial property rights and foreign equivalent or counterpart rights and forms of protection of a similar or analogous nature to any of the foregoing or having similar effect in any jurisdiction throughout the world; and (viii) registrations and applications for registration of any of the foregoing, including any renewals, extensions, continuations (in whole or in part), divisionals, reexaminations or reissues or equivalent or counterpart thereof.

 

“ Irish Business Employee ” means any Business Employee based in Ireland and ordinarily working in Ireland.

 

“ Irish Purchased Assets ” means those Purchased Assts arising from, related to, associated with or used primarily in the Business in Ireland.

 

“ IRS ” means the Internal Revenue Service of the United States of America.

 

“ knowledge ” of any Person that is not an individual means the actual knowledge of such Person’s officers after reasonable inquiry of appropriate direct reports.  Notwithstanding the foregoing, where any representation or warranty or other provision contained in this Agreement is expressly qualified by reference to the “knowledge of Seller”, such knowledge means the actual knowledge of each individual listed on Schedule 1.01(a)(iv) after reasonable inquiry by such individual of employees of Seller and its Affiliates who have provided information to the Buyer or are directly responsible for the areas covered by the relevant representation and warranty.

 

“ Leased Real Property ” means the real property subject to the Real Property Leases.

 

“ Legal Proceeding ” means any actions, formal demands or charges, or complaints, in each case made by or before any Governmental Authority, including any suits, proceedings, arbitrations, hearings, audits, investigations or claims of any kind (whether civil, criminal, administrative, investigative, or at law or in equity).

 

“ Liabilities ” means any and all debts, liabilities, commitments and obligations whether accrued or fixed, known or unknown, absolute or contingent, liquidated or unliquidated, matured or unmatured, determined, determinable or otherwise, regardless of when asserted or by whom and whether or not the same would be required to be recognized under GAAP.

 

“ Licensed Intellectual Property Rights ” means (i) all Intellectual Property Rights (other than any Software) owned by a third party and licensed or sublicensed to Seller or an Affiliate of Seller and held for use in or used, in each case, primarily in the conduct of the Business and (ii) all Transferred Software

 

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owned by a third party and licensed or sublicensed to Seller or an Affiliate of Seller.

 

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance, claim, option, encroachment, covenant, condition, easement, right of way, equitable interest, deed of trust, restriction on transfer, right of first refusal or other preferential right, title defect or other restriction or adverse claim of any kind in respect of such property or asset.  For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

 

“ M/A-COM ” means M/A-COM, Inc., a Florida corporation and indirect subsidiary of Seller.

 

“ M/A-COM Canada ” means M/A-COM Private Radio System Canada Corp., a Canadian corporation.

 

“ Material Adverse Effect ” means any circumstance, change, occurrence, event, development or effect that, individually or in the aggregate with all other circumstances, changes, occurrences, events, developments and effects, has resulted in or would reasonably be expected to result in, a material adverse effect on the assets, properties, business, operations, results of operations or financial condition of the Business; provided , however that the following circumstances, changes, occurrences, events, developments or effects shall not be considered for purposes of determining whether a “Material Adverse Effect” has occurred:  (i) changes in economic or political conditions or the financing, banking, currency or capital markets in general to the extent that the same do not materially disproportionately affect the Business (in comparison to other businesses operating in the same industry, markets and geographical areas as the Business); (ii) changes in Applicable Laws or interpretations thereof or changes in accounting requirements or principles (including GAAP) to the extent that the same do not materially disproportionately affect the Business (in comparison to other businesses operating in the same industry, markets and geographical areas as the Business); (iii) changes affecting the industry, markets or geographical areas in which the Business operates to the extent that the same do not materially disproportionately affect the Business (in comparison to other businesses operating in the same industry, markets and geographical areas as the Business); (iv) the announcement or pendency of the transactions contemplated by this Agreement or other communication by Buyer or any of its Affiliates of its plans or intentions (including in respect of employees) with respect to the Business, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Business; (v) the consummation of the transactions contemplated by this Agreement or any actions by Buyer or Seller taken pursuant to and in accordance with this Agreement ( provided that any circumstances, occurrences, events, developments and effects

 

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in existence or that have taken place prior to the taking of any action by Buyer or Seller pursuant to this Agreement and that Buyer or Seller are made aware of, directly or indirectly, as a result of any actions taken by Buyer or Seller pursuant to this Agreement, including any pre-existing breaches of any Contracts that are raised by any third party in connection with the consent solicitation process, may be a “Material Adverse Effect”); (vi) the failure of the Business to take any act for which Buyer’s prior written consent is required under Section 5.01(b) and for which such consent was sought by Seller but not received, but only to the extent that Seller can demonstrate that such act, if taken by the Business, would have prevented the circumstance, change, occurrence, development or event in question; or (vii) any failure by the Business to meet any internal projections or forecasts and seasonal changes in the results of operations of the Business ( provided that the underlying cause or causes of such failure to meet such projections or forecasts may constitute a “Material Adverse Effect”).

 

“ Non-Entity Business ” means the Business excluding the Business conducted by the Subsidiary.

 

“ Object Code ” means computer software that is substantially or entirely in binary form and that is intended to be directly executable by a computer after suitable processing and linking but without any intervening steps of compilation or assembly.

 

“ Owned Intellectual Property Rights ” means (i) the Intellectual Property Rights (other than Patents and Software) owned by Seller or an Affiliate of Seller and held for use in or used, in each case, primarily in the conduct of the Business and (ii) all Transferred Software owned by Seller or an Affiliate of Seller.

 

“ P7200 Trigger ” has the meaning set forth on Schedule 1.01(a)(vii).

 

“ Permit ” means each permit, certificate, license, consent, approval, exemption, waiver or authorization issued or granted by any Governmental Authority.

 

“ Permitted Liens ” means (i) Liens for Taxes not yet due or, if due, being contested in good faith; (ii) mechanic’s, materialman’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business that are not yet due and payable or, if due, are being contested in good faith; (iii) in the case of leased or subleased properties and assets, Liens on the lessors’ or prior lessors’ interests; (iv) in the case of Owned Real Property, (x) easements, covenants, conditions, restrictions and other similar matters, whether of record or not, affecting title to the Owned Real Property and other encroachments and minor title and survey defects to the extent that the same do not materially interfere with the present use of such Owned Real Property in the conduct of the Business, and matters that are disclosed on Schedule 1.01(a)(v) or would be disclosed on an accurate survey of such Real Property and (y) zoning, building codes and other

 

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land use laws regulating the use or occupancy of the Owned Real Property or the activities conducted thereon which are imposed by any Governmental Authority and (v) Liens which do not materially detract from the value of a Purchased Asset or a property or asset used in the conduct of the Business, or materially interfere with any present or intended use of a Purchased Asset or a property or asset used in the conduct of the Business.

 

“ Person ” means an individual, corporation, company, partnership, limited liability company, association, trust, joint venture or other entity or organization, including a Governmental Authority.

 

“ QST ” means the Quebec Sales Tax imposed pursuant to the Act respecting the Quebec sales tax (Quebec) and any related interest or penalties.

 

“ Real Property ” means the Owned Real Property and the Leased Real Property.

 

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing or dumping of a Hazardous Substance into the Environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Substance).

 

“ Relevant Products ” means the following models of products currently sold by the Business:  P5300, P5400, P7100, P7200, P7300, M5300, M7200 and M7300.

 

“ Representatives ” of any Person means such Person’s directors, managers, members, officers, employees, agents, advisors and representatives (including attorneys, accountants, consultants, financial advisors, financing sources and any representatives of such advisors or financing sources).

 

“ Resale Exemption Certificates ” means all fully completed and executed resale exemption certificate and other applicable exemption certificate in respect of the Purchased Assets, in each case acceptable to the states and localities in which Purchased Assets are to be transferred and obtainable under Applicable Law.

 

“ Retained Business ” means any business of Seller or any of its Affiliates other than the Business.

 

“ SEC ” means the United States Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.

 

“ Seller Parent ” means Tyco Electronics Ltd., a corporation incorporated under the laws of Bermuda (or Switzerland upon Tyco Electronics Ltd.’s

 

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shareholders approval of the proposed change of place of incorporation from Bermuda to Switzerland and Tyco Electronics Ltd.’s implementation of such change following such approval) and any successor thereto.

 

“ Seller Product ” means any good or service, or any component thereof, which is made, supplied, sold, developed or otherwise produced by or on behalf of any Retained Business, including any such good, service or component which is supplied to the Business or any other Person by any Retained Business.

 

“ Seller Shared Program Costs ” has the meaning set forth in Schedule 1.01(a)(vi).

 

“ Selling Expenses ” means all unpaid costs, fees and expenses of outside professionals incurred by Seller or any of its Affiliates or that any of the foregoing have agreed to pay relating to the process of selling the Business, whether incurred in connection with this Agreement or otherwise, including all legal, accounting, tax and investment banking fees and expenses.

 

“ Software ” means all computer software, including assemblers, compilers, development tools, design tools and user interfaces, whether in Source Code or Object Code form.

 

“ SONY Contract ” means the Master Agreement for the Construction, Operation & Maintenance of the New York State Statewide Wireless Network (Contract No. CM00841 (formerly Contract No. C000102)) by and between the State of New York, acting through the Office for Technology, and M/A-COM, dated December 6, 2004, as amended.

 

“ SONY Dispute ” means the matter described in Item 2 of Pending Litigation on Schedule 3.10 and any rights, obligations, disputes or lawsuits relating thereto.

 

“ SONY Litigation ” means all litigation between Seller or any of its Affiliates on the one hand and the State of New York and the Office for Technology on the other hand arising out of the SONY Contract, including but not limited to the claims asserted by Tyco Electronics Corporation and M/A-COM in Claim No. 116420 now pending in the Court of Claims of the State of New York.

 

“ Source Code ” means computer software that may be displayed or printed in human-readable form, including all related programmer comments, annotations, flowcharts, diagrams, help text, data and data structures, instructions, procedural, object-oriented or other human-readable code, and that is not intended to be executed directly by a computer without an intervening step of compilation or assembly.

 

“ Straddle Period ” means any taxable period relating to Taxes that would (absent an election) include, but not end until after, the Closing Date.

 

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“ Subcontract ” means a subcontract agreement in substantially the form attached hereto as Exhibit F pursuant to which Buyer will be performing Seller’s or its Affiliates’, as applicable, obligations under each of the prime Government Contracts as their subcontractor throughout the novation process of such prime Government Contracts.

 

“ Sublease Agreement ” means the Sublease Agreement between M/A-COM and Buyer to be entered into at the Closing in substantially the form attached hereto as Exhibit B .

 

“ Subsidiary ” means M/A-COM Poland Sp. Z o.o., and any successor thereto.

 

“ Targeted Technology ” has the meaning set forth on Schedule 6.06.

 

“ Tax ” means any federal, state, provincial, county, local, or foreign tax (including Transfer Taxes), charge, fee, levy, impost, duty, or other assessment, including income, gross receipts, excise, employment, sales, use, transfer, goods and services, recording, license, payroll, franchise, severance, documentary, stamp, occupation, profit, windfall profits, environmental, highway use, commercial rent, customs duty, capital stock, paid-up capital, profits, withholding, Social Security, single business, unemployment, disability, real property, personal property, registration, ad valorem, value added, escheat, abandoned property or unclaimed property, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Governmental Authority, including any estimated payments relating thereto, any interest, penalties, and additions imposed thereon or with respect thereto, and including Liability for taxes of another Person under Treas. Reg. Section 1.1502-6 or similar provision of state, local or foreign law, or as a transferee or successor, by Contract or otherwise.

 

“ Tax Opinion ” means an unqualified “will” opinion of qualified tax counsel under the Tax Sharing Agreement, dated as of June 29, 2007, by and among Seller, Tyco International Ltd. and Covidien Ltd., which opinion in form and substance is reasonably acceptable to Seller, Tyco International Ltd. and Covidien Ltd. and upon which each of them may rely, confirming that the transactions contemplated by this Agreement will not, either separately or in conjunction with other actions taken by Seller, result in any Taxes being imposed on or in connection with the distribution of Seller’s stock and the stock of Covidien Ltd. by Tyco International Ltd. to its shareholders on June 29, 2007 or any transactions undertaken in connection with such distributions.

 

“ Tax Return ” means any report of Taxes due, any information return with respect to Taxes, or other similar report, statement, declaration or document required to be filed under the Code or other Applicable Laws in respect of Taxes, any amendment to any of the foregoing, any claim for refund of Taxes paid, and any attachments, amendments or supplements to any of the foregoing.

 

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Term		Section
Actual Value		2.08(b)(iii)
Agreed Principles		2.08(a)
Agreement		Preamble
Allocation Statement		2.06(b)
Alternative Arrangement Costs		2.05
Assumed Compensation and Benefits		2.03(e)
Assumed Liabilities		2.03
Assumed Plans		2.01(o)
Audited Financial Statements		3.06(a)
Balance Sheet Date		3.06(a)
BIS		3.03
Business		Recitals
Business Contracts		3.08(b)
Buyer		Preamble
Buyer Cafeteria Plan		9.01(g)
Buyer CFC Taxes		8.14(b)
Buyer Covenant Not To Sue		7.05
Buyer Designee		4.01
Buyer Environmental Damages		11.07
Buyer Indemnitees		11.02(a)
Buyer Savings Plan		9.01(e)
Buyer’s Refunds		8.07(b)
Buyer’s Taxes		8.02
Canadian Deferred Hire Date		9.02
Closing		2.07
Closing Cash Amount		2.08(b)
Closing Statement		2.08(a)
Closing Working Capital		2.08(a)
Cobham Agreement		2.02(n)
COBRA		9.01(b)
Collateral Source		11.04(ii)
Communications Act		3.03
Com-Net Agreement		2.02(o)
Com-Net Indemnity		11.07
Covered Persons		5.04(a)
Damages		11.02(a)
DDTC		3.03
Deferred Hire Date		9.04
Disclosure Schedule		Article 3
Disputed Item		2.08(b)
DSS		3.03
Environmental Claims		11.08

 

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Term		Section
Excluded Assets		2.02
Excluded Contracts		2.02(d)
Excluded Liabilities		2.04
Excluded Plans		2.02(f)
Export Administration Regulations		3.03
FCC		3.03
Final Closing Working Capital		2.08(b)
Financial Statements		3.06(a)
Guarantee Trigger Event		11.09
High Value		2.08(b)(ii)
Indemnified Party		11.05
Indemnifying Party		11.05
Information Systems Contracts		3.14(g)
Interim Financial Statement		3.06(a)
Inventory		2.08(a)
Irish Benefit Plan		3.17(g)
ITAR		3.03
Lower Working Capital Limit		2.08(c)(i)
Low Value		2.08(b)(i)
Material Contracts		3.08(a)
Material Customers		3.21(a)
Material Suppliers		3.21(b)
M/A-COM Mark		7.05(a)
NFA Letter		11.08
NISPOM		3.03
Non-assignable Assets		2.05
Noncompetition Period		5.04(a)
Operating Subsidiaries		11.09
Other Business Employee		9.04
Other Consent Costs		2.05
Owned Real Property		2.01(b)
Parent Guarantees		3.22
Parent LofCs		3.22
Purchased Assets		2.01
Purchase Price		2.06(a)
Quebec Business Employee		9.02
Real Property Leases		2.01(a)
Re-Opener		11.08
Registered Intellectual Property		3.14(a)
Related Obligation or Contract		6.05(a)
Restricted Business		5.04(a)
Sale Transaction		5.02(a)

 

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Term		Section
Seller		Preamble
Seller CFC Taxes		8.14(a)
Seller Covenant Not To Sue		7.05
Seller Surety Bonds		3.22
Seller’s Refunds		8.07(a)
Seller’s Taxes		8.01
Selling Entities		3.01
Specified Policy		5.06
Subsidiary Shareholders Agreement		3.04
Tax Indemnified Party		8.06(d)
Tax Indemnifying Party		8.06(d)
Tax Claim		8.06(d)
Tax Notice		8.06(d)
Taxing Authority Notice		8.06(d)
Tax Objection Notice		8.06(e)
Third Party Claim		11.05(b)
Transferred Canadian Employee		9.02
Transferred Employee		9.07
Transferred Intellectual Property		2.01(j)
Transferred Other Employee		9.04
Transferred Patents		2.01(j)
Transfer Tax Returns		8.04(c)
Transferred U.S. Employees		9.01(a)
Tyco Electronics Cafeteria Plan		9.01(g)
Tyco Electronics Savings Plan		9.01(e)
Upper Working Capital Limit		2.08(c)(i)
Warranty Breach		11.02(a)(i)

 

Section 1.02.   Other Definitional and Interpretative Provisions.  The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of

 

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like import.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.  “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any Contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate schedule.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  References to “law”, “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Laws.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  Any reference to a statute refers to the statute, any amendments or successor legislation, and all regulations promulgated under or implementing the statute, as in effect at the relevant time.

 

ARTICLE 2
PURCHASE AND SALE

 

Section 2.01.   Purchase and Sale.  Upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase (or, subject to Section 13.05, cause Buyer’s designated Affiliate(s) to purchase) from Seller and its Affiliates and Seller agrees to sell, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer (or, subject to Section 13.05, Buyer’s designated Affiliate(s)) at the Closing, free and clear of all Liens, other than Permitted Liens, all of Seller’s and its Affiliates’ right, title and interest in, to and under the following assets, properties and rights of Seller and its Affiliates (the “ Purchased Assets ”):

 

(a)           all rights under the leases of real property listed on Schedule 2.01(a) (each a “ Real Property Lease ”, collectively, the “ Real Property Leases ”);

 

(b)           the real property, including those tower sites where Seller or any of its Affiliates own the real property on which the tower stands, together with all buildings, fixtures and improvements erected thereon, listed on Schedule 2.01(b) (collectively, the “ Owned Real Property ”);

 

(c)           all Closing Cash, if any, to the extent it is held in bank accounts dedicated to the Business;

 

(d)           all personal property and interests therein, including all machinery and equipment, tools, Information Systems, spare parts, furniture, office furnishings, vehicles, test equipment and other tangible personal property owned and used, held for use or intended to be used primarily in the Business, wherever

 

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located (including on or in transit to or from the Business properties), including those items of tangible personal property set forth on Schedule 2.01(d);

 

(e)           all raw materials, work in process, finished goods, supplies, molds, parts, spare parts, replacement and component parts, labels, packaging, demonstrating inventory and other inventories, wherever located (including on or in transit to or from the Business properties), owned and used, held for use or intended to be used primarily in the Business;

 

(f)            all rights (including any rights or claims for non-performance or breach) under all Contracts (other than the Real Property Leases) relating primarily to the Business other than the Excluded Contracts;

 

(g)           all accounts, notes, miscellaneous and other receivables, including unbilled receivables, unbilled revenues (including amounts due under customer holdback or retention arrangements) and reimbursable costs and expenses, of the Business, including the Assumed Intercompany Receivables;

 

(h)           all deposits, prepaid expenses and refunds of the Business (other than any Tax refunds to which Seller or its Affiliates are entitled under Article 8), including ad valorem Taxes, leases, rentals, advance payments, deferred charges and credits and any of Seller or its Affiliates’ rights in amounts held in trust in connection with the Service and Access Agreement (or related or subsequent Contract) with the State of Florida;

 

(i)            all rights, claims, credits, demands, causes of action or rights of set-off against third parties relating to or arising from the Purchased Assets or the Assumed Liabilities, including unliquidated rights under manufacturers’, suppliers’, licensors’, contractors’  and vendors’ warranties, guaranties, indemnities and similar rights relating primarily to the Business;

 

(j)            the Patents set forth on Schedule 2.01(j) (the “ Transferred Patents ”), the DTX Patents and DTX Trademarks and all Owned Intellectual Property Rights and Licensed Intellectual Property Rights, together with all income, royalties, damages and payments due or payable to Seller and/or its Affiliates as of the Closing or thereafter (including damages and payments for past, present or future infringements, misappropriations or other violations thereof) and the rights to sue and collect damages for past, present or future infringements, misappropriations or other violations thereof, and any corresponding, equivalent or counterpart rights, title or interest that now exist or may be secured hereafter anywhere in the world (collectively, the “ Transferred Intellectual Property ”);

 

(k)           all transferable Permits (or applications for Permits) primarily related to the Business;

 

(l)            all present and former customer, vendor, supplier, contractor, and service-provider lists and books, records, files, documents, lists, drawings, creative materials, studies, catalogues, product operation sheets, mailing lists,

 

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quality control records, certifications, procedures, reports, and papers, whether in hard copy or computer format, relating primarily to customers, vendors, suppliers, contractors or service providers of the Business and/or used in the Business, including billing, payment, dispute and credit information and similar data, engineering information, sales and promotional literature and records, manuals and data, sales and purchase correspondence, lists of present and former suppliers, lists of present and former customers and tangible embodiments of the Transferred Intellectual Property (or copies thereof) to the extent such embodiments are held for use or used in connection with the Business;

 

(m)          to the extent permitted by Applicable Law, copies of the personnel and employment records relating to Transferred Employees; provided that if Applicable Law requires that Buyer receive original personnel and employment records relating to any Transferred Employees, Buyer shall receive such records pursuant to this Section 2.01(m);

 

(n)           all goodwill and other intangible assets associated with the Business and the Purchased Assets (including the goodwill associated with the Transferred Intellectual Property), together with the right to represent to third parties that Buyer is the successor to the Business;

 

(o)           the assets of the Benefit Plans set forth on Schedule 2.01(o) (collectively, the “ Assumed Plans ”);

 

(p)           the Tax records of the Subsidiary;

 

(q)           any ownership interests in the Subsidiary; provided that notwithstanding the transactions contemplated hereby or any provision of this Agreement, all assets and liabilities of the Subsidiary shall remain the assets and liabilities of the Subsidiary;

 

(r)            all other types or categories of assets, rights and properties owned and used, held for use or intended to be used primarily in the conduct of the Business (other than the Excluded Assets); and

 

(s)           all other assets set forth on Schedule 2.01(s).

 

Section 2.02.   Excluded Assets.   Notwithstanding any provision in this Agreement or any other writing to the contrary, Seller and its Affiliates will retain and will not transfer or assign, and Buyer will not purchase, acquire or assume from Seller or any of its Affiliates, any of the following assets, properties or rights (collectively, the “ Excluded Assets ”), and Buyer shall acquire no right, title or interest in any Excluded Assets under this Agreement or as a result of the transactions contemplated hereby; provided that notwithstanding the transactions contemplated hereby or any provision of this Agreement, all assets and liabilities of the Subsidiary shall remain the assets and liabilities of the Subsidiary:

 

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(a)        Closing Cash to the extent that it is not held in bank accounts dedicated to the Business and not included in the Closing Cash Amount;

 

(b)           all intercompany receivables of the Business payable by Seller or an Affiliate of Seller, other than Assumed Intercompany Receivables;

 

(c)           any corporate books and records of Seller and its Affiliates (other than the Subsidiary);

 

(d)           the Contracts set forth on Schedule 2.02(d) (the “ Excluded Contracts ”);

 

(e)           any current and prior insurance policies of Seller and its Affiliates and any rights of any nature with respect thereto;

 

(f)            the assets of any Benefit Plan other than the Assumed Plans (such Benefit Plans are collectively, the “ Excluded Plans ”);

 

(g)           (i) the “Tyco”, “Tyco Electronics” and “M/A-COM” names, marks and logos, and any other item set forth on Schedule 2.02(g) (including all goodwill associated therewith) and (ii) except for the Transferred Intellectual Property, any Intellectual Property Rights of Seller or any of its Affiliates;

 

(h)           all loans and other advances owing to Seller or any of its Affiliates by each Business Employee who does not become a Transferred Employee;

 

(i)            the Tax records of Seller and any of its Affiliates (other than the Subsidiary);

 

(j)            the original personnel and employment records relating to Transferred Employees to the extent Applicable Law does not require that Buyer receive such original records;

 

(k)           any rights, claims, causes of action or rights of set off arising out of the Excluded Liabilities;

 

(l)            any refunds or credits of Taxes due to Seller or its Affiliates pursuant to Section 8.07;

 

(m)          any Purchased Assets sold or otherwise disposed of in the ordinary course of business and not in violation of any provisions of this Agreement during the period from the date hereof until the Closing Date;

 

(n)           all rights of Seller or any of its Affiliates owed by Cobham Defense Electronic Systems Corporation and Cobham plc pursuant to the Stock and Asset Purchase Agreement by and among Seller, Cobham Defense Electronic Systems Corporation and Cobham plc dated as of May 12, 2008, as amended (the “ Cobham Agreement ”);

 

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(o)           subject to Section 11.07, all rights of Seller or its Affiliates owed by Com-Net Critical Communications, Inc. and the former shareholders of Com-Net Critical Communications, Inc. pursuant to the Stock Purchase Agreement by and among Tyco Acquisition Corp. XVIII (now known as M/A-COM Tech. Holdings, Inc.), Com-Net Critical Communications, Inc. and the shareholders of Com-Net Critical Communications, Inc. dated as of March 30, 2001, as amended (the “ Com-Net Agreement ”); provided that the properties and assets transferred, directly or indirectly, to Seller or its Affiliates under such agreement will not be Excluded Assets; and

 

(p)           any other assets set forth on Schedule 2.02(p).

 

Section 2.03.   Assumed Liabilities.   Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the time of the Closing, to assume (or to cause to be assumed) all Liabilities to the extent relating primarily to the ownership, use or operation of the Purchased Assets or the Business, whether arising prior to, at or after the Closing, other than the Excluded Liabilities (all of the foregoing Liabilities to be so assumed being herein collectively called the “ Assumed Liabilities ”); provided that notwithstanding the transactions contemplated hereby or any provision of this Agreement, all assets and liabilities of the Subsidiary shall remain the assets and liabilities of the Subsidiary.  Without limitation of the foregoing, Assumed Liabilities shall include the following:

 

(a)           all accounts payable and other accrued expenses of the Business, including, without duplication, Assumed Intercompany Payables, but excluding Taxes (which, for the avoidance of doubt, shall be governed exclusively by Section 2.03(i) and Article 8);

 

(b)           subject to Sections 2.04(t) and 2.04(u), all Liabilities arising from the design, construction, testing, marketing, service, operation or sale of products and services of the Business prior to, at or after the Closing, including warranty obligations;

 

(c)           all Liabilities of Seller and its Affiliates arising prior to, at or after the Closing under the Contracts relating primarily to the Business (other than the Excluded Contracts);

 

(d)           all Liabilities of Seller and its Affiliates arising prior to, at or after the Closing under the Real Property Leases;

 

(e)           all Liabilities with respect to Business Employees (including (i) all Liabilities for any claim by a Business Employee under any self-insured health plan of Seller or an Affiliate of Seller incurred prior to the Closing, regardless of when such claim is reported by such Business Employee (but no other Liabilities with respect to a self-insured health plan or any Liability with respect to an insured health plan), (ii) any severance, termination pay, notice period and similar

 

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Liabilities arising from the termination of employment of any Business Employees who do not become Transferred Employees and (iii) any Liabilities with respect to any Business Employee who is on short-term disability, pregnancy or parental leave or any other authorized leave of absence immediately prior to the Closing Date and who returns to active employment with Buyer or an Affiliate of Buyer within six months following the Closing Date), excluding any Liabilities expressly set forth as Excluded Liabilities in Section 2.04 (such non-excluded compensation and benefits, “ Assumed Compensation and Benefits ”);

 

(f)            all Liabilities arising under any action, suit, investigation or proceeding by or on behalf of or with respect to any Business Employee;

 

(g)           all Liabilities arising under the Assumed Plans;

 

(h)           subject to Section 11.07, all Liabilities arising out of or relating to any Environmental Condition in connection with or relating to the Purchased Assets or the Real Property (other than any Excluded Environmental Liabilities);

 

(i)            all Liabilities for or with respect to Taxes for which Buyer bears responsibility pursuant to Article 8;

 

(j)            all Liabilities under any lease required to be classified as a capitalized lease obligation in accordance with GAAP; and

 

(k)           all other Liabilities set forth on Schedule 2.03(k).

 

Section 2.04.   Excluded Liabilities.  Notwithstanding any provision in this Agreement or any other writing to the contrary, Seller and its Affiliates shall retain and be responsible for the following Liabilities relating to the Business (collectively, the “ Excluded Liabilities ”); provided that notwithstanding transactions contemplated hereby or any provision of this Agreement all assets and liabilities of Subsidiary shall remain assets and liabilities of the Subsidiary:

 

(a)           all Liabilities for or with respect to Taxes for which Seller or its Affiliates bear responsibility pursuant to Article 8;

 

(b)           all Liabilities of Seller and its Affiliates to pay any Indebtedness incurred on or prior to the Closing Date;

 

(c)           all accounts payable and accrued expenses of Seller and its Affiliates not related to the conduct of the Business;

 

(d)           (i) intercompany payables of the Business owed to Seller or any Affiliate of Seller other than Assumed Intercompany Payables and (ii) all liabilities arising under Contracts of the Business that are solely between Seller and its Affiliates (including Contracts between two Affiliates of Seller), other than, in the case of clauses (i) and (ii), ordinary course arm’s length purchase orders for goods or services and Contracts regarding employment or employment benefits;

 

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(e)           all Liabilities for any Selling Expenses;

 

(f)            all retention, change in control, bonus or similar awards payable to employees, agents and consultants of Seller or any of its Affiliates as a result of, in connection with or with respect to the transactions contemplated by this Agreement and unpaid as of the Closing Date, including any amounts payable under the retention and sale bonus agreements set forth on Schedule 2.04(f) (including the employer portion of any payroll, social security, unemployment or similar Taxes);

 

(g)           all Liabilities arising under the Excluded Plans, including any defined benefit or defined contribution pension obligation (regardless of whether such obligation is contained in an employment agreement, collective bargaining agreement, national, industry or company agreement, works council agreement or otherwise), other than any such pension obligation that is solely governmental and, as an initial matter, was not voluntary in nature and other than the Canadian Registered Retirement Savings Plans and the Irish Benefit Plan; any non-qualified deferred compensation arrangement; and any post-retirement health and post-retirement life insurance plans (other than the Com-Net Retirement Medical Plan);

 

(h)           all Liabilities arising under the Tyco International (US) Inc. Retirement Savings and Investment Plan I, as amended and restated as of August 3, 2002, including those relating to the special pension supplement credited as a transitional benefit on behalf of eligible Business Employees who were participants in the AMP Incorporated Pension Plan;

 

(i)            all Liabilities arising under any stock option and other equity-based compensation plans of Seller or its Affiliates;

 

(j)            all Liabilities with respect to Former Employees;

 

(k)           all Liabilities with respect to Business Employees (i) whose employment transfers to Buyer or an Affiliate of Buyer or to whom an offer of employment is required to be made, in each case in accordance with Applicable Law (including the Transfer Regulations) if such Business Employee was, immediately prior to the Closing Date, on long-term disability, unauthorized leave of absence or lay-off with or without recall rights or (ii) who are on short-term disability, pregnancy or parental leave or any other authorized leave of absence immediately prior to the Closing Date and do not return to active employment with Buyer or an Affiliate of Buyer within six months following the Closing Date;

 

(l)            all liabilities for or with respect to employee benefits for which Seller or its Affiliates bear responsibility as specifically contemplated under Article 9;

 

(m)          all Excluded Environmental Liabilities;

 

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(n)           all Liabilities arising under, related to or in respect of the Cobham Agreement and the transactions contemplated thereby or undertaken in connection therewith, including all Liabilities arising under, related to or in respect of the business, properties and assets transferred under such agreement;

 

(o)           subject to Section 2.03(h), all Liabilities arising under, related to or in respect of the Com-Net Agreement and the transactions contemplated thereby or undertaken in connection therewith;

 

(p)           all Liabilities arising under, related to or in respect of the Autoliv Agreement and the transactions contemplated thereby or undertaken in connection therewith, including all Liabilities arising under, related to or in respect of the business, properties and assets transferred under such agreement;

 

(q)           any Liability primarily relating to or arising out of an Excluded Asset; provided that any Liability under Item 8 on Schedule 2.02(d) to the extent it relates to the personal property primarily used in the Business shall not be an Excluded Liability;

 

(r)            all Liabilities arising under, related to or in respect of any non-compliance (or alleged non-compliance) with any Applicable Laws prior to the Closing Date, but only to the extent arising out of any criminal Legal Proceeding;

 

(s)           all Liabilities arising out of or with respect to the Retained Business or any Seller Product (other than Seller Products sold to the Business) whether arising prior to, on or after the Closing Date;

 

(t)            all Liabilities arising out of or relating to any business (as opposed to a product line) formerly owned or operated by the Business or any predecessor thereof, but not so owned or operated as of the Closing Date;

 

(u)           all Liabilities related to, arising out of or with respect to the SONY Dispute, the SONY Contract or, to the extent related to the SONY Dispute or the SONY Contract, any agreement related thereto (including the breach of, performance or non-performance of, noncompliance with, or default under any provisions of the SONY Contract or, to the extent related thereto, any agreement related thereto by Seller or any of its Affiliates), or the design, construction, delivery, distribution, supply, operation, or maintenance of the land mobile radio system and network under the SONY Contract, including (i) all Liabilities arising from, related to or with respect to any letters of credit issued in connection with the SONY Contract or, to the extent related thereto, agreements related thereto, (ii) all Liabilities to third Persons, including vendors, subcontractors and employees, including General Dynamics and Alcatel, (iii) all Liabilities under Contracts (including vendor and subcontract Contracts) entered into primarily in connection with the SONY Contract, and (iv) any Legal Proceedings of any kind and whether or not currently threatened or pending that arise out of or are related to any of the foregoing; and

 

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Seller or its Affiliates in connection with the performance of any mutually agreeable arrangement or that otherwise would have been incurred by Buyer or its Affiliates had such Non-assignable Asset been assigned, transferred or conveyed as contemplated by this Agreement, including any Liability arising out of Buyer’s failure to perform thereunder (such costs and expenses, the “ Alternative Arrangement Costs ”).  Prior to the amount of the deductible described in clause (B) of Section 11.02(a) being exceeded (whether pursuant to reimbursement under this sentence or pursuant to any other provision of this Agreement or a combination of the foregoing), Buyer will promptly reimburse Seller for all out-of pocket costs and expenses actually incurred by Seller or its Affiliates (other than Alternative Arrangement Costs) relating to or arising from the failure to obtain a consent, approval or waiver for any Non-assignable Assets (such costs and expenses, the “ Other Consent Costs ”) and any such reimbursement shall be applied toward such deductible.  After the amount of such deductible has been exceeded, Buyer will promptly reimburse Seller for 50% of Other Consent Costs.  Seller will promptly pay to Buyer (or, subject to Section 13.05, its designated Affiliate(s)) when received all monies received by Seller or an Affiliate of Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, except to the extent the same represents an Excluded Asset.

 

(b)           Notwithstanding anything to the contrary in this Agreement (including anything in the foregoing Section 2.05(a)), with respect to the Transferred Software set forth on Schedule 1.01(a)(v), (i) if requested by Buyer in writing, Seller shall use its commercially reasonable efforts to seek the Consent of any third party required to transfer such Transferred Software to Buyer; provided that in no event shall Seller be required to (w) expend money, (x) commence any litigation, (y) offer or grant any accommodation (financial or otherwise) to any third party in order to obtain such Consent or (z) diminish any rights of the Seller or its Affiliates in the Transferred Software (other than a reduction in the number of seat or user licenses); and (ii) if Seller is unable to obtain any Consent in accordance with clause (i) required to transfer any Transferred Software, Seller shall have no further obligation to Buyer under the Agreement or otherwise with respect to the transfer of such Transferred Software, except as contemplated by the Transition Services Agreement.  In the event the Transferred Software is transferred to Buyer, Buyer shall be responsible for any obligations with respect to such Transferred Software after the date of such transfer.

 

Section 2.06.   Purchase Price; Allocation of Purchase Price.  (a)  The purchase price for the Purchased Assets (the “ Purchase Price ”) is equal to $675,000,000 in cash.  The Purchase Price shall be paid as provided in Section 2.07 and shall be subject to adjustment as provided in Section 2.08.  Seller shall be treated as receiving a portion of the Purchase Price as agent for any of its Affiliates actually selling, transferring or conveying the Purchased Assets, consistent with the allocation of the Purchase Price pursuant to the Allocation Statement, and Buyer’s payment of the Purchase Price to Seller shall constitute payment by Buyer to any of Seller’s Affiliates actually selling, transferring or conveying the Purchased Assets hereunder.

 

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(b)           Within 60 days after the Closing, Buyer shall deliver to Seller a statement (the “ Allocation Statement ”) allocating the Purchase Price (plus Assumed Liabilities and transaction costs, to the extent properly taken into account under Section 1060 of the Code) among the Purchased Assets in accordance with Section 1060 of the Code.  If, within five Business Days after delivery of the Allocation Statement, Seller notifies Buyer in writing that Seller objects to the allocation set forth in the Allocation Statement, Buyer and Seller shall use commercially reasonable efforts to resolve such dispute within 20 days.  In the event that Buyer and Seller are unable to resolve such dispute within 20 days, Buyer and Seller shall jointly retain KPMG LLP (the “ Accounting Referee ”) to resolve the disputed items in the manner described in Section 8.10.

 

(c)           Each of Buyer and Seller shall (i) be bound by the Allocation Statement, as may be adjusted in accordance with Section 2.06(e), (ii) act in accordance with, and cause its Affiliates to act in accordance with, the Allocation Statement in the preparation, filing and audit of any Tax Return (including filing IRS Form 8594 with its federal Income Tax Return for the taxable year that includes the Closing) and (iii) take no position, and cause its Affiliates to take no position, inconsistent with the allocation reflected on the Allocation Statement on any Tax Return, in any Contest or otherwise, unless required by a Final Determination.

 

(d)           In the event that the allocation reflected on the Allocation Statement is disputed by any Taxing Authority, the party receiving notice of the dispute shall promptly notify the other party hereto, and Buyer and Seller shall use their commercially reasonable efforts to defend such allocation in any Tax audit or similar proceeding.

 

(e)           If an adjustment is made with respect to the Purchase Price pursuant to Section 2.08, the Allocation Statement shall be adjusted in accordance with Section 1060 of the Code and as mutually agreed by Buyer and Seller.  In the event that an agreement is not reached within 20 days after the determination of the Final Closing Working Capital, any disputed items shall be resolved in the manner described in Section 8.10.  Buyer and Seller shall file any additional information return required to be filed pursuant to Section 1060 of the Code and to treat the Allocation Statement as adjusted in the manner described in Section 2.06(c).

 

(f)            Not later than 30 days prior to the filing of their respective Forms 8594 relating to this transaction, each party shall deliver to the other party a copy of its Form 8594.

 

Section 2.07.   Closing.  The closing (the “ Closing ”) of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, as soon as possible, but in no event later than three Business Days, after satisfaction (or to the extent permitted, the

 

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waiver) of the conditions set forth in Article 10 (other than those conditions that by their nature may only be satisfied at the Closing and will in fact be satisfied at the Closing), or at such other time or place as Buyer and Seller may agree; provided , however , that the Closing may be delayed by Seller (x) for up to one month if the Tax Opinion has not been finalized by such date, to permit the Tax Opinion to be finalized or (y) the end of Seller’s applicable fiscal month.  Notwithstanding the foregoing, Seller shall not be entitled to exercise its right to delay the Closing under either (x) or (y) of the immediately preceding sentence if Seller would otherwise be obligated to complete the Closing between June 26, 2009 and July 3, 2009 (inclusive).  If Seller exercises its right to delay the Closing as set forth in the second immediately preceding sentence, Seller shall deliver 5 Business Days’ notice to Buyer of Seller’s intent to close.  The Closing shall be deemed to be effective for accounting and other computational purposes, and the parties will treat the Closing as if it had occurred, at 11:59 p.m. Eastern Time on the Closing Date.  All proceedings to be taken, and all documents to be executed and delivered by all parties at the Closing, shall be deemed to have been taken and executed simultaneously, and no proceedings shall be deemed to have been taken and no documents shall be deemed to have been executed or delivered until all have been taken, executed and delivered.  At the Closing:

 

(a)           Buyer shall deliver (or, subject to Section 13.05, cause one or more of its designated Affiliates to deliver) to Seller the Purchase Price in immediately available funds by wire transfer to an account of Seller with a bank in New York City designated by Seller, by notice to Buyer, which notice shall be delivered not later than two Business Days prior to the Closing Date.

 

(b)           Seller shall deliver or cause its Affiliates to deliver, as applicable, to Buyer such deeds, bills of sale, endorsements, assignments, duly endorsed certificates, stock powers and other good and sufficient instruments of conveyance and assignment as reasonably necessary or appropriate to vest in Buyer (or, subject to Section 13.05, its designated Affiliate) all right, title and interest in, to and under the Purchased Assets other than the Irish Purchased Assets.

 

(c)           Seller shall deliver or cause its Affiliates to deliver, as applicable, to Buyer such deeds, bills of sale, endorsements, assignments, duly endorsed certificates, stock powers and other good and sufficient instruments of conveyance and assignment as reasonably necessary or appropriate to vest in Buyer (or, subject to Section 13.05, its designated Affiliate) all right, title and interest in, to and under the Irish Purchased Assets in accordance with Section 2.10.

 

(d)           Seller and Buyer shall enter into or cause their respective Affiliates, as applicable, to enter into the Transaction Documents (other than this Agreement), and Seller and Buyer shall deliver (or cause to be delivered) to each other their respective duly executed counterparts of each of the Transaction

 

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Documents (other than this Agreement) to which it (or any of its Affiliates) is a party.

 

(e)           Seller shall cause each Selling Entity that is selling any Owned Real Property or assigning a Real Property Lease that is located, or with respect to property located, in the United States to deliver to Buyer a non-foreign person affidavit that satisfies the requirements of Section 1445 of the Code.

 

(f)            Buyer and Seller shall each deliver to the other such other documents and instruments as the other may reasonably request to consummate the transactions contemplated by this Agreement or as evidence that the conditions set forth in Article 10 have been satisfied.

 

Section 2.08.   Closing Balance Sheet; Purchase Price Adjustment.  (a)  Promptly after the Closing Date, and in any event not later than thirty (30) days following the Closing Date, Seller shall prepare and deliver to Buyer for its review a statement (the “ Closing Statement ”) of the Closing Working Capital and the Closing Cash as of the close of business on the Closing Date.  “ Closing Working Capital ” means, as of the Closing, the current assets of the Business (excluding Closing Cash, State of Florida deferred costs phases 3,4,5 (recorded in SAP account number 1308015) and deferred Income Tax assets but including the long-term portion of any unbilled revenues or unbilled receivables) less the current liabilities of the Business (excluding all State of Florida deferred revenue liabilities (including SAP account numbers 2308010, 2308015 and 2308025), P7200 rework and related liabilities, deferred Income Tax liabilities and, for the avoidance of doubt, accrued Income Tax liabilities), in each case included in the Purchased Assets and Assumed Liabilities or owned or owing by the Subsidiary, taken as a whole.  Closing Working Capital and Closing Cash will be determined in a manner consistent with the policies, principles, practices and methodologies set forth on Exhibit D (the “ Agreed Principles ”).  The calculation of the target closing working capital is set forth in Exhibit E .   Buyer shall give Seller and its Representatives reasonable access to the premises, books and records, and appropriate personnel of the Business as necessary for purposes of the preparation of the Closing Statement in accordance with this Section 2.08(a) (and during the periods contemplated by Section 2.08(b)).  Buyer shall instruct its employees (including the Transferred Employees) and Representatives to cooperate with, and promptly and completely respond to all reasonable requests and inquiries of, Seller and its Representatives, and, upon execution of a customary access letter if required by Buyer’s outside accountants, Seller and its Representatives shall have reasonable access, upon reasonable notice, to all relevant work papers, schedules, memoranda and other documents prepared by Buyer or its Representatives (including its outside accountants) to the extent such materials have been prepared by Buyer and its Representatives and relate to the calculation of Closing Working Capital and/or the Closing Cash and are reasonably required by Seller or its Representatives in the calculation of Closing Working Capital and/or Closing Cash.  At the Business’s facilities in Lynchburg, Virginia, Cork, Ireland, and additional locations which would reasonably be deemed necessary to achieve at

 

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least 75% coverage of total inventory of the Business, whether raw materials, work-in-process or finished product (the “ Inventory ”), Seller will determine the quantities of Inventory located at such facilities as of the Closing Date for purposes of the Closing Working Capital calculation by taking a physical count or measurement of the Inventory located at such facilities commencing as soon as reasonably practicable after the Closing Date.  During such physical count or measurement, Seller will use commercially reasonable efforts to ensure that incoming shipments of materials from suppliers and shipments to customers do not affect such physical counts or measurements.  Seller will conduct such physical counts or measurements of the Inventory using Business Employees and/or contractors.  For finished product Inventory in transit to customers on the Closing Date, the physical count or measurement will exclude the invoiced quantities in transit to customers as supported by shipping records.  Buyer will have the right to have its Representatives observe and check such physical inventory count or measurement.

 

(b)           Buyer and its Representatives may make reasonable inquiries of Seller and/or its Representatives regarding questions concerning or disagreements with the Closing Statement arising in the course of Buyer’s review.  Seller shall give Buyer reasonable access to the premises, books and records, and its Representatives for purposes of reviewing the Closing Statement in accordance with this Section 2.08(b).  Seller shall instruct its employees and Representatives and cause its Affiliates to instruct their respective employees and Representatives to cooperate with, and promptly and completely respond to all reasonable requests and inquiries of, Buyer and its Representatives, and, upon execution of a customary access letter if required by Seller’s outside accountants, Buyer and its Representatives shall have reasonable access, upon reasonable notice, to all relevant work papers, schedules, memoranda and other documents prepared by Seller or its Representatives (including its outside accountants) to the extent such materials relate to the calculation of Closing Working Capital and/or the Closing Cash and are reasonably required by Buyer or its Representatives in the calculation of Closing Working Capital and/or Closing Cash.  Buyer shall complete its review of the Closing Statement within forty-five (45) days after the delivery thereof to Buyer.  Promptly following completion of its review (but in no event later than the conclusion of the forty-five (45) day period), Buyer may submit to Seller a letter regarding its concurrence or disagreement with the accuracy of the Closing Statement; provided that any such letter must specify (i) the items of the Closing Statement with which Buyer disagrees, (ii) the adjustments that Buyer proposes to be made to the Closing Statement and (iii) the specific amount of such disagreement and reasonable supporting documentation and calculations and provided , further , that Buyer may only disagree with the Closing Statement if Buyer’s proposed calculation will result in an adjustment to the Purchase Price.  If Buyer does not deliver a letter disagreeing with the accuracy of the Closing Statement before the conclusion of such forty-five (45) day period, the Closing Statement shall be final and binding upon the parties and Buyer shall be deemed to have agreed with all items and amounts contained in the Closing Statement.  If Buyer does deliver such a letter, following such delivery,

 

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Seller and Buyer shall attempt in good faith to resolve promptly any disagreement as to the computation of any item in the Closing Statement.  Any items to which there is no disagreement shall be deemed agreed.  If a resolution of such disagreement has not been effected within fifteen (15) days (or longer, as mutually agreed by the parties) after delivery of such letter, notwithstanding the parties’ good faith efforts to resolve the disagreement, then Seller and Buyer shall jointly engage the Accounting Referee to resolve on a basis consistent with the Agreed Principles such disagreement regarding the Closing Statement (a “ Disputed Item ”).  Each party shall cooperate with and make available to the other party and the Accounting Referee all information, records, data and working papers as may be reasonably requested by the Accounting Referee in connection with the preparation and analysis of the Closing Statement and the resolution of any disagreements relating thereto and shall cause the Accounting Referee to render its determination with respect to any Disputed Item within thirty (30) days of submission of such Disputed Item to the Accounting Referee.  The Accounting Referee shall adopt a position within the range of positions submitted by Seller and Buyer with respect to any Disputed Item.  The Accounting Referee’s determination regarding any Disputed Item shall be based solely on whether Seller included such Disputed Item in or excluded such Disputed Item from the Closing Statement or calculated such Disputed Item, as the case may be, in a manner consistent with the Agreed Principles.  All determinations made by the Accounting Referee shall be final, conclusive and binding on the parties hereto, and neither of the parties hereto, nor any of their respective Affiliates, shall seek recourse in the courts or other tribunals, other than to enforce the Accounting Referee’s determination.  Subject to Section 13.07, judgment may be entered to enforce such determination in any court of competent jurisdiction.  Closing Working Capital as finally determined in accordance herewith shall be referred to as the “ Final Closing Working Capital .”  The Closing Cash as finally determined in accordance herewith shall be referred to as the “ Closing Cash Amount .”  The fees, costs, and expenses of the Accounting Referee shall be shared as follows:

 

(i)            if the Accounting Referee resolves all of the Disputed Items in favor of Buyer’s position (the Final Closing Working Capital and/or the Closing Cash Amount, as the case may be, so determined is referred to herein as the “ Low Value ”), then Seller shall be obligated to pay for all of the fees and expenses of the Accounting Referee;

 

(ii)           if the Accounting Referee resolves all of the Disputed Items in favor of Seller’s position (the Final Closing Working Capital and/or Closing Cash Amount, as the case may be, so determined is referred to herein as the “ High Value ”), then Buyer shall be obligated to pay for all of the fees and expenses of the Accounting Referee; and

 

(iii)          if the Accounting Referee neither resolves all of the Disputed Items in favor of Buyer’s position nor resolves all of the Disputed Items in favor of Seller’s position (the Final Closing Working

 

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Capital and/or the Closing Cash Amount, as the case may be, so determined is referred to herein as the “ Actual Value ”), Seller shall be responsible for such fraction of the fees and expenses of the Accounting Referee for the Final Closing Working Capital and/or the Closing Cash Amount, as the case may be, equal to (x) the difference between the High Value and the Actual Value over (y) the difference between the High Value and the Low Value, for the Final Closing Working Capital and/or the Closing Cash Amount, as the case may be, and Buyer shall be responsible for the remainder of the fees and expenses of the Accounting Referee.

 

(c)        If the Final Closing Working Capital:

 

(i)            is equal to or greater than an amount three percent (3%) below the target closing working capital set forth on Exhibit E (the “ Lower Working Capital Limit ”) and is equal to or less than an amount three percent (3%) above the target closing working capital set forth on Exhibit E (the “ Upper Working Capital Limit ”), then no adjustments will be made to the Purchase Price in respect of the Final Closing Working Capital;

 

(ii)           exceeds the Upper Working Capital Limit, then Buyer shall be obligated to pay to Seller the amount by which the Final Closing Working Capital exceeds the Upper Working Capital Limit; or

 

(iii)          is less than the Lower Working Capital Limit, then Seller shall be obligated to repay to Buyer the amount by which the Lower Working Capital Limit exceeds the Final Closing Working Capital.

 

(d)        Buyer shall be obligated to pay to Seller the Closing Cash Amount, if any.

 

(e)        Any payments to be made pursuant to Sections 2.08(c) and 2.08(d) shall be made by wire transfer of immediately available funds to the account designated in writing by Buyer or Seller, as the case may be, within five (5) Business Days after the determination of the Final Closing Working Capital and the Closing Cash Amount, as the case may be.  For the avoidance of doubt, if either of the Final Closing Working Capital or the Closing Cash Amount, as the case may be, is determined before the other, Buyer or Seller, as the case may be, shall pay the other party any amount owed pursuant to Section 2.08(c) or 2.08(d) in respect of such determination within five (5) Business Days after such determination (notwithstanding that the other has not yet been determined).  Any payment made pursuant to Section 2.08(c) or 2.08(d) shall be made with interest (such interest to be calculated on the actual number of days elapsed) on such amount from (i) the date of the delivery of a letter of disagreement, if there is a disagreement or (ii) 35 days from the Closing if there is no such letter of

 

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disagreement (or if the Closing Statement has not yet been delivered by Seller), to the date of such payment at a rate equal to six percent (6%) per annum.

 

Section 2.09.  GST and QST Elections .  At the Closing, Seller and Buyer (or their respective Affiliates) shall jointly execute an election under section 167 of the Excise Tax Act (Canada) and an election under section 75 of an Act respecting the Quebec sales tax (Quebec) in the prescribed form, such that no GST or QST shall be payable in connection with the purchase and sale of the Purchased Assets pursuant to the provisions of this Agreement.  Buyer shall file the joint elections with the returns required to be filed by Buyer under the Excise Tax Act (Canada) and an Act respecting the Quebec sales tax (Quebec) for the Buyer’s reporting periods in which the sale was made, in compliance with the requirements of the Excise Tax Act (Canada) and an Act respecting the Quebec sales tax (Quebec).

 

Section 2.10.  Irish Purchased Assets.  Buyer and Seller acknowledge and agree that this Agreement does not convey title to any of the Irish Purchased Assets. Seller and Buyer shall use their commercially reasonable efforts to ensure that, in relation to the Irish Purchased Assets, appropriate documentation is entered into on the Closing Date to convey title to the Irish Purchased Assets so as to mitigate Irish Stamp Duty.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

 

Subject to Section 13.03, except as set forth in the Disclosure Schedule delivered by the parties concurrently with this Agreement (the “ Disclosure Schedule ”), Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date that:

 

Section 3.01.   Corporate Existence and Power.  Each of Seller and each Affiliate of Seller that owns any right or interest in any of the Purchased Assets and that will sell, transfer or convey any of the Purchased Assets to Buyer (or, subject to Section 13.05, its designated Affiliate) at the Closing (collectively, the “ Selling Entities ”) and the Subsidiary is an entity duly incorporated or organized, as applicable, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, as applicable, and has all powers and all material Permits required to own, lease and operate its properties and to carry on its business as now conducted.  Seller, the Subsidiary and each Selling Entity is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.02.   Corporate Authorization; Binding Effect.  (a)  Seller and each Selling Entity, as the case may be, has or will have full corporate (or other

 

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limited company) power and authority to execute and deliver this Agreement and/or each other Transaction Document to which it is a party, to perform its obligations hereunder and thereunder, as applicable, and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by Seller and each Selling Entity, as the case may be, of the Transaction Documents to which it is a party and each other document, agreement or instrument to be executed and delivered by Seller and each Selling Entity, as the case may be, pursuant to the Transaction Documents, and the performance by Seller and each Selling Entity, as the case may be, of its obligations hereunder and thereunder have been or at the Closing will have been duly authorized by all necessary action on the part of Seller and each Selling Entity, as applicable.

 

(b)        This Agreement has been, and each other Transaction Document to which Seller or any Selling Entity is a party will be, duly and validly executed and delivered by Seller and/or the applicable Selling Entity, as the case may be,  and this Agreement is, and each of the other Transaction Documents to which Seller or a Selling Entity is a party, when executed and delivered by Seller or a Selling Entity, as applicable, will constitute, assuming due execution and delivery by the other parties to such Transaction Document, a valid and binding obligation of Seller and/or the applicable Selling Entity, as the case may be, enforceable against Seller and/or the applicable Selling Entity in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

 

Section 3.03. Governmental Authorization.  The execution, delivery and performance by Seller or any of the Selling Entities, as the case may be, of this Agreement and the other Transaction Documents to which it is a party and each other document, agreement or instrument to be executed and delivered by Seller or any of the Selling Entities, as the case may be, pursuant to this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby require no material action, consent, approval, waiver or exemption by or of, or any filing with, or notification to, any Person other than compliance with any applicable requirements of (a) the HSR Act and other applicable Antitrust Laws set forth on Schedule 3.03(a), (b) the U.S. Federal Communications Commission (the “ FCC ”) under the Communications Act of 1934, as amended (the “ Communications Act ”), (c) Industry Canada under the Radiocommunication Act, (d) the U.S. Department of State’s Directorate of Defense Trade Controls (the “ DDTC ”) under the International Traffic in Arms Regulations of the United States (22 C.F.R. §§ 120-130) (the “ ITAR ”), (e) the U.S. Department of Commerce’s Bureau of Industry and Security (the “ BIS ”) under the Export Administration Regulations (15 C.F.R. § 730 et seq .) (the “ Export Administration Regulations ”), (f) FAR Subpart 42.12 with respect to the novation of the prime Government Contracts and (g) the United States Defense Security Service (the “ DSS ”) under the National Industrial Security Program Operating Manual, as amended (the “ NISPOM ”).

 

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or Liens that would not be material to the Business or the Purchased Assets, taken as a whole.

 

Section 3.06.   Financial Information; Undisclosed Liabilities .   (a)  Schedule 3.06(a) sets forth (i) the audited combined balance sheet of the Business as at September 26, 2008 (the “ Balance Sheet Date ”) and the related combined statements of income and cash flows of the Business for the fiscal year then ended, together with the notes thereto and other financial information included therewith (the “ Audited Financial Statements ”) and (ii) the unaudited combined balance sheet of the Business as of December 26, 2008 and the related combined statement of income of the Business for the fiscal quarter then ended (the “ Interim Financial Statements ”, and together with the Audited Financial Statements, the “ Financial Statements ”).

 

(b)           Except as described in Schedule 3.06(b), the Financial Statements were prepared in accordance with GAAP, consistently applied.  The combined balance sheets of the Business set forth in the Financial Statements fairly present, in all material respects, the financial position of the Business as of the dates thereof, and the related statements of income and cash flows set forth in the Financial Statements fairly present, in all material respects, the results of operations and cash flows of the Business for the time periods indicated except, in relation to the Interim Financial Statements, the absence of footnotes and normal year end adjustments.  As of September 26, 2008, an audit of Seller Parent and its subsidiaries’ internal control over financial reporting was performed, based upon the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  This audit did not identify any material weaknesses or significant deficiencies in the internal controls over financial reporting that were directly related to the Business.

 

(c)           The Business does not have Liabilities that are required to be set forth on a consolidated balance sheet prepared in accordance with GAAP (or, in respect of the Audited Financial Statements, in the notes thereto), except (1) Liabilities reflected on the balance sheets contained in the Financial Statements or disclosed in the notes thereto included in the Financial Statements, (2) Liabilities incurred in the ordinary course of the Business since the date of the Interim Financial Statements, (3) Liabilities incurred in connection with the transactions contemplated hereby, (4) Excluded Liabilities and (5) Liabilities for future performance under any Contract relating to the Business or any Real Property Lease or outstanding purchase order for goods or services.  For the avoidance of doubt, this Section 3.06(c) is not limited to matters not specifically addressed elsewhere in Article 3.

 

Section 3.07.   Absence of Certain Changes.  Except as contemplated by this Agreement, since the Balance Sheet Date and through the date hereof, (a) Seller and its Affiliates have conducted the Business in all material respects in the ordinary course of business consistent with past practice, (b) there has not occurred any Material Adverse Effect and (c) with respect to the Business no

 

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action has occurred that if taken after the date of this Agreement would constitute a breach of Section 5.01 (excluding Section 5.01(b)(x)).

 

Section 3.08.   Material Contracts.  (a)  Schedule 3.08(a) sets forth each of the following Contracts which, with respect to the Purchased Assets or the Business and as of the date hereof, Seller or any of its Affiliates is a party to or otherwise bound by:

 

(i)            any lease (whether of real or personal property) providing for (A) annual rental payments of $250,000 or more or (B) aggregate rental payments of $1,000,000 or more;

 

(ii)           any Contract, other than ordinary course purchase orders, for the purchase of materials, supplies, goods, services, equipment or other assets providing for either (A) payments in the course of the 2008 fiscal year by Seller or such Affiliate of $5,000,000 or more or (B) aggregate payments by Seller or such Affiliate during the prior three fiscal years of $15,000,000 or more, in each case, that cannot be terminated on not more than 60 days’ notice without payment by Seller or such Affiliate of any material penalty;

 

(iii)          any sales, distribution or other similar Contract, including any Governmental Contract (other than any program Contract), other than ordinary course purchase orders, providing for the sale by Seller or such Affiliate of materials, supplies, goods, services, equipment or other assets that provides for either (A) revenue recognized in the 2008 fiscal year by Seller or such Affiliate of $5,000,000 or more or (B) revenue to be recognized by Seller or such Affiliate over the remaining life of the Contract of $15,000,000 or more;

 

(iv)          (A) any program Contract which as of February 27, 2009 (x) was less than 75% complete and had an uncompleted value of $1,000,000 or more or (y) had an uncollected value in excess of $1,000,000 and (B) any program Contract entered into after February 27, 2009 which has a value in excess of $5,000,000;

 

(v)           any partnership, joint venture or other similar Contract providing for the formation of any such relationship;

 

(vi)          any Contract (not including Contracts for abandoned transactions) relating to the acquisition or disposition of any material business or any portion thereof (whether by merger, sale of stock, sale of assets or otherwise) or, other than in the ordinary course of business, material assets entered into (A) within the past five years or (B) at any time prior to the Closing Date for which Seller or its Affiliates have continuing obligations other than immaterial obligations such as access;

 

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(vii)         any Contract that limits or purports to limit the ability of the Business (including any Business Employee acting for the Business) to: (A) sell any material products or services of or to any other Person, (B) engage in any material line of business or (C) compete with or obtain material products or services from any other Person;

 

(viii)        any material intercompany agreement with or for the benefit of Seller or an Affiliate of Seller to the extent Seller or such Affiliate is not engaged in the conduct of the Business;

 

(ix)           any material license, sublicense and other agreements pursuant to which Seller or its Affiliates (A) licenses from any Person any Licensed Intellectual Property Rights (excluding licenses for commercial off the shelf computer software that are generally available and which have an acquisition cost of $50,000 or less) or (B) grants a license to use any Transferred Patent or Owned Intellectual Property Rights except for non-exclusive licenses granted in the ordinary course of business consistent with past practice in connection with the sale of goods or services by Seller and its Affiliates;

 

(x)            any Contract granting to any Person a put, call, right of first-refusal, right of first offer or similar preferential right in any of the material Purchased Assets or any material assets or properties of the Business;

 

(xi)           any settlement agreement, non-suit agreement, non-prosecution agreement or similar agreement or order, judgment, ruling, injunction, assessment, award, decree or writ of any Governmental Authority to which Seller or any Affiliate is a party and which requires ongoing compliance measures with respect to the Purchased Assets or the conduct of the Business;

 

(xii)          any material Contract relating to the consignment, custody, warehousing of inventory or any similar Contract;

 

(xiii)         any Contract, other than ordinary course purchase orders on an arm’s length basis for goods or services and Contracts regarding employment or employment benefits entered into in the ordinary course of business, relating to the Purchased Assets or the conduct of the Business by and between Seller or any of its direct or indirect Affiliates, on the one hand, and any other direct or indirect Affiliate of Seller or any director, manager or officer of Seller or any of its direct or indirect Affiliates, on the other hand; or

 

(xiv)        any other Contract that is material to the operation of the Business or the Purchased Assets and does not fall into any of the categories above in Section 3.08(a)(i) - (xiii).

 

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(b)           Each Contract set forth on (or required to be set forth on) Schedule 3.08(a) or that would be required to be set forth on Schedule 3.08(a) if entered into prior to the date hereof and not after the date hereof and prior to Closing (collectively, the “ Business Contracts ”) is in full force and effect and is a valid and binding obligation of Seller and/or any of its Affiliates that is a party thereto, and to the knowledge of Seller, is a valid and binding obligation of each other party thereto, enforceable in accordance with its terms.  None of Seller and its Affiliates or, to the knowledge of Seller, any other party thereto, is in default or breach in any material  respect under the terms of any Business Contract or any other material Contract of the Business, and, to the knowledge of Seller, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute any such default or breach thereunder.  Materially true, correct and complete copies of each Business Contract (including amendments or other modifications thereto) have been delivered to Buyer.  As of the date hereof, none of Seller or its Affiliates has received any notice of termination or any notice threatening termination of any Business Contract by any third Person.

 

Section 3.09.   Government Contracts.   (a) Except as set forth in Schedule 3.09(a), (i) none of the Business Employees is (or during the past 18 months has been), except as to routine security investigations, under administrative, civil or criminal investigation, indictment or information by a Governmental Authority, (ii) there is no pending (or to the knowledge of Seller, threatened) audit or investigation of the Business or any Business Employee with respect to any alleged irregularity, impropriety, violation, misstatement or omission arising under or relating to a Government Contract or Government Contract Bid, (iii) no termination for convenience, termination for default, stop work, cure notice or show cause notice has been issued with respect to any Government Contract, and (iv) during the past 18 months, neither Seller nor its Affiliates has made a voluntary or mandatory disclosure with respect to any alleged irregularity, impropriety, violation, misstatement or omission arising under or relating to a Government Contract or Government Contract Bid with respect to the Business, other than inquiries, audits and reconciliations that would not, individually or in the aggregate, materially affect the Business.  Neither Seller and its Affiliates nor any of the Business Employees has made any material misstatement or omission in connection with any disclosure that has led to, or would be reasonably expected to lead to, any of the consequences set forth in clause (i), (ii) or (iii) of the immediately preceding sentence or any other material damage, penalty assessment, recoupment of payment or disallowance of cost.

 

(b)           Except as set forth in Schedule 3.09(b), there are (i) no material claims pending (or to the knowledge of Seller, threatened) against Seller or its Affiliates by a Governmental Authority or by any prime contractor, subcontractor, or vendor arising under any Government Contract or Government Contract Bid with respect to the Business and (ii) no material disputes pending (or to the knowledge of Seller, threatened) between Seller or its Affiliates and any Governmental Authority  or between Seller or its Affiliates and any prime contractor, subcontractor, or vendor of the Business arising under or relating to

 

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any Government Contract or Government Contract Bid with respect to the Business.

 

(c)           Except as set forth in Schedule 3.09(c), neither Seller nor any of the Business Employees is (or during the past 18 months has been) suspended, debarred or proposed for or threatened with debarment or suspension, otherwise determined ineligible or disqualified from doing business with a Governmental Authority or is (or during such period was) subject of a finding of non-responsibility or ineligibility for contracting with a Governmental Authority.

 

(d)           Seller and its Affiliates are (and for the past 3 years have been) in compliance, in all material respects, with all Applicable Laws relating to obtaining, administering and performing their Government Contracts.  Seller and its Affiliates have not engaged in any conduct with regard to any Government Contract or Government Contract Bid that would constitute a criminal violation or a civil fraud or a basis for suspension or debarment.

 

(e)           All test and inspection results that Seller or any of its Affiliates has provided to any U.S. federal Governmental Authority pursuant to any Government Contract relating to the Business or to any other Person pursuant to any such Government Contract or as part of the delivery to the U.S. federal Governmental Authorities pursuant to any such Government Contract of any article designated, engineered or manufactured in the Business were complete and correct in all material respects as of the date so provided.  Seller and its Affiliates have provided all test and inspection results to the appropriate U.S. federal Governmental Authority pursuant to all Government Contracts related to the Business as required by Applicable Law and the terms of the applicable Government Contracts.

 

(f)            Schedule 3.09(f) sets forth all of the material facility security clearances held by Seller or its Affiliates with respect to the Purchased Assets or the Business other than any facility security clearances that are not permitted to be disclosed under any Applicable Law.

 

Section 3.10.   Litigation.  Schedule 3.10 sets forth each material Legal Proceeding currently pending (or which has been pending within the past 18 months), or, to the knowledge of Seller, threatened against or affecting the Business or the Purchased Assets, before any court or arbitrator or any Governmental Authority.  As of the date hereof, there is no Legal Proceeding pending, or to the knowledge of Seller threatened, which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement or challenges the validity or enforceability of this Agreement.

 

Section 3.11.  Compliance with Laws and Court Orders.  With respect to the Business or the Purchased Assets, neither Seller nor any of its Affiliates is (or in the past 3 years has been) in material violation of any material Applicable Law.

 

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As of the date hereof, neither Seller nor any of its Affiliates has received with respect to the Business or the Purchased Assets any notice from any Governmental Authority regarding any actual or alleged material violation of, or failure to comply with, any material Applicable Law.

 

Section 3.12.   Properties.  (a)  Schedule 3.12(a) sets forth a list of all real property that Seller or any of its Affiliates owns, leases, operates or subleases in connection with the conduct of the Business, and the owner or lessee, as applicable, for such real property.  Materially correct and complete copies of all Real Property Leases have been made available to Buyer.

 

(b)           Each Real Property Lease is a valid and binding agreement of Seller or an Affiliate of Seller, is free and clear of all Liens, except for Permitted Liens, and is in full force and effect, and none of Seller, such Affiliate or, to the knowledge of Seller, any other party thereto is in default or breach in any material respect under the terms of any such Real Property Lease, and, to the knowledge of Seller, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute any event of default thereunder, in each case which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.13.   Title to Purchased Assets; Sufficiency.  Seller and its Affiliates own and have good and marketable title to all material Purchased Assets, and the Subsidiary has good and marketable title to all of the properties and assets owned and used by it in the conduct of the Business, in each case, free and clear of all Liens, other than Permitted Liens or Liens that would not materially detract from the value or the intended use of the Purchased Assets.  The Purchased Assets, together with the services to be provided by Seller or its Affiliates to Buyer or its Affiliates pursuant to the Transition Services Agreement, are sufficient, in all material respects, for the conduct of the Business as currently conducted and are the only assets and properties used in the conduct of the Business as currently conducted except for (i) the Excluded Assets, (ii) Intellectual Property Rights (the sufficiency of which are covered in Section 3.14) and (iii) shared services utilized both by the Business and the Retained Businesses and not provided under the Transition Services Agreement as set forth on Schedule 3.13.  Nothing in this Section 3.13 shall be deemed to constitute a representation or warranty as to the adequacy of the amounts of working capital, including cash, of the Business as of the Closing or the availability of the same.

 

Section 3.14.   Intellectual Property.   (a)  Schedule 3.14(a) contains a true, correct and complete list of all registrations and applications for registrations included in the Owned Intellectual Property Rights, with the application number and/or registration/issue number, application and/or registration date, title or mark, country or other jurisdiction and owner(s), as applicable (the “ Registered Intellectual Property ”).  Neither Seller nor any of its Affiliates are in default with respect to any renewal or maintenance fees currently due in respect of any material Registered Intellectual Property or any material Transferred Patents.

 

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Immediately upon Closing, Buyer and/or its Affiliates shall own all of Seller’s and its Affiliates’ right, title and interest in and to the material Transferred Patents and the material Owned Intellectual Property Rights, in each case free from Liens other than Permitted Liens.

 

(b)           Seller and/or its Affiliates are the sole owners (including with respect to any current or former Representatives of Seller and/or its Affiliates) of all material Transferred Patents and material Owned Intellectual Property Rights and hold all right, title and interest in and to all material Transferred Patents and material Owned Intellectual Property Rights, free and clear of any Liens other than Permitted Liens.  To the extent proprietary, all designs and specifications (including all embodiments of such designs and specifications, such as molds, models, formulae, patterns, compilations, drawings, blueprints and other materials (but not including bills of material, approved vendor lists, and other purchasing-related documents) used in or intended to be used in the manufacture of any Relevant Products) for the Relevant Products are, in all material respects, solely owned by Seller or its Affiliates free and clear of any Liens other than Permitted Liens, and immediately after the Closing, Buyer and its Affiliates will own free and clear of any Liens other than Permitted Liens and have the right to obtain possession from contract manufacturers of the Business of all of such designs and specifications and their embodiments.

 

(c)           To the knowledge of Seller, the operation of the Business by Seller and its Affiliates has not infringed, misappropriated or otherwise violated any Intellectual Property Rights of any Person.  There is no material Legal Proceeding pending against, or, to the knowledge of Seller, threatened against, Seller or any Affiliate of Seller (i) based upon, or challenging or seeking to deny or restrict, the rights of Seller or any Affiliate of Seller in any of the Owned Intellectual Property Rights or Transferred Patents or (ii) except as set forth on Schedule 3.14(c). alleging that the conduct of the Business as currently conducted infringes, misappropriates, or otherwise violates any Intellectual Property Right of any third party.  None of the material Transferred Patents or material Owned Intellectual Property Rights has been adjudged invalid or unenforceable in whole or part, and, to the knowledge of Seller, all such Owned Intellectual Property Rights and Transferred Patents are valid and enforceable.

 

(d)           The Transferred Patents include all Patents owned by Seller and its Affiliates and held for use or used primarily in the conduct of the Business or that relate to the Targeted Technology.  Other than the Excluded Marks and any Software owned by Seller and set forth on Schedule 2.02(g), the Owned Intellectual Property Rights, together with the Transferred Patents and any other Intellectual Property Rights granted to Buyer pursuant to this Agreement, include all of the Intellectual Property Rights owned by Seller or any of its Affiliates and necessary to conduct the Business as currently conducted.

 

(e)           To the knowledge of Seller, no Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property Right or

 

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any Transferred Patent.  Seller and its Affiliates have taken commercially reasonable steps to maintain the confidentiality of all material Intellectual Property Rights that are used or held for use in the conduct of the Business and the value of which to the Business is contingent upon maintaining the confidentiality thereof.

 

(f)            As of the date hereof, with respect to the Business, neither Seller nor any of its Affiliates has received any notification from any Person regarding material non-compliance or violation of the standards of any industry standard setting organization.

 

(g)           Schedule 3.14(g) sets forth each material Contract pursuant to which Seller and its Affiliates obtain the right to use any Information System of any third party that is used in the conduct of the Business (other than any such Contract pursuant to which Seller and its Affiliates lease any computer hardware from a third party for use in connection with their respective information technology systems) (the “ Information Systems Contracts ”).  None of Seller and its Affiliates is in default or breach in any material respect under the terms of any Information Systems Contract.

 

(h)           To the knowledge of Seller, (i) there are no material problems or de