<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
NETWORKS ASSOCIATES, INC.,
NETWORK ASSOCIATES TECHNOLOGY, INC.,
NETWORK ASSOCIATES INTERNATIONAL BV,
NETWORK ASSOCIATES (INDIA) PRIVATE LIMITED,
NETWORK ASSOCIATES JAPAN CO., LTD.
AND
STARBURST TECHNOLOGY HOLDINGS INC.
EXECUTION DATE: APRIL 22, 2004
<PAGE>
TABLE OF CONTENTS
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PAGE
----
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Article I
DEFINITIONS.................................................................................
1
1.1
Definitions.........................................................................
1
Article II THE PURCHASE AND SALE OF
ACQUIRED ASSETS...................................................
16
2.1 Purchase
and
Sale...................................................................
16
2.2 Acquired
Assets and Excluded
Assets.................................................
16
2.3 Assumption
of Certain
Liabilities...................................................
18
2.4 Contract
Consents; Treatment of Retained Beneficial
Contracts....................... 21
2.5
Acquisition
Consideration...........................................................
22
2.6 Purchase
Price
Adjustment...........................................................
23
2.7 Allocation
of
Consideration.........................................................
25
2.8 Transfer
Taxes......................................................................
25
2.9 Divested
Technology.................................................................
25
2.10
Transferred Trade
Secrets...........................................................
28
Article III IP
LICENSES...............................................................................
28
3.1 Licenses
to
Purchaser...............................................................
28
3.2 Licenses
to
Sellers.................................................................
30
3.3 Licensor
Bankruptcy.................................................................
32
3.4 Defensive
Suspension................................................................
32
3.5 License
Transferability.............................................................
32
3.6 Other
Marks.........................................................................
33
3.7 Trade
Dress.........................................................................
33
Article IV THE
CLOSING................................................................................
34
4.1 Closing
Date........................................................................
34
4.2
Transactions To Be Effected at the
Closing.......................................... 34
4.3 Risk of
Loss........................................................................
34
4.4 Taking of
Necessary Action; Further
Action.......................................... 34
Article V REPRESENTATIONS AND WARRANTIES OF
SELLERS...................................................
35
5.1
Organization, Standing and
Power....................................................
35
5.2 Authority,
Conflicts,
Consents......................................................
35
5.3
Business............................................................................
36
5.4
Changes.............................................................................
36
5.5 Tax
Matters.........................................................................
38
5.6
Restrictions on Business
Activities.................................................
38
5.7 Title to
Properties; Absence of Liens and Encumbrances; Condition of
Property.......
39
5.8
Intellectual
Property...............................................................
39
5.9
Agreements, Contracts and
Commitments...............................................
42
5.10
Governmental
Authorization..........................................................
44
5.11
Litigation..........................................................................
44
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5.12
Employee Matters and Benefit
Plans..................................................
44
5.13
Labor
Matters.......................................................................
45
5.14
Insurance...........................................................................
46
5.15
Compliance with
Laws................................................................
47
5.16
Sufficiency of
Assets...............................................................
47
5.17
Brokers.............................................................................
47
5.18
Financial
Matters...................................................................
47
5.19
Related Party
Transactions..........................................................
48
5.20
Customers...........................................................................
48
5.21
Financial
Records...................................................................
48
5.22
Environmental
Matters...............................................................
49
5.23
Real
Property.......................................................................
49
Article VI REPRESENTATIONS AND WARRANTIES
OF PURCHASER................................................
49
6.1
Organization, Standing and
Power....................................................
49
6.2
Authority...........................................................................
49
6.3
Financing...........................................................................
50
Article VII CONDUCT PRIOR TO
CLOSING..................................................................
50
7.1 Conduct of
Business.................................................................
50
7.2 Conduct
Regarding Indian
Employees..................................................
53
7.3 Delivery
of Financial
Statements....................................................
53
Article VIII ADDITIONAL
AGREEMENTS....................................................................
55
8.1 Access to
Information...............................................................
55
8.2
Confidentiality.....................................................................
56
8.3
Expenses............................................................................
58
8.4 Public
Disclosure...................................................................
58
8.5 Sniffer
Customer and Channel Partner
Communication.................................. 58
8.6 Legal
Requirements..................................................................
58
8.7
Notification of Certain
Matters.....................................................
58
8.8 Employee
Matters....................................................................
59
8.9 Accounts
Receivable;
Inventory......................................................
62
8.10
Post-Closing
Assurances.............................................................
63
8.11
Prohibition on Solicitation of Other Acquisition
Offers............................. 63
8.12
Non-Solicitation....................................................................
64
8.13
Antitrust Regulatory
Filings........................................................
65
8.14
Tax
Matters.........................................................................
66
8.15
Patent
Matters......................................................................
66
Article IX CONDITIONS TO THE
ACQUISITION..............................................................
68
9.1 Conditions
to Obligations of Each Party to Effect the
Acquisition................... 68
9.2 Additional
Conditions to Obligations of
Sellers..................................... 68
9.3 Additional
Conditions to the Obligations of
Purchaser............................... 69
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Article X SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION.................................
70
10.1
Survival of Representations and
Warranties.......................................... 70
10.2
Indemnification.....................................................................
70
Article XI TERMINATION, AMENDMENT AND
WAIVER..........................................................
77
11.1
Termination.........................................................................
77
11.2
Effect of
Termination...............................................................
78
11.3
Amendment...........................................................................
78
11.4
Extension;
Waiver...................................................................
78
Article XII GENERAL
PROVISIONS........................................................................
78
12.1
Notices.............................................................................
78
12.2
Interpretation......................................................................
80
12.3
Counterparts........................................................................
80
12.4
Entire Agreement;
Assignment........................................................
80
12.5
Severability........................................................................
80
12.6
Governing Law;
Mediation/Arbitration................................................
81
12.7
Rules of
Construction...............................................................
82
12.8
Successors..........................................................................
82
12.9
Specific
Performance................................................................
82
</Table>
INDEX OF EXHIBITS
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<Caption>
Exhibits
Description
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Exhibit A
Asset Schedule
Exhibit B
Seller Disclosure Schedule
Exhibit C
Form of Joint Letter to Sniffer Customers
Exhibit D
Transition
Services Agreement
Exhibit E
McAfee OEM Agreement
Exhibit F
Services Agreement
Exhibit G
Infinistream OEM Term Sheet
</Table>
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET
PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of April 22, 2004 by and among (i)
Starburst Technology Holdings Inc., a
Delaware corporation ("Purchaser"), on the
one hand; and (ii) Networks
Associates, Inc., a Delaware corporation
("NAI"); Network Associates Technology,
Inc., a Delaware corporation and a wholly
owned subsidiary of NAI ("NATI");
Network Associates International BV, a
Netherlands corporation and a wholly
owned subsidiary of NAI ("NBV"); Network
Associates (India) Private Limited, an
Indian private limited company and a wholly
owned subsidiary of NAI ("NAI
India"); and Network Associates Japan Co.,
Ltd., a Japanese corporation and a
wholly owned subsidiary of NAI ("NAI
Japan") (each of NAI, NATI, NBV, NAI India
and NAI Japan, a "Seller" and collectively
the "Sellers"), on the other hand.
RECITALS
A.
The Boards
of Directors of NAI, NATI, NBV, NAI India, NAI Japan and
Purchaser believe it is in the best
interests of each company and their
respective stockholders that Purchaser
acquire (the "Acquisition") certain of
Sellers' assets, liabilities and other
rights constituting the Business (as
defined below) that develops, manufactures
and sells the Sniffer Products (as
defined below) and, in furtherance thereof,
have approved the Acquisition.
B.
Sellers
and Purchaser desire to make certain representations and
warranties and other agreements in
connection with the Acquisition.
NOW,
THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and
other agreements set forth herein,
and for other good and valuable
consideration, the parties to this Agreement
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions.
"Applicable Licensee" has the meaning set forth in Section 3.5
hereof.
"Accounts
Receivable" means the gross amounts of accounts and notes
receivable attributable to the
Business.
"Acquired
Assets" has the meaning set forth in Section 2.2(a) hereof.
"Acquisition Proposal" has the meaning set forth in Section 8.11
hereof.
STARBURST ASSET PURCHASE AGREEMENT
<PAGE>
"Acquisition" has the meaning set forth in the recitals to this
Agreement.
"Affiliate" when used with respect to any Person from time to time,
means
any other Person at such time directly or
indirectly controlling, controlled by
or under common control with, such Person.
As used in this definition of
Affiliate, "control" means (i) the direct
or indirect ownership of more than 50
percent of the total voting securities or
other evidences of equity ownership
interest of such Person or (ii) the
possession, direct or indirect, of the power
to direct or cause the direction of the
management and policies of a Person,
whether through the ownership of voting
securities, by contract or otherwise.
"Annual
Business Financial Statements" has the meaning set forth in
Section 7.3(a) hereof.
"Applicable Licensee" has the meaning set forth in Section 3.5
hereof.
"Asset
Schedule" is attached hereto as Exhibit A.
"Assigned
Leases" has the meaning set forth in Section 2.2(a)(xii)
hereof.
"Assumed
Liabilities" has the meaning set forth in Section 2.3 hereof.
"Audited
Financials" has the meaning set forth in Section 5.21 hereof.
"Benefits
Transition Date" has the meaning set forth in Section
8.8(d)(ii)
hereof.
"Business"
means the creation, development, manufacture, support,
enhancement, modification, sales,
promotion, licensing and distribution
activities and operations throughout the
world that involve those products (i)
on Section 1 of the Asset Schedule or (ii)
those products under development for
the Sniffer brands, and all business
activities required in connection with the
foregoing.
"Business
Contracts" means all Contracts between any Seller and any third
Person that are related to the Business in
any material respect.
"Business
Financial Statements" has the meaning set forth in Section
7.3(a) hereof.
"Business
Technology" means all Technology of any Seller that is: (i)
Technology constituting or necessary for
the creation, development, modification
or maintenance of the Sniffer Products
including the source and object code for
the Sniffer Products, or (ii) Technology
held for, used in, or necessary to, the
operation of the Business.
"Calculation" has the meaning set forth in Section 2.6(a)
hereof.
"Category
1 Technology" means (i) any Sniffer Software included in a
product of the Retained Business as of the
date hereof not in violation of
Sellers' representation and warranty in
Section 5.8(o) and (ii) Retained
Technology.
STARBURST ASSET PURCHASE AGREEMENT
-2-
<PAGE>
"Category
2 Technology" means Divested Technology that is not Unlicensed
IP.
"Claim"
has the meaning set forth in Section 10.2(d)(i) hereof.
"Claimant"
has the meaning set forth in Section 10.2(d)(i) hereof.
"Closing"
has the meaning set forth in Section 4.1 hereof.
"Closing
Date" has the meaning set forth in Section 4.1 hereof.
"COBRA"
means the Consolidated Omnibus Budget Reconciliation Act of
1985,
as amended.
"Code"
means the U.S. Internal Revenue Code of 1986, as amended.
"Competitive Limitations" has the meaning set forth in Section
8.1(g)
hereof.
"Compliance Attorney" has the meaning set forth in Section 2.9(b)
hereof
"Conflict"
has the meaning set forth in Section 5.2(b).
"Confidential Information" means either or both Purchaser
Confidential
Information or Seller Confidential
Information, as the context requires.
"Contracts" means all written agreements, contracts,
commitments,
obligations, purchase orders and license,
royalty or development agreements.
"Control
Affiliate" means, as to Purchaser or NAI, any Affiliate (i) of
which at least 50 percent of the total
voting securities or other evidences of
equity ownership are held directly or
indirectly by Purchaser or NAI, as
applicable, or (ii) owning directly or
indirectly at least 50 percent of the
total voting securities of Purchaser or
NAI, as applicable.
"Copyrights" has the meaning set forth in the defined term
"Intellectual
Property Rights."
"Covered
Affiliates" has the meaning set forth in Section 2.9(a) hereof.
"CPA Firm"
has the meaning set forth in Section 2.6(c).
"Customer"
means (i) any Person (including distributors, OEMs and
resellers) that purchased or licensed a
Sniffer Product or related services from
a Seller pursuant to a Business Contract
(other than a shrink wrap or other
similar agreement distributed with Sniffer
Products) with any Seller or (ii) any
end user or other Person that is recorded
in the Customer List as a purchaser or
licensee of a Sniffer Product.
"Customer
Contract" means any Business Contract between a Seller and any
Customer with respect to the licensing or
provision of Sniffer Products and/or
Sniffer services.
STARBURST ASSET PURCHASE AGREEMENT
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<PAGE>
"Customer
List" means the list and other information (but not the
database
Software to the extent it is Infrastructure
IP) of each Person to whom any of
the Sellers has an ongoing obligation to
provide customer support or maintenance
with respect to the Sniffer Products.
"Damages"
means all demands, claims, claims for reimbursement, actions or
causes of action, assessments, damages,
losses, costs, expenses, liabilities,
deficiencies, judgments, awards, fines,
sanctions, penalties, interest
(including prejudgment interest), charges
and amounts paid in settlement,
including the reasonable costs, fees and
expenses of attorneys, experts,
accountants, appraisers, consultants,
witnesses, investigators and agents and
all such costs, fees and expenses incurred
in defending against any of the
foregoing or in enforcing this Agreement or
the other Operative Documents. For
purposes of calculating the amount of the
foregoing damages, such damages (i)
may be calculated based on lost profits or
anticipated earnings but only to the
extent permitted under applicable law
governing the calculation of such damages
and (ii) except as expressly provided for
in Section 10.2(g) shall not include
Special Damages. Anything in the
immediately preceding sentence or Section
10.2(g) to the contrary notwithstanding
(but subject to Sections 10.2(c) and
(e)), in the event of any breach by any
Seller of any representation or warranty
in Article V or any covenant in Section 7.1
of this Agreement, the amount of
Damages which the Purchaser Indemnified
Parties will be deemed to have suffered
will equal the sum of (i) the diminution in
value of the Business resulting from
the facts and circumstances giving rise to
such breach as compared to the value
of the Business had such breach not
occurred and the applicable representation,
warranty or covenant been true and correct
plus (ii) the reasonable costs, fees
and expenses incurred by the Purchaser
Indemnified Parties in enforcing this
Agreement in respect of such breach. For
purposes of the immediately preceding
sentence, any diminution in value will be
measured as of the Closing Date (but
take into account all the facts and
circumstances relating to such breach) and
be determined assuming that the value of
the Business on the Closing Date equals
the Purchase Price if all representations
and warranties of the Sellers in
Article V are true and correct and that all
covenants in Section 7.1 are
complied with.
"Decreased
Amount" has the meaning set forth in Section 2.5(a) hereof.
"Divested
Technology" means the following Transferred Technology (except
to the extent that any such Technology is
also Retained Technology): (i) any
Sniffer Software, (ii) manufacturing
drawings, schematics, test fixtures,
models, circuit boards, electronic
components and other materials related to the
design, testing and manufacture of Sniffer
Products (including both current and
prior versions, prototypes or forms of such
products) that as of the date hereof
or as of the Closing Date is or in the
Ordinary Course of Business would be
considered, Confidential Information of
Sellers and (iii) any Technology
specified in clause (B) of the definition
of Material Divested Technology;
provided, however, that Divested Technology
shall not include those commercially
available devices or copies of Software
that are Sniffer Products used, or held
for use, in the ordinary course of business
consistent with past practice of the
Retained Business as of the Closing Date,
including the commercial versions of
Sniffer Products listed on Section 9.2(c)
of the Seller Disclosure Schedule.
STARBURST ASSET PURCHASE AGREEMENT
-4-
<PAGE>
"DOJ"
means the Antitrust Division of the U.S. Department of Justice.
"Employment Offer" has the meaning set forth in Section 8.8(a).
"Environmental Laws" means any statute, code, law (including common
law),
regulation, ruling, decision, judgment, or
order relating to protection of human
health and the environment, including but
not limited to: (a) pollution,
contamination, cleanup, preservation,
monitoring, assessment, or investigation
of the environment, including natural
resources; (b) public or employee health
and safety; and (c) the handling, use,
manufacture, storage, distribution,
release, or disposal of any hazardous
materials, hazardous substances,
pollutants, or contaminants.
"ERISA
Affiliate" means any entity, trade or business that is a member
of
a group described in Section 414(b), (c),
(m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes any
Seller, or that is a member of the same
"controlled group" as any Seller pursuant
to Section 4001(a)(14) of ERISA.
"ERISA"
means the Employment Retirement Income Security Act of 1974, as
amended.
"Excluded
Assets" has the meaning set forth in Section 2.2(b) hereof.
"Excluded
Contract" means any Business Contract that is (i) not related
primarily or exclusively to the Business,
(ii) is a Customer Contract or Inbound
IP Contract that is a Shared Contract,
(iii) a Retained Beneficial Contract,
(iv) an Inbound IP Contract granting
Sellers rights to any Retained IP, (v) an
Infrastructure Contract, or (vi) listed in
Section 3B of the Asset Schedule;
provided, that none of the Business
Contracts listed on Section 3D of the Asset
Schedule shall be "Excluded Contracts"
hereunder.
"Excluded
Liabilities" has the meaning set forth in Section 2.3(c)
hereof.
"Final
Modified Working Capital Calculation" has the meaning set forth
in
Section 2.6(e) hereof.
"Form S-1"
means a Form S-1 Registration Statement, or any equivalent
successor registration form, under the
Securities Act of 1933, as amended.
"FTC"
means the U.S. Federal Trade Commission.
"GAAP"
means United States generally accepted accounting principles
applied in a manner consistent with the
audited financial statements of NAI for
the twelve months ending and as of December
31, 2003.
"Governmental Entity" means any government or governmental or
regulatory
body thereof, or political subdivision
thereof, whether federal, state, local or
foreign, or any agency, commission or
instrumentality thereof, or any court or
arbitrator (public or private).
STARBURST ASSET PURCHASE AGREEMENT
-5-
<PAGE>
"HSR Act"
means the Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended.
"Inbound
IP Contracts" means any Business Contract pursuant to which a
third Person grants to any Seller any right
or license to any material IP,
including any IP that is included or
imbedded in any Sniffer Products.
"Increased
Amount" has the meaning set forth in Section 2.5(a) hereof.
"Indemnitor" has the meaning set forth in Section 10.2(d)(i)
hereof.
"Independent Products" shall have the meaning set forth in Section
3.5
hereof.
"Indian
Assets" means the furniture and fixtures owned by the Sellers
used
in the conduct of the Business, and
located, in Bangalore, India, including
those items set forth in Section 6A of the
Asset Schedule, but excluding the
Indian Lab Equipment.
"Indian Employees" means those
Seller Employees located in India.
"Indian
Lab Equipment" means the equipment and software set forth in
Section 6B of the Asset Schedule.
"Infrastructure Contract" means any Contract to which a Seller is a
party
pursuant to which a third Person provides
or licenses Infrastructure IP to any
Seller and that covers the Business but is
not specific to the Business,
including, for example, telecommunications
services.
"Infrastructure IP" means network or telecommunications Software
and
equipment, accounting Software, IT systems,
desktop computer Software, database
Software, general Software development or
control systems, tools or environments
and other general IT functionality provided
under the Transition Services
Agreement or otherwise used in the general
operation of both the Business and
the Retained Business. For the avoidance of
doubt, Infrastructure IP (A) does
not include any IP constituting or included
in the Sniffer Products and (B) does
not include any data or other information
with respect to the Business contained
in such Software, systems, tools, or
environments ("Sniffer IT Data").
"Intellectual Property Rights" means all intellectual property and
other
similar proprietary rights in any
jurisdiction, whether registered or
unregistered, including of the following
and all rights in, arising out of, or
associated therewith: (i) all United States
and foreign patents and utility
models and applications therefor, and all
reissues, divisions, reexaminations,
renewals, extensions, provisionals,
continuations and continuations-in-part
thereof, and equivalent or similar rights
anywhere in the world in inventions
and discoveries ("Patents"); (ii) trade
secret rights and all other rights in or
to confidential business or technical
information ("Trade Secrets"); (iii) all
rights in mask works, and all mask work
registrations and applications therefor,
and any equivalent or similar rights in
semiconductor masks, layouts
architecture or topology throughout the
world ("Mask Works"); (iv) all
copyrights, copyrights registrations and
applications therefor and all other
similar or
STARBURST ASSET PURCHASE AGREEMENT
-6-
<PAGE>
equivalent rights corresponding thereto
throughout the world ("Copyrights"); (v)
all rights in WWW addresses, uniform
resource locators and domain names and
applications and registrations therefor
("Internet Properties"); and (vi) any
similar, corresponding or equivalent rights
to any of the foregoing in the
United States or anywhere else in the world
(for example, data base rights and
industrial design rights). Intellectual
Property Rights specifically exclude (i)
trade mark or similar rights in Marks
("Trademark Rights"), and (ii) contractual
rights, including license grants.
"Intercompany Agreements" has the meaning set forth in Section
5.19
hereof.
"International Seller Employees" means any Seller Employee
whose
employment is primarily subject to the laws
of any non-United States
jurisdiction, and (i) who is identified by
employee identification number as an
International Seller Employee in Section
5.12(a) of the Seller Disclosure
Schedule along with the name of the
non-United States jurisdiction to which laws
such individual's employment is primarily
subject, or (ii) otherwise hired by
Sellers to work primarily in the Business
after the date of this Agreement in
the Ordinary Course of Business.
"Internet
Properties" has the meaning set forth in the defined term
"Intellectual Property Rights."
"Inventory" means all raw materials, work-in-process, finished
goods,
supplies, packaging materials, parts, goods
for sale and other inventories,
whether or not in transit on the Closing
Date that are used, intended to be
used, or held for use primarily by or for
the Business and that are owned by
Sellers or their Affiliates.
"IP" means
Technology and the Intellectual Property Rights in Technology.
"IRS"
means the United States Internal Revenue Service.
"Legally
Mandated Benefits" has the meaning set forth in Section 5.12(c)
hereof.
"Liabilities" means any liabilities, debts or obligations of any
nature,
whether accrued, absolute, fixed, or
contingent, liquidated, unliquidated or
otherwise and whether due or to become due,
and whether known or unknown.
"Licensed
Back Patents" means the Transferred Patents and any reissues,
divisional, continuations or continuations
in part of any of the Transferred
Patents, and any Patents that may issue
from or claim priority for such Patents,
and foreign counterparts of any of the
foregoing, that may be obtained by
Purchaser or its successor following the
Closing. Licensed Back Patents do not
include any Patent that Purchaser may
acquire from a third Person after the
Closing Date.
"Licensed
IPR" means the Licensed Patents, the Other Licensed IPR, and
Sellers' Intellectual Property Rights in
the Licensed Infinistream Technology
licensed under Section 3.1(c) hereof.
STARBURST ASSET PURCHASE AGREEMENT
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<PAGE>
"Licensed
Patents" means those Patents listed in Section 2B of the Asset
Schedule, any reissues, divisional,
continuations or continuations in part of
any of such Patents and any Patents that
may issue from or claim priority for
such Patents, and foreign counterparts of
any of the foregoing, that may
obtained by Sellers or their respective
successors following the Closing.
Licensed Patents do not include any Patent
that a Seller may acquire from a
third Person after the Closing Date.
"Licensed
Infinistream Technology" means the Software and other
Technology
listed on Section 2K of the Asset Schedule
as "Licensed Infinistream Technology"
but not any Technology listed on Schedule
2H of the Asset Schedule as "Retained
Technology."
"Licensed
Back Source Code" means the source code listed and designated
as
"Licensed Back Source Code" on Section 2J
of the Asset Schedule.
"Licensee"
or "Licensor," as applicable, has the meaning set forth in
Section 3.3 hereof.
"Liens"
means all liens, charges, claims, security interests or other
similar encumbrances of any kind incurred
prior to the Closing except for
Permitted Liens.
"Litigation" has the meaning set forth in Section 5.11 hereof.
"LOA
Employee" has the meaning set forth in Section 8.8(a) hereof.
"LOA
Employee Transition Date" has the meaning set forth in Section
8.8(a)
hereof.
"Marks"
means trademarks, service marks, logos, trade dress rights, and
similar designations of origin.
"Mask
Works" has the meaning set forth in the defined term
"Intellectual
Property Rights."
"Material
Adverse Effect" means any change, event, violation, inaccuracy,
circumstance or effect that is, or is
reasonably expected to be, materially
adverse to the business, assets (including
intangible assets), liabilities,
financial condition or results of
operations of the Business or on the ability
of Sellers to consummate the transactions
contemplated herein, except for those
changes, events or effects (individually or
in combination) that result from (i)
the public announcement of or pendency of
the Acquisition (including any
reduction in sales of the Business or loss
or termination of any Business
employees to the extent arising from such
announcement or pendency), (ii)
changes affecting the network fault or
applications performance industries
generally (which changes do not
disproportionately affect the Business), (iii)
changes affecting the United States economy
or foreign economies in any
locations where any Seller has material
operations or sales generally (which
changes do not disproportionately affect
the Business), (iv) compliance by
Sellers with the terms of, or the taking of
any action required or contemplated
by, this Agreement, in each case to the
extent such action is outside the
Ordinary Course of Business, or (v) any
terrorist acts, acts of war, natural
disasters or health emergencies (which do
not disproportionately affect the
Business).
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"Material
Divested Technology" means (A) (i) Divested Technology that is
Sniffer Software and (ii) other Divested
Technology that if possessed and/or
used by a competitor could reasonably be
expected to adversely affect the
Business, and (B) any derivative work of
any Technology described in clause (A)
that is created by or for Sellers or their
Affiliates.
"Material
Sniffer Software" means all Sniffer Software other than
Residual
Sniffer Software.
"Mediation/Arbitration Rules" has the meaning set forth in Section
12.6
hereof.
"Modified
Inventory" means the aggregate amount of Inventory on the date
of determination; provided, however, that
in calculating such total (a)
returned, refurbished, to be repaired and
other used Inventory, including 100%
of the Getronics Inventory, in the
aggregate shall not exceed $1.0 million, (b)
Inventory held outside the United States
will not exceed in the aggregate $7.0
million, and (c) to the extent any
particular Inventory as of the Closing Date
existed on December 31, 2003 but was not
given any gross value for purposes of
the calculation of Modified Working Capital
as of December 31, 2003 included in
Section 5.18(b) of the Seller Disclosure
Schedule, such Inventory will not be
given any gross value for purposes of
determining the Modified Working Capital
as of the Closing Date.
"Modified
Working Capital" means, as of the date of determination, (x)
the
aggregate dollar value of Accounts
Receivable and Modified Inventory (in each
case without reserves), less (y) those
items constituting Assumed Liabilities
pursuant to Section 2.3(a)(i) (trade
payables) and Sniffer Deferred Revenue,
determined in each case in accordance with
GAAP (excluding reserves in the cases
of Accounts Receivable and Modified
Inventory), provided that for purposes of
calculating Modified Working Capital, the
portion of Sniffer Deferred Revenue
that is manual deferred revenue (excluding
manual adjustments for Japan, Brazil
and SAP 3.0) shall not be less than $8.0
million.
"NDA"
means collectively the Confidentiality Agreements entered into
(i)
by and between NAI and Silver Lake
Technology Management L.L.C., dated January
6, 2004, and (ii) by and between NAI and
TPG Partners III, L.P., dated January
7, 2004.
"NAI's
Officer Certificate" has the meaning set forth in Section
9.3(b)
hereof.
"Objection
Notice" has the meaning set forth in Section 2.6(b) hereof.
"Operative
Documents" means this Agreement and the agreements, instruments
and certificates delivered in connection
with this Agreement, including the
Transition Services Agreement.
"Ordinary
Course of Business" means the ordinary course of business for
the Business consistent with past practice
of the Sellers' operation of the
Business.
"Other
Licensed IPR" means any Intellectual Property Rights (i) owned
by
any Seller that are neither Transferred
Intellectual Property Rights nor
licensed to Purchaser pursuant to a
separate
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agreement between the parties hereto
entered into in connection this Agreement,
and that are Intellectual Property Rights
(other than Patents) embodied by or
manifested in the Transferred Technology or
the Shared Technology, or (ii)
listed in Section 2D of the Asset Schedule;
provided, however, that Other
Licensed IPR shall not include Intellectual
Property Rights in the Licensed
Infinistream Technology.
"Other
Marks" means the Marks or other terms listed in Section 2I of
the
Asset Schedule.
"Outbound
IP Contracts" means any Business Contract pursuant to which a
Seller grants any third Person a right or
license to any material Transferred
IP, other than Customer Contracts.
"Patents"
has the meaning set forth in the defined term "Intellectual
Property Rights."
"Permits"
means all permits, licenses, franchises, approvals and
authorizations by Governmental Entities
related primarily to the Business
including those listed in Section 5 of the
Asset Schedule.
"Permitted
Liens" means (i) statutory or common law liens to secure
obligations to landlords, lessors or
renters under any Transferred Contract,
(ii) statutory or common law liens in favor
of carriers, warehousemen, mechanics
and materialmen to secure claims for
non-employee labor, materials or suppliers,
and (iii) liens for Taxes not yet due and
payable, or being contested in good
faith and for which adequate reserves have
been established.
"Person"
means any corporation, partnership, joint venture, limited
liability company, organization, entity,
association, business trust or natural
person.
"Post-Closing Period Taxes" means Taxes relating to the Business
or
Acquired Assets that are attributable to
the Post-Closing Period, including any
Taxes attributable to the Straddle Period
that are allocated to the Post-Closing
Period in accordance with the definition of
Pre-Closing Period Taxes below.
"Post-Closing Period" means any taxable period or portion of a
period that
begins after the Closing Date.
"Pre-Closing Period Taxes" means Taxes relating to the Business
or
Acquired Assets that are attributable to
the Pre-Closing Period; provided that
with respect to the Straddle Period, Taxes
and Tax items will be allocated
between the Pre-Closing Period and the
Post-Closing Period by closing the books
at the end of the Closing Date, except that
Taxes and Tax items of a periodic
nature, such as property taxes or
depreciation allowances calculated on an
annual basis, shall be allocated by
apportioning a pro rata portion of such
Taxes to each day in the relevant Straddle
Period.
"Pre-Closing Period" means any taxable period or portion of a
period that
begins on or before the Closing Date and
ends on the Closing Date.
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"Prime
Technology" means any Business Technology that is primarily
held
for or used primarily in the Business
including (i) Business Technology used
primarily in the creation, development,
modification or maintenance of Sniffer
Products (including both current and prior
versions, prototypes or forms of such
products), (ii) all Technology that is
included in or constitutes the Sniffer
Products (including both current and prior
versions or forms of such products
and the Software therefore), (iii) all
Technology (including documentation) as
the same exist as of the Closing Date that
constitutes or is primarily related
to a Sniffer Product under development as
of the Closing Date; and (iv) the
items identified in Section 2G of the Asset
Schedule. Any Technology that is not
capable of being copied (such as hardware)
that is primarily related to the
Business shall be deemed Prime Technology
and not Shared Technology. For
avoidance of doubt the Prime Technology
shall include all materials of Sellers
used primarily in the operation or conduct
of the program of Sellers' known as
"Sniffer University."
"Purchase
Price" has the meaning set forth in Section 2.5(a) hereof.
"Purchaser
Indemnified Parties" has the meaning set forth in Section
10.2(a) hereof.
"Purchaser
Confidential Information" has the meaning set forth in Section
8.2(a) hereof.
"Purchaser
Officer's Certificate" has the meaning set forth in Section
9.2(b) hereof.
"Purchaser
Representatives" means Purchaser's accountants, legal counsel
and other representatives.
"PWC"
means PricewaterhouseCoopers LLP, or such other nationally
recognized accounting firm mutually
agreeable to NAI and Purchaser.
"Qualified
Joint Venture" means any Person, now or hereafter existing, in
which a party owns or controls (either
directly or indirectly) at least: (i) the
direct or indirect right, on an ongoing
basis, to receive and share in more than
thirty percent (30%) of the net profits and
losses, respectively, of a Person;
and (ii) if such Person has voting shares
or other voting securities, more than
thirty percent (30%) of the outstanding
shares or securities entitled to vote
for the election of directors or similar
managing authority, or if such Person
does not have voting shares or other voting
securities, more than thirty percent
(30%) of the ownership interest that
represents the right to make decisions for
such Person of the type and nature that
would be made by the holders of the
voting shares or other voting securities of
such Person were such Person to have
voting shares or other voting
securities.
"Quarterly
Business Financial Information" has the meaning set forth in
Section 7.3(a) hereof.
"Reference
Modified Working Capital Amount" has the meaning set forth in
Section 2.5(a) hereof.
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"Registered IP" means (i) issued Patents and Patent
applications
(including provisional applications); (ii)
Mark registrations and applications
to register Marks; (iii) registered
Copyrights and applications for Copyright
registration; (iv) Internet Property
registrations; and (v) Mask Work
registrations and applications to register
Mask Works.
"Registered Other Marks" means the trademarks listed in Section 2P
of the
Asset Schedule.
"Residual
Sniffer Software" means Sniffer Software that includes no more
than 2.5% (measured by number of lines of
functional source code) of the total
functional source code of any Sniffer
Product, including linked
Sniffer-proprietary code, but excluding
linked third-party code.
"Residual
Information" has the meaning set forth in Section 8.2(c)
hereof.
"Retained
Beneficial Contract" means any (i) Business Contract which
would
otherwise fall within the definition of a
Transferred Contract but for the fact
that Sellers have not received the
necessary consent to assign or transfer such
Business Contract to Purchaser as of the
Closing, or (ii) Customer Contract that
does not relate exclusively to the
Business, or (iii) Business Contract listed
in Section 3C of the Asset Schedule.
"Retained
Business" means any business operations or activities of
Sellers
or their Affiliates other than those
businesses, operations and activities of
Sellers constituting the Business as of the
Closing Date.
"Retained
Intellectual Property Rights" means all Intellectual Property
Rights that are not Transferred
Intellectual Property Rights.
"Retained
IP" means Retained Technology and Retained Intellectual
Property
Rights.
"Retained
Technology" means all Business Technology that is: (i)
Infrastructure IP, (ii) not Prime
Technology, (iii) Shared Technology, or (iv)
that is listed in Section 2H of the Asset
Schedule. Any Technology that is not
capable of being copied (such as hardware)
that is not primarily related to the
Business shall be deemed Retained
Technology and not Shared Technology.
"SEC"
means the U.S. Securities and Exchange Commission.
"Second
Closing" means the date on which the Indian Employees are
transferred to Purchaser or its designated
Affiliate as contemplated in Section
4.5 hereof.
"Second
Closing Amount" has the meaning set forth in Section 4.5
hereof.
"Seller
Authorizations" means each Permit issued to Sellers by a
Governmental Entity and related primarily
to the Business which is required for
the operation of the Business or the
ownership of the Acquired Assets.
"Seller
Confidential Information" has the meaning set forth in Section
8.2(b) hereof.
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<PAGE>
"Seller
Disclosure Schedule" is attached hereto as Exhibit B.
"Seller
Employee Benefit Plan" has the meaning set forth in Section
5.12(c) hereof.
"Seller
Employees" means those Seller employees listed in Section
5.12(a)
of the Seller Disclosure Schedule and those
employees hired by Sellers to work
primarily in the Business after the date of
this Agreement in the Ordinary
Course of Business.
"Seller
Indemnified Parties" has the meaning set forth in Section
10.2(b)
hereof.
"Seller
Severance Arrangements" has the meaning set forth in Section
5.12(a) hereof.
"Sellers'
knowledge" or "knowledge of Sellers" means the actual knowledge
after due inquiry of Raymond Smets, Bakul
Mehta and Richard Morris; provided,
that solely for purposes of (i) Section
5.21 hereof, such term shall mean the
actual knowledge after due inquiry of
Stephen C. Richards and Brian Colbeck, and
(ii) Section 5.8(o) hereof, such term shall
mean the actual knowledge after due
inquiry of Christopher Bolin, Bakul Mehta
and Richard Morris.
"Shared
Contract" means a Business Contract relating both to the
Business
and to the Retained Business.
"Shared
Technology" means, (i) other than Material Sniffer Software,
copies of Prime Technology but only to the
extent that copies of such Prime
Technology (for example, Software or
documents) exist and are used or held for
use in the Retained Business by Sellers in
the ordinary course of business
consistent with past practice of the
Retained Business as of the date hereof and
not in violation of the representation and
warranty in Section 5.8(o), (ii)
Business Technology that is not Prime
Technology but only to the extent that
copies of such Business Technology (for
example, Software or documents) exist
and are used or held for use by the
Business in the ordinary course of business
consistent with past practice of the
Retained Business as of the date hereof,
(iii) Licensed Infinistream Technology and
(iv) any other items listed in
Section 2C of the Asset Schedule.
Notwithstanding the foregoing, the Prime
Technology referred to in Section 2.9(f)
will not be considered Shared
Technology.
"Sniffer
Deferred Revenue" has the meaning set forth in Section 5.18(c)
hereof.
"Sniffer
IT Data" has the meaning set forth in the definition of
"Infrastructure IP."
"Sniffer
Products" means the products set forth in Section 1 of the
Asset
Schedule as either (i) the products sold,
offered for sale or supported by the
Business as of the date hereof, or (ii) the
products developed or under
development and reduced to tangible form by
the Business as of the date hereof
but which have not been sold or offered for
sale prior to the date hereof.
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"Sniffer
Software" means all source code and other documentation that
contains or embodies source code, or from
which source code can be derived, for
any Sniffer Product (including for this
purpose both current and prior versions,
prototypes and forms of such products).
"Software"
has the meaning set forth in the defined term "Technology."
"Special
Damages" means Damages that are incidental damages, indirect
damages, special damages, punitive damages
or consequential damages.
"Special
Seller Breaches" and "Special Purchaser Breaches" have the
meanings set forth in Section 10.2(g)
hereof.
"Specified
Contract" has the meaning set forth in Section 5.9(a) hereof.
"Spin Out"
has the meaning set forth in Section 3.1(a)(ii) hereof.
"Straddle
Period" means any taxable period that begins before and ends
after the Closing Date.
"Stub
Business Financial Statements" has the meaning set forth in
Section
7.3(a) hereof.
"Sublicensee" and "Sublicensor" have the meanings set forth in
Section 3.4
hereof.
"Tax
Affiliate" of any Person means any affiliate of said Person that
was
included or includable in a Tax Return in
which such Person was included as a
member.
"Tax
Returns" means all federal, state, local and foreign returns,
estimates, information statements and
reports relating to Taxes, including any
schedule or attachment thereto, and
including any amendment thereof.
"Tax" or
Taxes" has the meaning set forth in Section 5.5(a) hereof.
"Technology" means any and all of the following tangible items or
things,
in any format, but specifically excluding
any Intellectual Property Rights
therein or thereto: (i) computer software
and code, including assemblers,
applets, compilers, source code, object
code, data (including image and sound
data), application program interfaces,
development toolkits, design tools, user
interfaces, programmer's guides and
manuals, user guides and manuals, and
related documentation, ("Software"); (ii)
computer hardware; (iii) product
prototypes, test fixtures, models, circuit
boards, electronic components,
drawings, blueprints and schematics, other
tangible technology associated with
the design, manufacture testing and
maintenance of electronic hardware; (iv)
processes, designs techniques,
developments, know-how and invention disclosures,
(v) any documents and materials containing
Trade Secrets and confidential
information of a Person, including
invention disclosures, including analyses and
research; (vi) databases and data
collections; (vii) materials used to develop,
test, promote, market, distribute, enhance,
modify, maintain, and/or support or
train users with
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<PAGE>
respect to, products; (viii) recordings and
other works of authorship; and (ix)
any media on which any of the foregoing is
recorded, and any other tangible
embodiments or copies of any of the
foregoing.
"Trade
Secrets" has the meaning set forth in the defined term
"Intellectual Property Rights."
"Trademarked Assets" has the meaning set forth in Section 8.9(c)
hereof.
"Transactions" has the meaning set forth in Section 8.2 hereof.
"Transfer
Regulations" means any foreign, federal, state or local
statute,
law, regulation, order, judicial opinion,
other authority or operation of law
governing the employment of the
International Seller Employees.
"Transfer
Taxes" means all sales, use, value-added, gross receipts,
excise, registration, stamp duty, transfer
or other similar taxes, customs
duties or governmental fees.
"Transferred Contracts" means any Business Contract relating
primarily or
exclusively to the Business (other than any
Excluded Contract or any Shared
Contract listed on Section 3A of the Asset
Schedule) that is (i) transferable by
any Seller to Purchaser in accordance with
this Agreement without the consent of
a third Person, or (ii) if consent of a
third Person is required, for which
consent has been obtained prior to Closing,
or subsequent to Closing as provided
in Section 2.4 hereof, provided, that the
Business Contracts listed on Section
3D of the Asset Schedule shall specifically
be included in this definition of
"Transferred Contracts."
"Transferred Copyrights" means the Copyrights in the works of
authorship
(or any other tangible in which a Copyright
may subsist) included in Prime
Technology.
"Transferred Intellectual Property Rights" means the (i)
Transferred
Patents, (ii) Transferred Marks, (iii)
Transferred Copyrights, (iv) the
Transferred Mask Works, (v) the Transferred
Internet Properties, (vi) the
Transferred Trade Secrets, and (vii) other
Intellectual Property Rights of
Seller listed in Section 2D of the Asset
Schedule.
"Transferred Internet Properties" means the Internet Properties
listed in
Section 2M of the Asset Schedule.
"Transferred IP" means the Transferred Technology and the
Transferred
Intellectual Property Rights.
"Transferred Marks" means the Marks listed in Section 2E of the
Asset
Schedule.
"Transferred Mask Works" means the Mask Works listed in Section 2N
of the
Asset Schedule.
"Transferred Patents" means the Patents listed in Section 2A of the
Asset
Schedule.
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<PAGE>
"Transferred Registered Copyrights" means the Copyrights listed in
Section
2O of the Seller Asset Schedule.
"Transferred Technology" means all Business Technology that is (i)
Prime
Technology, (ii) Shared Technology, (iii)
Licensed Back Source Code, or (iv) is
otherwise set forth in Section 2F of the
Asset Schedule as Transferred
Technology.
"Transferred Trade Secrets" means the Trade Secret rights of
Sellers' in
the Prime Technology.
"Transition Services Agreement" means the Transition Services
Agreement
dated the date of this Agreement and
entered into by Purchaser and NAI.
"Transitioning Employees" have the meaning set forth in Section
8.8(a)
hereof.
"Unlicensed IP" means (i) all Material Sniffer Software, (ii) any
Divested
Technology (including Residual Sniffer
Software) retained by Sellers in breach
of Section 2.9, and (iii) all Copyrights
and Trade Secrets embodied in either or
both of the foregoing "(i)" and "(ii)".
"WARN"
means the Worker Adjustment and Retraining Notification Act of
1988, as amended.
"Welfare
Benefits" has the meaning set forth in Section 8.8(d)(iii)
hereof.
ARTICLE II
THE PURCHASE AND SALE OF ACQUIRED ASSETS
2.1
Purchase and
Sale. Upon the terms and subject to the conditions of
this Agreement, each Seller hereby agrees
to sell, assign, transfer, convey and
deliver to Purchaser effective as of the
Closing, and Purchaser hereby agrees to
purchase, assume and acquire, effective as
of the Closing, the Acquired Assets.
2.2
Acquired Assets
and Excluded Assets.
(a) The term
"Acquired Assets" means all right, title and interest
of each Seller on the Closing Date in the
following assets and other rights (but
only those Intellectual Property Rights as
specifically listed below), except to
the extent such assets or other rights
constitute Excluded Assets:
(i) the rights
and benefits of any Seller under the
Transferred Contracts;
(ii) the Transferred
Technology;
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(iii) the Transferred Intellectual Property Rights, including
the rights of Sellers to recover past
damages for the infringement, impairment,
misappropriation or violation of any
Transferred Intellectual Property Rights;
(iv) the goodwill of
the Business appurtenant to or
symbolized by the Transferred Marks and/or
the Transferred Internet Properties;
(v) Permits to
the extent legally transferable by Sellers;
(vi) Inventory;
(vii) the Customer List and any other Sniffer IT Data;
(viii) all furniture, fixtures, machinery and equipment owned
by Sellers and used primarily in the
Business, including that which is listed in
Section 4 of the Asset Schedule (as such
Section 4 may be updated to add assets
as of the Closing, subject to the approval
of Purchaser) but excluding any
Infrastructure IP, the Indian Assets or
non-copyable computer hardware that is
not Inventory (the transfer of any such
computer hardware will be subject to the
more specific provisions contained in the
definition of "Transferred
Technology");
(ix) all Accounts
Receivable outstanding on or after the
opening of Business on the Closing Date;
and
(x) to the
extent not already included in the Transferred
Technology (A) copies of all books and
records (other than income Tax Returns
and employment files or personnel records
relating to the Seller Employees)
pertaining to the Business or Acquired
Assets, including but not limited to all
books of account, journals and ledgers,
files, correspondence, memoranda, maps,
plats, suppliers lists, customer lists,
catalogs, promotional materials,
machinery diagrams and plans, (B) copies of
all books, records and other
materials pertaining to the Business or
Acquired Assets provided by any Seller
to Purchaser in connection with Purchaser's
due diligence investigation of the
Business and Acquired Assets or otherwise
in connection with the negotiation and
execution of this Agreement or the
effectuation of the transactions contemplated
hereby, excluding in each case such books,
records and materials that
exclusively relate to the Excluded
Liabilities or the Retained Business, and (C)
originals of the Transferred Contracts, to
the extent existing in Sellers'
files;
(xi) all of Sellers'
rights, claims, counterclaims, cross
claims, credits, causes of action, rights
of set-off against third parties,
rebates or refunds to the extent relating
to the Acquired Assets, the Business
or the Assumed Liabilities, including
unliquidated rights under manufacturers'
and vendors' warranties;
(xii) the leasehold interests of Sellers as listed in Section
7 of the Asset Schedule (the "Assigned
Leases"); and
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(xiii) all other assets and rights of the Sellers used
primarily in the conduct of the Business
that are (A) not of a category or type
described in the foregoing clauses (i)
through (xii) or (B) Excluded Assets.
(b) Sellers will
retain and not transfer the Excluded Assets. The
term "Excluded Assets," collectively,
means:
(i) all rights
of Sellers under this Agreement and the other
Operative Documents;
(ii) except as
provided in Section 2.2(a)(x), all records
prepared by Sellers in connection with the
Acquisition;
(iii) all cash on hand and cash equivalents of any Seller;
(iv) all rights
arising from the Excluded Liabilities
(including Tax refunds and credits relating
to Pre-Closing Period Taxes);
(v) all Indian
Assets and all other furniture, fixtures,
machinery and equipment not used primarily
in the Business, and all computer
hardware not included in Transferred
Technology, unless listed in Section 4 of
the Asset Schedule;
(vi) all Excluded
Contracts and any rights of Sellers under
such Excluded Contracts;
(vii) all assets and other rights sold or otherwise disposed
of not in violation of any provisions of
this Agreement during the period from
the date hereof until the Closing;
(viii) the Retained Technology (other than the Shared
Technology) and Retained Intellectual
Property Rights and all rights of Sellers
therein;
(ix) all interests of
Sellers in real property and any
leasehold interests in real property of
each Seller, other than the Assigned
Leases; and
(x) all
Technology listed on Section 2H of the Asset
Schedule as "Excluded Technology," and all
Intellectual Property Rights (other
than Patents and Trademark Rights)
therein.
2.3
Assumption of
Certain Liabilities.
(a) Purchaser
hereby assumes, effective as of the Closing Date,
the following Liabilities, which shall be
the "Assumed Liabilities":
(i) (A) all
trade account payables to the extent
attributable to the Business which are
listed in Section 8 of the Asset
Schedule, and (B) those trade account
payables to the
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<PAGE>
extent attributable to the Business and
incurred in the Ordinary Course of
Business in accordance with the terms
hereof after the date of this Agreement
and on or before the Closing, excluding in
each case any accounts payable to
Sellers or their Affiliates;
(ii) all Liabilities,
other than those that are Excluded
Liabilities pursuant to Section 2.3(c)(ii),
required to be performed or accruing
on or after the Closing Date under the
Transferred Contracts included in the
Acquired Assets (or under any Customer
Contract to the extent provided in
Section 2.4), including (A) all related
implementation, consulting, customer
service, product return and warranty
obligations and (B) for these purposes, any
and all obligations as provided for under
Section 2.4 below;
(iii) the Liabilities of any Seller for accrued paid time off
of the Transitioning Employees where such
Liability can be assumed by Purchaser
pursuant to applicable law; provided,
however, that with respect to the Indian
Employees such Liabilities for accrued paid
time off shall be assumed, to the
extent permissible by applicable law, on or
after the Second Closing;
(iv) any Liabilities
for Post-Closing Period Taxes;
(v) any
Liabilities accruing on or after the Closing Date
relating to, arising out of, or resulting
from the employee agreements listed on
Section 8.8(b) of the Seller Disclosure
Schedule between Sellers and an
International Seller Employee who becomes a
Transitioning Employee, which the
Transfer Regulations shall require be
assumed by Purchaser or an Affiliate of
Purchaser, other than any such Liability
arising from any breach of any such
agreement attributable to any acts or
omissions of a Seller occurring on or
prior to the Closing Date; provided,
however, that any Liability associated with
the Purchaser's inability to comply with
the Transfer Regulations or other
employment requirements necessary to retain
the services of the International
Seller Employees as employees of Purchaser
or any Affiliate of Purchaser shall
constitute an Assumed Liability. Any
Liabilities described in the immediately
preceding clause that may arise with
respect to the Indian Employees shall not
constitute an Assumed Liability until the
Second Closing; and
(vi) except for those
Liabilities disclosed in Section
2.3(a)(vi) of the Seller Disclosure
Schedule, any severance Liability (v) with
respect to any Seller Employee who becomes
a Transitioning Employee, incurred as
a result of actions by the Purchaser on or
after the Closing Date, (w) with
respect to any International Seller
Employee whose individual employment
agreement is not assumed by Purchaser
pursuant to the Transfer Regulations,
incurred on or after the date hereof, (x)
with respect to any International
Seller Employee whose individual employment
agreement is assumed by Purchaser
pursuant to the Transfer Regulations,
incurred on or after the time of such
assumption, or (y) with respect to any
International Seller Employee who does
not have an individual employment
agreement, incurred on or after the date
hereof. For avoidance of doubt, Purchaser
does not and shall not be deemed to
have assumed any Liability for any amount
paid by NAI in connection with the
consummation of the Acquisition pursuant to
a cash bonus plan or bonus
arrangement implemented in connection with
the Acquisition or for any other
amount paid by NAI
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to any Seller Employee on account of the
Acquisition. Notwithstanding any of the
foregoing, any severance Liability assumed
by Purchaser pursuant to the
foregoing with respect to the Indian
Employees shall not constitute an Assumed
Liability until the Second Closing. If a
Seller Employee remains an employee of
any Seller following the Closing or such
employee becomes an employee of any
Seller within six (6) months of the Closing
(and such Seller Employee was not a
Transitioning Employee who was terminated
by Purchaser on or after the Closing),
and (B) such Seller Employee received
severance from Purchaser, Sellers shall
reimburse Purchaser for the amount of such
severance paid to such Seller
Employee. In the case of the Indian
Employees, the foregoing in the immediately
preceding sentence shall apply with respect
to the Indian Employees upon the
Second Closing.
(b)
Notwithstanding the foregoing, the Assumed Liabilities shall
not include any Excluded Liabilities.
(c)
Notwithstanding anything to the contrary in this Agreement,
Purchaser shall not and does not hereby
assume any Liabilities of the Sellers
(or any Affiliates of the Sellers), whether
relating to the Business, the
Acquired Assets or otherwise, other than
the Assumed Liabilities (all such
Liabilities other than the Assumed
Liabilities are collectively referred to
herein as the "Excluded Liabilities").
Excluded Liabilities shall include the
following:
(i) any
Liability of any Seller not stated to be assumed
pursuant to Section 2.3(a);
(ii) any Liability
arising from any breach of a Transferred
Contract prior to the Closing Date;
(iii) any Liability of any Seller, or any Tax Affiliate, in
respect of income Taxes and Pre-Closing
Period Taxes other than income Taxes;
(iv) any Liability
relating to or arising under or in
connection with any litigation of the type
described in Section 5.11 hereof
(without regard to the Material Adverse
Effect qualification set forth in
Section 5.11 hereof or the limitation of
such representation to the date
hereof);
(v) except as
provided in Section 2.3(a)(iii), (v) or (vi),
any Liability of any Seller relating to or
arising under or in connection with
any Seller Employee Benefit Plan or in
respect of any current or former employee
of any Seller, including any Seller
Employee or relating to or arising either in
connection with any actual or constructive
termination of the employment of any
such Seller Employee with any Seller and
any transaction bonus or other
compensation payable as a result of the
consummation of the transactions
contemplated hereby;
(vi) any obligation or
liability under WARN for employees of
any Seller, including the Seller Employees,
relating to the transactions
contemplated hereby as a result of actions
by Sellers as of the Closing, or
liabilities under COBRA for any Seller
Employees;
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(vii) any obligation or liability to the extent attributable
to an Excluded Asset except as provided for
in Section 2.4(c) hereof;
(viii) any obligation or liability of any Seller with respect
to any Retained Beneficial Contract except
as expressly set forth in Section
2.4(c) hereof;
(ix) any obligation or
liability related to any Intercompany
Agreement;
(x) any
obligation or liability related to (a) any
indebtedness for borrowed money or (b) any
guaranty, endorsement or
securitization;
(xi) other than the
Assumed Liabilities, any Liability
arising from the ownership or use of the
Acquired Assets or the conduct of the
Business before the Closing Date; and
(xii) any channel incentives or other distribution discounts
attributable to the period prior to the
Closing Date (except to the extent
funded by Sellers pursuant to Section
8.9(b)).
(d) Each Seller
agrees to pay, perform and discharge prior to the
Closing, all Liens except for Permitted
Liens.
2.4
Contract
Consents; Treatment of Retained Beneficial Contracts.
(a) Consents.
Sellers shall use reasonable commercial efforts
(without the expenditure, in the aggregate,
of significant personnel resources
or any out-of-pocket payments to third
parties to obtain third-party consents)
to obtain the consents set forth on Section
2.4(a) of the Seller Disclosure
Schedule necessary to transfer to Purchaser
at the Closing those Business
Contracts that would be Transferred
Contracts were such consent to be obtained.
Prior to the Closing, Sellers will consult
with Purchaser with respect to the
obtaining of such consents, will keep
Purchaser apprised of the status thereof
and will allow Purchaser to participate in
any discussions or negotiations
relating to such consents. In obtaining
such consents, Sellers will not agree to
any material modifications of any material
terms of such Contracts without the
consent of Purchaser. If Sellers are not
able to obtain any such required
consents as of the Closing, upon the
request of Purchaser during the 18-month
period from the Closing Date, Sellers will
use reasonable commercial efforts
(without the expenditure, in the aggregate,
of significant personnel resources
or any out-of-pocket payments to third
parties to obtain third-party consents)
to obtain such consents necessary to
transfer such Business Contracts to
Purchaser (and upon transferring any such
Business Contract to Purchaser after
obtaining the necessary consents, such
Contract shall be considered a
Transferred Contract under this Agreement).
To the extent Sellers are unable to
obtain any consents to the transfer of any
Business Contract that would be a
Transferred Contract were such consent
obtained, such Business Contract shall be
a Retained Beneficial Contract. Purchaser
agrees that it is primarily
responsible following the Closing for
entering into any new Contracts with
respect to the Business with the
counterparties to any Shared Contracts not
transferred to Purchaser, but Sellers agree
(without the expenditure, in the
aggregate, of significant personnel
resources or any out-of-pocket
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payments to third parties) that with
respect to any Shared Contracts (other than
any Inbound IP Contract that is a Shared
Contract, an Inbound IP Contract
granting Sellers rights to any Retained IP,
Infrastructure Contract, or Contract
listed on Section 3B of the Asset
Schedule), upon the request of Purchaser, it
shall assist Purchaser in entering into new
Contracts with respect to the
Business with the counterparties to such
Shared Contracts to replace such Shared
Contracts, such new Contracts to be
effective after Closing.
(b) Benefits
Under Retained Beneficial Contracts. To the extent
that a Retained Beneficial Contract is not
transferred to Purchaser as of the
Closing, at the request of Purchaser during
the 18-month period from the Closing
Date, Sellers will use reasonable
commercial efforts (without the expenditure,
in the aggregate, of significant personnel
resources or any out-of-pocket
payments to third parties to obtain
third-party consents) to provide to
Purchaser the benefits of such Retained
Beneficial Contract as related to the
Business for the term thereof (pursuant to
an arrangement as shall be reasonably
mutually acceptable to Purchaser and
Sellers), including (x) providing Purchaser
with the economic benefits of such Retained
Beneficial Contract as related to
the Business, (y) cooperating with
Purchaser in any lawful arrangement designed
to provide such benefits of such Retained
Beneficial Contract or applicable
portion thereof to Purchaser, and (z)
enforcing, at the request and expense of
and for the benefit of Purchaser, any
rights of Sellers arising from any such
Retained Beneficial Contract or applicable
portion thereof.
(c) Purchaser
Obligations. To the extent that and for the period
in which Purchaser is provided the benefits
of any Retained Beneficial Contract
after the Closing in accordance with the
foregoing Section 2.4(b), (i) Purchaser
shall perform the obligations of Sellers
thereunder to the extent they relate to
the benefits received by Purchaser and
would constitute Assumed Liabilities if
assignment occurred, (ii) Purchaser agrees
to pay, perform and discharge, and
defend and indemnify Sellers against, and
hold Sellers harmless from, all
Liabilities of Sellers under such Contract
(or applicable portion thereof) to
the extent such Liabilities relate to the
benefits to be received by Purchaser
and would constitute Assumed Liabilities if
assignment occurred and relating to
such performance or failure to perform and,
in the event of a failure to have
satisfied such indemnity obligation,
Sellers shall cease to be obligated under
this Section 2.4 with respect to such
agreement or applicable portion thereof
which are the subject of such failure, and
(iii) Purchaser and Sellers shall
enter into such arrangements at Purchaser's
expense as are reasonably necessary
to permit such Seller to perform such
responsibilities on behalf of Purchaser.
(d) Requirement
to Close. The failure by any Seller to assign at
Closing any Business Contract or relevant
portion thereof because a consent
necessary to effect such assignment has not
been obtained shall not relieve any
of the parties hereto from its respective
obligations to consummate the
transactions contemplated by this
Agreement.
2.5
Acquisition
Consideration.
(a) The purchase
price for the Acquired Assets (the "Purchase
Price") shall be two hundred seventy-five
million dollars ($275,000,000), plus
or minus, as applicable, the amount
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by which Modified Working Capital on the
opening of business on the Closing Date
(as set forth in the Final Modified Working
Capital Calculation) is more than or
less than $29,600,000 (the "Reference
Modified Working Capital Amount"). The
Modified Working Capital calculation as of
the opening of business on the
Closing Date shall be set forth in the
NAI's Officer Certificate delivered on
the Closing Date pursuant to Section 9.3(b)
hereof, and is subject to review and
recalculation pursuant to Section 2.6
hereof. If the Modified Working Capital
calculation as of the opening of business
on the Closing Date results in a
reduction of the Purchase Price, such
dollar difference shall be referred to as
the "Decreased Amount"; if the Modified
Working Capital calculation as of the
opening of business on the Closing Date
results in an increase in the Purchase
Price, such dollar difference shall be
referred to as the "Increased Amount."
(b) Purchaser
shall pay the Purchase Price, minus one hundred
thousand dollars ($100,000), in cash or
immediately available funds to the
Sellers on the Closing Date by electronic
wire transfer to an account or
accounts of Sellers designated by NAI at
least three (3) days prior to the
Closing Date, provided that if there is any
Decreased Amount, the Purchase Price
shall be reduced by such amount payable to
Sellers on the Closing Date. If there
is any Increased Amount, Purchaser shall
pay such Increased Amount in cash or
immediately available funds to Sellers no
later than fifteen (15) business days
after the Closing Date. Purchaser shall pay
the Second Closing Amount pursuant
to the terms of Section 4.5 hereof.
2.6
Purchase Price
Adjustment.
(a) Within
thirty (30) days after the Closing Date, Purchaser
(with the assistance of NAI to the extent
requested by Purchaser) will, at its
own expense, review the calculation of
Modified Working Capital as of the
opening of business on the Closing Date
delivered by NAI at the Closing. Upon
completion of such review, if Purchaser
determines that NAI's calculation of
Modified Working Capital was in error, as
calculated in accordance with GAAP and
the terms of this Agreement, then Purchaser
shall deliver to NAI its revised
calculation of such Modified Working
Capital amount (the "Calculation").
(b) NAI may,
within ten (10) business days after delivery of the
Calculation, deliver a notice to Purchaser
disagreeing with Purchaser's
calculation of the Modified Working Capital
as of the opening of business on the
Closing Date (an "Objection Notice"). If
Purchaser does not receive an Objection
Notice within such 10-business day period,
the Modified Working Capital amount
set forth in the Calculation pursuant to
Section 2.6(a) shall be deemed to have
been accepted by NAI and shall become
binding upon Purchaser and Sellers. The
Objection Notice shall specify those items
and amounts as to which NAI proposes
changes, including an explanation in
reasonable detail of the basis on which NAI
proposes such changes, and Sellers shall be
deemed to have agreed with all other
items and amounts contained in the
Calculation.
(c) If an
Objection Notice shall have been timely received by
Purchaser pursuant to Section 2.6(b),
Purchaser shall then have ten (10)
business days from the date of receipt to
review and respond to the Objection
Notice. NAI and the Purchaser agree to
attempt in good faith to
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resolve any disagreements with respect to
the determination of the Modified
Working Capital as of the opening of
business on the Closing Date by means of
(x) direct communication between the chief
financial officer of NAI and an
equivalent officer of Purchaser for five
(5) business days, and (y) if they are
unable to resolve all disagreements, direct
communication between the chief
executive officer of NAI and an equivalent
officer of Purchaser for five (5)
business days. If following these
procedures NAI and Purchaser are unable to
resolve all disagreements with respect to
the Modified Working Capital
calculation, they may refer, at the option
of either party, their remaining
differences to an internationally
recognized firm of independent public
accountants selected jointly by NAI and
Purchaser and who has no material
financial relationship with either NAI or
Purchaser, who shall determine solely
with respect to the differences so
submitted, whether and to what extent, if
any, the Modified Working Capital amount
set forth in the Calculation requires
adjustment. If NAI and Purchaser are unable
to so select independent public
accountants within ten (10) business days
of the date of the decision to refer
the disagreement to such accountants,
either NAI or the Purchaser may thereafter
request that the American Arbitration
Association make such selection (as
applicable, the firm selected by NAI and
Purchaser or the firm selected by the
American Arbitration Association is
referred to as the "CPA Firm"). NAI and
Purchaser shall direct the CPA Firm (i)
that it shall not assign a value to any
particular item greater than the greatest
value for such item claimed by NAI or
Purchaser or less than the smallest value
for such item claimed by NAI or
Purchaser, in each case as presented to the
CPA Firm, and (ii) to use its best
efforts to render its determination within
thirty (30) days. The CPA Firm's
determination shall be conclusive and
binding upon Sellers and Purchaser. The
fees and disbursements of the CPA Firm
shall be shared equally by NAI and
Purchaser. NAI and Purchaser shall make
readily available to the CPA Firm all
relevant books and records relating to the
calculation of Modified Working
Capital as of the as of the opening of
business on the Closing Date and all
other items reasonably requested by the CPA
Firm.
(d) Sellers
shall grant Purchaser and its representatives
reasonable access to all books and records
relating to the Business, employees
and facilities of Sellers and their
independent accountants that are reasonably
necessary to enable Purchaser to prepare
the Calculation. Sellers agree to
cooperate, and shall not interfere,
directly or indirectly, in the preparation
of the Calculation. Purchaser shall give
Sellers and their representatives
reasonable access to all books, records,
employees and facilities of Purchaser
and its independent accounts and shall
otherwise cooperate with Sellers to the
extent reasonably necessary for purposes of
reviewing, verifying and auditing
the Calculation.
(e) Based on the
Final Modified Working Capital Calculation
(defined below), the Modified Working
Capital as of the opening of business on
the Closing Date shall be recalculated. To
the extent NAI shall have been
overpaid or Purchaser shall have underpaid
on the Closing Date, as applicable,
NAI shall pay to Purchaser or Purchaser
shall pay to NAI an amount in cash equal
to such overpayment or deficiency in
accordance with Section 2.6(f) within two
(2) business days following the
determination of the Final Modified Working
Capital Calculation. The term "Final
Modified Working Capital Calculation" means
the Modified Working Capital amount (i) as
shown in NAI's calculation delivered
pursuant to Section 9.3(b) at the Closing
if Purchaser does not deliver the
Calculation pursuant to Section 2.6(a),
(ii) as shown in the Calculation
pursuant
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to Section 2.6(a) if no Objection Notice is
timely received pursuant to Section
2.6(b), or (iii) if an Objection Notice is
timely received, as determined by the
procedures set forth in Section 2.6(c).
(f) The amount
payable by NAI to Purchaser or from Purchaser to
NAI, as the case may be, under Section
2.6(e) shall be paid when due under
Section 2.6(e) by wire transfer of
immediately available funds to an account
designated not less than one business day
before such payment is due by
Purchaser or NAI, as the case may be.
2.7
Allocation of
Consideration. Sellers and Purchaser recognize their
mutual obligations pursuant to Section 1060
of the Code to timely file IRS Form
8594 with their respective federal income
Tax Returns. Within sixty (60) days
after Closing, Purchaser shall submit to
NAI in writing a proposed allocation of
the Purchase Price (and the assumed
liabilities, to the extent properly taken
into account) among the Acquired Assets
consistent with the provisions of
Section 1060 of the Code and the Treasury
Regulations thereunder and this
Section 2.7 for NAI's review and comment.
If the Purchaser and NAI are unable to
mutually agree on the purchase price
allocation within thirty (30) days after
NAI's receipt thereof, the determination of
the final purchase price allocation
shall be referred to the CPA Firm, the fees
of which will be shared equally by
Purchaser and NAI. The purchase price
allocation agreed to be the parties or
determined by the CPA Firm shall be
conclusive and binding upon Purchaser and
Sellers for all purposes, including
Transfer Taxes, and the parties agree that
all Tax Returns shall be prepared in a
manner consistent with such allocation,
and none of the Sellers or Purchaser shall
take a Tax position that is
inconsistent with such allocation, unless
required by the IRS or any other
applicable taxing authority. Any subsequent
adjustments to the Purchase Price
shall be reflected in a revised allocation
consistent with Section 1060 of the
Code and the Treasury Regulations
thereunder.
2.8
Transfer Taxes.
All Transfer Taxes imposed or levied by reason of,
in connection with or attributable to this
Agreement and the transactions
contemplated hereby shall be borne equally
by Purchaser, on the one hand, and
Sellers on the other hand. To the extent
Sellers are responsible for the
preparation and filing of any Transfer Tax
Return, Sellers shall prepare and
provide Purchaser such Transfer Tax Return
no later than ten (10) business days
prior to the due date of such Tax Return
and Purchaser shall remit to the
Sellers within five business days thereof
one-half of the amount of the Transfer
Taxes shown to be due on such Tax Return.
To the extent Purchaser is responsible
for the preparation and filing of any
Transfer Tax Return, Purchaser shall
prepare and provide Sellers such Transfer
Tax Return no later than ten (10)
business days prior to the due date of such
Tax Return and Sellers shall remit
to Purchaser within five business days
thereof one-half of the amount of the
Transfer Taxes shown to be due on such Tax
Return. The parties shall cooperate
with each other to the extent reasonably
requested and legally permitted to
minimize any Transfer Taxes.
2.9
Divested
Technology.
(a) It is the
intention of the parties that, at the Closing,
Sellers transfer to Purchaser, and not
retain copies of, the Divested Technology
and that Sellers not use such Divested
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Technology in the Retained Business
following the Closing. Accordingly, Sellers
shall use reasonable commercial efforts,
and shall cause any of their Affiliates
who have had access to any Divested
Technology ("Covered Affiliates") to use
reasonable commercial efforts to locate as
soon as practicable following the
Closing, (but in no event later than ninety
(90) days following the Closing) all
copies of all Material Divested Technology
and (i) deliver all Divested
Technology so located to Purchaser (if
Purchaser does not already possess a copy
of the applicable Divested Technology) or
(ii) destroy such Divested Technology
(if Purchaser already possesses a copy of
the applicable Divested Technology)
(subject to Sellers' right (but not
obligation) to store a copy thereof with an
independent third-party escrow agent
pursuant to subsection 2.9(h) below).). No
later than 10 days after the end of such 90
day period, NAI will deliver a
certificate signed by one of its officers
certifying that it has complied with
this Section 2.9(a).
(b) For the
purposes of Section 2.9, "reasonable commercial
efforts", shall include:
(i) In
connection with Section 2.9(a), informing Sellers'
and the Covered Affiliates respective
employees and contractors who might
reasonably be expected to have had access
to any of the Divested Technology of
Sellers' obligations under this Section 2.9
and instructing such employees and
contractors to promptly locate any Divested
Technology in their possession,
deliver any such Divested Technology to the
Compliance Attorney and to notify
the Compliance Attorney in writing that to
such employee's knowledge he or she
does not possess or have access to any
other Divested Technology;
(ii) The foregoing
shall include providing the identified
employees and contractors with sufficient
information so as to reasonably enable
them to locate such Divested
Technology;
(iii) In connection with Section 2.9(a), using reasonable
efforts to identify those servers,
computers, archive and backup tapes and other
archival media which might reasonably be
expected to contain any source code for
the Sniffer Products and using commercially
reasonable efforts to ensure the
examination of same for any source code
included in Divested Technology; and
(iv) appointing an
attorney of NAI designated by NAI's
general counsel (the "Compliance Attorney")
to coordinate Sellers' obligations
under this Section 2.9.
(c) If an
employee or contractor of any Seller or Covered
Affiliate locates any Material Divested
Technology in its possession at any time
following the ninetieth (90th) day after
the Closing and such Technology is
known by such employee or contractor to be
Divested Technology subject to this
Section 2.9, or any Seller or Covered
Affiliate otherwise has knowledge after
the ninetieth (90th) day following the
Closing that it has such Material
Divested Technology, Sellers or such
Covered Affiliate will (subject to Section
2.9(h)) promptly destroy such Divested
Technology, and to the extent that such
Material Divested Technology is licensed to
Sellers pursuant to Section
3.2(b)(ii) because it was not previously
discovered or known (for example if it
is Residual
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Sniffer Software or a derivative work
thereof), the license granted pursuant to
Section 3.2(b)(ii) with respect to such
Material Divested Technology shall
terminate 90 days after such discovery
(d) Purchaser
shall be permitted to designate either a
Transitioning Employee or an independent
third party reasonably acceptable to
Sellers to participate in and supervise the
divesture contemplated by Section
2.9(a). Sellers shall make available to
such person (and those assisting such
person) software tools, to the extent
available to Sellers, to locate Sniffer
Software. Sellers will otherwise provide
such person with all reasonable
cooperation in connection with the
foregoing and take such actions as may be
reasonably be requested by such person to
facilitate the location and
destruction of such the Divested
Technology. Any information learned by such
person regarding the Retained Business
shall be deemed Seller Confidential
Information and may not be used for any
purpose other than in connection with
the performance of the terms of this
Section 2.9(d).
(e) In addition
to the foregoing, no less frequently than every
six months and until the second anniversary
of the Closing Date, the Compliance
Attorney will use commercially reasonable
efforts to inform employees and
contractors who might reasonably be
expected to still have in their possession
any of the Divested Technology of Sellers'
obligations under this Section 2.9
and instructing such employees and
contractors to recheck if they have any
Divested Technology in their possession,
and if they do, to deliver any such
Divested Technology to the Compliance
Attorney for destruction.
(f) The parties
acknowledge that the Sellers currently use certain
Divested Technology in connection with the
operation and conduct of a division
of Sellers known as "NAI Labs" that is
engaged in, among other things,
government contracting. In the ninety (90)
day period immediately following the
Closing, Sellers shall use reasonable
commercial efforts to remove all such
Divested Technology from NAI Labs and
deliver to Purchaser or destroy such
Technology in accordance with Section
2.9(a). During such period, NAI Labs will
not share or disclose Divested Technology
with any employee of Sellers that is
not currently assigned to NAI Labs.
(g) Any Material
Divested Technology consisting of hardware will
be delivered to Purchaser rather than
destroyed.
(h) Sellers may
establish an escrow account in a form mutually
agreed to by Sellers and Purchaser with a
recognized third-party escrow agent to
hold a copy of the Divested Technology.
Purchaser shall be a party to any such
escrow agreement and shall have all the
rights of the owner of such escrowed
material under such escrow agreement. Such
escrow will provide that such
Divested Technology may be released only
(i) on prior notice to Purchaser (with
a reasonable opportunity of Purchaser to
object prior to such release), (ii) to
Sellers' outside counsel with a copy to
Purchaser, (iii) if there is a dispute
between Sellers and Purchaser (or either of
their respective successors), (iv)
solely for evidentiary purposes (and
covered by an appropriate protective
order); and (v) the scope and existence of
the Divested Technology is relevant
to such dispute.
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2.10
Transferred Trade
Secrets. Notwithstanding the transfer of the
Transferred Trade Secrets to the Purchaser
or the retention of any other Trade
Secrets related to the Business or the
Retained Business by Sellers, each party
shall have the independent and unrestricted
right to use all reasonable
commercial efforts to protect such Trade
Secrets known to it, and to enforce
without the requirement of the
participation of the other party, any claim
against a third Person for the
misappropriation of such Trade Secrets from it.
All such Trade Secrets shall be subject to
Section 8.2 hereof.
ARTICLE III
IP LICENSES
3.1
Licenses to
Purchaser.
(a) Patent
License.
(i) Effective as
of the Closing, Sellers hereby grant to
Purchaser and any of its Control Affiliates
as may be designated by Purchaser
from time to time (for the purposes of this
Section 3.1 only "Purchaser" means
Purchaser and any such Control Affiliates)
under all of Sellers' rights in the
Licensed Patents, a world-wide, fully
paid-up, perpetual, irrevocable,
non-terminable, non-exclusive,
non-sublicensable (except as provided below),
non-transferable (except as provided below)
right and license, to make, have
made, use, sell offer for sale, export, and
import any current or future
product, service or device (including
current or future Sniffer Products) and to
practice any process claimed in, or which
absent a license would infringe, such
Licensed Patents.
(ii) Purchaser may not
sublicense the rights granted to it in
Section 3.1(a)(i) or 3.1(c) to any third
Person except that Purchaser may
sublicense such rights (A) to the purchaser
(whether by asset sale or stock
sale) of any material portion of the
Business to which the Licensed Patents or
the Licensed Infinistream Technology, as
the case may be, do or may relate, (B)
in connection with or as necessary in the
manufacture, sale or distribution of
its products or services (including current
or future Sniffer Products)
including to end users (including OEMs)
whether alone or combined with products
or services of others, (C) in connection
with Purchaser's participation in and
ownership interest in a Qualified Joint
Venture, (D) to a Person that was a
Control Affiliate of Purchaser in
connection with the sale or distribution of
all or a majority of Purchaser's ownership
interest in such Person to public
stockholders in a public offering (such
transaction a "Spin Out"), (E) in
connection with the licensing by Purchaser
of all or substantially all of its
Patents in a patent portfolio cross-license
or (F) to Purchaser (in the event
that Purchaser has assigned its rights to a
Control Affiliate) or any Control
Affiliate of Purchaser. Any sublicense
granted by Purchaser or its successor in
accordance with the foregoing clauses (A),
(C) or (E) prior to the fifth (5th)
anniversary of the Closing Date shall be
subject to, and Sellers shall make such
sublicense grant subject to, Section 3.4.
If Purchaser sublicenses the Patent
license granted to it in Section 3.1(a)(i)
in accordance with Section
3.1(a)(ii)(E) the foregoing it shall pay to
Sellers the sum of $100.00;
provided, however, notwithstanding anything
to the contrary in this Agreement,
Sellers'
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sole and exclusive remedy for Purchaser's
failure to pay such amount shall be
the recovery of monetary damages in an
amount not to exceed $100.00.
(iii) Purchaser shall not exercise any rights, including the
make and have made rights granted to it in
Section 3.1(a)(i), in a manner that
is intended to or would have the effect of
sublicensing the rights licensed to
it hereunder to any third Person except as
permitted in Section 3.2(a)(ii).
(b) Other
Licensed IPR License. Effective as of the Closing,
Sellers hereby grant to Purchaser under all
of Sellers' rights in the Other
Licensed IPR a world-wide, fully paid-up,
perpetual, irrevocable,
non-terminable, non-exclusive, transferable
and sublicensable right and license
for any and all purposes including to (i)
make, have made, use, sell, offer to
sell, import, distribute, copy, publish,
modify, publicly perform or display,
prepare derivative works from and otherwise
exploit (A) any Sniffer Product and
the Acquired Assets and to provide any
other service or product and (B) any
product, service, device or in the
continuation of the Business in the future,
and (ii) otherwise to operate and continue
the Business. The foregoing license
shall not apply or extend to IP that is
licensed pursuant to any other section
of this Agreement including Section 3.1(c)
or any other license agreement
between Seller and Purchaser.
(c) Licensed
Infinistream Technology. Effective as of the Closing,
Sellers hereby grant to Purchaser and its
Control Affiliates under all of
Seller's rights in the Licensed
Infinistream Technology a world-wide, fully
paid-up, perpetual, irrevocable,
non-terminable, non-exclusive, right and
license (i) to internally copy, use, modify
and create derivative works of the
source code for the Software within the
Licensed Infinistream Technology, (ii)
to copy and distribute the Software within
the Licensed Infinistream Technology
solely in object-code form (including as
modified under this license) to end
users (directly or through distributors and
sub-distributors) as part of a
Purchaser product pursuant to
industry-standard licensing terms, and (iii) under
Seller's Intellectual Property Rights
(other than Patents) embodied by Licensed
Infinistream Technology (other than
Software), to make, have made, use, sell,
offer to sell, export and import Purchaser
products. In addition, to the extent
required by a customer of Purchaser and
provided that the source code escrows
are consistent with Purchaser's treatment
of other source code owned by
Purchaser, Purchaser may place the source
code for the Software within such
Licensed Infinistream Technology in an
escrow for the benefit of its customers.
The foregoing license may be sublicensed or
transferred by Purchaser only as
provided in Section 3.1(a)(ii) and 3.1(d)
respectively.
(d)
Transferability. The foregoing licenses to the Licensed
Patents and to the Licensed Infinistream
Technology shall not be transferable by
Purchaser except (i) in connection with the
change of control or merger of
Purchaser or a Control Affiliate of
Purchaser owning all, or substantially all,
of the Acquired Assets, (ii) the sale of
all, or substantially all, of the
assets of the Purchaser or its Control
Affiliates to which the Licensed Patents
or Licensed Infinistream Technology, as the
case may be, relate, or (iii) in
connection with a Spin Out. Any permitted
transfer by Purchaser of its license
to the Licensed Patents prior to the fifth
(5th) anniversary of the
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Closing Date shall be, and shall be made,
subject to Section 3.5. The prior
sentence shall not apply to the Licensed
Infinistream Technology.
3.2
Licenses to
Sellers.
(a) Patent
License.
(i) Effective as
of the Closing Date, Purchaser hereby
grants to Sellers and their Control
Affiliates (for the purposes of this Section
3.2 only, "Sellers" means Sellers and their
Control Affiliates), and Sellers
shall retain, under all rights Purchaser
acquired in the Licensed Back Patents,
a worldwide, fully paid-up, perpetual,
irrevocable, non-terminable,
non-exclusive, non-sublicenseable (except
as provided below) and
non-transferable (except as provided below)
right and license to make, have
made, use, offer for sale, sell, export and
import any current or future product
or service, and practice any process
claimed in, or which absent a license would
infringe, such Licensed Back Patents.
(ii) Sellers may not
sublicense the rights granted to them in
Section 3.2(a)(i) or 3.2(c) to any third
Person, except that Sellers may
sublicense such rights (A) to the purchaser
(whether by asset sale or stock
sale) of any material portion of Sellers'
business to which the Licensed Back
Patents do or may relate, (B) in connection
with or as necessary in the
manufacture, sale or distribution of the
any current or future products or
services of the Retained Business including
to end users (including OEMs)
whether alone or combined with products or
services of others, (C) in connection
with a Seller's participation in and
ownership interest in a Qualified Joint
Venture, (D) to a Person that was a Control
Affiliate of a Seller in a Spin Out
of such Control Affiliate, or (E) in
connection with the licensing by a Seller
of all or substantially all of the Patents
of a Seller in a patent portfolio
cross license. Any sublicense granted by
Sellers' or their successors in
accordance with the foregoing clauses (A),
(C) or (E) prior to the fifth (5th)
anniversary of the Closing Date shall be
subject to, and Sellers shall make such
sublicense grant subject to, Section 3.4.
If a Seller sublicenses the Patent
license granted to Sellers in Section
3.2(a)(i) in accordance with Section
3.2(a)(ii)(E) the foregoing, it shall pay
to Purchaser the sum of $100.00;
provided, however, notwithstanding anything
to the contrary in this Agreement,
Purchaser's sole and exclusive remedy for a
Seller's failure to pay such amount
shall be the recovery of monetary damages
in an amount not to exceed $100.00.
(iii) Sellers shall not exercise any rights, including the
make and have made rights granted to it in
Section 3.2(a)(i) in a manner that is
intended to or would have the effect of
sublicensing the rights licensed to it
hereunder to any third Person except as
permitted in Section 3.2(a)(ii).
(b) Other IP
License. Effective as of the Closing, Purchaser
hereby grants to Sellers and their Control
Affiliates, and Sellers and their
Control Affiliates retain:
(i) Category 1:
a world-wide, fully paid-up, perpetual,
non-exclusive, transferable, sublicenseable
right and license under all of the
Transferred Intellectual Property
rights
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in the Category 1 Technology (other than
the rights under Patents and Trademark
Rights), to make, have made, use, sell,
offer to sell, import, distribute, copy,
prepare derivative works from and otherwise
exploit the Category 1 Technology in
any manner including in any current or
future product or service of Sellers.
(ii) Category 2: a
world-wide, fully paid-up, perpetual,
non-exclusive, non-transferable (except
pursuant to 3.2(d)), non-sublicenseable
(except in connection with the licensing of
material other IP of Sellers) right
and license under the Transferred
Intellectual Property Rights (other than
rights under Patents and Trademark Rights)
in the Category 2 Technology to make,
have made, use, sell, offer to sell,
import, distribute, copy, prepare
derivative works from and otherwise exploit
the Category 2 Technology in any
manner including in any current or future
product or service of the Retained
Business. For avoidance of doubt this
Category 2 Technology license does not
extend to Unlicensed IP. Notwithstanding
the grant of licenses to certain
Divested Technology in the foregoing
license, such license shall not be
construed as in any way limiting any of
Sellers' obligations under Section 2.9.
(iii) The exclusion of any IP from the Category 2 Technology
license in Section 3.2(b)(ii) by such
section or by any other term of this
Agreement shall not preclude the granting
of a license to such IP under the
Category 1 Technology license in Section
3.2(b)(i) if such IP would otherwise be
within in the scope of such Category 1
Technology license and in such case the
terms of the Category 1 Technology license
shall prevail. The foregoing licenses
in Sections 3.2(b)(i) and 3.2(b)(ii) shall
not apply or extend to IP that is
licensed pursuant to any other section of
this Agreement, including Section
3.2(c), or under any other license
agreement between Seller and Purchaser.
(c) Licensed
Back Source Code. Effective as of the Closing,
Purchaser hereby grants to Sellers and
their Control Affiliates a world-wide,
fully paid-up, perpetual, irrevocable,
non-terminable, non-exclusive, right and
license to (i) internally copy, use, modify
and create derivative works of the
Licensed Back Source Code, and (ii) to copy
and distribute the Licensed Back
Source Code solely in object-code form
(including as modified under this
license) to end users (directly or through
distributors and sub-distributors) as
part of a Seller product pursuant to
industry-standard licensing terms. In
addition, to the extent required by a
customer of any Seller and provided that
the source code escrows are consistent with
a Seller's treatment of other source
code owned by a Seller, such Seller may
place such Licensed Back Source Code in
an escrow for the benefit of its customers.
The foregoing license may be
sublicensed or transferred by a Seller only
as provided in Sections 3.2(a)(ii)
and 3.2(d) respectively.
(d)
Transferability. The foregoing licenses to Sellers set forth
in Sections 3.2(a) and 3.2(b) shall not be
transferable by a Seller to a third
Person except (i) in connection with the
change of control or merger of a Seller
or a Control Affiliate of a Seller owning
all, or substantially all, of the
assets to which such licensed Patents or
licensed IP relates, (ii) the sale of
all, or substantially all, of the assets of
a Seller or its Control Affiliate to
which the such licensed Patents or licensed
IP relates, or (iii) in connection
with a Spin Out of a Control Affiliate of a
Seller. Any
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permitted transfer by Sellers of their
license to the Transferred Patents prior
to the fifth (5th) anniversary of the
Closing Date shall be, and shall be made,
subject to Section 3.5. The foregoing
sentence shall not apply to the Licensed
Back Source Code.
3.3
Licensor
Bankruptcy. The licenses granted in Sections 3.1 and 3.2
hereof by a party (in such capacity and for
the purposes of this Section 3.3
only, the "Licensor") to the other party
hereunder (in such capacity and for the
purposes of this Section 3.3 only the,
"Licensee") shall be and shall otherwise
be deemed to be, for purposes of Section
365(n) of the United States Bankruptcy
Code, 11 U.S.C. 101, et seq, a license to
rights of "intellectual property" as
defined thereunder. Notwithstanding any
provision contained herein to the
contrary, if a Licensor is under any
proceeding under the United States
Bankruptcy Code, 11 U.S.C. 101, et seq.,
and the trustee in bankruptcy of such
Licensor, or such Licensor, as a debtor in
possession, rightfully elects to
reject such license, Licensee may, pursuant
to 11 U.S.C. Section 365(n)(1) and
(2), retain any and all of the rights
granted to it hereunder, to the maximum
extent permitted by law, otherwise subject
to the terms of this Agreement.
3.4
Defensive
Suspension. Any sublicense granted prior to the fifth
(5th) anniversary of the Closing Date, in
accordance with the terms of Section
3.1(a)(ii)(A), (C) or (E) and
3.2(a)(ii)(A), (C) or (E), by Purchaser or a
Seller respectively (in such capacity a
"Sublicensor") to a third Person (the
"Sublicensee") of the Patent license
granted to Purchaser or Seller under
Sections 3.1(a) and 3.2(a), respectively,
shall contain a provision that states,
and has the effect that, if, prior to the
fifth (5th) anniversary of the Closing
Date, the Sublicensee brings or maintains a
lawsuit or claim for patent
infringement against the party hereto, its
Affiliates or its successor or
assigns (such Persons for the purposes of
this Section 3.4 only, the
"Licensor"), whose Patent rights are being
sublicensed by the Sublicensor that
is not in response to a lawsuit or claim
for patent infringement brought by
Licensor against such Sublicensee, then the
sublicense granted to such
Sublicensee shall terminate. Any sublicense
that does not comply with this
Section 3.4 shall itself be void ab
initio.
3.5
License
Transferability. Notwithstanding anything to the contrary
set forth herein, the patent licenses
granted to Purchaser in Section 3.1(a) and
Sellers in Section 3.2(a) shall not, prior
to the fifth (5th) anniversary of the
Closing Date, extend to Independent
Products of Purchaser or a Seller or their
respective Control Affiliates or the
permitted successor or assignee of such
license (Purchaser or Seller or their
respective Control Affiliates or such
permitted successor or assignee in
accordance with the terms of Sections 3.1(d)
and 3.2(d), respectively, the "Applicable
Licensee"). For the purposes of the
foregoing, (A) "Independent Products," as
applied to the Applicable Licensee
with respect to Sellers, means those
products of such Applicable Licensee that
exist as of the Closing Date (whether or
not owned by the Applicable Licensee at
the Closing) that compete directly with any
of the Sniffer Products in existence
as of the Closing Date (whether or not
owned by the Applicable Licensee at the
Closing) and follow-on products that are
independent of, and that neither
include nor are based upon, any of Sellers'
IP, and (B) "Independent Products,"
as applied to the Applicable Licensee with
respect to Purchaser, means those
products of such Applicable Licensee that
exist as of the Closing (whether or
not owned by the Applicable Licensee at the
Closing) that compete directly with
the products or services of the Retained
Business in existence as
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of the Closing Date (whether or not owned
by the Applicable Licensee at the
Closing) and follow-on products that are
independent of, and that neither
include nor are based upon, any of
Purchaser's IP.
3.6
Other Marks.
(a) Subject to
the terms of this Section 3.6, effective as of the
Closing, Sellers hereby assign and transfer
to Purchaser, without any
representation or warranty of any kind and
on an "as is, where is basis," any
rights that Sellers may have in the Other
Marks and any goodwill of the Business
appurtenant to such Other Marks.
(b)
Notwithstanding anything to the contrary in Section 5.8,
Sellers make no representations or
warranties with respect to the Other Marks
and specifically disclaim any
representations and warranties as to the
existence, validity or enforceability of
the Other Marks and as to any ownership
or rights of Sellers therein.
(c) Subject to Sections 3.6(b)
and 3.6(d), effective as of the
Closing Date, Sellers hereby covenant and
agree that they will not (i) use, as a
trademark of a Seller, any of the Other
Marks, (ii) claim any trademark rights
in the Other Marks, or (iii) oppose
Purchaser's registration of any of the Other
Marks in any jurisdiction; provided that,
Sellers have no affirmative duty to
expressly abandon or canc
