1
Exhibit 2.3
STOCK PURCHASE AGREEMENT
BY AND AMONG
GFI CAMINUS LLC,
A DELAWARE LIMITED LIABILITY COMPANY
CAMINUS ENERGY LIMITED,
AN ENGLISH CORPORATION
XX. XXXXX X. XXXXX, Ph.D.,
AN INDIVIDUAL
AND
XX. XXXXXXX X. XXXXXXXX, Ph.D.,
AN INDIVIDUAL
MAY 12, 1998
2
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS.................................................................... 2
ARTICLE 2 PURCHASE AND SALE OF SHARES.................................................... 5
2.1 The Closing; Closing Date.............................................. 5
2.2 Sale and Purchase of Shares............................................ 5
2.3 Payment of Cash Amount................................................. 6
2.4 Payment of Equity Amount............................................... 6
2.5 Issuance of Option..................................................... 6
2.6 Closing Adjustment..................................................... 6
2.7 Net Worth Adjustment................................................... 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................................. 7
3.1 Existence and Good Standing............................................ 7
3.1.1 The Company................................................... 7
3.1.2 Organizational Documents...................................... 8
3.1.3 Subsidiaries.................................................. 8
3.2 Capitalization and Title to Shares..................................... 8
3.3 Authority.............................................................. 9
3.4 No Conflicts........................................................... 9
3.5 Company Accounts....................................................... 10
3.6 Transaction Expenses................................................... 10
3.7 Material Contracts..................................................... 10
3.8 Intellectual Property.................................................. 11
3.9 Insurance.............................................................. 12
3.10 Labor Relations and Employee Agreements................................ 12
3.10.1 Compliance.................................................... 12
3.10.2 Employment Conditions and Agreements.......................... 13
3.10.3 Disclosed Scheme.............................................. 13
3.11 Payment of Taxes....................................................... 13
3.12 Books of Account; Bank Accounts........................................ 16
3.13 Condition of Tangible Assets........................................... 16
3.14 Ownership of Assets.................................................... 16
3.15 Brokers................................................................ 17
3.16 Litigation............................................................. 17
3.17 Personal Property Leases............................................... 17
3.18 Real Property Leases................................................... 17
3.19 Compliance with Laws; Permits.......................................... 18
3.20 Undisclosed Liabilities................................................ 18
3.21 Scope of Representations and Warranties................................ 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER........................................ 18
4.1 Existence and Good Standing............................................ 18
4.1.1 The Buyer..................................................... 18
3
4.1.2 Organizational Documents...................................... 19
4.1.3 Subsidiaries and Operations................................... 19
4.2 Agreement.............................................................. 19
4.2.1 Agreement Authorized......................................... 19
4.2.2 No Conflict.................................................. 19
4.3 Broker................................................................. 20
4.4 Capitalization......................................................... 20
4.5 Transaction Expenses................................................... 20
4.6 Scope of Representations and Warranties................................ 20
ARTICLE 5 TRANSACTION DOCUMENTS; DOCUMENT DELIVERY; COVENANTS............................ 21
5.1 Reliance............................................................... 21
5.2 Document Delivery...................................................... 21
5.3 Sellers Delivery of Documents.......................................... 21
5.4 Buyer Delivery of Documents............................................ 22
5.5 Covenant Not to Compete................................................ 22
5.6 Delivery of Transaction Documents...................................... 22
ARTICLE 6 INDEMNITY...................................................................... 22
6.1 Survival of Representations, Warranties, Agreements and Covenants...... 22
6.1.1 Sellers....................................................... 22
6.1.2 Buyer......................................................... 23
6.2 The Indemnity Obligation............................................... 23
6.3 Claims................................................................. 23
6.3.1 Notice........................................................ 23
6.3.2 Third Party Claim Procedures.................................. 24
6.4 Limitation on the Indemnifying Parties' Indemnification Obligations.... 24
6.5 Option to Recover Membership Interests or Options...................... 25
6.6 Sole and Exclusive Remedy.............................................. 25
6.7 Insurance Recoveries................................................... 26
6.8 Indemnity Limitations.................................................. 26
ARTICLE 7 MISCELLANEOUS.................................................................. 26
7.1 Entire Agreement....................................................... 26
7.2 Further Assurances..................................................... 26
7.3 Notices................................................................ 26
7.4 Governing Law and Submission to Jurisdiction........................... 29
7.5 Exhibits and Schedules................................................. 29
7.6 Captions............................................................... 29
7.7 Severability........................................................... 29
7.8 Counterparts........................................................... 30
7.9 Successors and Assigns................................................. 30
7.10 Waivers Strictly Construed............................................. 30
7.11 Number, Gender and Connection of Persons............................... 30
7.12 RTPA................................................................... 30
7.13 Statutory Update....................................................... 30
4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of
May 12, 1998, by and among XXX XXXXXXX XXX, x Xxxxxxxx Xxxxxx Xxxxxx limited
liability company, whose principle place of business is located at 00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("BUYER" or "GFI
CAMINUS"), CAMINUS ENERGY LIMITED, a company incorporated in England under the
registration number 1889028 and whose registered office is at Xxxxxxx Xxxxx,
Xxxxxx Xxxx, Xxxxxxxxx, XX0 XXX, Xxxxxx Xxxxxxx (the "COMPANY"), XX. XXXXX X.
XXXXX, Ph.D., an individual, of Xxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx,
Xxxxxxx, Xxxxxx Xxxxxxx ("XXXXX"), and XX. XXXXXXX X. XXXXXXXX, Ph.D., an
individual, of 00 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxx Xxxxxxx ("XXXXXXXX" and
together with Xxxxx, the "SELLERS"), with reference to the following facts and
circumstances.
RECITALS
WHEREAS, Buyer is a recently formed limited liability company organized
to acquire all of the equity interest in the Company and a seventy-one percent
(71%) partnership interest in ZAI*NET Software, L.P., a Delaware United States
limited partnership (the "PARTNERSHIP");
WHEREAS, Sellers are the beneficial owner of and together hold legal
title to all of the issued shares (the "SHARES") of the Company;
WHEREAS, Sellers desire to sell with full title guarantee, assign,
transfer and deliver to Buyer and Buyer desire to purchase and accept from
Sellers all of the issued Shares of the Company (the "PURCHASE");
WHEREAS, pursuant to the Subscription Agreement, dated as of the date
hereof (the "SUBSCRIPTION AGREEMENT"), among the Buyer, GFI Energy Ventures LLC
("VENTURES"), SS&C Technologies, Inc. ("SS&C"), OCM Caminus Investment, Inc.
("OAKTREE"), Xx. Xxxxxx X. Xxxxxxxxxxxx ("HESMONDHALGH"), RIT Capital Partners
("RIT") and Durham Enterprises Limited ("DURHAM"), (Ventures, SS&C, Oaktree,
Hesmondhalgh, RIT and Durham are referred to herein as the "INVESTORS"), the
Investors have agreed to make capital contributions to the Buyer and are
purchasing membership interests in the Buyer;
WHEREAS, pursuant to the SS&C Distributor Agreement, dated as of the
date hereof (the "LICENSE AGREEMENT"), between the Buyer and SS&C, SS&C is
licensing and/or granting to Buyer rights in certain proprietary technology
owned by SS&C as a portion of its capital contribution to the Buyer;
WHEREAS, pursuant to the Purchase Agreement, dated as of the date
hereof, among the Buyer, ZAI*NET Software, Inc., a Delaware United States
corporation, whose principle place of business is located at 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("ZAI*NET") and Xxxxx X. Xxxxxxx, an individual, the
Buyer simultaneously herewith is purchasing and accepting from ZAI*NET a seventy
percent (70%) partnership interest of the Partnership (the "ZAI*NET PURCHASE");
-1-
5
WHEREAS, pursuant to the Purchase Agreement, the Buyer simultaneously
herewith, is purchasing and accepting from Xxxxx X. Xxxxxxx, a one percent (1%)
general partnership interest in the Partnership, which shall constitute all of
the issued and outstanding general partnership interests in the Partnership;
WHEREAS, the Buyer desires to consummate the Purchase simultaneously
with the consummation of the purchase of the seventy-one percent (71%)
partnership interest in the Partnership, and upon the simultaneous closing of
each such transaction, the Buyer will be a holding company for each of the
Company and the Partnership; and
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements contained herein and in
the Related Agreements (as hereinafter defined), the parties hereto hereby agree
as follows.
ARTICLE 1
DEFINITIONS
"Agreement" shall have the meaning in the introductory paragraph hereof.
"Basket" shall have the meaning as set forth in Section 6.4 hereof.
"Buyer" shall have the meaning in the introductory paragraph hereof.
"Caminus Options" shall have the meaning set forth in Section 2.5 hereof.
"Cash Consideration" shall have the meaning set forth in Section 2.3 hereof.
"Closing" shall have the meaning as set forth in Section 2.1 hereof.
"Closing Audit" shall mean an audit of the Company as of the close of business
on April 30, 1998 to be performed by the Company's independent public
accountants (as specified by Buyer) in accordance with UK GAAP not later than
sixty (60) days following the Closing.
"Closing Date" shall have the meaning as set forth in Section 2.1 hereof.
"Companies Act" shall mean the Companies Xxx 0000 under the laws of England and
Wales.
"Company" shall have the meaning in the introductory paragraph hereof.
"Company Agreement" shall mean that certain Limited Liability Company Agreement
of GFI Caminus, dated as of the date hereof, by and among Ventures, SS&C,
Oaktree, Evans, Morrison, Hesmondhalgh and the other members of GFI Caminus as
of such date.
"Company Accounts" shall have the meaning as set forth in Section 3.5 hereof.
-2-
6
"Date Compliance" or "Date Compliant" shall mean the ability to: (i) process and
continue to process data correctly and consistently with reference to any and
all dates; (ii) operate, perform and function without being adversely affected
by any date or change of date; and (iii) produce output (including any output
for any interface to other hardware, software or systems) which will in relation
to any date contained within such output explicitly and unambiguously identify
the date in full including the century within which the date falls.
"Encumbrance" shall mean any claim, lien, security interest, mortgage, charge,
restriction, xxxx of sale, equity or other rights exercisable by third parties
and of any nature whatsoever.
"Equity Consideration" shall have the meaning set forth in Section 2.4 hereof.
"Estimated Net Worth" shall have the meaning set forth in Section 2.7 hereof.
"Xxxxx" shall have the meaning in the introductory paragraph hereof.
"GFI Caminus" shall have the meaning in the introductory paragraph hereof.
"Hesmondhalgh" shall have the meaning in the fourth Whereas clause hereof.
"Indemnified Party(ies)" shall have the meaning as set forth in Section 6.2
hereof.
"Indemnifying Party(ies)" shall have the meaning as set forth in Section 6.2
hereof.
"Investors" shall have the meaning set forth in the fourth Whereas clause
hereof.
"Knowledge" shall mean the actual knowledge or such knowledge as would have been
acquired, after due diligent and careful enquiry of the officers and key
employees of the Company, the Sellers or Buyer, as the case may be; provided,
however for purposes hereof, the officers and key employees of the Company shall
be only Xxxxx, Xxxxxxxx and Hesmondhalgh.
"License Agreement" shall have the meaning set forth in the fifth Whereas clause
hereof.
"Material Adverse Effect" means for all purposes of this Agreement any change or
effect that individually or when taken together with all other changes or
effects that have occurred during any relevant period of time prior to the date
of determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operation or prospects of
such person or entity, or does or is reasonably likely to materially adversely
affect the ability of such person or entity to perform its obligations under
this Agreement or the Related Agreements or to consummate the transactions
contemplated hereby or thereby, or materially adversely affects the ability of
such person or entity to conduct its business after the Closing Date
substantially as such business is being conducted as of the date hereof.
"Xxxxxxxx" shall have the meaning in the introductory paragraph hereof.
"Net Worth" shall mean the Company's assets less its liabilities (determined in
accordance with
-3-
7
UK GAAP) as of the close of business on April 30, 1998 and as determined
pursuant to the Closing Audit.
"Oaktree" shall have the meaning set forth in the fourth Whereas clause hereof.
"Partnership" shall have the meaning in the first Whereas clause hereof.
"Permitted Encumbrance" shall have the meaning as set forth in Section 3.14
hereof.
"Personal Property Leases" shall have the meaning as set forth in Section 3.17
hereof.
"Purchase" shall have the meaning as set forth in the third Whereas clause
hereto.
"Purchase Price" shall consist of the consideration payable and issuable by
Buyer in connection with the Purchase as specified in Sections 2.3, 2.4 and 2.5
hereof.
"Real Property Leases" shall have the meaning as set forth in Section 3.18
hereof.
"Related Agreements" shall mean (i) the service agreements and associated
covenants not to compete entered into between the Company and each of Xxxxx,
Xxxxxxxx and Hesmondhalgh dated as of the date hereof (each, a "SERVICE
AGREEMENT") (a form of said service agreements and associated covenants not to
compete is set forth as EXHIBIT A hereto) and (ii) the Company Agreement of GFI
Caminus (including any Appendices) attached hereto as EXHIBIT B.
"RTPA" shall mean the Restrictive Trade Practices Acts of 1976 and 1977, each as
amended.
"Sellers" shall have the meaning in the introductory paragraph hereof.
"Series A Membership Interests" shall mean the Series A membership interests of
GFI Caminus.
"Series B Membership Interests" shall mean the Series B membership interests of
GFI Caminus.
"Shares" shall have the meaning as set forth in the second Whereas clause
hereof.
"SS&C" shall have the meaning set forth in the fourth Whereas clause hereof.
"Subscription Agreement" shall have the meaning set forth in the fourth Whereas
clause hereof.
"Target Net Worth" shall have the meaning as set forth in Section 2.7 hereof.
"Tax" and "Taxes" shall have the meanings as set forth in Section 3.11 hereof.
"Tax Return" shall have the meaning as set forth in Section 3.11 hereof.
"Taxes Act" shall mean the Income and Corporation Xxxxx Xxx 0000.
"TCGA" shall mean the Taxation of Chargeable Gains Xxx 0000.
-4-
8
"Third Party Claims" shall have the meaning as set forth in Section 6.3.2
hereof.
"Transaction Documents" shall collectively mean the Related Agreements, the
Zai*Net Agreements, the License Agreement and the Subscription Agreement, all
dated as of the date hereof.
"UK GAAP" shall have the meaning in Section 3.5 hereof.
"Ventures" shall have the meaning set forth in the fourth Whereas clause hereof.
"Warranties" shall mean the representations and warranties contained in Article
3 and Article 4 hereof.
"ZAI*NET" shall have the meaning in the sixth Whereas clause hereof.
"Zai*Net Agreements" shall mean the Purchase Agreement, dated as of the date
hereof, among Buyer, the Partnership, ZAI*NET and Xxxxx X. Xxxxxxx, the
Assignment and Assumption Agreement, dated as of the date hereof between
ZAI*NET, the Partnership and Xxxxx X. Xxxxxxx, the Amended and Restated Limited
Partnership Agreement of the Partnership (including the Appendices attached
thereto) and the respective Employment Agreements and the associated Covenants
Not to Compete, each dated as of the date hereof, between the Partnership and
each of Xxxxx X. Xxxxxxx and Xxxxx Xxxxx.
"ZAI*NET Purchase" shall have the meaning set forth in the sixth Whereas clause
hereof.
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 THE CLOSING; CLOSING DATE. The signing of this Agreement, the
Related Agreements, and the closing of the transactions contemplated hereby and
thereby (the "CLOSING") shall take place (i) at the offices of Irell & Xxxxxxx
LLP, 000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx on the date
hereof, or (ii) at such other place, time and/or date as the parties hereto may
agree. The date upon which the Closing occurs is referred to herein as the
"CLOSING DATE".
2.2 SALE AND PURCHASE OF SHARES. Subject to the terms and conditions
set forth herein and in the Related Agreements, at the Closing each of the
Sellers who is the beneficial owner of the Shares set forth on SCHEDULE 3.2
attached hereto, shall sell or procure to be sold with full title guarantee and
deliver to Buyer, and Buyer shall purchase and accept from the Sellers, all of
the issued Shares in the Company in exchange for the Purchase Price. The Shares
shall be sold free from any Encumbrance, option, rights of pre-emption or any
other third party rights and together with all rights attached to such Shares at
the date of this Agreement or subsequently becoming attached thereto. The
Sellers shall waive and agree to procure the waiver of any restrictions on
transfer (including pre-emption rights) which may exist in relation to the
Shares under the articles of association of the Company or otherwise. The Buyer
shall pay all stamp duty and stamp duty reserve tax thereon. The Buyer shall not
be obligated to complete the
-5-
9
Purchase of any of the Shares unless the Sellers complete the sale of all the
Shares simultaneously, but completion of the purchase of some of the Shares will
not affect the rights of the Buyer with respect to the purchase of the other
Shares.
2.3 PAYMENT OF CASH AMOUNT. Subject to the terms and conditions set
forth herein and in the Related Agreements, at the Closing Buyer shall pay to an
account or accounts designated by the Sellers, pro rata in accordance with the
Shares sold by each of them pursuant hereto, credited as fully paid, Three
Million Dollars (U.S. $3,000,000) plus or minus any cash adjustments in
accordance with the provisions of Sections 2.6 and 2.7 below, which represents
the cash portion of the Purchase Price (the "CASH CONSIDERATION").
2.4 PAYMENT OF EQUITY AMOUNT. Subject to the terms and conditions set
forth herein, the Company Agreement and in the Related Agreements, at the
Closing Buyer shall authorize, issue, grant and deliver to Sellers, pro rata in
accordance with the Shares sold by each of them pursuant hereto, Series A
Membership Interests, having the rights, preferences and privileges and subject
to the restrictions contained in the Company Agreement, which represents the
equity portion of the Purchase Price (the "EQUITY CONSIDERATION"). The parties
acknowledge that Sellers are receiving as of the date hereof an aggregate
Capital Account credit of Three Million Dollars (U.S. $3,000,000), corresponding
to such Series A Membership Interests, as reflected in the Company Agreement.
2.5 ISSUANCE OF OPTION. Subject to the terms and conditions set forth
herein, the Company Agreement and in the Related Agreements, at the Closing
Buyer shall authorize, issue, grant and deliver to each of Xxxxx and Xxxxxxxx
(or to an entity designated by them and which they control), pro rata in
accordance with the Shares sold by each of them pursuant hereto, options
(referred to in the Company Agreement as the "CAMINUS OPTIONS") to acquire
Series B Membership Interests having the rights, preferences and privileges and
subject to the restrictions contained in the Company Agreement, which represents
the option portion of the Purchase Price. The parties acknowledge that the
exercise price of the Caminus Options is One Million Five Hundred Thousand
Dollars (U.S. $1,500,000), subject to adjustment as provided in the Company
Agreement, and that upon exercise the holder(s) thereof would have the right to
the corresponding Capital Account credit and Percentage Interests (both as
defined in the Company Agreement) in the Company.
2.6 CLOSING ADJUSTMENT. The parties acknowledge that, immediately prior
to May 1, 1998, the Company has (i) distributed all cash to the Sellers; and
(ii) repaid all then outstanding indebtedness of the Company (excluding trade
payables and other ordinary course accrued obligations), except to the extent
reflected on SCHEDULE 2.6 attached hereto; provided, however, that if any amount
of cash is remaining in the Company as of the close of business on April 30,
1998 and not distributed to Sellers or any indebtedness is not repaid, then such
cash and indebtedness shall be reflected in the Net Worth Adjustment set forth
in Section 2.7 below. Prior to May 1, 1998, the Company shall be entitled to
distribute any cash on hand to the Sellers and, unless otherwise agreed to by
the parties hereto, will repay any loans (excluding trade payables and other
ordinary course accrued obligations) of the Company outstanding prior to or as
of the close of business on April 30, 1998. The Sellers and the Company
represent and warrant that except as permitted in this Section 2.6, since the
date of the Company's Interim Accounts (as
-6-
10
defined in Section 3.5), the Net Worth of the Company has been managed and
maintained in the ordinary course of business and consistent with past
practices.
2.7 NET WORTH ADJUSTMENT. The parties acknowledge that, at least ten
(10) days prior to the date of this Agreement, the Sellers and the Company
delivered to Buyer, their good faith projection of the Net Worth of the Company
as of the close of business on April 30, 1998 (which projection includes
adequate reserves, provisions or accruals for taxes for all periods through the
close of business on April 30, 1998 and year end discretionary bonuses) (the
"ESTIMATED NET WORTH"). In the event that Estimated Net Worth exceeds pound
sterling 215,000 (the "TARGET NET WORTH"), the cash amount payable at Closing
pursuant to Section 2.3 shall be increased by the amount of such excess. In the
event that the Estimated Net Worth is less than the Target Net Worth, the cash
amount payable at Closing pursuant to Section 2.3 hereof shall be decreased by
the amount of the shortfall. Immediately following the Closing, the Company and
the Buyer shall initiate the Closing Audit. Based upon the actual Net Worth as
reflected in the Closing Audit, the provisions of this Section 2.7 shall again
be applied, substituting actual Net Worth for Estimated Net Worth; and, based
upon such application, not later than thirty (30) days following the completion
of the Closing Audit, the Buyer shall pay to the Sellers, or the Sellers shall
pay to the Buyer, as applicable, the appropriate "true up" amount.
Notwithstanding anything herein to the contrary, any distribution, dividend or
similar payment by the Company to a shareholder or any third party which is not
fully reflected in the computation of Net Worth (e.g., any such payment on or
after May 1, 1998 and prior to or on the Closing Date) shall be deducted in
computing Net Worth.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement for Buyer to enter into and consummate the
transactions contemplated by this Agreement (including the Related Agreements),
each of the Sellers, jointly and severally (except where expressly stated
otherwise), represents and warrants that, except as set forth in the Schedules
hereto prepared by the Sellers and delivered to Buyer, each of the following
statements is true, correct and complete as of the date hereof, which
representations and warranties shall survive the Closing as provided in Section
6.1 hereof.
3.1 EXISTENCE AND GOOD STANDING.
3.1.1 THE COMPANY. The company is a company duly incorporated,
validly existing, in good standing and not insolvent under the laws of England,
having full power and authority to own its properties and to carry on its
business as conducted. the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the operation of its business and
the ownership of its assets and properties requires it to be so qualified,
except where the failure to so qualify is not reasonably likely to have a
material adverse effect on the Company.
-7-
11
3.1.2 ORGANIZATIONAL DOCUMENTS. Copies of the memorandum and
articles of association or other organizational documents and bye-laws of the
Company, effective prior to the date hereof, have been delivered to Buyer and as
delivered are true and complete as of the Closing Date, having attached thereto,
copies of all resolutions and agreements referred to in Section 380(2) of the
Companies Act. The Company has complied with all of the provisions of the
memorandum and articles of association and, in particular has not entered into
any ultra xxxxx transactions. The statutory books and registers of the Company
and all current books of account are written up to date and all such documents
and other necessary records, deeds, agreements and documents relating to its
affairs are in its possession or under its control.
3.1.3 SUBSIDIARIES. The Company does not have, and has never had any
subsidiary, branch located outside of England or permanent establishment outside
the United Kingdom, and has complied in all material respects with all legal
requirements applicable to its business in the United Kingdom other than in
respect of Caminus Limited and Caminus Consultants Limited, both of which are
dormant and have never traded. The Company has no interest in the share capital
or other securities of any other entity.
3.2 CAPITALIZATION AND TITLE TO SHARES. Prior to giving effect to the
purchase and sale contemplated by this Agreement, the authorized and issued
share capital of the Company and the number of such issued Shares held by each
holder thereof is set forth on SCHEDULE 3.2 attached hereto. All of the issued
Shares are fully paid up and the Company has not exercised, purported to
exercise or claimed any Encumbrance over such Shares. Each of the Sellers
severally represents and warrants in respect of his Shares that he owns
beneficially and of record, free and clear of any Encumbrances, and has full
power and authority to sell with full title guarantee, assign, transfer,
deliver, vote and convey free and clear of any Encumbrances, the Shares, and
such Shares constitute all of the ownership interests in the Company owned by
each of the Sellers. There are no rights to call, outstanding options,
convertible securities, warrants, agreements, rights, contracts, calls,
commitments or demands of any character that either (i) obligates the Company to
issue, redeem, sell, convert or purchase any of the Shares, (ii) loan capital or
any other ownership interest in the Company, (iii) restricts or relates in any
way to the voting of any such securities, or (iv) restricts the transfer of or
otherwise relates to transactions in the Shares owned or held by the Sellers.
The Sellers, jointly and severally, represent and warrant that the pre-emption
rights contained in the Company's articles of association in respect of the
Shares sold and transferred pursuant hereto have been waived in writing by the
Sellers and are not subject to any other pre-emption rights. The register of
members of the Company contains a complete and accurate record of the members of
the Company and the Company has not received any notice of any application or
intended application for rectification. The Company and its officers have
complied with the provisions of the Companies Act, including the provisions as
to filing of returns, particulars, resolutions and other documents with the
United Kingdom Registrar of Companies, and all legal requirements of the United
Kingdom have been complied with in connection with the formation of the Company
and with issues of its share capital and other securities. Except as set forth
on SCHEDULE 3.2, attached hereto, the Company has not at any time, repaid,
redeemed or agreed to repay or redeem any shares of any class of its share
capital or otherwise reduced or agreed to reduce any class of its issued share
capital or purchased any of its own shares or carried out any transaction having
the effect of a reduction of capital; made or
-8-
12
resolved or agreed to make any issue of shares or other securities by way of
capitalization of profits or reserves; or given any financial assistance in
contravention of Section 151 of the Companies Act. There are no powers of
attorney given by the Company except any given incidental to and for the
purposes only of enforcement of any security.
3.3 AUTHORITY. Each of the Sellers severally represents and warrants
insofar as it is related to them as individual Sellers and otherwise jointly and
severally that they and the Company have the requisite power and authority to
execute and deliver this Agreement and the Related Agreements, and perform its
or his obligations herein and therein, and consummate the transactions
contemplated hereby and thereby. Each of the Sellers and the Company has duly
executed and delivered this Agreement and the Related Agreements (to which it is
a party), and has obtained the necessary authorization to execute and deliver
this Agreement and the Related Agreements (to which it is a party), and to
perform its or his respective obligations herein and therein and consummate the
transactions contemplated hereby and thereby, and such matters do not require
notice to, or consent or approval of, any other third party, governmental
authority or regulatory agency. Each of this Agreement and the Related
Agreements to which such Seller or the Company is a party is a valid, legal and
binding obligation of such Seller or the Company enforceable against such Seller
or the Company in accordance with its respective terms, except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding at law or at equity). No other action will be
necessary by any of the Sellers or the Company to authorize the execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby.
3.4 NO CONFLICTS. The Company has complied with all provisions of its
memorandum and articles of association and, in particular, has not entered into
any ultra xxxxx transaction. Neither the execution and delivery of this
Agreement or the Related Agreements (to which it is a party), nor the
consummation of the transactions contemplated hereby or thereby, (i) violates or
conflicts with any provision of the memorandum and articles of association,
bye-laws or other organizational documents of the Company; (ii) conflicts with
or violates any provision of any foreign or other law, statute, treaty,
ordinance, rule, regulation or any order, writ, judgment or decree of any court
or other governmental authority to which any of the Sellers, the Company or any
of their respective properties or assets may be bound or affected; or (iii)
breaches or constitutes grounds for a default (or an event, with notice or lapse
of time or both would become a default) under, or gives to others a right of
termination, amendment, acceleration, modification or cancellation of, or
results in the creation or imposition of (or the obligation to create or impose)
any Encumbrance on any of the properties or assets of any of the Sellers or the
Company pursuant to any note, mortgage, indenture, bond, lease, license, permit,
franchise, agreement, contract, undertaking or other instrument to which any of
the Sellers or the Company is a party or by which any of the Sellers, the
Company or any of their respective properties or assets may be bound or
affected, in each case described in clauses (ii) and (iii) which is reasonably
likely to have a Material Adverse Effect on any of the Sellers or the Company.
The execution, delivery and performance of this Agreement and the Related
Agreements by each of the Company and the Sellers does not require the notice
to, filing with, consent, approval or action of, any governmental authority or
any other third party whatsoever.
-9-
13
3.5 COMPANY ACCOUNTS. The Sellers have delivered to Buyer true and
correct copies of the accounts of the Company for the fiscal years ended April
30, 1996 and April 30, 1997 and as of and for the period ended March 31, 1998
(the "INTERIM ACCOUNTS", and collectively with the accounts for the fiscal years
ended April 30, 1996 and April 30, 1997, the "COMPANY ACCOUNTS"). All of the
Company Accounts (i) except the Interim Accounts, have been prepared under the
historical cost convention and in accordance with generally accepted accounting
practice commonly adopted and accepted by companies carrying on businesses in
the jurisdiction of England ("UK GAAP"); and (ii) (A) show a true and fair view
of the affairs of the Company as at their respective dates and of its results
for the fiscal periods ended on those dates; (B) comply with the requirements of
the Companies Act; (C) are prepared on consistent bases and policies of
accounting which are the same as those adopted by the Company since the
beginning of the first period covered without alteration; and (D) (save as the
Company Accounts expressly disclose) are not affected by any unusual or
non-recurring items. The Company Accounts make full provision or reserve for, or
disclose, all liabilities (including contingent and disputed liabilities) and
all capital commitments of the Company as at April 30, 1996, April 30, 1997 and
March 31, 1998, indicate clearly which of those liabilities are not usually
provided for or reserved, and make adequate provision or reserve for all bad and
doubtful debts (including, reserves, provisions or accruals for taxes and year
end discretionary bonuses). The profits shown in the Company Accounts have not
to a material extent been affected (except as disclosed in those accounts) by
any extraordinary or exceptional event or circumstance or by any other factor
rendering them unusually high or low. Since March 31, 1998, apart from the
dividends provided for in the Company Accounts, no dividend or other
distribution (as defined for the purposes of section 209 or 210 of the Taxes
Act) has been declared, paid or made by the Company other than as set forth in
SCHEDULE 3.5 attached hereto; the business of the Company has been carried on in
the ordinary course and so as to maintain it as a going concern; and there has
occurred no fact or circumstance constituting a Material Adverse Effect.
3.6 TRANSACTION EXPENSES. Any and all expenses, fees or costs incurred
by any of the Sellers or the Company in connection with the transactions
contemplated by this Agreement and the Related Agreements are set forth on
SCHEDULE 3.6. There are no other expenses, fees or costs incurred by any of the
Sellers or the Company in connection with the transactions contemplated by this
Agreement and the Related Agreements for which Buyer shall be responsible.
3.7 MATERIAL CONTRACTS. Set forth on SCHEDULE 3.7 attached hereto is a
complete and accurate list of all Material Contracts to which the Company is a
party or by which any of its assets, properties or business is bound. With
respect to each of the Material Contracts set forth on SCHEDULE 3.7, a true and
correct copy, or if a copy is not available, a summary of the contractual
obligation, has been provided to Buyer. Each of the Material Contracts is in
full force and effect, without material breach or default by the Company and to
the Knowledge of the Sellers and the Company, without material breach or default
by any other party thereto, and no written notice has been received regarding
termination, suspension, alteration, modification or amendment thereof. The
Company is not, and has not been party to any agreement between undertakings,
decision by any association of undertakings or concerted practice which
infringes or infringed Articles 85(1) of the Treaty of Rome (whether or not it
is or was exempted under Article 85(3) of the Treaty of Rome). The Company is
not, and has not been, party to any
-10-
14
agreement which is registrable under the RTPA (whether or not particulars of any
arrangement have been furnished to the United Kingdom Director General of Fair
Trading in accordance with that Act). None of the Material Contracts is subject
to termination or contains any provisions adverse to the Company that would be
triggered by the execution or performance of this Agreement or the Related
Agreements. "Material Contracts" means (a) all contracts or commitments arising
other than in the ordinary and usual course of business; (b) all contracts or
commitments involving an obligation which cannot or in reasonable probability
will not be completed or terminated within three (3) months from the Closing
Date or can be terminated within three (3) months from the Closing Date only
upon the payment of a penalty or the equivalent thereof; (c) all contracts or
commitments affecting ownership of or title to, any interest in real property
(other than as set forth in SCHEDULE 3.18); (d) all contracts or commitments
providing for payments or receipt of revenues in excess of Twenty Thousand
Pounds Sterling (pound sterling 20,000) per annum; (e) all loan agreements,
indentures, promissory notes and other documents evidencing or related to debt
for borrowed money or other funded indebtedness or capital lease obligations;
(f) all business sale or acquisition agreements, consulting agreements, license
or royalty agreements, nondisclosure agreements, non-compete agreements,
joint-venture agreements and service agreements (other than those set forth in
SCHEDULE 3.10.2); (g) all agreements between the Company and any shareholders or
a related party thereto or any officer or director of the Company; (h) all
agreements and commitments with respect to Intellectual Property; and (i) all
other agreements and commitments the loss of which would have a Material Adverse
Effect on the Company.
3.8 INTELLECTUAL PROPERTY. Set forth on SCHEDULE 3.8 attached hereto is
a list of all material inventions, trade names, trademarks, service names,
service marks, logos, patents, registered designs, design rights, know-how,
copyrights, licenses, formulas, trade secrets, programs, economic models,
strategic studies, reports, forecasting models, rate projections, computer
software (excluding commercially available general office computer software
licensed from unrelated third-parties and software covered by "shrink wrap"
licenses), technology and other intellectual property rights (whether registered
or not) and the goodwill therein (the "INTELLECTUAL PROPERTY") owned by the
Company or used or required by the Company in the operation of its business.
Except as set forth on SCHEDULE 3.8, the Company is the registered proprietor
(where available) and the beneficial owner of, and otherwise has good title to
and holds all of its right, title and interest in and to the Intellectual
Property, free and clear of all Encumbrances, as necessary to conduct its
business as presently being conducted, without the making of any payment,
royalty or sum in the nature of a royalty or the granting of any rights to
others. Except as set forth on SCHEDULE 3.8, the conduct of the business of the
Company as now conducted does not infringe or conflict with any Intellectual
Property rights of others. The Company has, as of the date hereof, satisfied all
requirements necessary to maintain the validity of all Intellectual Property,
and the right to use such Intellectual Property and is not subject to revocation
and has not been attacked or opposed by any person or entity. Except as set
forth on SCHEDULE 3.8 attached hereto, no infringement by others of any
Intellectual Property is pending, or to the Knowledge of the Sellers and the
Company, threatened by any third party who has asserted a claim of infringement
of any such Intellectual Property rights. All licenses, rights and other
agreements pertaining to the Intellectual Property are in compliance with all
applicable laws, rules and regulations in all jurisdictions in which the Company
conducts any business, including without limitation, those pertaining to
remittance of foreign exchange and taxation.
-11-
15
The execution and delivery of this Agreement, the Related Agreements and the
consummation of the transactions contemplated hereby or thereby will not alter
or impair the rights and interests of the Company in any of the Intellectual
Property and the Company will have the same rights and interests in such items
at and after the Closing Date as it has had immediately prior to the Closing
Date. Except as set forth on SCHEDULE 3.8, the Company has not entered into any
agreement for the licensing or use of any Intellectual Property, or the
provision or acquisition of know-how or technical information or assistance. To
the actual knowledge of the Sellers and the Company (for this purpose,
"knowledge" shall not be deemed to include constructive knowledge), and the
Company and the Sellers having made no systematic or specific investigations,
the computer systems, information technology, and other equipment used by the
Company are Date Compliant or the Company has taken (upon discovery of any
potential problems), appropriate measures in connection with Date Compliance
procedures so as to avoid a Material Adverse Effect on the Company. To the
Knowledge of the Sellers, the Company has not disclosed, permitted to be
disclosed or arranged to disclose any of its know how, secrets, confidential
information or other Intellectual Property that is not publicly known or
available.
3.9 INSURANCE. The assets, properties and operations of the Company are
insured under various policies of general liability, error and omissions and
other forms of insurance, copies of which have been provided to Buyer and
descriptions of which are set forth on SCHEDULE 3.9 attached hereto. SCHEDULE
3.9 discloses for each policy the outstanding claims thereunder and the carrier
of such insurance policy. To the Knowledge of the Sellers, all such policies are
in full force and effect in accordance with their terms, no notice of
cancellation has been received, and there is no existing breach or default (or
event which, with the giving of notice or lapse of time or both) would
constitute a breach or default thereunder. All premiums to date have been paid
in full.
3.10 LABOR RELATIONS AND EMPLOYEE AGREEMENTS.
3.10.1 COMPLIANCE. The Company is in material compliance with all
applicable laws, rules, regulations and ordinances relating to the employment of
labor and those other applicable laws, rules, regulations and ordinances
relating to wages, hours, occupational health and safety, anti-discrimination,
collective bargaining, equal employment opportunity and employment of labor in
general, and to the payment of and withholding of taxes. The Company has in
relation to each of its employees and to each of its former employees complied
with its obligations under the Employment Rights Xxx 0000, the Trade Union and
Labour Relations (Consolidation) Xxx 0000, the Sex Discrimination Xxx 0000, the
Race Relations Xxx 0000, Article 119 of The Treaty of Rome, the Equal Treatment
Directive, the Disability Discrimination Xxx 0000 and all other statutes,
regulations and codes of practice relevant to its relations with its employees
and with any recognized trade union representing such employees and all
collective agreements from time to time in force relating to such relations or
the conditions of service of the employees. The Company has maintained adequate
and suitable records regarding the service of the employees, and discharged
fully its obligations to pay all salaries, wages, commissions, bonuses, overtime
pay, holiday pay, sick pay, accrued entitlement under incentive schemes PAYE and
national insurance contributions and other benefits of or connected with
employment up to the date of this Agreement. There are no inquiries or
investigations existing, pending or threatened affecting the Company by the
Equal Opportunities Commissions or Commission for
-12-
16
Racial Equality.
3.10.2 EMPLOYMENT CONDITIONS AND AGREEMENTS. All material facts
relating to the salaries, ages, length of service, benefits, incentive schemes,
share option schemes, profit schemes, entitlements, collective agreements, union
membership, associations and any other arrangement or agreement of all employees
of the Company have been disclosed to the Buyer. Except as disclosed on SCHEDULE
3.10.2 attached hereto, the Company is not a party to any employment contract
with any employee, collective bargaining agreement, employees pension plan,
retirement plan, employees profit sharing plan, bonus plan, incentive plan,
welfare plan, severance agreement, termination agreement, any contract of
service with any employee or group of employers which is not terminable by the
Company by twelve (12) weeks notice or less without payment of compensation
(except as provided by statute), or any other similar agreement or plan. There
are no material labor controversies pending between the Company and any of its
employees. No agreement or arrangement exists for the provision by the Company
of any relevant benefits (as defined in section 612(1) of the Taxes Act, with
the omission of the exception in that definition) for any officer or employee or
former officer or employee of the Company or for any dependent of any such
person.
3.10.3 DISCLOSED SCHEME. No agreement or arrangement (other than
contributions to the private pension plans of its employees details of which are
included on SCHEDULE 3.10.3) exists for the provision by the Company of any
relevant benefits (as defined in section 612(1) of the Taxes Act with the
omission of the exception in that definition) for any person employed or
formerly employed by the Company or for any dependent of any such person. The
Company's private pension plan is in compliance with all applicable laws and the
Company has not breached and has complied with any and all obligations under the
Company's private pension plan. There are no disputes, complaints or claims by
any employee against the Company pending or threatened and there is no
industrial action or dispute threatened, existing or anticipated concerning any
of the Company's employees. Except as set forth in Schedule 3.10.3 the Company
has no obligation (whether actual or contingent present or future) to contribute
to any personal pension scheme (as defined in section 630 of the Taxes Act) in
respect of any person employed or formerly employed by the Company. No
undertaking or assurance has been given to all or any of the persons employed or
formerly employed by the Company as to the continuance, introduction, increase
or improvement of any retirement, death or disability benefits (whether or not
there is any legal obligation to do so). The Company is not providing and has
not at any time provided ex gratia pensions or other like payments for any
person employed or formerly employed by the Company or any dependant of any such
person. No company other than the Company participates in the Company's private
pension plan.
3.11 PAYMENT OF TAXES. (a) The Company has no liability in respect of
taxation (whether actual or contingent) arising in any part of the world that is
not adequately disclosed or provided for in full in the Company Accounts for
each period covered by such Company Accounts (other than as stated in the
Interim Accounts). The amount of the provision for deferred taxation contained
in the Company Accounts was, at the date the Company Accounts were prepared,
adequate and fully computed in accordance with UK GAAP and commonly adopted by
companies carrying on businesses similar to those carried on by the Company. The
Company has within the time limits prescribed by the relevant legislation duly
paid all Tax,
-13-
17
made all Tax Returns, given all notices, supplied all other information required
to be supplied to the Inland Revenue, Customs & Excise and any other
governmental authority and all such Tax Returns and notices were and remain
complete and accurate in all material respects and were made on a proper basis.
The Sellers have provided copies of such Tax Returns to Buyer for its taxable
years ending April 30, 1995, 1996 and 1997. There is no Tax dispute, audit,
investigation or other proceeding pending or, to the Knowledge of the Sellers or
the Company, threatened by the Inland Revenue, Custom & Excise or other
governmental authority against or affecting the Company. The Company has not
made a claim under Taxation of Chargeable Gains Xxx 0000 sections 152 or 154
which would affect the amount of the chargeable gain or allowance loss which
would, but for such claim, have arisen on a disposal of any of its assets. For
purposes of this Agreement, "TAX" and "TAXES" shall mean and refer to all taxes,
duties, levies, charges, rates, or other impositions or withholdings imposed of
any nature, whenever and by whatever authority imposed and whether of the United
Kingdom or elsewhere including (without limitation) income tax (including income
tax required to be deducted or withheld from or accounted for in respect of any
payment), corporation tax, advance corporation tax, capital gains tax, capital
transfer tax, inheritance tax, value added tax, customs duties, excise duties,
lottery duty, air passenger duty, insurance premium tax, rates (including the
uniform business rate), stamp duty, capital duty, stamp duty reserve tax,
national insurance and other similar contributions, any liability arising under
Section 419, Section 601 or Section 703 of the Taxes Act and any other taxes,
duties, rates, levies, charges, imposts or withholdings corresponding to,
similar to, replaced by or replacing any of them, together with any interest,
penalty or fine in connection with any taxation, and any liability to make a
payment by way of reimbursement, recharge, indemnity, damages or management
charge connected in any way with any taxation and regardless of whether any such
taxes, duties, rates, levies, charges, imposts, withholdings, interest,
penalties or fines are chargeable directly or primarily against or attributable
directly or primarily to the Company or any other person and of whether any
amount in respect of any of them is recoverable from any other person. "TAX
RETURN" means all returns, reports, forms or other information required to be
filed with respect to any Taxes.
(b) Neither the Company nor any director or officer of the Company (in
his capacity as such) has paid or become liable to pay, and there are no
circumstances by reason of which it is or they are likely to become liable to
pay, any penalty, fine, surcharge or interest whether charged by virtue of the
provisions of the Taxes Management Xxx 0000, the Customs and Excise Management
Xxx 0000 or the Value Added Tax Xxx 0000 or otherwise. All clearances obtained
by the Company have been properly obtained and all information supplied to the
Inland Revenue, Custom & Excise or other appropriate authority in connection
with such clearances was complete and accurate in all respects and any
transaction for which such clearance was obtained has been carried out only in
accordance with the terms of the clearance given therefor and the application on
which the clearance was based. There are no material and/or unusual
arrangements, agreements or undertakings, between the Company and the Inland
Revenue, Customs & Excise or any foreign tax authorities regarding or affecting
the taxation treatment of the Company. No payment has been made by the Company
(or may become due from the Company pursuant to a binding obligation incurred by
the Company prior to the Closing) which will not be deductible for corporation
tax purposes either in computing the profits of the Company or in computing the
corporation tax chargeable on the Company. No payment has been made to the
Company to which Section 601 of the Taxes Act applies (pension scheme
-14-
18
surpluses; payments to employers). The Company has not since the date of the
Company Accounts done or omitted to do or agreed to do, or permitted to be done,
any act as a result of which there may be made a balancing charge under the
Capital Xxxxxxxxxx Xxx 0000 or a withdrawal of first year allowances or recovery
of excess relief within Section 46 or Section 00 Xxxxxxx Xxxxxxxxxx Xxx 0000.
The Company has incurred no expenditure on the provision of machinery or plan
for leasing (the meaning of which is, for this purpose, as extended by Section
50 of the Capital Allowances Act 1990). The Company has not made any election
under Section 37 of the Capital Allowances Act 1990 (short life assets) nor is
taken to have made such an election under sub-section (8)(c) thereof.
(c) There are no surrenders or claims for any advance corporation tax
under the provisions of Section 240 of the Taxes Act (surrender of advance
corporation tax) or any amount by way of group relief under the provisions of
Sections 402 to 413 (inclusive) of the Taxes Act (group relief) and of any
special arrangement with respect to group relief made pursuant to Inland Revenue
Statement of Practice SP10/93. The Company has been a close company but not a
close investment company for the purposes of the Taxes Act in the last six
years.
(d) The Company has not made any repayment of share capital to which
Section 210 of the Taxes Act applies or issued any share capital paid up
otherwise than by the receipt of new consideration within the meaning of Part VI
of the Taxes Act. The Company has not been concerned in any exempt distribution
within Section 213 to the Taxes Act within the period of six years preceding the
Closing Date. The Company has not issued any share capital which is of a
relevant class as defined in Section 249(2) of the Taxes Act (stock dividends)
nor does the Company own any such share capital. No dividend or other payment
specified by section 247 of the Taxes Act which has been paid by the Company has
been paid under an election made under the said Section 247 and SCHEDULE 3.11
attached hereto, contains details of any such elections which have been made by
the Company. The Company has not issued any security (within the meaning of
Section 254(l) of the Taxes Act) outstanding on the Closing Date in
circumstances such that any interest or other payment payable in respect of it
may be treated as a distribution under Section 209 of the Taxes Act. The Company
has not made an election to treat any dividend paid or to be paid by it as a
foreign income dividend pursuant to Section 246A of the Taxes Act and the
Company is not an international headquarters company for the purposes of Section
246S of the Taxes Act. The Company has neither been a party to nor otherwise
involved in any transaction, scheme or arrangement the main purpose or object or
one of the main purposes or objects of which was to avoid or reduce a liability
to tax.
(e) The Company is a registered and taxable person for the purposes of
the Value Added Tax Xxx 0000 and neither is nor has ever been treated for such
purposes as a member of group. The Company has complied with and observed in all
respects the terms of the Value Added Tax Xxx 0000 and Section 10 of the Finance
Xxx 0000 and all regulations made or notices issued thereunder and has
maintained and obtained full, complete, correct and up-to-date records, invoices
and other records (as the case may be) appropriate or requisite for the purposes
thereof. The Company is not in arrears with any payments or returns or
notifications under such legislation, regulations or notices or liable to any
abnormal or non-routine payment or any forfeiture or penalty or interest or
surcharge provisions contained therein. The Company neither is nor has agreed to
become, an agent, manager or factor (for the purposes of Section 47 of the
-15-
19
Value Added Tax Act 1994) of any person who is not resident in the United
Kingdom. No claims have been or could be made by the Company under Section 36 of
the Value Added Tax Xxx 0000 (refund of tax in cases of bad debts). The Company
holds no interest in any buildings or land in respect of which the Company or
any other person has made an election to waive the exemption to value added tax
in accordance with the provisions of paragraph 2 of Schedule 10 to the Value
Added Tax Xxx 0000, nor is the Company contractually committed (contingently or
otherwise) to receive any supply in respect of which such an election has been
made.
(f) All documents in the possession or under the control of the Company
or to the production of which the Company is entitled which are necessary to
establish the title of the Company to any asset and which, in the United Kingdom
or elsewhere, attract either stamp duty or require to be stamped with a
particular stamp denoting that no duty is chargeable or that the document has
been produced to the appropriate authority, have been properly stamped; and no
such documents which are outside the United Kingdom would attract stamp duty if
they were brought into the United Kingdom.
3.12 BOOKS OF ACCOUNT; BANK ACCOUNTS. The books, records and accounts
of the Company accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of the Company with respect to its
business. The Company has not engaged in any material transaction with respect
to its business, maintained any bank account for its business or used any of its
funds, except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books, records and accounts of the Company.
SCHEDULE 3.12 attached hereto sets forth a list of all bank accounts, bank boxes
and other depositories of the Company identifying bank, branch and account
number, as well as the authorized signatories thereto. The Company has
maintained a system of internal accounting control sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization, transactions are recorded as
necessary to permit preparation of financial statements in conformity with UK
GAAP, access to assets, properties, books, records and accounts is permitted
only in accordance with management's general or specific authorization, and the
recorded accounting for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.13 CONDITION OF TANGIBLE ASSETS. The aggregate book value of all of
Company's tangible assets is less than Twenty Five Thousand Pounds Sterling
(pound sterling 25,000). Such tangible assets are in good operating condition
and repair, subject to ordinary wear and tear and comply with any applicable
legal requirement or restriction.
3.14 OWNERSHIP OF ASSETS. The Company can transfer title to all assets
and properties used by the Company, free and clear of all Encumbrances except
for Permitted Encumbrances. The Company's assets and properties are not subject
to any leasing, hiring or hire-purchase agreement, assignment, factoring,
deferred payment agreement or other similar agreement. For purposes of this
Agreement, "PERMITTED ENCUMBRANCES" shall mean Encumbrances that do not
materially detract from the value of, or materially interfere with, the present
use or the marketability of the property affected thereby; mechanic's,
carrier's, worker's, repairman's or other statutory liens arising or incurred in
the ordinary course of business; Encumbrances for
-16-
20
taxes, assessment and other governmental charges which are not yet due and
payable or which may thereafter be paid without penalty or are being contested
in good faith pursuant to appropriate proceedings and fully reserved on the
Company Accounts; easements, covenants, rights-of-way and other encumbrances or
restrictions of record that do not materially detract from the value of, or
materially interfere with, the present use or the marketability of the property
affected thereby; and planning, building, restrictions and other governmental
ordinances.
3.15 BROKERS. No amount is payable by the Sellers or the Company by way
of brokerage fees, finder's commissions or otherwise to any party on account of
this Agreement or the Related Agreements or the transactions contemplated hereby
or thereby.
3.16 LITIGATION. Except as disclosed on SCHEDULE 3.16 attached hereto,
there is no claim, action, suit, litigation, arbitration, investigation,
prosecution or other legal proceeding which is pending or to the Knowledge of
the Sellers or the Company threatened, before any court or governmental
authority, or arbitrator or board of arbitrators to which the Company or any of
the Sellers (in the case of any Seller, to the extent such matter relates in any
way to the Company) was or is a party, or to which any of the assets or
properties of the Company was or is subject. Neither the Company nor any of the
Sellers (in the case of any Seller, to the extent such matter relates in any way
to the Company) is in default with respect to any order, writ, injunction,
decree or demand of any court or other governmental or regulatory authority.
3.17 PERSONAL PROPERTY LEASES. The Company is not party to any
equipment or other personal property lease which requires annual payments in
excess of Twenty Thousand Pounds Sterling (pound sterling20,000) or has a term
longer than one (1) year from the date of this Agreement.
3.18 REAL PROPERTY LEASES. SCHEDULE 3.18 attached hereto sets forth a
list of all real property leases ("REAL PROPERTY LEASES") to which the Company
is a party. Each of the Real Property Leases is a valid and binding obligation
of the respective parties thereto and enforceable in accordance with its
respective terms and no licenses or collateral assurances, undertaking or
concessions have been granted. Each of the Real Property Leases is a head lease,
containing no particularly unusual or especially onerous provisions or any
rights for the landlord to determine such lease and is subject to a right of
re-entry only on the grounds of non-payment of rent or breach of a covenant. The
Company is not, in breach or default of such Real Property Leases in any
material respect and has paid the rent and all other sums payable under the Real
Property Lease on the due dates for payment. Except as disclosed on SCHEDULE
3.18, no license, consent or approval is required from the landlord or any
superior landlord for the assignment or transfer of any of the Real Property
Leases in connection with this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby. The security of tenure provisions
in Part II of the Landlord and Xxxxxx Xxx 0000 are not excluded nor is the right
to compensation or disturbance. Where there are provisions for rent reviews and
they require any effect on the rent of goodwill, the tenant's occupation and
improvements carried out other than at the landlord's expense (whenever carried
out) are to be disregarded, and they provide for the rent to be assessed on the
basis of the relevant property being let as a whole with vacant possession for a
term equal to the residue then remaining of the original term of the lease on
the same terms as the lease (including the provisions for rent review) and the
review itself is not subject to review. All licenses, consents and approvals
required from the landlord and any superior landlord under any
-17-
21
Real Property Lease have been obtained.
3.19 COMPLIANCE WITH LAWS; PERMITS. Each of the Company and the Sellers
with respect to the business of the Company has complied with and is in
compliance with all statutes, laws, ordinances, regulations, rules, permits,
judgments, orders and decrees applicable to it or any of its properties, assets,
operations and business, except where the failure so to comply would not
reasonably be expected to result in a Material Adverse Effect on the Company.
The Company is not required to hold or obtain any permits, licenses, easements,
variances, exemptions, consents, certificates, orders or approvals from
governmental authorities, excluding any such matters which are not material to
the business of the Company as such business is now being conducted.
3.20 UNDISCLOSED LIABILITIES. Except as set forth in the Company
Accounts or in SCHEDULE 3.20 attached hereto, there is no claim, liability or
obligation of any nature, whether absolute, accrued, known or unknown,
contingent or otherwise, affecting the Company or its business, other than
obligations incurred in the ordinary course of the business consistent with the
Company's past practice, which is reasonably likely (including those incurred in
the ordinary course of business) to have a Material Adverse Effect on the
Company.
3.21 SCOPE OF REPRESENTATIONS AND WARRANTIES. This Agreement (including
the Exhibit or Schedule), the Related Agreements and each other document and
certificate prepared or delivered by or on behalf of the Company and the Sellers
and furnished or to be furnished to Buyer in connection herewith, as of the date
hereof, does not contain any untrue statement of a material fact, or omit to
state a material fact necessary in order to make the statements contained herein
and therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement for the Sellers to enter into and consummate the
transactions contemplated by this Agreement and the Related Agreements, Buyer
represents and warrants that each of the following statements is true, correct
and complete as of the date hereof which representations and warranties shall
survive the Closing, as provided in Section 6.1.
4.1 EXISTENCE AND GOOD STANDING.
4.1.1 THE BUYER. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, having full power and authority to own its properties and to carry on
its business as conducted. Buyer is duly qualified to transact business and is
in good standing in each jurisdiction in which the operation of its business and
the ownership of its assets requires it to be so qualified. Buyer is a newly
formed limited liability company, organized to acquire the equity interest in
the Company and partnership interests in the Partnership and to act as a holding
company of those entities from and after the Closing Date. Buyer does not have
and has never had any business operations other than operations and activities
that are incidental and related to its formation and in preparation of the
purchase of its ownership interest in each of the Company and the Partnership.
Buyer has no
-18-
22
material liabilities or obligations of any nature, whether absolute, accrued,
known or unknown, contingent or otherwise, except the liabilities and
obligations expressly stated in the Transaction Documents.
4.1.2 ORGANIZATIONAL DOCUMENTS. Copies of the Company Agreement,
Certificate of Limited Liability Company and other organizational documents,
effective on or prior to the date hereof, have been delivered to sellers and as
delivered are true and complete as of the Closing Date.
4.1.3 SUBSIDIARIES AND OPERATIONS. Prior to the date hereof, the
Buyer has never had any subsidiaries or any business operations and has complied
in all material respects with all legal requirements applicable to its
organization and existence.
4.2 AGREEMENT
4.2.1 AGREEMENT AUTHORIZED. Buyer has the requisite power and
authority to execute and deliver this Agreement, the Related Agreements and the
other Transaction Documents to which it is a party, as applicable, and perform
its obligations herein and therein, and consummate the transactions contemplated
hereby and thereby. Buyer has duly executed and delivered this Agreement, the
Related Agreements and the other Transaction Documents to which it is a party,
and has obtained the necessary authorization in accordance with all applicable
laws and its organizational documents to execute and deliver this Agreement, the
Related Agreements and other Transaction Documents to which it is a party, and
perform its obligations herein and therein and consummate the transactions
contemplated hereby and thereby, and such matters do not require notice to, or
consent or approval of, any other third party, governmental authority or
regulatory agency, except as set forth on SCHEDULE 4.2.1 attached hereto. Each
of this Agreement, the Related Agreements and the other Transaction Documents to
which it is a party is a valid, legal and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding at law or at equity). The person executing this
Agreement, the Related Agreements and the other Transaction Documents to which
it is a party on behalf of Buyer has been specifically authorized to do so by
all necessary action. No other action will be necessary by Buyer to authorize
the execution and delivery of this Agreement, the Related Agreements and the
other Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby.
4.2.2 NO CONFLICT. Except as set forth in SCHEDULE 4.2.2 attached
hereto, neither the execution and delivery of this Agreement, the Related
Agreements or the other Transaction Documents to which it is a party, nor the
consummation of the transactions contemplated hereby or thereby, (i) violates or
conflicts with any provision of the Company Agreement or other organizational
documents of Buyer; (ii) conflicts with or violates any provision of any
foreign, federal, state or local law, statute, treaty, ordinance, rule,
regulation or any order, writ, judgment or decree of any court or other
governmental authority to which Buyer or any of its properties or assets may be
bound or affected; or (iii) breaches or constitutes
-19-
23
grounds for a default (or an event, with notice or lapse of time or both would
become a default) under, or gives to others a right of termination, amendment,
acceleration, modification or cancellation of, or results in the creation or
imposition of (or the obligation to create or impose) any Encumbrance on any of
the properties or assets of Buyer pursuant to any note, mortgage, indenture,
bond, lease, license, permit, franchise, agreement, contract, undertaking or
other instrument to which Buyer is a party or by which Buyer or any of its
properties or assets may be bound or affected, in each case which is reasonably
likely to have a Material Adverse Effect on Buyer. The execution, delivery and
performance of this Agreement, the Related Agreements and the other Transaction
Documents to which it is a party, by Buyer does not require the notice to,
filing with, consent, approval or action of, any governmental authority or any
other third party whatsoever, except as disclosed on SCHEDULE 4.2.2 which is
reasonably likely to have a Material Adverse Effect on Buyer.
4.3 BROKER. No amount is payable by Buyer by way of brokerage fees,
finder's commissions or otherwise to any party on account of this Agreement, the
Related Agreements, the Transaction Documents or the transactions contemplated
hereby or thereby.
4.4 CAPITALIZATION. All of the Series A Membership Interests and the
Caminus Options issuable pursuant to this Agreement, and the Series B Membership
Interests issuable upon the exercise of the Caminus Options have been and will
be (in the case of the Series B Membership Interests) duly authorized, validly
issued and are fully paid and nonassessable (subject only to the requirement to
pay the exercise price to exercise the Caminus Options), and were or will be
issued free of any preemptive rights. SCHEDULE 4.4 attached hereto sets forth a
list of all membership interests, options, warrants and other rights to acquire
Membership Interests or other securities of the Buyer issued and outstanding as
of the Closing Date. Except as set forth in SCHEDULE 4.4, or otherwise provided
in this Agreement, the Service Agreements and as set forth in the Company
Agreement, as of the Closing Date there are no options, convertible securities,
warrants, agreements, rights, contracts, calls, commitments or demands of any
character to which Buyer is a party that either (a) obligates Buyer to grant,
issue, redeem, sell or convert any of the Membership Interests, options or other
securities of Buyer; (b) obligates Buyer to repurchase, call or otherwise
acquire any of the Membership Interests, options or other securities of Buyer;
(c) subjects Buyer to any voting trusts, proxies or other arrangements or
understanding; or (d) restricts the sale, assignment or transfer of, or
otherwise relates to the ownership or voting interests of the any of the
Membership Interests, options or other securities of Buyer (excluding from the
foregoing subsections (a), (b), (c) and (d) the conversion rights held by
ZAI*NET Software, Inc. exercisable for equity interests in Buyer, as set forth
in the Purchase Agreement).
4.5 TRANSACTION EXPENSES. Buyer agrees to pay the expenses, fees and
costs set forth on SCHEDULE 3.6 incurred by any of the Sellers or the Company in
connection with the transactions contemplated by this Agreement and the Related
Agreements.
4.6 SCOPE OF REPRESENTATIONS AND WARRANTIES. This Agreement (including
any Exhibit or Schedule) and each other document or certificate prepared or
delivered by or on behalf of the Buyer and furnished or to be furnished to the
Sellers in connection herewith, as of the date hereof, does not contain any
untrue statement of a material fact, or omit to state a
-20-
24
material fact necessary in order to make the statements contained herein and
therein not misleading.
ARTICLE 5
TRANSACTION DOCUMENTS; DOCUMENT DELIVERY; COVENANTS
5.1 RELIANCE. The parties acknowledge that the Transaction Documents
are being executed, delivered and performed (when applicable) simultaneously
with the execution, delivery and performance (when applicable) of this
Agreement, and that neither Buyer nor Sellers would have agreed to execute,
deliver or perform this Agreement in the absence of the simultaneous execution,
delivery and performance (when applicable) of such documents.
5.2 DOCUMENT DELIVERY. The parties acknowledge and agree that the
following documents are being delivered in connection with the Closing:
5.2.1 the Company Agreement, duly executed by Buyer, the Sellers and
the other members of the Buyer; and
5.2.2 the Related Agreements, duly executed by the respective
parties thereto.
5.3 SELLERS DELIVERY OF DOCUMENTS. The parties acknowledge and Sellers
agree that the Sellers are delivering the following documents in connection with
the Closing:
5.3.1 a letter from Xxxxx & Xxxxx, counsel to the Company and the
Sellers to confirm the existence of the Company and similar matters in the form
attached hereto as Exhibit C;
5.3.2 certificate(s) from the Company dated the Closing Date, making
certain certifications concerning the articles of association, bye-laws and the
absence of breach of the representations, warranties, covenants and agreements
herein;
5.3.3 a duly executed transfer to the Buyer or its nominee of the
number of Shares sold by each Seller together with definitive Share certificates
(including any corresponding stock powers);
5.3.4 a power of attorney under which any document is executed on
behalf of a Seller;
5.3.5 any waivers, consents or other documents required to vest in
the Buyer the full beneficial ownership of the Shares and enable the Buyer to
procure them to be registered in the name of the Buyer or its nominees;
5.3.6 the certificate of incorporation, common seals, all statutory
and minute books (which shall be written up to, but not including the Closing
Date) and share certificate book of the Company together with all unused share
certificate forms;
-21-
25
5.3.7 all deeds and documents relating to the title of the Company
to each of its properties; and
5.3.8 the written resignations of all directors of and the secretary
of the Company (other than any person whom the Buyer may wish to remain in
office) executed as a deed in the agreed terms.
5.4 BUYER DELIVERY OF DOCUMENTS. The parties acknowledge and Buyer
agrees that the following documents are being delivered by Buyer in connection
with the Closing:
5.4.1 the Transaction Documents, duly executed by the respective
parties thereto; and
5.4.2 certificate(s) or document(s) from the Buyer or the Secretary
of State for the State of Delaware, dated the Closing Date, evidencing the good
standing of the Buyer and the certification of the representations, warranties,
covenants and agreements herein.
5.5 COVENANT NOT TO COMPETE. Each of the Sellers acknowledge and agree
that he is selling and transferring to the Buyer all of his equity ownership
interest in the Company (including goodwill) and is entering into a Service
Agreement with the Company, and if he were able to compete with the Company in
any manner that is proscribed by the Covenant Not to Compete attached hereto as
EXHIBIT D, then the Buyer would be deprived of a substantial portion of the
goodwill and going concern value sought to be obtained in the Purchase. In
consideration of this Agreement and the Service Agreement, and as a means to
reasonably protect the intellectual property, confidential and proprietary
information of the Company, each Seller, will not directly or indirectly, carry
on or be interested in a Competing Business or act as a consultant, employee or
officer in any executive, sales, marketing, research or technical support
capacity in a Competing Business as set forth more fully in Covenant Not to
Compete.
5.6 DELIVERY OF TRANSACTION DOCUMENTS. The Buyer has delivered copies
of all Transaction Documents, on or prior to the date hereof, to the Sellers and
as delivered are true and complete as of the Closing Date and are the only
material agreements and instruments evidencing the transactions contemplated by
the Purchase and the ZAI*NET Purchase and the funding thereof.
ARTICLE 6
INDEMNITY
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS
6.1.1 SELLERS. Except for the representations and warranties set
forth in each of Sections 3.1, 3.2 and 3.3 of this Agreement (as to which
survival shall be indefinite) and in Section 3.11 of this Agreement (as to which
survival shall extend for the applicable statute of limitations with respect to
any Tax liability or other matters that are the subject of an indemnity claim),
all representations, warranties, agreements and covenants of the Sellers made
hereunder or in connection with the transactions contemplated by this Agreement
(including the Exhibits
-22-
26
and Schedules attached hereto) shall survive the Closing for a period of ninety
(90) days from the completion date of the fiscal year audit for the first fiscal
year and subsequent to April 30, 1998, regardless of any investigation made at
any time by or on behalf of any party or of any information any party may have,
after which time they shall be null and void and of no effect whatsoever (except
as to claims asserted prior to the end of such period, in which case the
pertinent representations and warranties shall remain in effect until such
claims are fully and finally resolved). Sellers shall indemnify and hold Buyer
(or any successor entity) harmless in accordance with the provisions of Section
6.2 hereof.
6.1.2 BUYER. Except for the representations and warranties set forth
in each of Sections 4.1, 4.2.1 and 4.4 (as to which survival shall be
indefinite), all representations, warranties, agreements and covenants of Buyer
made hereunder or in connection with the transactions contemplated by this
Agreement (including the Exhibits and Schedules attached hereto) shall survive
the Closing for a period of one (1) year, regardless of any investigation made
at any time by or on behalf of any party or of any information any party may
have, after which time they shall be null and void and of no effect whatsoever
(except as to claims asserted prior to the end of such period, in which case the
pertinent representations and warranties shall remain in effect until such
claims are fully and finally resolved). Buyer shall indemnify and hold Sellers
(or any successor) harmless in accordance with the provisions of Section 6.2
hereof.
6.2 THE INDEMNITY OBLIGATION. Subject to the provisions of Article 6
hereof, each of Buyer on the one hand and the Sellers on the other hand,
including in each case any assignee or successor thereto in accordance with
Section 7.9 herein, and each officer, director, and trustee of any of the
foregoing (in such capacity, individually an "INDEMNIFIED PARTY" and
collectively the "INDEMNIFIED PARTIES"), shall be indemnified, held harmless and
reimbursed by the Sellers or Buyer, as the case may be (in such capacity,
individually an "INDEMNIFYING PARTY" and collectively the "INDEMNIFYING
PARTIES"), for any and all losses, liabilities, damages, costs and expenses
(including, without limitation, reasonable legal fees) (hereinafter "LOSSES"),
actually suffered or incurred by such Indemnified Party or Parties, which is
incurred as a result of any breach of any representation, warranty, agreement or
covenant made in this Agreement (including the Schedules and Exhibits hereto and
all instruments and undertakings delivered or made in connection herewith) or
any certificate delivered pursuant to this Agreement by the Indemnifying Party
or Parties. A breach by the Buyer or Sellers (as the case may be) of any of the
terms of this Agreement shall give rise only to an action for damages (which
shall be interpreted within English law principles notwithstanding any
indication to the contrary) and shall not entitle the Buyer or Sellers (as the
case may be) to rescind or repudiate this Agreement. Where the matter or default
giving rise to a breach of any representation, warranty, agreement or covenant
is reasonably capable of remedy, the breach shall not entitle the Indemnified
Party to damages or other compensation unless written notice of the breach is
given to the Indemnifying Party and the matter or default is not remedied to the
reasonable satisfaction of the Indemnified Party within thirty (30) days after
the date on which such notice is served.
6.3 CLAIMS.
6.3.1 NOTICE.
-23-
27
The Indemnified Party shall promptly give the Indemnifying Parties
written notice of any matter which it has determined has given rise to a right
of indemnification under this Agreement, stating the details of the claim, so
far as is known, the amount of the Loss, if known, and method of computation
thereof, all with reasonable particularity; provided, however, that the failure
of the Indemnified Party to give any notice required to be given hereunder shall
not affect the Indemnified Party's right to indemnification hereunder except to
the extent any of the Indemnifying Parties from whom such indemnity is sought
shall have been actually and materially prejudiced in its ability to defend the
claim or action for which such indemnification is sought by reason of such
failure.
6.3.2 THIRD PARTY CLAIM PROCEDURES. The obligations and liabilities
of any party under this Section 6.3.2 with respect to Losses arising from
claims, assertions, events or proceedings of any third party (including, without
limitation, claims by any assignee or successor of the Indemnified Party or any
governmental agency), which are subject to the indemnification provided for in
this Article 6 ("THIRD PARTY CLAIMS") shall be governed by and be subject to the
following additional terms and conditions: if the Indemnified Party shall
receive written notice of any Third Party Claim, the Indemnified Party shall
give the Indemnifying Parties prompt written notice of such Third Party Claim
(subject to the proviso in Section 6.3.1 above) and shall permit any of such
Indemnifying Parties, at its option, to participate in the defense of such Third
Party Claim by counsel of its own choosing and at its expense. If any of the
Indemnifying Parties acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Loss (without limitation) that may
result from such Third Party Claim, then such Indemnifying Party shall be
entitled, at its option, to assume and control the defense against such Third
Party Claim at its expense and through counsel of its choice if it gives prompt
written notice of its intention to do so to the Indemnified Party unless, in the
reasonable opinion of counsel for the Indemnified Party, there is a conflict or
a potential conflict of interest between the Indemnified Party and such
Indemnifying Party in such action, suit or proceeding, in which event the
Indemnified Party shall be entitled to direct the defense with respect to, but
only with respect to, those issues as to which such conflict exists. In the
event any of the Indemnifying Parties exercises its right to undertake the
defense against any such Third Party Claim as provided above, the Indemnified
Party shall, and it shall cause its affiliates to, cooperate with such
Indemnifying Party in such defense and make available to such Indemnifying Party
all pertinent records, materials and information in their possession or under
their control relating thereto as is required by such Indemnifying Party. No
Third Party Claim, except the settlement thereof which involves the payment of
money only for which the Indemnified Party is fully indemnified (without
limitation) by any of the Indemnifying Parties and the unconditional release
from all related liability of the Indemnified Party, may be settled by any of
the Indemnifying Parties without the written consent of the Indemnified Party.
Any settlement of a Third Party Claim by the Indemnified Party without the
written consent of any of the Indemnifying Parties shall discharge such
Indemnifying Parties from all liability hereunder with respect to the subject
matter of such Third Party Claim.
6.4 LIMITATION ON THE INDEMNIFYING PARTIES' INDEMNIFICATION
OBLIGATIONS. The Indemnifying Parties shall have no obligation to provide
indemnification pursuant to Section 6.2 hereof except to the extent that the
aggregate amount of indemnification to which the Indemnified Party, but for this
Section 6.4, otherwise shall have become entitled hereunder shall
-24-
28
exceed One Hundred Thousand Dollars ($100,000.00) (the "BASKET"), in which event
the Indemnifying Parties shall be obligated to provide indemnification with
respect to all Losses including those that make up the Basket. Notwithstanding
the foregoing provisions of this Section 6.4, the Indemnifying Parties are
obligated to provide indemnification pursuant to Section 6.2 hereof for all
Losses incurred as a result of any breach of or any Third Party Claim arising
directly or indirectly with respect to or in connection with the matters
referred to in Sections 3.1, 3.2. 3.3 and 3.11 ("EXCLUDED MATTERS"), and
Sections 4.1, 4.2.1, 4.4 and 4.5 of this Agreement. Losses referred to in the
immediately preceding sentence will be neither subject to nor counted against
the Basket.
6.5 OPTION TO RECOVER MEMBERSHIP INTERESTS OR OPTIONS. With respect to
any indemnification obligation for Losses determined to be owing to Buyer from
the Sellers, Buyer may, at its option, recover from the Sellers, pro rata with
respect to the Shares sold by each of them pursuant hereto, the Equity
Consideration and/or Caminus Options issued pursuant hereto. Notwithstanding the
foregoing, in the event that Buyer elects to pursue such a remedy, it will first
give notice to the Sellers of its intention to recover such interests in the
Company, indicating the underlying basis for the indemnification claim and the
related amount of Losses. If the Sellers object to the proposed recovery of
Equity Consideration and/or Caminus Options set forth in the Buyer's notice in a
notice to Buyer to that effect delivered by the Sellers within ten (10) days of
Buyer's notice (which notice from the Sellers shall reasonably detail the basis
for the Sellers' objection to the indemnification claim or the amount of Losses
corresponding thereto), then the recovery of Equity Consideration and/or Caminus
Options shall be suspended until the earlier of (a) the parties' mutual
agreement as to the recovery of such Equity Consideration and/or Caminus Options
in connection with the pertinent claim for indemnification, or (b) the
determination by a court of competent jurisdiction as to the propriety of such
indemnification claim, the Losses corresponding thereto and Buyer's right to
recover Equity Consideration and/or Caminus Options in accordance with this
Section 6.5. The value of Equity Consideration recovered in accordance with this
Section 6.5 shall be based on an assumed aggregate valuation of the entire
Equity Consideration equal to Three Million Dollars ($3,000,000), without regard
to the actual value of the Equity Consideration as of the date of recovery. The
value of such Caminus Options recovered in accordance with this Section 6.5
shall be based on an assumed aggregate valuation of the entire Caminus Options
equal to One Million Five Hundred Thousand Dollars ($1,500,000), without regard
to the actual value of the Caminus Options as of the date of recovery.
Notwithstanding the foregoing, in the event that Buyer elects to recover the
Equity Consideration and/or Caminus Options in accordance with this provision,
then the Sellers, within ten (10) days of notice of such election, may elect to
make cash payment of the indemnification amount, in lieu of permitting Buyer to
recover the Equity Consideration and/or Caminus Options, by notice to Buyer to
that effect and payment of the indemnification amount to Buyer within such ten
(10) day period.
6.6 SOLE AND EXCLUSIVE REMEDY. The indemnification obligations
specified under this Article 6 shall constitute the sole and exclusive remedies
of the Indemnified Party with respect to the matters described in Section 6.1.1
and 6.1.2, respectively. The parties hereto agree that in respect of any matter
which may give rise to a liability under this Agreement, such liability shall
not be met more than once.
-25-
29
6.7 INSURANCE RECOVERIES. In computing the amount of any Indemnified
Party's Losses with respect to an indemnifiable claim, there shall be deducted
the amount of any insurance proceeds actually received, directly or indirectly,
by such Indemnified Party with respect to the same facts and circumstances
giving rise to the Loss.
6.8 INDEMNITY LIMITATIONS. Notwithstanding anything contained in this
Agreement to the contrary, neither Seller shall be required to indemnify Buyer
pursuant to this Agreement to the extent that the aggregate indemnification
obligations of such Seller would exceed such Seller's portion of the Cash
Consideration, the Equity Consideration and the Caminus Options (the
"INDEMNIFICATION CAP"). Further, notwithstanding anything contained in this
Agreement to the contrary, neither Seller shall be required to make cash
indemnification payments to the extent that the aggregate such payments by such
Seller would exceed his portion of the Cash Consideration (exclusive of cash
payments elected to be made by such Seller pursuant to Section 6.5 above, in
lieu of permitting Buyer to recover Equity Consideration and/or Caminus
Options). To the extent that a Seller elects to make a cash indemnification
payment pursuant to Section 6.5 above, then the Equity Consideration and/or
Caminus Options, as applicable, that were the subject of such election, shall be
deducted and removed from the Indemnification Cap, such that Buyer shall not
thereafter have recourse to such property pursuant to this Article 6.
Notwithstanding the foregoing, the Excluded Matters shall not be subject to the
Indemnification Cap.
ARTICLE 7
MISCELLANEOUS
7.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) together with the Related Agreements and the
certificates and other instruments delivered in connection herewith constitutes
the entire agreement among the parties and supersedes all prior agreements,
representations, warranties, statements and understandings, whether oral or
written, with respect to the subject matter hereof, except as specifically set
forth in any document signed by all the parties hereto which expressly amends
this Agreement.
7.2 FURTHER ASSURANCES. Each party hereto shall at any time and from
time to time following the Closing promptly execute and deliver, or cause to be
executed and delivered, to the other parties all such further instruments and
take all such further action as may be reasonably necessary or appropriate to
confirm or carry out the provisions and intent of this Agreement and the Related
Agreements.
7.3 NOTICES. Any notices or other communications required or permitted
hereunder shall be in writing and shall be delivered by personal service,
telecopy or certified mail (postage prepaid), to such address as may be
designated from time to time by the relevant party, and which initially shall
be:
If to the Company:
-26-
30
Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx, XX0 XXX
Xxxxxx Xxxxxxx
Telephone No.: 000-00-0000-000-000
Telecopy No.: 011-44-1223-301-637
Attention: Managing Director
-27-
31
With a copy to:
GFI Caminus LLC
c/o GFI Energy Ventures LLC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx
If to the Sellers:
Dr. Xxxxx Xxxxx and Dr. Xxxxxxx Xxxxxxxx
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx, XX0 XXX
Xxxxxx Xxxxxxx
Telephone No.: 000-00-0000-000-000
Telecopy No.: 011-44-1223-301-637
With a copy to:
Xxxxx & Xxxxx
Xxxxxxx Xxxxx, 000 Xxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
Telephone No.: 000-00-0000-000-000
Telecopy No.: 011-44-1223-355-848
Attention: Xxxxxx Xxxxxxxxx, Esq.
If to Buyer:
GFI Caminus LLC
c/o GFI Energy Ventures LLC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx
-28-
32
With a copy to:
Irell & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
With a copy to:
Oaktree Capital Management LLC
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxxxxxxxxxx X. Brothers
Any notice sent by certified mail shall be deemed to have been given
five (5) days after the date on which it is mailed. If notice is given by
telecopy, notice shall be deemed given when such notice is transmitted to the
appropriate telecopy numbers specified in this Section 7.3. Notice by personal
service shall be deemed given when received.
7.4 GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Agreement shall
be governed by English law applicable to contracts executed and wholly performed
therein, without giving effect to the conflict of laws provisions thereof. Each
of the parties hereby consents to the non-exclusive jurisdiction of the High
Court of Justice in England and Wales. Each party hereby waives any objection
that it may have based on improper venue or forum non conveniens to the conduct
of any proceeding in any such court and to personal service of any and all
process upon it, and consents to any such service of process made in the manner
provided herein for the giving of notices under this Agreement.
7.5 EXHIBITS AND SCHEDULES. All Exhibits annexed hereto, and all
Schedules referred to herein, are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.
7.6 CAPTIONS. All section titles or captions contained in this
Agreement or in any Schedule or Exhibit annexed hereto or referred to herein are
for convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement. All references herein to
Sections shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
7.7 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be
-29-
33
held to be invalid, illegal or enforceable in any respect; provided, however,
that if such invalidity, illegality or unenforceability shall have Material
Adverse Effect on the transactions contemplated by this Agreement such that the
intent of this Agreement will not be achieved, the aggrieved party which shall
be materially and adversely affected thereby may terminate this Agreement and
abandon the transactions contemplated hereby by giving notice to the other
parties at any time prior to the Closing Date.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts which together shall be one and the same instrument.
7.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties, their respective successors and permitted
assigns; provided, however, a party may not assign an indemnification claim
pursuant to Article 6 hereof, without the prior written consent of the other
party (which consent shall not be unreasonably withheld or delayed).
Notwithstanding the foregoing to the contrary, Buyer shall be entitled to assign
an interest in this Agreement (including claims pursuant to Article 6) in
connection with any merger, sale, consolidation or other disposition of the
Company or all or substantially all of Buyer's interest therein.
7.10 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and no alteration, modification or impairment shall
be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
7.11 NUMBER, GENDER AND CONNECTION OF PERSONS. Throughout this
Agreement, as the context may require, the masculine gender includes the
feminine and the neuter gender includes the masculine and the feminine; the
singular tense and number includes the plural, and the plural tense and number
includes the singular; the past tense includes the present, and the present
tense includes the past; references to parties, sections, paragraphs and
exhibits mean the parties, sections, paragraphs and exhibits of and to this
Agreement; and periods of days, weeks or month mean calendar days, weeks or
months. A person shall be deemed to be connected with another if that person is
connected with another within the meaning of Section 839 of the Taxes Act.
7.12 RTPA. To the extent that any provision of this Agreement, or any
other arrangement of which it forms part, is a restriction or information
provision for the purposes of the RTPA by virtue of which this Agreement or any
such arrangement is registrable under the RTPA, no such restriction or provision
shall take effect until the day after particulars of this Agreement or, as the
case may be, that arrangement, have been furnished to the Director General of
Fair Trading in accordance with the RTPA.
7.13 STATUTORY UPDATE. In this Agreement, except where the context
otherwise requires, a reference to a statute or statutory provision shall
include a reference to such statute or provision as from time to time
consolidated, modified, amended, re-enacted or replaced by any subsequent
statute or statutory provision, to any repealed statute or statutory provision
which it
-30-
34
re-enacts (with or without modification) and any subordinate legislation made
under the relevant statute; provided, however, that any statutory update as set
forth in this Section 7.13 shall not apply to Articles 3 and 4 of this Agreement
and any reference to a statute or statutory provision in Articles 3 and 4 of
this Agreement are references to such statute in effect as of the Closing Date.
-31-
35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
Caminus Energy Limited
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xx. Xxxxx X. Xxxxx, Ph.D.
-----------------------------------------
Its: Chief Executive Officer
-----------------------------------------
Xx. Xxxxx X. Xxxxx, Ph.D.
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xx. Xxxxxxx X. Xxxxxxxx, Ph.D.
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
GFI Caminus LLC
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
-32-
36
LIST OF EXHIBITS
Exhibit A - Form of Service Agreement
Exhibit B - Form of Company Agreement
Exhibit C - Form of Letter
Exhibit D - Form of Covenant Not to Compete
LIST OF SCHEDULES
Schedule 2.6 - Distributions to Sellers
Schedule 3.2 - Issued Share Capital
Schedule 3.5 - Accrued and Other Liabilities
Schedule 3.6 - Transaction Expenses
Schedule 3.7 - Material Contracts
Schedule 3.8 - Intellectual Property
Schedule 3.9 - Insurance Policies
Schedule 3.10.2 - Employment Agreements
Schedule 3.12 - Bank Accounts
Schedule 3.16 - Litigation
Schedule 3.18 - Real Property Leases
Schedule 3.20 - Undisclosed Liabilities
Schedule 4.2.1 - Governmental Notices and Regulatory Approval
Schedule 4.2.2 - Required Consents
Schedule 4.4 - Outstanding Securities
