EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
AOL LLC,
TEGIC COMMUNICATIONS, INC.
and
NUANCE COMMUNICATIONS, INC.
Dated as of June 21, 2007
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.................................................... 1
SECTION 1.1 Certain Defined Terms................................. 1
SECTION 1.2 Other Defined Terms................................... 6
ARTICLE II PURCHASE AND SALE............................................. 7
SECTION 2.1 Purchase and Sale..................................... 7
SECTION 2.2 Closing............................................... 7
SECTION 2.3 Closing Deliveries by Seller.......................... 8
SECTION 2.4 Closing Deliveries by Purchaser....................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..................... 9
SECTION 3.1 Organization.......................................... 9
SECTION 3.2 Authority; Enforceability............................. 9
SECTION 3.3 Non-Contravention..................................... 9
SECTION 3.4 Governmental Consents................................. 10
SECTION 3.5 Capitalization of the Company......................... 10
SECTION 3.6 Company Subsidiaries.................................. 10
SECTION 3.7 Financial Information................................. 10
SECTION 3.8 Absence of Undisclosed Liabilities.................... 11
SECTION 3.9 Indebtedness.......................................... 11
SECTION 3.10 Absence of Certain Changes or Events.................. 11
SECTION 3.11 Contracts............................................. 12
SECTION 3.12 Compliance with Law................................... 14
SECTION 3.13 Litigation............................................ 15
SECTION 3.14 Minute Books.......................................... 15
SECTION 3.15 Employee Compensation and Benefit Plans; ERISA........ 15
SECTION 3.16 Labor Matters......................................... 16
SECTION 3.17 Real and Personal Property............................ 16
SECTION 3.18 Intellectual Property................................. 17
SECTION 3.19 Environmental Laws.................................... 21
SECTION 3.20 Taxes................................................. 22
SECTION 3.21 Bank Accounts......................................... 23
SECTION 3.22 Brokers............................................... 23
SECTION 3.23 Customers............................................. 23
SECTION 3.24 No Other Representations or Warranties................ 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 24
SECTION 4.1 Organization.......................................... 24
SECTION 4.2 Authority; Enforceability............................. 24
SECTION 4.3 Non-Contravention..................................... 24
SECTION 4.4 Governmental Consents................................. 25
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 4.5 Purchase for Investment............................... 25
SECTION 4.6 Financing............................................. 25
SECTION 4.7 Solvency.............................................. 25
SECTION 4.8 Brokers............................................... 25
ARTICLE V ADDITIONAL AGREEMENTS.......................................... 25
SECTION 5.1 Conduct of Business Prior to the Closing.............. 25
SECTION 5.2 Procedures for Requesting Purchaser Consent........... 28
SECTION 5.3 Access to Information................................. 28
SECTION 5.4 Further Action; Reasonable Best Efforts............... 29
SECTION 5.5 Resignations.......................................... 30
SECTION 5.6 Directors' and Officers' Indemnification and
Insurance............................................. 30
SECTION 5.7 Third Party Consents.................................. 32
SECTION 5.8 FIRPTA Compliance..................................... 32
SECTION 5.9 Additional Instruments and Further Assurances......... 32
SECTION 5.10 Books and Records..................................... 33
SECTION 5.11 Public Announcements.................................. 33
SECTION 5.12 Financing............................................. 33
SECTION 5.13 Intellectual Property................................. 33
SECTION 5.14 Real Property......................................... 34
SECTION 5.15 Financial Statements.................................. 34
SECTION 5.16 Account Administration................................ 36
SECTION 5.17 Integration Assistance Until the Closing Date......... 36
SECTION 5.18 Seattle Sublease...................................... 36
ARTICLE VI EMPLOYEE MATTERS.............................................. 36
SECTION 6.1 Employee Matters...................................... 36
SECTION 6.2 No Third Party Beneficiaries.......................... 39
ARTICLE VII TAX MATTERS.................................................. 39
SECTION 7.1 Tax Returns; Responsibility for Pre-Closing Taxes..... 39
SECTION 7.2 Refunds and Tax Benefits.............................. 40
SECTION 7.3 Carrybacks............................................ 41
SECTION 7.4 Transfer Taxes........................................ 41
SECTION 7.5 Tax Sharing Agreements................................ 41
SECTION 7.6 Tax Treatment of Indemnity Payments................... 41
SECTION 7.7 Tax Cooperation....................................... 41
SECTION 7.8 Survival.............................................. 41
SECTION 7.9 Tax Contest........................................... 42
ARTICLE VIII CONDITIONS TO CLOSING....................................... 43
SECTION 8.1 Mutual Conditions to Closing.......................... 43
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 8.2 Conditions to Obligations of Purchaser................ 43
SECTION 8.3 Conditions to Obligations of Seller................... 44
ARTICLE IX INDEMNIFICATION............................................... 44
SECTION 9.1 Survival of Representations and Warranties............ 44
SECTION 9.2 Indemnification....................................... 44
SECTION 9.3 Limits on Indemnification............................. 48
SECTION 9.4 Computation of Indemnifiable Losses................... 49
SECTION 9.5 Access................................................ 49
SECTION 9.6 Mitigation of Damages................................. 49
SECTION 9.7 Indemnification as Exclusive Remedy................... 49
ARTICLE X TERMINATION, AMENDMENT AND WAIVER.............................. 50
SECTION 10.1 Termination........................................... 50
SECTION 10.2 Effect of Termination................................. 50
SECTION 10.3 Expenses.............................................. 51
SECTION 10.4 Amendment............................................. 51
SECTION 10.5 Waiver................................................ 51
ARTICLE XI GENERAL PROVISIONS............................................ 51
SECTION 11.1 Materiality; Disclosure Letter........................ 51
SECTION 11.2 Notices............................................... 52
SECTION 11.3 Severability.......................................... 53
SECTION 11.4 Entire Agreement, Parties............................. 53
SECTION 11.5 Assignment............................................ 53
SECTION 11.6 No Third Party Beneficiaries.......................... 53
SECTION 11.7 Governing Law......................................... 54
SECTION 11.8 Specific Performance; Jurisdiction.................... 54
SECTION 11.9 WAIVER OF JURY TRIAL.................................. 54
SECTION 11.10 Interpretation........................................ 54
SECTION 11.11 Counterparts.......................................... 55
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EXHIBITS
Exhibit A - Accounting Principles and Methodologies
Exhibit B - Form of Intellectual Property License Agreement
Exhibit C - Form of Transition Services Agreement
Exhibit D - Form of Bank Account Designation
Exhibit E - List of Company Personnel for Purposes of the Definition of
Knowledge
Exhibit F - Seattle Sublease
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 21, 2007 (this
"AGREEMENT"), is by and among AOL LLC, a Delaware limited liability company
("SELLER"), Nuance Communications, Inc., a Delaware corporation ("PURCHASER"),
and, solely with respect to ARTICLE V (with respect to obligations to be
performed by it prior to the Closing) and ARTICLE XI, Tegic Communications,
Inc., a Washington corporation (the "COMPANY").
WITNESSETH:
WHEREAS, Seller owns 1,000 shares of the common stock, par value $0.01
per share (the "COMMON STOCK"), of the Company, representing 100% of the
outstanding shares of capital stock of the Company (the "SHARES"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Shares pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual terms,
conditions and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms have the following meanings:
"ANTITRUST LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations,
directives, orders, decrees, administrative and judicial doctrines and other
Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger, acquisition, or business combination,
however described.
"ACCOUNTING PRINCIPLES AND METHODOLOGIES" means the accounting
principles and methodologies set forth in EXHIBIT A attached hereto.
"ACQUIRED COMPANY EMPLOYEE" means an employee of the Company in the
United States.
"ACTION" means any action, suit, arbitration, inquiry or proceeding by
or before any Governmental Authority.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
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"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY MATERIAL ADVERSE EFFECT" means any change, event or effect
that is materially adverse to the business, assets (whether tangible or
intangible), financial condition or operations of the Company; provided,
however, that in no event shall any of the following be taken into account in
determining whether there has been or will be a Company Material Adverse Effect:
(i) any effects resulting from general changes or developments in the industries
in which the Company operates or changes or developments in markets or commodity
prices so long as such effects do not disproportionately affect the Company in
any material respect, (ii) any effects resulting from changes in general
economic conditions so long as such effects do not disproportionately affect the
Company in any material respect, (iii) any effects resulting from the
announcement of this Agreement and the transactions contemplated hereby, or the
performance of this Agreement and the transactions contemplated hereby,
including compliance with the covenants set forth herein, (iv) any effects
resulting from any actions required under this Agreement to obtain any approval
or authorization under applicable Antitrust Laws for the consummation of the
transactions contemplated by this Agreement, (v) any effects resulting from
changes in any Laws or applicable accounting regulations or principles, or (vi)
any effects resulting from any existing event, occurrence or circumstance with
respect to which Purchaser has Knowledge as of the date of this Agreement if the
adverse effect on the Company caused by such existing event, occurrence or
circumstance would have been reasonably foreseeable by a Person with Purchaser's
Knowledge thereof at the date of this Agreement.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated
February 23, 2007, between Purchaser and Seller.
"CONSOLIDATED OR COMBINED RETURN" means any Tax Return that is filed
on a consolidated, combined or unitary basis and that includes the Company, on
the one hand, and Seller or its Affiliates (other than the Company), on the
other hand.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, by contract or otherwise, including, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"EMPLOYEE" means an Acquired Company Employee or a Non-U.S. Employee.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien,
charge, option to purchase or lease or otherwise acquire any interest,
conditional sales agreement, restriction, covenant, easement, right of way,
title defect, adverse claim of ownership or use or
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other encumbrance of any kind other than those arising by reason of restrictions
on transfers under federal, state and foreign securities Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INCOME TAXES" means any Tax based upon, measured by, or calculated
with respect to (i) net income or profits (including, but not limited to, any
capital gains, minimum Tax and any Tax on items of Tax preference, but not
including sales, use, real or personal property, gross or net receipts, transfer
or similar Taxes) or (ii) multiple bases (including, but not limited to,
corporate franchise, doing business or occupation Taxes) if one or more of the
bases upon which such Tax may be based, measured by, or calculated with respect
to, is described in clause (i) above.
"INDEBTEDNESS" means, with respect to any Person, (i) indebtedness of
such Person for borrowed money, (ii) other indebtedness of such Person evidenced
by notes, bonds or debentures and (iii) capitalized leases classified as
indebtedness of such Person under GAAP.
"INTELLECTUAL PROPERTY" means all technology and all United States and
foreign intellectual property, including without limitation all of the following
and all rights associated therewith: (i) patents, inventions, discoveries,
processes, techniques and know-how; (ii) copyrights, copyrightable works and
other works of authorship (including computer programs, source code and
executable code (whether embodied in software, firmware, code, or otherwise),
architecture, documentation, designs, databases, data and related items,
Internet site content, graphics, photography, textual works, characters,
audiovisual works, musical compositions, sound recordings, and pictorial,
graphic and sculptural works); (iii) trademarks, service marks, trade names,
domain names, logos, trade dress and other source indicators, and the goodwill
of the business appurtenant thereto ("TRADEMARKS"); and (iv) trade secrets, ways
of doing business and confidential information.
"INTELLECTUAL PROPERTY LICENSE" means the Intellectual Property
License, substantially in the form of EXHIBIT B hereto, between Seller and the
Company.
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"KNOWLEDGE" means (i) with respect to Purchaser, the actual knowledge
of the executive officers of Purchaser and (ii) with respect to Seller, the
actual knowledge of the individuals listed on EXHIBIT E, in each case so long as
such Persons shall have made reasonable inquiry of those employees of Purchaser,
Seller or the Company, as the case may be, whom such individuals reasonably
believe would have actual knowledge of the matters represented.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code or other requirement of law of a Governmental
Authority or any Governmental Order.
"LIABILITIES" means any and all liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured.
"NON-U.S. EMPLOYEE" means an employee of the Company in a non-U.S.
jurisdiction.
"NON-U.S. SERVICE PROVIDER" means an individual who is primarily
dedicated to supporting the Company's business in a non-U.S. jurisdiction and
who is not a Non-U.S. Employee.
"PERMITTED ENCUMBRANCES" means (i) liens for Taxes, assessments and
governmental charges or levies not yet due and payable or being contested by
appropriate proceedings and for which adequate reserves have been established,
(ii) Encumbrances imposed by Law, (iii) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations, (iv) mechanics', carriers', workers',
repairers' and similar Encumbrances arising or incurred in the ordinary course
of business consistent with past practices for amounts not yet due and payable,
(v) zoning, entitlement and other land use and environmental regulations by
Governmental Authorities, (vi) such other imperfections or irregularities in
title, charges, easements, survey exceptions, reciprocal easement agreements,
restrictions and other customary encumbrances on title to real property so long
as none of the foregoing, in the aggregate, materially adversely affect the
continued use of the Leased Real Property to which they relate in the conduct of
the business currently conducted thereon, (vii) as to any Leased Real Property,
any Encumbrance affecting the interest of the lessor thereof, and (viii) any
matters disclosed in title reports or surveys delivered or made available to
Purchaser.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture, limited
liability company or other entity.
"PURCHASER MATERIAL ADVERSE EFFECT" means any change, event or effect
that will or is reasonably likely to materially impede the ability of Purchaser
to consummate the transactions contemplated by this Agreement in accordance with
the terms hereof.
"SEATTLE PROPERTY" means the real property leased by Seller pursuant
to the Office Lease between 1000-1100 Dexter Avenue, Inc. and America Online,
Inc. (now known as
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AOL LLC), dated July 28, 1999, as amended by the First Amendment dated December
2, 1999, the Second Amendment dated December 10, 1999, the Third Amendment dated
August 4, 2005 and the Fourth Amendment dated March 24, 2006.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SELLER MATERIAL ADVERSE EFFECT" means any change, event or effect
that will or is reasonably likely to materially impede the ability of Seller to
consummate the transactions contemplated by this Agreement in accordance with
the terms hereof.
"SUBSIDIARIES" of a Person means any and all corporations,
partnerships, limited liability companies and other entities, whether
incorporated or unincorporated, with respect to which such Person, directly or
indirectly, owns securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such entity.
"TAX" means any federal, state, provincial, local, territorial and
foreign income, profits, franchise, license, capital, capital gains, transfer,
ad valorem, wage, severance, occupation, import, custom, gross receipts,
payroll, sales, employment, use, property, real estate, excise, value added,
goods and services, estimated, stamp, alternative or add-on minimum,
environmental, withholding and any other taxes, duties, assessments or
governmental tax charges of any kind whatsoever, together with all interest and
penalties imposed with respect to such amounts.
"TAX AUTHORITY" means any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory authority.
"TAX RETURN" means any returns, declarations, reports, claims for
refund or information returns or statements relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof filed or to
be filed with any Tax Authority in connection with the determination, assessment
or collection of Taxes.
"TRANSFER TAXES" means all sales, use, value added, goods and
services, excise, multi-stage, retail sales and land transfer taxes, stamp
duties, stamp duty reserve tax, stamp duty land tax and any other similar taxes,
duties, assessments or governmental charges, together with all interest,
penalties and additions imposed with respect to such amounts.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement, substantially in the form attached as EXHIBIT C hereto, among Seller,
Purchaser and the Company.
"WBCA" means the Business Corporation Act of the State of Washington.
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"WILDSEED" means Wildseed LLC, a Delaware limited liability company.
"WILDSEED AGREEMENT" means the Agreement and Plan of Merger, dated as
of July 19, 2005, among America Online, Inc. (now known as AOL LLC), the
Company, WS Acquisition Corporation, Wildseed Ltd. (now known as Wildseed LLC)
and the other parties thereto.
SECTION 1.2 Other Defined Terms. The following terms have the meanings
ascribed to such terms in the Sections set forth below:
TERM SECTION
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Agreement......................................................... Preamble
Assigned Lease.................................................... 5.14(a)
Basket............................................................ 9.3(a)
Benefit Plans..................................................... 3.15(a)
Claim Notice...................................................... 9.2(c)
Closing........................................................... 2.2
Closing Date...................................................... 2.2
Common Stock...................................................... Preamble
Company........................................................... Preamble
Company Authorizations............................................ 3.12
Company Registered Intellectual Property.......................... 3.18(c)
Company Source Code............................................... 3.18(g)
Currently Contemplated To Be Conducted............................ 3.18(a)
Disclosure Letter................................................. Article 3
DOJ............................................................... 5.4(b)
Environmental Laws................................................ 3.19(d)
Environmental Permits............................................. 3.19(d)
Excepted Representations.......................................... 9.1
Expenses.......................................................... 10.3
Financial Statements.............................................. 3.7(a)
Financing......................................................... 4.6(a)
Financing Commitments............................................. 4.6(a)
FIRPTA Compliance Certificate..................................... 2.3(f)
FTC............................................................... 5.4(b)
GAAP Financial Statements......................................... 5.15(a)(ii)
Incorporated Open Source Software................................. 3.18(i)
Indemnified Company Persons....................................... 5.6(a)
Indemnified Party................................................. 9.2(c)
Indemnifying Party................................................ 9.2(c)
Leased Real Property.............................................. 3.17(b)
Loss.............................................................. 9.2(a)
Material Contract................................................. 3.11(a)
Materials of Environmental Concern................................ 3.19(d)
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TERM SECTION
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Maximum Amount.................................................... 9.3(b)
Non-GAAP Financial Statements..................................... 5.15(a)(i)
Pre-Closing Tax Period............................................ 7.1(c)
Purchase Price.................................................... 2.1
Purchaser......................................................... Preamble
Real Property Lease............................................... 3.17(b)
Remedies Exception................................................ 3.2
Retained Names.................................................... 5.13(a)
Retained Software................................................. 5.13(b)
SAS-100........................................................... 5.15(a)(i)
SEC............................................................... 5.15(a)(i)
Seller Controlled Tax Claim....................................... 7.9(b)
Seller Plans...................................................... 6.1(d)
Sellers........................................................... Preamble
Shares............................................................ Preamble
Statement Date.................................................... 3.7(a)
Statement of Net Assets........................................... 3.7(a)
Straddle Period................................................... 7.1(a)
Straddle Returns.................................................. 7.1(a)
Tax Claim......................................................... 7.9(a)
Tax Statement..................................................... 7.1(a)
Termination Date.................................................. 10.1(c)
Third Party Claim................................................. 9.2(d)
Transferred Employee.............................................. 6.1(a)
Waiver............................................................ 5.15(d)
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale.
(a) Upon the terms and subject to the conditions of this Agreement, at
the Closing, Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, the Shares.
(b) At the Closing in consideration for the sale and transfer of the
Shares, and upon the terms and subject to the conditions of this Agreement,
Purchaser shall pay (or cause to be paid) to Seller by wire transfer in
immediately available funds an amount equal to $265,000,000 (the "PURCHASE
PRICE").
SECTION 2.2 Closing. Upon the terms and subject to the conditions of
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "CLOSING") to be held at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 10:00 a.m., New York City time, two (2) Business
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Days following (but not including) the date on which the last of the conditions
set forth in ARTICLE VIII are satisfied or waived (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to
fulfillment or waiver of such conditions) or at such other place or at such
other time or on such other date as the parties may mutually agree upon in
writing (the day on which the Closing takes place being the "CLOSING DATE").
SECTION 2.3 Closing Deliveries by Seller. At the Closing, Seller shall
deliver to Purchaser:
(a) certificates evidencing the Shares registered in the name of
Purchaser or its nominee, together with stock powers or other instruments of
transfer, in form reasonably satisfactory to Purchaser;
(b) a receipt for the Purchase Price;
(c) the certificate required to be delivered pursuant to SECTION
8.2(C);
(d) the Transition Services Agreement, duly executed by Seller;
(e) the Intellectual Property License, duly executed by Seller; and
(f) a properly executed statement for purposes of satisfying
Purchaser's obligations under Treasury Regulation Section 1.1445 2(b)(2) (a
"FIRPTA COMPLIANCE CERTIFICATE").
SECTION 2.4 Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller:
(a) the Purchase Price, by wire transfer in immediately available
funds to the bank account designated by Seller in a written notice (a form of
which is attached hereto as EXHIBIT D) to Purchaser at least two (2) Business
Days before the Closing Date;
(b) a receipt for the Shares;
(c) the certificate required to be delivered pursuant to SECTION
8.3(C);
(d) the Transition Services Agreement, duly executed by the Company
and Purchaser; and
(e) the Intellectual Property License, duly executed by the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the disclosure letter delivered by Seller to
Purchaser upon the execution of this Agreement (the "DISCLOSURE LETTER"), Seller
hereby represents and warrants to Purchaser that:
SECTION 3.1 Organization.
(a) Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Seller has the requisite limited liability company power and
authority to own its properties and to carry on its business as presently
conducted, except where the failure to be so organized, existing or in good
standing would not reasonably be expected to have a Seller Material Adverse
Effect.
(b) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. The
Company has the requisite corporate power and authority to own its properties
and to carry on its business as presently conducted. The Company is duly
qualified to do business and is in good standing (where such concept exists) as
a foreign corporation in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.2 Authority; Enforceability. Seller has all necessary
limited liability company power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby have been duly and validly authorized by all necessary
limited liability company action on the part of Seller, and no other limited
liability company proceedings on the part of Seller are necessary pursuant to
its limited liability company agreement to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Seller and, assuming the due authorization, execution
and delivery of this Agreement by Purchaser, constitutes a legal, valid and
binding agreement of Seller and is enforceable against Seller in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar Laws relating to or
affecting creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law) (the "REMEDIES EXCEPTION").
SECTION 3.3 Non-Contravention. The execution, delivery and performance
of this Agreement by Seller do not (a) conflict with or violate the articles of
incorporation or by-laws of the Company or the limited liability company
agreement or certificate of formation of Seller in any material respect, (b)
assuming that all consents, approvals and authorizations contemplated by SECTION
3.4 have been obtained and all filings described in SECTION 3.4 have been made,
conflict with or violate in any material respect any Law applicable to the
Company
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or Seller or by which either of them or any of their respective properties are
bound or (c) result in any breach or violation of, constitute a default (or an
event which with notice or lapse of time or both would become a default) or
result in the loss of a benefit or the right of a counterparty to consent under,
or give rise to any right of termination, cancellation or acceleration of, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit or
other instrument or obligation to which the Company is a party or by which any
of its properties are bound, except, in the case of clause (c), for any such
conflict, violation, breach, default, loss, or right which would not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 3.4 Governmental Consents. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby do not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
Governmental Authority, except (a) as required under or pursuant to the HSR Act
or any other applicable Antitrust Laws and (b) for any consent, approval,
authorization, permit, action, filing or notification of or with any
Governmental Authority the failure of which to make or obtain would not
reasonably be expected to have a Company Material Adverse Effect or a Seller
Material Adverse Effect.
SECTION 3.5 Capitalization of the Company. Set forth on SECTION 3.5 of
the Disclosure Letter is the number of authorized, issued and outstanding shares
of capital stock of the Company as of the date of this Agreement. All of the
issued and outstanding Shares have been validly issued and have not been issued
in violation of any preemptive or similar rights. Seller owns good, valid and
marketable title to the Shares, free and clear of any Encumbrances and, upon
delivery of the Shares to Purchaser on the Closing Date in accordance with this
Agreement, good, valid and marketable title to the Shares, free and clear of any
Encumbrances, will pass to Purchaser. Except as set forth in this SECTION 3.5,
there are no other outstanding shares, options, warrants, calls, rights or
commitments or any other agreements of any character relating to dividend rights
or to the sale, issuance or voting of, or the granting of rights to acquire, any
equity securities of the Company, or any securities or other instruments
convertible into, exchangeable for or evidencing the right to purchase any
equity securities of the Company.
SECTION 3.6 Company Subsidiaries. The Company has no Subsidiaries.
SECTION 3.7 Financial Information.
(a) SECTION 3.7 of the Disclosure Letter contains copies of the
following financial information concerning the Company (collectively, the
"FINANCIAL STATEMENTS"): (i) a statement of net assets of the Company (the
"STATEMENT OF NET ASSETS") as of December 31, 2006 (the "STATEMENT DATE") and
December 31, 2005; and (ii) a statement of revenues and direct expenses of the
Company for the fiscal years ended December 31, 2006, December 31, 2005 and
December 31, 2004. The Financial Statements, subject to the limitations set
forth in the Accounting Principles and Methodologies and in SECTION 3.7(B), (A)
present fairly in all material respects the net assets and revenue of the
Company as of the dates thereof or for the periods covered thereby and (B) have
been prepared in all material respects in accordance with the Accounting
Principles and Methodologies.
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(b) Purchaser acknowledges that the Financial Statements have not been
prepared in accordance with GAAP and do not reflect the net assets and revenue
of Wildseed. All of the Financial Statements are qualified by the fact that the
Company has not operated as a separate "stand alone" entity within Seller. As a
result, the Company has received certain allocated charges and credits as
discussed more fully in the notes accompanying the Financial Statements and the
Accounting Principles and Methodologies. Seller makes no representations or
warranties with respect to whether or not such charges and credits, reflect the
amounts which would have resulted from arms'-length transactions.
SECTION 3.8 Absence of Undisclosed Liabilities. Except as set forth on
SECTION 3.8 of the Disclosure Letter, the Company has no Liabilities which are
material to the Company individually or in the aggregate of a nature that would
be required by GAAP to be reflected or reserved against on a balance sheet
prepared in accordance with GAAP, other than (i) those set forth or adequately
provided for in the most recent Statement of Net Assets or disclosed in the
notes thereto or (ii) those incurred in the ordinary course of business
consistent with past practice since the Statement Date.
SECTION 3.9 Indebtedness. The Company has no Indebtedness.
SECTION 3.10 Absence of Certain Changes or Events. Since the Statement
Date until the date of this Agreement, except as contemplated by this Agreement,
the Company has conducted its business in the ordinary course consistent with
past practice, and there has not occurred any:
(a) commitment for capital expenditure by the Company exceeding
$100,000 individually or $250,000 in the aggregate;
(b) payment, discharge or satisfaction in excess of $100,000
individually or $250,000 in the aggregate, of any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise of the
Company), other than payments, discharges or satisfactions of liabilities in the
ordinary course of business reserved against in the Statement of Net Assets;
(c) destruction, damage or loss in excess of $100,000 individually or
$250,000 in the aggregate of any material assets (whether tangible or
intangible) of the Company (whether or not covered by insurance), excluding
Intellectual Property;
(d) revaluation by the Company of any of its assets (whether tangible
or intangible), including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable, other than in the
ordinary course consistent with past practice;
(e) sale, lease, license or other disposition of any of the assets
(whether tangible or intangible) or properties of the Company for an amount in
excess of $100,000 individually or $250,000 in the aggregate outside of the
ordinary course of business, including,
-11-
but not limited to, the sale of any accounts receivable of the Company, or any
creation of any security interest in such assets or properties, excluding
Intellectual Property;
(f) loan by the Company to any Person, or purchase by the Company of
any debt securities of any Person;
(g) incurrence by the Company of any Indebtedness, amendment of the
terms of any outstanding loan agreement, guarantee by the Company of any
Indebtedness, issuance or sale of any debt securities of the Company or
guarantee of any debt securities of others;
(h) commencement or settlement of any lawsuit by the Company, the
commencement, settlement or, to the Knowledge of the Company, threat in writing
of any lawsuit or proceeding against the Company, other than settlements,
lawsuits or proceedings involving monetary amounts less than $100,000
individually or $250,000 in the aggregate and which settlements do not include
the license of Intellectual Property or restrictions on the Company's business;
(i) agreement by the Company, or any officer, employee or Seller on
behalf of the Company to do any of the things described in the preceding clauses
(a) through (h) of this SECTION 3.10 (other than negotiations with Purchaser and
its representatives regarding the transactions contemplated by this Agreement);
(j) (i) except standard outbound licenses and evaluation,
non-disclosure and professional services agreements entered into in the ordinary
course of business, (A) sale or license of any of the Company's Intellectual
Property or (B) execution, material modification or material amendment of any
agreement with respect to any of the Company's Intellectual Property with any
Person or with respect to the Intellectual Property of any Person; (ii) except
in the ordinary course of business, purchase or license of any Intellectual
Property of any Person; (iii) except for professional services agreements
entered into in the ordinary course of business, agreement or material
modification or material amendment of an existing agreement existing as at the
Statement Date with respect to the development of any Intellectual Property with
a third party; (iv) change in pricing or royalties set or charged by the Company
to its customers or licensees or in pricing or royalties set or charged by
Persons who have licensed Intellectual Property to the Company; or (v) notice of
any claim or potential claim of ownership, interest or right by any Person other
than the Company of the Company's Intellectual Property or of infringement by
the Company of any other Person's Intellectual Property; or
(k) any other event or condition of any character that has had or is
reasonably likely to have a Company Material Adverse Effect or a Seller Material
Adverse Effect.
SECTION 3.11 Contracts.
(a) As of the date hereof, except as set forth on SECTION 3.11 of the
Disclosure Letter, the Company is not a party to or bound by any of the
following (each, a "MATERIAL CONTRACT"):
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(i) any contract, judgment, injunction, agreement or commitment
(A) which contains provisions specifically prohibiting or restricting the
Company from competing in any line of business of or with any other Person
or from operating in any geographic location or (B) under which the Company
has specifically granted to another Person any exclusivity or "most favored
nation" right, right of first refusal or similar right, in each case in a
manner material to the business of the Company;
(ii) any agreement providing for indemnification, product
warranty or similar obligations of the Company;
(iii) any agreement by the Company to guarantee the obligations
of any other Person;
(iv) any employment or consulting agreement with an employee or
individual consultant providing for guaranteed annual base salary, wages,
or consulting fees in excess of $250,000;
(v) any Benefit Plan under which any of the benefits will be
increased or accelerated by the occurrence of any of the transactions
contemplated by this Agreement (either alone or upon the occurrence of any
additional subsequent events) or under which the value of any of the
benefits will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(vi) any lease of personal property having a value in excess of
$100,000 individually or $250,000 in the aggregate;
(vii) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $100,000
individually or $250,000 in the aggregate;
(viii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business
enterprise, in each case having a fair market value in excess of $100,000
individually or $250,000 in the aggregate outside the ordinary course of
the Company's business consistent with past practice;
(ix) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating
to Indebtedness;
(x) any purchase order or contract for the purchase of materials
involving in excess of $100,000 individually or $250,000 in the aggregate;
(xi) any dealer, distribution, marketing, development or joint
venture agreement;
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(xii) any sales representative, original equipment manufacturer,
manufacturing, value added, remarketer, reseller, or independent software
vendor, or other agreement for use or distribution of the products,
technology or services of the Company;
(xiii) any joint venture agreement or other agreement by which
the Company has any equity interest in any other Person;
(xiv) any contract (A) containing any license, assignment or
covenant with respect to Intellectual Property or (B) which is otherwise
royalty-bearing, excluding from such contracts only (I) out-bound customer
agreements in the ordinary course of business under which the Company is
the licensor and which are substantially in accordance with the Company's
standard form agreement which has been provided to Purchaser for payments
to the Company not in excess of $100,000 individually or $250,000 in the
aggregate for the twelve (12) months ended December 31, 2006, (II)
evaluation, non-disclosure and professional services agreements entered
into in the ordinary course of business under which third parties evaluate
the Company's Intellectual Property, and (III) non-exclusive licenses under
which the Company is the licensee, which in-licensed technology is not
incorporated into the Company products or proposed (pursuant to an approved
product roadmap) products, and which provide for payments by the Company
not in excess of $100,000 individually or $250,000 in the aggregate for all
users in the aggregate for the twelve (12) months ended December 31, 2006
and where the Intellectual Property licensed to the Company consists of
commercially available, off-the-shelf software and related items; or
(xv) any other agreement, contract or commitment that requires
payments in excess of $100,000 individually or $250,000 in the aggregate in
any twelve (12) month period and is not cancelable without penalty on sixty
(60) days' notice.
(b) As of the date hereof, the Company is not in breach of or default
in any material respect under any Material Contract, and to Seller's Knowledge,
no event has occurred that, with or without notice or lapse of time or both,
would result in a breach or a default in any material respect under any Material
Contract. SECTION 3.11 of the Disclosure Letter includes any Material Contracts
which, as of the date hereof, will terminate or which may be terminated by
either party thereto within one hundred and twenty (120) days of the Closing
Date solely due to the expiration of its term.
SECTION 3.12 Compliance with Law. The Company is not in violation of
any Law, except for any violation or possible violation that would not
reasonably be expected to have a Company Material Adverse Effect. The Company
has all permits, licenses, authorizations, exemptions, orders, grants, consents,
approvals and franchises, in each case which are material to the Company, from
Governmental Authorities required by the Company to hold any interest in any of
its properties or to conduct its businesses as now being conducted
(collectively, "COMPANY AUTHORIZATIONS"). The Company Authorizations are in full
force and effect in all material respects. Notwithstanding the foregoing, no
representation is made by Seller pursuant
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to this SECTION 3.12 with respect to the infringement, misappropriation or
other violation of any Intellectual Property (other than tangible personal
property, tangible technology, or tangible media that contains or embodies
Intellectual Property).
SECTION 3.13 Litigation. There are no material Actions pending or, to
Seller's Knowledge, threatened against the Company. The Company is not a party
or subject to or in default under any material Governmental Order.
SECTION 3.14 Minute Books. The minutes of the Company made available
to counsel for Purchaser constitute all of the minutes in possession of the
Company or Seller, and such minutes are accurate records of all actions taken
and accurate summaries of all meetings held by the stockholder and the board of
directors of the Company for the periods covered by such minutes.
SECTION 3.15 Employee Compensation and Benefit Plans; ERISA.
(a) SECTION 3.15(A) of the Disclosure Letter sets forth a true and
complete list of each material pension, retirement, profit sharing, deferred
compensation, stock option, employee stock ownership, severance pay, fringe
benefit, vacation, bonus, incentive, medical, vision, dental, life insurance,
and each other material employee benefit plan, program, arrangement or
agreement, including each material "employee benefit plan" as that term is
defined in Section 3(3) of ERISA, maintained by Seller or the Company and
currently providing benefits to any of the current Employees of the Company or
with respect to which the Company has or may have any liability or obligations
(collectively, the "BENEFIT PLANS"); provided, however, that any governmental
plan or program requiring the mandatory payment of social insurance taxes or
similar contributions to a governmental fund with respect to the wages of an
employee shall not be considered a "BENEFIT PLAN" for purposes of this
Agreement.
(b) Each Benefit Plan that is intended to be qualified within the
meaning of Code Section 401(a) has, to Seller's Knowledge, received a favorable
determination letter or advisory letter as to its qualification or still has a
remaining period of time under applicable Treasury Regulations or Internal
Revenue Service pronouncements in which to apply for such letter and to make any
amendments necessary to obtain a favorable determination, and, to Seller's
Knowledge, nothing has occurred that could reasonably be expected to result in
the revocation of such letter. To Seller's Knowledge, each Benefit Plan has been
established and administered in all material respects in accordance with its
terms and in material compliance with the applicable provisions of ERISA, the
Code and other applicable Laws, and there are no material actions, suits or
claims (other than routine claims for benefits in the ordinary course) pending
or, to Seller's Knowledge, threatened with respect to any Benefit Plan.
(c) Except as set forth on SECTION 3.15(C) of the Disclosure Letter,
the Company has not at any time since January 1, 2000 maintained, established,
sponsored, participated in or contributed to any (i) "employee pension benefit
plan," within the meaning of Section 3(2) of ERISA, which is subject to Title IV
of ERISA or Section 412 of the Code or (ii) multiemployer plan, as defined in
Section 3(37) of ERISA, with respect to which Purchaser
-15-
could be subject to any material Liabilities (including any indirect,
contingent, secondary or successor liability).
(d) Except as set forth in SECTION 3.15(D) of the Disclosure Letter,
no Benefit Plan provides, reflects or represents any material liability to
provide retiree welfare benefits to any Employee, except as may be required by
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and as
codified in Section 4980B of the Code and Section 601 et. seq. of ERISA or by
any other applicable Law. To Seller's Knowledge, the Company has no legally
binding verbal agreement to provide material retiree medical benefits to any
current Employee.
SECTION 3.16 Labor Matters.
(a) SECTION 3.16(A) of the Disclosure Letter sets forth a true and
complete list as of the date hereof of each Non-U.S. Service Provider (without
identifying each such Person's name, but, rather, coded with an identification
number), together with the following information as of the date hereof: (i) base
salary or rate of pay; (ii) bonus opportunities; (iii) position or job
description; and (iv) work location.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect: (i) to Seller's Knowledge, no union organizational campaign is
in progress with respect to the Employees; and (ii) the Company has not received
notice during the past three (3) years of the intent of any Governmental
Authority responsible for the enforcement of labor or employment Laws to conduct
an investigation of, or affecting, the Company, and, to Seller's Knowledge, no
such investigation is in progress. The Company is not a party to or bound by any
contract or collective bargaining agreement with any labor union, works council
or similar organization.
(c) The Company is in material compliance with all applicable foreign,
federal, state and local laws, rules and regulations respecting, employment,
employment practices, terms and conditions of employment, employee safety and
health and wages and hours, in each case, with respect to Employees and, to the
extent applicable, Non-U.S. Service Providers. There are no material actions,
suits, claims or administrative matters pending or, to Seller's Knowledge,
threatened or reasonably anticipated against the Company or any of its Employees
or Non-U.S. Service Providers related to the employment or service of any
Employee or Non-U.S. Service Provider or any labor matters, including charges of
unfair labor practices or wrongful discharge. The services provided by each of
the Employees is terminable at the will of the Company, except where prohibited
by applicable law. To Seller's Knowledge, the Company does not have any current
material liability with respect to any misclassification of any person as an
independent contractor rather than as an "employee", or with respect to any
Employee leased from another employer.
SECTION 3.17 Real and Personal Property.
(a) The Company does not own any real property.
-16-
(b) SECTION 3.17(B) of the Disclosure Letter contains a true and
complete list of all real property leased, subleased, licensed or otherwise
occupied by the Company (or Seller or any of its Affiliates, on behalf of the
Company, with respect to the Company's business) or its personnel as a tenant,
subtenant or pursuant to other occupancy arrangements. True and complete copies
of all written agreements pertaining to such real property to which the Company
(or Seller or any of its Affiliates, on behalf of the Company, with respect to
the Company's business) is a party pertaining to such real property (each a
"REAL PROPERTY LEASE" and any real property subject to a Real Property Lease,
the "LEASED REAL PROPERTY") (other than Real Property Leases which have been
terminated or expired and pursuant to which there is not any remaining
liability) as of the date hereof have been delivered to Purchaser.
(c) The Company (or Seller or its Affiliates, if applicable) has valid
leasehold estates in all Leased Real Property.
(d) Each Real Property Lease is in full force and effect and is valid
and enforceable in accordance with its terms (subject to the Remedies
Exception), and there is no material default under any Real Property Lease
either by the Company (or Seller or its Affiliates, if applicable) or, to
Seller's Knowledge, by any other party thereto, and, to Seller's Knowledge, no
event has occurred that, with the lapse of time or the giving of notice or both,
would constitute a material default by the Company (or Seller or its Affiliates,
if applicable) thereunder.
(e) There does not exist any pending or, to Seller's Knowledge,
threatened condemnation or eminent domain proceedings that affect any Leased
Real Property, and the Company (or Seller or its Affiliates, if applicable) has
not received any written notice of the intention of any Governmental Authority
to take or use any Leased Real Property. All Leased Real Property is in good
condition and repair, reasonable wear and tear excepted.
(f) The Company has good and valid title to all of its material
tangible personal property, free and clear of all Encumbrances other than
Permitted Encumbrances.
SECTION 3.18 Intellectual Property.
(a) The Company owns, or has the right to use, and immediately
following the Closing Date will own or have the right to use, subject to SECTION
5.13(B) hereof, pursuant to a license or otherwise, all Intellectual Property
required to operate its business and all material Intellectual Property used in
its business as currently conducted and as Currently Contemplated To Be
Conducted, free and clear of all Encumbrances other than Permitted Encumbrances.
"CURRENTLY CONTEMPLATED TO BE CONDUCTED" means as currently contemplated to be
conducted by the Company as described in SECTION 3.18(A) of the Disclosure
Letter. Nothing in this SECTION 3.18(A) shall be deemed a representation or
warranty by the Company with respect to infringement, misappropriation or other
violation of any Intellectual Property (other than tangible personal property,
tangible technology or tangible media that contains or embodies Intellectual
Property).
-17-
(b) In respect of the business of the Company on the one hand and the
other business of Seller and its Affiliates on the other hand, the Company
exclusively owns, and immediately following the Closing Date will exclusively
own, vis-a-vis Seller and its Affiliates, all Intellectual Property primarily
related to the businesses of the Company as currently conducted and as Currently
Contemplated To Be Conducted, including (i) all patents and patent applications
(A) primarily related to the business of the Company as currently conducted and
as Currently Contemplated To Be Conducted, (B) for which the inventors were
primarily employed by or primarily engaged as contractors for the Company or (C)
the costs for which were attributed to or considered expenses of the business of
the Company, (ii) all rights to enforce and to past and future damages for the
infringement of any such Intellectual Property and (iii) all goodwill of the
business of the Company associated with any Trademark rights included in such
Intellectual Property.
(c) SECTION 3.18(C)(I) of the Disclosure Letter sets forth all
patents, and registrations and applications for copyrights, Trademarks and other
Intellectual Property that have been registered, applied for or otherwise
perfected, issued, or recorded with or by any Governmental Authority and that
are owned by, purported to be owned by, or held in the name of the Company (the
"COMPANY REGISTERED INTELLECTUAL PROPERTY"), and all of same are unexpired,
subsisting, have not been abandoned or cancelled and, to Seller's Knowledge, are
valid. SECTION 3.18(C)(II) of the Disclosure Letter lists any material
proceedings or actions that are currently pending before any court, tribunal or
other Governmental Authority related to any of the Company Registered
Intellectual Property (excluding routine proceedings for Trademark office
actions and foreign patent re-examinations). All necessary registration,
maintenance and renewal fees in connection with such Company Registered
Intellectual Property have been paid, and all necessary documents and
certificates in connection with such Company Registered Intellectual Property
have been filed with the relevant patent, copyright, Trademark or other
authorities for the purposes of maintaining such Company Registered Intellectual
Property. In each case in which the Company has acquired any Intellectual
Property rights from any Person, the Company has obtained an assignment which is
valid, enforceable and sufficient to irrevocably transfer all rights in such
Intellectual Property to the Company.
(d) Except as disclosed under SECTION 3.11 of the Disclosure Letter,
(i) within the six (6) years preceding the date hereof, the Company has not
transferred ownership of any material Intellectual Property, or (ii) the Company
has not granted any exclusive license of or exclusive right to use, or
authorized the retention of any exclusive rights to use or joint ownership of,
any Intellectual Property that is or was owned by or exclusively licensed to the
Company.
(e) The operation of the business of the Company as it has been
conducted, is currently conducted and as it is Currently Contemplated To Be
Conducted has not infringed or misappropriated, and does not and will not
infringe or misappropriate, any Intellectual Property of any other Person in any
material respect. There are no pending, to Seller's Knowledge, Actions
threatened against the Company alleging that such operation of the business of
Company or any of its acts, products, services or Intellectual Property
infringes, misappropriates or
-18-
otherwise violates the Intellectual Property of any other Person. The Company
has not received (i) any written notice in the six (6) years preceding the date
hereof of any claims alleging that the Company's Intellectual Property is
invalid or (ii) any written notice in the six (6) years preceding the date
hereof alleging that the Company (including the operation of the business of the
Company or any of its acts, products, services or Intellectual Property)
infringes, misappropriates or otherwise violates the Intellectual Property of
any other Person, except for claims that have since been satisfactorily resolved
and disclosed under SECTION 3.11 (nor does Seller have Knowledge of any
reasonable basis for any such allegations).
(f) There are no Governmental Orders limiting or restricting the
Company's use of its Intellectual Property. No government funding, facilities or
resources of a university, college, other educational institution or research
center or funding from third parties was used in the development of the
Intellectual Property owned by the Company and no Governmental Authority,
university, college, other educational institution or research center has any
claim or right in or to such Intellectual Property.
(g) The Company takes reasonable actions to protect all Intellectual
Property that it has a contractual obligation to protect and all Intellectual
Property owned by the Company, and, to the Knowledge of Seller, no Person is
materially infringing or misappropriating any Intellectual Property owned by the
Company except for such infringements or misappropriations against which the
Company has decided in its reasonable business judgment not to take any action.
Except (i) as disclosed under SECTION 3.18(G) of the Disclosure Letter and (ii)
for source code licensed to the Company's customers in the ordinary course (such
as application programming interfaces and example code that is licensed for
purposes of integrating Company products into customer products) pursuant to
agreements provided by the Company to Purchaser, neither the Company nor any
other Person acting on the Company's behalf has disclosed, delivered or licensed
to any Person, agreed to disclose, deliver or license to any Person, or
permitted the disclosure or delivery to any escrow agent or other Person of any
source code or related proprietary or confidential information or algorithms
owned by the Company ("COMPANY SOURCE CODE"). Except (i) as disclosed under
SECTION 3.18(G) of the Disclosure Letter and (ii) for source code licensed to
the Company's customers in the ordinary course (such as application programming
interfaces and example code that is licensed for purposes of integrating Company
products into customer products), no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time or both) would,
or would reasonably be expected to, result in the disclosure or delivery by or
on behalf of the Company of any Company Source Code, other than pursuant to such
agreements. The Company has and enforces a policy requiring each employee and
contractor who has contributed to the creation or development of the Company's
Intellectual Property to execute confidentiality and assignment agreements
(representative samples of which have been provided to Purchaser). The Company
has and enforces a policy requiring each employee and contractor who has access
to the confidential information of the Company to execute confidentiality
agreements (representative samples of which have been provided to Purchaser).
Except as disclosed under SECTION 3.18(G) of the Disclosure Letter, to the
extent that any Intellectual Property has been developed or created
independently or jointly by any Person other than the Company for which
-19-
the Company has, directly or indirectly, provided consideration for such
development or creation, the Company has a written contract with such Person
with respect thereto, and the Company thereby has obtained ownership of, and is
the exclusive owner of, all such Intellectual Property by valid assignment and,
where applicable, has obtained a waiver of all non-assignable rights in such
Intellectual Property.
(h) The Company is not party to any agreement that solely, due to this
Agreement or the transactions contemplated by this Agreement, (i) will by its
terms obligate Purchaser and its Affiliates (other than the Company) to grant to
any third party any right to or with respect to any Intellectual Property owned
by, or licensed to them (other than the Company), (ii) will by its terms
obligate Purchaser and its Affiliates (other than the Company) to be bound by or
subject to, any exclusivity obligations, non-compete or other material
restriction on the operation or scope of their respective businesses or (iii)
will by its terms obligate Purchaser and its Affiliates (other than the Company)
to be obligated to pay any royalties or other amounts under any agreement in
existence as of the Closing Date in excess of those payable under that same
agreement by any of them, respectively, in the absence of this Agreement or the
transactions contemplated hereby (excluding in each case, for the avoidance of
doubt, agreements that require a consent of the counterparty thereto in
connection with the transactions contemplated hereby or that are otherwise set
forth in SECTION 3.4 of the Disclosure Letter).
(i) SECTION 3.18(I) of the Disclosure Letter lists all software or
other material of the Company that contains or incorporates Incorporated Open
Source Software and identifies the type of license or distribution model
governing its use. The Company's use and/or distribution of each component of
any Incorporated Open Source Software complies with all provisions of the
applicable license agreement, and in no case does such use or distribution give
rise under such license agreement to any (A) rights in any third parties under
any Intellectual Property owned by the Company or (B) obligations for the
Company with respect to any Intellectual Property other than Incorporated Open
Source Software, including without limitation any obligation to disclose or
distribute any such Intellectual Property in source code form, to license any
such Intellectual Property for the purpose of making derivative works, or to
distribute any such Intellectual Property without charge. For purposes of this
Agreement, "INCORPORATED OPEN SOURCE SOFTWARE" means third party software that
is distributed as "freeware," "free software," "open source software" or under a
similar licensing or distribution model (including but not limited to the GNU
General Public License).
(j) As of the date hereof, Seller and its Subsidiaries (other than the
Company) are not (nor do they have any approved product roadmap for) developing
or marketing to or licensing to original equipment manufacturers, software that
(i) is embedded in mobile handsets when shipped from original equipment
manufacturers and (ii) utilizes key presses on numeric or QWERTY keypads
(whether physical or virtual) of mobile handsets to predict (A) text or (B)
words and phrases for messaging applications or (C) a list of the most probable
mobile device functions, data and services that the user intends to access
(excluding any such list that arises from within a mobile instant messaging
(including chat), mobile social networking, mobile e-
-20-
mail, mobile Internet search, mobile advertising, mobile mapping and/or mobile
travel routing products that are made, used, sold, distributed or marketed by
Seller and its Subsidiaries), where each of clauses (A), (B) and (C) above adapt
to the user's previous behaviors.
SECTION 3.19 Environmental Laws.
(a) Except with respect to non-U.S. Environmental Laws or non-U.S.
Environmental Permits:
(i) The Company complies in all material respects with all
applicable Environmental Laws and possesses and complies with all
applicable material Environmental Permits required under such Environmental
Laws to operate as it presently operates.
(ii) To Seller's Knowledge, no Materials of Environmental Concern
have been released at any Leased Real Property under circumstances that are
reasonably likely to result in a material liability of the Company under
any applicable Environmental Law.
(iii) The Company has not received any written notification
alleging that it is liable for, or written request for information pursuant
to Section 104(e) of the Comprehensive Environmental Response, Compensation
and Liability Act or similar state statute concerning, any material release
or threatened release of Materials of Environmental Concern at any Leased
Real Property except to the extent (A) such matter has been resolved with
the appropriate foreign, federal, state or local regulatory Governmental
Authority or otherwise or (B) as would not be reasonably likely to result
in a material liability of the Company under any applicable Environmental
Law. Other than the Real Property Leases, the Company has not entered into
any written agreement that may require it to guarantee, reimburse, pledge,
defend, hold harmless or indemnify any other party with respect to
liabilities arising out of Environmental Laws, or the activities of the
Company or any other Person respecting Materials of Environmental Concern.
(b) For purposes of this Agreement, the following terms have the
meanings assigned below:
(i) "ENVIRONMENTAL LAWS" means all foreign, federal, state, or local
statutes, regulations, ordinances, codes, legally binding directives or
decrees protecting the quality of the ambient air, soil, surface water or
groundwater and regulating Materials of Environmental Concern (including
the exposure of any individual to Materials of Environmental Concern), each
as in effect as of the date of this Agreement.
(ii) "ENVIRONMENTAL PERMITS" means all permits, licenses,
registrations, and other authorizations required under applicable
Environmental Laws.
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(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means any material,
chemical, emission or substance that has been designated by any
Governmental Authority to be radioactive, toxic, hazardous, a pollutant or
otherwise a danger to health, reproduction or the environment, including
those defined and regulated as such under applicable Environmental Laws,
including the federal Comprehensive Environmental Response, Compensation
and Liability Act and the federal Resource Conservation and Recovery Act.
(c) Notwithstanding any other representations and warranties of Seller
in this Agreement, the representations and warranties of Seller in this SECTION
3.19 are the only representations and warranties of Seller in this Agreement
with respect to environmental matters.
SECTION 3.20 Taxes. Except as would not reasonably be expected to have
a Material Adverse Effect:
(a) All Tax Returns required to be filed by or with respect to the
Company prior to the date hereof have been filed (except those under valid
extension).
(b) As of the date hereof, all Taxes of the Company that are due have
been paid or withheld.
(c) All Taxes of the Company not yet due have been adequately provided
for on the Financial Statements other than those Taxes accrued in the ordinary
course of business since the Statement Date.
(d) The Company has not received written notice of any Action or audit
against, or with respect to, any Taxes of the Company and no such Action or
audit is currently in progress.
(e) The Company is not, and has not been at any time, a "United States
Real Property Holding Corporation" within the meaning of Section 897(c)(2) of
the Code.
(f) The Company has (i) never been a party to any Tax sharing,
indemnification or allocation agreement, nor does the Company owe any amount
under any such agreement, (ii) no liability for the Taxes of any person under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law, including any arrangement for group or consortium relief or similar
arrangement), as a transferee or successor, by contract, or otherwise, and (iii)
never been a party to any joint venture, partnership or other agreement that
could be treated as a partnership for Tax purposes.
(g) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock intended
to qualify for tax-free treatment under Section 355 of the Code within the last
two years.
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(h) The Company has not engaged in a reportable transaction under
Treas. Reg. Section 1.6011-4(b), including any transaction that is the same as
or substantially similar to one of the types of transactions that the Internal
Revenue Service has determined to be a tax avoidance transaction and identified
by notice, regulation, or other form of published guidance as a listed
transaction, as set forth in Treas. Reg. Section 1.6011-4(b)(2).
SECTION 3.21 Bank Accounts. SECTION 3.21 of the Disclosure Letter
lists all bank accounts, lock boxes and safe deposit boxes relating to the
business and operations of the Company (including the name of the bank or other
institution where such account or box is located and the name of each authorized
signatory thereto).
SECTION 3.22 Brokers. No agent, broker, finder or investment banker
(other than Citigroup Global Markets Inc., whose fees shall be paid by Seller)
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Seller or the Company. SECTION 3.23 Customers. SECTION
3.23 of the Disclosure Letter sets forth a list of the top-ten (10) customers of
the Company (based on revenues) for the fifteen (15) month period ended March
31, 2007. Since March 31, 2007, none of such customers has cancelled or
terminated or, to Seller's Knowledge, threatened in writing to cancel or
terminate, its relationship with the Company, except pursuant to or as
contemplated by the terms of any related contract, copies of which have been
provided to Purchaser.
SECTION 3.24 No Other Representations or Warranties.
(a) Except for the representations and warranties contained in this
ARTICLE III, Purchaser acknowledges that neither Seller nor any other Person on
behalf of Seller makes any other express or implied representation or warranty
with respect to Seller, the Company or its business or any information provided
to Purchaser. Neither Seller nor any other Person will have or be subject to any
liability or indemnification obligation to Purchaser or any other Person
resulting from the distribution to Purchaser, or use by Purchaser of, any such
information, including any information, documents, projections, forecasts or
other material made available to Purchaser in certain "data rooms", confidential
information memoranda, management presentations or in any other form in
expectation of the transactions contemplated by this Agreement. Purchaser is not
relying on any statement, representation or warranty, oral or written, express
or implied, other than those set forth in this ARTICLE III.
(b) In connection with the investigation by Purchaser of the Company,
Purchaser has received or may receive from Seller or the Company certain
projections, forward-looking statements and other forecasts and certain business
plan information. Purchaser acknowledges that (i) there are uncertainties
inherent in attempting to make such estimates, projections and other forecasts
and plans, (ii) Purchaser is familiar with such uncertainties, (iii) Purchaser
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying such
estimates, projections, forecasts or plans)
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and (iv) except in the case of fraud, Purchaser shall have no claim against
anyone with respect thereto. Accordingly, Purchaser acknowledges that Seller
makes no representation or warranty with respect to such estimates, projections,
forecasts or plans (including the reasonableness of the assumptions underlying
such estimates, projections, forecasts or plans).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
SECTION 4.1 Organization. Purchaser is duly organized, validly
existing and in good standing under the laws of the state of its organization.
Purchaser has the requisite corporate or similar power and authority to own its
properties and to carry on its business as presently conducted and is duly
qualified to do business and is in good standing (where such concept exists) as
a foreign corporation in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to have such power or authority or to be so
qualified and in good standing would not reasonably be expected to have a
Purchaser Material Adverse Effect.
SECTION 4.2 Authority; Enforceability. Purchaser has all necessary
corporate or similar power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Purchaser of
this Agreement and the consummation by Purchaser of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate or similar action on the part of Purchaser, and no other corporate or
similar proceedings on the part of Purchaser are necessary pursuant to its
certificate of incorporation, by-laws or similar organizational documents to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Purchaser and, assuming
the due authorization, execution and delivery of this Agreement by Seller,
constitutes a legal, valid and binding agreement of Purchaser and is enforceable
against each Purchaser in accordance with its terms, subject to the Remedies
Exception.
SECTION 4.3 Non-Contravention. The execution, delivery and performance
of this Agreement by Purchaser do not (a) conflict with or violate its
certificate of incorporation, by-laws or similar organizational documents, (b)
assuming that all consents, approvals and authorizations contemplated by SECTION
4.4 have been obtained and all filings described in SECTION 4.4 have been made,
conflict with or violate any Law applicable to Purchaser or any of its
Subsidiaries or by which any of their respective properties are bound or (c)
result in any breach or violation of, constitute a default (or an event which
with notice or lapse of time or both would become a default) or result in the
loss of a benefit or the right of a counterparty to consent under, or give rise
to any right of termination, cancellation or acceleration of, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or other
instrument or obligation to which Purchaser is a party or by which any of its
properties are bound, except, in the case of clauses (b) and (c), for any such
conflict, violation, breach, default, loss or right which would not reasonably
be expected to have a Purchaser Material Adverse Effect.
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SECTION 4.4 Governmental Consents. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby do not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
Governmental Authority, except (a) as required under or pursuant to the HSR Act
or any other applicable Antitrust Laws and (b) for any consent, approval,
authorization, permit, action, filing or notification of or with any
Governmental Authority the failure of which to make or obtain would not
reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated hereby.
SECTION 4.5 Purchase for Investment. Purchaser acknowledges that the
Shares have not been registered under the Securities Act or under any state
securities Laws. Purchaser (a) is not an underwriter as such term is defined
under the Securities Act, (b) is acquiring the Shares solely for investment with
no present intention to distribute any of the Shares to any Person and (c) will
not sell or otherwise dispose of any of the Shares, except in compliance with
the registration requirements or exemption provisions of the Securities Act and
any other applicable securities Laws.
SECTION 4.6 Financing. Purchaser will have obtained prior to the
Closing, and will have available to it at the Closing, sufficient cash,
available lines of credit or other sources of immediately available funds to
enable it to pay, in cash, the Purchase Price and all other amounts payable
pursuant to this Agreement or otherwise necessary to consummate all the
transactions contemplated hereby, including all related fees and expenses.
SECTION 4.7 Solvency. Immediately after giving effect to the
transactions contemplated hereby, Purchaser and each of its Subsidiaries
(including the Company) shall (i) be able to pay their respective debts as they
become due and shall own property which has a fair saleable value greater than
the amounts required to pay their respective debts (including a reasonable
estimate of the amount of all contingent liabilities) and (ii) have adequate
capital to carry on their respective businesses. No transfer of property is
being made, and no obligation is being incurred, in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of Purchaser and its Subsidiaries
(including the Company).
SECTION 4.8 Brokers. Except for UBS Investment Bank, no agent, broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Conduct of Business Prior to the Closing. During the
period from the date hereof until the Closing Date, except as contemplated by
this Agreement, as set forth in SECTION 5.1 of the Disclosure Letter or as
required by Law, or unless Purchaser shall
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otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed), Seller shall cause the Company to conduct its business in the
ordinary course of business, to use its commercially reasonable efforts to
preserve substantially intact its business organization and to preserve its
present relationships with customers and employees and other Persons with which
it has significant business relations. Between the date of this Agreement and
the Closing Date, except as otherwise contemplated by this Agreement, as set
forth in SECTION 5.1 of the Disclosure Letter or as required by Law, Seller
shall not permit the Company to do any of the following without the prior
written consent of Purchaser (which consent shall not be unreasonably withheld
or delayed):
(a) amend or otherwise change its articles of incorporation or
by-laws;
(b) issue, deliver, sell, pledge, lease, license, dispose of, abandon,
transfer or encumber, or authorize or propose the issuance, delivery, grant,
sale, pledge, lease, license, disposition, abandonment, transfer or encumbrance
of (i) any shares of capital stock of the Company, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock of the Company or any other ownership interest, of the Company or
(ii) any assets, rights or properties (whether tangible or intangible) having a
fair market value in excess of $100,000 individually or $250,000 in the
aggregate, including, without limitation, the sale of any accounts receivable of
the Company, except in the ordinary course of business and consistent with past
practice;
(c) except in the ordinary course of business, consistent with past
practice, (i) sell, lease, license or transfer to any Person any rights to any
of the Company's Intellectual Property or enter into any agreement or modify any
existing agreement with respect to any of the Company's Intellectual Property
with any Person or with respect to any Intellectual Property of any other
Person, (ii) purchase or license any Intellectual Property or enter into any
agreement or modify any existing agreement with respect to the Intellectual
Property of any Person, (iii) enter into any agreement or modify any existing
agreement with respect to the development of any Intellectual Property with a
third party, or (iv) change pricing or royalties set or charged by the Company
to its customers or licensees or the pricing or royalties set or charged by
Persons who have licensed Intellectual Property to the Company;
(d) except in the ordinary course of business consistent with past
practice and in consultation with Purchaser, giving due consideration to
Purchaser's expressed views, to the extent permitted by Law, enter into or amend
any strategic alliance, affiliate agreement, joint marketing agreement or
agreement pursuant to which any other party is granted marketing, distribution,
development or manufacturing rights with respect to any products or technology
of the Company;
(e) enter into any agreement to (i) purchase or sell any interest in
real property, (ii) grant any security interest in any real property, or (iii)
lease, sublease, license or otherwise occupy any real property;
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(f) revalue any of its assets (whether tangible or intangible),
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business
consistent with past practice;
(g) waive or release any right or claim of the Company, including any
write-off or other compromise of any account receivable of the Company, in
excess of $100,000 individually or $250,000 in the aggregate;
(h) commence any lawsuit or proceeding or settle any lawsuit or
proceeding, or threat of any lawsuit or proceeding against the Company, other
than settlements involving only the payment of money damages not in excess of
$100,000 individually or $250,000 in the aggregate and which settlement does not
include the license of Intellectual Property or restrictions on the Company's
business;
(i) declare, set aside, or pay any dividends on or make any other
distributions (in stock or property, except that cash dividends will not be
restricted) in respect of any capital stock of the company, or reclassify,
combine, split, subdivide, redeem, purchase or otherwise acquire any capital
stock of the Company or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of capital stock of the
Company, or repurchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of the Company (or options, warrants or other rights
exercisable therefor);
(j) (i) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) or sell (by merger, consolidation, sale of stock or assets
or otherwise) any corporation, partnership or other business organization or
division thereof or any assets, other than (A) purchases and sales of inventory
and other assets in the ordinary course of business consistent with past
practices, (B) routine purchases of office supplies and other assets used in the
ordinary course of business consistent with past practices in an amount up to
$15,000 individually or $75,000 in the aggregate and (C) sales of obsolete or
excess assets in the ordinary course of business consistent with past practice
with a reasonably estimated fair market value, (ii) incur or guarantee any
Indebtedness or make any loans, advances or capital contributions to, or
investments in, any other Person, including through the issuance or sale of any
debt securities of the Company or the guarantee of any debt securities of any
other Person (other than travel advances in the ordinary course of business
consistent with past practices to employees of the Company), (iii) other than in
the ordinary course of business consistent with past practice, enter into,
terminate, fail to renew, cancel, amend or otherwise modify (or agree to do so),
or violate the terms of, any Material Contract or any agreement that would
constitute a Material Contract had such agreement been in effect on the date
hereof, or (iv) make any new material capital expenditure or commitment therefor
(other than (A) as explicitly required by any existing commitments, (B) as
contemplated by business plans disclosed to Purchaser prior to the date of this
Agreement, or (C) those capital expenditures or commitments that are not, in the
aggregate, in excess of $250,000);
(k) except (i) to the extent required under any Benefit Plan, (ii) in
the ordinary course of business consistent with past practice with respect to
new hires and promotions, (iii) as
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required by applicable Law, or (iv) as may be required to avoid adverse
treatment under Section 409A of the Code, materially increase the compensation
of any of its officers, directors or employees holding a title of vice president
or more senior, or establish, adopt, enter into, terminate or materially amend
any Benefit Plan as it relates to the current Employees of the Company;
(l) make any changes in its accounting methods, practices or policies,
except as required by GAAP;
(m) make any changes in its accounts receivable practices or policies;
(n) make or change any material Tax election, adopt or change any Tax
accounting method, enter into any closing agreement with respect to material
Taxes, or settle or compromise any material Tax claim or assessment; or consent
to the extension or waiver of the limitations period applicable to any material
Tax claim or assessment, except that each of the foregoing will apply only to
the extent that it is with respect to the Company and adversely affects the
Company; or
(o) agree to take any of the actions described in SECTION 5.1(A)
through SECTION 5.1(N).
SECTION 5.2 Procedures for Requesting Purchaser Consent. If the
Company desires to take an action which would be prohibited pursuant to SECTION
5.1 of this Agreement without the written consent of Purchaser, prior to taking
such action the Company may request such written consent by sending an e-mail or
facsimile to both of the following individuals:
(a) Xxxxxxx Xxxxxx, Senior Vice President Corporate Development
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail address: xxxxxxx.xxxxxx@xxxxxx.xxx
(b) Xxxxxxxx Xxxxx, Director, Corporate Legal Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail address: xxxxxxxx.xxxxx@xxxxxx.xxx
SECTION 5.3 Access to Information.
(a) During the period from the execution of this Agreement through the
earlier of (I) the termination of this Agreement pursuant to its terms and (II)
the Closing, Seller shall cause the Company to, subject to restrictions imposed
from time to time upon advice of counsel respecting the provision of privileged
communications or competitively sensitive information and to any applicable
confidentiality agreement in force as of the date hereof, afford representatives
of Purchaser, following notice from Purchaser to Seller in accordance with this
SECTION 5.3, reasonable access during normal business hours to all facilities of
the Company. In
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conducting any inspection of any facilities of the Company, neither Purchaser
nor any of its representatives shall (i) contact or have any discussions with
any of the Company's employees, customers, agents or representatives, unless in
each case Purchaser obtains the prior written consent of Seller, (ii) interfere
with the business of the Company conducted at such facility, (iii) damage any
property or any portion thereof located at any facility, (iv) perform any
procedure or investigation (including any environmental investigation or study)
or (v) have access to or review a Consolidated or Combined Return without
Seller's prior written consent; provided, however, that in no such event shall
any environmental investigation or study shall be allowed to the extent
involving testing or sampling of environmental media or building materials.
Purchaser shall schedule and coordinate all inspections with Seller and shall
give Seller at least three (3) Business Days prior written notice thereof,
setting forth the inspection or materials that Purchaser or its representatives
intend to conduct. Notwithstanding anything to the contrary set forth in this
Agreement, neither Seller nor any of its Affiliates (including the Company)
shall be required to disclose to Purchaser or any of its representatives any (i)
information (A) relating to any sale or divestiture process conducted by Seller
or its Affiliates for the Company or its business (except with respect to the
Company's transfer to Seller of Wildseed and the Wildseed business prior to the
date hereof) or Seller's or its Affiliates' (or their representatives')
evaluation of the Company or its business in connection therewith, including
projections, financial or other information relating thereto or (B) if doing so
could violate any contract in existence as of the date of this Agreement or Law
to which Seller or any of its Affiliates (including the Company) is a party or
is subject or which it believes in good faith could result in a loss of the
ability to successfully assert a claim of privilege (including, without
limitation, the attorney-client and work-product privileges) or (ii) any
Consolidated or Combined Return or any other information relating to Taxes or
Tax Returns in each case other than to the extent relating solely to the
Company.
(b) All information obtained pursuant to this SECTION 5.3 shall be
subject to the Confidentiality Agreement.
SECTION 5.4 Further Action; Reasonable Best Efforts
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Law to consummate the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make an appropriate and timely filing of a Notification and Report Form pursuant
to the HSR Act, to make additional required filings pursuant to any other
Antitrust Law with respect to the transactions contemplated hereby as promptly
as practicable (and in any event, with respect to the HSR Act, no later than ten
(10) Business Days after the date of this Agreement), to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act or any other applicable Antitrust Law and to
take all other actions necessary, proper or advisable to cause the expiration or
termination of the applicable waiting periods under the HSR Act and any other
applicable Antitrust Laws as soon as practicable.
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(b) Each of Purchaser and Seller shall, in connection with the efforts
referenced in SECTION 5.4(A) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other applicable Antitrust Law, use its reasonable best efforts to:
(i) cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party; (ii) keep the other party informed
of any communication received by such party from, or given by such party to, the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice (the "DOJ") or any other U.S. or foreign Governmental Authorities and
of any communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby; and (iii) permit the other party to review any communication given by it
to, consult with each other in advance of any meeting or conference with, the
FTC, the DOJ or any such other Governmental Authorities or, in connection with
any proceeding by a private party, with any other Person, and to the extent
permitted by the FTC, the DOJ or such other applicable Governmental Authorities
or other Person, give the other party the opportunity to attend and participate
in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in SECTION 5.4(A) and SECTION 5.4(B), if any concerns or
objections are asserted with respect to the transactions contemplated by this
Agreement under any Antitrust Law or if any suit is threatened to be instituted
by the FTC, the DOJ or any other applicable Governmental Authorities or any
private party challenging any of the transactions contemplated hereby as
violative of any Antitrust Law or which would otherwise reasonably be expected
to prohibit, prevent or restrict or materially impair or materially delay the
consummation of the transactions contemplated hereby, Purchaser shall use its
reasonable best efforts to resolve any such objections or suits so as to permit
consummation of the transactions contemplated by this Agreement.
SECTION 5.5 Resignations. On the Closing Date, Seller shall cause to
be delivered to Purchaser duly signed resignations, effective immediately after
the Closing, of all directors of the Company whereby such Persons resign from
their offices and waive any right to compensation they might have in connection
therewith.
SECTION 5.6 Directors' and Officers' Indemnification and Insurance.
(a) Without limiting any additional rights that any employee may have
under any employment agreement or Benefit Plan, from and after the Closing Date,
Purchaser shall indemnify and hold harmless each present (as of the Closing
Date) and former officer or director of the Company (the "INDEMNIFIED COMPANY
PERSONS") against all losses, liabilities, damages, judgments, inquiries, fines
and reasonable fees, costs and expenses, including, attorneys' fees and
disbursements incurred in connection with any claim, Action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to the fact that the Indemnified Company Person is or was
an officer or director of the Company, whether asserted or claimed prior to, on
or after the Closing Date, to the fullest extent permitted
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under applicable Law. Each Indemnified Company Person shall receive advancement
of expenses incurred in the defense of any claim, Action, suit, proceeding or
investigation from Purchaser within ten (10) Business Days of receipt by
Purchaser from the Indemnified Company Person of a request therefor; provided
that any Indemnified Company Person to whom expenses are advanced shall provide
an undertaking to repay such advances if it is ultimately determined that such
Indemnified Company Person is prohibited from receiving indemnification under
the WBCA or other applicable Law.
(b) The articles of incorporation and by-laws of the Company after the
Closing shall contain provisions no less favorable, taken as a whole, with
respect to indemnification, advancement of expenses and exculpation of former or
present directors, officers and employees than are presently set forth in the
Company's articles of incorporation and by-laws, which provisions shall not be
amended, repealed or otherwise modified for a period of six (6) years from the
Closing Date in any manner that would adversely affect the rights thereunder of
any such individuals.
(c) Purchaser agrees to honor and perform under, and to cause the
Company to honor and perform under, all indemnification agreements entered into
by the Company with any Indemnified Company Person prior to the date of this
Agreement and set forth on SECTION 5.6(C) of the Disclosure Letter.
(d) Purchaser shall purchase and not terminate a directors' and
officers' insurance "tail" policy under the Company's existing directors' and
officers' insurance policy which (i) has an effective term of six (6) years from
the Closing Date, (ii) covers the Indemnified Company Persons, (iii) contains
terms and conditions (including, without limitation, coverage amounts) that are
no less advantageous, when taken as a whole, to those currently applicable to
the Indemnified Company Persons, and (iv) has a coverage period commencing no
later than the Closing Date. If the total cost of such coverage is in excess of
$150,000, then Purchaser shall obtain as much coverage as is possible at a cost
up to $150,000.
(e) In the event that any of the Company, Purchaser or their
respective successors or permitted assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers or conveys all or a
majority of its properties and assets to any Person, then, and in each such
case, proper provision shall be made so that such continuing or surviving
corporation or entity or the transferee thereof, as the case may be, shall
succeed to the obligations set forth in this SECTION 5.6.
(f) This SECTION 5.6 is intended to be for the benefit of, and shall
be enforceable by, each of the Indemnified Company Persons and their respective
heirs and legal representatives. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Company
Person is entitled, whether pursuant to Law, contract or otherwise.
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SECTION 5.7 Third Party Consents. The Company and Purchaser shall use
reasonable best efforts to obtain all necessary consents, waivers and approvals
of any parties to any Material Contracts as are required thereunder in
connection with the transactions contemplated by this Agreement so as to
preserve all rights of, and benefits to, the Company under such Material
Contracts from and after the Closing Date. Such consents, waivers and approvals
shall be in a form reasonably acceptable to Purchaser. In the event that the
other parties to any such Material Contracts (including any lessor or licensor
of any Leased Real Property) conditions its grant of a consent, waiver or
approval (including by threatening to exercise a "recapture" or other
termination right) upon the payment of a consent fee, "profit sharing" payment
or other consideration (including increased rent payments or other payments
under the Material Contract), then Purchaser shall be solely responsible for
making all payments or other accommodations required to obtain such consent,
waiver or approval.
SECTION 5.8 FIRPTA Compliance. On the Closing Date, the Company shall
deliver to Purchaser a FIRPTA Compliance Certificate in a form reasonably
acceptable to Purchaser.
SECTION 5.9 Additional Instruments and Further Assurances.
(a) At and after the Closing Date, each party hereto, at the request
of another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be reasonably necessary or
desirable for effecting completely the consummation of the transactions
contemplated hereby.
(b) At and after the Closing Date, to the extent that Purchaser
discovers that legal ownership of any issued or registered Intellectual Property
or Intellectual Property for which applications for registration are pending
which the Company is entitled to own under SECTION 3.18(B) is not held by or
recorded in the name of the Company, Seller agrees to assign and transfer and
take such further additional actions as may be reasonably necessary and
reasonably requested by Purchaser to document, register and cause to be assigned
and transferred to the Company effective as of the Closing Date all such issued
or registered Intellectual Property or Intellectual Property for which
applications for registration are pending, including all causes of action and
the right to past and future damages for infringement of such issued or
registered Intellectual Property or Intellectual Property for which applications
for registration are pending.
(c) At and after the Closing Date, to the extent that Seller
demonstrates by a preponderance of the evidence that legal ownership of any
issued or registered Intellectual Property or Intellectual Property for which
applications for registration are pending which the Company is not entitled to
own under SECTION 3.18(B) are set forth on SECTION 3.18(C)(I) of the Disclosure
Letter in error, Purchaser agrees to assign and transfer and take such further
additional actions as may be reasonably necessary and reasonably requested by
Seller to document, register and cause to be assigned and transferred to Seller
effective as of the Closing Date all such issued or registered Intellectual
Property or Intellectual Property for which applications for registration are
pending, including all causes of action and the right to past and
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future damages for infringement of such issued or registered Intellectual
Property or Intellectual Property for which applications for registration are
pending.
SECTION 5.10 Books and Records. Purchaser and Seller shall retain all
of the books and records of or with respect to the Company for a period of three
(3) years after the Closing or for such longer time as may be required by Law
and shall provide assistance as reasonably requested and make such books and
records (or copies thereof) available to the other party or its respective
agents, during normal business hours and upon reasonable notice, after the
Closing to the extent necessary for any reasonable business reasons, including,
without limitation, disputing any indemnification claim, the preparation of
financial statements or Tax Returns, the defense of litigation or Tax audits or
compliance with other legal requirements.
SECTION 5.11 Public Announcements. Each of Seller and Purchaser agrees
that no public release or announcement concerning the transactions contemplated
by this Agreement shall be issued by any party without the prior written consent
of the other party (which consent shall not be unreasonably withheld or
delayed), except as such release or announcement may be required by Law or the
rules or regulations of any applicable United States securities exchange, in
which case the party required to make the release or announcement shall use its
commercially reasonable efforts to allow the other party reasonable time to
comment on such release or announcement in advance of its issuance (it being
understood that the final form and content of any such release or announcement
shall be at the final discretion of the disclosing party).
SECTION 5.12 Financing. Purchaser shall use its reasonable best
efforts to have at the Closing sufficient funds, including obtaining lines of
credit or other sources of immediately available funds, to enable Purchaser to
pay, in cash, the Purchase Price and all other amounts payable pursuant to this
Agreement or otherwise necessary to consummate the transactions contemplated
hereby, including all related fees and expenses. Purchaser shall keep Seller
reasonably informed with respect to its efforts pursuant to this SECTION 5.12,
shall promptly notify Seller of any event which would reasonably be expected to
prevent Purchaser from having at the Closing sufficient funds to enable its to
pay the Purchase Price, and shall provide all reasonably related information as
requested by Seller. Compliance with the foregoing shall not limit Purchaser's
obligation to consummate the transactions contemplated hereby or its liability
for the failure to do so.
SECTION 5.13 Intellectual Property.
(a) Effective as of the Closing Date, Seller hereby grants to the
Company a license to use any Trademarks containing the names "America Online,"
"AOL" or the AOL logo (the "RETAINED NAMES") in a manner of a quality consistent
with past practice solely for use in the business of the Company consistent with
past practice and in each case as follows: (i) for 30 days only, for use on
existing Internet websites (provided that, if a domain name for an existing
Internet website is transferred from Seller to the Company prior to such time,
then such license shall terminate on the earlier of (A) five (5) business days
after Purchaser or the Company receives notice of such transfer or (B) upon the
expiration of such thirty (30) day period); and (ii)
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for ninety (90) days, for use on existing advertising and promotional materials,
inventory, business cards, stationery and similar items and content. The
foregoing license to the Company shall expire at the end of such time period.
Within thirty (30) days following the Closing Date, Seller shall initiate, and
the parties shall cooperate to cause, and Seller shall use reasonable efforts to
complete, the transfer from Seller to the Company of all domain names and
registrations held in the name of Seller and containing Trademarks of the
Company that are set forth on SECTION 3.18(C) of the Disclosure Letter. To the
extent there is a local presence requirement for registration of a domain name
in a jurisdiction, Seller shall have no obligation to maintain registration for
such domain names after one-hundred twenty (120) days after the Closing Date.
(b) Notwithstanding the representations and warranties of Seller under
SECTION 3.18(B), Purchaser acknowledges that the Company uses certain software,
information technology and similar items pursuant to licenses that are (i)
shared with other businesses of Seller and its Affiliates and/or (ii)
commercially available, off the shelf software (collectively, the "RETAINED
SOFTWARE"). SECTION 5.13(B) of the Disclosure Letter sets forth a true and
complete list of all Retained Software that is (A) required for the operation
of, or (B) material to and used in the operation of, the business of the Company
as currently conducted and Currently Contemplated To Be Conducted. Purchaser
acknowledges and agrees that, except as expressly provided in the Transition
Services Agreement, Purchaser and the Company shall have no right to use any
Retained Software after the Closing Date.
SECTION 5.14 Real Property.
(a) The parties shall use commercially reasonable efforts to assign to
Purchaser or an Affiliate of Purchaser the Real Property Lease set forth on
SECTION 5.14(A) of the Disclosure Letter (the "ASSIGNED LEASE") and to obtain
the release of Seller and its Affiliates from any obligation with respect to
such Assigned Lease from and after the Closing.
(b) Except as set forth in this SECTION 5.14, all employees of the
Company shall cease using and vacate all of Seller and its Affiliates' other
space from and after the Closing.
SECTION 5.15 Financial Statements.
(a) Seller shall use commercially reasonable efforts to prepare and to
cause its auditors to take such actions as are necessary for the preparation of:
(i) if the Waiver (as defined below) is granted by the Securities
and Exchange Commission (the "SEC"), (A) audited statements of net assets
to be acquired as of December 31, 2006 and December 31, 2005 and audited
statements of revenues and direct expenses of the Company for the fiscal
years ended December 31, 2006, December 31, 2005 and December 31, 2004 and
all required footnotes thereto and (B) an unaudited statement of net assets
to be acquired for the most recent fiscal quarter(s) then ended before the
Closing as required by Regulation S-X promulgated under the Securities
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Exchange Act of 1934, as amended, and an unaudited statement of revenues
and direct expenses of the Company for the most recent fiscal quarter(s)
then ended and the year to date information for the quarter then ended and
the corresponding prior fiscal periods, before the Closing as required by
Regulation S-X, in each case reviewed by the Company's independent
accountants in accordance with Statement of Auditing Standards No. 100
("SAS-100") and prepared in accordance with the Waiver and the Accounting
Principles and Methodologies and otherwise in a form consistent with
Purchaser's requirements for filing such financial statements under
Regulation S-X, as such requirements are modified by the Waiver
(collectively, the "NON-GAAP FINANCIAL STATEMENTS"); or
(ii) if the Waiver is not granted by the SEC, (A) audited balance
sheets of the Company as of December 31, 2006 and December 31, 2005 and
audited statements of income, stockholders' equity and comprehensive income
(loss) and cash flows of the Company for the fiscal years ended December
31, 2006, December 31, 2005 and December 31, 2004 and all required
footnotes thereto, and (B) an unaudited balance sheet of the Company for
the most recent fiscal quarter(s) then ended before the Closing as required
by Regulation S-X and (C) unaudited statements of income and cash flows of
the Company for the most recent fiscal quarter(s) then ended and the year
to date information for the quarter then ended and the corresponding prior
fiscal periods, before the Closing as required by Regulation S-X, in each
case reviewed by the Company's independent accountants in accordance with
SAS-100 and prepared in accordance with GAAP and otherwise in a form
consistent with Purchaser's requirements for filing such financial
statements under Regulation S-X (collectively the "GAAP FINANCIAL
STATEMENTS"). With respect to the statements of stockholders' equity and
comprehensive income (loss) described above, changes in stockholders'
equity and changes in comprehensive income will be presented in the GAAP
Financial Statements, either in a separate statement or in a note to such
financial statements, as and if required by Regulation S-X.
(b) If requested by Purchaser to do so, the Company shall use
commercially reasonable efforts to cause its auditors to deliver any opinions or
consents necessary for Purchaser to file the GAAP Financial Statements and the
Non-GAAP Financial Statements with the SEC. Purchaser shall promptly prepare and
present to the SEC a request for, and use commercially reasonable efforts to
obtain as promptly as possible, a waiver of the requirement under Rule 3-05 of
Regulation S-X to allow Purchaser to file the Non-GAAP Financial Statements in
satisfaction of its obligation to file financial statements of the Company under
such rule (the "WAIVER").
(c) Notwithstanding anything to the contrary contained in this Section
5.15, in the event Purchaser reasonably determines, based upon the advice of its
independent registered public accountants, that additional financial statements
of the Company are required in order for Purchaser to comply with Regulation
S-X, Seller shall use commercially reasonable efforts to
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prepare and to cause its auditors to take such actions as are necessary for the
preparation and delivery of such additional financial statements.
SECTION 5.16 Account Administration.
(a) Monies of the Company Received By Seller After Closing. After the
Closing Date, all payments and reimbursements made by any third party in the
name of or to Seller to the extent, in connection with, arising out of or
relating to the Company shall be held by Seller in trust for the benefit of the
Company, and, on or prior to the last Business Day of the month following the
month in which Seller received such payment or reimbursement, Seller shall pay
over to the Company the amount of such payment or reimbursement. Except as set
forth in the Transition Services Agreement or in SECTION 5.9(A), this SECTION
5.16(A) or SECTION 5.17, Seller will in no event assist or provide services to
Purchaser or the Company in the administration or collection of any accounts
receivable of the Company, whether outstanding prior to, as of or after the
Closing.
(b) Accounts Payable of the Company. After the Closing Date, if Seller
receives any notices or invoices by any third party in connection with, arising
out of or relating to any accounts payable of the Company, then, promptly after
receipt by Seller of any such notice or invoice, Seller shall forward such
notice or invoice to the Company for payment by Purchaser or the Company. Except
as set forth in the Transition Services Agreement or in SECTION 5.9(A), this
SECTION 5.16(B) or SECTION 5.17, Seller will in no event assist or provide
services to Purchaser or the Company in the payment or administration of any
accounts payable of the Company outstanding after the Closing.
SECTION 5.17 Integration Assistance Until the Closing Date. Between
the date of this Agreement and the Closing Date, Seller will use its
commercially reasonable efforts to assist the Purchaser, in a manner that does
not unreasonably interfere with Seller's operations or business, to facilitate
the orderly transition of the Company's operations to Purchaser's payroll,
billing, accounts receivable and internal computing systems and networks, as are
reasonably required to operate the business of the Company at and after the
Closing as a wholly owned Subsidiary of the Purchaser without the assistance,
support or services of Seller. Purchaser will promptly reimburse Seller for all
out-of-pocket expenses incurred by Seller in complying with this Section 5.17,
and Seller will not assume any risk or liability associated with Purchaser's
failure to successfully transition any of the Company's operations so long as
Seller has complied with its obligations in this Section 5.17.
SECTION 5.18 Seattle Sublease. Prior to the Closing, Seller will enter
into a sublease with the Company with respect to the Seattle Property, which
sublease will be on the terms set forth on EXHIBIT F.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.1 Employee Matters.
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(a) (i) Effective as of the Closing Date, Purchaser (or one of its
Affiliates): (1) shall continue to employ each Acquired Company Employee and
each Non-U.S. Employee; and (2) shall continue to employ (where employment
continues automatically by operation of Law) or offer employment to (where
employment does not continue automatically by operation of Law) each Non-U.S.
Service Provider. The Persons described in clauses (1) and (2) shall include
those Persons absent from work due to holiday, vacation, injury, sick leave,
disability, jury duty, military leave or other leave of absence. Each Acquired
Company Employee, each Non-U.S. Employee and each Non-U.S. Service Provider who
continues in employment or accepts an offer of employment, as the case may be,
shall be referred to herein as a "TRANSFERRED EMPLOYEE." Except to the extent
required by applicable Law, such continued employment or offers of employment
will be on an "at-will" basis and will be contingent on the Closing. Except to
the extent required by applicable Law, and subject to SECTION 6.1(B) and SECTION
6.1(D)(II), Transferred Employees will, upon Closing, become subject to
Purchaser's standard sexual harassment, business ethics, xxxxxxx xxxxxxx and
disclosure policies and procedures, copies of which have been provided to Seller
prior to the date hereof. With respect to Non-U.S. Service Providers, such
offers of employment may be conditioned upon the Non-U.S. Service Provider's
provision of evidence of legal right to work in such Non-U.S. Service Provider's
current country of service.
(ii) With respect to each Non-U.S. Employee and each Non-U.S.
Service Provider, Purchaser or its Affiliates shall, with the good faith
assistance of Seller and the Company, take all actions required by
applicable Law, including, where applicable, (A) submitting any filings to
governmental agencies, (B) consulting with and providing any required
notices to employees, service providers, labor organizations, works
councils, European Works Councils or other employee representative bodies
and (C) making compliant offers of employment at or prior to Closing, to
effectuate a transfer of employment and employer substitution as of the
Closing Date in accordance with applicable Law. In addition, Purchaser
agrees to cooperate with Seller and the Company in good faith to take such
further action before, on or after the Closing Date, to ensure that such
transfers of employment are effected in a manner that does not result in
any termination liabilities to Seller (including severance, vacation
accruals, vacation bonuses, or "13th salary") and that does not result in a
suspension or gap in benefit plan coverage or a reduction in compensation
or benefits. Purchaser further agrees to take the specific actions set
forth on SECTION 6.1(A)(II) of the Disclosure Letter in respect of the
Non-U.S. Employees and Non-U.S. Service Providers.
(iii) Purchaser hereby indemnifies Seller (itself and also on
behalf of the Non-U.S. Service Provider's current employer) and agrees to
hold Seller harmless against any and all Losses or Liabilities arising out
of or resulting from, directly or indirectly, (A) Purchaser's failure to
comply with this SECTION 6.1(A), including, without limitation, Liabilities
and claims relating to alleged termination of employment, breach of
contract, constructive discharge, failure to inform or consult, non-payment
of remuneration, compensation or benefits, wrongful or unlawful termination
or employee or employment-related rights, obligations or Liabilities and
(B) any severance,
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termination indemnity, redundancy or any other similar or related payments,
costs, benefits, compensation or Liabilities with respect to any Non-U.S.
Service Provider who does not accept Purchaser's offer of employment or
whose employment does not transfer to Purchaser or one of its Affiliates at
Closing and therefore does not become a Transferred Employee.
(b) Without limiting the provisions of SECTION 6.1(A) or any
additional rights under any Benefit Plan, as of the Closing Date and for a
period of not less than twelve (12) months following the Closing Date, Purchaser
shall, or shall cause its Affiliates and the Company to, provide each
Transferred Employee with base salary, incentive compensation, bonus
opportunities and employee benefits that are no less favorable, in the
aggregate, than those provided to such Transferred Employee immediately prior to
the Closing Date. Without limiting the generality of the foregoing, (i)
Purchaser shall not, during such twelve (12) month period, reduce any
Transferred Employee's rate of salary or wages from that in effect immediately
prior to Closing, and (ii) from and after the Closing Date, Purchaser shall, or
shall cause its Affiliates and the Company, as applicable, to honor those
employment, change in control, termination, retention and severance agreements
set forth in SECTION 6.1(B) of the Disclosure Letter.
(c) From and after the Closing Date, Purchaser shall, or shall cause
its Affiliates and the Company to, provide each Transferred Employee credit for
all service with Seller, the Company and their Affiliates (and service credited
by any of them with any predecessor employer) for purposes of eligibility to
participate and vesting under all employee benefit plans, programs, policies and
arrangements (other than equity incentive compensation awards under stock
incentive plans, such as stock options and restricted stock units, but not
retirement plans) in which the Transferred Employees become participants on or
after the Closing Date; provided, however, that such service need not be
recognized to the extent that such recognition would result in a duplication of
benefits. From and after the Closing Date, Purchaser shall, or shall cause its
Affiliates and the Company to, as applicable, (i) waive all limitations as to
preexisting conditions and waiting periods with respect to participation and
coverage requirements applicable to the Transferred Employees under any welfare
benefit plans in which such Transferred Employees may be eligible to participate
after the Closing Date and (ii) provide each Transferred Employee with credit
for any co-payments and deductibles paid during the portion of the relevant plan
year prior to the Closing Date to satisfy any applicable deductible or
out-of-pocket requirements under any welfare plans in which such Transferred
Employees are eligible to participate after the Closing Date.
(d) (i) Effective as of the Closing Date, all Acquired Company
Employees and Non-U.S. Employees and Non-U.S. Service Providers shall cease to
accrue any further benefits under, and shall cease to participate as active
participants in, all Benefit Plans and all other compensation and benefit
arrangements, plans, policies or agreements sponsored, contributed to or
maintained by Seller or any of its Subsidiaries or Affiliates that are not
maintained exclusively by the Company (the "SELLER PLANS"). As of the Closing
Date, the Company shall cease to be a participating employer under the Seller
Plans and Seller shall retain
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all assets and liabilities under, and Seller or any Affiliate of Seller shall
assume sole sponsorship of, the Seller Plans.
(ii) Purchaser's and Seller's agreements with respect to certain
bonus arrangements are set forth on SECTION 6.1(D)(II) of the Disclosure
Letter.
(e) As of the Closing Date, except as otherwise provided in SECTION
6.1(A)(III) and SECTION 6.1(D)(II), Seller shall be responsible for and shall
indemnify and hold harmless, Purchaser against any liabilities or claims under
the Seller Plans.
(f) Purchaser shall not assume any options, warrants, stock
appreciation, phantom stock, or other similar rights or equity based awards with
respect to any security of the Company, Seller or any Affiliate thereof, and all
such awards shall remain the sole responsibility of Seller or any Affiliate
thereof.
(g) Purchaser (or, after the Closing, the Company) shall not, at any
time prior to ninety (90) days after the Closing, effectuate a "plant closing"
or "mass layoff", as those terms are defined in the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN"), affecting in whole or in part any
site of employment, facility, operating unit or employee of Seller, without
notifying Seller in advance and without complying with the notice requirements
and other provisions of WARN. In addition, Purchaser (or, after the Closing, the
Company) shall provide a full defense to, and indemnify Seller for, any loss,
liability, claim, damage or expense (including attorneys' fees and other costs
of defense) which Seller may incur in connection with, any suit or claim of
violation brought against Seller under WARN for any actions taken by Purchaser
(or, after the Closing, the Company) with regard to any site of employment,
facility, operating unit or employee affected by this Agreement.
SECTION 6.2 No Third Party Beneficiaries. This ARTICLE VI shall inure
exclusively to the benefit of, and be binding solely upon, the parties to this
Agreement and their respective successors, permitted assigns, executors and
legal representatives. Nothing in this ARTICLE VI, expressed or implied, shall
be construed to create any third-party beneficiary rights in any present or
former employee, service provider or any such Person's alternate payees,
dependents or beneficiaries, whether in respect of continued employment or
resumed employment, compensation, employee benefits or otherwise.
ARTICLE VII
TAX MATTERS
SECTION 7.1 Tax Returns; Responsibility for Pre-Closing Taxes.
(a) Purchaser shall file, or cause to be filed, all Tax Returns
relating to the Company, other than those Tax Returns (i) of the Company that
are due on or prior to the Closing Date or (ii) that are Consolidated or
Combined Returns. With respect to Tax Returns that are required to be filed
after the Closing Date by or with respect to the Company for any Tax period that
commenced prior to and continues after the Closing Date (such period, a
"STRADDLE
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PERIOD," and such returns, "STRADDLE RETURNS"), such Straddle Returns shall be
prepared in a manner consistent with past practice (unless otherwise required by
Law). Purchaser shall deliver to Seller at least thirty (30) days prior to the
due date for filing such Straddle Return (including extensions) a statement
setting forth the amount of Tax allocated to Seller pursuant to SECTION 7.1(C)
(the "TAX STATEMENT") and copies of such Straddle Return. Seller shall have the
right to review such Straddle Return and the Tax Statement prior to the filing
of such Straddle Return and, within ten (10) days after the date of receipt by
Seller of any Straddle Return, to request in writing any reasonable changes to
such Straddle Return. Seller and Purchaser agree to consult and resolve in good
faith any issue arising as a result of the review of such Straddle Return and
the Tax Statement and mutually to consent to the filing as promptly as possible
of such Straddle Return. In the event the parties are unable to resolve any
dispute within ten (10) days after Purchaser has received Seller's written
request for changes, then any disputed issues shall be immediately submitted to
a nationally recognized independent accounting firm chosen by and mutually
acceptable to both Seller and Purchaser to resolve in a final binding matter
prior to the due date for such Straddle Return. The fees and expenses of such
independent accounting firm shall be shared equally between Seller and
Purchaser.
(b) Seller shall file, or cause to be filed, all Tax Returns referred
to in SECTION 7.1(A)(I) and SECTION 7.1(A)(II) and, to the extent that they are
required to be filed (without regard to extensions) on or before the Closing
Date, shall pay all Taxes due with respect to such Tax Returns, which Tax
Returns shall be completed in accordance with applicable Law and consistent with
past practice. Neither Seller nor its Affiliates shall take any position on any
amended Tax Return relating to the Company or settle or compromise any Action or
audit, in each case that would have a material adverse effect on Purchaser or
its Affiliates (including, after the Closing, the Company).
(c) Seller and its Affiliates (other than the Company) shall indemnify
and hold Purchaser and its Affiliates (including, after the Closing, the
Company) harmless against any and all Losses for (i) any Income Taxes (A)
imposed on the Company with respect to any Tax period (or portion thereof)
ending on or before the Closing Date (the "PRE-CLOSING TAX PERIOD") and (B) with
respect to the Pre-Closing Tax Period, of any other Person as a result of Treas.
Reg. Section 1.1502-6(a) (or any similar provision of state, local or foreign
Law, including any arrangement for group or consortium relief or similar
arrangement), as a transferee or successor, by contract or otherwise, and (ii)
any Taxes of Wildseed or Transfer Taxes relating to the transfer of Wildseed (or
the transfer of assets to or from Wildseed). The Income Taxes imposed upon the
Company allocable to the Pre-Closing Tax Period shall be computed as if such
taxable period ended on the Closing Date; provided that exemptions, allowances
or deductions that are calculated on an annual basis (including depreciation and
amortization deductions), other than with respect to property placed in service
after the Closing, shall be allocated between the Pre-Closing Tax Period and the
period after the Closing Date in proportion to the number of days in each
period.
SECTION 7.2 Refunds and Tax Benefits. The amount or economic benefit
of any refunds, credits or offsets of Taxes of the Company with respect to Taxes
that are paid by
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Seller under SECTION 7.1(C) shall be for the account of Seller. The amount or
economic benefit of any other refunds, credits or offsets of Taxes of the
Company shall be for the account of Purchaser. Each party shall forward, and
shall cause its Affiliates to forward, to the party entitled to receive the
amount or economic benefit of a refund, credit or offset of Taxes the amount of
such refund, or the economic benefit of such credit or offset of Taxes, within
ten (10) days after such refund is received or after such credit or offset is
allowed or applied against another Tax liability, as the case may be.
SECTION 7.3 Carrybacks. To the extent permitted by Law, Purchaser
shall cause the Company to elect to relinquish any carryback of net operating
losses, net capital losses, unused tax credits and other deductible or
creditable tax attributes arising in a period beginning after the Closing Date
to a consolidated, combined or unitary Tax Return for any taxable period ending
on or before the Closing Date.
SECTION 7.4 Transfer Taxes. Notwithstanding any provision of this
Agreement to the contrary, all Transfer Taxes in connection with the
transactions contemplated by this Agreement shall be borne solely by Purchaser
(other than as set forth in SECTION 7.1(C)(II) with respect to Wildseed).
Purchaser shall file, or shall cause to be filed, to the extent permitted by
applicable Law, all Tax Returns as may be required to comply with the provisions
of such Tax Laws relating to Transfer Taxes.
SECTION 7.5 Tax Sharing Agreements. On or prior to the Closing Date,
all Tax sharing agreements between the Company, on the one hand, and Seller or
its Affiliates (other than the Company), on the other hand, shall be terminated,
and, after the Closing, neither the Company, Seller, Purchaser or any Affiliates
of the foregoing shall be bound thereby or have any obligations or Liability
thereunder.
SECTION 7.6 Tax Treatment of Indemnity Payments. The parties agree to
treat any indemnity payment made under this ARTICLE VII or ARTICLE IX as an
adjustment to the Purchase Price for all federal, state, local and foreign Tax
purposes, and the parties agree to, and shall cause their respective Affiliates
to, file their Tax Returns accordingly.
SECTION 7.7 Tax Cooperation. Purchaser and its Affiliates and Seller
and its Affiliates shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of any Tax Returns
with respect to the Company or its operations and any audit, litigation or other
proceeding with respect to Taxes of or attributable to the Company or its
operations. Such cooperation shall include retention and provision of records
and information that are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any materials provided
hereunder.
SECTION 7.8 Survival. The obligations set forth in this ARTICLE VII
(and any claim for breach thereof) shall terminate at the close of business on
the thirtieth (30th) day following the expiration of the applicable statute of
limitations with respect to the Tax liabilities in question (giving effect to
any waiver, mitigation or extension thereof), and shall not be subject
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to any of the limitations on indemnification set forth in ARTICLE IX hereof. In
the event of any conflict between this ARTICLE VII and any other provision of
this Agreement (including Article IX), this ARTICLE VII shall govern.
SECTION 7.9 Tax Contest.
(a) If a claim shall be made by any Tax Authority, which, if
successful, might result in an indemnity payment to an Indemnified Party
pursuant to SECTION 7.1(C) or SECTION 9.2, then such Indemnified Party shall
give notice to the Indemnifying Party in writing of such claim and of any
counterclaim the Indemnified Party proposes to assert (a "TAX CLAIM"); provided,
however, the failure to give such notice shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party has been
materially prejudiced as a result of such failure.
(b) Except as set forth in SECTION 7.9(C) with respect to Straddle
Periods, with respect to any Tax Claim made prior to the twelve (12) month
anniversary of the date of this Agreement or relating to Income Taxes of the
Company, in each case for a Pre-Closing Tax Period (each, a "SELLER CONTROLLED
TAX CLAIM"), Seller shall, solely at its own cost and expense, control all
proceedings and may make all decisions taken in connection with such Seller
Controlled Tax Claim (including selection of counsel) and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any Tax
Authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and xxx for a refund where applicable Law permits such refund suits
or contest the Seller Controlled Tax Claim in any permissible manner.
Notwithstanding the foregoing, Sellers shall not settle such Seller Controlled
Tax Claim without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, and Purchaser, and counsel of its own choosing,
shall have the right to participate fully in all aspects of the prosecution or
defense of such Seller Controlled Tax Claim if Purchaser reasonably determines
that such Seller Controlled Tax Claim could have a material adverse impact on
the Taxes of the Company in a taxable period or portion thereof beginning after
the Closing Date. Except as set forth in SECTION 7.9(C) with respect to Straddle
Periods, Purchaser shall control all proceeding and make all decisions taken in
connection with all other Tax Claims.
(c) Seller and Purchaser shall jointly control and participate in all
proceedings taken in connection with any Tax Claim made prior to the twelve (12)
month anniversary of the date of this Agreement or relating to Income Taxes of
the Company, in each case for a Straddle Period and shall bear their own
respective costs and expenses. Neither Seller nor Purchaser shall settle any
such Tax Claim without the prior written consent of the other.
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ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1 Mutual Conditions to Closing. The respective obligations
of each party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing, of each of the
following conditions:
(a) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced by any United States or any
other Governmental Authority which prohibits, restrains or enjoins the
consummation of the transactions contemplated by this Agreement; provided,
however, that, prior to invoking this condition, each party shall have complied
with its covenants and obligations under SECTION 5.4; and
(b) The waiting period (and any extension thereof) applicable to the
transactions contemplated by this Agreement under the HSR Act shall have been
terminated or shall have expired.
SECTION 8.2 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
further subject to the satisfaction or waiver at or prior to the Closing of each
of the following conditions:
(a) The representations and warranties of Seller and the Company set
forth in this Agreement and in any certificate delivered pursuant to this
ARTICLE VIII (disregarding, for this purpose, all exceptions in those
representations and warranties relating to materiality, Company Material Adverse
Effect and Seller Material Adverse Effect contained therein other than the
reference thereto contained in SECTION 3.10(K)) shall be true and correct on and
as of the date of this Agreement and as of the Closing Date as though made on
and as of such date (unless any such representation or warranty is made only as
of a specific date, in which event such representation and warranty shall be
true and correct as of such specified date), except where the failure of any
such representations and warranties to be so true and correct, individually or
in the aggregate, has not had and would not be reasonably likely to have a
Company Material Adverse Effect (it being understood and agreed that, solely for
the purposes of determining whether this condition has been satisfied with
respect to the representation and warranty set forth in SECTION 3.18(H), the
definition of Company Material Adverse Effect shall be read to replace "Company"
with "Purchaser").
(b) Seller shall have performed in all material respects and complied
with in all material respects the obligations, agreements and covenants,
required to be performed by or complied with by it under this Agreement at or
prior to the Closing Date.
(c) Purchaser shall have received a certificate of an executive
officer of Seller certifying that the conditions set forth in SECTION 8.2(A) and
SECTION 8.2(B) have been satisfied.
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(d) If the Waiver has been granted by the SEC, Seller shall have
delivered the Non-GAAP Financial Statements to Purchaser, and, if the Waiver has
not been granted by the SEC, Seller shall have delivered the GAAP Financial
Statements to Purchaser, in each case as contemplated by SECTION 5.15.
(e) No Company Material Adverse Effect shall have occurred since the
date of this Agreement and be continuing as of the Closing Date.
SECTION 8.3 Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated under this Agreement shall be
further subject to the satisfaction or waiver at or prior to the Closing Date of
the following conditions:
(a) The representations and warranties of Purchaser set forth in this
Agreement and in any certificate delivered pursuant to this ARTICLE VIII
(disregarding, for this purpose, all exceptions in those representations and
warranties relating to materiality and Purchaser Material Adverse Effect) shall
be true and correct on and as of the date of this Agreement and as of the
Closing Date as though made on and as of such date (unless any such
representation or warranty is made only as of a specific date, in which event
such representation and warranty shall be true and correct as of such specified
date), except where the failure of any such representations and warranties to be
so true and correct, individually or in the aggregate, has not had and would not
be reasonably likely to have a Purchaser Material Adverse Effect.
(b) Purchaser shall have performed in all material respects and
complied with in all material respects the obligations, agreements and
covenants, required to be performed by or complied with by it under this
Agreement at or prior to the Closing Date.
(c) Seller shall have received a certificate of an executive officer
of Purchaser certifying that the conditions set forth in SECTION 8.3(A) and
SECTION 8.3(B) have been satisfied.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall expire on the
twelve (12) month anniversary of the date of this Agreement; provided, however,
that the representations and warranties contained (i) in the first sentence of
SECTION 3.1 (Organization) and in SECTION 3.2 (Authority; Enforceability),
SECTION 3.5 (Capitalization of the Company), and SECTION 3.22 (Brokers) and (ii)
in the first sentence of SECTION 4.1 (Organization) and in SECTION 4.2
(Authority; Enforceability) and SECTION 4.8 (Brokers) (each, an "EXCEPTED
REPRESENTATION") shall survive until the expiration of the applicable statute of
limitations for such representation and warranty. If written notice of a claim
has been given in accordance with SECTION 9.2(C) prior to the expiration of the
applicable representation and warranty, then the relevant representation and
warranty shall survive as to such claim until such claim has been finally
resolved.
SECTION 9.2 Indemnification.
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(a) From and after the Closing, Purchaser and its Affiliates,
officers, directors, employees, agents, successors and permitted assigns shall
be indemnified and held harmless by Seller from and against all Liabilities,
losses, damages, claims, costs and expenses (including reasonable attorneys'
fees and expenses), interest, awards, judgments and penalties actually suffered
or incurred by them (hereinafter a "LOSS") arising out of or resulting from:
(i) the breach of any representation or warranty made by Seller
in this Agreement or in any certificate delivered pursuant to ARTICLE VIII;
provided, however, that for purposes of determining the amount of any Loss
incurred or sustained as a result of any breach or inaccuracy of any
representation or warranty of the Company or Seller (but not for purposes
of determining whether any such breach has occurred), all exceptions in
such representation or warranty relating to materiality and Company
Material Adverse Effect shall be disregarded other than such exceptions
contained in SECTION 3.10(K);
(ii) the breach of any covenant or agreement by Seller contained
in this Agreement;
(iii) the Wildseed Agreement or the business of Wildseed; or
(iv) any Expenses incurred by the Company prior to the Closing
and not paid by Seller.
The foregoing provisions of this SECTION 9.2(A) shall not apply with respect to
any Losses arising out of (and no indemnification hereunder shall be available
with respect to) any breach of any representation or warranty of Seller that has
expired as provided in SECTION 9.1.
(b) From and after the Closing, Seller and its Affiliates, officers,
directors, employees, agents, successors and permitted assigns shall be
indemnified and held harmless by Purchaser for any and all Losses arising out of
or resulting from:
(i) the breach of any representation or warranty made by
Purchaser in this Agreement or in any certificate delivered pursuant to
ARTICLE VIII;
(ii) the breach of any covenant or agreement by Purchaser
contained in this Agreement; or
(iii) any Liabilities of the Company after the Closing other than
as specifically contemplated by this Agreement to be the responsibility of
Seller or which otherwise constitutes a Loss for which Purchaser is
entitled to indemnification hereunder.
The foregoing provisions of this SECTION 9.2(B) shall not apply with respect to
any Losses arising out of (and no indemnification hereunder shall be available
with respect to) any breach of any representation or warranty of Purchaser that
has expired as provided in SECTION 9.1.
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(c) Any party seeking indemnification under SECTION 9.2(A) or SECTION
9.2(B) (an "INDEMNIFIED PARTY") (except with respect to Tax Claims, which shall
be governed exclusively by ARTICLE VII) shall promptly give the party from whom
indemnification is being sought (an "INDEMNIFYING PARTY") notice (a "CLAIM
NOTICE") of any matter which such Indemnified Party has determined has given or
could give rise to a right of indemnification under this Agreement within sixty
(60) days of such determination, stating in reasonable detail, the nature of the
claim, a good-faith reasonable estimate of the Loss and method of computation
thereof and a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises. If the Indemnifying Party
has disputed a claim for indemnification (including any Third-Party Claim), the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution to such dispute. If the Indemnifying Party and the
Indemnified Party cannot resolve such dispute in thirty (30) days after the
commencement of such negotiations, such dispute shall be resolved by litigation
in an appropriate court of law.
(d) Except with respect to Tax Claims (which shall be governed
exclusively by ARTICLE VII), the obligations and Liabilities of an Indemnifying
Party under SECTION 9.2 with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in SECTION 9.2 (a
"THIRD PARTY CLAIM") shall be governed by and contingent upon the following
additional terms and conditions:
(i) If an Indemnified Party shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice
of such Third Party Claim within thirty (30) days of the receipt by the
Indemnified Party of such notice and a copy of the papers served with
respect to such claim (if any); provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from any of
its obligations under SECTION 9.2, except to the extent the Indemnifying
Party is materially prejudiced by such failure. At its election, the
Indemnifying Party shall be entitled to jointly participate in the defense
of such Third Party Claim with the Indemnified Party if the Indemnifying
Party gives notice to the Indemnified Party of its intention to join in the
participation of the defense of such Third Party Claim within the earlier
of (i) ninety (90) calendar days of delivery of the Claim Notice and (ii)
ten (10) Business Days following delivery of written notice from the
Indemnified Party to the Indemnifying Party that the Indemnified Party has
reasonably and in good faith, based on the advice of outside counsel,
determined that the Indemnified Party's ability to successfully prosecute
such litigation would be materially prejudiced by the failure to make such
election to join prior to expiration of the ninety (90) day period referred
to in the immediately preceding clause (i); provided that the Indemnified
Party shall grant the Indemnifying Party reasonable access to all relevant
witnesses, records, materials and information in order to determine whether
to exercise such right. In the event the Indemnifying Party exercises the
right to join with the Indemnified Party in any such defense against any
such Third Party Claim as provided above, the Indemnified Party and the
Indemnifying Party shall (i) consult and cooperate with each other in such
defense and in all strategic, tactical and other significant actions and
decisions relating thereto (and shall not take any material actions
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or decisions without the consent of the other party), (ii) both be
considered to be engaged in a client relationship with the counsel acting
in the defense of such Third Party Claim and (iii) shall make available to
each other all witnesses, records, materials and information in such
party's possession or under such party's control relating thereto as is
reasonably required to conduct the defense of such Third Party Claim.
Counsel for such defense shall be selected by the mutual agreement of the
Indemnified Party and the Indemnifying Party and both the Indemnifying
Party and the Indemnified Party shall share an attorney-client relationship
with such counsel.
(ii) In the event the Indemnifying Party does not elect to join
in the defense of any Third Party Claim pursuant to the terms hereof, the
Indemnified Party shall have the right, in its sole discretion, to assume
and control the defense of such Third Party Claim without relieving the
Indemnifying Party of any of its obligations to indemnify the Indemnified
Party pursuant and subject to this ARTICLE IX for Losses incurred in
connection with such Third Party Claim (including the cost of the defense
thereof).
(iii) In the event the Indemnifying Party elects to join in the
defense of any Third Party Claim pursuant to the terms hereof:
(A) The Indemnified Party shall have the right, in its sole
discretion at any time and without the consent of the Indemnifying
Party, to settle or compromise any such Third Party Claim or consent
to the entry of any judgment in respect of such Third Party Claim if:
(I) after giving effect to the limitations set forth in this ARTICLE
IX based on the indemnified Losses to date, the amount of such
settlement, judgment or compromise (including the cost of defending
against such Third Party Claim) would be borne more by the Indemnified
Party than the Indemnifying Party; (II) such settlement, compromise or
judgment includes as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnifying Party of a written release
from all liability in respect of such Third Party Claim; (III) in the
case of a settlement, such settlement does not contain any admission
of fault by or on behalf of the Indemnifying Party; and (IV) such
settlement, compromise or judgment does not contain any non-monetary
relief imposed upon the Indemnifying Party.
(B) The Indemnifying Party shall have the right, in its sole
discretion at any time and without the consent of the Indemnified
Party, to cause the Indemnified Party to settle or compromise such
Third Party Claim or consent to the entry of any judgment in respect
of such Third Party Claim if: (I) after giving effect to the
limitations set forth in this ARTICLE IX based on the indemnified
Losses to date, (x) the amount of such settlement, judgment or
compromise (including the cost of defending against such Third Party
Claim) would be borne more by the Indemnifying Party than the
Indemnified Party, (y) such amount does not exceed the Cap and (z) the
amount payable by the Indemnified Party does not
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exceed the then-remaining portion of the Basket; (II) such settlement,
compromise or judgment includes as an unconditional term thereof the
delivery by the claimant or plaintiff to the Indemnified Party of a
written release from all liability in respect of such Third Party
Claim; (III) in the case of a settlement, such settlement does not
contain any admission of fault by or on behalf of the Indemnified
Party; and (IV) such settlement, compromise or judgment does not
contain any non-monetary relief imposed upon the Indemnified Party.
(C) In all cases not described in the foregoing clauses (A) and
(B), any settlement or compromise of, or consent to judgment in, any
such Third Party Claim shall require the mutual consent of the
Indemnified Party and the Indemnifying Party.
SECTION 9.3 Limits on Indemnification.
(a) Basket.
(i) No amount shall be payable by Seller pursuant to SECTION
9.2(A)(I) or SECTION 9.2(A)(II) unless the aggregate amount of Losses
indemnifiable under SECTION 9.2(A)(I) or SECTION 9.2(A)(II) exceeds
$5,000,000 (the "BASKET") (and only to the extent of such excess); and
(ii) No amount shall be payable by Purchaser pursuant to SECTION
9.2(B)(I) or SECTION 9.2(B)(II) unless the aggregate amount of Losses
indemnifiable under SECTION 9.2(B)(I) or SECTION 9.2(B)(II) exceeds the
Basket (and only to the extent of such excess);
provided, however, that the limitations set forth in this SECTION 9.3(A) shall
not apply to (A) Losses arising out of breaches of the representations and
warranties contained in SECTION 3.20 (Taxes) or the Excepted Representations or
(B) breaches of covenants or agreements that are willful or intentional.
(b) Cap. Notwithstanding anything to the contrary contained in this
Agreement, the maximum amount of aggregate indemnifiable Losses which may be
recovered from Seller, on the one hand, or Purchaser, on the other hand, arising
out of or resulting from the causes enumerated in SECTION 9.2 shall be an amount
equal to $25,000,000 (the "MAXIMUM AMOUNT"); provided that no such limitation
shall apply in respect of Losses arising out of (i) breaches of the Excepted
Representations (provided, however, that Losses arising out of the Excepted
Representations shall not be indemnified in an amount, when taken together with
all other indemnifiable Losses, in excess of the Purchase Price) or (ii) SECTION
9.2(A)(III), SECTION 9.2(A)(IV) or SECTION 9.2(B)(III), for which no such
maximum limitations shall apply.
(c) De Minimis Threshold. No amount shall be payable by an
Indemnifying Party pursuant to SECTION 9.2(A)(I), SECTION 9.2(A)(II), SECTION
9.2(B)(I) or SECTION 9.2(B)(II) unless the amount of Losses with respect to any
single matter or series of related matters exceeds
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$50,000, and any such Losses that are in an amount of $50,000 or less shall not
be included in calculating the deductibles established in SECTION 9.3(A);
provided, however, that no such limitation shall apply in respect of Losses
arising out of SECTION 9.2(A)(III), SECTION 9.2(A)(IV) or SECTION 9.2(B)(III).
(d) No Incidental Damages, Etc. Other than in connection with Third
Party Claims which are resolved in a manner that requires the payment of such
damages to a third party, no Indemnifying Party shall be liable for any punitive
or special damages or any damages caused by or consisting of business
interruption or loss of future revenue, cash flows or profits or loss of
business reputation or opportunity or any damages measure determined by
diminution in value or the application of a multiple to any financial or other
dollar measure.
SECTION 9.4 Computation of Indemnifiable Losses. Any amount payable
pursuant to this ARTICLE IX shall be decreased to the extent of any amounts
actually recovered by the Indemnified Party from any third party (including
insurance proceeds) in respect of an indemnifiable Loss; provided, however, the
Indemnified Parties shall be under no obligation to pursue payment under or from
any insurer or third party in respect of such Losses prior to pursuing payment
from any Indemnifying Party.
SECTION 9.5 Access. From and after the delivery of a Claim Notice by
any Indemnified Party, each Indemnified Party shall grant the Indemnifying Party
and its representatives all reasonable access to the books, records, employees
and properties of such Indemnified Party (including, without limitation, the
Company) related to the matters to which the claim relates (provided that, as
necessary to protect any attorney-client privilege, the parties shall execute a
joint defense agreement containing customary terms). All such access shall be
granted during normal business hours.
SECTION 9.6 Mitigation of Damages. The parties hereto shall cooperate
with each other and use commercially reasonable efforts to mitigate any Losses.
SECTION 9.7 Indemnification as Exclusive Remedy. Subject to SECTION
11.8 and ARTICLE VII, the indemnification provided in this ARTICLE IX (but
subject to the limitations set forth herein) shall be the exclusive post-Closing
remedy available to any party for any Loss suffered in connection with or
arising from the transactions contemplated hereby, including any breach of any
representation, warranty, covenant or agreement by the other party contained
herein, and no party shall pursue or seek to pursue any other remedy. Except as
specifically set forth in or arising under this Agreement, from and after the
Closing, the parties hereto waive any rights and claims that a party may have
against any other party, whether in law or in equity, relating to the
transactions contemplated hereby or thereby, including claims for contribution
or other rights of recovery arising out of or relating to any Environmental
Laws, claims for breach of contract, breach of representation or warranty,
negligent misrepresentation and all claims for breach of duty; provided,
however, that nothing set forth in this Agreement shall limit the rights,
remedies and claims of any party hereto with respect to any actual fraud.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) by mutual written consent of each party hereto;
(b) by any party hereto if any court of competent jurisdiction or
other Governmental Authority shall have issued a final order, decree or ruling
or taken any other final action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action is or shall have become final and nonappealable;
(c) by any party hereto if the Closing Date shall not have occurred on
or before November 20, 2007 (the "TERMINATION DATE"); provided that the right to
terminate this Agreement pursuant to this SECTION 10.1(C) shall not be available
to the party seeking to terminate if any action of such party or the failure of
such party to perform any of its obligations under this Agreement required to be
performed at or prior to the Closing Date has been the primary cause of, or
resulted in, the failure of the Closing Date to occur on or before the
Termination Date and such action or failure to perform constitutes a breach of
this Agreement;
(d) by Purchaser, if Purchaser is not in material breach of its
representations, covenants or agreements such that a failure of a condition to
Closing contained in this Agreement would be triggered under this Agreement and
there has been a breach of any representation, warranty, covenant or agreement
of the Company or Seller contained in this Agreement such that the conditions
set forth in SECTION 8.2(A) or SECTION 8.2(B) hereof would not be satisfied and
such breach has not been cured within twenty (20) calendar days after written
notice thereof to the Company and Seller; provided, however, that no cure period
shall be required for a breach which by its nature cannot be cured; or
(e) by the Company and Seller if neither the Company nor Seller is in
material breach of its representations, covenants or agreements such that a
failure of a condition to Closing contained in this Agreement would be triggered
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement of Purchaser contained in this Agreement such
that the conditions set forth in SECTION 8.3(A) or SECTION 8.3(B) hereof would
not be satisfied and such breach has not been cured within twenty (20) calendar
days after written notice thereof to Purchaser; provided, however, that no cure
period shall be required for a breach which by its nature cannot be cured.
The party desiring to terminate this Agreement pursuant to this SECTION 10.1
(other than pursuant to SECTION 10.1(A)) shall give notice of such termination
to the other party.
SECTION 10.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to SECTION 10.1, this Agreement shall forthwith become
void and there shall
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be no further liability or obligation on the part of any party hereto, except
with respect to SECTION 5.3(B) (Access to Information), SECTION 5.11 (Public
Announcements), this SECTION 10.2 (Effect of Termination), SECTION 10.3
(Expenses) and ARTICLE XI (General Provisions), which shall survive such
termination in accordance with their terms; provided, however, that in the event
that the Closing does not occur, then (i) nothing herein shall limit the
liability of either party for any willful breach of this Agreement, (ii) the
provisions of Article IX shall not apply and shall be of no force or effect and
(iii) the parties hereto shall be entitled to seek any remedy available to such
party in law or at equity for any such breach.
SECTION 10.3 Expenses. All fees and expenses incurred in connection
with the transactions contemplated by this Agreement, including, without
limitation, all legal, accounting, financial advisory, consulting, and all other
fees and expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and
the transactions contemplated hereby ("EXPENSES"), shall be the obligation of
the respective party incurring such fees and expenses. Seller shall be
responsible for and shall timely pay the Company's Expenses that are incurred
prior to the Closing. Any Expenses incurred by the Company and not paid by
Seller shall constitute an indemnifiable Loss under ARTICLE IX.
SECTION 10.4 Amendment. Subject to applicable Law, this Agreement may
be amended by the parties hereto at any time prior to the Closing Date. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 10.5 Waiver. At any time prior to the Closing Date, any party
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) subject to the requirements of applicable Law, waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 Materiality; Disclosure Letter. As used in this
Agreement, unless the context would require otherwise, the terms "material" or
"material to the Company" and the concept of the "material" nature of an effect
upon the Company shall be measured relative to the entire business of the
Company taken as a whole. There have been, however, included in the Disclosure
Letter (and may be included elsewhere in this Agreement) items which are not
"material" within the meaning of the immediately preceding sentence in order to
avoid any misunderstanding, and such inclusion shall not be deemed to be an
acknowledgement by Seller that such items are "material" and shall not be used
to define the meaning of such term for purposes of this Agreement. Disclosures
included in any Section of the Disclosure Letter shall be considered to be made
for purposes of all other Sections of the Disclosure Letter to the
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extent that the relevance of any such disclosure to any other Section of the
Disclosure Letter is reasonably apparent from the text of such disclosure.
SECTION 11.2 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this SECTION 11.2 prior to 5:00 p.m.
(New York time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 5:00 p.m. (New
York time) on any date and earlier than 11:59 p.m. (New York time) on such date,
(iii) the Business Day following the date of dispatch, if sent by nationally
recognized overnight courier service or (iv) the tenth (10th) Business Day
following the date of mailing, if sent by registered or certified mail, return
receipt requested, postage prepaid. The address for such notices and
communications shall be as follows:
(a) if to Seller:
AOL LLC
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
AOL LLC
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Deputy General Counsel
and to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to Purchaser:
Nuance Communications, Inc.
0 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
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Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
0000 X Xxxxxx, XX
Xxxxx Xxxxx
Xxxxxxxxxx, XX 2006
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
SECTION 11.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 11.4 Entire Agreement, Parties. This Agreement (including the
Disclosure Letter and any Exhibits) and the Confidentiality Agreement constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and undertakings, both written and
oral, between the parties hereto with respect to the subject matter hereof. The
Company is a party hereto for the limited purposes set forth in the heading of
this Agreement. If the Closing occurs, from and after the Closing, the Company
shall not be deemed a party hereunder and shall not be entitled to enforce,
waive, amend, modify or otherwise compromise any provision of this Agreement or
any right or obligation of Seller hereunder.
SECTION 11.5 Assignment. This Agreement may not be assigned by any
party without the prior written consent of each of the other parties (which
consent may be granted or withheld in the sole discretion of such other party).
Any attempted assignment in violation of this SECTION 11.5 shall be void.
SECTION 11.6 No Third Party Beneficiaries. Except as set forth in
SECTION 5.6, this Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their successors and permitted assigns, and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
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SECTION 11.7 Governing Law. This Agreement and the rights and duties
of the parties hereunder shall be governed by, and construed in accordance with,
the law of the State of New York.
SECTION 11.8 Specific Performance; Jurisdiction. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States of America located in the State of New York, this
being in addition to any other remedy to which such party is entitled at law or
in equity. In addition, each of the parties hereto agrees that any Action with
respect to this Agreement or the transactions contemplated hereby may be brought
only in the courts of the State of New York or the federal courts of the United
States of America located in the State of New York, in each case located in the
Borough of Manhattan, City of New York, State of New York. Each of the parties
hereto submits to the exclusive jurisdiction of the courts of the State of New
York and the federal courts of the United States of America located in the State
of New York over any Action with respect to this Agreement or the transactions
contemplated hereby. Each of the parties hereto waives any objection that it may
have to the venue of such Action in any such court or that such Action in such
court was brought in an inconvenient court and agrees not to plead or claim the
same. Each party hereto hereby agrees that, to the fullest extent permitted by
Law, service of any process, summons, notice or document by U.S. registered mail
to the respective addresses set forth in SECTION 11.2 shall be effective service
of process for any Action in connection with this Agreement or the transactions
contemplated hereby.
SECTION 11.9 WAIVER OF JURY TRIAL. EACH OF SELLER AND PURCHASER HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF SELLER OR PURCHASER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
AND ENFORCEMENT OF THIS AGREEMENT.
SECTION 11.10 Interpretation. When reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted. The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
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SECTION 11.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
(Remainder of Page Intentionally Left Blank.)
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IN WITNESS WHEREOF, Seller, Purchaser and the Company have caused this
Stock Purchase Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
AOL LLC
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
---------------------------------------
Title: Executive V.P. & G.M. for AOL Wireless
--------------------------------------
TEGIC COMMUNICATIONS, INC.
(solely with respect to ARTICLE V (with
respect to obligations to be performed
by it prior to the Closing) and ARTICLE
XI)
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Name: Xxxxx Xxxxx
---------------------------------------
Title: Executive V.P. & CFO
---------------------------------------
NUANCE COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
Title: CEO
