Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
May 26, 1999,
among
MARC Analysis Research Corporation,
The Significant Shareholders,
The XxxXxxx-Xxxxxxxxxx Corporation
and
Msc Holdings Co. II
ARTICLE I - THE MERGER
1.1 The Merger 1
1.2 Closing 2
1.3 Effective Time 2
1.4 Conversion of Shares 2
1.5 Delivery of Merger Consideration 3
1.6 Dissenting Shares 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE
SIGNIFICANT SHAREHOLDERS
2.1 Subsidiaries; Organization and Related
Matters 4
2.2 Capitalization 5
2.3 Financial Statements; Contingencies 5
2.4 No Material Adverse Changes 6
2.5 Tax and Other Returns and Reports 6
2.6 Material Contracts 8
2.7 Property 9
2.8 Authorization; No Conflicts 9
2.9 Actions and Orders 11
2.10 Dividends and Other Distributions 11
2.11 Insurance 11
2.12 Compliance with Law 12
2.13 Employee Benefits 13
2.14 Certain Interests 15
2.15 Bank Accounts, Powers, etc. 15
2.16 No Brokers or Finders 15
2.17 Intangible Property 16
2.18 Receivables 17
2.19 Customers and Suppliers 17
2.20 Certain Payments 17
2.21 Employees 18
2.22 Disclosure 18
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization and Related Matters 19
3.2 Authorization 19
3.3 Approvals 19
3.4 No Conflicts 19
3.5 No Brokers or Finders 19
3.6 Legal Proceedings 19
3.7 Merger Sub 20
3.8 Available Funds 20
3.9 SEC Reports 20
ARTICLE IV - COVENANTS RELATING TO THE PERIOD ENDING
WITH THE CLOSING
4.1 Access 20
4.2 Changes; Reports 21
4.3 Conduct of Business 21
4.4 Permits and Approvals 22
4.5 Preservation of Business Before Closing Date 23
4.6 Confidentiality 23
4.7 Negotiations 23
4.8 Shareholders' Meeting 23
4.9 Tax Returns 24
ARTICLE V - ADDITIONAL CONTINUING COVENANTS
5.1 Nondisclosure of Proprietary Data 24
5.2 Tax Cooperation 24
ARTICLE VI - CONDITIONS
6.1 Conditions to Obligations of All Parties 25
6.2 Conditions to Buyer's Obligations 25
6.3 Conditions to Obligations of Company and the
Significant Shareholders. 26
ARTICLE VII - TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement 27
7.2 Effect of Termination 28
ARTICLE VIII - INDEMNIFICATION
8.1 Effect of Knowledge; Waiver 29
8.2 Losses 29
8.3 Indemnification of Buyer 29
8.4 Indemnification by Buyer 30
8.5 Survival. 30
8.6 Limitation on Indemnification; Escrow 30
8.7 Procedure 31
ARTICLE IX - GENERAL
9.1 Amendments; Waivers 32
9.2 Schedules; Exhibits; Integration 33
9.3 Best Efforts; Further Assurances 33
9.4 Governing Law 33
9.5 No Assignment 34
9.6 Headings 34
9.7 Counterparts 34
9.8 Publicity and Reports 34
9.9 Notices 34
9.10 Expenses and Attorneys Fees 36
9.11 Shareholder Representative 36
9.12 Specific Performance 37
9.13 Agreement to Arbitrate 37
ARTICLE X - DEFINITIONS
10.1 Definitions 38
Exhibits
Exhibit A Form of Letter of Transmittal
Exhibit B Forms of Software Licensing Agreements
Exhibit C Forms of Confidentiality and Inventions Agreements
Exhibit D Form of Opinion of Counsel to Company
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Terms of Stay Bonus Letter
Exhibit G Form of Agreement of Merger
Exhibit H Form of Consulting Agreement
Exhibit I Form of Escrow Agreement
Exhibit J Form of Non-Competition Agreement
Schedules
Schedule 1.1 Surviving Corporation Officers and Directors
Schedule 2.1 Subsidiaries; Acquired Company Officers and
Directors
Schedule 2.2 Capitalization; Options; Share Ownership
Schedule 2.3 Liabilities: Auditor's Exceptions
Schedule 2.5 Taxes; Audits; Credits
Schedule 2.6 Material Contracts
Schedule 2.7 Property
Schedule 2.8 Authorizations
Schedule 2.9 Actions; Orders
Schedule 2.11 Insurance
Schedule 2.12 Compliance; Permits
Schedule 2.13 Employee Benefits
Schedule 2.14 Certain Interests
Schedule 2.15 Bank Accounts, Powers, etc.
Schedule 2.17 Intangible Property
Schedule 2.19 Customers and Suppliers
Schedule 2.21 Employees
Schedule 3.3 Buyer Approvals
Schedule 4.3(q) Capital Expenditures
AGREEMENT AND PLAN OF MERGER
This Agreement ("Agreement") is entered into as of
May 26, 1999, by and among The XxxXxxx-Xxxxxxxxxx
Corporation, a Delaware corporation ("Buyer"), MSC Holdings
Co. II, a California corporation ("Merger Sub"), MARC
Analysis Research Corporation, a California corporation
("Company"), and the following "Significant Shareholders" of
Company: Dendron Technology B.V., a Dutch corporation
("Dendron"), Fronos Technology B.V., a Dutch corporation
("Fronos") and Nearchos Irinarchos, a resident of Sweden.
R E C I T A L S
WHEREAS, the Persons listed on Schedule 2.2 own
all issued and outstanding shares of Company Common Stock,
1/00 xxxx par value (the "Shares");
WHEREAS, the Boards of Directors of Buyer and
Company have each determined that it is in the respective
best interests of Buyer and Company for Buyer to acquire
Company through the merger of Merger Sub with and into
Company (the "Merger") upon the terms and subject to the
conditions of this Agreement;
WHEREAS, in connection with the Merger, Dendron,
Fronos and Buyer are entering into a Stock Purchase
Agreement dated the date of this Agreement (the "Stock
Purchase Agreement") providing for Buyer's acquisition,
immediately before the Merger, of 10,325,688 Shares owned by
Dendron and Fronos (the "Stock Purchase");
WHEREAS, Company and its Subsidiaries are
collectively referred to as the "Acquired Companies;" and
WHEREAS, other capitalized terms used in this
Agreement have the meanings given in Article X.
A G R E E M E N T
In consideration of the mutual promises contained
in this Agreement and intending to be legally bound, the
Parties agree as follows:
ARTICLE I - THE MERGER
1.1 The Merger.
At the Effective Time, Merger Sub will merge with
and into Company, the separate corporate existence of Merger
Sub will then cease, and Company will be the surviving
corporation (the "Surviving Corporation") and a wholly-owned
subsidiary of Buyer. The separate corporate existence of
Company with all its rights, privileges, immunities, powers
and franchises will continue unaffected by the Merger, and
Company will succeed, without other transfer, to all of
Merger Sub's rights and properties and will be subject to
all of Merger Sub's debts and liabilities. Merger Sub's
Articles of Incorporation and Bylaws in effect immediately
before the Effective Time will be the Surviving
Corporation's Articles of Incorporation and Bylaws, except
that, at the Effective Time, Article I of the Surviving
Corporation's Articles of Incorporation will be amended to
provide that the Surviving Corporation's name is "MARC
Analysis Research Corporation." The Surviving Corporation's
directors and officers will be as stated on Schedule 1.1.
Those directors will hold office until their successors have
been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and
Bylaws.
1.2 Closing.
The closing of the Merger (the "Closing") will
take place (a) at the offices of O'Melveny & Xxxxx LLP, 000
Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, beginning at
10:00 A.M., Los Angeles time on the second business day
after the last of the conditions in Article VI is fulfilled
or waived in accordance with this Agreement, or (b) as
otherwise agreed to by the Parties. The Stock Purchase
Closing will take place immediately before the Closing.
1.3 Effective Time.
As soon as practicable after the Closing, and
provided that this Agreement has not been terminated or
abandoned pursuant to Article VII, the Surviving Corporation
will file an Agreement of Merger and appropriate
certificates of approval with the Office of the Secretary of
State of the State of California. The Merger will then
become effective in accordance with the CGCL; the time of
such effectiveness is referred to in this Agreement as the
"Effective Time;" and the date of such effectiveness is
referred to as the "Effective Date."
1.4 Conversion of Shares.
(a) Company Stock. On the Effective Date, each
outstanding Share will be cancelled and extinguished, and will
be automatically converted into the right to receive the
Exchange Amount upon surrender of the Certificate
representing that Share in accordance with Section 1.5, upon
the terms and subject to the conditions in this Agreement,
including the escrow provisions of Section 8.6(b); except
that any Shares held by Buyer, any of its subsidiaries or
any Acquired Company will be cancelled (the "Cancelled
Shares"). After the Effective Time and until surrendered
for payment, each Certificate will represent only the right
to receive an amount equal to the Exchange Amount multiplied
by the number of Shares represented by that certificate (the
"Merger Consideration") (without interest). Buyer and
Surviving Corporation will be entitled to rely on Company's
stock records at the Effective Time.
(b) Company Options. At the Effective Time, by virtue
of the Merger and without any action by any Person, each then
outstanding Company Option will be cancelled and
extinguished, and will be automatically converted into the
right to receive an amount in cash (without interest) equal
to (i) the product of (x) the number of Shares issuable upon
the exercise in full of the Company Option, multiplied by
(y) the Exchange Amount less (ii) the Aggregate Exercise
Price of the Company Option (net of any required Tax
withholdings), all upon the terms and subject to the
conditions in this Agreement, including Section 8.6(b).
(c) Capital Stock of Merger Sub. At the Effective
Time, by virtue of the Merger and without any action by any
Person, each share of common stock of Merger Sub issued and
outstanding immediately before the Effective Time will be
cancelled and extinguished, and will be automatically
converted into and exchanged for one validly issued, fully
paid and nonassessable share of common stock of the
Surviving Corporation. Each stock certificate evidencing
ownership of any such shares of common stock of Merger Sub
will from then on evidence ownership of an equivalent number
of shares of common stock of the Surviving Corporation.
(d) No Further Ownership Rights in Common Stock. All
cash paid in respect of the surrender for exchange of Shares in
accordance with this Agreement will be deemed to be full
satisfaction of all rights pertaining to those Shares, and
there will be no further registration of transfers on the
records of the Surviving Corporation of Shares outstanding
immediately before the Effective Time. If, after the
Effective Time, certificates representing Shares are
presented to the Surviving Corporation for any reason, they
will be cancelled and exchanged on the terms and subject to
the conditions in this Section 1.4.
1.5 Delivery of Merger Consideration.
(a) Surrender of Certificates. Subject to Sections
1.6 and 8.6(b), each holder of one or more Certificates
representing Shares (other than Cancelled Shares) at the
Effective Time will be entitled to receive in exchange for
delivery of those Certificates and a signed Letter of
Transmittal in the form of Exhibit A (the "Letter of
Transmittal") to Buyer, cash in an amount equal to the Merger
Consideration, less any applicable withholding Taxes. No
interest will accrue or be paid on any Merger Consideration.
In the event of a Share transfer not registered in Company's
transfer records, the transferee will be entitled to receive
Merger Consideration only if (i) the Certificate representing
the transferred Shares surrendered in accordance with this
Section 1.5 is properly endorsed for transfer or is
accompanied by appropriate and properly endorsed stock
powers and is otherwise in proper form to effect the
transfer, (ii) the Person requesting the transfer pays any
transfer or other Taxes payable by reason of the transfer or
establishes to Buyer's satisfaction that those Taxes have
been paid or are not required to be paid, and (iii) the
Person establishes to Buyer's satisfaction that the transfer
would not violate any applicable federal or state securities
Laws. At and after the Effective Time, each holder of a
Certificate will cease to have any rights as a Company
shareholder, except for the right to surrender the holder's
Certificate in exchange for the Merger Consideration and
except as otherwise provided by applicable Law, and no
transfer of Shares will be made on the Surviving
Corporation's stock transfer books.
(b) Company Options. Subject to Sections 1.6 and
8.6(b), at the Effective Time, each Option Holder will be
entitled to receive in exchange for it, cash in an amount equal
to the amount payable in respect of the Company Option pursuant
to Section 1.4(b). No interest will accrue or be paid on
any Merger Consideration paid to Option Holders. Merger
Consideration due Option Holders will be deposited by Buyer
in an account designated in writing by the Surviving
Corporation and will be distributed (net of appropriate Tax
and other withholdings) to Option Holders as soon as
practicable after the Effective Time.
(c) Lost Certificates. If any Certificate is lost,
stolen or destroyed before its surrender to the Buyer in
accordance with this Section 1.5, the holder of the Shares
represented by that Certificate will be entitled to receive,
and the Buyer will deliver, or cause to be delivered, the Merger
Consideration payable in respect of those Shares pursuant to
Section 1.4 upon the execution and delivery by the holder to
the Buyer of an Affidavit of Lost Certificate (which will
include an appropriate indemnity) in the form attached to
the Letter of Transmittal.
(d) Unclaimed Merger Consideration. Neither Buyer
nor the Surviving Corporation will be liable to a holder of a
Certificate or an Option Holder for the Merger Consideration
payable in respect of the Shares represented by that
Certificate, or due such Option Holder, properly delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
1.6 Dissenting Shares.
(a) Conversion. Notwithstanding any provision of this
Agreement to the contrary, any Shares held by a holder who
has, subject to paragraph (b) below, exercised and perfected
dissenter's rights for those Shares in accordance with
Chapter 13 of the CGCL and who, as of the Effective Date,
has not effectively withdrawn, waived, surrendered or lost
those dissenter's rights ("Dissenting Shares"), will not be
converted into or represent a right to receive the Merger
Consideration pursuant to Section 1.4, and the holder will
only be entitled to the rights granted by Chapter 13 of the
CGCL.
(b) Loss of Rights. Notwithstanding paragraph
(a) above, if any holder of Dissenting Shares effectively
withdraws, waives, surrenders or loses (through failure to
perfect or otherwise) the holder's dissenter's rights, then,
as of the later of the Effective Date and the occurrence of that
event, the Shares previously constituting Dissenting Shares
will automatically be converted into and represent only the
right to receive the Merger Consideration as provided in
Section 1.4, without interest, upon surrender of the
Certificate representing the Common Stock and delivery of a
signed Letter of Transmittal to Buyer.
(c) Notice. As soon as practicable before the
Effective Date, Company will give Buyer (i) prompt notice of any
written demand for the purchase by the Company of any Shares
received by Company pursuant to the applicable provisions of
Section 1301 of the CGCL regarding dissenter's rights, and
(ii) the opportunity to participate in all negotiations and
proceedings with respect to those demands. Company will
not, except with Buyer's prior written consent, voluntarily
make any payment with respect to any such demands or offer
to settle or settle any such demands. After the Effective
Date, Buyer will solely control all negotiations and
proceedings related to those demands.
(d) Expenses. If Buyer and/or the Surviving
Corporation incur more than $5,000 of reasonable administrative,
legal and other related expenses in handling Dissenting Shares,
the excess will be deemed an indemnifiable Loss covered by
Section 8.3.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY
AND THE SIGNIFICANT SHAREHOLDERS
Company and the Significant Shareholders, jointly
and severally, represent, warrant and agree as follows:
2.1 Subsidiaries; Organization and Related Matters.
Schedule 2.1 lists all Company Subsidiaries and
correctly states the name of each Subsidiary, Company's
ownership interest in that Subsidiary, any interest of any
other Person in that Subsidiary, the jurisdiction in which
each Acquired Company was organized and each jurisdiction in
which each Acquired Company is qualified or licensed to do
business as a foreign Person. Each Acquired Company is a
corporation duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation, with all necessary corporate power and
authority to own its properties and assets and to carry on
its business as now conducted. Schedule 2.1 correctly lists
the current directors and officers of each Acquired Company.
True, correct and complete copies of the respective charter
documents of each Acquired Company as in effect on the date
of this Agreement have been delivered to Buyer. Each
Acquired Company is qualified or licensed to do business as
a foreign Person in each jurisdiction where the failure to
be so qualified or licensed could have a material adverse
effect on that Acquired Company.
2.2 Capitalization.
(a) Equity Securities. Company's authorized capital
stock consists of 50,000,000 shares of Common Stock, 1/50> per
share par value, of which 20,913,921 Shares are issued and
outstanding on the date of this Agreement, and 5,000,000
shares of Preferred Stock, 1/50> per share par value, none
of which is outstanding. Schedule 2.2 lists all outstanding
options, warrants or other agreements for the issuance of
Equity Securities of any Acquired Company, indicating the
holder thereof and exercise price. Except as described on
Schedule 2.2, there are no outstanding Contracts or other
rights to subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to acquire, any
Equity Securities of any Acquired Company, or to restructure
or recapitalize any Acquired Company. There are no
outstanding Contracts of any Acquired Company to repurchase,
redeem or otherwise acquire any Equity Securities of any
other Acquired Company. All outstanding Equity Securities
of each Acquired Company are duly authorized, validly
issued, fully paid and nonassessable and were issued in
conformity with applicable Laws. There are no preemptive
rights in respect of any Equity Securities of any Acquired
Company. Any Equity Securities of any Acquired Company that
were issued and reacquired by any of these entities were so
reacquired (and, if reissued, so reissued) in compliance
with all applicable Laws, and no Acquired Company has any
outstanding obligation or liability with respect to them.
Except as stated on Schedule 2.2, Company owns no Equity
Securities of any Person except the Subsidiaries, and no
Subsidiary owns any Equity Securities of any Person.
(b) Ownership. Schedule 2.2 lists the name of each
Shareholder and the number of Shares owned of record by each
Shareholder.
2.3 Financial Statements; Contingencies.
(a) Audited Financial Statements. Company has
delivered to Buyer the audited consolidated balance sheets
for the Acquired Companies as of December 31, 1998, 1997 and
1996, and the related consolidated statements of income, changes
in shareholders' equity and cash flows for the periods then
ended, together with the related report of the Auditors.
Since December 31, 1998, there has been no change in any of
the significant accounting policies, practices or procedures
of any of the Acquired Companies. The audited consolidated
balance sheet as of December 31, 1998 is referred to in this
Agreement as the "Balance Sheet."
(b) Unaudited Interim Financial Statements. Company
has delivered to Buyer unaudited consolidated balance sheets for
the Acquired Companies at April 30, 1999 and 1998, and the
related statements of income changes in shareholders' equity
and cash flows for the periods then ended. The
consolidated balance sheet as of April 30, 1999 is referred
to in this Agreement as the "Interim Balance Sheet."
(c) Fair Presentation; GAAP. The financial
statements referred to in clauses (a) and (b) of this Section
2.3 (i) fairly present the financial condition and results of
operations, changes in shareholders' equity and cash flows
of the Acquired Companies as of the respective dates and for
the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of unaudited
financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or
in the aggregate, be materially adverse) and the absence of
notes, and (ii) reflect the consistent application of GAAP
throughout the periods involved, subject in each case to the
exceptions stated in the auditors' report included in
Schedule 2.3. No financial statements of any Person other
than the Acquired Companies are required by GAAP to be
included in Company's consolidated financial statements.
(d) No Other Liabilities. Except as stated on
Schedule 2.3, the Acquired Companies do not have any
liabilities of any nature, whether known or unknown, and
whether accrued, absolute, contingent or otherwise, and
whether due or to become due, except (i) liabilities that
are reflected or reserved against in the Interim Balance
Sheet or (ii) current liabilities incurred after the date of
the Interim Balance Sheet Date in the Ordinary Course and
that, in the aggregate, do not exceed $35,000.
2.4 No Material Adverse Changes.
Since the date of the Interim Balance Sheet Date,
whether or not in the Ordinary Course, there has not been,
occurred or arisen: (a) any change in or event affecting the
Acquired Companies that has had or could reasonably be
expected to have a material adverse effect on the Acquired
Companies or the Business, or (b) any agreement, condition,
action or omission that would be proscribed by (or require
consent under) Section 4.3 had it existed, occurred or
arisen after the date of this Agreement.
2.5 Tax and Other Returns and Reports.
(a) Filings and Payments. All Tax Returns required
to be filed by or with respect to each Acquired Company have
been timely filed, and all those Tax Returns are complete and
correct in all material respects. Each Acquired Company has
paid (or there has been paid on its behalf) all Taxes that
are due from or with respect to it for the periods covered
by the Tax Returns and has made all required estimated
payments of Tax sufficient to avoid any penalties for
underpayment. The accrual for current Taxes in the
financial statements referred to in Section 2.3 are adequate
to cover any and all Taxes (whether or not disputed and
whether or not due) of each Acquired Company with respect to
all taxable periods (or portions thereof) ending on or
before the date of the relevant financial statement. No
Acquired Company has incurred any liability for Taxes
subsequent to April 30, 1999, other than in the ordinary
course of the company's business. True and correct copies
of all income and franchise Tax Returns (or summaries in the
case of certain non-U.S. Tax Returns) filed by each Acquired
Company for the preceding seven taxable years and all
examination reports issued by any Governmental Entity with
respect to the Tax Returns have been delivered to Buyer. No
claim has ever been made by any Governmental Entity in any
jurisdiction where an Acquired Company does not file Tax
Returns that Acquired Company is or may be subject to
taxation by that jurisdiction.
(b) Consenting Corporation. No Acquired Company has
elected to be treated as a consenting corporation under
Section 341(f)(2) of the Code.
(c) Audits. Schedule 2.5 lists the date or dates
through which the IRS and any other Governmental Entity have
examined the United States federal income tax returns and
any other Tax Returns of the Acquired Companies. Except as
stated in Schedule 2.5, since December 31, 1996 no
Governmental Entity has examined or is in the process of
examining any Tax Returns of any Acquired Company. Except
as stated in Schedule 2.5, no Governmental Entity has
proposed or Threatened any deficiency, assessment or claim
for Taxes. Except as stated on Schedule 2.5, no waiver of
the statute of limitations with respect to Acquired Company
Tax Returns has been given by or requested from any Acquired
Company or any Group member.
(d) Losses, Etc. Schedule 2.5 also states (i) all
material consents or agreements for purpose of federal, foreign,
state or local Taxes, in each case, that reasonably could be
expected to affect or be binding upon any Acquired Company
or its assets or operations after the Closing, and (ii) all
adjustments at any time made, agreed to, requested or
required with respect to any Acquired Company pursuant to
Section 481(a) or 482 of the Code or similar provisions of
state or foreign law.
(e) Withholding. All Taxes that Company has been
required by Law to withhold or to collect for payment have been
duly withheld and collected, and have been paid or accrued,
reserved against and added on the Acquired Company's books.
The Acquired Companies have complied in all material
respects with all information reporting and backup
withholding requirements, including maintenance of required
records, in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or
other third party.
(f) Liabilities for Others. No Acquired Company is
liable for the Taxes of any Person, including as a transferee,
pursuant to Treasury Regulations Section 1.1502-6 or any
analogous provision of state, local or foreign law, or as a
result of any indemnity or other contractual arrangement
with any third party or any taxing authority.
(g) Parachute Payments. Except as specifically
stated on Schedule 2.5, there is no Contract or plan by or
with any Acquired Company covering any Person as to which
payment or vesting thereunder (including any payment or vesting
as a result of the Merger) could result in either a
nondeductible expense to the Acquired Company because of Section
280(G) of the Code or an excise tax to the recipient of the
payment under Section 4999 of the Code.
(h) Miscellaneous. No Acquired Company (i) is or has
ever been a partner in a partnership or an owner of an interest
in an entity treated as a partnership for federal income tax
purposes; or (ii) is a passive foreign investment company as
defined in Section 1296(a) of the Code.
(i) Straddle Periods. For purposes of this
Agreement, whenever it is necessary to determine the liability
for Taxes of any Acquired Company for a taxable period that
begins before and ends after the Closing Date (a "Straddle
Period"), the determination of the Taxes of the Acquired
Company for the portion of the Straddle Period ending on and
including, and the portion of the Straddle Period beginning
after, the Closing Date will be determined by assuming that
the Straddle Period consisted of two taxable years or
periods, one that ended at the close of the Closing Date and
the other that began at the beginning of the day following
the Closing Date, and items of income, gain, deduction, loss
or credit of the Acquired Company for the Straddle Period
will be allocated between the two taxable years or periods
on a "closing of the books basis" by assuming that the
Acquired Company's books were closed at the close of
business on the Closing Date, provided, however, that
exemptions, allowances or deductions that are calculated on
an annual basis, such as the deduction for depreciation,
will be apportioned between such two taxable years or
periods on a daily basis.
2.6 Material Contracts.
Schedule 2.6 lists each Contract to which any
Acquired Company is a party or to which any Acquired Company
or any of its properties is subject or by which any Acquired
Company or its assets is bound that is deemed a Material
Contract under this Agreement. The following Contracts will
be deemed to be Material Contracts: any Contract that
(a) obligates any Acquired Company to pay, or entitles any
Acquired Company to receive, after the date of the Interim
Balance Sheet, $35,000 or more, (b) has an unexpired term as
of the date of the Interim Balance Sheet in excess of one
year, (c) the Business is substantially dependent upon or
that is otherwise material to the Business, (d) provides for
an extension of credit to or by any Acquired Company,
(e) limits or restricts the ability of any Acquired Company
to compete or otherwise to conduct its business in any
manner or place, (f) provides for a guaranty or indemnity by
or in favor of any Acquired Company, (g) grants a power of
attorney, agency or similar authority to another Person,
(h) grants to a third party a right of first refusal,
(i) grants a right to, or creates an obligation of, any
Affiliate, officer or director or any Associate of any
Shareholder or Acquired Company, other than options granted
under Company's stock option plans, as described on Schedule
2.2, (j) requires any Acquired Company to buy or sell goods
or services with respect to which there will be material
losses (other than as provided for or otherwise reserved
against on the Interim Balance Sheet), (k) is between one or
more Shareholders or Option Holders or any Affiliate of any
Shareholder or any Option Holder and any Acquired Company,
other than options granted under Company's stock option
plans, as described on Schedule 2.2, (l) relates to the
licensing to or by any Acquired Company of Intellectual
Property Rights (other than Company's standard license
agreements substantially in the forms attached as Exhibit B
and shrink-wrap licenses for readily available software),
(m) pertains to a joint venture, partnership or other
arrangement involving a sharing of profits, losses, costs or
liabilities with any other Person; (n) is a collective
bargaining or similar agreement with a labor union or
representative of a group of employees; (o) relates to the
lease, rental, installment or conditional sale of any
Acquired Company tangible or intangible personal property
(other than Intellectual Property licenses); (p) relates to
the licensing of software and deviates from the forms of
standard licensing agreements attached as Exhibit B; (q)
relates to distribution or reseller arrangements for
software products; or (r) was not made in the Ordinary
Course and involves an amount in excess of $5,000. Each
Material Contract is valid and subsisting; the relevant
Acquired Company has duly performed all its material
obligations thereunder to the extent that those obligations
have accrued; no breach or default or alleged breach or
default, or event that would (with the passage of time,
notice or both) constitute a breach or default thereunder by
any Acquired Company or, to the Knowledge of Company and the
Significant Shareholders, any other Person, as the case may
be, has occurred; and no breach or default thereunder has
occurred or will occur as a result of the execution,
delivery or performance of this Agreement. True copies of
the agreements listed on Schedule 2.6, including all
amendments and supplements, have been delivered to Buyer.
2.7 Property.
(a) Leased Real Property. Schedule 2.7 accurately
lists all real property leaseholds held by any Acquired Company.
The Acquired Companies do not own any real property in fee,
and do not own or hold any other interests in real property.
Company has delivered or made available to Buyer true copies
of all lease agreements pertaining to real property leased
by any Acquired Company.
(b) Ownership of Property. The Acquired Companies
own all the properties and assets they purport to own or that
are reflected as owned in the Acquired Companies' books and
records, including all properties and assets reflected in
the Balance Sheet and the Interim Balance Sheet (except for
personal property sold since the date of the Balance Sheet
and the Interim Balance Sheet, as the case may be, in the
Ordinary Course), and all properties and assets purchased or
otherwise acquired by the Acquired Companies since the date
of the Interim Balance Sheet (except for personal property
acquired and sold since the date of the Interim Balance
Sheet in the Ordinary Course).
(c) Encumbrances. All material properties and
assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances except (i)
security interests shown on the Balance Sheet or the Interim
Balance Sheet as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists,
(ii) security interests incurred in connection with the
purchase of property or assets after the date of the Interim
Balance Sheet (these mortgages and security interests being
limited to the property or assets so acquired), with respect
to which no default (or event that, with notice or lapse of
time or both, would constitute a default) exists,
(iii) liens for current Taxes not yet due, and (iv) as
described on Schedule 2.7.
2.8 Authorization; No Conflicts.
(a) Authorization. Each of Company and each corporate
Significant Shareholder has all necessary power and
authority to execute, deliver and perform this Agreement and
the other Seller Documents to which it is a party. The
execution, delivery and performance of this Agreement and
other Seller Documents by Company and the corporate
Significant Shareholders have been duly and validly
authorized by their respective Boards of Directors and by
all other necessary corporate action on their part. The
individual Significant Shareholder has the unrestricted
right, power and capacity to execute, deliver and perform
this Agreement and other Seller Documents signed by him.
This Agreement and the other Seller Documents constitute the
legally valid and binding obligations of Company and the
Significant Shareholders, enforceable against Company and
the Significant Shareholders in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or
limiting creditors rights generally.
(b) No Conflicts. Neither the execution and
delivery of this Agreement and the other Seller Documents nor
the consummation or performance of any Transactions will,
directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or violate (A) any
provision of the charter documents or bylaws of any
Acquired Company or any corporate Significant Shareholder
or (B) any resolution adopted by the boards of directors or
shareholders of any Acquired Company or any corporate
Significant Shareholder;
(ii) contravene, conflict with or violate, or
give any Governmental Entity or other Person the right to
challenge any of the Transactions or any related agreements
or to exercise any remedy or obtain any relief under, any
Law or Order to which any Acquired Company or Significant
Shareholder or any assets owned or used by any Acquired
Company may be subject;
(iii) contravene, conflict with or violate
any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Permit held by any
Acquired Company or that otherwise relates to the Business;
(iv) cause any Acquired Company to become
subject to, or to become liable for the payment of, any
Tax;
(v) cause any material assets owned by any
Acquired Company to be reassessed or revalued by any taxing
authority or other Governmental Entity;
(vi) contravene, conflict with or violate any
provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or
modify, any Material Contract or any Contract of a
Significant Shareholder (except that Company Options will
be affected as provided in Sections 1.4(b) and 1.5(b));
(vii) result in the imposition or creation of
any Encumbrance upon or with respect to any assets owned
or used by any Acquired Company; or
(viii) accelerate vesting of any employee
benefits except as disclosed on Schedule 2.8.
(c) Approvals. Except for a filing under the Xxxx-
Xxxxx-Xxxxxx Act, the approval of the Merger by the Shareholders,
and the Approvals listed on Schedule 2.8, no Acquired
Company or Significant Shareholder is, nor will it be,
required to give any notice to, make any filing with, or
obtain any Approval or Permit from, any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Transactions.
(d) No Dissenters' Rights. Each Significant
Shareholder hereby waives any dissenter's rights it could have
under Chapter 13 of the CGCL in connection with the Merger.
2.9 Actions and Orders.
(a) Actions. Except as stated on Schedule 2.9, (i)
there is no pending Action that (A) has been commenced by
or against any Acquired Company or that otherwise relates to
or could affect the Business, or any of the assets owned or
used by any Acquired Company; or (B) that challenges, or
that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the
Transactions, and (ii) to the Knowledge of Company and the
Significant Shareholders, (A) no such Action has been
Threatened, and (B) no event has occurred or circumstance
exists that could give rise to or serve as a basis for the
commencement of any such Action.
(b) Orders. Except as stated on Schedule 2.9, (i)
there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is
subject; (ii) no Significant Shareholder is subject to any
Order that relates to the Business, or to any of the assets
owned or used by any Acquired Company; (iii) no officer,
director, agent, or employee of any Acquired Company is
subject to any Order that prohibits him or her from engaging
in or continuing any conduct, activity, or practice relating
to the Business; (iv) each Acquired Company is, and at all
times since December 31, 1994 has been, in full compliance
with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or
has been subject; (v) no event has occurred or circumstance
exists that may constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply
with any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any
Acquired Company, is subject; and (vi) no Acquired Company
has received, at any time since December 31, 1994, any
notice or other communication (whether oral or written) from
any Governmental Entity or any other Person regarding any
actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order
to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is or has been subject.
(c) Effect; Documents. No Order applicable to any
Acquired Company or the Business, and no pending or
Threatened Action involving any Acquired Company or the
Business has had or will have, individually or in the
aggregate, a material adverse effect on any Acquired Company
or the Business. Company has made available to Buyer true
copies of all Actions and Orders listed in Schedule 2.9.
2.10 Dividends and Other Distributions.
Since the date of the Interim Balance Sheet,
Company has not declared, paid, distributed or issued to its
Shareholders any dividend or other distribution of assets or
securities, whether consisting of money, property or any
other thing of value.
2.11 Insurance.
(a) Deliveries. Company has delivered to Buyer: (i)
true and complete copies of all policies of insurance to which
any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has
been covered at any time since December 31, 1994; (ii) true
and complete copies of all pending applications for policies
of insurance; and (iii) any statement by the auditor of any
Acquired Company's financial statements with regard to the
adequacy of such entity's coverage or of the reserves for
claims.
(b) Self-Insurance, Etc. Schedule 2.11 describes (i)
any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established under that
arrangement; (ii) any Contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk
by any Acquired Company; and (iii) all obligations of the
Acquired Companies to third parties with respect to
insurance (including such obligations under leases and
service agreements) and identifies the policy under which
such coverage is provided.
(c) Loss Experience. Schedule 2.11 provides, for
the current policy year and each of the three preceding policy
years: (i) a summary of the loss experience under each
policy; (ii) a statement describing each claim under an
insurance policy for an amount in excess of $10,000, which
states: (A) the name of the claimant; (B) a description of
the policy by insurer, type of insurance, and period of
coverage; and (C) the amount and a brief description of the
claim; and (iii) a statement describing the loss experience
for all claims that were self-insured, including the number
and aggregate cost of such claims.
(d) Status. Except as stated on Schedule 2.11, all
policies to which any Acquired Company is a party or that
provide coverage to any Acquired Company, or any director or
officer of an Acquired Company (i) are valid, outstanding
and enforceable; (ii) are issued by an insurer that is
financially sound and reputable; (iii) taken together,
provide insurance coverage for the Acquired Companies and
the Business at a level customary in the Acquired Companies'
industry; (iv) will continue in full force and effect
following the consummation of the Transactions; and (v) do
not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any
Acquired Company. There are no Material Contracts, or Laws
applicable to the Acquired Companies, requiring that any
Acquired Company maintain any particular amount or type of
insurance.
(e) Cancellation and Premiums. Except as stated on
Schedule 2.11, (i) no Acquired Company or Significant
Shareholder has received since December 31, 1994, (A) any
refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or
able to perform its obligations thereunder; and (ii) the
Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations,
under each policy to which any Acquired Company is a party
or that provides coverage to any Acquired Company or any of
its directors.
(f) Notice of Claims. The Acquired Companies have
given notice to the relevant insurer of all claims that
could be insured by their insurance policies.
2.12 Compliance with Law.
(a) General. Except as stated in Schedule 2.12:
(i) each Acquired Company is, and at all times
since December 31, 1994 has been, in full compliance with each
Law applicable to it or the Business;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) could
constitute or result in a violation by any Acquired Company of,
or a failure on the part of any Acquired Company to comply with,
any Law, or (B) could give rise to any obligation on the
part of any Acquired Company to undertake, or to bear all or
any portion of the cost or, any remedial action of any
nature; and
(iii) no Acquired Company has received, at any
time since December 31, 1994, any notice or other communication
(whether oral or written) from any Governmental Entity or
any other person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to company
with, any Law, or (B) any actual, alleged, possible, or
potential obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Environmental Matters. Except as specifically
described in Schedule 2.12, (i) no Acquired Company has
generated, used, transported, treated, stored, released or
disposed of, or has suffered or permitted anyone else to
generate, use, transport, treat, store, release or dispose
of any Hazardous Substance in violation of any Law;
(ii) there has not been any generation, use, transportation,
treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the Business or
the use of any property or facility of any Acquired Company,
or to the Knowledge of Company or the Significant
Shareholders any nearby or adjacent properties that has
created or might reasonably be expected to create any
liability under any Law or that would require reporting to
or notification of any Governmental Entity; (iii) no
asbestos or polychlorinated biphenyl or underground storage
tank is contained in or located at any Acquired Company
facility; and (iv) any Hazardous Substance handled or dealt
with in any way in connection with the Business, whether
before or during the relevant Acquired Company's ownership,
has been and is being handled or dealt with in compliance
with all applicable Laws.
(c) Permits. The Acquired Companies hold no Permits
other than routine, immaterial licenses to do business in
certain localities. These Listed Permits (i) will not be
revoked or otherwise adversely affected by the Transactions,
and (ii) collectively constitute all of the Permits necessary
to permit the Acquired Companies to lawfully conduct and
operate the Business in the manner they currently conduct
and operate it and to permit the Acquired Companies to own
and use their assets in the manner in which they currently
own and use them.
2.13 Employee Benefits.
(a) Benefit Plans.
(i) Schedule 2.13 lists all employee benefit,
compensation and fringe benefit plans and arrangements,
including any "employee benefit plan" (within the meaning
of Section 3(3) of ERISA), to which any Acquired Company
is or ever has been a party or by which any is or ever has
been bound, legally or otherwise (collectively, the
"Plans").
(ii) Company has delivered to Buyer true and
complete copies of all documents and summary plan
descriptions with respect to the Plans, or summary
descriptions of any Plans not in writing.
(iii) There are no negotiations, demands or
proposals that are pending or have been made that concern
matters now covered, or that would be covered, by the Plans.
(iv) The Acquired Companies and each trade or
business (whether or not incorporated) that is a member of a
group of which any Acquired Company is a member and that is
under common control within the meaning of Section 414(b)
and (c) of the Code ("ERISA Affiliate") are in full
compliance with the applicable provisions of ERISA and all
other Laws applicable with respect to all such plans,
agreements and arrangements and to all group health plans
of any ERISA Affiliate. The Acquired Companies and ERISA
Affiliates have performed all of their obligations under all
such plans, agreements and arrangements. There are no
Actions (other than routine claims for benefits) pending or
Threatened against such plans or their assets, or arising
out of such plans, agreements or arrangements, and, no facts
exist that could give rise to any such Actions.
(v) Except as specified in Schedule 2.13, each
Plan can be terminated by an Acquired Company within 30 days
after the Closing Date, without payment of any additional
compensation or amount or the additional vesting or
acceleration of any benefits.
(b) Qualified Stock, Pension and Profit-sharing Plans.
(i) Company's 401(k) plan (the "401(k) Plan")
is the only "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) that is a stock bonus,
pension or profit-sharing plan within the meaning of Section
401(a) of the Code.
(ii) The 401(k) Plan is qualified in form and
operation under Section 401(a) of the Code and the trust
under that plan is exempt from tax under Section 501(a)
of the Code. No event has occurred that will or could
subject the 401(k) Plan to tax under Section 511 of the
Code. No prohibited transaction (within the meaning of
Section 4975 of the Code) or party-in-interest transaction
(within the meaning of Section 406 of ERISA) has occurred
with respect to the 401(k) Plan.
(iii) With respect to the 401(k) Plan, Company
has delivered to Buyer copies of the following documents:
(i) the form 5500 with all attachments filed in each of
the most recent three plan years, (ii) the most recent
determination letter from the IRS, and (iii) the
consolidated statement of assets and liabilities of the
401(k) Plan as of its most recent valuation date.
(c) Section 412 or Title IV Plans. No plan listed in
Schedule 2.13(a) is a plan subject to Section 412 of the
Code or Title IV of ERISA.
(d) Multiemployer Plans. No Plan listed in Section
2.13 is a "multiemployer plan" (within the meaning of Section
3(37) of ERISA). Neither Company nor any ERISA Affiliate has
ever contributed to or had an obligation to contribute to any
multiemployer plan.
(e) Retiree Benefits. There are no Company employees
who are entitled to (i) any pension benefit that is unfunded or
(ii) any pension or other benefit to be paid after
termination of employment other than required by Section 601
of ERISA (or similar provision of state Law) or pursuant to
plans intending to be qualified under Section 401(a) of the
Code, and no other benefits whatsoever are payable to any
Company employees after termination of employment (including
retiree medical and death benefits).
(f) Employee Welfare Benefit Plans. Each Plan that
is an "employee welfare benefit plan" as that term is defined
in Section 3(1) of ERISA is either (i) funded through an
insurance company contract and is not a "welfare benefit
fund" within the meaning of Section 419 of the Code or
(ii) unfunded. There is no liability in the nature of a
retroactive rate adjustment to or loss-sharing or similar
arrangement, with respect to any employee welfare benefit
plan.
(g) Contributions. All contributions or payments
owed with respect to any periods before the Closing under any
Plan have been made, and all other amounts that relate to those
periods have been accrued on the financial statements
referred to in Section 2.3.
2.14 Certain Interests.
Except as listed on Schedule 2.14, no Affiliate or
Associate of any Acquired Company, no Associate of any such
Affiliate, no director or officer of any Acquired Company
(or any Associate of such officer or director), no
Significant Shareholder, and, to the Knowledge of Company
and the Significant Shareholders, no other Shareholder, has
any (a) interest in any property used in or pertaining to
the Business; (b) interest in any Person that competes with
any Acquired Company; (c) interest in any customer or
supplier doing business with the any Acquired Company; (d)
any Contract with any Acquired Company; or (e) claim
against any Acquired Company.
2.15 Bank Accounts, Powers, etc.
Schedule 2.15 lists each bank, trust company,
savings institution, brokerage firm, mutual fund or other
financial institution with which any Acquired Company has an
account or safe deposit box and the names and identification
of all Persons authorized to draw on it or to have access to
it.
2.16 No Brokers or Finders.
No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or
acting on behalf of any Acquired Company or any of their
respective Affiliates in connection with the negotiation,
execution or performance of this Agreement or the
Transactions, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of
this Agreement or the Transactions other than Xxx Xxxxxx or
his previous employer.
2.17 Intangible Property.
(a) Registrations. Schedule 2.17 lists all United
States and foreign: (i) patents and patent applications;
(ii) registered trademarks and trademark applications;
(iii) registered copyrights and applications for copyright
applications; (iv) mask work registrations and applications
to register mask works; (v) other registered Intellectual
Property Rights; and (vi) other material items of Intangible
Property, in each case owned by, or licensed to, any
Acquired Company, or in which any Acquired Company has an
interest. The registrations listed on Schedule 2.17 are
valid and subsisting in all jurisdictions listed on Schedule
2.17; all necessary registration and renewal fees have been
made or paid; all documents and certificates have been filed
with the relevant patent, copyright and trademark
authorities; and there are no pending or, to the Knowledge
of Company and the Significant Shareholders, Threatened
objections or oppositions by third parties against these
registrations.
(b) Products. The Acquired Companies own
exclusively, and have good title to, all software products of
the Acquired Companies or other works of authorship that any
Acquired Company otherwise purports to own. Except as listed
on Schedule 2.17, the Acquired Companies have complete rights
and ownership of all Intangible Property used in connection
with the Business and do not use any Intangible Property by
consent of any other Person or pursuant to any obligation to
make any payments (and do not make any payments) to others
with respect to them (other than shrink wrap licenses for
readily available software). The Acquired Companies'
Intangible Property is fully assignable free and clear of
any Encumbrances and will not be adversely affected by the
execution and delivery of this Agreement or the consummation
of the Transactions.
(c) Contracts. The Contracts listed on Schedule
2.17 include all Contracts, including all licenses or
sublicense agreements, to which any Acquired Company is a
party with respect to any Intellectual Property Rights licensed
to or by any Acquired Company (other than shrink wrap licenses
for readily available software and standard software license
agreements in the forms attached as Exhibit B). The
Acquired Companies have performed all obligations required
to be performed by them, and are not in default, under any
of these Contracts.
(d) Notice of Infringement. No Acquired Company has
received notice from any Person (or otherwise has Knowledge)
that its operation of the Business, including its design,
development, manufacture and sale of its products and
provision of services, conflicts with or infringes the
Intellectual Property Rights of any Person.
(e) Agreements. All current and former employees
and consultants of the Acquired Companies have executed
confidentiality and inventions agreements in the form of
Exhibit C.
(f) Year 2000. All (i) software products sold by
the Acquired Companies since December 31, 1994, and (ii)
internal computer hardware, software and networks of
the Acquired Companies are "Year 2000 compliant" in
accordance with the standards contained in IEEE Standard
2000.1-1998.
(g) Trade Secrets.
(i) The documentation relating to each Trade
Secret is current, accurate and sufficient in detail and
content to identify and explain it and to allow its full
and proper use without reliance on the Knowledge or memory
of any individual.
(ii) The Acquired Companies have taken all
reasonable precautions to protect the secrecy,
confidentiality and value of their Trade Secrets.
(iii) The Acquired Companies have good title
and an absolute (but not necessarily exclusive) right to use
the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature and, to the Knowledge of the
Acquired Companies and the Significant Shareholders, have
not been used, divulged or appropriated either for the
benefit of any Person or to the detriment of the Acquired
Companies. No Trade Secret is subject to any adverse claim
or has been challenged or threatened in any way.
2.18 Receivables.
All receivables of the Acquired Companies
reflected on the Interim Balance Sheet or on the Acquired
Companies' accounting records as of the Closing Date or
otherwise, represent or will represent valid obligations
arising from sales actually made in the Ordinary Course.
Unless paid before the Closing Date, these receivables are
or will be current and fully collectible net of any reserves
shown on the Interim Balance Sheet (which reserves are
adequate and were calculated on a basis consistent with GAAP
and past practices) within 90 days after the day they first
became or become due. Company has delivered to Buyer a
complete and accurate aging list of all Acquired Company
receivables as of April 30, 1999.
2.19 Customers and Suppliers.
Schedule 2.19 lists all Acquired Company Contracts
with, and the relevant percentage of business attributable
to, the 10 largest customers of the Business at the date of
this Agreement. No Acquired Company has any sole-source
suppliers of significant goods or services (other than
utilities), and no supplier is otherwise critical to any
Acquired Company.
2.20 Certain Payments.
Since December 31, 1994, no Acquired Company or
director, officer, agent or employee of any Acquired
Company, or any other Person associated with or acting for
or on behalf of any Acquired Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in
money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for
or in respect of any Acquired Company or any Affiliate of an
Acquired Company, or (iv) otherwise in violation of any Law;
or (b) established or maintained any fund or asset not
recorded in the books and records of the Acquired Companies.
2.21 Employees.
(a) List. Schedule 2.21 contains a complete and
accurate list of the following information for each Acquired
Company employee or director, including each employee on leave
of absence or layoff status: employer; name; job title; current
compensation paid or payable; vacation accrued; location;
and service credited for purposes of vesting and eligibility
to participate under any Acquired Company's employee benefit
plans described in Section 2.13.
(b) Agreements. To the Knowledge of Company and the
Significant Shareholders, no employee or director of any
Acquired Company is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between
him or her and any other Person that in any way adversely
affects or will affect (i) the performance of his or her
duties as an Acquired Company employee or director, or
(ii) the ability of any Acquired Company to conduct its
business, including any agreement with the Acquired
Companies or the Significant Shareholders by any such
employee or director. To the Knowledge of Company and the
Significant Shareholders, no director, officer, or other key
employee of any Acquired Company intends to terminate his
employment with that Acquired Company.
(c) Retiree Benefits. Schedule 2.21 also accurately
summarizes all benefit plans for all retired Acquired
Company employees, directors and their dependents receiving
benefits or scheduled to receive benefits in the future.
(d) Labor Relations; Compliance. Since December 31,
1994, no Acquired Company has been or is a party to any
collective bargaining or other labor Contract. Since that date,
there has not been, there is not presently pending or existing,
and there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process,
(b) any Action against or affecting any Acquired Company
relating to the alleged violation of any Law pertaining to
labor relations or employment matters, including any charge
or complaint filed by an employee or union with the National
Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Entity,
organizational activity, or other labor or employment
dispute against or affecting any Acquired Company or its
premises, or (c) any application for certification of a
collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout
of any employees by any Acquired Company, and no Acquired
Company contemplates such an action. Each Acquired Company
has complied in all respects with all Laws relating to
employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes,
occupational safety and health, and plant closing. No
Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any
of the foregoing Laws.
2.22 Disclosure.
No representation or warranty of Company and the
Significant Shareholders in this Agreement or the related
Schedules, contains, and no notice under this Agreement will
contain, a Material Misstatement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization and Related Matters.
Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.
Buyer has all necessary corporate power and authority to
carry on its business as now being conducted. Buyer has the
necessary corporate power and authority to execute, deliver
and perform this Agreement and the other Buyer Documents.
3.2 Authorization.
The execution, delivery and performance of this
Agreement and the other Buyer Documents by Buyer has been
duly and validly authorized by Buyer's Board of Directors
and by all other necessary corporate action on Buyer's part.
This Agreement and the other Buyer Documents constitute the
legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting
creditors' rights generally.
3.3 Approvals.
Except for a filing under the Xxxx-Xxxxx-Xxxxxx
Act and the Approvals listed on Schedule 3.3, Buyer is not,
nor will it be, required to give any notice to, make any
filing with, or obtain any Approval or Permit from, any
Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Transactions.
3.4 No Conflicts.
The execution, delivery and performance of this
Agreement and the other Buyer Documents by Buyer will not
violate or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or
otherwise) under (a) Buyer's charter documents or bylaws,
(b) any Law to which Buyer is subject or (c) any Contract to
which Buyer is a party that is material to Buyer's financial
condition, results of operations or business.
3.5 No Brokers or Finders.
No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or
acting on behalf of Buyer or its Affiliates in connection
with the negotiation, execution or performance of this
Agreement or the Transactions, is or will be entitled to any
broker's or finder's or similar fees or other commissions as
a result of this Agreement or the Transactions.
3.6 Legal Proceedings.
There is no Order or Action pending or, to Buyer's
Knowledge, Threatened against Buyer that individually or
when aggregated with one or more other Actions has or might
reasonably be expected to have a material adverse effect on
Buyer's business or its ability to perform this Agreement.
3.7 Merger Sub.
(a) Formation. Merger Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the State of California. The execution, delivery and
performance by Merger Sub of this Agreement and all the
other instruments to be executed and/or delivered by Merger
Sub in connection with the Transactions, have been duly and
validly authorized by all necessary corporate action on the
part of Merger Sub, and do not conflict with its Articles of
Incorporation or Bylaws. Merger Sub has all necessary power
and authority to execute, deliver and perform this Agreement
and such other instruments. This Agreement and all the
other instruments to be executed and/or delivered by Merger
Sub constitute valid and binding obligations of Merger Sub
enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting
creditors' rights generally.
(b) Ownership. Buyer owns all issued and outstanding
capital stock of Merger Sub.
3.8 Available Funds.
On the Closing Date, Buyer will have sufficient
available funds to pay the Merger Consideration.
3.9 SEC Reports.
All documents filed by Buyer with the SEC pursuant
to the Securities Act and the Exchange Act were filed on a
timely basis, complied in form in all material respects with
applicable Laws, and did not contain any Material
Misstatement.
ARTICLE IV - COVENANTS RELATING TO THE PERIOD ENDING
WITH THE CLOSING
4.1 Access.
The Acquired Companies and the Significant
Shareholders will authorize and permit Buyer and its
representatives (including its independent accountants and
counsel) to have reasonable access during normal business
hours, upon reasonable notice and in ways that will not
unreasonably interfere with the conduct of the Business, to
all of their respective properties, books, records,
operating instructions and procedures, Tax Returns and all
other information with respect to the Business as Buyer may
from time to time request, and to make copies of those
books, records and other documents and to discuss the
Business with those other Persons, including its directors,
officers, employees, accountants, counsel, suppliers,
customers and creditors, as Buyer considers necessary or
appropriate for the purposes of familiarizing itself with
the Business, obtaining any necessary Approvals of or
Permits for the Transactions and conducting an evaluation of
the Business. Company will provide Buyer with notice of all
meetings of the shareholders of the Company and its board of
directors and will furnish concurrently to Buyer copies of
all materials distributed to members of the board in
connection with those meetings.
4.2 Changes; Reports. Between the date of this
Agreement and the Closing Date:
(a) Notice. Company will promptly notify Buyer
of any event, fact or condition that (i) has had or might
reasonably be expected to have a material adverse effect on
the Business; or (ii) if known as of the date of this
Agreement would have been required by this Agreement to be
disclosed to Buyer in this Agreement (including its
schedules); or (iii) would constitute a breach of any
covenant of Company or the Significant Shareholders; or
(iv) would make satisfaction of any condition in this
Agreement unlikely or impossible.
(b) Reports. Company will furnish to Buyer (i)
monthly and quarterly unaudited balance sheets, statements of
income, changes in shareholders' equity and cash flows for the
Acquired Companies, and (ii) any other reports Buyer
reasonably requests relating to the Business.
(c) Tax Returns. Company will furnish to Buyer all Tax
Returns filed with any Governmental Entity relating to any
Acquired Company.
4.3 Conduct of Business.
Between the date of this Agreement and the Closing
Date, Company and the Significant Shareholders will ensure
that no Acquired Company will, without Buyer's prior consent
in writing:
(a) conduct the Business other than in the Ordinary
Course; or
(b) except as required by their terms, amend,
terminate, renew/fail to renew or renegotiate any Material
Contract or default (or take or omit to take any action that,
with or without the giving of notice or passage of time, would
constitute a default) in any of its obligations under any
Material Contract or enter into any new Material Contract or
take any action that could reasonably be expected to
jeopardize the continuance of its material supplier or
customer relationships; or
(c) terminate, amend or fail to renew any existing
insurance coverage; or
(d) terminate or fail to renew or preserve any
Permits; or
(e) incur or agree to incur any obligation or
liability (absolute or contingent) that individually calls for
payment by any Acquired Company of more than $10,000 in any
specific case or $50,000 in the aggregate; or
(f) make any loan, guaranty or other extension of
credit, or enter into any commitment to make any loan, guaranty
or other extension of credit, to or for the benefit of any
director, officer, employee, shareholder or any of their
respective Associates or Affiliates; or
(g) sell, transfer, lease, pledge, mortgage, encumber
or otherwise dispose of any assets (other than sales of
inventory in the Ordinary Course), including any sale,
license, lease or other disposition of Intellectual
Property; or
(h) issue, sell, redeem or acquire for value, any
debt obligations or Equity Securities of any Acquired Company,
other than issuances of Common Stock upon the exercise of
stock options under the Company's existing stock option
plan; or
(i) declare, issue, make or pay any dividend or other
distribution of assets, whether consisting of money, other
personal property, real property or other thing of value, to
its shareholders, or split, combine, dividend, distribute or
reclassify any shares of its Equity Securities; or
(j) change or amend its charter documents or bylaws;
or
(k) make special or extraordinary payments to any
Person; or
(l) make any material investment, by purchase,
contributions to capital, property transfers, or otherwise,
in any other Person; or
(m) compromise or otherwise settle any claims
involving more than $10,000; or
(n) make any Tax election or make any change in any
method or period of accounting or in any accounting policy,
practice or procedure; or
(o) dispose of or permit to lapse any Intangible
Property or any rights to its use; or
(p) grant any general or uniform increase in the
rates of pay or benefits to officers, directors or employees
(or a class thereof) or any material increase in salary or
benefits of any officer, director, employee or agent; or pay
any bonus to any Person; or adopt any new employee benefit
plan or arrangement, or modify any existing employee benefit
plans described in Section 2.13; or
(q) make any capital expenditures, except as stated
in Schedule 4.3(q); or
(r) cancel or waive any claims or rights; or
(s) agree to or make any commitment to take any
actions prohibited by this Section 4.3.
4.4 Permits and Approvals.
Company, the Significant Shareholders and Buyer
each agree to cooperate with each other and use their Best
Efforts to obtain, and will immediately prepare all
registrations, filings (including filings under the Xxxx-
Xxxxx-Xxxxxx Act), applications, requests and notices
necessary to obtain, all Approvals and Permits that are
necessary, or that are reasonably requested by Buyer, to
consummate the Transactions.
4.5 Preservation of Business Before Closing Date.
During the period beginning on the date of this
Agreement and ending on the Closing Date, (a) Company and
the Significant Shareholders will use their best efforts to
preserve the Business and to preserve the goodwill of
customers, suppliers and others having business relations
with any Acquired Company, and (b) the Parties will consult
with each other concerning, and Company and the Significant
Shareholders will cooperate to keep available to Buyer, the
services of the officers and employees of each Acquired
Company that Buyer wishes to have such Acquired Company
retain. Nothing in this Section will obligate Buyer or any
Acquired Company after the Closing to retain or offer
employment to any Acquired Company officer or employee.
4.6 Confidentiality.
All non-public information disclosed by any Party
(or its representatives) whether before or after the date of
this Agreement, in connection with the Transactions, or the
discussions and negotiations preceding this Agreement, to
any other Party (or its representatives) will be kept
confidential by the receiving Party and its representatives
and will not be used by any such Persons other than as
contemplated by this Agreement, except to the extent
otherwise required by Law or to the extent the duty as to
confidentiality is waived in writing by the disclosing
Party. If this Agreement is terminated in accordance with
its terms, each receiving Party will return upon written
request from the disclosing Party all documents (and
reproductions thereof) received by it or its representatives
from the disclosing Party (and, in the case of
reproductions, all such reproductions made by the receiving
Party) that include information not within the exceptions
contained in the first sentence of this Section 4.6, unless
the recipients provide assurances reasonably satisfactory to
the requesting Party that the documents have been destroyed.
4.7 Negotiations.
The Acquired Companies and the Significant
Shareholders (either directly or indirectly) and Company,
and each of their representatives and agents, will not
initiate, solicit or encourage any inquiry, offer or
proposal with respect to any acquisition, merger, tender or
exchange offer or other form of business combination
involving any Acquired Company, or any acquisition or
disposition of all or any substantial part of any Acquired
Company's assets, stock or other securities (each a
"Competing Transaction"). Company and the Significant
Shareholders will promptly notify Buyer of the details of
any discussions with or proposal or offer from any other
Person relating to a Competing Transaction. Compliance with
this Section will not relieve Company of any other express
or implied obligations under this Agreement or under
applicable Law.
4.8 Shareholders' Meeting.
Company will, and the Significant Shareholders
will cause Company to, take all steps necessary to duly
call, give notice of, convene and hold a meeting of the
Shareholders to be held as soon as is reasonably practicable
for the purpose of voting on the approval of this Agreement
and the Transactions, including the Merger. Company will,
through its Board of Directors, recommend to the
Shareholders that they approve this Agreement, the Merger
and the other Transactions, and any other matters submitted
to the Shareholders in connection with this Agreement. The
materials sent by Company to the Shareholders to solicit
their approval will not contain any Material Misstatement.
The Significant Shareholders will vote all their Shares in
favor of the Transactions, including the Merger and any
other matters submitted to the Shareholders in connection
with this Agreement.
4.9 Tax Returns.
Company and the Significant Shareholders will
ensure that the Acquired Companies timely file all Tax
Returns required to be filed, and pay all Taxes (including
payments of estimated tax sufficient to avoid penalties)
required to be paid, before the Closing Date. Buyer will
have the opportunity to review all such material Tax Returns
before they are filed and to approve any positions taken in
those Tax Returns that could materially affect the Tax
liability of the Acquired Companies or their Affiliates in
any post-Closing period; provided, however, that such
approval will not be required as to any position that
reflects a consistent reporting practice followed by the
relevant Acquired Company in prior years.
ARTICLE V - ADDITIONAL CONTINUING COVENANTS
5.1 Nondisclosure of Proprietary Data.
No Acquired Company or Significant Shareholder nor
any of their representatives will, at any time, make use of,
divulge or otherwise disclose, directly or indirectly, any
Trade Secret or other proprietary data (including, but not
limited to, any customer list, record or financial
information) concerning the Business or any Acquired Company
that the Significant Shareholders or any representative of
the Significant Shareholders may have learned as a
shareholder, employee, officer or director of any Acquired
Company. In addition, neither the Significant Shareholders
nor any of their representatives will make use of, divulge
or otherwise disclose, directly or indirectly, to Persons
other than Buyer, any confidential information concerning
the Business that may have been learned in any such capacity
or any confidential information they learn about Buyer.
5.2 Tax Cooperation.
After the Closing, the Significant Shareholders
will cooperate with Buyer and the Acquired Companies in the
preparation of their Tax Returns and will provide, or cause
to be provided at Buyer's sole cost and expense, to Buyer
and the Acquired Companies any related records and other
information they reasonably request, as well as access to,
and the cooperation of, the auditors of the Acquired
Companies. The Significant Shareholders will cooperate with
Buyer and the Acquired Companies in connection with any Tax
audit or Tax-related Action. Any information obtained
pursuant to this Section 5.2 or pursuant to any other
Section of this Agreement providing for the sharing of
information or the review of any Tax Return or other
Schedule relating to Taxes will be subject to Section 4.6.
ARTICLE VI - CONDITIONS
6.1 Conditions to Obligations of All Parties.
The Parties' respective obligations to complete
the Merger and related Transactions will be subject to (a)
the expiration or termination of the waiting period
prescribed by the Xxxx-Xxxxx-Xxxxxx Act before July 31,
1999; (b) the closing of the Stock Purchase; and (c) the
absence of any Action commenced or Threatened since the date
of this Agreement against Buyer, or against any person
affiliated with Buyer, or against Company, any Company
officer or director or any Significant Shareholder
(i) involving any challenge to, or seeking damages or other
relief in connection with, any of the Transactions, or
(ii) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the
Transactions.
6.2 Conditions to Buyer's Obligations.
Buyer's obligation to consummate the Merger and
other Transactions is subject to the satisfaction, on or
before the Closing Date, of each of the following additional
conditions (any of which can be waived by Buyer in whole or
in part):
(a) Representations and Warranties of Company and the
Significant Shareholders. All of the representations and
warranties of Company and the Significant Shareholders in
this Agreement (considered collectively), and each of these
representations and warranties (considered individually),
must have been accurate as of the date of this Agreement,
and all such representations and warranties, other than the
representation and warranty in Section 2.4(a), must be
accurate in all material respects as of the Closing Date as
if made on the Closing Date, without giving effect to any
disclosures after the date of this Agreement. It is
understood that if there has been a material adverse change
or effect of the kind described in Section 2.4(a) after the
date of this Agreement, other than as a result of an adverse
change or event triggered by third party actions taken in
response to the Transactions, it will be subject to a claim
for indemnification under Section 8.3(a) and will not give
rise to a failure of a condition to Buyer's obligations to
complete the Closing.
(b) Performance by Company and the Significant
Shareholders. All of the covenants and obligations that
Company and the Significant Shareholders are required to
perform or to comply with pursuant to this Agreement at or
before the Closing (considered collectively), and each of
these covenants and obligations (considered individually),
must have been duly performed and complied with in all
material respects.
(c) Approvals. Each Approval identified in Schedule
2.8, must have been obtained (without the imposition of
conditions or other requirements Buyer reasonably deems
materially burdensome) and remain in full force and effect.
(d) Resignation of Directors and Officers. The
directors and officers of the Acquired Companies listed in a
letter to be delivered by Buyer to Company not less than five
days before the Closing Date must have submitted their
resignations in writing to the relevant Acquired Company, as
applicable. These resignations will be effective as of the
Closing.
(e) Documents. Each of the following documents must
have been delivered to Buyer:
(i) an opinion of Xxxxxx & Xxxxx LLP, dated the
Closing Date, in form and substance reasonably satisfactory
to Buyer and addressing the matters listed in Exhibit D, as
well as any others reasonably requested by Buyer:
(ii) the Escrow Agreement, duly executed by
Company and the Significant Shareholders;
(iii) the Non-Competition Agreement, duly
executed by Nearchos Irinarchos;
(iv) a certificate signed by Company's Chief
Executive Officer and Chief Financial Officer and each
of the Significant Shareholders to the effect that the
conditions stated above in Sections 6.2(a) and 6.2(b)
have been satisfied; and
(v) any other documents Buyer reasonably
requests for the purpose of (A) enabling its counsel to
provide the opinion referred to in Section 6.3(c)(i), (B)
evidencing the accuracy of any of the representations
and warranties of Company and the Significant
Shareholders, (C) evidencing the performance by Company
and the Significant Shareholders of, or their
compliance with, any covenant or obligation required to
be performed or complied with by them, (D) evidencing
the satisfaction of any condition referred to in
Section 6.1 or this Section 6.2, or (E) otherwise
facilitating the consummation of any of the
Transactions.
(f) Dendron/Fronos Instructions. Dendron and Fronos
must have delivered to Buyer irrevocable instructions, in
form and substance reasonably satisfactory to Buyer,
directing the deduction from the Aggregate Merger
Consideration otherwise due to them, and the deposit into
the Escrow, of the amount required by Section 8.6(b).
(g) Disinterested Shareholder Approval. The Merger
and related Transactions must have been approved by a
majority of the Shareholders other than the Significant
Shareholders.
6.3 Conditions to Obligations of Company and the
Significant Shareholders.
The obligation of Company and the Significant
Shareholders to consummate the Merger and related
Transactions is subject to the satisfaction, at or prior to
the Closing, of each of the following additional conditions
(any of which may be waived by Company and the Significant
Shareholders, in whole or in part):
(a) Buyer Representations. All of Buyer's
representations and warranties in this Agreement (considered
collectively), and each of these representations and
warranties (considered individually), must have been
accurate as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as
if made on the Closing Date, without giving effect to any
disclosures after the date of this Agreement.
(b) Buyer Performance. All of the covenants and
obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and
obligations (considered individually), must have been
performed and complied with in all material respects.
(c) Documents. Buyer must have caused the following
documents to be delivered as indicated below:
(i) to Company and the Significant Shareholders
an opinion of O'Melveny & Xxxxx LLP, dated the Closing
Date, substantially in the form of Exhibit E;
(ii) to Company and the Significant Shareholders
the Escrow Agreement duly executed by Buyer;
(iii) to Pan Cosmos A.B., the Consulting Agreement,
duly executed by Buyer.
(iv) to Company and the Significant Shareholders a
certificate signed by Buyer's Chief Executive Officer
and Chief Financial Officer to the effect that that the
conditions stated above in Sections 6.3(a) and 6.3(b)
have been satisfied;
(v) any other documents Company and the
Significant Shareholders reasonably request for the
purpose of (A) enabling their counsel to provide the
opinion referred to in Section 6.2(e)(i),
(B) evidencing the accuracy of any Buyer representation
or warranty, (C) evidencing Buyer's performance of, or
compliance with, any covenant or obligation required to
be performed or complied with by Buyer, (D) evidencing
the satisfaction of any condition referred to in
Section 6.1 or this Section 6.3, or (E) otherwise
facilitating the consummation of any of the
Transactions.
(d) Stay Bonus Plan. Buyer must have created a stay
bonus program for the key Acquired Company employees to be
identified by mutual agreement of Buyer and Company. The
program will consist of (i) $723,802 in cash which will vest
and be payable over a period to be determined and
(ii) options to purchase Buyer's Common Stock under Buyer's
1998 Stock Option Plan having an aggregate value of $723,802
determined in accordance with the Black-Scholes valuation
model. Acquired Company employees will receive offers of
the stay bonus pursuant to a letter substantially in the
form of Exhibit F.
(e) Injunction. There must not be in effect any Law
or Order that (i) prohibits the Merger, the Stock Purchase
or the other Transactions, and (ii) has been adopted or
issued, or has otherwise become effective, since the date of
this Agreement.
ARTICLE VII - TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement.
Anything in this Agreement to the contrary
notwithstanding, either Party (as used in this Article 7,
"Party" means Buyer on the one hand and Company and the
Significant Shareholders on the other) can terminate this
Agreement and the Transactions by notice to the other Party
after July 31, 1999 unless that date is extended by mutual
consent in writing by the Parties. Otherwise, this
Agreement can be terminated at any time before the Closing
as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing
of Buyer, Company, Merger Sub and the Significant Shareholders.
(b) Certain Conditions Not Met by Earlier Date. By
either Party if the condition in Section 6.1(a) has not been met
by July 31, 1999; provided, however, that notwithstanding the
foregoing, the right to terminate this Agreement pursuant to
this Section 7.1(b) will not be available to any Party whose
action or failure to act has been a principal direct or
indirect cause in the failure of the condition in Article VI
to have been satisfied and the action or failure to act
constitutes a material breach of this Agreement.
(c) Conditions to Buyer's Performance Not Met. By
Buyer by written notice to Company and the Significant
Shareholders if any event occurs or condition exists that
would render impossible the satisfaction of one or more
conditions to Buyer's obligations to consummate the
Transactions as stated in Section 6.1 or 6.2.
(d) Conditions to Company's Performance Not Met. By
Company and the Significant Shareholders by written notice
to Buyer if any event occurs or condition exists that would
render impossible the satisfaction of one or more conditions
to the obligations of Company and the Significant
Shareholders to consummate the Transactions as stated in
Section 6.1 or 6.3.
(e) Material Breach. By either Party if there has
been a Material Misstatement by the other Party in its
representations and warranties in this Agreement, or other
material breach by the other Party of its covenants in this
Agreement.
(f) Xxxx-Xxxxx-Xxxxxx. By Buyer if it receives a
request for further information under the Xxxx-Xxxxx-Xxxxxx Act
from either the Federal Trade Commission or Department of
Justice (provided Buyer exercises its right to terminate this
Agreement at any time before making a responsive filing to
the request) by delivering written notice of the termination
to Company and the Significant Shareholders.
7.2 Effect of Termination.
Subject to the two immediately following
sentences, if this Agreement is terminated pursuant to
Section 7.1, all further obligations of the Parties under
this Agreement will terminate without further liability of
any Party to another; provided that the obligations of the
Parties contained in Sections 4.6, 9.11 and 9.14 will
survive any such termination. A termination under
Section 7.1 will not relieve any Party of any liability for
a breach of, or for any misrepresentation under, this
Agreement, or be deemed to constitute a waiver of any
available remedy (including specific performance if
available) for any such breach or misrepresentation.
ARTICLE VIII - INDEMNIFICATION
8.1 Effect of Knowledge; Waiver.
The right to indemnification, payment of Losses or
other remedy based on the representations, warranties,
covenants and obligations in this Agreement, the Stock
Purchase Agreement and any related document delivered in
connection with this Agreement or the Stock Purchase
Agreement, will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of
or compliance with, any such representation, warranty,
covenant or obligation. The waiver of any condition based
on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or
obligation, will not affect the right to indemnification,
payment of Losses, or other remedy based on such
representations, warranties, covenants or obligations.
8.2 Losses.
The term "Losses" as used in this Article VIII is
not limited to matters asserted by third parties against any
Indemnified Party, but includes Losses incurred or sustained
by an Indemnified Party in the absence of third party
claims. Payments by any Indemnified Party of amounts for
which the Indemnified Party is indemnified under this
Agreement will not be a condition precedent to recovery.
Nothing in this Agreement will preclude a Party from
exercising its rights under this Agreement and applicable
Law to any available equitable remedies, including specific
performance and injunctions, with respect to other Losses or
breaches.
8.3 Indemnification of Buyer.
(a) By the Shareholders and Option Holders Through
the Escrow. Buyer, Merger Sub and the Surviving Corporation
and their respective directors, officers, employees, Affiliates,
agents and assigns (each an "Indemnified Buyer Party"), will
be indemnified and held harmless, through the Escrow (as
defined in Section 8.6(b)), from and against any and all
Losses (whether or not arising out of third-party claims)
including Losses incurred in connection with, arising out
of, resulting from or incident to (i) any breach of any
representation or warranty made by Company and the
Significant Shareholders in this Agreement, other than a
breach resulting from an adverse change or event triggered
by third party actions taken in response to the Transactions
(such as, for example, a Company client terminating its
relationship with Company because of an unwillingness to
deal with a Buyer Affiliate); (ii) any breach of any
covenant or agreement made by Company and the Significant
Shareholders in this Agreement; and (iii) any liability of
an Acquired Company for Taxes for any period (or portion
thereof) ending on or before the Closing Date, except to the
extent the liability was included in the accrual for current
Taxes in the Interim Balance Sheet. Company and the
Significant Shareholders will notify Buyer of any matters
covered by this Article VIII upon discovery or receipt of
notice thereof (other than from Buyer), whether before or
after Closing.
(b) By the Significant Shareholders. The
Significant Shareholders, jointly and severally, will
indemnify and hold harmless each Indemnified Buyer Party from
(i) any fraud and/or willful or intentional misrepresentation
by Company or the Significant Shareholders in this Agreement
or the related documents; (ii) any liabilities of the Acquired
Companies for Taxes for any period (or portion thereof)
ending on or before the Closing Date, to the extent such
liabilities arise after the termination of the Escrow (or
cannot otherwise be satisfied through the Escrow), are
asserted by the Indemnified Party during the Survival Period
and exceed $100,000 in the aggregate (with indemnification
from the first dollar if such threshold is reached), except
to the extent the liability was included in the accrual for
current Taxes in the Interim Balance Sheet; and (iii) any of
the following kinds of Losses to the extent there are
insufficient Escrowed Assets to cover those Losses, or to
the extent the Losses are incurred or discovered after the
termination of the Escrow and before the end of the relevant
Survival Period (as defined below): (A) Losses relating to
breaches of the representations and warranties in the second
sentence of Section 2.1, or of those in Sections 2.2, 2.5 or
2.8; and (B) Losses relating to breaches of the covenants of
Company and the Significant Shareholders in this Agreement.
8.4 Indemnification by Buyer.
Buyer will indemnify and hold harmless Company and
the Shareholders and their respective directors, officers,
employees, Affiliates, agents and assigns (each an
"Indemnified Seller Party" and together with an Indemnified
Buyer Party an "Indemnified Party") from and against any and
all Losses incurred in connection with, arising out of,
resulting from or incident to (a) any breach of any
representation or warranty made by Buyer in this Agreement
or the Stock Purchase Agreement; or (b) any breach of any
covenant or agreement made by Buyer in this Agreement
.
8.5 Survival.
The indemnification obligations with respect to
breaches of representations and warranties in this Agreement
will survive for 12 months after the Effective Date, except
that (a) such obligations with respect to the
representations and warranties in the second sentence of
Section 2.1 and those in Sections 2.2, 2.5 and 2.8 will
survive the Closing and will remain in full force and effect
through the shorter of (i) the expiration of the applicable
statute of limitations as the same may be extended or (ii)
ten years, and (b) if a Claim or notice is given under
Article VIII with respect to any representation or warranty
before the applicable expiration date, the indemnification
obligations with respect to that representation or warranty
will continue indefinitely until the Claim is finally
resolved (the "Survival Period"). Continuing covenants in
this Agreement will continue indefinitely, or for any
shorter period specified in the relevant section.
8.6 Limitation on Indemnification; Escrow.
(a) Maximum. The maximum amount of Losses that the
Shareholders and Option Holders will be responsible to bear
pursuant to Section 8.3(a) (which Losses will be indemnified
solely through the Escrow), is $1,400,000 in cash. The
maximum amount of Losses that Buyer will be responsible to
bear under Section 8.4 is $1,400,000.
(b) Escrow. On the Effective Date, an escrow (the
"Escrow") will be established pursuant to the Escrow
Agreement. On that date, Buyer will deduct from the
Aggregate Merger Consideration, and deposit in the Escrow,
$1,500,000. Of this amount, $629,596.50 will be deducted
from the Aggregate Merger Consideration due to Dendron and
Fronos under this Agreement (with such deduction being made
pursuant to an irrevocable instruction in form reasonably
satisfactory to Buyer), and $870,403.50 will be deducted
from the Aggregate Merger Consideration due all Shareholders
(including Dendron and Fronos) and Option Holders pro rata
in proportion to the Aggregate Merger Consideration payable
to them under this Agreement. The $1,500,000 deposited in
the Escrow will be held and disbursed as provided in the
Escrow Agreement. The Parties will promptly give any
necessary instructions to the escrow agent to carry out the
purposes of this Agreement and the Escrow Agreement. The
funds placed in the Escrow, along with any related income
and dividends (less the Shareholder Expense Reserve, as
defined in the Escrow Agreement), are referred to as the
"Escrowed Assets."
(c) Insurance. The amount of Losses for which any
Indemnified Party is entitled to indemnification under
Section 8.3 or 8.4, as the case may be, will be offset, on a
dollar for dollar basis, against the net amount of any
insurance proceeds actually received by the Indemnified
Party, less any expenses incurred in connection with the
receipt of those proceeds under any available insurance
policies then in effect covering the Losses to which the
Indemnified Party is a party; provided, however, that with
respect to any Indemnified Buyer Party, this section will
apply only to insurance policies to which Company is a
party. Nothing in this section will preclude an Indemnified
Party from filing a Claim for Losses pursuant to this
Article VIII. Each Indemnified Party will use its
commercially reasonable efforts to obtain any insurance
reimbursement that may be available under insurance policies
then in effect to which the Indemnified Party is a party in
respect of any Losses suffered or incurred by the
Indemnified Party for which the Indemnified Party would
otherwise be entitled to indemnification under Section 8.3
or 8.4, as the case may be.
8.7 Procedure.
(a) Cooperation. The Indemnified Party will
cooperate in all reasonable respects with the indemnifying
Party and its representatives (including its attorneys) with
respect to any Action covered by the indemnification provisions
of this Agreement (and any appeal arising therefrom); provided,
however that the Indemnified Party may at its own cost,
participate in negotiations, arbitrations and the
investigation, trial and defense of the lawsuit or action
and any appeal arising therefrom. The Parties will
cooperate with each other in any notifications to insurers.
(b) Defense of Claim. If a claim for Losses (a
"Claim") is to be made by an Indemnified Party against the
indemnifying Party, the Party claiming indemnification will
give written notice (a "Claim Notice") to the indemnifying
Party as soon as practicable after the Party entitled to
indemnification becomes aware of any fact, condition or event
that may give rise to Losses for which indemnification may be
sought under this Article VIII. If any lawsuit or enforcement
action is filed against an Indemnified Party, written notice
thereof will be given to the indemnifying Party as promptly as
practicable (and in any event within 15 calendar days after
the service of the citation or summons). The failure of any
Indemnified Party to give timely notice hereunder for any
purpose will not affect rights to indemnification hereunder,
except to the extent that the indemnifying Party has been
damaged by the failure. After the notice, except as
provided in the following sentence, if the indemnifying
Party acknowledges in writing to the Indemnified Party that
the indemnifying Party will be obligated under its indemnity
in this Agreement in connection with the lawsuit or action,
then the indemnifying Party will be entitled, if it so
elects at its own cost, risk and expense, (i) to take
control of the defense and investigation of the lawsuit or
action, (ii) to employ and engage attorneys of its own
choice but in any event, reasonably acceptable to the
Indemnified Party, to handle and defend the same unless the
named parties to the action or proceeding (including any
impleaded parties) include both the indemnifying Party and
the Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or more
legal defenses available to the Indemnified Party that are
different from or additional to those available to the
indemnifying Party, in which event the Indemnified Party
will be entitled, at the indemnifying Party's cost risk and
expense, to separate counsel of its own choosing and
(iii) to compromise or settle the lawsuit or action, which
compromise or settlement will be made only with the written
consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Shareholders and Option Holders
may assume the defense of a lawsuit or action as described
in the preceding sentence only if Shareholders and Option
Holders agree to be responsible for all Claims for Losses
related to Action and if the funds available pursuant to the
Escrow Agreement or otherwise provided as security by the
Shareholders and Option Holders are sufficient to cover the
amount of the Claim, without regard to the probability of
success on the merits of any such Claim.
If the indemnifying Party fails to assume the
defense of the lawsuit or action within 30 calendar days
after receipt of the Claim Notice, the Indemnified Party
against which the lawsuit or action has been asserted will
(upon delivering notice to that effect to the indemnifying
Party) have the right to undertake, at the indemnifying
Party's cost and expense, the defense, compromise or
settlement of the lawsuit or action on behalf of and for the
account and risk of the indemnifying Party and the
indemnifying Party will, upon request of the Indemnified
Party, promptly pay to the Indemnified Party the amount of
any Losses resulting from the lawsuit or action; provided,
however, that the lawsuit or action will not be compromised
or settled without the written consent of the indemnifying
Party, which consent will not be unreasonably withheld or
delayed. In the event the Indemnified Party assumes the
defense of the lawsuit or action, the Indemnified Party will
keep the indemnifying Party reasonably informed about the
progress of any such defense, compromise or settlement.
Subject to Section 8.6, the indemnifying Party will be
liable for any settlement of any action effected pursuant to
and in accordance with this Article VIII and for any final
judgment (subject to any right of appeal) and the
Indemnifying Party agrees to indemnify and hold harmless an
indemnified Party from and against any Losses by reason of
the settlement or judgment.
ARTICLE IX - GENERAL
9.1 Amendments; Waivers.
This Agreement and any attached schedule or
exhibit can be amended only by agreement in writing of all
Parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement or any agreement
contemplated by it will be effective unless in writing and
signed by the Party to be bound and then only to the
specific purpose, extent and instance so provided.
9.2 Schedules; Exhibits; Integration.
Each schedule and exhibit delivered pursuant to
this Agreement will be in writing and will constitute a part
of this Agreement, although schedules need not be attached
to each counterpart of this Agreement. This Agreement,
together with those schedules and exhibits, constitutes the
entire agreement among the Parties pertaining to the subject
matter of this Agreement and supersedes all of the Parties'
prior agreements and understandings in connection therewith,
including, but not limited to, the existing confidentiality
agreement between Buyer and Company.
9.3 Best Efforts; Further Assurances.
Each Party will use its Best Efforts to cause all
conditions to its obligations to be timely satisfied and to
perform and fulfill all obligations on its part to be
performed and fulfilled under this Agreement, to the end
that the Transactions will be effected substantially in
accordance with its terms as soon as feasible. Each Party
will execute and deliver both before and after the Closing
any further certificates, agreements and other documents,
and take any other actions, necessary or desirable to
consummate, implement or evidence the Transactions.
9.4 Governing Law.
This Agreement, the legal relations between the
Parties and any Action, whether contractual or non-
contractual, instituted by any Party with respect to matters
arising under or growing out of or in connection with or in
respect of this Agreement, the Stock Purchase Agreement and
the other Buyer Documents and Seller Documents
(collectively, the "Transaction Agreements"), including but
not limited to the negotiation, execution, interpretation,
coverage, scope, performance, breach, termination, validity,
or enforceability of the Agreements, will be governed by and
construed in accordance with the laws of the State of
California applicable to contracts made and performed in
that state and without regard to conflicts of law doctrines,
except to the extent that certain matters are preempted by
federal law or are governed as a matter of controlling law
by the law of the State of Delaware, Buyer's jurisdiction of
incorporation. Each Party irrevocably submits to and
accepts for itself and its properties, generally and
unconditionally, the exclusive jurisdiction of and service
of process pursuant to the laws of the State of California
and the rules of its courts, waives any defense of forum non
conveniens and agrees to be bound by any judgment rendered
thereby arising under or out of in respect of or in
connection with the Transaction Agreements or any related
document or obligation. Each Party further irrevocably
designates and appoints the individual identified in or
pursuant to Section 9.10 to receive notices on its behalf,
as its agent to receive on its behalf service of all process
in any such Action before any body, such service being
hereby acknowledged to be effective and binding service in
every respect (copies of notices or service to counsel for a
party are not notice or service of process for purposes of
this Agreement). A copy of any such process so served will
be mailed by registered mail to each Party at its address
provided in Section 9.10; provided that, unless otherwise
provided by applicable law, any failure to mail that copy
will not affect the validity of the service of process. If
any agent so appointed refuses to accept service, the
designating Party agrees that service of process sufficient
for personal jurisdiction in any action against it in the
applicable jurisdiction can be made by registered or
certified mail, return receipt requested, to its address
provided in Section 9.10. Each Party acknowledges that such
service will be effective and binding in every respect.
Nothing in this Agreement will affect the right to serve
process in any other manner permitted by Law.
9.5 No Assignment.
Neither this Agreement nor any rights or
obligations under it are assignable except that (a) Buyer
can assign its rights under this Agreement (including but
not limited to its rights under Article VIII) to any Buyer
Affiliate or to any post-Closing purchaser of the Shares or
of a substantial part of Company's assets, provided,
however, that any such transferee will be bound by Buyer's
obligations to Company and the Significant Shareholders
under this Agreement; and (b) Dendron and Fronos can merge
with each other without Buyer's consent or liquidate,
reorganize or engage in other restructuring transactions
with the consent of Buyer, which consent will not be
unreasonably withheld.
9.6 Headings.
The descriptive headings of the Articles, Sections
and subsections of this Agreement are for convenience only
and do not constitute a part of this Agreement.
9.7 Counterparts.
This Agreement and any amendment to it or any
other agreement (or document) delivered pursuant to this
Agreement can be executed in one or more counterparts and by
different Parties in separate counterparts. All these
counterparts will constitute one and the same agreement (or
other document) and will become effective (unless otherwise
provided therein) when one or more counterparts have been
signed by each Party and delivered to the other Party.
9.8 Publicity and Reports.
Company and Buyer will coordinate all publicity
relating to the Transactions and no Party will issue any
press release, publicity statement or other public notice
relating to this Agreement, or the Transactions, without
obtaining the prior consent of both Company and Buyer except
to the extent that independent legal counsel to Company or
Buyer, as the case may be, delivers a written opinion to the
other Party that a particular action is required by
applicable Law. Company will obtain Buyer's prior consent
to the form and content of any application or report made to
any Governmental Entity or that relates to this Agreement.
9.9 Notices.
Any notice or other communication hereunder must
be given in writing and (a) delivered in person,
(b) transmitted by telex, telefax or telecommunications
mechanism or (c) mailed, postage prepaid, receipt requested
as follows:
If to Buyer, addressed to:
The XxxXxxx-Xxxxxxxxxx Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
With a copy (which does not constitute notice or
service of process) to:
O'Melveny & Xxxxx LLP
1999 Avenue of the Stars, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: D. Xxxxxxx Xxxxxx
Fax: (000) 000-0000
If to Company, addressed to:
MARC Analysis Research Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
If to the Significant Shareholders, addressed to:
Dendron Technology B.V. or Fronos Technology B.V.
X/X Xxxxxxxx Xxxxxxxxxx
Xxxxxxxxx 0
X-000 00 Xxxxxx
Xxxxxx
If to the Shareholder Representative, addressed to
Xxxx X. Xxxxxxx
XXXX Analysis Research Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
With copies of any notice to Company, the
Significant Shareholders or the Shareholder
Representative (which does not constitute notice
or service of process) to:
Xxxxxx & Xxxxx LLP
000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxxxx
Fax: (000) 000-0000
and
Nearchos Irinarchos (at the address given above
for Mr. Irinarchos)
or to any other address or to such other Person either Party
has last designated by notice to the other Party. Each such
notice or other communication will be effective (i) if given
by telecommunication, when transmitted to the applicable
number so specified in (or pursuant to) this Section 9.9 and
an appropriate answerback is received, (ii) if given by
mail, three days after the communication is deposited in the
mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when
actually received at that address.
9.10 Expenses and Attorneys Fees.
The Parties will each pay their own respective
expenses incident to the negotiation, preparation and
performance of this Agreement and the Transactions,
including the fees, expenses and disbursements of their
respective investment bankers, accountants and counsel;
provided, however, that, (a) Company's expenses in excess of
$450,000 will be paid for by the Significant Shareholders to
the extent not covered by the Shareholder Expense Reserve
established under the Escrow Agreement and will not be paid
by Company; and (b) Buyer will pay the fee for the
contemplated filing under the Xxxx-Xxxxx-Xxxxxx Act. In the
event of any Action for the breach of this Agreement or
misrepresentation by any Party, the prevailing Party will be
entitled to reasonable attorney's fees, costs and expenses
incurred in connection with the Action.
9.11 Shareholder Representative.
Each Significant Shareholder hereby appoints, and
each Shareholder and Option Holder will appoint (through the
Letter of Transmittal and the approval of the Merger and
related Transactions by the Shareholders, in the case of the
Shareholders, and by another appropriate instrument in the
case of the Option Holders), Xxxx X. Xxxxxxx (in that
capacity, the "Shareholder Representative") the true and
lawful agents and attorneys-in-fact of each Shareholder and
Option Holder in his or her name, place and xxxxx, with full
power and authority to act, including full power of
substitution, in the name of, for and on behalf of each
Shareholder and Option Holder relating to any matters
arising in connection with, or related to the following
actions and omissions:
(a) compromise and settlement of any indemnification
claims; and any and all acts and omissions involving the
Shareholders in any way related to or in furtherance of this
Agreement and the Escrow Agreement; and
(b) provision of instructions and notices for
distributions and any other actions under the Escrow Agreement;
provided, however, that any payments to be made to the
Shareholders and Option Holders will be made directly to the
Shareholders and Option Holders and not to the Shareholder
Representative. The Shareholder Representative can make,
exchange, acknowledge and deliver any and all agreements,
certificates, receipts or other documents, and in general do
all things and take all actions, that the Shareholder
Representative, in his sole discretion consider necessary or
proper in connection with, or to carry out the purposes of,
the Transactions.
9.12 Specific Performance.
The Parties each acknowledge that, in view of the
uniqueness of the Business and the Transactions, each Party
would not have an adequate remedy at law for money damages
in the event that this Agreement has not been performed in
accordance with its terms, and therefore agrees that the
other Party will be entitled to specific enforcement of this
Agreement in addition to any other remedy to which it may be
entitled, at law or in equity.
9.13 Agreement to Arbitrate.
(a) General. Any controversy, dispute or claim
under, arising out of, in connection with or in relation to the
Agreements (other than the Escrow Agreement and matters
covered by Section 1.6(b)), including the negotiation,
execution, interpretation, construction, coverage, scope,
performance, non-performance, breach, termination, validity
or enforceability of those Agreements or this Section 9.13
will be determined by arbitration conducted in accordance
with the Commercial Arbitration Rules or then existing rules
for commercial arbitration of the American Arbitration
Association. The arbitration will additionally be governed
by the California Arbitration Act. The arbitration will be
before a single arbitrator selected by mutual agreement of
the Parties from among a list of seven potential arbitrators
provided by the American Arbitration Association. If the
Parties cannot agree on an arbitrator from this first list,
the Parties will select an arbitrator for the arbitration
from a second list of seven potential arbitrators provided
by the American Arbitration Association with Buyer on the
one hand, and the Shareholder Representatives, on the other,
alternately striking names, with the last name remaining to
be the arbitrator so selected. If either Party seeks a
temporary restraining order, preliminary injunction or other
provisional relief, Section 1281.8 of the California Code of
Civil Procedure will apply. The arbitration of such issues,
including any Party's rights to specific performance
pursuant to Section 9.12 or any other provision of the
Agreements providing for specific performance or to any
award of damages suffered by any Party by reason of the acts
or omissions of any Party, will be final and binding upon
the Parties to the maximum extent permitted by law. The
Parties intend that this Section will be valid, binding,
enforceable and irrevocable and will survive the termination
of this Agreement.
(b) Choice of Law. This Section 9.13, and any
proceedings under it, will be subject to Section 9.4.
(c) Place of Arbitration. Any arbitration
proceedings under this Agreement will be held in Los Angeles,
California.
(d) Judgment. Judgment upon any award rendered by
the arbitrator(s) can be entered by any court having
jurisdiction thereof.
ARTICLE X - DEFINITIONS
10.1 Definitions.
For all purposes of this Agreement, except as
otherwise expressly provided,
(a) the terms defined in this Article X have the
meanings given them in this Article X and include the plural
as well as the singular,
(b) all accounting terms not otherwise defined in
this Agreement have the meanings assigned under GAAP.
(c) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of the
body of this Agreement,
(d) pronouns of either gender or neuter will include,
as appropriate, the other pronoun forms,
(e) the words "herein," "hereof" and "hereunder" and
similar words refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision, and
(f) the word "including" does not imply any
limitation.
As used in this Agreement and the Exhibits and
Schedules delivered pursuant to this Agreement, the
following definitions apply.
"Accountants" is defined in Section 1.6.
"Acquired Companies" is defined in the Recitals.
"Action" means any action, complaint, petition,
investigation, suit or other proceeding, whether civil or
criminal, in law or in equity, or before any arbitrator or
Governmental Entity.
"Affiliate" means a Person that directly, or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, a
specified Person.
"Agreement" means this Agreement as amended or
supplemented together with all Exhibits and Schedules
attached or incorporated by reference.
"Agreement of Merger" means an agreement of merger
to be filed with the Office of the Secretary of State of the
State of California, substantially in the form of Exhibit G.
"Aggregate Exercise Price" means, with respect to
any Company Option, an amount equal to the product of
(a) the exercise price per share of that Company Option,
multiplied by (b) the aggregate number of Shares issuable
upon the exercise in full of the Company Option.
"Aggregate Merger Consideration" means
$20,276,198.
"Approval" means any approval, authorization,
consent, qualification or registration, or any waiver of any
of the foregoing, required to be obtained from, or any
notice, statement or other communication required to be
filed with or delivered to, any Governmental Entity or any
other Person.
"Associate" of a Person means (a) a corporation or
organization (other than Company or a Party to this
Agreement) of which that Person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities; (b) any trust or
other estate in which that Person has a substantial
beneficial interest or as to which the Person serves as
trustee or in a similar capacity; and (iii) any relative or
spouse of that individual or any relative of such spouse.
"Auditors" means PricewaterhouseCoopers, LLP,
Company's independent public accountants.
"Balance Sheet" is defined in Section 2.3(a).
"Best Efforts" means the efforts a prudent Person
who wanted to achieve a result would use in similar
circumstances to see that the result was achieved as quickly
as possible; provided, however, that an obligation to use
Best Efforts under this Agreement does not require the
Person subject to that obligation to take actions that would
result in a materially adverse change in the benefits to
that Person of this Agreement and the Transactions.
"Business" means the business of the Acquired
Companies, and will be deemed to include any of the
following incidents of that business: income, cash flow,
operations, condition (financial or other), assets and
properties (whether owned or used), anticipated revenues,
prospects, rights, policies, liabilities, goodwill and
personnel.
"Buyer Documents" means this Agreement and the
other Agreements signed by Buyer (or a Buyer Affiliate) in
connection with this Agreement, including the Consulting
Agreement, the Escrow Agreement, the Stock Purchase
Agreement and the following documents described in the Stock
Purchase Agreement: the Indenture, the Registration Rights
Agreement, the Warrant Agreement and the Notes .
"Cancelled Shares" is defined in Section 1.4.
"Certificate" means a certificate that represented
issued and outstanding Shares immediately before the
Effective Time.
"CGCL" means the General Corporation Law of the
State of California.
"Claim" is defined in Section 8.7.
"Claim Notice" is defined in Section 8.7.
"Closing" is defined in Section 1.2.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as
amended, or as hereafter amended.
"Common Stock" means the common stock, par value
$1/50> per share, of Company.
"Company" is defined in the opening paragraph.
"Company Options" means the options, warrants or
other agreements for the issuance of Company Equity
Securities listed on Schedule 2.2.
"Competing Transaction" is defined in Section 4.7.
"Consulting Agreement" means the Consulting
Agreement between Buyer (or a Buyer Affiliate) and Pan
Cosmos A.B., a Swedish corporation, in substantially the
form of Exhibit H.
"Contract" means any agreement, arrangement, bond,
commitment, franchise, indemnity, indenture, instrument,
lease, license or understanding, whether or not in writing.
"Copyright Law" means the Copyright Laws of the
U.S., Title 17 U.S.C. section 101 et. seq.
"Dissenting Shares" is defined in Section 1.6(a).
"Effective Date" is defined in Section 1.3.
"Effective Time" is defined in Section 1.3.
"Encumbrance" means any claim, charge, easement,
encumbrance, lease, covenant, security interest, lien,
option, pledge, rights of others, or restriction (whether on
voting, sale, transfer, disposition or otherwise), whether
imposed by agreement, understanding, law, equity or
otherwise, except for any restrictions on transfer generally
arising under any applicable federal or state securities
law.
"Equity Securities" means any capital stock or
other equity interest or any securities convertible into or
exchangeable for capital stock or any other rights, warrants
or options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the related
regulations and published interpretations.
"ERISA Affiliate" is defined in Section 2.13(c).
"Escrow" is defined in Section 8.6(b).
"Escrow Agreement" means the escrow agreement
substantially in the form of Exhibit I.
"Escrowed Assets" is defined in Section 8.6(b).
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Amount" means an amount (before any
adjustment under this Agreement) equal to the quotient
obtained by dividing (i) the Aggregate Merger Consideration
by (ii) Total Outstanding Shares.
"GAAP" means generally accepted accounting
principles in the United States, as in effect from time to
time.
"Governmental Entity" means any government or any
agency, district, bureau, board, commission, court,
department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal,
state or local, domestic or foreign.
"Group" means, individually and collectively,
(a) Company, (b) any Significant Shareholder, (c) the
Company's Subsidiaries and (d) any Person as to which
Company is liable for Taxes incurred by that Person as
transferee, pursuant to Treasury Regulations 1.1502-6 or
pursuant to other provisions of Law.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the related regulations and published interpretations.
"Hazardous Substance" means (but will not be
limited to) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Laws as
"hazardous substances," "hazardous materials," "hazardous
wastes" or "toxic substances," or any other formulation
intended to define, list or classify substances by reason of
deleterious properties such as ignitibility, corrosivity,
reactivity, radioactivity, carcinogenicity, reproductive
toxicity or "EP toxicity," and petroleum and drilling
fluids, produced waters and other wastes associated with the
exploration, development, or production of crude oil,
natural gas or geothermal energy.
"Indemnified Buyer Party" is defined in Section
8.3.
"Indemnified Party" is defined in Section 8.4.
"Indemnified Seller Party" is defined in Section
8.4.
"Intangible Property" means any trade secret,
secret process or other confidential information or know-how
and any and all Intellectual Property Rights.
"Intellectual Property Rights" means any and all
(by whatever name or term known or designated) tangible and
intangible and now known or hereafter existing (a) rights
associated with works of authorship, including but not
limited to copyrights (including the sole and exclusive
right to prepare "derivative works" (as defined in the
Copyright Law) of the copyrighted work and to copy,
manufacture, reproduce, distribute copies of, modify,
publicly perform and display the copyrighted work and all
derivative works thereof) and moral rights (including any
right to identification of authorship and any limitation on
subsequent modification), (b) rights in and relating to the
protection of trademarks, service marks, trade names,
goodwill, rights in packaging, rights of publicity and
privacy, merchandising rights and similar rights, (c) rights
in and relating to the protection of trade secrets and
confidential information, (d) patents, designs, algorithms
and other industrial property rights and rights associated
therewith, (e) other intellectual and industrial property
and proprietary rights (of every kind and nature however
designated) relating to intangible property that are
analogous to any of the foregoing rights (including logos,
character rights, "rental rights" and rights to
remuneration), whether arising by operation of law,
contract, license or otherwise, (f) registrations,
applications, renewals, extensions, continuations,
divisions, or reissues thereof now or hereafter in force
throughout the universe (including rights in any of the
foregoing), and (g) rights in and relating to the sole and
exclusive possession, ownership and use of any of the
foregoing, including the right to license and sublicense,
franchise, assign, pledge, mortgage, sell, transfer, convey,
grant, gift over, divide, partition and use (or not use) in
any way any of the foregoing now or hereafter (including any
claims and causes of action of any kind with respect to, and
any other rights relating to the enforcement of, any of the
foregoing).
"Interim Balance Sheet" is defined in Section
2.3(b).
"IRS" means the Internal Revenue Service or any
successor entity.
"Knowledge" of an individual means his or her
actual knowledge and will be deemed to exist with respect to
a particular matter if a prudent individual could be
expected to discover or otherwise become aware of it in the
course of conducting a reasonably comprehensive
investigation concerning its existence. A Person (other
than an individual) will be deemed to have "Knowledge" of a
particular matter if any individual who is serving, or who
has at any time served, as a director, officer, partner,
executor, or trustee of that Person (or in any similar
capacity) has, or at any time had, Knowledge of the matter.
"Law" means any constitutional provision, statute
or other law, rule, regulation, or interpretation of any
Governmental Entity and any Order.
"Letter of Transmittal" is defined in Section 1.5.
"Loss" means any action, cost, damage,
disbursement, expense, liability, loss, deficiency,
diminution in value, obligation, penalty or settlement of
any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying
costs, penalties, costs of remedial or corrective action
(including clean-up costs), legal, accounting and other
professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims
and amounts paid in settlement, that may be imposed on or
otherwise incurred or suffered by the specified Person.
"Material Contract" means any Contract material to
the business of the subject Person as of or after the date
of this Agreement and includes those contracts deemed
material by Section 2.6.
"Material Misstatement" means, with respect to any
statement or document, an untrue statement of a material
fact or an omission to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
"Merger" is defined in the Recitals.
"Merger Consideration" is defined in Section
1.4(a).
"Merger Sub" is defined in the first paragraph.
"Non-Competition Agreement" means the Non-
Competition Agreement between Buyer (or a Buyer Affiliate)
and Nearchos Irinarchos in substantially the form of Exhibit
J.
"Option Holders" means holders of Company Options.
"Order" means any decree, injunction, judgment,
order, ruling, assessment or writ.
"Ordinary Course" means an action taken in
connection with the Business that is consistent with the
past practices in the ordinary course of the normal day-to-
day operations of the Business;
"Parties" means the parties to this Agreement,
unless otherwise specified.
"PBGC" means the Pension Benefit Guaranty
Corporation or any successor to it.
"Permit" means any license, permit, franchise,
certificate of authority, or order, or any waiver of the
foregoing, issued, granted or given by any Governmental
Entity pursuant to any Law.
"Person" means an association, a corporation, an
individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Plans" is defined in Section 2.13(a)(i).
"Qualified Plans" is defined in
Section 2.13(b)(i).
"SEC" means the Securities and Exchange Commission
or any successor entity.
"Securities Act" means the Securities Act of 1933,
as amended.
"Seller Documents" means this Agreement and the
other instruments signed by Company and/or one or more of
the Significant Shareholders, including the Non-Competition
Agreement, Escrow Agreement, Consulting Agreement, Stock
Purchase Agreement, and Registration Rights Agreement.
"Shareholders" means the holders of Shares.
"Shareholder Representative" is defined in Section
9.12.
"Shares" is defined in the Recitals.
"Significant Shareholders" is defined in the
Recitals.
"Stock Purchase" is defined in the Recitals
"Stock Purchase Agreement" is defined in the
Recitals.
"Stock Purchase Closing" means the closing of the
transactions under the Stock Purchase Agreement.
"Straddle Period" is defined in Section 2.5(i)
"Subsidiary" means any Person in which Company has
a direct or indirect equity interest in excess of 50%.
"Survival Period" is defined in Section 8.5.
"Surviving Corporation" is defined in Section 1.1.
"Tax" means any foreign, federal, state, county or
local income, sales, use, excise, franchise, ad valorem,
real and personal property, transfer, gross receipt, stamp,
premium, profits, customs, duties, windfall profits, capital
stock, production, business and occupation, disability,
employment, payroll, severance or withholding taxes, fees,
assessments or charges of any kind whatever imposed by any
Governmental Entity, any interest and penalties (civil or
criminal), additions to tax, payments in lieu of taxes or
additional amounts related thereto or to the nonpayment
thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
"Tax Return" means a declaration, statement,
report, return or other document or information required to
be filed or supplied with respect to Taxes including, where
permitted or required, combined or consolidated returns for
any group of entities that includes any Acquired Company.
"Threatened" means, with respect to an Action,
dispute or other matter, that a demand or statement has been
made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred
or any other circumstances exist, that would lead a prudent
Person to conclude that such an Action, dispute or other
matter is likely to be asserted, commenced, taken or
otherwise pursued in the future.
"Total Aggregate Exercise Price" means the sum of
the Aggregate Exercise Prices of all Company Options
outstanding immediately before the Effective Time.
"Total Outstanding Shares" means an amount equal
to the sum of (a) the aggregate number of Shares issued and
outstanding immediately before the Effective Time, and
(b) the aggregate number of Shares issuable upon the
conversion, exercise or exchange of all securities
convertible into, or exercisable or exchangeable for,
Shares, including all Shares issuable upon the exercise of
all Company Options outstanding immediately before the
Effective Time; provided, however, that for purposes of
determining the number of Total Outstanding Shares, all
Shares held by Buyer or any Buyer Affiliate as a result of
the Stock Purchase Agreement will be excluded.
"Trade Secret" means all know-how, trade secrets,
confidential information, customer lists, software,
technical information, data, process technology, plans,
drawings and blue prints owned, used or licensed by the
Acquired Companies as licensee or licensor.
"Transaction Agreements" is defined in
Section 9.4.
"Transactions" means all of the transactions
contemplated by or referred to in this Agreement, including
(a) the Merger; (b) the Stock Purchase; (c) the execution,
delivery and performance of this Agreement and the Stock
Purchase Agreement; and (d) Buyer's acquisition of Company
through the Stock Purchase and the Merger.
"Warrant Agreement" means the Warrant Agreement
executed and delivered under the Stock Purchase Agreement.
"Warrants" is defined in Section 1.2 of the Stock
Purchase Agreement.
IN WITNESS WHEREOF, each Party has caused this
Agreement to be executed by its duly authorized officers as
of the day and year first above written.
BUYER
By: /s/ Xxxxx Xxxxx, Xx.
----------------------------
Its: Chief Executive Officer
By: /s/ Xxxxx X. Xxxxx
----------------------------
Its: Chief Financial Officer
and Secretary
COMPANY
By: /s/ Xxxx X. Xxxxxxx
----------------------------
Its: Vice-President of Finance
and Administration
By: /s/ Xxx X. Xxxxxxxx
----------------------------
Its: Secretary
MSC HOLDINGS CO. II
By: /s/ Xxxxx Xxxxx, Xx.
----------------------------
Its: President
By: /s/ Xxxxx X. Xxxxx
----------------------------
Its: Secretary
DENDRON TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
----------------------------
Its: General Manager
FRONOS TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
----------------------------
Its: General Manager
NEARCHOS IRINARCHOS
/s/ Nearchos Irinarchos
--------------------------------
