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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
JSB SOFTWARE TECHNOLOGIES plc,
SPYGLASS, INC.
AND
SURFWATCH SOFTWARE, INC.
SEPTEMBER 20, 1999
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TABLE OF CONTENTS
Page
ARTICLE I. THE PURCHASE AND SALE OF SHARES ................................ 2
1.1. PURCHASE AND SALE OF THE SHARES .................................. 2
1.2. CLOSING .......................................................... 2
1.3. CONSIDERATION .................................................... 2
1.4. DELIVERIES AT THE CLOSING ........................................ 3
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF PARENT AND TARGET ........... 3
2.1. ORGANIZATION, STANDING AND POWER ................................. 4
2.2. CAPITALIZATION; TITLE TO THE SHARES .............................. 4
2.3. AUTHORITY ........................................................ 5
2.4. SUFFICIENCY OF ASSETS ............................................ 5
2.5. FINANCIAL STATEMENTS ............................................. 6
2.6. ABSENCE OF CERTAIN CHANGES ....................................... 6
2.7. ABSENCE OF UNDISCLOSED LIABILITIES ............................... 6
2.8. LITIGATION ....................................................... 7
2.9. RESTRICTIONS ON BUSINESS ACTIVITIES .............................. 7
2.10 GOVERNMENTAL AUTHORIZATION ...................................... 7
2.11 PROPERTY ........................................................ 7
2.12 INTELLECTUAL PROPERTY ........................................... 7
2.13 ENVIRONMENTAL MATTERS ........................................... 9
2.14 TAX MATTERS ..................................................... 11
2.15 EMPLOYEE BENEFIT PLANS .......................................... 13
2.16 CERTAIN AGREEMENTS AFFECTED BY THIS AGREEMENT ................... 14
2.17 EMPLOYEE MATTERS ................................................ 14
2.18 INTERESTED PARTY TRANSACTIONS ................................... 16
2.19 COMPLIANCE WITH LAWS ............................................ 16
2.20 MINUTE BOOKS .................................................... 16
2.21 COMPLETE COPIES OF MATERIALS .................................... 16
2.22 BROKERS' AND FINDERS' FEES ...................................... 17
2.23 VOTE REQUIRED ................................................... 17
2.24 BOARD APPROVAL .................................................. 17
2.25 ACCOUNTS RECEIVABLE ............................................. 17
2.26 CUSTOMERS AND SUPPLIERS ......................................... 17
2.27 MATERIAL CONTRACTS .............................................. 17
2.28 NO BREACH OF MATERIAL CONTRACTS ................................. 18
2.29 MATERIAL THIRD PARTY CONSENTS ................................... 19
2.30 EXPORT CONTROL LAWS ............................................. 19
2.31 PRODUCT RELEASES ................................................ 19
2.32 YEAR 2000 . ..................................................... 19
2.33 SECURITIES LAW MATTERS .......................................... 19
2.34 REPRESENTATIONS COMPLETE ........................................ 19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF ACQUIROR ................... 20
3.1. ORGANIZATION, STANDING AND POWER ................................. 20
3.2. AUTHORITY ........................................................ 20
3.3. CAPITALIZATION; ACQUIROR SHARES .................................. 20
3.4. FINANCIAL STATEMENTS ............................................. 21
3.5. LITIGATION ....................................................... 21
3.6. FILINGS .......................................................... 21
3.7. BROKERS' AND FINDERS' FEES ....................................... 22
ARTICLE IV. CONDUCT PRIOR TO THE CLOSING DATE ............................. 22
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4.1. CONDUCT OF BUSINESS............................................. 22
4.2. RESTRICTION ON CONDUCT OF THE BUSINESS.......................... 23
4.3. NO SOLICITATION................................................. 25
ARTICLE V. ADDITIONAL AGREEMENTS......................................... 25
5.1. LOCK-UP AGREEMENT............................................... 25
5.2. ACCESS TO INFORMATION........................................... 25
5.3. CONFIDENTIALITY................................................. 26
5.4. PUBLIC DISCLOSURE............................................... 26
5.5. CONSENTS; COOPERATION........................................... 26
5.6. LEGAL REQUIREMENTS.............................................. 27
5.7. TRANSFERRED EMPLOYEES........................................... 28
5.8. EMPLOYEE PLANS.................................................. 28
5.9. COVENANT NOT TO COMPETE......................................... 28
5.10. COMMERCIALLY REASONABLE EFFORTS AND FURTHER ASSURANCES....... 29
5.11. SHARES LISTING............................................... 30
5.12. INTERIM SERVICES AGREEMENT................................... 30
5.13. PRICING AGREEMENT............................................ 30
5.14. WORKING CAPITAL.............................................. 30
5.15. INTER-COMPANY BALANCES....................................... 30
5.16. AUDITED FINANCIAL STATEMENTS................................. 30
ARTICLE VI. CONDITIONS TO THE CLOSING.................................... 31
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE CLOSING... 31
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT.................. 31
6.3. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR............ 32
ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER........................... 33
7.1. TERMINATION..................................................... 33
7.2. EFFECT OF TERMINATION........................................... 34
7.3. EXPENSES AND TERMINATION FEES................................... 34
7.4. AMENDMENT....................................................... 35
7.5. EXTENSION; WAIVER............................................... 35
ARTICLE VIII. INDEMNIFICATION............................................ 35
8.1. INDEMNIFICATION................................................. 35
ARTICLE IX. GENERAL PROVISIONS........................................... 38
9.1. SURVIVAL........................................................ 38
9.2. NOTICES......................................................... 38
9.3. INTERPRETATION.................................................. 39
9.4. COUNTERPARTS.................................................... 39
9.5. ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST......... 39
9.6. SEVERABILITY.................................................... 39
9.7. REMEDIES CUMULATIVE............................................. 40
9.8. RULES OF CONSTRUCTION........................................... 40
9.9. GOVERNING LAW................................................... 40
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of September 20, 1999, by and between JSB Software Technologies
plc, a plc incorporated in England and Wales under the Companies Act of 1985
("ACQUIROR"), Spyglass, Inc., a Delaware corporation ("PARENT") and SurfWatch
Software, Inc., a California corporation ("TARGET").
RECITALS
A. Target is engaged in the business of developing,
marketing, distributing and selling software and services for the filtering of
content accessible via the Internet (the "BUSINESS").
B. Parent owns all of the outstanding capital stock of
Target, consisting of 1,000 shares of common stock, par value $.01 per share
(the "SHARES").
C. Parent desires to sell to Acquiror, and Acquiror desires
to acquire from Parent, the Shares, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the covenants,
representations and other agreements set forth herein, and for other good and
valuable consideration, the parties agree as follows:
ARTICLE I.
THE PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale of the Shares. Upon the terms and
subject to the conditions set forth in this Agreement, Acquiror agrees to
purchase from Parent, and Parent agrees to sell and deliver to Acquiror, the
Shares.
1.2. Closing. The closing of the transactions contemplated
hereby (the "CLOSING") shall take place on October 29, 1999 or, if all of the
conditions to the obligations of the parties hereto to consummate the
transactions contemplated at the Closing have not been satisfied or waived by
such date, on the date of the satisfaction or waiver of all such conditions
(excluding the delivery of any documents to be delivered at the Closing) set
forth in Article VI (the date and time of the Closing is herein called the
"CLOSING DATE"), provided, that Acquiror shall give Parent at least three (3)
business days prior notice of the satisfaction of the closing condition set
forth in Sections 6.2(c) and 6.3(g) hereof. The Closing shall take place at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX 00000, or at such other location as Acquiror and Parent may mutually agree.
1.3. Consideration. In consideration of the sale of the
Shares at Closing, Acquiror shall at the Closing:
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(i) pay to Parent the amount of U.S. $17,000,000 in cash by
wire transfer of immediately available funds to an account
designated by Parent at least two (2) business days prior to the
Closing Date; and
(ii) issue to Parent a number of ordinary shares of Acquiror
as determined by dividing U.S. $12,000,000 (the "STOCK
CONSIDERATION") by (unless the offering price is in U.S. Dollars)
the product of (x) the initial offering price on the date of
admission to trading of the shares (whether in share form or via a
depositary receipt) on EASDAQ or the London Stock Exchange and (y)
the closing mid-point spot exchange rate for British Pounds and
U.S. Dollars for such date as reported in the Financial Times
(London edition) on the next publication date following such date
or, if the offering price is in U.S. Dollars, that number of
ordinary shares as determined by dividing U.S. $12,000,000 by the
initial offering price (the "ACQUIROR SHARES"). In the event that
the number of Acquiror Shares, together with any other ordinary
shares or other instruments convertible into or representing
ordinary shares held by Parent or its affiliates or subsidiaries,
aggregate greater than 29.9% of the outstanding ordinary shares of
Acquiror on the Closing Date, Acquiror shall pay Parent on the
Closing Date an amount in cash (and decrease the amount of the
Stock Consideration by such amount) such that the number of
ordinary shares issued to Parent pursuant to this clause (ii)
shall not cause such event to occur.
1.4. Deliveries at the Closing.
(a) Parent shall deliver to Acquiror the certificates representing
the Shares, accompanied by stock transfer forms in favor of Acquiror or, if
required by Acquiror, in favor of one of its subsidiaries, in proper form duly
executed and attested to the satisfaction of Acquiror and its counsel.
(b) Parent and Target shall deliver to Acquiror all other
documents and instruments required hereunder to be delivered by (or at the
direction of) Parent or Target to Acquiror at the Closing.
(c) Acquiror shall (i) deliver by wire transfer of immediately
available funds an amount equal to U.S. $17,000,000, plus any additional amount
payable under Section 1.3(ii), if any, to an account designated by Parent, (ii)
deliver to Parent a stock certificate representing the Acquiror Shares and (iii)
deliver to Parent all other documents and instruments required hereunder to be
delivered by Acquiror to Parent at the Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF PARENT AND TARGET
Any reference to any event, change, condition or effect being
"MATERIAL" with respect to any entity or group of entities means any event,
change, condition or effect which (i) is material to the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, prospects, operations or results of operations of such entity or group
of entities and its or their subsidiaries, taken as a whole or (ii) would
prevent or materially alter or
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delay any of the transactions contemplated by this Agreement. Any reference to a
"MATERIAL ADVERSE EFFECT" with respect to any entity or group of entities means
any event, change or effect that (x) is materially adverse to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, prospects, operations or results of operations of such
entity or group of entities and its or their subsidiaries, taken as a whole or
(y) would prevent or materially alter or delay any of the transactions
contemplated by this Agreement.
Any reference to a party's "KNOWLEDGE" means (i) with respect to
any natural person, the actual knowledge, after reasonable inquiry, of such
person, or (ii) with respect to any corporation or entity, the actual knowledge
of such party's officers and directors provided that such persons shall have
made reasonable inquiry of those employees of such party whom such officers and
directors reasonably believe would have actual knowledge of the matters
represented.
Except as disclosed in the disclosure schedule (referencing the
appropriate section and paragraph numbers) delivered by Parent and Target to
Acquiror simultaneously with the execution and delivery of this Agreement (the
"DISCLOSURE SCHEDULE"), Parent and Target, jointly and severally, represent and
warrant to Acquiror as follows:
2.1. Organization, Standing and Power. Each of Parent and Target is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of Parent and Target has the
corporate power to own its properties and to carry on the Business as now being
conducted and as currently proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on
Target. Target has delivered a true and correct copy of the Articles of
Incorporation and Bylaws of Target, as amended to date, to Acquiror. Target is
not in violation of any of the provisions of its Articles of Incorporation and
Bylaws or equivalent organizational documents. Target does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
2.2. Capitalization; Title to the Shares. The authorized capital
stock of Target consists of 1,000 shares of common stock, par value $.01 per
share, of which there were issued and outstanding as of the close of business on
the date hereof 1,000 shares of common stock, all of which are owned by Parent.
There are no other outstanding shares of capital stock or voting securities and
no outstanding commitments to issue any shares of capital stock or voting
securities of Target. All outstanding shares of Target capital stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any
liens or encumbrances, and are not subject to preemptive rights or rights of
first refusal created by statute, the Articles of Incorporation or Bylaws of
Target or any agreement to which Parent or Target is a party or by which it is
bound. Upon the Closing, Acquiror will receive good and valid title to the
Shares, subject to no liens or encumbrances retained, granted or permitted by
Parent or Target. There are no other options, warrants, calls, rights,
commitments or agreements of any character to which Parent or Target is a party
or by which either is bound obligating Parent or Target to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of capital stock of Target or obligating Parent or Target
to grant, extend,
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accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. Except for the
agreements contemplated by this Agreement, there are no contracts, commitments
or agreements in effect relating to voting, purchase or sale of Target's capital
stock between or among Parent and any of its securityholders.
2.3. Authority. Parent and Target have all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of Parent and Target. This
Agreement has been duly executed and delivered by Parent and Target and
constitutes the valid and binding obligation of Parent and Target enforceable
against Parent and Target in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity. Except as set
forth in Schedule 2.3 of the Disclosure Schedule, the execution and delivery of
this Agreement by Target does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under (i) any provision of the Articles of Incorporation or
Bylaws of Parent or Target, or (ii) any Material Contract (as defined in Section
2.28 hereof) or any material permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Target
or any of its properties or assets. Except as set forth in Schedule 2.3 of the
Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to Parent or Target or any of Parent's
subsidiaries in connection with the execution and delivery this Agreement or the
consummation of the transactions contemplated hereby, except for such consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not reasonably be expected to have a Material Adverse Effect on the
Business and would not prevent, or materially alter or delay any of the
transactions contemplated by this Agreement.
2.4. Sufficiency of Assets. Except as set forth on Schedule 2.4,
Target has good and valid title to, or, in the case of leased properties and
assets, a valid leasehold interest in, all of its tangible and intangible
properties and assets, real, personal and mixed, including, without limitation,
Intellectual Property (as defined in Section 2.12), used or held for use in the
Business, free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances, options or claims of any kind or
nature whatsoever ("LIENS"), except for Permitted Liens (as defined below). Such
properties and assets constitute the only property and assets necessary to carry
on the Business as presently conducted or as intended by Target to be conducted.
As used herein, "PERMITTED LIENS" means (i) any statutory Lien arising in the
ordinary course of business by operation of law with respect to a liability that
is not yet due or delinquent and (ii) any minor imperfection of title or similar
Lien which individually or in the aggregate with other such Liens does not
materially impair the value of the property or asset subject to such Lien or the
use of such property or asset in the conduct of the Business.
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2.5. Financial Statements. Parent has delivered to Acquiror draft
audited consolidated financial statements of Target as at, and for the fiscal
year ended September 30, 1998 and as at and for the interim period ended July
31, 1999 (collectively, the "FINANCIAL STATEMENTS"). The Financial Statements
are true, accurate and correct in all material respects and have been prepared
in accordance with U.S. generally accepted accounting principles (except that
the draft Financial Statements do not contain footnotes) applied on a consistent
basis throughout the periods indicated and with each other. The Financial
Statements fairly present the consolidated financial condition and operating
results of the Business and Target as of the dates, and for the periods,
indicated therein. The audited consolidated financial statements of Target as
at, and for the fiscal year ended September 30, 1998 and as at and for the
interim period ended July 31, 1999, in the form delivered by Parent's
independent public accountants in their audit report to Parent, will not contain
any material changes from the Financial Statements, except for the existence of
footnotes thereto. Target maintains an adequate system of internal controls
established and administered in accordance with U.S. generally accepted
accounting principles. Neither Parent, nor any "ultimate parent entity" (within
the meaning of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended ("HSR")) of Parent has annual net sales or total assets of $100 million
or more.
2.6. Absence of Certain Changes. Since July 31, 1999 (the "TARGET
BALANCE SHEET DATE"), except as set forth in Schedule 2.6 of the Disclosure
Schedule, each of Parent and Target has conducted its business in the ordinary
course consistent with past practice and there has not occurred with respect to
the Business: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect on the Business; (ii) any acquisition, sale or transfer
of any material asset of Target; (iii) any alteration in the manner in which
Parent or Target keeps its books, accounts or records relating to the Business
or in the accounting practices therein reflected, including the recognition and
computation of accrued expenses; (iv) any material contract entered into by
Target, or any material amendment or termination of, or default under, any
material contract to which Target is a party or by which it is bound; (v) any
amendment or change to the Articles of Incorporation and Bylaws of Target; (vi)
any material increase in or modification of the compensation or benefits payable
or to become payable by Target or Parent or any of their respective subsidiaries
to any directors or employees of Target; (vii) any damage destruction or loss,
whether or not covered by insurance, which has had a Material Adverse Effect on
Target; (viii) the incurrence by Target of any indebtedness for borrowed money
or commitment to borrow money or any guaranty, direct or indirect, of
indebtedness of others, or any prepayment of long-term debt, except for
borrowings in the ordinary course of business; or (ix) any agreement by Target
to do any of the things described in the preceding clauses (i) through (viii)
(other than negotiations with Acquiror and its representatives regarding the
transactions contemplated by this Agreement).
2.7. Absence of Undisclosed Liabilities. Target has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in the Financial Statements as of the Target Balance
Sheet Date (the "TARGET BALANCE SHEET"), (ii) those incurred in the ordinary
course of business and not required to be set forth in the Target Balance Sheet
under U.S. generally accepted accounting principles and (iii) those incurred in
the ordinary course of business since the Target Balance Sheet Date and
consistent with past practice.
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2.8. Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Parent or Target,
threatened in writing against Parent or Target or any of their respective
subsidiaries or any of their properties or any of their respective officers or
directors (in their capacities as such) relating to the Business. There is no
judgment, decree or order against Target or Parent or any of their subsidiaries,
or any of their directors or officers (in their capacities as such), that could
prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that would reasonably be expected to have a
Material Adverse Effect on the Business. Schedule 2.8 to the Disclosure Schedule
also lists all litigation that Target or Parent or any of their respective
subsidiaries has pending against other parties relating to the Business.
2.9. Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Target or Parent or any of
their respective subsidiaries which has or could reasonably be expected to have
the effect of prohibiting the Business or impairing the right of Target to
conduct the Business.
2.10. Governmental Authorization. Each of Target and Parent and
their respective subsidiaries has obtained each federal, state, county, local or
foreign governmental consent, license, permit, grant, or other authorization of
a Governmental Entity (i) pursuant to which Target or Parent or any of their
respective subsidiaries currently operates or holds any interest in any of its
properties relating to the Business or (ii) that is required for the operation
of the Business or the holding of any such interest ((i) and (ii) herein
collectively called "TARGET AUTHORIZATIONS"), and all of such Target
Authorizations are in full force and effect, except where the failure to obtain
or have any such Target Authorizations would not reasonably be expected to have
a Material Adverse Effect on the Business.
2.11. Property.
(a) Schedule 2.11(a) to the Disclosure Schedule identifies
each parcel of real property owned or leased by Target or any of its
subsidiaries. All of the buildings, fixtures and other improvements
located on the real property are in good operating condition and
repair, subject to normal wear and tear, and the operation thereof
is not in violation of any applicable building code, zoning
ordinance or other law or regulation.
(b) Schedule 2.11(b) lists (i) each item of tangible personal
property owned by Target or Parent or their respective subsidiaries
related to the Business which is to be transferred to Acquiror
pursuant hereto having on the date hereof a depreciated book value
in excess of $10,000 and (ii) an identification of the owner of, and
any agreement relating to the use of, each item of material tangible
personal property the rights to which are to be transferred to
Acquiror pursuant hereto under leases or other similar agreements.
Each item of such tangible personal property is located on the real
property listed above and is in good operating condition and repair
subject to normal wear and tear. Routine maintenance has been
performed on all of the tangible personal property in the ordinary
course of business.
2.12. Intellectual Property.
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(a) Each of Target or Parent or their respective subsidiaries
owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names and service
marks (whether or not registered), and all goodwill associated with
the foregoing, copyrights (whether or not registered), and any
applications therefor, internet domain names and any applications
therefor, maskworks, net lists, schematics, technology, know-how,
trade secrets, inventions (whether or not patented), ideas,
algorithms, processes, computer software programs or applications
(in source code and/or object code form), and tangible or intangible
information or material, in each case of a confidential or
proprietary nature, that are used or proposed by Target to be used
in the Business as currently conducted, but excluding U.S. Patent
No. 5,884,033 issued to Parent ("INTELLECTUAL PROPERTY"). Except as
disclosed in paragraph (a) of Schedule 2.12 to the Disclosure
Schedule, neither Target nor Parent nor any of their respective
subsidiaries has, directly or indirectly (i) licensed any of its
Intellectual Property in source code form to any party, (ii) entered
into any agreement requiring Parent or any of its subsidiaries to
license or otherwise provide future versions, upgrades or
enhancements of its Intellectual Property in source code form or
(iii) entered into any exclusive agreements relating to its
Intellectual Property with any party.
(b) Paragraph (b) of Schedule 2.12 to the Disclosure Schedule
lists (i) all patents and patent applications and all registered and
unregistered trademarks, trade names and service marks, registered
copyrights and maskworks, included in the Intellectual Property
owned by Target or Parent or any of their respective subsidiaries,
including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any application for
such issuance and registration has been filed, (ii) all licenses,
sublicenses and other agreements to which Target or Parent or any of
their respective subsidiaries is a party and pursuant to which any
person other than Target or Parent and their respective subsidiaries
is authorized to use any Intellectual Property owned by Target or
Parent or any of their respective subsidiaries, and (iii) other than
Commercial Software, all licenses, sublicenses and other agreements
to which Target or Parent or any of their respective subsidiaries is
a party and pursuant to which Target or Parent or any of their
respective subsidiaries is authorized to use any third party
patents, trademarks or copyrights, including software ("THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS") which are incorporated in, are, or
form a part of any product of Target or are used in the performance
of any service by Target. "COMMERCIAL SOFTWARE" means packaged
commercially available software programs generally available to the
public in computer software which have been licensed to Target or
Parent or any of their respective subsidiaries pursuant to end-user
licenses and which are used in the Business but are in no way a
component of or incorporated in or specifically required to develop
or support any of the Business' products and related trademarks,
technology and know how.
(c) To the knowledge of Target and Parent, there is no
unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property rights of Target or Parent or any of their
respective subsidiaries, or any Intellectual Property right of any
third party to the extent licensed by or through Target or Parent or
any of their respective subsidiaries, by any third party, including
any employee or former employee of Target or Parent or any of their
respective subsidiaries. Neither Target nor Parent nor any of their
respective subsidiaries has entered into any agreement to indemnify
any other person
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against any charge of infringement of any Intellectual Property,
other than indemnification provisions contained in purchase orders
or license agreements arising in the ordinary course of business.
(d) Neither Target nor Parent nor any of their respective
subsidiaries is, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights.
(e) All patents, registered trademarks, registered service
marks and registered copyrights held by Target or Parent or any of
their respective subsidiaries relating to the Business are valid and
subsisting. Neither Target nor Parent nor any of their respective
subsidiaries (i) is or has been the subject of any current pending
or threatened in writing suit, action or proceeding which involves a
claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary
right of any third party relating to the Business or (ii) has
brought or threatened in writing to bring any action, suit or
proceeding for infringement of Intellectual Property or breach of
any license or agreement involving Intellectual Property against any
third party. The reproduction, manufacturing, distribution,
marketing, licensing, sublicensing, use, sale, and importation of
Intellectual Property do not infringe any patent, registered
trademark, registered service xxxx, registered copyright, trade
secret or other proprietary right of any third party.
(f) Each of Target and Parent and their respective
subsidiaries has secured valid written assignments from all
consultants and employees who contributed to the creation or
development of Intellectual Property owned by Target or Parent and
their respective subsidiaries of the rights to such contributions
that Target, Parent and/or their respective subsidiaries does not
already own by operation of law.
(g) Each of Target, Parent and their respective subsidiaries
has taken all reasonably necessary and appropriate steps to protect
and preserve the confidentiality of all of Target, Parent and their
respective subsidiaries' Intellectual Property not otherwise
protected by patents, patent applications or copyright
("CONFIDENTIAL INFORMATION"). All use, disclosure or appropriation
of Confidential Information owned by Target or its subsidiaries by
or to a third party has been pursuant to the terms of a written
agreement between Target and/or its subsidiaries, on the one hand,
and such third party, on the other hand, pursuant to which the third
party undertakes to protect and not disclose Target Confidential
Information. All use, disclosure or appropriation of Confidential
Information not owned by Target has been pursuant to the terms of a
written agreement between Target and the owner of such Confidential
Information, or is otherwise lawful.
(h) Except as set forth in the Disclosure Schedule, following
the Closing, neither Parent nor any of its subsidiaries or
affiliates (other than Target) will have any rights in or ownership
of any technology used for the filtering of content accessible via
the Internet.
2.13. Environmental Matters.
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(a) The following terms shall be defined as follows:
(iii) "ENVIRONMENTAL AND SAFETY LAWS" shall mean any laws,
ordinances, codes, regulations, rules, policies and orders
that are intended to assure the protection of the environment,
or that classify, regulate, call for the remediation of,
require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or
which are intended to assure the safety of employees, workers
or other persons, including the public.
(iv) "HAZARDOUS MATERIALS" shall mean any toxic or
hazardous substance, material or waste or any pollutant or
contaminant, or infectious or radioactive substance or
material, including without limitation, those substances,
materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(v) "PROPERTY" shall mean all real property leased or
owned by Target or any of its subsidiaries either currently or
in the past.
(vi) "FACILITIES" shall mean all buildings and
improvements on the Property of Target or any of its
subsidiaries.
(b) Parent and Target represent and warrant as follows: (i) to
the knowledge of Parent and Target, no methylene chloride or
asbestos is contained in or has been used at or released from the
Facilities; (ii) to the knowledge of Parent and Target, all
Hazardous Materials and wastes have been stored, labeled, handled,
released, treated, processed, deposited, transported, documented and
disposed of in accordance with all Environmental and Safety Laws;
(iii) neither Target nor any of its subsidiaries has received any
notice (verbal or written) of any non-compliance of the Facilities
or its past or present operations with Environmental and Safety
Laws; (iv) there have not been nor are there threatened or pending
any civil or criminal actions, notices of violations,
investigations, administrative proceedings or written communications
alleging violations from any private party, governmental body or
other regulatory authority under any Environmental and Safety Laws
against Parent or Target or any of its assets or any of the
directors, employees or officers of Parent or Target relating to the
Business; (v) none of the Properties is or has been contaminated
with any Hazardous Material or any substance regulated by
Environmental and Safety Laws; (vi) to the knowledge of Parent and
Target, neither Parent nor Target is a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), or foreign analogous statute, arising
out of events occurring prior to the Closing Date; (vii) to the
knowledge of Parent and Target, there have not been in the past and
are not now, any Hazardous Materials on, under or migrating to or
from the Facilities or Property; (viii) to the knowledge of Parent
and Target, there have not been in the past, and are not now, any
underground tanks or underground improvements at, on or under the
Property including without limitation, treatment or storage tanks,
sumps, or water, gas or oil xxxxx; (ix) to the knowledge of Parent
and Target, there are no polychlorinated biphenyls (PCBs) deposited,
stored, disposed of or located on the Property or Facilities or
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any equipment on the Property containing PCBs at levels in excess of
50 parts per million; (x) to the knowledge of Parent and Target,
there is no formaldehyde on the Property or in the Facilities, nor
any insulating material containing urea formaldehyde in the
Facilities; (xi) the Facilities and Parent's and Target's uses and
activities therein have at all times complied in all material
respects with all Environmental and Safety Laws; (xii) Parent and
Target and their respective subsidiaries have all the permits and
licenses required to be issued under Environmental and Safety Laws
in connection with the Business and are in compliance in all
material respects with the terms and conditions of those permits;
(xiii) Parent and Target are not required to register or meet any
obligations under the Producer Responsibility Obligations (Packaging
Waste) Regulations 1997 (as amended); and (xiv) Parent and Target
have maintained all records and information required to be
maintained under Environmental and Safety Laws.
2.14. Tax Matters.
(a) For the purposes of this Agreement, "TAX" or,
collectively, "TAXES", means (i) any and all federal, state, local
and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
capital, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a
result of being a member of an affiliated, consolidated, combined or
unitary group for any period; and (iii) any liability for the
payment of any amounts of the type described in clause (i) or (ii)
as a result of any express or implied obligation to indemnify any
other person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Target, and any consolidated, combined, unitary or
aggregate group for Tax purposes of which Target, Parent or
any of their subsidiaries is or has been a member, as of the
Closing will have prepared and timely filed all required
federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to any
and all Taxes concerning or attributable to Target or the
Business or such group of companies, and such Returns are true
and correct and have been completed in accordance with
applicable law.
(ii) Target as of the Closing: (A) will have paid all
Taxes it is required to pay and will have withheld with
respect to its employees all federal and state income taxes,
Federal Insurance Contribution Act ("FICA"), Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld, and (B) has accrued on the Target Balance Sheet all
Taxes attributable to the periods prior to the Target Balance
Sheet and will not have incurred any liability for Taxes for
the period after the Target Balance Sheet Date and prior to
the Closing other than in the ordinary course of business.
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(iii) Target has not been delinquent in the payment of any
Tax, nor is there any Tax deficiency outstanding, assessed or,
to the knowledge of Target or Parent, proposed against Target,
nor has Target executed any waiver of any statute of
limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of Target
is presently in progress, nor has Target been notified of any
request for such an audit or other examination.
(v) Target has no liabilities for unpaid federal, state,
local and foreign Taxes which have not been accrued or
reserved on the Target Balance Sheet, whether asserted or
unasserted, contingent or otherwise, and Target has not
incurred any liability for Taxes since the date of the Target
Balance Sheet other than in the ordinary course of business.
(vi) Target has made available to Acquiror or its legal
counsel, copies of all foreign, federal, state and local
income and all state and local sales and use Returns for
Target filed for all periods since its inception.
(vii) There are (and immediately following the Closing
there will be) no Liens on the assets of Target relating to or
attributable to Taxes other than Liens for Taxes not yet due
and payable.
(viii) Neither Target nor Parent has knowledge of any
basis for the assertion of any claim relating or attributable
to Taxes which, if adversely determined, would result in any
Lien on the assets of Target.
(ix) None of Target's assets is treated as "tax-exempt use
property," within the meaning of Section 168(h) of the Code.
(x) Target has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(4)
of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by Target.
(xi) Target is not a party to any tax sharing,
indemnification or allocation agreement nor does Target owe
any amount under any such agreement.
(xii) Target's tax basis in its assets for purposes of
determining its future amortization, depreciation and other
federal income Tax deductions is accurately reflected on
Target's tax books and records.
(xiii) Target is not, and has not been at any time, a
"United States Real Property Holding Corporation" within the
meaning of Section 897(c)(2) of the Code or a "personal
holding company" within the meaning of Section 542 of the
Code.
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(xiv) No adjustment relating to any Return filed by Target
has been proposed to Target formally or informally by any tax
authority to Target or any representative thereof.
(xv) Target files its income Tax Returns on the accrual
basis.
(xvi) Target has not been and will not be required to
include any material adjustment in Taxable income for any Tax
period pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign laws as a result
of transactions, events or accounting methods employed prior
to the Closing.
(xvii) Neither Target nor any of its subsidiaries has
filed any disclosure under Section 6662 of the Code or
comparable provisions of state, local or foreign law to
prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax return or report.
(c) There is no contract, agreement, plan or arrangement to
which Target is a party as of the date hereof, including but not
limited to the provisions of this Agreement, covering any employee
or former employee of Target, which, individually or collectively,
could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(d) Parent has had an opportunity to review with its own tax
advisors the tax consequences to it of the transactions contemplated
by this Agreement. Parent understands that it must rely solely on
its advisors and not on any statements or representations by
Acquiror, Target or any of their respective agents. Parent
understands that it (and not Acquiror or Target) shall be
responsible for its own tax liability that may arise as a result of
the other transactions contemplated by this Agreement.
2.15. Employee Benefit Plans.
(a) All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other arrangements
covering any active or former employee, director or consultant of
Target or any trade or business (whether or not incorporated) which
is a member of a controlled group or which is under common control
with Target within the meaning of Section 414 of the Code, or with
respect to which Target has or may in the future have liability, are
listed on Section 2.15 of the Disclosure Schedule (the "PLANS").
(b) Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Code,
which are applicable to such Plans. No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary
course of Plan activities) has been brought, or to the knowledge of
Parent and Target is threatened in writing, against or with respect
to any such Plan. All contributions, reserves or premium payments
required to be made or accrued as of the date hereof to the Plans
have been timely made or accrued. Section 2.15 of the
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Disclosure Schedule includes a listing of the accrued vacation
liability of Target as of the Target Balance Sheet Date. Any Plan
intended to be qualified under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code (i) has
either obtained a favorable determination, notification, advisory
and/or opinion letter, as applicable, as to its qualified status
from the Internal Revenue Service or still has a remaining period of
time under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such letter and to make
any amendments necessary to obtain a favorable determination, and
(ii) incorporates or has been amended to incorporate all provisions
required to comply with the Tax Reform Act of 1986 and subsequent
legislation. Target has furnished or made available to Acquiror
copies of the most recent Internal Revenue Service letters, if any,
and the most recent Form 5500 with respect to any such Plan.
(c) Neither Target nor any of its affiliates has at any time
ever maintained, established, sponsored, participated in, or
contributed to any plan subject to Title IV of ERISA or Section 412
of the Code and at no time has Target or any of its affiliates
contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA. Neither Target nor any
officer or director of Target is subject to any liability or penalty
under Section 4975 through 4980B of the Code or Title 1 of ERISA.
There are no audits, inquiries or proceedings pending or, to the
knowledge of Parent and Target, threatened by the IRS or Department
of Labor with respect to any Plan. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA,
has occurred with respect to any Plan.
(d) None of the Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by
applicable law, including but not limited to, the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and
Target has never represented, promised or contracted (whether in
oral or written form) to provide such retiree benefits to any
employee, former employee, director, consultant or other person,
except to the extent required by statute.
2.16. Certain Agreements Affected by this Agreement. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, contractual or
statutory redundancy pay, golden parachute, liquidated damages, damages for
breach of contract or wrongful dismissal, compensation in respect of unfair
dismissal, bonus or otherwise) becoming due to any present or former director or
employee or consultant of Target, (ii) materially increase or create any power
to augment or augment any benefits otherwise payable by Target in respect of any
present or former director or employee of Target or (iii) result in the
acceleration of the time of payment or vesting of any such benefits. No payment
which will or may be made by Target or any of its subsidiaries to any employee
will be characterized as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
2.17. Employee Matters.
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(a) Each of Target and Parent and their respective
subsidiaries (with respect to the Transferred Employees (as
hereinafter defined in Section 5.8) is in compliance in all material
respects with all currently applicable laws and regulations and
other requirements having the force of law (including without
limitation codes of practice, orders and awards) respecting
employment, the prevention or prohibition of unlawful harassment and
discrimination in or in connection with employment, terms and
conditions of employment, wages, hours and occupational safety and
health and employment practices, in connection with all present and
former directors, employees and consultants of Target and any of its
subsidiaries and trade unions and employee representatives and with
all collective bargaining agreements with respect to such employees
and trade unions.
(b) Each of Target and Parent and their respective
subsidiaries has, in relation to all Transferred Employees and
consultants withheld all amounts required by law or by agreement to
be withheld from the wages, salaries, and other payments to
employees; and has, in relation to such persons, discharged its
obligations in full and is not liable for any arrears in respect of
wages, salaries, fees, commission, bonus, overtime pay, holiday pay,
sick pay, employer pension contribution (and employee pension
contribution where relevant) and any other benefits and emoluments
or any taxes or national insurance contributions and is not liable
in respect of any penalty for failure to comply with any of the
foregoing.
(c) Neither Target nor Parent nor their respective
subsidiaries (with respect to the Transferred Employees) is liable
for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation
benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal
course of business and consistent with past practice).
(d) There are no material pending claims against Target or
Parent or their respective subsidiaries (with respect to the
Transferred Employees) under any workers compensation plan or policy
or for long term disability.
(e) There are no controversies or disputes (whether
industrial, trade or otherwise) pending or, to the knowledge of
Parent and Target, threatened, between Target or Parent and their
respective subsidiaries on the one hand, and any of the Transferred
Employees or former employees of Target on the other hand, which
controversies have or could reasonably be expected to result in an
action, suit, proceeding, claim, arbitration or investigation
involving Target before any agency, court or tribunal in the United
States or in any other jurisdiction.
(f) Neither Target nor Parent nor any of their respective
subsidiaries is a party to any collective bargaining agreement or
other labor union contract or any form of agreement or arrangement
(whether oral or in writing or existing by reason of custom and
practice and whether or not legally binding) with any labor union or
other employees' representatives or organization concerning or
affecting Target employees and the Transferred Employees nor does
Target or Parent know of any activities or proceedings of any labor
union or organize any such employees. Further, neither Target nor
Parent
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nor any of their respective subsidiaries, so far as they are aware,
has done any act which might be construed as recognition of a labor
union and there has been no request for recognition from any labor
union.
(g) To the knowledge of Parent and Target, no employees of
Target or the Transferred Employees are in violation of any term of
any employment contract, patent disclosure agreement, noncompetition
agreement, confidentiality agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be
employed by Target because of the nature of the Business or to the
use of trade secrets or proprietary information of others.
(h) No Transferred Employees have given notice to Target or
Parent, nor is Target or Parent otherwise aware, that any such key
employee or officer intends to terminate his or her employment.
2.18. Interested Party Transactions. Except as set forth in Schedule
2.18 of the Disclosure Schedule, neither Target nor Parent nor any of their
respective subsidiaries is indebted to any affiliate of such person, any
director, officer, employee or agent of Target or Parent or any such subsidiary
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses) in any manner relating to the Business, and no such person is
indebted to Target in any manner relating to the Business. No officer, director
or shareholder of Target (nor any ancestor, sibling, descendant or spouse of any
of such persons, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
an interest in any entity which furnished or sold, or furnishes or sells,
services, products or technology that Target furnishes or sells, or proposes to
furnish or sell, or (ii) any interest in any entity that purchases from or sells
or furnishes to Target, any goods or services or (iii) a beneficial interest in
any Material Contract; provided, that ownership of no more than two percent (2%)
of the outstanding voting stock of a publicly traded corporation shall not be
deemed an "interest in any entity" for purposes of this Section 2.18.
2.19. Compliance With Laws. Each of Target and Parent and their
respective subsidiaries has complied with, are not in violation of, and have not
received any notices of violation with respect to, any federal, state, local or
foreign statute, law or regulation with respect to the conduct of the Business,
or the ownership or operation of the Business, except for such violations or
failures to comply as could not be reasonably expected to have a Material
Adverse Effect on Target.
2.20. Minute Books. The minute books of Target and its subsidiaries
made available to Acquiror contain a complete and accurate summary in all
material respects of all meetings of directors and shareholders or actions by
written consent since the time of incorporation of Target and the respective
subsidiaries through the date of this Agreement, and reflect all transactions
referred to in such minutes accurately in all material respects.
2.21. Complete Copies of Materials. Target has delivered or made
available true and complete copies of each document (to the extent applicable or
existing) which has been requested by Acquiror or its counsel in connection with
their legal and accounting review of Target and its subsidiaries.
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2.22. Brokers' and Finders' Fees. Neither Target nor Parent has
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby which could give rise to any claim by any person against
Acquiror (including Target after the Closing) for a finders' fee, agents'
commission or investment bankers' fee or any similar charges.
2.23. Vote Required. No vote of Parent's shareholders is necessary
to approve this Agreement and the transactions contemplated hereby.
2.24. Board Approval. The Board of Directors of Parent has
unanimously (i) approved this Agreement and (ii) determined that the
transactions contemplated herein are advisable.
2.25. Accounts Receivable. Target has made available to Acquiror a
list of all material accounts receivable of Target as of August 31, 1999 along
with a range of days elapsed since invoice. All accounts receivable shown on the
Target Balance Sheet (net of reserves indicated on the Target Balance Sheet) or
thereafter acquired until the Closing Date (net of reserves accrued in the
normal course of business and consistent with past practice) arose in the
ordinary course of business and are valid receivables. The value of any account
receivable, the collection of which is doubtful or which is subject to a defense
or set-off, has been written down to an amount believed by Target to be not in
excess of net realizable value or adequate reserves or allowances therefor have
been provided. The values at which accounts receivable are carried reflect the
accounts receivable valuation policy of Target, which is consistent with its
past practice and in accordance with Target's accounting practices applied on a
consistent basis. To the knowledge of Parent and Target, none of the receivables
of Target is subject to any claim of offset, recoupment, set off, or
counterclaim, and, to the knowledge of Parent and Target, there are no facts or
circumstances (whether asserted or unasserted) that would give rise to any
claim. No receivables are contingent upon the performance by Target of any
obligation or contract (other than receivables under maintenance and support
agreements). No person or entity has any lien, charge, pledge, security
interest, or other encumbrance on any such receivables, and no agreement for
deduction or discount has been made with respect to any of such receivables.
2.26. Customers and Suppliers. No customer which individually
accounted for more than 5% of the Business' gross revenues during the 12-month
period ended June 30, 1999, and no material supplier of the Business, has
canceled or otherwise terminated, or made any written threat to Target or Parent
to cancel or otherwise terminate its relationship with Target or Parent, or has
decreased materially its services or supplies to Target or Parent in the case of
any such supplier, or its usage of the services or products of the Business in
the case of such customer, and to the knowledge of Parent and Target, no such
supplier or customer intends to cancel or otherwise terminate its relationship
with the Business or to decrease materially its services or supplies to the
Business or its usage of the services or products of the Business. Neither
Target nor Parent nor any of their respective subsidiaries has knowingly
breached, so as to provide a benefit to the Business that was not intended by
the parties, any agreement with, or engaged in any fraudulent conduct with
respect to, any customer or supplier of the Business.
2.27. Material Contracts. Except for the contracts and agreements
described in Schedule 2.27 to the Disclosure Schedule (collectively, the
"MATERIAL CONTRACTS"), neither
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Target nor Parent nor any of their respective subsidiaries is a party to or
bound by any material contract relating to the Business, including without
limitation:
(a) any distributor, sales, advertising, agency or
manufacturer's representative contract;
(b) any continuing contract for the purchase of materials,
supplies, equipment or services involving in the case of any such
contact more than $25,000 over the life of the contract;
(c) any material contract that expires or may be renewed at
the option of any person other than Target so as to expire more than
one year after the date of this Agreement;
(d) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any currency
exchange, commodities or other hedging arrangement or any leasing
transaction of the type required to be capitalized in accordance
with generally accepted accounting principles;
(e) any contract for capital expenditures in excess of $10,000
in the aggregate;
(f) any contract limiting the freedom of Target or any of its
subsidiaries to engage in any line of business or to compete with
any other Person as that term is defined in the U.S. Securities
Exchange Act of 1934, as amended, or, other than those entered into
in the ordinary course of business, any confidentiality, secrecy or
non-disclosure contract;
(g) any contract pursuant to which Target is a lessor of any
machinery, equipment, motor vehicles, office furniture, fixtures or
other personal property calling for annual payments in excess of
$10,000;
(h) any contract with any affiliate of Target or any of its
subsidiaries; or
(i) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect
to, the monetary obligations, or indebtedness of any other Person.
2.28. No Breach of Material Contracts. All Material Contracts are in
written form. Each of Target and Parent and their respective subsidiaries has in
all material respects performed the obligations required to be performed by it
and is entitled to all benefits under, and is not alleged to be in default in
respect of any Material Contract. Each of the Material Contracts is in full
force and effect, and there exists no default or event of default or event,
occurrence, condition or act, with respect to Target or Parent or any of their
respective subsidiaries or, to the knowledge of Parent and Target, with respect
to the other contracting party, which, with the giving of notice, the lapse of
time or the happening of any other event or conditions, would reasonably be
expected to become a default or event of default under any Material Contract.
Except for the warranties and indemnities contained in those contracts and
agreements set forth in the Disclosure Schedule, and statutory implied
warranties, Target has not given any warranties
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or indemnities relating to products or technology sold or services rendered by
Target. True, correct and complete copies of all Material Contracts have been
delivered to Acquiror.
2.29. Material Third Party Consents. Schedule 2.29 of the Disclosure
Schedule identifies each Material Contract that would permit the other party to
the contract to terminate the contract or otherwise would require the consent of
such other party as a result of the transactions contemplated by this Agreement.
2.30. Export Control Laws. All export transactions of the Business have
been conducted in accordance with applicable provisions of export control laws
in the country of origin and the country of destination.
2.31. Product Releases. Parent has provided Acquiror a Schedule of
Product Releases related to the Business, which Schedule is attached as Schedule
2.31 to the Disclosure Schedule. Parent has a good faith reasonable belief that
the release of products on the schedule is achievable and is not currently aware
of any change in its circumstances or other fact that has occurred that would
cause it to believe that it will be unable to meet such release schedule.
2.32. Year 2000. All Target Date Sensitive Systems are and shall remain
Year 2000 Compliant. "TARGET DATE SENSITIVE SYSTEMS" means any software,
microcode or hardware system or component that processes date data and that is
installed, in development or on order by Target for its own internal use, or
which Target sells, leases, licenses, assigns or otherwise provides to its
customers, vendors, suppliers, affiliates or any other third party. "YEAR 2000
COMPLIANT" means that, (i) with respect to date data, the software products
correctly process date data before, during, and after January 1, 2000, including
any leap year dates, without any loss in functionality or performance,
including, but not limited to, accepting date data input, producing date data
output, storing date data, and performing calculations on date data or any
portion thereof; (ii) the software products will not cease to function or
function inaccurately, before, during and after January 1, 2000, including on
leap year dates, as a result of the advent of the new century, (iii) the
software products respond to two-digit year date data in a disclosed, defined
and predetermined manner; (iv) the software products store, create, process and
provide output of date data in a manner that is unambiguous as to century; and
(v) the software products recognize the year 2000 as a leap year.
Notwithstanding the foregoing, nothing herein shall be interpreted as a warranty
of Year 2000 Compliance with respect to the Internet. It is acknowledged and
agreed that interruption in the provision of services arising out of any Year
2000 issues relative to the Internet are outside the control of Target.
2.33. Securities Law Matters. Parent is aware of Acquiror's business
affairs and financial condition, and has acquired sufficient information about
Acquiror to reach an informed and knowledgeable decision to acquire the Acquiror
Shares. Parent is acquiring the Acquiror Shares for its own account for
investment purposes only and not with a view to, or for the resale in connection
with, any "distribution" thereof in violation of the Securities Act of 1933, as
amended (the "SECURITIES ACT").
2.34. Representations Complete. None of the representations or
warranties made by Target or Parent herein or in any Schedule hereto, including
the Disclosure Schedule, or certificate furnished by Target or Parent pursuant
to this Agreement, when all such documents
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are read together in their entirety, contains or will contain at the Closing
Date any untrue statement of a material fact, or omits or will omit at the
Closing Date to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to Parent as follows:
3.1. Organization, Standing and Power. Acquiror is a corporation
limited by shares duly organized and validly existing under the laws of its
jurisdiction of organization. Acquiror has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good standing
would have a Material Adverse Effect on Acquiror. Acquiror is not in violation
of any of the provisions of its Memorandum and Articles of Association.
3.2. Authority. Subject to obtaining authority and resolutions from its
shareholders to satisfy the Stock Consideration, (i) Acquiror has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, and (ii) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Acquiror. This
Agreement, when duly executed and delivered in accordance with its terms, will
constitute the valid and binding obligation of Acquiror enforceable against
Acquiror in accordance with its terms except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting the enforcement of creditors' rights generally and
general principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under (i) any provision of the Memorandum and Articles of Association of
Acquiror, as amended, or (ii) any material mortgage, indenture, lease, contract
or other agreement or instrument, permit, concession, franchise, license,
judgment, order or decree applicable to Acquiror or its properties or assets.
Other than the approval of EASDAQ or the London Stock Exchange Limited to the
arrangements proposed for Acquiror's EASDAQ quotation or London Stock Exchange
listing, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or the London Stock
Exchange, is required by or with respect to Acquiror in connection with the
execution and delivery of this Agreement by Acquiror or the consummation by
Acquiror of the transactions contemplated hereby, except for such consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Acquiror and would not
prevent, materially alter or delay any of the transactions contemplated by this
Agreement.
3.3. Capitalization; Acquiror Shares. The authorized share capital of
Acquiror consists of (i) 2,500,000 British Pounds divided into 25,000,000
ordinary shares of 10 Xxxxx
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each, of which 12,325,328 ordinary shares of 10 Xxxxx each are issued, and (ii)
500,595 British Pounds divided into 1,001,990 deferred shares of 50 Xxxxx each,
all of which have been issued, in each case as of the close of business on the
date hereof. On the date hereof, there are no other issued or allotted shares of
capital stock or voting securities and no outstanding commitments to issue any
shares or equity securities of Acquiror. All issued shares of Acquiror capital
stock are duly authorized, validly issued, fully paid and non-assessable and are
free of any liens or encumbrances, and are not subject to preemptive rights or
rights of first refusal created by statute, Acquiror's Memorandum or Articles of
Association or any agreement to which Acquiror is a party or by which it is
bound. The Acquiror Shares to be issued pursuant to this Agreement will, when
issued and delivered in accordance with this Agreement, be duly authorized,
validly issued, fully paid, and non-assessable and will rank pari passu in all
respects with the existing issued ordinary shares of Acquiror.
3.4. Financial Statements. Acquiror has made available to Target the
financial statements of Acquiror as at, and for the fiscal year ended most
recently prior to the date of this Agreement (the "ACQUIROR FINANCIAL
STATEMENTS"). The Acquiror Financial Statements have been prepared in accordance
with U.K. generally accepted accounting principles applied on a basis consistent
throughout the periods indicated and consistent with each other. The Acquiror
Financial Statements present a true and fair view of the consolidated financial
condition and operating results of Acquiror at the dates and during the periods
indicated therein. Acquiror maintains an adequate system of internal controls
established and administered in accordance with U.K. generally accepted
accounting principles. Since the most recent quarter end prior to the date of
this Agreement, Acquiror has conducted its business in the ordinary course
consistent with past practice and there has not occurred (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
would reasonably be expected to result in, a Material Adverse Effect on Acquiror
or (ii) any acquisition, sale or transfer of any material asset of Acquiror.
Neither Acquiror nor any "ultimate parent entity" (within the meaning of HSR) of
Acquiror has total assets or annual net sales of $100 million or more.
3.5. Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Acquiror, threatened
in writing against Acquiror or any of its subsidiaries or any of its properties
or any of its officers or directors (in their capacities as such). There is no
judgment, decree or order against Acquiror or any of its subsidiaries, or any of
its directors or officers (in their capacities as such), that could prevent,
enjoin, or materially alter or delay any of the transactions contemplated by
this Agreement, or that would reasonably be expected to have a Material Adverse
Effect on Acquiror. Other than (i) a claim against Clearview Software in
relation to the unauthorized distribution of components of Multi View software
and (ii) a potential claim for trademark infringement against an Indian company,
Acquiror is not engaged in any material litigation.
3.6. Filings. Acquiror has made available to Parent a correct and
complete copy of each report filed by Acquiror with the Companies Announcement
Office of the London Stock Exchange and the Registrar of Companies in England
and Wales on or after the date of Acquiror's admission to the AIM and prior to
the date of this Agreement (the "ACQUIROR REPORTS"). The Acquiror Reports (a)
were prepared in accordance with the requirements of the Companies Act of 1985
and the AIM rules and (b) did not at the time they were filed (or if
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amended or superseded by a filing prior to the date of this Agreement then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Acquiror Reports comprise all announcements required
to be delivered during that period by Acquiror pursuant to the AIM Admission
Rules of the London Stock Exchange.
3.7. Brokers' and Finders' Fees. Acquiror has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby which
could give rise to any claim by any person against Parent for a finders' fee,
agents' commission or investment bankers' fee or any similar charges.
ARTICLE IV.
CONDUCT PRIOR TO THE CLOSING DATE
4.1. Conduct of Business. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement or the Closing
Date, Target and Parent and their respective subsidiaries (with respect to the
Business) shall: (i) use their reasonable best efforts to take all action and to
do all things necessary, proper or advisable in order to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated by
this Agreement (including satisfaction, but not waiver of, the closing
conditions set forth in Section 6.3); (ii) use their reasonable best efforts
consistent with past practice and policies to preserve intact its and their
respective subsidiaries' present business organizations, keep available the
services of its and their respective subsidiaries' present officers and key
employees and preserve its and their respective subsidiaries' relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its and their respective
subsidiaries' goodwill and ongoing businesses shall be unimpaired at the Closing
Date; (iii) except to the extent expressly contemplated by this Agreement or as
consented to in writing by Acquiror, pay debts and Taxes when due subject to
good faith disputes over such debts or Taxes, and pay or perform other
obligations when due; (iv) deliver to Acquiror a copy of the audited Financial
Statements upon receipt by Parent of the audit report by Ernst & Young LLP; (v)
transfer and assign to Target (x) any Material Contract to which Parent is a
party, or otherwise provide Acquiror with the benefits of such agreements
(insofar as they relate to the Business), and (y) any Intellectual Property
owned by Parent, including, without limitation, the "SurfWatch" trademark
registration and any domain names used in the Business, in each case in form and
substance reasonably acceptable to Acquiror, but excluding intellectual property
underlying services to be provided under the Interim Services Agreement; and
(vi) cooperate with Acquiror in facilitating Acquiror's employment of the
Transferred Employees, including, without limitation, providing Acquiror with
reasonable access to the Transferred Employees. Parent shall promptly notify
Acquiror of any material event or occurrence not in the ordinary course of the
Business or in the event its representations and warranties are discovered to be
untrue as of the time made or in the event Parent determines that such
representations and warranties shall be untrue as if made at and as of the
Closing Date. No disclosure by Parent pursuant to this Section 4.1 however,
shall be deemed to amend or supplement the Disclosure Schedule or to cure any
misrepresentation or breach of warranty.
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4.2. Restriction on Conduct of the Business. During the period from the
date hereof and continuing until the earlier of the termination of this
Agreement or the Closing Date, except as set forth in the Disclosure Schedule
and as expressly contemplated by this Agreement, Target and Parent (with respect
to the Business) shall not do, cause or permit any of the following, without the
prior written consent of Acquiror:
(a) Charter Documents. Cause or permit any amendments to Target's
Articles of Incorporation or Bylaws or other charter or organizational
documents, or form any subsidiaries of Target;
(b) Dividends; Changes in Capital Stock. Declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of Target's capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock;
(c) Material Contracts. Enter into any contract or commitment or
violate, amend or otherwise modify or waive any of the terms of any of
its Material Contracts, other than in the ordinary course of business
consistent with past practice (it being agreed that Acquiror's consent
shall be required for the execution of a contract with WebTrends);
(d) Issuance of Securities. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose the
purchase of, any shares of Target's capital stock or securities
convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating
it to issue any such shares or other convertible securities;
(e) Intellectual Property. Transfer to any person or entity any
rights to its Intellectual Property other than licenses to customers in
the ordinary course of business consistent with past practice;
(f) Exclusive Rights. Enter into or amend any agreements pursuant
to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of Target's
products or technology;
(g) Dispositions. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material,
individually or in the aggregate, to the Business, except for sales or
licenses of products in the ordinary course of business consistent with
past practice;
(h) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(i) Leases. Enter into any operating lease with respect to the
Business;
(j) Payment of Obligations. Pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) relating to
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the Business arising other than in the ordinary course of business
other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in the Financial Statements;
(k) Capital Expenditures. Make any capital expenditures, capital
additions or capital improvements except in the ordinary course of
business and consistent with past practice;
(l) Insurance. Materially reduce the amount of any insurance
coverage provided by existing insurance policies of Target;
(m) Termination or Waiver. Terminate or waive any material right
relating to the Business;
(n) Employee Benefit Plans; New Hires; Pay Increases. Adopt or
amend any employee benefit or stock purchase or option plan, or hire
any new director level or officer or manager level employee, pay any
special bonus or special remuneration to any employee or director or,
other than in the ordinary course consistent with past practice in
connection with scheduled performance reviews, increase the salaries or
wage rates of the employees of Target or the Transferred Employees;
(o) Severance Arrangements. Grant any severance or termination pay
(i) to any director or officer or (ii) to any other employee of the
Business except payments made pursuant to written agreements
outstanding on the date hereof;
(p) Lawsuits. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material
impairment of a valuable aspect of the Business, provided that it
consults with Acquiror prior to the filing of such a suit or (iii) for
a breach of this Agreement;
(q) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to its and its
subsidiaries' business, taken as a whole;
(r) Taxes. Other than in the ordinary course of business, make or
change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or
any amendment to a material Tax Return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable
to any claim or assessment in respect of Taxes;
(s) Revaluation. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
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(t) Year 2000 Compliance. Fail to carry forward in all material
respects Target's Year 2000 assessment and compliance program; or
(u) Other. Take or agree in writing or otherwise to take, any of
the actions described in Sections 4.2(a) through (u) above, or any
action which would make any of its representations or warranties
contained in this Agreement untrue or incorrect or prevent it from
performing or cause it not to perform its covenants hereunder.
4.3. No Solicitation. Subject to Section 7.3(b) hereof, until the
earlier of the Closing Date or the termination of this Agreement, Parent and
Target and their respective directors, officers, agents or representatives will
not (other than with respect to Acquiror) (i) solicit, encourage, initiate or
participate in any negotiations or discussions with respect to any offer or
proposal to acquire all or any portion of the Business whether by purchase of
assets, merger or acquisition of all or substantially all of the capital stock
of Target or otherwise, other than with respect to inventory or non-essential or
excess assets sold in the ordinary course of business (any such negotiations or
discussions hereinafter referred to as an "ACQUISITION PROPOSAL"), (ii) disclose
any information not customarily disclosed to any person concerning the assets or
operations of the Business or afford to any person or entity access to the
properties, books or records of the Business, other than to its advisors or with
respect to inventory or non-essential or excess assets sold in the ordinary
course of business, or (iii) cooperate with any person to make any proposal to
purchase all or any part of the Business (directly or indirectly) other than
inventory or non-essential or excess assets sold in the ordinary course of
business. If Parent or Target or any of their officers, directors, employees,
affiliates or agents receives any Acquisition Proposal or inquiry, or any
request for nonpublic information in connection with any such Acquisition
Proposal or inquiry, Parent or Target will within one business day notify
Acquiror, describing in detail the identity of the person making such
Acquisition Proposal or inquiry and the terms and conditions of such Acquisition
Proposal or inquiry.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. Lock-Up Agreement. Parent hereby agrees, for a period of eighteen
(18) months after the Closing Date (the "LOCK-UP PERIOD"), not to offer to sell,
contract to sell or otherwise sell, dispose of, loan, pledge (except as part of
the pledge of substantially all of the assets of Parent to secure indebtedness)
or grant any rights with respect to any of the Acquiror Shares; provided,
however, that (i) with respect to one-third of the Acquiror Shares, such Lock-Up
Period shall terminate six (6) months after the Closing Date and (ii) with
respect to an additional one-third of the Acquiror Shares, such Lock-Up Period
shall terminate twelve (12) months after the Closing Date. Acquiror may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period of time.
5.2. Access to Information.
(a) Target and Parent shall afford Acquiror and its accountants,
counsel and other representatives, reasonable access during normal
business hours during the period prior to the Closing Date to (i) all
of Target's and its subsidiaries' properties, books, contracts,
commitments and records, and (ii) all other information concerning the
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business, properties and personnel of Target and the Business as
Acquiror may reasonably request. Parent agrees to provide to Acquiror
and its accountants, counsel and other representatives copies of
internal financial statements of Target promptly upon request.
(b) Subject to compliance with applicable law, from the date
hereof until the Closing Date, each of Acquiror, Target and Parent
shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of
materiality and the general status of ongoing operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the transactions contemplated
hereby.
5.3. Confidentiality. The parties acknowledge that Acquiror and Parent
have previously executed a non-disclosure agreement dated June 3, 1999 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms. In addition, the parties
agree that the terms and conditions of the transactions contemplated hereby and
information exchanged in connection with the execution hereof shall be subject
to the same standard of confidentiality as set forth in the Confidentiality
Agreement.
5.4. Public Disclosure. Unless otherwise permitted by this Agreement,
Acquiror and Parent shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD. Notwithstanding the foregoing, Parent agrees that the terms of this
Agreement and the transactions contemplated hereby may be disclosed in any
materials related to the offering described in Section 5.12 hereof, provided
Parent is provided with an opportunity to review such disclosure and grants its
prior written consent to such disclosure, which consent shall not be
unreasonably withheld.
5.5. Consents; Cooperation.
(a) Each of Acquiror and Parent shall promptly apply for or
otherwise seek, and use its commercially reasonable efforts to obtain,
all consents and approvals required to be obtained by it for the
consummation of the transactions contemplated hereby, including those
required under any foreign antitrust laws. Parent and Target shall use
commercially reasonable efforts to obtain all necessary consents,
waivers and approvals under any of its material contracts for the
assignment thereof or otherwise. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one
another, in connection with any analyses, appearances, presentations,
memoranda,
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briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or
relating to any antitrust or fair trade law.
(b) Each of Acquiror and Parent shall use all commercially
reasonable efforts to resolve such objections, if any, as may be
asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement under the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended,
and any other Federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade (collectively, "ANTITRUST LAWS"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated
by this Agreement as violative of any Antitrust Law, each of Acquiror
and Parent shall cooperate and use all commercially reasonable efforts
vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent
(each an "ORDER"), that is in effect and that prohibits, prevents, or
restricts consummation of the transactions contemplated hereby, unless
by mutual agreement Acquiror and Parent decide that litigation is not
in their respective best interests. Notwithstanding the provisions of
the immediately preceding sentence, it is expressly understood and
agreed that neither Acquiror nor Parent shall have any obligation to
litigate or contest any administrative or judicial action or proceeding
or any Order beyond the earlier of (i) the three-month anniversary of
the date hereof or (ii) the date of a ruling preliminarily enjoining
the transactions contemplated hereby issued by a court of competent
jurisdiction. Each of Acquiror and Parent shall use all commercially
reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under Antitrust Laws with respect to
such transactions as promptly as possible after the execution of this
Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
(i) Acquiror shall not be required to divest any of its businesses,
product lines or assets, or to take or agree to take any other action
or agree to any limitation that could reasonably be expected to have a
Material Adverse Effect on Acquiror or on the Business after the
Closing Date and (ii) Parent shall not be required to divest any of its
businesses, product lines or assets, or to take or agree to take any
other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect on Parent.
5.6. Legal Requirements. Each of Acquiror and Parent will, and Parent
will cause Target to, take all reasonable actions necessary to comply in all
material respects promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be
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obtained or made by them in connection with the taking of any action
contemplated by this Agreement.
5.7. Transferred Employees. Immediately after the Closing Date,
Acquiror shall cause each employee of Target (each a "TRANSFERRED EMPLOYEE") to
continue to be employed in his or her respective positions with Target, whether
or not the Transferred Employee is subject to a written employment agreement.
Nothing herein shall require Acquiror after the Closing Date to retain any
Transferred Employee for any specified period of time.
5.8. Employee Plans. (a) As of the Closing Date, Target shall cease to
be a participating employer under the Plans and Parent shall take, or cause to
be taken, all such action as may be necessary to effect such cessation of
participation. Acquiror shall establish and maintain, or shall cause Target to
establish and maintain, as of the Closing Date, for all Transferred Employees,
such employee benefit plans, programs and policies and fringe benefits that
would provide benefits to such Transferred Employees that, in the aggregate, are
substantially equivalent to those provided to current United States employees of
Acquiror. Acquiror shall grant to each Transferred Employee credit for all
service with Target for purposes of eligibility, vesting and, except with
respect to any pension benefit plan (as defined in Section 3(2) of ERISA),
calculation of benefits (except to the extent that crediting such service would
result in the duplication of benefits) under each such employee benefit plan,
program and policy and fringe benefit. With respect to any health benefit plan
provided to the Transferred Employees, Acquiror shall waive any pre-existing
condition exclusion and, for purposes of any applicable deduction fees,
co-payments or out-of-pocket maximums, each Transferred Employee shall receive
credit for all amounts paid by such Transferred Employee under the health
benefit plans of Target and Parent. Acquiror shall not assume any assets,
liabilities or obligations (i) under any Plans for the payment of benefits
accrued, (ii) in the case of medical, dental and hospitalization plans, for
expenses actually incurred prior to the Closing Date, or (iii) for payment of
bonuses or termination or change of control payments pursuant to employment
agreements or otherwise, or similar payments payable to Transferred Employees as
a result of the sale of the Shares contemplated by this Agreement.(b) Prior to
the Closing Date, Parent will cause the vesting of fifty percent (50%) of all
unvested stock options held by Transferred Employees to be accelerated,
effective as of the Closing Date and conditioned upon the consummation of the
transactions contemplated by this Agreement. Acquiror agrees to offset any
compensation expense incurred by Parent as a result of such acceleration of
stock options up to a maximum amount of $140,000.
5.9. Covenant Not to Compete.
(a) Parent covenants and agrees that, if the Closing is
consummated and except as permitted under this Section 5.10, for a
period of five years after the Closing Date, it will not, and will
cause its subsidiaries not to, directly or indirectly, (i) engage in
the Business, (ii) render any services of a nature provided by Target
prior to the Closing to any person engaged in the Business, (iii)
become interested in any person engaged in the Business as a partner,
shareholder, member, manager, principal, agent, trustee, director,
officer, consultant or in any other similar relationship or capacity,
in each case in any location in which Acquiror or any subsidiary of
Acquiror (including Target after the Closing Date) engages in such
business as of the day before the Closing Date;
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provided, however, that nothing herein shall be construed to prevent
Parent or any of its subsidiaries from (A) holding the Acquiror Shares
or from owning, solely as an investment, securities of any person that
is publicly traded on any national securities exchange if such party
(x) is not a controlling person or a member of a group which controls
such person, and (y) does not, directly or indirectly, own in the
aggregate 2% or more of any class of securities of such person or (B)
exercising its rights under the Pricing Agreement.
(b) It is the desire and intent of the parties that the provisions
of this Section 5.9 shall be enforced to the fullest extent permitted
under the laws and public policies of each jurisdiction in which
enforcement is sought. If any court determines that any provision of
this Section 5.9 is unenforceable, such court shall have the power to
reduce the duration or scope of such provision, as the case may be, or
terminate such provision and, in reduced form, such provision shall be
enforceable; it is the intention of the parties that the foregoing
restrictions shall not be terminated, unless so terminated by a court,
but shall be deemed amended to the extent required to render them valid
and enforceable, such amendment to only apply with respect to the
operation of this Section 5.9 in the jurisdiction of the court that has
made the adjudication.
(c) Parent covenants and agrees that, if the Closing is
consummated, for a period of five years after the Closing Date, it will
not, and will cause its subsidiaries not to, directly or indirectly,
solicit for employment, either as an employee or consultant, any
employee or independent contractor of Acquiror or any of its
subsidiaries to become an employee or consultant or otherwise provide
services to Parent or any of its subsidiaries; provided, however, that
nothing in this paragraph (c) shall be construed as (i) prohibiting
Parent or any of its subsidiaries from conducting any general
solicitation (including by placing advertisements in any form or
method) not targeted at employees or independent contractors of
Acquiror and its subsidiaries or (ii) retaining the services of a
consultant or independent contractor of Acquiror for purposes unrelated
to the Business, provided that it does not impair such consultant's or
independent contractor's rendering of services to Acquiror.
(d) The parties acknowledge and agree that the restrictions
contained in this Section 5.9 are a reasonable and necessary protection
of the immediate interest of Acquiror, and any violation of these
restrictions would cause substantial injury to Acquiror and Acquiror
would not have entered into this Agreement without receiving the
additional consideration offered by Parent in binding itself to these
restrictions. In the event of a breach or a threatened breach by Parent
or any of its subsidiaries of these restrictions, Acquiror shall be
entitled to apply to any court of competent jurisdiction for an
injunction restraining such person from such breach of threatened
breach (without the necessity of providing the inadequacy of money
damages as a remedy); provided, however, that the right to apply for
injunctive relief shall not be construed as prohibiting Acquiror from
pursuing any other available remedies for such breach or threatened
breach.
5.10. Commercially Reasonable Efforts and Further Assurances. Each of
the parties to this Agreement shall use its commercially reasonable efforts to
effectuate the transactions
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contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
5.11. Shares Listing. Acquiror shall use its reasonable best efforts to
(i) consummate an underwritten offering of ordinary shares or ADRs, as the case
may be, of Acquiror to be listed for trading on EASDAQ or the London Stock
Exchange by October 29, 1999, and (ii) make all filings mandated by law or by
EASDAQ or the London Stock Exchange that are necessary for the Acquiror Shares
to be listed on such exchange. In addition, Acquiror shall use its reasonable
best efforts to ensure that the Acquiror Shares may be freely sold by Parent as
the Acquiror Shares are released from the lock-up described in Section 5.1.
5.12. Interim Services Agreement. In connection with the consummation
of the transactions contemplated by this Agreement, Parent and Acquiror covenant
and agree to negotiate in good faith and enter into an Interim Services
Agreement in form and substance reasonably acceptable to Parent and Acquiror
("INTERIM SERVICES AGREEMENT") on the Closing Date, relating to the transitional
services described on Appendix A hereto which Parent will provide to Acquiror at
cost for a four-month period following the Closing Date (or such shorter period
of time as may be specified by written notice from Acquiror to Parent delivered
at least 30 days prior to the expiration of such shorter period of time).
5.13. Pricing Agreement. In connection with the consummation of the
transactions contemplated by this Agreement, Parent and Acquiror covenant and
agree to negotiate in good faith and enter into a Pricing Agreement containing
the terms described on Appendix B hereto and otherwise in form and substance
reasonably acceptable to Parent and Acquiror ("PRICING AGREEMENT") on the
Closing Date.
5.14. Working Capital. Parent shall use commercially reasonable efforts
to ensure that the working capital of Target as of the Closing Date is
substantially equivalent to the working capital of Target as of July 31, 1999,
as calculated based on the Financial Statements (the "Target Amount"). If the
working capital of Target as of the Closing Date is less than the Target Amount,
Parent shall pay to Acquiror (in U.S. dollars) the amount of such deficiency
within 30 days following the Closing Date. If the working capital of Target as
of the Closing Date is greater than the Target Amount, Acquiror shall pay to
Parent (in U.S. dollars) the amount of such excess within 30 days following the
Closing Date. The determination of the working capital of Target as of the
Closing Date shall be done mutually by Parent and Acquiror, working in
cooperation with each other. For purposes of this Section 5.14, the working
capital of Target shall mean the current assets of Target less the current
liabilities of Target, excluding any inter-company accounts between Target and
Parent or any subsidiary or affiliate of Parent and excluding deferred revenue,
in all cases calculated in accordance with U.S. generally accepted accounting
principles.
5.15. Inter-Company Balances. Parent shall eliminate all inter-company
balances between Target and Parent or any subsidiary or affiliate of Parent,
effective as of the Closing.
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5.16 Audited Financial Statements. Parent will ensure that the audited
consolidated financial statements of Target as referred to in Section 2.5 hereof
and delivered by Parent's independent public accountants in their audit report
to Parent are delivered to Acquiror by midday (UK time) on September 25, 1999.
ARTICLE VI.
CONDITIONS TO THE CLOSING
6.1. Conditions to Obligations of Each Party to Effect the Closing. The
respective obligations of each party to this Agreement to consummate and effect
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of which
may be waived, in writing, by agreement of all the parties hereto:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
Governmental Entity or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; nor shall there be any action taken,
or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the transactions contemplated hereby, which makes
the consummation of the transactions contemplated hereby illegal. In
the event an injunction or other order shall have been issued, each
party agrees to use its reasonable efforts to have such injunction or
other order lifted.
(b) Governmental Approval. Acquiror, Parent and Target, their
respective subsidiaries shall have timely obtained from each
Governmental Entity all material approvals, waivers and consents, if
any, necessary for consummation of or in connection with the several
transactions contemplated hereby.
6.2. Additional Conditions to Obligations of Parent. The obligations
of Parent to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Acquiror in this Agreement shall be
true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a
reference to materiality, which representations and warranties as so
qualified shall be true in all respects) on and as of the Closing Date
as though such representations and warranties were made on and as of
such time, except to the extent that the inaccuracy of any such
representation or warranty, individually or in the aggregate, is the
result of the conduct of Acquiror's business in the ordinary course of
business consistent with past practice and except to the extent that
the inaccuracy of the representations and warranties
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contained in Section 3.5 is the result of any litigation instituted by
Parent or any of its subsidiaries or affiliates, and (ii) Acquiror
shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Date.
(b) Certificate of Acquiror. Parent shall have been provided with
a certificate executed on behalf of Acquiror by an officer of Acquiror
to the effect set forth in Section 6.2(a).
(c) Listing of Acquiror Shares. Acquiror shall have consummated an
underwritten offering of ordinary shares or ADRs, as the case may be,
of Acquiror to be listed on EASDAQ or the London Stock Exchange and
shall have received payment therefor, and the Acquiror Shares shall be
available to be listed on such exchange, subject only to any customary
documents and actions to be executed or taken by Parent to obtain such
listing.
(d) Pricing Agreement. Acquiror and Parent shall have entered into
the Pricing Agreement.
(e) Legal Opinion. Parent shall have received a legal opinion from
Acquiror's legal counsel in the United Kingdom in form and substance
reasonable and customary for transactions of this nature.
6.3. Additional Conditions to the Obligations of Acquiror.
The obligations of Acquiror to consummate and effect the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, by Acquiror:
(a) Representations, Warranties and Covenants. Except as disclosed
in the Disclosure Schedule, (i) the representations and warranties of
Parent and Target in this Agreement shall be true and correct in all
material respects (except for such representations and warranties that
are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all
respects) at and as of the Closing Date as though such representations
and warranties were made on and as of such time, except to the extent
that the inaccuracy of any such representation or warranty,
individually or in the aggregate, is the result of the conduct of the
Business in the ordinary course of business consistent with past
practice, and (ii) Parent and Target shall have performed and complied
in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by them as
of the Closing Date.
(b) Certificate of Target. Acquiror shall have been provided with
a certificate executed on behalf of Parent by its President to the
effect that set forth in Section 6.3(a).
(c) Third Party Consents. Acquiror shall have been furnished with
evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the
transactions contemplated hereby under the contracts of Parent and
Target set forth on Schedule 2.29 hereto, except for any the
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absence of which would not have a Material Adverse Effect on the
Business or on the ability of the parties hereto to consummate the
transactions contemplated by this Agreement.
(d) Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or
regulatory restraint provision limiting or restricting Acquiror's
conduct or operation of the Business following the Closing Date shall
be in effect, nor shall any proceeding brought by an administrative
agency or commission or other Governmental Entity, domestic or foreign,
seeking the foregoing be pending.
(e) Legal Opinion. Acquiror shall have received a legal opinion
from Parent's legal counsel in the United States in form and substance
reasonable and customary for transactions of this nature.
(f) Resignation of Directors and Officers. The directors and
officers of Target in office immediately prior to the Closing Date
shall have resigned as directors and officers, as applicable, of Target
effective as of the Closing Date, and Acquiror shall have received
letters of resignation (including waivers of claims against Target)
from such persons in form and substance reasonably satisfactory to
Acquiror.
(g) Listing of Acquiror Shares. Acquiror shall have consummated an
underwritten offering of ordinary shares or ADRs, as the case may be,
of Acquiror to be listed on EASDAQ or the London Stock Exchange and
shall have received payment therefor, and the Acquiror Shares shall be
available to be listed on such exchange, subject only to any customary
documents and actions to be executed or taken by Parent to obtain such
listing.
(h) Interim Services Agreement. Acquiror and Parent shall have
entered into the Interim Services Agreement.
(i) Pricing Agreement. Acquiror and Parent shall have entered into
the Pricing Agreement.
(j) FIRPTA Compliance. Acquiror shall have received a copy of the
statement regarding the Foreign Investment and Real Property Tax Act of
1980, validly executed by a duly authorized officer of Target.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. At any time prior to the Closing Date this Agreement
may be terminated:
(a) by mutual consent duly authorized by the Board of Directors of
Acquiror and Parent;
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(b) by either Acquiror or Parent, if the Closing shall not have
occurred on or before December 15, 1999 (provided, a later date may be
agreed upon in writing by the parties hereto, and provided further that
the right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose action or failure to act has been
the cause or resulted in the failure of the transactions contemplated
hereby to occur on or before such date and such action or failure to
act constitutes a breach of this Agreement);
(c) by Acquiror, if Parent or Target shall breach any
representation, warranty, obligation or agreement hereunder in any
material respect and such breach is not cured within 15 days after
written notice thereof from Acquiror;
(d) by Parent, if Acquiror shall breach any representation,
warranty, obligation or agreement hereunder in any material respect and
such breach is not cured within 15 days after written notice thereof
from Parent;
(e) by either Acquiror or Parent if any permanent injunction or
other order of a court or other competent authority preventing the
consummation of the transactions contemplated by this Agreement shall
have become final and nonappealable.
7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Acquiror, Parent or
Target or their respective officers, directors, agents, shareholders or
affiliates, except as set forth in Section 7.3 below and to the extent that such
termination results from the breach by a party hereto of any of its
representations, warranties, obligations or agreements set forth in this
Agreement; provided that the provisions of Section 5.3 (Confidentiality),
Section 7.3 (Expenses and Termination Fees) and this Section 7.2 and of Article
IX shall remain in full force and effect and survive any termination of this
Agreement.
7.3. Expenses and Termination Fees.
(a) Subject to Section 7.3 (b), whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring
such expense, provided, however, that Acquiror shall reimburse Parent
for expenses incurred in connection with an audit of Target in an
amount not to exceed $25,000.
(b) In the event that this Agreement shall be terminated by
Acquiror pursuant to Section 7.1(c), Parent shall pay to Acquiror, upon
such termination, an amount equal to $2,000,000. In the event that (i)
this Agreement shall be terminated under any other provision of Section
7.1 (excluding Section 7.1(d)), (ii) Parent has received an Acquisition
Proposal prior to such termination and (iii) such Acquisition Proposal
is consummated (as defined below), Parent shall pay to Acquiror an
amount equal to $2,000,000 upon the consummation of such Acquisition
Proposal. For purposes of this Section 7.3(b) "consummation" of an
Acquisition Proposal shall mean the consummation of the acquisition or
merger contemplated by the Acquisition Proposal.
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7.4. Amendment. The parties hereto may cause this Agreement to be
amended at any time by execution of an instrument in writing signed on behalf of
each of the parties hereto.
7.5. Extension; Waiver. At any time prior to the Closing Date any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII.
INDEMNIFICATION
8.1. Indemnification.(a)
(a) (i) Subject to the limitations set forth in Section 8.1(b)
below, Parent shall indemnify and hold Acquiror and its officers,
directors and affiliates (including Target after the Closing), harmless
against all claims, losses, liabilities, damages, deficiencies, costs
and expenses, including reasonable attorneys' fees and expenses of
investigation and defense (hereinafter individually, a "LOSS" and
collectively "LOSSES") incurred by Acquiror or its officers, directors
or affiliates, directly or indirectly, as a result of (x) any
inaccuracy or breach of a representation or warranty of Target or
Parent contained in this Agreement or in any instrument or certificate
executed and delivered by Target or Parent to Acquiror pursuant to the
terms of this Agreement, or (y) any failure by Target or Parent to
perform or comply with any covenant contained in this Agreement.
(ii) Subject to the limitations set forth in Section 8.1(b) below,
Acquiror shall indemnify and hold Parent and its officers, directors
and affiliates harmless against all Losses incurred by Parent or its
officers, directors or affiliates, directly or indirectly, as a result
of (x) any inaccuracy or breach of a representation or warranty of
Acquiror contained in this Agreement or in any instrument or
certificate executed and delivered by Acquiror to Parent pursuant to
the terms of this Agreement, or (y) any failure by Acquiror to perform
or comply with any covenant contained in this Agreement.
(b) Limitation on Liability.
(i) Notwithstanding the foregoing, except (A) as provided in this
Section 8.1(b)(i) and (B) for Losses resulting from breaches or
inaccuracies of representations and warranties contained in Section
2.14 of this Agreement, the aggregate maximum amount either Acquiror or
Parent may recover from the other under this Agreement shall be limited
to U.S. $17,000,000. Parent shall not have any right of contribution
from Target with respect to any Loss claimed by Acquiror, or its
officers, directors, employees and affiliates, after the Closing. In
the event of a willful or fraudulent breach of the representations,
warranties or covenants contained herein, the limitations on
indemnification provided for in this Section 8.1(b)(i) shall not apply.
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(ii) Notwithstanding the foregoing, neither Parent nor Acquiror
shall be liable for Losses under this Article VIII unless and until the
aggregate Losses for which it would otherwise be liable exceed $100,000
(at which point Parent or Acquiror shall become liable for the
aggregate amount of such Losses, and not just amounts in excess of
$100,000).
(iii) The amount of Losses recoverable under this Article VIII
shall be reduced by any proceeds which the indemnified party (or an
affiliate of the indemnified party) receives, or is legally entitled to
receive, with respect to such Losses from an insurance carrier.
(iv) Except with respect to claims based on fraud, after the
Closing the rights set forth in this Article VIII shall be the
exclusive monetary remedy of the parties to this Agreement with respect
to claims resulting from or relating to any inaccuracy or breach of a
representation or warranty contained in this Agreement or in any
certificate executed and delivered pursuant to the terms of this
Agreement and any failure to perform or comply with any covenant
contained in this Agreement.
(c) Delivery of Officer's Certificate. In the event a party shall
have incurred any Losses for which such party wishes to be indemnified
pursuant to this Article VIII, such party shall deliver to the
indemnifying party a certificate signed by any officer of such party
(an "OFFICER'S CERTIFICATE"): (i) stating that such party to be
indemnified has paid or properly accrued or reasonably anticipates that
it will have to pay or accrue Losses and (ii) specifying in reasonable
detail the individual items of Losses included in the amount so stated,
the date each such item was paid or properly accrued or the basis for
such anticipated liability, and the nature of the misrepresentation,
breach of warranty or covenant to which such item is related. The
indemnifying party may object to the claim made in the Officer's
Certificate by delivering to the party to be indemnified written notice
of such objection (which shall include a summary of the basis upon
which such objection is founded) within thirty (30) days after delivery
of the Officer's Certificate to the indemnifying party.
(d) Resolution of Conflicts; Arbitration.
(i) In the event that the indemnifying party shall, as provided
for in Section 8.1(c), object in writing to any claim or claims made in
any Officer's Certificate within thirty (30) days after delivery to the
indemnifying party of such Officer's Certificate, the parties hereto
shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the parties hereto
should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties.
(ii) If no such agreement can be reached after good faith
negotiation, either party may, not earlier than 30 days following
delivery of such notice of objection, demand arbitration of the matter
unless the amount of the damage or Loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in each such event the matter shall be settled by
arbitration conducted by one arbitrator mutually
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agreeable to Parent and Acquiror. In the event that within fifteen (15)
days after submission of any dispute to arbitration, Parent and
Acquiror cannot mutually agree on one arbitrator, Acquiror and Parent
shall each select one arbitrator, and the two arbitrators so selected
shall select a third arbitrator. The arbitrator or arbitrators, as the
case may be, shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgement of the
arbitrator or majority of the three arbitrators, as the case may be, to
discover relevant information from the opposing parties about the
subject matter of the dispute. The arbitrator or a majority of the
three arbitrators, as the case may be, shall rule upon motions to
compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the extent as a
competent court of law or equity, should the arbitrators or a majority
of the three arbitrators, as the case may be, determine that discovery
was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision
of the arbitrator or a majority of the three arbitrators, as the case
may be, as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this
Agreement. Such decision shall be written and shall be supported by
written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrator(s).
(iii) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Any such arbitration shall be
held in New York, New York, under the rules then in effect of the
American Arbitration Association. The arbitrator(s) shall determine how
all expenses relating to the arbitration shall be paid, including,
without limitation, the respective expenses of each party, the fees of
each arbitrator and the administrative fee of the American Arbitration
Association.
(e) Third-Party Claims. In the event any party becomes aware of a
third-party claim which it believes may result in Losses, it shall
promptly notify the other party of such claim. The indemnifying party
shall have the right at its expense to employ counsel of its choice to
assume control of the defense of such claim and the party to be
indemnified shall be entitled, at its expense, to participate in the
defense of such claim. So long as the indemnifying party is defending
such claim, the indemnifying party shall employ reasonable efforts to
inform the party to be indemnified of material developments relating to
such claim. So long as the indemnifying party is defending such claim,
in good faith, the party to be indemnified will not settle such claim
without the indemnifying party's written consent, which consent shall
not be unreasonably withheld, and the indemnifying party shall not
settle any claim on behalf of the party to be indemnified without such
party's written consent, which consent shall be not be unreasonably
withheld. In the event that the indemnifying party does not assume the
defense of such claim or fails to defend the claim in good faith, the
party to be indemnified shall have the right in its sole discretion to
defend and settle any such claim; provided, however, that except with
the consent of the indemnifying party, no settlement of any such claim
with third-party claimants shall be determinative of the amount of any
claim for indemnification pursuant to Section 8.1.
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ARTICLE IX.
GENERAL PROVISIONS
9.1. Survival. The representations and warranties of the parties
contained herein shall survive until the date occurring eighteen (18) months
after the Closing Date (or, if later, the final resolution of any indemnity
claims hereunder with respect to a particular representation or warranty made
before such date), except that the representations, warranties and covenants
contained in Section 2.2 and 2.3 shall survive indefinitely, and in Section 2.14
shall survive until the expiration of all applicable statutes of limitations, or
extensions thereof, and the provisions of Article VIII shall survive in
accordance with their terms.
9.2. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
(a) if to Acquiror, to:
JSB Software Technologies plc
Xxxxxxxxx
Xxxxxxxxxxx Xxx
Xxxxxxxxx
Xxxxxxxx
XX00 0XX
Attention: Group Chief Executive
Facsimile No: 011-44-126-029-6201
Telephone No: 000-00-000-000-0000
with a copy to:
Xxxxxxx Suddards
Trinity Court
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx X00 0XX
Attention: Xxxxxxx Xxxxx
Facsimile No: 011-44-161-830-5001
Telephone No: 000-00-000-000-0000
(b) if to Parent or Target, to:
Spyglass, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Facsimile No: 000-000-0000
Telephone No: 000-000-0000
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with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No: 617-526-5000
Telephone No: 000-000-0000
Any notice or other communication hereunder shall be deemed to have been given
on the date which it is received by the receiving party.
9.3. Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
9.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. This Agreement may be executed and
delivered by facsimile signature.
9.5. Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Disclosure Schedule (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, except for the Confidentiality
Agreement, which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms, (b)
are not intended to confer upon any other person any rights or remedies
hereunder, (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided and except that Acquiror may assign its rights
hereunder to a wholly-owned subsidiary and (d) shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
9.6. Severability. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
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9.7. Remedies Cumulative. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
9.8. Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
9.9. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized,
all as of the date first written above.
SPYGLASS, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
SURFWATCH SOFTWARE, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
JSB SOFTWARE TECHNOLOGIES PLC
By: ________________________________
Name: ________________________________
Title: ________________________________
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The following appendices and Disclosure Schedules have been omitted. They will
be supplied to the SEC upon its request:
Appendix A - Transitional Services
Appendix B - Pricing Agreement related to Spyglass as a reseller of
Surfwatch Software
Disclosure Schedule 2.4 - Sufficiency of Assets
Disclosure Schedule 2.8 - Litigation
Disclosure Schedule 2.11 - Property
Disclosure Schedule 2.12 - Intellectual Property
Disclosure Schedule 2.14 - Tax Matters
Disclosure Schedule 2.15 - Employee Benefit Plans
Disclosure Schedule 2.16 - Certain Agreements Affected by Stock Purchase
Agreement
Disclosure Schedule 2.27 - Material Contracts
Disclosure Schedule 2.28 - No Breach of Material Contracts
Disclosure Schedule 2.29 - Material Third Party Consents
Disclosure Schedule 2.31 - Product Releases
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