PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 10, 2001
BY AND BETWEEN
MERANT PLC
AND
DATA DIRECT INTERNATIONAL LIMITED
TABLE OF CONTENTS
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ARTICLE 1 PURCHASE AND SALE OF ASSETS.......................................................2
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1.1 Purchase of Assets...........................................................2
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1.2 Limited Assumption of Liabilities............................................4
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1.3 Purchase Price...............................................................5
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1.4 Purchase Price Adjustment....................................................5
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1.5 Allocation of Purchase Price.................................................8
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1.6 Subsidiary Agreements........................................................8
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1.7 Maintenance Contracts........................................................9
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ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER..........................................9
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2.1 Organization.................................................................9
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2.2 Authorization................................................................9
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2.3 No Conflict.................................................................10
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2.4 Completeness of Assets......................................................10
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2.5 Financial Statements........................................................10
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2.6 Absence of Undisclosed Liabilities..........................................11
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2.7 Absence of Certain Facts or Events..........................................11
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2.8 Property, Leases and Encumbrances...........................................12
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2.9 Acquired Stock..............................................................13
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2.10 Contracts and Commitments...................................................13
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2.11 Permits and Authorizations..................................................14
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2.12 No Violations...............................................................15
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2.13 No Consents.................................................................15
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2.14 Proceedings.................................................................15
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2.15 Insurance...................................................................15
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2.16 Proprietary Information and Rights..........................................15
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2.17 Employee Benefits...........................................................17
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2.18 Employment Matters..........................................................17
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2.19 Environmental Laws..........................................................18
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2.20 Taxes.......................................................................19
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2.21 Accounts Receivable; Customers..............................................20
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2.22 Warranties..................................................................20
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2.23 No Finders or Brokers.......................................................20
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2.24 No Unlawful Contributions...................................................20
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2.25 Delivery of Documents.......................................................21
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2.26 Board Recommendation........................................................21
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2.27 Required Stockholder Vote...................................................21
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................21
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3.1 Organization................................................................21
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3.2 Authorization...............................................................21
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3.3 No Conflict.................................................................21
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3.4 No Finders or Brokers.......................................................22
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3.5 Investment Representations..................................................22
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3.6 Litigation..................................................................22
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3.7 Financing...................................................................23
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ARTICLE 4 COVENANTS OF SELLER..............................................................23
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4.1 Access......................................................................23
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4.2 Conduct of Business.........................................................23
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4.3 No Solicitation.............................................................23
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4.4 Intercompany Accounts.......................................................26
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4.5 Third Party Standstill Agreements...........................................26
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4.6 Solicitation of Shareholder Approval........................................26
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ARTICLE 5 MUTUAL COVENANTS OF PURCHASER AND SELLER.........................................27
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5.1 Post Closing Cooperation....................................................27
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5.2 Payments With Respect to Accounts Receivable................................28
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5.3 Fulfillment of Conditions...................................................28
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5.4 Further Assurances..........................................................29
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5.5 Confidentiality.............................................................29
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5.6 Personnel Matters...........................................................30
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5.7 Third Party Consents........................................................32
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5.8 Public Announcements........................................................33
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5.9 Certain Notifications.......................................................33
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5.10 Tax Matters.................................................................33
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5.11 Use of Division Names.......................................................35
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5.12 MERANT Name.................................................................35
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5.13 Cooperation Regarding Minimization of Costs.................................36
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ARTICLE 6 CONDITIONS OF CLOSING............................................................36
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6.1 Conditions of Obligations of Purchaser......................................36
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6.2 Conditions of Obligations of Seller.........................................39
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ARTICLE 7 CLOSING......................................................................... 40
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7.1 Closing Date................................................................40
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7.2 Termination of Agreement....................................................40
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7.3 Effect of Termination.......................................................42
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ARTICLE 8 POST-CLOSING.....................................................................42
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8.1 Survival of Representations and Warranties..................................42
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8.2 Indemnification of Purchaser by Seller......................................43
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8.3 Indemnification of Seller by Purchaser......................................44
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8.4 Procedure for Indemnification...............................................45
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ARTICLE 9 MISCELLANEOUS....................................................................46
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9.1 Further Actions.............................................................46
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9.2 Expenses....................................................................46
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9.3 Entire Agreement............................................................46
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9.4 Descriptive Headings; Interpretation........................................46
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9.5 Notices.....................................................................46
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9.6 Governing Law...............................................................47
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9.7 Assignability...............................................................48
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9.8 Waivers and Amendments......................................................48
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9.9 Third Party Rights..........................................................48
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9.10 Severability................................................................48
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9.11 Arbitration.................................................................49
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9.12 Specific Performance........................................................49
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9.13 Counterparts................................................................49
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SCHEDULES
EXHIBIT A Acquired Subsidiary
EXHIBIT B-1 Form of Subsidiary Agreement - Asset
EXHIBIT B-2 Form of Subsidiary Agreement - Stock
EXHIBIT C Form of Transition Services Agreement
EXHIBIT D Form of Proprietary Rights Agreement
EXHIBIT E Form of Non-competition Agreement
EXHIBIT F Form of Assignment and Assumption and Xxxx of Sale
EXHIBIT G-1 Form of Trademark Assignment
EXHIBIT G-2 Form of Copyright Assignment
EXHIBIT H Form of Opinion of Counsel to Seller
EXHIBIT I Form of Opinion of Counsel to Purchaser
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is dated as of
September 10, 2001, by and between Data Direct International Limited, a company
organized under the laws of the Cayman Islands ("Purchaser") and MERANT plc, a
company incorporated in England and Wales (registered no. 1709998, whose
registered office is at The Lawn, Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxx XX00 0XX,
Xxxxxx Xxxxxxx) ("Seller"). Capitalized terms not otherwise defined in this
Agreement are used as defined in Appendix A hereto. Unless otherwise stated, all
monetary references shall be in the currency of the United States. Any reference
in this Agreement to any United States federal or state legal term or concept
(including, without limitation, any action, remedy, method of judicial
proceeding, document, statute, court official, governmental authority or agency)
shall in respect of any jurisdiction other than the United States be construed
as references to the term or concept which most nearly corresponds to it in that
jurisdiction.
W I T N E S S E T H:
WHEREAS, Seller and its Affiliates are in the business of, among
other things, developing, supporting and marketing, licensing and selling
various middleware products and services, including data connectivity products
and services for the purpose of providing a solution that addresses enterprise
data access and connectivity needs through the DataDirect series, which business
Seller and its Affiliates carry on through their Enterprise Data Connectivity
division (the "Division").
WHEREAS, Seller and certain of its Affiliates desire to sell,
and Purchaser and certain of its Affiliates desire to purchase, all of the
assets of the Division hereinafter specified. The purchase and sale of the
Division Assets (as defined in Section 1.1(a)) will be accomplished by (i)
direct purchase, sale and conveyance of certain specified assets and (ii)
purchase and sale of all of the issued and outstanding shares of capital stock
(the "Acquired Stock") of the subsidiary of Seller set forth on Exhibit A
attached hereto (referred to herein as the "Acquired Subsidiary"), in each case
upon the terms and conditions set forth below.
WHEREAS, the board of directors of Seller, subject to the terms
and conditions set forth herein, has (i) determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interest of the
stockholders of Seller, (ii) determined that the consideration to be paid in
connection with the transactions contemplated hereby is fair to and in the best
interests of the stockholders of Seller, (iii) declared the advisability of this
Agreement and the transactions contemplated hereby and approved this Agreement
and the transactions contemplated hereby and (iv) resolved to recommend approval
and adoption of this Agreement and the transactions contemplated hereby by such
stockholders.
WHEREAS, Seller and Purchaser each expect to benefit from the
consummation of the transactions contemplated hereby and, to induce each other
to enter into this Agreement, agree to be bound by the terms and provisions in
this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase of Assets.
(a) On the terms and subject to the conditions
contained in this Agreement, on the Closing Date, Purchaser or one or more of
its Affiliates shall purchase, and Seller or one or more of its Affiliates shall
sell, convey, assign, transfer and deliver, free and clear of all Indebtedness
and Encumbrances (except for any Permitted Encumbrances) by appropriate
instruments of conveyance reasonably satisfactory to Purchaser, all assets,
properties, rights, titles and interests of every kind or nature owned, leased,
licensed or otherwise held by Seller or its Affiliates (including indirect and
other forms of beneficial ownership) as of the Closing Date, whether tangible,
intangible, real or personal and wherever located, which are exclusively used
by, or exclusively for the benefit of, the Division in operating the Business or
are exclusively related to the Business, including all of the following assets
which are exclusively used by, or exclusively for the benefit of, the Division
in operating the Business or are exclusively related to the Business, but
excluding all Excluded Assets (nothing herein shall be deemed to require
conveyance of any assets that are used by or in any other business of Seller,
which assets may be subject to the Transition Services Agreement or one or more
other shared facility agreements) (all such assets, whether to be conveyed
directly by asset transfer or indirectly by transfer of capital stock of the
Acquired Subsidiary, hereinafter referred to as the "Division Assets"):
(i) all accounts receivable and all
correspondence with respect thereto, including without limitation, all trade
accounts receivable, notes receivable from customers, vendor credits and
accounts receivable from employees and all other obligations from customers with
respect to sales of goods or services, whether or not evidenced by a note;
(ii) all prepayments, prepaid expenses and
other assets (it being agreed that between the date of this Agreement and the
Closing Date, the parties will prepare and mutually agree upon a specifically
identifiable list of such assets and attach such list hereto as Schedule
1.1(a)(ii));
(iii) all Acquired Stock;
(iv) all interests in leased or subleased
real estate set forth on Schedule 1.1(a)(iv);
(v) all inventories, work in progress and
supplies (it being agreed that between the date of this Agreement and the
Closing Date, the parties will prepare and
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mutually agree upon a specifically identifiable list of such assets and attach
such list hereto as Schedule 1.1(a)(v));
(vi) all machinery, equipment, furniture,
automobiles and other vehicles, spare parts and supplies, computers and all
related equipment, telephones and all related equipment and all other tangible
personal property (it being agreed that between the date of this Agreement and
the Closing Date, the parties will prepare and mutually agree upon a
specifically identifiable list of such assets and attach such list as Schedule
1.1(a)(vi));
(vii) all rights existing under all contracts,
agreements and arrangements to which Seller or any of its Affiliates is a party
(it being agreed, for avoidance of doubt, that no maintenance contracts shall be
transferred, but that such maintenance contracts shall be subcontracted pursuant
to Section 1.7) ("Contracts");
(viii) all rights to the employment of the
employees of the Business addressed in a separate letter agreement dated on or
about the date hereof between Purchaser and Seller (the "Letter Agreement");
(ix) all lists and records pertaining to
customer accounts (whether past or current), suppliers, distributors, personnel
and agents;
(x) all claims, deposits, prepayments,
warranties, guarantees, refunds, causes of action, rights of recovery, rights of
set-off and rights of recoupment of every kind and nature;
(xi) all Division Proprietary Rights;
(xii) all Authorizations, but excluding any
such Authorizations that are not transferable;
(xiii) all insurance, warranty and condemnation
net proceeds received after the Closing Date with respect to damage,
non-conformance of or loss to the Division Assets, but only to the extent
Purchaser has assumed the related liabilities with respect thereto pursuant to
Section 1.2(a);
(xiv) except as provided in Section 1.1(b)(ii)
below, all books, records, ledgers, files, documents, correspondence, lists,
studies and reports and other printed or written materials;
(xv) all Software Products;
(xvi) cash in an amount equal to the estimated
balance of the deferred maintenance revenue liability of the Business as of the
Closing Date (as determined by reference to the determination of Estimated
Tangible Net Book Value made pursuant to Section 1.4(a)), multiplied by 29%, the
projected percentage cost to service the related maintenance revenue contracts,
which cash will be transferred directly to Purchaser ("Maintenance Cash"); and
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(xvii) all other assets of any kind or nature
which are exclusively used by, or exclusively for the benefit of, the Division
in operating the Business or are exclusively related to the Business.
(b) Excluded Assets. Notwithstanding the foregoing,
the following assets are expressly excluded from the purchase and sale
contemplated hereby (the "Excluded Assets") and, as such, are not included in
the assets to be conveyed hereby:
(i) Seller's or its post-Closing Affiliates'
rights under or pursuant to this Agreement;
(ii) Seller's or its post-Closing Affiliates'
general ledger, accounting records, minute books, statutory books and corporate
seal, provided that Purchaser shall be given copies of the general ledger and
accounting records as such documents exist as of the Closing Date to the extent
such documents relate to the Business;
(iii) any right to receive mail and other
communications addressed to Seller or any of its Affiliates relating to the
Excluded Assets or the Excluded Liabilities;
(iv) all contracts, agreements, arrangements
and other assets listed on Schedule 1.1(b)(iv) attached hereto;
(v) all intercompany receivables,
investments or other intercompany assets of any kind or nature;
(vi) any maintenance contracts, which will be
handled as set forth in Section 1.7;
(vii) except as provided in Section
1.1(a)(xvi) or any cash in the Acquired Subsidiary, any cash; and
(viii) any other asset not specified in Section
1.1(a).
Nothing herein will prohibit Seller or any of its Affiliates from causing the
Acquired Subsidiary to transfer any asset which is not a Division Asset to
Seller or one or more of its other Affiliates. As of the Closing, Seller will
ensure that the cash balances of the Acquired Subsidiary do not exceed
$1,500,000.
1.2 Limited Assumption of Liabilities
(a) From and after the Closing, Purchaser or one or
more of its Affiliates will assume and agree to pay, defend, discharge and
perform as and when due the following specific liabilities and obligations of
Seller and its Affiliates, but only to the extent such liabilities and
obligations relate to the Business (the "Assumed Liabilities").
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(i) all liabilities and obligations of
performance after the Closing under each Contract (other than any performance
obligation arising out of, related to, in the nature of or caused by any
pre-Closing breach of contract or breach of warranty);
(ii) all liabilities and obligations of
performance after the Closing under each real property lease set forth on
Schedule 1.1(a)(iv) hereto (other than any performance obligation arising out
of, related to, in the nature of or caused by any pre-Closing breach of contract
or breach of warranty); and
(iii) those accounts payable and accrued
expenses specifically attributable to the Business which would be required to be
set forth on or accrued on a Closing Date balance sheet of the Division prepared
in accordance with U.S. GAAP, consistently applied in accordance with Seller's
past practices (excluding Seller's past practices of allocating such amounts, it
being agreed that all such accounts payable and accrued expenses will either be
specifically identified or will not be assumed by Purchaser, but rather will be
retained and satisfied by Seller and its post-Closing Affiliates).
(b) Excluded Liabilities. Notwithstanding anything
to the contrary contained in this Agreement and regardless of whether such
liability is disclosed herein or on any schedule or exhibit hereto, neither
Purchaser nor any of its Affiliates will assume or be liable for any liabilities
or obligations of Seller or any of its Affiliates (i) not described in Section
1.2(a) hereof or (ii) arising out of or related to any (A) Taxes, (B)
indebtedness for borrowed money or deferred purchase price for property, (C)
intercompany payables, loans or other intercompany liabilities of any kind or
nature, (D) any Excluded Asset, (E) resulting from, arising out of, relating to,
in the nature of, or caused by any breach of contract, breach of warranty, tort,
infringement, violation of law or environmental matter (unless specifically
accrued for in the determination of Actual Tangible Net Book Value included in
the Closing Date Balance Sheet, and then only to the extent so accrued) or (F)
any deferred revenue liability, which will be treated as specified in Section
1.7 hereof (in each case, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated and whether due or to become due) (the
"Excluded Liabilities").
1.3 Purchase Price.
(a) The aggregate purchase price for the Division
Assets (including, without limitation, the Acquired Stock) is (i) $29,250,000
(the "Cash Portion") and (ii) the assumption of the Assumed Liabilities ((i) and
(ii) collectively referred to as the "Purchase Price"). The Cash Portion will be
subject to adjustment as set forth in Section 1.4. On the Closing Date (as
defined herein), Purchaser shall pay to the account or accounts designated by
Seller, by wire transfer of immediately available funds, an aggregate amount
equal to the Cash Portion, as the same may be adjusted as set forth in Section
1.4.
1.4 Purchase Price Adjustment.
(a) Closing Determination. No later than five (5)
Business Days prior to the Closing, Seller and Purchaser will confer and make a
mutually agreed upon determination
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of the Division's estimated Tangible Net Book Value as of the Closing (the
"Estimated Tangible Net Book Value") as set forth on a mutually agreed upon
estimated Closing Date balance sheet reflecting the assets of the Division being
purchased and the liabilities of the Division being assumed. "Tangible Net Book
Value" means, except as otherwise set forth in this Section 1.4, the aggregate
net book value of the Division Assets (excluding Maintenance Cash), less the sum
of (i) the aggregate net book value of all intangible Division Assets
(including, without limitation, the aggregate net book value of (A) any
capitalized software costs related to internal research and development, (B)
software purchased for resale and (C) purchased software, the license of which
is not transferable to Purchaser) and (ii) the aggregate net book value of all
liabilities of the Division required to be set forth on the face of a closing
date balance sheet, all as determined in accordance with U.S. GAAP applied in a
manner consistent with Seller's past practices; it being agreed that (A) the
calculation of Tangible Net Book Value will not include accounts receivable
related to the delivery of future services, unless a corresponding amount of
deferred revenue liability with respect to such accounts receivable is included
in the calculation of the Division's liabilities, (B) for avoidance of doubt,
the calculation of the assets and liabilities of the Division will include the
assets and liabilities of the Acquired Subsidiary, (C) the calculation of
Tangible Net Book Value will not include the benefit of, or the burden of, any
asset or liability which inures to the benefit of, or is to be borne by, Seller
or its post-closing Affiliates, (D) notwithstanding the agreement of the parties
to leave all maintenance contracts related to the Business with Seller and its
Affiliates as specified in Section 1.7 hereof and notwithstanding any provision
to the contrary contained herein, the determination of Tangible Net Book Value
will be made as if all maintenance contracts and the related deferred revenue
liabilities with respect thereto are to be transferred to Purchaser and its
Affiliates and (E) notwithstanding any provision to the contrary contained
herein, the determinations of prepaid assets, inventory and property, plant and
equipment, any other fixed assets and any other assets or liabilities to be
included in the determination of Tangible Net Book Value will be made based on
the specifically identified schedules of such assets made pursuant to Sections
1.1(a)(ii), 1.1(a)(v) and 1.1(a)(vi) hereto or other schedules specifically
identifying any such assets and liabilities, in each case as updated to reflect
activity through the Closing Date. With regard to the Division Assets and
Assumed Liabilities required to be set forth on Schedules as described in
Section 1.1 and Section 1.2, such Schedules will be subject to the procedural
mechanisms set forth in this Section 1.4 (e.g., the post-Closing determination
and review process set forth in Section 1.4(b)). If the Estimated Tangible Net
Book Value is less than $6,400,000, the Cash Portion of the Purchase Price
otherwise deliverable to Seller at the Closing will be reduced by an amount
equal to such shortfall. If the Estimated Tangible Net Book Value is greater
than $6,400,000, the Cash Portion of the Purchase Price otherwise deliverable to
Seller at the Closing will be increased by the amount of such excess.
(b) Post-Closing Determination. No later than 120
days after the Closing Date, Seller will prepare (it being agreed that the
Purchaser's employees and representatives (including PricewaterhouseCoopers)
will be entitled to participate in such preparation together with Seller,
subject to Seller's overall supervision and control of such preparation) and
deliver to Purchaser a Closing Date balance sheet reflecting the assets and
liabilities of the Division transferred to and assumed by Purchaser and its
Affiliates and reflecting the Tangible Net Book Value of the Division (the
"Draft Closing Date Balance
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Sheet"). If Purchaser disagrees with the calculation of the Tangible Net Book
Value of the Division reflected on the Draft Closing Date Balance Sheet,
Purchaser may, within 30 days after receipt of the Draft Closing Date Balance
Sheet, deliver a notice (an "Objection Notice") to Seller setting forth any such
disagreement. If Purchaser does not deliver an Objection Notice within such 30
day period, then the Tangible Net Book Value set forth on the Draft Closing Date
Balance Sheet shall be deemed final and conclusive and binding on each of the
parties. Purchaser and Seller will use reasonable best efforts to resolve any
disagreements as to the calculation of the Tangible Net Book Value of the
Division, but if they do not obtain a final resolution no later than 30 days
after Seller's receipt of the Objection Notice, Purchaser and Seller will
jointly retain an independent accounting firm of recognized national standing
(the "Firm") to resolve any remaining disagreements. If Purchaser and Seller are
unable to agree on the choice of the Firm, then the Firm will be a "big-five"
accounting firm selected by lot (after excluding one firm designated by
Purchaser and one firm designated by Seller). Purchaser and Seller will direct
the Firm to render a determination within 30 days of its retention and
Purchaser, Seller and their respective agents will cooperate with the Firm
during its engagement. The Firm will consider only those items and amounts with
respect to the Draft Closing Date Balance Sheet set forth in the Objection
Notice which Purchaser and Seller are unable to resolve. Purchaser and Seller
shall each make written submissions to the Firm promptly (and in any event no
later than 15 days after the Firm's engagement), which submissions shall contain
such party's computation of the Tangible Net Book Value and information,
arguments, and support for such party's position. The Firm shall review such
submissions and base its determination solely on such submissions. In resolving
any disputed item, the Firm may not assign a value to any item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party. The Firm's determination will be
based on the definition of the Tangible Net Book Value included herein. The
determination of the Firm will be conclusive and binding upon Purchaser and
Seller. Purchaser and Seller shall each bear the costs and expenses of the Firm
based on the percentage which the portion of the contested amount not awarded to
each party bears to the amount actually contested by such party (e.g., if Seller
makes a claim for $1,000 and Purchaser only contests $500 of the amount claimed
by Seller, and if the Firm resolves the dispute by awarding Seller $300 of the
$500 contested, then the Firm's costs and expenses will be allocated 60% to
Purchaser and 40% to Seller). The Tangible Net Book Value as finally determined
pursuant to this Section 1.4(b) is referred herein as the "Actual Tangible Net
Book Value" and the final balance sheet on which it is reflected as the "Closing
Date Balance Sheet."
(c) Post-Closing Adjustment.
(i) Payment by Seller. If the Actual
Tangible Net Book Value is less than Estimated Tangible Net Book Value, Seller
will, within five (5) business days after the determination thereof, pay to
Purchaser an amount equal to such shortfall, by wire transfer of immediately
available funds. If the amount of Maintenance Cash, as computed based on the
Closing Date Balance Sheet, is greater than the estimate thereof as of the
Closing, Seller will, within five (5) business days after the determination
thereof, pay to Purchaser an amount equal to such excess, by wire transfer of
immediately available funds.
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(ii) Payments by Purchaser. If the Actual
Tangible Net Book Value is greater than Estimated Tangible Net Book Value,
Purchaser will, within five (5) business days after the determination thereof,
pay to Seller an amount equal to such excess, by wire transfer of immediately
available funds. If the amount of Maintenance Cash, as computed based on the
Closing Date Balance Sheet, is less than the estimate thereof as of the Closing,
Purchaser will, within five (5) business days after the determination thereof,
pay to Seller an amount equal to such shortfall, by wire transfer of immediately
available funds.
(iii) Dispute. If, pursuant to this Section
1.4, there is a dispute as to the amount of the Estimated Tangible Net Book
Value or the amount of the Actual Tangible Net Book Value, then subject to the
other terms and conditions of this Section 1.4, Purchaser and Seller shall
promptly pay to the other, as appropriate, such amounts as are not in dispute,
pending final determination of such dispute pursuant to this Section 1.4.
1.5 Allocation of Purchase Price. Each of the parties hereto
will cooperate on the allocation of the Purchase Price, but shall make its own
allocation of the Purchase Price as each such party sees fit.
1.6 Subsidiary Agreements.
(a) Seller and Purchaser shall pursuant to, and in
accordance with, the terms and conditions of this Agreement enter into, or cause
their respective Affiliates to enter into, as soon as reasonably practicable
following the date hereof (but in any event prior to the Closing Date) separate
agreements (the "Subsidiary Agreements") documenting the purchase and sale of
(i) each portion of the Division Assets (other than the Acquired Stock) and the
Assumed Liabilities to be conveyed separately to Purchaser or one or more of its
Affiliates and (ii) the Acquired Stock of the Acquired Subsidiary. Such
individual Subsidiary Agreements will be used merely to memorialize the transfer
of particular assets to particular Affiliates of Purchaser, it being agreed that
notwithstanding any provision in this Agreement to the contrary, all intangible
assets of any type or nature (including, without limitation, any Proprietary
Rights and any Contracts) will be conveyed directly from Seller and its
Affiliates (including, without limitation, the Acquired Subsidiary) directly (by
direct asset transfer rather than indirectly by transfer of capital stock) to
Purchaser (rather than its Affiliates). Each separate Subsidiary Agreement shall
reflect an individual allocation of the Purchase Price consistent with the
determination of the Estimated Tangible Net Book Value.
(b) The Subsidiary Agreements shall be in
substantially the forms attached hereto as Exhibit B-1 and Exhibit B-2, with
such modifications as are necessary and appropriate as a result of differences
in local laws or customs, in order to maintain substantially the same legal
meaning and effect as provided for in this Agreement.
(c) In the event of any conflict or inconsistency
between the terms and conditions of this Agreement and any Subsidiary Agreement,
the terms and conditions of this Agreement shall prevail.
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1.7 Maintenance Contracts. Purchaser and Seller agree that
no maintenance contract related to the Business will be assigned or transferred
from Seller or its Affiliates to Purchaser or its Affiliates and except for
Section 1.4, each of Seller and Purchaser will treat such maintenance contracts
as retained by Seller and its Affiliates for all purposes, including Taxes.
Notwithstanding the foregoing, all benefits of (including the right to all
revenues and cash receipts therefrom), and all burdens of, all such maintenance
contracts, to the extent related to the Business, will inure to, or be borne by,
Purchaser, including Taxes. From and after the Closing, Purchaser and its
Affiliates will have the right to renew any such maintenance contracts in their
own name and for their own account.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser, as of the
date hereof or as otherwise set forth in such representation or the schedules
hereto, as follows:
2.1 Organization. Seller, each of its Affiliates to be party
to any agreement contemplated hereby and the Acquired Subsidiary is a
corporation properly organized, validly existing and in good standing (to the
extent such concept is relevant in any particular jurisdiction) under the laws
of its jurisdiction of incorporation, and has the requisite power and authority
to conduct its business as it is presently being conducted and to own and lease
its properties and assets. Seller, each of its Affiliates to be party to any
agreement contemplated hereby and the Acquired Subsidiary is properly qualified
to do business as a foreign corporation and is in good standing (to the extent
such concept is relevant in any particular jurisdiction) in each jurisdiction in
which such qualification is necessary under the applicable law as a result of
the conduct of the Business, except where the failure to be so qualified would
not have a Material Adverse Effect.
2.2 Authorization. The execution and delivery of this
Agreement by Seller and the performance by Seller of its obligations hereunder
has been authorized by all necessary action on the part of Seller and its
shareholders other than the shareholder approval described in Section 4.6
hereof. No other corporate action or approval is necessary for the execution,
delivery or performance of this Agreement by Seller, other than the shareholder
approval described in Section 4.6 hereof. Prior to the Closing, Seller will
cause each of its Affiliates transferring any Division Assets or Assumed
Liabilities to authorize by all necessary action (whether by such Affiliate or
its shareholders) the execution, delivery and performance by such Affiliate of
such other agreements and instruments to which any such Person is a party.
Seller and each of its Affiliates has full right, power, authority and capacity
to execute, deliver and perform this Agreement and such other agreements and
instruments as are contemplated hereby to which any such Person is a party. This
Agreement has been duly executed and delivered by Seller. This Agreement and
each other agreement and instrument to be executed or delivered by Seller or any
of its Affiliates constitute, or will constitute when executed and delivered,
valid and binding obligations of Seller or such Affiliate, enforceable against
them in accordance with their respective terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, relating to or
-9-
limiting creditors' rights generally and (b) general principles of equity
(whether considered in an action in equity or at law).
2.3 No Conflict. Neither the execution and delivery of this
Agreement or any other agreement or instrument to be executed and delivered in
connection herewith by Seller or any of its Affiliates nor the consummation of
the transactions contemplated hereby or thereby nor the fulfillment by Seller or
any of its Affiliates of any of terms contemplated hereby or thereby will,
except as described on Schedule 2.3:
(a) conflict with or result in a breach by Seller or
any of its Affiliates of, or constitute a default under, or create an event
that, with the giving of notice or the lapse of time, or both, would be a
default under or breach of, or give a right to terminate or cancel under, any of
the terms, conditions or provisions of (i) any Material Contract (as defined in
Section 2.10), (ii) the articles/certificate of incorporation or the bylaws (or
equivalent governing documents) of Seller or any of its Affiliates or (iii) any
judgment, order, writ, injunction, decree or demand of any Governmental Entity
involving Seller or any of its Affiliates;
(b) result in the creation or imposition of any
Encumbrance of any nature whatsoever upon any of the Division Assets that would
materially affect Purchaser's or its Affiliates' ability to conduct the Business
as conducted by Seller and its Affiliates prior to the date of this Agreement;
or
(c) cause a loss or adverse modification of any
Authorization granted by a Governmental Entity to or otherwise held by the
Business which is necessary to operate the Business in any respect that would
materially affect Purchaser's or its Affiliates' ability to conduct the Business
as conducted by Seller and its Affiliates prior to the date of this Agreement.
2.4 Completeness of Assets. The Division Assets (including,
without limitation Software Products and Division Proprietary Rights being
transferred to Purchaser and its Affiliates pursuant to this Agreement), the
services to be made available to Purchaser and its Affiliates pursuant to the
Transition Services Agreement and the other rights being made available to
Purchaser and its Affiliates pursuant to this Agreement or the Proprietary
Rights Agreement constitute all the assets and services used by Seller and its
Affiliates in operating the Business of the Division as it is currently operated
by Seller and its Affiliates (exclusive of those services which Seller has made
available, but Purchaser has elected not to receive, pursuant to the Transition
Services Agreement). The price or cost of each service to be provided to
Purchaser and its Affiliates under the Transition Services Agreement does not
exceed the historical price or cost of such service as reflected in the
Financial Statements (assuming the same levels of activity during the applicable
period).
2.5 Financial Statements.
(a) Seller has delivered to Purchaser and attached
hereto as Schedule 2.5 the consolidated balance sheet (the "2001 Balance Sheet")
and related consolidated statements of operations of the Division as at and for
the year ended April 30, 2001, prepared in accordance with U.S. GAAP,
consistently applied in accordance with Seller's past practices (the
-10-
"Financial Statements"). The Financial Statements (including the notes thereto,
if any) (i) present fairly the financial position and results of operations of
the Division as of the dates and for the periods then ended in accordance with
U.S. GAAP, consistently applied in accordance with Seller's past practices and
(ii) are in agreement with the books and records of Seller and its Affiliates
with respect to the Division.
(b) Except as expressly disclosed in Schedule 2.5,
the Financial Statements do not contain any items of special or nonrecurring
income or any other income not earned or otherwise realized in the ordinary
course of business.
2.6 Absence of Undisclosed Liabilities. The Business does
not have, and as of the Closing, will not have, any obligation or liability (in
any case, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or due or to become
due) arising out of or related to facts, events, transactions, occurrences or
actions or inactions arising on or prior to the Closing Date, other than: (i)
liabilities and obligations reflected on the face of the 2001 Balance Sheet,
(ii) liabilities and obligations incurred in the ordinary course of business
(none of which is a liability resulting from, arising out of, relating to, in
the nature of, or caused by any breach of contract, breach of warranty, tort,
infringement, violation of law, environmental matter, claim or lawsuit or
indebtedness for borrowed money), (iii) other liabilities and obligations
expressly disclosed (both by description and amount) on Schedule 2.6 and (iv)
Excluded Liabilities.
2.7 Absence of Certain Facts or Events. Except as listed on
Schedule 2.7, since April 30, 2001, Seller and each of its Affiliates have
conducted the Business in the ordinary course of business consistent with past
custom and practice and there has not been:
(a) a Material Adverse Effect suffered by the
Business, and during the period from April 30, 2001 through and including the
Closing Date, there shall not have been a Material Adverse Effect suffered by
the Business;
(b) any damage, destruction or loss to any Division
Asset, whether tangible or intangible, whether covered by insurance or not,
involving losses cumulatively in excess of $500,000;
(c) any hiring of new key employees of the Business
whose annual compensation exceeds $100,000, any amendment to or entering into of
any employment agreement or any increase in the compensation payable or to
become payable by the Business to any of its employees whose 2000 annual
remuneration exceeded $100,000 or any material increase in the coverage or
benefits under any bonus, insurance, pension or other Benefit Plan (excluding
annual length-of-service and similar adjustments to the benefits of individual
participants) or the transfer of any employee of the Business whose 2000 annual
remuneration exceeded $100,000 to any other business conducted by Seller or its
Affiliates;
(d) any sale, assignment, modification or transfer
of any contractual rights, claims or other assets of the Business valued at more
than $500,000 individually, or $1,000,000 in the aggregate, other than (i)
changes to sales or purchase orders, licenses or other
-11-
customer contracts and changes thereto in the ordinary course of business
consistent with past custom and practice and (ii) Excluded Liabilities;
(e) any Encumbrance placed on any of the Division
Assets, other than any Permitted Encumbrances which would not prevent or
materially limit the sale of any Division Asset;
(f) any waiver or release of any of the Business'
rights of substantial value or any modification or termination of, or claims of
any breach under, any Material Contract except those that constitute Excluded
Assets;
(g) any material transaction entered into or
consummated by Seller or any of its Affiliates with respect to the Business,
except in the ordinary course of business consistent with past custom and
practice;
(h) any material addition to or modification of the
Benefit Plans of the Business or other arrangements or practices affecting
personnel of the Business (other than extensions of coverage thereunder to
employees of the Business who became eligible to participate in such Benefit
Plans after April 30, 2001 in accordance with the terms thereof or additions or
modifications to Benefit Plans not being assumed by the Purchaser); or
(i) any obligation or liability incurred by Seller
or any of its Affiliates involving any capitalized expenditures of any kind or
nature of the Business in excess of $200,000.
2.8 Property, Leases and Encumbrances.
(a) Schedule 2.8(a) hereto accurately sets forth as
of April 30, 2001 all material real properties (the "Real Property") used in
connection with the Business that are to be transferred as part of the
transactions contemplated by this Agreement, whether owned or leased, and
contains a list of all material leases, franchises and similar agreements
creating, or materially modifying or altering rights to such Real Property,
including material zoning or use restrictions. Except as noted on Schedule
2.8(a), Seller or one of its Affiliates has good and marketable title to such
owned Real Property, free and clear of all Encumbrances of any nature whatsoever
other than Permitted Encumbrances and a valid leasehold interest in Leased Real
Property.
(b) As of the Closing Date, Seller or one of its
Affiliates will have good and marketable title to all material items of
machinery, equipment, furniture, and other tangible personal property of the
Business constituting Division Assets, free and clear of all Encumbrances of any
nature whatsoever other than Permitted Encumbrances.
(c) To Seller's Knowledge, the tangible Division
Assets in all material respects are in good operating condition and repair,
ordinary wear and tear excepted, have been operated, serviced and maintained in
accordance with the recommendations and requirements, if any, of the
manufacturers thereof and are suitable for the purposes for which they are
presently being used, including use in the conduct of the Business.
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2.9 Acquired Stock.
(a) Seller or one of its Affiliates is the
registered and beneficial owner of that number of shares of Acquired Stock set
forth opposite the name of the Acquired Subsidiary described on Schedule 2.9,
which constitutes all of the issued and outstanding shares of each class of
capital stock of the Acquired Subsidiary. All of the shares of Acquired Stock
are validly issued, fully paid and non-assessable, and there are no restrictions
with respect to the transfer of the Acquired Stock by Seller or one of its
Affiliates to Purchaser or one of its Affiliates, except those imposed by
applicable securities or local law. The delivery to Purchaser or one of its
Affiliates at Closing of certificates evidencing the Acquired Stock will convey
and transfer to Purchaser or one of its Affiliates good, complete and marketable
title to the Acquired Stock, free and clear of any Encumbrances (other than
restrictions on transfer imposed by applicable securities or local laws and
Permitted Encumbrances). Schedule 2.9 sets forth the Acquired Subsidiary's name,
its place and date of incorporation, the number of shares of Acquired Stock of
the Acquired Subsidiary held by Seller or one of its Affiliates, and the
percentage ownership represented by such shares of Acquired Stock. Neither
Seller nor any of its Affiliates (including, without limitation, the Acquired
Subsidiary) is subject to any obligation (contingent or otherwise) with respect
to the issuance of any capital stock (or any warrants, options or other rights
with respect thereto) of the Acquired Subsidiary or the redemption or repurchase
of any such capital stock (or any warrants, options or other rights with respect
thereto).
(b) The authorized capital stock and the number of
shares issued and outstanding with respect to the Acquired Subsidiary is as set
forth on Schedule 2.9 hereto. All shares of the Acquired Subsidiary's capital
stock are duly authorized, validly issued and outstanding, fully paid and
non-assessable. There are no outstanding options, warrants or other rights to
acquire, or any securities or obligations convertible into or exchangeable for,
any shares of the capital stock of the Acquired Subsidiary which have been
issued or granted by or are binding upon the Acquired Subsidiary or any other
Person, except for Purchaser's rights as contemplated by this Agreement. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to the Acquired Subsidiary. The Acquired Subsidiary has no
wholly-owned, majority-owned or other subsidiaries or any investment in any
other Person.
2.10 Contracts and Commitments.
(a) Except as set forth on Schedule 2.10, with
respect to the Business, and except for Excluded Assets and Excluded
Liabilities, neither Seller nor any of its Affiliates has any: (i) collective
bargaining agreements or any agreements or policies that contain or include any
severance pay liabilities or obligations; (ii) employment, consulting or similar
agreement, contract or commitment which is not terminable without penalty or
cost by Seller or one of its Affiliates on notice of thirty (30) days or less or
contains an obligation of Seller or one of its Affiliates to pay more than
$100,000 per year; (iii) lease of real or personal property (as lessor or
lessee) involving rental payments in excess of $250,000 per annum; (iv) note or
other evidence of Indebtedness for borrowed money or the deferred purchase price
of property or services (other than accounts payable and accrued expenses
incurred in the ordinary course of
-13-
business consistent with past custom and practice); (v) agreement, contract or
commitment relating to capitalized expenditures of any kind or nature involving
unpaid obligations in excess of $200,000; (vi) agreement, contract or commitment
relating to the acquisition of assets of, or any interest in, any business
enterprise involving amounts in excess of $250,000; (vii) license agreement, or
any other contract, arrangement or commitment, whether written or oral, with any
third party relating to Proprietary Rights (other than (A) license agreements or
other contracts for commercially-available third party off-the-shelf software or
(B) contracts, arrangements or commitments entered into in the ordinary course
of business consistent with past custom and practice); (viii) other contract or
agreement which involves payments of $500,000 or more and is not cancelable
without penalty or cost by the Business on thirty (30) days or less notice,
except for sales orders, licenses with customers, customer contracts or purchase
orders entered into in the ordinary course of business consistent with past
custom and practice or (ix) contracts specifically set forth on Schedule
2.10(ix) attached hereto. Each of the contracts, agreements or commitments
required to be disclosed on Schedule 2.10 (including, for avoidance of doubt,
each of the items in the aforementioned clause (ix)) is referred to herein as a
"Material Contract." Seller has delivered or made available to Purchaser copies
of each Material Contract required to be disclosed on Schedule 2.10.
(b) Except as expressly disclosed on Schedule 2.10:
(i) neither Seller nor any of its Affiliates is in violation of, nor has Seller
or any of its Affiliates received any claim, whether written or oral, that any
of them has breached any of the terms or conditions of any Material Contract;
(ii) each Material Contract is in full force and effect and is valid, binding
and enforceable without any default, breach, waiver or indulgence thereunder by
Seller or any of its Affiliates or, to Seller's Knowledge, by any other party
thereto; and (iii) to Seller's Knowledge, there are no facts or conditions which
have occurred or are, based on facts presently known to exist, anticipated
which, through the passage of time or the giving of notice, or both, would
constitute a default under any Material Contract.
2.11 Permits and Authorizations.
(a) All material consents, licenses, permits, grants
or other authorizations of a Governmental Entity pursuant to which Seller or any
of its Affiliates conduct the Business are collectively referred to herein as
"Authorizations". All Authorizations are in full force and effect and constitute
all Authorizations required to operate the Division Assets and conduct the
Business, except those Authorizations, the lack of which would not materially
impair the ability of Purchaser and its Affiliates to conduct the Business in
the same manner conducted by Seller and its Affiliates prior to the Closing
Date. Except as disclosed on Schedule 2.11(a), to Seller's Knowledge, the
Authorizations may be transferred to Purchaser or one of its Affiliates on the
Closing Date. The consummation of the transactions contemplated by this
Agreement will not, except as disclosed on Schedule 2.11(a), require any
transfer, renewal or notice with respect to any Authorizations.
(b) Except as set forth on Schedule 2.11(b), Seller
has not been notified of, and is not presently aware of, any factual basis that
would give it any reason to believe any Authorization will not in the ordinary
course of business be renewed upon its
-14-
expiration when such Authorization is transferred to Purchaser or one of its
Affiliates, or renewed in the name of Purchaser or one of its Affiliates.
(c) Except as set forth on Schedule 2.11(c), Seller
has not received in writing or, to Seller's Knowledge, otherwise, any claim or
assertion that it has breached any of the terms or conditions of any
Authorization in such manner (i) as would permit any other Person to cancel,
terminate or materially amend any Authorization necessary to permit the
continued operation of the Division as presently conducted or the use of any
material Division Asset or (ii) that is reasonably likely to result in a penalty
or fee of more than $50,000.
2.12 No Violations. Except as disclosed on Schedule 2.12
hereto, Seller and each of its Affiliates is and, since October 31, 1995 (the
end of the month during which Seller completed the Technosis acquisition), has
been in compliance in all material respects with each applicable law, statute,
order, rule or regulation promulgated or judgment entered against any of them
with respect to the Business, the Division or any Division Asset.
2.13 No Consents. Except as disclosed on Schedule 2.13
hereto, or in connection with customer contracts or leased properties, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity or any other Person is required to be made or
obtained by Seller or any of its Affiliates in connection with the execution,
delivery or performance by any of them of this Agreement.
2.14 Proceedings.
(a) Schedule 2.14 lists all claims, investigations,
suits, actions, arbitrations, mediations and legal or administrative proceedings
and governmental investigations (collectively, "Proceedings") relating to the
Business or the Division or any Division Asset demanding injunctive relief or
involving a claim for damages in excess of $50,000 or any unspecified material
claim, which are pending against Seller or any of its Affiliates, to which any
of them is a party or as to which any of them has received any written claim or
assertion and, to Seller's Knowledge, no such Proceeding has been threatened.
Except as set forth on Schedule 2.14, to Seller's Knowledge, there are no facts
in existence which are reasonably likely to lead to the instigation of any such
Proceeding. Except as set forth on Schedule 2.14, there is no outstanding
unsatisfied judgment, order, decree, award, stipulation or injunction of any
Governmental Entity against or affecting the Business or the Division or any
Division Asset.
(b) Except as set forth on Schedule 2.14, there is
no Proceeding pending, or to Seller's Knowledge, threatened against Seller or
any of its Affiliates seeking to prevent or delay the consummation of the
transactions contemplated by this Agreement.
2.15 Insurance. Seller has insurance coverage under policies
that, to the Knowledge of Seller, provide adequate insurance coverage for the
Division and the Business until the Closing Date.
2.16 Proprietary Information and Rights.
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(a) Schedule 2.16(a) contains a complete and
accurate list of all: (i) software products currently licensed or sold by Seller
or any of its Affiliates exclusively through the Division (the "Software
Products"); (ii) patented or registered Division Proprietary Rights and pending
patent applications and other applications for registration of Division
Proprietary Rights owned or filed by or on behalf of Seller or any of its
Affiliates; and (iii) trade names, corporate names and material unregistered
trademarks, service marks and copyrights included among the Division Proprietary
Rights.
(b) As of the Closing, Seller or an Affiliate of
Seller will own all right, title and interest in and to, or have a valid and
enforceable license to use, the Division Proprietary Rights, free and clear of
all Encumbrances.
(c) Except as indicated on Schedule 2.16(c): (i) to
Seller's Knowledge, all of the Division Proprietary Rights are valid and
enforceable, (ii) there have been no claims made against, or notices received
by, Seller or any of its Affiliates which are currently outstanding alleging or
asserting (1) the invalidity, misuse or unenforceability of any Division
Proprietary Rights or, with respect to the Business, that Seller or any of its
Affiliates violated, infringed, misappropriated or otherwise conflicted with any
Proprietary Rights of any third party (including any demand or request that
Seller or any of its Affiliates cease using any Division Proprietary Rights or
license any Proprietary Rights from any third party) or (2) that the sale or
licensing of any Software Products violated, infringed, misappropriated or
otherwise conflicted with any Proprietary Rights of any third party (including
any demand or request that Seller or any of its Affiliates cease selling or
licensing any such Software Product); (iii) the conduct of the Business has not
violated the Proprietary Rights of any third party in any material respect and
the continued conduct of the Business as currently conducted will not infringe,
misappropriate or otherwise violate the Proprietary Rights of any third party;
(iv) Seller has not received any notices of, and is not aware of any facts which
indicate a likelihood of, any material infringement, misappropriation or other
violation by any third party with respect to the Division Proprietary Rights;
(v) neither Seller nor any of its Affiliates is in breach or default of any
license or other grant of rights with respect to the Division Proprietary
Rights; (vi) no third party has been granted any perpetual license to use any
Division Proprietary Rights (or the right or option to acquire such a license)
other than contracts, arrangements or commitments entered into in the ordinary
course of business consistent with past custom and practice; and (vii) all
registrations of Division Proprietary Rights with Governmental Entities are
valid and subsisting, and are in good standing, and all required filings in
respect of the Division Proprietary Rights with any relevant Governmental Entity
have been made and all required filing fees have been paid.
(d) Seller and each of its Affiliates has taken all
commercially reasonable and desirable actions customary in the software industry
to maintain and protect the Division Proprietary Rights owned by it and no loss
or expiration of any such Division Proprietary Rights is pending, threatened or
reasonably foreseeable except for registered Proprietary Rights expiring at the
end of their statutory terms. To the Seller's Knowledge, the owners of any
Division Proprietary Rights licensed to Seller or any of its Affiliates have
taken all reasonably necessary and desirable actions to maintain the Proprietary
Rights that are subject to such licenses.
-16-
(e) The sale and licensing of the Software Products
in the ordinary course of business do not violate or conflict with the terms of
the GNU General Public License or any other "copyleft" restrictions.
2.17 Employee Benefits.
(a) Except as set forth on Schedule 2.17, no
employee benefit plans (including, without limitation, "plans" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), profit-sharing, deferred compensation, bonus, stock option, stock
purchase, vacation pay, holiday pay, pension, retirement plans, medical and
other compensation or benefit arrangements (collectively, "Benefit Plans") are
maintained or contributed to or required to be contributed to by Seller or any
of its Affiliates for the benefit of the Business' employees (or former
employees) and/or their beneficiaries. Seller has delivered to Purchaser true
and complete copies of all documents pertaining to those items required to be
disclosed on Schedule 2.17. Neither Seller nor any of its Affiliates maintains,
contributes to or has any liability with respect to any Benefit Plans with
respect to the Business' employees other than those disclosed on Schedule 2.17.
(b) Seller and each of its Affiliates have timely
made all contributions required by law to be made to the Benefit Plans, and have
timely filed all reports and other documents required to be filed with respect
thereto.
(c) There is no contract, agreement or benefit
arrangement covering any employee of the Business which, individually or
collectively, could give rise to the payment of any amount which would
constitute an "excess parachute payment" (within the meaning of Section 280G of
the Internal Revenue Code (the "Code")).
(d) All Benefit Plans of the Acquired Subsidiary and
any Affiliate of Seller which is the sponsor of any Benefit Plan required by
operation of law to be transferred to Purchaser or one of its Affiliates as a
result of the transactions contemplated hereby and the MERANT, Inc. 401(k) Plan
(i) have complied in form and operation in all material respects with the
applicable requirements of law; and (ii) with respect to each such Benefit Plan
that is intended to be qualified under Section 401(a) of the Code, such plan has
received a favorable determination letter from the Internal Revenue Service and
no event has occurred and no condition exists which could reasonably be expected
to result in the revocation of any such favorable determination letter. Neither
the Seller nor any of its Affiliates (i) has any obligation or liability to
provide any post-employment welfare benefits to any employee of the Business
(other than as required under Section 4980(B) of the Code) or (ii) contributes
to or has any liability with respect to a multiemployer plan.
2.18 Employment Matters.
(a) Seller and each of its Affiliates has paid or
made adequate provision to pay all wages and other compensation and all other
amounts due and payable to any employee or former employee of the Business
through and including the Closing Date.
-17-
(b) Except for requirements of local law, no
collective bargaining agreement is currently in existence or is being negotiated
by Seller or any of its Affiliates with respect to the Business and, as of the
date of this Agreement, no labor organization has been certified or recognized
as the representative of any employees of Seller or any of its Affiliates with
respect to the Business. Seller and each of its Affiliates operates the Business
in all material respects in accordance with all applicable laws respecting
employment and employment practices, including but not limited to terms and
conditions of employment, wages and hours, and occupational safety, and has not
received written or verbal notice of, and is not engaged in, any unfair labor
practice with respect to the Business. Seller and each of its Affiliates has
made all required payments of social security, unemployment and similar taxes.
2.19 Environmental Laws.
(a) Except as disclosed on Schedule 2.19, (i) the
Division Assets and the Division have been operated by Seller and each of its
Affiliates in compliance in all material respects with all applicable
Environmental Laws including, without limitation, obtaining and complying with
all material Authorizations required for the occupation and use of their
respective properties and facilities, (ii) there has been no production,
generation, storage, treatment, Release, disposal or arrangement for disposal of
any Hazardous Materials in a manner that has given or would give rise to any
material liabilities or obligations (contingent or otherwise) pursuant to
Environmental Laws at, in, on, under, about or from any of the Real Properties
by or on behalf of Seller or any of its Affiliates, (iii) there has been no
production, generation, storage, treatment, Release or disposal of any Hazardous
Materials in a manner that has given or would give rise to any material
liabilities or obligations (contingent or otherwise) pursuant to Environmental
Laws by or on behalf of Seller or any of its Affiliates at any other Division
site, (iv) to Seller's Knowledge, there are no storage tanks or electrical
equipment containing polychlorinated biphenyls on the Real Properties, or any
asbestos-containing materials on the Real Properties and (v) neither Seller nor
any of its Affiliates has received, nor is aware of, any notice, report or other
information regarding any violation of, or any liability (contingent or
otherwise) or investigatory, corrective or remedial obligation under, any
Environmental Laws with respect to their or their predecessors' past or current
operations, properties or facilities to the extent it would result in a Material
Adverse Effect. The Seller and its Affiliates have made available to Purchaser
all environmental audits, reports and other material environmental documents
relating to their or their predecessors' past or current properties, facilities
or operations that constitute part of the Division Assets that are in their
possession or under their reasonable control.
(b) "Environmental Law" shall mean all federal,
state, local and foreign (including, without limitation, United Kingdom and
European Union) laws and directives, including statutes, regulations, rules,
ordinances, orders and similar provisions having the force or effect of law, and
all common law, which purport to regulate the Release of Hazardous Materials to
the environment, or impose requirements relating to environmental management,
reporting or protection or public or employee health and safety, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq., the Emergency Planning and Community Right-to-
-18-
Know Act, as amended, 42 U.S.C. Section 11001 et seq., the Clean Air Act, as
amended, 42 U.S.C. Section 7401 et seq., the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, as
amended, 42 U.S.C. Section 300f et seq., the Federal Insecticide, Fungicide &
Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq., the Federal Food,
Drug and Cosmetic Act, as amended, 21 U.S.C. Section 301 et seq. and the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651 et seq.
(c) "Hazardous Material(s)" shall mean any substance
which is defined as a hazardous substance, hazardous material, hazardous waste,
pollutant, contaminant or words of similar import under any Environmental Law.
(d) "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment (including the abandonment
or discarding of barrels, containers or other receptacles containing any
Hazardous Material).
2.20 Taxes. Except as set forth on Schedule 2.20, Seller and
each of its Affiliates has accurately prepared and has duly filed with the
appropriate Governmental Entities all material Tax Returns and reports required
to be filed on or before the date of this Agreement with respect to the Business
or the Division Assets, and all such returns were and remain true and complete
in all material respects. All Taxes owed, or which may be claimed to be owed,
and which are due and payable to any Governmental Entity with respect to any
period (or portions thereof) ending on or before the Closing Date, and all
interest, penalties, assessments and deficiencies connected therewith, have been
or will be paid in full or adequate reserves have been established therefor.
Neither Seller nor any of its Affiliates is a party to any pending action or
proceeding, nor to Seller's Knowledge, is any such action or proceeding
threatened, by a Governmental Entity for the assessment or collection of Taxes
with respect to the Business and no unresolved deficiency notices or reports
have been received by Seller or any of its Affiliates with respect to the
Business or the Division Assets. There are no claims against Seller or any of
its Affiliates for any Taxes which have resulted in, or may result in, an
Encumbrance against any Division Asset other than a Permitted Encumbrance. The
Acquired Subsidiary is not a party to any agreement, contract, arrangement or
plan, and none of the Assumed Liabilities is an obligation, that could result in
the payment of any "excess parachute payment" within the meaning of United
States Internal Revenue Code Section 280G (or any corresponding provision of
state, local or non-U.S. income Tax law). No claim is pending by a taxing
authority in a jurisdiction where the Acquired Subsidiary does not file Tax
Returns that such Person is or may be subject to taxation by such jurisdiction.
The Acquired Subsidiary is not a party to a tax allocation or tax sharing
agreement except with Seller and its Affiliates and the Acquired Subsidiary will
not have any liability or obligation under any such agreement after the Closing
Date. The Acquired Subsidiary is, where appropriate, registered for value added
tax and has complied in all material respects with the requirements and
provisions of any value added tax legislation, subject to any accrual therefor
reflected in the financial statements of the Business. All documents in the
enforcement of which the Acquired Subsidiary is or may be interested have been
duly stamped.
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2.21 Accounts Receivable; Customers. Except as set forth on
Schedule 2.21, the accounts receivable reflected on the Financial Statements of
the Business or originated thereafter by Seller or any of its Affiliates with
respect to the Business through the Closing Date are not subject to any dispute
in excess of $50,000, individually or in the aggregate, as of the date hereof.
To Seller's Knowledge, there are no facts existing with respect to any of the
accounts receivable which would give rise to a dispute in excess of $50,000,
individually or in the aggregate, over the same. Schedule 2.21 discloses, as of
the date hereof, all accounts receivable of the Business which have remained
unpaid more than sixty (60) days from the due date of the applicable invoice and
also discloses as of April 30, 2001, (x) the identity of the ten (10) largest
customers (by dollar volume) of the Division for the year ended April 30, 2001,
and (y) the fiscal year-to-date sales for each customer identified on Schedule
2.21 and the amount owing from such customer as of April 30, 2001.
2.22 Warranties. Neither Seller nor any of its Affiliates has
given or made any warranties of any kind or nature to any Person with respect to
any products sold or services performed by or on behalf of the Business, except
in accordance with Seller's standard warranty for products and services of the
Business or any warranties given in the ordinary course of Seller's and its
Affiliate's business, or warranties the obligation for which constitute Excluded
Liabilities.
2.23 No Finders or Brokers. Except for the Seller's
arrangements with Xxxxxx Brothers and UBS Warburg Ltd. with respect to the sale
of the Business (the cost and expense of which will be borne solely by Seller),
neither Seller nor any of its Affiliates has entered into any agreement,
arrangement or understanding with any Person to pay any finder's fee, brokerage
commission, advisory fee or similar payment in connection with the transactions
contemplated hereby.
2.24 No Unlawful Contributions. Neither Seller nor any of its
Affiliates nor any of their respective directors or officers, nor, to Seller's
Knowledge, any agent or employee or other Person associated with or acting on
behalf of Seller or any of its Affiliates with respect to the Business: (i) has
made or used any funds to make any unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity or any direct or
indirect unlawful payments to officials or employees of any Governmental Entity;
(ii) failed to file any reports required with respect to lawful contributions;
(iii) established or maintained any unlawful or unrecorded fund of any of the
monies or other assets; (iv) made any intentionally false or fictitious entries
on the books or records of Seller or any of its Affiliates; or (v) made or
received any bribe, payoff, influence payment, kickback or other unlawful
payment.
2.25 Delivery of Documents. Seller has delivered or made
available to Purchaser true and correct copies of all documents, and any and all
amendments to any such documents, referred to in Article 2 of this Agreement.
2.26 Board Recommendation. The Seller's board of directors,
at a meeting duly called and held, has (a) declared the advisability of this
Agreement and the transactions contemplated hereby and approved and adopted this
Agreement and the transactions contemplated hereby in accordance with applicable
law, (b) determined that this Agreement and
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the transactions contemplated hereby are fair to and in the best interests of
the stockholders of Seller, (c) determined that the consideration to be paid is
fair to and in the best interests of the stockholders of Seller and (iv) subject
to the provisions of Section 4.6 hereof, resolved to recommend that the
stockholders of Seller approve and adopt this Agreement.
2.27 Required Stockholder Vote. The approval of this
Agreement at the Stockholders Meeting (as defined in Section 4.6) by the holders
of a majority of the issued and outstanding ordinary shares entitled to vote at
the Stockholders Meeting (the "Stockholder Approval") is the only vote of the
holders of any class or series of Seller's securities necessary to adopt and
approve this Agreement and the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.1 Organization. Purchaser and each of its Affiliates is a
properly organized corporation, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has the power and authority to
conduct its business as it is presently being conducted and to own and lease its
properties and assets. As of the Closing, Purchaser and each of its Affiliates
will be qualified to do business as a foreign entity in each jurisdiction as is
necessary in order to conduct the Business following the Closing.
3.2 Authorization. The execution and delivery of this
Agreement by Purchaser and the performance by Purchaser of its obligations
hereunder have been duly authorized by all necessary action on the part of
Purchaser, and no other action or approval by Purchaser is necessary for the
execution, delivery or performance of this Agreement by Purchaser. Prior to the
Closing, Purchaser will cause each of its Affiliates which is the assignee of
any Division Assets or Assumed Liabilities to authorize by all necessary action
(whether by such Affiliate or its shareholders) the execution, delivery and
performance by such Affiliate of such other agreements and instruments to which
any such Person is a party. This Agreement has been duly executed and delivered
by Purchaser. This Agreement and each other agreement and instrument to be
executed and delivered by Purchaser or any of its Affiliates constitutes, or
will constitute when executed and delivered, valid and binding obligations of
Purchaser or such Affiliate, enforceable against them in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, relating to or limiting creditors' rights generally and (b)
general principles of equity (whether considered in an action in equity or at
law).
3.3 No Conflict. Neither the execution and delivery of this
Agreement or any other agreement or instrument to be executed and delivered in
connection herewith by Purchaser or any of its Affiliates nor the consummation
of the transactions contemplated hereby or thereby nor the fulfillment by
Purchaser or any of its Affiliates of any of the terms contemplated hereby or
thereby will:
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(a) conflict with or result in a breach by Purchaser
or any of its Affiliates of, or constitute a default under, or create an event
that, with the giving of notice or the lapse of time, or both, would be a
default under or breach of, any of the terms, conditions or provisions of (i)
any indenture, mortgage, lease, deed of trust, pledge, loan or credit agreement
or any other material contract, arrangement or agreement to which Purchaser or
any of its Affiliates is a party or to which any of the assets of Purchaser or
any of its Affiliates is subject, (ii) the articles/certificate of incorporation
or bylaws (or equivalent governing documents) of Purchaser or any of its
Affiliates or (iii) any judgment, order, writ, injunction, decree or demand of
any Governmental Entity applicable to Purchaser or any of its Affiliates;
(b) result in the creation or imposition of any
Encumbrance which will materially affect the ability of Purchaser or any of its
Affiliates to conduct their business as conducted prior to the date of this
Agreement; or
(c) cause a loss or adverse modification of any
permit, license, or other authorization granted by any Governmental Entity to or
otherwise held by Purchaser or any of its Affiliates which is necessary to
operate their respective businesses prior to the Closing.
3.4 No Finders or Brokers. Neither Purchaser nor any of its
Affiliates has entered into any agreement, arrangement or understanding with any
Person to pay any finder's fee, brokerage commission, advisory fee or similar
payment in connection with this Agreement or the transactions contemplated
hereby.
3.5 Investment Representations.
(a) Purchaser and each of its Affiliates is
acquiring the Acquired Stock for investment purposes only, for its own account
and not as a nominee or agent for any other Person, and not with a view to or
for resale in connection with any distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) Neither Purchaser nor any of its Affiliates has
any contract, understanding, agreement or other arrangement or commitment,
formal or informal, with any Person to sell, transfer or pledge the Acquired
Stock, or any portion thereof, and neither Purchaser nor any of its Affiliates
has any present plans to enter into any such contract, understanding, agreement,
arrangement or commitment.
(c) Purchaser and each of its Affiliates is capable
of evaluating the merits and risks of their investment in the Acquired Stock and
has the capacity to protect its own interests in connection with the
transactions contemplated hereby.
3.6 Litigation.(a) There is no Proceeding pending, or to
Purchaser's Knowledge, threatened against or affecting Purchaser or any of its
Affiliates seeking to prevent or delay the consummation of the transactions
contemplated by this Agreement.
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3.7 Financing. As of the Closing, Purchaser will have
sufficient funds available to consummate the transactions contemplated hereby
and pay all related fees and expenses.
ARTICLE 4
COVENANTS OF SELLER
Seller hereby covenants and agrees that from the date of this
Agreement until the Closing Date, unless another time period is specified:
4.1 Access. Purchaser and its counsel, accountants, other
representatives and lenders have had, and will continue to have, reasonable
access during normal business hours to all properties, books, accounts, records,
contracts, documents, key senior management personnel, independent accountants
and legal counsel of Seller and its Affiliates with respect to the Business.
Seller and its Affiliates shall furnish or cause to be furnished to Purchaser
and its representatives all data and information concerning the Business that
may reasonably be requested by Purchaser.
4.2 Conduct of Business. Except as specifically contemplated
in this Agreement, from the date of this Agreement to the Closing Date, the
Business will be operated only in the ordinary course of business, consistent
with past custom and practice, and Seller shall not and shall not permit any of
its Affiliates to (without the prior written approval of Purchaser, which will
not be unreasonably withheld):
(a) enter into any material contract, commitment or
other transaction relating to the Business, except in the ordinary course of
business consistent with past custom and practice;
(b) materially modify, amend, cancel or terminate
any Material Contract, except in the ordinary course of business consistent with
past custom and practice;
(c) take any action which, or omit to take any
action the omission of which, would require disclosure under Section 2.7 hereof;
(d) agree to do any of the actions described in the
preceding clauses (a) through (c).
4.3 No Solicitation.
(a) From and after the date hereof until the earlier
of the Closing Date and the termination of this Agreement pursuant to Article 7,
Seller and its Affiliates shall not, and shall cause each of their respective
officers, directors, employees, agents, counsel, accountants, investment
bankers, financial advisors and representatives (collectively, the "Seller
Representatives") not to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing information or assistance, except for
any information which Seller's independent
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legal counsel advises Seller it is obliged to furnish pursuant to the City Code
on Takeovers and Mergers), or take any other action to facilitate, any inquiry
in connection with or the making of any proposal from any Person that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal
(as defined below), (ii) enter into, explore, maintain, participate in or
continue any discussion or negotiation with any Person (other than Purchaser or
any of its representatives) regarding an Acquisition Proposal, or furnish to any
Person (other than Purchaser or any of its representatives) any information
(except for any information which Seller's independent legal counsel advises
Seller it is obliged to furnish pursuant to the City Code on Takeovers and
Mergers) or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person (other than
Purchaser or any of its representatives) to make or effect an Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to, or otherwise endorse, any Acquisition Proposal or (iv) authorize or
permit any Seller Representative to take any such action. Notwithstanding the
foregoing, with respect to any Acquisition Proposal which only involves the
Business (a "Business Acquisition Proposal"), nothing contained in this Section
4.3 shall prohibit Seller's board of directors, prior to approval of this
Agreement by the stockholders of Seller at the Stockholders Meeting, from
furnishing information to, or engaging in discussions or negotiations with, any
Person that makes an unsolicited bona fide written Business Acquisition Proposal
(which did not result from a breach of this Section 4.3) if (A) Seller's board
of directors determines in good faith after consultation with independent
outside legal counsel, that such action is necessary for Seller's board of
directors to comply with its fiduciary duties to Seller's stockholders under
applicable law or in order to comply with their obligations under the City Code
on Takeovers and Mergers (it being agreed the directors' obligations under the
City Code on Takeovers and Mergers shall be limited to the obligation to furnish
information, and not to engage in discussions or negotiations with, any such
Person), (B) the Business Acquisition Proposal constitutes or would reasonably
be expected to lead to a Superior Proposal (as defined below) and (C) prior to
furnishing such information to, or engaging in discussions or negotiations with,
such Person, Seller receives from such Person an executed confidentiality
agreement (which agreement shall be provided to Purchaser for information
purposes) with terms materially no less favorable to Seller than those contained
in the confidentiality agreement between Seller and Golden Gate Private Equity,
Inc. Notwithstanding the foregoing, with respect to any Acquisition Proposal
which involves MERANT plc (including the Business), nothing contained in this
Section 4.3 shall prohibit Seller's board of directors, prior to approval of
this Agreement by the stockholders of Seller at the Stockholders Meeting, from
engaging in any of the activities described in clause (i) or clause (ii) of the
first sentence of this Section 4.3(a) if prior to furnishing such information
to, or engaging in discussions or negotiations with, such Person, Seller
receives from such Person an executed confidentiality agreement with terms
materially no less favorable to Seller than those contained in the
confidentiality agreement between Seller and Golden Gate Private Equity, Inc.
(b) From and after the date hereof until the earlier
of the Closing Date and the termination of this Agreement pursuant to Article 7,
if Seller's board of directors is entitled to engage in any of the activities
described in Section 4.3(a) by virtue of the last two sentences of Section
4.3(a) on the terms contemplated therein, Seller's board of directors may, prior
to the approval of this Agreement by the stockholders of Seller at the
Stockholders
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Meeting, terminate this Agreement in respect of any Acquisition Proposal,
including a Business Acquisition Proposal, pursuant to the termination
provisions set forth in Article 7 hereof if (A) such Acquisition Proposal
constitutes a Superior Proposal and (B) Seller's board of directors shall have
determined in good faith after consultation with independent outside legal
counsel, that such action is necessary for Seller's board of directors to comply
with its fiduciary duties to Seller's stockholders under applicable law.
(c) Seller (i) will promptly (but in any event
within one business day) notify Purchaser orally and in writing of the receipt
of any Business Acquisition Proposal or any inquiry regarding the making of a
Business Acquisition Proposal including any request for information, the terms
and conditions of such request, Business Acquisition Proposal or inquiry and the
identity of the Person making such request, Business Acquisition Proposal or
inquiry and (ii) will keep Purchaser informed on a timely basis of the status
and details (including amendments and proposed amendments) of any such request,
Business Acquisition Proposal or inquiry. Prior to engaging in any of the
activities permitted by the penultimate sentence of Section 4.3(a), Seller's
board of directors shall promptly (but in any event within one business day)
notify Purchaser orally and in writing of any action it proposes to take with
respect to such Business Acquisition Proposal. After taking any such action,
Seller's board of directors shall promptly advise Purchaser orally and in
writing of the status of such action as developments arise or as requested by
Purchaser. Notwithstanding any provision in this Agreement to the contrary, at
least five business days (the "Five Day Period") prior to terminating this
Agreement because of a Business Acquisition Proposal pursuant to Section 4.3(b),
Seller's board of directors shall notify Purchaser of any such action it
proposes to take and, during the Five Day Period, Seller's board of directors
shall negotiate in good faith with Purchaser with respect to any revised
proposal to acquire the Business that Purchaser may make prior to or during the
Five Day Period.
(d) None of Seller or its board of directors shall,
except as permitted by Section 4.3(b), propose to approve or recommend any
Acquisition Proposal. Without limiting the foregoing, it is understood and
agreed that any violation of the restrictions set forth in the preceding
sentence by any Seller Representative, whether or not acting on behalf of Seller
or any of its Affiliates, shall be deemed to be a breach of this Section 4.3 by
Seller.
(e) Seller shall immediately cease and cause its
Affiliates and the Seller Representatives to immediately cease any and all
existing activities, discussions or negotiations with any parties (other than
Purchaser or any of its representatives) conducted heretofore with respect to
any Business Acquisition Proposal, and shall use its reasonable best efforts to
cause any such parties in possession of confidential information about the
Business that was furnished by or on behalf of Seller to return or destroy all
such information in the possession of any such party.
(f) For purposes of this Agreement, "Acquisition
Proposal" shall mean any offer or proposal for, or any indication of interest
in, (i) any direct or indirect acquisition or purchase of 10% or more of the
total assets of the Business, in a single transaction or series of transactions,
(ii) any direct or indirect acquisition or purchase of 10% or more of any class
of equity securities of the Business, in a single transaction or series of
transactions, (iii) any merger, consolidation, share exchange, business
combination, recapitalization, reclassification or other
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similar transaction involving the Business or (iv) any public announcement of an
agreement, proposal, plan or intention to do any of the foregoing, other than
the transactions contemplated by this Agreement. For avoidance of doubt, an
"Acquisition Proposal" will include any such transaction involving Seller which
includes the Business, including a transaction for all of MERANT plc, and
Business Acquisition Proposal means only an Acquisition Proposal that is
directed exclusively at the Business.
(g) For purposes of this Agreement, "Superior
Proposal" shall mean any bona fide written Acquisition Proposal by a Person that
(i) Seller's board of directors has determined in good faith, after consultation
with an independent financial advisor of recognized reputation, is more
favorable from a financial point of view to Seller's stockholders than the
transactions contemplated hereby (including any adjustment to the terms and
conditions thereof proposed in writing by Purchaser in response to any such
Acquisition Proposal) and (ii) is reasonably capable of being consummated in a
timely manner (taking into account all financial, regulatory, legal and other
aspects of such proposal (including, without limitation, any antitrust or
competition law approvals or non-objections)) and for which financing, to the
extent required, is then committed or reasonably capable (in the good faith
judgment of Seller's board of directors) of being financed by such third party.
4.4 Intercompany Accounts. Effective immediately prior to
the Closing, all intercompany receivables, payables, loans and investments and
any other intercompany accounts of any type or nature then existing between
Seller or any of its Affiliates that is not the Acquired Subsidiary, on the one
hand, and the Acquired Subsidiary, on the other hand, shall be settled, canceled
or otherwise terminated or eliminated. Seller shall indemnify and hold harmless
Purchaser, each of its Affiliates and the Acquired Subsidiary and their
respective directors, shareholders, partners, officers, employees, agents,
consultants, representatives, successors, transferees and assigns, from and
against any and all Taxes incurred or payable, to the extent arising out of, or
related to the consummation of any of the transactions contemplated by this
Section 4.4.
4.5 Third Party Standstill Agreements. During the period
from the date of this Agreement through the Closing Date, without the prior
written consent of Purchaser (not to be unreasonably withheld), Seller shall not
terminate, amend, modify or waive any material provision of any confidentiality
agreement that related to the Business or any standstill agreement to which
Seller is a party (other than any such agreement involving Golden Gate Private
Equity, Inc. or its Affiliates). During such period, Seller agrees to enforce,
to the fullest extent permitted under applicable law, the provisions of any such
agreements, including, but not limited to, seeking injunctions to prevent any
breaches of such agreements to enforce specifically the terms and provisions
thereof.
4.6 Solicitation of Shareholder Approval.
(a) Seller, acting through its board of directors,
shall, in accordance with applicable law and its constitutional documents, duly
call, give notice of, convene and hold an extraordinary general meeting of its
stockholders (the "Stockholders Meeting") as soon as practicable following the
execution of this Agreement for the purpose of considering and voting
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upon the approval and adoption of this Agreement, the transactions contemplated
hereby and such other matters as may be necessary to effectuate the transactions
contemplated hereby. Seller's board of directors shall (i) recommend to the
stockholders of Seller the approval and adoption of this Agreement and the
transactions contemplated hereby, (ii) include in the Seller Disclosure Document
such favorable recommendation of Seller's board of directors that the
stockholders of Seller vote in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby, (iii) take all permitted
lawful action to solicit approval from Seller's institutional stockholders and
(iv) not withdraw or modify such favorable recommendation, in each case, unless
Seller's board of directors, after consultation with independent outside legal
counsel, determines in good faith that failing to take such action is necessary
for Seller's board of directors to comply with its fiduciary duties to Seller's
stockholders under applicable law. Seller agrees that its obligations set forth
in the first sentence of this Section 4.6(a) shall not be affected by the
withdrawal or modification by Seller's board of directors, in accordance with
the immediately preceding sentence, of its recommendation to Seller's
stockholders that such stockholders approve and adopt this Agreement and the
transactions contemplated hereby.
(b) As soon as practicable following the execution
of this Agreement and in connection with the Stockholders Meeting, Seller shall
(i) promptly prepare and file with the UK Listing Authority (the "UKLA") (but in
no event later than four days after the date hereof), use its best efforts to
have approved by the UKLA and thereafter mail to its stockholders as promptly as
practicable a Class 1 Shareholder Circular (the "Seller Disclosure Document") in
accordance with the listing rules of the Financial Services Authority for the
purposes of Part IV of the Financial Services Act (the "Listing Rules"), (ii)
notify Purchaser of the receipt of any comments of the UKLA with respect to the
Seller Disclosure Document and of any requests by the UKLA for any amendment or
supplement thereto or for additional information and shall promptly provide to
Purchaser copies of all correspondence between Seller or any representative of
Seller and the UKLA, (iii) shall give Purchaser and its counsel the opportunity
to review the Seller Disclosure Document prior to its being filed with the UKLA
and shall give Purchaser and its counsel the opportunity to review all
amendments and supplements to the Seller Disclosure Document and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the UKLA, (iv) subject to the terms of Section
4.6(a), use its best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby and (v)
use its best efforts otherwise to comply with all legal requirements applicable
to such meeting.
ARTICLE 5
MUTUAL COVENANTS OF PURCHASER AND SELLER
5.1 Post Closing Cooperation. After the Closing, each party
shall cooperate with the other to the extent reasonably requested, and make
available to the requesting party all financial, insurance, tax and other
information (including reasonable access to books and records and personnel)
with respect to any fiscal period ending on or prior to the Closing Date to the
extent required by the requesting party in connection with (i) any audit or
other investigation by any taxing authority, (ii) the prosecution or defense of
any tax claims or related litigation that
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might give rise to indemnification payments hereunder, (iii) the preparation by
the requesting party of tax returns or any other reports or submissions to any
Governmental Entity required to be made or (iv) in connection with the
contesting by either party or defending by either party against any action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand
with respect to any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, failure to act or transaction
involving the Business, the Division or the Division Assets on, prior to or
after the Closing Date, including, but not limited to, the shareholder
litigation pending on the date hereof; provided that in any such case, such
cooperation and availability of information may be done in a manner so as to not
unreasonably interfere with the normal business of the cooperating party and the
requesting party shall bear all out-of-pocket costs incurred by the cooperating
party in providing such assistance. Each party shall preserve all such
information, including without limitation, the books and records of the Division
and the Acquired Subsidiary, for at least six (6) years after the Closing Date;
provided that the books and records related to Seller's on-going shareholder
litigation shall be preserved until such time as Seller advises Purchaser that
such litigation has reached a final, non-appealable resolution.
5.2 Payments With Respect to Accounts Receivable. Following
the Closing Date, Seller shall continue to remit to Purchaser all monies
received by Seller or any of its Affiliates in payment for any accounts
receivable included in the Division Assets acquired by Purchaser as of the
Closing Date pursuant to this Agreement. Payments remitted to Purchaser pursuant
to this Section 5.2 shall be accompanied by a description of the accounts
receivable to which they relate, including an invoice and/or account number, as
applicable and as available from normal accounting systems of the Seller or its
Affiliates. Seller shall periodically provide Purchaser with such additional
evidence or supporting detail as Purchaser may reasonably request regarding
particular payments or outstanding accounts. With respect to any accounts
receivables constituting Division Assets transferred to Purchaser or its
Affiliates which have been commingled with accounts receivable of any of
Seller's or its Affiliates' other businesses, each party and its Affiliates
shall have the right to collect any such commingled accounts receivable which
are owned by such party or its Affiliates from and after the Closing Date,
following advice from and consultation with the other party so as to preserve
the other party's business relationships with its customers. Each party shall
promptly account for any portion of such commingled accounts receivable which do
not relate to their respective businesses and promptly remit any such amounts to
the other party or its Affiliates. At either party's request, the other party or
its Affiliates shall use commercially reasonably efforts to assist the
requesting party or its Affiliates in the collection of any such commingled
accounts receivable.
5.3 Fulfillment of Conditions.
(a) Seller will use all reasonable efforts, and will
cause each of its Affiliates to use all reasonable efforts, to perform, comply
with and fulfill all obligations, covenants and conditions required by this
Agreement to be performed, complied with or fulfilled by any of them prior to or
as of the Closing Date. Purchaser will use all reasonable efforts, and will
cause each of its Affiliates to use all reasonable efforts, to perform, comply
with and fulfill all obligations, covenants and conditions required by this
Agreement to be performed, complied with or fulfilled by any of them prior to or
as of the Closing Date. Between the date hereof and
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the Closing Date, the parties will mutually agree upon and finalize the
schedules to be appended to the Transition Services Agreement as Exhibit I and
Exhibit II thereto (detailing the transition services to be provided, the price
or cost thereof and the term such services are to be provided).
(b) Seller will use all reasonable efforts, and will
cause each of its Affiliates to use all reasonable efforts, to secure all
necessary consents, waivers, permits, approvals, licenses and authorizations and
will make, and will cause each of its Affiliates to make, all necessary filings
in order to enable the parties to consummate the transactions contemplated
hereby, including but not limited to any filing required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") and any
applicable foreign antitrust laws. Purchaser will use all reasonable efforts,
and will cause each of its Affiliates to use all reasonable efforts, to secure
all necessary consents, waivers, permits, approvals, licenses and authorizations
and will make all necessary filings in order to enable Purchaser to consummate
the transactions contemplated hereby, including but not limited to any required
filings under the HSR Act and any applicable foreign antitrust laws.
5.4 Further Assurances. Each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, any such action in relation to the granting of security by
Purchaser or any of its Affiliates (including the Acquired Subsidiary) in
connection with the financing necessary for the consummation of the transactions
contemplated hereby.
5.5 Confidentiality.
(a) Until the Closing, each party shall treat in
confidence and not disclose to any third Person any confidential information
which such party shall have obtained regarding the other party. In the event the
sale and purchase called for by this Agreement shall not be consummated,
Purchaser, on the one hand, and Seller, on the other hand, shall return or
destroy (verified in writing) all copies of documents and materials constituting
confidential information (whether or not such information is marked or
designated as "confidential") which have been furnished by the other in
connection with this Agreement. However, nothing contained herein shall prohibit
any party from (i) using such documents, materials and other information in
connection with any action or proceeding brought or any claim asserted with
respect to any breach of any representation, warranty or covenant made in or
pursuant to this Agreement; (ii) supplying or filing such documents, materials
or other information to or with any Governmental Entity or other Person which
either party deems reasonably necessary in connection with the obtaining of any
consent, waiver, amendment, modification, approval, authorization, permit or
license which may be necessary to effectuate this Agreement and to consummate
the transactions contemplated hereby; (iii) in the case of Seller, disclosing
information to the extent required to comply with Seller's obligations under the
Listing Rules and applicable securities laws; or (iv) supplying such documents,
materials or other information to such party's lenders, counsel, accountants and
other consultants and representatives in connection with the transactions
contemplated hereby.
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(b) From and after the Closing Date, Seller and
Purchaser shall each treat, and shall cause each of their respective Affiliates
to treat, in confidence and shall not disclose, and cause their respective
Affiliates to not disclose, all confidential information with respect to the
Business, Seller and/or Purchaser, or their respective Affiliates, which are in
their possession or control, subject to the requirements of applicable
securities laws.
5.6 Personnel Matters.
(a) Transferred Employees. As of the Closing Date,
the parties agree that the employees of the Business shall only include (i)
those United States employees of the Business set forth in the Letter Agreement
that accept an offer of employment from Purchaser or one of its Affiliates (the
"US Transferred Employees") and (ii) (A) with respect to the Acquired
Subsidiary, only those employees of the Acquired Subsidiary set forth in the
Letter Agreement and (B) with respect to any portion of the Business conducted
outside of the United States other than through the Acquired Subsidiary, only
those foreign employees set forth in the Letter Agreement who accept the offer
of employment (without any rejection thereof as permitted under applicable law)
made by Purchaser or one of its Affiliates or, in the case of local law which
provides for a transfer of employment, those foreign employees set forth in the
Letter Agreement whose employment is so transferred to Purchaser or one of its
Affiliates (the employees described in clauses (A) and (B) collectively, the
"Foreign Transferred Employees", and together with the US Transferred Employees,
the "Transferred Employees"). In furtherance of the foregoing, (i) the
employment of each US Transferred Employee and the employment of each Foreign
Transferred Employee referred to in clause (B) of the preceding sentence will be
terminated by Seller or its applicable Affiliate immediately prior to the
Closing and (ii) Seller and its Affiliates will cause the employment of each
employee of the Acquired Subsidiary, other than those persons described in
clause (A) of the preceding sentence, to be terminated not later than
immediately prior to the Closing. The employment of each Transferred Employee
shall be on substantially similar terms to those in effect prior to the Closing
Date (other than with respect to equity-based compensation). As of the Closing
Date, the parties will prepare, and update as a supplemental schedule to the
Letter Agreement, a list of Transferred Employees to reflect hiring and
termination activity between the date hereof and the Closing Date.
(b) Employee Costs. Except for any liabilities or
obligations with respect to the Transferred Employees included in the
determination of Actual Tangible Net Book Value included in the Closing Date
Balance Sheet, (i) neither Purchaser nor any of its Affiliates (including,
without limitation, the Acquired Subsidiary) shall assume or in any way be
liable for any liability or obligation with respect to Seller's or its
Affiliates' employees, former employees or retirees, regardless of when such
liability or obligation arises or is incurred (whether on, prior to or after the
Closing Date), (ii) Seller and its Affiliates shall be solely responsible for
the payment of all wages, salaries and other compensation and employee benefits
(including, without limitation, any severance pay, insurance, supplemental
pension, deferred compensation, "stay" or other similar incentive bonuses,
change-in-control bonuses (or other bonuses related to the execution, delivery
or performance of this Agreement), retirement and any other benefits, premiums
and claims and related costs) to any of Seller's or its Affiliates' employees,
former employees or retirees and (iii) except as required by operation of law,
neither Purchaser nor any of its Affiliates shall assume any liability or
obligation with respect to any employee benefit plan
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of any kind or nature maintained by Seller or any of its Affiliates for any of
their employees, former employees or retirees.
(c) Certain Foreign Employee Matters. Neither
Purchaser nor any of its Affiliates shall have any obligation to provide
employment to any non-United States employee of the Business (a "Foreign
Employee") who properly objects to becoming a Foreign Transferred Employee. If a
Foreign Employee so objects, or refuses to assent to the consummation of the
transactions contemplated hereby, Purchaser and its Affiliates shall have no
liability or obligation to such Foreign Employee and Seller shall be fully
responsible for any liability or obligation with respect to such Foreign
Employee. Seller shall indemnify and save harmless Purchaser and its Affiliates
(including, without limitation, the Acquired Subsidiary) from any and all
claims, actions, obligations, liabilities and damages of any kind, in law or in
equity, and including legal fees, arising out of, relating to or based in any
way upon the employment relationship of any Foreign Employee with Seller or its
Affiliates prior to the Closing Date or with Purchaser or its Affiliates on and
after the Closing Date, including reimbursement of all compensation and benefit
costs related to such persons, if (i) such person received a notice of
termination on or prior to the Closing Date, (ii) Seller or its Affiliates
terminated or attempted to terminate such person on or prior to the Closing Date
but such termination or attempted termination is invalid for any reason, (iii)
such person is classified as a Foreign Transferred Employee by operation of law
or otherwise but such person is not listed in the Letter Agreement or (iv)
Seller or its Affiliates have failed to comply with applicable law on or prior
to the Closing Date, whether by failure to properly consult with employees in
connection with the transactions contemplated hereby or otherwise.
(d) Except to the extent otherwise set forth in the
Transition Services Agreement, Transferred Employees shall not accrue benefits
under any employee benefit policy, plan, arrangement, program or agreement of
Seller or its Affiliates after the Closing Date. Notwithstanding the foregoing,
except with respect to any liability or obligation included in the determination
of Actual Tangible Net Book Value included in the Closing Date Balance Sheet,
Seller shall be responsible for all benefits accrued, claims incurred or
obligations arising with respect to the Transferred Employees' service with
Seller or its Affiliates on or prior to the Closing Date, and Seller shall
satisfy such responsibility by paying to Purchaser the amount of any such
pre-Closing Date obligations which are assumed by Purchaser or its Affiliates,
by operation of law or by express assumption.
(e) Seller is wholly responsible for complying with
all applicable health care continuation coverage requirements under the law
commonly known as COBRA with respect to the employees of the Business as to
qualifying events that occur on or prior to the Closing Date, and Purchaser is
wholly responsible for complying with such coverage requirements with respect to
employees employed by Purchaser and its Affiliates from and after the Closing
Date who have qualifying events that occur after the Closing.
(f) As soon as reasonably practicable after the
Closing Date and to the extent permitted by law (it being agreed that, to the
extent such documents may be amended in accordance with applicable law to permit
the transfer contemplated hereby, such plan documents shall be so amended),
Seller shall cause the Trustees of the MERANT, Inc. 401(k) Plan
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("MERANT Plan") to transfer (in the form of cash and notes associated with plan
loans) the US Transferred Employees' vested and nonvested account balances (and
all related assets and liabilities) to one or more defined contribution plans
established by Purchaser or its Affiliates ("Purchaser's 401(k) Plan"). Seller
agrees not to place any US Transferred Employees' plan loan into default if such
employee's account balance is to be transferred in accordance with the preceding
sentence.
(g) In the event that medical or dental insurance
coverage under Purchaser's welfare plans is not available for the US Transferred
Employees as of the Closing Date, Seller agrees to provide medical continuation
coverage to such employees and their covered dependents for up to three months
following the Closing Date in accordance with Section 4980B of the Code;
provided that the appropriate premiums are paid on a timely basis.
(h) Effective as of the Closing, Seller will offer
the US Transferred Employees domiciled in California the option to (i) transfer
all or a part of their vacation accrual to Purchaser's U.S. Affiliate or (ii) be
paid all or a part of their vacation accrual as of the Closing Date. In the
event Seller or its Affiliates suffer any Losses as a result of their failure to
offer the option described in the preceding sentence to any other US Transferred
Employee, Purchaser will indemnify Seller and its Affiliates from any such
Losses.
(i) Each of the parties acknowledges and agrees that
pursuant to the Transfer of Undertakings (Protection of Employment) Regulations
1981 (the "Regulations"), as of the Closing Date, the Foreign Transferred
Employees employed in the UK (the "UK Transferred Employees") will become
employees of an Affiliate of Purchaser on terms and conditions prescribed in the
Regulations. Each of the parties agrees that an employee of the Division in the
UK will not become an UK Transferred Employee if he or she properly objects to
becoming a UK Transferred Employee in accordance with the requirements of the
Regulations.
5.7 Third Party Consents. Prior to the Closing Date, Seller
shall, and shall cause each of its Affiliates to, use their respective best
efforts to obtain all necessary third party consents required in connection with
the transfer to Purchaser of the Division Assets, each Scheduled Contract (as
defined in Section 6.1(e)) and the Assumed Liabilities, and shall advise
Purchaser from time to time, or as requested by Purchaser, regarding the status
of such consents. If any contract to be assigned to Purchaser hereunder requires
the consent of a third party which has not been obtained as of the Closing Date,
this Agreement shall not be deemed to effect an assignment of such contract. In
such a case, with respect to any such Scheduled Contracts and the real property
leases described in Section 6.1(e) only, Seller agrees that it shall, and shall
continue to cause its Affiliates to, use their respective best efforts to obtain
the required consent to the assignment of such Scheduled Contracts and real
property leases, and Seller shall bear the risk of loss of any such Scheduled
Contract or real property lease which is not properly transferred to Purchaser
in accordance with the terms thereof as in effect as of the date hereof, and
Seller shall indemnify and hold Purchaser harmless from any Loss incurred by
Purchaser or any of its Affiliates with respect to, in connection with or
arising from the failure to obtain any such required consent with respect to any
such Scheduled Contract or real property lease, including any loss of any future
benefit or revenue under any such Scheduled Contract or real property lease,
including, without limitation, any minimum guaranteed payments. Unless and
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until such consent is obtained, Purchaser will perform and fulfill, on a
subcontractor basis, the obligations of Seller or its Affiliates to be performed
under such Scheduled Contracts and real property leases after the Closing Date
in accordance with the terms thereof as in effect as of the date hereof, and
Seller will, and will cause its Affiliates to, remit to Purchaser all payments
received in connection with such Scheduled Contracts or real property leases.
5.8 Public Announcements. From and after the date hereof
through and including the Closing Date, except as required by law or regulation,
no press releases or other public announcements relating to the transactions
contemplated hereby will be issued or otherwise released by any party without
the prior written consent of the other party. If Seller or Purchaser or any of
their respective Affiliates is required by law or regulation to make any public
announcements relating to the transactions contemplated hereby from and after
the date hereof through and including the Closing Date, such party will submit
its proposed announcement in advance to the other party and will give it a
reasonable opportunity in the circumstances to comment thereon in advance of
release. This Section 5.8 shall not apply to publication of the Seller
Disclosure Document to which Section 4.6 will apply.
5.9 Certain Notifications. At all times from the date hereof
and prior to the Closing Date, each party shall promptly notify the other party
in writing of the occurrence of any event known to such party which will or is
likely to result in the failure to satisfy any of the conditions specified in
Article 6 hereof.
5.10 Tax Matters.
(a) Taxable Periods Ending on or Before the Closing
Date. Seller shall prepare, or cause to be prepared and file or cause to be
filed, all Tax Returns for the Acquired Subsidiary for all taxable periods
ending on or prior to the Closing Date which are filed after the Closing Date
(excluding any income and franchise Tax Returns with respect to periods for
which the operations of the Acquired Subsidiary are included in the
consolidated, unitary or combined income Tax Returns of Seller or its
Affiliates, for which Seller will bear sole responsibility for the preparation,
filing and payment of all Taxes with respect thereto). Seller shall permit
Purchaser to review and comment on each such Tax Return described in the
preceding sentence prior to filing. Seller shall pay for Taxes of the Acquired
Subsidiary with respect to such periods when such Taxes are due and payable.
Seller shall be entitled to all tax refunds for the Acquired Subsidiary for all
taxable periods ending on or prior to the Closing Date (except to the extent
such refunds result from losses arising after the Closing Date), and Purchaser
shall, and shall cause its Affiliates to, at Seller's request and sole cost,
file for such refunds and fully cooperate to obtain the same. Purchaser shall
pay Seller any such refund amounts to which Seller is entitled pursuant to this
Section 5.10(a) within five (5) days of Purchaser's receipt of the same.
(b) Taxable Periods Beginning Before and Ending
After the Closing Date. Purchaser shall prepare, or cause to be prepared and
file or cause to be filed, any Tax Returns for the Acquired Subsidiary for
taxable periods which begin before the Closing Date and end after the Closing
Date. Seller shall pay Purchaser no later than five (5) days prior to the date
on which Taxes are paid with respect to such periods an amount equal to the
portion of such
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Taxes which relates to the portion of such taxable period ending on the Closing
Date. For purposes of this Section 5.10, in the case of any Taxes that are
imposed on a periodic basis and are payable for a taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates to
the portion of such taxable period ending on the Closing Date shall (x) in the
case of any Taxes other than Taxes based upon or related to income, be deemed to
be the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days from the beginning of the taxable
period and ending on the Closing Date and the denominator of which is the number
of days in the entire taxable period and (y) in the case of any Tax based upon
or related to income be deemed equal to the amount which would be payable if the
relevant taxable period ended on the Closing Date. Any Tax refunds for taxable
periods which begin before the Closing Date and end after the Closing Date shall
be shared by the parties as described in this Section 5.10(b) and in accordance
with Section 5.10(a).
(c) Additional Tax Indemnification. In addition to
the Taxes to be borne by Seller under Section 5.10(a) and Section 5.10(b) above,
Seller shall be liable for, and shall indemnify and hold Purchaser, each of its
Affiliates and the Acquired Subsidiary harmless against, without duplication,
(i) all liability (whether as a result of Treasury Regulation Section 1.1502-6
or any similar provision of state, local or non-U.S. law, as a transferee, by
contract or otherwise) for Taxes of any Person (other than the Acquired
Subsidiary) based on an affiliation, contractual relationship or other
relationship existing at any time prior to the Closing or (ii) any liability for
Tax of the Acquired Subsidiary arising as a result of the Acquired Subsidiary
ceasing to be an Affiliate of Seller as of the Closing.
(d) Cooperation on Tax Matters. Purchaser and each
of its Affiliates, and Seller and each of its Affiliates shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 5.10, or any amended return,
claim for refund, determining a liability for Taxes or a right to refund of
Taxes, or any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
return, analysis, audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Each of the parties agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Acquired Subsidiary relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by Purchaser or Seller, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority and (B) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests allowing such other party to take
possession of such books and records.
(e) Except as otherwise set forth herein, Purchaser
and Seller shall bear equally (i) the costs of all sales and use Taxes,
transfer, stamp and similar Taxes, if any, applicable to the consummation of the
transactions contemplated hereby and the consummation of the transactions in any
other agreement contemplated hereby (other than value-added or
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similar Taxes, to the extent fully refundable to Purchaser) and (ii) the costs
and expenses of obtaining consents and approvals of governmental authorities or
third parties for the consummation of the transactions contemplated hereby
(including, without limitation, any consents required to be obtained in
connection with the transfer of any Contracts).
5.11 Use of Division Names. From and after the Closing, as
soon as is reasonably practicable, but no later than ninety (90) days after the
Closing, Seller shall amend the Articles of Incorporation or Certificate of
Incorporation of any of its Affiliates using any of the names of the Division
listed on Schedule 5.11 and shall remove, or shall cause to be removed, from the
exterior of the Seller's or any of its Affiliates' premises any such names
listed on said schedule or any related logo. After Closing, Seller and its
Affiliates shall have quantities of inventory, software, preprinted stationery,
packaging material and other supplies which bear such names and logos. With
respect to (i) such preprinted stationery, packaging material and other
supplies, for a period of up to six (6) months from the Closing Date and (ii)
inventory and software, for such period of time until such inventory or software
is sold or otherwise consumed in the ordinary course of business consistent with
past practice, Purchaser hereby grants to Seller and each of its Affiliates a
worldwide, non-exclusive, non-transferable, royalty-free license to use the
names and logos specified on Schedule 5.11 and any trademarks, service marks,
logos, corporate names, trade names or trade dress associated therewith
("Business Marks") solely in connection with the marketing of Seller's products
as the same exist as of the date hereof (other than the Software Products) and
in the operation of Seller's business; provided that (a) such use is in
accordance with Seller's trademark usage guidelines in effect as of the Closing
Date and (b) such license shall cease immediately upon the expiration of the
periods identified above. Any goodwill arising from such use shall inure to the
benefit of Purchaser. Seller agrees that the nature and quality of all goods and
services rendered by Seller in connection with the Business Marks shall be
advertised, offered and provided in a manner consistent with the quality control
standards previously used by Seller in connection with the Business. Upon any
termination of the licenses set forth above, Seller will no longer make any use
of the Business Marks, except as may be required to be disclosed in any filings
made with the US Securities and Exchange Commission or the London Stock
Exchange. Purchaser will have the exclusive right to own, use, hold, apply for
registration for, and register the Business Marks during the term of, and after
the expiration or termination of, this license; Seller will neither take nor
authorize any activity inconsistent with such exclusive right. Seller and its
Affiliates shall not be entitled to use the Business Marks except as provided in
this Section 5.11 or as otherwise permitted in accordance with the Transition
Services Agreement.
5.12 MERANT Name. From and after the Closing, as soon as is
reasonably practicable, but no later than ninety (90) days after the Closing,
Purchaser shall amend the Articles of Incorporation or Certificate of
Incorporation of the Acquired Subsidiary using the name "MERANT" and shall
remove, or shall cause to be removed, from the exterior of the Acquired
Subsidiary's premises the "MERANT" name and "MERANT" logo. After Closing,
Purchaser and its Affiliates shall have quantities of inventory, software,
preprinted stationery, packaging material and other supplies which bear the
"MERANT" name and logo. With respect to (i) such preprinted stationery,
packaging material and other supplies, for a period of up to six (6) months from
the Closing Date and (ii) inventory and software, for such period of time until
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such inventory or software is sold or otherwise consumed in the ordinary course
of business consistent with past practice, Seller hereby grants to Purchaser and
each of its Affiliates a worldwide, non-exclusive, non-transferable,
royalty-free license to use the "MERANT" name and logo and any trademarks,
service marks, logos, corporate names, trade names or trade dress associated
therewith ("MERANT Marks") solely in connection with the marketing of the
Software Products and in the operation of the Business; provided that (a) such
use is in accordance with Seller's trademark usage guidelines in effect as of
the Closing Date and (b) such license shall cease immediately upon the
expiration of the periods identified above. Any goodwill arising from such use
shall inure to the benefit of Seller. Purchaser agrees that the nature and
quality of all goods and services rendered by Purchaser in connection with the
MERANT Marks shall be advertised, offered and provided in a manner consistent
with the quality control standards previously used by Seller in connection with
the Business. Upon any termination of the licenses set forth above, Purchaser
will no longer make any use of the MERANT Marks, except as may be required to be
disclosed in any filings made with the US Securities and Exchange Commission or
the London Stock Exchange. Seller will have the exclusive right to own, use,
hold, apply for registration for, and register the MERANT Marks during the term
of, and after the expiration or termination of, this license; Purchaser will
neither take nor authorize any activity inconsistent with such exclusive right.
Purchaser and its Affiliates shall not be entitled to use the "MERANT" name
and/or logo except as provided in this Section 5.12 or as otherwise permitted in
accordance with the Transition Services Agreement.
5.13 Cooperation Regarding Minimization of Costs. Purchaser
and Seller hereby agree to work cooperatively from and after the date hereof
(including during the period following the Closing Date) to minimize any costs
and expenses to be shared by Purchaser and Seller pursuant to the terms of this
Agreement. Furthermore, Purchaser and Seller hereby agree to work cooperatively
from and after the date hereof (including during the period following the
Closing Date) to minimize the costs and expenses that may result from the
separation of the Business from Seller's other business operations in order to
reduce or eliminate any adverse economic exposure to Purchaser; provided that
Seller shall not be required to take any action that would, in any material
respect, adversely affect Seller or its other business operations.
ARTICLE 6
CONDITIONS OF CLOSING
6.1 Conditions of Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated hereby is subject to
the satisfaction of the following conditions, any of which may be waived by
Purchaser:
(a) Representations and Warranties; Performance of
Obligations. The representations and warranties of Seller set forth in Article 2
hereof, and in all agreements, documents and instruments executed and delivered
pursuant hereto or in connection with the Closing shall be true and correct in
all material respects as of the Closing Date. Seller and each of its Affiliates
shall have performed in all material respects the agreements and obligations
required to be performed by them under this Agreement prior to the Closing Date.
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(b) Bring-Down Certificate. Purchaser shall have
received a certificate, dated the Closing Date, signed by an officer of Seller,
certifying that the conditions specified in Section 6.1(a) have been fulfilled.
(c) Certificate of Secretary. Purchaser shall have
received a certificate, dated the Closing Date, signed by the Secretary or any
Assistant Secretary of Seller, attesting to the completion of all necessary
action by Seller and each of its Affiliates with respect to the transactions
contemplated by this Agreement, and including copies of the constating documents
of Seller and each of its Affiliates (including the Acquired Subsidiary) and all
corporate resolutions required in connection with this Agreement.
(d) No Injunction. No preliminary or permanent
injunction or order that would prohibit or restrain the consummation of the
transactions contemplated hereunder shall be in effect and no Governmental
Entity or other third Person shall have commenced or threatened to commence an
action or proceeding seeking to enjoin the consummation of such transactions or
to impose liability on the parties hereto in connection therewith; provided that
Purchaser shall use commercially reasonable efforts to have any such order
vacated.
(e) Consents and Approvals. All necessary
governmental consents or approvals to the consummation of the transactions
contemplated hereby by Seller or any of its Affiliates shall have been obtained
by Seller and delivered to Purchaser, including any consents or approvals
required under the HSR Act and any applicable foreign antitrust laws or
regulations and an appropriate Belgian tax clearance certificate. All consents
or approvals of each third party which are required in order to effect the
transfer of Contracts set forth on Schedule 6.1(e) (the "Scheduled Contracts")
representing not less than a majority of the aggregate contract value set forth
on Schedule 6.1(e) will have been obtained (or such portion of such Contracts,
if any, which may be properly transferred without third party consent shall have
been so transferred) on terms and conditions no less favorable than in effect as
of the date hereof. All consents or approvals of each landlord which are
required in order to effect the transfer of the real property leases for the
Business' principal facilities located in Morrisville, North Carolina and
Duffel, Belgium will have been obtained on terms and conditions no less
favorable than in effect as of the date hereof.
(f) Transition Services Agreement and Proprietary
Rights Agreement. Seller, on behalf of itself and its Affiliates, shall have
executed and delivered (i) a Transition Services Agreement in form and substance
as set forth on Exhibit C attached hereto together with Exhibit I and Exhibit II
thereto as contemplated in Section 5.3 above (the "Transition Services
Agreement") and the Transition Services Agreement shall be in full force and
effect as of the Closing and (ii) a Proprietary Rights Agreement in form and
substance as set forth on Exhibit D attached hereto, together with definitive
agreements incorporating the terms set forth in Schedule 4(b) thereto
(collectively, the "Proprietary Rights Agreement") and the Proprietary Rights
Agreement shall be in full force and effect as of the Closing.
(g) Noncompetition and Nonsolicitation Agreement.
Seller, on behalf of itself and each of its Affiliates, shall have executed and
delivered the Noncompetition and
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Nonsolicitation Agreement in the form and substance attached hereto as Exhibit
E, and such agreement shall be in full force and effect as of the Closing.
(h) Deliveries of Seller. Seller shall have
delivered or cause to be delivered to Purchaser the following:
(i) possession of all of the Division Assets
(excluding, for avoidance of doubt, any Excluded Assets);
(ii) one or more Assignments and Assumptions
and Bills of Sale, executed by Seller and/or its Affiliates transferring the
Division Assets and Assumed Liabilities, in the form attached hereto as Exhibit
F;
(iii) one or more Trademark Assignments,
executed by Seller and/or its Affiliates conveying any trademarks and service
marks included within the Division Assets, in the form attached hereto as
Exhibit G-1 and one or more Copyright Assignments, executed by Seller and/or its
Affiliates conveying any copyrights included within the Division Assets, in the
form attached hereto as Exhibit G-2;
(iv) one or more domain name transfer
documents conveying any domain names included among the Division Assets to
Purchaser;
(v) the opinion of Macfarlanes, U.K. counsel
to the Seller, dated the Closing Date, which opinion will address the items set
forth in Exhibit H attached hereto;
(vi) stock certificates representing the
Acquired Stock, with duly executed assignments or stock transfer forms separate
from certificate; and
(vii) other documents reasonably required to
be delivered by Seller or its Affiliates in order to effect the transactions
contemplated hereby, in form and substance reasonably satisfactory to Purchaser
and its counsel.
(i) Formation of Operating Subsidiaries. Purchaser
or its Affiliates shall have formed one or more new operating Subsidiaries in
each country in which the Division Assets are to be conveyed by direct asset
transfer.
(j) Indebtedness. Purchaser will have received
payoff letters with respect to the Acquired Subsidiary's Indebtedness, if any,
(including any accrued interest related thereto and all prepayment premiums and
penalties incurred in connection with any prepayment thereof in connection with
the transactions contemplated by this Agreement), all of which is to be repaid
prior to Closing.
(k) Shareholder Approval. The transactions
contemplated by this Agreement shall have been approved and adopted at a meeting
by the requisite vote of the holders of the issued and outstanding shares of
stock in Seller entitled to vote thereon as required under Seller's
organizational documents, applicable law and the Listing Rules.
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6.2 Conditions of Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction of the following conditions, any of which may be waived by Seller:
(a) Representations and Warranties; Performance of
Obligations. The representations and warranties of Purchaser set forth in
Article 3 hereof, and in all agreements, documents and instruments executed and
delivered pursuant hereto or in connection with the Closing shall be true and
correct in all material respects as of the Closing Date. Purchaser and each of
its Affiliates shall have performed in all material respects the agreements and
obligations required to be performed by them under this Agreement prior to the
Closing Date.
(b) Bring-Down Certificate. Seller shall have
received a certificate, dated the Closing Date, signed by an officer of
Purchaser, certifying that the conditions specified in Section 6.2(a) have been
fulfilled.
(c) Certificate of Secretary. Seller shall have
received a certificate, dated the Closing Date, signed by the Secretary or any
Assistant Secretary of Purchaser, attesting to the completion of all necessary
action by Purchaser and each of its Affiliates with respect to the transactions
contemplated by this Agreement, and including copies of the constating documents
of Purchaser and each of its Affiliates and all corporate resolutions required
in connection with this Agreement.
(d) No Injunction. No preliminary or permanent
injunction or order that would prohibit or restrain the consummation of the
transactions contemplated hereunder shall be in effect and no Governmental
Entity or other third Person shall have commenced or threatened to commence an
action or proceeding seeking to enjoin the consummation of such transactions or
to impose liability on the parties hereto in connection therewith; provided that
Seller shall use commercially reasonable efforts to have any such order vacated
(e) Consents and Approvals. All necessary
governmental consents or approvals to the consummation of the transactions
contemplated hereby by Purchaser or any of its Affiliates shall have been
obtained by Purchaser and delivered to Seller, including any consents or
approvals required under the HSR Act and any applicable foreign antitrust laws
or regulations.
(f) Transition Services Agreement and Proprietary
Rights Agreement. Purchaser, on behalf of itself and its Affiliates, shall have
executed and delivered (i) the Transition Services Agreement in form and
substance as set forth on Exhibit C attached hereto together with Exhibit I and
Exhibit II thereto as contemplated in Section 5.3 above and the Transition
Services Agreement shall be in full force and effect as of the Closing and (ii)
the Proprietary Rights Agreement in form and substance as set forth on Exhibit D
attached hereto and the Proprietary Rights Agreement shall be in full force an
effect as of the Closing.
(g) Shareholder Approval. The transactions
contemplated by this Agreement shall have been approved and adopted at a meeting
by the requisite vote of the
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holders of the issued and outstanding shares of stock in Seller entitled to vote
thereon as required under Seller's organizational documents, applicable law and
the Listing Rules.
(h) Deliveries of Purchaser. Purchaser shall have
delivered or cause to be delivered to Seller the following:
(i) the Cash Portion of the Purchase Price,
as adjusted pursuant to Section 1.4 as of the Closing;
(ii) one or more Assignments and Assumptions
and Bills of Sale, executed by Purchaser and/or its Affiliates accepting the
transfer of the Division Assets and Assumed Liabilities, in the form attached
hereto as Exhibit F;
(iii) one or more Trademark Assignments,
executed by Purchaser and/or its Affiliates accepting the transfer of any
trademarks and service marks included within the Division Assets, in the form
attached hereto as Exhibit G-1 and one or more Copyright Assignments, executed
by Purchaser and/or its Affiliates accepting the transfer of the copyrights
included within the Division Assets, in the form attached hereto as Exhibit G-2;
(iv) one or more domain name transfer
documents conveying any domain names included in the Division Assets to
Purchaser;
(v) the opinion of Xxxxxx and Xxxxxx, Cayman
Islands counsel to the Purchaser, dated the Closing Date, which opinion will
address the items set forth in Exhibit I attached hereto; and
(vi) other documents reasonably required to
be delivered by Purchaser or its Affiliates in order to effect the transactions
contemplated hereby, in form and substance reasonably satisfactory to Seller and
its counsel.
ARTICLE 7
CLOSING
7.1 Closing Date. The closing for the consummation of the
transactions contemplated by this Agreement (the "Closing") shall, unless
another date or place is agreed to in writing by Seller and Purchaser, take
place no later than ten (10) Business Days following the satisfaction or waiver
of each of the conditions specified in Article 6 hereof (the "Closing Date") at
a place to be determined by the parties.
7.2 Termination of Agreement. This Agreement may be
terminated and abandoned at any time prior to the Closing Date:
(a) By mutual consent of the parties hereto; or
(b) By Purchaser or Seller, if any governmental
authority shall have issued an order (which has not been vacated, withdrawn or
overturned) permanently restraining,
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enjoining or otherwise prohibiting the transactions contemplated hereby and such
order shall have become final and nonappealable; provided that the right to
terminate this Agreement pursuant to this Section 7.2(b) shall not be available
to any party that has failed to perform its obligations under Section 5.3 or the
proviso contained in Sections 6.1(d) or 6.2(d); or
(c) By Purchaser or Seller, if the transactions
contemplated hereby shall not have been consummated on or before December 31,
2001 (the "Expiration Date") or if events have occurred which have made it
impossible to satisfy on or before the Expiration Date a condition precedent to
the terminating party's obligations to consummate the transactions contemplated
hereby; provided that the right to terminate this Agreement under this Section
7.2(c) shall not be available to any party whose failure to perform any covenant
or obligation under this Agreement has been the cause of or resulted in the
failure of the transactions contemplated hereby to occur on or before the
Expiration Date; or
(d) By Purchaser or Seller, if there shall be any
law, statute, rule or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited; or
(e) By Purchaser or Seller, if the Stockholder
Approval shall not have been obtained by reason of the failure to obtain the
required vote at the Stockholder Meeting (provided that Seller shall have made
all payments to Purchaser required by Section 7.3); or
(f) By Purchaser if there has been a material breach
by Seller of any of its representations, warranties or covenants contained in
this Agreement, which breach is not cured within five days after notice thereof
is received by Seller (provided that Seller shall not be entitled to any cure
period for any breach of Section 4.3); or
(g) By Purchaser, if (i) Seller's board of directors
withdraws, modifies or changes in a manner adverse to Purchaser its approval and
favorable recommendation of this Agreement and the transactions contemplated
hereby, (ii) Seller's board of directors fails to reconfirm such approval and
favorable recommendation within three business days after a written request by
Purchaser to do so, (iii) Seller's board of directors shall have approved or
recommended to the stockholders of Seller, taken no position with respect to, or
failed to recommend against acceptance of, any Acquisition Proposal, (iv) Seller
fails to call the Stockholders Meeting or fails to mail the Seller Disclosure
Document within five days after being cleared by the UKLA or fails to include in
such document the favorable recommendation referred to above or (v) Seller or
its board of directors resolves to do any of the foregoing (provided that Seller
shall have made all payments to Purchaser required by Section 7.3); or
(h) By Seller if there has been a material breach by
Purchaser of any of its representations, warranties or covenants contained in
this Agreement, which breach is not cured within five days after notice thereof
is received by Purchaser; or
(i) By Seller, at any time prior to the adoption of
this Agreement by the Seller's stockholders at the Stockholders Meeting,
pursuant to and in accordance with Section 4.3(b) (provided that Seller shall
have complied with the provisions of Section 4.3, including,
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without limitation, the notice provisions therein, and made all payments to
Purchaser required by Section 7.3).
7.3 Effect of Termination.(a) In the event of termination of
this Agreement as provided in Section 7.2, notice thereof shall be promptly
given by the terminating party to the other party and thereafter this Agreement
shall forthwith become void, and there shall be no liability or obligation on
the part of Purchaser or Seller or any of their respective Affiliates except
that (a) Section 5.5, regarding confidentiality, and this Section 7.3 shall
remain in full force and effect and (b) nothing herein will relieve any party
from liability for any breach of any representation, agreement or covenant
herein.
(b) If (i) this Agreement is terminated by Seller
pursuant to Section 7.2(i) or by Purchaser pursuant to Section 7.2(g) or by
Seller or Purchaser pursuant to Section 7.2(e), then Seller shall pay to
Purchaser (concurrently with such termination) an amount equal to $292,500
(which amount shall be deemed liquidated damages, and not a penalty, for any
damages suffered by Purchaser as a result thereof, including any Expenses
incurred by Purchaser and its Affiliates prior to any such termination of this
Agreement). "Expenses" as used in this Agreement means all out-of-pocket
expenses (including, without limitation, all fees and expenses of outside
counsel, investment bankers, banks, other financial institutions, accountants,
financial printers, experts and consultants to a party hereto) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby (including any contemplated financing) and all
other matters contemplated by this Agreement and the closing thereof, but
excluding, for avoidance of doubt (and all of which will be separately
reimbursed by Seller to Purchaser), fees and reasonable expenses of, or incurred
in connection with, any litigation or proceedings to collect the amounts payable
pursuant to this Section 7.3(b).
(c) All amounts payable by Seller to Purchaser
pursuant to this Section 7.3 shall be paid in cash and in immediately available
funds to such account as Purchaser may designate in writing to Seller.
(d) The parties agree that the agreements contained
in this Section 7.3 are an integral part of the transactions contemplated hereby
and constitute liquidated damages and not a penalty.
ARTICLE 8
POST-CLOSING
8.1 Survival of Representations and Warranties. Regardless
of any investigation at any time made by or on behalf of any party hereto, or of
any information any party may have in respect thereof, all representations and
warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall, except as otherwise set forth in (ii)
through (iii) or elsewhere in this Section 8.1, survive the Closing for a period
of or until (i) the eighteen month anniversary of the Closing Date, (ii) the
second anniversary of the Closing Date, in the case of any breach of any
representation or warranty contained in Section
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2.16 (Proprietary Information and Rights) and (iii) 30 days after the expiration
of the relevant statute of limitations, in the case of any breach of any
representation or warranty contained in Section 2.9 (Acquired Stock) (but in the
case of Section 2.9, solely with respect to title to the Acquired Stock) or
Section 2.20 (Taxes) (each of the foregoing clauses (i), (ii) and (iii)
collectively referred to as the "Indemnification Deadline"); provided that so
long as such written notice of a Loss (as hereinafter defined) is given on or
prior to the Indemnification Deadline, such representations and warranties shall
continue to survive until such matter is resolved. Notwithstanding the
foregoing, any breaches of any of the covenants or agreements of any party
hereto will not be subject to any time limitations.
8.2 Indemnification of Purchaser by Seller. From and after
the Closing Date, Seller (for purposes of this Section 8.2 only, "Indemnifying
Party") shall indemnify, defend, and hold harmless Purchaser, each of its
Affiliates, the Acquired Subsidiary, and their respective officers, directors,
shareholders, successors and assigns, from and against any and all costs,
expenses, losses, damages, fines, penalties or liabilities (including, without
limitation, interest which may be imposed in connection therewith, court costs,
litigation expenses, reasonable attorneys' fees and accounting fees) ("Losses")
incurred by any such Person with respect to, in connection with, arising from,
or alleged to result from, arise out of, or be in connection with:
(a) A breach by the Indemnifying Party of any
representation or warranty made by the Indemnifying Party and contained in this
Agreement or in any certificate or other document delivered by said party to
Purchaser or its Affiliates hereunder or thereunder;
(b) A breach by the Indemnifying Party of any
covenant, restriction or agreement made by or applicable to the Indemnifying
Party and contained in this Agreement or in any certificate or other document
delivered by said party to Purchaser or its Affiliates hereunder or thereunder;
(c) Except for any Assumed Liabilities (or any
liability or obligation of the Acquired Subsidiary which, if such liability or
obligation had been directly assumed pursuant to Section 1.2(a) (rather than by
the transfer of the capital stock of the Acquired Subsidiary), would have been
an Assumed Liability), any liability or obligation of Seller or any of its
Affiliates (including the Acquired Subsidiary) of any nature or kind whatsoever
(in any case, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, due or to become
due or otherwise) arising out of or related to facts, events, transactions,
occurrences or actions or inactions arising on or prior to the Closing Date
(including, without limitation, whether or not disclosed on any schedule or
exhibit hereto, any such liability or obligation resulting from, arising out of,
relating to, in the nature of, or caused by any breach of contract, breach of
warranty, tort, infringement, violation of law or environmental matter or
related to the deferred purchase price or other contingent consideration related
to any acquisition of the business of any Person, including, without limitation,
any such matter disclosed on Schedule 2.14 hereto or any such matter related to
the deferred purchase price or other contingent consideration which may be
payable by the Business or any claim or litigation related thereto); or
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(d) All loss, expense or damage suffered as the
direct result of the Indemnifying Party's failure to pay or perform those
liabilities expressly assumed or undertaken under this Agreement.
The Indemnifying Party shall not be required to indemnify Purchaser and its
Affiliates pursuant to Section 8.2(a) unless and until the aggregate of all
Losses pursuant to Section 8.2(a) exceeds $292,500 (the "Basket") and in such
case (i) Purchaser's and its Affiliates' right to recover for Section 8.2(a)
claims shall apply only to the excess of the Basket; (ii) in no event shall the
aggregate amount of indemnification in excess of the Basket under Section 8.2(a)
by the Indemnifying Party exceed $10,000,000 (the "Cap Amount"); provided that
the Basket shall not apply to any Losses relating to Section 2.4 (Completeness
of Assets) and the Cap Amount shall not apply to any Losses relating to Section
2.4 (Completeness of Assets), Section 2.5 (Financial Statements) or Section 2.20
(Taxes). If any Loss indemnifiable pursuant to Section 8.2(a) above would also
be indemnifiable pursuant to Section 8.2(b), Section 8.2(c) or Section 8.2(d)
above, such Loss will be deemed to be the subject matter of the indemnity set
forth in Section 8.2(b), Section 8.2(c) or Section 8.2(d), and thus, not subject
to the limitations set forth in Section 8.1 or this Section 8.2 (including,
without limitation, the Basket, the Cap Amount or the Indemnification Deadline).
8.3 Indemnification of Seller by Purchaser. From and after
the Closing Date, Purchaser (for purposes of this Section 8.3 only,
"Indemnifying Party") shall indemnify, defend, and hold harmless Seller and its
Affiliates and their respective officers, directors, shareholders, successors
and assigns, from and against any and all costs, expenses, losses, damages,
fines, penalties or liabilities (including, without limitation, interest that
may be imposed in connection therewith, court costs, litigation expenses,
reasonable attorneys' fees and accounting fees) ("Losses") incurred by any such
Person with respect to, in connection with, arising from, or alleged to result
from, arise out of, or be in connection with:
(a) A breach by the Indemnifying Party of any
representation or warranty made by the Indemnifying Party and contained in this
Agreement or in any certificate or other document delivered by said party to
Seller or its Affiliates hereunder or thereunder;
(b) A breach by the Indemnifying Party of any
covenant, restriction or agreement made by or applicable to the Indemnifying
Party and contained in this Agreement or in any certificate or other document
delivered by said party to Seller or its Affiliates hereunder or thereunder; or
(c) All loss, expense or damage suffered as the
direct result of the Indemnifying Party's failure to pay or perform those
liabilities expressly assumed or undertaken under this Agreement, including,
without limitation, any Assumed Liability.
The Indemnifying Party shall not be required to indemnify Seller and its
Affiliates pursuant to Section 8.3(a) unless and until the aggregate of all
Losses pursuant to Section 8.3(a) exceeds $292,500 (the "Basket") and in such
case (i) Seller's and its Affiliates' right to recover for Section 8.3(a) claims
shall apply only to the excess of the Basket; and (ii) in no event shall the
aggregate amount of indemnification in excess of the Basket under Section 8.3(a)
by the
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Indemnifying Party exceed $10,000,000 (the "Cap Amount"). If any Loss
indemnifiable pursuant to Section 8.3(a) above would also be indemnifiable
pursuant to Section 8.3(b) or Section 8.3(c) above, such Loss will be deemed to
be the subject matter of the indemnity set forth in Section 8.3(b) or Section
8.3(c), and thus, not subject to the limitations set forth in Section 8.1 or
this Section 8.3 (including, without limitation, the Basket, the Cap Amount or
the Indemnification Deadline).
8.4 Procedure for Indemnification.
(a) The party which is entitled to be indemnified
hereunder (the "Indemnified Party") shall promptly give written notice hereunder
to the party required to indemnify (the "Indemnifying Party") after obtaining
notice of any claim as to which recovery may be sought against the Indemnifying
Party because of the indemnity in Section 8.2 or Section 8.3 hereof and, if such
indemnity shall arise from the claim of a third party, shall permit the
Indemnifying Party to assume the defense of any such claim and any litigation
resulting from such claim. Notwithstanding the foregoing, the right to
indemnification hereunder shall not be affected by any failure of an Indemnified
Party to give such notice, or delay by an Indemnified Party in giving such
notice unless, and then only to the extent that, the rights and remedies of the
Indemnifying Party shall have been materially prejudiced as a result of the
failure to give, or delay in giving, such notice. Failure by an Indemnifying
Party to notify an Indemnified Party of its election to defend any such claim or
action by a third party within thirty (30) days after notice thereof shall have
been given to the Indemnifying Party shall be deemed a waiver by the
Indemnifying Party of its right to defend such claim or action.
(b) Subject to Section 8.2 or Section 8.3, as
applicable, if the Indemnifying Party assumes the defense of such claim or
litigation resulting therefrom, the obligations of the Indemnifying Party
hereunder as to such claim shall include taking all steps necessary in the
defense or settlement of such claim or litigation and holding the Indemnified
Party harmless from and against any and all damages caused by or arising out of
any settlement approved by the Indemnifying Party or any judgment in connection
with such claim or litigation. The Indemnifying Party shall not, in the defense
of such claim or any litigation resulting therefrom, consent to entry of any
judgment (other than a judgment of dismissal on the merits without costs) except
with the written consent of the Indemnified Party, or enter into any settlement
(except with the written consent of the Indemnified Party) which does not
include as an unconditional term thereof the giving by claimant or plaintiff to
the Indemnified Party of a release from all liability in respect of such claim
or litigation. Anything in this Section 8.4 to the contrary notwithstanding, the
Indemnified Party may, with counsel of its choice and at its expense,
participate in the defense of any such claim or litigation. In all cases, the
Indemnified Party shall cooperate with the Indemnifying Party in the defense of
claims or litigation, including by making employees, information, and
documentation reasonably available.
(c) If the Indemnifying Party shall not assume the
defense of any such claim by a third party or litigation resulting therefrom
after receipt of notice from such Indemnified Party, the Indemnified Party may
defend against such claim or litigation in such manner as it deems appropriate,
and unless the Indemnifying Party shall deposit with the Indemnified Party a sum
equivalent to the total amount demanded in such claim or litigation plus
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the Indemnified Party's estimate of the costs of defending the same, the
Indemnified Party may settle such claim or litigation on such terms as it may
deem appropriate and, subject to Section 8.2 or Section 8.3, as applicable, the
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of such settlement and for all damages incurred by the Indemnified Party in
connection with the defense against or settlement of such claim or litigation.
(d) Subject to Section 8.2 or Section 8.3, as
applicable, the Indemnifying Party shall promptly reimburse the Indemnified
Party for the amount of any judgment rendered with respect to any claim by a
third party in such litigation and for all damage incurred by the Indemnified
Party in connection with the defense against such claim or litigation, whether
or not resulting from, arising out of, or incurred with respect to, the act of a
third party.
ARTICLE 9
MISCELLANEOUS
9.1 Further Actions. From time to time, as and when
requested by the other party, Seller and Purchaser shall execute and deliver, or
cause to be executed and delivered, such documents and instruments and shall
take, or cause to be taken, such further or other actions as the requesting
party may reasonably deem necessary or desirable to carry out the intent and
purposes of this Agreement, and to consummate and give effect to the other
transactions, covenants and agreements contemplated hereby.
9.2 Expenses. Except as otherwise expressly provided herein,
each of Seller, on the one hand, and Purchaser, on the other hand, shall bear
its own expenses incident to its obligations under this Agreement and each of
the other agreements contemplated hereby and the transactions contemplated
hereby and thereby, including, without limitation, all fees and expenses of its
bankers, investment bankers, legal counsel, brokers, accountants or other
representatives or consultants.
9.3 Entire Agreement. This Agreement, which includes the
Appendix, the Schedules and the Exhibits hereto and the other documents,
agreements and instruments executed and delivered pursuant to this Agreement,
contains the entire agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
arrangements, agreements or understandings with respect thereto, whether written
or oral.
9.4 Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement. Whenever
required by the context, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa.
9.5 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if (a)
delivered personally, (b) sent by registered or certified mail, postage prepaid,
(c) sent by overnight courier with a nationally
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recognized courier or (d) via facsimile confirmed in writing in any of the
foregoing manners, as follows:
If to Seller: MERANT plc
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to: Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Silver
Facsimile: (000) 000-0000
If to Purchaser: Data Direct International Limited
c/o Golden Gate Private Equity, Inc.
Xxx Xxxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxx, Managing Director
Facsimile: (000) 000-0000
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxx Xxxxxxx
Facsimile: (000) 000-0000
If sent by mail, notice shall be considered delivered five (5) Business Days
after the date of mailing, and if sent by any other means set forth above,
notice shall be considered delivered upon delivery thereof. Any party may by
notice to the other parties change the address to which notice or other
communications to it are to be delivered or mailed.
9.6 Governing Law This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (other than the
choice of law principles thereof). Any action, suit or other proceeding
initiated by either party against the other under or in connection with this
Agreement may be brought in any Federal or state court in the State of New York,
as the party bringing such action, suit or proceeding shall elect, having
jurisdiction over the subject matter thereof. Each of Seller and Purchaser
hereby submit themselves to the jurisdiction of any such court for the purposes
of this Section 9.6 only. Except to the extent specifically awarded by the
court, each party shall bear its own expenses in connection with any claims
brought pursuant to this Section 9.6 and agree that service of process on them
in any such
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action, suit or proceeding may be effected by the means by which notices are to
be given to it under this Agreement.
9.7 Assignability. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding the foregoing, this Agreement shall not be
assignable by any party without the written consent of the other party and any
such purported assignment by any party without such consent shall be void,
except that:
(a) any or all rights of either Seller or Purchaser
to receive the performance of the obligations of the other party hereunder, any
or all rights to assert claims against the other party in respect of any
inaccuracy in or breach of any representations, warranties or covenants of such
party hereunder and any or all of either party's obligations to the other party
hereunder, may be assigned by either Seller or Purchaser to any of their
respective Affiliates (it being agreed that no such assignment shall relieve
either Seller or Purchaser from any liability to the other party with respect to
any such assignment of such party's obligations); and
(b) Purchaser may assign to any financial
institution providing financing to Purchaser or any of its Affiliates any or all
of its rights to assert claims against Seller in respect of any inaccuracy in or
breach of representations, warranties or covenants under this Agreement, but
Purchaser shall require any assignee of such rights under clause (a) or (b) to
take such rights subject to any defenses, counterclaims and rights to which
Seller might be entitled under this Agreement.
9.8 Waivers and Amendments. Any waiver of any term or
condition of this Agreement, or any amendment or supplementation of this
Agreement, shall be effective only if in writing and signed by the parties
hereto. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive a
party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Agreement.
9.9 Third Party Rights. Notwithstanding any other provision
of this Agreement, and except as expressly provided in Article 8 hereof or as
permitted pursuant to Section 9.7 hereof, this Agreement shall not create
benefits on behalf of any shareholder or employee of any Person (including,
without limitation, any broker or finder), except for Seller or Purchaser
themselves and this Agreement shall be effective only as between the parties
hereto, their successors and permitted assigns.
9.10 Severability. If any term or provision of this Agreement
shall, in any jurisdiction, be invalid or unenforceable, such term or provision
shall be ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable such term or
provision in any other jurisdiction, or affecting any other provision of this
Agreement.
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9.11 Arbitration. With the exception of any matter involving
a request for injunctive relief or the retention of the Firm to resolve any
dispute with respect to the determination of Tangible Net Book Value, from and
after the Closing, any dispute regarding the validity, the terms or any aspect
of this Agreement, or any act which allegedly has or would violate any provision
of this Agreement, will be submitted to binding arbitration and shall be
administered by the JAMS/Endispute, Inc. ("JAMS") or the American Arbitration
Association ("AAA"), which shall be the exclusive remedy for such claim or
dispute. The selection of JAMS or AAA will be at the option of the claimant, and
the matter shall be conducted in accordance with the rules for commercial
arbitration then in effect for the tribunal selected. The arbitrator shall be a
retired judge or attorney licensed to practice law in New York having more than
five years of substantial experience in litigation of similar disputes. Unless
the parties otherwise agree, or except where the law of another jurisdiction
(such as English law in the case of fiduciary requirements of Seller's board of
directors) shall be applicable, the arbitrator shall apply the substantive New
York and federal law applicable to the claim asserted, as though the matter were
heard in the courts of those jurisdictions located in the State of New York. The
arbitrator shall not have the power to commit errors of law or legal reasoning,
or to award punitive damages, and the award may be vacated for any such error.
The arbitration shall be conducted in New York, New York, at a location to be
determined by the arbitrator. Unless specifically awarded by the arbitrator,
each party shall bear the cost of its own attorneys' fees and expenses.
9.12 Specific Performance.The parties recognize that if
either party refuses to perform its obligation to consummate the transactions
contemplated hereby, monetary damages alone will be inadequate to compensate the
other party for its injury. Accordingly, either party shall, so far as it is
able under the applicable law of any relevant jurisdiction, be entitled to
obtain specific performance (without the requirement of posting any bond or
other security) of the terms of this Agreement with respect to the consummation
of the transactions contemplated hereby in addition to any other remedies to
which such party may be entitled to, at law or in equity, including, but not
limited to, monetary damages.
9.13 Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement. Facsimile signatures shall be treated as if they were originals.
[SIGNATURES ON FOLLOWING PAGE]
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[SIGNATURE PAGE TO PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have executed and delivered
this Purchase Agreement as of the date first above written.
"Purchaser"
DATA DIRECT INTERNATIONAL LIMITED
By: /s/ XXXXXXXX XXXX
--------------------------------
"Seller"
MERANT PLC
By: /s/ XXXX X. XXXXXXXXXX
--------------------------------
APPENDIX A
Definitions
Capitalized terms in this Agreement shall have the meanings
ascribed to them in this Appendix A unless such terms are defined elsewhere in
this Agreement:
Affiliate: With respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" means the power to direct the management and policies of
another Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Business: Means the Division's business of developing,
supporting and marketing, licensing and selling various middleware products and
services, including data connectivity products and services for the purpose of
providing a solution that addresses data access and connectivity needs through
the DataDirect series. Notwithstanding the foregoing, the "Business" shall not
include Seller's Application Development Management business as currently
conducted, which encompasses the MERANT PVCS solution series.
Business Day: Any day that is not a Saturday, Sunday or a day on
which commercial banks in the State of New York are required or permitted by law
to be closed.
Division Proprietary Rights: Means all Proprietary Rights owned
or used by Seller or any of its Affiliates which are exclusively used in or
exclusively applicable to the Business and all Proprietary Rights owned or used
by the Acquired Subsidiary, including, without limitation, all Software
Products, in each case together with all income, royalties, damages and payments
due or payable at the Closing or thereafter (including, without limitation,
damages and payments for past or future infringements or misappropriations
thereof), the right to xxx and recover for past infringements or
misappropriations thereof and any and all corresponding rights that now or
hereafter may be secured throughout the world.
Encumbrance: Any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary (including
any conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest) and, with respect to
capital stock, any option or other right to purchase or any restriction on
voting or other rights.
Governmental Entity: Any nation or any state, commonwealth,
territory, possession or tribe and any political subdivision, courts,
departments, commissions, boards, bureaus, agencies or other instrumentalities
of any of the foregoing.
Indebtedness: With respect to any Person (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to capital
leases that is properly classified as a liability on a balance sheet in
conformity with U.S. GAAP; (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money;
(d) any obligation owed for all or any part of the deferred purchase price of
property or services
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if the purchase price is due more than six months from the date the obligation
is incurred or is evidenced by a note or similar written instrument; and (e) all
indebtedness secured by any Encumbrance on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Knowledge: Means (i) in the case of an individual, to the best
of such Person's knowledge and (ii) in the case of a Person other than a human
being, to the best of such Person's knowledge after due inquiry of the executive
officers of such Person.
Material Adverse Effect: A material adverse effect on the
business, operations or condition (financial or otherwise) of the Division,
taken as a whole.
Permitted Encumbrances: Means (i) Encumbrances for Taxes or
other governmental charges, assessments or levies which are (A) not delinquent
or (B) the validity of which is being contested in good faith by appropriate
proceedings and as to which adequate reserves have been established on the
Business' financial statements, (ii) landlord's, mechanic's, carrier's,
workmen's, repairmen's or other similar Encumbrances arising or incurred in the
ordinary course of business, (iii) other Encumbrances the existence of which do
not materially impair the operations of the Business in the ordinary course or
the value of the Division Assets taken as a whole and (iv) minor imperfections
of title, conditions, easements and reservations of rights, including easements
and reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, encroachments,
covenants and restrictions. Notwithstanding the foregoing, any Encumbrance for
Indebtedness as of the Closing will not be a Permitted Encumbrance.
Person: An individual, corporation, partnership, joint venture,
trust or unincorporated organization or association or other form of business
enterprise or a Governmental Entity.
Proprietary Rights: Means all (i) patents, patent applications
and patent disclosures; (ii) trademarks, service marks, trade dress, trade
names, logos, corporate names, trade names and domain names, and any
registrations or applications for registration of any of the foregoing, together
with all good will associated therewith; (iii) copyrights and copyrightable
works and registrations and applications for registration thereof; (iv) mask
works and registrations and applications for registration thereof; (v) computer
software (including source code and object code), data, databases and
documentation thereof; (vi) trade secrets, know how and other confidential or
proprietary information (including, without limitation, inventions,
specifications, flow charts, designs, proposals, financial and marketing plans
and customer and supplier lists and information); and (vii) copies and tangible
embodiments of the foregoing (in whatever form or medium).
Tax: Any and all license and registration fees, taxes
(including, without limitation, income, minimum or alternative minimum tax,
gross receipts, ad valorem, value added, environmental tax, turnover, sales,
use, personal property (tangible and intangible), stamp, leasing, lease, user,
leasing use, excise, payroll, franchise, transfer, fuel, excess profits,
occupational, interest equalization and other taxes), levies, imposts, duties or
withholdings of any
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nature whatsoever imposed by any Governmental Entity, together with any and all
penalties, fines, additions to tax and interest thereon, whether or not such Tax
shall be existing or hereafter adopted.
Tax Return: Shall mean any return, report, information return,
declaration, claim for refund or other document (including any related or
supporting information) filed or required to be filed with any taxing authority
with respect to Taxes.
U.S. GAAP: Generally accepted accounting principles,
consistently applied, in the United States as promulgated by the Financial
Accounting Standards Board, the Accounting Principles Board and other recognized
sources for the promulgation of such generally accepted accounting principles.
Other Definitions: The following terms have the meanings
ascribed to them in the Sections noted:
Section
-------
2001 Balance Sheet 2.5(a)
AAA 9.11
Acquired Stock Recitals
Acquired Subsidiary Recitals
Acquisition Proposal 4.3(f)
Actual Tangible Net Book Value 1.4(b)
Agreement Recitals
Assumed Liabilities 1.2(a)
Authorizations 2.11(a)
Basket. 8.2 / 8.3
Benefit Plans 2.17(a)
Business Acquisition Proposal 4.3(a)
Business Marks 5.11
Cap Amount 8.2 / 8.3
Cash Portion 1.3(a)
Closing 7.1
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Closing Date 7.1
Closing Date Balance Sheet 1.4(b)
Code 2.17(c)
Contracts 1.1(a)(vii)
Division Recitals
Division Assets 1.1(a)
Draft Closing Date Balance Sheet 1.4(b)
Environmental Law 2.19(b)
Equipment 2.8(b)
ERISA 2.17(a)
Estimated Tangible Net Book Value 1.4(a)
Excluded Assets 1.1(b)
Excluded Liabilities 1.2(b)
Expenses 7.3(b)
Expiration Date 7.2(c)
Financial Statements 2.5(a)
Firm 1.4(b)
Five Day Period 4.3(c)
Foreign Employee 5.6(c)
Foreign Transferred Employees 5.6(a)
Hazardous Material(s) 2.19(c)
HSR Act 5.3(b)
Indemnification Deadline 8.1
Indemnified Party 8.4(a)
Indemnifying Party 8.2 / 8.3 / 8.4(a)
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JAMS 9.11
Letter Agreement 1.1(a)(viii)
Listing Rules 4.6(b)
Losses 8.2 / 8.3
Maintenance Cash 1.1(a)(xvi)
Material Contract 2.10(a)
MERANT Marks 5.12
MERANT Plan 5.6(f)
Objection Notice 1.4(b)
Proceedings 2.14(a)
Proprietary Rights Agreement 6.1(f)
Purchase Price 1.3(a)
Purchaser Recitals
Purchaser's 401(k) Plan 5.6(f)
Real Property 2.8(a)
Regulations 5.6(i)
Release 2.19(d)
Scheduled Contract 6.1(e)
Securities Act 3.5(a)
Seller Recitals
Seller Disclosure Document 4.6(b)
Seller Representatives 4.3(a)
Software Products 2.16(a)
Stockholder Approval 2.27
Stockholders Meeting 4.6(a)
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Subsidiary Agreements 1.6(a)
Superior Proposal 4.3(g)
Tangible Net Book Value 1.4(a)
Transferred Employees 5.6(a)
Transition Services Agreement 6.1(f)
UKLA 4.6(b)
UK Transferred Employees 5.6(i)
US Transferred Employees 5.6(a)
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