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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
dated as of August 23, 2000
by and between
METACREATIONS CORPORATION
and
COMPUTER ASSOCIATES INTERNATIONAL, INC.
with respect to all
outstanding capital stock of
VIEWPOINT DIGITAL, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I SALE OF SHARES AND CLOSING............................................................................1
1.01 Purchase and Sale..............................................................................1
1.02 Purchase Price.................................................................................1
1.03 Closing........................................................................................1
1.04 Further Assurances; Post-Closing Cooperation...................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................3
2.01 Organization of Seller.........................................................................3
2.02 Authority......................................................................................3
2.03 Organization of the Company....................................................................3
2.04 Capital Stock..................................................................................3
2.05 Subsidiaries...................................................................................4
2.06 No Conflicts...................................................................................4
2.07 Governmental Approvals and Filings.............................................................5
2.08 Books and Records..............................................................................5
2.09 Financial Statements...........................................................................5
2.10 Absence of Changes.............................................................................5
2.11 No Undisclosed Liabilities.....................................................................7
2.12 Taxes..........................................................................................7
2.13 Legal Proceedings..............................................................................8
2.14 Compliance With Laws and Orders................................................................8
2.15 Seller Plans; ERISA............................................................................9
2.16 Real Property..................................................................................9
2.17 Tangible Personal Property; Investment Assets.................................................10
2.18 Intellectual Property Rights..................................................................10
2.19 Contracts.....................................................................................10
2.20 Licenses......................................................................................12
2.21 Insurance.....................................................................................12
2.22 Affiliate Transactions........................................................................12
2.23 Employees; Labor Relations....................................................................13
2.24 Substantial Customers and Suppliers...........................................................13
2.25 Bank and Brokerage Accounts; Investment Assets................................................13
2.26 No Powers of Attorney.........................................................................14
2.27 Accounts Receivable...........................................................................14
2.28 Nature of Purchase; Accredited Investor.......................................................14
2.29 Brokers.......................................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER........................................................15
3.01 Organization..................................................................................15
3.02 Authority.....................................................................................15
3.03 No Conflicts..................................................................................15
3.04 Governmental Approvals and Filings............................................................15
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3.05 Legal Proceedings.............................................................................16
3.06 Purchase for Investment.......................................................................16
3.07 SEC Reports and Financial Statements; No Adverse Change.......................................16
3.08 Capital Stock.................................................................................16
3.09 Brokers.......................................................................................16
ARTICLE IV COVENANTS OF SELLER.................................................................................17
4.01 Regulatory and Other Approvals................................................................17
4.02 HSR Filings...................................................................................17
4.03 Investigation by Purchaser....................................................................17
4.04 No Solicitations..............................................................................18
4.05 Conduct of Business...........................................................................18
4.06 Governmental and Regulatory Filings...........................................................19
4.07 Employee Matters..............................................................................19
4.08 Certain Restrictions..........................................................................20
4.09 Affiliate Transactions........................................................................21
4.10 Books and Records.............................................................................21
4.11 Noncompetition................................................................................21
4.12 Company Assets................................................................................22
4.13 Notice and Cure...............................................................................22
4.14 Fulfillment of Conditions.....................................................................22
ARTICLE V COVENANTS OF PURCHASER...............................................................................23
5.01 Regulatory and Other Approvals................................................................23
5.02 HSR Filings...................................................................................23
5.03 Notice and Cure...............................................................................23
5.04 Fulfillment of Conditions.....................................................................24
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER..............................................................24
6.01 Representations and Warranties................................................................24
6.02 Performance...................................................................................24
6.03 Officers' Certificates........................................................................24
6.04 Orders and Laws...............................................................................24
6.05 Regulatory Consents and Approvals.............................................................25
6.06 Third Party Consents..........................................................................25
6.07 License Agreement.............................................................................25
6.08 Reseller Agreement............................................................................25
6.09 Resignations of Directors and Officers........................................................25
6.10 Proceedings...................................................................................25
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER................................................................26
7.01 Representations and Warranties................................................................26
7.02 Performance...................................................................................26
7.03 Officers' Certificates........................................................................26
7.04 Orders and Laws...............................................................................26
7.05 Regulatory Consents and Approvals.............................................................26
7.06 Third Party Consents..........................................................................26
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7.07 Proceedings...................................................................................26
7.08 License Agreement.............................................................................27
7.09 Reseller Agreement............................................................................27
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES................................................................27
8.01 Transfer Taxes................................................................................27
8.02 Additional Tax Covenants......................................................................27
8.03 Tax Returns...................................................................................28
ARTICLE IX OTHER AGREEMENTS....................................................................................29
9.01 Leases........................................................................................29
9.02 Company Employees; Seller Plans, Benefits.....................................................29
9.03 Financial Statements..........................................................................30
ARTICLE X SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS....................................30
10.01 Survival of Representations, Warranties, Covenants and Agreements.............................30
ARTICLE XI INDEMNIFICATION.....................................................................................31
11.01 Tax Indemnification...........................................................................31
11.02 Other Indemnification.........................................................................32
ARTICLE XII TERMINATION........................................................................................33
12.01 Termination...................................................................................33
12.02 Effect of Termination.........................................................................34
ARTICLE XIII DEFINITIONS.......................................................................................34
13.01 Definitions...................................................................................34
ARTICLE XIV MISCELLANEOUS......................................................................................40
14.01 Notices.......................................................................................40
14.02 Entire Agreement..............................................................................41
14.03 Expenses......................................................................................41
14.04 Public Announcements..........................................................................41
14.05 Confidentiality...............................................................................41
14.06 Waiver........................................................................................42
14.07 Amendment.....................................................................................42
14.08 No Third Party Beneficiary....................................................................42
14.09 No Assignment; Binding Effect.................................................................42
14.10 Headings......................................................................................42
14.11 Invalid Provisions............................................................................42
14.12 Governing Law.................................................................................43
14.13 Counterparts..................................................................................43
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EXHIBITS
EXHIBIT A Note No. 1
EXHIBIT B Note No. 2
EXHIBIT C Officer's Certificate of Seller
EXHIBIT D Secretary's Certificate of Seller
EXHIBIT E Officer's Certificate of Purchaser
EXHIBIT F Secretary's Certificate of Purchaser
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This STOCK PURCHASE AGREEMENT dated as of August 23, 2000 is
made and entered into by and between MetaCreations Corporation, a Delaware
corporation ("Purchaser"), and Computer Associates International, Inc., a
Delaware corporation ("Seller"). Capitalized terms not otherwise defined herein
have the meanings set forth in Section 13.01.
WHEREAS, Seller owns one hundred (100) shares of common stock,
par value $0.01 per share, of Viewpoint Digital, Inc., a Delaware corporation
(the "Company"), constituting all issued and outstanding shares of capital stock
of the Company (such shares being referred to herein as the "Shares"); and
WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the Shares on the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale. Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from Seller, all of the right, title and
interest of Seller in and to the Shares at the Closing on the terms and subject
to the conditions set forth in this Agreement.
1.02 Purchase Price. The aggregate purchase price for the
Shares is (i) 715,000 shares of common stock, par value $0.001 per share, of
Purchaser (the "Purchaser Shares"), (ii) $10,000,000 payable in immediately
available United States funds (the "Cash Payment"), (iii) a promissory note to
be executed by Purchaser in favor of Seller in the aggregate principal amount of
$15,000,000, substantially in the form of the note attached hereto as Exhibit A
("Note No. 1"), and (iv) a promissory note to be executed by Purchaser in favor
of Seller in the aggregate principal amount of $15,000,000, substantially in the
form of the note attached hereto as Exhibit B ("Note No. 2" and, together with
the Purchaser Shares, the Cash Payment and Note No. 1, the "Purchase Price").
1.03 Closing. The Closing will take place at the offices of
Milbank, Tweed, Xxxxxx & XxXxxx LLP, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as Purchaser and Seller mutually agree, at 10:00
A.M. local time, on the Closing Date. At the Closing, Purchaser will pay the
Purchase Price by (i) delivery to Seller of a certificate or certificates
representing the Purchaser Shares, in genuine and unaltered form, duly endorsed
in blank or accompanied by duly executed stock powers endorsed in blank, with
requisite stock transfer tax stamps, if any, attached, (ii) wire transfer of the
Cash Payment in immediately available funds to such account as Seller may
reasonably direct by written notice delivered to Purchaser by Seller at least
two (2) Business Days before the Closing Date, and (iii) delivery to Seller of
Note No. 1 and Note No. 2, each as duly executed by Purchaser. Simultaneously,
Seller will assign and transfer to Purchaser all of Seller's right, title and
interest in and to the Shares by delivering to Purchaser a certificate or
certificates representing the Shares, in genuine and
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unaltered form, duly endorsed in blank or accompanied by duly executed stock
powers endorsed in blank, with requisite stock transfer tax stamps, if any,
attached. At the Closing, there shall also be delivered to Seller and Purchaser
the certificates and other Contracts, documents and instruments to be delivered
under Articles VI and VII.
1.04 Further Assurances; Post-Closing Cooperation. (a) At any
time or from time to time after the Closing, Seller shall execute and deliver to
Purchaser such other documents and instruments, provide such materials and
information and take such other actions as Purchaser may reasonably request more
effectively to vest title to the Shares in Purchaser and, to the full extent
permitted by Law, to put Purchaser in actual possession and operating control of
the Company and the Subsidiaries and their Assets and Properties and Books and
Records, and otherwise to cause Seller to fulfill its obligations under this
Agreement and the Transaction Documents to which it is a party.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business or
Condition of the Company in its possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party in connection
with (i) the preparation of Tax Returns, (ii) the determination or enforcement
of rights and obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv) the determination
or enforcement of the rights and obligations of any party to this Agreement or
any of the Transaction Documents or (v) in connection with any actual or
threatened Action or Proceeding. Further, each party agrees for a period
extending one (1) year after the Closing Date not to destroy or otherwise
dispose of any such books, records and other data unless such party shall first
offer in writing to surrender such books, records and other data to the other
party and such other party shall not agree in writing to take possession thereof
during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of the Company not referred to
in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by Seller in accordance with this paragraph shall be held confidential
by Seller in accordance with Section 14.05.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section shall be subject to applicable rules relating
to discovery.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.01 Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Seller has full corporate power and authority to execute and deliver
this Agreement and the Transaction Documents and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares.
2.02 Authority. The execution and delivery by Seller of this
Agreement and the Transaction Documents, and the performance by Seller of its
obligations hereunder and thereunder, have been duly and validly authorized by
the Seller, no other corporate action on the part of Seller or its stockholders
being necessary. This Agreement has been duly and validly executed and delivered
by Seller and constitutes, and upon the execution and delivery by Seller of the
Transaction Documents, such Transaction Documents will constitute, legal, valid
and binding obligations of Seller enforceable against Seller in accordance with
their terms.
2.03 Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its Assets
and Properties. The Company is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Section
2.03 of the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of its Assets and Properties, or the conduct or nature
of its business, makes such qualification, licensing or admission necessary,
except for those jurisdictions in which the adverse effects of all such failures
by the Company and the Subsidiaries to be qualified, licensed or admitted and in
good standing can in the aggregate be eliminated without material expense by the
Company or a Subsidiary, as the case may be, becoming qualified or admitted and
in good standing. The name of each director and officer of the Company on the
date hereof, and the position with the Company held by each, are listed in
Section 2.03 of the Disclosure Schedule. Seller has prior to the execution of
this Agreement delivered to Purchaser true and complete copies of the
certificate of incorporation and by-laws of the Company as in effect on the date
hereof.
2.04 Capital Stock. The authorized capital stock of the
Company consists solely of one thousand (1,000) shares of Common Stock, of which
only the Shares have been issued. The Shares are duly authorized, validly
issued, outstanding, fully paid and nonassessable. Seller owns the Shares,
beneficially and of record, free and clear of all Liens. Except for this
Agreement, there are no outstanding Options with respect to the Company. The
delivery of a certificate or certificates at the Closing representing the Shares
in the manner provided in Section 1.03 will transfer to Purchaser good and valid
title to the Shares, free and clear of all Liens.
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2.05 Subsidiaries. Section 2.05 of the Disclosure Schedule
lists the name of each Subsidiary and all lines of business in which each
Subsidiary is participating or engaged. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation identified in Section 2.05 of the Disclosure
Schedule, and has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its Assets and
Properties. Each Subsidiary is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Section
2.05 of the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of such Subsidiary's Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse effects
of all such failures by the Company and the Subsidiaries to be qualified,
licensed or admitted and in good standing can in the aggregate be eliminated
without material expense by the Company or a Subsidiary, as the case may be,
becoming qualified, licensed or admitted and in good standing. All of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully paid and nonassessable, and are owned,
beneficially and of record, by the Company or Subsidiaries wholly owned by the
Company free and clear of all Liens. There are no outstanding Options with
respect to any Subsidiary. The name of each director and officer of each
Subsidiary on the date hereof, and the position with such Subsidiary held by
each, are listed in Section 2.05 of the Disclosure Schedule. Seller has prior to
the execution of this Agreement delivered to Purchaser true and complete copies
of the certificate or articles of incorporation and by-laws (or other comparable
corporate charter documents) of each of the Subsidiaries as in effect on the
date hereof.
2.06 No Conflicts. The execution and delivery by Seller of
this Agreement do not, and the execution and delivery by Seller of the
Transaction Documents, the performance by Seller of its obligations under this
Agreement and such Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate or certificate of
incorporation or by-laws of Seller, the Company or any Subsidiary;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.07 of the
Disclosure Schedule, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Seller, the Company or any
Subsidiary or any of their respective Assets and Properties, except for any
violations or breaches which, in the aggregate, would not have a material
adverse effect on the business, financial condition or results of operation of
the Company and its Subsidiaries taken as a whole ("Material Adverse Effect");
or
(c) except as disclosed in Section 2.06 of the Disclosure
Schedule, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Seller, the Company or any Subsidiary to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, (iv) result in or give to any Person any right
of termination, cancellation, acceleration or modification in or with respect
to, (v) result in or give to any Person any
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additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (vi) result in the creation or imposition of any
Lien upon Seller, the Company or any Subsidiary or any of their respective
Assets and Properties under, any Contract or License to which Seller, the
Company or any Subsidiary is a party or by which any of their respective Assets
and Properties is bound, except with respect to (i) through (vi) any action or
consequence which, in the aggregate, would not cause a Material Adverse Effect.
2.07 Governmental Approvals and Filings. Except as disclosed
in Section 2.07 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Seller, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or any of the Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby.
2.08 Books and Records. The minute books and other similar
records of the Company and the Subsidiaries as made available to Purchaser prior
to the execution of this Agreement contain a complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, the boards of directors and committees of
the boards of directors of the Company and the Subsidiaries. The stock transfer
ledgers and other similar records of the Company and the Subsidiaries as made
available to Purchaser prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company and the Subsidiaries.
2.09 Financial Statements. Prior to the execution of this
Agreement, Seller has delivered to Purchaser copies of the following:
(a) the unaudited summary balance sheets of the Company and
its consolidated subsidiaries as of December 31, 1999 and 1998, and the
related unaudited summary consolidated statements of operations for
each of the fiscal years then ended; and
(b) the unaudited summary balance sheet of the Company and its
consolidated subsidiaries as of June 30, 2000 and the related unaudited
summary consolidated statements of operations for the portion of the
fiscal year then ended.
All such financial statements fairly present the consolidated financial
condition and results of operations of the Company and its consolidated
subsidiaries as of the respective dates thereof and for the respective periods
covered thereby.
2.10 Absence of Changes. Except for the execution and delivery
of this Agreement and the transactions to take place pursuant hereto on or prior
to the Closing Date, since June 30, 2000 there has not been any material adverse
change, or any event or development which, individually or together with other
such events, could reasonably be expected to result in a material adverse
change, in the Business or Condition of the Company. Without limiting the
foregoing, except as disclosed in Section 2.10 of the Disclosure Schedule, there
has not occurred between June 30, 2000 and the date hereof:
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(i) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of the Company,
or any direct or indirect redemption, purchase or other acquisition by
the Company or any Subsidiary of any such capital stock of or any
Option with respect to the Company;
(ii) any authorization, issuance, sale or other disposition by
the Company or any Subsidiary of any shares of capital stock of or
Option with respect to the Company or any Subsidiary, or any
modification or amendment of any right of any holder of any outstanding
shares of capital stock of or Option with respect to the Company or any
Subsidiary;
(iii) (x) any increase in the salary, wages or other
compensation of any officer, employee or consultant of Seller whose
employment primarily relates to the Company or any Subsidiary whose
annual salary is, or after giving effect to such change would be,
$75,000 or more; (y) any establishment or modification of (A) targets,
goals, pools or similar provisions in respect of any fiscal year under
any Seller Plan, employment-related Contract or other employee
compensation arrangement relating to any present or former employee of
Seller whose employment primarily relates or is primarily related to
the Company or its Subsidiaries or (B) salary ranges, increase
guidelines or similar provisions in respect of any Seller Plan,
employment-related Contract or other employee compensation arrangement
relating to any present or former employee of Seller whose employment
primarily relates or is primarily related to the Company or its
Subsidiaries; or (z) any adoption, entering into or becoming bound by
any Seller Plan, employment-related Contract or collective bargaining
agreement, or amendment, modification or termination (partial or
complete) of any Seller Plan, employment-related Contract or collective
bargaining agreement relating to any present or former employee of
Seller whose employment primarily relates or is primarily related to
the Company or its Subsidiaries, except to the extent required by
applicable Law;
(iv) (A) incurrences by the Company or any Subsidiary of
Indebtedness in an aggregate principal amount exceeding $250,000 (net
of any amounts discharged during such period), or (B) any voluntary
purchase, cancellation, prepayment or complete or partial discharge in
advance of a scheduled payment date with respect to, or waiver of any
right of the Company or any Subsidiary under, any Indebtedness of or
owing to the Company or any Subsidiary;
(v) any physical damage, destruction or other casualty loss
affecting any of the property or equipment of the Company or any
Subsidiary in an aggregate amount exceeding $250,000;
(vi) any material change in (x) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax
practice or policy of the Company or any Subsidiary, or (y) any method
of calculating any bad debt, contingency or other reserve of the
Company or any Subsidiary for accounting, financial reporting or Tax
purposes, or any change in the fiscal year of the Company or any
Subsidiary;
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(vii) any write-off or write-down of or any determination to
write off or write down any of the material Assets and Properties of
the Company or any Subsidiary;
(viii) any acquisition or disposition of, or incurrence of a
Lien (other than a Permitted Lien) on, any Assets and Properties of the
Company or any Subsidiary, other than in the ordinary course of
business consistent with past practice;
(ix) any (x) amendment of the certificate of incorporation or
by-laws of the Company or any Subsidiary, (y) recapitalization,
reorganization, liquidation or dissolution of the Company or any
Subsidiary or (z) merger or other business combination involving the
Company or any Subsidiary and any other Person;
(x) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any
consent with respect to (A) any Contract which is required (or had it
been in effect on the date hereof would have been required) to be
disclosed in the Disclosure Schedule pursuant to Section 2.19(a) or (B)
any material License held by the Company or any Subsidiary;
(xi) capital expenditures or commitments for additions to
property, plant or equipment of the Company and the Subsidiaries
constituting capital assets in an aggregate amount exceeding $250,000;
(xii) any transaction by the Company or any Subsidiary with
Seller, any officer, director or Affiliate (other than the Company or
any Subsidiary) of Seller (A) outside the ordinary course of business
consistent with past practice or (B) other than on an arm's-length
basis; or
(xiii) any entering into of a Contract to do or engage in any
of the foregoing after the date hereof.
2.11 No Undisclosed Liabilities. Except as reflected or
reserved against in the June 30 Balance Sheet, there are no Liabilities against,
relating to or affecting the Company or any Subsidiary or any of their
respective Assets and Properties, other than Liabilities (i) incurred in the
ordinary course of business consistent with past practice or (ii) which,
individually or in the aggregate, are not material to the Business or Condition
of the Company.
2.12 Taxes. Except as disclosed in Section 2.12 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) The financial results of the Company and its Subsidiaries
have been included in the financial results of Seller, which has filed (or there
have been filed on their behalf) all material Tax Returns and reports required
to be filed by or on behalf of each of them, or requests for extensions to file
such returns or reports have been timely filed or granted and have not expired,
and all such Tax Returns and reports are complete and accurate in all respects,
except to the extent that such failures to file, have extensions granted that
remain in effect or be complete and accurate in all respects, as applicable,
individually or in the aggregate, would not have a material adverse effect on
the Business or Condition of the Company. The Company and
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each of its Subsidiaries has paid (or there has paid on their behalf) all Taxes
shown as due on such Tax Returns and reports. The balance sheet of the Company
and its Subsidiaries as of June 30, 2000 reflects an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements, and no
deficiencies for any taxes have been proposed, asserted or assessed for which
the Company or any of its Subsidiaries could be held liable that are not
adequately reserved for, except for inadequately reserved taxes and inadequately
reserved deficiencies that would not, individually or in the aggregate, have a
material adverse effect on the Business or Condition of the Company. No requests
for waivers of the time to assess any Taxes against the Company or any of its
Subsidiaries have been granted or are pending.
(b) Neither the Company nor any of its Subsidiaries is a party
to, is bound by, or has any obligation under, any agreement relating to the
allocation or sharing of Taxes or has any liability for the Taxes of any person
other than the Company or its Subsidiaries (or the affiliated group filing a
consolidated federal income tax return that includes the Company and its
Subsidiaries), as a transferee, or successor or otherwise (including, without
limitation, any liability under Treasury Regulations Section 1.1502-6 or any
similar provision of state, local or foreign law).
(c) Neither the Company nor any of its Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
under Code Section 280G will not be deductible.
(d) Neither the Company nor any of its Subsidiaries has ever
been a member of an affiliated group of corporations (within the meaning of Code
Section 1504(a)) filing consolidated Tax Returns.
2.13 Legal Proceedings. Except as disclosed in Section 2.13 of
the Disclosure Schedule (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of Seller, threatened against, relating to or affecting Seller, the
Company or any Subsidiary or any of their respective Assets and Properties which
(i) could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Transaction Documents or otherwise result in a material diminution of the
benefits contemplated by this Agreement or any of the Transaction Documents to
Purchaser, or (ii) if determined adversely to Seller, the Company or a
Subsidiary, could reasonably be expected to result in (x) any injunction or
other equitable relief against the Company or any Subsidiary that would
interfere in any material respect with its business or operations or (y) Losses
by the Company or any Subsidiary, individually or in the aggregate with Losses
in respect of other such Actions or Proceedings, exceeding $100,000; and
(b) there are no Orders outstanding against the Company or any
Subsidiary.
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2.14 Compliance With Laws and Orders. Except as disclosed in
Section 2.14 of the Disclosure Schedule, neither the Company nor any Subsidiary
is or has at any time since October 20, 1998 been, or has received any notice
that it is or has at any time since October 20, 1998 been, in violation of or in
default under, in any material respect, any Law or Order (including, without
limitation, any Environmental Law or Order) applicable to the Company or any
Subsidiary or any of their respective Assets and Properties, and to the
Knowledge of Seller no such violation or default has occurred since January 1,
1997.
2.15 Seller Plans; ERISA. (a) Section 2.15(a) of the
Disclosure Schedule contains a list of each "employee benefit plan" (within the
meaning of section 3(3) of ERISA, including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of Seller whose employment primarily
relates or primarily related to the Company or its Subsidiaries, may have any
present or future right to benefits or under which the Company or its
Subsidiaries could have any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Seller Plans". None of the Seller Plans has ever been sponsored or
maintained by the Company or its Subsidiaries and neither the Company nor its
Subsidiaries could have any liabilities under or in respect of the Seller Plans.
(b) None of the Seller Plans is subject to Title IV of ERISA,
and neither Seller nor any of its ERISA Affiliates (defined as any organization
which is a member of a controlled group or organizations within the meaning of
Code section 414(b), (c), (m) or (o) of which Seller is a member) has ever
sponsored, maintained or contributed to any plan subject to Title IV of ERISA.
(c) Neither the Company nor any of its Subsidiaries sponsor,
maintain or participate in any Seller Plan that could result in the payment to
any present or former employee of Seller whose employment primarily relates or
is primarily related to the Company or its Subsidiaries of any money or other
property or accelerate or provide any other rights or benefits to any present or
former employee of Seller whose employment primarily relates or primarily
related to the Company or its Subsidiaries, as a result of the transaction
contemplated by this Agreement, whether or not such payment would constitute a
parachute payment within the meaning of Code section 280G.
2.16 Real Property. (a) Neither the Company nor any of its
Subsidiaries owns any real property.
(b) Section 2.16(b) of the Disclosure Schedule contains a true
and correct list of each parcel of real property leased by the Company or any
Subsidiary (as lessor or lessee) or by Seller for use by the Company. The
Company or a Subsidiary has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the real properties leased by it for the full term
of the lease thereof. Each lease listed in Section 2.16(b) of the Disclosure
Schedule is a
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legal, valid and binding agreement, enforceable in accordance with its terms, of
the Company or a Subsidiary and of each other Person that is a party thereto,
and there is no, and neither the Company nor any Subsidiary has received notice
of any, default (or any condition or event which, after notice or lapse of time
or both, would constitute a default) thereunder. Neither the Company nor any
Subsidiary owes any brokerage commissions with respect to any such leased space.
(c) Seller has delivered to Purchaser prior to the execution
of this Agreement complete copies of all leases (including any amendments and
renewal letters) listed in Section 2.16(c) of the Disclosure Schedule.
2.17 Tangible Personal Property; Investment Assets. (a) The
Company or a Subsidiary is in possession of and has good title to, or has valid
leasehold interests in or valid rights under Contract to use, all tangible
personal property used in or reasonably necessary for the conduct of their
business. All such tangible personal property is free and clear of all Liens,
other than Permitted Liens and Liens disclosed in Section 2.17(a) of the
Disclosure Schedule, and is in good working order and condition, ordinary wear
and tear excepted, and its use complies in all material respects with all
applicable Laws.
(b) Section 2.17(b) of the Disclosure Schedule describes each
Investment Asset owned by the Company or any Subsidiary on the date hereof.
Except as disclosed in Section 2.17(b) of the Disclosure Schedule, all such
Investment Assets are owned by the Company or a Subsidiary free and clear of all
Liens other than Permitted Liens.
2.18 Intellectual Property Rights. (a) The Company and the
Subsidiaries have interests in or use the Intellectual Property disclosed in
Section 2.18(a) of the Disclosure Schedule, each of which the Company or a
Subsidiary either has all right, title and interest in or a valid and binding
rights under Contract to use. No other Intellectual Property is necessary in the
conduct of the business of the Company or any Subsidiary. Except as disclosed in
Section 2.18(a) of the Disclosure Schedule, no other rights in Intellectual
Property used in the conduct of the business of the Company or any Subsidiary
have been registered with or issued by any Governmental or Regulatory Authority.
Except as disclosed in Section 2.18(a) of the Disclosure Schedule, (i) the
Company or a Subsidiary has the exclusive right to use the Intellectual Property
disclosed in Section 2.18(a) of the Disclosure Schedule, (ii) all registrations
with and applications to Governmental or Regulatory Authorities in respect of
such Intellectual Property are valid and in full force and effect and all Taxes
to maintain their validity or effectiveness have been paid (iii) there are no
restrictions on the direct or indirect transfer of any Contract, or any interest
therein, held by the Company or any Subsidiary in respect of such Intellectual
Property, (iv) the Company and the Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their trade
secrets, (v) neither the Company nor any Subsidiary is, or has received any
notice that it is, in default (or with the giving of notice or lapse of time or
both, would be in default) under any Contract to use such Intellectual Property
and (vi) to the Knowledge of Seller, no such Intellectual Property is being
infringed by any other Person. Neither Seller, the Company nor any Subsidiary
has received notice that the Company or any Subsidiary is infringing any
Intellectual Property of any other Person, no claim is pending or, to the
Knowledge of Seller, has been made to such effect that has not been resolved
and, to
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the Knowledge of Seller, neither the Company nor any Subsidiary is infringing
any Intellectual Property of any other Person.
(b) Except as disclosed in Section 2.18(b) of the Disclosure
Schedule, the Company has no obligation under any agreement or other arrangement
to compensate any person for the use of the Intellectual Property disclosed in
Section 2.18(a) of the Disclosure Schedule.
2.19 Contracts. (a) Section 2.19(a) of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts or other arrangements
which have been entered into since January 1, 1999 or under which services are
still being provided or payments or other obligations are still outstanding
(copies of which, together with all amendments and supplements thereto, have
been delivered to Purchaser prior to the execution of this Agreement), to which
the Company or any Subsidiary is a party or by which any of their respective
Assets and Properties is bound:
(i) (A) all Contracts (excluding Seller Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the termination
of employment, the name, position and rate of compensation of each
Person party to such a Contract and the expiration date of each such
Contract; and (B) any written or unwritten representations,
commitments, promises, communications or courses of conduct (excluding
Seller Plans and any such Contracts referred to in clause (A))
involving an obligation of the Company or any Subsidiary to make
payments in any year, other than with respect to salary or incentive
compensation payments in the ordinary course of business, to any
employee exceeding $100,000;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company or any
Subsidiary to engage in any business activity or compete with any
Person or prohibiting or limiting the ability of any Person to compete
with the Company or any Subsidiary;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or
any Subsidiary in excess of $100,000 or to preferred stock issued by
the Company or any Subsidiary;
(v) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice, and (B) any merger or other business combination;
(vii) all Contracts between or among the Company or any
Subsidiary, on the one hand, and Seller, any officer, director or
Affiliate (other than the Company or any Subsidiary) of Seller, on the
other hand;
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(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts that (A) limit or contain restrictions on
the ability of the Company or any Subsidiary to declare or pay
dividends on, to make any other distribution in respect of or to issue
or purchase, redeem or otherwise acquire its capital stock, to incur
Indebtedness, to incur or suffer to exist any Lien, to purchase or sell
any Assets and Properties, to change the lines of business in which it
participates or engages or to engage in any merger or other business
combination or (B) require the Company or any Subsidiary to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition; and
(x) all other Contracts (other than Seller Plans, leases
listed in Section 2.16(a) of the Disclosure Schedule and insurance
policies listed in Section 2.21 of the Disclosure Schedule) that
involve the payment or potential payment, pursuant to the terms of any
such Contract, by or to the Company or any Subsidiary of more than
$500,000 annually.
(b) Each Contract required to be disclosed in Section 2.19(a)
of the Disclosure Schedule is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of each
party thereto; and except as disclosed in Section 2.19(b) of the Disclosure
Schedule neither the Company, any Subsidiary nor, to the Knowledge of Seller,
any other party to such Contract is, or has received notice that it is, in
violation or breach of or default under any such Contract (or with notice or
lapse of time or both, would be in violation or breach of or default under any
such Contract) in any material respect.
2.20 Licenses. Section 2.20 of the Disclosure Schedule
contains a list of all Licenses used in and material, individually or in the
aggregate, to the business or operations of the Company or any Subsidiary. Prior
to the execution of this Agreement, Seller has delivered to Purchaser copies of
all such Licenses. Except as disclosed in Section 2.20 of the Disclosure
Schedule:
(i) the Company and each Subsidiary owns or validly holds all
Licenses that are material, individually or in the aggregate, to its
business or operations;
(ii) each License listed in Section 2.20 of the Disclosure
Schedule is valid, binding and in full force and effect; and
(iii) neither the Company nor any Subsidiary is, or has
received any notice that it is, in default (or with the giving of
notice or lapse of time or both, would be in default) under any such
License.
2.21 Insurance. The Company does not maintain any liability,
property, workers' compensation, directors' and officers' liability or other
insurance policies.
2.22 Affiliate Transactions. Except as disclosed in Section
2.19(a)(vii) or Section 2.22(a) of the Disclosure Schedule, (i) there are no
intercompany Liabilities between the Company or any Subsidiary, on the one hand,
and Seller, any officer, director or Affiliate (other than the Company or any
Subsidiary) of Seller, on the other, (ii) neither Seller nor any such
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officer, director or Affiliate provides or causes to be provided any assets,
services or facilities to the Company or any Subsidiary, (iii) neither the
Company nor any Subsidiary provides or causes to be provided any assets,
services or facilities to Seller or any such officer, director or Affiliate and
(iv) neither the Company nor any Subsidiary beneficially owns, directly or
indirectly, any Investment Assets issued by Seller or any such officer, director
or Affiliate. Except as disclosed in Section 2.22(b) of the Disclosure Schedule,
each of the Liabilities and transactions listed in Section 2.22(a) of the
Disclosure Schedule was incurred or engaged in, as the case may be, on an
arm's-length basis. Since June 30, 1999, all settlements of intercompany
Liabilities between the Company or any Subsidiary, on the one hand, and Seller
or any such officer, director or Affiliate, on the other, have been made, and
all allocations of intercompany expenses have been applied, in the ordinary
course of business consistent with past practice.
2.23 Employees; Labor Relations. (a) Section 2.23 of the
Disclosure Schedule contains a list of the name of each employee of Seller whose
employment primarily relates to the Company and the Subsidiaries at the date
hereof, together with each such person's position or function, annual base
salary or wages and any incentive or bonus arrangement with respect to such
person in effect on such date. Seller has not received any information that
would lead it to believe that a material number of such persons will or may
cease to be employees, or will refuse offers of employment from Purchaser,
because of the consummation of the transactions contemplated by this Agreement.
(b) Except as disclosed in Section 2.23 of the Disclosure
Schedule, (i) no employee of Seller whose employment primarily relates to the
Company or any Subsidiary is presently a member of a collective bargaining unit
and, to the Knowledge of Seller, there are no threatened or contemplated
attempts to organize for collective bargaining purposes any of the employees of
Seller whose employment primarily relates to the Company or any Subsidiary, and
(ii) no unfair labor practice complaint or sex, age, race or other
discrimination claim has been brought during the last three (3) years against
the Company or any of the Subsidiaries before the National Labor Relations
Board, the Equal Employment Opportunity Commission or any other Governmental or
Regulatory Authority. Since August 21, 1997 there has been no work stoppage,
strike or other concerted action by employees of Seller whose employment
primarily relates to the Company or any Subsidiary. During that period, the
Company and the Subsidiaries have complied in all material respects with all
applicable Laws relating to the employment of labor, including, without
limitation those relating to wages, hours and collective bargaining.
2.24 Substantial Customers and Suppliers. Section 2.24(a) of
the Disclosure Schedule lists the ten largest customers of the Company and its
Subsidiaries, on the basis of revenues for goods sold or services provided for
the most recently-completed fiscal year. Section 2.24(b) of the Disclosure
Schedule lists the ten largest suppliers of the Company and the Subsidiaries, on
the basis of cost of goods or services purchased for the most recently-completed
fiscal year. Except as disclosed in Section 2.24(c) of the Disclosure Schedule,
no such customer or supplier has ceased or materially reduced its purchases
from, use of the services of, or sales or provision of services to the Company
and the Subsidiaries since December 31, 1999, or to the Knowledge of Seller, has
threatened to cease or materially reduce such purchases, use, sales or provision
of services after the date hereof.
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2.25 Bank and Brokerage Accounts; Investment Assets. Section
2.25 of the Disclosure Schedule sets forth (a) a list of the names and locations
of all banks, securities brokers and other financial institutions at which the
Company or any Subsidiary has an account or safe deposit box or maintains a
banking, custodial, trading or other similar relationship; (b) a list and
description of each such account, box and relationship, indicating in each case
the account number and the names of the respective officers or employees of the
Company or any Subsidiary having signatory power with respect thereto; and (c) a
list of each Investment Asset, the name of the record and beneficial owner
thereof, the location of the certificates, if any, therefor.
2.26 No Powers of Attorney. Except as set forth in Section
2.26 of the Disclosure Schedule, neither the Company nor any Subsidiary has any
powers of attorney or comparable delegations of authority outstanding.
2.27 Accounts Receivable. Except as set forth in Section 2.27
of the Disclosure Schedule, the accounts and notes receivable of the Company and
the Subsidiaries reflected on the June 30 Balance Sheet, and all accounts and
notes receivable arising subsequent to June 30, 2000, (i) arose from bona fide
sales transactions in the ordinary course of business and are payable on
ordinary trade terms, (ii) are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their terms, (iii) are not
subject to any valid set-off or counterclaim, (iv) do not represent obligations
for goods sold on consignment, on approval or on a sale-or-return basis or
subject to any other repurchase or return arrangement, (v) are collectible in
the ordinary course of business consistent with past practice in the aggregate
recorded amounts thereof, net of any applicable reserve reflected in the June 30
Balance Sheet, and (vi) are not the subject of any Actions or Proceedings
brought by or on behalf of the Company or any Subsidiary.
2.28 Nature of Purchase; Accredited Investor. (a) Seller is
acquiring the Purchaser Shares issued pursuant to this Agreement for its account
for investment, not as a nominee or agent, and not with a view to the resale or
distribution of such shares or any part thereof, and Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Seller acknowledges that the issuance of the Purchaser Shares pursuant
to this Agreement will not be registered under the Securities Act or any state
securities or blue sky law, on the grounds that the offering and sale of the
Purchaser Shares contemplated by this Agreement are exempt from registration
pursuant to exceptions available under such laws, and that Purchaser's reliance
upon such exemptions is predicated upon Seller's representations set forth in
this Agreement. Seller acknowledges and understands that such shares must be
retained by Seller until they are subsequently registered under the Securities
Act and/or applicable state securities or blue sky laws or an exemption from
such registration is available, and that the certificates representing such
shares will contain a legend to the foregoing effect.
(b) Seller is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
2.29 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Seller directly
with Purchaser without the intervention of any Person on behalf of Seller in
such manner as to give rise to any valid claim by
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any Person against Purchaser, the Company or any Subsidiary for a finder's fee,
brokerage commission or similar payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Purchaser has full corporate power and authority to execute and deliver this
Agreement and the Transaction Documents, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.
3.02 Authority. The execution and delivery by Purchaser of
this Agreement and the Transaction Documents, and the performance by Purchaser
of its obligations hereunder and thereunder, have been duly and validly
authorized by the Board of Directors of Purchaser, no other corporate action on
the part of Purchaser or its stockholders being necessary. This Agreement has
been duly and validly executed and delivered by Purchaser and constitutes, and
upon the execution and delivery by Purchaser of the Transaction Documents, such
Transaction Documents will constitute, legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with their terms.
3.03 No Conflicts. The execution and delivery by Purchaser of
this Agreement do not, and the execution and delivery by Purchaser of the
Transaction Documents, the performance by Purchaser of its obligations under
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws (or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 3.04 hereto,
conflict with or result in a violation or breach of any term or provision of any
Law or Order applicable to Purchaser or any of its Assets and Properties; or
(c) except as disclosed in Schedule 3.03 hereto, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require Purchaser to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon Purchaser or any of its Assets or
Properties under, any Contract or License to which Purchaser is a party or by
which any of its Assets and Properties is bound.
3.04 Governmental Approvals and Filings. Except as disclosed
in Schedule 3.04 hereto, no consent, approval or action of, filing with or
notice to any
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Governmental or Regulatory Authority on the part of Purchaser is required in
connection with the execution, delivery and performance of this Agreement or the
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby.
3.05 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its Assets and Properties which could reasonably
be expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Transaction Documents.
3.06 Purchase for Investment. The Shares will be acquired by
Purchaser for its own account for the purpose of investment, it being understood
that the right to dispose of such Shares shall be entirely within the discretion
of Purchaser. Purchaser will refrain from transferring or otherwise disposing of
any of the Shares, or any interest therein, in such manner as to cause Seller to
be in violation of the registration requirements of the Securities Act of 1933,
as amended, or applicable state securities or blue sky laws.
3.07 SEC Reports and Financial Statements; No Adverse Change.
Purchaser delivered to Seller prior to the execution of this Agreement a copy of
its Annual Report on Form 10-K for the period ended December 31, 1999, Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1999, 1999
definitive proxy statement (together with all amendments thereof and supplements
thereto) filed by Purchaser or any of its subsidiaries with the Securities and
Exchange Commission (the "SEC") (as such documents have since the time of their
filing been amended or supplemented, the "Purchaser SEC Reports"). As of their
respective dates, the Purchaser SEC Reports (i) complied as to form in all
material respects with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as the case may be, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in the
Purchaser SEC Reports (the "Purchaser Financial Statements") complied as to form
in all material respects with the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments) the consolidated financial position of Purchaser and
its consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended.
3.08 Capital Stock. The Purchaser Shares issuable in
connection with this Agreement constitute voting stock, have been duly
authorized by Purchaser and reserved for issuance pursuant to this Agreement
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable.
3.09 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Purchaser directly
with Seller without the inter-
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vention of any Person on behalf of Purchaser in such manner as to give rise to
any valid claim by any Person against Seller, the Company or any Subsidiary for
a finder's fee, brokerage commission or similar payment.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times
from and after the date hereof until the Closing and, with respect to any
covenant or agreement by its terms to be performed in whole or in part after the
Closing, for the period specified therein or, if no period is specified therein,
indefinitely, Seller will comply with all covenants and provisions of this
Article IV, except to the extent Purchaser may otherwise consent in writing.
4.01 Regulatory and Other Approvals. Seller will, and will
cause the Company and the Subsidiaries to, as promptly as practicable (a) take
all commercially reasonable steps necessary or desirable to obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Seller,
the Company or any Subsidiary to consummate the transactions contemplated hereby
and by the Transaction Documents, including without limitation those described
in Sections 2.06 and 2.07 of the Disclosure Schedule, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as Purchaser or such Governmental or Regulatory Authorities or
other Persons may reasonably request in connection therewith and (c) cooperate
with Purchaser in connection with the performance of its obligations under
Sections 5.01 and 5.02. Seller will provide prompt notification to Purchaser
when any such consent, approval, action, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Transaction Documents.
4.02 HSR Filings. In addition to and not in limitation of
Seller's covenants contained in Section 4.01, Seller will (a) take promptly all
actions necessary to make the filings required of Seller or its Affiliates under
the HSR Act, (b) comply at the earliest practicable date with any request for
additional information received by Seller or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general.
4.03 Investigation by Purchaser. Seller will, and will cause
the Company and the Subsidiaries to, (a) provide Purchaser and its officers,
directors, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives (together "Representatives") with full
access, upon reasonable prior notice and during normal business hours, to all
officers, employees, agents and accountants of the Company and the Subsidiaries
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and their Assets and Properties and Books and Records, and (b) furnish Purchaser
and such other Persons with all such information and data (including without
limitation copies of Contracts, Seller Plans and other Books and Records)
concerning the business and operations of the Company and the Subsidiaries as
Purchaser or any of such other Persons reasonably may request in connection with
such investigation.
4.04 No Solicitations. Seller will not take, nor will it
permit the Company, the Subsidiaries or any Affiliate of Seller (or authorize or
permit any investment banker, financial advisor, attorney, accountant or other
Person retained by or acting for or on behalf of Seller, the Company, the
Subsidiaries or any such Affiliate) to take, directly or indirectly, any action
to solicit, encourage, receive, negotiate, assist or otherwise facilitate
(including by furnishing confidential information with respect to the Company or
any Subsidiary or permitting access to the Assets and Properties and Books and
Records of the Company or any Subsidiary) any offer or inquiry from any Person
concerning an Acquisition Proposal. If Seller, the Company, any Subsidiary or
any such Affiliate (or any such Person acting for or on their behalf) receives
from any Person any offer, inquiry or informational request referred to above,
Seller will promptly advise such Person, by written notice, of the terms of this
Section 4.04 and will promptly, orally and in writing, advise Purchaser of such
offer, inquiry or request and deliver a copy of such notice to Purchaser.
4.05 Conduct of Business. Seller will cause the Company and
the Subsidiaries to conduct business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, Seller will:
(a) cause the Company and the Subsidiaries to use commercially
reasonable efforts to (i) preserve intact the present business organization and
reputation of the Company and the Subsidiaries, (ii) keep available (subject to
dismissals and retirements in the ordinary course of business consistent with
past practice) the services of the present employees of Seller whose employment
primarily relates to the Company and the Subsidiaries, (iii) maintain the Assets
and Properties of the Company and the Subsidiaries in good working order and
condition, ordinary wear and tear excepted and (iv) maintain the good will of
customers, suppliers, lenders and other Persons to whom the Company or any
Subsidiary sells goods or provides services or with whom the Company or any
Subsidiary otherwise has significant business relationships;
(b) except to the extent required by applicable Law, (i) cause
the Books and Records to be maintained in the usual, regular and ordinary
manner, (ii) not permit any material change in (A) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax practice or
policy of the Company or any Subsidiary, or (B) any method of calculating any
bad debt, contingency or other reserve of the Company or any Subsidiary for
accounting, financial reporting or Tax purposes and (iii) not permit any change
in the fiscal year of the Company or any Subsidiary;
(c) (i) use, and will cause the Company and the Subsidiaries
to use, commercially reasonable efforts to maintain in full force and effect
until the Closing substantially the same levels of coverage as the insurance
afforded under the Contracts listed in Section 2.21 of the Disclosure Schedule,
(ii) to the extent requested by Purchaser prior to the Closing Date, use all
commercially reasonable efforts to cause such insurance coverage held by
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any Person (other than the Company or any Subsidiary) for the benefit of the
Company or any Subsidiary to continue to be provided at the expense of the
Company and the Subsidiaries for at least sixty (60) days after the Closing on
substantially the same terms and conditions as provided on the date of this
Agreement and (iii) cause any and all benefits under such Contracts paid or
payable (whether before or after the date of this Agreement) with respect to the
business, operations, employees or Assets and Properties of the Company and the
Subsidiaries to be paid to the Company and the Subsidiaries; and
(d) cause the Company and the Subsidiaries to comply, in all
material respects, with all Laws and Orders applicable to the business and
operations of the Company and the Subsidiaries, and promptly following receipt
thereof to give Purchaser copies of any notice received from any Governmental or
Regulatory Authority or other Person alleging any violation of any such Law or
Order.
4.06 Governmental and Regulatory Filings. As promptly as
practicable, Seller will deliver copies of all License applications and other
filings made by the Company or any Subsidiary after the date hereof and before
the Closing Date with any Governmental or Regulatory Authority (other than
routine, recurring filings made in the ordinary course of business consistent
with past practice).
4.07 Employee Matters. Except as may be required by Law,
Seller will refrain, and will cause the Company and the Subsidiaries to refrain,
from directly or indirectly:
(a) making any representation or promise, oral or written, to
any officer, employee of Seller whose employment primarily relates to the
Company or any Subsidiary concerning any Seller Plan, except for statements as
to the rights or accrued benefits of any officer, employee or consultant under
the terms of any Seller Plan;
(b) making any increase in the salary, wages or other
compensation of any employee of Seller whose employment primarily relates to the
Company or any Subsidiary whose annual salary is or, after giving effect to such
change, would be $50,000 or more;
(c) adopting, entering into or becoming bound by any Seller
Plan, employment-related Contract or collective bargaining agreement, or
amending, modifying or terminating (partially or completely) any Seller Plan,
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law; or
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any Seller Plan,
employment-related Contract or other employee compensation arrangement or (ii)
salary ranges, increase guidelines or similar provisions in respect of any
Seller Plan, employment-related Contract or other employee compensation
arrangement.
Seller will cause the Company and the Subsidiaries to
administer each Seller Plan, or cause the same to be so administered, in all
material respects in accordance with the applicable provisions of the Code,
ERISA and all other applicable Laws. Seller will promptly notify Purchaser in
writing of each receipt by Seller, the Company or any Subsidiary (and furnish
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Purchaser with copies) of any notice of investigation or administrative
proceeding by the IRS, Department of Labor, PBGC or other Person involving any
Seller Plan.
4.08 Certain Restrictions. Seller will cause the Company and
the Subsidiaries to refrain from:
(a) amending their certificates of incorporation or by-laws or
taking any action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of
any shares of capital stock of or any Option with respect to the Company or any
Subsidiary, or modifying or amending any right of any holder of outstanding
shares of capital stock of or Option with respect to the Company or any
Subsidiary;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary
not wholly owned by the Company, or directly or indirectly redeeming, purchasing
or otherwise acquiring any capital stock of or any Option with respect to the
Company or any Subsidiary not wholly owned by the Company;
(d) acquiring or disposing of, or incurring any Lien (other
than a Permitted Lien) on, any Assets and Properties, other than in the ordinary
course of business consistent with past practice;
(e) (i) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving any consent with
respect to (A) any Contract that would, if in existence on the date of this
Agreement, be required to be disclosed in the Disclosure Schedule pursuant to
Section 2.19(a) or (B) any material License or (ii) granting any irrevocable
powers of attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or without notice or
lapse of time or both) would constitute a material violation or breach of, or
default under, any term or provision of any License held or used by the Company
or any Subsidiary or any Contract to which the Company or any Subsidiary is a
party or by which any of their respective Assets and Properties is bound;
(g) (i) incurring Indebtedness in an aggregate principal
amount exceeding $100,000 (net of any amounts of Indebtedness discharged during
such period), or (ii) voluntarily purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a scheduled payment
date with respect to, or waiving any right of the Company or any Subsidiary
under, any Indebtedness of or owing to the Company or any Subsidiary;
(h) engaging with any Person in any merger or other business
combination;
(i) making capital expenditures or commitments for additions
to property, plant or equipment constituting capital assets in an aggregate
amount exceeding $100,000;
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(j) making any change in the lines of business in which they
participate or are engaged;
(k) writing off or writing down any of their Assets and
Properties outside the ordinary course of business consistent with past
practice; or
(l) entering into any Contract to do or engage in any of the
foregoing.
4.09 Affiliate Transactions. Except as set forth in Section
4.09 of the Disclosure Schedule, immediately prior to the Closing, all
Indebtedness and other amounts owing under Contracts between Seller, any
officer, director or Affiliate (other than the Company or any Subsidiary) of
Seller, on the one hand, and the Company or any of the Subsidiaries, on the
other, will be paid in full, and Seller will terminate and will cause any such
officer, director or Affiliate to terminate each Contract with the Company or
any Subsidiary. Prior to the Closing, neither the Company nor any Subsidiary
will enter into any Contract or amend or modify any existing Contract, and will
not engage in any transaction outside the ordinary course of business consistent
with past practice or not on an arm's-length basis (other than pursuant to
Contracts disclosed pursuant to Section 2.19(a)(vii) of the Disclosure
Schedule), with Seller or any such officer, director or Affiliate.
4.10 Books and Records. On the Closing Date, Seller will
deliver or make available to Purchaser at the offices of the Company and the
Subsidiaries all of the Books and Records, and if at any time after the Closing
Seller discovers in its possession or under its control any other Books and
Records, it will forthwith deliver such Books and Records to Purchaser.
4.11 Noncompetition. (a) Seller will, for a period of eighteen
(18) months from the Closing Date, refrain from, either alone or in conjunction
with any other Person, or directly or indirectly through its present or future
Affiliates:
(i) employing, engaging or seeking to employ or engage any
Person who within the prior twelve (12) months had been an officer of
the Company or Subsidiary or employee of Seller whose employment
primarily relates to the Company or a Subsidiary, unless such officer
or employee (A) resigns voluntarily (without any solicitation from
Seller or any of its Affiliates) or (B) is terminated by the Company or
any Subsidiary after the Closing Date;
(ii) causing or attempting to cause (A) any client, customer
or supplier of the Company or any Subsidiary to terminate or materially
reduce its business with the Company and the Subsidiaries or (B) any
officer of the Company or a Subsidiary or employee or consultant of
Seller whose employment primarily relates to the Company or any
Subsidiary to resign or sever a relationship with the Company or a
Subsidiary; or
(iii) disclosing (unless compelled by judicial or
administrative process) or using any confidential or secret information
relating to the Company or any of the Subsidiaries or any of their
respective clients, customers or suppliers.
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(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this Section would be inadequate, and
Seller hereby consents to the granting by any court of an injunction or other
equitable relief, without the necessity of actual monetary loss being proved, in
order that the breach or threatened breach of such provisions may be effectively
restrained.
4.12 Company Assets. Prior to the Closing Date, Seller shall
transfer to Purchaser all assets of Seller used primarily in connection with the
business of the Company including, but not limited to, domain names of the
Company (the "Company Assets"). Section 4.12 of the Disclosure Schedule contains
a true and correct list of all of the Company Assets.
4.13 Notice and Cure. Seller will notify Purchaser in writing
(where appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Purchaser with copies of any and all information
or documents relating to, and will use all commercially reasonable efforts to
cure before the Closing, any event, transaction or circumstance, as soon as
practicable after it becomes Known to Seller, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of Seller under
this Agreement to be breached or that renders or will render untrue any
representation or warranty of Seller contained in this Agreement as if the same
were made on or as of the date of such event, transaction or circumstance. No
notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein or
shall in any way limit Purchaser's right to seek indemnity under Article XI.
4.14 Fulfillment of Conditions. Seller will execute and
deliver at the Closing each Transaction Document that Seller is required hereby
to execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Purchaser contained in this
Agreement and will not, and will not permit the Company or any Subsidiary to,
take or fail to take any action that could reasonably be expected to result in
the nonfulfillment of any such condition.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times
from and after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this Article V, except to the extent Seller may
otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will as
promptly as practicable (a) take all commercially reasonable steps necessary or
desirable to obtain all consents, approvals or actions of, make all filings with
and give all notices to Governmental or Regulatory Authorities or any other
Person required of Purchaser to consummate the transactions contemplated hereby
and by the Transaction Documents, including without limitation those described
in Schedules 3.03 and 3.04 hereto, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Seller or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (c) cooperate with Seller, the
Company and the Subsidiaries in connection with the performance of their
obligations under Sections 4.01 and 4.02. Purchaser will provide prompt
notification to Seller when any such consent, approval, action, filing or notice
referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Seller of any communications (and, unless precluded
by Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Transaction Documents.
5.02 HSR Filings. In addition to and without limiting
Purchaser's covenants contained in Section 5.01, Purchaser will (i) take
promptly all actions necessary to make the filings required of Purchaser or its
Affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any request for additional information received by Purchaser or its Affiliates
from the Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (iii) cooperate with Seller in connection
with Seller's filing under the HSR Act and in connection with resolving any
investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission
or the Antitrust Division of the Department of Justice or state attorneys
general.
5.03 Notice and Cure. Purchaser will notify Seller in writing
of, and contemporaneously will provide Seller with copies of any and all
information or documents relating to, and will use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance, as
soon as practicable after it becomes known to Purchaser, occurring after the
date of this Agreement that causes or will cause any covenant or agreement of
Purchaser under this Agreement to be breached or that renders or will render
untrue any representation or warranty of Purchaser contained in this Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance. No notice given pursuant to this Section shall have any effect on
the representations, warranties, covenants or agreements
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contained in this Agreement for purposes of determining satisfaction of any
condition contained herein or shall in any way limit Seller's right to seek
indemnity under Article XI.
5.04 Fulfillment of Conditions. Purchaser will execute and
deliver at the Closing each Transaction Document that Purchaser is hereby
required to execute and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the obligations of Seller contained
in this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Shares
are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.01 Representations and Warranties. Each of the
representations and warranties made by Seller in this Agreement (other than
those made as of a specified date earlier than the Closing Date) shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date, and any
representation or warranty made as of a specified date earlier than the Closing
Date shall have been true and correct in all material respects on and as of such
earlier date.
6.02 Performance. Seller shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by Seller at or before the
Closing.
6.03 Officers' Certificates. Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed in the name and on
behalf of Seller by the President or any Vice President of Seller, substantially
in the form and to the effect of Exhibit C hereto, and a certificate, dated the
Closing Date and executed by the Secretary of Seller, substantially in the form
and to the effect of Exhibit D hereto.
6.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Transaction Documents or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Transaction Documents
to Purchaser, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Purchaser,
the Company, any Subsidiary or the transactions contemplated by this Agreement
or any of the Transaction Documents of any such Law.
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6.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser and Seller to perform their
obligations under this Agreement and the Transaction Documents and to consummate
the transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to Purchaser, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Transaction Documents,
including under the HSR Act, shall have occurred.
6.06 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Section 6.06 of the Disclosure Schedule, and all other
consents (or in lieu thereof waivers) to the performance by Purchaser and Seller
of their obligations under this Agreement and the Transaction Documents or to
the consummation of the transactions contemplated hereby and thereby as are
required under any Contract to which Purchaser, Seller, the Company or any
Subsidiary is a party or by which any of their respective Assets and Properties
are bound (a) shall have been obtained, (b) shall be in form and substance
reasonably satisfactory to Purchaser, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, except (other than in the case of the
consents listed in Section 6.06 of the Disclosure Schedule) where the failure to
obtain any such consent (or in lieu thereof waiver) could not reasonably be
expected, individually or in the aggregate with other such failures, to
materially adversely affect Purchaser or the Business or Condition of the
Company or otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement and the Transaction Documents to
Purchaser.
6.07 License Agreement. Seller and Purchaser shall have
entered into a license agreement, dated as of the Closing Date, governing the
licensing of the Company's technology to Seller, in form and substance to be
mutually agreed to in good faith by Seller and Purchaser (the "License
Agreement").
6.08 Reseller Agreement. Seller and Purchaser shall have
entered into a reseller agreement, dated as of the Closing Date, governing the
resale by Seller of Purchaser's products, in form and substance to be mutually
agreed to in good faith by Seller and Purchaser (the "Reseller Agreement").
6.09 Resignations of Directors and Officers. Such members of
the boards of directors and such officers of the Company and the Subsidiaries as
are designated in a written notice delivered at least two (2) Business Days
prior to the Closing Date by Purchaser to Seller shall have tendered, effective
at the Closing, their resignations as such directors and officers.
6.10 Proceedings. All proceedings to be taken on the part of
Seller in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Seller in
its sole discretion):
7.01 Representations and Warranties. Each of the
representations and warranties made by Purchaser in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date.
7.02 Performance. Purchaser shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by Purchaser at or before
the Closing.
7.03 Officers' Certificates. Purchaser shall have delivered to
Seller a certificate, dated the Closing Date and executed in the name and on
behalf of Purchaser by the President or any Vice President of Purchaser,
substantially in the form and to the effect of Exhibit E hereto, and a
certificate, dated the Closing Date and executed by the Secretary of Purchaser,
substantially in the form and to the effect of Exhibit F hereto.
7.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law that became effective after the date of this
Agreement restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Transaction Documents.
7.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Seller and Purchaser to perform their
obligations under this Agreement and the Transaction Documents and to consummate
the transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (c) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Transaction Documents,
including under the HSR Act, shall have occurred.
7.06 Third Party Consents. All consents (or in lieu thereof
waivers) to the performance by Seller of its obligations hereunder and to the
consummation of the transactions contemplated hereby as are required under the
Contracts listed in Section 7.06 of the Disclosure Schedule (a) shall have been
obtained, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect.
7.07 Proceedings. All proceedings to be taken on the part of
Purchaser in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have
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received copies of all such documents and other evidences as Seller may
reasonably request in order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith.
7.08 License Agreement. Seller and Purchaser shall have
entered into the License Agreement.
7.09 Reseller Agreement. Seller and Purchaser shall have
entered into the Reseller Agreement.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 Transfer Taxes. All Transfer Taxes incurred in connection
with the consummation of the transactions contemplated by this Agreement shall
be borne by Purchaser. Seller shall, at its own expense, prepare and timely
file, in accordance with all applicable laws and regulations, all necessary Tax
Returns and other documentation with respect to all such Transfer Taxes.
Purchaser shall reasonably cooperate with Seller in the preparation and filing
of any such Tax Returns and other documentation.
8.02 Additional Tax Covenants. (a) (i) Any Tax Sharing
Agreement to which the Company is a party shall be terminated as to the Company
as of the Closing Date, and the Company shall have no further obligations
thereunder.
(ii) All powers of attorney granted by the Company with
respect to Taxes shall be revoked as of the Closing Date.
(iii) Seller agrees that between the date of this Agreement
and the Closing, they will not cause or permit the Company to (x) make
any change in the Company's Tax accounting methods, any new election
with respect to Taxes or any modification or revocation of any existing
election with respect to Taxes or (y) settle or otherwise dispose of
any Tax audit, dispute, or other Tax proceeding, in each case without
Purchaser's express written consent thereto.
(b) At or prior to the Closing, Seller shall deliver to
Purchaser a certificate in the form required by Section 1445(b)(2) of the Code
and the regulations promulgated thereunder to the effect that the Seller is not
a "foreign person" within the meaning of Section 1445 of the Code.
(c) (i) Subject to the provisions of this Section 8.02(c),
Seller shall have the right, at its own expense, to control, manage and be
responsible for any audit, contest, claim, proceeding or inquiry with respect to
Taxes for any taxable year or period ending on or before the Closing Date and
shall have the right to settle or contest in its discretion any such audit,
contest, claim or proceeding; provided, however, that (x) no settlement or
disposition of any such proceeding shall be made without Purchaser's written
consent if the same could reasonably be expected to affect Purchaser's liability
for Taxes in any taxable period or portion of a taxable
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period ending after the Closing Date; [(y) Purchaser and Seller shall jointly
control any proceeding relating to a taxable period that begins before, and ends
after, the Closing Date]; and (z) Purchaser shall have the right to attend and
participate in (but not control) at is own expense, any proceeding (insofar as
it relates to the Company) the control of which is allocated to Seller pursuant
to this Section 8.02(c).
(ii) Except for the proceedings the control of which is
determined pursuant to Section 8.02(c)(i), Purchaser shall, at its own
expense, control, manage and solely be responsible for any audit,
contest, claim, proceeding or inquiry with respect to Taxes for any
taxable year or period ending after the Closing Date, and shall have
the exclusive right to settle or contest any such audit, contest,
claim, proceeding or inquiry without the consent of any other party.
8.03 Tax Returns. (a) Seller shall cause the Company, to the
extent permitted by Law, to join, for any taxable year or period ending on or
prior to the Closing Date, in (i) the consolidated federal income Tax Returns
for the group of which Seller is the common parent company and (ii) any
combined, consolidated or unitary state or local income Tax Returns of any
member of the such group (other than the Company) with respect to which the
Company is required to be included or has been included in accordance with most
recent past practice. All Taxes with respect to such Tax Returns shall be paid
by Seller.
(b) Seller shall timely prepare (or cause to be prepared) and
shall timely file (or cause to be timely filed) all Tax Returns of the Company
(other than those addressed in clause 8.03(a) above) for any taxable year or
period ending on or before the Closing Date which are not required to be filed
on or before the Closing Date. At least 30 days prior to the due date for filing
such Tax Return, Seller shall provide Purchaser with a copy of such Tax Return
for its review and consent, which shall not be unreasonably withheld. Seller
shall, at least five days prior to the due date for making payments with respect
to any such Tax Return, remit to Purchaser the amount of Taxes shown as due
thereon.
(c) Purchaser shall prepare (or cause to be prepared) and file
(or cause to be filed) all Tax Returns of the Company for any taxable year or
period commencing prior to the Closing Date and ending subsequent to the Closing
Date. Purchaser shall provide Seller with a copy of each Tax Return for its
review and comment at least 30 days prior to the due date for filing such Tax
Return. Seller shall, at least five days prior to the due date for filing such
Tax Return, remit to Purchaser the amount allocated to it with respect to such
period pursuant to Section 11.01(a).
(d) The Tax Returns referred to in Sections 8.03(a), (b) and
(c), shall, to the extent not otherwise required by Law, be prepared in a manner
consistent with the Company's past practice (including any Tax elections and
methods of accounting).
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ARTICLE IX
OTHER AGREEMENTS
9.01 Leases. (a) On the Closing Date, Seller will assign to
Purchaser the leases with respect to the premises located at 00000 Xxxxxxxxx
Xxxx., Xxxxxx Xxxx, XX 00000-0000 and 000 Xxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000
and enter into a sublease agreement with Purchaser with respect to the premises
located at 00000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxx, XX 00000, in each case in form
and substance to be mutually agreed upon in good faith by Seller and Purchaser
as soon as practicable following the date hereof.
(b) Any cost incurred in connection with fulfilling the
obligations under this Section 9.01 shall be borne equally by Seller and
Purchaser, including any costs incurred in connection with the partition of the
premises located at 00000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxx, XX 00000.
9.02 Company Employees; Seller Plans, Benefits. (a) Purchaser
shall offer employment, commencing on the Closing Date, to all salaried and
hourly employees employed by Seller whose employment primarily relates to the
Company (all such employees being the "Offered Employees"). Section 9.02(a) of
the Disclosure Schedule is a list of the employees employed by Seller whose
employment primarily relates to the Company as of the date hereof. Those Offered
Employees who commence employment as of the Closing Date shall be collectively
referred to as the "Transferred Employees". For purposes of this section, any
person on short-term disability, vacation or leave of absence with a definite
date of return shall be considered offered employment as set forth in this
section when they return to work; but any person on long-term disability, layoff
or on a leave of absence with no prior agreement or understanding to return to
employment at the end of such disability, layoff or leave shall not be
considered offered employment.
(b) Seller shall retain responsibility for and continue to pay
all medical, life insurance, disability and other welfare plan expenses and
benefits for each Transferred Employee with respect to claims incurred by such
Transferred Employees or their covered dependents prior to the Closing Date.
Expenses and benefits with respect to claims incurred by Transferred Employees
or their covered dependents on or after the Closing Date shall be the
responsibility of Purchaser, subject to the terms of Purchaser's welfare plans.
For purposes of this paragraph, a claim is deemed incurred when the services
that are the subject of the claim are performed; in the case of life insurance,
when the death occurs, in the case of long-term disability benefits, when the
disability occurs and, in the case of a hospital stay, when the employee first
enters the hospital.
(c) With respect to any welfare benefit plans (as defined in
section 3(1) of ERISA) maintained by Purchaser for the benefit of Transferred
Employees on and after the Closing Date, Purchaser shall (i) cause there to be
waived any pre-existing condition limitations (to the extent such pre-existing
conditions were satisfied or waived under the Company's welfare plans on the
Closing Date) and (ii) give effect, in determining any deductible and maximum
out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to, such
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employees with respect to similar plans maintained by the Company (and its
affiliates) for their benefit immediately prior to the Closing Date.
(d) Seller shall assume, be responsible for, and indemnify
Purchaser for, any and all obligations to provide continuation coverage under
the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") for any Offered
Employees which (i) arises on or prior to the Closing Date or (ii) arises, or
may be deemed to exist or arise, as a result of, or in connection with, the sale
of the Company hereunder.
(e) Purchaser shall provide each Transferred Employee with
credit for purposes of eligibility and vesting (but not for purposes of benefit
accrual) for all service with the Company and its affiliates under each employee
benefit plan, program, or arrangement of Purchaser or its affiliates in which
such employee is eligible to participate; provided, however, that in no event
shall any employee be entitled to any credit to the extent that it would result
in a duplication of benefits with respect to the same period of service; and
provided further that each Transferred Employee will be permitted to carry over,
and the Purchaser will cause the Company to continue to honor, any accrued but
unused vacation days.
(f) Purchaser shall, following the Closing Date, permit the
Transferred Employees to participate in employee benefit plans substantially
comparable, in the aggregate, to those plans in which Purchaser's similarly
situated employees generally participate.
9.03 Financial Statements. Not later than sixty (60) days
following the Closing Date, Purchaser shall have received from Seller an audited
balance sheet of the Company as of December 31, 1998 and 1999 and the related
statements of operations and cash flow for the years ended December 31, 1998 and
1999, together with unaudited balance sheets of the Company and its consolidated
Subsidiaries as of June 30, 2000 and the related statements of operations and
cash flow for the period commencing January 1, 2000 and ending on June 30, 2000.
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
10.01 Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the affairs of the Company and the Subsidiaries or any right of any
party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement,
Seller and Purchaser have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements of Seller and
Purchaser contained in this Agreement will survive the Closing (a) indefinitely
with respect to (i) the representations and warranties contained in Sections
2.02, 2.04, 2.05 (but only insofar as it relates to the capital stock of the
Subsidiaries), 2.30, 3.02 and 3.08 and (ii) the covenants and agreements
contained in Sections 1.04, 14.03 and 14.05; (b) until sixty (60) days after the
expiration of all applicable statutes of limitation (including all periods of
extension, whether automatic or permissive) with respect to matters
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covered by Section 2.12 and Article VIII and (insofar as they relate to ERISA or
the Code) Section 2.15 and Section 9.02; (c) until eighteen months after the
Closing Date in the case of all other representations and warranties and any
covenant or agreement to be performed in whole or in part on or prior to the
Closing or (d) with respect to each other covenant or agreement contained in
this Agreement, until sixty (60) days following the last date on which such
covenant or agreement is to be performed or, if no such date is specified,
indefinitely; provided that any representation, warranty, covenant or agreement
that would otherwise terminate in accordance with clause (b), (c) or (d) above
will continue to survive if an Indemnity Notice shall have been timely given
under Article XI on or prior to such termination date, until the related claim
for indemnification has been satisfied or otherwise resolved as provided in
Article XI; provided that if an Indemnity Notice shall have been given, the
underlying representation, warranty, covenant or agreement will terminate nine
months after the date that the Indemnity Notice is served unless a legal
proceeding has been commenced in a court of competent jurisdiction, in which
case the representation, warranty, covenant or agreement will survive until the
claim is fully and finally resolved.
ARTICLE XI
INDEMNIFICATION
11.01 Tax Indemnification. (a) Seller shall be responsible for
and indemnify and hold harmless the Purchaser Indemnified Parties from and
against (i) all Taxes of the Company for any taxable year or period (or portion
thereof) ending on or before the Closing Date, and (ii) all income Taxes arising
under treasury regulation Section 1.1502-6 or any analogous state, local or
foreign Tax provision. Seller's indemnification obligations pursuant to this
Section 11.01(a) shall, for the avoidance of doubt, cover any Losses borne by
the Purchaser Indemnified Parties with respect to any such Taxes, including any
interest and penalties with respect thereto, regardless of whether such
additional amounts relate to a taxable period prior to or subsequent to the
Closing Date.
(b) For purposes of this Section 11.01, whenever it is
necessary to determine the liability for Taxes of the Company for a portion of a
taxable year or period that begins before and ends after the Closing Date, the
determination of such Taxes for the portion of the year or period ending on, and
the portion of the year or period beginning after, the Closing Date shall be
determined (i) in the case of income Taxes, and any other Taxes not addressed in
clause (ii) below, based upon an interim closing of the books of the Company as
of the close of business on the Closing Date and (ii) in the case of real and
personal property Taxes, based upon the relative number of days in the portion
of the taxable period up to and including the Closing Date and the portion of
the taxable period subsequent to the Closing Date.
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11.02 Other Indemnification. (a) Subject to paragraph (c) of
this Section and the other Sections of this Article XI, Seller shall indemnify
the Purchaser Indemnified Parties in respect of, and hold each of them harmless
from and against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out of or
relating to any breach of representation or warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of Seller contained in
this Agreement.
(b) Subject to the other Sections of this Article XI,
Purchaser shall indemnify the Seller Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to any breach of representation or warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Purchaser contained in this Agreement.
(c) No amounts of indemnity shall be payable in the case of a
claim by a Purchaser Indemnified Party under Section 11.02(a) unless and until
the Purchaser Indemnified Parties have suffered, incurred, sustained or become
subject to Losses referred to in such Section in excess of $300,000 in the
aggregate, in which event the Purchaser Indemnified Parties shall be entitled to
claim indemnity for the full amount of such Losses.
(d) Seller's indemnity obligation under Section 11.02(a) shall
be limited to (i) $30,000,000 with respect to any Losses suffered by the
Purchaser Indemnified Parties as a result of a breach of Section 2.18 and (ii)
$10,000,000 with respect to any Losses suffered by the Purchaser Indemnified
Parties as a result of a breach of any other representations or warranties under
Article II. For purposes of clarification, in no event will Seller's indemnity
obligation under Section 11.02(a) exceed $30,000,000 in the aggregate.
(e) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under this Section 11.02 is asserted
against or sought to be collected from such Indemnified Party by a Person other
than a party hereto or any of its Affiliates (a "Third Party Claim"), then such
Indemnified Party shall give written notice to the latter of such Third Party
Claim, provided that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 11.02, except to the extent that the Indemnifying Party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, the Indemnifying Party shall be entitled
to participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party; provided that in order to assume the
defense of such action the Indemnifying Party must first deliver to the
Indemnified Party a notice of its election so to assume the defense thereof and
expressly agree in such notice that as between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be solely obligated to satisfy
and discharge any Liability or Loss resulting from such Third Party Claim,
subject to the limitations set forth herein. After such notice is received by
the Indemnified Party, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense of such Third Party Claim; provided that
the Indemnified Party may participate in such defense at the Indemnified Party's
expense. The Indemnifying Party will not be obligated to pay the fees and
expenses of more than one counsel for the
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Indemnified Parties with respect to any claim. The Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party, which consent will not be unreasonably
withheld or delayed. No Indemnifying Party shall be subject to any liability for
any settlement made without its consent, which consent shall not be unreasonably
withheld or delayed.
(f) In the event of any claim or demand, including Third Party
Claims, in respect of which an Indemnified Party might seek indemnity under this
Section 11.02, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. The Indemnifying Party will notify the
Indemnified Party within the thirty (30) day period following its receipt of
such Indemnity Notice (the "Dispute Period") as to whether the Indemnifying
Party disputes its liability to the Indemnified Party hereunder. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim described in such Indemnity Notice, the Loss specified in the Indemnity
Notice will be conclusively deemed a liability of the Indemnifying Party under
this Section 11.02 and the Indemnifying Party shall pay the amount of such Loss,
when it has been finally determined, to the Indemnified Party on demand. If the
Indemnifying Party disputes its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within sixty (60) days the parties may pursue their legal remedies.
ARTICLE XII
TERMINATION
12.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Seller and Purchaser;
(b) at any time before the Closing, by Seller or Purchaser, in
the event (i) of a material breach hereof by the non-terminating party if such
non-terminating party fails to cure such breach within five (5) Business Days
following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after October 30, 2000 by Seller or Purchaser
upon notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or
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before such date and such failure to consummate is not caused by a breach of
this Agreement by the terminating party.
12.02 Effect of Termination. If this Agreement is validly
terminated pursuant to Section 12.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Seller or
Purchaser (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to expenses in Section
14.03 and confidentiality in Section 14.05 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to Section 12.01(b), (c)
or (d), Seller will remain liable to Purchaser for any breach of this Agreement
by Seller existing at the time of such termination, and Purchaser will remain
liable to Seller for any breach of this Agreement by Purchaser existing at the
time of such termination, and Seller or Purchaser may seek such remedies,
including damages and fees of attorneys, against the other with respect to any
such breach as are provided in this Agreement or as are otherwise available at
Law or in equity.
ARTICLE XIII
DEFINITIONS
13.01 Definitions. (a) Defined Terms. As used in this
Agreement, the following defined terms have the meanings indicated below:
"Acquisition Proposal" means any proposal for a merger or
other business combination to which the Company or any Subsidiary is a party or
the direct or indirect acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary, other than the
transactions contemplated by this Agreement.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"Agreement" means this Stock Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with Sections 6.03 and 7.03, as the same shall be
amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or
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intangible, whether absolute, accrued, contingent, fixed or otherwise and
wherever situated), including the goodwill related thereto, operated, owned or
leased by such Person, including without limitation cash, cash equivalents,
Investment Assets, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
Intellectual Property.
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York are authorized or obligated
to close.
"Business or Condition of the Company" means the business,
condition (financial or otherwise), results of operations, Assets and Properties
and prospects of the Company and the Subsidiaries taken as a whole.
"Cash Payment" has the meaning ascribed to it in Section 1.02.
"Closing" means the closing of the transactions contemplated
by Section 1.03.
"Closing Date" means (a) the third Business Day after the day
on which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings described in Sections
6.04 through 6.06 and Sections 7.04 through 7.06 has been obtained, made or
given or has expired, as applicable, or (b) such other date as Purchaser and
Seller mutually agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company Assets" has the meaning ascribed to it in Section
4.12.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"Controlled Group" has the meaning ascribed to it in Section
2.15(c).
"December 31 Balance Sheet" means the balance sheet of the
Company and its consolidated subsidiaries as of December 31, 1999 referred to in
Section 2.09.
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"Disclosure Schedule" means the record delivered to Purchaser
by Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Seller pursuant to this Agreement.
"Dispute Period" has the meaning ascribed to it in Section
11.02(e).
"Environmental Law or Order" means any Law or Order relating
to the regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification
under any provision of Article XI.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XI.
"Indemnity Notice" means written notification pursuant to
Section 11.02(e) of a claim for indemnity under Article XI by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably determinable, the estimated amount, determined
in good faith, of the Loss arising from such claim.
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source
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codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
any Subsidiary and issued by any Person other than the Company or any Subsidiary
(other than trade receivables generated in the ordinary course of business of
the Company and the Subsidiaries).
"IRS" means the United States Internal Revenue Service.
"Knowledge of Seller" or "Known to Seller" means the knowledge
of Xxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxxxx Xxxxxxxx.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"License Agreement" has the meaning ascribed to it in Section
6.07.
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim, default
or assessment).
"Note No. 1" has the meaning ascribed to it in Section 1.02.
"Note No. 2" has the meaning ascribed to it in Section 1.02.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any
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kind convertible into or exchangeable or exercisable for any shares of capital
stock of such Person or (ii) receive or exercise any benefits or rights similar
to any rights enjoyed by or accruing to the holder of shares of capital stock of
such Person, including any rights to participate in the equity or income of such
Person or to participate in or direct the election of any directors or officers
of such Person or the manner in which any shares of capital stock of such Person
are voted.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of the
business of the Company or any Subsidiary.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Purchase Price" has the meaning ascribed to it in Section
1.02.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Purchaser Financial Statements" has the meaning ascribed to
it in Section 3.07.
"Purchaser SEC Reports" has the meaning ascribed to it in
Section 3.07.
"Purchaser Shares" has the meaning ascribed to it in Section
1.02.
"Purchaser Indemnified Parties" means Purchaser.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"Representatives" has the meaning ascribed to it in Section
4.03.
"Reseller Agreement" has the meaning ascribed to it in Section
6.08.
"SEC" has the meaning ascribed to it in Section 3.07.
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"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Seller Indemnified Parties" means Seller.
"Seller Plan" has the meaning ascribed to it in Section
2.15(a).
"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests in, or the voting control of,
such Person.
"Tax Returns" means a report, return or other information
(including any amendments) required to be supplied to a Governmental or
Regulatory Authority with respect to Taxes.
"Tax Sharing Agreement" means any agreement or arrangement,
whether or not written, providing for the sharing or allocation of liability for
Taxes of the parties thereto.
"Taxes" shall include any and all federal, state, county,
local, foreign or other taxes, charges, imposts, rates, fees, levies or other
assessments imposed by any Governmental or Regulatory Authority, including,
without limitation, all net income, alternative minimum, gross income, sales and
use, ad valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance, withholding or other taxes, fees, assessments or other similar
charges of any kind whatsoever, together with any interest and penalties (civil
or criminal) on or additions to any such taxes.
"Third Party Claim" has the meaning ascribed to it in Section
11.02(d).
"Transaction Documents" means the License Agreement, the
Reseller Agreement and any support or other agreements to be entered into in
connection with the transaction.
"Transfer Taxes" means all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
arising out of or in connection with the transactions effected pursuant to this
Agreement.
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of the Company or a Subsidiary. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
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ARTICLE XIV
MISCELLANEOUS
14.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
MetaCreations Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
If to Seller, to:
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: President
with a copy to:
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request
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46
or other communication is received by any other Person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
14.02 Entire Agreement. This Agreement and the Transaction
Documents supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof.
14.03 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 12.02), whether
or not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses, and Seller shall pay the costs and expenses of the
Company and the Subsidiaries, incurred in connection with the negotiation,
execution and closing of this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby.
14.04 Public Announcements. At all times at or before the
Closing, Seller and Purchaser will not issue or make any reports, statements or
releases to the public or generally to the employees, customers, suppliers or
other Persons to whom the Company and the Subsidiaries sell goods or provide
services or with whom the Company and the Subsidiaries otherwise have
significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the other, which consent
shall not be unreasonably withheld. If either party is unable to obtain the
approval of its public report, statement or release from the other party and
such report, statement or release is, in the opinion of legal counsel to such
party, required by Law in order to discharge such party's disclosure
obligations, then such party may make or issue the legally required report,
statement or release and promptly furnish the other party with a copy thereof.
Seller and Purchaser will also obtain the other party's prior approval of any
press release to be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.
14.05 Confidentiality. Each party hereto will hold, and will
use its best efforts to cause its Affiliates and their respective
Representatives to hold, in strict confidence from any Person (other than any
such Affiliate or Representative), unless (i) compelled to disclose by judicial
or administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning the Company and the
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47
Subsidiaries furnished by Seller hereunder. In the event the transactions
contemplated hereby are not consummated, upon the request of the other party,
each party hereto will, and will cause its Affiliates and their respective
Representatives to, promptly redeliver or cause to be redelivered all copies of
documents and information furnished by the other party in connection with this
Agreement or the transactions contemplated hereby and destroy or cause to be
destroyed all notes, memoranda, summaries, analyses, compilations and other
writings related thereto or based thereon prepared by the party furnished such
documents and information or its Representatives.
14.06 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
14.07 Amendment. This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.
14.08 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article XI.
14.09 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of its rights,
interests and obligations hereunder (including without limitation its rights
under Article XI) to (i) a wholly-owned subsidiary, provided that any such
subsidiary agrees in writing to be bound by all of the terms, conditions and
provisions contained herein, but no such assignment shall relieve Purchaser of
its obligations hereunder. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
14.10 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
14.11 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
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48
14.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
14.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
METACREATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxx X. Xxxx
Title: President and Chief Executive
Officer
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Vice President
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