EXHIBIT 2.01
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (this "AGREEMENT") is made as of October
31, 1995, by and between Integrated Systems, Inc., a California corporation
("ISI"), takeFive Software Gesellschaft m.b.H., an Austrian Corporation ("T5"),
and each of the persons holding or being a Trust Beneficiary of a share interest
in T5 as listed on Exhibit A (the "SHAREHOLDERS").
RECITALS
WHEREAS, the board of directors of ISI, T5 and the managing directors
and Shareholders of T5 deem it advisable and in the best interests of each such
corporation and its shareholders for ISI or ISI's Austrian subsidiary to acquire
and each of the Shareholders to exchange all of their share interests in T5 (the
"T5 Shares") on the terms and subject to the conditions set forth in this
Agreement and in accordance with the General Corporation Law of California for
common stock in ISI (the "ISI COMMON STOCK"); and
WHEREAS, ISI and each Shareholder desire to enter into an agreement to
ensure that the Shareholders do not compete directly or indirectly with ISI and
its Subsidiaries (including T5) or solicit any of their respective employees or
customers;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the parties hereto agree as
follows:
ARTICLE I
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, in addition to
the terms defined elsewhere in the Agreement (including in the Recitals), the
following terms will have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any note, bond or security issued by such Person or of any
mortgage, indenture, deed of trust, lease, license, franchise, contract,
agreement, instrument or undertaking to which such Person is a party or to which
it or any of its property or assets is subject.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
from time to time thereunder.
"FAIRNESS HEARING" means a fairness hearing before the
California Commissioner of Corporations pursuant to Section 25142 of the
Securities Law.
"GAAP" means generally accepted accounting principles in the
United States of America.
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"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"ISI AUSTRIAN SUBSIDIARY" means the Subsidiary formed under
the laws of Austria which is either directly or indirectly wholly-owned by ISI.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any kind
or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement or any financing lease having substantially the
same economic effect as any of the foregoing).
"MATERIAL ADVERSE EFFECT" (a) as used with respect to T5 means
a material adverse effect on the following: (i) the business, operations,
property or condition (financial or other) of T5 as a whole or (ii) the ability
of T5 to consummate the transactions contemplated by this Agreement or the
Related Agreements or perform its obligations hereunder or thereunder or (iii)
the ability of ISI to exercise its rights under this Agreement or the Related
Agreements or as a shareholder of T5 and (b) as used with respect to ISI means a
material adverse effect on the following: (i) the business, operations, property
or condition (financial or other) of ISI taken as a whole or (ii) the ability of
ISI to consummate the transactions contemplated by this Agreement or the Related
Agreements or perform their obligations hereunder or thereunder or (iii) the
ability of T5 to exercise its rights under this Agreement or the Related
Agreements.
"PERMIT" means a permit issued pursuant to Section 25110 of
the Securities Law after the Fairness Hearing.
"PERMIT APPLICATION" means the application for qualification
of the ISI Common Stock to be issued in the Transaction and application for the
Fairness Hearing, together with any other documents required by the Securities
Law in connection with the Exchange.
"PERSON" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other entity of
whatever nature.
"RELATED AGREEMENTS" means collectively each agreement entered
into by ISI and T5 in connection with this Agreement, including without
limitation the Employment Agreements, NonCompetition and NonSolicitation
Agreement, and Affiliate Agreements.
"REQUIREMENT(S) OF LAW" means, as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" means each statement or report filed by the
Company under the Exchange Act, each registration statement (including
amendments thereto), and any other document filed by T5 or any of its
Subsidiaries with the SEC pursuant to the Securities Act or the Exchange Act,
including all schedules and Company-prepared exhibits thereto.
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"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the SEC promulgated from
time to time thereunder.
"SECURITIES LAW" means the California Corporate Securities Law
of 1968, as amended.
"SHAREHOLDERS' EXPENSES" means: (i) all broker fees incurred
by the Shareholders as a result of the Transaction regardless of whether T5 or
the Shareholders are directly obligated by contract to pay such fees and (ii)
0.625% (one-half of 1.25%) of the GmbH stock transfer tax and fifty percent
(50%) of the notarial fees. Provided however, ISI or the ISI Austrian Subsidiary
shall be responsible for any additional transfer tax incurred as a result of ISI
electing to have the ISI Austrian Subsidiary acquire the T5 Shares.
"SUBSIDIARY" means, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person.
"T5 AFFILIATES" will mean the Shareholders and managing
directors of T5.
"TAX" OR "TAXES" mean, with respect to any Person, a net
income, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
transfer, occupation, premium, property or windfall profit tax, custom duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any jurisdiction or other taxing authority
(federal, state, local or foreign) on such Person.
1.2 OTHER DEFINITIONS. The capitalized terms used in this Agreement and
not defined in Section 1.1 are defined elsewhere in this Agreement.
ARTICLE II
EXCHANGE OF SHARES
2.1 EXCHANGE OF T5 SHARES. Subject to the terms and conditions of this
Agreement, all of the issued and outstanding shares of T5 Shares shall be deemed
to be transferred by the Shareholders, at the Closing, for shares of ISI Common
Stock ("TOTAL NUMBER OF SHARES OF ISI COMMON STOCK") as determined by dividing
the sum of fifteen million dollars ($15,000,000.00) less the Shareholders'
Expenses by the lower of (i) thirty-three dollars ($33.00) or (ii) the average
of the ISI closing price on the ten (10) business days ending one day prior to
the Closing Date (as reported on the Wall Street Journal) (the "TRANSACTION").
The "EXCHANGE RATIO" for the T5 Shares is the Total Number of Shares of ISI
Common Stock divided by 500,000. ISI shall issue to each Shareholder the number
of shares of ISI Common Stock determined by multiplying the percentage set forth
opposite of such Shareholder's name on Exhibit A by the Total Number of Shares
of ISI Common Stock.
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2.2 FRACTIONAL SHARES. No fractional shares of ISI Common Stock shall
be issued and such fractional interests shall not entitle the owner thereof to
vote. In lieu of any fractional share, each holder of T5 Shares who would
otherwise be entitled to receive a fraction of a share of ISI Common Stock will
be entitled to receive from ISI an amount of cash, without interest, equal to
the ISI Average Closing Price multiplied by the fraction of share of ISI Common
Stock to which such holder would otherwise be entitled.
2.3 ADJUSTMENTS FOR CAPITAL CHANGES. If on or after the date of this
Agreement, but on or prior to Closing, ISI recapitalizes through a stock split,
reverse stock split, or reorganizes, reclassifies or otherwise changes its
outstanding shares into the same or a different number of shares of other
classes, or declares a dividend on its outstanding shares payable in shares or
securities convertible into shares, the Total Number of Shares of ISI Common
Stock to be exchanged for T5 Shares will be adjusted appropriately so as to
maintain the proportionate interests of the Shareholders.
2.4 CLOSING. The closing of the Transaction (the "CLOSING") will take
place on October 31, 1995 after satisfaction or waiver of all of the conditions
set forth in Article VII that by their terms are not to occur at the Closing
(the "CLOSING DATE"), at the offices of Fenwick & West, Two Palo Alto Square,
Palo Alto, California, unless another date or place is agreed to in writing by
the parties hereto.
2.5 EFFECTS OF THE TRANSACTION. Subsequent to the Closing, at ISI's
option, T5 shall be a wholly owned Subsidiary of ISI or the ISI Austrian
Subsidiary.
2.6 ACCOUNTING TREATMENT. The business combination to be effected by
the Transaction is intended to be treated for accounting purposes as a "pooling
of interests." The Affiliates of T5 and ISI shall execute and deliver Affiliates
Agreements, respectively.
2.7 FAIRNESS HEARING.
(a) The ISI Common Stock to be issued in the Transaction shall
be qualified by the Permit after the Fairness Hearing and the issuance thereof
shall thereby be an exempt transaction under Section 3(a)(10) of the Securities
Act. As promptly as practicable after the date of this Agreement, ISI shall
prepare and file with the California Department of Corporations the Permit
Application. ISI shall also take any action required to be taken under any
applicable state securities or "blue sky" laws in connection with the issuance
of the ISI Common Stock in the Transaction. The Shareholders shall furnish to
ISI all information concerning T5 and the Shareholders as may be reasonably
requested in connection with any action contemplated by this Section 2.7. The
parties shall use their best efforts to take any actions required to be taken to
complete the Fairness Hearing and obtain the issuance of the Permit.
(b) Notwithstanding the foregoing, ISI reserves the right to
qualify the issuance of ISI Common Stock under a different SEC exemption in the
event a Fairness Hearing exemption is impracticable or unavailable, provided
that the Shareholders have substantially the same liquidity as the liquidity
obtained from a Fairness Hearing. The parties shall use their best efforts to
take any actions required to qualify under such alternative exemption.
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ARTICLE III
EXCHANGE OF CERTIFICATES
3.1 EXCHANGE. At the Closing, at ISI's option, ISI will, or will cause
its ISI Austrian Subsidiary to, deliver to each Shareholder a share certificate
registered in the name of such Shareholder for the number of shares of ISI
Common Stock that such Shareholder is entitled to receive pursuant to Section
2.1, as adjusted if applicable pursuant to Section 2.3.
3.2 NO FURTHER OWNERSHIP RIGHTS IN T5 SHARES. All ISI Common Stock
delivered in exchange for T5 Shares in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such shares of T5 Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND T5
Subject to the exceptions set forth in the letter delivered by T5 to
ISI concurrently herewith (the "EXCEPTIONS LETTER") attached hereto as Exhibit
B, T5 and the Shareholders represent and warrant to ISI, as of the date hereof
and as of the Closing Date, that:
4.1 DUE ORGANIZATION. T5 is (i) duly organized and validly existing
under the laws of Austria as registered under FN36.149K LG Salzburg and (ii)
duly qualified as a foreign corporation under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except to the extent that the failure to
qualify as a foreign corporation would not, in the aggregate with all such other
failures, have a Material Adverse Effect. T5 has the corporate power and
authority and the legal right to own and operate its property, to lease the
property it operates as lessee and to conduct its business as now being
conducted and as proposed to be conducted, except to the extent the failure to
have such power, authority or legal right would not, in the aggregate with all
such other failures, have a Material Adverse Effect.
4.2 CORPORATE POWER. Complete and correct copies of the Austrian
Registry Excerpt, the Articles of Association and Bylaws (or similar charter
documents), all attached hereto as Exhibit C, of T5, as amended to date, have
been delivered to ISI. T5 is not in default in the performance, observance or
fulfillment of any provision of its Articles of Association or Bylaws (or
similar charter documents).
4.3 GOOD TITLE. Upon delivery to ISI (or at ISI's direction, to the ISI
Austrian Subsidiary) of the notarial deed, duly executed by the Shareholders and
ISI (or the ISI Austrian Subsidiary, as applicable) in substantially the form of
a draft of which is attached hereto as Exhibit D, at the Closing the T5 Shares
will be duly and validly authorized and issued, fully paid and nonassessable and
ISI (or if applicable, the ISI Austrian Subsidiary) will be the owner of the T5
Shares free and clear of any adverse encumbrances or claims.
4.4 CAPITALIZATION. T5 is an Austrian Gesellschaft m.b.H., which is a
limited liability company. Shareholders own shares in T5 which are not embodied
in share certificates but such holdings are registered in the Austrian
commercial registry. The T5 Shares may be transferred by notarial deed. The
authorized share capital of T5 as of the date hereof consists only of ATS
500,000 shares. No person or entity owns or has rights to the T5 Shares or any
other
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security of T5 except for the Shareholders. All T5 Shares are duly authorized
and fully paid and the terms of the T5 Shares are as set forth in T5's Articles
of Association, a copy of which has been delivered to ISI. There are no
outstanding options, warrants, calls, rights, commitments or agreements of any
kind to which T5 is a party or by which it is bound obligating it to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of any class of, or other equity interests in, T5 or any
securities convertible or exchangeable into or evidencing the right to purchase
any shares of capital stock of any class of, or other equity interests in, T5 or
obligating T5 to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement.
4.5 NO CONFLICT. Except as set forth in Section 4.5 of the Exceptions
Letter, neither the execution, delivery or performance by the Shareholders and
T5 of this Agreement or any Related Agreement nor the consummation of the
transactions contemplated hereby and thereby and compliance by the Shareholders
and T5 with any of the provisions hereof and thereof will (a) require any
consent, approval or notice under, violate, conflict with, or result in a breach
of any provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration, or result in the creation of any Lien upon any
of the properties or assets of T5 under, any of the terms, conditions or
provisions of (i) the Articles of Association or Bylaws of T5; (ii) any Bank
Document (as defined in Section 4.16) or (iii) any Contractual Obligation of T5,
except with respect to any or all of (i), (ii) or (iii) (other than with respect
to any Bank Document or the loan documents and the transactions contemplated
thereby) (A) to the extent the failure to obtain any such consent or approval or
to give any such notice would not have a Material Adverse Effect, and (B) for
such violations, conflicts, breaches or defaults which would not, in the
aggregate with all other such failures, violations, conflicts, breaches and
defaults, terminations, accelerations and creations of liens, have a Material
Adverse Effect or (b) assuming compliance with the Requirements of Law
applicable to ISI, violate any Requirement of Law applicable to T5, the
violation of which would, in the aggregate with all other such violations, have
a Material Adverse Effect. Without limiting the foregoing, Section 4.5 of the
Exceptions Letter sets forth a complete description, including the financial
consequences to T5, of any rights, benefits or payments which may arise or be
accelerated with respect to employees, directors, officers or consultants of T5
or with respect to any other Person as a result of the consummation of the
transactions contemplated hereby.
4.6 GOVERNMENTAL CONSENTS. Except as specifically set forth in this
Agreement, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by the Shareholders and T5 in connection with the execution and
delivery of the Agreement and the Related Agreements or the consummation of the
transactions contemplated hereby by the Shareholders and T5, except for (a) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws and Austrian merger
control laws and (b) such other consents, orders, authorizations, filings,
approvals and registrations which if not obtained or made would not in the
aggregate have a Material Adverse Effect.
4.7 FINANCIAL STATEMENTS. T5 and the Shareholders have delivered to ISI
true and complete copies of (i) the audited unconsolidated balance sheets of T5
(a) at December 31, 1994, and (b) the subsequent eight (8) months ending
thereafter on August 31, 1995 (the "LATEST BALANCE SHEET"), accompanied by notes
and the certificate of Deloitte & Touche, independent certified public
accountants. The foregoing financial statements and notes are collectively
referred to herein as the "FINANCIAL STATEMENTS". Other than liabilities which
have arisen since the date of the Latest Balance Sheet in the ordinary course of
the business of T5 (none of which relates to a material liability for breach of
contract, breach of warranty, infringement of proprietary rights,
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lawsuits or similar claims), T5 does not have any material obligation or
liability (whether accrued, contingent, unliquidated or otherwise, whether or
not known to T5, whether due or to become due) which is not reflected on the
Latest Balance Sheet. T5 and the Shareholders do not know of the assertion of
any material liability against T5, viewed as a whole, of any nature not fully
reflected or reserved against in the Latest Balance Sheet or in the notes
thereto. T5 is not a guarantor, indemnitor or otherwise liable for any
indebtedness or other obligations of any other Person, firm or corporation. The
Financial Statements: (a) are in accordance with the books and records of T5;
(b) fairly present the results of the financial period of T5 at its date of
reference, and the general financial condition of T5 at the respective dates
therein indicated and the results of operations for the respective periods
therein specified; and (c) in the case of the audited Financial Statements only,
have been prepared in accordance with the Austrian Accounting Act (RLG) and
Austrian generally accepted accounting principles (GOB) applied on a consistent
basis.
4.8 ABSENCE OF CERTAIN CHANGES. Except for the transactions
contemplated hereby and except as set forth in the Exceptions Letter, since
August 31, 1995 (except where a later date is indicated below), T5 has conducted
its business only in the ordinary and usual course and there has not been:
(a) any change in the financial condition, properties, assets,
liabilities or operations of T5 which change by itself or in conjunction with
all other such changes, whether or not arising in the ordinary course of
business, has had or can reasonably be expected to have a Material Adverse
Effect on T5;
(b) any development, event or condition or combination of
developments, events or conditions relating to T5 of which T5 or the
Shareholders have knowledge which may result in a Material Adverse Effect;
(c) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the properties or business
of T5 taken as a whole;
(d) any declaration, setting aside or payment of any dividend
in respect of the share interests of T5 or any redemption or acquisition of such
share interests by T5 or other distribution of the assets of T5;
(e) any labor organization activity, termination of key
employees or other material disputes involving employees of T5;
(f) any change of accounting principles, practices or methods
of T5;
(g) other than sales or other dispositions in the ordinary
course of business, any sale, mortgage, pledge, subjection to Lien or other
disposition of assets of T5 which, individually or in any series of related
transactions, have a value in excess of fifty thousand dollars ($50,000);
(h) any amendment or termination of a material contract or
agreement to which T5 is a party, the effect of which is adverse to T5, taken as
a whole;
(i) any issuance of securities of T5;
(j) any increase in the compensation or severance arrangements
payable or to become payable by T5 to any of their directors, officers or key
employees other than increases in the ordinary course of business consistent
with prior practice;
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(k) any adoption of, or increase in, any bonus, incentive
compensation, share option plan and any adoption of, or increase in any pension,
profit sharing, or retirement, insurance, medical reimbursement or other
employee benefit plan, any employment agreement or severance arrangement or any
payment or arrangement made to, for or with any officers or key employees of T5,
other than increases made in the ordinary course of business consistent with
prior practice; or
(l) except as specifically contemplated by this Agreement, any
agreement by T5 to take any action described in this Section 4.8.
4.9 NO SUBSIDIARIES. Except as set forth in Section 4.9 of the
Exceptions Letter, T5 does not have any Subsidiaries or any equity interest,
direct or indirect, in any corporation, partnership, joint venture or other
business entity.
4.10 LEGAL PROCEEDINGS. T5 warrants that: (a) there is no pending or,
to the best of T5's and the Shareholders' knowledge, threatened claim, action,
lawsuit, administrative proceeding, arbitration, labor dispute or governmental
investigation ("LITIGATION") to which T5 is a party or by which any of T5's
material assets may be bound, which, if adversely determined, could have a
Material Adverse Effect, and (b) to T5's and the Shareholders' knowledge, no
facts exist that give rise to a valid claim against T5 for breach of an
obligation, or for violation of applicable law, rule or regulation, where such
claim could have a Material Adverse Effect. T5 is not subject to any judgment,
order, writ, injunction or decree of any court, arbitrator or other competent
governmental or regulatory authority. T5 has not been permanently or temporarily
enjoined by any order, judgment or decree of any court or other competent
governmental or regulatory authority from engaging in or continuing any conduct
or practice in connection with its business, nor requiring T5 to take any action
of any kind with respect to its business.
4.11 CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY REQUIREMENTS. T5
has, to T5's and the Shareholders' knowledge, complied with each Requirement of
Law promulgated by any Governmental Authority applicable to the operation,
conduct or ownership of the property or business of T5 (including, without
limitation, those relating to the offering and sale of securities, occupational
safety and health, equal employment practices, antitrust, consumer protection
and employee benefits and pensions), except where such failure to comply with
any such Requirement of Law would not reasonably be expected to have, in the
aggregate with all such failures, a Material Adverse Effect.
4.12 PROPERTIES; LIENS AND ENCUMBRANCES. T5 has no real properties
(except for leasehold interests, in which event the entity directly holding such
interest has a valid leasehold interest) and has marketable title to its other
properties and assets material to the business of T5 taken as a whole, subject
only to (a) statutory Liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not delinquent or
the validity of which is being contested in good faith by appropriate
proceedings, (b) Liens for Taxes not yet delinquent or the validity of which is
being contested in good faith by appropriate proceedings, (c) Liens to secure
any indebtedness reflected on the Company's August 31, 1995 audited balance
sheet, (d) property or assets acquired subject to Liens since August 31, 1995,
(e) Liens and defects in title that are not in the aggregate material to the
business, operations or condition (financial or other) of T5 taken as a whole
and (f) Liens reflected in the Exceptions Letter. The tangible personal property
owned, leased or rented by T5 and the intangible personal property owned or
licensed by T5 constitute all of the property now used in, and necessary for the
conduct of, the business of T5 in the manner and to the extent presently
conducted. All of the fixed assets and properties listed on the Latest Balance
Sheet, or thereafter acquired or currently used by T5, are in good operating
condition in all material respects and are free from any material defect.
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4.13 INSURANCE. T5 has maintained in full force and effect, with all
premiums due thereon paid, such policies of insurance and bonds in such amounts
and against such risks and losses which are disclosed in Section 4.13 of the
Exception Letter, as are generally maintained with respect to comparable
businesses and properties. Except as set forth in Section 4.13 of the Exceptions
Letter, T5 does not pay for or own any "key man" insurance on the life of any
employee. Set forth in Section 4.13 of the Exceptions Letter is a true and
complete list of all insurance policies carried by T5 at any time during the
past twelve (12) months with respect to the business, assets and operations of
T5, together with, in respect of each policy, the name of the insurer, the
number of the policy, the annual policy premium payable therefor, the limits of
coverage, the deductible amounts, if any, the expiration date, and each pending
claim thereunder, if any. Complete and correct copies of each current policy
have been delivered to ISI, and each policy shown as current is on the date
hereof in full force and effect.
4.14 U.S. GOVERNMENT CONTRACTS; EXPORT REGULATION.
(a) T5 does not have access to any classified information,
data or technology under any contract with the U.S. government, including,
without limitation, the military services; and,
(b) To the knowledge of T5 and the Shareholders, T5 has not
conducted its business in violation of either the Export Administration Act of
1979, as amended, or the Export Administration Amendment Act of 1981, as
amended.
4.15 INTELLECTUAL PROPERTY.
(a) Set forth in Section 4.15 of the Exceptions Letter is a
true and correct list of the following properties (hereinafter referred to as
"INTELLECTUAL PROPERTY RIGHTS"): (i) all United States and foreign patents
including any extensions, registrations, confirmations, reexaminations, reissues
or renewals thereof, and patent applications, and any divisions, continuations,
in whole or in part, therefor, of T5 ("Patents"); (ii) all registered trademarks
and service marks, and all pending applications therefore, of T5 ("TRADEMARKS");
(iii) all United States and foreign copyrights (the "COPYRIGHTS"); (iv) all
confidential information related to T5's business or its products or embodied in
any of its products ("TRADE SECRETS"); and (v) all permits, grants, licenses,
sublicenses, options, rights of first and subsequent refusal, outstanding offers
which, if accepted, would create a legal binding obligation of T5, and any other
rights, all relating to Patents, Trademarks, Copyrights, or Trade Secrets and
running from T5 to a Person, or from a third party to T5 ("LICENSE RIGHTS").
(b) Section 4.15 of the Exceptions Letter sets forth all of
the Intellectual Property Rights material to the conduct of the business of T5
as now conducted or proposed to be conducted. Section 4.15 of the Exceptions
Letter lists for each identified Intellectual Property Right the following
information: (i) the nature of such Intellectual Property Right; (ii) T5's
ownership interest in such Intellectual Property Rights; (iii) the jurisdiction
wherein each Intellectual Property Right is effective, and for each such
jurisdiction the applicable serial numbers and corresponding filing dates for
each such Intellectual Property Right, and, if applicable, the numbers and dates
corresponding to each approval, registration or grant, respectively; and (iv)
the identities of all licensees or licensors of any License Rights. Section 4.15
of the Exceptions Letter sets forth a list of all documents to which T5 is a
party, including all amendments thereto, representing the License Rights,
complete and correct copies of which have been delivered to ISI. Except as set
forth in Section 4.15 of the Exceptions Letter, T5 owns, whether pursuant to
assignment or otherwise, the entire right, title and interest in and to the
Patents, Trademarks, Copyrights and Trade Secrets, and, to T5's and the
Shareholders' knowledge, no such Patent,
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Trademark, Copyright or Trade Secret has been declared invalid, in whole or in
part, or abandoned, dedicated, disclaimed or allowed to lapse for non-payment of
fees or taxes or for any other reason. Except as set forth in Section 4.15 of
the Exceptions Letter or in agreements or other documents representing the
License Rights that are identified in Section 4.15 of the Exceptions Letter, to
T5's and the Shareholders' knowledge, (i) the License Rights are in full force
and effect and (ii) no such License Rights have been declared invalid in whole
or in part, or abandoned, dedicated, disclaimed or allowed to lapse for
non-payment of fees or taxes or for any other reason. Except as set forth in
Section 4.15 of the Exceptions Letter, T5 and the Shareholders are not aware of
any patents, trademarks, copyrights, or trade secrets held by any Person under
which a license is reasonably likely to be required in connection with the
conduct of the business of T5 or any Subsidiary, as now conducted or as
currently proposed to be conducted. Except as set forth in Section 4.15 of the
Exceptions Letter, T5 and the Shareholders do not have any notice of any adverse
claim of any Person with respect to any Intellectual Property Right or asserted
against or threatened to be asserted against T5 with respect to any Intellectual
Property Right.
4.16 MATERIAL CONTRACTS. Except for the documents listed on Section
4.16 of the Exceptions Letter, there is no written contract, debt instrument,
lease, employment agreement or collective bargaining agreement now in effect to
which T5 is a party which involves a commitment or liability in excess of
seventy-five thousand dollars ($75,000) or extending for a period of more than
six (6) months (each such contract, a "MATERIAL Contract"). (For the purposes of
this Agreement the term "BANK DOCUMENTS" refers to the bank agreements, credit
agreements, loan documents, guarantees, subordination agreements or other
contracts or documents, or Contractual Obligations, to which T5 is a party that
relate to indebtedness of seventy-five thousand dollars ($75,000) or more.) A
copy of each Material Contract has been delivered to ISI. To T5's and the
Shareholders' knowledge, to the extent T5 is a party thereto, each of the
Material Contracts is valid, binding, in full force and effect and enforceable
by T5 in accordance with its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and rules
of laws concerning equitable remedies. Except as otherwise described in the
Exceptions Letter, T5 is not in default in the performance of any of its
obligations under any Material Contract, except for defaults which, in the
aggregate with all such defaults, would not have a Material Adverse Effect. To
T5's and the Shareholders' knowledge, except as otherwise described in the
Exceptions Letter, no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default by T5 under any Material Contract or to T5's or the
Shareholders' knowledge by any other party thereto, except for defaults which in
the aggregate with all such defaults would not have a Material Adverse Effect.
4.17 CERTAIN AGREEMENTS. T5 is not a party to any (a) agreement with
any of its executive officers, other employees or any other Person (i) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of transactions of the nature contemplated by this Agreement
or any Related Agreement, or (ii) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the reason
for such termination of employment which are conditioned upon a change of
control or (b) agreement, instrument, option, warrant or plan, including,
without limitation, any share option plan, share appreciation rights plan, share
purchase plan or any other employee plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or any
Related Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or any Related Agreement. T5 and the Shareholders are not aware that
any officer or key employee (including those persons with the title "Vice
President"), or any group of key employees, intends to terminate their
employment with T5, and T5 does not have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and employee
of T5, subject to general principles related to wrongful termination of
employees, is terminable, to the best of T5's and the Shareholders' knowledge,
at the will of T5.
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4.18 EMPLOYEE MATTERS. Except as set forth in Section 4.18 of the
Exceptions Letter, T5 has no employment contract or material consulting
agreement currently in effect that is not terminable on minimum notice provided
for by Austrian law or whose lawful termination would result in any payment to
the terminated employee greater than the minimum amounts required by Austrian
law upon termination of an employee (other than agreements with the sole purpose
of providing for the confidentiality of proprietary information or assignment of
inventions). To the best knowledge of the Shareholders and T5, no employee of T5
is in violation of (a) any material term of any employment contract,
Intellectual Property Rights non-disclosure agreement or non-competition
agreement or (b) any material term of any other contract or agreement, or any
restrictive covenant, relating to the right of any such employee to be employed
by T5 or to use trade secrets or proprietary information of others. To the best
of the Shareholders' and T5's knowledge the mere fact of employment of any
employee of T5 does not subject T5 to any liability to any third party. A list
of all ongoing employees, officers and development consultants of the T5 and
their current compensation (salary and bonuses) is set forth in Section 4.18 of
the Exceptions Letter. Section 4.18 of the Exceptions Letter contains a list of
all pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance pans or other similar employee
benefit plans maintained by T5 (the "EMPLOYEE PLANS"). Each of the Employee
Plans, and their administration, is, in all material respects, in compliance
with all applicable national, municipal, local and other governmental laws and
ordinances, orders, rules and regulations and T5 is in full compliance with the
terms of all of the Employee Plans. All contributions due have been made or
accrued on the Financial Statements with respect to any pension or profit
sharing plan maintained by T5 except those contributions accruing after the
latest Balance Sheet in the ordinary course.
4.19 LABOR MATTERS. There is no works counsel at T5 or, to the
knowledge of T5 and the Shareholders, any ongoing efforts to establish a works
counsel at T5.
4.20 TAXES. T5 has filed all Austrian and other foreign tax and
information returns required to be filed, has paid all taxes required to be paid
in respect of all periods for which returns have been filed, has established an
adequate accrual or reserve for the payment of all taxes payable in respect of
all periods ending on or prior to the Latest Balance Sheet, has made all
necessary estimated tax payments to the extent payment is due and has no
liability for taxes in excess of the amount so paid or accruals or reserves so
established in the Financial Statements, except with respect to transactions
occurring after the Latest Balance Sheet. True and complete copies of all such
tax and information returns requested by ISI have been provided by T5 to ISI. T5
is not delinquent in the payment of any tax or in the filing of any tax returns,
and no deficiencies for any tax have been threatened, claimed, proposed or
assessed which have not been settled or paid. No tax returns of T5 have ever
been audited by the Austrian Revenue Service (equivalent to the IRS) or any
provincial taxing agency or authority. For the purposes of this Section, the
terms "TAX" and "TAXES" include without limitation all Austrian and foreign
corporation tax, income tax, capital gains, inheritance tax, value added tax,
customs duty, excise duty, national insurance, social security, pay as you earn
and stamp duty, franchise, property, sales, use, consumption, employment,
license, payroll, occupation, recording, or any other tax, duty, levy or impost
imposed by any statutory, governmental or municipal authority whatsoever
anywhere in the world (whether payable directly or by withholding), and, with
respect to such taxes, any estimated tax, interest and penalties or additions to
tax and interest on such penalties and additions to tax. T5 will not incur any
stamp duty tax or other similar tax or charge imposed by the Austrian taxing
authorities as a result of the Transaction.
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4.21 OTHER TRANSACTIONS. Except for the transactions contemplated with
ISI, or the ISI Austrian Subsidiary, pursuant to this Agreement, T5 (i) has not
reached agreement for the acquisition of all or any portion of the assets or
share interests (currently outstanding or to be issued) of any other entity and
(ii) has not reached agreement for the sale or acquisition of all or a
substantial portion of T5's assets or any portion of share interests (whether
currently outstanding or to be issued) by any other entity.
4.22 BROKERS, FINDERS, ETC. Except as set forth in Section 4.22 of the
Exceptions Letter, T5 and the Shareholders have not employed, nor are subject to
the valid claim of, any broker, finder or other financial intermediary, in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission.
4.23 FULL DISCLOSURE. T5 and the Shareholders have heretofore made all
of the corporate books, corporate records, agreements and other documents of T5
or portions thereof relating to the transactions contemplated by this Agreement
and the Related Agreements available to ISI for inspection and due diligence. To
the knowledge of T5 and the Shareholders, such corporate books and corporate
records, agreements and documents and all other documents and papers delivered
to ISI by or on behalf of T5 in connection with this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby, a list of which
is set forth in Exhibit E, are accurate, complete and authentic. Furthermore, to
the knowledge of T5 and the Shareholders, the representations and warranties of
T5 and the Shareholders in this Agreement and the Related Agreements and the
information contained in the foregoing materials and furnished to ISI by T5 and
the Shareholders in connection with this Agreement and the Related Agreements
and the transactions contemplated hereby and thereby do not contain any untrue
statement of a material fact and do not omit to state any fact necessary to make
the statements made, in the context in which they are made, not false or
misleading.
4.24 INDEBTEDNESS. Except as set forth in Section 4.24 of the
Exceptions Letter, T5 is not indebted to any Person in an amount exceeding fifty
thousand dollars ($50,000). Section 4.24 of the Exceptions Letter lists each
bank agreement, credit agreement, loan document, guarantee, subordination
agreement or other contract or document, or Contractual Obligation to which T5
is a party that related to indebtedness of fifty thousand dollars ($50,000) or
more.
4.25 ACCOUNTING MATTERS. To the best knowledge of T5 and the
Shareholders, neither T5 nor any of its Shareholders has taken or agreed to take
any action that without giving effect to any action taken or agreed to be taken
by ISI or any of its affiliates, would prevent ISI from accounting for this
business combination to be affected by the Transaction as a pooling of
interests.
4.26 ENVIRONMENTAL MATTERS. To the Shareholders' and T5's knowledge,
during the period that T5 has leased its properties, there have been no
disposals, releases or threatened releases of hazardous, toxic or other
dangerous materials ("HAZARDOUS MATERIALS") from or any presence thereof on such
properties which would have a Material Adverse Effect upon the business or
Financial Statements of T5. During the time that T5 has owned or leased its
properties, there has been no litigation, proceeding or administrative action
brought or threatened in writing against T5, or any settlement reached by T5
with, any party or parties alleging the presence, disposal, release or
threatened release of any Hazardous Materials on, from or under any of such
properties.
4.27 INFORMATION REVIEWED. T5 and the Shareholders have read all
documents that ISI has filed with the SEC and all press releases issued by ISI
in the last two (2) years.
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4.28 DUE DILIGENCE. T5 and the Shareholders have completed a due
diligence investigation of ISI to their satisfaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ISI
Subject to the exceptions set forth in the letter delivered by ISI to
T5 and the Shareholders concurrently herewith (the "ISI EXCEPTIONS LETTER"),
attached hereto as Exhibit F, ISI hereby represents and warrants to T5 and the
Shareholders, as of the date hereof and as of the Closing Date, that:
5.1 DUE ORGANIZATION. ISI (i) is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and (ii)
the corporate power and authority and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct its
business as now being conducted and as proposed to be conducted, except to the
extent the failure to have such power, authority or legal right would not, in
the aggregate with all such other failures, have a Material Adverse Effect.
5.2 CORPORATE POWER. ISI has all requisite corporate power and
authority to enter into and deliver this Agreement and each Related Agreement
and to perform its obligations hereunder and thereunder. ISI is not in default
in the performance, observance or fulfillment of any provision of its charter
documents. Complete and correct copies of the Articles of Incorporation and
Bylaws (or similar charter documents) of ISI, as amended to date, have been
delivered to T5. ISI is not in default in the performance, observance or
fulfillment of any provision of its Articles of Incorporation or Bylaws (or
similar charter documents).
5.3 CAPITALIZATION. The authorized capital of ISI as of August 31, 1995
is as set forth in the most recently filed 10Q (the "10Q") for the quarter
ending August 31, 1995. All ISI Common Stock is duly authorized and fully paid
and the terms of such Common Stock are as set forth in ISI's Articles of
Incorporation, a copy of which has been delivered to T5.
5.4 AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution, delivery
and performance by ISI of this Agreement and each Related Agreement and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action. Except as otherwise
contemplated by this Agreement, no other corporate action on the part of ISI is
necessary for the execution, delivery and performance by ISI, as applicable, of
this Agreement and each Related Agreement and the consummation by ISI, as
applicable, of the transactions contemplated hereby and thereby. This Agreement
and each Related Agreement has been duly executed and delivered by ISI, and this
Agreement and the Related Agreements constitute the legally valid and binding
obligations of ISI, enforceable against it in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.5 INVESTMENT INTENT. The share interests to be acquired by ISI (or if
applicable the ISI Austrian Subsidiary), pursuant to Article II are being
acquired by ISI (or if applicable the ISI Austrian Subsidiary), solely for its
own account, for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of such share interests, other than
in accordance with applicable securities laws.
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5.6 SOPHISTICATION. ISI (or if applicable, the ISI Austrian Subsidiary)
is able to bear the economic risk of an investment in the securities acquired by
it pursuant to this Agreement and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the proposed investment and therefore has the capacity to protect its own
interests in connection with the purchase of the securities. ISI (or if
applicable, the ISI Austrian Subsidiary) has had access to and has reviewed and
understood all material information, including financial statements, concerning
T5 that it deems necessary or advisable in order to evaluate the risks and
merits of entering into this transaction and acquiring the securities to be
issued hereunder. ISI (or if applicable, the ISI Austrian Subsidiary) has been
given the opportunity to ask questions and receive answers from T5, the
Shareholders, the officers and any Persons acting on behalf of T5 and the
Shareholders and has made such further investigation as it deemed appropriate
with respect to the transactions contemplated hereby.
5.7 BROKERS, FINDERS, ETC. ISI has not employed, nor is it subject to
the valid claim of any broker, finder or other financial intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission.
5.8 LEGAL PROCEEDINGS. ISI warrants that: (a) there is no pending or,
to the best of ISI's knowledge, threatened claim, action, lawsuit,
administrative proceeding, arbitration, labor dispute or governmental
investigation ("LITIGATION") to which ISI is a party or by which any of ISI's
material assets may be bound, which, if adversely determined, could have a
Material Adverse Effect, and (b) to ISI's knowledge, no facts exist that give
rise to a valid claim against ISI for breach of an obligation, or for violation
of applicable law, rule or regulation, where such claim could have a Material
Adverse Effect. ISI is not subject to any judgment, order, writ, injunction or
decree of any court, arbitrator or other competent governmental or regulatory
authority. ISI has not been permanently or temporarily enjoined by any order,
judgment or decree of any court or other competent governmental or regulatory
authority from engaging in or continuing any conduct or practice in connection
with its business, nor requiring ISI to take any action of any kind with respect
to its business.
5.9 GOVERNMENTAL CONSENTS. Except as specifically set forth in this
Agreement, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by ISI (or if applicable, the ISI Austrian Subsidiary) in
connection with the execution and delivery of the Agreement and the Related
Agreements or the consummation of the transactions contemplated hereby by ISI
(or if applicable, the ISI Austrian Subsidiary), except for (a) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws and (b) such other consents,
orders, authorizations, filings, approvals and registrations which if not
obtained or made would not in the aggregate have a Material Adverse Effect.
5.10 FINANCIAL STATEMENTS. ISI has delivered to T5 and the Shareholders
true and complete copies of (i) the audited consolidated balance sheets of ISI
for FYE February 28, 1995, and related consolidated statements of operation and
cash flows of ISI for the twelve (12) months then ended, accompanied by notes
and the certificate of Coopers & Xxxxxxx, independent certified public
accountants, and (ii) the unaudited consolidated balance sheets of ISI for
August 31, 1995 (the "LATEST BALANCE SHEET"), and the related consolidated
statement of operations and cash flows of ISI for the six-month period then
ended and 10Q's filed since the FYE February 28, 1995. The foregoing financial
statements and notes are collectively referred to herein as the "ISI FINANCIAL
STATEMENTS". The ISI Financial Statements are accurate and fairly present the
financial condition of ISI at the respective dates therein indicated and in the
case of the audited ISI Financial Statements only, have been prepared in
accordance with GAAP applied on a consistent basis.
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5.11 ABSENCE OF CERTAIN CHANGES. Except for the transactions
contemplated hereby and except as set forth in the ISI Exceptions Letter, since
August 31, 1995 (except where a later date is indicated below), ISI has
conducted its business only in the ordinary and usual course and there has not
been:
(a) any change in the financial condition, properties, assets,
liabilities or operations of ISI which change by itself or in conjunction with
all other such changes, whether or not arising in the ordinary course of
business, has had or can reasonably be expected to have a Material Adverse
Effect on ISI;
(b) any development, event or condition or combination of
developments, events or conditions relating to ISI of which ISI has knowledge
which may result in a Material Adverse Effect;
(c) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the properties or business
of ISI taken as a whole; or
(d) except as specifically contemplated by this Agreement, any
agreement by ISI to take any action described in this Section 5.11.
5.12 REGISTRATION ON FORM S-3. ISI currently qualifies for registration
of its Common Stock on SEC Form S-3.
5.13 DUE DILIGENCE. ISI has completed a due diligence investigation of
T5 to its satisfaction.
ARTICLE VI
COVENANTS
6.1 ADVICE OF CHANGES. From and after the date of this Agreement and
until the Closing or the earlier termination of this Agreement, each of the
parties will promptly advise the other parties in writing (a) of any event
occurring subsequent to the date of this Agreement that would render any
representation or warranty of that party contained in this Agreement or the
Related Agreements, as if made on or as of the date of such event, untrue or
incomplete in any material respect, (b) of any event having a Material Adverse
Effect with respect to the party and taken as a whole, and (c) of any breach by
the party of any covenant or agreement contained in this Agreement or the
Related Agreements.
6.2 CONDUCT OF BUSINESS. Except as permitted or required by this
Agreement, or otherwise consented to or approved in writing by ISI, during the
period commencing on the date hereof and until the Closing the Shareholders and
T5 covenant and agree to endeavor to preserve and conduct the operations of T5
and maintain the assets of T5 in a manner consistent with the ordinary course of
its business, and further covenant and agree not to take any action or to permit
any of T5's Shareholders, officers or directors to take any action that would
have a Material Adverse Effect with respect to T5. T5 will not enter into any
transaction or agreement or take any action out of the ordinary course of
business or enter into any transaction or make any commitment involving an
expense or capital expenditure by T5 in excess of fifty thousand dollars
($50,000) in the aggregate without ISI's prior consent. T5 will not sell,
license or encumber any of its tangible or intangible assets (except product
sales/licenses in the ordinary cause of business), declare any dividends, grant
share options, or rights to acquire any such options, shares or securities, or
make any commitments with respect to any of the foregoing, from the date hereof
until the Closing, except as the Shareholders, T5 and ISI shall mutually agree.
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6.3 CERTAIN DEFAULTS. From and after the date of this Agreement and
until the Closing, the Shareholders and T5 will give prompt notice to ISI of (a)
any notice of default received by T5 or the Shareholders under any material
instrument or agreement to which T5 is a party or by which T5 is bound, and (b)
any suit, action or proceeding instituted or threatened against or affecting T5.
6.4 SATISFACTION OF CONDITIONS PRECEDENT. Each of the parties will use
their best efforts to satisfy or cause to be satisfied all the conditions
precedent to the obligations of such other party, and the parties will use their
best efforts to cause the transactions contemplated by this Agreement to be
consummated.
6.5 FURTHER ACTIONS. Subject to the terms and conditions hereof, T5,
the Shareholders and ISI agree to use commercially reasonable efforts to obtain
all written consents, take, or cause to be taken, all action and to do, or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement and the
Related Agreements and to satisfy the conditions hereto and thereto.
6.6 BOARD OF DIRECTORS. (a) Upon the Closing, if duly appointed,
Xxxxxxxxx Xxxxxxxxxxxxx will continue as a director of T5. Concurrently with the
execution and delivery of this Agreement, each of the other directors will
deliver to T5 their executed written resignations as directors of T5, effective
as of the Closing. Subsequent to the Closing, the sole shareholder of T5 will
appoint Xxxxx Xxxxx and Xxxxx St. Xxxxxxx as T5 directors.
6.7 CONSENTS. The parties will diligently use their best efforts to
obtain as promptly as possible all consents, approvals, orders, waivers or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any court or any federal or state governmental authority or
third party required on the part of such party in connection with the
consummation of the transactions contemplated by this Agreement.
6.8 NO INTERIM ISSUANCE OF SECURITIES OR OTHER COMMITMENTS. During the
period commencing with the date of this Agreement and ending at the Closing, T5
will not, and the Shareholders will not cause T5, to (i) issue any share
interests or other securities or rights or commitments with respect to
securities of T5, (ii) make any changes in T5's salary and bonus plans, (iii)
enter into any "golden parachute" arrangements, (iv) approve increases in
salaries or make payments of bonuses, (v) approve any amendments to its Articles
of Association or Bylaws, and (vi) make any commitment by T5 with respect to
such foregoing actions, without first obtaining the written consent of ISI for
such actions or issuances, including the specific terms thereof.
6.9 SHAREHOLDER APPROVAL. The Shareholders shall agree to exchange
their respective T5 Shares for ISI Common Stock and execute the necessary
agreements to do so.
6.10 BINDING AGREEMENT. T5, the Shareholders and ISI agree that this
Agreement shall be binding on all parties, subject to satisfaction or waiver of
the conditions precedent to Closing, as specified in Article VII of this
Agreement. Each of the parties acknowledge that each party to this Agreement
would suffer irreparable damages in the event that any party fails to perform
its obligations under this Agreement or otherwise breaches the terms of this
Agreement. Therefore, each party shall have all remedies available at law and in
equity, including, but not limited to, injunctive relief and money damages,
notwithstanding Section 10.15 of this Agreement.
6.11 AFFILIATES. If not previously executed, the affiliate agreements
(the "AFFILIATE AGREEMENTS") in the form attached as Exhibit G will be executed
by the T5 Affiliates and ISI affiliates. ISI shall be entitled to place
appropriate legends on the certificate evidencing any shares
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of ISI Common Stock to be received by T5 Affiliates pursuant to the terms of
this Agreement and to issue appropriate stop transfer instructions to the
transfer agent for shares of ISI Common Stock consistent with the terms of the
Affiliate Agreements.
6.12 POOLING. Each party will not, nor will they cause any other party
to, take any action, whether before or after the Closing, which would disqualify
this Transaction as a pooling of interests for accounting purposes.
6.13 NONCOMPETITION AND NONSOLICITATION AGREEMENT. Subsequent to the
issuance of the Permit, each of the Shareholders and Xxxxxxxxx Xxxxxxxxxxxxx, as
a former T5 shareholder, shall enter into a mutually acceptable agreement to not
compete, directly or indirectly, with ISI and the ISI Austrian Subsidiary, if
applicable, or its Subsidiaries (including T5) or solicit any of their
respective employees or customers for a term of thirty (30) months (the
"NONCOMPETITION AND NONSOLICITATION AGREEMENT"), in a form attached hereto as
Exhibit H.
6.14 EMPLOYMENT AGREEMENTS. Subsequent to the issuance of the Permit,
employment agreements between T5, ISI and certain of the Shareholders (the
"EMPLOYMENT AGREEMENTS") attached hereto as Exhibit I, in a form mutually
agreeable to ISI, T5 and certain of the Shareholders, shall be executed and
delivered at Closing. The Employment Agreements shall provide for a two (2) year
term.
6.15 FORMAL NOTARIZATION. Subsequent to the issuance of the Permit, the
parties, including the ISI Austrian Subsidiary, if applicable, shall execute the
sale of T5 Shares in notarial form in accordance with the requirements of
applicable law.
6.16 TRUST BENEFICIARIES. To the extent that any Shareholders' T5
Shares are held in a trust, any individuals who are named beneficiaries of the
trust (the "TRUST BENEFICIARIES") shall also be obligated under this Agreement,
as a party hereto.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES. None of the parties
hereto will be obligated to consummate at the Closing any of the transactions
provided for herein if any preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States or by any United States or other Governmental Authority or of any
statute, rule, regulation or executive order promulgated or enacted by any
United States or other Governmental Authority which is in effect at the Closing
restrains, enjoins or otherwise prohibits the consummation of such transaction
at the Closing.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ISI. The obligation of ISI
to consummate at the Closing any of the transactions provided for herein is
subject to the satisfaction, at or prior to the Closing, of each of the
following additional conditions:
(a) Accuracy of Representations and Warranties. ISI will have
received a certificate of the Shareholders and T5, dated the date of the
Closing, that the representations and warranties of T5 and the Shareholders
contained herein are true and complete in all material respects as of the
Closing.
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(b) Managing Director's Certificate. ISI will have received
from the Shareholders and T5 a copy of the Articles of Association and Bylaws of
T5, certified by the Managing Director of T5, on behalf of the Shareholders and
T5, as in effect at all relevant times.
(c) Additional Documents and Matters. ISI will have received
each additional document, instrument, legal opinion or item of information
reasonably requested by ISI, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which T5 may be a
party and that is reasonably available to T5 as is necessary to close the
Transaction, complete the Fairness Hearing process, and to comply with any
obligations under this Agreement.
(d) Material Adverse Change in T5. There will not have
occurred after the date hereof any event resulting in a Material Adverse Effect
as to the business, operations, or financial condition of T5.
(e) Other Actions. The following actions will have been taken:
the consents, approvals, orders, waivers or authorizations, registrations,
qualifications, designations, declarations and filings will have been obtained
as provided in Section 6.7.
(f) Legal Opinion. ISI shall have received an opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel of the Shareholders and T5, in the
form and substance reasonably satisfactory to ISI, which may be based, in part,
on the legal opinion of T5's Austrian counsel.
(g) No Interim Issuance of Securities or Other Commitments.
During the period commencing with the date of this Agreement and ending at the
Closing, T5 will not, and the Shareholders will not cause T5, to (i) issue any
share interests, or other securities or rights or commitments with respect to
securities of T5, (ii) make any changes in T5's salary and bonus plans, (iii)
enter into any "golden parachute" arrangements, (iv) approve increases in
salaries or payments of bonuses, (v) approve any amendments to its Articles or
Bylaws, and (vi) make any commitment by T5 with respect to such foregoing
actions, without first obtaining the written consent of ISI for such actions or
issuances, including the specific terms thereof.
(h) Pooling of Interests, Representation Letters. The
Shareholders and T5 shall not have breached their representations in Section
4.25 or their covenant in Section 6.12 with the result that the Transaction will
not qualify for pooling of interest accounting treatment.
(i) Notarization. Subsequent to the issuance of the Permit, or
alternative qualification pursuant to Section 2.7(b), the Shareholders shall
have executed the sale of T5 Shares in notarial form in accordance with the
requirements of applicable law.
(j) Assignment of Inventions Agreements. All Shareholders,
officers, and all present and former development employees and consultants that
have been involved in the development of software at T5 have executed and
delivered to T5 an agreement regarding the protection of such proprietary
information and the assignment of inventions to T5 in form and substance
reasonably satisfactory to ISI.
(k) Share Interests. ISI shall be satisfied that the share
interests reflected in Exhibit A to this Agreement are true and accurate, in
accordance with Austrian law, and T5 and the Shareholders shall have provided
satisfactory proof of the title-chain and documentary evidence of all present
and previous shareholder consents to prior share transfers in accordance with
Austrian law.
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(l) Execution of the Agreement. Each of the Shareholders shall
have executed this Agreement.
7.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF T5 AND THE SHAREHOLDERS. The
obligation of the Shareholders and T5 to consummate at the Closing any of the
transactions provided for herein is subject to the satisfaction, at or prior to
the Closing, of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
Shareholders and T5 will have received a certificate of ISI, executed on behalf
of ISI by an executive officer thereof, dated the date of the Closing, that the
representations and warranties of ISI contained herein are true and complete in
all material respects at and as of the Closing.
(b) Legal Opinion. The Shareholders and T5 shall have received
an opinion of Fenwick & West, counsel to ISI, in the form and substance
reasonably satisfactory to the Shareholders.
(c) Tradeable Securities. The ISI Common Stock received by the
Shareholders in exchange for the T5 Shares shall be tradeable under Rule 145 of
the Securities Act in accordance with the provisions of Rule 145.
(d) Notarization. Subsequent to the issuance of the Permit,
ISI, and if applicable, the ISI Austrian Subsidiary, shall have executed the
sale of T5 Shares in notarial form in accordance with the requirements of
applicable law.
(e) Fairness Hearing. ISI shall have received the issuance the
Permit by the California Department of Corporations following a Fairness Hearing
for this Transaction and the issuance of the ISI Common Stock shall be an exempt
transaction under Section 3(a)(10) of the Securities Act, or in the alternative,
pursuant to Section 2.7(b) of this Agreement, ISI shall have qualified the
Transaction under an alternative exemption, provided the Shareholders have
substantially the same liquidity as the liquidity obtained from a Fairness
Hearing.
(f) Material Adverse Change in ISI. There will not have
occurred after the date hereof any event resulting in a Material Adverse Effect
as to the business, operations, or financial condition of ISI.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVERS
8.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned prior to the Closing:
(a) by mutual consent of ISI, the Shareholders and T5;
(b) by either ISI or the Shareholders and T5 prior to the
Closing, if all the conditions to that party's performance at the Closing will
not have been satisfied or waived by the close of business on October 31, 1995
other than as a result of a breach of this Agreement by the terminating party;
-23-
(c) by either ISI or the Shareholders and T5, if a permanent
injunction or other order by any federal or state court which would make illegal
or otherwise restrain or prohibit the consummation of the transactions provided
for in this Agreement will have been issued and will have become final and
nonappealable;
(d) by the Shareholders and T5, if any representations of ISI
in this Agreement (with such changes as may been made therein in compliance with
this Agreement) will be materially false or if ISI will have committed a
material breach of its obligations under this Agreement and will have failed to
cure such breach after reasonable notice thereof (but in any event within ten
(10) days after such notice).
(e) by ISI, if any representations of the Shareholders or T5
in this Agreement (with such changes as may been made therein in compliance with
this Agreement) will be materially false or if the Shareholders or T5 will have
committed a material breach of its obligations under this Agreement and will
have failed to cure such breach after reasonable notice thereof (but in any
event within ten (10) days after such notice).
8.2 PROCEDURE UPON TERMINATION. In the event of the termination of this
Agreement by any party in accordance with Section 8.1, such party shall promptly
give written notice thereof to the other parties hereto and this Agreement will
terminate and the transactions contemplated hereby will be abandoned without
further action by any of the parties hereto, except that Articles IV, V, IX and
X will survive any such termination.
8.3 AMENDMENT AND MODIFICATION; WAIVER. Subject to applicable law, this
Agreement may be amended, modified and supplemented by a written instrument
authorized and executed on behalf of ISI, the Shareholders and T5. No waiver by
either party of any of the provisions hereof will be effective unless explicitly
set forth in writing and executed by the party so waiving. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, will be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein and in
any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement will not operate or be construed as a
waiver of any other or subsequent breach.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. During the Indemnification Period (as defined
below), the Shareholders shall indemnify and hold harmless ISI and its
respective shareholders, Subsidiaries, officers, directors, agents, employees,
representatives, attorneys, successors and assigns (hereinafter referred to
individually as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED
PERSONS") from and against any and all losses, costs, damages, liabilities,
expenses, claims, demands, actions and causes of action, including, without
limitation, reasonable attorneys' fees and expenses and any diminution in the
value of securities owned by an Indemnified Person (hereinafter referred to as
"DAMAGES"), arising out of any inaccuracy or breach of or default in connection
with any of the representations or warranties at the time made or deemed to be
made, or any of the covenants or agreements made, by the Shareholders and T5 in
this Agreement or any Related Agreement. The Shareholders shall not be obligated
to provide indemnification under this Section 9.1 unless and until the aggregate
Damages for which one or
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more Indemnified Persons seeks such indemnification exceeds $200,000, in which
event the Shareholders shall be obligated to provide such indemnification for
those Damages and for all other Damages. The total liability hereunder for
Damages shall not exceed $3,000,000, which is twenty percent (20%) of the total
consideration of $15,000,000, as set forth in Section 2.1. Each Shareholder
shall be equally liable for the Damages except that no one Shareholder shall be
liable for any amount of Damages that exceeds the value of the ISI Common Stock
received by the Shareholder in exchange for the Shareholder's T5 Shares at the
time of Closing net of any tax and other payments made by the Shareholder
directly related to the Transaction. The amount of any Damages owed hereunder
shall be reduced by any ISI tax benefit that arises as a result of the Claim for
Indemnification (as defined below) and by any insurance proceeds received by the
Indemnified Person. The indemnification provided under this Section 9.1 will be
the sole remedy available to any Indemnified Person for any breach of the
representations and warranties made in this Agreement, other than for
intentional or fraudulent omissions or misstatements or willful misconduct. The
obligation of T5 to repay the subsidies received from the Austrian Government
shall give rise to a Claim for Indemnification as defined in Section 9.3 below.
9.2 INDEMNIFICATION PERIOD. The "INDEMNIFICATION PERIOD" shall mean
that period commencing on the date hereof and terminating: (i) after the
delivery to ISI of the first independent audit of T5 for the year ended February
29, 1996 following consummation of the combination, for items expected to be
encountered in the audit process (but such period to end no later than one (1)
year from the Closing Date) provided that ISI shall have a reasonable period of
time, not to exceed ninety (90) days, to review the audit results to determine
if any Claim for Indemnification exists or (ii) one (1) year from the Closing
Date for all other items. Provided however, in all cases as to matters which an
Indemnified Party has given written notice of a Claim for Indemnification (as
defined below) during the Indemnification Period of (i) or (ii), the
Indemnification Period with respect thereto shall continue until such Claim for
Indemnification is finally resolved and the Shareholders' indemnification
obligations under Section 9.1 hereof with respect thereto are fully satisfied.
9.3 PROSECUTION OR DEFENSE OF A CLAIM. After the receipt by an
Indemnified Person of notice or discovery of any claim, damage or legal action
or proceeding giving rise to indemnification rights under Section 9.1 hereof (a
"CLAIM FOR INDEMNIFICATION"), such Indemnified Person will give the Shareholders
written notice of the Claim for Indemnification in accordance with Section 9.4
hereof. Within the earlier of thirty (30) days after such written notice or ten
(10) days before any answer must be filed with the court respecting the Claim
for Indemnification, the Shareholders may, at their sole expense, elect to take
all necessary steps properly to contest and prosecute to conclusion the Claim
for Indemnification to the extent it involves third parties; provided, however,
that the Shareholders may only compromise or settle the Claim for
Indemnification if the Indemnified Person has granted prior written consent
thereto, which consent (a) shall not be unreasonably withheld and (b) shall be
deemed given by the Indemnified Person if such person does not respond within
thirty (30) days after receipt of written notice of such compromise or
settlement (or such shorter notice as may be reasonable under the
circumstances), but in no event (even in extreme circumstances) less than
forty-eight (48) hours after such receipt. If the Shareholders make the
foregoing election, then the Indemnified Person will have the right at its own
expense to participate in (but not to control or direct) all proceedings. If the
Shareholders do not make such election, then the Indemnified Person shall be
free to handle the prosecution or defense of such Claim for Indemnification. In
any case, the party not in control of a Claim for Indemnification will cooperate
with the other party in the conduct of the prosecution or defense of such Claim
for Indemnification.
9.4 NOTICE OF CLAIM FOR INDEMNIFICATION. Each notice of a Claim for
Indemnification by an Indemnified Person (the "NOTICE OF CLAIM FOR
INDEMNIFICATION") will be in writing and will contain, to the extent reasonably
available to such Indemnified Person, (i) an
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estimate of the maximum amount of the Damages (which amount may be revised by
such Indemnified Person at any time) and (ii) a brief description of the facts,
circumstances or events giving rise to the Damages, including, without
limitation, the identity and address of any third-party claimant and copies of
any formal demand or complaint.
9.5 RESOLUTION OF NOTICE OF CLAIM. Any Notice of Claim for
Indemnification delivered by an Indemnified Person to the Shareholders pursuant
to Section 9.4 hereof will be resolved as follows:
(a) In the event that the Shareholders do not contest in
writing to the Indemnified Person the underlying liability upon which a Notice
of Claim for Indemnification is based, the Shareholders shall pay to such
Indemnified Person within thirty (30) calendar days after that Notice of Claim
for Indemnification is delivered to the Shareholders the amount demanded
therein.
(b) In the event that the Shareholders give written notice
contesting all or a portion of a Notice of Claim for Indemnification to such
Indemnified Person (a "CONTESTED CLAIM FOR INDEMNIFICATION") within the thirty
(30) day period provided above, the Shareholders' liability under that Contested
Claim for Indemnification will be settled by binding arbitration as set forth in
Section 10.15 of this Agreement. The final decision of the arbitrator will be
furnished to the Shareholders, ISI and such Indemnified Person in writing and
will constitute a conclusive determination of the issue in question, binding
upon such parties.
(c) Any amount owed by the Shareholders to such Indemnified
Person hereunder shall be paid first by the return of a number of shares of the
ISI Common Stock determined. The total number of shares of ISI Common Stock to
be returned to ISI in payment of the amount owed by the Shareholders (the
"INDEMNITY SHARES") shall be determined by dividing the amount owed by the fair
market value of the ISI Common Stock on the Closing Date. Provided however, if
the ISI Common Stock is no longer held by the Shareholders or an insufficient
number of shares is held, the amount owed shall first be paid by the return of
ISI Common Stock held by the Shareholders (the "RETURNED SHARES") and then in
cash in U.S. dollars. The cash settlement to be paid to the Indemnified Person
is based upon the sum of the number of Indemnity Shares minus the number of
Returned Shares, multiplied by the fair market value of the ISI Common Stock on
the Closing Date.
(d) An Indemnified Party need not exhaust any other remedies
that may be available to it before it proceeds directly in accordance with the
provisions of this Article IX. The assertion of any single Claim for
Indemnification hereunder will not bar any Indemnified Person from asserting
other Claims for Indemnification hereunder.
ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation made by or on behalf of any party to this Agreement, all
representations and warranties contained in or made in writing by T5, the
Shareholders or ISI pursuant to this Agreement will survive the Closing.
10.2 EXPENSES; CERTAIN FEES; TAXES. ISI will pay the reasonable fees
and expenses (not to exceed an aggregate of One Hundred Thousand Dollars
($100,000)) of T5's and the Shareholders' accountants, attorneys, investment
advisors and other professionals incurred in connection with the negotiation,
preparation, execution and performance of this Agreement and the
-26-
Transaction contemplated thereby. Each of the parties shall be responsible for
its own income, sales and use taxes. ISI shall pay the Shareholders' Expenses
which reduce the purchase price in the calculation of the Total Number of Shares
of ISI Common Stock pursuant to Section 2.1 of this Agreement. In addition,
without reducing the purchase price, ISI shall be responsible for paying the
entire 2.5% of the GmbH stock transfer tax as well as fifty percent (50%) of the
notarial fees.
10.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given if delivered personally or
mailed, either by certified or registered mail with postage prepaid or by
national or international overnight courier, or sent by facsimile, as follows:
(a) if to the Shareholders, to:
To the address and fax number specified on the
signature page.
with a copy to: Shareholders' Attorneys
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
(b) if to T5, to:
TakeFive Software Gesellschaft m.b.H.
Xxxxx-Xxxxxxxx-Xxxxxxx 0
0000 Xxxxxxxx, Xxxxxxx
Facsimile: 43-662-4579156
Attn: Xxxxxxxxx Xxxxxxxxxxxxx
(a) if to ISI, to:
Integrated Systems, Inc.
0000 Xxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxxxxx, Vice President of Finance and
CFO
with a copy to:
Fenwick & Xxxx
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
or to such other Person or address as either party will specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications will be deemed to have
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been received (i) if given by personal delivery or by facsimile, on the date of
personal delivery or by facsimile , (ii) if by nationally or internationally
recognized overnight courier, on the fourth business day following dispatch.
10.4 ENTIRE AGREEMENT. This Agreement and the Related Agreements
(including the Exhibits hereto and thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof and thereof.
10.5 BINDING EFFECT, BENEFIT. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors,
assigns, executors and legal representatives. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.6 ASSIGNABILITY. This Agreement will not be assigned by either party
hereto without the prior written consent of the other parties and any attempt to
do so will be void.
10.7 SECTION HEADINGS. The Section headings contained in this Agreement
are inserted for reference purposes only and will not affect the meaning or
interpretation of this Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed to be an original, and all of which
together will be deemed to be one and the same instrument.
10.9 APPLICABLE LAW. This Agreement and the legal relations between the
parties hereto will be governed by and construed in accordance with the laws of
the State of California without regard to conflicts of laws principles thereof
to the extent that such principles would apply the law of another jurisdiction.
10.10 SEVERABILITY. In case any provision of this Agreement will be
invalid, illegal or unenforceable in any jurisdiction, then as to such
jurisdiction only, such provision will to the extent of such prohibition or
unenforceability be deemed severed from the remainder of this Agreement and the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired thereby.
10.11 NO WAIVER. No waiver of any breach or default hereunder of any
party hereto will be deemed a waiver of any default or breach subsequently
occurring.
10.12 REMEDIES NOT EXCLUSIVE. Except as otherwise provided in this
Agreement, no remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy and each remedy will
be cumulative and will be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise. No
remedy will be deemed to be a limitation on the amount or measure of damages
resulting from any breach of this Agreement. The election of any one or more
remedies will not constitute a waiver of the right to pursue other available
remedies.
10.13 INTERPRETATION. The words "include", "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation."
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10.14 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.15 ARBITRATION. Except as specifically provided in Section 6.11 of
this Agreement or elsewhere in this Agreement, any Contested Claim for
Indemnification and any other dispute under this Agreement or Related
Agreements, except for the Employment Agreements, shall be settled by mandatory
and binding arbitration pursuant to the arbitration provisions set forth below:
(a) Any dispute between the parties shall be settled by
arbitration (i) in Santa Xxxxx County, California if arbitration is requested by
T5 or the Shareholders, and (ii) in Frankfurt, Germany, if requested by ISI or
the ISI Austrian Subsidiary, if applicable, and, except as herein specifically
stated, in accordance with the commercial arbitration rules of the International
Chamber of Commerce ("ICC RULES") then in effect. However, in all events, the
provisions of this Agreement shall govern over any conflicting rules which may
now or hereafter be contained in the ICC Rules. Any judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction over
the subject matter thereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve a dispute between the parties.
(b) Any such arbitration will be conducted before a single
arbitrator who will be compensated for his or her services at a rate to be
determined by the parties or by the ICC, but based upon reasonable hourly or
daily consulting rates for the arbitrator in the event the parties are not able
to agree upon his or her rate of compensation.
(c) The ICC will have the authority to select an arbitrator
from a list of arbitrators who are partners in a nationally recognized firm of
independent certified public accountants from the management advisory services
department (or comparable department or group) of such firm or are partners in a
major law firm acceptable to all of the parties; provided, however, that such
firm cannot be the firm of certified public accountants then auditing the books
and records of either party or providing management or advisory services for
either party.
(d) The party initiating the arbitration proceedings will pay
one hundred percent (100%) of the initial compensation to be paid to the
arbitrator in any such arbitration and fifty percent (50%) of the costs of
transcripts and other normal and regular expenses of the arbitration
proceedings; provided, however, that the prevailing party in any arbitration
will be entitled to an award of attorneys' fees and costs, and all costs of
arbitration, including those provided for above, will be paid by the losing
party, and the arbitrator will be authorized to make such determinations.
(e) Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to the parties to the dispute, along
with a signed copy of the award. The arbitrator chosen in accordance with these
provisions will not have the power to alter, amend or otherwise affect the terms
of the arbitration provisions set forth herein or any other provision of this
Agreement or any Related Agreement. Except as specifically otherwise provided in
this Agreement, arbitration will be the sole and exclusive remedy of the parties
for any Contested Claim for Indemnification arising out of Article IX or any
other
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dispute concerning the provisions or performance of the Agreement or Related
Agreements. The final decision of the arbitrator will be furnished to the
parties in writing and will constitute a conclusive determination of the issue
in question, binding upon such parties.
10.16 ISI STOCK OPTION PLAN. The T5 employees shall be eligible for
stock options under any ISI stock option plans to the same extent as other
similarly situated employees of ISI and subject to the same conditions and
requirements as are other employees of ISI.
10.17 DISCLOSURE. ISI, T5 and the Shareholders agree not to make any
public announcement of this transaction without the approval of both ISI and T5,
such approval not to be unreasonably withheld. Each party agrees to take
reasonable actions to avoid any trading in ISI securities by such party's
respective officers, directors, employees and agents until October 31, 1995 or
that would be based on material nonpublic information that relates to the
proposed Transaction or that was learned in the due diligence process.
-30-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TAKEFIVE SOFTWARE GESELLSCHAFT M.B.H., THE SHAREHOLDERS
AN AUSTRIAN CORPORATION
Lavinia BV
By:___________________________________ By: __________________________________
___________________________________
Name:_________________________________ Name:_________________________________
Title:________________________________ Title:________________________________
Address:______________________________
______________________________________
Facsimile:____________________________
Xxxxxxxxx Xxxxxxxxxxxxx
______________________________________
as an individual and Trust Beneficiary
Address:______________________________
______________________________________
Facsimile:____________________________
Xxxxxxxxx Xxxxxxxxxxxxx Privatstiftung
By:___________________________________
Its:__________________________________
Address:______________________________
______________________________________
Facsimile:____________________________
-31-
______________________________________
Xxxxxxxxxx Xxxxxxxxxxxxx
Address:______________________________
______________________________________
Facsimile:____________________________
______________________________________
Xxxxx Xxxxx
Address:______________________________
______________________________________
Facsimile:____________________________
______________________________________
Peterne Bucsi
Address:______________________________
______________________________________
Facsimile:____________________________
______________________________________
Xxxxxx Xxxxxx
Address:______________________________
______________________________________
Facsimile:____________________________
______________________________________
Xxxxxx Xxxxx Korosine
Address:______________________________
______________________________________
Facsimile:____________________________
[SIGNATURE PAGE TO STOCK EXCHANGE AGREEMENT]
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INTEGRATED SYSTEMS, INC.,
A CALIFORNIA CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
[SIGNATURE PAGE TO STOCK EXCHANGE AGREEMENT]
-33-
Exhibits
A. T5 Shareholders
B. Exceptions Letter
C. Austrian Registry Excerpt, Articles of Association and Bylaws of T5
D. Notarial Deed
E. List of All Agreements and Documents Provided in Due Diligence.
F. ISI Exceptions Letter
G. Affiliate Agreements
H. Noncompetition and Nonsolicitation Agreement
I. Employment Agreements
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