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EXHIBIT 2
FORM OF EXECUTED STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("AGREEMENT") effective as of this 22nd day
of December, 2000, by and among MANUGISTICS, INC. a Delaware corporation
having its principal place of business at 0000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("PURCHASER"); MANUGISTICS GROUP, INC. a Delaware
corporation having its principal place of business at 0000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("MANUGISTICS GROUP"); STG HOLDINGS, INC., a
Delaware corporation having its principal place of business at The Hounslow
Centre, Xxxxxxx Road, Hounslow, Xxxxxxxxx, XX0 0XX, Xxxxxx Xxxxxxx (the
"COMPANY"); each of the stockholders of the Company listed on Exhibit A hereto
(individually, a "STOCKHOLDER" and collectively, the"STOCKHOLDERS" ); and
STRATHDON INVESTMENTS LIMITED, as agent and representative of each of the
Equity Holders (the "EQUITY HOLDERS' REPRESENTATIVE").
WITNESSETH:
WHEREAS, the Company and its subsidiaries, including without
limitation the subsidiaries listed on SCHEDULE 1 hereto (collectively, the
"SUBSIDIARIES" and, together with the Company, "STG" ), are engaged in the
business of providing software and services for advanced planning, scheduling
and simulation for all types of manufacturing and process companies; and
WHEREAS, the Stockholders are the owners of all of the issued and
outstanding shares of capital stock of the Company (the "SHARES"), which
Shares are owned by each of the Stockholders as set forth opposite such
Stockholder's name on EXHIBIT A hereto; and
WHEREAS, the Stockholders desire to sell to Purchaser, and Purchaser
desires to purchase from the Stockholders, all of the Shares on the terms and
conditions hereinafter set forth;
WHEREAS, Manugistics Group, which is the sole shareholder of the
Purchaser, has agreed to issue and deliver shares of its common stock as part
of the purchase price to be paid for the Shares, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties hereto agree as
follows:
1. SALE AND PURCHASE OF SHARES; DELIVERY OF CERTIFICATES.
1.1 Sale and Purchase of Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date (as defined in Section 2 hereof),
each Stockholder will sell, transfer, convey and assign to Purchaser,
and Purchaser will purchase from each Stockholder, all of the Shares
owned by such Stockholder as set forth opposite such Stockholder's
name on EXHIBIT A hereto, free and clear of any and all liens,
security interests, pledges, encumbrances, charges and restrictions
whatsoever. Purchaser shall have no obligation
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to purchase any Shares unless all of the Shares of all of the
Stockholders are assigned and delivered to Purchaser at Closing.
1.2 Delivery of Certificates. At the Closing (as defined in Section 2
hereof), each Stockholder shall deliver to Purchaser certificates
representing all of the Shares owned by such Stockholder
(collectively, the "CERTIFICATES"), each Certificate duly endorsed in
blank or with stock powers annexed thereto duly executed in favor of
Purchaser by the Stockholder, in proper form for transfer of the
Shares to Purchaser upon delivery.
2. CLOSING; CLOSING DATE.
2.1 The closing hereunder (the "CLOSING") shall take place at 10:00 a.m.
at the offices of Xxxxxxxx Xxxxxx LLP, 3200 Mellon Bank Center, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, on January 17, 2001,
or if earlier, the next business day after all of the conditions to
the respective obligations of the parties have been satisfied or
waived, or on such later date as the parties may mutually agree in
writing (the "CLOSING DATE").
2.2 If the Closing shall not have occurred by January 17, 2001 or such
later date as the parties may have agreed in writing, any party may
terminate this Agreement by written notice to the other parties, and
upon such termination no party shall have any obligation or liability
to the other parties in connection with this Agreement or the
transactions contemplated hereby.
3. PURCHASE PRICE.
3.1 As consideration for the purchase and sale of the Shares, Purchaser
shall pay a purchase price (the "PURCHASE PRICE") consisting of the
Base Consideration and the Performance Consideration, if any.
3.2 The "BASE CONSIDERATION" for the Shares shall consist of:
3.2.1 Immediately available funds equal to the sum of (a) U.S. $1,000,000
(the "CASH BASE CONSIDERATION"), which shall be paid by Purchaser on
the Closing Date to the Escrow Agent under an Escrow Agreement dated
as of the Closing Date, in substantially the form of EXHIBIT B hereto
(the "ESCROW AGREEMENT"), and held and disposed of in accordance with
the terms and conditions of the Escrow Agreement, (b) the fees and
expenses of X. X. Xxxxxx & Co. and Xxxxxx & Xxxxx, the solicitors
acting for the Stockholders, in the amounts set forth on Schedule
3.2.1 hereto, which shall be paid by Purchaser to such firms upon
receipt of invoices therefor (the "STOCKHOLDERS' LEGAL EXPENSE"), and
(c) the fees and expenses of Updata Capital, Inc. in the amount set
forth on Schedule 3.2.1 hereto, which shall be paid by Purchaser to
such firm upon receipt of invoices therefor (the "STOCKHOLDERS'
BROKERS EXPENSE"); and
3.2.2 Shares of the Common Stock of Manugistics Group, par value $.002 per
share ("MANUGISTICS COMMON STOCK"), which shall be delivered by
Purchaser to the Equity Holders' Representative on the First
Distribution Date, in an aggregate number of shares determined by
dividing (i) U.S.$5,000,000 less the amount of the Stockholders'
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Legal Expense and the Stockholders' Brokers Expense, by (ii) the
average closing price of Manugistics Common Stock for the ten-day
trading period ending on the fourth business day prior to the First
Distribution Date, rounded up or down to the nearest whole number
(the "STOCK BASE CONSIDERATION").
3.2.3 The Cash Base Consideration and the Stock Base Consideration payable
to each Stockholder shall be allocated among the Stockholders as set
forth in the Allocation Agreement.
3.3 The "PERFORMANCE CONSIDERATION" if any, for the Shares, shall be
calculated as follows:
3.3.1 The amount of the Performance Consideration will be based on the
Annual Revenue Rate of the STG Business Revenues (as defined below)
as determined over the 21-month period following the Closing Date,
commencing with the first day of the first month following the
Closing Date (the "PERFORMANCE PERIOD") as follows:
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Annual Revenue Rate of Total Performance
STG Business Revenues Consideration
(U.S.$ million) (U.S.$ million)
------------------------ -----------------------
up to 6.99 0
------------------------ -----------------------
7.00 to 7.99 1.1
------------------------ -----------------------
8.00 to 8.99 2.2
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9.00 to 9.99 3.4
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10.00 to 10.99 4.6
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11.00 to 11.99 5.9
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12.00 to 13.99 7.2
------------------------ -----------------------
14.00 to 15.99 10.1
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16.00 to 17.99 13.2
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18.00 to 19.99 16.5
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20.00 to 21.99 20.1
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22.00 to 23.99 23.9
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24.00 or more 27.9
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The Performance Consideration shall be an amount equal to:
- the quotient of (A less B) divided by (C less B)
- times (D less E)
- plus E
where: A is the Annual Revenue Rate for the Performance Period;
B is the lower number in the left-hand column in the range in
which the number A falls;
C is the higher number in the left-hand column in the range in
which the number A falls;
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D is the number in the right-hand column appearing immediately
below E; and
E is the number in the right-hand column opposite the range in
which the number A falls,
provided, however, that in no event shall the total amount of the Performance
Consideration exceed U.S. $27,900,000.
3.3.2 For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"ANNUAL REVENUE RATE" means the product of (x) the total STG Business
Revenues for the Performance Period, and (y) a fraction, the
numerator of which is 12 and the denominator of which is 21.
"MANUGISTICS" means Manugistics Group and its direct and indirect
subsidiaries, including without limitation Purchaser and, from and
after the Closing Date, STG.
"STG'S CLIENT BASE" means the customers and active prospects of STG
as of the Closing Date, excluding the existing customers of
Manugistics (and in the case of multi-national customers, as defined
by division, office location or geographic area), all as set forth in
SCHEDULE 3.3.2-A hereto.
"STG'S PRODUCTS" means the products of STG and the constituent
components of such products (including those presently under
development by STG) listed on SCHEDULE 3.3.2-B here, including any
modification of such products, additions to such products and
products derived from such products, and notwithstanding any renaming
of any of such products.
"STG BUSINESS REVENUES" means all or a percentage (as specified
below) of the revenues from the sale by Manugistics of products and
services to end users, product integrators, royalties from
distributors, technology partners and marketing partners (as
indicated by commitments to buy software and services in the form of
a signed purchase order and/or license agreement from end users, or
notification of sales achieved by distributors, technology and
marketing partners), which shall be determined by adding the three
components of STG Business Revenues set forth in paragraphs (a), (b)
and (c) below:
(a) A percentage of the net revenues from all sales during
the Performance Period to customers in STG's Client Base
of (x) Manugistics' current and future licensed software
products, (y) maintenance/solutions support services,
and (z) consulting services, calculated as follows -
(i) With respect to sales of Manugistics' licensed
software products to customers in STG's Client
Base, the following percentage of the net
revenue from such sales shall be included in
STG Business Revenues:
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(i) 50% of the first US $1,000,000 of such net
revenue during the Performance Period; (ii) 30%
of the next $500,000 of such net revenue during
the Performance Period; and (iii) 20% of all
such net revenue in excess of US $1,500,000
during the Performance Period. The "net
revenue" from sales of licensed software
products shall mean the gross revenue from such
sales less any royalties payable on arms-length
terms to third parties in connection with such
sales.
(ii) With respect to sales of
maintenance/solutions support services and
consulting services to customers in STG's
Client Base, the following percentage of the
net revenue from such sales shall be included
in STG Business Revenues: (i) 50% of the first
US $1,000,000 of such net revenue during the
Performance Period; (ii) 30% of the next
$500,000 of such net revenue during the
Performance Period; and (iii) 20% of all such
net revenue in excess of US $1,500,000 during
the Performance Period. The "net revenue" from
sales of consulting services shall mean the
gross revenues from such sale less (A) any
fully loaded internal costs of Manugistics
directly related to the provision of such
services, and (B) any fees and costs payable by
Manugistics to third parties to provide such
services. The "fully loaded internal costs" of
Manugistics will consist of (x) its direct
expenses associated with any employees
providing the consulting services, such as
compensation, benefits, payroll taxes, bonuses
and other incentives, recruiting, training,
telephone, travel and business meals, and (y)
its allocated expenses to cover the costs
associated with facilities, administrative
services, employee benefits (such as medical,
dental, vision, pension and 401K and similar
expenses), and technology infrastructure;
provided, however, that the allocated expenses
shall not exceed 25% of the direct expenses;
and provided further that the Purchaser will
provide a reasonably detailed explanation of
such internal costs to the Equity Holders'
Representative at his request. If the Equity
Holders' Representative disagrees with the
Purchaser's determination of the fully loaded
internal costs, the Equity Holders'
representative may refer the matter to the
Audit Team (as defined in Section 3.3.3 below).
The "net revenue" from sales of
maintenance/solutions support shall be
equivalent to the gross revenues from such
sales.
(b) A percentage of the net revenues from all sales during
the Performance Period to customers that are not in
STG's Client Base of (x) Manugistics' current and future
licensed software products, (y) maintenance/solutions
support services, and (z) consulting services (exclusive
of sales included under paragraph (c) below) which
involved the knowledge and expertise of Manugistics
personnel who were employed by STG immediately prior to
the Closing Date, if such personnel significantly
supported and otherwise significantly assisted in the
sale. The "net revenue" from such sales shall be
determined as set forth in paragraph (a) above. The
percentage of the net revenue from such sales to be
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included in STG Business Revenues shall be based on the
contribution that such former STG personnel made to such
sales (relative to the contribution made by all
Manugistics' personnel), as determined by the Audit
Team. In determining the contribution of the former STG
personnel and the appropriate percentage of net revenue,
the Purchaser shall consider whether such former STG
personnel qualified for any commission under any sales
incentive program of Manugistics and, if so, what
proportion of the aggregate commission on each sale was
allocated to such former STG personnel. The Audit Team
shall make their determination in writing promptly
following the end of each fiscal quarter of the Company.
(c) 100% of the net revenues from all sales during the
Performance Period to any customer of STG's Products and
related maintenance/solutions support services and
consulting services. The "net revenue" from such sales
shall be determined as set forth in paragraph (a) above;
and in determining the net revenue from the sale of
consulting services, the costs shall include any costs
reasonably incurred by Manugistics relating to
development work, modifications, tuning and new features
in connection with such consulting services.
Manugistics will provide a reasonably detailed
explanation of such costs to the Equity Holders'
Representative at his request. If the Equity Holders'
Representative disagrees with the Purchaser's
determination of such costs, the Equity Holders'
Representative may refer the matter to the Audit Team.
For purposes of calculating the STG Business Revenues, the revenues
from the sale of products and services shall only be included in the
calculation of the STG Business Revenues if such revenue is
recognized by Manugistics for financial statement purposes during the
Performance Period in accordance with generally accepted accounting
principles as in effect in the United States as applied by
Manugistics in accordance with past practice and the Revenue
Recognition Policies attached as EXHIBIT C hereto.
3.3.3 The Audit Team shall be a four member committee consisting of two
individuals designated by the Purchaser and two individuals
designated by the Equity Holders' Representative. The Audit Team
shall initially consist of Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxxxxxx,
Xxxxxxx Xxxxxx and Xxxxxxxx Hillsborough. If Xxxxxxx Xxxxxxxx or
Xxxxxxx Xxxxxxxxxxxx should leave the Audit Team for any reason,
Purchaser shall designate his or their replacements. If Xxxxxxx
Xxxxxx or Xxxxxxxx Hillsborough should leave the Audit Team for any
reason, the Equity Holders' Representative shall designate his or
their replacements. The Purchaser and the Equity Holders'
Representative will instruct their designees on the Audit Committee
to review all disputes referred to them and to attempt in good faith
to resolve them. If the Audit Committee is unable to resolve any
dispute within thirty (30) days of its referral to the Committee, the
Purchaser or the Equity Holders' Representative may initiate
arbitration proceedings with respect to such dispute under Section
12.2 hereof.
3.3.4 Not later than thirty (30) days after the end of the Performance
Period, Purchaser shall determine the amount of the Performance
Consideration in accordance with the terms of
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this Section 3.3 (the "PURCHASER'S DETERMINATION") and shall give
written notice of such determination to the Equity Holders'
Representative. The notice shall be accompanied by a report prepared
by or at the direction of Purchaser (the "STG REVENUE REPORT") which
shall include an accounting of the STG Business Revenues and the
calculations on which the Purchaser's Determination of the
Performance Consideration is based.
3.3.5 Unless within thirty (30) days after its receipt of the STG Revenue
Report the Equity Holders' Representative gives written notice to
Purchaser that the Equity Holders' Representative disputes the
Purchaser's Determination (a "DISPUTE NOTICE"), the Purchaser's
Determination shall be final and binding on Purchaser and all of the
Equity Holders. If within such thirty-day period the Equity Holders'
Representative gives a Dispute Notice to Purchaser, the Equity
Holders' Representative and Purchaser shall promptly enter into
discussions in good faith for the purpose of reconciling any
disagreements or differences that they may have relating to the STG
Revenue Report and the Purchaser's Determination. As part of these
discussions, Purchaser shall make available to the Equity Holders'
Representative and its accountants or other representatives (i) such
former STG personnel as the Equity Holders' Representative may
reasonably request; provided that such former STG personnel are then
employed by Manugistics and have information that is relevant to the
calculation of the Performance Consideration; and provided further
that the Purchaser shall have the right to be present at any meeting
between such former STG personnel and the Equity Holders'
Representative; and (ii) any books, records and other information (or
copies thereof) that they may reasonably request relating to the
determination of the STG Business Revenues and the calculation of the
amount of the Performance Consideration. The Equity Holders'
Representative and its accountants and other representative shall
keep all such information in strict confidence and shall not, without
the written consent of Purchaser, disclose or use such information to
any other Person or for any other purpose (except that the Equity
Holders' Representative may disclose such information to the Equity
Holders upon receipt of an agreement from the Equity Holders to be
bound by the terms of this Section 3.3.5, in form and substance
reasonably satisfactory to Purchaser, and may disclose such
information in any proceeding for the resolution of any dispute as to
the determination and amount of the Performance Consideration), and
shall return information to Purchaser promptly after the Purchaser's
payment of any Performance Consideration that is determined to be
due, or if it shall be determined that no Performance Consideration
is due, promptly after such determination. If the Equity Holders'
Representative and Purchaser have not been able to reach agreement on
the amount of the Performance Consideration within thirty (30) days
from the initiation of their discussions, either the Equity Holders'
Representative or Purchaser may refer the dispute to arbitration
pursuant to Section 12.2 hereof.
3.3.6 The Company, the Stockholders and Strathdon Investments Limited, as
representative of the holders of the Stock Rights (as defined in
Section 4.5.4 hereof) (such Person or his successor under the
Allocation Agreement being referred to as the "EQUITY HOLDERS'
REPRESENTATIVE") shall enter into an Allocation and Indemnification
Agreement and Appointment of Equity Holders' Representative dated as
of the Closing Date, in the form of EXHIBIT D hereto (the "ALLOCATION
AGREEMENT"), which shall be joined in by each of
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the holders of Stock Rights and which shall provide for, among other
things, (i) the cancellation and termination of any and all Stock
Rights held by such holders, and (ii) the allocation of the Base
Consideration and the Performance Consideration, if any, among the
Stockholders and the holders of the Stock Rights (the Stockholders
and the holders of the Stock Rights being collectively referred to
herein as the "EQUITY HOLDERS"). The Performance Consideration, if
any, shall be paid by Purchaser to the Equity Holders' Representative
under the Allocation Agreement, either in cash (U.S. dollars in
immediately available funds) or in shares of Manugistics Common
Stock, at the sole option of Purchaser. If Purchaser elects (or is
required) to pay the Performance Consideration in cash, the
Performance Consideration shall be paid to the Equity Holders'
Representative within ten (10) days after the final determination of
the amount thereof pursuant to Section 3.3.5 hereof, subject to
Sections 6(i) and 6(j) of the Allocation Agreement. If Purchaser
elects (and is permitted) to pay the Performance Consideration in
Manugistics Common Stock, the Performance Consideration shall be
delivered to the Equity Holders' Representative on the Second
Distribution Date, subject to Sections 6(i) and 6(j) of the
Allocation Agreement, and shall consist of that number of shares of
Manugistics Common Stock determined by dividing (i) the dollar amount
of the Performance Consideration by (ii) the average closing price of
Manugistics Common Stock (the "MANUGISTICS STOCK PRICE") for the
ten-trading day period ending on the fourth business day prior to the
Second Distribution Date, rounded up or down to the nearest whole
number. Notwithstanding the foregoing, the Performance Consideration
shall be paid to the Equity Holders' Representative in cash rather
than Manugistics Common Stock if (x) the Manugistics Stock Price is
less than $15 per share or more than $30 per share, as adjusted for
any stock splits or stock dividends with respect to Manugistics
Common Stock, or (y) any Person or Persons acting in concert acquire
more than thirty percent (30%) of the total voting rights attached to
all capital stock of Manugistics Group or the Purchaser, or (z)
Manugistics Group or the Purchaser becomes subject to any voluntary
or involuntary bankruptcy, reorganization or other insolvency
proceeding, or takes any steps for the winding up or liquidation of
its business, or is unable to pay its debts as they fall due, or
ceases to carry on its business; and upon the occurrence of any such
event under clauses (y) and (z), the Performance Consideration shall
become immediately due and payable based on the amount of the Annual
Revenue Rate as calculated by annualizing the total STG Business
Revenues realized over the period prior to the occurrence of such
event (rather than the full Performance Period).
3.4 Purchaser and the Stockholders and the other Equity Holders shall
enter into a Registration Rights Agreement dated as of the Closing
Date, in the form of EXHIBIT E hereto (the "REGISTRATION RIGHTS
AGREEMENT"), which shall provide for, among other things, (i) the
registration of the shares of Manugistics Common Stock to be
delivered to the Stockholders on the First Distribution Date, and
(ii) the registration of any shares of Manugistics Common Stock to be
delivered to the Equity Holders' Representative on the Second
Distribution Date, unless Purchaser elects or is required to pay the
Performance Consideration, if any, in cash.
3.5 The "First Distribution Date" and the "Second Distribution Date"
shall be determined as follows:
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3.5.1 The "FIRST DISTRIBUTION DATE" shall be the second business day after
the effective date of the registration statement for the shares of
Manugistics Common Stock comprising the Base Consideration, or such
other date as the Equity Holders' Representative and Purchaser may
agree in writing; provided, however, that if such registration
statement shall not have become effective within 180 days after the
Closing Date, the Equity Holders' Representative may at any time
thereafter request delivery of the shares of Manugistics Common Stock
comprising the Base Consideration notwithstanding the absence of such
an effective registration statement, and in such event the First
Distribution Date shall be the fifth business day after Purchaser's
receipt of such request.
3.5.2 The "SECOND DISTRIBUTION DATE" shall be the second business day after
the effective date of the registration statement for the shares of
Manugistics Common Stock comprising the Performance Consideration, if
any, or such other date as the Equity Holders' Representative and
Purchaser may agree in writing; provided, however, that if such
registration statement shall not have become effective within 180
days after the date of the final determination of the amount of the
Performance Consideration under Section 3.3.5 hereof (subject to
Sections 6(i) and 6(j) of the Allocation Agreement), the Equity
Holders' Representative may at any time thereafter request delivery
of the shares of Manugistics Common Stock comprising the Performance
Consideration notwithstanding the absence of such an effective
registration statement, and in such event the Second Distribution
Date shall be the fifth business day after Purchaser's receipt of
such request..
3.5.3 In the event that the Equity Holders' Representative requests
delivery of unregistered shares of Manugistics Common Stock pursuant
to Section 3.5.1 or 3.5.2 hereof, the following provisions shall
apply:
3.5.3.1 Purchaser may, at its option, pay the Base Consideration or
the Performance Consideration to the Equity Holders'
Representative in cash on the applicable Distribution Date.
3.5.3.2 If (i) Purchaser pays the Base Consideration or the
Performance Consideration by delivery of unregistered shares
of Manugistics Common Stock to the Equity Holders'
Representative, (ii) within one year thereafter such shares
are covered by an effective registration statement, and
(iii) the average closing price of Manugistics Common Stock
for the ten-day trading period ending on the fourth business
day prior to the date on which such registration statement
becomes effective (for purposes of this Section 3.5.3.2, the
"THEN-CURRENT MARKET PRICE") is less than price that was
used for the purpose of calculating the number of
unregistered shares delivered to the Equity Holders'
Representative, Purchaser shall, within two business days
after the effective date of such registration statement,
deliver to the Equity Holders' Representative such
additional shares (if any) of Manugistics Common Stock as
may be necessary to provide a total share value (determined
by valuing both the unregistered shares previously delivered
to the Equity Holders' Representative and such additional
shares at the Then-Current Market Price) equal to the amount
of the Base Consideration or the Performance Consideration,
as the case may be.
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3.5.3.3 If (i) Purchaser pays the Base Consideration or the
Performance Consideration by delivery of unregistered shares
of Manugistics Common Stock to the Equity Holders'
Representative, (ii) such shares are not covered by an
effective registration statement within one year thereafter,
and (iii) the average closing price of Manugistics Common
Stock for the ten-day trading period ending on such one year
anniversary date (for purposes of this Section 3.5.3.3, the
"THEN-CURRENT MARKET PRICE") is less than price that was
used for the purpose of calculating the number of
unregistered shares delivered to the Equity Holders'
Representative, Purchaser shall, within two business days
after such one year anniversary date, pay to the Equity
Holders' Representative cash in an amount equal to the
difference between (i) the amount of the Base Consideration
or the Performance Consideration, as the case may be, and
(ii) the value of the unregistered shares previously
delivered to the Equity Holders' Representative based on the
Then-Current Market Price.
3.6 Except as expressly set forth in Section 3.7 hereof, each Stockholder
hereby acknowledges and agrees that Manugistics shall have sole
discretion with respect to all decisions and plans that may affect
the level of the STG Business Revenues and that Manugistics shall
have no duty or obligation at any time after the Closing and during
the Performance Period to make any expenditures or commit resources
of any kind (including without limitation financial, management,
marketing or technical support) to (i) maintain, support or promote
the development, marketing, distribution, sale or licensing of STG's
products and services, (ii) maintain, support or promote the sale or
licensing of Manugistics' products and services to customers in STG's
Client Base, or (iii) otherwise increase the level of the STG
Business Revenues. Each Stockholder hereby releases Manugistics from
any and all claims that such Stockholder may ever have regarding the
amount of the Performance Consideration payable hereunder based on
Manugistics' actions with respect to STG's business following the
Closing, except to the extent such actions are in violation of
Section 3.7 hereof.
3.7 Purchaser covenants that, from the Closing Date until the end of the
Performance Period:
3.7.1 Purchaser will not sell or otherwise transfer to any other Person any
shares of capital stock of the Company or any of the Subsidiaries or
all or any substantial part of the assets or business of STG;
provided, however, that Purchaser shall be permitted (i) to transfer
such shares or assets to one or more other wholly owned subsidiaries
of Manugistics Group, so long as such transfer will not interfere
with the ability of Purchaser to determine the STG Business Revenues
and calculate the amount of the Performance Consideration, and (ii)
to pledge or otherwise encumber such shares or assets in connection
with any debt issuance or other financing for Manugistics;
3.7.2 Purchaser will not, and will not permit the Company or any Subsidiary
(other than STG South Africa, STG Pacific or any inactive Subsidiary)
to, take any steps for the winding up, liquidation or dissolution of
its business or allow receivership, bankruptcy, reorganization or
other insolvency proceedings to be commenced with respect to its
assets or business;
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3.7.3 Purchaser will not, and will not permit Manugistics to, establish any
bonus or other compensation arrangements that are designed to
discourage or create disincentives for Manugistics' personnel to sell
Manugistics' products and services to any customer in STG's Client
Base or to sell STG's products and services to any customer.
3.7.4 Purchaser will not, and will not permit Manugistics to, terminate the
employment of any of the STG employees listed on SCHEDULE 3.7.4-A
hereof prior to the end of the Performance Period, except for cause
(as defined in SCHEDULE 3.7.4-B hereof), and will not, and will not
permit Manugistics to, materially change the scope of such employees'
duties or their status prior to the end of the Performance Period
unless Purchaser determines in good faith that such change is in the
best interests of developing and promoting the business of
Manugistics.
3.7.5 Not later than March 31, 2001, Purchaser shall grant stock options to
certain STG employees for not less than 236,000 shares of Manugistics
Common Stock, with the allocation of such stock options among such
STG employees as previously agreed by the Company and Purchaser. The
stock options shall be subject to the usual terms and conditions for
Manugistics' employee stock options, including provision for vesting
over a four-year period at the rate of 25% per year on each
anniversary of the grant of the option.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS REGARDING STG.
As used herein the term "to the knowledge" of the Company shall mean,
with respect to any statement herein, to the actual knowledge of any executive
officer or any member of the board of directors of the Company or any
Subsidiary. This Agreement, the Escrow Agreement, the Allocation Agreement and
the Registration Rights Agreement are collectively referred to in this
Agreement as the "TRANSACTION DOCUMENTS." Each Stockholder represents and
warrants to Purchaser that as of the date hereof, subject to the exceptions
set forth in the letter dated January 16, 2001 from the Company, on behalf of
itself and the Stockholders, to Purchaser (the "DISCLOSURE LETTER"), a copy of
which is attached hereto as EXHIBIT 4, and subject to the provisions and
limitations of Section 6 of the Allocation Agreement:
4.1 Organization, Charter Documents, Etc. of the Company. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power
and authority, corporate or otherwise, to own, lease and operate its
properties and to carry on its business as and in the places where
such properties are now owned, leased or operated or such business is
now being conducted. Complete and correct copies of the Certificate
of Incorporation of the Company and all amendments thereto, certified
in each case by the Secretary of State of the state of incorporation,
and of the By-laws of the Company and all amendments thereto,
certified by the Secretary of the Company, have been heretofore
delivered to Purchaser, and there have been no amendments to such
documents since the date of such delivery. The Company is duly
qualified to do business and is in good standing in the jurisdictions
listed in paragraph 4.1 of the Disclosure Letter, which are the only
jurisdictions in which such qualification is necessary because of the
character of the properties owned, leased or operated by it or the
nature of its activities. The Company has taken no action and has
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not failed to take any action, which action or failure would preclude
or prevent Purchaser from conducting the business of the Company in
the manner heretofore conducted. Except for the stock of the
subsidiaries listed in paragraph 4.1 of the Disclosure Letter, the
Company does not own any capital stock, warrants, options, equity
interests, rights to participate in profits, notes, debentures,
bonds, rights, options, calls or any guarantees thereof or any
obligations or instruments evidencing the rights to purchase or
effect a conversion into any contract, commitment, instrument,
understanding or obligation, whether written, oral, express or
implied, relating to the issuance or transfer of any thereof whether
or not such may be authorized, issued or outstanding ("SECURITIES")
in any natural person, corporation, business, trust, firm,
association, partnership, joint venture, entity, or organization
("PERSON").
4.2 Organization, Charter Documents, Etc. of Subsidiaries. The Company
holds all of the issued and outstanding shares of stock of each of
the Subsidiaries, free and clear of any lien or encumbrance. The
Company does not hold fifty percent (50%) or more of the voting
Securities of any Person other than the Subsidiaries. Each Subsidiary
is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation or organization and has all requisite power and
authority, corporate or otherwise, to own, lease and operate its
properties and to carry on its business as and in the places where
such properties are now owned, leased or operated or such business is
now being conducted. Complete and correct copies of the Certificate
of Incorporation of each Subsidiary and all amendments thereto,
certified in each case by the Secretary of State of the jurisdiction
of incorporation or organization, and of the By-laws of each
Subsidiary and all amendments thereto, or equivalent corporate
governance documents, have been heretofore delivered to Purchaser,
and there have been no amendments to such documents since the date of
such delivery. Each Subsidiary is duly qualified to do business and
is in good standing in the jurisdictions listed in paragraph 4.2 of
the Disclosure Letter, which are the only jurisdictions in which such
qualification is necessary because of the character of the properties
owned, leased or operated by it or the nature of its activities. Each
Subsidiary has taken no action and has not failed to take any action,
which action or failure would preclude or prevent Purchaser from
conducting the business of such Subsidiary in the manner heretofore
conducted. Except as set forth in paragraph 4.2 of the Disclosure
Letter, no Subsidiary owns any Securities or any interest in any
Person.
4.3 Corporate Power. The Company has all requisite power and authority to
enter into the Transaction Documents to which it is a party and to
assume and perform its obligations thereunder. The execution and
delivery by the Company of the Transaction Documents to which it is a
party and the performance by the Company of its obligations
thereunder have been duly and validly authorized by all necessary
corporate action of the Company and no further action or approval,
corporate or otherwise is required in order to constitute the
Transaction Documents as valid, binding and enforceable obligations
of the Company. The execution and delivery of the Transaction
Documents, the consummation of the transactions contemplated thereby,
the fulfillment of the terms, conditions or provisions thereof and
the compliance with the terms, conditions or provisions thereof (i)
do not and will not conflict with, or violate any provision of the
Certificate of
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Incorporation or By-laws or equivalent corporate governance documents
of the Company or any Subsidiary, and (ii) except as set forth in
paragraph 4.11 of the Disclosure Letter, do not and will not conflict
with, or result in any breach of, any term, condition or provision
of, or constitute a default under, or give rise to any right of
termination, modification, cancellation or acceleration under
(whether after the giving of notice or lapse of time or both), any
contract, mortgage, lien, lease, agreement, indenture, license,
franchise, instrument, order, judgment or decree to which the Company
or any Subsidiary is a party of which is binding upon the Company or
any Subsidiary, and (iii) will not be in violation of any statute,
law, rule or regulation applicable to the Company or any Subsidiary,
and (iv) will not result in the creation or imposition of any lien,
charge, pledge security interest or any encumbrance upon any of the
assets of STG.
4.4 Authorization. No action, approval, consent or authorization,
including, but not limited to, any action, approval, consent or
authorization by, or filing with, any governmental or
quasi-governmental agency, commission, board, bureau or
instrumentality or any Person is necessary or required in connection
with the execution and delivery of the Transaction Documents by the
Company, the consummation of the transactions contemplated thereby or
in order to constitute the Transaction Documents as valid, binding
and enforceable obligations of the Company in accordance with their
respective terms.
4.5 Capitalization.
4.5.1 The authorized capital stock of the Company consists of (A)
45,000,000 shares of Common Stock, par value $0.01 per share ("STG
COMMON STOCK"), of which 2,069,930 shares are issued and outstanding,
and no shares are held in the treasury of the Company; (B) 100,000
shares of Class A Preferred Stock, par value $0.01 per share, of
which 63,074 shares are issued and outstanding, and no shares are
held in the treasury of the Company; (C) 400,000 shares of Class B
Preferred Stock, par value $0.01 per share, of which 385,207 shares
are issued and outstanding, and no shares are held in the treasury of
the Company; (D) 1,700,000 shares of Class C Preferred Stock, par
value $0.01 per share, of which 878,824 shares are issued and
outstanding, and no shares are held in the treasury of the Company;
and (E) 500,000 shares of Class D Preferred Stock, par value $0.01
per share, of which 162,500 shares are issued and outstanding, and no
shares are held in the treasury of the Company (such classes of
Preferred Stock being collectively referred to herein as "STG
PREFERRED STOCK"). Such issued and outstanding shares constitute all
of the issued and outstanding shares of capital stock of the Company.
All outstanding capital stock of the Company was issued and is issued
in compliance with all applicable federal, state and foreign
securities laws.
4.5.2 There are issued and outstanding options and warrants (vested and
nonvested) to purchase and acquire, in the aggregate, 4,762,460
shares of STG Common Stock (collectively, the "STG COMMON STOCK
OPTIONS"). Paragraph 4.5.2 of the Disclosure Letter sets forth a list
of (1) all holders of STG Common Stock Options; and (2) the number of
shares of STG Common Stock represented by the STG Common Stock
Options.
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4.5.3 There are issued and outstanding options and warrants (vested and
nonvested) to purchase and acquire, in the aggregate, 173,740 shares
of Class C Preferred Stock (collectively, the "STG CLASS C PREFERRED
STOCK OPTIONS"). Paragraph 4.5.3 of the Disclosure Letter sets forth
a list of (1) all holders of STG Class C Preferred Stock Options; (2)
the number of shares of STG Class C Preferred Stock represented by
the STG Class C Preferred Stock Options; and (3) the number of shares
of STG Common Stock into which the shares of STG Class C Preferred
Stock underlying the STG Class C Preferred Stock Options are
convertible.
4.5.4 Except for the STG Preferred Stock, the STG Common Stock Options and
the STG Class C Preferred Stock Options, or as otherwise set forth in
paragraph 4.5.4 of the Disclosure Letter, there are no outstanding
subscription rights, convertible securities, stock options, warrants,
equity interests, stock appreciation rights, phantom stock rights,
profit participation rights or similar rights with respect to the
Company or any class or series of the capital stock of the Company
(collectively, the "STOCK RIGHTS"). Upon the execution and delivery
of the Allocation Agreement by the parties thereto, all existing
Stock Rights will be cancelled and terminated.
4.5.5 All of the issued and outstanding capital stock of each Subsidiary is
owned by the Company and there are no outstanding subscription
rights, convertible securities, stock options, warrants, equity
interests, stock appreciation rights, phantom stock rights, profit
participation rights or similar rights with respect to any Subsidiary
or any class or series of the capital stock of any Subsidiary.
4.5.6 All of the issued and outstanding shares of capital stock of the
Company and each Subsidiary are validly issued, fully paid and
nonassessable. Each share of the capital stock of the Company and
each Subsidiary is free and clear of any lien, charge, security
interest, pledge, option, right of first refusal, voting proxy or
other voting agreement, or encumbrance of any kind or nature imposed
by the Company, other than restrictions on transfer imposed by
applicable federal, state and foreign securities laws. Except for the
dividends accrued on the STG Preferred Stock, there are no dividends
declared or accrued, but not paid, in respect of any of the shares of
the capital stock of the Company.
4.6 Financial Statements. Attached to the Disclosure Letter are (a) the
consolidated balance sheet of the Company and its subsidiaries as of
March 31, 2000 and the consolidated profit and loss account of the
Company and its subsidiaries for the fiscal year then ending
(collectively, the "MARCH 31, 2000 FINANCIAL STATEMENTS"), which have
been audited by PricewaterhouseCoopers, independent certified public
accountants, and have been prepared in accordance with generally
accepted accounting principles as in effect in the United Kingdom
("UK GAAP") consistently applied throughout the periods indicated;
(b) the consolidated balance sheet of the Company and its
subsidiaries as of March 31, 1999 and March 31, 1998 and the
consolidated profit and loss account of the Company and its
subsidiaries for the fiscal years then ending (collectively, the
"PRIOR FINANCIAL STATEMENTS"), which have been audited by
PricewaterhouseCoopers, and have been prepared in accordance with UK
GAAP consistently applied throughout the
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periods indicated; and (c) the consolidated balance sheet of the
Company and its subsidiaries as of November 30, 2000 and the
consolidated profit and loss account of the Company and its
subsidiaries for the seven-month period then ending (collectively,
the "NOVEMBER 30, 2000 FINANCIAL STATEMENTS"). The Prior Financial
Statements and the March 31, 2000 Financial Statements are
hereinafter referred to collectively as the "FINANCIAL STATEMENTS".
The Financial Statements fairly, completely and accurately present
the financial condition of the Company and its subsidiaries at the
dates specified or the results of its operations for the periods
covered. The November 30, 2000 Financial Statements have been
prepared in a manner consistent in all material respects with the
March 31, 2000 Financial Statements and fairly reflect the financial
condition of the Company and its subsidiaries as of such date. The
Company has not made any material changes in the accounting policies
that its uses to prepare its financial statements since March 31,
2000.
4.7 Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any indebtedness, liabilities or obligations whether
accrued, absolute, contingent, liquidated or unliquidated, and
whether due or to become due, which are required to be reflected on
their consolidated financial statements under UK GAAP and which (i)
are not reflected in or reserved against on the March 31, 2000
Financial Statements, or (ii) did not arise in the ordinary course of
business after the date of the March 31, 2000 Financial Statements,
or (iii) are otherwise disclosed in the Disclosure Letter.
4.8 Absence of Adverse Changes. Except as reflected in the November 30,
2000 Financial Statements or as set forth in paragraph 4.8 of the
Disclosure Letter, since March 31, 2000 there have been no adverse
changes in the assets, liabilities or earnings of the Company and its
Subsidiaries, and neither the Company nor any Subsidiary has:
4.8.1 authorized, issued, sold or converted any Securities, or entered into
any agreement with respect thereto;
4.8.2 incurred any damage, destruction or similar loss, whether or not
covered by insurance, adversely affecting its respective business,
assets or properties;
4.8.3 other than in the ordinary course of business, sold, assigned,
transferred or otherwise disposed of any of their tangible or
intangible assets or intellectual properties, including, without
limitation, any patent, trademark, trade name, copyright, license,
franchise, design or other intangible asset or intellectual property
right;
4.8.4 other than in the ordinary course of business, mortgaged, pledged,
granted or suffered to exist any lien or other encumbrance or charge
on any of their assets or properties, tangible or intangible;
4.8.5 other than in the ordinary course of business, waived any rights of
material value or cancelled, discharged, satisfied or paid any debt,
claim, lien, encumbrance, liability or obligation, whether absolute,
accrued, contingent or otherwise and whether due or to become due;
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4.8.6 incurred any obligation or liability (absolute or contingent,
liquidated or unliquidated, cheat or inchoate), except current
obligations and liabilities incurred in the ordinary course of its
business;
4.8.7 other than in the ordinary course of business, leased or effected any
transfer of any of its respective assets, properties or rights;
4.8.8 other than in the ordinary course of business and consistent with
past practices, entered into, made any amendment of, or terminated
any lease, contract, license or other agreement to which it is a
party;
4.8.9 amended its Certificate of Incorporation or By-laws (or equivalent
corporate governance documents);
4.8.10 effected any change in its accounting practices or procedures;
4.8.11 paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement, arrangement or
transaction of any nature with, any of its stockholders, officers or
directors or any business or Person in which any of its stockholders,
officers or directors or any "AFFILIATE" or "ASSOCIATE" (as such
terms are defined in the Rules and Regulations of the Securities and
Exchange Commission promulgated under the Securities Act of 1933, as
amended) of any such Person has any direct or indirect interest,
except for regular compensation paid to the stockholders or any
affiliates of the stockholders who are also employees of the Company
or any Subsidiary;
4.8.12 paid any bonus or similar payment or increased the compensation
payable to any of its directors, officers or employees or became
obligated to increase any such compensation, except for stay bonuses
equal to one month's salary to be paid to employees on earlier of
December 31, 2000 and the sale of STG;
4.8.13 had any resignation of any director, officer or employee, the lost of
which would be, or has had, a material adverse effect on the business
of STG;
4.8.14 had any termination of any consulting contract or similar agreement
by any consultant, the termination of which has had or is likely to
have a material adverse effect on the business of STG;
4.8.15 entered into any other material transaction other than in the
ordinary course of business and consistent with past practices, or
changed in any material way its business policies or practices; or
4.8.16 obtained knowledge of any event or circumstance reasonably likely to
result in a material adverse change in its business, assets,
prospects, earnings, net worth or financial condition.
4.9 Title to and Sufficiency of Assets. The Company and the Subsidiaries
own outright, and have good and marketable title to, all of their
respective assets, free and clear of any
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mortgage, lien, pledge, charge, claim, conditional sale or other
agreement, lease, right or encumbrance of any sort except as shown on
or reserved against the March 31, 2000 Financial Statements, and such
assets constitute all of the assets required for the Company and the
Subsidiaries to carry on their business as it has been conducted.
4.10 Taxes. The Company and each Subsidiary have duly filed all national,
state, provincial, county, local and foreign income, excise, sales,
property, withholding, social security, franchise, license,
information returns and other tax returns and reports required by law
to have been filed by the Company or such Subsidiary, respectively,
to the date hereof. Each such return is true, correct and complete in
all material respects and the Company and each Subsidiary has paid
all taxes (including without limitation any customs duties or related
charges) which it is required by law to pay taxing authorities with
respect to all periods prior to the date of the March 31, 2000
Financial Statements required to have been paid by the Company and
each Subsidiary and created sufficient reserves or made provision for
all thereof accrued but not yet due and payable by it. Neither the
Company nor any Subsidiary has any liability for any taxes,
assessments, amounts, interest or penalties of any fiscal nature
whatsoever except as reserved against the March 31, 2000 Financial
Statements and, to the knowledge of the Company, there is no basis
for any additional claim or assessment other than with respect to
liabilities for taxes which may have accrued in the ordinary course
of business since the date of the March 31, 2000 Financial
Statements. No government or governmental authority is now asserting
or, to the knowledge of the Company, threatening to assert any
deficiency or assessment for additional taxes or any interest,
penalties or fines with respect to the Company or any Subsidiary.
Complete and correct copies of the U.S. federal income tax returns
and U.K. tax returns of the Company and each Subsidiary required to
file such tax returns for the years ended March 31, 1998, 1999 and
2000 have been heretofore delivered to Purchaser or its accountants.
Neither the Company nor any Subsidiary has any liability for, and
there is no basis for any claim or assessment for, any taxes,
assessments, amounts, interest or penalties arising out of or
relating to (i) cross-border debt balances among the Company and its
Subsidiaries, except as reserved against in the March 31, 2000
Financial Statements, or (ii) any determination that any consultant
to the Company or any Subsidiary should be deemed an employee of the
Company or such Subsidiary.
4.11 Contracts. Except only those contracts, agreements and commitments
listed and described in paragraph 4.11 of the Disclosure Letter
(complete and correct copies of each of which have been heretofore
delivered to Purchaser), neither the Company nor any Subsidiary is a
party to, and has no, contract, agreement or commitment of any kind
or nature whatsoever, written or oral, formal or informal, of the
following kind:
4.11.1 any sales, advertising, license (other than licenses for
"off-the-shelf" software licensed to the Company or any Subsidiary),
franchise, distribution, dealer, agency, manufacturer's
representative, or similar agreement, or any other contract that
involves the payment of a commission;
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4.11.2 any pension, profit-sharing, bonus, stock purchase, stock option,
retirement, severance, hospitalization, accident, insurance or other
similar plan, arrangement or agreement involving benefits to current
or former employees;
4.11.3 any contract or commitment for the employment of any employee or
consultant or any commitment for the payment of any severance or
termination pay (including, without limitation, change of control or
"golden parachute" provisions);
4.11.4 any collective bargaining agreement or other contract with any labor
union;
4.11.5 any material contract or commitment for the purchase by the Company
or any Subsidiary of services, materials, supplies, merchandise,
inventory or equipment from any other Person;
4.11.6 any material contract or commitment for the sale by the Company or
any Subsidiary of any of its services, products or assets to any
other Person;
4.11.7 any mortgage, indenture, promissory note, loan agreement, guaranty or
other contract or commitment for the borrowing of money or for a line
or letter of credit;
4.11.8 any contract or commitment with any stockholder or any current or
former director, officer or employee of the Company or any Subsidiary
which will be in effect on the Closing Date;
4.11.9 any material contract or commitment with any government or
governmental department, agency, bureau or instrumentality thereof;
4.11.10 any contract pursuant to which the right of the Company or any
Subsidiary to compete with any other Person in the conduct of
business anywhere in the world is restrained or restricted for any
reason or in any way;
4.11.11 any material contract or commitment guaranteeing the performance,
liabilities or obligations of any Person;
4.11.12 any contract which provides for the indemnification of any officer,
director, employee or agent of the Company or any Subsidiary by the
Company or such Subsidiary;
4.11.13 any material contract or commitment for capital improvements or
expenditures or with any contractor or subcontractor;
4.11.14 any contract creating or relating to any partnership or joint venture
or any sharing of revenues, profits, losses, costs or liabilities
with any Person other than the Company or a Subsidiary;
4.11.15 any material contract or commitment for charitable contributions;
4.11.16 any lease or other agreement or commitment pursuant to which the
Company or any Subsidiary is a lessee of, or holds or operates, any
real property, machinery, equipment,
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motor vehicles, office furniture, fixtures or similar personal
property owned by any third party;
4.11.17 any contract relating to the Intellectual Property or Licensed
Intellectual Property (as those terms are defined below) (except for
licenses for "off-the-shelf" software licensed to the Company or any
Subsidiary); or
4.11.18 any other material contract or commitment, whether or not in the
ordinary course of business.
For purposes of this Section 4.11, a contract, commitment or other
agreement shall be considered "material" if such contract, commitment
or other agreement requires payments over the term thereof
aggregating in excess of US $50,000 or requires the performance of
services or sale of products for more than one year (including any
periods covered by any options to renew by any other Person) unless
such contract, commitment or other agreement can be terminated
without liability to the Company or such Subsidiary on ninety days or
less written notice
Except as set forth in paragraph 4.11 of the Disclosure Letter, (i)
each of the contracts, commitments and other agreements referred to
therein is in full force and effect and, to the knowledge of the
Company, is enforceable against the other parties thereto in
accordance with its terms, (ii) neither the Company, any Subsidiary
nor any other party thereto is in default thereunder and no claim of
default by any party has been made or is now pending, and (iii) to
the knowledge of the Company, no event exists which, with or without
the lapse of time or the giving of notice, or both, would constitute
a breach or default, cause acceleration of any obligation, would
permit the termination or excuse the performance by any party
thereto. The execution, delivery and performance of the Transaction
Documents by the Company and the Subsidiaries will not violate,
result in a default under, or require the consent of any other Person
under, any of the contracts, commitments and other agreements listed
in paragraph 4.11 of the Disclosure Letter.
The Company and the Subsidiaries possess or have adequate contractual
arrangements required to secure all intellectual property, personnel
and other resources necessary to perform fully each material contract
and commitment within the time permitted thereby and all other
material terms thereof, without incurring costs materially in excess
of the compensation to be received by the Company and the
Subsidiaries for such performance.
4.12 Inventory. Except as set forth in paragraph 4.12 of the Disclosure
Letter, any inventory included in the assets reflected on the March
31, 2000 Financial Statements was determined in accordance with UK
GAAP consistently applied, stated at the lower of cost or market
value, and consists solely of merchandise usable or salable in the
ordinary course of business at not less than gross cost.
4.13 Accounts. Except as set forth in paragraph 4.13 of the Disclosure
Letter, each account receivable reflected on the March 31, 2000
Financial Statements constitutes a bona fide receivable resulting
from a bona fide sale to a customer in the ordinary course of
business. The books and records of the Company and each Subsidiary
state correctly
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each account receivable of the Company or such Subsidiary and the
balance due thereon. To the knowledge of the Company, no defenses,
counterclaims, offsets, refusals to pay or other rights of setoff
against any such accounts receivable have been asserted or
threatened. Except to the extent of appropriate reserves and
allowances which the Company has established specifically for
doubtful accounts (which reserves and allowances are as set forth on
the November 30, 2000 Financial Statements), each account receivable
existing on the date hereof will be paid in full by no later than the
90th day after the date hereof. Such reserves and allowances have
been established on the basis of historical experience in accordance
with UK GAAP consistently applied.
4.14 Real Property. Neither the Company nor any Subsidiary owns any real
property. Paragraph 4.14 of the Disclosure Letter lists all premises
leased in whole or in part by the Company or any Subsidiary and all
guarantees of any leases given by the Company or any Subsidiary for
any other Person. Complete and correct copies of all such leases,
guarantees of leases and other documents concerning such agreements
and the interests of the Company or any Subsidiary therein have been
heretofore delivered to Purchaser. Paragraph 4.14 of the Disclosure
Letter also contains a brief description of all alterations being
made or which are planned in any premises of the Company or any
Subsidiary, together with the amounts budgeted for such alterations.
No improvement, fixture or equipment of STG in or on any such
premises, nor the occupation or leasehold of STG with respect
thereto, is in violation of any law, including, without limitation,
any zoning, building, safety, health or environmental law, and each
of such premises or properties is currently being used.
4.15 Personal Property. Paragraph 4.15 of the Disclosure Letter lists (i)
all tangible personal property owned by the Company or any Subsidiary
having a book value at the date hereof in excess of $5,000 per item
and (ii) all personal property having a value in excess of $5,000
owned by a third party which is leased to, or otherwise used by, the
Company or any Subsidiary, together with a description of the lease
or other agreement relating to the lease, use or operation thereof,
including, without limitation, leases or other agreements relating to
the use or operation of any machinery, equipment, motor vehicles,
office furniture or fixtures owned by any third party (complete and
correct copies of which leases or other agreements have been
heretofore delivered to Purchaser).
4.16 Intellectual Property.
4.16.1 All patents, trademarks, trade names, service marks, Internet domain
names, copyrights and any renewal rights therefor, technology,
supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, technical
documentation of such software programs, registrations and
applications for any of the foregoing and all other tangible or
intangible proprietary information or materials that are or have been
used by (including without limitation in the development of) the
business and/or in any product, technology or process (i) currently
being or formerly manufactured, published or marketed by the Company
or any Subsidiary, (ii) previously or currently under development for
possible future manufacturing, publication, marketing, or other use
by the Company or any Subsidiary,
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or (iii) relating to services performed by the Company or any
Subsidiary in the conduct of its business, are hereinafter referred
to as the "INTELLECTUAL PROPERTY".
4.16.2 Paragraph 4.16.2 of the Disclosure Letter lists the Company's and
each Subsidiary's patents, patent applications, trademarks, trademark
applications, trade names, service marks, service xxxx applications,
Internet domain names, Internet domain name applications, copyrights
and copyright registrations and applications and other filings and
formal actions made or taken pursuant to national, state, provincial,
county, local and foreign laws by the Company or any Subsidiary to
protect its respective interests in its Intellectual Property.
4.16.3 The Intellectual Property consists solely of items and rights which
are: (i) owned by the Company or any Subsidiary; (ii) in the public
domain; or (iii) rightfully used by the Company or any Subsidiary
pursuant to a valid license (the "LICENSED INTELLECTUAL PROPERTY"),
the parties, date, term and subject matter of each such license
agreement (each, a "LICENSE AGREEMENT") being set forth on paragraph
4.16.1 of the Disclosure Letter, except for desk-top office software
generally available at retail. The Company and each Subsidiary has
all rights in the Intellectual Property (including without limitation
the ST-POINT product and the documentation therefor, the OPT product
and the documentation therefor, and such computer software owned or
distributed by Oracle Corporation UK Limited or other third parties
as is necessary for the functionality of any of the products of the
Company or any Subsidiary) necessary to carry out the current
activities of the Company or such Subsidiary (and had all rights
necessary to carry out their former activities at the time such
activities were being conducted), including without limitation, to
the extent required to carry out such activities, all necessary
rights to make, use, reproduce, adopt, create derivative works based
on, translate, distribute (directly or indirectly), transmit, display
and perform publicly, license, rent and lease and, other than with
respect to the Licensed Intellectual Property, modify, assign and
sell, the Intellectual Property.
4.16.4 The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in the
Intellectual Property, as now used or proposed for use, licensing or
sale by the Company or any Subsidiary does not infringe on any
patent, copyright, trade secret, trademark, service xxxx, trade name,
firm name, Internet domain name, logo or other intellectual property
or proprietary right of any Person, except where such infringement
would not have a material adverse effect on the Company or any
Subsidiary. No claims (i) challenging the validity, effectiveness
or, other than with respect to the Licensed Intellectual Property,
ownership by the Company or any Subsidiary of any of the Intellectual
Property, or (ii) to the effect that the use, distribution,
licensing, sublicensing, sale or any other exercise of rights in any
of the Intellectual Property as now used or proposed for use,
licensing, sublicensing or sale by the Company or any Subsidiary
infringes or will infringe on any intellectual property or other
proprietary right of any Person have been asserted or, to the
knowledge of the Company, are threatened by any Person, nor are
there, to the knowledge of the Company, any valid grounds for any
bona fide claim of any such kind. To the knowledge of the Company,
all registered, granted or issued patents,
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trademarks, Internet domain names and copyrights held by the Company
or any Subsidiary are enforceable and subsisting. To the knowledge
of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Intellectual Property by any third
party, employee or former employee.
4.16.5 All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the
conception and development of the Intellectual Property on behalf of
the Company or any Subsidiary, have executed nondisclosure agreements
in the form delivered to Purchaser and either (i) have been a party
to an arrangement or agreements with the Company or such Subsidiary
in accordance with applicable national, state and/or foreign law that
has accorded the Company or such Subsidiary full, effective,
exclusive and original ownership of all tangible and intangible
property thereby arising, or (ii) have executed appropriate
instruments of assignment in favor of the Company or such Subsidiary
as assignee that have conveyed to the Company or such Subsidiary
effective and exclusive ownership of all tangible and intangible
property thereby arising.
4.16.6 Neither the Company nor any Subsidiary is, nor as a result of the
execution or delivery of the Transaction Documents, or performance of
the Company's or any Subsidiary's obligations thereunder, will the
Company or any Subsidiary be, in violation of any license,
sublicense, agreement or instrument to which the Company or such
Subsidiary is a party or otherwise bound, except as would not have a
material adverse effect on the Company or any Subsidiary; nor will
execution and delivery of the Transaction Documents, or performance
of the Company or any Subsidiary's obligations thereunder, cause the
diminution, termination or forfeiture of any of the Intellectual
Property.
4.16.7 Paragraph 4.16.7 of the Disclosure Letter contains a true and
complete list of all software programs of the Company and each
Subsidiary (the "SOFTWARE PROGRAMS"). The Company or such Subsidiary
has the rights to license or owns full and unencumbered right and
good, valid and marketable title to the Software Programs free and
clear of all mortgages, pledges, liens, security interests,
conditional sales agreements, encumbrances or charges of any kind.
All unexpired representations and warranties made or given by the
Company or any Subsidiary to any of its respective customers
respecting any of the Software Programs or its respective
Intellectual Property are true and correct in all material respects.
4.16.8 The source code and system documentation relating to the Software
Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by the Company or any Subsidiary only to
employees who have a "need to know" the contents thereof in
connection with the performance of their duties to the Company or
such Subsidiary and who have executed the nondisclosure agreements
referred to in Section 4.16.4 above, and (iii) have not been
disclosed to any third party.
4.16.9 All license agreements permit the Company or the applicable
Subsidiary or a third party to make all modifications, bypasses,
de-bugging, work-arounds, repairs, replacements, conversions or
corrections necessary to permit the components of all Software
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Programs to operate compatibly and reliably, in conformance with
their respective specifications and to be Year 2000 compliant.
4.16.10 No Software Program contains any "backdoor" or concealed access or
any "software locks" or similar undocumented devices which, upon the
occurrence of a certain event, the passage of a certain amount of
time or the taking of any action (or the failure to take any such
action) by or on behalf of the Company, any Subsidiary or any third
party, will cause any software, database, or information in any
database to be destroyed, erased, damaged or otherwise rendered
inoperable or inaccessible.
4.16.11 No component of any Software Program is subject to any national,
state, provincial, county, local or foreign export control laws or
regulations.
4.16.12 The Company and the Subsidiaries do not currently have any products
other than those listed on SCHEDULE 3.3.2-B hereof.
4.17 Insurance. Paragraph 4.17 of the Disclosure Letter lists all
insurance policies, together with a brief description (including name
of insurer, agent, type of coverage, policy number, annual premium,
amount of coverage, expiration date and any pending claims
thereunder), including, without limitation, liability, burglary,
theft, fidelity, life, fire, product liability, workmen's
compensation, health and other forms of insurance of any kind held by
the Company or any Subsidiary; each such policy is valid and
enforceable, outstanding and in full force and effect; the Company
and its Subsidiaries are the sole beneficiaries of each such policy;
no such policy, or the future proceeds thereof, has been assigned to
any other Person; all premiums and other payments due from the
Company or any Subsidiary under, or on account of, any such policy
have been paid; the Company has no knowledge of any act or fact or
failure to act which has or might cause any such policy to be
cancelled or terminated; the Company and each Subsidiary has given
each notice and presented each claim under each such policy and taken
any other required or appropriate action with respect thereto in due
and timely fashion; and the coverages and amounts of the insurance
policies maintained by the Company and its Subsidiaries are
consistent with advice obtained from insurance brokers as to the
coverages and amounts of insurance maintained by businesses similar
to the business in which the Company and its Subsidiaries is engaged.
Complete and correct copies of each policy have been heretofore
delivered to Purchaser.
4.18 Accounts Payable. All material amounts payable of the Company or any
Subsidiary are currently within their respective terms, or if not
within terms, are not past due by more than ninety (90) days, except
as set forth in paragraph 4.18 of the Disclosure Letter.
4.19 Bank Accounts. Paragraph 4.19 of the Disclosure Letter lists the
names and locations of all (i) banks at which the Company or any
Subsidiary has an account or safe deposit box and (ii) company credit
cards of the Company and each Subsidiary, the number of the accounts
and the names of all persons authorized to draw thereon or to have
access thereof.
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4.20 Legal Proceedings. Except as set forth in paragraph 4.20 of the
Disclosure Letter, no action, suit, claim, arbitration, governmental
investigation or proceeding, whether legal or administrative or in
mediation or arbitration, is pending or, to the knowledge of Company,
threatened, at law or in equity, before or by any court or national,
state, provincial, county, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, (i)
against or directly affecting the Company or any Subsidiary or any of
their assets or respective business, operations, financial condition
or prospects of the Company or any Subsidiary or (ii) in which an
unfavorable judgment, decree or order would restrain, prohibit,
invalidate, set aside, rescind, prevent or make unlawful the
Transaction Documents or the carrying out of the Transaction
Documents or the transactions contemplated thereby; nor does the
Company have knowledge of any basis for any such action, suit, claim,
investigation or proceeding. There is no pending action, suit or
proceeding which has been brought by or on behalf of the Company or
any Subsidiary in any court, before any governmental agency or
arbitration tribunal. Neither the Company nor any Subsidiary is in
default with respect to any order, writ, information or decree of any
court or any national state, provincial, county, local, foreign or
other governmental department, bureau, agency or instrumentality.
4.21 Permits. The Company and each Subsidiary has all permits, licenses,
orders and approvals of all national, state, provincial, county,
local or foreign governmental regulatory bodies required for it to
conduct its respective business as presently conducted; all such
permits, licenses, orders and approvals are in full force and effect
and no suspension or cancellation of any of them is pending or
threatened; and none of such permits, licenses, orders or approvals
will be adversely affected by the consummation of the transactions
contemplated by the Transaction Documents.
4.22 Compliance With Laws. The Company and each Subsidiary is in
compliance with each law, rule and regulation applicable to its
respective businesses including, without limitation, laws, rules and
regulations respecting occupational safety, environmental protection
and employment practices.
4.23 Illegal Discrimination. Except as set forth in paragraph 4.23 of the
Disclosure Letter, neither the Company nor any Subsidiary has been
found by any court or governmental department, commission, board,
agency or instrumentality to have committed any act of sexual,
religious, age or racial discrimination or any act of sexual
harassment which violates any national, state, provincial, county,
local or foreign law or regulation and there is not pending in any
court or before any governmental department, commission, board,
agency or instrumentality, or threatened, any claim with respect to
any of the foregoing.
4.24 Labor. Except as set forth in paragraph 4.24 of the Disclosure
Letter, neither the Company nor any Subsidiary is a party to any
representation or labor contract with any trade union or employee
representatives. Neither the Company nor any Subsidiary is in breach
of, or has not properly complied with, any provision of any such
contract; neither the Company nor any Subsidiary has received any
notice from any labor union or group of employees that such union or
group represents or believes or claims it
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represents or intends to represent any of the employees of the
Company or such Subsidiary; neither the Company nor any Subsidiary
has received any notice or threat of any strike or work interruption
by any of its employees. Complete and correct copies of any such
labor or representation contract to which the Company or any
Subsidiary is a party have been heretofore delivered to Purchaser. At
no time during the past five (5) years have the Company or any
Subsidiary experienced any threats of strikes, work stoppages or
demands for collective bargaining by any union or labor organization
or any other group or other organization of employees, and
grievances, disputes or controversies with any union or any other
group or any other organization of employees or any pending or
threatened court or arbitration proceedings involving an employment
grievance, dispute or controversy. Except as set forth in paragraph
4.24 of the Disclosure Letter, (i) neither the Company nor any
Subsidiary is delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation
for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees; (ii) in the event of
termination of the employment of any said employees, neither the
Company nor any Subsidiary will, under any employment contract or
other agreement, be liable to any of said employees for so-called
"severance pay" or any other payments; (iii) the Company and each
Subsidiary are in compliance with all national, state, provincial,
county, local and foreign laws and regulations respecting labor,
employment and wages and hours; and (iv) there is no unfair labor
practice complaint against the Company or any Subsidiary pending
before the National Labor Relations Board or any comparable state,
local or foreign agency.
4.25 Employment Contracts. Paragraph 4.25 of the Disclosure Letter lists
the names and current annual salary, bonus, commission and perquisite
arrangements, written or unwritten, for each director, officer and
employee of the Company and each Subsidiary. Except as set forth in
paragraph 4.25 of the Disclosure Letter, no current or former
director, officer or employee of the Company or any Subsidiary or any
relative, associate or agent of such director, officer or employee
has any interest in any property of the Company or any Subsidiary
except as a stockholder, or is a party, directly or indirectly, to
any contract for employment or otherwise or any lease or has entered
into any transaction with the Company or any Subsidiary, including,
without limitation, any contract for the furnishing of services by,
or rental of real or personal property from or to, or requiring
payments to, any such director, officer, employee, relative,
associate or agent. Complete and correct copies of any such contracts
have been heretofore delivered to Purchaser. Also set forth in
paragraph 4.25 of the Disclosure Letter is a complete and correct
list of all vehicles, apartments and other facilities owned or
operated by the Company or any Subsidiary and not listed in any other
Schedule hereto, and of all country club and other memberships owned
or paid for, or the dues for which are borne, by the Company or any
Subsidiary. Except as set forth in paragraph 4.25 of the Disclosure
Letter, neither the Company nor any Subsidiary has been notified or
advised (orally or in writing) that any employee listed therein
intends to terminate his or her employment relationship with the
Company or such Subsidiary, as applicable, and neither the Company
nor any Subsidiary has any contract for the future employment of any
officer or employee not listed in paragraph 4.25 of the Disclosure
Letter. The
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transactions contemplated by the Transaction Documents will not
result in any liability for severance pay, termination pay or any
"golden parachute" to any director, officer or employee of the
Company or any Subsidiary, nor will any current or former directors,
officers or employees of the Company or any Subsidiary be entitled to
any payment solely by reason of such transactions. Neither the
Company nor any Subsidiary is under any obligation to pay any bonus
or similar payment except as described in Paragraph 4.11.2 of the
Disclosure Letter.
4.26 Customers and Suppliers. Paragraph 4.26 of the Disclosure Letter
lists the names and addresses of the twenty-five (25) largest
customers of the Company and its Subsidiaries, in the aggregate,
during the last fiscal year and the ten (10) largest suppliers of the
Company and its Subsidiaries, in the aggregate, during the last
fiscal year, and the total sales to, or purchases from, such
customers or suppliers made by the Company and its Subsidiaries, in
the aggregate during the last fiscal year and the salesperson
assigned to such customers. No supplier or customer of the Company or
any Subsidiary representing in excess of two percent (2%) of the
aggregate purchases or sales of the Company and its Subsidiaries
during the last fiscal year has advised the Company or any
Subsidiary, formally or informally, that it intends to terminate,
discontinue or substantially modify or reduce its business with the
Company or any Subsidiary (i) by reason of the transactions
contemplated by the Transaction Documents or (ii) otherwise.
4.27 Employee Plans. Paragraph 4.27 of the Disclosure Letter lists all
pension, profit-sharing and other employee benefit plans ("EMPLOYEE
PLANS") maintained by the Company or any Subsidiary. Neither the
Company nor any Subsidiary has any material liability on account of
any such Employee Plan, except to the extent described in paragraph
4.27 of the Disclosure Letter, including, but not limited to,
liability for (i) additional contributions accruing under said
Employee Plans with respect to periods commencing on or prior to the
date hereof; (ii) fiduciary breaches by the Company or any
Subsidiary, the trustees under a trust created under any of said
plans, or any other persons under the Employee Retirement Income
Security Act of 1974, as amended, or any other applicable statute,
regulation or rule; or (iii) income taxes by reason of
non-qualification or disqualification of said Employee Plans. Without
limiting the generality of the foregoing:
4.27.1 With respect to each Employee Plan which is a defined benefit pension
plan, the Company has heretofore furnished to Purchaser the most
recent actuarial report showing (A) the actuarial present value
(based upon the same actuarial assumptions as those heretofore used
for funding purposes) of all vested and nonvested (but without any
assumption that nonvested accrued benefits have become
nonforfeitable) accrued benefits; (B) the net fair market value of
the assets held to fund such a plan; (C) the funding method used in
connection with such plan; and (D) the amount and plan year of any
"accumulated funding deficiency" as defined in Section 302(a)(2) of
ERISA which exists with respect to any plan year of such plan. As of
the date hereof, there have been no significant changes in the
information contained in such actuarial reports.
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4.27.2 Neither the Company, any Subsidiary, nor any plan fiduciary of any
Employee Plan is engaged in any transaction in violation of Section
406(a) or 406(b) of ERISA (for which no exemption exists under ERISA
or under applicable sections of the Internal Revenue Code). Where
applicable, the Company or the applicable Subsidiary has paid all
premiums (and interest charges and penalties for late payment, if
applicable) due to the Pension Benefit Guaranty Corporation with
respect to all Employee Plans. True and complete copies of each
Employee Plan, related trust agreements or annuity contracts (or any
other funding instruments), the most recent determination letter
issued by the Internal Revenue Service with respect to each Employee
Plan qualified under Section 401(a) of the Internal Revenue Code,
annual reports on Form 5500 Series for the two (2) most recent plan
years and actuarial reports prepared for the last two (2) plan years
of each Employee Plan which is a defined benefit pension plan have
been heretofore delivered to Purchaser. All Employee Plans, related
trust instruments or annuity contracts (or any other funding
instruments) are legal valid and binding and are in full force and
effect. There are no pending claims nor has any claim been
threatened in writing with respect to any Employee Plan by any
participant therein or beneficiary thereunder. Neither the Company,
any Subsidiary, nor the administering committee or trustees of any
Employee Plan has received (A) notice from the Internal Revenue
Service or the Department of Labor of the occurrence of a prohibited
transaction within the meaning of Section 406 of ERISA (and no such
prohibited transaction has in fact been undertaken) or (B) notice of
any breach of loyalty, prudence, diversification or effectuation
within the meaning of Section 404 of ERISA.
4.27.3 The Company and the Subsidiaries do not contribute to any
multi-employer pension plans.
4.28 Gifts. Neither the Company, any Subsidiary, nor any officer, employee
or agent of the Company or any Subsidiary (nor any Person acting on
behalf of any of the foregoing) has since January 1, 1986, directly
or indirectly, given or agreed to give any gift or similar benefit in
any material amount to any customer, supplier, governmental employee
or other Person who is or may be in a position to help or hinder the
Company or any Subsidiary or assist the Company or any Subsidiary in
connection with any actual or proposed transaction, which, if not
given in the past, might have had an adverse effect on the business
or prospects of the Company or any Subsidiary, or which, if not
continued in the future, might adversely affect the business or
prospects, of the Company or any Subsidiary, or which might subject
the Company or any Subsidiary to suit or penalty in any private or
governmental litigation or proceeding.
4.29 Related Parties. Except as described in paragraph 4.29 of the
Disclosure Letter or elsewhere in the Transaction Documents, neither
the Company nor any Subsidiary is party to any contract with or for
the benefit of (A) any Person (other than the Company or any
Subsidiary) owning, beneficially or of record, directly or
indirectly, any shares of or other equity interest in the Company or
any Subsidiary, (B) any natural person related by blood, adoption or
marriage to any such party, (C) any director, officer, or employee of
the Company or any Subsidiary, or (D) any Person in which any of the
foregoing parties has, directly or indirectly, at least a ten percent
(10%) beneficial
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interest (each, a "RELATED PARTY"). Without limiting the generality
of the foregoing, no Related Party, directly or indirectly, owns or
controls any assets or properties which are used in the business of
the Company or any Subsidiary and no Related Party directly or
indirectly engages in or has any significant interest in or
connection with any business which is, or has been within the past
two years, a competitor, customer or supplier of the Company or any
Subsidiary or which currently sells or provides products or services
which are similar or related to the products or services sold or
provided in connection with the business of STG.
4.30 Accelerations or Postponements of Sale. Since the date of the March
31, 2000 Financial Statements, neither the Company nor any Subsidiary
has accelerated or effected prior to the date, or postponed the date,
that any sale of products or services would have been effected in
accordance with customary business practices.
4.31 Environmental. The Company and each Subsidiary are in compliance in
all material respects with all applicable Environmental Laws (as
defined below), which compliance includes the possession by the
Company and each Subsidiary of all permits and other governmental
authorizations required under applicable Environmental Laws and the
compliance with the terms and conditions thereof. Neither the Company
nor any Subsidiary has received any written notice or written
communication from any governmental agency, citizens group or Person,
that alleges that the Company or such Subsidiary is not in compliance
with any Environmental Law. To the knowledge of the Company, no
current or prior owner of any property leased or controlled by the
Company or any Subsidiary has received any written notice or written
communication from any governmental agency, citizens group or Person,
that alleges that such current or prior owner, or the Company or such
Subsidiary, is not in compliance with any Environmental Law. Fur
purposes of this Agreement, "ENVIRONMENTAL LAW" means any national,
state, provincial, county, local or foreign legal requirement
(whether by statute, law, rule, executive order, or otherwise) (each,
a "LEGAL REQUIREMENT") relating to pollution or protection of human
health or the environment (including ambient air, surface water,
ground water, land surface or subsurface strata), including any Legal
Requirement relating to emissions, discharges, releases or threatened
releases, manufacture, storage, processing, distribution, use,
treatment, disposal, transport or handling of chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or petroleum
products, or other substances now or hereafter regulated by an
Environmental law or otherwise a danger to health or the environment.
4.32 No Material Statement or Omission of Material Fact. Neither the
Transaction Documents nor the representations and warranties by the
Stockholders contained therein or in any documents, instruments,
certificates or Schedules furnished pursuant thereto or in connection
with the transactions contemplated thereby contains any untrue
statement of a material fact or, to the knowledge of the Company,
omits to state a material fact necessary to make the statements or
facts contained therein not misleading.
5. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS.
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As used herein the term "to the knowledge" of a Stockholder shall
mean, with respect to any statement herein, to the actual knowledge of such
Stockholder. Each Stockholder, severally as to such Stockholder and not
jointly, represents, warrants and covenants to Purchaser, that as of the date
hereof and as of the date of the Closing, subject to the provisions of Section
6 of the Allocation Agreement:
5.1 Title to the Shares. Such Stockholder is the lawful record and
beneficial owner of, and has good and marketable title to, the number
of Shares set forth opposite such Stockholder's name on EXHIBIT A
hereto. Each of such Shares are fully paid and free of preemptive
rights, except for preemptive rights in connection with the sale or
transfer of the Shares to Purchaser, which are hereby waived and
terminated by such Stockholder. The Shares set forth opposite such
Stockholder's name on EXHIBIT A hereto represent all of the Shares of
such Stockholder as of the date hereof, which Shares are owned by
such Stockholder free and clear of any and all liens, security
interests, pledges, encumbrances, charges and restrictions
whatsoever, other than as set forth in paragraph 5.1 of the
Disclosure Letter.
5.2 Power and Capacity. Such Stockholder has full right, power and
capacity to execute, deliver and perform the Transaction Documents,
to sell, transfer and deliver the Shares owned by such Stockholder to
Purchaser thereunder, and to perform all other transactions
contemplated to be performed by such Stockholder thereby. Such
Stockholder, if a corporation, partnership, trust or other entity, is
duly authorized to execute, deliver and perform the Transaction
Documents by all necessary actions on the part of such Stockholder,
and the person signing the Transaction Documents on behalf of such
Stockholder has been duly authorized to do so. The Transaction
Documents are valid and binding obligations of such Stockholder,
enforceable against such Stockholder in accordance with their
respective terms. At the Closing, such Stockholder will transfer to
the Purchaser good and marketable record and beneficial title to the
Shares, free and clear of any and all liens, security interests,
pledges, encumbrances, charges and restrictions whatsoever.
5.3 Freedom to Contract. The execution and delivery of the Transaction
Documents by such Stockholder does not, and the performance by such
Stockholder of its obligations thereunder will not violate or
conflict with the charter and other governing documents applicable to
or governing the Company or any Subsidiary or such Stockholder (if
such stockholder is a corporation, partnership, trust or other
entity) or any amendments thereto or restatements thereof. The
execution and delivery of the Transaction Documents does not, and the
performance by such Stockholder of its obligations thereunder will
not (a) violate any of the terms, conditions or provisions of any
law, rule, regulation, order, writ, injunction, judgment or decree of
any court, governmental authority, or regulatory agency, or (b)
result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any shareholder agreement, voting
agreement, note, bond, indenture, debenture, security agreement,
trust agreement, lien, mortgage, lease, agreement, license,
franchise, permit, guaranty, joint venture agreement, or other
agreement,
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instrument, or obligation, oral or written, to which such Stockholder
is a party (whether as an original party or as an assignee or
successor) or by which such Stockholder is bound.
5.4 Litigation. Such Stockholder is not and, to the knowledge of such
Stockholder, neither the Company or any Subsidiary is, a party to any
suit, action, arbitration or legal, administrative, governmental or
other proceeding or investigation pending or threatened which might
have an adverse effect or restrict the ability of such Stockholder to
consummate the transactions contemplated hereby or to perform such
Stockholder's obligations hereunder.
5.5 Investment Risks. Such Stockholder, whether residing in the United
States, the United Kingdom or elsewhere except as the context
otherwise requires, represents and warrants to Purchaser as to
himself, herself or itself only:
5.5.1 Such Stockholder, alone or together with his advisors and/or
Purchaser Representative (as defined in Rule 501 under the Securities
Act), if any, has such knowledge and experience in financial and
business matters and, in particular, concerning investments, as is
necessary to enable him to evaluate the merits and risks of making an
investment in the Manugistics Common Stock.
5.5.2 Such Stockholder has no immediate need for liquidity in the
Manugistics Common Stock and is able to bear the risk of making an
investment in the Manugistics Common Stock for an indefinite period.
Each such Stockholder's present financial condition is such that he
is under no present or contemplated future need to dispose of any
portion of the Manugistics Common Stock to satisfy any existing or
contemplated undertaking, need or indebtedness.
5.5.3 If such Stockholder is a "US Person" as defined in Rule 902(k) under
the Securities Act (a "US PERSON"), the shares of Manugistics Common
Stock being issued to such Stockholder pursuant to this Agreement are
being acquired by such Stockholder for investment purposes only, for
such party's own account and not with a view to the offer, sale or
distribution thereof, provided, however, that, in the event that such
Manugistics Common Stock are registered on a registration statement
under the Securities Act for resale by the Stockholders as
contemplated by the Registration Rights Agreement, such Stockholder
may, at its sole discretion, offer and sell all or any portion of
such shares pursuant to such registration statement, subject,
however, to compliance with any applicable state, provincial or other
law.
5.5.4 Such Stockholder has not taken, nor will such Stockholder take or
cause to be taken any action, that would cause such Stockholder to be
deemed to be an "underwriter," as defined in Section 2(11) of the
Securities Act, with respect to those Manugistics Common Stock,
except in connection with the offer and sale of such shares pursuant
to such registration statement.
5.5.5 Purchaser has afforded, or otherwise caused Manugistics Group to
afford, such Stockholder and such Stockholder's professional advisors
and Purchaser Representative
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(if any) full and complete access to all information with respect to
Manugistics Group, and its business, operations, financial condition
and management which the Stockholder, such advisors and/or Purchaser
Representative (if any) have deemed necessary and material for an
evaluation of the merits and risks of the Stockholder acquiring and
making an investment in the Manugistics Common Stock hereunder. Such
Stockholder, its advisors and/or Purchaser Representative (if any)
have had adequate opportunity to ask questions of, and receive
answers from, persons acting on behalf of Manugistics Group regarding
the terms and conditions of the issuance and sale of the Manugistics
Common Stock hereunder and to obtain any additional information which
Manugistics Group possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the
information furnished to such Stockholder, its professional advisors
and or Purchaser Representative, if any, including, without
limitation, the information set forth in the Manugistics Documents
(as defined in Section 5.5.6 hereof). All such questions have been
answered to the full satisfaction of such Stockholder, its
professional advisors and/or Purchase Representative (if any).
5.5.6 Such Stockholder, either alone or with his professional advisors
and/or his respective Purchaser Representative, if any, has received,
has read and understands the documents, financial statement and other
material, including the documents identified on EXHIBIT F hereto (the
"MANUGISTICS DOCUMENTS").
5.5.7 In evaluating the merits and risks of making an investment in the
Manugistics Common Stock hereunder, such Stockholder has relied on
the advice of his own personal legal, financial and accounting
advisors and/or Purchaser Representative (if any).
5.5.8 If such Stockholder is an individual, the permanent address set forth
for such Stockholder on EXHIBIT A hereto is the true residence of
such Stockholder, and such Stockholder has no present intention of
becoming a resident of any other state, province or other
jurisdiction. If such Stockholder is a corporation, trust,
partnership or other entity, such Stockholder has its principal place
of business at the address set forth for such Stockholder on EXHIBIT
A hereto and was not organized for the specific purpose of acquiring
any of the Manugistics Common Stock.
5.5.9 Such Stockholder understands that there are substantial risks
pertaining to the making of an investment in the Manugistics Common
Stock hereunder. Such Stockholder is fully able to bear the economic
risk of an investment in the Manugistics Common Stock for an
indefinite period of time and can afford a complete loss of such
investment.
5.5.10 Such Stockholder understands and acknowledges that the Manugistics
Common Stock have not been registered for offer or sale under the
Securities Act or registered or qualified under any state, provincial
or other securities act, and are being sold on the basis of
exemptions from registration under the federal and applicable state,
provincial or other securities laws. Reliance on such exemptions is
based in part on the accuracy of the representations, warranties and
agreements made by each Stockholder herein, and such Stockholder
acknowledges and agrees that Manugistics Group has relied on such
representations, warranties and agreements. Such Stockholder further
understands and
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acknowledges that the Manugistics Common Stock may not be sold,
assigned or otherwise transferred unless so registered or qualified
or unless, in the opinion of counsel to such Stockholder, which
opinion is acceptable to Manugistics Group, an exemption from
registration and any such qualification is available.
5.5.11 Such Stockholder understands that neither the Securities and Exchange
Commission nor any other federal, state, provincial or other
governmental authority has approved the Manugistics Common Stock, nor
have any of the foregoing authorities made any recommendation,
findings or determination relating to the merits of making an
investment in the Manugistics Common Stock hereunder.
5.5.12 The information concerning such Stockholder in EXHIBIT A hereto is
true and correct in all respects as of the date hereof and will be
true at and as of Closing (or, if there have been any changes in such
information since the date such information was furnished, the
undersigned has advised counsel to Manugistics Group in writing of
such changes).
5.5.13 If such Stockholder resides outside of the United States, such
Stockholder (i) certifies that such Stockholder is not a US Person
and is not acquiring the Manugistics Common Stock for the account or
benefit of any US Person; (ii) agrees not to resell the Manugistics
Common Stock except in accordance with the requirements of Regulation
S under the Act, pursuant to registration under the Act, or pursuant
to an available exemption from registration under the Act; (iii)
agrees not to engage in hedging transactions with respect to the
Manugistics Common Stock except in accordance with the Act; and (iv)
understands and agrees that the Manugistics Common Stock (x) is
"restricted" within the meaning of Rule 144 under the Act, and (y)
may not be resold to a US Person for a period of 12 months (other
than pursuant to registration under the Act), and that the
certificate(s) representing the Manugistics Common Stock will contain
a legend to the effect of all of the foregoing.
5.6 Waiver and Forfeiture of Rights. Such Stockholder hereby waives and
forfeits any and all rights to accrued and unpaid dividends in
respect of any Shares now or previously owned by such Stockholder.
Such Stockholder also waives and forfeits any and all other rights
with respect to the Company or any Subsidiary (including without
limitation any voting rights, registration rights, rights to Board
representation, rights to financial information, rights of first
refusal, tag-along or drag-along rights, or similar rights) that such
Stockholder may have acquired in connection with such Stockholder's
acquisition or ownership of the Shares.
5.7 No Preemptive Rights. Such Stockholder acknowledges and agrees that
such Stockholder shall have no preemptive rights or any similar
rights to subscribe for any additional Manugistics Common Stock or
any other security issued by or interest in or obligation of
Manugistics Group.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 Purchaser hereby represents and warrants to the Company and each
Stockholder as follows:
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6.1.1 Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite power and authority, corporate or otherwise, to own, lease
and operate its properties and carry on its business as and in the
places where such properties are now owned, leased or operated or
such business is now being conducted.
6.1.2 Purchaser has all requisite power and authority, corporate or
otherwise, to enter into the Transaction Documents to which it is a
party and to assume and perform its obligations thereunder. The
execution and delivery of the Transaction Documents and the
performance by Purchaser of its obligations thereunder have been duly
authorized by all necessary corporate action of Purchaser and no
further action or approval, corporate or otherwise, is required in
order to constitute the Transaction Documents as valid, binding and
enforceable obligations of Purchaser.
6.1.3 No action, approval, consent or authorization, including, but not
limited to, any action, approval, consent or authorization by, or
filing with, any governmental or quasi-governmental agency,
commission, board, bureau or instrumentality is necessary or required
as to Purchaser in order to constitute the Transaction Documents as
valid, binding and enforceable obligations of Purchaser in accordance
with their respective terms.
6.1.4 The execution and delivery of the Transaction Documents, the
consummation of the transactions contemplated thereby, the
fulfillment of the terms, conditions or provisions thereof (A) do not
and will not conflict with, or violate any provision of the
Certificate of Incorporation or By-laws of Purchaser or (B) do not
and will not conflict with, or result in any breach of, any condition
or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration under (whether
after the giving of notice or lapse of time or both) any contract,
mortgage, lien, lease, agreement, indenture, license, franchise,
instrument, order, judgment or decree to which Purchaser is a party
or which is or purports to be binding upon Purchaser, or (C) will not
be in violation of any statute, rule or regulation applicable to
Purchaser.
6.1.5 None of the Manugistics Documents, nor any representation or warranty
by Purchaser in any Transaction Document or under any documents,
instruments, certificates or schedules furnished pursuant thereto or
in connection with the transactions contemplated thereby, contains
any untrue statement of a material fact or, to the knowledge of
Purchaser, omits to state a material fact necessary to make the
statements of fact contained herein and therein not misleading.
6.1.6 All shares of Manugistics Common Stock delivered to the Equity
Holders' Representative under this Agreement in payment of the
Purchase Price will be duly and validly authorized and issued, fully
paid and non-assessable, and (assuming the accuracy of the
representations, warranties and covenants of the Equity Holders in
this Agreement and the Allocation Agreement) will be issued and
delivered in compliance with the Securities Act.
7. COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
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7.1 The Company covenants and agrees as follows:
7.1.1 Between the date hereof and the Closing Date, the Company and each
Subsidiary shall give to Purchaser and its authorized representatives
full access, during regular business hours, to any and all of its
respective premises, properties, contracts, books and records and
will cause its respective officers and employees to furnish to
Purchaser and its authorized representatives any and all data and
information pertaining to the business and properties of the Company
or any Subsidiary as Purchaser or its authorized representatives
shall from time to time request. Such access shall include, but
shall not be limited to, the placing of one or more employees and
authorized representatives at any office or premises for the purpose
of enabling such employees and representatives to become familiar
with the operations of the Company or such Subsidiary. Unless and
until the acquisition contemplated herein has been consummated,
Purchaser shall hold in confidence all information obtained pursuant
to this Agreement and, if such acquisition is not consummated,
Purchaser shall return to the Company or the appropriate Subsidiary
all documents and other materials received by it hereunder. Such
obligation of confidentiality shall not extend to any information
which is shown to have been (i) previously known to Purchaser, (ii)
generally known to others engaged in the trade or business of the
Company or such Subsidiary, (iii) part of public knowledge or
literature, or (iv) lawfully received by Purchaser from a third party
(not including the Company or any Subsidiary). Unless such
information is set forth in the Disclosure Letter, the furnishing of
any information to Purchaser, or any investigation made by Purchaser
or its authorized representatives, shall not affect or otherwise
modify, diminish or obviate any of the representations and warranties
made by the Company and the Subsidiaries in this Agreement (and
Purchaser's right to rely thereon) or any of the conditions to the
obligation of Purchaser to consummate the transactions contemplated
hereby. If the acquisition contemplated herein is consummated,
Purchaser covenants and agrees that it shall preserve and keep the
records of the Company delivered to it hereunder for a period of one
(1) year from the Closing Date and shall make such records available
to the Company or its authorized representatives as reasonably
required by the Company in connection with any legal proceedings
against, or governmental investigations of, the Company or in
connection with any tax examination of the Company.
7.1.2 From the date hereof until the Closing Date, except as otherwise
consented to or approved in writing by Purchaser or as required by
this Agreement, neither the Company nor any Subsidiary shall:
7.1.2.1 authorize, issue, sell, convert or modify any Securities or
enter into any agreement with respect thereto, except (i)
pursuant to the Allocation Agreement, (ii) the cancellation
of options held by Page Wheatcroft to purchase14,870 shares
of STG Common Stock pursuant to a release in the form
submitted to Purchaser, and (iii) the confirmatory grant of
options previously agreed to be granted to Xxxx Xxxx to
purchase14,870 shares of STG Common Stock (which options
will be cancelled and released pursuant to the Allocation
Agreement);
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7.1.2.2 take or cause to be taken any action which results in any
damage, destruction or similar loss, whether or not covered
by insurance, materially affecting the business or
properties of the Company or such Subsidiary, as applicable;
7.1.2.3 other than in the ordinary course of business, sell, assign
or transfer any of its tangible assets or patent, trademark,
trade name, copyright, license, franchise, design or other
intangible assets or intellectual property;
7.1.2.4 other than in the ordinary course of business, mortgage,
pledge, grant or suffer to exist any lien or encumbrance or
charge on any of its assets or properties, tangible or
intangible;
7.1.2.5 other than in the ordinary course of business, waive any
rights of material value or cancel, discharge, satisfy or
pay any debt, claim, lien, encumbrance, liability or
obligation, whether absolute, accrued, contingent or
otherwise and whether due or to become due; provided,
however, that the Company may repay up to $350,000 principal
amount of the aggregate $600,000 of loans from certain of
the Stockholders, so long as the Company gives prompt
written notice of such repayment to Purchaser;
7.1.2.6 incur any obligation or liability (absolute or contingent,
liquidated or unliquidated, xxxxxx or inchoate) except
current obligations and liabilities incurred in the ordinary
course of its business; without limiting the generality of
the foregoing, neither the Company nor any Subsidiary shall
incur any additional indebtedness to any of the Stockholders
without the prior written consent of Purchaser;
7.1.2.7 other than in the ordinary course of business, lease or
effect any transfer of any of the assets, properties or
rights of the Company or such Subsidiary, as applicable;
7.1.2.8 other than in the ordinary course of business and consistent
with past practices, enter into, make any amendment of, or
terminate any lease, contract, license or other agreement to
which the Company or such Subsidiary, as applicable, is a
party;
7.1.2.9 effect any change in the accounting practices or procedures
of the Company or such Subsidiary, as applicable;
7.1.2.10 make any changes in its authorized issued or outstanding
capital stock or grant or modify any options, warrants,
conversion privileges or other rights to its capital stock,
except (i) pursuant to the Allocation Agreement, (ii) the
cancellation of options held by Page Wheatcroft to
purchase14,870 shares of STG Common Stock pursuant to a
release in the form submitted to Purchaser, and (iii) the
confirmatory grant of options previously agreed to be
granted to Xxxx Xxxx to purchase14,870 shares of STG Common
Stock (which options will be cancelled and released pursuant
to the Allocation Agreement); or make
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any amendments or changes to its Certificate of
Incorporation, By-laws or other charter documents;
7.1.2.11 declare, set aside, make provision for payment, or pay any
dividend on its capital stock, or make any other payment or
enter into any commitment to make any payment to any of its
stockholders;
7.1.2.12 without the consent of Purchaser, increase the compensation
payable to any of its directors, officers or employees,
become obligated to increase any such compensation, or make
or become obligated to make any bonus or similar payment or
loan to any of its directors, officers or employees;
7.1.2.13 enter into any transaction other than in the ordinary course
of business, or change in any way any of the business
policies or practices of the Company or such Subsidiary, as
applicable.
7.1.3 The Company and each Subsidiary shall, from the date hereof through
the Closing Date, consult with Purchaser on a regular basis with
respect to all operating decisions which could reasonably be expected
to result in a change in the business of the Company or any
Subsidiary as presently operated or which are not in the ordinary
course of the business of the Company or any Subsidiary. In
connection therewith, and subject to the preceding sentence, the
Company and each Subsidiary shall operate its business as presently
operated and only in the normal and ordinary course, and, consistent
with such operation, shall use reasonable efforts to maintain and
preserve its assets and properties in good condition and repair,
reasonable wear and tear excepted, and will use reasonable efforts to
continue to promote its products and services, to preserve intact its
present business organization, to keep available to Purchaser the
present services of its officers and employees and to preserve for
Purchaser the goodwill of its suppliers, customers, landlords and
others having business relationships with the Company or any
Subsidiary.
7.1.4 The Company and each applicable Subsidiary will maintain in full
force and effect all insurance policies listed in paragraph 4.17 of
the Disclosure Letter, will comply with all laws or regulations
affecting operation of its business and will give notice to Purchaser
of any unusual event or circumstances affecting its business or
assets.
7.1.5 The Company and the Subsidiaries shall give Purchaser prompt notice
of any change in any of the information contained in the
representations and warranties of the Company and the Subsidiaries
hereunder or under the other Transaction Documents, the Schedules
thereto or the documents furnished by the Company and the
Subsidiaries in connection therewith which occurs prior to the
Closing; provided, however, that the delivery of any notice pursuant
to this Section 7.1.5 shall not limit or otherwise affect any
remedies available to the party receiving such notice and no
disclosure by the Company or any Subsidiary pursuant to this Section
7.1.5 shall be deemed to amend or supplement this Agreement or the
Schedules hereto or prevent or cure any misrepresentations, breach of
warranty or breach of covenant, unless the recipient party shall
agree in writing to accept the disclosures set forth in any such
notice.
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7.2 The Company covenants and agrees, and each Stockholder, severally as
to such Stockholder and not jointly, covenants and agrees, as
follows:
7.2.1 The Company, the Subsidiaries and such Stockholder shall use
reasonable efforts to take, or cause to be taken, all actions and do
or cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement,
including, without limitation, to obtain all consents, approvals and
authorizations of third parties and to make all filings with, and
give all notices to, third parties which may be necessary or required
in order to effectuate the transactions contemplated hereby.
7.2.2 From the date hereof until the Closing Date or the termination of
this Agreement, (a) neither the Company, any Subsidiary nor such
Stockholder will solicit the sale or disposition of the Company or
any Subsidiary (whether by way of a sale of shares or assets, merger,
consolidation or other combination) to any Person or enter into any
agreement, arrangement or understanding with respect to any such sale
or other disposition, and (b) neither the Company, any Subsidiary nor
such Stockholder will solicit the sale or other disposition of the
business of the Company or any Subsidiary or any material part of the
assets or properties of the Company or any Subsidiary to any Person
or enter into any agreement, arrangement or understanding with
respect to the sale or other disposition thereof or any option, call
or commitment with respect thereto, except for the sale of products
and the furnishing of services and related activities in the ordinary
course of business.
8. COVENANTS OF PURCHASER
8.1 Purchaser covenants and agrees as follows:
8.1.1 Purchaser shall give the Company prompt notice of any change in any
of the information contained in the representations and warranties of
Purchaser hereunder or in the documents furnished by Purchaser in
connection herewith which occurs prior to the Closing Date; provided,
however, that the delivery of any notice pursuant to this Section
8.1.1 shall not limit or otherwise affect any remedies available to
the party receiving such notice and no disclosure by Purchaser
pursuant to this Section 8.1.1 shall be deemed to amend or supplement
this Agreement or prevent or cure any misrepresentations, breach of
warranty or breach of covenant, unless the recipient party shall
agree in writing to accept the disclosures set forth in any such
notice.
8.1.2 Purchaser shall use reasonable efforts to take, or cause to be taken,
all actions and do or cause to be done all things necessary, proper
and advisable to consummate the transactions contemplated by this
Agreement, including, without limitation, to obtain all consents,
approvals and authorizations of third parties and to make all filings
with, and give all notices to, third parties which may be necessary
or required in order to effectuate the transactions contemplated
hereby.
8.1.3 Purchaser will offer to any officers and employees of the Company or
any Subsidiary that are offered and accept employment with Purchaser
or any subsidiary thereof after
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the Closing Date employee benefits similar to those that are made
available to officers and employees of Purchaser and its
subsidiaries, including stock option plans.
9. CONDITIONS OF CLOSING
9.1 Conditions Precedent to the Obligations of the Purchaser. The
obligation of Purchaser to close hereunder shall be subject to the
fulfillment and satisfaction, prior to or at the Closing, of the
following conditions or the written waiver thereof by Purchaser:
9.1.1 There shall not exist any fact, circumstance or condition which, if
the representations and warranties of the Company and the
Stockholders in the Transaction Documents were restated at Closing,
would constitute a Substantial Breach of such representations and
warranties, and Purchaser shall have received a certificate to that
effect dated the Closing Date and executed by the Company. For
purposes of this Agreement, a "SUBSTANTIAL BREACH" means a breach of
the representations and warranties that has or is likely to have such
a fundamental adverse effect on the condition (financial or
otherwise) or business of STG taken as a whole that no reasonably
prudent buyer would complete the purchase of the Company on the terms
set forth in the Transaction Documents. Without limiting the
generality of the foregoing, a Substantial Breach shall include the
breach of any representation or warranty relating to (i) the
capitalization of the Company or the ownership of the capital stock
of the Company and the Subsidiaries or other Equity Rights, or (ii)
the Intellectual Property of STG, or (iii) material adverse claims or
litigation against the Company or any Subsidiary.
9.1.2 Each of the agreements and covenants of the Company and the
Stockholders to be performed under the Transaction Documents at or
prior to the Closing Date shall have been duly performed in all
material respects and Purchaser shall have received a certificate to
that effect dated the Closing Date and executed by the Company.
9.1.3 No injunction or restraining order shall be in effect to forbid or
enjoin the consummation of the transactions contemplated by the
Transaction Documents and no national, state, provincial, county,
local or foreign statute, rule or regulation shall have been enacted
which prohibits, restricts or delays the consummation hereof.
9.1.4 Purchaser shall have received a certified copy of resolutions duly
adopted by the board of directors of the Company authorizing and
approving the execution and delivery of the Transaction Documents by
the Company and the performance of its obligations thereunder.
9.1.5 Purchaser shall have received (a) an opinion of the Company's U.S.
counsel, dated as of the Closing Date, covering the matters set forth
in SCHEDULE 9.1.5-A hereof, and (b) an opinion of the Purchaser's
U.K. counsel (or if the Equity Holders' Representative so elects, the
Company's counsel), dated as of the Closing Date, covering the
matters set forth in SCHEDULE 9.1.5-B hereof
9.1.6 Each of the STG officers and employees listed on SCHEDULE 9.1.6
hereof shall each have entered into an Employment Agreement with
Purchaser or the Company or a
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Subsidiary, as designated by Purchaser, in substantially the form
previously supplied, as the same may be modified by the mutual
agreement of Purchaser and the Equity Holders' Representative.
9.1.7 Purchaser shall have received certificates, duly endorsed for
transfer, of all of the Shares, constituting one hundred percent
(100%) of the issued and outstanding capital stock of the Company.
9.1.8 The Allocation Agreement shall have been executed by all of the
Equity Holders and Purchaser shall have received an original
counterpart thereof.
9.1.9 The Company shall have delivered to the Purchaser the written
resignation of each director and officer of the Company and each
Subsidiary as shall be requested by the Purchaser. The Company also
shall have delivered to the Purchaser the written resignations of all
trustees or committee members of any stock option plans, benefit
plans, pension plans, or similar plans or schemes, as shall be
requested by the Purchaser.
9.1.10 The Company shall have received a written release from Updata
Capital, in substantially the form attached as EXHIBIT G hereto,
releasing the Company and its Subsidiaries from any liability or
obligation with respect to brokers' fees or other amounts due in
connection with the sale of the Company.
9.1.11 The Company shall have repaid $350,000 of the principal of the
$600,000 aggregate amount of loans from certain Stockholders (it
being understood and agreed that any right to receive the balance of
the principal and any and all accrued interest and other amounts in
respect of such loans has been released by such Stockholders pursuant
to Section 5(c) of the Allocation Agreement).
9.1.12 Purchaser shall have received a letter from Bank of Scotland stating
the amount outstanding under the Company's overdraft facility as of
the Closing Date.
9.1.13 Purchaser shall have received certificate in the form attached hereto
as EXHIBIT H duly completed and executed by each Equity Holder who is
a US Person.
9.2 Conditions Precedent to Obligations of the Company and the
Stockholders. The obligations of the Company and the Stockholders to
close hereunder shall be subject to the fulfillment and satisfaction,
prior to or at the Closing, of the following conditions or the
written waiver thereof by the Company:
9.2.1 There shall not exist any fact, circumstance or condition which, if
the representations and warranties of Purchaser in the Transaction
Documents were restated at Closing, would constitute a Substantial
Breach of such representations and warranties, and the Equity
Holders' Representative shall have received a certificate to that
effect dated the Closing Date and executed by Purchaser.
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9.2.2 Each of the agreements and covenants of Purchaser to be performed
under the Transaction Documents at or prior to the Closing Date shall
have been duly performed in all material respects and the Company
shall have received a certificate to that effect dated the Closing
Date and executed by Purchaser.
9.2.3 No injunction or restraining order shall be in effect to forbid or
enjoin the consummation of the transactions contemplated by the
Transaction Documents and no national, state, provincial, county,
local or foreign statute, rule or regulation shall have been enacted
which prohibits, restricts or delays the consummation hereof.
9.2.4 The Company shall have received a certified copy of resolutions duly
adopted by the board of directors of Purchaser authorizing and
approving the execution of the Transaction Documents by Purchaser and
the performance by Purchaser of its obligations thereunder.
10. FURTHER COVENANTS AND AGREEMENTS OF THE STOCKHOLDERS
10.1 Each Stockholder, severally as to such Stockholder and not jointly,
covenants and agrees that:
10.1.1 At all times after the Closing Date, such Stockholder shall hold in a
fiduciary capacity for the benefit of Purchaser any information,
knowledge and data that such Stockholder may have relating to the
assets and business of STG, and such Stockholder shall not at any
time after the Closing Date use, disclose or divulge any such
information, knowledge or data to any other Person, other than to
Purchaser or the Company.
10.1.2 Such Stockholder agrees that the remedy at law for any breach of the
provisions of Section 10.1.1 hereof will be inadequate and that
Purchaser shall be entitled to injunctive relief to compel such
Stockholder to perform or refrain from action required or prohibited
hereunder.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
11.1 All of the representations, warranties, covenants and agreements made
by the parties to the Transaction Documents shall survive the
execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated
thereby and shall terminate on the Second Distribution Date, except
as otherwise provided in the Escrow Agreement and the Allocation
Agreement.
12. INDEMNIFICATION; ARBITRATION
12.1 The Purchaser and the Stockholders shall each be entitled to be
indemnified and held harmless by the other party with respect to any
and all Losses (as defined in the Allocation Agreement) resulting
from or arising out of any breach of the representations, warranties
and covenants contained in this Agreement or the other Transaction
Documents subject to and in accordance with the terms and conditions
of Section 6 of the Allocation Agreement.
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12.2 If Purchaser and Equity Holders' Representative or the members of the
Audit Team are unable to resolve any dispute with respect to the
calculation of the STG Business Revenues or the amount of the
Performance Consideration, the dispute shall be settled by
arbitration. The venue for any such arbitration shall be Wilmington,
Delaware, or such other location as the parties may mutually agree.
Except as expressly set forth herein, all proceedings under this
Section 12.2 shall be undertaken in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA")
then in force. Only individuals who are (i) accountants engaged
full-time in the practice of accounting, and (ii) on the AAA register
of arbitrators shall be selected as an arbitrator. There shall be one
arbitrator who shall be chosen in accordance with the rules of the
AAA. Within twenty (20) days of the conclusion of the arbitration
hearing, the arbitrator shall prepare written findings of fact and
conclusion of law. Judgment on the written award may be entered and
enforced in any court of competent jurisdiction. It is mutually
agreed that the written decision of the arbitrator shall be valid,
binding, final and non-appealable; provided, however, that the
parties hereto agree that the arbitrator shall not be empowered to
award punitive damages against any party to such arbitration. The
arbitrator shall require the non-prevailing party to pay the
arbitrator's full fees and expenses or, if in the arbitrator's
opinion there is no prevailing party, arbitrator's fees and expenses
will be borne equally by the parties thereto.
13. BROKERS
13.1 Each of the parties hereto covenant and represent to each of the
other parties hereto that, except as set forth in paragraph 13.1 of
the Disclosure Letter, such party has had no dealings with any broker
or finder in connection with this Agreement or the transactions
contemplated hereby and no broker, finder or other Person is entitled
to receive any broker's commission or finder's fee or similar
compensation in connection with any such transaction.
13.2 The commission due the broker listed in paragraph 13.1 of the
Disclosure Letter shall be the obligation of the Stockholders. Each
of the parties agrees to defend, indemnify and hold harmless the
other parties from, against, for and in respect of any and all losses
sustained by the other as a result of any liability or obligation to
any broker or finder on the basis of any arrangement, agreement or
acts made by or on behalf of such other party with any Person or
Persons whatsoever. If after the Closing any claim for a commission
or other amount is made against the Company or any Subsidiary by any
broker or finder claiming that it was engaged by the Company or any
Stockholder, Purchaser shall be entitled to recover any loss
resulting therefrom pursuant to the terms of the Escrow Agreement and
Allocation Agreement.
14. MISCELLANEOUS
14.1 This Agreement and the other Transaction Documents (including the
Schedules which are made a part thereof) constitutes the entire
agreement of the parties with respect to the subject matter hereof.
The representations, warranties, covenants and agreements set forth
in the Transaction Documents and in any financial statements,
schedules or exhibits delivered pursuant hereto constitute all the
representations, warranties,
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covenants and agreements of the parties hereto and upon which the
parties have relied and, except as may be specifically provided
herein, no change, modification, amendment, addition or termination
of the Transaction Documents or any part thereof shall be valid
unless in writing and signed by or on behalf of the parties thereto.
14.2 Any and all notices or other communications or deliveries required or
permitted to be given or made shall be in writing and delivered
personally, or sent by certified or registered mail, return receipt
requested and postage prepaid or sent by overnight courier service as
follows:
If to Purchaser:
Manugistics, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx, Chief Financial Officer
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxxxx Xxxxxx LLP
3200 Mellon Bank Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esquire
Facsimile No.: (000) 000-0000
If to the Company or any of the Subsidiaries:
STG Holdings Inc.
The Hounslow Centre
Xxxxxxx Road
Hounslow, Xxxxxxxxx, XX0 0XX
Xxxxxx Xxxxxxx
Attention: Xxxx Xxxxxxxx Hillsborough,
Chief Financial Officer
Facsimile No.: 011 44 208 577 5605
with a copy to:
XX Xxxxxx & Co.
000 Xxxx'x Xxx Xxxx
Xxxxxx XX0X 0XX
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Attention: Xxxxxx Xxxxx
Facsimile No. 011 44 020 7533 2000
If to any of the Stockholders:
Strathdon Investments Limited
00/00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx XX00 0XX
Attention: Xxxx Xxxxxxx
Facsimile No. 011 44 01962 843413
with a copy to:
XX Xxxxxx & Co.
000 Xxxx'x Xxx Xxxx
Xxxxxx XX0X 0XX
Attention: Xxxxxx Xxxxx
Facsimile No. 011 44 020 7533 2000
or at such other address as any party may specify by notice given to
such other party in accordance with this Section 14.2. The date of
giving of any such notice shall be the date of hand delivery, two
days after the date of the posting of the mail or the date when
deposited with the overnight courier.
14.3 No waiver of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No
waiver shall be deemed a continuing waiver or waiver in respect of
any subsequent breach or default, either of similar or different
nature, unless expressly so stated in writing.
14.4 The Transaction Documents shall be construed (both as to validity and
performance) and enforced in accordance with, and governed by, the
laws of the State of Delaware, without giving effect to the
principles of conflicts of law. Except for disputes that are subject
to binding arbitration pursuant to Section 12.2 hereof, the parties
hereto agree that any suit or proceeding arising out of the
Transaction Documents or the consummation of the transactions
contemplated thereby shall be brought only in State of Delaware. The
parties hereto each waive any claim that such jurisdiction is not a
convenient forum for any such suit or proceeding and the defense of
lack of personal jurisdiction. Should any clause, section or part of
the Transaction Documents be held or declared to be void or illegal
for any reason, all other clauses, sections or parts of the
Transaction Documents which can be effected without such illegal
clause, section or part shall nevertheless continue in full force and
effect.
14.5 Except as otherwise expressly provided herein, whether or not the
transactions contemplated hereby are consummated, all fees and
expenses incurred in connection
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with the Transaction Documents (including without limitation all
legal, accounting, consulting and all other fees and expenses of
third parties incurred by a party in connection with the negotiation
and effectuation of the Transaction Documents and the transactions
contemplated hereby) shall be the obligation of the party incurring
such fees and expenses.
14.6 Purchaser and the Equity Holders' Representative shall consult with
each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby or thereby and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by law, the NASDAQ or any listing agreement
with a national securities exchange.
14.7 This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns or
heirs and personal representatives; provided, however, that no party
may assign any of its rights or delegate any of its duties under this
Agreement without the prior written consent of the other parties
hereto.
14.8 Each party shall, at the request of another party hereto, execute and
deliver such other documents and instruments and do and perform such
other acts and things as may be necessary or desirable for effecting
completely the consummation of this Agreement and the transactions
contemplated hereby.
14.9 The headings or captions under sections of this Agreement are for
convenience and reference only and do not in any way modify,
interpret or construe the intent of the parties or effect any of the
provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the date and year first above written.
PURCHASER:
MANUGISTICS, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
ISSUER:
MANUGISTICS GROUP, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
COMPANY:
STG HOLDINGS INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
STOCKHOLDERS:
APS PARTNERS, LP
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXXX-EFO PARTNERS, LP
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
MERIFIN CAPITAL, N.V.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
47
STRATHDON INVESTMENTS LIMITED
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXXX TECHNOLOGY I PARTNERS, LP
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXXX TECHNOLOGY II PARTNERS, LP
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
CANON'S NOMINEES LIMITED (DESIGNATION
INNVOTEC LIMITED PARTNERSHIP)
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
SEFTA TRUSTEES LIMITED (REF 026)
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
----------------------------------------
AVI GREENFIELD
----------------------------------------
XXXXXXXX XXXXXX
----------------------------------------
XXXXXXXX HILLSBOROUGH
----------------------------------------
XXXXXXX XXXXXX
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----------------------------------------
XXXXX XXXXX
----------------------------------------
XXXX X. XXXXX
EFO HOLDINGS, L.P.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
STRATHDON INVESTMENTS LIMITED,
AS EQUITY HOLDERS' REPRESENTATIVE
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
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STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 22, 2000
BY AND AMONG
MANUGISTICS, INC.,
AND
MANUGISTICS GROUP, INC.,
AND
STG HOLDINGS, INC.,
AND
THE STOCKHOLDERS OF STG HOLDINGS, INC.
AND
STRATHDON INVESTMENTS LIMITED,
AS EQUITY HOLDERS REPRESENTATIVE
