Exhibit 2.1
STOCK PURCHASE AGREEMENT
AMONG
BSW HOLDINGS, INC., AS BUYER,
ELECTRONIC DATA SYSTEMS CORPORATION, AS SELLER,
AND
UGS PLM SOLUTIONS INC.
DATED AS OF MARCH 12, 2004
TABLE OF CONTENTS
1. DEFINITIONS
1.1 Definitions............................................................ 1
1.2 References and Titles.................................................. 8
2. PURCHASE AND SALE
2.1 Purchase and Sale of Common Stock...................................... 8
2.2 Closing................................................................ 8
2.3 Working Capital Adjustment............................................. 9
2.4 Post-Closing Payment................................................... 10
2.5 Foreign Cash Adjustment................................................ 10
2.6 Access................................................................. 12
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
3.1 Organization, Qualification and Authority.............................. 12
3.2 Capitalization......................................................... 13
3.3 Authorization; Valid and Binding Agreement............................. 13
3.4 Noncontravention; Consents............................................. 14
3.5 Financial Statements, Books and Records................................ 14
3.6 Recent Events.......................................................... 15
3.7 Tax Matters............................................................ 16
3.8 Properties............................................................. 18
3.9 Intellectual Property; Software........................................ 18
3.10 Contracts.............................................................. 21
3.11 Litigation............................................................. 22
3.12 Employees; Employment Matters.......................................... 23
3.13 Employee Benefit Plans................................................. 23
3.14 Licenses, Permits and Approvals; Compliance with Laws.................. 25
3.15 Insurance.............................................................. 26
3.16 Environmental Matters.................................................. 26
3.17 Brokers' Fees.......................................................... 27
3.18 Transactions with Affiliates........................................... 27
3.19 Customers and Suppliers................................................ 27
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization, Qualification and Authority.............................. 28
4.2 Authorization; Valid and Binding Agreement............................. 28
4.3 Noncontravention; Consents............................................. 28
4.4 Consents............................................................... 28
4.5 Title to Purchased Shares.............................................. 29
4.6 Broker's Fees.......................................................... 29
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5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Power................................................. 29
5.2 Authorization; Valid and Binding Agreement............................. 29
5.3 Noncontravention; Consents............................................. 29
5.4 Litigation............................................................. 30
5.5 Broker's Fees.......................................................... 30
5.6 Investment Representation.............................................. 30
5.7 Financing.............................................................. 30
6. COVENANTS OF SELLER AND THE COMPANY
6.1 Conduct of the Business................................................ 31
6.2 Access to Books and Records............................................ 32
6.3 Regulatory Filings..................................................... 32
6.4 Conditions; Cooperation................................................ 32
6.5 Exclusive Dealing...................................................... 33
6.6 Notification........................................................... 33
6.7 Financial Statements and Reports....................................... 33
6.8 Non-Compete; Non-Solicitation.......................................... 34
6.9 Confidential Information............................................... 35
6.10 Payments Received...................................................... 36
6.11 Software Master........................................................ 36
6.12 Intercompany Liabilities............................................... 36
7. COVENANTS OF BUYER
7.1 Notification........................................................... 36
7.2 Regulatory Filings..................................................... 36
7.3 Conditions............................................................. 37
7.4 Financing.............................................................. 37
7.5 Certain Matters Relating to Special Indemnified Losses................. 38
8. ADDITIONAL COVENANTS AND AGREEMENTS
8.1 Independent Investigation.............................................. 38
8.2 Tax Matters............................................................ 39
8.3 Additional Documents and Instruments; Execution and Delivery of Certain
Documents at Closing................................................... 43
8.4 Agreement Regarding Attorney/Client Privilege Waiver................... 44
8.5 Insurance Matters...................................................... 44
8.6 Employees and Employee Benefits........................................ 46
8.7 Separate Acquisitions of Foreign Subsidiaries.......................... 49
8.8 Stand-Alone Requirements............................................... 49
8.9 Back-to-Back Agreements................................................ 49
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9. CONDITIONS TO CLOSING
9.1 Conditions to Buyer's Obligations...................................... 50
9.2 Conditions to Seller's Obligations..................................... 51
10. TERMINATION
10.1 Termination............................................................ 52
10.2 Effect of Termination.................................................. 53
11. SURVIVAL OF WARRANTIES AND INDEMNIFICATION
11.1 Survival............................................................... 53
11.2 Indemnification........................................................ 54
11.3 Limits on Indemnification.............................................. 54
11.4 Matters Involving Third Parties........................................ 56
11.5 Exclusive Remedy....................................................... 57
11.6 Remedies Cumulative.................................................... 57
12. MISCELLANEOUS
12.1 No Third Party Beneficiaries........................................... 58
12.2 No Public Disclosure................................................... 58
12.3 Entire Agreement....................................................... 58
12.4 Succession and Assignment.............................................. 58
12.5 Counterparts........................................................... 58
12.6 Notices................................................................ 58
12.7 Governing Law; Jurisdiction and Venue.................................. 60
12.8 Waiver of Trial by Jury................................................ 60
12.9 Amendments and Waivers................................................. 61
12.10 Severability........................................................... 61
12.11 Expenses............................................................... 61
12.12 Construction........................................................... 61
12.13 Tax Disclosure......................................................... 62
Exhibits:
Exhibit A - Executive Employment Agreement
Exhibit B - Stand-Alone Requirements
Exhibit C-1 - Co-Location License
Exhibit C-2 -- Standard Sublease Agreement
Exhibit D-1 - Debt Financing Commitment Letters
Exhibit D-2 - Equity Financing Commitment Letters
Exhibit E - Royalty Plan
Exhibit F - Working Capital Methodology
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of March 12, 2004, among (i) BSW Holdings, Inc., a Delaware corporation
("BUYER"), (ii) Electronic Data Systems Corporation, a Delaware corporation
("SELLER"), and (iii) UGS PLM Solutions Inc., a Delaware corporation (together
with its predecessors, the "COMPANY"). Buyer, Seller and the Company are each
sometimes referred to herein individually as a "PARTY" and collectively as the
"PARTIES."
RECITALS
A.The Company is in the business of researching and developing, marketing,
licensing and maintaining computer-aided design, computer-aided manufacturing,
computer-aided engineering, product lifecycle management, product data
management and related software for customers in academia and a wide range of
industries, including aerospace, automotive, hi-tech, machine tool and consumer
goods, and providing services related to such software, including installation,
integration, modification and process engineering services (as conducted on the
date hereof, the "BUSINESS").
B. Seller owns 1,000 shares of common stock, par value $.01 of the Company
(the "COMMON STOCK"), which 1,000 shares of Common Stock constitute all of the
issued and outstanding capital stock of the Company.
C. Seller desires to sell, and Buyer desires to purchase, all of the
shares of the Common Stock owned by Seller (the "PURCHASED SHARES") on the terms
and conditions set forth herein.
D. Before the execution of this Agreement the Company has entered into an
executive employment agreement attached hereto as Exhibit A (the "EXECUTIVE
EMPLOYMENT AGREEMENT") with Xxxxxxx X. Xxxxxx, President and Chief Executive
Officer of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the
representations, warranties and covenants herein contained, the Parties hereby
agree as follows:
1. DEFINITIONS
1.1 Definitions. The following terms shall have the meanings ascribed to
them below in this Agreement:
"ADVERSE CONSEQUENCES" means all damages, dues, penalties, fines, costs,
losses, and expenses.
"AFFILIATE" means, with respect to any particular Person, any Person
controlling, controlled by or under common control with such Person, whether by
ownership or control of voting securities, by contract or otherwise, or any
partner, director, manager or executive officer of such Person.
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"BUSINESS DAY" means any day other than (a) a Saturday, Sunday or federal
holiday or (b) a day on which commercial banks in the State of Texas or New York
are authorized or required to be closed.
"BUYER INDEMNIFIED TAXES" means any and all Taxes (other than Transfer
Taxes allocated to Buyer in Section 8.2(g)) (a) imposed on the Company or any
Subsidiary of the Company for any Taxable period ending on or prior to the
Closing Date or the portion of any Straddle Period ending on the Closing Date
(determined in accordance with the provisions of Section 8.2(c)), (b) for which
the Company or any Subsidiary of the Company may be liable under Treasury
Regulation Section 1.1502-6 by reason of its having been a member of Seller's
affiliated group (or any corresponding provision of state, local or foreign
law), (c) of any other Person for which the Company or any Subsidiary of the
Company may be liable as a transferee or successor, by contract or otherwise for
any Taxable period ending on or prior to the Closing Date or the portion of any
Straddle Period ending on the Closing Date, (d) resulting from a breach of any
covenant, representation or warranty of Seller or any of its Affiliates or (e)
equal to the excess of, if any, foreign Taxes of any Subsidiary actually paid by
such Subsidiary over foreign Taxes of such Subsidiary that would have been paid
had the royalties prepaid as described in Section 6.1(c)(iii) not been prepaid
and instead had been paid when otherwise due and payable (excluding foreign
Taxes attributable to a 5% royalty free sales range), in each case not including
Taxes taken into account in determining the Final Working Capital and without
double counting any Taxes paid by Seller or the Company on or before the Closing
Date. Notwithstanding the above, Buyer Indemnified Taxes shall not include (x)
any Taxes of the Company or any Subsidiaries thereof that are directly
attributable to actions taken by Buyer or its Affiliates (including the Company
and its Subsidiaries) after the Closing Date or on the Closing Date after the
Closing that are outside of the Ordinary Course of Business, except to the
extent contemplated by the Transaction Documents or required by law; (y) any
Taxes imposed as a result of a breach by Buyer of any covenant contained in
Section 8.2; or (z) any Taxes of the Company or any Subsidiaries in respect of
Taxable periods or portions thereof beginning on or after the Closing Date
attributable to adjustments or eliminations of any net operating losses,
non-capital losses, net capital losses, capital losses, credits or tax basis of
the assets or stock of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"CO-LOCATED FACILITIES" means each facility identified as a co-located
facility on Section 1.1(a) of the Company Disclosure Letter.
"CO-LOCATION LICENSE" means the license agreement, in substantially the
form attached hereto as Exhibit C-2, for all Co-Located Facilities for which the
words "License Agreement" appear under the caption "tenure" in Section 1.1(a) of
the Company Disclosure Letter, with base rent at a rate equal to the estimated
2004 annual rent set forth with respect to each Co-Located Facility thereon,
plus associated costs in accordance with past practice, in each case for
temporary occupancy for a period ending on the earlier of the term set forth on
Section 1.1(a) of the Company Disclosure Letter after the Closing Date and the
date on which the licensee relocates affected employees to other locations, to
be entered into by Seller or its appropriate Affiliate and the Company or its
appropriate Subsidiary on or before the Closing.
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"COMPANY DISCLOSURE LETTER" means the disclosure letter delivered to Buyer
by the Company concurrently with the execution of this Agreement.
"CONFIDENTIALITY AGREEMENT" means, collectively, (i) the Confidentiality
Agreement, dated October 23, 2003, between Seller and Warburg Pincus LLC, (ii)
the Confidentiality Agreement, dated October 23, 2003, between Seller and Silver
Lake Technology Management L.L.C. and (iii) the Confidentiality Agreement, dated
October 23, 2003, between Seller and Xxxx Capital California, Inc.
"DISCLOSURE LETTERS" means each of the Company Disclosure Letter and
Seller Disclosure Letter.
"ENCUMBRANCE" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, option, right or restriction, other than (a)
mechanic's, materialmen's, and similar liens for amounts not yet due and
payable, (b) statutory liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith, (c) purchase money liens and liens
securing rental payments under capital lease arrangements that have been
disclosed pursuant hereto, (d) other liens and encumbrances not incurred in
connection with the borrowing of money that do not materially and adversely
affect the occupancy, use or value of the affected assets, (e) in the case of
the Common Stock or capital stock of Subsidiaries, restrictions arising under
applicable securities laws, (f) pledges or deposits made in the Ordinary Course
of Business in connection with workers' compensation, unemployment insurance and
other types of social security, (g) deposits to secure the performance of bids,
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the Ordinary Course of Business, (h) zoning regulations and
restrictive covenants and easements of record that do not detract in any
material respect from the value of any real property and do not materially and
adversely affect, impair or interfere with the use of any property affected
thereby, (i) public utility easements of record, in customary form, to serve any
real property, (j) landlords' liens in favor of landlords under the leases with
respect to any leased real property, (k) mortgages, deeds of trust and other
security instruments, and ground leases or underlying leases covering the title,
interest or estate of such landlords with respect to any leased real property
and to which the leases with respect to the leased real property are subordinate
and (l) any mortgage, pledge, lien, encumbrance, charge, or other security
interest, option, right or restriction described in Section 1.1(b) of the
Company Disclosure Letter; provided, however, that clauses (a) through (l)
(other than clause (e)) shall not apply to the Purchased Shares or the capital
stock of the Company's Subsidiaries.
"ENVIRONMENTAL LAWS" means all existing laws, statutes, or regulations
pertaining to Hazardous Materials and protection of the environment including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Solid Waste Disposal Act, the Federal Water Pollution
Control Act, the Clean Air Act, and the Toxic Substances Control Act, each as
amended, and similar foreign laws.
"EXHIBITS" means the exhibits that are attached to this Agreement and are
incorporated by reference herein.
"FINAL WORKING CAPITAL ADJUSTMENT AMOUNT" means an amount equal to the
Final
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Working Capital less the Estimated Working Capital, together with interest on
the absolute value of such difference at a rate equal to the average LIBOR for
the 30 days prior to the day of payment plus 0.75% per annum for the period
beginning on the Closing Date and ending on the date of payment of the Final
Working Capital Adjustment Amount as provided in Section 2.4.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied consistently with the principles used in
preparing the Financial Statements (as defined in Section 3.5 below) for the
Most Recent Fiscal Year End (as defined in Section 3.5 below).
"HAZARDOUS MATERIAL" means any substance, whether solid, liquid or gaseous
in nature that is or becomes defined as a "HAZARDOUS WASTE," a "HAZARDOUS
SUBSTANCE," a "POLLUTANT," or a "contaminant" under the Environmental Laws;
petroleum products and the constituents and fractions thereof; and asbestos and
polychlorinated biphenyls ("PCB").
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INDEBTEDNESS" means (a) indebtedness for borrowed money, (b) Liabilities
evidenced by bonds, notes, debentures or other similar instruments or by letters
of credit, including purchase money obligations or other obligations relating to
the deferred purchase price of property (other than trade payables incurred in
the Ordinary Course of Business), (c) Liabilities of Persons other than the
Company and its Subsidiaries secured by an Encumbrance on any asset of the
Company or any of its Subsidiaries, (d) Liabilities under or in respect of
letters of credit and bank guarantees (including reimbursement obligations with
respect thereto), (e) Liabilities under any sale and leaseback transaction, any
synthetic lease or tax ownership operating lease transaction or any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet, (f)
Liabilities under interest rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging or similar agreements,
(g) to the extent not otherwise included in the foregoing, any Liabilities in
respect of financing of accounts receivable or inventory, and (h) Liabilities in
the nature of guarantees of obligations of the type described in the foregoing
clauses of any other Person.
"INDEMNIFIED PARTY" means, as the context may require, a party entitled to
indemnification pursuant to Article 11 hereof.
"INDEMNIFYING PARTY" means, as the context may require, a party required
to indemnify an Indemnified Party pursuant to Article 11 hereof.
"INFRINGE" means to infringe, violate, or render unenforceable, convert,
misappropriate, or, with respect to marks, dilute.
"INTELLECTUAL PROPERTY RIGHTS" means all United States, international and
foreign intellectual property rights, including, without limitation, any or all
of the following rights: (a) all rights in inventions, and proprietary methods
and processes (in each case, whether patentable or not), as well as all United
States, international and foreign patents and applications therefor, and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part
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thereof throughout the world; (b) all confidential information, trade secrets,
and know how, including but not limited to, confidential software, source code,
invention disclosures, improvements, customer lists, supplier lists, business
plans, development projects, technical data, and documentation; (c) all rights
in expressive works of authorship, whether or not copyright registration has
been obtained therefor, including without limitation all copyrights, copyright
registrations and applications therefore and all other rights corresponding
thereto, including all moral rights of authors, throughout the world; (d) all
rights in names, marks and brand identifiers used in connection with the
Business, whether or not registration has been obtained or applied for, all
trademarks, service marks, trade names, trade dress, domain names, slogans, and
logos, and registrations and applications therefore throughout the world, and
all goodwill arising from or associated with the foregoing; (e) all maskworks
and any registrations and applications therefor throughout the world; (f) all
items constituting "Software" in Section 3.9(b)(i); and (g) all rights in the
foregoing clauses (a) through (f) enjoyed under written consents, releases, or
permissions previously obtained by the Company or by Seller for the benefit of
the Company which explicitly refer to such rights set forth in any of the
foregoing (a) through (f).
"KNOWLEDGE OF THE COMPANY" or any similar phrase means with respect to any
matter that such matter is known to any of the following Persons after
reasonable investigation: Xxxxxxx X. Xxxxxx; Xxxxx X. Xxxxxxxxxx; or Xxxxxxx X.
Xxxxxxxxxx.
"LEASE" means a lease or license for office space on the EDS-owned campus
in Plano, Texas between Seller or its appropriate Affiliate and the Company, on
terms reasonably agreeable to the Parties.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, known or unknown, matured or
unmatured or determined or determinable, including without limitation all
obligations in respect of principal, accrued interest, penalties, fees and
premiums.
"LIBOR" means, on the applicable date, the rate which appears on page 3750
on the Dow Xxxxx Telerate Service, or such other page as may replace page 3750
on that service (rounded up to the nearest 1/100 of 1%), for the purpose of
displaying London interbank offered rates of major banks for deposits of United
States Dollars.
"MATERIAL ADVERSE CHANGE" means any change, effect, development,
circumstance or condition that, in the aggregate, is materially adverse to the
assets, liabilities, condition (financial or otherwise), results of operations
or business of the Company and its Subsidiaries taken as a whole or on the
ability of the Company or Seller to consummate the transactions contemplated
hereby; provided, however, that none of the following shall be deemed in
themselves, either alone or in combination, to constitute a Material Adverse
Change: (a) any immaterial failure by the Company and/or any of its Subsidiaries
to meet internal projections or forecasts or published revenue or earnings
predictions for any period ending (or for which revenues or earnings are
released) on or after the date of this Agreement; or (b) any adverse change,
effect, development, circumstance, condition, event, occurrence or state of
facts attributable to, resulting from, or relating to (i) the announcement or
pendency of the transactions contemplated by this Agreement, (ii) conditions
affecting the industry in which the Company and its Subsidiaries participate,
the United States economy as a whole, the capital markets in general, or the
markets
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in which the Company and its Subsidiaries operate that do not disproportionately
affect the Company and its Subsidiaries (other than as a result of the outbreak
or escalation of hostilities involving the United States, the declaration by the
United States of a national emergency or war, or the occurrence of any other
calamity or crisis, including an act of terrorism), (iii) compliance with the
terms of, or the taking of any action required by, this Agreement, (iv) any
change in accounting requirements or principles or any change in applicable
laws, rules or regulations or the interpretation thereof, or (v) actions
required to be taken under applicable laws, rules, regulations, contracts or
agreements.
"MATERIAL ADVERSE EFFECT" means any change, effect, development,
circumstance or condition that, individually or in the aggregate, is materially
adverse to the assets, liabilities, condition (financial or otherwise), results
of operations or business of the Company and its Subsidiaries taken as a whole
or on the ability of the Company or Seller to consummate the transactions
contemplated hereby; provided, however, that none of the following shall be
deemed in themselves, either alone or in combination, to constitute a Material
Adverse Effect: (a) any adverse change, effect, development, circumstance,
condition, event, occurrence or state of facts primarily attributable to,
resulting from, or relating to (i) the announcement or pendency of the
transactions contemplated by this Agreement, (ii) compliance with the terms of,
or the taking of any action required by, this Agreement, or (iii) any change in
accounting requirements or principles required to be adopted by GAAP during the
period in which such change occurs.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of the
Company and its Subsidiaries in all material respects consistent with past
custom and practice.
"PERSON" means any individual, trust, corporation, partnership, limited
partnership, joint venture, limited liability company or other business
association or entity, court, governmental body or governmental agency.
"SELLER DISCLOSURE LETTER" means the disclosure letter delivered to Buyer
by Seller concurrently with the execution of this Agreement.
"SPECIAL INDEMNIFIED LOSSES" means any Adverse Consequences to any Buyer
Indemnified Person: (a) to the extent arising from (i) the audit and outstanding
IRS correction submission with respect to Seller's 401(k) plan listed on Section
3.13(a) of the Company Disclosure Letter, (ii) In re Electronic Data Systems
Corp. "ERISA" Litigation referred to in Section 3.13(a) of the Company
Disclosure Letter, or (iii) any defined benefit pension plan maintained by EDS
or any Affiliate (other than the Company or any of its Subsidiaries) prior to
Closing except to the extent rights or obligations in respect thereof are
expressly assumed hereby; (b) relating to the violations of Export
Administration Regulations referred to in Section 3.11 of the Company Disclosure
Letter, to the extent such Adverse Consequences exceed (i) the reserve
specifically allocated thereto on the Year End Balance Sheet minus (ii) the
legal fees and disbursements paid by the Company for services performed during
the period after the Most Recent Fiscal Year End pursuant to Section 7.5; and
(c) relating to the matters that are the subject of Configuration Data Systems
x. Xxxxxxxx Grumman Corp. referred to in Section 3.11 of the Company Disclosure
Letter.
"STRADDLE PERIOD" means any Taxable period beginning on or before and
ending after
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the Closing Date.
"SUBLEASES" means the subleases or functionally equivalent agreements, in
substantially the form attached hereto as Exhibit C-2, for each of the
Co-Located Facilities for which the word "Sublease" appears under the caption
"Tenure" on Section 1.1(a) of the Company Disclosure Letter, each to be entered
into by Seller or its appropriate Affiliate and the Company or its appropriate
Subsidiary on or before the Closing with base rent with respect to each such
Sublease as set forth in Section 1.1(a) of the Company Disclosure Letter,
associated costs in accordance with past practice, and sublease periods
extending to the length of the underlying lease, unless otherwise indicated
thereon, in each case unless Buyer and Seller mutually agree otherwise.
"SUBSIDIARY" means any corporation, limited liability company, limited
partnership, partnership, trust or other entity with respect to which another
person (a) has the power, directly or indirectly through one or more
intermediaries, to vote or direct the voting of sufficient securities or
interests to elect a majority of the directors or management committee or
similar governing body or (b) directly or indirectly owns at least 50% of the
outstanding capital stock or similar ownership interests.
"TARGET WORKING CAPITAL" means $5,000,000, which amount was calculated
using the methodology set forth on Exhibit F.
"TAX" or "TAXES" means any federal, state, local or foreign income, gross
receipts, sales, licenses, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, charge, fee, levy,
import or assessment of any kind whatsoever imposed by any federal, state,
local, or foreign Taxing authority, including any interest, penalty, or addition
thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRANSACTION DOCUMENTS" means this Agreement and the Transition Services
Agreements and all other documents, instruments and certificates contemplated by
this Agreement.
"TRANSITION SERVICES AGREEMENTS" means the Transition Services Agreement,
in a form mutually agreeable to Buyer and Seller, and the Subleases, Lease, if
any, and Co-Location Licenses.
"WORKING CAPITAL" as of a given date means the amount calculated by
subtracting certain of the current liabilities of the Company and its
consolidated Subsidiaries as of that date from certain of the current assets of
the Company and its consolidated Subsidiaries as of that date, and then adding
back cash in U.S. bank accounts, in each case using the methodology set forth on
Exhibit F and determined in accordance with GAAP, except that the Company's
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restructuring reserve shall not be reduced from levels included in the Year End
Balance Sheet except to the extent of actual cash expenditures made with respect
thereto.
1.2 References and Titles. Any reference to any United States, state,
local, or other foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Each defined term used in this Agreement has a comparable meaning
when used in its plural or singular form. Each gender-specific term used herein
has a comparable meaning whether used in a masculine, feminine or gender-neutral
form. The term "include" and its derivatives shall have the same construction as
the phrase "include, without limitation," and its derivatives. The section
headings contained in this Agreement are inserted for convenience or reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. Reference in this Agreement to any legal term for any law, action,
remedy, method of judicial proceeding, legal document, legal status, court,
official or any other legal concept or thing shall in respect of any
jurisdiction other than the United States be deemed to include that legal
concept or thing in that other jurisdiction which most nearly approximates that
United States legal term (in addition to any other analogous legal concept or
term specified).
2. PURCHASE AND SALE
2.1 Purchase and Sale of Common Stock. Subject to the terms and conditions
of this Agreement, at the Closing (as defined in Section 2.2), (a) Buyer will
purchase, and Seller will sell, transfer and assign to Buyer, the Purchased
Shares free and clear of all Encumbrances and (b) Buyer shall pay to Seller or
its designees by wire transfer of immediately available funds to an account or
accounts designated by Seller at least two Business Days prior to the Closing
Date an amount equal to Two Billion Fifty Million Dollars ($2,050,000,000.00)
(the "PURCHASE PRICE"); provided, that the Purchase Price shall be adjusted (i)
on the Closing Date, to reflect a Positive Estimated Working Capital Amount or a
Negative Estimated Working Capital Amount as provided in Section 2.3, (ii) after
the Closing to reflect a Positive Final Working Capital Amount or a Negative
Final Working Capital Amount as provided in Section 2.4, and (iii) after the
Closing to reflect payments in respect of Repatriated Amounts and Unrepatriated
Amounts as provided in Section 2.5. The Purchase Price shall represent the total
amount of consideration paid by Buyer for the Purchased Shares and the separate
acquisitions contemplated by Section 8.7 hereof.
2.2 Closing. (a) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
10, and subject to the satisfaction or waiver of the conditions set forth in
Article 9, the closing of the purchase and sale of the Purchased Shares and the
other transactions contemplated hereby (the "CLOSING") shall take place at 10:00
a.m., Dallas, Texas time, not later than the fifth Business Day after
termination or expiration of the applicable waiting period (and any extension
thereof) under the HSR Act, at the offices of Xxxxxx & Xxxxxx L.L.P., 3700
Xxxxxxxx Xxxx Center, 0000 Xxxx Xxx., Xxxxxx, Xxxxx 00000-0000, unless another
date, time or place is mutually agreed to in writing by Buyer and Seller. If any
of the conditions set forth in Article 9 are not satisfied or waived at the time
the Closing is to occur pursuant to this Section 2.2, Buyer and Seller may agree
to postpone the Closing to a later date (but not later than the Business Day
immediately prior to the Termination Date). The date and time on which the
Closing occurs is the "CLOSING
8
DATE."
(b) If the conditions set forth in Article 9 (other than the
conditions set forth in Sections 9.1(c) and 9.2(c)) have been met, and the
conditions set forth in Sections 9.1(c) or 9.2(c) have not been met with respect
to the stock or assets and liabilities of the Company or any of its Subsidiaries
in any non-US jurisdiction, or if any other consents required by law to effect
the change of control of such stock or assets and liabilities have not been
received (in each case excluding separate foreign acquisitions contemplated by
Section 8.7 hereof) and (i) the affected assets constitute less than 5% of the
Company's consolidated assets and (ii) the revenues generated by such assets
constituted less than 5% of the Company's consolidated revenues in 2003, then
(x) Buyer may notify Seller it wishes the Closing to proceed, in which case the
Closing shall proceed and Buyer shall indemnify Seller for all Adverse
Consequences resulting from the failure to have obtained such consents or (y)
Seller may notify Buyer that it wishes the Closing to proceed, in which case the
Closing shall proceed and Seller shall indemnify Buyer for all Adverse
Consequences resulting from the failure to have obtained such consents. If the
Closing occurs under such circumstances, until the required consents have been
received, the Company and its Subsidiaries shall cooperate with Buyer in any
lawful arrangement that is not unduly economically burdensome under which Buyer
receives the benefits of such stock or assets and is allowed to perform its
obligations under the related liabilities, to the same extent as if such stock
or assets were transferred with the purchase of the Purchased Shares at Closing.
The parties agree to undertake commercially reasonable efforts to obtain such
consents and satisfy such conditions as soon as practicable following the
Closing Date.
2.3 Working Capital Adjustment. (a) No later than three Business Days
before the Closing Date, the Company shall, and Seller shall cause the Company
to, deliver to Buyer (i) a good faith estimate of the consolidated balance sheet
for the Company and its Subsidiaries as of 11:59 p.m. on the last day of the
fiscal month that ended at least five Business Days before the Closing Date and
prepared in accordance with GAAP consistently applied with the Year End Balance
Sheet (the "CLOSING BALANCE SHEET"), (ii) a good faith estimate of Working
Capital based on the Closing Balance Sheet and using the methodology set forth
on Exhibit F, provided that the Company shall adjust such estimates as
reasonably agreed by Buyer and Seller to account for expected changes in Working
Capital between the date of the Closing Balance Sheet and the Closing Date that
are not properly included or excluded therefrom (the "ESTIMATED WORKING
CAPITAL"), and (iii) a certificate of the chief executive officer and the chief
financial officer of the Company certifying that the Estimated Working Capital
and the Closing Balance Sheet have been estimated and calculated in accordance
with this Agreement. If the Estimated Working Capital less the Target Working
Capital is a positive number (a "POSITIVE ESTIMATED WORKING CAPITAL AMOUNT"),
then the Purchase Price payable by Buyer on the Closing Date shall be increased
by an amount equal to the Positive Estimated Working Capital Amount. If the
Estimated Working Capital less the Target Working Capital is a negative number
(a "NEGATIVE ESTIMATED WORKING CAPITAL AMOUNT"), then the Purchase Price payable
by Buyer on the Closing Date shall be decreased by an amount equal to the
absolute value of the Negative Estimated Working Capital Amount.
(b) No later than 90 days after the Closing Date, the Company shall,
and Buyer shall cause the Company to, prepare and deliver to Seller (i) a
consolidated balance sheet for the Company and its Subsidiaries as of 11:59 p.m.
on the date immediately prior to the
9
Closing Date (the "FINAL BALANCE SHEET"), and (ii) a statement of Working
Capital as of 11:59 p.m. on the date immediately prior to the Closing Date based
on the Final Balance Sheet and using the methodology set forth on Exhibit F (the
"WORKING CAPITAL STATEMENT"). The Final Balance Sheet shall be prepared in
accordance with GAAP consistently applied and shall fairly present the financial
position of the Company as of 11:59 p.m. on the date immediately prior to the
Closing Date. If within 30 days following delivery of the Working Capital
Statement to Seller, Seller has not given Buyer written notice of its objection
to the Working Capital Statement (such notice must contain a statement
describing the basis of such objection), then the Working Capital reflected on
the Working Capital Statement shall be deemed final and conclusive and shall be
the "FINAL WORKING CAPITAL." If Seller gives such written notice of objection
within such 30 day period, then the issues in dispute shall be submitted for
resolution to a "big four" accounting firm to be selected jointly by Seller and
Buyer within the following 15 days (the "REFEREE"). The Referee shall determine
the Final Working Capital within 30 days after the dispute is submitted to it.
If issues in dispute are submitted to the Referee for resolution, (A) each Party
shall furnish to the Referee such work papers and other documents and
information relating to the disputed issues as the Referee may request and are
available to that Party or its Subsidiaries (or its independent auditors), shall
be afforded the opportunity to present to the Referee any material relating to
the determination of Final Working Capital and to discuss such determination
with the Referee, and shall otherwise cooperate with the Referee and the other
Parties to enable the Referee to make its determination as soon as practicable,
(B) the determination by the Referee of Final Working Capital, as set forth in a
written notice delivered to both Parties by the Referee, shall be binding and
conclusive on the Parties (except in the event of fraud), and (C) Seller and
Buyer shall each bear one-half of the fees and expenses of the Referee for such
determination.
2.4 Post-Closing Payment. In the event that the Final Working Capital less
the Estimated Working Capital is a positive number, then Buyer shall pay to
Seller an amount equal to the Final Working Capital Adjustment Amount. In the
event that the Final Working Capital less the Estimated Working Capital is a
negative number, then Seller shall pay to Buyer an amount equal to the absolute
value of the Final Working Capital Adjustment Amount. Any required payment shall
be made by Buyer or Seller, as the case may be, on the third Business Day
following the determination of Final Working Capital, in immediately available
funds by wire transfer to such bank account or accounts as the other Party may
specify.
2.5 Foreign Cash Adjustment.
(a) Closing Cash Schedule. No later than 30 days after the Closing
Date, the Company shall, and Buyer shall cause the Company to, prepare and
deliver to Seller (i) a statement of the amount, in local currencies, of cash
and cash equivalents held in each country other than the United States by the
Company or any of its Subsidiaries as of 11:59 p.m. on the date immediately
prior to the Closing Date (the "CLOSING CASH SCHEDULE"). If within 30 days
following delivery of the Closing Cash Schedule to Seller, Seller has not given
Buyer written notice of its objection to the Closing Cash Schedule (such notice
must contain a statement describing the basis of such objection), then the
Closing Cash Schedule shall be deemed final and conclusive and shall be the
"FINAL CLOSING CASH SCHEDULE." If Seller gives such written notice of objection
within such 30 day period, then the issues in dispute shall be submitted for
resolution to a "big four" accounting firm to be selected jointly by Seller and
Buyer within the
10
following 15 days (the "REFEREE"). The Referee shall determine the Final Closing
Cash Schedule within 30 days after the dispute is submitted to it. If issues in
dispute are submitted to the Referee for resolution, (A) each Party shall
furnish to the Referee such work papers and other documents and information
relating to the disputed issues as the Referee may request and are available to
that Party or its Subsidiaries (or its independent auditors), shall be afforded
the opportunity to present to the Referee any material relating to the
determination of the Final Closing Cash Schedule and to discuss such
determination with the Referee, and shall otherwise cooperate with the Referee
and the other Parties to enable the Referee to make its determination as soon as
practicable, (B) the determination by the Referee of the Final Closing Cash
Schedule, as set forth in a written notice delivered to both Parties by the
Referee, shall be binding and conclusive on the Parties (except in the event of
fraud), and (C) Seller and Buyer shall each bear one-half of the fees and
expenses of the Referee for such determination.
(b) Facilitation of Repatriation. Buyer and the Company shall
cooperate with Seller's reasonable requests to facilitate the repatriation to
the United States of cash and cash equivalents included on the Final Closing
Cash Schedule during the 180 day period after the Closing Date.
(c) Monthly Repatriation Payments. If the Final Closing Cash
Schedule has been determined prior to any of the first five calendar month ends
after the Closing Date, then no later than 30 days after such month end, the
Company shall, and Buyer shall cause the Company to, prepare and deliver to
Seller a statement (a "MONTHLY REPATRIATION SCHEDULE") of the amount in U.S.
dollars repatriated to the United States on or prior to such month end from each
foreign country identified on the Closing Cash Schedule with respect to the cash
and cash equivalents in local currencies included on the Closing Cash Schedule,
net of all Adverse Consequences related to such repatriation (the sum of such
net amounts, the "INTERIM REPATRIATED AMOUNT"), and Buyer shall pay to Seller an
amount equal to the difference between (i) the Interim Repatriated Amount as of
such month end and (ii) the aggregate amount previously paid pursuant to this
Section 2.5(c), in immediately available funds by wire transfer to such bank
account or accounts as the other Party may specify.
(d) Repatriation Schedule. No later than 210 days after the Closing
Date, the Company shall, and Buyer shall cause the Company to, prepare and
deliver to Seller a statement (the "REPATRIATION SCHEDULE") of (i) the amount in
U.S. dollars repatriated to the United States from each foreign country
identified on the Closing Cash Schedule on or prior to the 180th day after the
Closing Date with respect to the cash and cash equivalents in local currencies
included on the Closing Cash Schedule, net of all Adverse Consequences related
to such repatriation (the sum of such net amounts, the "REPATRIATED AMOUNT") and
(ii) the amount in U.S. dollars not repatriated to the United States from each
foreign country identified on the Closing Cash Schedule on or prior to the 180th
day after the Closing Date with respect to the cash and cash equivalents in
local currencies included on the Closing Cash Schedule (the sum of such amounts,
the "UNREPATRIATED AMOUNT"). If within 30 days following delivery of the
Repatriation Schedule to Seller, Seller has not given Buyer written notice of
its objection to the Repatriation Schedule (such notice must contain a statement
describing the basis of such objection), then the Repatriation Schedule, the
Repatriated Amount and the Unrepatriated Amount shall be deemed final and
conclusive and shall be the "FINAL REPATRIATION SCHEDULE," the "FINAL
REPATRIATED AMOUNT" and the "FINAL UNREPATRIATED AMOUNT," respectively. If
Seller gives such written
11
notice of objection within such 30 day period, then the issues in dispute shall
be submitted for resolution to a "big four" accounting firm to be selected
jointly by Seller and Buyer within the following 15 days (the "REFEREE"). The
Referee shall determine the Final Repatriation Schedule, Final Repatriated
Amount and Final Unrepatriated Amount within 30 days after the dispute is
submitted to it. If issues is dispute are submitted to the referee for
resolution, (A) each Party shall furnish to the Referee such work papers and
other documents and information relating to the disputed issues as the Referee
may request and are available to that Party or its Subsidiaries (or its
independent auditors), shall be afforded the opportunity to present to the
Referee any material relating to the determination of the Final Repatriation
Schedule, Final Repatriated Amount and Final Unrepatriated Amount and to discuss
such determination with the Referee, and shall otherwise cooperate with the
Referee and the other Parties to enable the Referee to make its determination as
soon as practicable, (B) the determination by the Referee of the Final
Repatriation Schedule, Final Repatriated Amount and Final Unrepatriated Amount,
as set forth in a written notice delivered to both Parties by the Referee, shall
be binding and conclusive on the Parties (except in the event of fraud), and (C)
Seller and Buyer shall each bear one-half of the fees and expenses of the
Referee for such determination.
(e) Final Payment. On the third Business Day following the
determination of the Final Repatriated Amount and Final Unrepatriated Amount,
Buyer shall pay to Seller an amount equal to (i) the difference between (A) the
sum of (1) the Final Repatriated Amount plus (2) the lesser of (x) $2,500,000 or
(y) 20% of the Final Unrepatriated Amount and (B) the amounts previously paid
pursuant to Section 2.5(c), in immediately available funds by wire transfer to
such bank account or accounts as the other Party may specify.
2.6 Access. Buyer will make available (or cause to be made available) to
Seller and its auditors and advisors all records and work papers used in
preparing the Working Capital Statement, the Closing Cash Schedule or the
Repatriation Schedule in connection with its reviews thereof in accordance with
Section 2.4 or Section 2.5.
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
Seller and the Company hereby jointly and severally represent and warrant
to Buyer, as of the date of this Agreement and as of the Closing Date, that:
3.1 Organization, Qualification and Authority.
(a) The Company. The Company is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to carry on the business
in which it is presently engaged and to own and use the properties presently
owned and used by it. True and correct copies of the Company's certificate of
incorporation and bylaws, as amended to date, have been made available to Buyer.
The Company is qualified to conduct business and is in good standing or is
active, as the case may be, under the laws of each jurisdiction wherein the
nature of its business or its ownership of property requires it to be so
qualified, except where the failure to be so qualified could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
12
(b) Subsidiaries. Except as set forth in Section 3.1(b) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries owns
or holds the right to acquire any stock, membership interest, partnership
interest, joint venture interest or other equity ownership interest in any other
Person. Each Subsidiary of the Company is either wholly owned by the Company or
a Subsidiary of the Company as indicated in Section 3.1(b) of the Company
Disclosure Letter, except as set forth in Section 3.1(b) of the Company
Disclosure Letter. Except as set forth in Section 3.1(b) of the Company
Disclosure Letter, each of the Subsidiaries identified in Section 3.1(b) of the
Company Disclosure Letter is qualified to conduct business and is in good
standing or is active, as the case may be, under the laws of each jurisdiction
wherein the nature of its business or its ownership of property requires it to
be so qualified, except where the failure to be so qualified could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the Company's Subsidiaries has all requisite corporate
or other organizational power and authority to carry on the business in which it
is presently engaged and to own and use the properties presently owned and used
by it. Each of the outstanding shares of capital stock of each of the
Subsidiaries is duly authorized, validly issued, fully paid and, except for the
Subsidiaries organized outside of the United States and identified on Section
3.1(b) of the Company Disclosure Letter, nonassessable, and the Company is the
beneficial owner of all of the capital stock or similar ownership interests in
the Company's Subsidiaries and holds such stock or interests free and clear of
all Encumbrances.
3.2 Capitalization. Section 3.2 of the Company Disclosure Letter sets
forth (a) the authorized capital stock of the Company, (b) the number of issued
and outstanding shares of each class of the authorized capital stock of the
Company, all of which are owned of record by Seller, and (c) all of the current
directors and other executive officers of the Company. All of the issued and
outstanding shares of Common Stock have been duly authorized and are validly
issued, fully paid, and nonassessable. Except as set forth on Section 3.2 of the
Company Disclosure Letter, there are no currently outstanding or authorized
options, warrants, rights, contracts, rights of first refusal or first offer,
calls, preemptive rights, puts, rights to subscribe, conversion rights, voting
trusts, registration rights or other agreements or commitments providing for the
issuance, disposition, or acquisition of any of the Company's Common Stock or
securities convertible into or exchangeable for its Common Stock, or for the
issuance, disposition, or acquisition of any of the capital stock or similar
outstanding ownership interests of the Company's Subsidiaries or securities
convertible into or exchangeable for any of the capital stock or similar
outstanding ownership interests of the Company's Subsidiaries. There are no
outstanding or authorized equity appreciation, phantom equity, or similar rights
with respect to the Company or any of its Subsidiaries. As of the Closing, the
Purchased Shares will represent all of the then issued and outstanding capital
stock of the Company.
3.3 Authorization; Valid and Binding Agreement. The execution, delivery
and performance by the Company of the Transaction Documents to be executed by
the Company and the consummation of the transactions contemplated thereby have
been duly and validly authorized by all requisite corporate action of the
Company, and no other proceedings on its part are necessary to authorize the
execution, delivery or performance of the Transaction Documents to be executed
by the Company. The Transaction Documents to be executed by the Company have
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other Parties thereto, constitute
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms, except as enforceability
13
may be limited by bankruptcy laws, other similar laws affecting creditors'
rights and general principles of equity affecting the availability of specific
performance and other equitable remedies.
3.4 Noncontravention; Consents.
(a) Noncontravention. Except as set forth on Section 3.4(a) of the
Company Disclosure Letter, and except where the failure of any of the following
to be true could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, the execution and the delivery of the
Transaction Documents by the Company and Seller and the consummation by them of
the transactions contemplated thereby will not (i) violate or conflict in any
way with any statute, regulation, law, rule, ordinance or common law doctrine
applicable to the Company or its Subsidiaries, (ii) violate or conflict in any
way with any judgment, order, decree, stipulation, injunction, charge or other
restriction of any government, governmental agency or court to which the Company
or any of its Subsidiaries is subject or any provision of the Company's or any
of its Subsidiaries' certificate of incorporation, bylaws or similar
organizational documents, (iii) result in a breach of, constitute a default
under (with or without notice or lapse of time, or both), result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent or approval under, (a) any Contract
(as defined in Section 3.10(a)), or (b) other lease, sublease, license,
sublicense, franchise, permit, indenture, agreement for borrowed money or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which it is bound, or (iv) result in the loss of any benefit to the
Company or any Subsidiary or in the creation of any Encumbrance on the Purchased
Shares or on any assets or properties of the Company or any Subsidiary pursuant
to any note, bond, mortgage, indenture, contract, agreement, lease license,
permit, franchise or other instrument to which Seller, the Company, or any
Subsidiary is a party or by which any of such assets or properties is bound or
affected.
(b) Consents. Except as set forth on Section 3.4(b) of the Company
Disclosure Letter, except where the failure of any of the following to be true
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and except for the applicable requirements of the HSR
Act or any similar competition or foreign investment laws in any foreign
jurisdiction ("COMPETITION LAWS"), the Company and its Subsidiaries are not
required to submit any notice, report or other filing with any governmental
authority in connection with the execution, delivery or performance by them of
this Agreement or the consummation of the transactions contemplated hereby, and
no consent, approval or authorization of any governmental or regulatory
authority or any other party or Person is required to be obtained by them in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
3.5 Financial Statements, Books and Records.
(a) The Company has provided Buyer with the following financial
statements, with respect to each such period which has been completed
(collectively the "FINANCIAL STATEMENTS"): (i) audited consolidated balance
sheets as of December 31, 2002, and December 31, 2003 (the "YEAR END BALANCE
SHEET"), and related audited consolidated statements of income and cash flows of
the Company and its Subsidiaries for the fiscal years ended December
14
31, 2001, December 31, 2002, and December 31, 2003 (the "MOST RECENT FISCAL YEAR
END"); and (ii) monthly unaudited financial statements of the Company and its
Subsidiaries in the form customarily prepared by management for internal use for
each complete month beginning January 1, 2004 (the "MONTHLY STATEMENTS"). The
Financial Statements (other than the Monthly Statements), including the notes
thereto, have been prepared in accordance with GAAP and fairly present in all
material respects the financial condition and results of operations of the
Company and its Subsidiaries (taken as a whole) as of the times and for the
periods referred to therein. The Monthly Statements have been prepared in
accordance with the methods customarily employed by the Company for the
preparation of monthly financial statements. The Company received certain
allocated charges and credits during the fiscal year ended December 31, 2003, as
reflected in note 10 to the Financial Statements for such period and the summary
detail of which is described in Section 3.5 of the Company Disclosure Letter.
Such charges and credits, while believed by Seller to be reasonable, do not
necessarily reflect the amounts which would have resulted from arm's length
transactions.
(b) As of the date of this Agreement, there are no Liabilities of
the Company or any of its Subsidiaries that are reasonably expected to have a
Material Adverse Effect other than Liabilities: (i) reflected or reserved
against on the Year End Balance Sheet (or the notes thereto); (ii) incurred
since the Latest Balance Sheet Date solely in the Ordinary Course of Business;
(iii) incurred under the Transaction Documents; (iv) that are disclosed in this
Article 3 or the Company Disclosure Letter or (v) with respect to Taxes.
3.6 Recent Events. Except as set forth on Section 3.6 of the Company
Disclosure Letter, since the Most Recent Fiscal Year End through the date of
this Agreement, the Company and its Subsidiaries have been operated solely in
the Ordinary Course of Business and have not experienced or suffered any
Material Adverse Effect. Without limiting the generality of the foregoing,
except as set forth in Section 3.6 of the Company Disclosure Letter, since the
Most Recent Fiscal Year End, none of the Company or any of its Subsidiaries, or
(on behalf of the Company or any of its Subsidiaries) Seller or any of its
Subsidiaries, has:
(a) borrowed any amount or incurred or become subject to any
material liabilities, other than (i) liabilities incurred in the Ordinary Course
of Business and borrowings from Seller necessary to meet working capital
requirements in the Ordinary Course of Business, (ii) liabilities under the
Transaction Documents, (iii) liabilities for fees and expenses incurred in
connection with the transactions contemplated in the Transaction Documents or
the alternative sale of a minority interest in the Company or initial public
offering of the Company's common stock, and (iv) liabilities that are not
material to the financial condition or operating results of the Company and its
consolidated Subsidiaries, taken as a whole;
(b) sold, leased, licensed, transferred, assigned, abandoned or
permitted to lapse any material assets, rights or properties, tangible or
intangible, in whole or in part, other than in the Ordinary Course of Business;
(c) amended its certificate of incorporation, bylaws, or similar
organizational documents or the terms of any of its capital stock or similar
ownership interests, or issued, sold or transferred any of its capital stock or
other equity securities, securities convertible into its capital stock or other
equity securities or warrants, options or other rights to acquire its capital
15
stock or other equity securities, or any bonds or debt securities, or paid any
dividend;
(d) experienced any material damage, destruction, or loss (whether
or not covered by insurance) to any material assets (other than ordinary wear
and tear); or
(e) made or committed to make any capital expenditures (including
capital leases but excluding operating leases and capitalized internal software
costs) for a single project in excess of $1,000,000 or entered into any other
material transaction outside the Ordinary Course of Business;
(f) agreed to complete or completed any acquisition (by merger,
consolidation, or acquisition of stock or assets) of any Person or division
thereof for a purchase price in excess of $1,000,000;
(g) increased the compensation payable or paid, whether
conditionally or otherwise, to any director, officer, employee, consultant or
agent other than in the Ordinary Course of Business or pursuant to the Executive
Employment Agreement, amended the Executive Employment Agreement, or entered
into or amended arrangements requiring severance, change of control or other
payments in connection with the transactions contemplated hereby;
(h) permitted the creation of any Encumbrances on any properties or
assets (whether tangible or intangible) other than (i) Encumbrances that will be
released at or prior to the Closing and (ii) Encumbrances on assets having a
value not exceeding $500,000 in the aggregate;
(i) after the date of this Agreement, modified, amended, assigned,
terminated (other than by expiration) or relinquished any Contract, other than
in the Ordinary Course of Business; or
(j) entered any agreement to take any actions specified in this
Section 3.6.
3.7 Tax Matters.
(a) Tax Returns. Except as set forth on Section 3.7(a) of the
Company Disclosure Letter, the Company, its Subsidiaries and each affiliated,
consolidated, combined or unitary group of which the Company or any of its
Subsidiaries is or was a member have timely filed all material Tax Returns that
were required to be filed on or prior to the date hereof. All such Tax Returns
were correct and complete in all material respects for the periods covered
thereby, and all material Taxes that have become due, whether or not shown to be
due on such Tax Returns, have been paid prior to their due dates. Except for
Taxes that are being contested in good faith, the Company and its Subsidiaries
withheld and paid when due (or set aside in accounts for such purpose) all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor, foreign
payee or other third party.
(b) Tax Liens. There are no liens for Taxes (other than for current
Taxes not yet due and payable and for Taxes that are being contested in good
faith) on any assets of the
16
Company or any of its Subsidiaries.
(c) Audits. Except as set forth on Section 3.7(c) of the Company
Disclosure Letter, no audits or other administrative proceedings or any court
proceedings are currently pending or have been threatened in writing with regard
to any Taxes or Tax Return of the Company or any Subsidiary.
(d) Tax Sharing Agreements. Except as set forth in Section 3.7(d) of
the Company Disclosure Letter, none of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement.
(e) Consolidated Return Liability. Except as set forth on Section
3.7(e) of the Company Disclosure Letter, none of the Company and its
Subsidiaries on or after January 1, 1996 (i) has been a member of an "affiliated
group," as defined in Section 1504(a) of the Code, filing a consolidated federal
income Tax Return (other than a group the common parent of which is Seller, the
Company, or any Subsidiary of the Company) or (ii) has any liability for the
Taxes of any Person (other than the Company and its Subsidiaries and the members
of the affiliated group the common parent of which is Seller) under Treasury
Regulation Section 1.1502-6 (or any corresponding provision of state, local or
foreign law), as transferee or successor, by contract or otherwise.
(f) Adjustments. None of the Company and its Subsidiaries is or has
been required to make any adjustment pursuant to Section 481(a) of the Code (or
any predecessor provision) or any similar provision of state, local or foreign
Tax law by reason of any change in any accounting methods, or will be required
to make such an adjustment as a result of the transactions contemplated herein,
and there is no application pending with any taxing authority requesting
permission for any changes in any of its accounting methods for Tax purposes. To
the Knowledge of the Company, no taxing authority has in writing proposed any
such adjustment or change in accounting method.
(g) Post-Closing Inclusions. Except as set forth on Section 3.7(g)
of the Company Disclosure Letter, none of the Company and its Subsidiaries will
be required to include any amount in taxable income or exclude any item of
deduction or loss from taxable income, or will be subject to any Tax, for any
taxable period (or portion thereof) ending after the Closing Date as a result of
(i) any closing agreement with any taxing authority (other than a closing
agreement relating to a Seller Consolidated Return) executed on or prior to the
Closing Date, or (ii) an installment sale or open transaction disposition made
on or prior to the Closing Date.
(h) Parachute Payments. None of the Company nor any of its
Subsidiaries is a party to any agreement, contract, arrangement or plan that, as
a result of the transactions contemplated by this Agreement, will result in the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code (or any corresponding provision of state, local or foreign tax law).
(i) Subpart F Income. During the period beginning January 1, 2004
and ending on the Closing Date, none of the Subsidiaries will generate any
material subpart F income
17
(as defined in section 952(a) of the Code) outside the Ordinary Course of
Business.
3.8 Properties.
(a) Except for the property addressed in Section 3.9, each of the
Company and its Subsidiaries has indefeasible title to, or valid leasehold
interests in, all of its properties and assets, free and clear of all
Encumbrances. Sections 3.8(a)(i) of the Company Disclosure Letter sets forth a
list of all owned real property of the Company and its Subsidiaries, and Section
3.8(a)(ii) of the Company Disclosure Letter sets forth a list of all leased real
property of the Company and its Subsidiaries. Each of the Company and its
Subsidiaries is not in default of any material obligations of any material real
property leases to which it is a party, and all such material leases are in full
force and effect. Seller and its Affiliates are not in default of any material
obligations of any real property leases to which any of them is a party and with
respect to which the Company or one of its Subsidiaries will be a party to a
Sublease in accordance with this Agreement that is material to the Business, and
all such leases are in full force and effect.
(b) The assets (including intangible assets), rights and properties
of the Company and its Subsidiaries include all of the assets, rights or
properties of any kind that are material to or necessary for the Business as it
is now conducted and is currently intended to be conducted.
3.9 Intellectual Property; Software.
(a) Intellectual Property.
(i) Status. Set forth on Section 3.9(a) of the Company
Disclosure Letter is a true and complete list of all patents, patent
applications, registered trademarks and service marks, unregistered trademarks
and service marks, trademark and service xxxx applications, trade names, domain
names and copyright registrations currently owned by the Company and its
Subsidiaries (together with all other Intellectual Property Rights owned by the
Company or its Subsidiaries, the "OWNED INTELLECTUAL PROPERTY"). Set forth on
Section 3.9(a) of the Company Disclosure Letter is a true and complete list of
all material royalty-bearing licenses to the Company and its Subsidiaries
relating to Intellectual Property Rights currently used in the Business of the
Company and its Subsidiaries (all items so listed or required to be so listed,
the "LICENSED INTELLECTUAL PROPERTY"). The Owned Intellectual Property is
subsisting and valid. Except as set forth in Section 3.9(a) of the Company
Disclosure Letter, no action, suit, proceeding, complaint, claim or demand is
pending or, to the Knowledge of the Company, threatened, which challenges the
validity, enforceability or ownership of the Owned Intellectual Property. Except
as set forth in Section 3.9(a)(i) of the Company Disclosure Letter and to the
Knowledge of the Company, (i) no party to any license, sublicense, agreement or
permission covering the Licensed Intellectual Property is in breach or default
and (ii) all such agreements or permissions are legal, valid, binding,
enforceable against all parties thereto, except as enforcement may be limited by
bankruptcy, insolvency, or other similar laws affecting the rights and remedies
of creditors generally and the general principles of equity. Except as set forth
in Section 3.9(a)(i) of the Company Disclosure Letter, no action, suit,
proceeding, complaint, claim or demand is pending or, to the Knowledge of the
Company, threatened, which challenges the validity, enforceability or legality
of any agreement granting the Company the right to exploit the
18
Licensed Intellectual Property.
(ii) Ownership/Right to Use. The Company or one of its
Subsidiaries owns, or has the license or right to use (without additional
license fees or royalties other than in Contracts identified in Section 3.10(a)
of the Company Disclosure Letter) in the United States and in any foreign
country in which the Company and its Subsidiaries conduct business, all
Intellectual Property Rights currently used to conduct the Business as currently
conducted, except for such licenses the lack of which could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Except as set forth in Section 3.9(a)(ii) of the Company Disclosure Letter, all
Intellectual Property Rights owned by the Company or its Subsidiaries, or used
by the Company or its Subsidiaries in the Business immediately prior to the
Closing, will be owned or available for use by the Company or its Subsidiaries
on identical terms immediately subsequent to the Closing free and clear of any
Encumbrances.
(iii) No Infringement. To the Knowledge of the Company, the
Business as currently conducted by the Company or any of its Subsidiaries does
not Infringe any Intellectual Property Rights of any other Person, and except as
disclosed in Section 3.9(a)(iii) of the Company Disclosure Letter the Company
has not received within the last twelve (12) months prior to the date of this
Agreement (or earlier, if the allegations in such notices remain unresolved) any
written notices of any infringement or violation by the Company or any of its
Subsidiaries (including invitations for a license) with respect to the
Intellectual Property Rights of any Person. To the Knowledge of the Company and
except as disclosed in Section 3.9(a)(iii) of the Company Disclosure Letter, no
Person is Infringing the Intellectual Property Rights owned or exclusively
licensed to the Company or any of its Subsidiaries.
(iv) Assignment. The Company and its Subsidiaries have a
standard practice of obtaining, and to the Knowledge of the Company, have
obtained from each employee and independent contractor a written agreement under
which each such person or entity is obligated to disclose, transfer, and fully
assign, to the Company, without receipt by such person of any additional value
therefor (other than such person's contract, employment, normal salary, and
benefits) any inventions, developments, and discoveries, and/or Intellectual
Property Rights, which during the period of employment or engagement with or by
the Company and its Subsidiaries, he or she, makes or conceives of, either
solely or jointly with others, that relate to any subject matter with which his
or her work for the Company or its Subsidiaries may be concerned, or relate to
or are connected with the present or anticipated business, products, services,
or projects of the Company or its Subsidiaries, or involve the use of the
Company's or its Subsidiaries, time, materials, or facilities.
(v) Confidential Information. The Company and its Subsidiaries
have a standard written practice of obtaining, and to the Knowledge of the
Company, have obtained legally binding written confidentiality agreements
containing reasonable protective terms from all employees, independent
contractors, and third persons, with whom the Company and its Subsidiaries have
shared material, confidential, and/or proprietary information: (i) of the
Company or its Subsidiaries; or (ii) received from others which the Company or
its Subsidiaries are obligated to treat as confidential, which agreements
require such employees and third parties to keep such information confidential.
The Company has not taken any action to jeopardize its trade secrets embodied in
any of its material software products.
19
(b) Software.
(i) "OWNED SOFTWARE" means all computer programs and/or
software programs (including, but not limited to, all source code, object code,
firmware, programming tools and/or documentation and related materials),
including without limitation, computer programs used by the Company in the
planning, development, testing and/or acceptance phase, owned or purported to be
owned by the Company or any of its Subsidiaries. "LICENSED SOFTWARE" means all
material computer programs and/or software programs (including, but not limited
to, all source code, object code, firmware, programming tools and/or
documentation and related materials) licensed to and used by the Company or any
of its Subsidiaries by any third party (other than any off-the-shelf computer
programs licensed to the Company or any of its Subsidiaries under a shrink wrap
license) (the Licensed Software and the Owned Software, the "SOFTWARE").
(ii) Except as set forth on Section 3.9(b)(ii) of the Company
Disclosure Letter and except for Licensed Software incorporated into the
Business's products free and clear of any obligation on the part of the Company
other than for payments (which are up to date), confidentiality and other
covenants contained in the applicable license agreements regarding the Licensed
Software, the Company, directly or through its Subsidiaries, owns all right,
title and interest, and has the right to sell, license, transfer, assign,
convey, use, and otherwise exploit all of the Owned Software, free and clear of
all Encumbrances. The Company, directly or through its Subsidiaries, is in
actual possession of or has necessary control over: (i) the source code and
object code and all related materials for each computer program included in the
Owned Software; and (ii) the object code and, to the extent required for the use
of the Software as currently used in the Business or as currently offered to the
Business's customers or potential customers, the source code, for each computer
program included in the Licensed Software. Except where the failure to do so
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company, directly or through its Subsidiaries, is
in possession of or has necessary control over all documentation (including,
without limitation, all related engineering specifications, program flow charts,
installation and user manuals) and know-how required for the use and revision of
the Software as currently used, or that is being designed and/or developed, in
the Business or as currently offered to the Business's customers or potential
customers. Except for computer programs described in Section 3.9(b)(ii) of the
Company Disclosure Letter, the Software constitutes all the computer programs
necessary to conduct the Business as currently conducted by the Company and its
Subsidiaries. Except as set forth in Section 3.9(b)(ii) of the Company
Disclosure Letter, other than pursuant to agreements entered into in the
Ordinary Course of Business, no person other than the Company and its
Subsidiaries has any material ownership right or interest in or with respect to
the Owned Software or any rights to sell, license, transfer, use or otherwise
exploit the Owned Software.
(iii) Since the Company and its Subsidiaries have owned the
Owned Software, the Company and its Subsidiaries have disclosed source code to
the Owned Software only pursuant to written confidentiality terms that
reasonably protect the Company's rights in such Owned Software. To the Knowledge
of the Company, except as disclosed in accordance with such confidentiality
agreements or valid source code escrow agreements or except as set forth in
Section 3.9(b)(iii) of the Company Disclosure Letter, no Person (other than
Company
20
and its Subsidiaries) is in possession of any source code for any computer
program included in the Owned Software or has any rights to the same.
(iv) Except as set forth on Section 3.9(b)(iv) of the Company
Disclosure Letter, neither the Company or any Subsidiary is obligated to support
or maintain any of the Owned Software except pursuant to agreements terminable
by the Company (other than for cause) on a periodic basis and that provide for
periodic payments to the Company for such services.
(v) To the Knowledge of the Company, the Owned Software and
all software products of the Company and its Subsidiaries function in accordance
with their documentation in all material respects, and to the Knowledge of the
Company, do not Infringe on the Intellectual Property Rights of any Person.
Neither the Company nor any Subsidiary is or is alleged to be in material breach
of any license to the Owned Software.
(vi) None of the Owned Software or any software products of
the Company or its Subsidiaries, except as disclosed in the documentation for
such Owned Software or software products or in any license agreements therefor,
contain any time bomb, virus, worm, trojan horse, back door, drop dead device,
or any other code that would interfere with the normal operation of the same,
would allow circumvention of security controls for the same, or that is intended
to cause damage to hardware, software or data.
(vii) The Owned Software is Year 2000 Compliant and does not
use windowing or any other Year 2000 remediation technique that is subject to
expiration within 10 years of the date of this Agreement. For purposes of this
Agreement, "YEAR 2000 COMPLIANT" means that neither performance nor
functionality will be adversely affected by dates prior to, during or after the
year 2000 and that the year 2000 will be recognized as a leap year.
(viii) No Federal, state, local or other governmental entity
nor any university, college, or academic institution has rights in Owned
Software other than pursuant to a valid, nonexclusive license granted by the
Company.
3.10 Contracts.
(a) Material Contracts. Section 3.10(a) of the Company Disclosure
Letter lists, as of the date of this Agreement, each of the contracts,
agreements, leases, subleases, licenses, sublicenses, plans, arrangements,
commitments and other documents and instruments of the following types (each as
required to be so listed, a "CONTRACT"):
(x) to which the Company or any of its Subsidiaries is a party:
(i) any material written arrangement or agreement with any of
the Persons identified in Section 3.19(a) of the Company Disclosure Letter;
(ii) any material written arrangement concerning a
partnership, limited liability company, joint venture or business alliance;
(iii) any material written arrangement or agreement with any
of the
21
Persons identified in Section 3.19(b) of the Company Disclosure Letter;
(iv) any contract for the employment of any officer of the
Company or its Subsidiaries on a full-time or consulting basis, and any
arrangement requiring severance, change of control or other payments in
connection with the transactions contemplated hereby;
(v) any written agreement or commitment with respect to the
lending or investing of funds by the Company to or in other Persons;
(vi) any written material agreement or commitment with Seller
or any officer, director, or Affiliate of the Company or a Subsidiary that will
not terminate automatically upon the Closing;
(vii) any agreement for the acquisition or disposition of a
business or business line (by way of stock purchase, asset purchase, merger,
consolidation or other business combination) for a purchase price of $25 million
or more entered into on or after January 1, 1999 under which the Company or any
of its Subsidiaries is, or may become, obligated to pay any amount in respect of
indemnification obligations, purchase price adjustment or otherwise;
(viii) any contracts or agreements containing covenants
restricting the Company or any of its Subsidiaries from engaging in any line of
business or competing with any Person; and
(ix) any credit agreement, loan agreement, guarantee, note or
other evidence of Indebtedness or agreement providing for Indebtedness; and
(y) which relates to the Business and to which both (i) Seller or any Seller
Subsidiary is a party, and (ii) any of General Motors, its Subsidiaries, or the
U.S. federal government is a party.
(b) No Breach. The Company has made available to Buyer a correct and
complete copy of each arrangement (including all amendments thereto) listed or
required to be listed in Section 3.10(a) of the Company Disclosure Letter. With
respect to each arrangement so listed or required to be listed: (i) the written
arrangement is legal, valid, binding and enforceable against the Company or a
Subsidiary (as the case may be) and, to the Company's Knowledge, legal, valid,
binding and enforceable against each other party thereto, in each case except as
enforcement may be limited by bankruptcy, insolvency, or other similar laws
affecting the rights and remedies of creditors generally and the general
principles of equity; and (ii) neither the Company nor a Subsidiary (as the case
may be) nor any other party is in breach or default, except for such breaches,
defaults, terminations, modifications or accelerations that have been cured or
waived or that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.11 Litigation. Except as set forth on Section 3.11 of the Company
Disclosure Letter, there are no actions, suits, proceedings, claims,
arbitrations or investigations (collectively, "ACTIONS") pending or, to the
Company's Knowledge, threatened against or involving the Company or any
Subsidiary, or any of the assets, rights or properties of the Company or any
Subsidiary, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency, court or
instrumentality, domestic
22
or foreign, or any arbitral or other forum, that (a) could, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, (b)
could reasonably be expected to prevent, enjoin, alter or materially delay the
consummation of the transactions contemplated hereby or (c) could reasonably be
expected to result in any change in the current equity ownership of the Company
or any Subsidiary, nor, to the Company's Knowledge, is there any basis for any
of the foregoing. Neither the Company nor any Subsidiary, nor any of the assets
or properties of the Company or any Subsidiary, is subject to any outstanding
judgment, order or decree, stipulation, charge, injunction or other restriction
of any court or any of the other foregoing bodies.
3.12 Employees; Employment Matters.
(a) Collective Bargaining Agreements. Except as set forth on Section
3.10(a) of the Company Disclosure Letter, neither the Company nor any Subsidiary
is a party to or bound by any collective bargaining agreement.
(b) Compliance with Laws. To the Company's Knowledge, the Company
and its Subsidiaries have materially complied with all applicable laws relating
to labor or labor relations and employment standards, including any provisions
thereof relating to wages, hours, overtime pay, immigration control, employee
safety, termination pay, vacation pay, fringe benefits, employee benefits,
collective bargaining and the payment and/or accrual of the same and all
insurance and all other costs and expenses applicable thereto, except where such
noncompliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and, to the Company's Knowledge,
neither the Company nor any Subsidiary is liable for any arrearage, or any costs
or penalties for failure to comply with any of the foregoing.
(c) Employment Claims. As of the date of this Agreement, except as
set forth on Section 3.12(c) of the Company Disclosure Letter, no charge or
complaint of employment discrimination or other similar charge or complaint
against the Company or any Subsidiary has been filed with any local, state or
federal agency, or any court, during the last twelve (12) months, or is pending
before any such agency or court or, to the Knowledge of the Company, is
threatened.
3.13 Employee Benefit Plans.
(a) ERISA. Set forth on Section 3.13(a) of the Company Disclosure
Letter is a complete and accurate list of all "pension plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (the "U.S. PENSION PLANS"), "welfare plans" (as defined in Section
3(1) of ERISA) (the "U.S. WELFARE PLANS"), and, without limitation, all stock
purchase, stock option, restricted stock or other equity-based plans, deferred
compensation plans or arrangements, severance, employment, change-in-control,
collective bargaining, bonus, incentive, employee loan, and all other employee
fringe benefit plans, arrangements, and general employee benefit plans under
which (i) any current or former U.S. employee, director or consultant of the
Company or its Subsidiaries has any present or future right to benefits and
which are contributed to, sponsored by, or maintained by the Company or its
Subsidiaries or (ii) the Company or any of its Subsidiaries has any present or
future liability.
23
The U.S. Pension Plans, the U.S. Welfare Plans, and the other foregoing plans,
agreements, programs, policies, and arrangements are collectively referred to as
the "U.S. PLANS." Each of the U.S. Pension Plans that is intended to be
qualified under section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service or has submitted a
request for such a letter within the applicable remedial amendment period. To
the Knowledge of the Company and except as set forth on Section 3.13(a) of the
Company Disclosure Letter, nothing has occurred, whether by action or failure to
act that could reasonably be expected to cause a loss of such qualification. The
U.S. Plans comply in form and operation in all material respects with the
requirements of the Code and ERISA.
(b) Foreign Benefit Plans. To the Knowledge of the Company, all
pensions, welfare, employment and severance arrangements that are maintained by
Seller, the Company or its Subsidiaries outside of the United States primarily
for the benefit of current or former employees of the Company or any of its
Subsidiaries working outside the United States (the "FOREIGN BENEFIT PLANS")
have been established, maintained, and administered in material compliance with
their terms and all applicable statutes, laws, ordinances, rules, orders,
decrees, judgments, writs and regulations of any controlling governmental
authority or instrumentality.
(c) Required Contributions. With respect to all U.S. Plans, all
required contributions have been made or accrued in accordance with GAAP.
(d) Disclosure. The Company has made available to Buyer true and
complete copies of (i) all U.S. Pension Plans and U.S. Welfare Plans, (ii) the
most recent determination letter received from the Internal Revenue Service
regarding the U.S. Pension Plans (where applicable), (iii) the most recent Form
5500 for the U.S. Pension Plans and U.S. Welfare Plans (where required by
applicable law to be filed with the IRS), and (iv) the most recent actuarial
report for any U.S. Pension Plan that is a "defined benefit plan" as defined in
Section 3.35 of ERISA.
(e) Multi-Employer Plans. No U.S. Plan is a "multi-employer plan"
(as defined in Section 4001(a)(3) of ERISA), and neither the Company nor any
Subsidiary nor any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Sections 414(b), (c), (m) or (o) of the Code), sponsors or
contributes to, or has any liability or obligation with respect of, any
multi-employer plan.
(f) Benefit Claims. Except as disclosed on Section 3.13(f) of the
Company Disclosure Letter, with respect to any U.S. Pension or U.S. Welfare Plan
or Foreign Benefit Plan, (i) no actions (other than routine claims for benefits
in the Ordinary Course of Business) are pending or, to the Knowledge of the
Company, threatened, (ii) no facts or circumstances exist that could give rise
to any such actions, and (iii) no written or oral communication has been
received from the PBGC in respect of any U.S. Plans subject to Title IV of ERISA
concerning the funded status of any such plan or the transactions contemplated
by this Agreement.
(g) Payments in Connection with the Closing. Except as disclosed on
Section 3.13(g) of the Company Disclosure Letter, in connection with the
transactions contemplated by the Transaction Documents or this Agreement or
solely as a result of any action taken by Buyer
24
on or after the Closing Date, the execution of this Agreement and the
transactions contemplated by this Agreement will not result in (i) the payment
of any money or any property to any employee of the Company or any Subsidiary,
or (ii) the increase, acceleration or provision of any payments or benefits to
any employee of the Company or any Subsidiary, whether or not any such payment
or benefit would constitute a "parachute payment" within the meaning of section
280G of the Code.
(h) Post-Retirement Medical Benefits. Neither the Company nor any of
its Subsidiaries has incurred any current or projected liability in respect of
post-employment or post-retirement health, medical or life insurance benefits
for current, former or retired employees of the Company or any of its
Subsidiaries, except as required to avoid an excise tax under section 4980B of
the Code, or otherwise except as may be required pursuant to any other
applicable law.
(i) Reportable Events and Prohibited Transactions. With respect to
any U.S. Plan, (i) no "reportable event" (as such term is defined in Section
4043 of ERISA) has occurred, or will occur by reason of the transactions
contemplated by this Agreement, that could reasonably be expected to result in
material liability to the Company or any Subsidiary, (ii) no "prohibited
transaction" (as such term is defined in Section 406 of ERISA and section 4975
of the Code) has occurred that could reasonably be expected to result in
material liability to the Company or any Subsidiary, and (iii) no condition
exists that would subject the Company or its Subsidiaries, either directly or by
reason of their affiliation with any member of their Controlled Group to a
material Tax, fine, lien, penalty or other liability imposed by ERISA, the Code
or other applicable laws, rules and regulations.
(j) Foreign Benefit Plans. With respect to the Foreign Benefit
Plans: (i) all required contributions have been made in accordance with
applicable local statutory requirements or accrued to the extent required by
applicable local statutory requirements; (ii) the fair market value of the
assets of each funded Foreign Benefit Plan, the liability of each insurer for
any Foreign Benefit Plan funded through insurance or the book reserve
established for any Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the benefits determined
on any ongoing basis (actual or contingent) accrued to the Closing Date (i.e. on
an "accrued benefit obligation" basis as is defined in SFAS 87 or equivalent
under local generally accepted accounting principles) with respect to all
current and former participants under such Foreign Benefit Plan according to the
actuarial assumptions and valuations most recently used to determine employer
contributions to such Foreign Benefit Plan, and none of the transactions
contemplated by this Agreement shall cause such assets or insurance obligations
or book reserves to be less than such benefit obligations; and (ii) there is no
liability with respect to any funded Foreign Benefit Plan which will result by
reason of the transactions contemplated by this Agreement.
3.14 Licenses, Permits and Approvals; Compliance with Laws.
(a) Permits. Except as set forth in Section 3.14(a) of the Company
Disclosure Letter, the Company, its Subsidiaries and their respective employees
hold all material governmental and regulatory licenses, authorizations,
franchises, certificates, permits and approvals (collectively, the "PERMITS")
that, to the Knowledge of the Company, constitute all Permits necessary for the
conduct of the Business as presently conducted, except where the
25
failure to hold any such Permit could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Section 3.14(a) of the Company Disclosure Letter, there are no violations by the
Company or any of its Subsidiaries of, or any claims or proceedings pending or,
to the Knowledge of the Company, threatened, challenging the validity of or
seeking to discontinue, any such Permits except for those Permits, that, if
declared invalid or discontinued, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Compliance with Laws. Neither the Company nor its Subsidiaries
are in violation of any material law, rule, regulation, order, judgment or
decree applicable to the Company or any Subsidiary or by which any of the
properties of the Company or any Subsidiary is bound, except as set forth in
Section 3.14(b) of the Company Disclosure Letter. The matters set forth in
Section 3.14(b) of the Company Disclosure Letter, individually and in the
aggregate, have not had and could not reasonably be expected to have a Material
Adverse Effect. Except as set forth in Section 3.14(b) of the Company Disclosure
Letter, the Company and its Subsidiaries have not, in the last twelve (12)
months, received any written communication from any governmental authority that
alleges that the Company or such Subsidiary is not in compliance with any
material law, rule, regulation, ordinance, order, judgment or decree that has
not been resolved. Since January 1, 2002, in the conduct of the Business, to the
Knowledge of the Company, neither the Company, any of its Subsidiaries, nor any
of their directors, officers, employees or agents, has (a) directly or
indirectly, given, or agreed to give, any illegal gift, contribution, payment or
similar benefit to any supplier, customer, governmental official or employee or
other Person who was, is or may be in a position to help or hinder the Company
or any of its Subsidiaries (or assist in connection with any actual or proposed
transaction) or made, or agreed to make, any illegal contribution, or reimbursed
any illegal political gift or contribution made by any other Person, to any
candidate for federal, state, local or foreign public office or (b) established
or maintained any unrecorded fund or asset or made any false entries on any
books or records for any purpose.
3.15 Insurance. Section 3.15 of the Company Disclosure Letter sets forth a
list of all current insurance policies, including policies by which the Company
and its Subsidiaries, or any of their assets, employees, officers or directors
or the Business has been insured. All such policies are in full force and
effect, all premiums due thereon have been paid by Seller, the Company or its
Subsidiaries, and Seller, the Company or its Subsidiaries have complied in all
material respects with the provisions of such insurance policies.
3.16 Environmental Matters. Except as set forth in Section 3.16 of the
Company Disclosure Letter, (a) the Company and its Subsidiaries are in
compliance with all Environmental Laws, except for such noncompliance as could
not reasonably be expected to have a Material Adverse Effect; and (b) to the
Knowledge of the Company, no notice, demand, claim or other communication has
been given to or served on the Company or any of its Subsidiaries from any
entity, governmental body or other Person claiming, asserting or notifying of
any violation of or liability under any of the Environmental Laws or demanding
payment, contribution, indemnification, remedial action, removal action,
financial assurance or any other action or inaction with respect to any actual
or alleged environmental damage, condition or event or injury to persons,
property or natural resources, relating to the Company, its Subsidiaries or
their facilities (and, to the Company's Knowledge, there is no basis for any
such notice, demand, claim
26
or other communication), the subject of which is unresolved and that could
reasonably be expected to have a Material Adverse Effect.
3.17 Brokers' Fees. None of the Company or its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
3.18 Transactions with Affiliates. Except as set forth on Section 3.10 (if
identified therein as a transaction with an Affiliate) or Section 3.18 of the
Company Disclosure Letter and except for normal advances to employees consistent
with past practices, payment of compensation for employment to employees
consistent with past practices, and participation in Plans by employees, and for
arrangements with Seller for services that will be provided pursuant to Section
8.8, pursuant to any Sublease or the Transition Services Agreement, since
January 1, 2003 neither the Company nor any of its Subsidiaries has purchased,
acquired or leased any property or services from, or sold, transferred or leased
any property or services to, or loaned or advanced money to, or borrowed any
money from or entered into or been subject to any management, consulting or
similar agreement with, any officer, director, shareholder or other Affiliate of
the Company or any of its Subsidiaries, other than employment agreements of
employees outside of the United States who are at-will and may be terminated
without material liability (other than pursuant to local law). Except as set
forth on Section 3.18 of the Company Disclosure Letter, no Affiliate of the
Company (other than the Company or any of its Subsidiaries) is indebted to the
Company or any of its Subsidiaries for money borrowed or other loans or
advances, and neither the Company nor any Subsidiary is indebted to Seller or
any such Affiliate.
3.19 Customers and Suppliers. Section 3.19 of the Company Disclosure
Letter sets forth a complete and accurate list of (a) the ten largest end-user
customers and the ten largest value-added resellers and distributors of the
Company and its Subsidiaries (measured by aggregate gross revenue) during the
twelve months ended on the Most Recent Fiscal Year End and (b) the twenty most
significant suppliers of software (other than outside contractors, providers of
back-office functions, and providers of generally commercially available
software) to the Company and its Subsidiaries (measured by royalty payments
accrued) during the twelve months ended on the Most Recent Fiscal Year End. The
relationships of the Company and its Subsidiaries with the Persons listed or
required to be listed on Section 3.19 of the Company Disclosure Letter are good
commercial working relationships, and none of such Persons has canceled,
terminated or otherwise materially altered (including any material reduction in
the rate or amount of sales or purchases or material increase in the prices
charged or paid, as the case may be) or notified Seller, the Company or any of
their Subsidiaries of any intention to do any of the foregoing or otherwise
threatened in writing to cancel, terminate or materially alter (including any
material reduction in the rate or amount of sales or purchases, as the case may
be) its relationship with the Company or any of its Subsidiaries. To the
Knowledge of the Company, there is no reason to believe that there will be any
change in the relationship of the Company and its Subsidiaries with the
customers and suppliers listed or required to be listed on Section 3.19 of the
Company Disclosure Letter as a result of the transactions contemplated by this
Agreement, except as contemplated by Sections 8.8 and 8.9.
27
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as of the date of this
Agreement as of the Closing Date, that:
4.1 Organization, Qualification and Authority. Seller is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware. Seller has all requisite corporate power and authority to carry on
the business in which it is presently engaged and to own and use the properties
presently owned and used by it. True and correct copies of Seller's certificate
of incorporation and bylaws, as amended to date, have been made available to
Buyer. Seller is qualified to conduct business and is in good standing or is
active, as the case may be, under the laws of each jurisdiction wherein the
nature of its business or its ownership of property requires it to be so
qualified, except where the failure to be so qualified could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.2 Authorization; Valid and Binding Agreement. The execution, delivery
and performance by Seller and the Company of the Transaction Documents to be
executed by Seller and the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action of Seller, and no other proceedings on its part are necessary
to authorize the execution, delivery or performance of the Transaction Documents
to be executed by Seller and the Company. The Transaction Documents to be
executed by Seller have been duly executed and delivered by Seller and, assuming
the due authorization, execution and delivery by the other Parties hereto,
constitute legal, valid and binding obligations of Seller, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy laws, other similar laws affecting creditors' rights and general
principles of equity affecting the availability of specific performance and
other equitable remedies.
4.3 Noncontravention; Consents.
(a) Noncontravention. Except as set forth on Section 4.3(a) of
Seller Disclosure Letter, and except where the failure of any of the following
to be true could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, the execution and the delivery of this
Agreement by Seller, and the consummation by it of the transactions contemplated
hereby will not (i) violate or conflict in any way with any statute, regulation,
law, rule, ordinance or common law doctrine applicable to Seller, (ii) violate
or conflict in any way with any judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which Seller is subject or any provision of Seller's certificate of
incorporation, bylaws or similar organizational documents, or (iii) result in a
breach of, constitute a default under (with or without notice or lapse of time,
or both), result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
approval under, any material contract, or other lease, sublease, license,
sublicense, franchise, permit, indenture, agreement for borrowed money or other
material agreement or instrument to which Seller is a party or by which it is
bound.
4.4 Consents. Except where the failure of any of the following to be true
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and except for the applicable requirements of any
Competition Laws, Seller is not required to submit any notice, report or other
filing with any governmental authority in connection with the
28
execution, delivery or performance by it of this Agreement or the consummation
of the transactions contemplated hereby, and no consent, approval or
authorization of any governmental or regulatory authority or any other party or
Person is required to be obtained by Seller in connection with its execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
4.5 Title to Purchased Shares. Seller is the sole beneficial and record
owner of the Purchased Shares and has good and marketable title to the Purchased
Shares, free and clear of any Encumbrances. Seller has full right, power and
authority to transfer and deliver to Buyer valid title to the Purchased Shares,
free and clear of all Encumbrances. Upon purchase of the Purchased Shares
pursuant to this Agreement, Buyer will be the sole beneficial and record owner
of the Purchased Shares and will receive good and marketable title to the
Purchased Shares, free and clear of any Encumbrances other than Encumbrances
imposed by or through Buyer.
4.6 Broker's Fees. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement other than fees or commissions that will be fully
paid as of the Closing, and in no event shall Buyer, the Company or any of the
Company's Subsidiaries be liable for any such fees or commissions.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, as of the date of this Agreement
and as of the Closing Date, that:
5.1 Organization and Power. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
5.2 Authorization; Valid and Binding Agreement. The execution, delivery
and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite action, and no other proceedings on its part are necessary to
authorize the execution, delivery or performance of this Agreement. This
Agreement has been duly executed and delivered by Buyer and assuming the due
authorization, execution and delivery by the other Parties hereto constitutes a
legal, valid and binding obligation of Buyer, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy laws, other similar
laws affecting creditors' rights and general principles of equity affecting the
availability of specific performance and other equitable remedies.
5.3 Noncontravention; Consents.
(a) The execution and the delivery of this Agreement by Buyer, and
the consummation of the transactions contemplated hereby will not (A) violate or
conflict in any way with any statute, regulation, law, rule, ordinance or common
law doctrine applicable to Buyer, (B) violate or conflict in any way with any
judgment, order, decree, stipulation, injunction, charge or other restriction of
any government, governmental agency or court to which Buyer is subject or any
provision of Buyer's articles of incorporation, bylaws or similar
29
organizational documents, or (C) result in a breach of, constitute a default
under (with or without notice or lapse of time, or both), result in the
acceleration of, create in any party the right to accelerate, terminate or
cancel, or require any notice, consent or approval under, any lease, sublease,
license, sublicense, franchise, permit, indenture, agreement for borrowed money
or other material agreement or instrument to which Buyer is a party or by which
it is bound.
(b) Except for the applicable requirements of the HSR Act and other
Competition Laws, Buyer is not required to submit any notice, report or other
filing with any governmental authority in connection with the execution,
delivery or performance by it of this Agreement or the consummation of the
transactions contemplated hereby, and no consent, approval or authorization of
any governmental or regulatory authority or any other party or Person is
required to be obtained by Buyer in connection with its execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
5.4 Litigation. There are no actions, suits or proceedings pending or, to
Buyer's knowledge, overtly threatened against or affecting Buyer at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that would adversely affect Buyer's ability to perform under this
Agreement or the consummation of the transactions contemplated hereby.
5.5 Broker's Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company (prior to Closing) or
Seller would be liable.
5.6 Investment Representation. Buyer is purchasing the Purchased Shares
for its own account with the present intention of holding such securities for
investment purposes and not with a view to or for sale in connection with any
public distribution of such securities in violation of any federal or state
securities laws. Buyer is an "ACCREDITED INVESTOR" as defined in Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933 (the "SECURITIES ACT"). Buyer acknowledges that it is informed as to the
risks of the transactions contemplated hereby and of ownership of the Purchased
Shares. Buyer acknowledges that the Purchased Shares have not been registered
under the Securities Act or any state or foreign securities laws and that the
Purchased Shares may not be sold, transferred, offered for sale, pledged
hypothecated or otherwise disposed of unless such transfer, sale, assignment,
pledge, hypothecation or other disposition is pursuant to the terms of an
effective registration statement under the Securities Act and is registered
under any applicable state or foreign securities laws or pursuant to an
exemption from registration under the Securities Act and any applicable state or
foreign securities laws.
5.7 Financing. As of the date hereof, Buyer has obtained (a) a debt
financing commitment letter or letters (the "DEBT FINANCING COMMITMENTS"), and,
if "flex" provisions are not included in any such Debt Financing Commitments, a
related "flex" letter or letters ("FLEX LETTERS"), from responsible financial
institutions, true, correct and complete copies of which are attached hereto as
Exhibit D-1, and (b) equity commitment letters from each of Xxxx Capital Fund
VII, L.P., Silver Lake Partners, L.P., and Warburg Pincus Private Equity VIII,
L.P. (the "EQUITY FINANCING COMMITMENTS"), true, correct and complete copies of
which are attached as Exhibit D-2 (the Debt Financing Commitments, the Flex
Letters, if any, and the Equity
30
Financing Commitments, collectively, the "COMMITMENT LETTERS"). The Commitment
Letters provide for, subject to certain conditions set forth therein,
commitments to provide all funds necessary to consummate the transactions
contemplated hereby. Buyer has no reason to believe that such available cash
shall not be available or that the commitments shall not be funded, and, subject
to the accuracy of the representations of the Company and Seller contained
herein, Buyer has not made any material misrepresentation in connection with
obtaining such financing commitments.
6. COVENANTS OF SELLER AND THE COMPANY
6.1 Conduct of the Business.
(a) Conduct of Business. From the date hereof until the Closing
Date, the Company shall carry on, and Seller shall cause the Company and its
Subsidiaries to carry on, the Business in the Ordinary Course of Business and
substantially in the same manner as previously conducted, unless Buyer shall
have consented in writing, and use commercially reasonable efforts to preserve
intact the business organization of the Company and its Subsidiaries and
relationships with third parties (including lessors, licensors, suppliers,
consultants, distributors and customers) and employees. Without limiting the
generality of the foregoing, the Company shall, and Seller shall cause the
Company and its Subsidiaries to continue to make capital expenditures and
capitalized software expenditures in the Ordinary Course of Business.
(b) Prohibited Actions. From the date hereof until the Closing Date,
except as otherwise provided for by this Agreement, as necessary to prepare for
the Closing or as consented to in writing by Buyer, the Company shall not, and
shall not permit any Subsidiary to take or omit to take any action which, if
taken or omitted to be taken between the Most Recent Fiscal Year End and the
date of this Agreement, would have been required to be disclosed on Section 3.6
of the Company Disclosure Letter as of the date of this Agreement, whether or
not such action is described in Section 3.6 of the Company Disclosure Letter;
provided, however, that without the consent of Buyer the Company may enter into
definitive documentation with respect to, and consummate, the ATKPS/PLM
eBreviate deal described in Section 3.6 of the Company Disclosure Letter so long
as such transaction is (i) on terms equivalent to those that would be obtained
on an arm's length basis and (ii) on substantially the terms contained in the
memorandum of understanding referred to in such section.
(c) Dividends and Royalty Prepayments. Notwithstanding anything in
this Agreement to the contrary and without requirement for the consent of Buyer,
to the extent not already completed as of the date of this Agreement: (i) to the
extent legally distributable, the Company may declare and pay to Seller
dividends in cash or notes in the aggregate amount of up to $200 million or such
greater amount as agreed to by Buyer (of which $140,452,000 has been declared
and paid with a note or on prior to the date of this Agreement); (ii) to the
extent legally distributable, Subsidiaries of the Company may declare and pay to
the Company dividends in the aggregate amount of up to $150 million or such
greater amount as agreed to by Buyer; and (iii) certain Subsidiaries of the
Company may make a prepayment of royalties in the aggregate amount of up to $250
million of royalties otherwise due and payable for the period July 1, 2004,
through December 31, 2005. Such dividends and prepayments may be made in cash or
notes as Seller may determine, except that no such note referenced in clause
(ii) or (iii) shall be payable to
31
any Person other than the Company or one of its Subsidiaries. Any note created
as a result of a dividend referenced in clause (i) shall be paid in full prior
to Closing. The estimated allocation of such dividends and royalty prepayments
by foreign Subsidiaries of the Company (such estimates and such foreign
Subsidiaries to be further revised in a manner mutually acceptable to Buyer and
Seller), and the royalty rate for periods commencing on January 1, 2004 and
ending no sooner than December 31, 2005, with respect to any of the Company's
Subsidiaries making a royalty prepayment are set forth on Exhibit E (such rates
to be in accordance with the transfer pricing study conducted by the Company).
The Company has provided, or will provide promptly after execution, copies of
all notes or royalty prepayment agreements to Buyer.
6.2 Access to Books and Records. From and after the date hereof until the
Closing, Seller and the Company shall, and shall cause each Subsidiary of the
Company to, afford to Buyer and each of its representatives (including
accountants, consultants, counsel and representatives of financing sources)
("BUYER'S REPRESENTATIVES") access during normal business hours, upon reasonable
prior notice and in such manner as will not unreasonably interfere with the
conduct of the Business, to all properties, books, records (including Tax
Returns) of the Company and each of its Subsidiaries, and to all other
information with respect to the Business, together with the opportunity, at the
sole cost and expense of Buyer, to make copies of such books, records and other
documents and to discuss the Business with such members of management, officers,
directors, counsel and accountants for the Company and its Subsidiaries as Buyer
and its representatives may reasonably request and the Company shall cause such
members of management, officers, directors, counsel and accountants to
reasonably cooperate with Buyer and Buyer's Representatives in connection
therewith. Notwithstanding the foregoing provisions of this Section 6.2, the
Company shall not be required to, or to cause any of its Subsidiaries to, grant
access or furnish information to Buyer or any of Buyer's representatives to the
extent restricted by Section 8.4 hereof. All information provided pursuant to
this Agreement shall remain subject in all respects to the provisions of the
Confidentiality Agreement.
6.3 Regulatory Filings. Seller and the Company shall, and shall cause the
Company's Subsidiaries to, reasonably cooperate with Buyer in the making or
causing to be made of all filings and submissions ("COMPETITION FILINGS") under
the HSR Act or any other Competition Laws, and shall make or cause to be made
all filing and submissions, if any, under any other laws or regulations
applicable to the Company and its Subsidiaries required to be made by Seller,
the Company or its Subsidiaries for the consummation of the transactions
contemplated herein as soon as reasonably practicable after the date of this
Agreement. Seller and the Company shall coordinate and cooperate with Buyer in
exchanging such information and assistance as Buyer may reasonably request in
connection with all of the foregoing.
6.4 Conditions; Cooperation. Seller and the Company shall use commercially
reasonable efforts to cause the conditions set forth in Section 9.1 to be
satisfied and to consummate the transactions contemplated hereby, provided that
neither Seller nor the Company shall be required to waive any condition in
Section 9.2 in connection with such efforts. During the period prior to the
Closing, each of Seller and the Company shall, and shall direct its employees,
accountants and other third parties to cooperate in all reasonable respects with
Buyer in connection with Buyer's efforts to raise financing in the capital
markets, including without limitation participating in road shows for potential
sources of financing and assisting with the
32
preparation of the material referred to in clause (a) of Section 7.4, including
without limitation by providing financial statements and financial data
complying with Regulation S-X and Regulation S-K under the Securities Act (other
than the financial statements of Structural Dynamics Research Corporation for
the eight months ended August 31, 2001 (the "SDRC FINANCIALS")), and, in the
case of the accountants of the Company, reasonably providing consents,
representation letters and comfort letters with respect to such financing. From
and after the Closing Date, Seller shall reasonably cooperate with Buyer by
providing reasonable access to its accountants for purposes of facilitating the
Company's financing efforts that require financial information with respect to
pre-Closing periods and shall use commercially reasonable efforts to cause its
accountants to cooperate in all reasonable respects with Buyer in connection
with Buyer's efforts to raise financing in the capital markets, including
without limitation providing financial statements and financial data complying
with Regulation S-X and S-K under the Securities Act for periods prior to the
Closing Date, consenting to the inclusion of such financial statements in
registration statements filed under the Securities Act and providing customary
comfort letters in connection therewith.
6.5 Exclusive Dealing. During the period from the date of this Agreement
through the earlier of the Closing or termination of this Agreement pursuant to
Article 10 hereof, neither Seller nor the Company shall take or permit any other
Person on its behalf directly or indirectly to take any action to encourage,
initiate or participate in any discussions or negotiations with, or provide any
information to, or facilitate in any way, any Person (other than Buyer and
Buyer's Representatives) concerning any purchase of the Purchased Shares, any
merger involving the Company or any of its Subsidiaries, any sale of all or
substantially all of the assets of the Company or any of its Subsidiaries, or
similar transaction involving the Company (other than assets sold in the
Ordinary Course of Business) or any alternative to the transactions contemplated
by this Agreement; provided, that Seller shall be permitted to disclose any
information that it reasonably determines is required to be disclosed by law or
by any listing agreement with any national securities exchange or by the
National Association of Securities Dealers, Inc. The Company and Seller will
notify Buyer in writing immediately if any Person makes any proposal, offer,
inquiry or contact with respect to any of the foregoing (whether solicited or
unsolicited) after the date of this Agreement.
6.6 Notification. From the date hereof until the Closing Date, Seller
shall disclose to Buyer in writing (in the form of updates to the Company
Disclosure Letter, the Seller Disclosure Letter, or the Exhibits) any material
variances from the representations and warranties contained in Article 3 or
Article 4 promptly upon discovery thereof. Such disclosures shall amend and
supplement the appropriate sections of the Company Disclosure Letter, the Seller
Disclosure Letter and the Exhibits delivered on the date hereof other than for
purposes of Article 9, Article 10 or Article 11 hereof.
6.7 Financial Statements and Reports. As promptly as practicable, and in
any event no later than thirty days after the end of each fiscal month and
forty-five days after the end of each fiscal quarter ending after the date
hereof and before the Closing Date, Seller will deliver to Buyer true and
complete copies of the unaudited consolidated balance sheets and the related
unaudited consolidated statements of income of the Company and the Subsidiaries
as of and for each such fiscal month or quarter, respectively, and (with respect
to quarterly financial information only) the portion of the fiscal year then
ended, excluding in the case of such monthly
33
financial statements the notes, if any, relating thereto. Such monthly unaudited
consolidated balance sheets and unaudited consolidated statements of income
shall be prepared in the manner currently used by the Company's management for
its internal use and may exclude adjustments and accruals ordinarily required
under GAAP. Such quarterly financial statements shall be prepared in accordance
with GAAP (subject to normal year-end audit adjustments, the effect of which
will not, individually or in the aggregate, be materially adverse) and shall
comply with Regulation S-X and Regulation S-K under the Securities Act. Seller
shall cause the Company to use commercially reasonable efforts to deliver the
SDRC Financials to Buyer as promptly as practicable after the date hereof.
6.8 Non-Compete; Non-Solicitation.
(a) During the period commencing on the Closing Date and continuing
for a two year period after the Closing Date, Seller covenants and agrees that
except as otherwise set forth below, Seller shall not, nor shall it permit any
Affiliate (such Affiliates collectively referred to as the "SELLER CONTROL
GROUP"; provided, however, that EDS (Australia) Pty Limited shall not be
included as a part of the Seller Control Group nor be bound by the provisions of
this Section 6.8), directly or indirectly, engage in the Competing Business (as
defined below) anywhere in the world.
(b) Notwithstanding the foregoing, neither Seller nor any member of
the Seller Control Group shall be deemed to have violated the provisions of
Section 6.8(a) as a result of: (i) providing or agreeing to provide services to,
or otherwise engaging in activities and/or transactions with (each in the
ordinary course of the services or businesses Seller or any such member of the
Seller Control Group is or may be engaged in) any unaffiliated third party for
which one or more activities might be deemed to be in the Competing Business but
for which such activities are bundled together with the ordinary course
information technology, telecommunications or consulting products, services or
activities (collectively, "BUNDLED SERVICES") provided by Seller or any such
member of the Seller Control Group and such activities relating to the Competing
Business constitute a complementary and less than substantial component of such
Bundled Services; (ii) collectively owning, solely as an investment, up to an
aggregate of 5% of the outstanding capital stock of a Person who is required to
file reports under Section 13 or 15 of the Securities Exchange Act of 1934 or
whose stock is otherwise listed on a recognized stock exchange and who is
primarily engaged in the Competing Business; (iii) providing services that are
in the nature of Competing Business pursuant to a contract that was executed
prior to the Closing Date or pursuant to a work order, task order or new
agreement entered into after the Closing Date with a party to any such
pre-existing contract; or (iv) an acquisition of another Person which is engaged
primarily in a business other than the Competing Business, whether by means of
merger, business combination or other transaction ("TRANSACTION") where such
Person is also engaged in the Competing Business (the "ACQUIRED PERSON") and
Seller or the applicable member of the Seller Control Group is the continuing or
surviving entity thereof, provided that Seller shall, or shall cause the
applicable member of the Seller Control Group to, cause such Acquired Person to
maintain its existing Competing Business only in the ordinary course and not
permit the expansion of the base of the Competing Business of the Acquired
Person beyond that existing as of the date the agreement for the Transaction is
entered into or beyond that required by existing contractual obligations of the
Acquired Person as of the execution date of the agreement entered into in
connection with the
34
Transaction. To the best knowledge of Seller, as of the date hereof, none of
Seller or any member of the Seller Control Group (other than the Company and its
Subsidiaries) primarily engages in the Competing Business. For the purposes of
this Section 6.8, the term "COMPETING BUSINESS" shall mean developing,
marketing, licensing, sublicensing, distributing, maintaining or provisioning
product lifecycle management products addressing any phase of the product
lifecycle, including concept development, design, analysis and testing,
manufacturing, service and maintenance, and retirement. By way of example and
not by limitation, product lifecycle management product software includes the
digital product design and manufacturing by computer-aided design,
computer-aided manufacturing and computer-aided engineering as well as related
product data management, component and supplier management, and visualization
and digital mockup. Notwithstanding anything in the foregoing to the contrary,
Competing Business shall not be deemed to include any services or business
activities of the following types or nature: (i) data mining and analyses,
fulfillment and distribution; (ii) geospatial technology, geographical
information workflow processes and related system integration and support
services; or (iii) software integration services involving integration of a PLM
software product with other software.
(c) Seller further agrees that neither Seller nor any of its
Affiliates shall, directly or indirectly, (x) during the period commencing on
the Closing Date and continuing for a three year period after the Closing Date,
recruit, offer employment to, employ, engage as a consultant, lure or entice
away, or in any other manner persuade or attempt to persuade to leave the employ
of the Company any of the following persons: Xxxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxxxxxx and Xxxxxxx X. Xxxxxxxxxx, and the employees who are at the time, or
were within the previous six months of such time, direct reports of any of such
persons, or (y) during the period commencing on the Closing Date and continuing
for a eighteen month period after the Closing Date, direct recruitment efforts
toward any employees of the Company or any of its Subsidiaries; provided,
however, that the foregoing clause (y) shall not preclude Seller or its
Affiliates or A.T. Xxxxxxx, Inc. from soliciting or hiring any person who (1)
initiates discussions regarding employment without any direct solicitation by
Seller, (2) responds to any general public advertisement by Seller or A.T.
Xxxxxxx, Inc. that is not directed towards any such employee or group of
employees of the Company, or (3) has been terminated by the Company. Nothing
contained herein shall prohibit any executive search firm or similar business
controlled by Seller or any of its Affiliates from engaging in its business in
the ordinary course in a manner consistent with past practices on behalf of
clients other than on behalf of Seller or any of its Affiliates.
6.9 Confidential Information. Seller acknowledges that the success of the
Company and its Subsidiaries after the Closing depends upon the continued
preservation of the confidentiality of certain information possessed by Seller,
that the preservation of the confidentiality of such information by Seller and
its Affiliates is an essential premise of the bargain between Seller and Buyer,
and that Buyer would be unwilling to enter into this Agreement in the absence of
this Section 6.9. Accordingly, Seller hereby agrees with Buyer that Seller and
its Affiliates will not, and that Seller will cause its Affiliates not to, at
any time, directly or indirectly, without the prior written consent of Buyer,
disclose or use, any confidential or proprietary information involving or
relating to the Business, the Company or any of its Subsidiaries; provided,
however, that the information subject to the foregoing provisions of this
sentence will not include any information generally available to, or known by,
the public (other
35
than as a result of disclosure in violation hereof); and provided, further, that
the provisions of this Section 6.9 will not prohibit any retention of copies of
records or disclosure (a) required by any applicable legal requirement so long
as reasonable prior notice is given of such disclosure and a reasonable
opportunity is afforded to contest the same or (b) made in connection with the
enforcement of any right or remedy relating to this Agreement or the
transactions contemplated by this Agreement. Seller agrees that it will be
responsible for any breach or violation of the provisions of this Section 6.9 by
any of its officers, directors, employees, agents or other representatives.
6.10 Payments Received. Seller agrees that after the Closing it will hold
and will promptly transfer and deliver to the Company, from time to time as and
when received by Seller or its Affiliates, any cash or checks with appropriate
endorsements (using Seller's reasonable best efforts not to convert such checks
into cash), or other property that Seller or its Affiliates may receive on or
after the Closing on account of the Business which properly belongs to the
Company. From and after the Closing, the Company shall have the right and
authority to endorse without recourse the name of Seller on any check or any
other evidences of Indebtedness received by the Company on account of the
Business.
6.11 Software Master. On the Closing Date, prior to the Closing, the
Company shall carry out a development freeze and create a set of digital files
storing in source and object code formats containing: (i) all software currently
under development by the Company as of the Closing Date, whether or not such
software is then commercially released; (ii) the then current versions of
software products of the Company offered for sale or license to customers as of
the Closing Date; and (iii) software that has been previously sold or licensed
to a customer and, as of the Closing Date, is still maintained and supported by
the Company. The Company shall store such files and make them available to
Seller in the event of a dispute involving development matters after the
Closing.
6.12 Intercompany Liabilities. Prior to the Closing, the Company and
Seller shall, and Seller shall cause its Affiliates to, repay in full (a) all
Indebtedness of Seller and any of its Affiliates (other than the Company or any
of its Subsidiaries) to the Company or its Subsidiaries except Indebtedness for
products or services in the Ordinary Course of Business that is not yet due and
payable and (b) all Indebtedness of the Company or any of its Subsidiaries to
Seller or any of its Affiliates (other than the Company or any of its
Subsidiaries) except Indebtedness for products or services in the Ordinary
Course of Business that is not yet due and payable, and in each case all
instruments in respect of such Indebtedness shall be cancelled or terminated.
7. COVENANTS OF BUYER
7.1 Notification. From the date hereof until the Closing Date, Buyer shall
disclose to Seller in writing any material variances from Buyer's
representations and warranties contained in Article 5 promptly upon discovery
thereof.
7.2 Regulatory Filings. Without limiting the generality of the obligations
set forth in Section 7.3, Buyer shall make or cause to be made all Competition
Filings and any other filings or submissions required to be made by Buyer under
any other laws or regulations applicable to Buyer or the Company and its
Subsidiaries required for the consummation of the transactions
36
contemplated herein at the earliest practicable date after the date of this
Agreement. Buyer shall be responsible for all Competition Filing fees (whether
of Buyer, Seller, or the Company) and any fees for filings or notifications
necessary or appropriate under such other laws or regulations as are applicable
to Buyer in connection with the transactions contemplated by this Agreement.
Buyer shall coordinate and cooperate with Seller in exchanging such information
and assistance as Seller may reasonably request in connection with all of the
foregoing.
7.3 Conditions. Buyer shall use commercially reasonable efforts to cause
the conditions set forth in Section 9.2 to be satisfied and to consummate the
transactions contemplated herein, provided that Buyer shall not be required to
waive any condition in Section 9.1 in connection with such efforts.
7.4 Financing. Buyer acknowledges that the Debt Financing Commitments
contemplate the funding of the transactions contemplated hereby using bridge
financing. Buyer will use commercially reasonable efforts to negotiate
definitive bridge loan documentation with its financing sources and otherwise
prepare for the funding of the bridge facility. Additionally, Buyer shall use
commercially reasonable efforts (including, (a) promptly after the date of this
Agreement, commencing the preparation of the necessary offering circulars,
private placement memoranda, prospectus, registration statement or other
offering documents or marketing materials and negotiating definitive loan
documentation concerning the placement and syndication of the senior
subordinated notes and the senior secured credit facilities as contemplated by
the Debt Financing Commitments, (b) commencing promptly thereafter the road show
and syndication activities concerning the placement and syndication of the
senior subordinated notes and the senior secured credit facilities as
contemplated by the Debt Financing Commitments, and (c) accepting any changes in
the terms of the proposed financing as contemplated in any Flex Letters or the
flex provisions of the Debt Financing Commitments if such changes are necessary
to complete financings) to perform and comply with all obligations and
conditions required by the Commitment Letters to be performed or satisfied by
Buyer prior to, at and as of the Closing Date as necessary to obtain funding
under the Commitment Letters to consummate the transactions contemplated herein;
provided, however, if either the lead arranger or lead manager should advise
Buyer that, due to the then current market conditions, the activities
contemplated by clause (b) should be delayed, then Buyer shall be entitled to
delay the actions contemplated by clause (b) as necessary and shall undertake
commercially reasonable efforts to restart the process when market conditions
dictate. If all closing conditions contained in Article 9 (other than Section
9.1(f)) shall have been satisfied or waived, or are capable of being satisfied
solely by delivery of prepared documents required by such conditions, Buyer will
demand funding of the senior secured credit facilities and the senior
subordinated bridge facility as contemplated by the Debt Financing Commitments
on the first date thereafter on which Buyer shall have had for 30 consecutive
days all financial statements and financial data required by Regulation S-X and
Regulation S-K under the Securities Act (excluding the SDRC Financials) and
customarily included in private placements under Rule 144A of the Securities Act
to consummate an offering of senior subordinated notes on such proposed funding
date. In the event that the financings contemplated by the Commitment Letters
will not be available to consummate the transactions contemplated by this
Agreement, Buyer shall (x) promptly notify Seller of such fact and (y) use
commercially reasonable efforts, until the Termination Date, to obtain alternate
financing for the transactions contemplated by this Agreement provided that the
terms, conditions and costs of such financing are not less favorable to Buyer
than those in the
37
Commitment Letters ("ALTERNATIVE FINANCING"). Without the prior consent of
Seller, Buyer shall not permit or allow any modification or amendment to any of
the Commitment Letters that could reasonably be expected to materially hinder,
delay or make more difficult the financing process as contemplated under this
Section 7.4.
7.5 Certain Matters Relating to Special Indemnified Losses. Buyer agrees
that the matters referred to in clauses (b) and (c) of the definition of Special
Indemnified Losses shall be controlled by Seller, including without limitation
the defense with respect thereto. Buyer agrees to cooperate, and to cause the
Company, its Subsidiaries and each of their employees, to cooperate with Seller
in their control, defense and resolution of such matters. At Seller's direction,
Buyer shall apply the reserve specifically allocated to each such matter on the
Year End Balance Sheet toward the payment of legal fees and disbursements
related to such matter.
8. ADDITIONAL COVENANTS AND AGREEMENTS
8.1 Independent Investigation.
(a) Buyer acknowledges and agrees that it has made its own inquiry
and investigation into, and, based thereon and upon the representations,
warranties and agreements contained herein and in the Transaction Documents, has
formed an independent judgment concerning, the Company and its Subsidiaries and
their businesses and operations. In connection with Buyer's investigation of the
Company and its Subsidiaries and their businesses and operations, Buyer and
Buyer's Representatives have received from Seller, the Company or their
representatives certain projections and other forecasts for the Company and its
Subsidiaries and certain estimates, plans and budget information. Subject to,
and in reliance upon, the Company's and the Seller's representations and
warranties contained herein, Buyer acknowledges and agrees that (i) there are
uncertainties inherent in attempting to make such projections, forecasts,
estimates, plans and budgets, (ii) Buyer is familiar with such uncertainties,
(iii) Buyer is taking full responsibility for making its own evaluations of the
adequacy and accuracy of all estimates, projections, forecasts, plans and
budgets so furnished to Buyer or Buyer's Representatives, and (iv) Buyer will
not (and will cause all of its Subsidiaries and other Affiliates and all other
persons and Buyer's Representatives acting on its behalf not to) assert any
claim or cause of action against Seller, the Company, its Subsidiaries or any of
Seller's or the Company's direct or indirect directors, officers, employees,
agents, stockholders, Affiliates, consultants, counsel, accountants, investment
bankers or representatives with respect to such estimates, projections,
forecasts, plans and budgets, or hold any such other person liable with respect
thereto, except for claims made to enforce specific terms of this Agreement or
based on fraud.
(b) Buyer agrees that, except for the representations and warranties
made by the Company and Seller that are expressly set forth in this Agreement
and the Transaction Documents, respectively, neither Seller, the Company nor any
of their respective Affiliates or representatives has made and shall not be
deemed to have made to Buyer or to any of Buyer's Representatives or Affiliates
any representation or warranty of any kind.
(c) Seller and the Company acknowledge and agree that except for the
representations and warranties made by Buyer as expressly set forth in this
Agreement, neither Buyer nor any of its Affiliates or any of Buyer's
Representatives has made and shall not be
38
construed as having made to Seller, the Company or any of their respective
Affiliates any representation or warranty of any kind.
8.2 Tax Matters.
(a) Filing of Tax Returns. Seller shall prepare and file or
otherwise furnish in proper form to the appropriate Tax authority (or cause to
be prepared and filed or so furnished) in a timely manner (i) all consolidated,
combined, unitary or similar Tax Returns that include or would include both the
Company or any Subsidiary of the Company and Seller or an Affiliate of Seller
(other than the Company or a Subsidiary of the Company) ("SELLER CONSOLIDATED
RETURN"), and (ii) all other Tax Returns that include or relate to the Company
or any Subsidiary of the Company that are due on or before the Closing Date.
Buyer shall prepare and file or otherwise furnish in proper form to the
appropriate Tax authority all other Tax Returns that include or relate to the
Company or any Subsidiary of the Company. With respect to each such Tax Return
required to be filed by Buyer covering a Taxable period that begins on or before
the Closing Date, at least thirty (30) days prior to the due date (including
extensions) of such Tax Return, Buyer shall furnish a copy of such Tax Return to
Seller and Buyer shall permit Seller to review and comment on such Tax Return
and shall make such revisions to such Tax Returns as reasonably requested by
Seller. Seller shall reimburse Buyer for any Buyer Indemnified Taxes owed with
respect to any Tax Return at least five Business Days prior to the due date for
payment thereof.
(b) Consistency. Tax Returns of the Company and its Subsidiaries
prepared by Buyer for any Taxable period that begins on or before the Closing
Date shall be prepared in a manner consistent with practices followed in prior
years with respect to similar Tax Returns, except for changes required by
applicable law. Buyer shall be deemed to have complied with this Section 8.2(b)
if Buyer complies with Section 8.2(a).
(c) Proration. In the case of Taxes (other than Transfer Taxes
described in Section 8.2(g) or Taxes resulting from actions taken by Buyer and
its Affiliates (including the Company and its Subsidiaries) on the Closing Date
after the Closing that are not in the Ordinary Course of Business of the Company
or a Subsidiary of the Company except to the extent contemplated by the
Transaction Documents or required by law) that are payable with respect to any
Straddle Period, the portion of any such Tax that is attributable to the portion
of the period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or
related to income or receipts, or (B) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible), deemed equal to the amount that would be payable if the Taxable
years of the Company and its Subsidiaries ended with (and included) the Closing
Date; and
(ii) in the case of Taxes that are imposed on a periodic basis
with respect to the assets of the Company or a Subsidiary of the Company, deemed
to be the amount of such Taxes for the entire period (or, in the case of such
Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period), multiplied by a fraction the numerator of which
is the number of calendar days in the portion of the period ending on the
39
Closing Date and the denominator of which is the number of calendar days in the
entire period.
(d) Tax Contests. If Buyer receives any written notice of a proposed
assessment or claim in an audit or administrative or judicial proceeding
relating to Taxes that are or could be Buyer Indemnified Taxes (a "TAX
PROCEEDING"), then Buyer shall promptly notify Seller thereof in writing and
shall send a copy of such notice to Electronic Data Systems Corporation, EDS Tax
Department, 0000 Xxxxxx Xxxxx, Xxxx Xxxx X0-0X-00, Xxxxx, Xxxxx 00000; Tel (972)
000-0000; Fax (000) 000-0000; Attn: Corporate Tax Director; provided however,
that no delay on the part of Buyer in notifying Seller shall relieve Seller from
any obligation hereunder unless (and then solely to the extent) Seller is
actually and materially prejudiced thereby. Seller will have the exclusive right
to control any Tax Proceedings involving a Seller Consolidated Return. With
respect to any Tax Proceeding (other than a Tax Proceeding that involves a
Seller Consolidated Return) Seller will have the exclusive right to control any
such Tax Proceeding relating to Taxes that are or could be Buyer Indemnified
Taxes or that could result in a refund payable to Seller pursuant to Section
8.2(f) so long as (i) Seller notifies Buyer, within fifteen (15) Business Days
after Buyer has given notice of such Tax Proceeding to Seller, that Seller
wishes to control such Tax Proceeding and that the Seller will indemnify Buyer
from and against the entirety of any and all Adverse Consequences Buyer may
suffer resulting from, arising out of, relating to, or caused by Buyer
Indemnified Taxes resulting from such Tax Proceeding (and Seller will be deemed
to have so notified Buyer with respect to each such Tax Proceeding listed on
Section 3.7(c) of the Company Disclosure Letter), (ii) Seller conducts the
defense of such Tax Proceeding in an active and diligent manner, and (iii) such
Tax Proceeding does not involve an issue for which both Seller or its Affiliates
and Buyer or its Affiliates could be liable (and not indemnified by the other
party). So long as the conditions set forth in the preceding sentence are and
remain satisfied, then Seller may control the relevant Tax Proceeding and Buyer
may retain separate co-counsel at its sole cost and expense. If Seller does not
deliver the notice contemplated by the second preceding sentence within fifteen
(15) Business Days after Buyer has given notice of the relevant Tax Proceeding
to Seller, or Seller otherwise at any time fails to conduct the defense of the
Tax Proceeding actively and diligently, Buyer shall be entitled to have sole
control over the defense or settlement, compromise, admission or acknowledgement
of the Tax Proceeding; provided, however, that Seller shall be entitled to
participate in such action at its own expense; and provided, further, that Buyer
shall make no settlement, compromise, admission, or acknowledgement that would
give rise to liability on the part of Seller without the prior written consent
of Seller not to be unreasonably withheld. If clause (iii) of the third
preceding sentence is or becomes unsatisfied, Buyer may defend, and may consent
to the entry of any judgment or enter into any compromise or settlement with
respect to the Tax Proceeding, provided, however, that Seller will not be bound
by the entry of any such judgment consented to, or any such compromise or
settlement effected, without its prior written consent (which consent will not
be unreasonably withheld or delayed). In the event that Buyer conducts the
defense of any Tax Proceeding pursuant to any of the preceding sentences, Seller
will (i) reimburse Buyer promptly and periodically for the portion of the costs
of defending such Tax Proceeding (including reasonable attorneys' fees and
expenses) that relates to Buyer Indemnified Taxes and (ii) remain responsible
for any and all other Adverse Consequences that Buyer may incur or suffer
resulting from, arising out of, relating to, or caused by Buyer Indemnified
Taxes resulting from such Tax Proceeding to the fullest extent provided in this
Section 8.2(d). Buyer shall have the exclusive right to defend any audit or
administrative or judicial proceeding relating to Taxes that is not a Tax
Proceeding.
40
(e) Access to Tax Records; Cooperation. Buyer, the Company and its
Subsidiaries and Seller shall cooperate, as and to the extent reasonably
requested by the other Party, in each case at such requesting Party's
out-of-pocket expense, in connection with the filing of any Tax Returns of the
Company and its Subsidiaries for any Taxable period that begins on or before the
Closing Date. Such cooperation shall include the retention and the provision (in
each case, upon a Party's request and at its out-of-pocket expense) of records
and information that are reasonably relevant to any Tax Proceeding and making
employees available to the other Party (at such other Party's out-of-pocket
expense) on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder including, without limitation,
making Company and Subsidiary personnel available on a mutually convenient basis
to assist in defense of Tax Proceeding involving research and development Tax
credits that are currently the subject of administrative proceedings with the
Internal Revenue Service. Buyer, the Company and its Subsidiaries and Seller
agree (i) to retain all books and records with respect to Tax matters pertinent
to the Company and its Subsidiaries relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer, Seller or the Company, any extensions thereof)
of the respective Taxable periods, and to abide by all record retention
agreements entered into with any Taxing authority, and (ii) upon request of any
Party (such request to be made prior to the expiration of the relevant period
referred to in clause (i)), to allow such Party (at such Party's out-of-pocket
expense) to take possession of any copies of such books and records.
(f) Refunds and Carrybacks.
(i) Refunds. Subject to Section 8.2(f)(ii), Buyer shall pay
(to the extent such amounts were not taken into account in determining the Final
Working Capital) to Seller the amount of any Tax refund, credit or offset
(including any interest paid or credited with respect thereto but reduced by any
Taxes that Buyer, and any Company or Subsidiary shall be required to pay with
respect thereto) received or, in the case of a credit or offset, utilized, by
Buyer or any Company or Subsidiary, within 30 days after receipt or such
utilization to the extent such refund is received, or such credit or offset
results in a reduction of Taxes, with respect to Taxable periods or portions
thereof ending on or before the Closing Date (including any Taxes allocated to
such period) and shall pay (to the extent such amounts were not taken into
account in determining the Final Working Capital) to Seller the benefit of any
Taxes in respect of Taxable periods or portions thereof beginning on or after
the Closing Date actually paid by Seller or the Company on or before the Closing
Date (provided that this provision shall not require Buyer to pay any amounts
attributable to net operating losses, net capital losses, credits or other
similar items carried forward into Taxable periods or portions thereof beginning
on or after the Closing Date). Buyer shall, if Seller so requests and at
Seller's expense, cause the relevant entity to file for and use its reasonable
efforts to obtain and expedite the receipt of any refund to which Seller is
entitled under this Section 8.2(f)(i), but only to the extent that Buyer is not
materially prejudiced by taking such action. All refunds, credits or offsets of
the Company and its Subsidiaries received or, in the case of a credit or offset,
utilized, with respect to Taxable periods or portions thereof beginning after
the Closing Date shall be for the account of Buyer and Seller shall pay to Buyer
the amount of any such refunds (including any interest paid or credited with
respect thereto, but reduced by any Taxes that Seller shall be required to pay
with respect thereto) received by Seller or any of its Affiliates within 30 days
after receipt.
41
(ii) Carrybacks. Buyer shall make, and shall cause the Company
and its Subsidiaries to make elections under Section 172(b)(3) and other
relevant provisions of the Code, and under any comparable provision of any
state, local or foreign tax law in any state, locality or foreign jurisdiction
in which the Company or any Subsidiary files a combined, consolidated or unitary
return with Seller or any of its Affiliates (other than the Company or the
Subsidiaries), to relinquish the entire carryback period with respect to any net
operating loss, capital loss, or tax credit of the Company or any Subsidiary
arising in any taxable period beginning after the Closing Date that could be
carried back to a taxable year of such Company or Subsidiary ending on or before
the Closing Date; provided, however, that with respect to any such item for
which an election cannot be made under applicable law, Seller shall be required
to pay to Buyer, the Company or any Subsidiary thereof any Tax refund received
or credit utilized that results solely from such carryback net of any costs of
Seller in procuring such Tax refund or credit, but only to the extent Seller or
its Affiliates are not materially prejudiced.
(g) Transfer Taxes. Buyer will pay, and will indemnify and hold
Seller harmless against any stamp tax, stock transfer tax, or other similar Tax
imposed on Seller or its Affiliates as a result of the transactions contemplated
by this Agreement other than any such taxes attributable to Seller's
restructuring of certain of the Company's foreign Subsidiaries (collectively,
"TRANSFER TAXES"), and any penalties or interest with respect to the Transfer
Taxes. Seller agrees to cooperate with Buyer in the filing of any returns with
respect to the Transfer Taxes, including promptly supplying any information in
their possession that is reasonably necessary to complete such returns.
(h) Section 338 Election. No elections under Section 338 of the Code
(or any corresponding provision of state, local or foreign law) shall be made
with respect to Buyer's acquisition of the Purchased Shares of the Company or
any of its Subsidiaries without the prior written consent of Seller.
(i) Changes in Elections, Amended Returns, Etc. Prior to the
Closing, the Company will not, and Seller will not permit the Company to, make
or change any elections with respect to Taxes in any Tax Return other than a
Seller Consolidated Return that are inconsistent with prior elections reflected
in prior Tax Returns of the Company or any Subsidiary or with past practices if
such election or change would have a material adverse impact on Buyer, the
Company, or its Subsidiaries in any Taxable period or portion thereof beginning
on or after the Closing Date. Except to the extent permitted by Section 8.2(d),
Buyer will not, and will not permit any of its Affiliates to, without the
consent of Seller (which consent shall not be unreasonably withheld or delayed),
make or change any elections with respect to Taxes reflected in prior Tax
Returns of the Company or Subsidiary, amend any Tax Return that includes the
Company or Subsidiary for any period prior to or including the Closing Date, or
change an annual Tax accounting period, adopt or change any Tax accounting
method, enter into any closing agreement, settle any Tax claim or assessment,
surrender any right to claim a refund of Taxes or consent to any extension or
waiver of the statute of limitations period applicable to any Tax claim or
assessment, if any such election, adoption, change, amendment, agreement,
settlement, surrender or consent could have the effect of materially increasing
the amount of Buyer Indemnified Taxes or materially decreasing the amount of any
Tax refund, credit or offset payable to Seller pursuant to Section 8.2(f).
Notwithstanding the foregoing, Buyer may take any such action without the
consent of Seller, provided that Buyer notifies Seller that such material
42
increase in additional Taxes will not be deemed to constitute Buyer Indemnified
Taxes or that, as applicable, Buyer will pay an amount equal to any such
material decrease in any such Tax refund to Seller; provided, further, that the
filing of an amended Tax Return described in the third sentence of Section
8.2(a) shall instead be governed by that sentence.
(j) Adjustment to Purchase Price. Any payment by Buyer or Seller
under this Agreement will be treated as an adjustment to the purchase price,
except to the extent different treatment is otherwise required by applicable
law.
(k) Restriction On Certain Post-Closing 2004 Foreign Distributions.
Buyer will not permit or cause any non-United States, direct or indirect,
Subsidiary of Company to pay any dividend or make any other distribution that
would be treated as a distribution of earnings and profits within the meaning of
Section 312 of the Code until after December 31, 2004 if (i) such Subsidiary has
paid any such dividend or made any other distribution on or after January 1,
2004 and prior to Closing or (ii) the Company or any Affiliate of the Company
would otherwise include an amount in income under Section 1248 of the Code with
respect such Subsidiary in the Tax year beginning January 1, 2004. Buyer will
not permit or cause any non-United States, direct or indirect, Subsidiary of
Company to make an investment in United States property (including, without
limitation, a loan to a United States affiliate, a guarantee, a pledge of
assets, or a pledge of more than sixty-five percent of the stock of a non-United
States Subsidiary, to secure the debt of a United States affiliate) within the
meaning of Section 956 of the Code until after December 31, 2004 if (i) such
Subsidiary has paid any such dividend or made any other distribution on or after
January 1, 2004 and prior to Closing or (ii) the Company or any Affiliate of the
Company would otherwise include an amount in income under Section 1248 of the
Code with respect such Subsidiary in the Tax year beginning January 1, 2004.
8.3 Additional Documents and Instruments; Execution and Delivery of
Certain Documents at Closing.
(a) From time to time, as and when requested by any Party hereto and
at such Party's expense, any other Party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as may be reasonably
necessary or desirable to evidence and effectuate the transactions contemplated
by this Agreement. Seller will not take any action that is designed or intended
to have the effect of discouraging any lessor, licensor, supplier, value-added
reseller, distributor or customer of the Company or any of its Subsidiaries or
other Person with whom the Company or any of its Subsidiaries has a relationship
from maintaining the same relationship with the Company and its Subsidiaries
after the Closing as it maintained prior to the Closing and will cooperate in
establishing the contractual arrangements referred to in Section 9.1(j). Seller
will refer all customer inquiries relating to the Business to Buyer or the
Company, as appropriate, from and after the Closing.
(b) At the Closing, Seller, its Affiliates and the Company and its
Subsidiaries, as applicable, shall deliver to Buyer duly executed counterparts
of the Transition Services Agreement in accordance with Section 8.8 hereof. At
or before the Closing, Seller, its Affiliates and the Company and its
Subsidiaries, as applicable, shall execute the Co-Location Licenses, the Lease
(if agreed by both parties), and the Subleases.
43
8.4 Agreement Regarding Attorney/Client Privilege Waiver. The parties
hereto acknowledge that all Pre-Closing Communications (as defined below) among
Seller, the Company or any of its Subsidiaries, and Seller's legal department
(including any Persons in Seller's legal department who become employees of the
Company after the Closing), Xxxxxx & Xxxxxx L.L.P., Xxxxx Xxxxx LLP, Xxxxx Xxxx
and Xxxxxxx & Xxxxxxx LLP were for the benefit of Seller. Accordingly, only
Seller has the right to waive any evidentiary privilege attaching to any such
Pre-Closing Communications, including attorney/client privilege, work product
privilege, and federally-authorized tax practitioner privilege pursuant to
Section 7525 of the Code (any such privileged Pre-Closing communications,
"PRIVILEGED INFORMATION"), and neither Buyer nor the Company nor any of its
Subsidiaries, nor any of their respective Affiliates, shall have the right to
compel disclosure of any such Privileged Information without the prior written
consent of Seller. The Parties agree to take the steps necessary to ensure that
any privilege attaching to any Privileged Information will survive the Closing
and remain in effect; provided, however, that from and after the Closing such
privilege will be controlled by Seller and not Buyer, the Company and their
respective Affiliates. In addition, Buyer and its Affiliates hereby waive on
their own behalf, and agree to cause the Company and its Affiliates to waive,
any conflicts that may arise in connection with (a) such counsel representing
Seller or its Affiliates after the Closing on matters (including disputes) under
this Agreement and the Transaction Documents whether or not adverse to Buyer,
the Company, or any of its Subsidiaries and also on matters not adverse to
Buyer, the Company and the Company's Subsidiaries, (b) the Pre-Closing
Communication by such counsel to Seller or its Affiliates, in any such
representation, of any fact known to such counsel, including in connection with
a dispute with Buyer or the Company or any of its Subsidiaries on or following
the Closing, and (c) Seller's legal department on any matter whether or not
adverse to Buyer, the Company and its Subsidiaries. For purposes of this Section
8.4, "PRE-CLOSING COMMUNICATIONS" means communications occurring before the
Closing regarding (x) the transactions contemplated hereby, including
alternatives hereto and (y) any matter for which Seller has agreed to indemnify
Buyer Indemnified Persons; provided, however, that Pre-Closing Communication
with respect to members of Seller's legal department who do not become employees
of the Company after the Closing shall include all communications occurring
before the Closing.
8.5 Insurance Matters.
(a) Post-Closing Claims Management. Seller agrees that after the
Closing Date, the Company shall be entitled to furnish notice of insurance
claims through Seller's Corporate Risk Management Department under any insurance
policies of Seller and otherwise to communicate with Seller's Corporate Risk
Management Department in a manner consistent with past practice. Seller's
Corporate Risk Management Department will work with the appropriate insurers of
Seller to ensure that any such claims of the Company are handled to their
conclusion.
(b) Treatment of Certain Retentions and Deductibles. Except as
otherwise provided herein, responsibility for deductible or self-insured
retention amounts with respect to any insurance policy provided or maintained by
Seller for the Company's pending claims at the Closing Date or occurrence based
claims reported by the Company after the Closing Date as it relates to coverage
for any "covered person" of the Company shall be borne 100% by the Company;
provided, however, such deductibles and self-insured amounts shall be the
corporate deductibles and self-insurance amounts applicable to Seller's
insurance policy as of the date of
44
this Agreement. Notwithstanding the foregoing, if Seller and the Company are
involved in the same claim, Seller and the Company shall negotiate in good faith
the fair allocation of any self-insurance retention or other deductible or claim
limits payable under any Seller occurrence based insurance policy. Such
allocation shall be based upon all relevant factors, including, without
limitation and as appropriate, the relative number of Persons affiliated with
the Company or Seller that are involved in such claim and the nature of the
allegations with respect to each such Person.
(c) Pending Claims. Seller shall not charge the Company or its
Subsidiaries, and the Company and its Subsidiaries shall not be obligated to
pay, any amounts (other than any applicable corporate deductible or
self-insurance retention amounts regarding periods prior to the Closing Date
that are payable by the Company) with respect to claims under any Seller
insurance policies; provided, however, that if (i) a third party insurance
provider has paid insurance proceeds to or for the benefit of the Company for a
pending claim under a Seller insurance policy, (ii) such insurance provider has
reserved its right to reimbursement in the event of a later determination that
such proceeds were not payable under Seller insurance policy, (iii) Seller, the
Company and the insurance provider later agree that such proceeds are
reimbursable to the insurance provider, and (iv) Seller actually repays such
amounts to such insurance provider, then the Company shall promptly reimburse
Seller for such amounts actually repaid to the third party insurance provider by
Seller.
(d) Management of Covered Litigation. Other than claims governed by
the provisions and procedures set forth in Article 11, the management, defense
and settlement of any claim covered by any Seller insurance policy that is
brought by a third party shall be handled as follows: If such claim involves
both Seller or any of its Affiliates and the Company or any of its Affiliates
(including as a result of bearing some or all of the risk due to self-insured
portions of the potential liability), involves only the payment of money damages
and does not seek an injunction or other equitable relief against the Company or
any of its Affiliates, and implicates any Seller insurance policy providing
insurance coverage and the Company has not been advised by counsel that an
actual or potential conflict exists between the Company or its Affiliates and
Seller or its Affiliates, Seller and the Company shall jointly control the
defense of, and cooperate with each other with respect to defending, such claim.
If either Seller or the Company fails to jointly defend any such claim, the
party that does not so fail shall solely defend such claim and the party failing
to jointly defend shall use commercially reasonable efforts to cooperate with
the other party in its defense of such claim. Seller and the Company shall
consult with each other prior to the settlement of such claim, and shall
consider in good faith any recommendations or objections of the other as to the
amount or form of such settlement. The Company shall have the right to settle
such claim, but the Company shall not settle such claim without the prior
written consent of Seller, which consent shall not be unreasonably withheld. The
Company shall be responsible, and Seller shall have the right to charge the
Company, pursuant to Section 8.5(b), for that portion of the settlement that is
within any applicable deductible or retention. In all other circumstances
involving a claim that implicates any of Seller's insurance policies providing
insurance coverage for the Company, the Company shall have the right to manage
the defense of, including, without limitation, the selection of counsel with
respect to, such claim, subject to any applicable policy terms and conditions.
The Company shall provide Seller with all information reasonably requested by
Seller regarding the defense of such claim. The Company shall be entitled to
settle such claim in an amount below any applicable deductible or self-insurance
45
retention. The Company shall consult with Seller (or Seller's insurer) prior to
the settlement of such claim and shall consider in good faith any
recommendations or objections of Seller (or such insurer) as to the amount or
form of such settlement. Any settlement of such claim in excess of any
applicable deductible or self-insurance retention amount shall require the prior
written consent of Seller, which consent shall not be unreasonably withheld.
Nothing in this Agreement shall be construed to allocate responsibility for the
defense of any action or suit between the Company and its Subsidiaries, on the
one hand, and Seller and its Affiliates other than the Company and its
Subsidiaries, on the other hand.
(e) Post-Closing Insurance Coverage. From and after the Closing
Date, the Company shall be responsible for obtaining and maintaining insurance
coverage with respect to the Business separately from Seller's insurance
programs for occurrences after the Closing. Notwithstanding the foregoing,
Seller shall maintain in full force and effect, and renew as necessary the
following insurance policies providing coverage to the Company as of the date of
this Agreement for the following periods after the Closing Date, but only to the
extent that Seller is maintaining such types of insurance policies during such
periods for it and its Subsidiaries, and only subject to the retentions,
deductibles and policy limits applicable to Seller and its Subsidiaries
thereunder: (x) directors and officers insurance (three years); (y) fiduciary
insurance (three years); and (z) employment practices insurance (four years).
Additionally, Seller shall maintain directors and officers liability insurance
as required by Section 6.05 of the Agreement and Plan of Merger, dated as of May
23, 2001, among Seller, Emerald Acquisition Corporation I and Structural
Dynamics Research Corporation and Section 7.05 of the Agreement and Plan of
Merger, dated as of August 2, 2001, among Seller, UGS Acquisition Corp., and
Unigraphics Solutions Inc. The Company shall have no obligation to maintain or
pay for the insurance coverage pursuant to any of the Claims Made Policies.
8.6 Employees and Employee Benefits.
(a) Buyer's Obligations.
(i) Buyer shall take such actions as may be necessary so that
on the Closing Date and for a period of one year after the Closing Date, all
employees of the Company and its Subsidiaries (including employees that are
domiciled either within or without the United States) who remain employed by the
Company and its Subsidiaries are provided cash compensation (including base
salary or hourly wages) at a rate that is no less than the rate of cash
compensation in effect for each such employee immediately prior to the Closing
Date (other than employees compensated on the basis of variable target
compensation, including sales commissions, whose compensation may be adjusted so
long as such adjustment would not give rise to a "constructive discharge" or
similar claim against Seller or its Affiliates). Subject to Section 8.8, Buyer
shall also take such actions as may be reasonably necessary so that on the
Closing Date, and for a period of one year thereafter, employees of the Company
and its Subsidiaries domiciled outside of the United States ("FOREIGN
EMPLOYEES") are provided employee benefits, plans and programs and conditions of
employment (excluding any equity or equity-related compensation) that are in the
aggregate substantially comparable to the employee benefits, plans and programs
and conditions of employment (excluding any equity or equity-related
compensation) offered to such employees immediately prior to the Closing Date by
Sellers, the Company and its Subsidiaries (except plans, programs and conditions
that would not
give rise to a "constructive discharge" or similar claim against Seller or its
Affiliates). In Canada, such plans shall include a registered approved
retirement plan for the benefit of the Canadian Foreign Employees (which may be
defined contribution or defined benefit, in Buyer's sole discretion) regardless
of whether a "constructive discharge" or similar claim would arise. For the
avoidance of doubt, except to the extent required to avoid a "constructive
discharge" or similar claim against Seller or its Affiliates, nothing in this
Section shall require Buyer to establish a defined benefit pension plan for any
Foreign Employee who is a member of such a plan prior to Closing. Seller agrees
to cooperate and assist the Company's management in the implementation and
transition of Company employees to employee benefit plans to be maintained by
Buyer following the Closing Date in accordance with Section 8.8.
(ii) For purposes of eligibility to participate and vesting in
all employee benefit plans and programs provided after the Closing Date, Buyer
shall cause all current employees of the Company and its Subsidiaries to be
given credit for all employment periods with Seller, the Company and its
Subsidiaries to the same extent such credit was given under the corresponding
plans immediately prior to the Closing Date. The eligibility of any current
employee of the Company and its Subsidiaries to participate in any welfare
benefit plan or program maintained by Buyer for the benefit of such employees
after the Closing Date shall not be subject to any participation waiting periods
or exclusions for any pre-existing conditions if such employee has met such
participation waiting requirements of similar benefit plans and programs in
which the current employees of the Company and its Subsidiaries participated
immediately prior to the Closing Date, and Buyer shall cause the Company and its
Subsidiaries to count claims arising on or prior to the Closing Date for
purposes of satisfying deductibles, out-of-pocket maximums and other similar
limitations under any such plans for the applicable plan year in which the
Closing Date occurs.
(iii) Effective as of the Closing Date, Buyer shall assume
sponsorship of the Unigraphics Solutions, Inc. Executive Deferral Plan, the
Unigraphics Solutions, Inc. Restoration Account Plan and the UGS Benefits
Solution Program for the purpose of maintaining such plans and paying benefits
according to their terms. Thereafter, Buyer shall be responsible for all claims
and liabilities of any kind relating to such plans. In addition, Seller shall
(or shall procure that the trustees of the relevant pension arrangement) make
available a transfer of any assets or liabilities arising out of or in
connection with or under any pension, welfare, employment or severance
arrangement that is maintained by Sellers or its Affiliates relating to current
or former employees of the Company or any of its Subsidiaries working outside
the United States to the extent required by applicable local law or the terms of
such arrangements for any such employee who requests such a transfer. Nothing in
this Section shall oblige Buyer, the Company or its Subsidiaries or the
trustees/managers of any of their pension arrangements to accept any such
transfer unless and to the extent required by applicable local law.
(b) Seller's Obligations.
(i) As soon as practicable following the date of this
Agreement, Seller shall take such actions as may be required to provide that,
effective as of the Closing Date, each Company employee who has an accrued
benefit under the terms of the EDS Benefit Restoration Plan and the EDS
Supplemental Executive Retirement Plan shall be 100% vested in such accrued
47
benefit notwithstanding such Company employee's years of service under the terms
of such plan.
(ii) During the period commencing on the Closing Date and
continuing for a six year period after the Closing Date, Seller covenants and
agrees that it shall promptly deliver to the Company a copy of any notice,
request or other correspondence received from the PBGC with respect to the EDS
Retirement Plan, to the extent that it is reasonably expected that the PBGC
intends to institute proceedings to terminate such plan under section 4042 of
ERISA.
(iii) With respect to any employee listed on Section 8.6(b) of
the Company Disclosure Letter who is not actively at work with the Company or
its Subsidiaries on account of illness or disability as of the Closing Date
("Inactive Employees"), such employee shall remain or become an employee of
Seller or its Affiliates until he returns to work, with a physician's release or
other appropriate documentation indicating he is able to resume his prior
duties. In the event an Inactive Employee provides Seller with a physician's
release or appropriate documentation indicating he is able to resume his prior
duties within six (6) months after the Closing Date, Buyer shall promptly extend
an offer of employment to such Inactive Employee and the compensation and other
terms and conditions of such offer shall be as set forth in Section 8.6(a). In
the event an Inactive Employee does not provide Seller with a physician's
release or other appropriate documentation indicating he is able to resume his
prior duties within six (6) months of the Closing Date, Buyer shall be under no
obligation to offer employment or any other form of benefits to such employee.
(iv) Seller shall retain all liabilities arising out of or in
connection with or under any U.S. Plan or Foreign Benefit Plan established or
maintained by Seller or its Affiliates (other than the Company and its
Subsidiaries) prior to Closing (other than Plans or assets or liabilities under
such Plans transferred to the Company in accordance with Section 8.6(a)(iii) of
this Agreement), including without limitation the Supplemental Executive
Retirement Plan in effect as of the date of this Agreement for the benefit of
certain employees of the Company. Seller shall ensure that, with respect to any
funded Foreign Benefit Plan that is a defined benefit plan maintained under the
laws of the United Kingdom, there is no amount owed or "debt due" thereunder for
which Buyer, the Company or any Affiliate thereof could be liable nor will any
such amount or debt become due as a result of this transaction. Seller shall
take all actions necessary to discharge the Company and its Affiliates from any
such debt as a matter of law and shall provide Buyer with such evidence of such
discharge as Buyer may reasonably request.
(c) Pre- and Post-Closing Welfare Benefit Claims. Seller agrees that
any claims for welfare benefits incurred before the Closing Date with respect to
any employees of the Company and its Subsidiaries (or their covered dependents
or beneficiaries) shall be the responsibility of Seller or the insurers of
Seller's welfare plans and Buyer agrees that any claims for welfare benefits
incurred on or after the Closing Date with respect to any employees (or their
covered dependents as beneficiaries) shall be the responsibility of Buyer or the
insurers of Buyer's welfare plans. For avoidance of doubt, with respect to
health care services provided in connection with in patient hospitalization,
such claim is deemed incurred on the first day on which hospitalization occurs
or, in the event of an employee's death or permanent disability, the date the
employee dies or is deemed permanently disabled under the applicable Plan.
48
8.7 Separate Acquisitions of Foreign Subsidiaries. Buyer and Seller will
enter into mutually agreeable arrangements by which the Company or its
Subsidiaries will sell stock or assets of certain of the Company's foreign
Subsidiaries to one or more purchasers designated by Buyer in separate
transactions occurring on or prior to the Closing. The consideration paid to
Seller or its Affiliates in respect of these transactions shall, to the extent
not retained by the Company and its Subsidiaries, be a portion of the Purchase
Price. Buyer and Seller agree to cooperate to identify the Company's
Subsidiaries that will be the subject of such transactions. The terms of local
jurisdiction purchase agreements shall contain only those terms reasonably
necessary to effect the transfer of stock or assets in such acquisitions and
shall contain such other representations, warranties, covenants and
indemnification provisions as are required by local law or recommended by local
counsel of the Parties after consultation. The aggregate consideration to be
paid in such transactions will be no less than $560,000,000 based on currency
exchange rates as of five Business Days prior to the Closing Date.
8.8 Stand-Alone Requirements. The Company shall, and Seller shall cause
the Company to, use commercially reasonable efforts to accomplish the
stand-alone requirements set forth in Exhibit B that are able to be completed
prior to Closing, and Buyer, the Company and Seller shall cooperate with one
another to effect the smooth transition of ownership of the Company in
accordance with such terms. If other stand-alone needs are identified by any of
the Parties, the Parties agree to negotiate in good faith to agree to terms
regarding such needs in substantially the manner set forth in Exhibit B with
respect to identified needs. To the extent requirements identified in Exhibit B
or otherwise agreed to after the date of this Agreement are incomplete as of the
Closing Date or by their terms require services after the Closing Date, the
Parties shall refine such list of needs appropriately and provide for their
performance and payment therefor by attaching a description of such services, in
a form reasonably acceptable to the Parties, as a schedule or service order to
the Transition Services Agreement to be executed and delivered at Closing.
8.9 Back-to-Back Agreements.
(a) GM. On or before the Closing, the Company and Seller shall enter
into agreements on terms mutually agreeable to Seller and Buyer, with respect to
the continuation of the relationship between the Company and General Motors
Corporation and its Affiliates ("GM") from and after the Closing, including
without limitation a "back to back" agreement on terms mutually agreeable to
Buyer and Seller that will: (a) provide that the Company shall be jointly and
severally liable with Seller under the Master Services Agreement (the "MSA")
between Seller and GM, as in effect on the date hereof, for the performance of
the "MSA Services" (as defined in the MSA) that Seller provides or is
responsible for providing to GM under the MSA or that GM may require pursuant to
the terms of the MSA to the extent and only to the extent that such services or
products relate to the Business, which services ("UGS/GM SERVICES") shall be
described with reasonable specificity; (b) provide that the Company shall be
entitled to all compensation under the MSA with respect to the UGS/GM Services;
(c) provide that the Company's liability under the MSA shall continue during the
term of the MSA including any extensions or transitions thereof to which GM is
contractually entitled or to which the Company agrees in writing; (d)
incorporate all of the applicable terms of the MSA; and (e) such other terms as
Buyer and Seller shall mutually agree and are customary and appropriate under
the circumstances.
49
(b) Government Contracts. On or before the Closing, the Company and
Seller (or the appropriate Seller Subsidiary) shall enter into "back to back"
agreements on terms mutually agreeable to Buyer and Seller that will provide
that the Company will perform services that Seller (or the appropriate Seller
Subsidiary) provides or is responsible for providing under the government
contracts identified on Section 10(a)(7) of the Company Disclosure Letter to the
extent and only to the extent that such services relate to the Business, which
services ("UGS/GOVERNMENT SERVICES") shall be described with reasonable
specificity and (b) provide that the Company shall be entitled to all
compensation under such government contracts with respect to the UGS/Government
Services.
9. CONDITIONS TO CLOSING
9.1 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions as of the Closing Date:
(a) Representations and Warranties. The representations and
warranties of Seller and the Company set forth in Article 3 and Article 4 and in
any document, instrument or certificate delivered hereunder (i) that are not
qualified by materiality or Material Adverse Effect shall be true and correct in
all material respects both at and as of the date of this Agreement and at and as
of the Closing Date as though made on and as of such time and (ii) that are
qualified by materiality or Material Adverse Effect shall be true and correct
both at and as of the date of this Agreement and at and as of the Closing Date
as though made on and as of such time (other than such representations and
warranties that are expressly made as of another date, that shall be so true and
correct as of such date);
(b) Performance of Covenants and Agreements. Seller and the Company
shall have performed in all material respects all of the covenants and
agreements to the extent required to be performed by them under this Agreement
at or prior to the Closing;
(c) Competition Filings. Subject to Section 2.2(b) above, all
required Competition Filings shall have been approved or the applicable waiting
periods, if any, with respect thereto shall have expired or been terminated;
(d) Actions and Proceedings. No action or proceeding before any
court or government body shall be pending, or threatened in writing, wherein an
unfavorable judgment, decree or order would prevent the performance of this
Agreement or the consummation of any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause any of
such transactions to be rescinded, subject to Section 2.2(b) hereof;
(e) Closing Deliverables. The Company or Seller, as applicable,
shall have delivered to Buyer each of the following:
(i) a certificate of the Company, dated the Closing Date,
stating that the conditions specified in subsections (a) and (b), as they relate
to the Company, have been satisfied;
(ii) a certificate of Seller, dated the Closing Date, stating
that the
50
conditions specified in subsections (a) and (b), as they relate to Seller, have
been satisfied;
(iii) the certificate representing the Purchased Shares, duly
endorsed for transfer to Buyer;
(iv) a copy of the certificate of incorporation of the
Company, certified by the Secretary of State of Delaware, and a certificate of
good standing from Delaware and each jurisdiction in the United States in which
the Company is duly qualified to transact business, in each case, dated within
fifteen (15) Business Days of the Closing Date;
(v) certified copies of the resolutions duly adopted by each
of Seller's and the Company's respective boards of directors authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions contemplated
hereby and thereby; and
(vi) each of the Transaction Documents, duly executed by
Seller and the Company, as applicable.
(f) Financing. Buyer shall have received the financing contemplated
by the Debt Financing Commitments in such amount (when aggregated with the
Equity Financing Commitments) that is sufficient to fund the Closing payment
obligations of Buyer under Section 2.1 hereof, and such debt and equity
financing shall be on substantially the terms and conditions set forth in the
Commitment Letters, as the Debt Financing Commitments may be modified by a flex
change pursuant to a Flex Letter, or pursuant to the terms of an Alternative
Financing obtained by Buyer. It being understood that if a condition under the
Debt Financing Commitments is not satisfied solely because of a failure of the
funding under the Equity Financing Commitments, then the condition under this
Section 9.1(f) shall be deemed satisfied or waived.
(g) Legal Opinion. Buyer will have received from Xxxxxx & Xxxxxx,
L.L.P., counsel to the Company and Sellers (or other counsel reasonably
acceptable to Buyer), its opinion with respect to the transactions contemplated
by this Agreement, which opinion will be in the form and substance reasonably
acceptable to Buyer. Such opinion will, at the request of Buyer, be confirmed to
any provider of debt financing entered into in connection with the transactions
contemplated by this Agreement.
(h) No Material Adverse Change. Between the date hereof and the
Closing Date, there shall not have occurred any Material Adverse Change.
If the Closing occurs, all closing conditions set forth in this Section 9.1 that
have not been fully satisfied as of the Closing shall be deemed to have been
fully waived by Buyer (solely for purposes of Section 9).
9.2 Conditions to Seller's Obligations. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions as of the Closing Date:
(a) Representations and Warranties. The representations and
warranties of
51
Buyer set forth in Article 5 and in any document, instrument or certificate
delivered hereunder (i) that are not qualified by materiality or Material
Adverse Effect shall be true and correct in all material respects both at and as
of the date of this Agreement and at and as of the Closing Date as though made
on and as of such time and (ii) that are qualified by materiality or Material
Adverse Effect shall be true and correct both at and as of the date of this
Agreement and at and as of the Closing Date as though made on and as of such
time (other than such representations and warranties that are expressly made as
of another date, that shall be so true and correct as of such date);
(b) Performance of Covenants and Agreements. Buyer shall have
performed in all material respects all the covenants and agreements to the
extent required to be performed by it under this Agreement at or prior to the
Closing;
(c) Competition Filings. Subject to Section 2.2(b) above, all
required competition filings shall have been approved or the applicable waiting
periods, if any, with respect thereto shall have expired or been terminated;
(d) Actions and Proceedings. No action or proceeding before any
court or government body shall be pending, or threatened in writing, wherein an
unfavorable judgment, decree or order would prevent the performance of this
Agreement or the consummation of any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause any of
such transactions to be rescinded, subject to Section 2.2(b) hereof; and
(e) Closing Deliverables. Buyer shall have delivered to Seller the
following:
(i) the Purchase Price, as adjusted pursuant to Section 2.3,
by wire transfer of immediately available funds;
(ii) certified copies of the resolutions duly adopted by
Buyer's board of directors (or its equivalent governing body) authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions contemplated
hereby and thereby; and
(iii) a certificate of Buyer, dated the Closing Date, stating
that the conditions specified in subsections (a) and (b) have been satisfied.
(f) Legal Opinion. Seller will have received from Ropes & Xxxx LLP,
special counsel to Buyer, its opinion with respect to the transactions
contemplated, which opinion will be in form and substance reasonably
satisfactory to Seller.
If the Closing occurs, all closing conditions set forth in this Section 9.2 that
have not been fully satisfied as of the Closing shall be deemed to have been
fully waived by Seller (solely for purposes of Section 9).
10. TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
52
(a) by the mutual written consent of Seller and Buyer;
(b) by Buyer, if there has been a material violation or breach by
Seller or the Company of any covenant, representation or warranty contained in
this Agreement that has had or could reasonably be expected to have a Material
Adverse Effect and has prevented the satisfaction of any condition to the
obligations of Buyer at the Closing and such violation or breach has not been
waived by Buyer or, in the case of a covenant breach, cured by Seller or the
Company (as the case may be) within thirty (30) days after written notice
thereof from Buyer to Seller;
(c) by Seller, if there has been a material violation or breach by
Buyer of any covenant, representation or warranty contained in this Agreement
that has prevented the satisfaction of any condition to the obligations of
Seller at the Closing and such violation or breach has not been waived by Seller
or, in the case of a covenant breach, cured by Buyer within thirty (30) days
after written notice thereof from Seller (provided that the failure of Buyer to
deliver the consideration to be paid by Buyer pursuant to Section 2.1 as
required hereunder shall not be subject to cure hereunder unless otherwise
agreed to in writing by Seller); or
(d) by either Buyer or Seller if the transactions contemplated
hereby have not been consummated by September 30, 2004 as such date may be
extended up to 30 days in order to allow for any applicable cure period as
contemplated by Section 10.1(b) or Section 10.1(c) (the "TERMINATION DATE");
provided that neither Buyer nor Seller shall be entitled to terminate this
Agreement pursuant to this Section 10.1(d) if such Person's knowing or willful
breach of this Agreement has prevented the consummation of the transactions
contemplated hereby.
10.2 Effect of Termination. In the event of termination of this Agreement
by either Buyer or Seller as provided above, the provisions of this Agreement
shall immediately become void and of no further force and effect (other than
Section 3.17 (Broker's Fees), Section 4.6 (Broker's Fees), Section 5.5 (Broker's
Fees), Section 6.9 (Confidential Information), Section 10.2 (Effect of
Termination) and Article 12 (Miscellaneous) hereof and the Confidentiality
Agreement, that shall each survive the termination of this Agreement), and there
shall be no liability on the part of Buyer, Seller or the Company to one
another, except for liability for knowing or willful breaches of this Agreement
prior to the time of such termination.
11. SURVIVAL OF WARRANTIES AND INDEMNIFICATION
11.1 Survival. All of the representations and warranties of Seller and the
Company shall survive the Closing until the twelve (12) month anniversary of the
Closing Date other than (a) representations and warranties contained in Section
3.1 (Organization, Qualification and Authority), Section 3.2 (Capitalization),
Section 3.3 (Authorization; Valid and Binding Agreement), Section 3.17 (Broker's
Fees), Section 4.1 (Organization, Qualification and Authority), Section 4.2
(Authorization; Valid and Binding Agreement), Section 4.5 (Title to Purchased
Shares), and Section 4.6 (Broker's Fees), which shall survive indefinitely, and
(b) the representations and warranties contained in Section 3.7 (Tax Matters),
Section 3.13 (Employee Benefit Plans) and Section 3.14(b) (Compliance with
Laws), which shall survive until thirty (30) days after the expiration of the
applicable statute of limitations (taking into account any tolling periods and
other extensions), including in each case representations and warranties with
respect
53
to such sections made in certificates or instruments delivered at Closing (with
respect to a particular representation or warranty, its "SURVIVAL PERIOD"). All
the representations and warranties of Buyer shall survive the Closing.
11.2 Indemnification.
(a) Indemnification by Seller. If the Closing occurs, Seller shall
(subject to Section 11.3) indemnify, defend and hold harmless Buyer and each of
its Affiliates (including, following the Closing, the Company and its
Subsidiaries) and Buyer's Representatives and each Affiliate of the foregoing
Persons (each, a "BUYER INDEMNIFIED PERSON") from and against the entirety of
any Adverse Consequences a Buyer Indemnified Person may suffer, sustain or
become subject to, through and after the date of the claim for indemnification
("BUYER INDEMNIFIABLE LOSSES"), arising out of or directly or indirectly
relating to or resulting from (i) any breach or inaccuracy of the
representations and warranties of Seller or the Company made in a Transaction
Document (in each case, other than representations or warranties contained in
Section 3.7, as such representation or warranty would read if all qualifications
as to the Company's Knowledge and materiality, including each reference to the
defined term "Material Adverse Effect," were deleted therefrom), (ii) any
nonfulfillment or breach of any covenant or agreement on the part of the Company
(prior to the Closing) or Seller in a Transaction Document, (iii) any Buyer
Indemnified Taxes, (iv) any fraud or intentional misrepresentation of Seller or
(before the Closing) the Company, and (v) any Special Indemnified Matters.
(b) Indemnification by Buyer. Buyer shall indemnify, defend and hold
harmless Seller and each of its Affiliates and Seller's representatives and each
Affiliate of the foregoing Persons (each, a "SELLER INDEMNIFIED PERSON") from
and against the entirety of any Adverse Consequences such Person may suffer,
sustain or become subject to, through and after the date of the claim for
indemnification ("SELLER INDEMNIFIABLE LOSSES"; Buyer Indemnifiable Losses and
Seller Indemnifiable Losses, as the context requires, are each sometimes
referred to herein as "INDEMNIFIABLE LOSSES"), arising out of or directly or
indirectly relating to or resulting from (i) any breach or inaccuracy of the
representations and warranties made by it in a Transaction Document (in each
case, as such representation or warranty would read if all qualifications as to
Buyer's Knowledge and materiality, including each reference to the defined term
"Material Adverse Effect," were deleted therefrom), (ii) any nonfulfillment or
breach of any covenant or agreement on the part of the Company (after the
Closing) or Buyer in a Transaction Document and (iii) any fraud or intentional
misrepresentation of Buyer.
11.3 Limits on Indemnification.
(a) The aggregate liability of Seller to indemnify Buyer Indemnified
Persons from and against any Indemnifiable Losses arising solely under Section
11.2(a)(i) hereof shall not exceed One Hundred Fifty Million Dollars
($150,000,000.00) (the "CAP").
(b) Seller will not have any obligation to indemnify Buyer
Indemnified Persons with respect to any Indemnifiable Losses arising solely
under Section 11.2(a)(i) until Buyer shall first have suffered such aggregate
Indemnifiable Losses in excess of Twenty ($20,000,000.00) (the "BASKET") (at
which point Seller will be obligated to indemnify Buyer Indemnified Persons for
all such Indemnifiable Losses in excess of Five Million Dollars
54
($5,000,000) (the "DEDUCTIBLE")); provided, however, that Seller will not have
any obligation to indemnify Buyer Indemnified Persons with respect to individual
or related Indemnifiable Losses of less than Twenty-Five Thousand Dollars
($25,000.00) each, and such Indemnifiable Losses shall not be counted toward the
Basket or Deductible; and provided further, however, that notwithstanding the
foregoing, the Cap, the Basket and the Deductible shall not apply to
Indemnifiable Losses that Seller is obligated to indemnify pursuant to Section
11.2(a)(i) above with respect to breaches of representations and warranties
contained in Section 3.1 (Organization, Qualification and Authority), Section
3.2 (Capitalization), Section 3.3 (Authorization; Valid and Binding Agreement),
Section 3.17 (Brokers' Fees), Section 4.1 (Organization, Qualification and
Authority), Section 4.2 (Authorization; Valid and Binding Agreement), Section
4.5 (Title to Purchased Shares) and Section 4.6 (Brokers' Fees) and within the
definition of Buyer Indemnified Taxes.
(c) Seller shall have no obligation to indemnify Buyer Indemnified
Persons from and against any Indemnifiable Losses arising out of the breach of a
representation or warranty made herein or pursuant hereto unless Buyer makes a
written claim for the breach within the Survival Period applicable to such
representation or warranty, provided that the Survival Period shall not apply to
claims based on fraud or intentional misrepresentation.
(d) An Indemnified Party shall, at the Indemnifying Party's request,
reasonably cooperate in the defense of any matter subject to indemnification
hereunder, subject to Section 11.4.
(e) The amount of any Indemnifiable Losses payable under Section
11.2 by the Indemnifying Party shall be net of (i) amounts actually recovered
from any third party with indemnification obligations or from any other Person
responsible therefor (other than pursuant to insurance policies purchased by the
Company and its Subsidiaries after the Closing or purchased by Buyer or any of
its Affiliates (other than the Company and the Company's Subsidiaries) and (ii)
the Tax benefit realized by the Indemnified Party arising from the incurrence or
payment of any such Indemnifiable Losses (but only to the extent such benefit
has actually reduced such Indemnified Party's Tax liability). If an Indemnified
Party receives any amounts from any third party with indemnification obligations
or from any other Person found to be responsible for any Indemnifiable Losses
(other than pursuant to insurance policies purchased by the Company and its
Subsidiaries after the Closing or purchased by Buyer or any of its Affiliates
(other than the Company and the Company's Subsidiaries)), subsequent to an
indemnification payment by any Indemnifying Party, then such Indemnified Party
shall promptly reimburse the Indemnifying Party for any payment made by such
Indemnifying Party to the Indemnified Party.
(f) No Indemnifying Party shall be liable under Section 11.2 for
punitive damages except in the event of fraud.
(g) Each Indemnified Party shall take and shall cause their
respective Affiliates to take commercially reasonable steps to mitigate and
otherwise minimize the Indemnifiable Losses upon and after becoming aware of any
event that would be reasonably expected to give rise to any Indemnifiable
Losses, provided that the costs of such mitigation shall be Indemnifiable
Losses.
55
(h) If an Indemnified Party receives any payment from an
Indemnifying Party in respect of any Indemnifiable Losses and the Indemnified
Party could have recovered all or part of such Indemnifiable Losses from a third
party other than pursuant to an insurance policy held by the Indemnified Party
(a "POTENTIAL CONTRIBUTOR") based on the underlying claim asserted against the
Indemnifying Party, the Indemnified Party shall assign such of its rights to
proceed against the Potential Contributor as are necessary to permit the
Indemnifying Party to recover from the Potential Contributor the amount of such
payment.
11.4 Matters Involving Third Parties.
(a) If any third party shall notify an Indemnified Party with
respect to any matter (a "THIRD PARTY CLAIM") that may give rise to a claim for
indemnification against an Indemnifying Party under this Article 11, then the
Indemnified Party shall promptly notify the Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is actually and materially prejudiced thereby.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of the Indemnifying
Party's choice (including the Indemnifying Party's in-house counsel), reasonably
satisfactory to the Indemnified Party, so long as (i) the Indemnifying Party
notifies the Indemnified Party, within ten (10) Business Days after the
Indemnified Party has given notice of the Third Party Claim to the Indemnifying
Party that the Indemnifying Party is assuming the defense of such Third Party
Claim, (ii) the Indemnifying Party conducts the defense of the Third Party Claim
in an active and diligent manner, (iii) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief against
the Indemnified Party, (iv) the Indemnified Party has not been advised by
counsel that an actual or potential conflict exists between the Indemnified
Party and the Indemnifying Party in connection with the defense of the Third
Party Claim, (v) the Third Party Claim does not relate to or otherwise arise in
connection with Taxes (except to the extent provided in Section 8.2(d)) or any
criminal or regulatory enforcement action, and (vi) settlement of, an adverse
judgment with respect to or the Indemnifying Party's conduct of the defense of
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to be materially adverse to the Indemnified Party.
(c) So long as the conditions set forth in Section 11.4(b) are and
remain satisfied, then (i) the Indemnifying Party may conduct the defense of the
Third-Party Claim in accordance with Section 11.4(b), (ii) the Indemnified Party
may retain separate co-counsel at its sole cost and expense, and (iii) the
Indemnifying Party will not, without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld or delayed),
consent to the entry of any judgment with respect to the matter, or enter into
any settlement that either imposes an injunction or other equitable relief upon
the Indemnified Party, involves a finding or admission of any violation of legal
requirements by the Indemnified Party, affects any other claim that may be made
against the Indemnified Party or does not include a full and general release of
the Indemnified Party by the plaintiff or claimant in the matter.
(d) If the Indemnifying Party does not deliver the notice
contemplated by
56
Section 11.4(b) within 10 Business Days after the Indemnified Party has given
notice of the Third Party Claim, or otherwise at any time fails to conduct the
defense of the Third Party Claim actively and diligently, the Indemnified Party
shall be entitled to have sole control over the defense or settlement,
compromise, admission or acknowledgement of the Third Party Claim; provided,
however, that the Indemnifying Party shall be entitled to participate in such
action at its own expense; and provided, further, that the Indemnified Party
shall make no settlement, compromise, admission, or acknowledgement that would
give rise to liability on the part of any Indemnifying Party without the prior
written consent of such Indemnifying Party not to be unreasonably withheld. If
such notice and evidence is given on a timely basis and the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently but any of
the other conditions in Section 11.4(b) is or becomes unsatisfied, the
Indemnified Party may defend, and may consent to the entry of any judgment or
enter into any compromise or settlement with respect to, the Third Party Claim;
provided, however, that the Indemnifying Party will not be bound by the entry of
any such judgment consented to, or any such compromise or settlement effected,
without its prior written consent (which consent will not be unreasonably
withheld or delayed). In the event that the Indemnified Party conducts the
defense of the Third Party Claim pursuant to this Section 11.4(d), the
Indemnifying Party will (i) advance the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses) and (ii) remain responsible for any and
all other Adverse Consequences that the Indemnified Party may incur or suffer
resulting from, arising out of, relating to, in the nature of or caused by the
Third Party Claim to the fullest extent provided in this Article 11.
(e) Seller and Buyer shall treat any payments that Buyer and Seller
receive pursuant to this Article 11 as an adjustment to and refund of the
Purchase Price for federal Tax purposes, unless a final determination (which
shall include the execution of a Form 870-AD or successor form) with respect to
Buyer and Seller causes such payment not to be treated as an adjustment to or
refund of the Purchase Price for federal Tax purposes.
11.5 Exclusive Remedy. If the Closing shall occur, the remedies set forth
in this Article 11 shall constitute the sole rights and exclusive remedies for
Indemnifiable Losses relating to or arising from (i) the inaccuracy of any
representation or warranty in this Agreement, any of the other Transaction
Documents or any of the certificates furnished by a Party hereunder and
contemplated by any of the Transaction Documents, or otherwise (whether in
contract or in tort) with respect to this Agreement, the other Transaction
Documents or the transactions contemplated by this Agreement or (ii) breaches of
agreements, covenants and obligations stated in this Agreement; provided, that
foregoing clause (ii) shall not apply with respect to the Transition Services
Agreements. Notwithstanding the foregoing, (x) each of the Parties hereto shall
be entitled to such equitable remedies to which such Party may otherwise be
entitled, including, without limitation, the ability to apply to any court of
competent jurisdiction for specific performance or injunctive relief and (y)
nothing set forth in this Agreement shall limit the rights, remedies and claims
of any Party with respect to any fraud, intentional misrepresentation or willful
misconduct or with respect to rights that under applicable law may not be
waived.
11.6 Remedies Cumulative. The rights of each Buyer Indemnified Person and
Seller Indemnified Person under this Article 11 are cumulative, and each Buyer
Indemnified Person
57
and Seller Indemnified Person, as the case may be, will have the right in any
particular circumstance, in its sole discretion, to enforce any provision of
this Article 11 without regard to the availability of a remedy under any other
provision of this Article 11.
12. MISCELLANEOUS
12.1 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that Buyer may assign any
and all of its rights and interests hereunder to any provider of debt financing
of the transactions contemplated hereby and provided further that Seller
Indemnified Parties and Buyer Indemnified Parties are intended to be third party
beneficiaries of this Agreement.
12.2 No Public Disclosure. No press release or public announcement related
to this Agreement or the transactions contemplated herein, or prior to the
Closing, any other announcement or communication to the employees, customers or
suppliers of the Company and its Subsidiaries (other than communications with
managers of the Company or its Subsidiaries in preparation for Closing), shall
be issued or made by any Party hereto without the joint prior approval of Buyer
and Seller, (a) except for private disclosure by any prospective provider of
equity or debt financing in the ordinary course to any such Person's
representatives, potential investors or participants, so long as each such
recipient is under an obligation to keep such disclosed information
confidential, (b) unless required by law (in the reasonable opinion of counsel)
in which case Buyer and Seller shall have the right to review such press
release, announcement or communication prior to its issuance, distribution or
publication or (c) except for disclosure made in connection with the enforcement
of any right or remedy relating to this Agreement or the transactions
contemplated hereby.
12.3 Entire Agreement. Other than the Confidentiality Agreement, this
Agreement constitutes the entire agreement between the Parties and their
Affiliates and any of Buyer's Representatives and supersedes any prior
understandings, agreements, or representations by or between the Parties, their
Affiliates and Buyer's Representatives, written or oral, that may have related
in any way to the subject matter hereof.
12.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Except as set forth in Section 12.1, no Party may assign
this Agreement or any of such Party's rights, interests, or obligations
hereunder without the prior written approval of the other Parties.
12.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. It is the express intent
of the Parties to be bound by the exchange of signatures on this Agreement via
telecopy.
12.6 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) three (3)
Business Days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) upon receipt if electronically
58
confirmed, if sent by fax (provided that a hard copy shall be promptly sent by
first class mail), or (iii) one (1) Business Day following deposit with a
recognized national overnight courier service for next day delivery, charges
prepaid, and, in each case, addressed to the intended recipient as set forth
below:
If to the Company (prior to Closing) With a copy to:
or Seller:
Electronic Data Systems Corporation Xxxxxx & Xxxxxx L.L.P.
Legal Department 3700 Xxxxxxxx Xxxx Center
5400 Legacy Drive, Mailstop H3-3D-05 0000 Xxxx Xxxxxx
Xxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000-0000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: General Counsel Attn: Xxxxxx X. Xxxxxxx
If to the Company (after Closing)
or Buyer:
BSW Holdings, Inc.
care of each of:
Xxxx Capital Partners, LLC Silver Lake Partners Warburg Pincus LLC
000 Xxxxxxxxxx Xxxxxx 0000 Xxxx Xxxx Xxxx, Xxx 000 000 Xxxxxxxxx Xxx.
Xxxxxx, XX 00000 Xxxxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx Attn: Xxxxxxx Xxx Attn: Xxxxxxx X. Back
With copies to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is delivered to the individual for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
59
12.7 Governing Law; Jurisdiction and Venue.
(a) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(b) Subject to the provisions of Sections 1.4 and 11.4(f), each
party to this Agreement, by its execution hereof, (i) hereby irrevocably submits
to the exclusive jurisdiction of the state courts of the States of Delaware or
the United States District Court located in the District of Delaware for the
purpose of any action between the parties arising in whole or in part under or
in connection with this Agreement, (ii) hereby waives to the extent not
prohibited by applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such action brought in
one of the above-named courts should be dismissed on grounds of forum non
conveniens, should be transferred or removed to any court other than one of the
above-named courts, or should be stayed by reason of the pendency of some other
proceeding in any other court other than one of the above-named courts, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court and (iii) hereby agrees not to commence any such action other than before
one of the above-named courts. Notwithstanding the previous sentence a party may
commence any action in a court other than the above-named courts solely for the
purpose of enforcing an order or judgment issued by one of the above-named
courts.
(c) Each party agrees that for any action between the parties
arising in whole or in part under or in connection with this Agreement, such
party bring actions only in the courts set forth in Section 12.7(b) above. Each
party further waives any claim and will not assert that venue should properly
lie in any other location within the selected jurisdiction.
(d) Each party hereby (i) consents to service of process in any
action between the parties arising in whole or in part under or in connection
with this Agreement in any manner permitted by Delaware law, (ii) agrees that
service of process made in accordance with clause (i) or made by registered or
certified mail, return receipt requested, at its address specified pursuant to
Section 12.6, will constitute good and valid service of process in any such
action and (iii) waives and agrees not to assert (by way of motion, as a
defense, or otherwise) in any such action any claim that service of process made
in accordance with clause (i) or (iii) does not constitute good and valid
service of process.
12.8 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW, SELLER, THE
COMPANY AND BUYER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY IN CONNECTION HEREWITH. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL
60
INDUCEMENT FOR SELLER TO ENTER INTO THIS AGREEMENT.
12.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Seller, the Company and Buyer. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence of
such kind.
12.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the invalid or unenforceable term or provision
in any other situation or in any other jurisdiction. If a final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
12.11 Expenses. Except as otherwise explicitly provided in this Agreement,
Buyer shall bear its own, and Seller shall bear its own and the Company's,
direct and indirect costs and expenses (including fees and expenses of legal
counsel, investment bankers, brokers or other representatives or consultants)
incurred in connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby, whether or not such
transactions are consummated.
12.12 Construction.
(a) Each of the Parties acknowledges that it has been represented by
independent counsel of its choice throughout all negotiations that have preceded
the execution of this Agreement and that it has executed the same with consent
and upon the advice of said independent counsel. Each Party and its counsel
cooperated in the drafting and preparation of this Agreement and the documents
referred to herein, and any and all drafts relating thereto shall be deemed the
work product of the Parties and may not be construed against any Party by reason
of its preparation. Accordingly, any rule of law or any legal decision that
would require interpretation of any ambiguities in this Agreement against any
Party that drafted it is of no application and is hereby expressly waived.
(b) The inclusion of any information in any section of any
Disclosure Letter to this Agreement shall not be deemed an admission or
acknowledgment, in and of itself and solely by virtue of the inclusion of such
information in any Section of such Disclosure Letter, that such information is
required to be listed in the applicable Section of such Disclosure Letter or
that such items are material to any Party. The headings, if any, of each Section
of each Disclosure Letter are inserted for convenience only and shall not be
deemed to constitute a part thereof or a
61
part of this Agreement. The disclosure of an item in one Section of the
Disclosure Letter as an exception to a particular representation or warranty
shall be deemed adequately disclosed as an exception with respect to all other
representations or warranties to the extent that the relevance of such item to
such representations or warranties is reasonably apparent on the face of such
item, notwithstanding the presence or absence of an appropriate cross reference
thereto.
(c) The specification of any dollar amount in the representations
and warranties or otherwise in this Agreement or in any Disclosure Letter is not
intended and shall not be deemed to be an admission or acknowledgment of the
materiality of such amounts or items, nor shall the same be used in any dispute
or controversy between the Parties to determine whether any obligation, item or
matter (whether or not described herein or included in any schedule) is or is
not material for purposes of this Agreement (other than with respect to any
representation, warranty or provision of this Agreement in which such
specification occurs).
(d) The Disclosure Letters and Exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof. Where any provision
in this Agreement refers to action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether the
action in question is taken directly or indirectly by such Person.
(e) Matters reflected in the Disclosure Letters and Exhibits to this
Agreement are not necessarily limited to matters required by this Agreement to
be reflected in such Disclosure Letters or Exhibits. Such additional matters are
set forth for informational purposes only and do not necessarily include other
matters of a similar nature.
12.13 Tax Disclosure. Notwithstanding anything herein to the contrary,
each Party may disclose (without prior notification to, or approval or consent
by, the other Party), to taxing authorities and/or to such Party's
representatives, outside counsel and advisors, any Confidential Information that
is required to be disclosed in connection with such Party's tax filings,
reports, claims, audits, and litigation.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER:
BSW HOLDINGS, INC.
By: /s/ Xxxxxxx Xxx
------------------------------------
Name: Xxxxxxx Xxx
Title: Co-President
SELLER:
ELECTRONIC DATA SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer
THE COMPANY:
UGS PLM SOLUTIONS INC.
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
