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EXHIBIT 4.4
SHARE PURCHASE AND SALE AGREEMENT
BY AND AMONG
NICE SYSTEMS LTD.,
NICE SYSTEMS LATIN AMERICA, INC.,
NICE CTI SYSTEMS UK LIMITED,
ACTIMIZE JAPAN KK
AND
FORTENT, INC.,
AND, SOLELY FOR THE PURPOSES OF SECTION 11.6,
AGM ACQUISITION CORP.,
ALERT GLOBAL MEDIA, INC.
AND
ASSOCIATION OF CERTIFIED ANTI-MONEY LAUNDERING SPECIALISTS, INC.
DATED AS OF AUGUST 31, 2009
TABLE OF CONTENTS
1. DEFINITIONS................................................................1
1.1. CERTAIN DEFINITIONS...............................................1
2. PURCHASE AND SALE OF SHARES................................................9
2.1. PURCHASE AND SALE OF SHARES.......................................9
2.2. CLOSING PAYMENTS..................................................9
2.3. BASE PRICE ADJUSTMENT.............................................9
2.4. TAX GROSS-UP.....................................................12
2.5. TAX TREATMENT....................................................12
3. CLOSING...................................................................13
3.1. CLOSING..........................................................13
3.2. CLOSING DELIVERIES OF COMPANY....................................13
3.3. CLOSING DELIVERIES OF PARENT.....................................15
3.4. ESCROW FUND......................................................15
3.5. TRANSFER TAXES...................................................15
3.6. PURCHASE PRICE ALLOCATION........................................15
4. BASIC REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................16
4.1. ORGANIZATION AND AUTHORITY.......................................16
4.2. NONCONTRAVENTION.................................................16
4.3. TITLE TO SHARES..................................................16
4.4. GOVERNMENTAL APPROVALS. ........................................17
4.5. BROKERS' FEES....................................................17
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO THE
ACQUIRED COMPANIES...............................................17
5.1. ORGANIZATION AND AUTHORITY.......................................17
5.2. NONCONTRAVENTION.................................................18
5.3. CAPITALIZATION; TITLE............................................19
5.4. GOVERNMENTAL APPROVALS...........................................19
5.5. COMPANY FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES............19
5.6. ABSENCE OF CERTAIN CHANGES.......................................21
5.7. TAX MATTERS......................................................23
5.8. ASSETS AND PROPERTY; LEASES......................................24
5.9. INTELLECTUAL PROPERTY............................................26
5.10. ENVIRONMENTAL MATTERS............................................30
5.11. CONTRACTS........................................................30
5.12. INSURANCE........................................................32
5.13. LITIGATION.......................................................33
5.14. EMPLOYEE MATTERS.................................................33
5.15. LICENSES AND PERMITS; LEGAL COMPLIANCE...........................37
5.16. AFFILIATE TRANSACTIONS; EXCLUDED SUBSIDIARIES....................38
5.17. ACCOUNTS RECEIVABLE..............................................39
5.18. WARRANTIES.......................................................39
5.19. NO PUBLIC OFFER. ...............................................39
5.20. BROKERS' FEES....................................................40
5.21. BANK ACCOUNTS; POWERS OF ATTORNEY. .............................40
5.22. HSR..............................................................40
5.23. FULL DISCLOSURE..................................................40
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE ACQUIRING SUBSIDIARIES...40
6.1. ORGANIZATION.....................................................40
6.2. AUTHORITY........................................................40
6.3. NONCONTRAVENTION.................................................41
6.4. GOVERNMENTAL APPROVALS. ........................................41
6.5. HSR..............................................................41
6.6. INSPECTIONS; NO OTHER REPRESENTATIONS............................41
7. COVENANTS.................................................................42
7.1. REASONABLE BEST EFFORTS; FURTHER ASSURANCES. ...................42
7.2. 2009 AUDITED FINANCIALS; FINANCIAL STATEMENTS OF THE BUSINESS....42
7.3. PUBLIC ANNOUNCEMENTS.............................................42
7.4. FIRPTA COMPLIANCE................................................43
7.5. NON-SOLICITATION OF EMPLOYEES....................................43
7.6. NON COMPETE......................................................43
7.7. CONFIDENTIAL INFORMATION.........................................44
7.8. INDEMNIFICATION OF DIRECTORS AND OFFICERS........................45
7.9. USE OF NAME......................................................46
7.10. ASSET TRANSFERS..................................................46
7.11. INTERCOMPANY DEBTS...............................................47
8. RELEASES AND WAIVERS......................................................47
8.1. GENERAL RELEASE..................................................47
9. CONDITIONS TO CLOSING.....................................................48
9.1. CONDITIONS TO OBLIGATIONS OF THE COMPANY.........................48
9.2. CONDITIONS TO OBLIGATIONS OF THE BUYERS..........................48
10. SURVIVAL..................................................................48
10.1. SURVIVAL.........................................................48
11. INDEMNIFICATION...........................................................49
11.1. INDEMNIFICATION BY THE COMPANY. ................................49
11.2. INDEMNIFICATION FROM ESCROW PROCEDURE............................49
11.3. PROCEDURES FOR INDEMNIFICATION...................................50
11.4. CERTAIN RIGHTS AND LIMITATIONS...................................51
11.5. STRADDLE PERIOD TAXES............................................53
11.6. EXCLUDED SUBSIDIARIES............................................53
ii
12. GENERAL PROVISIONS........................................................54
12.1. ASSIGNMENT.......................................................54
12.2. PARTIES IN INTEREST..............................................54
12.3. FEES AND EXPENSES................................................54
12.4. NOTICES..........................................................54
12.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.........................55
12.6. SEVERABILITY.....................................................56
12.7. GOVERNING LAW. .................................................56
12.8. JURISDICTION, SERVICE OF PROCESS.................................56
12.9. WAIVER OF JURY TRIAL.............................................56
12.10. COUNTERPARTS.....................................................57
12.11. SPECIFIC PERFORMANCE.............................................57
12.12. CONSTRUCTION; INTERPRETATION.....................................57
EXHIBITS:
Exhibit A: Escrow Agreement
Exhibit B: Transition Services Agreement
Exhibit C: Parent Press Release
Exhibit D: [INTENTIONALLY OMITTED]
Exhibit E: Asset Transfer Agreement
iii
SHARE PURCHASE AND SALE AGREEMENT
SHARE PURCHASE AND SALE AGREEMENT, dated as of August 31, 2009 by and among
NICE SYSTEMS Ltd., an Israeli company ("PARENT"), NICE SYSTEMS LATIN AMERICA,
INC., a Delaware corporation and an indirect wholly owned subsidiary of Parent
("SUB A"), NICE CTI SYSTEMS UK LIMITED, a private limited company organized
under the Laws of England and Wales and an indirect wholly owned subsidiary of
Parent ("SUB B"), ACTIMIZE JAPAN KK, a KABUSHIKI KAISHA organized under the Laws
of Japan and an indirect wholly owned subsidiary of Parent ("SUB C" and together
with Sub A and Sub B, the "ACQUIRING SUBSIDIARIES"), and FORTENT, INC., a
Delaware corporation (the "COMPANY"), and, solely for the purposes of SECTION
11.6, AGM ACQUISITION CORP., a Delaware corporation ("AGMA"), ALERT GLOBAL
MEDIA, INC., a Delaware corporation ("AGM"), and ASSOCIATION OF CERTIFIED
ANTI-MONEY LAUNDERING SPECIALISTS, INC., a Delaware corporation ("ACAMS").
W I T N E S S E T H :
WHEREAS, the Company is the record and beneficial owner of all the issued
and outstanding Shares (as defined below) of the Acquired Subsidiaries (as
defined below); and
WHEREAS, the Acquiring Subsidiaries (the "BUYERS") desire to purchase from
the Company, and the Company desires to sell to the Buyers, all of the issued
and outstanding Shares of the Acquired Subsidiaries upon the terms and subject
to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that such
transactions are advisable and in the best interests of the Company and its
stockholders, has approved and adopted the transactions contemplated hereby and
the stockholders of the Company have approved and adopted this Agreement and the
transactions contemplated hereby; and
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
following meanings:
"ACQUIRED COMPANIES" means the Acquired Subsidiaries, together with
Searchspace Group Ltd., a private company organized under the Laws of
England and Wales, Fortent Ltd., a private company organized under the Laws
of England and Wales, and Searchspace GmbH, a GESELLSCHAFT MIT BESCHRANKTER
HAFTUNG organized under the Laws of the Federal Republic of Germany.
"ACQUIRED COMPANY PLAN" means any Plan sponsored or maintained by any
Acquired Company or by the Company or to which the Company or any of the
Acquired Companies is a party or required to contribute.
"ACQUIRED SUBSIDIARIES" means each of Fortent Americas, Fortent Japan
and Fortent UK.
"ACTION" means any legal, administrative, governmental or regulatory
proceeding or other action, suit, proceeding, claim, arbitration,
mediation, alternative dispute resolution procedure, inquiry or
investigation by or before any arbitrator, mediator, court or other
Governmental Authority.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control
with such Person. For purposes of this Agreement, the term "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING", "CONTROLLED
BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities or partnership interests, by
contract or otherwise.
"AFFILIATE PLAN" shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA) which any ERISA Affiliate sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions.
"AGGREGATE CLOSING PAYMENT" means the Base Purchase Price less (i) the
Escrow Funds and (ii) the Severance Payment.
"AGREEMENT" means this Share Purchase and Sale Agreement, including
all Exhibits and Schedules hereto, as the same may be amended, modified or
supplemented from time to time in accordance with its terms.
"BASE PURCHASE PRICE" shall mean US$73,500,000 (Seventy Three Million
and Five Hundred Thousand Dollars) as adjusted at the Closing pursuant to
SECTION 2.3.2.
"BUSINESS" shall mean all of the business of the Acquired Companies,
including all of the Acquired Companies' business conducted through the
Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which banking institutions in either the State of Israel or in
the State of New York are not open for the transaction of normal banking
business.
"BUSINESS INTELLECTUAL PROPERTY" means all Intellectual Property owned
or used in or for the Business.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
2
"CODE" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"CONFIDENTIALITY AGREEMENT" means the Non-Disclosure and
Confidentiality Letter Agreement dated August 25, 2008 between Parent and
the Company.
"CONSENTS" means consents, approvals, requirements, exemptions,
orders, waivers, allowances, novations, authorizations, declarations,
filings, registrations and notifications.
"CONTRACTS" means, with respect to any Person, any legally binding
written or oral contract, agreement, undertaking, lease, franchise,
obligation, arrangement, promise, understanding, commitment, instrument or
guaranty: (i) to which such Person is a party, (ii) under which such Person
has any rights, (iii) under which such Person has any Liability, or (iv) by
which such Person, or any of the assets or properties owned or used by such
Person, is bound, including, in each case, all amendments, modifications
and supplements thereto and waivers thereunder.
"DAMAGES" means any and all losses, liabilities, claims, damages,
deficiencies, fines, payments, Taxes, costs and expenses, whether or not
resulting from Third Party Claims (including the reasonable costs and
expenses of any and all Actions or other legal matters); all amounts paid
in connection with any demands, assessments, judgments, settlements and
compromises relating thereto; interest and penalties with respect thereto;
and reasonable costs and expenses, including reasonable attorneys',
accountants' and other experts' fees and expenses, incurred in
investigating, preparing for or defending against any such Actions or other
legal matters or in asserting, preserving or enforcing an Indemnitee's
rights hereunder.
"ENVIRONMENTAL LAWS" means any and all applicable Laws and Licenses
issued, promulgated or entered into by any Governmental Authority and all
codes of practice and guidance notes regulating, relating to or imposing
liability or standards of conduct concerning the environment (including the
air, water and land) or the generation, treatment, use, discharge, storage
or disposal of any material, chemical, or substance that, whether because
of its nature, form, condition or quantity, is regulated under applicable
Environmental Laws.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any Person that at any relevant time prior to
the Closing is considered a single employer with the Company or any of the
Acquired Subsidiaries under Section 414 of the Code.
"ESCROW AGENT" means the Person selected by Parent and the Company to
act as escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" means an escrow agreement by and among Parent, the
Company and the Escrow Agent attached hereto as EXHIBIT A.
"ESCROW FUNDS" means US$6,500,000 (Six Million Five Hundred Thousand).
3
"EXCLUDED SUBSIDIARIES" means each of AGMA, AGM and ACAMS.
"FORTENT AMERICAS" means Fortent Americas, Inc., a corporation
organized under the Laws of the State of Delaware.
"FORTENT AMERICAS SHARES" means all of the issued and outstanding
common shares of Fortent Americas, without par value.
"FORTENT JAPAN" means Fortent Japan K.K., a KABUSHIKI KAISHA organized
under the Laws of Japan.
"FORTENT JAPAN SHARES" means all of the issued and outstanding shares
of Fortent Japan.
"FORTENT UK" means Tiltgrange Ltd., a private limited company
organized under the Laws of England and Wales.
"FORTENT UK SHARES" means all of the issued and outstanding (i) "A"
Convertible Preference Shares of (pound)0.01 each and (ii) "B" Preference
Shares of (pound)0.01 each, of Fortent UK.
"GAAP" means the accounting principles generally accepted in the
United States, including as set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board, and applied consistently throughout the periods
involved.
"GOVERNMENTAL AUTHORITY" means, in any jurisdiction, including the
United States, any (i) supranational, national, federal, state, local,
foreign or international government, (ii) court, arbitral or other
tribunal, (iii) governmental or quasi-governmental authority of any nature
(including any political subdivision, instrumentality, branch, department,
official or entity) or (iv) agency, commission, authority or body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of
any nature.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
4
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents (including utility and design patents, industrial
designs and utility models), patent applications and patent and invention
disclosures, and all other rights of inventorship, worldwide, together with
all reissuances, continuations, continuations-in-part, divisions,
revisions, supplementary protection certificates, extensions and
re-examinations thereof (collectively, "PATENTS"); (b) trademarks, service
marks, trade names, service names, brand names, trade dress rights, logos,
Internet domain names, together with the goodwill associated with any of
the foregoing throughout the world, and all applications, registrations and
renewals thereof (collectively, "MARKS"); (c) copyrights and registrations
and applications therefor, including in and to works of authorship, moral
rights, mask works and all other rights corresponding thereto throughout
the world, whether published or unpublished, including rights to prepare,
reproduce, perform, display and distribute copyrighted works and copies,
compilations, collective works, and derivative works thereof (collectively,
"COPYRIGHTS"); (d) all trade secrets and confidential business and
technical information (including ideas, research and development, know-how,
formulas, technology, compositions, manufacturing and production processes
and techniques, technical data, engineering, production and other designs,
plans, drawings, engineering notebooks, industrial models, software and
specifications) (collectively, "TRADE Secrets"); (e) all computer and
electronic data, data processing programs, documentation and software, both
source code and object code (including flow charts, diagrams, descriptive
texts and programs, computer print-outs, underlying tapes, computer
databases and similar items), computer applications and operating programs;
(f) all rights to ▇▇▇ for and remedies against past, present and future
infringements of any or all of the foregoing and rights of priority and
protection of interests therein under the Laws of any jurisdiction
worldwide; (g) all copies and tangible embodiments of any or all of the
foregoing (in whatever form or medium, including electronic media); and (h)
all similar proprietary rights.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" or "AWARE OF" or a similar phrase, means with respect to
any fact, circumstance, event or other matter in question, such Person's
actual knowledge and the knowledge that such Persons would be reasonably
expected to have in the due diligent conduct of their respective duties.
Knowledge of the Company shall be deemed to be the Knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
and ▇▇▇▇ ▇'▇▇▇▇▇.
"LAWS" means all laws, statutes, constitutions, treaties, rules,
regulations ordinances, codes, judgments, rulings, orders, writs, decrees,
and injunctions of all Governmental Authorities.
"LEASES" means all leases, subleases, sub-subleases, licenses, rights
to occupy or use and other Contracts with respect to real property,
including, in each case, all amendments, modifications, extensions,
assignments, renewals and supplements thereto.
"LIABILITY" means any and all claims, debts, liabilities, obligations
and commitments of whatever nature, whether asserted or reasonably expected
to be asserted, fixed, absolute or contingent, matured or unmatured,
accrued or unaccrued, liquidated or unliquidated or due or to become due,
and whenever or however arising (including those arising out of any
Contract or tort, whether based on negligence, strict liability or
otherwise) regardless of whether the same would be required by GAAP to be
reflected as a liability in financial statements or disclosed in the notes
thereto.
"LICENSES" means all Consents, licenses, permits, certificates,
variances, exemptions, franchises and other approvals or authorizations
issued, granted, given, required or otherwise made available by any
Governmental Authority.
"LIEN" means any charge, community property interest, equitable
interest, lien, encumbrance, option, proxy, pledge, security interest,
mortgage, right of first refusal, right of preemption, transfer or
retention of title agreement, or restriction by way of security of any kind
or nature, including any restriction on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership.
5
"MATERIAL ADVERSE EFFECT" means any event, change, circumstance or
effect that has, or would be reasonably expected to have, a material
adverse effect on the assets, liabilities, business, financial condition or
results of operations of (x) when referring to the Acquired Companies, the
Company and the Acquired Companies, taken as a whole, or that materially
impairs the ability of the Company to consummate the Transaction or (y)
when referring to Parent or the Buyers, Parent and its Subsidiaries, taken
as a whole, or that materially impairs the ability of Parent and the Buyers
to consummate the Transaction, other than in the case of (x) or (y) any
event, change, circumstance or effect arising from or relating to (A)
general economic conditions that do not have a disproportionate impact on
the applicable party(ies) relative to other industry participants, (B) the
industry in which such party operates in general that do not have a
disproportionate impact on the applicable party(ies) relative to other
industry participants, (C) the negotiation, execution, announcement,
pendency or performance of this Agreement or the consummation of the
Transaction, including the impact thereof on relationships, contractual or
otherwise, with customers, suppliers, distributors or partners, (D) any
declaration of war by or against, or an escalation of hostilities
involving, or an act of terrorism against, any country where such party or
its major sources of supply have material operations or where such party
has sales, or (E) changes in applicable Laws or in generally accepted
accounting principles or accounting standards.
"OWNED BUSINESS INTELLECTUAL PROPERTY" means all Business Intellectual
Property owned by the Acquired Companies.
"PERMITTED LIENS" means Liens (i) for Taxes, assessments and other
governmental charges not yet due and payable or, if due, not delinquent or
being diligently contested in good faith through appropriate proceedings,
and (ii) for inchoate workmen's, materialmen's, repairmen's or other
similar Liens or retentions of title arising or incurred in the ordinary
course of business consistent with past practices in respect of obligations
which are not overdue, minor title defects and recorded easements, which
workmen's, repairmen's or other similar Liens, retentions of title, minor
title defects and recorded easements do not, individually or in the
aggregate, impair the continued use, occupancy, value or marketability of
title of the property to which they relate or the business of the Acquired
Companies, assuming that the property is used on substantially the same
basis as such property is currently being used by the Acquired Companies.
"PERMITTED SHARE LIENS" means restrictions on transfer under each of
the Acquired Company's Formation Documents in their current form.
"PERSON" means any individual, firm, partnership, joint venture,
trust, corporation, limited liability entity, unincorporated organization,
estate or other entity (including a Governmental Authority).
6
"PLAN" means each plan, including any pension, retirement, cash
balance, money purchase, savings, profit sharing, annuity, deferred
compensation, bonus, incentive (including, without limitation, cash, stock
option, stock bonus, stock appreciation, phantom stock, restricted stock
and stock purchase), medical, dental, vision, hospitalization, long-term
care, prescription drug and other health, employee assistance, cafeteria,
flexible benefits, life insurance, short and long term disability, vacation
pay, severance pay, other welfare and fringe benefit and similar plans,
programs, understandings, arrangements or agreements, including without
limitation all employee benefit plans, sponsored or maintained by the
Company or Acquired Companies or to which the Company or any of the
Acquired Companies is a party or required to contribute.
"PRE-CLOSING TAX PERIOD" means any Tax period ending on or before the
Closing Date and the portion of any Straddle Period up to and including the
Closing Date.
"PROSPECT HOUSE LEASE" means the lease of sixth floor Prospect House
80-100 (even) New ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ made between Britel Fund
Trustees Limited and Fortent Limited), together with any ancillary license
or documents to such lease.
"REQUIRED CONSENTS" means those Consents specified in SCHEDULE 5.2 and
in SECTION 5.4.
"REPRESENTATIVES" means, with respect to any Person, such Person's
Affiliates, directors, officers, employees, agents, consultants, advisors
and other representatives, including legal counsel, accountants and
financial advisors.
"SHARES" means, collectively, the Fortent Americas Shares, the Fortent
Japan Shares and the Fortent UK Shares.
"SOFTWARE" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) computer-based databases and
compilations, (iii) descriptions, flow-charts and other work product used
to design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons, and (iv) all documents including user manuals and other
training documentation related to any of the foregoing.
"STRADDLE PERIOD" means any Tax period that includes, but does not end
on, the Closing Date;
"TARGET AMOUNT" means ($1,000,000) (Negative One Million Dollars).
"TAX" or "TAXES" means any and all current and future, taxes, charges,
duties, fees, levies, imposts or other assessments, reassessments, or
mandatory payments of any kind whatsoever, whether direct or indirect,
imposed by or payable to or accrued to the benefit of any federal, state,
local or foreign tax authority and/or Governmental Authority, including,
without limitation, gross income, net income, gross receipts, license,
payroll, employment, workers' compensation, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, property, personal property, sales,
use, transfer, registration, value added, business, ad valorem, duties,
turnover, goods, production, occupancy, utility, services, municipal, real
property, abandoned property under escheatment Laws, capital gain, transfer
and gain, alternative or add-on minimum, estimated, or other taxes or
mandatory payments of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, including any liability for
the foregoing by reason of membership in affiliated, consolidated,
combined, unitary or similar Tax group.
7
"TAX PLANNING EXPENSES" means up to $225,000 of fees and out-of-pocket
costs and expenses of PricewaterhouseCoopers LLP charged to the Company
and/or the Acquired Companies (without duplication) in connection with Tax
advice relating to the Transaction.
"TAX RETURN" means any return, declaration, report, claim for refund,
election, designation, computation, disclosure, estimates, information
return, statement or other document relating to Taxes, including any
related or supporting information, schedules or attachments thereto, and
including any amendment thereof, required to be filed with or supplied to
any Governmental Authority and/or Tax authority.
"TOTAL CONSIDERATION" means the Base Purchase Price (as adjusted in
accordance with SECTION 2.4).
"TRANSACTION" means the transactions contemplated by the Transaction
Documents.
"TRANSACTION DOCUMENTS" means this Agreement, the Transition Services
Agreement, the Escrow Agreement, the Asset Transfer Agreements and all
other instruments, certificates and agreements delivered or required to be
delivered by the Company, Parent, Acquiring Subsidiaries, Acquired
Companies or any of their Representatives pursuant to this Agreement.
"TRANSACTION EXPENSES" means any and all fees and out-of-pocket costs
and expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Inc., the portion of the severance amounts for those individuals
set forth on SCHEDULE I (the "DESIGNATED EMPLOYEES") equal to the severance
amount set forth in each such Designated Employee's Release Letter less the
applicable Parent Severance Participation (as those terms are defined
herein) (the "SEVERANCE PAYMENT"), the cost of procuring "run-off" or
"tail" insurance coverage for each present and former director and officer
of the Company and the Acquired Companies as set forth in SECTION 7.8.2 and
any fees and out of pocket costs and expenses of PricewaterhouseCoopers LLP
in excess of the Tax Planning Expenses.
"TRANSITION SERVICES AGREEMENT" means an agreement providing for
transition services post Closing, by and among Fortent Americas and AGM,
attached hereto as EXHIBIT B.
"UNIVERSAL GUARANTEE" means the outstanding guarantee provided by
Fortent Limited by way of the Prospect House License to Assign with respect
to the obligations and liabilities of Universal under the Prospect House
Lease assigned to it by Fortent Limited.
8
TERMS GENERALLY. The definitions in SECTION 1.1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The
words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Exhibits and Schedules to this Agreement)
in its entirety and not to any part hereof unless the context shall
otherwise require. All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation
are to it as amended and supplemented from time to time (and, in the case
of a statute or regulation, to any successor provisions). Any reference to
any supranational, national, federal, state, local, or foreign statute or
Law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Any reference in this
Agreement to a "day" or a number of "days" (without explicit reference to
"BUSINESS DAYS") shall be interpreted as a reference to a calendar day or
number of calendar days. If any action is to be taken or given on or by a
particular calendar day, and such calendar day is not a Business Day, then
such action may be deferred until the next Business Day.
2. PURCHASE AND SALE OF SHARES
2.1. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, in reliance on the covenants, representations and warranties of
the Buyers contained herein, the Company will at the Closing sell, convey,
transfer, assign and deliver to the Buyers all Shares owned by the Company on
the date hereof, in each case, free and clear of all Liens, other than Permitted
Share Liens, and Buyers, in reliance on the covenants, representations and
warranties of the Company contained herein, will purchase and acquire from the
Company at the Closing all such Shares. The Shares shall be purchased as
follows: (a) all the Fortent Americas Shares shall be purchased by Sub A, (a)
all the Fortent UK Shares shall be purchased by Sub B, and (c) all the Fortent
Japan Shares shall be purchased by Sub C.
2.2. CLOSING PAYMENTS. Subject to the terms and conditions set forth
herein, in consideration for the sale, assignment, conveyance, transfer and
delivery of all the Shares being sold, conveyed, transferred, assigned and
delivered hereunder, at the Closing the Buyers will deliver to the Company the
Aggregate Closing Payment and deliver to the Escrow Agent the Escrow Funds, by
wire transfers of immediate available funds, to the Company's and the Escrow
Agent's bank accounts, which payment shall include a sum of US$9,802,294.47 out
of the Aggregate Closing Payment to be paid directly to Comerica Bank, in
accordance with the terms of the Payoff Letter (as defined below).
2.3. BASE PRICE ADJUSTMENT. The Base Purchase Price shall be subject to
adjustment as follows:
2.3.1. "NET WORKING CAPITAL" means an amount equal to the excess of
(a) all current assets of the Acquired Companies required by GAAP to be set
forth on the face of a balance sheet, including without limitation, all
accounts receivable and prepaid expenses, plus any long-term deferred costs
and long-term deposits in an amount not exceeding US$756,000, over (b) all
liabilities of the Acquired Companies required by GAAP to be set forth on
the face of a balance sheet (including all current Tax liabilities properly
accrued under GAAP through the Closing Date), all determined on a
consolidated basis in accordance with GAAP and consistent with past
practices of the Company, PROVIDED, that, for the purposes of the Net
Working Capital calculation only, (i) liabilities shall exclude all costs
and expenses (and reserves therefor) related to the preparation of audited
financial statements, (ii) liabilities shall include all Transferred
Liabilities (as defined herein), except to the extent otherwise excluded
pursuant to this proviso, (iii) assets shall include all Transferred Assets
(as defined herein) but shall not include any assets listed in Schedule
7.10 hereof, (iv) liabilities shall not include any severance obligations
of the Company or the Acquired Companies or any other Liabilities arising
as a result of the Transaction, (v) liabilities shall not include any
deferred Tax liabilities, (vi) liabilities shall not include any
Liabilities arising from the Comerica Bank loan referenced in SECTION
3.2.10to the extent that such loan is fully paid simultaneously with the
Closing, (vii) liabilities shall not include the Universal Guarantee,
(viii) current assets shall not include any deferred Tax assets and (ix)
deferred revenue shall be excluded except to the extent of the estimated
cost of delivery calculated in accordance with SCHEDULE 2.3.1.
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2.3.2. Within ten (10) days prior to the Closing, but in no event less
than four (4) Business Days prior to the Closing, the Company shall prepare
and deliver to Parent a draft of the Closing Date Statement (as defined
below) (the "DRAFT CLOSING DATE STATEMENT") which will include a draft
estimate of the Closing Net Working Capital (as defined below) (the "DRAFT
CLOSING NET WORKING CAPITAL"). The Company shall make such information,
personnel and resources available to Parent as may be reasonably necessary
to enable Parent to review the Draft Closing Date Statements and the Draft
Closing Net Working Capital. If the Draft Closing Net Working Capital is
less than the Target Amount, then the amount of such deficiency (on a
dollar for dollar basis), shall be subtracted from the Base Purchase Price
and withheld by the Buyers until final determination of the Closing Net
Working Capital (the "WITHHELD AMOUNT"). If the Draft Closing Net Working
Capital is equal to or greater than the Target Amount, then no adjustment
to the Base Purchase Price shall be made at Closing.
2.3.3. Promptly following the Closing, but in any event no later than
90 days thereafter, the Buyers shall cause to be prepared and delivered to
the Company an unaudited statement (the "CLOSING DATE STATEMENT") of the
Net Working Capital of the Acquired Companies as of the end of business on
the Closing Date (the "CLOSING NET WORKING CAPITAL"), prepared in
accordance with GAAP consistently applied with the Company's past
practices.
2.3.4. The Closing Date Statement shall be accompanied by all relevant
backup materials and schedules relating to the calculation of the Closing
Net Working Capital, in detail reasonably acceptable to the Company.
Parent, the Buyers and the Acquired Companies shall make such information,
personnel and resources available to the Company as may be reasonably
necessary to enable the Company to review the Closing Net Working Capital;
provided that the obligation of Parent and the Acquired Companies to
provide such information, personnel and resources shall be limited to
normal business hours with reasonable prior notice and in such a manner so
as not to interfere unreasonably with the conduct of their business.
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2.3.5. In the event that the Company disputes the Closing Date
Statement or the Closing Net Working Capital, the Company shall notify the
Buyers in writing (the "COMPANY DISPUTE NOTICE") of the amount, nature and
basis of such dispute, within 30 calendar days after delivery of the
Closing Date Statement. In the event of such a dispute, the Buyers and the
Company shall first use their diligent good faith efforts to resolve such
dispute among themselves. If the Buyers and the Company are unable to
resolve the dispute within 30 calendar days after delivery of the Company
Dispute Notice then any remaining items in dispute shall be submitted to
one of the "BIG 4" accounting firms jointly chosen by the Buyers and the
Company, which in the absence of an agreement shall be Ernst & Young LLP,
unless Ernst & Young LLP is conflicted in which case KPMG International
shall be the audit firm (the "AUDIT FIRM").
2.3.6. The written decision of the Audit Firm shall be rendered within
no more than 60 days from the date that the matter is referred to such firm
and shall be final and binding on the parties hereto and shall not be
subject to dispute or review. Following any such dispute resolution
(whether by mutual agreement of the parties or by written decision of the
Audit Firm), the Closing Net Working Capital (as determined in such dispute
resolution) shall be determined final. The expenses of the Audit Firm shall
be borne by the party whose aggregate estimate of the disputed amount
differs most greatly from the determination of the Audit Firm.
2.3.7. Immediately upon the expiration of the 30 calendar day period
for giving the Company Dispute Notice, if no such notice is given, or upon
notification by the Company to the Buyers that no such notice will be
given, or immediately upon the resolution of disputes, if any, pursuant to
this SECTION 2.4, the Base Purchase Price shall be adjusted as follows: If
the Draft Closing Net Working Capital was equal to or greater than the
Target Amount (i.e. the Withheld Amount equals zero), then (a) if the
Closing Net Working Capital is less than the Target Amount, then the amount
of such deficiency (on a dollar for dollar basis), shall be subtracted from
the Base Purchase Price, and (b) if the Closing Net Working Capital is
equal to or greater than the Target Amount, then no adjustment to the Base
Purchase Price shall be made. If the Draft Closing Net Working Capital was
less than the Target Amount (i.e. the Withheld Amount is a positive
number), then (i) if the Closing Net Working Capital is less than the
Target Amount but equal to or greater than the Draft Closing Net Working
Capital , then the portion of the Withheld Amount representing the
difference between the Draft Closing Net Working Capital and the Closing
Net Working Capital shall be repaid by the Buyers to the Company and the
portion of the Withheld Amount representing the difference between the
Closing Net Working Capital and the Target Amount shall be retained by the
Buyers and deem subtracted from the Base Purchase Price, (ii) if the
Closing Net Working Capital is less than the Draft Closing Net Working
Capital , then in addition to the Withheld Amounts which shall be retained
by the Buyers, the difference between the Draft Closing Net Working Capital
and the Closing Net Working Capital shall be repaid by the Company to the
Buyers, and (iii) if the Closing Net Working Capital is equal to or greater
than the Target Amount, then the Withheld Amounts shall be repaid by the
Buyers to the Company and no adjustment to the Base Purchase Price shall be
made.
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2.3.8. PAYMENTS ON ACCOUNT OF ADJUSTMENTS. Any repayment by the
Company to the Buyers, shall be paid to the Buyers (or Parent, as directed
by Parent, at its sole discretion) within five Business Days in cash by
wire transfer of immediate available funds .
2.4. TAX GROSS-UP. The Total Consideration shall be increased (in cash
only) as much as shall be necessary so that after actual payment of all (and
solely) New York City and State Taxes by the Company or any of its subsidiaries
imposed by any Governmental Authority as a result of the Transaction the
Stockholders of the Company receive an amount equal to the sum they would have
received had Parent purchased the stock of the Company directly from the
stockholders of the Company for the same Total Consideration (the "GROSS UP
AMOUNT"); provided that the foregoing shall be subject to the following: (a) the
Gross Up Amount shall in no event exceed US $1,780,000 plus five percent (5%) of
the amount by which the Fortent Americas Allocation (as defined herein) exceeds
US $40,000,000; (b) for both New York State Corporate Franchise Tax and for New
York City General Corporation Tax purposes, the Company will not file combined
reports with the Acquired Companies in the year of the sale of the Shares of the
Acquired Companies and that accordingly, the Tax Returns that the Company will
file with the State of New York and the City of New York will report the gain or
loss on the sale of the Shares the Acquired Companies as gain or loss from the
disposition of subsidiary capital; (c) as promptly as practicable following the
Closing, the Company and the stockholders shall cause the Company to liquidate
for U.S. Tax purposes; (d) Parent and the Company shall jointly control any Tax
audit or other proceeding relating to Taxes which results in payment of the
Gross Up Amount; (e) the Company and the stockholders shall provide to Parent
such cooperation and information, as and to the extent reasonably requested, in
connection with the foregoing; (f) neither the Company nor Parent may settle,
compromise or pay any such excess Tax, without the prior written consent of the
other party; and (g) in the event that the Total Consideration is increased as a
result of this Section, then from such Gross Up Amount to be paid shall be
deducted the Tax Planning Expenses previously paid by the Buyers.
2.5. TAX TREATMENT.
2.5.1. The parties agree to treat the Transaction as taxable
acquisitions of the Acquired Subsidiaries for U.S. federal, state and local
income Tax purposes and shall not take any actions inconsistent with such
treatment.
2.5.2. The Company shall timely file an election under Treasury
Regulations Sections 1.1502-95(c) and 1.1502-95(f), and any corresponding
elections under state, local and foreign Tax Law (collectively, a "SECTION
1.1502-95 ELECTION"), to allocate to Fortent Americas: (1) 100 percent of
the Company's Affiliated Group's Code Section 382 limitation from prior
ownership changes, and (2) 100 percent of the net unrealized built-in gain
of the Company's Affiliated Group. The Company shall provide Buyers with a
copy of such election 30 days prior to the filing of the Company's
Affiliated Group's federal income Tax return, to which such election is
required to be attached. The Company and Buyers shall cause Fortent
Americas to join with the Company in making such Section 1.1502-95
Election.
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2.5.3. If the Fortent Americas Shares are "loss shares" for purposes
of Treasury Regulations Section 1.1502-36, after taking into account the
effects of all applicable rules of law, including any adjustments under
Treasury Regulations Section 1.1502-36(b), (c), or (d)(5)(iii), and if a
reduction in tax attributes of Fortent Americas would otherwise be required
under Treasury Regulations 1.1502-36(d), the Company shall make an election
pursuant to Treasury Regulations Section 1.1502-36(d)(6)(i)(A) to reduce
the basis in such the Fortent Americas Shares. The Company shall provide
Buyers with a copy of such election 30 days prior to the filing of
Company's Affiliated Group's federal income tax return, to which such
election is required to be attached.
2.5.4. Except for the transactions contemplated by this Agreement and
the other Transaction Documents, on or prior to the Closing Date neither
the Company nor its Affiliates shall take any action that would materially
diminish, including by way of election, the Tax attributes (including
without limitation, net operating losses) of Fortent Americas, as
determined on the Closing Date, and following the Closing Date neither the
Company nor its Affiliates shall make any Tax election or filing (other
than (i) in connection with a good faith amendment to a Tax Return to
correct a prior error or (ii) in connection with any audit or other Tax
proceeding) that would materially diminish such Tax attributes. Neither
SECTION 2.5.4 nor SECTION 11.6 shall prevent the Company from filing Tax
Returns for any Pre-Closing Tax Period for the U.S. consolidated tax group
and utilizing any net operating losses of the consolidated tax group as a
result of income reported on such Tax Return, which Tax Returns will be
consistent with past practice (unless otherwise required by applicable
Law).
3. CLOSING
3.1. CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP,
1290 Avenue of the Americas, New York, New York, simultaneously with the
execution of this Agreement, and subject to the satisfaction or waiver of each
of the conditions set forth in SECTION 9 (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) (such date hereinafter, the "CLOSING DATE"). All
transactions occurring at the Closing shall be deemed to take place
simultaneously, and no transaction shall be deemed to have been completed and no
document or certificate shall be deemed to have been delivered until all
transactions are completed and all documents delivered. Unless otherwise
indicated, all documents and certificates shall be dated on or as of the Closing
Date.
3.2. CLOSING DELIVERIES OF COMPANY. At the Closing, the Company will
deliver to the Buyers:
3.2.1. (a) stock certificates representing the Fortent Americas Shares
to be sold, conveyed, transferred, assigned and delivered hereunder,
accompanied by a duly executed stock power in form reasonably satisfactory
to the Buyers transferring the Fortent Americas Shares to Sub A, and (b)
such other documents that are necessary under applicable Law to transfer to
Sub B and Sub C good and valid title to Fortent UK Shares and Fortent Japan
Shares, respectively, in each case of the foregoing (a) and (b) free and
clear of any Liens, other than Permitted Share Liens;
13
3.2.2. written resignations of all directors of the Acquired Companies
and of all members of all the Acquired Companies' committees and any
company secretary of an Acquired Company;
3.2.3. a good standing certificate of Fortent Americas as of a date
within three (3) Business Days prior to the Closing Date;
3.2.4. the Escrow Agreement, signed by the Company;
3.2.5. the Transition Services Agreement, signed by AGM and Fortent
Americas;
3.2.6. executed written consents of the board of directors and the
stockholders of the Company approving, in accordance with all applicable
Laws and the Company's Formation Documents, the execution, delivery and
performance by the Company of this Agreement and any other Transaction
Documents, which stockholder approval includes the approval of any
agreements, contracts or arrangements that may result, separately or in the
aggregate, in the payment of any amount or the provision of any benefit
that would not be deductible by reason of Section 280G of the Code, in such
manner and by such stockholders in order for such payments and benefits not
to be deemed parachute payments under Section 280G;
3.2.7. all other instruments, agreements, certificates and documents
reasonably required to be delivered by the Company or an Acquired Company
at or prior to the Closing Date pursuant to this Agreement or as may
reasonably required by the Buyers;
3.2.8. the minute books and register of stockholders of the Acquired
Subsidiaries certified by an officer of each Acquired Subsidiary who is in
charge of the maintenance of such books and register;
3.2.9. in respect of Fortent UK: (a) a power of attorney in respect of
the Fortent UK Shares; (b) the appropriate forms to amend the bank mandate
given by each Acquired Company incorporated in the UK, to its bankers, and
(c) a resolution of the Board of Directors of each Acquired Company
incorporated in the UK, approving the Transactions and all ancillary
resolutions that may be required all in such forms to be agreed upon by
Parent and the Company; and
3.2.10. a payoff letter in customary form (and reasonably satisfactory
to Parent) from Comerica Bank with respect to a release of Liens, if any,
on the Shares and assets of the Acquired Companies upon the receipt of a
payment at the Closing.
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3.3. CLOSING DELIVERIES OF PARENT. At the Closing, the Buyers will deliver
the following:
3.3.1. the payments required to be made pursuant to SECTION 2.2;
3.3.2. all other instruments, agreements, certificates, opinions and
documents reasonably required to be delivered by Parent at or prior to the
Closing Date pursuant to this Agreement; and
3.3.3. the Escrow Agreement, signed by Parent.
3.4. ESCROW FUND.
3.4.1. On the Closing Date, the Buyers shall deliver to the Escrow
Agent the Escrow Funds to be held and disposed of by the Escrow Agent as
provided in the Escrow Agreement. The Escrow Fund shall be held as a trust
fund and shall not be subject to any lien, attachment, trustee process or
any other judicial process of any creditor of any party, and shall be held
and disbursed solely for the purposes and in accordance with the terms of
the Escrow Agreement.
3.4.2. On the first Business Day after twelve (12) months from the
Closing Date (the "RELEASE DATE"), the Escrow Agent shall to deliver to the
Company all Escrow Funds remaining on deposit with the Escrow Agent except
for the amount of any unresolved (or resolved in favor of Parent but not
distributed) Indemnity Claim Amounts.
3.4.3. If any Notices of Claim that have been given to the Company and
the Escrow Agent at any time on or prior to the Release Date remain
outstanding and unresolved (or resolved in favor of Parent but not
distributed) on the Release Date (including any Notice of Claim for which a
Dispute Notice is not yet due), an amount equal to such outstanding and
unresolved (and resolved in favor of Parent but not distributed) Indemnity
Claim Amount will be deducted from the Escrow Funds to be distributed to
the Company on the Release Date and will remain on deposit with the Escrow
Agent and will be paid out of the Escrow Funds only in accordance with the
terms of SECTION 11.
3.5. TRANSFER TAXES. All stock transfer Taxes (including any stamp Taxes)
due as a result of the sale of the Shares and filing, recording, registration,
stamp, documentary and other similar Taxes and fees payable in connection with
the Transaction will be borne by Parent. Subject to SECTION 2.4, all Taxes on
income or capital gains on the sale of the Shares will be borne by the Company.
3.6. PURCHASE PRICE ALLOCATION. Empire Valuation Consultants LLC (the
"VALUATION ADVISOR") shall be appointed by Parent to conduct a purchase price
allocation study allocating the Total Consideration among the Shares and other
assets acquired pursuant to this Agreement, which will be provided to Parent and
Company within one hundred and twenty (120) days after the Closing Date (the
"ALLOCATION STATEMENT"); including the amount of the Total Consideration
allocated to the Fortent Americas Shares (the amount of such allocation, the
"FORTENT AMERICAS ALLOCATION"). The Allocation Statement of the Valuation
Advisor will be binding on all parties. Parent shall bear the costs of the
Valuation Advisor. The Company and Parent shall report the purchase and sale of
the Shares in accordance with such allocation for all Tax purposes and filings.
15
4. BASIC REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyers as of the date of this
Agreement (except to the extent such representations and warranties expressly
relate to another date) as follows:
4.1. ORGANIZATION AND AUTHORITY. The Company is duly organized, validly
existing and in good standing under the Laws of the State of Delaware. The
Company has all requisite corporate power and authority to execute and deliver
each Transaction Document delivered or to be delivered by the Company and to
perform all of its obligations hereunder and thereunder. The execution, delivery
and performance by the Company of each Transaction Document delivered or to be
delivered by the Company and the consummation by the Company of the Transaction
have been duly authorized by all necessary and proper corporate action on the
part of the Company. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. Each other
Transaction Document to be delivered by the Company will be duly executed and
delivered by the Company and, when so executed and delivered, will constitute
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
4.2. NONCONTRAVENTION. None of the execution, delivery or performance by
the Company of any Transaction Document or the consummation by the Company of
the Transaction does or will, with or without the giving of notice or the lapse
of time or both, conflict with, or result in a breach or violation of, or a
default under, or give rise to a right of amendment, termination, cancellation
or acceleration of any obligation or to a loss of a benefit under (i) the
charter or memorandum and articles of association (or similar governance
documents) of the Company, (ii) any Contract of the Company or any of its
controlled Affiliates (other than Contracts required to be terminated pursuant
to the terms of this Agreement), or (iii) any Law or License to which the
Company or its properties or assets is subject, except in the case of clauses
(ii) and (iii) as would not, individually or in the aggregate, have a Material
Adverse Effect.
4.3. TITLE TO SHARES. The Company has good and valid title to, and is the
legal and beneficial owner of all the Shares, as further set forth on SCHEDULE
4.3 (and as of the Closing will have good and valid title to, and will be the
legal and beneficial owner of, all such Shares), free and clear of any Liens
(other than Permitted Share Liens). Upon transfer and delivery to Buyers at the
Closing, Buyers will have good and valid title to the Company's Shares, free and
clear of any Liens, other than Permitted Share Liens and any Liens arising
through the Buyers and their Affiliates. The number of Shares set forth on
SCHEDULE 4.3 constitutes all of the Shares over which any voting or dispositive
power is held by the Company and the Company does not own, beneficially or
otherwise, directly or indirectly, any other capital stock or share capital of,
or other securities, equity or ownership interest in any Acquired Company.
Except as set forth on SCHEDULE 4.3, there are no (i) outstanding options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other similar Contracts relating to the Shares, (ii) outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Shares, (iii) voting trusts, proxies, or other Contracts or
understandings with respect to the voting of the Shares, or (iv) transfer
restrictions with respect to the Shares.
16
4.4. GOVERNMENTAL APPROVALS. Subject to the receipt of the Required
Consents set forth in SECTION 5.4, no material Consent or order of, with or to
any Governmental Authority is required to be obtained or made by or with respect
to the Company in connection with the execution, delivery and performance by the
Company of any Transaction Document or the consummation by the Company of the
Transaction.
4.5. BROKERS' FEES. Except as set forth on SCHEDULE 4.5, neither the
Company nor any of its Affiliates has authorized or retained any Person to act
as an investment banker, broker, finder or other intermediary who is or might be
entitled to any fee, commission or payment in connection with the negotiation,
preparation, execution or delivery of any Transaction Document or the
consummation of the Transaction, nor is there any basis for any such fee,
commission or payment to be claimed by any Person against the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO THE ACQUIRED
COMPANIES
Except as set forth in any Disclosure Schedules (each matter referred to in
any Schedule shall be deemed to have been disclosed by the Company for all
relevant purposes (to the extent such other relevant purposes are readily
apparent on the face of such disclosure) in all other Schedules), the Company
represents and warrants to the Buyers as of the date of this Agreement (except
to the extent such representations and warranties expressly relate to another
date) as follows:
5.1. ORGANIZATION AND AUTHORITY.
5.1.1. Each of the Acquired Companies is a corporation duly organized
and validly existing under the Laws of its jurisdiction of incorporation.
Each Acquired Company has all requisite corporate power and authority to
carry on its business as it is currently conducted as it will be conducted
through the Closing Date and to own, lease and operate its assets and
properties where such assets and properties are now owned, leased or
operated. Each Acquired Company is duly qualified to transact business and
in good standing as a foreign company in each jurisdiction in which the
ownership, leasing or holding of its assets or properties or the conduct or
nature of its business makes such qualification necessary, except where the
failure to be so qualified would not be reasonably likely to have a
Material Adverse Effect. Set forth on SCHEDULE 5.1.1 is a list of the
jurisdictions in which each Acquired Company is organized and qualified to
transact business.
17
5.1.2. SCHEDULE 5.1.2 lists each of the Acquired Companies and the
Excluded Subsidiaries, the jurisdiction of incorporation of each such
subsidiary and the Company's equity interest therein, and, if not directly
or indirectly wholly owned by the Company, the identity and ownership
interest of each of the other owners of such subsidiary. Other than as set
forth in SCHEDULE 5.1.2, the Company, directly or indirectly, owns 100% of
the outstanding equity interests of each of the Acquired Subsidiaries and
the Excluded Subsidiaries. As of the date hereof neither the Company nor
any Acquired Company has agreed, is obligated to make or is bound (or has
bound its property) by any written agreement or contract under which it is
legally obligated to make any future investment (in the form of a loan,
capital contribution or otherwise) in any other entity (other than the
Company or a wholly owned Acquired Company). Other than the Company's
interests in the Acquired Companies and the Excluded Subsidiaries or as set
forth in SCHEDULE 5.1.2, neither the Company nor any Acquired Company
directly or indirectly owns any equity, partnership or similar interest in
any Person. All of the issued and outstanding shares of capital stock of or
other equity interests in each Acquired Company have been duly authorized
and validly issued and are fully paid and nonassessable and, except as set
forth in SCHEDULE 5.1.2, all such shares or interests owned by the Company
or any Acquired Company are owned free and clear of all Liens.
5.1.3. The Company has delivered to Parent accurate and complete
copies of its Certificate of Incorporation, By-laws, as amended, as well as
the organizational documents of each of the Acquired Companies, all
attached hereto as SCHEDULE 5.1.3 (collectively, the "FORMATION
Documents"). Such Formation Documents are in full force and effect and no
other organizational documents are applicable to or binding upon the
Company or the Acquired Companies. None of the Company or the Acquired
Companies is in material default or violation of any of the provisions of
their Formation Documents.
5.1.4. All the minute books of the Acquired Companies have been
provided to Parent. No material resolutions have been passed, enacted,
consented to or adopted by the directors (or any committee thereof) or
stockholders or any other organ or other committee of the Acquired
Companies, except for those contained in such minute books.
5.1.5. The affirmative vote of the holders of a majority of the
outstanding Shares of Common Stock and Preferred Stock (voting together as
a single voting class on an as-converted basis) was the only vote of the
Company's stockholders necessary to adopt this Agreement and the
Transaction (the "COMPANY STOCKHOLDER APPROVAL").
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5.2. NONCONTRAVENTION. Except as set forth in SCHEDULE 5.2 and assuming the
receipt by Closing of all Required Consents, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) conflict with or result in a violation or breach of any term or
provision of, nor constitute a default under, the Formation Documents of the
Acquired Companies or those of the Company; (ii) contravene, conflict with or
result in a violation or breach of, or result in a default under, or result in
the acceleration or cancellation of any obligation under, or give rise to a
right by any person to terminate, cancel, modify or amend in any material
respect its obligations under any Material Contract to which any Acquired
Company or the Company is a party or by which any of them or their properties or
assets are bound, (iii) contravene, conflict with or result in a violation of,
or give any Governmental Authority or other Person the right to challenge the
Transaction or to exercise any remedy or obtain any relief under, any legal
requirement or any order, writ, injunction, judgment or decree to which the
Company or any Acquired Company, or any of the assets owned or used by the
Company or any Acquired Company, is subject, (iv) contravene, conflict with or
result in a violation of any of the terms or requirements of any License held by
the Company or any Acquired Company or that otherwise relates to the business or
assets of any Acquired Company, or (v) result in the imposition or creation or
perfection of any Lien upon or with respect to any asset or property owned,
leased or used by the Company or any Acquired Company, or (vi) with the passage
of time, the giving of notice, or the taking of any action by a third person, or
any combination thereof, have any of the effects set forth in clauses (i)
through (v) of this SECTION 5.2, except, with respect to clauses (ii), (iii),
(iv) and (v), where such conflict, violation, default, contravention,
acceleration, cancellation, modification, amendment or Lien would not reasonably
be expected to have a Material Adverse Effect. SCHEDULE 5.2 sets forth a
complete and accurate list of (A) all holders of any outstanding indebtedness of
the Company or an Acquired Company, the lessors of any real property leased by
the Company or an Acquired Company and the holders of any options or warrants to
which the Company or an Acquired Company is a party or bound, in each case whose
Consent is required in connection with the Transaction, and (B) all other
parties to any Material Contract to which the Company or an Acquired Company is
a party or bound whose Consent is required in connection with the Transaction
5.3. CAPITALIZATION; TITLE. There are no bonds, debentures, notes or other
indebtedness of any type whatsoever of any Acquired Company that are convertible
into, exchangeable or exercisable for Shares or other capital stock of any
Acquired Company or that have the right to vote (or convertible into, or
exchangeable or exercisable for, securities having the right to vote) on any
matters on which any stockholders of such Acquired Company may vote. There are
no (i) outstanding options, warrants, calls, demands, purchase rights,
subscription rights, conversion rights, exchange rights, or other similar
Contracts, commitments, arrangements or understandings relating to the issuance
by any Acquired Company of any Shares or any other securities of any Acquired
Company, (ii) outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Acquired Company, or (iii)
except as set forth in SCHEDULE 5.3, voting trusts, proxies, or other agreements
or understandings with respect to the voting of any Shares or any other
securities of any Acquired Company, and no Acquired Company is obligated,
pursuant to any securities, options, warrants, calls, demands, Contracts or
other rights of any nature or otherwise, now or in the future, contingently or
otherwise, to issue, deliver, sell, purchase or redeem any share capital of any
Acquired Company, any other securities of any Acquired Company or any equity
interest in any Acquired Company to or from any Person or to issue, deliver,
sell, purchase or redeem any stock appreciation rights or other Contracts of any
Acquired Company relating to any share capital or other securities of any
Acquired Company to or from any Person.
5.4. GOVERNMENTAL APPROVALS. Except as set forth in SCHEDULE 5.4, no
Consent or order of, with or to any Governmental Authority is required to be
obtained or made by or with respect to the Company or any Acquired Company in
connection with the execution, delivery and performance of the Transaction
Documents by the Company or any Acquired Company or the consummation of the
Transaction.
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5.5. COMPANY FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
5.5.1. The audited consolidated financial statements of the Company
(including the balance sheet and the related statements of income and cash
flows and the notes to the financial statements) as of and for the fiscal
year ended March 31, 2008, and unaudited consolidated financial statements
as of and for the fiscal year ended March 31, 2009 (the "COMPANY FINANCIAL
STATEMENTS") have been prepared in accordance with GAAP (except for the
lack of notes and year-end adjustments to such unaudited financial
statements) applied on a consistent basis throughout the periods indicated
therein and with each other, present fairly the financial position, results
of operations and cash flows of the Company (on a consolidated basis) as of
the respective dates and during the respective periods indicated therein in
accordance with GAAP applied on a consistent basis and, to the Company's
Knowledge, are true and correct in all material respects. The balance sheet
of the Company as of March 31, 2009 shall be referred to in this Agreement
as the "CURRENT BALANCE SHEET" and the date thereof shall be referred to in
this Agreement as the "BALANCE SHEET DATE."
5.5.2. Except (i) as set forth in SCHEDULE 5.5.2, (ii) as disclosed in
the Current Balance Sheet, (iii) for Liabilities incurred in the ordinary
course, consistent with past practice or (iv) arising under this Agreement,
to the Company's Knowledge, no Acquired Company has any material Liability.
Except for obligations and liabilities reflected in the Company Financial
Statements and as set forth in SCHEDULE 5.5.2, to the Company's Knowledge,
the Company and the Acquired Companies have no material off balance sheet
obligation or Liability to, or any financial interest in, any third party
or entities, the purpose or effect of which is to defer, postpone, reduce
or otherwise avoid or adjust the recording of debt expenses incurred by the
Company and the Acquired Companies.
5.5.3. Except as set forth in SCHEDULE 5.5.3, the Company and the
Acquired Companies have policies designed to, and have used reasonable
efforts to comply with such policies, (i) require the maintenance of
records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of each of the Acquired
Companies, (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance
with GAAP, and that receipts and expenditures of the Company and each of
the Acquired Companies are being made only in accordance with appropriate
authorizations of management of the Company and the Acquired Companies, and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the assets of the
Company and each of the Acquired Companies. The Company has no Knowledge of
(a) any significant deficiencies, including material weaknesses, in the
design or operation of internal control over financial reporting that are
reasonably likely to adversely affect the Company's or the Acquired
Companies' ability to record, process, summarize and report financial data,
(b) any fraud, whether or not material, that involves any of the Company's
or the Acquired Companies' management or other employees who have a role in
the preparation of financial statements or the internal accounting controls
utilized by the Company and the Acquired Companies, or (c) any claim or
allegation regarding any of the foregoing.
20
5.5.4. Since March 31, 2009, none of the Company or an Acquired
Subsidiary or an Excluded Subsidiary has received any written complaint,
allegation, assertion or claim that the Company or an Acquired Subsidiary
or Excluded Subsidiary has engaged in fraudulent accounting practices.
5.6. ABSENCE OF CERTAIN CHANGES.
5.6.1. Except as set forth on SCHEDULE 5.6.1, since March 31, 2009,
the Company and the Acquired Companies have conducted their businesses only
in the ordinary course consistent with past practice, and there has not
been any Material Adverse Effect.
5.6.2. Except as set forth on SCHEDULE 5.6.2, from and after ▇▇▇▇▇ ▇▇,
▇▇▇▇, ▇▇▇▇ of the Company nor any of Acquired Companies has:
5.6.2.1. suffered any loss to its property (whether through
destruction, accident, casualty, expropriation, condemnation or
otherwise) or its business, or incurred any liability, damage, award
or judgment for injury to the property or business of others or for
injury to any person (in each case, whether or not covered by
insurance) in excess of $100,000 in any one case or $200,000 in the
aggregate;
5.6.2.2. made any capital expenditure in excess of $50,000 or
series of capital expenditures in excess of $200,000 in the aggregate;
5.6.2.3. made any material change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable or
to become payable to any of their respective directors, officers,
employees or agreed or promised (orally or otherwise) to pay any bonus
or extra compensation or other employee benefit to any of such
directors, officers or employees in an amount that exceeds $300,000
per year in the aggregate;
5.6.2.4. sold, assigned, leased or transferred any material
assets or properties, other than sales of inventory or licenses in the
ordinary course of business;
5.6.2.5. materially amended or renegotiated or voluntarily
terminated (other than by completion thereof) any Material Contract;
5.6.2.6. made any material change in its accounting methods,
policies, practices or principles;
5.6.2.7. made or changed any material election, changed an annual
accounting period, adopted or changed any material accounting method,
filed any material amended Tax Return, entered into any closing
agreement, settled any material Tax claim or assessment relating to
the Acquired Companies surrendered any right to claim a refund of
Taxes, consented to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Acquired
Companies, or taken any other similar action relating to the filing of
any material Tax Return or the payment of any material Tax, if such
election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing
the Tax liability of the Acquired Companies for any period ending
after the Closing Date or decreasing any Tax attribute of the Acquired
Companies existing on the Closing Date;
21
5.6.2.8. issued, delivered, pledged or otherwise encumbered, sold
or disposed of any shares of its capital stock or other securities, or
created, issued, delivered, pledged or otherwise encumbered, sold or
disposed of any securities convertible into, or rights with respect
to, or options or warrants to purchase or rights to subscribe to, any
shares of its capital stock or other securities, whether as a result
of any exercise thereof or otherwise;
5.6.2.9. split, combined or reclassified any of its shares of
capital stock or issued or authorized the issuance of any other
securities in respect of, in lieu of or in substitution for any of its
shares of capital stock;
5.6.2.10. (A) entered into any material employment agreement with
or for the benefit of any Person; (B) paid any pension, retirement
allowance or other material employee benefit not required by any Plan,
agreement or arrangement existing as of March 31, 2009 to any Person,
or (C) materially changed the terms of any existing Plan or employee
agreement or arrangement;
5.6.2.11. incurred, assumed or created any material indebtedness
for borrowed money or guaranteed any material indebtedness for
borrowed money of any other Person;
5.6.2.12. made, incurred, assumed, created or guaranteed any loan
or made any advance (other than to an employee in the ordinary course
of business consistent with past practices) or capital contribution to
or investment in any Person (other than cash management transactions
in the ordinary course of business consistent with past practice and
transactions in bank accounts of the Acquired Companies or involving
only marketable securities), in each case, in excess of $100,000;
5.6.2.13. subjected any of its assets or properties with a value
in excess of $50,000 to any Lien or permitted any of its assets or
properties with a value in excess of $50,000 to be subjected to any
Lien, other than Permitted Liens;
5.6.2.14. granted any license or sublicense of any rights under
or with respect to, or sold or transferred, any material Intellectual
Property, excluding customer agreements in the ordinary course of
business;
5.6.2.15. materially revalued any of its assets, including
writing down the value of its inventory or fixed assets or writing off
notes or accounts receivable;
22
5.6.2.16. made any acquisition of any entity;
5.6.2.17. purchased any real property or entered into any Lease
(including any capitalized lease obligations);
5.6.2.18. settled or compromised any material Action; or
5.6.2.19. entered into any agreement or Contract (other than the
Transaction Documents to take any of the types of actions described in
SECTIONS 5.6.2.1 through 5.6.2.18).
5.7. TAX MATTERS.
5.7.1. (i) All income and other material Tax Returns which are
required to be filed on or before the date hereof, taking into account
extensions of time for filing, by or with respect to the Company and the
Acquired Companies have been duly and timely filed, (ii) all income and
other material Taxes due and owing by the Company and the Acquired
Companies (whether or not shown on any Tax Return) have been timely paid in
full and (iii) each of the Company and the Acquired Companies has withheld
from each payment or deemed payment made to its past or present employees,
officers, directors and independent contractors, suppliers, creditors,
stockholders or other third parties all material Taxes and other deductions
required to be withheld and has, within the time and in the manner required
by Law, paid such withheld amounts to the proper Governmental Authorities.
5.7.2. There is not in force any extension of time with respect to the
due date for the filing of any income and other material Tax Return of or
with respect to the Company or the Acquired Companies or any waiver or
agreement for any extension of time for the assessment or payment of any
income and other material Tax of or with respect to the Company or the
Acquired Companies.
5.7.3. Neither the Company nor any Acquired Company is a party to or
bound by any Tax allocation or Tax sharing agreement with any person, and
none of them has any current or potential contractual obligation to
indemnify any other person with respect to Taxes.
5.7.4. Except as set forth on SCHEDULE 5.7.4, no foreign, federal,
state, or local Tax audits or administrative or judicial proceedings are
pending or being conducted with respect to the Company or any of the
Acquired Companies. Neither the Company nor any Acquired Company has
received from any foreign, federal, state, or local taxing authority
(including jurisdictions where the Company or any of the Acquired Companies
have not filed Tax Returns) any (i) notice indicating an intent to open an
audit or other review, (ii) request for information related to material Tax
matters, or (iii) notice of deficiency or proposed adjustment for any
material amount of Tax proposed, asserted, or assessed by any taxing
authority against the Company or any of the Acquired Companies.
23
5.7.5. The total amounts set up as liabilities for current and
deferred Taxes in the Company Financial Statements are sufficient to cover
the payment of all material Taxes, whether or not assessed or disputed,
which are, or are hereafter found to be, or to have been, due by or with
respect to the Acquired Companies up to and through the periods covered
thereby.
5.7.6. Except for Permitted Liens, no Liens for Taxes exist upon the
assets of any of the Acquired Companies.
5.7.7. Neither has the Company or any Acquired Company entered into
any agreement or ruling with any Governmental Authority.
5.7.8. Except as set forth in SCHEDULE 5.7.8, neither the Company nor
any Acquired Company (i) has been a member of an affiliated group filing a
consolidated Tax Return (other than a group the common parent of which was
the Company) or (ii) has any liability for the Taxes of any Person under
United States Treasury Regulations by reason of being a member of a group
of entities filing a consolidated, combined or unified Tax Return,
including under Section 1.1502-6 (or any similar provision of state, local
or foreign Law), as a transferee or successor.
5.7.9. Neither the Company nor any Acquired Company has within the
past three years been a party to a transaction (as a "distributing
corporation" or a "controlled corporation") intended to qualify under
Section 355 of the Code or under Section 356 of the Code as relates to
Section 355 of the Code.
5.7.10. Neither the Company nor any of the Acquired Companies has
consummated, has participated in, or is currently participating in any
transaction which was or is a "TAX SHELTER" transaction as defined in
Sections 6662, 6011, 6012 or 6111 of the Code or the Treasury Regulations
promulgated thereunder, or in similar provisions of foreign Law or which
was or is a "LISTED TRANSACTION" as defined in the Code and the Treasury
regulations thereunder or in similar provisions of foreign Law.
5.8. ASSETS AND PROPERTY; LEASES.
5.8.1. Except as set forth on SCHEDULE 5.8.1, each of the Company and
the Acquired Companies has good and marketable title, free and clear of all
Liens, to all of the material properties and assets, real and personal,
that are reflected on the most Current Balance Sheet or acquired after the
Balance Sheet Date, but prior to the date hereof, except for dispositions
of such properties or assets in the ordinary course of business consistent
with past practice and except for Permitted Liens. None of the Company or
any of the Acquired Companies owns any real property.
5.8.2. SCHEDULE 5.8.2 contains a complete and accurate list of: (i)
all real estate and improvements leased, subleased or occupied by the
Company or any of the Acquired Companies pursuant to a Lease (each, a
"LEASED PREMISES"), indicating the leasehold ownership, full address, fee
owner and use of each Leased Premises; and (ii) all Leases to which the
Company or an Acquired Company is a party as lessor or lessee (and all (x)
amendments, extensions, renewals and assignments thereof, and (y)
subleases, sub-subleases, licenses and other occupancy agreements under
which the Company or such Acquired Company has granted any interest in any
of the Leased Premises, or any portion thereof, to any Person). Except as
set forth on SCHEDULE 5.8.2, none of the Company or any of the Acquired
Companies owns, leases, subleases, sub-subleases, occupies or otherwise
holds any other real property or interests therein.
24
5.8.3. Except as set forth on SCHEDULE 5.8.3:
5.8.3.1. The Company and each Acquired Company (i) has good and
valid leasehold interests in, and (ii) is in peaceful and undisturbed
possession of, that portion of the Leased Premises it occupies in
accordance with and subject to the terms of the respective Leases.
True, correct and complete copies of all Leases in effect as of the
date hereof, together with all amendments thereto and assignments
thereof, have been made available to Parent by the Company and/or the
Acquired Companies. Each Lease is in full force and effect, and is
valid and binding upon and enforceable against the Company or the
applicable Acquired Company and, to the Company's Knowledge, each
other party thereto, in accordance with its terms. All rent and other
sums and charges payable by the Company or the applicable Acquired
Company as lessee, sublessee, sub-sublessee or other occupant
thereunder are current. The Company and each Acquired Company has
complied in all material respects with the terms of each applicable
Lease and no termination event or condition or uncured default exists
under any Lease. No event has occurred and no condition exists which,
with the giving of notice or the lapse of time or both, would
constitute such a default or termination event or condition. The
current use of the Leased Premises, or any portion thereof and the
improvements erected thereon, and any other use permitted pursuant to
the applicable Lease, does not violate or conflict with (x) any Laws,
(y) any covenants, conditions or restrictions applicable thereto, and
(y) the terms and provisions of the applicable Lease or any other
Contract except as would not have a Material Adverse Effect. Neither
the Company nor any Acquired Company has subleased, licensed or
otherwise granted anyone the right to use or occupy any Leased
Premises or any portion thereof, nor has the Company or any Acquired
Company granted any security interest in any Lease or any interest
therein, and there are no Liens on the estate or interest created by
any such Lease, except as may be set forth in SCHEDULE 5.8.3.
5.8.4. The facilities, equipment, vehicles and other tangible personal
property owned or leased by the Company or any of the Acquired Companies
are in good operating condition and repair and free from any material
defects, reasonable wear and tear excepted, and are suitable for the uses
for which they are being used and are performing the functions for which
they were intended.
5.8.5. The assets and properties of the Company and the Acquired
Companies (other than the Business Intellectual Property), whether owned,
leased, licensed or otherwise held, constitute and will constitute on the
Closing Date all of the material assets and rights that are used by the
Company and the Acquired Companies in the operation of the Business as it
is being conducted as of the date hereof and as it will be conducted
through the Closing Date (other than Business Intellectual Property).
Without limiting the foregoing, as of the Closing, neither the Company nor
any Excluded Subsidiary will own or hold any assets, rights, properties,
licenses and permits, contracts or other benefits that are primarily used
in the Business, except as specifically set forth in the Transition
Services Agreement.
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5.9. INTELLECTUAL PROPERTY.
5.9.1. SCHEDULE 5.9.1 sets forth an accurate and complete list of all
Patents, registered Marks, pending applications for registrations of any
Marks, registered Copyrights and pending applications for the registration
of Copyrights which are included in the Owned Business Intellectual
Property (with the name of their record owner) (such Owned Business
Intellectual Property, the "REGISTERED INTELLECTUAL PROPERTY"). SCHEDULE
5.9.1 lists all of the jurisdictions in which each such item of Registered
Intellectual Property has been issued or registered or in which any such
application for such issuance or registration has been filed. Each item of
Registered Intellectual Property is subsisting and to the Knowledge of the
Company, valid and has not been abandoned or passed into the public domain.
The Company and Acquired Companies have not received any written opinions
with respect to the Patents, except as set forth in SCHEDULE 5.9.1.
5.9.2. Except as disclosed on SCHEDULE 5.9.2, the Acquired Companies
own (and to the Company's Knowledge are the sole and exclusive owners of
all right, title and interest in and to) the Owned Business Intellectual
Property, including the Patents, the Marks and the Copyrights included
therein. All Business Intellectual Property either (i) was invented or
created by employees of the Acquired Companies, acting within the scope of
their employment, or by third parties (including consultants, independent
contractors, or former employees of the Acquired Companies), all of which
employees and third parties have executed written agreements assigning all
of their rights, title and interest in and to such Intellectual Property,
to the Acquired Companies, and to the Knowledge of the Company no third
party (including any employee of an Acquired Company) owns or has any
rights, title and interest to any of such Business Intellectual Property,
or (ii) is duly and validly licensed to the Acquired Companies, in either
case, free and clear of all Liens (except for those specified licenses
included on SCHEDULE 5.9.5). No Person who has licensed any Business
Intellectual Property to an Acquired Company has any ownership rights or
license rights to improvements or derivative works made by the Acquired
Companies with respect to such Business Intellectual Property.
5.9.3. The operation of the business of the Acquired Companies as
currently conducted, including the use of the Business Intellectual
Property in connection therewith to the Knowledge of the Company, do not
infringe, misappropriate, constitute unauthorized use or otherwise violate
any Intellectual Property of any Person. The Business Intellectual Property
include all of the Intellectual Property currently used by Acquired
Companies in their business as currently conducted, and in the Company's
reasonable business judgment, the Business Intellectual Property constitute
Intellectual Property which is sufficient to conduct such business as
currently being conducted.
26
5.9.4. Except with respect to licenses of commercial off-the-shelf
software, no Acquired Company is required, obligated, or under any
Liability, to make any payments by way of royalties, fees or otherwise to
any owner, licensor of, or other claimant to any Business Intellectual
Property with respect to the use thereof.
5.9.5. SCHEDULE 5.9.5 sets forth a complete and accurate list of all
material Contracts currently in effect to which the Company or any of the
Acquired Companies are a party (i) granting the Company or the Acquired
Companies a right to use a third party's Intellectual Property (other than
licenses of commercial off-the-shelf software), (ii) pursuant to which the
Company or an Acquired Company has granted to any third party any right to
use, license or sell any of the Business Intellectual Property (other than
customers of the Acquired Companies in the ordinary course of business), or
(iii) containing a covenant limiting in any material respect the ability of
the Company or any of the Acquired Companies to exploit any of the Business
Intellectual Property (all the above, the "INTELLECTUAL PROPERTY
LICENSES"). Without derogating from the above, the Company and the Acquired
Companies have not granted a license to any Patent included in the Owned
Business Intellectual Property (other than as an integral part of an
Intellectual Property License to a customer).
5.9.6. Each of the Intellectual Property Licenses is in full force and
effect and, is the legal, valid and binding obligation of the parties
thereto, enforceable against the Company or the Acquired Company who is a
party thereto, and to the Knowledge of Company against the other parties
thereto, in accordance with its terms. Neither the Company nor any Acquired
Company is in material default under any Intellectual Property License,
nor, to the Knowledge of the Company, is any other party to a Intellectual
Property License in default thereunder, and to the Knowledge of the
Company, no event has occurred that with the lapse of time or the giving of
notice or both would constitute a material default thereunder. No party to
any of the Intellectual Property Licenses has notified the Company or any
Acquired Company that it has exercised any termination rights with respect
thereto.
5.9.7. To the Knowledge of the Company, no Trade Secret included in
the Business Intellectual Property has been authorized to be disclosed or
has been actually disclosed by the Company or any of the Acquired Companies
to any employee, Affiliate or any third party other than pursuant to a
non-disclosure agreement restricting the disclosure and use of such Trade
Secret. The Company and the Acquired Companies have taken commercially
reasonable measures to protect the secrecy, confidentiality and value of
all the Trade Secrets of the Company and the Acquired Companies that
constitute part of the Business Intellectual Property. Each employee,
consultant, and independent contractor of the Company and the Acquired
Companies that was engaged in the past three years has entered into a
written non-disclosure and invention assignment agreement with the Company
or the Acquired Companies, in standard forms previously made available to
Parent.
5.9.8. No (i) government funding or (ii) facilities of a university,
college, other educational institution or research center was used in the
development of the Owned Business Intellectual Property. To the Knowledge
of the Company, no current or former employee, consultant or independent
contractor of the Company or any Acquired Company, who was involved in, or
who contributed to, the creation or development of any Owned Business
Intellectual Property, has performed services for or otherwise was under
restrictions resulting from his/her relations with any government,
university, college or other educational institution or research center
during a period of time during which such employee, consultant or
independent contractor was also performing services for the Company or any
Acquired Company.
27
5.9.9. As of the date hereof, neither the Company nor any Acquired
Company is the subject of any pending Action brought by any Person against
the Company or the Acquired Companies, or to the Knowledge of the Company
any threatened Action against the Company or the Acquired Companies, which
involves a claim of infringement, unauthorized use, or violation of any
Intellectual Property, or which challenges the ownership, use, validity or
enforceability of any Business Intellectual Property or to the Company's
Knowledge any Intellectual Property Licenses. Neither the Company nor any
Acquired Company has received written (including, without limitation, by
electronic mail) notice of any such threatened claim against the Company or
any Acquired Company of infringement, unauthorized use, or violation of any
Intellectual Property or other right, or challenging the ownership, use,
validity or enforceability of any Business Intellectual Property or any
Intellectual Property Licenses.
5.9.10. The Company has no Knowledge of any facts or information that
would reasonably be expected to render any Registered Intellectual Property
invalid. The Company has not Knowingly misrepresented, or failed to
disclose, and have no Knowledge of any misrepresentation or failure to
disclose, any fact or circumstances in any application or other filing with
respect to, any Owned Business Intellectual Property that would constitute
fraud or a misrepresentation with respect to such application or other
filing or that to the Company's Knowledge would otherwise affect the
validity or enforceability of any registration with respect to any Owned
Business Intellectual Property.
5.9.11. All registration, maintenance, renewal or any other fees due
in connection with each application or registration (including renewals,
etc) for Owned Business Intellectual Property have been paid, and all
material documents and certificates required in connection with such Owned
Business Intellectual Property have been filed with the relevant
authorities for the purpose of maintaining the registrations, recordations
and, filings with respect to any such Owned Business Intellectual Property.
There are no actions that must be taken by the Acquired Companies or Parent
within sixty (60) days following the Closing Date to maintain such Owned
Business Intellectual Property, including the payment of any registration,
maintenance or renewal fees or the filing of any responses to office
actions, documents, applications or certificates. To the maximum extent
provided for by, and in accordance with, Laws, the Acquired Companies have
recorded in a timely manner each assignment of registered Owned Business
Intellectual Property assigned to the Acquired Companies with the relevant
Governmental Authority, including the United States Patent and Trademark
Office or their respective counterparts in any relevant foreign
jurisdiction, as the case may be.
28
5.9.12. To the Knowledge of the Company, no Person or third party
product or service is infringing, violating, misusing or misappropriating
any Owned Business Intellectual Property and no such claims have been made
in writing or are currently pending against any Person by the Company or
the Acquired Companies.
5.9.13. There are no orders (whether temporary, preliminary or
permanent) to which the Company or any of the Acquired Companies are a
party which restrict the rights of the Company or the Acquired Companies to
use any of the Business Intellectual Property or any Intellectual Property
Licenses.
5.9.14. The consummation of the transactions contemplated hereby will
not result in the loss or material impairment of Parent's right to own or
use any portion of any material Business Intellectual Property or any
Intellectual Property Licenses, assuming receipt of the consents under such
Intellectual Property Licenses specified in SCHEDULE 5.2.
5.9.15. SCHEDULE 5.9.15 sets forth a complete and accurate list of all
Software that is owned by the Company and the Acquired Companies (and the
entity owning such Software). Such Software operate in a manner that is
substantially in conformity and compliance in all material respects with
all specifications relating thereto relating to the design, performance,
operation, test, support and maintenance of such Software, and other
documentation relating to such technical specifications.
5.9.16. SCHEDULE 5.9.16 sets forth a complete list of all Contracts
pursuant to which any source code that is part of, any Business
Intellectual Property has been placed in escrow by the Company or the
Acquired Companies for the benefit of any third party. Neither the
execution of this Agreement, the Transaction Documents nor any of the
transactions contemplated hereby or thereby will cause the release of or
give any Person the right to demand any source code or other data or
information under any such Contracts.
5.9.17. SCHEDULE 5.9.17 lists all software or other material that is
or is required to be distributed as "freeware," "free software," "open
source software" or under a similar licensing or distribution model
(including but not limited to any license which complies with the Open
Source Initiative Corporation's (OSI) open source definition or which is,
or is equivalent to, a license approved by OSI) that the Company or the
Acquired Companies use or license, and identifies that which is
incorporated into, combined with, or distributed in conjunction with any
Company or Acquired Companies' products or services ("INCORPORATED OPEN
SOURCE SOFTWARE") copies of which have been provided to Parent. The
Company's and the Acquired Companies' use and distribution of each
component of Incorporated Open Source Software complies with all material
provisions of the applicable license agreement, and in no case does such
use, modification or distribution give rise under such license agreement to
any rights in any third parties under any Business Intellectual Property or
obligations for the Company or the Acquired Companies with respect to any
Business Intellectual Property, including without limitation any obligation
to disclose or distribute any such Intellectual Property in source code
form, to license any such Intellectual Property for the purpose of making
derivative works, to distribute any such Intellectual Property without
charge or grant any patent license to any of the patents embedded therein.
29
5.9.18. Except as set forth in SCHEDULE 5.9.18, neither the Company
nor any Acquired Company is now or has ever been a member or promoter of,
or a contributor to, any industry standards body or any similar
organization that could reasonably be expected to require or obligate any
of the Acquired Companies to grant or offer to any other Person any license
or right to any Business Intellectual Property.
5.10. ENVIRONMENTAL MATTERS. The Company and the Acquired Companies have
complied in all material respects with all applicable Environmental Laws, and no
claim, action, suit, litigation, proceeding or investigation has been filed or
commenced against the Company and the Acquired Companies alleging any failure to
comply with any such Environmental Laws. To the Knowledge of the Company, none
of the Company or any of the Acquired Companies has exposed any Person to any
substance or condition that could form the basis for any liability for any
illness of or personal injury to such Person. To the Knowledge of the Company,
no material event has occurred nor does any condition exist that would
constitute a violation of or noncompliance with Environmental Laws by any party
with respect to the Leased Premises.
5.11. CONTRACTS.
5.11.1. SCHEDULE 5.11.1 lists, under the corresponding subsection, the
following Contracts (other than Transaction Documents and those set forth
in SCHEDULES 5.8.2 and 5.9.5) to which either an Acquired Company is a
party, or to which the Company is a party:
5.11.1.1. all Contracts for the lease (whether as lessor or
lessee) of personal property to or from the Company or an Acquired
Company which provide for lease payments in excess of $100,000
annually;
5.11.1.2. all Contracts with the Company's twenty (20) largest
suppliers or vendors (measured based on annual payments in 2008);
5.11.1.3. all Contracts (other than purchase orders, change
orders, statements of work, non-disclosure agreements and similar
ancillary documentation) with the Company's customers from whom
aggregate payments between the beginning of the Company's 2007 fiscal
year and the date hereof have exceeded $50,000;
5.11.1.4. all Contracts concerning any partnership or joint
venture or joint development;
5.11.1.5. all research and development, broker, distributor,
dealer, agency, sales promotion, marketing, reseller and advertising
Contracts;
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5.11.1.6. all Contracts providing for management-level services
or for the services of independent contractors or consultants (or
similar arrangements) providing for payments from the Company or the
Acquired Companies in excess of $50,000 annually;
5.11.1.7. all Contracts for the purchase or sale of any business,
corporation, partnership, joint venture, association or other business
organization or any division, material assets, operating unit or
product line thereof;
5.11.1.8. all Contracts relating to or evidencing indebtedness
for money borrowed by the Company or an Acquired Company (or the
creation, incurrence, assumption, securing or guarantee thereof) and
all derivative agreements, including without limitation, any
indebtedness or financial obligations from the Acquired Companies to
the Company;
5.11.1.9. all Contracts under which (A) any Person has directly
or indirectly guaranteed any indebtedness for money borrowed or other
Liabilities of the Company or an Acquired Company or (B) the Company
or an Acquired Company has directly or indirectly guaranteed any
indebtedness for money borrowed or other Liabilities of any Person;
5.11.1.10. all Contracts under which the Company or an Acquired
Company has made any material advance, loan, extension of credit or
capital contribution to, or other material investment in, any Person,
including employees, or which involve a sharing of material profits,
losses, costs or Liabilities by the Company or an Acquired Company
with any other Person, other than trade accounts payable arising in
the ordinary course of business of the Acquired Companies;
5.11.1.11. all Contracts providing for or containing any
mortgage, pledge, security agreement or deed of trust or other
Contract granting a Lien upon any assets or properties of an Acquired
Company with a value in excess of $50,000;
5.11.1.12. all Contracts which limit the ability of the Company
(to the extent relating to the Business) or any of the Acquired
Companies to compete in any line of business or with any Person or in
any geographic area or which limit or restrict in any material respect
the ability of the Company or any of the Acquired Companies with
respect to the development, manufacture, marketing, sale or
distribution of, or other rights with respect to, any products or
services;
5.11.1.13. all Contracts with any Governmental Authority;
5.11.1.14. all Contracts containing any restrictions with respect
to payment of dividends or any other distributions in respect of the
capital stock of any Acquired Company which will continue in effect
after the Closing;
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5.11.1.15. all Contracts between or among any Acquired Company,
on the one hand, and any Affiliate, officer, director or stockholder
of any Acquired Company or any Affiliate of any thereof, on the other
hand, including with any Excluded Subsidiary or with the Company;
5.11.1.16. all Contracts concerning the issuance, delivery,
pledge or other encumbrance, sale or disposal of any shares of capital
stock or other securities of an Acquired Company or the creation,
issuance, delivery, pledge or other encumbrance, sale or disposal of
any securities convertible into, or rights with respect to, or options
or warrants to purchase or rights to subscribe to, any shares of
capital stock or other securities of an Acquired Company;
5.11.1.17. all Contracts granting a proxy or relating to a voting
arrangement regarding the Shares; and
5.11.1.18. all Contracts granting to a third party a power of
attorney to act on behalf of any Acquired Company.
The Contracts set forth or required to be set forth on SCHEDULES
5.8.2, 5.9.5 and 5.11.1 are referred to herein as "MATERIAL
CONTRACTS". The Company has heretofore made available to Parent true
and complete copies of all written Material Contracts and a true and
complete, in all material respects, written summary of all oral
Material Contracts.
5.11.2. Each Material Contract is in full force and effect and is
legal, valid and binding on the Company (to the extent relating to the
Business) or the Acquired Company that is a party thereto and, to the
Knowledge of the Company, the other party or parties thereto.
5.11.3. The Company and the Acquired Companies (and, to the Knowledge
of the Company, each of the other party or parties thereto), have performed
in all material respects all obligations required to be performed by them
under each Material Contract. Except as set forth in SCHEDULE 5.11.3, no
event has occurred with respect to the Acquired Companies or, to the
Knowledge of the Company, with respect to any other Person that (with or
without lapse of time or the giving of notice or both) contravenes,
conflicts with or results in a violation or breach of, or gives any
Acquired Company or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity of, or to cancel,
terminate or modify, any Material Contract. Except as set forth on SCHEDULE
5.11.3, there are no active renegotiations of license and maintenance fees,
or written requests to renegotiate any such fees, in each case payable
under a Material Contract with any of the Company's ten (10) largest
customers (based on fiscal year 2009 revenue). No Acquired Company has
received any notice that any other party or parties to any Material
Contract intend to exercise any right of cancellation, termination or
non-renewal thereof.
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5.12. INSURANCE. SCHEDULE 5.12 sets forth a complete and accurate list of
all insurance policies and surety bonds which the Company and the Acquired
Companies maintain (the "INSURANCE POLICIES"). The Insurance Policies are in
full force and effect and will not lapse or be subject to suspension,
modification, revocation, cancellation, termination or non-renewal by reason of
the execution, delivery or performance of any Transaction Document or
consummation of the Transaction. The Company and each of the Acquired Companies
is current in all premiums or other payments due under each Insurance Policy and
has otherwise performed in all material respects all of its respective
obligations thereunder. None of the Company or any of the Acquired Companies has
received any notice that any Insurance Policy is not in full force and effect,
and the Company does not have any Knowledge of any event, circumstance or
condition that would cause (or would be reasonably likely to cause) any
Insurance Policy not to be in full force and effect.
5.13. LITIGATION.
5.13.1. No judgment, ruling, order, writ, decree, stipulation,
settlement, injunction or determination by or with any arbitrator, court or
other Governmental Authority to which the Company or the Acquired Companies
or to the Knowledge of the Company, any Affiliate (in its capacity as such)
of any of the foregoing, is party or by which any of the Company or the
Acquired Companies or to the Knowledge of the Company, any Affiliate (in
its capacity as such) of any of the foregoing, or any assets of any the
foregoing is bound is in effect. Neither the Company nor any of the
Acquired Companies nor, to the Knowledge of the Company, any Affiliate (in
its capacity as such) of any of the foregoing, is party to or engaged in
or, to the Knowledge of the Company, threatened with any material Action,
and to the Knowledge of the Company, no event has occurred and no condition
exists which could reasonably be expected to result in any such material
Action.
5.13.2. Neither the Company nor any of the Acquired Companies is in
default under or with respect to any judgment, ruling, order, writ, decree,
stipulation, settlement, injunction or determination of the type described
in SECTION 5.13.1.
5.13.3. No order has been made, petition presented or resolution
passed for the winding-up of any of the Acquired Companies and no meeting
has been convened for the purposes of winding-up of any of the Acquired
Companies. No steps have been taken for the appointment of an administrator
or receiver of all or any part of the Company or any of the Acquired
Companies' assets. Neither the Company nor any of the Acquired Companies
have made or proposed any arrangement or composition with its creditors or
any class of its creditors. Neither the Company nor any of the Acquired
Companies is insolvent, and neither the Company nor any Acquired Company is
unable to pay its debts within the meaning of the insolvency legislation
applicable to such entity and has not stopped paying its debts as they fall
due.
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5.14. EMPLOYEE MATTERS.
5.14.1. SCHEDULE 5.14.1 sets forth as of the date hereof an accurate
and complete list of each Plan copies of which have been previously
delivered to Parent. For the purpose of this Agreement "PLANS" do not
include individual employment agreements, offer letters or similar
undertakings provided to a single employee and not to a group of employees.
5.14.2. With respect to the Plans and except as otherwise set forth in
SCHEDULE 5.14.2:
5.14.2.1. Each Plan has been administered in all material
respects in accordance with its terms and applicable Law;
5.14.2.2. There are no actions, suits or claims pending or
threatened in writing against, or with respect to, any of the Acquired
Company Plans or their assets, and there is no basis for any such
action, suit or claim;
5.14.2.3. There are no funded benefit obligations for which
contributions have not been made and there are no unfunded benefit
obligations which have not been accounted for by reserves, or
otherwise properly reflected in accordance with GAAP, on the Company
Financial Statements;
5.14.2.4. The Company and the Acquired Companies have performed
all obligations in all material respects, whether arising by operation
of Law or by contract, required to be performed by them in connection
with the Plans, and, to the Knowledge of the Company, there have been
material no defaults or violations by any other Person with respect to
the Plans;
5.14.2.5. All reports and disclosures relating to the Plans
required to be filed with or furnished to Governmental Authorities,
Plan participants or beneficiaries have been filed or furnished in
accordance with applicable Law in a timely manner;
5.14.2.6. There is no matter pending (other than routine
qualification determination filings) with respect to any of the
Acquired Company Plans before any Governmental Authority;
5.14.2.7. Except as set forth in SCHEDULE 5.14.2.7, the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby in and of itself, will not (A)
require the Company or the Acquired Companies to make a larger
contribution to, or pay greater benefits or provide other rights
under, any Plan than it otherwise would, or (B) create or give rise to
any additional vested rights or service credits under any Plan,
accelerated vesting of options or any payment in cash or other
property, in either case whether or not some other subsequent action
or event would be required to cause such payment or provision to be
triggered; and
5.14.2.8. The accrual vacation policies of the Acquired Companies
for their employees are set forth in SCHEDULE 5.14.2.8.
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5.14.3. Neither the Company nor any Acquired Company is a party to any
collective bargaining or other labor union contracts. No collective
bargaining agreement or other labor union contract is being negotiated by
the Company or any Acquired Company and no Person is currently seeking to
represent the employees of the Company or any Acquired Company. There is no
pending or, to the Knowledge of the Company, threatened labor dispute,
strike or work stoppage against any Acquired Company. Neither the Company
nor any Acquired Company or, to the Knowledge of the Company, any of their
respective representatives or employees has committed any unfair labor
practices in connection with the operation of the respective businesses of
the Company or any Acquired Company, and there is no pending or threatened
in writing charge or complaint against the Company or any Acquired Company
filed with or issued by any Governmental Authority, or in the case of an
Acquired Company incorporated in the UK, by any Trade Union.
5.14.4. Attached hereto as SCHEDULE 5.14.4 is an anonymised list of
all the Acquired Company's directors, officers, employees and consultants
and individuals who provide services to the Acquired Companies as
independent contractors, and for each such Person includes (i) the name of
such Person's employer or recipient of services, (ii) job title(s), (iii) a
summary description of the material compensation and employment benefits
paid to such Person (including bonuses), (iv) accrued but unused vacation,
(v) the date of commencement of employment for such Person, and (vi) such
Person's status as of the date hereof (i.e., active, vacation, leave of
absence, and if so, type of leave), including visa status, if applicable.
SCHEDULE 5.14.4 also sets forth as of the date hereof a list of all
employees, consultants and independent contractors of the Company who
provide services to the Acquired Companies, with all details set forth
above, and including the amount of time devoted to the business of the
Acquired Companies.
5.14.5. Except as set forth in SCHEDULE 5.14.5 as of the date hereof,
neither the Company nor any Acquired Company has amended any employment
agreement, or taken any other actions with respect to the employment of any
employees, officers or directors or to any of the Plans or any of the
Plans, agreements, policies or other arrangements described in this SECTION
5.14 of this Agreement since March 31, 2009 which could materially increase
the Company's or an Acquired Company's costs or obligations thereunder.
5.14.6. To the Knowledge of the Company, neither the Company nor any
Acquired Company has incurred, nor do they reasonably expect to incur, any
material liability under Title IV of ERISA with respect to any Affiliate
Plan.
5.14.7. No present or former employee or independent contractor
performing services for the Company or an Acquired Company is owed or has a
claim pending, to the Knowledge of the Company, or has threatened in
writing to make a claim against the Company or such Acquired Company,
including any claim for (i) overtime pay, (ii) wages, salaries, commissions
or profit sharing (excluding wages, salaries, commissions or profit sharing
for the current payroll period), (iii) vacations, time off or pay in lieu
of vacation or time off, other than vacation or time off (or pay in lieu
thereof) earned in respect of the current fiscal year or otherwise still
outstanding, (iv) any violation of any rule or contract relating to minimum
wages or maximum hours of work, (v) discrimination or retaliation against
employees on any basis, (vi) severance pay or unlawful or wrongful
employment or termination practices, (vii) unlawful retirement, termination
or labor relations practices or breach of contract or (viii) any violation
of occupational safety or health standards. Without derogating from the
above, all previous reductions in work force plans and termination of
employment of employees of the Company and Acquired Companies were
conducted in accordance with, and subject to, all applicable Laws,
employment agreements and Plans. There are no administrative charges,
arbitration or mediation proceedings or court complaints pending or
threatened in writing against the Company or any Acquired Company before
any Government Authority, arbitration forum or any other entity concerning
alleged employment discrimination, contract violation or any other matters
relating to the employment of labor.
35
5.14.8. Except as set forth in SCHEDULE 5.14.8, the Company and the
Acquired Companies are and have been in compliance in all material respects
with all applicable employment agreements, handbooks or policies, Laws,
rules and regulations relating to the employment of labor (including
without limitation, any of the health care continuation requirements of the
COBRA). Without derogating from the foregoing, the Company and the Acquired
Companies have complied with all bonus payments required to be made by them
in connection with their fiscal years 2008 and 2009.
5.14.9. Except as set forth on SCHEDULE 5.14.9, no current employee
(other than administrative staff and similar non-essential personnel) has
given written notice to the Company or any Acquired Company of such
employee's intention to terminate his or her employment and no current
employee (other than administrative staff and similar non-essential
personnel) has been given written notice from the Company or any Acquired
Company of the Company's or such Acquired Company's intention to terminate
his or her employment. The employment of each of the employees of the
Acquired Companies is "at will" (except for non-U.S. employees of the
Acquired Companies located in a jurisdiction that does not recognize the
"at will" employment concept) and the Company and the Acquired Companies do
not have any obligation to provide any particular form or period of notice
prior to terminating the employment of any of their respective employees,
except as set forth on SCHEDULE 5.14.9.
5.14.10. There are no audits or inquiries pending or, to the Knowledge
of the Company, threatened by the IRS, the United States Department of
Labor or any other Governmental Authority with respect to any Acquired
Company Plan. Neither the Company nor any Acquired Company has ever
incurred: (i) any penalty or Tax with respect to any Plan under Section
502(i) of ERISA or Sections 4975 through 4980 of the Code; or (ii) any
penalty or Tax under applicable Law. The Company and each Acquired Company
has made all contributions and other payments required by and due under the
terms of each Plan.
5.14.11. Except as set forth in SCHEDULE 5.14.11, any Acquired Company
Plan intended to be qualified under Section 401(a) of the Code has obtained
a favorable determination letter (or opinion letter, if applicable) as to
its qualified status under the Code. All pension Acquired Company Plans
required to have been approved by any non-U.S. Governmental Authority have
been so approved, no such approval has been revoked (or, to the Knowledge
of the Company, has revocation been threatened) and, to the Knowledge of
the Company, no event has occurred since the date of the most recent
approval or application therefor relating to any such pension Acquired
Company Plan that would reasonably be expected to materially affect any
such approval relating thereto or materially increase the costs relating
thereto. Each Acquired Company Plan intended to be Tax qualified under
applicable Law is, to the Knowledge of the Company, so Tax qualified, and,
to the Knowledge of the Company, no event has occurred and no circumstance
or condition exists that could reasonably be expected to result in the
disqualification of any such Plan.
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5.14.12. Except as set forth on SCHEDULE 5.14.12, neither the Company
nor any Acquired Company maintains, sponsors or contributes to any Plan
that is an employee welfare benefit plan (as such term is defined in
Section 3(1) of ERISA) and that is, in whole or in part, self-funded or
self-insured. No Plan provides (except at no cost to the Company or the
Acquired Companies), or reflects or represents any liability of the Company
or any of the Acquired Companies to provide, post-termination or retiree
life insurance, post-termination or retiree health benefits or other
post-termination or retiree employee welfare benefits to any Person for any
reason, except as may be required by COBRA or other applicable Law.
5.14.13. Except as set forth on SCHEDULE 5.14.13, there is no
agreement, plan, arrangement or other Contract covering any director or
officer or other employee of the Company or any Acquired Company, and no
payments have been made or will be made to any director or officer or other
employee of the Company or any Acquired Company, that, considered
individually or considered collectively with any other such Contracts or
payments, will, or could reasonably be expected to, be characterized as a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code or
give rise directly or indirectly to the payment of any amount that would
not be deductible pursuant to Section 162(m) of the Code (or any comparable
provision under U.S. state or local or non-U.S. Tax Laws). Except as set
forth in SCHEDULE 5.14.13, neither the Company nor any Acquired Company is
a party to or has any obligation under any Contract to compensate any
Person for excise Taxes payable pursuant to Section 4999 of the Code.
5.15. LICENSES AND PERMITS; LEGAL COMPLIANCE.
5.15.1. Except as set forth in SCHEDULE 5.15.1, the Company (to the
extent relating to the Business) and the Acquired Companies are in
possession of Licenses necessary to own, lease, maintain and operate their
properties and to carry on their business as it is now being conducted,
other than as would not have a Material Adverse Effect.
37
5.15.2. (i) Except as set forth on SCHEDULE 5.15.2, each of the
Company (to the extent relating to the Business) and the Acquired Companies
is in compliance in all material respects and has complied in all material
respects with all Laws and Licenses applicable to it, including all Laws
relating to the exportation of goods, services and products and export
compliance and control, (ii) no claims or complaints from any Governmental
Authorities or other Persons have been asserted or received by the Company
or any Acquired Company or any Affiliate thereof related to or affecting
the Company or any Acquired Company and, to the Knowledge of the Company,
no claims or complaints are threatened, alleging that the Company or any
Acquired Company or any Affiliate thereof is in violation of any Laws or
Licenses applicable to the Company or any Acquired Company and (iii) no
investigation, inquiry, or review by any Governmental Authority with
respect to the Company or any Acquired Company is pending or, to the
Knowledge of the Company, threatened, nor has any Governmental Authority
advised the Company of an intention to conduct any such investigation,
inquiry or review.
5.15.3. None of the Company or the Acquired Companies, nor, to the
Company's Knowledge, any director, officer, agent, employee or other Person
associated with or acting on behalf of the Company or the Acquired
Companies has, directly or indirectly, at any time used funds, in
connection with the Business, in violation of any applicable Law,
including, without limitation, for the making of any unlawful payment,
contribution, bribe or kickback to any person affiliated with any political
party or government. Neither the Company nor any Acquired Company is in
violation in any material respect of any Law concerning the export or
re-export of any products or services or the prohibited boycott of any
country.
5.16. AFFILIATE TRANSACTIONS; EXCLUDED SUBSIDIARIES.
5.16.1. Except as set forth in SCHEDULE 5.16.1, there are no Contracts
between any Acquired Company on the one hand, and the Company or the
Excluded Subsidiaries (or any Affiliate thereof) on the other hand. As of
the Closing Date and thereafter, except as set forth in the Transition
Services Agreement and the Asset Transfer Agreements referenced in Section
7.10 hereof, (a) the Acquired Companies shall have no Liabilities or
obligations, direct or indirect, contingent or otherwise, owing to the
Company or the Excluded Subsidiaries or any of their Affiliates, including
payables, and (b) the Company and the Excluded Subsidiaries shall have no
Liabilities or obligations, direct or indirect, contingent or otherwise,
owing to the Acquired Companies, including payables.
5.16.2. Except as set forth in SCHEDULE 5.16.2, to the Knowledge of
the Company, no officer, director or holder of 5% or more of the
outstanding shares of the Company or an Acquired Company (or any Affiliate
of such officer, director or holder) owns or holds, directly or indirectly,
any interest in (excepting holdings solely for passive investment purposes
of securities of publicly held and traded entities constituting less than
5% of the equity of any such entity), or is an officer, director, employee
or consultant of any Person that is, a lessor, lessee, customer or supplier
of the Company or the Acquired Companies. To the Knowledge of the Company,
no officer, director or holder of 5% or more of the outstanding shares of
the Company or an Acquired Company (or any Affiliate of such officer,
director or holder) (or equivalent position) (a) has made, on behalf of the
Company or the Acquired Companies, any material payment or material
commitment to pay any commission, fee or other amount to, or to purchase or
obtain or otherwise contract to purchase or obtain any goods or services
from, any other Person of which any officer or director of the Company or
of the Acquired Companies is a partner, member or stockholder (except
holdings solely for passive investment purposes of securities of publicly
held and traded entities constituting less than 5% of the equity of any
such entity), (b) owes any material amount of money to the Company or the
Acquired Companies or (c) has any interest in any material property, real
or personal, tangible or intangible, used in or pertaining to the business
of the Company or the Acquired Companies.
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5.17. ACCOUNTS RECEIVABLE.
5.17.1. The accounts receivable shown on the Current Balance Sheet
arose in the ordinary course of business, consistent with past practices
and represented, in all material respects, bona fide claims against debtors
for sales and other charges, subject to credits and adjustments made in the
ordinary course of business consistent with past practices. Allowances for
doubtful accounts shown on the Current Balance Sheet have been prepared in
accordance with GAAP consistently applied. The accounts receivable of the
Company and the Acquired Companies arising after the Balance Sheet Date
arose in the ordinary course of business, consistent with past practices
and represented, in all material respects, bona fide claims against debtors
for sales and other charges, subject to credits and adjustments made in the
ordinary course of business consistent with past practices. SCHEDULE 5.17.1
sets forth an aging of the Company's and the Acquired Companies' accounts
receivable in the aggregate and by customer, and indicates the amounts of
allowances for doubtful accounts as of June 30, 2009.
5.17.2. During the last 2 years, except with regard to the customers
set forth in SCHEDULE 5.17.2, the Company and the Acquired Companies have
not renegotiated or amended any Contract with a customer that has merged
with, or been acquired by, or has acquired, another customer.
5.17.3. Except as set forth on SCHEDULE 5.17.3, the Current Balance
Sheet fairly presents in all material respects deferred revenues of the
Company, which arose in the ordinary course of business consistent with
past practice and represent(ed) bona fida future revenue from amounts
invoiced and/or collected for sales and other charges and have been
prepared in accordance with GAAP consistently applied in accordance with
past practice.
5.18. WARRANTIES. SCHEDULE 5.18 sets forth the aggregate amounts paid by
the Company to customers under any right of return or indemnity provisions
during each of the fiscal years covered by the Company Financial Statements.
5.19. NO PUBLIC OFFER. None of the Acquired Companies nor anyone acting on
their behalf has offered securities of the Acquired Companies or any part
thereof or any similar securities for issuance or sale to, or solicited any
offer to acquire any of the same from, anyone so as to make the sale of the
Shares not exempt from the registration requirements of any Law. None of the
Acquired Companies' securities have been offered or sold in such a manner as to
make the sale of such securities not exempt from such registration requirements,
and all such securities have been offered and are being sold in compliance with
all applicable securities Laws.
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5.20. BROKERS' FEES. Except as set forth on SCHEDULE 5.20, None of the
Acquired Companies nor any of their Affiliates has authorized or retained any
Person to act as an investment banker, broker, finder or other intermediary who
is or might be entitled to any fee, commission or payment in connection with the
negotiation, preparation, execution or delivery of any Transaction Document or
the consummation of the Transaction, nor is there any basis for any such fee,
commission or payment to be claimed by any Person.
5.21. BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 5.21 sets forth a
complete and accurate list of: (a) all bank accounts, investment accounts, lock
boxes and safe deposit boxes maintained by or on behalf of any Acquired Company,
including the location and account numbers of all such accounts, lock boxes and
safe deposit boxes and (b) the names of all Persons authorized to take action
with respect to such accounts, safe deposit boxes and lock boxes or who have
access thereto.
5.22. HSR. As of the date hereof, each of the Acquired Companies other than
Fortent Americas (i) is a "foreign issuer" as defined by 16 C.F.R.
ss.801.(e)(2)(ii); and (ii) in the aggregate, made sales in or into the United
States of not more than $65.2 million in their most recent fiscal year(s).
5.23. FULL DISCLOSURE. To the Knowledge of the Company, the representations
and warranties set forth in SECTIONS 4 and 5 of this Agreement, taking into
account the Company Disclosure Schedules, do not contain any untrue statements
of material fact or omit to state a material fact necessary to make the
statements herein not misleading in view of the circumstances in which they were
made.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE ACQUIRING SUBSIDIARIES
Parent and the Acquiring Subsidiaries hereby represent and warrant to the
Company as of the date of this Agreement (except to the extent such
representations and warranties expressly relate to another date) as follows:
6.1. ORGANIZATION. Each of Parent and the Acquiring Subsidiaries is a
corporation duly organized, validly existing and (to the extent applicable in
its jurisdiction of incorporation) is in good standing under the Laws of its
jurisdiction of incorporation.
6.2. AUTHORITY. Each of Parent and the Acquiring Subsidiaries has all
requisite corporate power and authority to enter into this Agreement and the
other Transaction Documents to which they are a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and the Acquiring Subsidiaries.
This Agreement has been duly executed and delivered by each of Parent and the
Acquiring Subsidiaries and constitutes the valid and binding obligation of
Parent and the Acquiring Subsidiaries enforceable against Parent and the
Acquiring Subsidiaries, respectively, in accordance with its terms. Each other
Transaction Document to be delivered by Parent and/or any Acquiring Company will
be duly executed and delivered Parent and such Acquiring Company, as applicable,
and, when so executed and delivered, will constitute the legal, valid and
binding obligation of Parent and such Acquiring Company, enforceable against
Parent and such Acquiring Company in accordance with its terms.
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6.3. NONCONTRAVENTION. Subject to the receipt of the Required Consents,
none of the execution, delivery or performance by Parent and the Acquiring
Subsidiaries of any Transaction Document or the consummation by Parent and the
Acquiring Subsidiaries of the Transaction does or will, with or without the
giving of notice or the lapse of time or both, conflict with, or result in a
breach or violation of, or a default under, or give rise to a right of
amendment, termination, cancellation or acceleration of any obligation under (i)
any organizational or charter document (or similar organizational documents) of
Parent or the Acquiring Subsidiaries, or (ii) any material Law or License to
which Parent or the Acquiring Subsidiaries or their properties or assets are
subject.
6.4. GOVERNMENTAL APPROVALS. Except as set forth on SCHEDULE 6.4, no
material Consent or order of, with or to any Governmental Authority is required
to be obtained or made by or with respect to Parent and the Acquiring
Subsidiaries in connection with the execution, delivery and performance by
Parent and the Acquiring Subsidiaries of any Transaction Documents or the
consummation by Parent and the Acquiring Subsidiaries of the Transaction.
6.5. HSR.
6.5.1. As of the date hereof, Parent has determined that the fair
market value of the voting securities Fortent Americas, as calculated
pursuant to 16 C.F.R. Section 801.10, does not exceed $65,200,000.
6.5.2. As of the date hereof, Parent has determined that the fair
market value of the US assets of Fortent UK and Fortent Japan, in the
aggregate, does not exceed $65,200,000.
6.6. INSPECTIONS; NO OTHER REPRESENTATIONS. The Buyers are informed and
sophisticated purchasers, and have engaged expert advisors, experienced in the
evaluation and acquisition of companies such as the Acquired Subsidiaries
contemplated hereunder. The Buyers have undertaken such investigation as they
have deemed necessary to make an informed and intelligent decision with respect
to the execution, delivery and performance of this Agreement. The Buyers
acknowledge that the Company has given Buyers access to key employees, documents
and facilities of the Acquired Subsidiaries requested by Buyers and, to the
extent related thereto, their Affiliates requested by Buyers. Without limiting
the generality of the foregoing, the Buyers acknowledge that none of Acquired
Companies or any of their officers or directors, makes any representation or
warranty with respect to any projections, estimates or budgets delivered to or
made available to Parent of future revenues, future results of operations (or
any component thereof), future cash flows or future financial condition (or any
component thereof) of the Acquired Companies or the future business and
operations of the Acquired Companies or any other information or documents made
available to the Buyers or their counsel, accountants or advisors with respect
to the Acquired Companies or any of the businesses, assets, liabilities or
operations of the foregoing, except as expressly set forth in this Agreement.
Nothing in this SECTION 6.6 shall derogate from the right of the Buyers to rely
on the representations and warranties of the Company set forth in SECTIONS 4 and
5 herein, and the right to seek indemnification pursuant to the provisions of
SECTION 11 below regardless of any investigation made by the Buyers or Parent.
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7. COVENANTS
7.1. REASONABLE BEST EFFORTS; FURTHER ASSURANCES. From time to time after
the date hereof, at Parent's reasonable request and without further
consideration from the Buyers, (i) the Company shall execute and deliver such
other instruments of conveyance and transfer and take such other action as
Parent reasonably may require to convey, transfer to and vest in the Buyers and
to put Buyers in possession of the Shares in accordance with the terms of this
Agreement (ii) the Company shall execute and deliver such documents as may be
required to vary the bank mandates of the bank accounts of Fortent UK and its
subsidiaries, and (iii) the Company shall not otherwise exercise any rights in
respect of such bank accounts and shall use its reasonable best efforts to
ensure that no person who has signatory rights thereto shall take any action in
connection therewith (in each case unless done so with the express prior written
consent of Parent).
7.2. 2009 AUDITED FINANCIALS; FINANCIAL STATEMENTS OF THE BUSINESS.
7.2.1. Parent shall be responsible for, and shall bear all costs and
expenses associated with, the preparation of audited consolidated financial
statements of the Company (including the balance sheet and the related
statements of income and cash flows and the notes to the financial
statements) as of and for the fiscal year ended March 31, 2009 (the
"AUDITED COMPANY FINANCIAL STATEMENTS"), to be prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated therein
and with each other.
7.2.2. Parent shall be responsible for, and shall bear all costs and
expenses associated with, the preparation of any audited or unaudited
consolidated financial statements of the Business (on a stand-alone basis)
(including the balance sheet and the related statements of income and cash
flows and the notes to the financial statements) required by Parent (the
"ACQUIRED COMPANIES FINANCIAL STATEMENTS").
7.3. PUBLIC ANNOUNCEMENTS. Except for the announcement by Parent of the
execution and delivery of this Agreement in the form attached hereto as EXHIBIT
C, the timing and content of which have been mutually agreed by the parties
hereto, no party hereto shall issue any press release or otherwise make any
public announcement (excluding any investor relations conference call to be
conducted by Parent following the Closing) with respect to this Agreement or the
Transaction contemplated hereby. Notwithstanding the foregoing, if such an
announcement is required of Parent by applicable Law or any listing agreement
with a national securities exchange or quotation system (including Nasdaq)
Parent shall provide notice to and a copy of such as promptly as practicable in
advance of such announcement and will use all reasonable efforts to consult with
the Company and take the views of the Company in respect of such announcement
into account prior to making such announcement, subject to applicable Law or
listing requirements and provided such consultation and review shall not delay
any such announcement.
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7.4. FIRPTA COMPLIANCE. On or prior to the Closing Date, the Company shall
deliver to Parent either (a) a properly executed statement in a form reasonably
acceptable to Parent for purposes of satisfying Parent's obligations under
Treasury Regulation Section 1.1445-2(c)(3) with respect to each of the Acquired
Subsidiaries, or (b) an affidavit, under penalties of perjury, that the Company
is not a foreign person consistent with Treasury Regulation Section
1.1445-2(b)(2)(iv).
7.5. NON-SOLICITATION OF EMPLOYEES. For a period of two (2) years from and
after the Closing Date, without the prior written consent of Parent, the Company
will not, and will cause its controlled Affiliates (including the Excluded
Subsidiaries) not to, (a) solicit as an employee, independent contractor or
consultant any person employed by an Acquired Company on the date hereof and
will not, and will cause its controlled Affiliates (including the Excluded
Subsidiaries) not to, during such period, induce or attempt to induce any such
employee to terminate his or her employment with an Acquired Company or Parent
or any of its Affiliates by resignation, retirement or otherwise; or (b) hire or
retain any of the persons set forth on SCHEDULE 7.5; PROVIDED, that, the
foregoing restrictions shall not apply to employees terminated by an Acquired
Company, Parent or any of its Affiliates after the Closing Date and general
solicitations and employment searches not targeted at such employees will not be
considered a solicitation, inducement or attempt to induce any such employee.
7.6. NON COMPETE.
7.6.1. In order that the Buyers may have and enjoy the full benefit of
the business being acquired hereunder, the Company (including the Excluded
Subsidiaries) shall not, directly or indirectly: (i) from the Closing Date
hereof until the expiration of two (2) years after the Closing (the
"NON-COMPETE PERIOD"), own, manage, operate, finance, join, control or
participate in the ownership, management, financing, operation, business or
control of or otherwise be involved in any way in any business or Person in
the United States, the United Kingdom, Japan or any other country in which
the products or services of any of the Acquired Companies were used as of
the Closing Date (the "TERRITORY"), that at any time during the Non-Compete
Period engages, in the Territory, in the developing, producing, offering,
distributing, selling or supporting of products or services directly
competitive with the products and services offered or sold by the Acquired
Companies as of the Closing Date (other than Fortent Inform and any
products or services of the Excluded Subsidiaries currently offered or sold
by the Excluded Subsidiaries or currently contemplated to be offered or
sold), and (ii) from the Closing Date hereof until the expiration of two
(2) years after the Closing, whether acting on their own behalf, or acting
as an owner, shareholder, partner, or member of, or otherwise exercising
control over, any other Person, or acting through any other Person, solicit
or attempt to solicit any Person that was a customer of any of the Acquired
Companies at the Closing Date: (A) to cease, diminish, modify or not renew
its business relationship (in respect of products or services offered or
sold by the Acquired Companies as of the Closing Date) with any of the
Acquired Companies (or their successors); or (B) to purchase products or
services which are the products and services offered or sold by the
Acquired Companies as of the Closing Date; provided, that neither clause
(i) or (ii) shall apply to the business of the Excluded Subsidiaries as
conducted on the date hereof or as currently proposed to be conducted. The
Company acknowledges that the consideration received by the Company
hereunder is paid in consideration, in part, for the non-compete
obligations hereunder and that in light of the nature of this transaction
and the critical significance of the non-compete covenant to the Buyers'
business and to its willingness to enter into this Agreement and pay the
aggregate consideration hereunder, the non-compete covenant is reasonable
and fair in the circumstances.
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7.6.2. The covenants and undertakings contained in this SECTION 7.6
relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this SECTION 7.6 may cause
irreparable injury to the Buyers, the amount of which will be impossible to
estimate or determine and which cannot be adequately compensated.
Therefore, the Buyers will be entitled to seek an injunction, restraining
order or other equitable relief from any court of competent jurisdiction in
the event of any breach of this SECTION 7.6. The rights and remedies
provided by this SECTION 7.6 are cumulative and in addition to any other
rights and remedies which Buyers may have hereunder or at Law or in equity.
In the event that Buyers were to seek damages for any breach of this
SECTION 7.6, the portion of the aggregate consideration hereunder which is
allocated by the parties to the foregoing covenant shall not be considered
a measure of or limit on such damages.
7.6.3. The parties hereto agree that, if any court of competent
jurisdiction in a final nonappealable judgment determines that a specified
time period, a specified geographical area, a specified business limitation
or any other relevant feature of this SECTION 7.6 is unreasonable,
arbitrary or against public policy, then a lesser time period, geographical
area, business limitation or other relevant feature which is determined to
be reasonable, not arbitrary and not against public policy may be enforced
against the applicable party.
7.7. CONFIDENTIAL INFORMATION.
7.7.1. From and after the Closing, the Company will, and will cause
its controlled Affiliates (including the Excluded Subsidiaries), to (i)
maintain in strict confidence any and all confidential information
concerning the Acquired Companies and (ii) refrain from using any and all
such information for its own benefit or to compete with or otherwise to the
detriment of Buyers or any of the Buyers' respective Affiliates (including
the Acquired Companies). It is understood that the Company shall not have
any liability or obligation hereunder with respect to information that (i)
is in or, through no fault of the Company or its Affiliates, comes into the
public domain, or (ii) the Company or any of its Affiliates, is legally
required to disclose.
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7.7.2. In the event that the Company or any of its Affiliates is
required by Law to disclose any such information, the Company will promptly
notify Parent in writing so that Parent may seek a protective order and/or
other motion to prevent or limit the production or disclosure of such
information. If such motion has been denied, has not been promptly
prosecuted or is pending and unresolved at the time disclosure of such
information is required by Law, then the Person required to disclose such
information may disclose only such portion of such information which (i)
based on advice of the Company's outside legal counsel is required by Law
to be disclosed (provided that the Person required to disclose such
information will use all reasonable efforts to preserve the confidentiality
of the remainder of such information) or (ii) Parent consents in writing to
having disclosed. The Company will not, and will not permit any of its
Affiliates to, oppose any motion for confidentiality brought by Buyers or
any Acquired Company. The Company will continue to be bound by its
obligations pursuant to this SECTION 7.7 for any information that is not
required to be disclosed, or that has been afforded protective treatment,
pursuant to such motion.
7.8. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
7.8.1. For a period of seven (7) years after the date hereof, the
Acquired Companies shall indemnify and hold harmless each present and
former director and officer of the Company and the Acquired Companies
(collectively, the "INDEMNIFIED PERSONS") against any Liability incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the date hereof, whether
asserted or claimed prior to, at or after the date hereof to the fullest
extent that the Company or any of the Acquired Companies was permitted to
indemnify such Indemnified Persons by Law or under the Company's
Certificate of Incorporation or Bylaws or other similar organizational
documents in effect on the date of this Agreement and the Acquired
Companies shall also advance expenses as incurred to the fullest extent
permitted by Law. The Parent shall cause the Acquired Companies to so
observe such obligations, and ensure that the Acquired Companies have
sufficient funds for such obligations. The indemnification obligations
above shall be subject to the Company and the Indemnified Persons first
seeking and actively pursuing in good faith coverage under the insurance
policy described in SECTION 7.8.2; PROVIDED, HOWEVER, that in no event
shall this sentence be construed to require any Indemnified Person to bring
an action against any Person or otherwise expend any personal funds in
furtherance of such pursuit of coverage. The amount to which an Indemnified
Person may become entitled under this SECTION 7.8.1 shall be without
duplication of any amounts actually recovered by such Indemnified Person
under or pursuant to the insurance policy below. To the extent an
Indemnified Person is paid by the Acquired Companies any amount of any
claim hereunder, such Indemnified Person will assign to the Acquired
Companies, to the fullest extent allowable, its claim under such insurance
policy, or in the event assignment is not permissible, such Indemnified
Person shall pursue such claim at the Acquired Companies' reasonable
direction and expense, with any recovery thereon to be transmitted promptly
to the Acquired Companies. The provisions of this SECTION 7.8.1 are
intended to be for the benefit of, and shall be enforceable against the
Acquired Companies and each of their respective successors and assigns by,
each of the present and former directors and officers of the Company and
any Acquired Company, their heirs and their representatives and shall
survive the consummation of the Transaction. For the avoidance of doubt,
the Acquired Companies shall indemnify the Indemnified Persons to the
extent of any deductible not recovered under the policy described in
SECTION 7.8.2
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7.8.2. At the Closing Date, the Company shall purchase "run-off" or
"tail" insurance coverage with a policy limit of at least $10,000,000,
which shall have substantially the same terms and conditions as the
Company's existing directors and officers liability insurance policies,
covering those Persons described in SECTION 7.8.1 who are covered on the
date hereof by the Company's directors and officers liability insurance
policies, and the costs of such "run-off" or "tail" coverage shall be at
the expense of the Company. Such policy or "run-off" or "tail" coverage
shall remain in effect for at least seven (7) years after the date hereof.
7.8.3. The obligations under this SECTION 7.8 shall not be terminated
or modified in such a manner as to adversely affect any Indemnified Person
hereto without the consent of such affected Indemnified Person.
7.9. USE OF NAME. From and after the Closing, the Company shall and shall
cause the Excluded Subsidiaries to, as soon as practicable, cease using the
Marks (other than trade names) in the Owned Business Intellectual Property, and
shall, within 60 days after the Closing Date, cease to do business under a
corporate name or trade name that incorporates such Marks or any marks or names
confusingly similar thereto, provided that the Excluded Subsidiaries shall have
a period of 120 days to change (and cease the use of) the name of the product
known as "Fortent Inform."
7.10. ASSET TRANSFERS. Prior to the Closing and in full coordination, and
on such terms and conditions as shall be agreed upon in advance with Parent, (a)
the Company shall transfer to Fortent Americas and/or Fortent UK (to the extent
that related to the UK companies) all of its properties, rights, titles,
interests, remedies, powers and privileges (the "TRANSFERRED ASSETS") other than
as set forth on SCHEDULE 7.10 that are currently owned by the Company and
Fortent Americas shall accept the assignment thereof and assume all of the
Liabilities of the Company (the "TRANSFERRED LIABILITIES") except for such
Liabilities set forth on SCHEDULE 7.10 that are currently obligations of the
Company and (b) Fortent Americas shall transfer to AGM all of its rights, title
and interest in and to the assets set forth on SCHEDULE 7.10 that are currently
owned by Fortent Americas and AGM shall accept assignment thereof and assume the
Liabilities set forth on SCHEDULE 7.10 that are currently Liabilities of Fortent
Americas, which assets and liabilities are used primarily in the business of the
Excluded Subsidiaries. For the avoidance of doubt, Parent agrees to assume and
honor, in accordance with the terms thereof, the employment agreements of the
Designated Employees set forth on SCHEDULE 7.10-A, PROVIDED, HOWEVER, that (a)
each such Designated Employee has signed a release, substantially in the form
attached hereto as SCHEDULE 7.10-B (the "RELEASE LETTERS"), and (b) Parent and
the Acquired Companies shall be responsible for 80% of the severance payments
due to such Designated Employees in accordance with the employment agreements
set forth on SCHEDULE 7.10-A (the "PARENT SEVERANCE Participation"). Any
Transferred Assets and Transferred Liabilities to be so transferred by the
Company shall be evidenced by separate instruments of transfer which shall be
executed by the Company and Fortent Americas and/or Fortent UK, attached hereto
as EXHIBIT E.
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7.11. INTERCOMPANY DEBTS. Prior to the Closing, the Company shall have
contributed any balance or indebtedness from any Acquired Company to the Company
into equity of such Acquired Company and/or against the issuance of ordinary
stock of such Acquired Company, so that at Closing no balances between any of
the Acquired Companies on the one hand, and the Company or any Excluded
Subsidiary on the other hand shall exist. Any balance or indebtedness owed by
any Acquired Company to an Excluded Subsidiary shall have been assigned by the
Excluded Subsidiary to the Company and then converted into equity as provided
above. The above conversion shall be done in full cooperation and, and on such
terms and conditions as shall be agreed upon in advance with Parent and set
forth in the Asset Transfer Agreement attached as EXHIBIT E.
8. RELEASES AND WAIVERS
8.1. GENERAL RELEASE.
8.1.1. For and in consideration of the amounts payable to the Company
under the Transaction Documents, effective as of the Closing Date, the
Company hereby releases, acquits and forever discharges, and shall ensure
that each of the Excluded Subsidiaries release, acquit and forever
discharge, each Acquired Company and each of their present and former
officers, directors and employees (collectively, the "RELEASED PARTIES")
and each of their respective heirs, executors, administrators, successors
and assigns, of and from any and all manner of action or actions, cause or
causes of action, demands, rights, Damages, debts, dues, sums of money,
accounts, reckonings, costs, expenses, responsibilities, covenants,
contracts, controversies, agreements, Actions and claims whatsoever,
whether known or unknown, of every name and nature, both in law and in
equity, which the Company, the Excluded Subsidiaries or their heirs,
executors, administrators, successors or assigns ever had or now has, or
which they may have or shall have against the Acquired Companies or any
other Released Party, arising out of any matters, causes, acts, conduct,
claims, circumstances or events occurring or failing to occur or conditions
existing at or prior to the Closing, except as the same may arise under the
Transaction Documents.
8.1.2. Subject to, and without derogating from, the provisions of
Section 11, for and in consideration of the sale of the Acquired
Subsidiaries under the Transaction Documents, effective as of the Closing
Date, Parent hereby releases, acquits and forever discharges, and shall
ensure that each of the Acquired Companies release, acquit and forever
discharge, of and from any and all manner of actions, cause or causes of
action, demands, rights, Damages, debts, dues, sums of money, accounts,
reckonings, responsibilities, covenants, contracts, controversies,
agreements, Actions and claims whatsoever, whether known or unknown, of
every name and nature, both in law and in equity, which the Acquired
Companies ever had or now has, or which they may have or shall have against
the Company and the Excluded Subsidiaries and each of their present and
former officers, directors and employees and each of their respective
heirs, executors, administrators, successors and assigns, arising out of
any matters, causes, acts, conduct, claims, circumstances or events
occurring or failing to occur or conditions existing at or prior to the
Closing.
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8.1.3. Subject to, and without derogating from, the provisions of
Section 11, Parent and Buyers agree that except for fraud, on and after the
Closing Date, none of the Company's or Acquired Subsidiaries' officers,
directors, stockholders, Affiliates of the stockholders, or representatives
or agents of the stockholders, as the case may be (excluding the Company
itself) (collectively, the "SELLING GROUP"), shall have any liability or
responsibility to Parent, Buyers or any other Affiliate of Parent (and each
of them unconditionally releases the Selling Group from) any liability or
obligation of, or arising out of, or relating to, Liabilities of whatever
kind or nature, whether contingent or absolute, whether arising prior to,
on or after, and whether determined or indeterminable on, the Closing Date,
solely: (i) relating to this Agreement and the transactions contemplated
hereby, (ii) arising out of or due to any inaccuracy of any representation
or warranty or breach of any covenant, undertaking or other agreement of
the Company contained in this Agreement, the Schedules to this Agreement or
in any certificate contemplated hereby and delivered by the Company in
connection herewith and (iii) relating to any information (whether written
or oral), documents or materials furnished by the Company or the Acquired
Subsidiaries or any of their respective Affiliates or other members of the
Selling Group, including any information, documents or material made
available to Parent and Buyers in certain "data rooms," management
presentations or any other form in expectation of the transactions
contemplated by this Agreement.
8.1.4. Each member of the Selling Group is intended to be a third
party beneficiary of this SECTION 8.
9. CONDITIONS TO CLOSING
9.1. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the transactions contemplated hereby shall be subject to
the Company's receipt of all closing deliverables as set forth in SECTION 3.3 in
form and substance reasonably acceptable to the Company (it being understood
that the foregoing condition is solely for the benefit of the Company and may be
waived by the Company in writing in its sole discretion without notice,
liability or obligation to any Person).
9.2. CONDITIONS TO OBLIGATIONS OF THE BUYERS. The obligations of the Buyers
to consummate the transactions contemplated hereby shall be subject to the
Parent's receipt of all closing deliverables as set forth in SECTION 3.2 in form
and substance reasonably acceptable to the Parent (it being understood that each
such condition is solely for the benefit of the Buyers and may be waived by
Parent in writing in its sole discretion without notice, liability or obligation
to any Person).
10. SURVIVAL
10.1. SURVIVAL. The respective representations and warranties of the
Company, Parent and Buyers contained in this Agreement will survive the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the Closing Date and will continue in full force and
effect until the first anniversary of the Closing Date (the "SURVIVAL DATE") and
then terminate and expire; PROVIDED, HOWEVER, that the right to indemnification
in respect of a specific claim shall not terminate if written notice of such
claim was delivered in accordance with the terms of SECTIONS 11.2 and 12.4 prior
to the Survival Date.
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11. INDEMNIFICATION
11.1. INDEMNIFICATION BY THE COMPANY. Subject to SECTION 11.4, to the
extent a valid claim is submitted pursuant to SECTION 11.2 after the Closing but
prior to the Survival Date, the Company shall indemnify, defend and hold
harmless the Buyers and their Affiliates (including the Acquired Companies) and
their respective employees, directors and officers (collectively, the "PARENT
GROUP") from and against, and pay or reimburse, as the case may be, the Parent
Group for, any and all Damages actually paid, incurred or sustained by Parent or
any other member of the Parent Group to the extent caused by:
11.1.1. any breach of any representation or warranty made by the
Company in any Transaction Document;
11.1.2. any breach or violation of any covenant or agreement by the
Company contained in any Transaction Document; and
11.1.3. any and all liability for Taxes of the Acquired Companies (or
of the Company to the extent included as a Transferred Liability)
attributable or allocable to any Pre-Closing Tax Period (except to the
extent accrued in the Net Working Capital).
11.2. INDEMNIFICATION FROM ESCROW PROCEDURE.
Any claims of the Parent Group pursuant to SECTION 11.1 shall be made
in accordance with the following procedures.
11.2.1. If any member of the Parent Group determines in good faith
that it is entitled to indemnification for Damages actually paid, incurred
or sustained or reasonably determined by Parent that will be paid, incurred
or sustained, from the Company pursuant to SECTION 11.1, Parent may give to
the Company and the Escrow Agent a written notice with respect thereto (a
"NOTICE OF CLAIM") setting forth in reasonable detail the basis for such
claim, and specifying the amount of Damages claimed (which, if not finally
determined, may be a good faith estimate thereof) (the amount of Damages so
claimed being hereinafter referred to as the "INDEMNITY CLAIM AMOUNT").
11.2.2. The Company shall use commercially reasonable efforts to
respond within 30 days after delivery of any Notice of Claim, and as
applicable, acknowledge or object to such Notice of Claim and any Indemnity
Claim Amount set forth in such Notice of Claim by delivery to Parent and
the Escrow Agent of written notice of such dispute (a "DISPUTE NOTICE"),
setting forth if such information is available to the Company in reasonable
detail the basis for such dispute and the amount of the Indemnity Claim
Amount which the Company objects to being claimed by Parent in respect of
the Notice of Claim.
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11.2.3. Upon a joint written notice of release executed by both the
Company and Parent (a "JOINT RELEASE"), the Escrow Agent will be authorized
to disburse to Parent Escrow Funds with a value equal to the Indemnity
Claim Amount specified in such Notice of Claim within three Business Days
after receipt of such Joint Release. The Escrow Agent will not be
authorized to disburse Escrow Funds in respect of any Indemnity Claim
Amount unless it has received either a Joint Release directing the Escrow
Agent to deliver Escrow Funds in an amount equal to all or any portion of
such funds and setting forth instructions as to payment, which Joint
Release Parent and the Company agree to deliver to the Escrow Agent
promptly following resolution of such Notice of Claim, or a final order by
a court of competent jurisdiction, which order is not subject to appeal (a
"FINAL ORDER"), directing the Escrow Agent to disburse to Parent and/or the
Company, as the case may be, Escrow Funds in such amount as set forth in
such Final Order.
11.3. PROCEDURES FOR INDEMNIFICATION.
11.3.1. If a claim or demand is made against any member of the Parent
Group (each an "INDEMNITEE"), or an Indemnitee shall otherwise learn of an
assertion, by any Person who is not a party to this Agreement (and who is
not an Affiliate of a party to this Agreement) (a "THIRD PARTY CLAIM") as
to which a party (the "INDEMNIFYING PARTY") may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee will notify the
Indemnifying Party in writing, and in reasonable detail, of the Third Party
Claim reasonably promptly after becoming aware of such Third Party Claim;
PROVIDED, HOWEVER, that failure to give any such notification will not
affect the indemnification provided hereunder except to the extent (i) that
the Indemnifying Party it has been actually and materially prejudiced as a
result of such failure or (ii) such claim is submitted after the Survival
Date.
11.3.2. If a Third Party Claim is made against an Indemnitee and the
Indemnifying Party agrees in writing to indemnify the Indemnitee therefor,
the Indemnifying Party will be entitled to assume the defense thereof (at
the expense of the Indemnifying Party) with counsel selected by the
Indemnifying Party and reasonably satisfactory to the Indemnitee. Should
the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party will not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof as long as the Indemnifying Party
diligently conducts such defense; PROVIDED that, if (i) in any Indemnitee's
reasonable judgment a conflict of interest exists in respect of such claim
or (ii) any Indemnifying Party fails to provide reasonable assurance to the
Indemnitee (upon request of the Indemnitee) of such Indemnifying Party's
financial capacity to defend such Third Party Claim and provide
indemnification with respect thereto, such Indemnitee will have the right
to employ separate counsel to represent such Indemnitee and in that event
the reasonable fees and expenses of such separate counsel will be paid by
such Indemnifying Party (provided, that if the Indemnifying Party is the
Company, and such payments shall be limited to and disbursed from the
Escrow Funds). If the Indemnifying Party assumes the defense of any such
Third Party Claim, the Indemnitee will have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Party. The Indemnifying Party will
be liable for the reasonable and documented fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof. If the Indemnifying Party
assumes the defense of any such Third Party Claim, the Indemnifying Party
will promptly supply to the Indemnitee copies of all correspondence
relating to or in connection with such Third Party Claim and keep the
Indemnitee fully informed of all material developments relating to or in
connection with such Third Party Claim (including, without limitation,
providing to the Indemnitee on request updates and summaries as to the
status thereof). If the Indemnifying Party chooses to defend a Third Party
Claim, the Indemnitee will reasonably cooperate with the Indemnifying Party
in the defense thereof if requested by the Indemnifying Party (such
cooperation to be at the expense, including reasonable legal fees and
expenses, of the Indemnifying Party).
50
11.3.3. No Indemnifying Party will consent to any settlement,
compromise or discharge (including the consent to entry of any judgment) of
any Third Party Claim without the Indemnitee's prior written consent, which
will not be unreasonably withheld; PROVIDED, that if the Indemnifying Party
agrees to indemnify the Indemnitee for a Third Party Claim, the Indemnitee
will agree to any settlement, compromise or discharge of such Third Party
Claim which unconditionally and irrevocably releases the Indemnitee
(pursuant to a release which is reasonably satisfactory to the Indemnitee)
completely from all Liability in connection with such Third Party Claim;
PROVIDED, HOWEVER, that the Indemnitee's prior written consent (not to be
unreasonably withheld, delayed or conditioned) is required for any such
settlement, compromise or discharge that provides for injunctive or other
non-monetary relief affecting the Indemnitee. The Indemnitee will not
(unless required by Law) admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying
Party's prior written consent (which consent will not be unreasonably
withheld).
11.3.4. Any claim on account of Damages which does not involve a Third
Party Claim shall be asserted by written notice given by the Indemnitee to
the Indemnifying Party from whom such indemnification is sought. The
failure by any Indemnitee so to notify the Indemnifying Party will not
relieve the Indemnifying Party from any liability which it may have to such
Indemnitee under this Agreement, except to the extent (i) that the
Indemnifying Party shall have been actually prejudiced as a result of such
failure or (ii) such claim is submitted after the Survival Date. The
Indemnifying Party and the Indemnitee will proceed in good faith to
negotiate a resolution of any such claim and, if not resolved through
negotiations by the 30th day after notice of such claim was given to the
Indemnifying Party, the Indemnifying Party and the Indemnitee will be free
to pursue such remedies as may be available under this Agreement.
51
11.4. CERTAIN RIGHTS AND LIMITATIONS.
11.4.1. Excluding with respect to claims for fraud, no monetary amount
shall be payable by the Company to any member of the Parent Group with
respect to the indemnification of any claims pursuant to SECTION 11.1,
until the aggregate amount of Damages actually incurred by the Parent Group
with respect to such claims exceeds $1,000,000 (the "DEDUCTIBLE") in the
aggregate, after which point the Parent Group shall be entitled to
indemnity for Damages in excess of $500,000. In no event shall Damages
relating to any single claim for indemnification pursuant to Section 11.1
constitute Damages, and therefore shall not be applied toward the
Deductible to be indemnifiable hereunder, unless such Damages relating to
any single claim for indemnification pursuant to SECTION 11.1 exceed
$50,000.
11.4.2. The amount of Damages for which indemnification is provided
under this Agreement will be reduced to take account of any Tax benefit
realized by the Indemnitee arising from the incurrence or payment of any
such Damages. In computing the amount of any such Tax benefit, the
Indemnitee will be deemed to be subject to the applicable Federal, state,
local and/or local country income Taxes at the maximum statutory rate then
in effect. Any indemnity payment made pursuant to this Agreement will be
treated as an adjustment to the purchase price for Tax purposes.
11.4.3. Notwithstanding anything to the contrary in this Agreement,
except in the event of fraud or intentional misrepresentation, the maximum
aggregate Liability for Damages arising under SECTION 11.1 hereof shall be
limited to the Escrow Funds. Except with respect equitable relief for
post-closing covenants, the remedies set forth in SECTION 11 are intended
and shall be construed so as to be the sole and exclusive remedy after the
Closing which any member of the Parent Group may have arising out of or
related to this Agreement or the transactions contemplated herein.
11.4.4. Notwithstanding anything to the contrary contained in this
Agreement, no party to this Agreement shall be liable to another party to
this Agreement for punitive, indirect, or consequential damages hereunder.
11.4.5. The amount to which an Indemnitee may become entitled under
this SECTION 11 shall be net of any amounts actually recovered by an
Indemnitee under or pursuant to any insurance policy, indemnity,
reimbursement arrangement or contract with respect to the claim giving
raise to such entitlement (an "ALTERNATIVE ARRANGEMENT"). To the extent
that an Alternative Arrangement is available to any Indemnitee to cover any
item for which indemnification may be sought hereunder, Indemnitee will use
its reasonable efforts consistent with available resources to pursue
recovery under such Alternative Arrangements. To the extent an Indemnitee
is paid by the Indemnifying Party any amount of any claim hereunder,
Indemnitee will assign to the Indemnifying Party, to the fullest extent
allowable, its claim under such Alternative Arrangement, or in the event
assignment is not permissible, but Indemnitee in question is nonetheless
permitted to pursue such claim on the Indemnifying Party's behalf,
Indemnitee shall pursue, such claim, at the Indemnifying Party's reasonable
direction, with any recovery thereon to be transmitted promptly to the
Indemnifying Party.
52
11.4.6. If a claim is made by any Tax authority which, if successful,
is likely to result in an indemnity payment to any member of the Parent
Group pursuant to SECTION 11.1, Parent shall notify the Company of such
claim (a "TAX CLAIM"), stating the nature and basis of such claim and the
amount thereof, to the extent known. Failure to give such notice shall not
relieve the Company from any liability which it may have on account of this
indemnification, except to the extent that the Company is prejudiced
thereby. The Company shall have the right, at its option, to control the
defense of such Tax Claim and to employ counsel of its choice. Parent shall
cooperate with the Company in contesting any such Tax Claim, which
cooperation shall include the retention and, upon the Company's request,
the provision of records and information which are reasonably relevant to
such Tax Claim and making employees available on a mutually convenient
basis to provide additional information or explanation of any material
provided hereunder. The Company's right to control a Tax Claim will be
limited to amounts in dispute which would be paid by the Company or for
which the Company would be liable pursuant to SECTION 11.1. Without the
prior written consent of the Company, no member of the Parent Group shall
file an amended Tax Return to the extent that such amended Tax Return could
result in an indemnity payment to any member of the Parent Group pursuant
to SECTION 11.1.
11.5. STRADDLE PERIOD TAXES. In the case of any Straddle Period, the amount
of any Taxes based on or measured by income or receipts of each of the Company
and the Acquired Companies for the Pre-Closing Tax Period shall be determined
based on an interim closing of the books as of the close of business on the
Closing Date (and for such purpose, the taxable period of any partnership or
other pass-through entity in which the Company and the Acquired Companies hold a
beneficial interest shall be deemed to terminate at the close of business on the
Closing Date) and the amount of other Taxes of the Company and the Acquired
Companies for a Straddle Period that relates to the Pre-Closing Tax Period shall
be deemed to be the amount of such Tax for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the taxable period
through the Closing Date and the denominator of which is the number of days in
such Straddle Period. The Buyers (and the Acquired Companies) shall be
responsible for all Tax Returns relating to the Acquired Companies that need to
be filed at any time following the Closing, except for consolidated Tax Returns
of the Company and the Acquired Companies for the period up to the Closing Date,
which will be filed by the Company. The Buyers shall allow the Company to
review, comment upon and reasonably approve without undue delay any Tax Return
related to a Straddle Period or a Pre-Closing Tax Period which is filed after
the Closing Date and with respect to which an indemnification claim pursuant to
SECTION 11.1 could be made prior to its filing date, and the Company shall allow
Parent to review, comment upon and reasonably approve without undue delay any
consolidated Tax Return of the Company and the Acquired Companies for the period
up to the Closing Date, prior to its filing date.
11.6. EXCLUDED SUBSIDIARIES. Notwithstanding anything to the contrary, the
Excluded Subsidiaries shall remain solely responsible and liable for, and shall
indemnify and hold the Parent Group harmless from, the Excluded Subsidiaries'
share (using separate company taxable income concepts similar to those of U.S.
Treasury Regulation Section 1.1502-12) of the federal income tax liability of
the U.S. consolidated tax group that includes the Company and the Excluded
Subsidiaries, and such indemnification shall not be subject to any limitations
provided under this SECTION 11. In the event that any claim or demand for
payment of any such Tax Liability is made against the Parent Group, then the
provisions of SECTION 11.4.6 above shall apply, mutatis mutandis.
53
12. GENERAL PROVISIONS
12.1. ASSIGNMENT. No party to this Agreement will convey, assign or
otherwise transfer any of its rights or obligations under any Transaction
Document without the prior written consent of Company (in the case of an
assignment by Parent or Acquiring Subsidiary) or of Parent (in the case of an
assignment by the Company). Any conveyance, assignment or transfer requiring the
prior written consent of the Company or Parent which is made without such
consent will be void ab initio. No assignment of this Agreement will relieve the
assigning party of its obligations hereunder.
12.2. PARTIES IN INTEREST. This Agreement is binding upon and is for the
benefit of the parties hereto and their respective successors and permitted
assigns. Subject to SECTION 2.4, SECTION 7.8 and SECTION 8, this Agreement is
not made for the benefit of any Person not a party hereto, and no Person other
than the parties hereto or their respective successors and permitted assigns
will acquire or have any benefit, right, remedy or claim under or by reason of
this Agreement, except that members of the Parent Group will be entitled to the
rights to indemnification provided to the Parent Group hereunder.
12.3. FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, all costs and expenses (including all fees and disbursements of
counsel, financial advisors and accountants) incurred in connection with the
negotiation and preparation of this Agreement, the performance of the terms of
this Agreement and the consummation of the transactions contemplated by this
Agreement, shall be paid by the respective party incurring such costs and
expenses, whether or not the Closing shall have occurred; PROVIDED, HOWEVER,
that (subject to the provisions of SECTION 2.4), the Tax Planning Expenses shall
be paid by Parent. Without derogating from the generality of foregoing, the
Company shall pay directly (not through the Acquired Subsidiaries) all
Transaction Expenses prior to the Closing, and to the extent any such
Transaction Expense is not fully paid for prior to the Closing or deducted from
the Base Purchase Price, it shall remain a liability of the Company and not
transferred as part of the Transferred Liabilities.
12.4. NOTICES. All notices, requests, claims, demands and other
communications required or permitted to be given under any Transaction Document
shall be in writing and will be delivered by hand or telecopied or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service or fax or by email, and will be deemed given when so delivered by hand
or telecopied, or five Business Days after being so mailed (three Business Day
in the case of overnight courier service) or upon confirmation of successful
transmission if sent by facsimile (provided that if given by facsimile such
notice, request, instruction or other document shall be followed up within one
(1) Business Day by dispatch pursuant to one of the other methods described
herein), or in the case of a notice sent by email to the email address set forth
below (if any), on the next Business Day after transmission. In the event that
notices are given pursuant to one of the methods listed above, a copy of the
notice should also be sent by email All such notices, requests, claims, demands
and other communications will be addressed as set forth below, or pursuant to
such other instructions as may be designated in writing by the party to receive
such notice in accordance with this SECTION 12.4:
54
If to the Company:
Alert Global Media, Inc.
Brickell Bayview Center
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: ▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If to the Buyers:
Nice Systems Ltd.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.▇▇▇ ▇▇▇
▇▇'▇▇▇▇▇ ▇▇▇▇▇
Tel: ▇▇▇▇-▇-▇▇▇▇▇▇▇
Fax: ▇▇▇▇-▇-▇-▇▇▇▇▇▇▇
Attn.: Yechiam ▇▇▇▇▇, General Counsel
With a copy to:
Meitar, Liquornik, Geva & Leshem, ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
Fax: ▇▇▇▇-▇-▇▇▇-▇▇▇▇
Email: ▇▇▇@▇▇▇▇▇▇.▇▇▇
12.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, the other
Transaction Documents and the Confidentiality Agreement collectively represent
the entire understanding and agreement between the parties hereto with respect
to the subject matter hereof, supersede all prior negotiations, agreements and
understandings of the parties of any nature, whether oral or written, relating
thereto and can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. Except as otherwise provided herein, all remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
55
12.6. SEVERABILITY. If any provision of any Transaction Document or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions thereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
12.7. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the internal Laws of the State of New York applicable to
contracts made and to be performed entirely within such State, without regard to
the conflicts of law principles of such State.
12.8. JURISDICTION, SERVICE OF PROCESS. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the applicable federal and
state courts located in the City of New York, New York, for the purposes of any
suit, action or other proceeding arising out of this Agreement. Each of the
parties hereto further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth in
SECTION 12.4 shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
the parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in such courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Notwithstanding the foregoing, this
SECTION 12.8 shall not apply to any dispute under SECTION 2.3 that is required
to be decided by the Audit Firm.
12.9. WAIVER OF JURY TRIAL. IN ANY ACTION OR PROCEEDING ARISING HEREFROM,
THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ITS SUCCESSORS AGAINST ANY OTHER
PARTY HERETO OR ITS SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
56
12.10. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.
12.11. SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of any
Transaction Document, the party or parties who are or are to be thereby
aggrieved will have the right of specific performance and injunctive relief
giving effect to its or their rights under such Transaction Document, in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies will be cumulative. The parties agree that any such
breach or threatened breach would cause irreparable injury, that the remedies at
law for any such breach or threatened breach, including monetary damages, are
inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
12.12. CONSTRUCTION; INTERPRETATION. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
57
[SHARE PURCHASE AND SALE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
FORTENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
SOLELY FOR THE PURPOSES OF SECTION 11.6:
AGM ACQUISITION CORP. ALERT GLOBAL MEDIA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President Title: President
ASSOCIATION OF CERTIFIED ANTI-MONEY LAUNDERING SPECIALISTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
NICE SYSTEMS LTD. NICE CTI SYSTEMS UK LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------ ---------------- ------------------ ----------------
Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO CFO Title: CEO CFO
NICE SYSTEMS LATIN AMERICA, INC. ACTIMIZE JAPAN KK
By: /s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------ ---------------- ------------------ ----------------
Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO CFO Title: CEO CFO
