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EXHIBIT 2.1
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SHARE PURCHASE AGREEMENT
BY AND AMONG
BINDVIEW DEVELOPMENT CORPORATION,
NETECT LTD.,
HOLDERS OF ALL OF THE OUTSTANDING
SHARE CAPITAL AND OF RIGHTS TO ACQUIRE
SHARE CAPITAL OF NETECT LTD.
AND
XXXX X. XXXXXXX, AS SHAREHOLDERS' REPRESENTATIVE
DATED JANUARY 29, 1999
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.......................................................................2
ARTICLE II
PURCHASE AND SALE OF NETECT SHARES...............................................10
2.1 The Exchange............................................................10
2.2 Closing of Netect's Transfer Books......................................11
2.3 Shareholders' Representative............................................11
ARTICLE III
CLOSING..........................................................................12
3.1 Closing.................................................................12
3.2 Closing Obligations.....................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NETECT AND THE SHAREHOLDERS....................15
4.1 Organization and Good Standing..........................................15
4.2 Authority; No Conflict..................................................16
4.3 Capitalization..........................................................17
4.4 Financial Statements....................................................17
4.5 Books and Records.......................................................18
4.6 Title to Properties; Encumbrances. ............................18
4.7 Condition and Sufficiency of Assets.....................................18
4.8 Accounts Receivable.....................................................19
4.9 No Material Undisclosed Liabilities.....................................19
4.10 Taxes. ...............................................................19
4.11 No Material Adverse Change..............................................20
4.12 Employee Benefits.......................................................20
4.13 Compliance with Legal Requirements; Governmental Authorizations.........24
4.14 No Legal Proceedings; No Orders.........................................25
4.15 Absence of Certain Changes and Events...................................25
4.16 Contracts; No Defaults..................................................25
4.17 Software................................................................27
4.18 Insurance...............................................................30
4.19 Employees...............................................................31
4.20 Labor Relations; Compliance.............................................31
4.21 Intellectual Property...................................................32
4.22 Absence of Certain Payments and Transactions............................34
4.23 Full Disclosure.........................................................34
4.24 No Brokers or Finders...................................................34
4.25 Year 2000 Compliance....................................................34
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4.26 Relationships with Related Persons......................................35
4.27 Share Ownership.........................................................35
4.28 Securities Law Matters..................................................36
4.29 Shareholder Authority; No Conflict......................................38
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BINDVIEW.......................................39
5.1 Organization and Good Standing..........................................39
5.2 Authority; No Conflict..................................................39
5.3 No Proceedings..........................................................40
5.4 No Brokers or Finders...................................................40
5.5 BindView Capitalization.................................................40
5.6 BindView SEC Reports....................................................41
5.7 No Material Adverse Change..............................................41
5.8 Compliance with Laws....................................................41
5.9 Properties..............................................................41
5.10 No Brokers or Finders...................................................42
ARTICLE VI
COVENANTS OF NETECT AND THE SHAREHOLDERS.........................................42
6.1 Access and Investigation................................................42
6.2 Operation of the Businesses of Netect...................................42
6.3 Negative Covenants......................................................43
6.4 Required Approvals......................................................43
6.5 Notification............................................................43
6.6 Payment of Indebtedness by Related Persons..............................44
6.7 No Negotiation..........................................................44
6.8 Commercially Reasonable Efforts.........................................44
6.9 Lock-up.................................................................44
6.10 Nontaxable Reorganization...............................................44
ARTICLE VII
COVENANTS OF BINDVIEW............................................................44
7.1 Approvals of Governmental Bodies........................................44
7.2 Commercially Reasonable Efforts.........................................45
7.3 [Reserved]..............................................................45
7.4 Notification............................................................45
7.5 Pooling Treatment.......................................................45
7.6 Indemnification of Company Officers and Directors; Insurance............45
7.7 Stock Options...........................................................45
7.8 Nontaxable Reorganization...............................................46
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ARTICLE VIII
CONDITIONS PRECEDENT TO NETECT'S AND THE SHAREHOLDERS'
OBLIGATION TO CLOSE..............................................................46
8.1 Accuracy of Representations.............................................46
8.2 BindView's Performance..................................................47
8.3 Consents................................................................47
8.4 No Proceedings..........................................................47
8.5 Indemnity Escrow Agreement..............................................47
8.6. Closing Certificate.....................................................47
8.7 Pooling Opinion.........................................................47
8.8 Nasdaq Listing..........................................................47
8.9 Affiliate Letters.......................................................47
ARTICLE IX
CONDITIONS PRECEDENT TO BINDVIEW'S OBLIGATION TO CLOSE...........................48
9.1 Accuracy of Representations.............................................48
9.2 Netect's and the Shareholders' Performance..............................48
9.3 Consents................................................................48
9.4 [Reserved]..............................................................48
9.5 No Proceedings..........................................................48
9.6 No Claim Regarding Stock Ownership or Sale Proceeds.....................48
9.7 Waivers.................................................................49
9.8 Pooling Opinion.........................................................49
9.9 No Material Adverse Change..............................................49
9.10 Indemnity Escrow Agreement..............................................49
9.11 Transaction Expenses; Severance Costs; Debt.............................49
9.12. Closing Certificate.....................................................49
9.13 Shareholder Releases....................................................50
9.14 Compiling Software......................................................50
ARTICLE X
TERMINATION......................................................................50
10.1 Termination Events......................................................50
10.2 Effect of Termination...................................................50
ARTICLE XI
INDEMNIFICATION; REMEDIES........................................................51
11.1 Survival; Right to Indemnification Not Affected by Knowledge............51
11.2 Indemnification and Payment of Damages by Netect and the Shareholders...51
11.3 Indemnification and Payment of Damages by BindView......................52
11.4 Time Limitations........................................................52
11.5 Limitations on Amount - The Shareholders................................53
11.6 Limitations on Amount - BindView........................................53
11.7 Indemnity Escrow........................................................53
11.8 Procedure for Indemnification - Third Party Claims......................53
11.9 Procedure for Indemnification - Other Claims............................54
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ARTICLE XII
GENERAL PROVISIONS...............................................................55
12.1 Expenses................................................................55
12.2 Public Announcements....................................................55
12.3 Confidentiality.........................................................55
12.4 Notices.................................................................56
12.5 Jurisdiction; Service of Process........................................56
12.6 Further Assurances......................................................57
12.7 Waiver..................................................................57
12.8 Entire Agreement and Modification.......................................57
12.9 Disclosure Letter.......................................................57
12.10 Assignments, Successors and No Third-party Rights.......................57
12.11 Severability............................................................57
12.12 Section Headings, Construction..........................................58
12.13 Time of Essence.........................................................58
12.14 Governing Law...........................................................58
12.15 Counterparts............................................................58
12.16 Amendment of Disclosure Letter..........................................58
Exhibits
Exhibit A Form of Employment Agreement
Exhibit A-1 List of Selected Employees
Exhibit B Form of Indemnity Escrow Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Shareholder Release
Exhibit E Form of Non-competition Agreement
Exhibit E-1 Form of Non-competition Covenantors
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered into
this 29th day of January, 1999, by and among BINDVIEW DEVELOPMENT CORPORATION, a
Texas corporation ("BindView"), NETECT LTD., an Israeli corporation ("Netect"),
the individuals and entities set forth on the signature pages hereto and
identified as owners of all of the outstanding share capital of Netect or of
rights to acquire share capital of Netect (the "Shareholders"), and Xxxx X.
Xxxxxxx, as representative of the Shareholders (the "Shareholders'
Representative").
W I T N E S S E T H:
WHEREAS, BindView desires to acquire Netect in the manner provided in this
Agreement;
WHEREAS, BindView, Netect and the Shareholders believe that the acquisition
by BindView of all of the outstanding share capital of Netect, in the manner
provided by and subject to the terms and conditions set forth in this Agreement
and all exhibits, schedules and supplements hereto, is desirable and in their
respective best interests;
WHEREAS, BindView, Netect and the Shareholders intend that the Contemplated
Transactions will be treated as a "pooling of interests" for accounting purposes
and a nontaxable transaction under Section 368(a)(1)(B) of the IRC;
WHEREAS, the Boards of Directors of BindView and Netect have each approved
the Contemplated Transactions, pursuant to the terms and subject to the
conditions of this Agreement, whereby Shareholders will exchange their Netect
Shares and Options for shares of and options exercisable for shares of BindView
Common Stock; and
WHEREAS, BindView, Netect and the Shareholders desire to make certain
representations, warranties and agreements in connection with the Contemplated
Transactions;
WHEREAS, BindView, Netect and the Shareholders intend that (i) the
Contemplated Transactions will be recorded for accounting purposes as a pooling
of interests under United States generally accepted accounting principles and
(ii) the exchange of Netect Shares for BindView Common Stock will be treated as
a transaction described in Section 368(a)(1)(B) of the IRC.
NOW, THEREFORE, in consideration of the mutual benefits to be derived and
the representations and warranties, conditions, covenants and promises herein
contained, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"APPLICABLE CONTRACT" means any Contract (i) under which Netect or any of
its Subsidiaries has or may acquire any rights, (ii) under which Netect or any
of its Subsidiaries has or may become subject to any obligation or liability or
(iii) by which Netect or any of its Subsidiaries or any of the Assets owned or
used by them is or may become bound.
"ASSETS" means all assets and property, whether real, personal or mixed,
tangible or intangible.
"BALANCE SHEETS" has the meaning given to that term in Section 4.4.
"BINDVIEW COMMON STOCK" means the common stock of BindView, no par value
per share.
"BINDVIEW INTELLECTUAL PROPERTY ASSETS" means all right, title and
interest, anywhere in the world, in and to any of the following things that are
associated with the software of BindView or with the licensing or distribution
of software by BindView or any of its Subsidiaries:
(i) the name "BindView Development Corporation", and all fictional
business names, trading names, registered and unregistered domain names,
trademarks, service marks and registration applications for the same;
(ii) all issued patents, pending or unfiled patent applications and
inventions and discoveries that may be patentable;
(iii) all copyrights or copyright registrations in both published
works and unpublished works;
(iv) all rights in mask works; and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings and blue prints owned, used or licensed by BindView as
licensee or licensor.
"BINDVIEW SEC REPORTS" has the meaning given to that term in Section
4.28.3.1.
"BREACH" means a "Breach" of a representation, warranty, covenant,
obligation or other provision of this Agreement or any instrument delivered
pursuant to this Agreement; a Breach will be deemed to have occurred if there is
or has been any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation or other provision.
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"BUSINESS DAYS" means any day other than Saturday, Sunday or a day on which
commercial banks in Houston, Texas, Boston, Massachusetts or Tel Aviv, Israel
are authorized or required by law to close.
"CLOSING" means the consummation of the Contemplated Transactions.
"CLOSING DATE" means the date and time as of which the Closing actually
takes place.
"CONSENT" means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" means all of the following transactions
contemplated by this Agreement:
(i) the acquisition by BindView of all of the outstanding Netect
Shares and the Options, other than Options under the Netect Option Plans,
which will be converted into options for BindView Common Stock pursuant to
Section 7.7;
(ii) the exchange by Shareholders of their Netect Shares and
Options for shares of and options exercisable for shares of BindView Common
Stock;
(iii) the execution and delivery of the Indemnity Escrow Agreement,
the Registration Rights Agreement, the Non-competition Agreements and the
Employment Agreements; and
(iv) the performance by BindView, Netect and the Shareholders of
their respective covenants and obligations under this Agreement prior to
Closing.
"CONTRACT" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DEFINED BENEFIT PENSION PLAN" has the meaning given in ERISA
Section 3(35).
"DISCLOSURE LETTER" means the disclosure letter dated the date of this
Agreement and delivered by Netect and the Shareholders to BindView, which
Disclosure Letter is incorporated into and is a part of this Agreement.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"EMPLOYMENT AGREEMENTS" means those certain agreements in the form of
Exhibit A attached hereto dated as of the Closing Date, by and among BindView
and each of the Selected Employees.
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"ENCUMBRANCE" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"ERISA" means the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to such Act or any
successor law.
"ERISA AFFILIATE" means, with respect to Netect, any other Person that,
together with Netect, would be, or at anytime within the last six years was
treated as a single employer under IRC Section 414 or Section 4001 of ERISA.
"ESCROW SHARES" has the meaning set forth in Section 2.1.3.
"ESTIMATED TRANSACTION EXPENSES" means an amount as set forth on Schedule
9.11 hereto.
"EXCHANGE" means (i) the acquisition by BindView of all of the outstanding
Netect Shares and the Options (other than Options under the Netect Option
Plans), (ii) the conversion of Options under the Netect Option Plans into
options for BindView Common Stock pursuant to Section 7.7, and (iii) the
exchange by the Shareholders of their Netect Shares and Options for shares of
and options exercisable for shares of BindView Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor law, and regulations and rules issued pursuant to such act or any
successor law.
"FACILITIES" means any real property currently owned or leased by Netect
and any buildings, structures or fixtures currently owned or leased by Netect.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"GAAP" means generally accepted accounting principles consistently applied
within the United States.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license, permit,
waiver or other authorization issued, granted, given or otherwise made available
by or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY" means any:
(i) nation, state, county, city, town, municipality or other
jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign or other government;
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(iii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or entity
and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
"INDEMNIFIED PERSONS" has the meaning set forth in Section 11.2.
"INDEMNITY ESCROW AGENT" means Southwest Bank of Texas, N.A. or any
successor appointed pursuant to and in accordance with the Indemnity Escrow
Agreement.
"INDEMNITY ESCROW AGREEMENT" means that certain agreement in the form of
Exhibit B attached hereto to be dated as of the Closing Date, by and among
BindView, the Shareholders, the Shareholders' Representative and the Indemnity
Escrow Agent.
"IRC" means the United States Internal Revenue Code of 1986, as amended, or
any successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.
"IRS" means the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"ISRAELI GAAP" means generally accepted accounting principles consistently
applied within Israel.
"KNOWLEDGE" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(i) such individual is actually aware of such fact or other
matter; or
(ii) a prudent individual could be expected to discover such fact
or other matter in the course of conducting a "reasonable investigation"
concerning the existence of such fact or other matter. "Reasonable
investigation" shall mean direct verbal or written inquiries of the
management team or executive or other Person responsible for the oversight
or management of the fact or matter in question.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as an officer
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter. For purposes of this definition, the "officers" of
Netect are Xxxx X. Xxxxxxx (President and CEO), Xxx Xxxxxxxxxxx (Chief Financial
Officer) Xxxx Xxxx (Vice President) and Xxxx Xxxxxxx (Vice President). For
purposes of this definition, the "officers" of BindView are Xxxx X. Xxxxxxx
(Chairman, President and CEO) and Xxxxx X. Xxxxxxxxxx (Vice President and CFO).
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"LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty.
"MATERIAL ADVERSE EFFECT" means any change in or effect on the referenced
entity that is or is reasonably expected to be materially adverse to any of the
financial condition, results of operations, businesses, assets or liabilities of
such entity, taken as a whole, it being understood that none of the following
shall be deemed by itself or by themselves, either alone or in combination with
any other change or effect, to constitute a Material Adverse Effect: (a)
conditions affecting the computer software industry or the computer security
market as a whole, (b) conditions affecting the U.S. economy, the Israeli
economy or the world economy as a whole, (c) any effect arising primarily out of
or resulting primarily from actions contemplated by the parties in connection
with, or which is primarily attributable to, the announcement of this Agreement
and the transactions contemplated hereby or (d) with respect to Netect, any
action or event permitted in Article VI hereof, or the results of any action
taken or not taken after the date hereof and on or before the Closing Date after
consultation with and with the prior approval of BindView.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"NASDAQ" means the Nasdaq National Market.
"NETECT INTELLECTUAL PROPERTY ASSETS" has the meaning given to that term in
Section 4.21.
"NETECT OTHER BENEFIT OBLIGATION" means an Other Benefit Obligation owed,
adopted or followed by Netect or an ERISA Affiliate.
"NETECT OPTION PLANS" means the Section 102 Employee Option Plan and the
1998 International Employee Stock Plan of Netect.
"NETECT PLANS" means all Plans (i) of which Netect or an ERISA Affiliate is
or was a Plan Sponsor at any time within the six-year period preceding the date
of this Agreement, (ii) to which Netect or an ERISA Affiliate otherwise
contributes or has contributed at any time within the six-year period preceding
the date of this Agreement or (iii) in which Netect or an ERISA Affiliate
otherwise participates or has participated at any time within the six-year
period preceding the date of this Agreement. All references to Plans are to
Netect Plans unless the context requires otherwise.
"NETECT SHARES" means the share capital of Netect, including ordinary and
preferred shares.
"NETECT VEBA" means a VEBA whose members include employees of Netect or any
ERISA Affiliate.
"NON-COMPETITION AGREEMENT" means one of those certain Non-competition
Agreements in the form attached as Exhibit E to be signed by the individuals
listed on Exhibit E-1.
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"OPTIONS" means any and all options, warrants, rights to purchase or calls
on Netect Shares or any other securities convertible into or exchangeable or
redeemable for Netect Shares (including any lien or charge on unissued share
capital).
"ORDER" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator, other
than any orders of any Governmental Body of or within Israel which are
incorporated into a law or regulation of general applicability.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(i) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(ii) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority).
"ORGANIZATIONAL DOCUMENTS" means (i) the articles or certificate of
incorporation and the bylaws (or analogous charter documents) of a corporation
or the articles of association and the memorandum of association of any Israeli
corporation, (ii) the partnership agreement and any statement of partnership of
a general partnership, (iii) the limited partnership agreement and the
certificate of limited partnership of a limited partnership, (iv) the
certificate of formation and the operating or members' agreement (or their
substantial equivalents) of a limited liability company, (v) any charter or
similar document adopted or filed in connection with the creation, formation or
organization of a Person, (vi) any shareholder agreements or share purchase
agreements relating to the securities of the Person in question and (vii) any
amendment to any of the foregoing.
"OTHER BENEFIT OBLIGATIONS" means all obligations, arrangements or
customary practices to provide benefits, other than salary, as compensation for
services rendered, to present or former directors, employees or agents, other
than obligations, arrangements and practices that are Plans. Other Benefit
Obligations include consulting agreements under which the compensation paid does
not depend upon the amount of service rendered, sabbatical policies, severance
payment policies and fringe benefits within the meaning of IRC Section 132.
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
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"PLAN SPONSOR" has the meaning given in ERISA Section 3(16)(B).
"PROCEEDING" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"QUALIFIED PLAN" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"REGISTRATION RIGHTS AGREEMENT" means that certain agreement in the form of
Exhibit C attached hereto to be dated as of the Closing Date, by and among
BindView, the Shareholders' Representative and the Shareholders.
"RELATED PERSON" with respect to a particular individual means:
(i) each other member of such individual's Family (as defined
below);
(ii) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(iii) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest (as defined below); and
(iv) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity).
With respect to a specified Person other than an individual means:
(v) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(vi) any Person that holds a Material Interest in such specified
Person;
(vii) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar capacity);
(viii) any Person in which such specified Person holds a Material
Interest;
(ix) any Person which is a limited partnership with respect to
which such specified Person serves as a general partner (or in a similar
capacity); and
(x) any Related Person of any individual described in clause (vi)
or (vii).
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For purposes of this definition, (a) the "Family" of an individual includes
(1) the individual, (2) the individual's spouse and any former spouses, (3) any
other natural person who is related to the individual or the individual's spouse
within the second degree and (4) any other natural person who resides with such
individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing at least 10% of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.
"REPRESENTATIVE" with respect to a particular Person, means any director,
officer, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants and financial advisors.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECTION 102 EMPLOYEE OPTION PLAN" means Netect's Employee Share Option
Plan dated September 20, 1997, as amended.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to such act or any
successor law.
"SECURITIES LAWS" mean, collectively, the Securities Act and the Exchange
Act.
"SELECTED EMPLOYEES" means those employees of Netect listed in Exhibit A-1.
"SHAREHOLDER INDEMNIFIED PERSONS" has the meaning set forth in Section
11.3.
"SHAREHOLDERS' REPRESENTATIVE" means Xx. Xxxx X. Xxxxxxx or such other
Shareholder designated by the Shareholders pursuant to this Agreement or any
other document with a provision similar to Section 2.3, who is not a competitor
of BindView or an employee of any such competitor.
"SUBSIDIARY" with respect to any Person (the "Owner"), means any other
Person of which securities or other interests having the power to elect a
majority of that Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that Person
(other than securities or other interests having such power only upon the
happening of a contingency that has not occurred) are held by the Owner or one
or more of its Subsidiaries.
"TAX" and "TAXES" mean any and all income, profits, secondary, capital
duties, franchise, sales, value added, use, employment, payroll, transfer,
occupation, real property, personal property, severance, production, excise,
gross receipts, license, stamp, premium, customs, duties, capital stock,
windfall profit, environmental, withholding, social security (or similar),
unemployment, disability, registration, alternative or add-on minimum, estimated
or other taxes, assessments or duties of any kind whatsoever imposed by any
Governmental Body, together with any interest thereon, any
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penalties, additions to tax or additional amounts with respect thereto and any
interest in respect of such penalties, additions or additional amounts.
"TAX RETURN" means any return (including any information return), report,
statement, schedule, notice, form or other document or information filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection or payment of
any Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" means a claim, Proceeding, dispute, action or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing).
"TITLE IV PLANS" means all Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. Section 1301 et seq., other than Multiemployer Plans.
"TRANSACTION EXPENSES" mean fees and expenses paid or incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement and the Contemplated Transactions to agents, representatives,
investment advisors, counsel and accountants and any related opinions
(specifically excluding normal compensation and normal expenses of employees of
Netect). Without limiting the generality of the foregoing, Transaction Expenses
includes any employee bonuses not disclosed on the Disclosure Letter as of the
date hereof or the salary component of severance payments relating to the
Contemplated Transactions or resulting from a "change in control" of Netect.
"VEBA" means a voluntary employees' beneficiary association under IRC
Section 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
ARTICLE II
PURCHASE AND SALE OF NETECT SHARES
2.1 THE EXCHANGE.
2.1.1 Upon the terms and subject to the conditions of this
Agreement, each Shareholder agrees to tender all of such Shareholder's
Netect Shares and Options (other than Options under the Netect Option
Plans, which shall be governed by Section 7.7) to BindView at the
Closing in exchange for such Shareholder's portion of the
Consideration, as provided on Schedule II attached hereto.
2.1.2 Upon the terms and subject to the conditions of this
Agreement, BindView agrees to purchase at the Closing all of the
Netect Shares and all Options (other than Options under the Netect
Option Plans, which shall be governed by
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Section 7.7) in exchange for the Consideration, as provided on
Schedule II attached hereto.
2.1.3 Consideration. The Consideration to be paid to each
Shareholder shall be as set forth on Schedule II attached hereto and
shall equal 1,238,099 shares of BindView Common Stock in the aggregate
(subject to equitable adjustment in the event of any stock split,
stock dividend, combination or the like with respect to the BindView
Common Stock), provided that the number of shares indicated thereon
with respect to each Person as "Escrow Shares" shall be Escrow Shares
(the "Escrow Shares") under the Indemnity Escrow Agreement (all such
shares are collectively referred to as the "Consideration").
2.1.4 The Consideration delivered to the Indemnity Escrow Agent
pursuant to the Indemnity Escrow Agreement (i.e., the Escrow Shares)
shall consist of an aggregate of 105,841 shares of BindView Common
Stock (subject to reduction by not more than 30 shares to eliminate
fractional shares).
2.1.5 Each Shareholder hereby waives any and all rights of first
refusal and preemptive rights with respect to the sale and transfer of
the Netect Shares and Options to BindView hereunder.
2.2 CLOSING OF NETECT'S TRANSFER BOOKS. After the date hereof, no
Shareholder shall transfer any Netect Shares, except to effect record
transfers where benefitted ownership has previously been transferred, and
in any case no Netect Shares shall be transferred to any Person not a party
to this Agreement. No later than 15 days prior to the Closing Date, the
share transfer books of Netect shall be closed and no transfers of Netect
Shares (and no conversion or exercise of Options, including Netect
preferred shares but excluding conversion of debentures) shall be made
thereafter.
2.3 SHAREHOLDERS' REPRESENTATIVE. Each Shareholder agrees that Xxxx X.
Xxxxxxx is hereby appointed the "Shareholders' Representative" and in such
capacity shall have full power and authority to participate in and
represent the Shareholders and their successors and assigns with respect to
all matters arising under this Agreement, the Indemnity Escrow Agreement
and the Registration Rights Agreement, including but not limited to (i)
defend, compromise and settle, in his absolute discretion, on behalf of the
Shareholders all claims for indemnification made by BindView, its Related
Persons, officers, directors, employees, agents, shareholders and
controlling Persons and their respective successors and permitted assigns
under Article XI to the extent such indemnification is for a claim for
which the Shareholders are obligated, (ii) execute any and all documents,
certificates, instruments and agreements for and in the name of such
Shareholder in connection with the Contemplated Transactions, (iii) take
any and all actions on behalf of the Shareholders as may be necessary to
assert or defend the Shareholders' rights under such Agreements, and (iv)
interpret all of the terms and provisions of this Agreement, the Indemnity
Escrow Agreement and the Registration Rights Agreement. Each Shareholder
agrees to be bound by the actions of the Shareholders' Representative taken
pursuant to the powers and authority granted herein. Execution of this
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Agreement by the Shareholders constitutes an irrevocable appointment of Xxxx X.
Xxxxxxx as the Shareholders' Representative.
2.3.2 (i) The Shareholders' Representative shall not incur any
liability with respect to any action taken, not taken or suffered by
him in reliance upon any note, direction, instruction, consent,
statement or other document believed by him to be genuinely and duly
authorized, nor for other action or inaction as the Shareholders'
Representative, excepting only his own proven willful misconduct or
gross negligence. The Shareholders' Representative may, in all
questions arising hereunder or under the Indemnity Escrow Agreement or
the Registration Rights Agreement, rely on the advice of counsel and
for anything done, omitted or suffered in good faith by the
Shareholders' Representative based on such advice, the Shareholders'
Representative shall not be liable to anyone.
(ii) In the event of the death or permanent disability of the
Shareholders' Representative, or his resignation as the Shareholders'
Representative, a successor Shareholders' Representative shall be
elected by a majority vote of the Shareholders, with each Shareholder
to be given a vote equal to his proportionate percentage pursuant to a
procedure to be mutually agreed upon among the Shareholders. The
Shareholders shall cause to be delivered to BindView prompt written
notice of such election of a successor Shareholders' Representative,
signed by a majority in interest of the Shareholders. The Shareholders
holding a majority of the issued and outstanding shares of BindView
Common Stock originally issued as Consideration shall act as the
interim Shareholders' Representative until such election. Each interim
and successor Shareholders' Representative shall have all the power,
authority, rights, protections, and privileges conferred by this
Agreement upon the original Shareholders' Representative, and the term
"Shareholders' Representative" as used herein shall be deemed to
include any interim or successor Shareholders' Representative.
BindView shall be entitled to treat the Shareholders' Representative
(or any successor) as the Shareholders' Representative and to rely on
any action he may take until notified otherwise by a written document
signed by a majority in interest of the Shareholders.
(iii) Should the Shareholders' Representative be in doubt as to
what action to take under this Agreement, the Indemnity Escrow
Agreement or the Registration Rights Agreement, the Shareholders'
Representative shall have the right, but not the obligation, either to
(1) withhold any action, payment or distribution until his doubt is
resolved or (2) institute a petition for interpleader in any court of
competent jurisdiction to determine his rights and obligations.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing provided for in this Agreement will take
place at the offices of Fulbright & Xxxxxxxx L.L.P., 0000 XxXxxxxx,
Xxxxxxx, Xxxxx, at 10:00 a.m. (local time) within five Business Days of the
satisfaction of all conditions in Articles VIII and IV, but in any event
not later than March 1, 1999, or at such other time and place as BindView
and Netect may agree. Subject to
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the provisions of Article X, failure to consummate the Closing on the date
and time and at the place determined pursuant to this Section 3.1 will not
result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
3.2 CLOSING OBLIGATIONS. At the Closing:
3.2.1 Netect will deliver to BindView:
3.2.1.1 a certificate executed by an officer of Netect on
behalf of Netect as to the matters described in Section 9.12;
3.2.1.2 a certificate executed by the Chief Financial
Officer, Secretary or Assistant Secretary of each of Netect and
each of its Subsidiaries certifying the Organizational Documents
and Bylaws of each of Netect and its Subsidiaries, the
resolutions of Netect authorizing this Agreement and the
Contemplated Transactions and the incumbency of officers or other
authorized representatives to act on behalf of Netect with
respect to this Agreement and the Contemplated Transactions;
3.2.1.3 an opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, U.S.
special counsel to Netect, dated the Closing Date, in a form
customary and reasonably satisfactory to BindView;
3.2.1.4 an opinion of Xxxxx Xxxxx & Co., Israeli counsel to
Netect, dated the Closing Date, in a form customary and
reasonably satisfactory to BindView; and
3.2.1.5 certificates of qualification and good standing, as
applicable, from the jurisdictions listed in Schedule 4.1 of the
Disclosure Letter.
3.2.2 The Shareholders' Representative, on behalf of the
Shareholders, or the Shareholders will deliver to BindView:
3.2.2.1 a certificate or certificates executed by each of
the Shareholders as to the matters described in Section 9.12;
3.2.2.2 share transfer deeds duly endorsed as may be
required to effect the transfer of the Netect Shares and Options
listed in Schedule II to BindView;
3.2.2.3 the Indemnity Escrow Agreement, executed by each
Shareholder;
3.2.2.4 the Employment Agreements, if applicable, executed
by each of the Selected Employees;
3.2.2.5 the Registration Rights Agreement, executed by each
of the Shareholders; and
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3.2.2.6 the Non-competition Agreements, executed by each of
the individuals listed on Exhibit E-1.
3.2.3 BindView will deliver to the Shareholders and Netect:
3.2.3.1 a certificate executed by an officer of BindView on
behalf of BindView as to the matters described in Section 8.6;
3.2.3.2 a certificate executed by the Chief Financial
Officer, Secretary or Assistant Secretary of BindView certifying
the Bylaws, the resolutions of BindView authorizing this
Agreement and the Contemplated Transactions and the incumbency of
officers or other authorized representatives to act on behalf of
BindView with respect to this Agreement and the Contemplated
Transactions;
3.2.3.3 an opinion of Fulbright & Xxxxxxxx L.L.P., counsel
to BindView, dated as of the Closing Date, in a form customary
and reasonably satisfactory to Netect and the Shareholders'
Representative;
3.2.3.4 certificates representing the Consideration (other
than the Escrow Shares) and option agreements representing the
options to be assumed pursuant to Section 7.7, bearing the
restrictive legends set forth in Section 4.28.4.3, issued in the
names and denominations of the Shareholders as shall be provided
by the Shareholders' Representative not later than 10 days before
the Closing;
3.2.3.5 a copy of the Articles of Incorporation of BindView,
certified by the Secretary of State of the State of Texas;
3.2.3.6 a certificate by the Secretary of State of the State
of Texas, certifying BindView's existence and good standing under
the laws of the State of Texas;
3.2.3.7 a certificate by the Comptroller of Public Accounts
of the State of Texas, certifying BindView's good standing with
regard to the payment of corporate franchise taxes under the laws
of the State of Texas;
3.2.3.8 the Indemnity Escrow Agreement, executed by
BindView;
3.2.3.9 the Employment Agreements with each Selected
Employee, executed by BindView;
3.2.3.10 the Registration Rights Agreement executed by
BindView;
3.2.3.11 the Non-competition Agreements executed by
BindView; and
3.2.3.12 the affiliate letters described in Section 8.9.
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3.2.4 BindView will deliver to the Indemnity Escrow Agent the
Escrow Shares, bearing the restrictive legends set forth in Section
4.28.4.3, issued in the names and denominations of the Shareholders as
shall be provided by the Shareholders' Representative (or, in the
discretion of the Shareholders' Representative, issued in one
certificate in the name of the Indemnity Escrow Agent, in its capacity
as such) not later than ten days before the Closing.
3.2.5 BindView, the Indemnity Escrow Agent, the Shareholders'
Representative and the Shareholders, will enter into the Indemnity
Escrow Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF NETECT AND THE SHAREHOLDERS
Netect represents and warrants to BindView, as of the date of this
Agreement and as of the Closing Date, as to the matters set forth in Sections
4.1 through 4.26 inclusive. Each of the Shareholders severally represents and
warrants to BindView, as of the date of this Agreement and as of the Closing
Date, as to the matters set forth in Sections 4.27 through 4.29 inclusive.
4.1 ORGANIZATION AND GOOD STANDING.
4.1.1 Netect is a corporation duly organized and validly existing
under the laws of Israel, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and Assets that it purports to own or use and to perform all its
obligations under Applicable Contracts. Schedule 4.1 of the Disclosure
Letter contains a complete and accurate list of the other jurisdictions in
which Netect is authorized to transact business. Netect is duly qualified
to transact business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership
or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification and where the
failure to be so qualified would have a Material Adverse Effect on Netect.
4.1.2 Each of Netect's Subsidiaries is listed in Schedule 4.1 of the
Disclosure Letter, and each is a corporation (unless otherwise identified),
validly existing and in good standing under the laws of its jurisdiction of
incorporation (as identified in such Schedule 4.1), with full corporate
power and authority to conduct its business as it is now being conducted,
to own or use the properties and Assets that it purports to own or use and
to perform all its obligations under Applicable Contracts. Schedule 4.1 of
the Disclosure Letter contains a complete and accurate list of the other
jurisdictions in which each such Subsidiary is authorized to transact
business. Each such Subsidiary is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it,
requires such qualification and where the failure to be so qualified would
have a Material Adverse Effect on Netect.
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4.2 AUTHORITY; NO CONFLICT.
4.2.1 This Agreement constitutes the legal, valid and binding
obligation of Netect and is enforceable against Netect in accordance with
its terms. Netect has the absolute and unrestricted right, power, authority
and capacity to execute and deliver this Agreement and to perform its
obligations under this Agreement.
4.2.2 Except as set forth in Section 4.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation
or performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
4.2.2.1 contravene, conflict with or result in a violation of (i)
any provision of the Organizational Documents of Netect, or (ii) any
resolution validly adopted by the board of directors or the
shareholders of Netect currently in effect and not superseded;
4.2.2.2 contravene, conflict with or result in a violation of, or
give any Governmental Body the right to challenge any of the
Contemplated Transactions or to exercise any remedy pursuant to any
Legal Requirement or any Order to which Netect or any of its
Subsidiaries or any of the Assets owned by Netect or any of its
Subsidiaries, or the Netect Shares, is subject;
4.2.2.3 contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Netect or any of its
Subsidiaries or that relates to the Assets owned by Netect or any of
its Subsidiaries, or the Netect Shares;
4.2.2.4 contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Applicable
Contract; or
4.2.2.5 result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets owned by Netect or any of
its Subsidiaries or the Netect Shares.
Except as set forth in Schedule 4.2 of the Disclosure Letter, neither
Netect nor any of its Subsidiaries is or to the Knowledge of Netect will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
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4.3 CAPITALIZATION.
4.3.1 The authorized equity securities of Netect consists of 5,300,000
Netect Shares, of which 4,000,000 are ordinary shares, 600,000 are
preference A shares and 700,000 are preference B shares. As of the date of
this Agreement there are, and as of the Closing Date there will be,
1,406,900 ordinary shares, 10,800 preference A shares and 6,900 preference
B shares, and no other Netect Shares issued and outstanding, except to the
extent Options described in Schedule 4.3 of the Disclosure Letter are
exercised or converted. Except as set forth in Schedule 4.3 of the
Disclosure Letter, the Shareholders are and will be on the Closing Date the
record and beneficial owners and holders of all Netect Shares, free and
clear of all Encumbrances, and each own the number and percentage of Netect
Shares as set forth in Schedule 4.3 of the Disclosure Letter.
4.3.2 Other than as set forth in Schedule 4.3 of the Disclosure
Letter, there are no, and on the Closing Date there will be no Options
outstanding which are or have been issued or granted by Netect. Schedule
4.3 of the Disclosure Letter sets forth the name of each holder of an
Option and the material terms (including number of shares, exercise price,
vesting periods, expiration period and, if applicable, tax treatment under
the IRC) of each relevant Option. Each Option issued pursuant to an option
plan has been identified as such, and Netect has provided true, complete
and correct copies of each such plan to BindView. Netect has no other
outstanding equity securities other than as set forth in Schedule 4.3 of
the Disclosure Letter. Except as set forth in Schedule 4.3 of the
Disclosure Letter, there are no Applicable Contracts relating to the
issuance, sale or transfer or repurchase or redemption of any equity
securities of Netect.
4.3.3. All of the outstanding equity securities of Netect have been
duly authorized and validly issued and are fully paid and nonassessable,
are not subject to rights of first refusal imposed by or through Netect,
and were not issued in violation of any preemptive or similar rights. None
of the outstanding equity securities or other securities of Netect was
issued in violation of the Securities Act or any other Legal Requirement.
4.3.4 Netect owns all of the capital stock or other interests of its
Subsidiaries as listed on Schedule 4.1 of the Disclosure Letter free and
clear of any Encumbrances. Other than such Subsidiaries, Netect does not
own or have any Contract to acquire any equity securities or other
securities of any Person or any direct or indirect equity or ownership
interest in any other business, and is not a party to any joint venture,
teaming agreement, partnership or similar entity or enterprise.
4.4 FINANCIAL STATEMENTS. Netect has delivered to BindView: (i) audited
consolidated balance sheets of Netect and its Subsidiaries as of December 31,
1996 and 1997, the unaudited consolidated balance sheets of Netect and its
Subsidiaries as of December 31, 1998 (collectively, the "Balance Sheets"), and
the related audited consolidated statements of operations, cash flows and
changes in shareholders' equity for each of the fiscal years ended December 31,
1996 and 1997 and the unaudited consolidated statements of operations for the
fiscal year ended December 31, 1998, together, with respect to the audited
portions, with the notes thereto and the report thereon of Xxxxx
00
00
& Young LLP, independent certified public accountants (collectively, the
"Financial Statements"). The Financial Statements fairly present the financial
condition and the results of operations, changes in shareholders' equity and
cash flow of Netect at the respective dates of and for the periods referred to
in the Financial Statements, in accordance with Israeli GAAP; the Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved.
4.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books and other records of Netect and each of its Subsidiaries, all of which
have been made available to BindView or its counsel, are complete and correct.
The minute books of Netect and each of its Subsidiaries contain accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the Boards of Directors and committees of the Boards of Directors
of Netect and each of its Subsidiaries, as applicable, and no meeting of any
such shareholders, Board of Directors or committee has been held for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of Netect.
This Section 4.5 is qualified by Schedule 4.5 of the Disclosure Letter.
4.6 TITLE TO PROPERTIES; ENCUMBRANCES.
4.6.1 Neither Netect nor any of its Subsidiaries own any Facilities.
Except as set forth in Schedule 4.6 of the Disclosure Letter, Netect does
not conduct, and has never conducted, any operations other than at the
Facilities. Netect or its Subsidiaries owns, subject only to the matters
permitted by Section 4.6.2 or has a valid leasehold interest in, all of its
properties and Assets reflected in the Balance Sheets, or otherwise
acquired by Netect or any of its Subsidiaries since the date of the Balance
Sheets (except for personal property and Assets acquired and sold since the
date of the Balance Sheets in the Ordinary Course of Business and
consistent with past practice).
4.6.2 Except as set forth in Schedule 4.6 of the Disclosure Letter,
all Assets reflected in the Balance Sheets are free and clear of all
Encumbrances, except with respect to all such Assets, (i) mortgages or
security interests shown on the Balance Sheets, (ii) mortgages or security
interests incurred in connection with the purchase of property or Assets
after the date of the Balance Sheets (such mortgages and security interests
being limited to the property or Assets so acquired), (iii) liens for
current taxes not yet due or being contested in good faith and for which
adequate reserves have been established on the Balance Sheets, (iv)
Encumbrances affecting or encumbering the title or interest of the landlord
of any such real, property leased by Netect or its Subsidiaries, (v) liens
in favor of any landlord created by law or under any lease of such real
property for amounts not yet due under such leases, and (vi) materialmens',
warehousemens' liens and the like incurred in the Ordinary Course of
Business.
4.7 CONDITION AND SUFFICIENCY OF ASSETS. To the Knowledge of Netect, the
Facilities of Netect and its Subsidiaries are in good operating condition and
repair (ordinary wear and tear excepted) and are adequate for the uses to which
they are being put.
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4.8 ACCOUNTS RECEIVABLE. All accounts receivable of Netect and its
Subsidiaries that are reflected on the Balance Sheets or on the accounting
records of Netect as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectible net of the respective reserves shown
on the Balance Sheets or on the accounting records of Netect as of the Closing
Date (which reserves are adequate and calculated consistent with past practice).
There is no contest, claim or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
4.9 NO MATERIAL UNDISCLOSED LIABILITIES. Except as set forth in Schedule
4.9 of the Disclosure Letter, Netect has no liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise) except for
liabilities or obligations (i) reflected or reserved against in the Balance
Sheets, (ii) current liabilities incurred in the Ordinary Course of Business
since the respective dates thereof and (iii) liabilities not required under
Israeli GAAP to be reflected on the Balance Sheet or the notes thereto.
4.10 TAXES.
4.10.1 Netect and its Subsidiaries have filed or have obtained
extensions to file or caused to be filed on a timely basis all Tax Returns
that are or were required to be filed by or with respect to it pursuant to
applicable Legal Requirements. Netect and its Subsidiaries have delivered
or made available to BindView copies of all such Tax Returns filed since
December 31, 1996. Netect and its Subsidiaries have paid, or made full
provision for the payment of, all Taxes that have or may have become due
for the taxable periods covered by those Tax Returns, except such Taxes, if
any, as are listed in Schedule 4.10 of the Disclosure Letter and are being
contested in good faith and as to which adequate reserves have been
provided in the Balance Sheets.
4.10.2 Schedule 4.10 of the Disclosure Letter contains a complete and
accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All
deficiencies proposed as a result of such audits have been paid, reserved
against, settled or, as described in Schedule 4.10 of the Disclosure
Letter, are being contested in good faith by appropriate proceedings.
Schedule 4.10 of the Disclosure Letter describes all adjustments to the Tax
Returns filed by Netect and its Subsidiaries for all taxable years since
December 31, 1996, and the resulting deficiencies proposed by the relevant
tax authorities. Except as described in Schedule 4.10 of the Disclosure
Letter, Netect has neither given nor been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of
Taxes of Netect and its Subsidiaries or for which Netect or its
Subsidiaries may be liable.
4.10.3 The charges, accruals and reserves with respect to Taxes on the
books of Netect are adequate and are at least equal to Netect's and its
Subsidiaries' aggregate liability
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for Taxes, and such charges, accruals and reserves are adjusted for
continuing operations consistent with past practices of Netect. There
exists no proposed tax assessment against Netect or its Subsidiaries except
as disclosed in the Balance Sheets. No consent to the application of IRC
Section 341(f)(2) has been filed with respect to any property or Assets
held, acquired or to be acquired by Netect or its Subsidiaries. All Taxes
that Netect and its Subsidiaries are or were required by Legal Requirements
to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Body or other
Person.
4.10.4 All Tax Returns filed by (or that include on a consolidated
basis) Netect or its Subsidiaries are true, correct and complete. There is
no tax sharing agreement that will require any payment by Netect or its
Subsidiaries after the date of this Agreement.
4.11 NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 4.11 of
the Disclosure Letter, since the most recent date of the Balance Sheets, there
has not been any change in the financial condition, result of operations or
properties of Netect and its Subsidiaries, taken as a whole, that have resulted
in a Material Adverse Effect to Netect and no event has occurred or circumstance
exists that could reasonably be expected to result in a Material Adverse Effect
to Netect and its Subsidiaries.
4.12 EMPLOYEE BENEFITS.
4.12.1 Netect maintains no Netect VEBAs.
4.12.2 [Reserved]
4.12.3 Netect has delivered to BindView:
4.12.3.1 all documents that set forth the terms of each Netect
Plan or Netect Other Benefit Obligation and of any related trust,
including (i) all plan descriptions and summary plan descriptions of
Netect Plans for which Netect is required to prepare, file and
distribute plan descriptions and summary plan descriptions and (ii)
all summaries and descriptions furnished to participants and
beneficiaries regarding Netect Plans and Netect Other Benefit
Obligations for which a plan description or summary plan description
is not required;
4.12.3.2 all personnel, payroll and employment manuals and
policies;
4.12.3.3 all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both
pension and welfare benefits) by Netect and the ERISA Affiliates, and
all collective bargaining agreements pursuant to which contributions
are being made or obligations are owed by such entities;
4.12.3.4 a written description of any Netect Plan or Netect Other
Benefit Obligation that is not otherwise in writing;
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4.12.3.5 all registration statements with respect to any Netect
Plan;
4.12.3.6 all insurance policies which were purchased by or to
provide benefits under any Netect Plan;
4.12.3.7 all contracts with third party administrators,
actuaries, investment managers, consultants and other independent
contractors that relate to any Netect Plan or Netect Other Benefit
Obligation;
4.12.3.8 all reports submitted within the four years preceding
the date of this Agreement by third party administrators, actuaries,
investment managers, consultants or other independent contractors with
respect to any Netect Plan or Netect Other Benefit Obligation;
4.12.3.9 samples of all notifications to employees of their
rights under ERISA Section 601 et seq. and IRC Section 4980B;
4.12.3.10 the Form 5500 filed in each of the most recent three
plan years with respect to each Netect Plan and each IRC Section 125
cafeteria plan of Netect or any ERISA Affiliate, including all
schedules thereto and the opinions of independent accountants;
4.12.3.11 all notices or reports that were given by Netect, any
ERISA Affiliate or any Netect Plan to the IRS or the PBGC, pursuant to
statute, within the four years preceding the date of this Agreement,
including notices that are expressly mentioned elsewhere in this
Section 4.12;
4.12.3.12 all notices that were given by the IRS, the PBGC or the
Department of Labor to Netect, any ERISA Affiliate or any Netect Plan
within the four years preceding the date of this Agreement; and
4.12.3.13 with respect to Netect Plans that are Qualified Plans,
the most recent determination letter for each such Plan.
4.12.4 Except as set forth on Schedule 4.12 of the Disclosure Letter,
4.12.4.1 Netect and each ERISA Affiliate has performed all of its
obligations under all Netect Plans and Netect Other Benefit
Obligations. Netect and each ERISA Affiliate has made appropriate
entries in its financial records and statements for all obligations
and liabilities under such Plans and Obligations that have accrued but
are not due.
4.12.4.2 No statement, either written or oral, has been made by
Netect or an ERISA Affiliate to any Person with regard to any Plan or
Other Benefit Obligation that was not in accordance with the Plan or
Other Benefit Obligation.
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4.12.4.3 No Netect Plan is a Defined Benefit Pension Plan, or any
other Pension Plan to which the minimum funding provisions of ERISA
Section 302 and IRC Section 412 apply, or a Multiemployer Plan. There
is no Netect VEBA.
4.12.4.4 Netect and the ERISA Affiliates, with respect to all
Netect Plans and Netect Other Benefits Obligations, are, and each
Netect Plan and Netect Other Benefit Obligation is, in full compliance
with ERISA, the IRC and other applicable Legal Requirements, including
the provisions of such Legal Requirements expressly mentioned in this
Section 4.12, and with any applicable collective bargaining agreement.
4.12.4.4.1 Neither Netect, any ERISA Affiliate nor any
Shareholder has engaged in or knowingly permitted to occur and,
to Netect's and each of the Shareholders' Knowledge, no other
party has engaged in or permitted to occur any transaction
prohibited by ERISA Section 406 or "prohibited transaction" under
IRC Section 4975(c) with respect to any Netect Plan, except for
any transactions which are exempt under ERISA Section 408 or IRC
Section 4975.
4.12.4.4.2 Neither Netect, any ERISA Affiliate nor any
Shareholder has any liability to the IRS with respect to any
Plan, including any such liability imposed by Chapter 43 of the
IRC.
4.12.4.4.3 Neither Netect, any ERISA Affiliate nor any
Shareholder has any liability with respect to any Netect Plan
under ERISA.
4.12.4.4.4 All filings required by ERISA and the IRC as to
each Plan have been timely filed, and all notices and disclosures
to participants required by either ERISA or the IRC have been
timely provided.
4.12.4.4.5 All contributions and payments made or accrued
with respect to all Netect Plans and Netect Other Benefit
Obligations which have been deducted were deductible under
applicable IRC provisions, including IRC Section 162 or Section
404. No Netect Plan or the Assets thereof are liable for any tax
as unrelated business taxable income.
4.12.4.4.6 Except for any formal qualification requirement
with respect to which the remedial amendment period set forth in
IRS Section 401(b), and any regulations, rulings or other IRS
releases thereunder, has not expired, (i) each Netect Plan that
is a Qualified Plan is qualified in form and operation under IRC
Section 401(a), and each trust for each such Plan is exempt from
federal income tax under IRC Section 501(a), and (ii) no event
has occurred or circumstance exists that gives rise to
disqualification or loss of tax-exempt status of any such Plan or
trust.
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4.12.4.4.7 No event has occurred or circumstance exists that
has resulted in or could result in the partial termination,
within the meaning of IRC ss. 411(d)(3), of any Netect Plan that
is a Qualified Plan, excluding any event with respect to which
the requirements of IRC Section 411(d)(3) have been satisfied.
4.12.4.5 Each Netect Plan can be terminated without payment of
any additional contribution or amount and, except for any Qualified
Plan, without the vesting or acceleration of any benefits promised by
such Plan.
4.12.4.6 Since January 1, 1998, there has been no establishment
or amendment of any Netect Plan or Netect Other Benefit Obligation.
4.12.4.7 No event has occurred or circumstance exists that could
result in a material increase in premium costs of Netect Plans and
Netect Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are
self-insured.
4.12.4.8 Other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving, any
Netect Plan or Netect Other Benefit Obligation is pending or, to
Netect's and each of the Shareholders' Knowledge, is Threatened.
4.12.4.9 No Netect Plan is subject to Title IV of ERISA.
4.12.4.10 Except as set forth in Schedule 4.12.4.10 of the
Disclosure Letter and except to the extent required under ERISA ss.
601 et seq. and IRC ss. 4980B, Netect does not provide health or
welfare benefits for any retired or former employee nor is it
obligated to provide health or welfare benefits to any active employee
following such employee's retirement or other termination of service.
4.12.4.11 Netect has the right to modify and terminate benefits
as to retirees (other than pensions) with respect to both retired and
active employees.
4.12.4.12 Netect and each of the Shareholders have complied with
the provisions of ERISA Section 601 et seq. and IRC Section 4980B.
4.12.4.13 Except as set forth in Schedule 4.12.4.13 of the
Disclosure Letter, no payment that is owed or may become due to any
director, officer, employee or agent of Netect will be non-deductible
to Netect or subject to tax under IRC ss. 280G or ss. 4999; nor will
Netect be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to
such person.
4.12.4.14 Except as set forth in Schedule 4.12.4.14 of the
Disclosure Letter, the consummation of the Contemplated Transactions
will not result in the payment,
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vesting or acceleration of any benefit, assuming that no employee
incurs a termination of employment or reduction in hours, and no
Netect Plan or Netect Other Benefit Obligation is terminated, in
connection with the Contemplated Transactions.
4.12.5 Netect has granted options to no more than 35 people in any one
year unless an exemption was obtained from the Israel Securities Authority
or a prospectus was published in connection with the relevant plan.
4.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
4.13.1 Except as set forth in Schedule 4.13 of the Disclosure Letter:
4.13.1.1 Netect and each of its Subsidiaries is, and at all times
since December 31, 1997 has been, in full compliance in all material
respects with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its Assets;
4.13.1.2 no event has occurred or circumstance exists that (with
or without notice or lapse of time) (i) will constitute or result in a
violation by Netect or its Subsidiaries of, or a failure on the part
of Netect or its Subsidiaries to comply with, any material Legal
Requirement or (ii) will give rise to any obligation on the part of
Netect or its Subsidiaries to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature pursuant to any
Legal Requirements; and
4.13.1.3 Netect and its Subsidiaries have not received, at any
time since December 31, 1997, any notice or other communication
(whether oral or written) from any Governmental Body regarding (i) any
actual, alleged, possible or potential violation of, or failure to
comply with, any material Legal Requirement by Netect or any
Subsidiary or (ii) any actual, alleged, possible or potential
obligation on the part of Netect or its Subsidiaries to undertake, or
to bear all or any portion of the cost of, any remedial action of any
nature pursuant to any Legal Requirements.
4.13.1.4 Netect and its Subsidiaries have not received, at any
time since incorporation, any funding from the Office of the Chief
Scientist of the Ministry of Industry and Trade of the State of
Israel. Netect has received and recognized benefits as an "Approved
Enterprise" under Israeli tax law. Netect has not been granted a lease
from the Israel Land Authority.
4.13.2 Netect and each Subsidiary has obtained each license and permit
(a "Permit") material to the business of the business of Netect, from the
appropriate Governmental Body issuing such license or permit. Such licenses
and permits are valid and in full force and effect, and none of such
licenses or permits will be terminated or impaired or become terminable as
a result of the transactions contemplated hereby.
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4.14 NO LEGAL PROCEEDINGS; NO ORDERS. Except as set forth in Schedule
4.14 of the Disclosure Letter, there is no Proceeding pending against, or to the
knowledge of Netect, Threatened against, Netect or any Subsidiary or any of
their respective properties or the transactions contemplated hereby any
Governmental Body.
4.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as disclosed in
Schedule 4.15 of the Disclosure Letter, since the most recent date of the
Balance Sheets, Netect and its Subsidiaries have conducted business only in the
Ordinary Course of Business and there has not been any:
4.15.1 change in Netect's or any of its Subsidiaries' authorized or
issued share capital or capital stock; grant of any stock option or right
to purchase share capital of Netect or shares of capital stock of any of
its Subsidiaries; issuance of any security convertible into such share
capital or capital stock; grant of any registration rights; purchase,
redemption, retirement or other acquisition by Netect or any of its
Subsidiaries of any shares of any such share capital or capital stock; or
declaration or payment of any dividend or other distribution or payment
with respect to such share capital or capital stock;
4.15.2 amendment to the Organizational Documents of Netect or any of
its Subsidiaries;
4.15.3 payment or increase by Netect or any of its Subsidiaries of any
bonuses, salaries or other compensation to any shareholder, director,
officer or employee or entry into any employment, severance or similar
Contract with any director, officer or employee;
4.15.4 damage to or destruction or loss of any property or Asset of
Netect or any of its Subsidiaries, whether or not covered by insurance,
which has had or would reasonably be expected to have a Material Adverse
Effect on Netect or any of its Subsidiaries;
4.15.5 any transaction or commitment made, or any contract or
agreement entered into, by Netect or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by Netect or any Subsidiary of any contract or other right,
other than transactions and commitments in the Ordinary Course of Business
and those contemplated by this Agreement;
4.15.6 material change in the accounting methods used by Netect; or
4.15.7 agreement, whether oral or written, by Netect or any of its
Subsidiaries to do any of the foregoing.
4.16 CONTRACTS; NO DEFAULTS.
4.16.1 Schedule 4.16 of the Disclosure Letter sets forth a list of all
Applicable Contracts meeting any of the following descriptions
(collectively, the "Material Contracts"):
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4.16.1.1 Applicable Contracts granting rights of first refusal or
preemptive rights with respect to Netect Stock;
4.16.1.2 Contracts (i) for the sale of any of the Assets of
Netect or any of its Subsidiaries, other than contracts entered into
in the Ordinary Course of Business, or (ii) for the grant to any
person of any preferential rights to purchase any of its Assets;
4.16.1.3 Contracts which currently restrict Netect or any of its
Subsidiaries, from competing in Netect's line of business in any
geographical area;
4.16.1.4 Contracts which currently restrict Netect or any of its
Subsidiaries from disclosing any confidential information concerning
or obtained from any other person;
4.16.1.5 Contracts which restrict the freedom of Netect or any of
its Subsidiaries to sell, pledge or otherwise dispose of Assets;
4.16.1.6 indentures, credit agreements, security agreements,
mortgages, guarantees, promissory notes and other Contracts relating
to the borrowing or lending of money or to capitalized lease
obligations, except contracts relating to indebtedness incurred in the
ordinary course of business in an amount, individually or in the
aggregate, not exceeding US$50,000;
4.16.1.7 Contracts providing for the provision of professional
services by Netect or any of its Subsidiaries on a fixed-fee basis
that cannot be terminated by Netect without liability or obligation on
the part of Netect, individually or in the aggregate, in excess of
US$25,000;
4.16.1.8 Contracts pursuant to which Netect or any of its
Subsidiaries has granted to any other person the right to distribute,
resell or hold on consignment any products ("Distributor Agreements");
4.16.1.9 Contracts requiring the expenditure or series of related
expenditures of funds by Netect in excess of US $10,000;
4.16.1.10 any labor union, management service, employment,
consulting or similar Contracts or any Contracts with any group of
employees;
4.16.1.11 any Contract not cancelable within 60 days upon notice
by Netect or its Subsidiaries;
4.16.1.12 any Contract cancelable upon any change of control of
Netect or its Subsidiaries;
4.16.1.13 any Contract with any Governmental Body; and
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4.16.1.14 all other agreements, Contracts or instruments entered
into outside of the Ordinary Course of Business and which are material
to Netect.
4.16.2 Netect has made available to BindView true, correct and
complete copies of each Material Contract.
4.16.3 Neither Netect nor any of its Subsidiaries is in breach or
default in any material respect under any Material Contract nor, to the
Knowledge of Netect, is any other party to any Material Contract in breach
or default thereunder in any material respect.
4.16.4 All of the Material Contracts are in full force and effect. The
enforceability of the Material Contracts will not be affected in any manner
by the execution and delivery of this Agreement or by the consummation of
the Contemplate Transactions.
4.16.5 None of the Distributor Agreements grants to any person
exclusive rights to distribute, resell or hold on consignment any products
in any geographic area.
4.17 SOFTWARE.
4.17.1 (i) Schedule 4.17.1 of the Disclosure Letter sets forth under
the caption "Owned Software" a true, correct and complete list of all
computer programs (source code, object code, and any associated data files
or other non-code files, all collectively "Computer Programs") that Netect
or any Subsidiary of Netect purport to own, including, without limitation,
any Computer Programs in the development or testing phase (the "Owned
Software"). (ii) Schedule 4.17.1 of the Disclosure Letter sets forth under
the caption "Licensed Software" a true, correct and complete list of all
Computer Programs licensed to Netect or any Subsidiary of Netect by another
person and embedded in Netect's products currently available for general
commercial license (collectively, the "Licensed Software" and, together
with the Owned Software, the "Software").
4.17.2 (i) Netect, directly or through its Subsidiaries, has good,
marketable and exclusive title to, and the valid and enforceable power and
unqualified right to sell, license, lease, transfer, use and otherwise
exploit, all existing versions and releases of the Owned Software and all
copyrights thereof, free and clear of all liens, except for liens set forth
in the Disclosure Letter. Netect, directly or through its Subsidiaries, has
the valid and enforceable power and unqualified right to sell, license,
lease, transfer, use and otherwise exploit, all existing versions and
releases of the Software and all copyrights thereof, free and clear of all
liens and third-party licenses, except for liens and third-party licenses
set forth in the Disclosure Letter. (ii) Except as specified in Schedule
4.17.2 of the Disclosure Letter, Netect, directly or through its
Subsidiaries, is in actual possession of at least one copy of the source
code and object code and any associated non-code files or data for each
computer program included in the Owned Software. (iii) Netect, directly or
through its Subsidiaries, is in possession of all other existing
documentation (including without limitation all related engineering
specifications, existing program flow charts, installation and user
manuals, if any) required for the use of the Software as currently offered
or represented to Netect's customers
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or potential customers. (iv) Netect, directly or through its Subsidiaries,
is in actual possession of at least one copy of the object code and user
manuals, if any, for each computer program included in the Licensed
Software. (v) Except as specified in Schedule 4.17.2 of the Disclosure
Letter, no person other than Netect and its Subsidiaries has any right or
interest of any kind or nature in or with respect to the Owned Software or
any portion thereof or any rights to sell, license, lease, transfer, use or
otherwise exploit the Owned Software or any portion thereof, except for
non-exclusive customer licenses. (vi) Each software author has made his or
her contribution to the Owned Software (1) within the scope of employment
with Netect or a Subsidiary thereof as a "work made for hire" or (2) as an
independent contractor pursuant to a written agreement in which work
product and the intellectual property rights therein, including copyrights,
either (x) were designated as "works made for hire," or (y) were the
subject of a written assignment of, or a written obligation to assign, all
right, title, and interest therein to Netect or a Subsidiary thereof.
4.17.3 Schedule 4.17.3 of the Disclosure Letter sets forth a true,
correct and complete list, by computer program, of (i) all persons other
than Netect and its Subsidiaries that have been provided with the source
code or have a right to be provided with the source code (including any
such right that may arise after the occurrence of any specified event or
circumstance, either with or without the giving of notice or passage of
time or both) for any of the Owned Software, and (ii) all source code
escrow agreements relating to any of the Owned Software (setting forth as
to any such escrow agreement the source code subject thereto and the names
of the escrow agent and all other persons who are actual or potential
beneficiaries of such escrow agreement), and identifies with specificity
all agreements and arrangements pursuant to which the execution, delivery
and performance of this Agreement or the consummation of the Contemplated
Transactions would entitle any third party or parties to receive possession
of the source code for any of the Owned Software or any related technical
documentation. Except as specified in Schedule 4.17.3 of the Disclosure
Letter, no person (other than Netect and its Subsidiaries and any person
that is a party to a contract referred to in Section 4.16.1.4 that
restricts such person from disclosing any information concerning such
source code) is in possession of, or has or has had access to, or has made
any request or demand for access to, any source code for any computer
program included in the Owned Software.
4.17.4 Except as specified in Schedule 4.17.4 of the Disclosure
Letter:
4.17.4.1 To the knowledge of Netect, (i) There are no defects in
the Owned Software currently available for general commercial license,
and there are no errors in any related documentation, which defects or
errors would in any material respect affect BindView's, Netect's or
any existing or future licensee's use of the Owned Software (in its
present-day form) or the functioning thereof in accordance with the
specifications for the Owned Software published by Netect and its
Subsidiaries. (ii) The Owned Software currently available for general
commercial license has all the features described in the related user
manual or advertisements and materials made available to Netect's and
its Subsidiaries' customers. (iii) The Owned Software currently
available for general commercial license does not contain any "back
door",
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"time bomb", "Trojan horse", "worm", "drop dead device", "virus" (as
these terms are commonly used in the computer software industry), or
other software routines or hardware components designed to permit
unauthorized access, to disable or erase software, hardware or data or
to perform any other similar type of functions;
4.17.4.2 To the knowledge of Netect, there are no material
defects in any computer program included in the Owned Software
currently available for general commercial license that would
adversely affect the functioning thereof in accordance with any
published specifications therefor or which would cause the Owned
Software currently available for general commercial license to fail to
be Year 2000 compliant which, as to being Year 2000 compliant, means
that all of the Software has the following properties and
capabilities: (i) the capability to correctly recognize and accurately
process dates expressed as a four-digit number (or the binary
equivalent or other machine readable iteration thereof) (collectively,
the "Four-Digit Dates"); (ii) the capability to accurately execute
calculations using Four-Digit Dates; (iii) the functionality (both
on-line and batch), including entry, inquiry, maintenance and update,
to support processing involving Four-Digit Dates; (iv) the capability
to generate interfaces and reports that support processing involving
Four-Digit Dates; (v) the capability to generate and successfully
transition, without human intervention, into the year 2000 using the
correct system date and to thereafter continue processing with
Four-Digit Dates; (vi) the capability to provide correct results in
forward and backward data calculations spanning century boundaries,
including the conversion of pre-2000 dates currently stored as
two-digit dates; and (vii) the capability of correctly recognizing and
processing all leap-year aspects of any of items (i) through (vi).
4.17.4.3 To the Knowledge of Netect, (i) no third party is
violating or has violated any of Netect's or its Subsidiaries'
proprietary rights in the Owned Software; (ii) no third party has any
right to compensation from Netect or its Subsidiaries by reason of the
use, exploitation or sale of the Owned Software; (iii) there are no
restrictions on the ability of Netect or its Subsidiaries, or any of
their respective successors or assignees, to use, sell or otherwise
exploit the Owned Software, except as applicable to the software
industry generally; (v) such use, sale or exploitation does not
obligate Netect or its Subsidiaries, or any of their respective
successors or assignees (including BindView), to pay any royalty, fee
or other compensation to any Person; and (v) Netect has not received
any written notice and does not have any Knowledge of any complaint,
assertion, claim, threat or allegation inconsistent with the preceding
statements in this paragraph.
4.17.5 (i) Each Computer Program included in the Software exists in
machine readable form. (ii) All warranty claims within the last three years
(including any pending claims) relating to the Software are described in
Schedule 4.17.5 of the Disclosure Letter.
4.17.6 Except as specified in Schedule 4.17.6 of the Disclosure
Letter, neither Netect nor any of its Subsidiaries markets, or has
marketed, and none of them has supported or is obligated to support, any
Licensed Software not embedded in Netect's products.
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4.17.7 No agreement, license or other arrangement pertaining to any of
the Software (including without limitation any development, distribution,
marketing, user or maintenance agreement, license or arrangement) to which
Netect or any Subsidiary of Netect is a party will terminate or become
terminable by any party thereto as a result of the execution, delivery or
performance of this Agreement or the consummation of the Contemplated
Transactions.
4.18 INSURANCE.
4.18.1 Except as set forth in Schedule 4.18 of the Disclosure Letter,
Netect has delivered to BindView:
4.18.1.1 true and complete copies of all policies of insurance to
which Netect or any of its Subsidiaries is a party or under which
Netect or any of its Subsidiaries, or any officer or director of
Netect or any of its Subsidiaries, is or has been covered at any time
within the three years preceding the date of this Agreement;
4.18.1.2 true and complete copies of all pending applications for
policies of insurance; and
4.18.1.3 any management letter by any auditor of Netect's
financial statements with statements regarding the adequacy of
Netect's coverage or of the reserves for claims received by Netect or
its Subsidiaries since January 1, 1998.
4.18.2 [Reserved]
4.18.3 Since January 1, 1998, there has been no claim under an
insurance policy for an amount in excess of US$10,000 as to which coverage
has been questioned, denied or disputed by the underwriters of such
policies.
4.18.4
4.18.4.1 All policies to which Netect is a party or that provide
coverage to Netect or any of its Subsidiaries or any Shareholder, or
any director or officer of Netect:
4.18.4.1.1 are valid, outstanding and enforceable;
4.18.4.1.2 Such policies of insurance are of the type and in
amounts customarily carried by Persons conducting the same
business or businesses as Netect and its Subsidiaries and of the
same size and scope of operations as Netect and its Subsidiaries
and for all risks to which Netect and its Subsidiaries are
normally exposed;
4.18.4.1.3 are sufficient for compliance with all Legal
Requirements specifically calling for the maintenance of
insurance and Contracts specifically
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calling for the maintenance of insurance to which Netect or any
of its Subsidiaries are a party or by which it is bound;
4.18.4.1.4 will continue in full force and effect following
the Closing and the consummation of the Contemplated
Transactions; and
4.18.4.1.5 do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of
Netect or any of its Subsidiaries .
4.18.4.2 Since January 1, 1998, Netect and its Subsidiaries have
not received (i) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights or (ii) any notice of
cancellation or any other indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the
issuer of any policy is not willing or able to perform its obligations
thereunder.
4.18.4.3 Netect and its Subsidiaries have paid all premiums due,
and has otherwise performed all of its respective obligations, under
each policy to which Netect or its Subsidiaries is a party or that
provides coverage to Netect or any of its Subsidiaries or any officer
or director thereof.
4.19 EMPLOYEES.
4.19.1 Schedule 4.19 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee of Netect and
its Subsidiaries whose annual base salary exceeds $50,000, name; job title;
current compensation paid or payable.
4.19.2 Except as disclosed on Schedule 4.19 of the Disclosure Letter,
Netect has no retired employees or directors receiving benefits or
scheduled to receive benefits in the future.
4.19.3 Schedule 4.19 of the Disclosure Letter contains a complete list
of all former employees or consultants of Netect or any of its subsidiaries
who is not obligated under a written contract to refrain from (i) competing
with Netect or its Subsidiaries before March 1, 2000 or (ii) disclosing any
confidential information regarding Netect or its Subsidiaries (including
confidential information regarding the Software).
4.20 LABOR RELATIONS; COMPLIANCE. Neither Netect nor any of its
Subsidiaries has been or is a party to any collective bargaining or other labor
Contract. There has not been, there is not presently pending or existing and to
Netect's Knowledge there is not Threatened, (i) any strike, slowdown, picketing,
work stoppage or employee grievance process, (ii) any Proceeding against or
affecting Netect or its Subsidiaries relating to the alleged violation of any
Legal Requirement pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
Governmental Body, organizational activity or other labor or employment dispute
against or affecting Netect or its Subsidiaries or (iii) any application for
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certification of a collective bargaining agent. To Netect's Knowledge, no event
has occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by Netect
or its Subsidiaries, and no such action is contemplated. Netect and its
Subsidiaries have complied in all respects with all material Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. Netect and its Subsidiaries are not liable for the payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
4.21 INTELLECTUAL PROPERTY.
4.21.1 Intellectual Property Assets. The term "Netect Intellectual
Property Assets" includes all right, title and interest, anywhere in the
world, in and to any of the following things that are associated with the
Owned Software or with the licensing or distribution of the Owned Software
to third parties by Netect or any of its Subsidiaries:
4.21.1.1 the names "HackerShield", "Anti-Hacker Suite",
"HackerAlert", "Netective", "Netection", "Netect", "Netector", "Netect
Ltd.", "Netect, Inc.", and all fictional business names, trading
names, registered and unregistered domain names, trademarks, service
marks and registration applications for the same (collectively,
"Marks");
4.21.1.2 all issued patents, pending or unfiled patent
applications and inventions and discoveries that may be patentable
(collectively, "Patents");
4.21.1.3 all copyrights or copyright registrations in both
published works and unpublished works (collectively, "Copyrights");
4.21.1.4 all rights in mask works (collectively, "Rights in Mask
Works"); and
4.21.1.5 all know-how, trade secrets, confidential information,
customer lists, software, technical information, specifications,
pseudo code, information relating to security checks, data, process
technology, plans, drawings and blue prints (collectively, "Trade
Secrets") owned by Netect or its Subsidiaries or licensed by Netect or
its Subsidiaries as licensee and embedded in Netect's products
currently available for general commercial license.
4.21.2 Contracts. Schedule 4.21 of the Disclosure Letter contains a
complete and accurate list and summary description of all Contracts
relating to the Netect Intellectual Property Assets to which Netect or any
of its Subsidiaries is a party or by which Netect or any of its
Subsidiaries is bound, except for any license implied by the sale of a
Netect or third-party product and perpetual, paid-up licenses for commonly
available software programs with a value of less than US$5,000 under which
Netect or any of its Subsidiaries is the licensee or
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licensor. There are no outstanding and, to Netect's Knowledge, no
Threatened disputes or disagreements with respect to any such agreement.
4.21.3 No Patents; No Infringement.
4.21.3.1 Netect and it Subsidiaries do not own any Patents.
Schedule 4.21.3 of the Disclosure Letter sets forth a list of all
pending patent applications of Netect.
4.21.3.2 To Netect's Knowledge, neither the Owned Software nor
the making or sale or other distribution of copies thereof, nor the
use thereof in accordance with the associated documentation or
advertising, nor any process or know-how used by Netect or its
Subsidiaries in the making, sale or distribution of the Owned
Software, infringes or is alleged to infringe any patent of any other
Person anywhere in the world.
4.21.4 Marks.
4.21.4.1 Schedule 4.21.4 of the Disclosure Letter contains a
complete and accurate list and summary description of all Marks. To
Netect's Knowledge, Netect or its Subsidiaries is the owner of all
right, title and interest in and to each of the Marks, free and clear
of all liens, security interests, charges, encumbrances, equities and
other adverse claims, except for liens and the like set forth on the
Disclosure Letter.
4.21.4.2 All Marks that have been registered with the United
States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable and are not subject to any
maintenance fees or taxes or actions falling due within 90 days after
the Closing Date.
4.21.4.3 To Netect's Knowledge, no Xxxx has been or is now
involved in any opposition, invalidation or cancellation and, to
Netect's Knowledge, no such action is Threatened with the respect to
any of the Marks.
4.21.4.4 To Netect's Knowledge, there is no potentially
interfering trademark or trademark application of any third party with
respect to the Marks.
4.21.4.5 To Netect's Knowledge, no Xxxx is infringed or has been
challenged or threatened in any way and none of the Marks used by
Netect infringes or is alleged to infringe any trade name, trademark
or service xxxx of any third party anywhere in the world.
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4.21.5 Copyrights; No Infringement.
4.21.5.1 Schedule 4.21.5 of the Disclosure Letter contains a
complete and accurate list and summary description of all registered
Copyrights. Netect or its Subsidiaries is the owner of all right,
title and interest in and to each of the Copyrights, free and clear of
all liens, security interests, charges, encumbrances, equities and
other adverse claims except as set forth in the Disclosure Letter.
4.21.5.2 To Netect's Knowledge, no Copyright is infringed or has
been challenged or threatened in any way.
4.21.5.3 Except as set forth in Schedule 4.21.5.3 of the
Disclosure Letter, to Netect's Knowledge, neither the Owned Software
nor the making or sale or other distribution of copies thereof, nor
the use thereof in accordance with the associated documentation or
advertising, nor any process or know-how used by Netect or its
Subsidiaries in the making, sale or other distribution of the Owned
Software, infringes or is alleged to infringe any copyright of any
other Person anywhere in the world.
4.21.6 Trade Secrets. Netect has the valid right to use the
specifications, pseudo code, and information relating to security
checks in its possession on the date hereof. To Netect's Knowledge,
neither the Owned Software nor the making or sale or other
distribution of copies thereof, nor the use thereof in accordance with
the associated documentation or advertising, nor any process or
know-how used by Netect or its Subsidiaries in the making, sale or
other distribution of the Owned Software, constitutes or is alleged to
constitute misappropriation of any Trade Secret of any other Person
anywhere in the world.
4.22 ABSENCE OF CERTAIN PAYMENTS AND TRANSACTIONS. Neither Netect nor any
of or its Subsidiaries has engaged in any business practice or conducted any
transactions in violation of "trading-with-the-enemy" laws of the United States,
nor is Netect currently contracting with or receiving payments from any Person
such that the acquisition of Netect by a United States Person would result in a
violation of such laws.
4.23 FULL DISCLOSURE. No representation or warranty of Netect or each of
the Shareholders in this Agreement and no statement in the Disclosure Letter
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
4.24 NO BROKERS OR FINDERS. Except as set forth on Schedule 4.24 of the
Disclosure Letter (a copy of each agreement related to such exception set forth
in such Schedule 4.24 having been previously provided to BindView), Netect and
its Subsidiaries and their respective agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
4.25 YEAR 2000 COMPLIANCE. To the Knowledge of Netect, with respect to any
computer software, hardware, product or service utilized by Netect or its
Subsidiaries in the Ordinary Course
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of Business, each of such computer software, hardware, product or service, or
anything affected by or produced in accordance with such computer software,
hardware, product or service has the following properties and capabilities: (i)
the capability to correctly recognize and accurately process Four-Digit Dates;
(ii) the capability to accurately execute calculations using Four-Digit Dates;
(iii) the functionality (both on-line and batch), including entry, inquiry,
maintenance and update, to support processing involving Four-Digit Dates; (iv)
the capability to generate interfaces and reports that support processing
involving Four-Digit Dates; (v) the capability to generate and successfully
transition, without human intervention, into the year 2000 using the correct
system date and to thereafter continue processing with Four-Digit Dates; (vi)
the capability to provide correct results in forward and backward data
calculations spanning century boundaries, including the conversion of pre-2000
dates currently stored as two-digit dates; and (vii) the capability of correctly
recognizing and processing all leap-year aspects of any of items (i) through
(vi).
4.26 RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth on Schedule 4.26 of the Disclosure Letter:
4.26.1 there are no written or oral Contracts between Netect and any
Shareholder including, without limitation, any such Contracts relating to
the provision of any services by Netect to any such Shareholder, or by any
such Shareholder to Netect; and
4.26.2 (i) since January 1, 1998, there have been, (ii) from the date
hereof to the Closing Date there will be, and (iii) after the Closing Date
there will be, no transactions, agreements or arrangements between Netect
and (x) any Shareholder, (y) any director or officer of Netect or (z) any
member of the immediate family of any individual described in clause (x) or
(y) of this sentence.
4.26.3 Since January 1, 1998, no executive officer of Netect or any of
its Subsidiaries has engaged in competition with Netect or its Subsidiaries
with respect to any line of the products or services of Netect and its
Subsidiaries (a "Competing Business") in any market presently served by
Netect or its Subsidiaries, except for ownership of less than five percent
of the outstanding capital stock of any Competing Business that is publicly
traded on any national securities exchange or quoted on any national
automated quotation system or traded in the over-the-counter market;
Each of the Shareholders severally represents and warrants to BindView, as
of the date of this Agreement and as of the Closing Date, as to the matters set
forth in Sections 4.27 through 4.29 inclusive.
4.27 SHARE OWNERSHIP. Such Shareholder is and will be on the Closing Date
the record and beneficial owner and holder, free and clear of all Encumbrances,
of the number of Netect Shares as set forth in Schedule 4.3 of the Disclosure
Letter. All of the outstanding Netect Shares held by such shareholder have been
duly authorized and validly issued and are fully paid and nonassessable, are not
subject to rights of first refusal, and were not issued in violation of any
preemptive or similar rights.
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4.28 SECURITIES LAW MATTERS.
4.28.1 Such Shareholder recognizes and understands that the BindView
Common Stock to be issued pursuant to this Agreement will not be registered
under the Securities Laws. The Consideration is not being so registered in
reliance upon exemptions from registration, qualification or permit under
the Securities Laws that are predicated, in part, on the representations,
warranties and agreements of the Shareholders contained herein.
4.28.2 Accredited Investor Status; Purchaser Representative.
4.28.2.1 Unless such Shareholder's name is listed in Section 4.28
of the Disclosure Letter (the "Non-Accredited Shareholders"), such
Shareholder is an "Accredited Investor" within the meaning of
Regulation D promulgated by the SEC pursuant to the Securities Act
("Reg D").
4.28.2.2 If such Shareholder is a Non-Accredited Shareholder, by
executing and delivering this Agreement, such Shareholder appoints and
acknowledges Simon Weintram as his "Purchaser Representative", within
the meaning of Reg D, in connection with evaluating the merits and
risks of the prospective investment in the Consideration to be made in
connection with the Contemplated Transactions.
4.28.2.3 To such Shareholder's Knowledge, the Purchaser
Representative (i) is not an affiliate, director, officer or other
employee of BindView; (ii) has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of the prospective investment in the Consideration to
be made in connection with the Contemplated Transactions; and (iii)
has no material relationship between himself or any of his affiliates
and BindView or any of its affiliates, and no such relationship is
contemplated or has existed at any time during the previous two years.
4.28.3 Information Provided. Such Shareholder acknowledges that:
4.28.3.1 he has been furnished, at a reasonable time prior to the
date hereof, (i) BindView's registration statement on Form S-1
initially filed with the SEC under the Securities Act on November 6,
1998, as amended December 3, 1998; the "BindView SEC Reports"); (ii)
upon request by such Shareholder, all exhibits filed with the BindView
SEC Reports; and (iii) a summary description of the terms of the
Consideration;
4.28.3.2 BindView has made available to such Shareholder, at a
reasonable time prior to the date hereof, the opportunity to ask
questions and receive answers concerning the terms and conditions of
the Contemplated Transactions and to obtain any additional information
that it possesses or could acquire without unreasonable effort or
expense that is necessary to verify the accuracy of the information
contained in the BindView SEC Reports; and
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4.28.3.3 BindView has advised such Shareholder of the limitations
on resale of the Consideration contained in the following Paragraph.
4.28.4 Limitations on Resale; No Underwriters.
4.28.4.1 The Consideration shall have the status of securities
acquired in a transaction under Section 4(2) of the Securities Act and
cannot be resold without registration under the Securities Act or an
exemption therefrom.
4.28.4.2 Such Shareholder is acquiring the Consideration solely
himself, for investment and not with a view toward resale or
redistribution in violation of the Securities Laws.
4.28.4.3 Such Shareholder understands that the certificates
representing BindView Common Stock to be acquired as Consideration
will be imprinted with the following legends, the terms of which are
specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, THESE
SHARES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
Such Shareholder understands and agrees that appropriate stop transfer
notations will be placed in the records of BindView and with its
transfer agents in respect of the Consideration.
4.28.5 No Assurances. Such Shareholder acknowledges that no assurances
have been made concerning the future results of BindView or as to the value
of the Consideration.
4.28.6 Such Shareholder further acknowledges that he has had the
opportunity to consult with his own legal counsel with respect to the
Securities Laws and their applicability to the Consideration. Such
Shareholder further acknowledges that he bears his own risk as to the tax
effects of the Contemplated Transactions.
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4.29 SHAREHOLDER AUTHORITY; NO CONFLICT.
4.29.1 This Agreement constitutes the legal, valid and binding
obligation of such Shareholder and is enforceable against such Shareholder
in accordance with its terms. Upon the execution and delivery by such
Shareholder of the Indemnity Escrow Agreement and the Registration Rights
Agreement and, if applicable, the Employment Agreement and the
Non-competition Agreement (collectively, the "Shareholder Closing
Documents"), the Shareholder Closing Documents will constitute the legal,
valid and binding obligations of such Shareholder, enforceable against such
Shareholder in accordance with their respective terms. Such Shareholder has
the absolute and unrestricted right, power, authority and capacity to
execute and deliver this Agreement and the Shareholder Closing Documents
and to perform his obligations under this Agreement and the Shareholder
Closing Documents.
4.29.2 Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions by such
Shareholder will, directly or indirectly (with or without notice or lapse
of time):
4.29.2.1 contravene, conflict with or result in a violation of,
or give any Governmental Body the right to challenge any of the
Contemplated Transactions or to exercise any remedy pursuant to any
Legal Requirement or any Order to which such Shareholder or the Netect
Shares held by it, is subject;
4.29.2.2 contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by such Shareholder or the
Netect Shares held by it; or
4.29.2.3 result in the imposition or creation of any Encumbrance
upon or with respect to the Netect Shares held by it.
Except as set forth in Schedule 4.2 of the Disclosure Letter, such
Shareholder is not, nor to its Knowledge will it be required to give any
notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BINDVIEW
BindView represents and warrants to Netect and the Shareholders as follows:
5.1 ORGANIZATION AND GOOD STANDING. BindView is a corporation duly
organized and validly existing under the laws of the State of Texas, with full
corporate power and authority to conduct its business as it is now being
conducted. BindView is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification and where the failure to be so qualified would have a Material
Adverse Effect on BindView.
5.2 AUTHORITY; NO CONFLICT.
5.2.1 This Agreement constitutes the legal, valid and binding
obligation of BindView, enforceable against BindView in accordance with its
terms. Upon the execution and delivery by BindView of the Indemnity Escrow
Agreement, the Registration Rights Agreement, the Non-competition
Agreements and the Employment Agreements (collectively, the "BindView
Closing Documents"), the BindView Closing Documents will constitute the
legal, valid and binding obligations of BindView, enforceable against
BindView in accordance with their respective terms. BindView has the
absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement and the BindView Closing Documents and to
perform its obligations under this Agreement and the BindView Closing
Documents.
5.2.2 Other than the waiver by certain securityholders of BindView of
certain registration rights, neither the execution and delivery of this
Agreement or the BindView Closing Documents by BindView, the consummation
or performance of any of the Contemplated Transactions by BindView, nor the
performance of or compliance with this Agreement and the BindView Closing
Documents by BindView will give any Person the right to prevent, delay or
otherwise interfere with any of the Contemplated Transactions pursuant to,
or contravene, conflict with or result in a violation of:
5.2.2.1 any provision of BindView's Organizational Documents;
5.2.2.2 any resolution adopted by the board of directors or the
shareholders of BindView;
5.2.2.3 any Legal Requirement or Order to which BindView is
subject; or
5.2.2.4 any Contract to which BindView is a party or by which
BindView is bound.
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5.2.3 Other than the waiver by certain securityholders of BindView of
certain registration rights, BindView is not and will not be required to
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the BindView Closing Documents, the
consummation or performance of any of the Contemplated Transactions, or the
performance of this Agreement or the BindView Closing Documents.
5.3 NO PROCEEDINGS. There is no pending Proceeding that has been commenced
against BindView and that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Contemplated
Transactions. To BindView's Knowledge, no such Proceeding has been Threatened.
5.4 NO BROKERS OR FINDERS. BindView and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
5.5 BINDVIEW CAPITALIZATION.
5.5.1 The authorized capital stock of BindView consists of 100,000,000
shares of BindView Common Stock, of which 20,716,203 shares were
outstanding as of the close of business on December 31, 1998, and
20,000,000 shares of preferred stock, par value US$0.01 per share, of which
no shares are outstanding. All of the outstanding shares of BindView Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. BindView has no common stock or preferred stock reserved for
issuance, except that, as of December 31, 1998, there were an aggregate of
1,070,645 shares of BindView Common Stock reserved for issuance pursuant to
BindView's stock option and incentive plans and there currently are up to
1,424,659 shares of BindView Common Stock reserved for issuance as the
Consideration. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares of capital stock
or other securities of BindView or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable
for, or giving any Person a right to subscribe for or acquire, any
securities of BindView or any of its Subsidiaries, and no securities or
obligation evidencing such rights are authorized, issued or outstanding.
BindView does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
stockholders of BindView on any matter.
5.5.2 Prior to the Closing, BindView will have taken all necessary
action to permit it to issue the number of shares of BindView Common Stock
to be issued as Consideration pursuant to Article II. The Consideration,
when issued, will be validly issued, fully paid and nonassessable (other
than the Escrowed Shares, which are subject to the Indemnity Escrow
Agreement), and no Person will have any preemptive right of subscription or
purchase in respect thereof.
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5.6 BINDVIEW SEC REPORTS. BindView has delivered to Netect and the
Shareholders the BindView SEC Reports. Since July 24, 1998, BindView has made
all filings with the SEC that it has been required to make under the Securities
Act or the Exchange Act. Each of the BindView SEC Reports has complied with the
Securities Act and the Exchange Act in all material respects. As of their
respective dates, the BindView SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the BindView SEC
Reports (including the related notes and schedules) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, fairly presents the consolidated financial position of BindView
and its Subsidiaries as of its date and each of the consolidated statements of
operations, cash flow and shareholders' equity included in the BindView SEC
Reports (including any related notes and schedules) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, fairly presents the results of operations, retained earnings
and changes in cash flow and shareholders' equity, as the case may be, of
BindView and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year end audit adjustments
that will not be material in amount or effect), in each case in accordance with
GAAP consistently applied during the periods involved, except as may be noted
therein.
5.7 NO MATERIAL ADVERSE CHANGE. Since the date of the balance sheet
included in the most recently filed BindView SEC Report, BindView has conducted
its business in the ordinary course and there has not occurred: (a) any change
in the financial condition, liabilities, assets or business of BindView that
would result in a Material Adverse Effect; (b) any amendment or change to the
Articles of Incorporation or Bylaws of BindView; (c) any damage to, destruction
or loss of any assets of BindView (whether or not covered by insurance) that
would result in a Material Adverse Effect; (d) any declaration, setting aside or
payment of any dividend or any other distribution with respect to any of the
capital stock or other equity interests of BindView, or (e) any material change
by BindView in accounting principles.
5.8 COMPLIANCE WITH LAWS. Except for such non-compliance as would not,
individually or in the aggregate, have a Material Adverse Effect on BindView
and, except as disclosed in the BindView SEC Reports, to BindView's knowledge,
the conduct of BindView complies in all material respects with all environmental
and other Legal Requirements, statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto, except for violations or
failures so to comply, if any, that are consistent with the relevant industry
standard. To BindView's knowledge, no action or proceeding relating to any such
Legal Requirements, statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees is pending of threatened, except for such actions and
proceedings as would not, individually or in the aggregate, have a Material
Adverse Effect on BindView and its Subsidiaries taken as a whole.
5.9 PROPERTIES. Except as disclosed in Schedule 5.9 of the Disclosure
Letter and except for Permitted Liens, BindView or a Subsidiary of BindView has
good and marketable title to its material assets and the material assets of its
Subsidiaries, including the BindView Intellectual Property, free and clear of
all liens and encumbrances, except where such failure to hold such title
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would not, individually or in the aggregate, have a Material Adverse Effect on
BindView and its Subsidiaries taken as a whole.
5.10 NO BROKERS OR FINDERS. BindView and its agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
ARTICLE VI
COVENANTS OF NETECT AND THE SHAREHOLDERS
During the period from the date of this Agreement and continuing until the
Closing Date (except in the case of Section 6.9 which shall continue for the
period set forth therein), Netect and each Shareholder severally covenant with
BindView (except as expressly contemplated or permitted hereby, as specifically
permitted by the Disclosure Letter or as otherwise permitted with BindView's
prior written consent):
6.1 ACCESS AND INVESTIGATION. Upon reasonable notice, Netect shall, and
shall cause its Representatives to (i) afford BindView and its Representatives
access to Netect's and its Subsidiaries personnel, properties, contracts
(subject to redaction of confidential information where required by an
Applicable Contract), books and records, and other documents and data, (ii)
furnish BindView and its Representatives with copies of all such contracts
(subject to redaction of confidential information where required by an
Applicable Contract), books and records, and other existing documents and data
as BindView may reasonably request and (iii) furnish BindView and its
Representatives with such additional financial, operating and other data and
information as BindView may reasonably request.
6.2 OPERATION OF THE BUSINESSES OF NETECT. Netect will, except as set
forth on Schedule 6.2 of the Disclosure Letter:
6.2.1 conduct the business of Netect only in the Ordinary Course of
Business;
6.2.2 use its commercially reasonable efforts to preserve intact the
current business organization of Netect, keep available the services of the
current officers, employees and agents of Netect and maintain the relations
and good will with suppliers, customers, landlords, creditors, employees,
agents and others having business relationships with Netect;
6.2.3 confer with BindView concerning operational matters of a
material nature; and
6.2.4 otherwise report periodically to BindView regarding the status
of the business, operations and finances of Netect.
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6.3 NEGATIVE COVENANTS. Except as otherwise expressly contemplated or
permitted by this Agreement, Netect and its Subsidiaries will not, without the
prior consent of BindView,
6.3.1 take any affirmative action, or fail to take any reasonable
action within its control, as a result of which any of the changes or
events listed in Section 4.15 as qualified by Schedule 4.15 of the
Disclosure Letter is likely to occur;
6.3.2 pay, make or declare any distribution or dividend, including but
not limited to any regular bonuses that would otherwise be payable to the
Shareholders during such time period, to the Shareholders or to any other
shareholder of Netect except the issuance of Netect Shares or the grant of
options or rights to acquire Netect Shares pursuant to the Netect Stock
Plans in the Ordinary Course of Business substantially consistent as to
amount, exercise price, vesting and other terms with past practice;
6.3.3 make any transfer of or conduct or permit any other transaction
relating to Netect Shares or other equity interests of Netect except the
issuance of Netect Shares or the grant of options or rights to acquire
Netect Shares pursuant to the Netect Stock Plans in the Ordinary Course of
Business substantially consistent as to amount, exercise price, vesting and
other terms with past practice;
6.3.4 prepay or amend the provisions of any term indebtedness of
Netect existing as of the date hereof; or
6.3.5 notwithstanding anything in the Disclosure Letter, take any
action that would jeopardize treatment of the Contemplated Transactions as
a "pooling of interests" for accounting purposes or that is not in the
Ordinary Course of Business.
6.4 REQUIRED APPROVALS. As promptly as practicable after the date of this
Agreement, Netect and its Subsidiaries will make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Netect and its Subsidiaries will (i) cooperate with BindView with
respect to all filings that BindView elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions and (ii)
cooperate with BindView in obtaining all consents identified in Schedule 4.2 of
the Disclosure Letter.
6.5 NOTIFICATION. Netect will promptly notify BindView in writing if
Netect becomes aware of any fact or condition that would cause or constitutes a
Breach of any of Netect's representations and warranties as of the date of this
Agreement, or if Netect becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
or permitted by this Agreement) cause or constitute a Breach of any such
representation or warranty, had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, Netect and each Shareholder will promptly notify BindView if such party
becomes aware of the occurrence of any Breach of any covenant of Netect or such
Shareholder, as the case may be, in this Article VI and Netect will promptly
notify BindView upon becoming aware of the occurrence of any event that may make
the satisfaction of the conditions in Article IX impossible or unlikely.
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6.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, each Shareholder will cause all indebtedness owed to
Netect by such Shareholder or any Related Person of such Shareholder to be paid
in full prior to Closing.
6.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Article X, each Shareholder will not, and Netect will not
and will cause each of its Representatives not to, directly or indirectly
solicit, initiate or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than BindView)
relating to any transaction involving the sale of Netect Shares or the business
or Assets (other than the licensing of software products in the Ordinary Course
of Business) of Netect or its Subsidiaries, or any merger, consolidation,
business combination or similar transaction involving Netect or its
Subsidiaries.
6.8 COMMERCIALLY REASONABLE EFFORTS. Netect and each Shareholder,
severally, will use such party's commercially reasonable efforts to cause the
conditions in Articles VIII and IX to be satisfied.
6.9 LOCK-UP. Each Shareholder severally agrees that, any other provision
of this Agreement notwithstanding, such Shareholder shall not attempt to sell or
otherwise transfer its portion of the Consideration prior to the time BindView
publicly announces its results of operations for a financial period that
reflects at least 30 days of combined operations of BindView and Netect. Each
Shareholder severally agrees that BindView may place appropriate stop transfer
notations with its transfer agent in connection with this Section 6.9.
6.10 NONTAXABLE REORGANIZATION. Netect and the Shareholders intend for the
Exchange to qualify as a reorganization under Section 368(a) of the IRC; they
shall use commercially reasonable efforts to cause the Exchange to so qualify;
they will take the position for all purposes that the Exchange so qualifies; and
neither shall take any action other than the consummation of the transactions
contemplated herein that would cause the Exchange (i) not to so qualify or (ii)
to become taxable to any of the Shareholders immediately prior to the Closing
Date.
ARTICLE VII
COVENANTS OF BINDVIEW
7.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after the
date of this Agreement, BindView will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, BindView will, and will cause each Related Person to, (i)
cooperate with Netect and the Shareholders with respect to all filings that
Netect and the Shareholders are required by Legal Requirements to make in
connection with the Contemplated Transactions and (ii) cooperate with Netect and
the Shareholders in obtaining all consents identified in Schedule 4.2 of the
Disclosure Letter.
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7.2 COMMERCIALLY REASONABLE EFFORTS. Between the date of this Agreement and
the Closing Date, BindView will use its commercially reasonable efforts to cause
the conditions in Articles VIII and IX to be satisfied.
7.3 [RESERVED]
7.4 NOTIFICATION. Between the date of this Agreement and the Closing Date,
BindView will promptly notify Netect in writing if BindView becomes aware of any
fact or condition that would cause or constitutes a Breach of any of BindView's
representations and warranties as of the date of this Agreement, or if BindView
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated or permitted by this
Agreement) cause or constitute a Breach of any such representation or warranty,
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period, BindView will
promptly notify Netect if BindView becomes aware of the occurrence of any Breach
of any covenant of BindView in this Article VII or of the occurrence of any
event that may make the satisfaction of the conditions in Article VIII
impossible or unlikely.
7.5 POOLING TREATMENT. BindView will not take any action that would
jeopardize treatment of the Contemplated Transactions as a "pooling of
interests" for accounting purposes.
7.6 INDEMNIFICATION OF COMPANY OFFICERS AND DIRECTORS; INSURANCE. BindView
agrees for a period of six years following the Closing Date, not to amend the
exculpation, limitation of liability or indemnification provisions set forth in
the Organizational Documents of Netect in a manner that would adversely affect
the rights of Netect's officers, directors and employees to indemnification and
advancement of expenses thereunder and agrees to cause Netect to fulfill and
honor such obligations to the maximum extent permitted by law; provided,
however, that nothing in this Section shall prevent BindView from effecting any
merger, reorganization or consolidation of Netect. This Section is intended to
be for the benefit of, and shall be enforceable by, the indemnified parties
referred to herein, their heirs and personal representatives and shall be
binding on BindView and its successors and assigns.
7.7 STOCK OPTIONS.
7.7.1 At the Closing, BindView shall assume the Netect Option Plans
and all of Netect's obligations with respect to each outstanding stock
option thereunder. The stock options so assumed by BindView shall continue
to have, and be subject to, the same terms and conditions as set forth in
the applicable Netect Option Plan and/or any agreements pursuant to which
such stock options were granted as in effect immediately prior to the
Closing Date hereof, except that (1) each stock option shall be exercisable
for that number of whole shares of BindView Common Stock equal to the
number of Netect Shares covered by such stock option immediately prior to
the Closing, multiplied by the Option Exchange Ratio and rounded down to
the nearest whole number of shares of BindView Common Stock and (2) the
price at which each such stock option is exercisable shall be divided by
the Option Exchange Ratio (rounded up to the nearest cent). BindView shall
reserve for issuance the
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aggregate number of shares of BindView Common Stock that will become
issuable upon the exercise of all stock options outstanding at the Closing.
The Option Exchange Ratio shall equal 0.398409869.
7.7.2 (i) Within 20 days after the Closing, BindView shall cause to be
filed with the SEC a registration statement on Form S-8 with respect to the
stock options assumed hereby providing for issuance of BindView Common
Stock upon exercise of stock options, and will use its best efforts to
cause such registration statement to become and remain effective for so
long as stock options registered thereby remain outstanding, and (ii)
BindView shall file prior to the Closing a Notification Form for the
Listing of Additional Shares on Form 10b-17 with the Nasdaq National Market
with respect to the BindView Common Stock issuable upon exercise of such
stock options.
7.8 NONTAXABLE REORGANIZATION. BindView intends for the exchange to
qualify as a reorganization under Section 368(a) of the IRC; BindView and its
affiliates shall use commercially reasonable efforts to cause the Exchange to so
qualify; BindView and its affiliates will take the position for all purposes
that the Exchange so qualifies; and BindView and its affiliates shall not take
any action other than the consummation of the transactions contemplated herein
that would cause the Exchange (i) not to so qualify or (ii) to become taxable to
any of the Shareholders immediately prior to the Closing Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO NETECT'S AND THE SHAREHOLDERS'
OBLIGATION TO CLOSE
Netect's and the Shareholders' obligation to take the actions required to
be taken by them at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions, any of which may be waived by
Netect or the Shareholders (such waiver by the Shareholders to be evidenced in
writing signed by the Shareholders' Representative), in whole or in part;
provided, however, that Netect's and the Shareholders' election to proceed with
the Closing shall not be deemed a waiver of any breach of any representation,
warranty or covenant contained herein, whether or not within the Knowledge of
Netect or the Shareholders or existing on the Closing Date.
8.1 ACCURACY OF REPRESENTATIONS. All of BindView's representations and
warranties in this Agreement (considered collectively) will be accurate in all
material respects as of the Closing Date as if made on the Closing Date except,
in each case, (i) representations and warranties made expressly with respect to
a specific date, (ii) changes specifically contemplated, permitted or required
by this Agreement and (iii) without regard to materiality qualifications or
dollar thresholds contained in Article V.
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8.2 BINDVIEW'S PERFORMANCE.
8.2.1 All of the covenants and obligations that BindView is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), have been performed and complied
with in all material respects.
8.2.2 BindView has delivered each of the documents required to be
delivered by it pursuant to Section 3.2 and has delivered the Consideration
to the Shareholders as set forth in Section 2.1.
8.3 CONSENTS. Each of the Consents identified in Schedule 4.2 of the
Disclosure Letter has been obtained and is in full force and effect.
8.4 NO PROCEEDINGS. Since the date of this Agreement, there has not been
commenced or Threatened against Netect or any of the Shareholders, or against
any Person affiliated with Netect or any of the Shareholders, any Proceeding (i)
involving any challenge to, or seeking damages or other relief in connection
with, any of the Contemplated Transactions or (ii) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Contemplated Transactions.
8.5 INDEMNITY ESCROW AGREEMENT. BindView, the Shareholders'
Representative, the Shareholders, and the Indemnity Escrow Agent shall have
entered into the Indemnity Escrow Agreement.
8.6 CLOSING CERTIFICATE. BindView shall have delivered to the
Shareholders' Representative a certificate of an officer of BindView dated the
Closing Date certifying as to the satisfaction of the conditions set forth in
Sections 8.1 and 8.2.
8.7 POOLING OPINION. Netect shall have received a written opinion of
PricewaterhouseCoopers L.L.P. that, in accordance with generally accepted
accounting principles and applicable rules and regulations of the SEC, Netect
and BindView, respectively, are poolable entities and the acquisition of the
Netect Shares and Options by BindView pursuant to this Agreement will be treated
as a "pooling of interests" for accounting purposes.
8.8 NASDAQ LISTING. The shares of BindView Common Stock to be included in
the Consideration will, on the Closing Date, be authorized for listing on the
Nasdaq National Market.
8.9 AFFILIATE LETTERS. Affiliates of BindView shall have delivered
customary "pooling-of-interests" lock-up, affiliate letters addressed to
BindView and the Shareholders' Representative, as may be required to permit the
Contemplated Transaction to be accounted for under the "pooling-of-interests"
method of accounting.
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ARTICLE IX
CONDITIONS PRECEDENT TO BINDVIEW'S
OBLIGATION TO CLOSE
BindView's obligation to take the actions required to be taken by it at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions, any of which may be waived by BindView, in whole or in
part; provided, however, that BindView's election to proceed with the Closing
shall not be deemed a waiver of any breach of any representation, warranty or
covenant contained herein, whether or not within the Knowledge of BindView or
existing on the Closing Date.
9.1 ACCURACY OF REPRESENTATIONS. All of Netect's and the Shareholders'
representations and warranties in this Agreement (considered collectively) will
be accurate in all material respects as of the Closing Date as if made on the
Closing Date except, in each case, (i) representations and warranties made
expressly with respect to a specific date, (ii) changes specifically
contemplated or permitted or required by this Agreement and (iii) without regard
to materiality qualifications or dollar thresholds contained in Article IV.
9.2 NETECT'S AND THE SHAREHOLDERS' PERFORMANCE.
9.2.1 All of the covenants and obligations that Netect and the
Shareholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), have been duly
performed and complied with in all material respects.
9.2.2 Netect and the Shareholders have delivered each of the documents
required to be delivered by them pursuant to Section 3.2 and have delivered
Netect Shares to BindView as set forth in Section 2.1.
9.3 CONSENTS. Each of the Consents identified in Schedule 4.2 of the
Disclosure Letter has been obtained and is in full force and effect.
9.4 [Reserved]
9.5 NO PROCEEDINGS. Since the date of this Agreement, there has not been
commenced or Threatened against BindView, or against any Person affiliated with
BindView, any Proceeding (i) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions or (ii)
that may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Contemplated Transactions.
9.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There has not
been made or Threatened by any Person any claim asserting that such Person (i)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity or
ownership interest in, Netect or any of its Subsidiaries or (ii) is entitled to
all or any portion of the Consideration payable for Netect Shares.
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9.7 WAIVERS. Netect shall have received written waivers or releases in
form and substance reasonably satisfactory releasing the encumbrances described
in Schedule 4.6 (other than those set forth in Item 2, (a) and (d)) of the
Disclosure Letter.
9.8 POOLING OPINION. BindView shall have received a written opinion of
PricewaterhouseCoopers L.L.P. that, in accordance with generally accepted
accounting principles and applicable rules and regulations of the SEC, Netect
and BindView, respectively, are poolable entities and the acquisition of the
Netect Shares and Options by BindView pursuant to this Agreement will be treated
as a "pooling of interests" for accounting purposes.
9.9 NO MATERIAL ADVERSE CHANGE. Since the most recent date of the Balance
Sheets, except as set forth in the Disclosure Letter, there shall not have been
any change in the business, operations, properties, Assets or condition of
Netect and its Subsidiaries that may result in a Material Adverse Effect to
Netect and its Subsidiaries, and no event shall have occurred or circumstance
exist that would reasonably be likely to result in a Material Adverse Effect to
Netect and its Subsidiaries.
9.10 INDEMNITY ESCROW AGREEMENT. BindView, the Shareholders, and the
Indemnity Escrow Agent shall have entered into the Indemnity Escrow Agreement.
9.11 TRANSACTION EXPENSES; SEVERANCE COSTS; DEBT.
9.11.1 Since December 31, 1998, Netect and its Subsidiaries shall not
have paid or incurred or otherwise become liable for Transaction Expenses
in excess of an amount equal to the Estimated Transaction Expenses as set
forth in Schedule 9.11.
9.11.2 Netect and its Subsidiaries shall not have paid or incurred or
otherwise become liable for any employee bonuses or severance payments
relating to the Contemplated Transactions or resulting from a "change in
control" of Netect in excess of those for which it was contractually
obligated on January 21, 1999 (which are disclosed on Schedule 9.11) and,
in the case of employees who are not Selected Employees and to whom Netect
and its Subsidiaries are not contractually bound to make severance or bonus
payments, an amount equal to six months of the base annual salary of such
employee as in effect on January 4, 1999.
9.11.3 As of the Closing Date, Netect and its subsidiaries shall not
have more than US $200,000 in indebtedness, exclusive of trade payables and
bridge loan financing from securityholders and accrued but unpaid
Transaction Expenses.
9.12 CLOSING CERTIFICATE. Each Shareholder shall have delivered to BindView
a certificate dated the Closing Date certifying as to the satisfaction of the
conditions set forth in Sections 9.1 and 9.2 as applicable to such Shareholder.
Netect shall have delivered to BindView a certificate dated the Closing Date
certifying as to the satisfaction of the conditions set forth in Sections 9.1,
9.2, 9.9 and 9.11 as applicable to it.
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9.13 SHAREHOLDER RELEASES. BindView shall have received a release of Netect
and its Subsidiaries signed by each Shareholder in the form attached as
Exhibit D.
9.14 COMPILING SOFTWARE. Not later than five Business Days prior to the
Closing, Netect shall have provided to BindView, at BindView's facility in
Houston, Texas, a computer on which all of the source code relating to the
HackerShield 1.1 Software is stored and on which an executable version of the
HackerShield 1.1 Software may be compiled from such source code, and BindView
shall have been able to compile and test such an executable version to its
reasonable satisfaction.
ARTICLE X
TERMINATION
10.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or at
the Closing, be terminated:
10.1.1 [Reserved]
10.1.2 (i) by BindView if any of the conditions in Article IX has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
BindView to comply with its obligations under this Agreement) and BindView
has not waived such condition on or before the Closing Date; or (ii) by
Netect and the Shareholders' Representative if any of the conditions in
Article VIII has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Netect or the Shareholders to comply with any of
their obligations under this Agreement) and Netect or the Shareholders have
not waived such condition on or before the Closing Date;
10.1.3 by mutual written consent of BindView and Netect and the
Shareholders' Representative; or
10.1.4 by BindView, or Netect and the Shareholders' Representative if
the Closing has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before March 1, 1999; provided, however, that
such date may be extended for up to twenty (20) Business Days by written
notice given by BindView or Netect.
10.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 10.1, all further obligations of the parties hereunder shall
terminate, except for the obligations set forth in Sections 12.2 (Public
Announcements) and 12.3 (Confidentiality), and except that nothing in this
Section 10.2 shall relieve any party hereto of any liability for willful breach
of this Agreement prior to such termination. In addition, upon such a
termination as provided for in this Article X, each of Netect, the Shareholders
and BindView shall return any and all written information, documents and data
and other property (including without limitation computers, software, source
code and technical documentation) obtained from the other party in connection
with this transaction to the
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owner of such written information, documents and data and other property within
the five business days following such confirmed termination.
ARTICLE XI
INDEMNIFICATION; REMEDIES
11.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
Claims for any Breach of any representation, warranty, covenant or obligation in
this Agreement (including the Disclosure Letters incorporated herein) or in any
certificate delivered pursuant to this Agreement will survive the Closing until
the first anniversary of the Closing (other than any Claims for Breach to the
extent relating to any failure of BindView to perform or comply with covenants
or obligations following the Closing Date, which shall survive for the
respective terms of such covenants and obligations). The right to
indemnification and payment of Damages hereunder will not be affected by any
investigation conducted with respect to, or any Knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant or
obligation.
11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SHAREHOLDERS. If the
Closing occurs, the Shareholders, severally and on a pro-rata basis in
proportion to each Shareholder's interest in the Escrow Shares, will indemnify
and hold harmless BindView and its Representatives, stockholders, controlling
persons and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons solely out of the Escrow Shares (as defined in
the Indemnity Escrow Agreement) the amount of, any loss, liability, claim,
damage (including incidental and consequential damages), expense (including
costs of defense and reasonable attorneys' fees) or diminution of value, whether
or not involving a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with:
11.2.1 any Breach of any representation or warranty made by Netect or
such Shareholder in this Agreement or any other certificate delivered by
Netect or by such Shareholder pursuant to this Agreement;
11.2.2 any Breach of any representation or warranty made by Netect or
such Shareholder in this Agreement as if such representation or warranty
were made on and as of the Closing Date (unless specifically permitted or
required hereby); or
11.2.3 any Breach by Netect or such Shareholder of any covenant or
obligation of Netect or such Shareholder in this Agreement;
in each case net of any specific accruals reflected on the most recent
Balance Sheet and net of any of the following that is in excess of accruals
reflected in the Balance Sheet and that is received or recognized within
the calendar year in which such indemnification claim is resolved: (i) an
actual reduction or refund of Taxes, (ii) insurance proceeds or (iii)
recoveries from third parties.
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The remedies provided in this Section 11.2 shall be the sole and exclusive
remedies of BindView and the other Indemnified Persons and shall exclude and
limit any other remedies that may otherwise be available to BindView or any of
the other Indemnified Persons following the Closing with respect to the
representations, warranties, covenants and obligations of Netect, the
Shareholders and the Shareholders' Representative in this Agreement in any
certificate delivered pursuant to this Agreement or otherwise in connection
herewith..
11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BINDVIEW. If the Closing
occurs, BindView will indemnify and hold harmless the Shareholders and their
respective Representatives, stockholders, partners, members, controlling persons
and affiliates (collectively, the "Shareholder Indemnified Parties") for, and
will pay to the Shareholder Indemnified Parties the amount of any Damages
arising, directly or indirectly, from or in connection with:
11.3.1 any Breach of any representation or warranty made by BindView
in this Agreement or any other certificate delivered by BindView pursuant
to this Agreement;
11.3.2 any Breach of any representation or warranty made by BindView
in this Agreement as if such representation or warranty were made on and as
of the Closing Date (unless specifically permitted or required hereby); or
11.3.3 any Breach by BindView of any covenant or obligation of
BindView in this Agreement;
in each case net of any of the following that is received or recognized
within the calendar year in which such indemnification claim is resolved:
(i) an actual reduction or refund of Taxes, (ii) insurance proceeds or
(iii) recoveries from third parties.
The remedies provided in this Section 11.3 shall be the sole and exclusive
remedies of the Shareholders and the other Shareholder Indemnified Persons and
shall exclude and limit any other remedies that may otherwise be available to
the Shareholders or any of the other Shareholder Indemnified Persons following
the Closing with respect to the representations, warranties, pre-closing
covenants and pre-closing obligations of BindView in this Agreement in any
certificate delivered pursuant to this Agreement or otherwise in connection
herewith.
11.4 TIME LIMITATIONS.
11.4.1 If the Closing occurs, the Shareholders will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with in
respect of any of the Contemplated Transactions prior to the Closing Date
unless on or before the first anniversary of the Closing Date BindView
notifies the Shareholders' Representative of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by
BindView.
11.4.2 If the Closing occurs, BindView will have no liability (for
indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be
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performed and complied with in respect of any of the Contemplated
Transactions prior to the Closing Date unless on or before the first
anniversary of the Closing Date any or all of the Shareholders notify
BindView of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by such Shareholder.
11.5 LIMITATIONS ON AMOUNT - THE SHAREHOLDERS. The Shareholders will have
no liability (for indemnification or otherwise) with respect to the matters
described in Sections 11.2 unless and until the total of all Damages with
respect to such matters exceeds an amount equal to the sum of (i) US$200,000
plus (ii) one half of the amount by which the Transaction Expenses are less than
Estimated Transaction Expenses (such total amount being the "Basket"), and then
such liability shall include those Damages comprising the Basket amount.
The maximum aggregate amount of Damages for all matters that may be
recovered under Section 11.2 from the Shareholders and the source of the
recovery shall be limited to the Escrow Shares pursuant to the Indemnity Escrow
Agreement. However, the limitations provided for by this Section 11.5 will not
apply to Damages relating to actual fraud by Netect or, with respect to any
Shareholder, by such Shareholders.
11.6 LIMITATIONS ON AMOUNT - BINDVIEW. BindView will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
11.3.1 or 11.3.2 or, to the extent relating to any failure to perform or comply
prior to the Closing Date, 11.3.3, until the total of all Damages with respect
to such matters exceeds an amount equal to the Basket, and then such liability
shall include those Damages comprising the Basket amount.
The maximum aggregate amount of Damages for all matters that may be
recovered under Section 11.3 from BindView shall be an amount equal to
US$2,567,000. However, the limitations provided for by this Section 11.6 will
not apply to Damages relating to actual fraud by BindView.
11.7 INDEMNITY ESCROW. Upon notice to the Shareholders' Representative
specifying in reasonable detail the basis for a Claim, BindView may give notice
of a Claim under the Indemnity Escrow Agreement.
11.8 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
11.8.1 Promptly after receipt by an indemnified party under Section
11.2 or 11.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is
materially prejudiced by the indemnifying party's failure to give such
notice.
11.8.2 If any Proceeding referred to in Section 11.8.1 is brought
against an indemnified party, the indemnifying party will be entitled to
participate in such Proceeding
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and, to the extent that it wishes (unless (i) the indemnifying party is
also a party to such Proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense of
such Proceeding with counsel reasonably satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified
party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Article XI for any
fees of other counsel or any other expenses with respect to the defense of
such Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding. If the
indemnifying party assumes the defense of a Proceeding, (a) no compromise
or settlement of such claims may be effected by the indemnifying party
without the indemnified party's consent, which consent may not be
unreasonably withheld, unless (1) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made against the
indemnified party and (2) the sole relief provided is monetary damages that
are paid in full by the indemnifying party or having a value recoverable in
Escrow Shares and (b) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of
any Proceeding and the indemnifying party does not, within ten days after
the indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense of such Proceeding, the
indemnifying party will be entitled to participate in the defense at its
own expense and will be bound by any compromise or settlement effected by
the indemnified party with the indemnifying party's consent, not to be
unreasonably withheld.
11.8.3 Notwithstanding the foregoing, if an indemnified party
determines in good faith that with respect to any third party claim
involving intellectual property rights there is a reasonable probability
that a Proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice
to the indemnifying party, assume the right to defend, compromise or settle
such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
11.9 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
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ARTICLE XII
GENERAL PROVISIONS
12.1 EXPENSES. Except as expressly set forth in this Agreement, each party
to this Agreement shall bear all of its legal, accounting, investment banking,
and other expenses incurred by it or on its behalf in connection with the
transactions contemplated by this Agreement, whether or not such transactions
are consummated; provided, however, that to the extent the Transaction Expenses
exceed the Estimated Transaction Expenses, BindView's only recourse is to make a
Claim under the Indemnity Escrow Agreement without regard to the Basket, up to
the amount of the Escrow Shares.
12.2 PUBLIC ANNOUNCEMENTS. Unless consented to in writing in advance by
BindView and Netect or required by Legal Requirements or stock exchange rule or
regulation, prior to the Closing, or at any time after the termination of this
Agreement pursuant to Section 10.1, the parties hereto shall keep this Agreement
strictly confidential and may not make disclosure regarding this Agreement to
any Person. If a party hereto is required by Legal Requirements to make any such
disclosure, such party must first provide to BindView and Netect a copy of such
proposed disclosure, a description of the Legal Requirements requiring such
disclosure and the time and place at which such disclosure will be made. Netect
and BindView will consult generally with each other concerning the means by
which Netect's and its Subsidiaries' customers and suppliers and others having
dealings with Netect and its Subsidiaries will be informed of the Contemplated
Transaction prior to Closing, and BindView will have the right to be present for
any such communication. Netect may discuss the foregoing matters with its
employees without regard to the provisions of this Section 12.2.
12.3 CONFIDENTIALITY. Between the date of this Agreement and the Closing
Date, BindView, Netect and each of the Shareholders will maintain in confidence,
and will cause their respective directors, officers, employees, agents, advisors
and Representatives to maintain in confidence, any written information obtained
in confidence from such other party in connection with this Agreement or the
Contemplated Transactions, unless (i) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions or (iii) the furnishing or use of such information is required by
or necessary or appropriate in connection with any Legal Requirement or legal
proceeding.
If the Contemplated Transactions are not consummated, each receiving party
will return or destroy as much of such written information as any disclosing
party may reasonably request.
The provisions of this Section 12.3 are in addition to and cumulative of
the terms and conditions contained in (a) that certain Nondisclosure Agreement
dated November 6, 1998, by and between Netect and BindView (the "Confidentiality
Letter") and (b) that certain letter of intent dated January 21, 1999, by and
between Netect and BindView. In the event of any conflict between the terms of
this Section 12.3 and the Confidentiality Letter, the terms of the
Confidentiality Letter will supersede the conflicting terms of this Section
12.3.
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12.4 NOTICES. All notices, consents, waivers and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (i) delivered by hand (with written confirmation of receipt), (ii) sent by
telecopier (with written confirmation of receipt) or (iii) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
IF TO BINDVIEW:
BindView Development Corporation
0000 Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President and Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxx, Xx.
Facsimile No.: (000) 000-0000
IF TO NETECT, THE SHAREHOLDERS OR THE SHAREHOLDERS' REPRESENTATIVE:
Xxxx X. Xxxxxxx
Netect Inc.
00 Xxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: 000-000-0000
12.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of Texas,
County of Xxxxxx, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of Texas, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or
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proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
12.6 FURTHER ASSURANCES. The parties agree (i) to furnish upon request to
each other such further information, (ii) to execute and deliver to each other
such other documents and (iii) to do such other acts and things, all as any
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.7 WAIVER. To the maximum extent permitted by applicable law, (i) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
parties, (ii) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given and (iii) no notice to or demand
on one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
12.8 ENTIRE AGREEMENT AND MODIFICATION. Except as otherwise provided
herein, this Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between BindView
and Netect dated January 21, 1999) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by each of
the parties hereto.
12.9 DISCLOSURE LETTER. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure Letter
with respect to a representation or warranty), the statements in the body of
this Agreement will control.
12.10 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties, which will not be unreasonably withheld, except that BindView may
assign any of its rights under this Agreement to any Subsidiary of BindView.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Except as specifically set forth in Sections 7.6 and
7.7, nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. Except as specifically set forth in Sections 7.6 and 7.7,
this Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
12.11 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable. The
provisions of this
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Agreement were negotiated by the parties hereto and this Agreement shall be
deemed to have been drafted by all the parties hereto.
12.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.13 TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
12.14 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Texas without regard to conflicts of laws principles.
12.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
12.16 AMENDMENT OF DISCLOSURE LETTER. Until five Business Days prior to the
Closing, each of Netect and the Shareholders may supplement or amend the
Disclosure Letter relating to their respective representations and warranties
and covenants in this Agreement in order to make such representations and
warranties accurate and such covenants fulfilled as of the Closing Date. The
matter, liability or obligation disclosed in such supplement or amendment shall
be considered in determining whether or not the conditions set forth in Articles
VIII and IX have been satisfied. If such supplement or amendment discloses
matters, liabilities or obligations that, as of the date hereof, are within the
Knowledge of the party so amending or supplementing, then such matters,
liabilities or obligations shall be considered in determining whether or not the
relevant representation or warranty was Breached on the date hereof and the
extent to which any party may have rights to indemnification under Article XI
for any such matter, liability or obligation; and provided further that if such
supplement or amendment discloses matters, liabilities or obligations that, as
of the date hereof, are not within the Knowledge of the party so amending or
supplementing, then such matters, liabilities or obligations shall not be
considered in determining whether or not the relevant representation or warranty
was Breached but shall only be considered in determining the extent to which any
other party may have rights to indemnification under Article XI for such breach
as follows: if such supplement or amendment discloses a matter, liability or
obligation for which a party otherwise would have been entitled to
indemnification under Article XI, then the total amount to which such party is
entitled under Section XI for that specific matter, liability or obligation (but
not the amounts with respect to the Basket or liability limits) will be reduced
by half.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the date first written above.
BINDVIEW DEVELOPMENT CORPORATION
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
Chief Executive Officer and President
NETECT LTD.
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
SHAREHOLDERS' REPRESENTATIVE
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
SHAREHOLDERS
/s/ XXXX XXXXXXXXXX
-----------------------------------------
Xxxx Xxxxxxxxxx
/s/ XXXXXXX XXXXX
-----------------------------------------
Xxxxxxx Xxxxx
/s/ XXXXXX XXXXXXX
-----------------------------------------
Xxxxxx Xxxxxxx
/s/ XXX XXXXX
-----------------------------------------
Xxx Xxxxx
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/s/ XXXXX BINAMOWITCH
-----------------------------------------
Xxxxx Binamowitch
/s/ JACOB LIF
-----------------------------------------
Jacob Lif
Advocate Ziv Ironi, FBO of Xxxxx Alluch
By:
--------------------------------------
Name: /s/ [Signature Illegible]
------------------------------------
Title:
-----------------------------------
/s/ XXXXXXXX XXXXX
-----------------------------------------
Xxxxxxxx Xxxxx
/s/ XXXX XXXX
-----------------------------------------
Xxxx Xxxx
/s/ XXX XXXXXXXX
-----------------------------------------
Xxx Xxxxxxxx
/s/ XXXX XXXXXXXXX
-----------------------------------------
Xxxx Xxxxxxxxx
XDL Netect Holland
By:
--------------------------------------
Name: /s/ XXXXX XXXXXX
------------------------------------
Title:
-----------------------------------
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Delta Capital LTD.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
------------------------------------
Integral Capital Partners III L.P.
By:
--------------------------------------
Name: /s/ XXXXXX XXXXXXX
------------------------------------
Title:
-----------------------------------
/s/ XXXXX XXXXXXX
-----------------------------------------
Xxxxx Xxxxxxx
Integral Capital Partners International
III L.P.
By:
---------------------------------------
Name: /s/ XXXXXX XXXXXXX
------------------------------------
Title:
-----------------------------------
/s/ XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
Revaya Aspakat Mime Be'er Yaacov Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
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Xxxx Xxx Xxx Trustee Co. (1992) Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Yuval 63 Holdings (1995) Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Xxx Xxxxxx Holdings Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Xxx Xxxxxx Holdings Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Xxxx Electronics Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Genesis Partners (Cayman) L.P.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
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Xxxxx Global Investment, Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Remington Investments Strategies, L.P.
By:
--------------------------------------
Name: /s/ XXXXXX XXXXXXXXXX
------------------------------------
Title:
-----------------------------------
Genesis Partners I L.P.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
W.S.P. Capital Holding Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
Xxxxxx Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
/s/ XXXXXXX XXXXXXXX
-----------------------------------------
Xxxxxxx Xxxxxxxx
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I. J. T. Technologies Ltd.
By:
--------------------------------------
Name: /s/ [signature illegible]
------------------------------------
Title:
-----------------------------------
/s/ XXXX XXXXX
-----------------------------------------
Xxxx Xxxxx
(as a trust of Xxxxx Xxxxxxxxx)
64
