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EXHIBIT 2.3
SHARE ACQUISITION AGREEMENT
BY AND AMONG
NEW ERA OF NETWORKS, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇▇
AND
THE SHAREHOLDERS OF SLI INTERNATIONAL AG
DATED AS OF APRIL 15, 1999
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Form of Non-Competition Agreement
Exhibit B Form of Shareholder Agreement
Exhibit C Form of Escrow Agreement
SCHEDULE DESCRIPTION
1.1 Shareholders; Allocation of Purchase Price
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TABLE OF CONTENTS
PAGE
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ARTICLE I - PURCHASE AND SALE OF COMPANY STOCK.............................. 2
1.1 Purchase and Sale................................................. 2
1.2 Consideration..................................................... 2
1.3 Closing........................................................... 4
1.4 Definitions....................................................... 5
1.5 No Further Ownership Rights in Shares............................. 6
1.6 Taking of Necessary Action; Further Action........................ 6
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS............. 6
2.1 Organization of the Company....................................... 6
2.2 Subsidiaries...................................................... 6
2.3 Company Capital Structure......................................... 7
2.4 Authority......................................................... 7
2.5 No Conflict....................................................... 7
2.6 Consents.......................................................... 8
2.7 Company Financial Statements...................................... 8
2.8 No Undisclosed Liabilities........................................ 8
2.9 No Changes........................................................ 9
2.10 Tax Matters; Definition of Taxes................................. 10
2.11 Restrictions on Business Activities.............................. 12
2.12 Title of Properties; Absence of Liens and Encumbrances; Condition
of Equipment..................................................... 12
2.13 Intellectual Property............................................ 13
2.14 Agreements, Contracts and Commitments............................ 13
2.15 Interested Party Transactions.................................... 15
2.16 Governmental Authorization....................................... 15
2.17 Litigation....................................................... 15
2.18 Accounts Receivable.............................................. 15
2.19 Minute Books..................................................... 16
2.20 Environmental Matters Hazardous Material......................... 16
2.21 Brokers' and Finders' Fees; Third Party Expenses................. 16
2.22 Employee Benefit Plans and Compensation.......................... 17
2.23 Insurance........................................................ 19
2.24 Compliance with Laws............................................. 19
2.25 Warranties; Indemnities.......................................... 19
2.26 Complete Copies of Materials..................................... 19
2.27 Proprietary Information Agreements............................... 19
2.28 Representations Complete......................................... 20
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ARTICLE III - FURTHER REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS................................................. 20
3.1 Ownership of Shares.............................................. 21
3.2 Tax Matters...................................................... 21
3.3 Absence of Claims by the Shareholders............................ 21
3.4 Authority........................................................ 21
3.5 No Conflict...................................................... 21
3.6 Consents......................................................... 22
3.7 Unregistered Shares.............................................. 22
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF NEON........................ 22
4.1 Organization, Standing and Power................................. 22
4.2 Authority........................................................ 22
4.3 Capital Structure................................................ 22
4.4 No Conflict...................................................... 23
4.5 Consents......................................................... 23
4.6 SEC Documents; NEON Financial Statements......................... 23
ARTICLE V - CONDUCT PRIOR TO THE CLOSING................................... 24
5.1 Conduct of Business of the Company............................... 24
5.2 No Solicitation.................................................. 26
ARTICLE VI - ADDITIONAL AGREEMENTS......................................... 26
6.1 Access to Information............................................ 26
6.2 Confidentiality.................................................. 27
6.3 Expenses......................................................... 27
6.4 Public Disclosure................................................ 27
6.5 Consents......................................................... 27
6.6 Reasonable Efforts............................................... 27
6.7 Tax Matters...................................................... 28
6.8 Employees; NEON Stock Options.................................... 28
6.9 Additional Documents and Further Assurances...................... 28
6.10 Suspension and Termination of Memorandum of Understanding........ 29
ARTICLE VII - CONDITIONS TO THE CLOSING.................................... 29
7.1 Conditions to Obligations of Each Party to Consummate the
Acquisition...................................................... 29
7.2 Conditions to Obligations of the Shareholders.................... 29
7.3 Conditions to the Obligations of NEON............................ 30
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ARTICLE VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY AND ESCROW........................................ 31
8.1 Survival of Representations and Warranties; Indemnity............ 31
8.2 Indemnity; Escrow Arrangements................................... 31
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER............................. 35
9.1 Termination...................................................... 35
9.2 Effect of Termination............................................ 36
9.3 Amendment........................................................ 36
9.4 Extension; Waiver................................................ 36
9.5 Termination Payment.............................................. 36
ARTICLE X - GENERAL PROVISIONS............................................. 37
10.1 Notices.......................................................... 37
10.2 Interpretation................................................... 38
10.3 Counterparts..................................................... 38
10.4 Entire Agreement................................................. 38
10.5 Severability..................................................... 38
10.6 Other Remedies................................................... 38
10.7 Specific Performance............................................. 39
10.8 Governing Law.................................................... 39
10.9 Assignment....................................................... 39
10.10 Absence of Third-Party Beneficiary Rights....................... 39
10.11 Waiver of Jury Trial............................................ 39
10.12 Rules of Construction........................................... 39
10.13 U.S. Currency................................................... 39
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SHARE ACQUISITION AGREEMENT
This SHARE ACQUISITION AGREEMENT (the "Agreement") is made and entered
into as of April 15, 1999 by and among New Era of Networks, Inc., a Delaware
corporation ("NEON"), ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Holding Shareholder") as the sole
shareholders of ▇▇▇▇▇▇▇ Holdings AG ("KH"), and the shareholders (the "SLI
Shareholders," and, along with the Holding Shareholder, the "Shareholders") set
forth on Schedule 1.1 attached hereto of SLI INTERNATIONAL AG, a Swiss
corporation incorporated in the Canton of Thurgau as the holding company of SLI
Consulting AG (Switzerland) (additionally, SLI Systemhaus AG (Switzerland) is a
50% owned subsidiary of SLI Consulting AG), SLI Consulting Inc. (United
States), SLI Consulting Ltd. (United Kingdom), SLI Consulting SDN BHD
(Malaysia) (additionally, SLI Consulting Pte. Ltd. (Singapore) and SLI
Consulting Limited (Hong Kong) are both wholly-owned subsidiaries of SLI
Consulting SDN BHD), (hereafter "SLI," and, together with the other companies
listed above, the "Company"), and, with respect to Article VIII, ▇▇▇▇▇ ▇▇▇▇▇▇▇
(in his capacity as the "Shareholder Representative"). All references to the
"Shareholders" shall be deemed to include both the SLI Shareholders and the
Holding Shareholder unless otherwise indicated. All references to "the Company"
shall include SLI and all of the other companies listed above unless otherwise
indicated.
RECITALS
A. The SLI Shareholders and KH own all of the issued and outstanding
capital stock of SLI and the Holding Shareholder owns all of the issued and
outstanding capital stock of KH. NEON desires to acquire all of the issued and
outstanding capital stock of SLI owned or held of record or to be owned or held
of record by the Shareholders and all of the issued and outstanding capital
stock of KH owned by the Holding Shareholder (together the "Acquisition") such
that upon consummation of the acquisition NEON will own (i) all of the issued
and outstanding capital stock of the Company owned by the Shareholders, and
(ii) all of the issued and outstanding capital stock of KH owned by the Holding
Shareholder.
B. The Shareholders desire to sell all of the capital stock of SLI
owned or held of record or to be owned or held of record by them to NEON, and
the Holding Shareholder desires to sell all of the capital stock of KH owned by
him to NEON, upon the terms and subject to the conditions set forth herein.
C. As an inducement for NEON to consummate the Acquisition, the
Shareholders agree to make certain representations, warranties, covenants and
other agreements in connection with the Acquisition.
D. Ten percent (10%) of the consideration payable by NEON in
connection with the Acquisition shall be placed in escrow by NEON for the
purposes of satisfying damages, losses, expenses and other similar charges that
result from breaches of representations, warranties and
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covenants and shall be subject to an Escrow Agreement in substantially the form
attached hereto as Exhibit C.
E. As an inducement for NEON to enter into this Agreement and to
consummate the Acquisition, ▇▇▇▇▇ ▇▇▇▇▇▇▇ has agreed to enter into a
Non-Competition Agreement of even date herewith, in substantially the form
attached hereto as Exhibit A, which Non-Competition Agreements shall be
effective only upon the closing of the Acquisition.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the parties agree as follows:
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ARTICLE I
PURCHASE AND SALE OF COMPANY STOCK
1.1 Purchase and Sale. At the Closing (as defined in Section 1.3) and
subject to and upon the terms and conditions of this Agreement:
(a) NEON shall purchase from each Shareholder and each
Shareholder shall sell, convey, transfer, assign and deliver to NEON, free and
clear of all liens, encumbrances or other defects of title, all of the issued
and outstanding shares of capital stock of the Company now beneficially owned
or held of record and to be beneficially owned or held of record by each
Shareholder at the Closing (the "SLI Shares"), including all property or rights
issued by the Company with respect to the SLI Shares. The name and address of
the Shareholders and the number of such SLI Shares being sold by the
Shareholders pursuant hereto are set forth in Schedule 1.1 attached hereto.
(b) NEON shall purchase from the Holding Shareholder and the
Holding Shareholder shall sell, convey, transfer, assign and deliver to NEON,
free and clear of all liens, encumbrances or other defects of title, all of the
issued and outstanding shares of capital stock of KH now beneficially owned or
held of record by the Holding Shareholder at the Closing (the "KH Shares"),
including all property or rights issued by KH with respect to the KH Shares.
The SLI Shares and KH Shares are sometimes collectively referred to herein as
the "Shares".
1.2 Consideration.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date, in consideration of the sale, transfer and delivery of all of
each Shareholder's right, title and interest in and to the Company Stock to
NEON, and all of the Holding Shareholder's right, title and interest in and to
the KH Shares to NEON, NEON shall (i) pay to the SLI Shareholders and the
Holding Shareholder cash in the aggregate amount of $16.5 million (the "Cash
Consideration"), and (ii) issue to the SLI Shareholders and the Holding
Shareholder, as set forth below, that number of shares of Common Stock of NEON
valued at $5.5 million at the Closing based on the lower of (i) the average
closing sale price of a share of NEON Common Stock, as reported on the Nasdaq
National Market, for the twenty (20) most recent trading days ending on the
third trading day immediately preceding the Closing Date and (ii) the average
closing sale price of a share of NEON Common Stock, as reported on the Nasdaq
National Market, for the five (5) most recent trading days ending on the third
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trading day immediately preceding the Closing Date (the "Stock Consideration"
and, together with the Cash Consideration, the "Purchase Price"); provided,
however, that NEON shall withhold $1.65 million of Cash Consideration (the
"Escrow Cash"), together with that number of shares of Common Stock of NEON
valued at $550,000 at the Closing based on the lower of (i) the average closing
sale price of a share of NEON Common Stock, as reported on the Nasdaq National
Market, for the twenty (20) most recent trading days ending on the third
trading day immediately preceding the Closing Date and (ii) the average closing
sale price of a share of NEON Common Stock, as reported on the Nasdaq National
Market, for the five (5) most recent trading days ending on the third trading
day immediately preceding the Closing Date (the "Escrow Shares," and, together
with the Escrow Cash, the "Escrow Amount") into an escrow account established
in the joint names of NEON and the Shareholder Representative, for deposit (the
"Escrow Fund") as collateral for the indemnification obligations of the
Shareholders under Article VIII hereof pursuant to the provisions of an escrow
agreement substantially in the form of Exhibit C attached hereto (the "Escrow
Agreement") to be entered into at the Closing by and among NEON, the
Shareholder Representative and Credit Suisse Trust (the "Escrow Agent").
Schedule 1.1 sets forth the pro rata allocation of the consideration among the
SLI Shareholders and the Holding Shareholder (including the allocation of the
Escrow Fund and the Incentive Shares, if any, among the SLI Shareholders and
the Holding Shareholder).
(b) In addition, NEON shall issue to the Shareholders up to
that number of shares of Common Stock of NEON valued at $3 million at the
Incentive Share Issuance Date and at Subsequent Incentive Share Issuance Dates
based on the lower of (i) the average closing sale price of a share of NEON
Common Stock, as reported on the Nasdaq National Market, for the twenty (20)
most recent trading days ending on the third day immediately preceding the
Closing Date and (ii) the average closing sale price as reported on the Nasdaq
National Market for the five (5) most recent trading days ending on the third
trading date immediately preceding the Closing as incentive consideration (the
"Incentive Shares"), subject to the following provisions:
(i) As used herein, "Incentive Product Revenue"
shall mean the net revenues recognized by NEON from the license of NEON's
software products where one or more SLI employees materially participated in
the sale and/or implementation services of such NEON software product. The
Incentive Product Revenue shall be determined in accordance with U.S. GAAP and
SOP 97-2 and NEON's revenue recognition policies (as determined by NEON's
independent auditors, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose determination shall be final
and conclusive).
(ii) NEON shall issue Incentive Shares having a
value of $1.5 million, if any, within thirty (30) days after the Incentive
Product Revenue reaches an aggregate of $5 million (the "Incentive Share
Issuance Date"), but only in the event that the Incentive Product Revenue
reaches an aggregate of $5 million on or before June 30, 2000. Additional
Incentive Shares in an amount valued at $1.00 shall be issued for each $3.00 of
Incentive Product Revenue in excess of $5 million attained prior to June 30,
2000. The issuance of additional Incentive Shares shall be evaluated quarterly
after Incentive Product Revenues have surpassed $5 million and the additional
Incentive Shares, if any, shall be issued within 30 days following the end of
each such quarter (the "Subsequent Incentive Share Issuance Dates"). The
Incentive Shares, if any, shall be issued to the Shareholders pro rata in
accordance with Schedule 1.1.
(iii) At the time of issuance of Incentive Shares,
if any, pursuant to this Section 1.2, NEON shall provide to each Shareholder a
report containing a statement of the Incentive Product Revenue and the number
of Incentive Shares earned pursuant to this Section 1.2, and the basis of such
determination.
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(iv) NEON shall maintain adequate books and records
relating to the calculation of the Incentive Product Revenues through June 30,
2000 for a period of one (1) year following the June 30, 2000 date and the
Shareholders shall have the right to inspect, audit and receive copies of such
information during normal business hours. The Shareholders shall be required to
bear the reasonable fees and costs of such audit unless the results of the
audit indicate an underpayment by NEON equal to or in excess of 10% of the
payment due, in which case NEON shall bear the reasonable fees and costs of the
audit. NEON shall be required to make any underpayments shown by the audit. The
Shareholders shall be required to pay to NEON any overpayments shown by the
audit. In the event of any dispute, the determination of such firm shall be
final and binding on all parties.
(c) The shares of NEON Common Stock (including any Incentive
Shares) issuable hereunder shall be subject to a Shareholder Agreement
substantially in the form of Exhibit B attached hereto (the "Shareholder
Agreement") to be executed by and between each Shareholder and NEON.
(d) No fraction of a share of NEON Common Stock will be
issued, but, after aggregating all fractional shares of NEON Common Stock to be
received by such holder, such number shall be rounded to the nearest whole
number of shares of NEON Common Stock.
1.3 Closing.
(a) The closing of the Acquisition (the "Closing") will take
place at or about 9:00 a.m. Denver, Colorado time on or before May 16, 1999,
provided that satisfaction or waiver of the conditions set forth in Article VII
has occurred, simultaneously at the offices of Wilson, Sonsini, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ and SLI International AG,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, unless another time or
place is agreed to in writing by NEON and the Shareholders. The date upon which
the Closing actually occurs is herein referred to as the "Closing Date."
(b) At the Closing, the Company and each Shareholder and the
Holding Shareholder shall deliver or cause to be delivered to NEON the
following:
(i) as to the Shareholders, certificate(s)
representing the SLI Shares duly endorsed or accompanied by stock powers duly
endorsed in blank;
(ii) as to the Holding Shareholder, certificate(s)
representing the KH Shares duly endorsed or accompanied by stock powers duly
endorsed in blank;
(iii) an executed Shareholder Agreement;
(iv) with regard to ▇▇▇▇▇▇▇, an executed
Non-Competition Agreement; and
(v) all other documents, agreements, certificates,
instruments or writings required to be delivered by the Shareholders on or
prior to the Closing Date pursuant to this Agreement
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or as may be reasonably requested by any party in order to consummate the
transactions contemplated by this Agreement.
(c) At the Closing, NEON shall deliver or cause to be
delivered to the Shareholders the following:
(i) for each Shareholder, that amount of Cash
Consideration payable to such Shareholder pursuant to Section 1.2 hereof and
set forth on Schedule 1.1 hereto, payable by certified or cashier's check or by
wire transfer to an account designated by such Shareholder;
(ii) for each Shareholder, a certificate or
certificates representing that number of shares of the Stock Consideration
payable to such Shareholder pursuant to Section 1.2 hereof and set forth on
Schedule 1.1 hereto; and
(iii) all other documents, agreements, certificates
or writings required to be delivered by NEON on or prior to the Closing Date
pursuant to this Agreement or as may be reasonably requested by any party in
order to consummate the transactions contemplated by this Agreement.
(d) At the Closing or prior to the Closing, NEON shall
deliver to the Escrow Agent the Escrow Amount in accordance with Section 8.2.
1.4 Definitions.
"Aggregate Company Shares" shall mean the aggregate number of
shares of Company Stock outstanding immediately prior to the Closing Date.
"Cash Consideration" shall mean $16.5 million.
"Company Stock" shall mean all shares of stock capital of
SLI, par value CHF 100 per share.
"Material Adverse Effect" shall mean any event, circumstance
or condition that could have a material adverse effect on the business, assets
(including intangible assets), condition (financial or otherwise), results of
operations or prospects of the Company.
"NEON Common Stock" shall mean unregistered shares of NEON
Common Stock, $.0001 par value per share.
"Swiss GAAP" shall mean Swiss generally accepted accounting
principles, consistently applied.
"US GAAP" shall mean United States generally accepted
accounting principles, consistently applied.
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1.5 No Further Ownership Rights in Shares. All consideration paid in
respect of the surrender for exchange of the Shares in accordance with the
terms hereof, shall be deemed to be full satisfaction of the Shareholders'
rights pertaining to such Shares.
1.6 Taking of Necessary Action; Further Action. If, at any time after
the Closing Date, any such further action is necessary or desirable to carry
out the purposes of this Agreement, the transfer, sale, assignment and
conveyance of all shares of the capital stock of the Company, and to ensure
that the Company retains full right, title and possession to all of its assets,
property, rights, privileges, powers and franchises, NEON, the Shareholders and
the officers and directors of the Company are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action to the extent permissible by law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
A. Each of the Shareholders hereby, jointly and severally in the case
of the Holding Shareholder and severally in the case of the other Shareholders,
except as to the Escrow Amount, in which case liability shall be joint and
several as to all of the Shareholders, represents and warrants to NEON, subject
to such exceptions as are specifically and accurately disclosed in the
disclosure schedule (referencing the appropriate section and paragraph numbers)
supplied by the Shareholders to NEON (the "Company Disclosure Schedule") and
dated as of the date hereof, as follows:
2.1 Organization of the Company. SLI is a corporation duly organized,
validly existing and in good standing under the laws of Canton of Thurgau,
Switzerland, and each country jurisdiction where registered. The Company has
the corporate power to own its properties and to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the failure to be so qualified
or licensed could have a Material Adverse Effect on the Company. A true and
correct copy of SLI's Certificate of Incorporation and Bylaws, each as amended
to date, has been made available to NEON. Section 2.1 of the Company Disclosure
Schedule lists the directors and officers of the Company. Except as set forth
in Section 2.1 of the Company Disclosure Schedule, the operations now being
conducted by the Company have not been conducted under any other name.
2.2 Subsidiaries. The Company does not have, and has never had, any
subsidiaries and does not otherwise own, and has not otherwise owned, any
shares in the capital of or any interest in, or control, directly or
indirectly, any corporation, limited liability company, partnership,
association, joint venture or other business entity other than as set forth in
the Recital to this Agreement (the "Subsidiaries"). Each of the Subsidiaries is
duly organized, validly existing and in good standing in its respective
jurisdiction of organization. Each Subsidiary has the corporate power to own
its properties and to carry on its business as now being conducted. Each
Subsidiary is duly qualified or licensed to do business and in good standing as
a foreign corporation in each jurisdiction in which the failure to be so
qualified or licensed could have a Material Adverse Effect on the Company.
SLI's ownership of the shares of the Subsidiaries will not be negatively
impacted or interfered with
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as a result of the Acquisition. The execution and delivery by SLI of this
Agreement and the consummation of the transactions contemplated hereby will not
create any rights in any third party with respect to the Company's shares or
otherwise.
2.3 Company Capital Structure.
(a) The authorized capital stock of SLI consists of
registered shares of authorized Company Stock with par value of CHF 100,
representing a total nominal value of CHF 100,000, all of which are issued. All
of the issued and outstanding Company Stock is held by the Shareholders. All
outstanding shares of Company Stock are duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of SLI or any agreement to
which the Company is a party or by which it is bound and have been issued in
compliance with all applicable laws. SLI has no other capital stock authorized,
issued or outstanding.
(b) There are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. The Company does not have any stock option plan or
other plan providing for equity compensation of any person. There is no
outstanding Company capital stock that is subject to vesting. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to the Company. Except as
contemplated hereby, there are no voting trusts, proxies, or other agreements
or understandings with respect to the voting stock of the Company.
(c) Upon completion of the Acquisition hereunder, NEON will
own one hundred percent (100%) of the capital stock of the Company and any
rights to acquire or receive such capital stock, free and clear of all liens,
encumbrances or other defects of title.
2.4 Authority. The Shareholders have all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly approved and
authorized by the Board of Directors of the Company and all other necessary
corporate action on the part of the Company has been taken. This Agreement has
been duly executed and delivered by the Shareholders, and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the valid and binding obligation of the Shareholders, enforceable in accordance
with its terms, except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and to rules of law governing
specific performance, injunctive relief or other equitable remedies.
2.5 No Conflict. Except as set forth in Section 2.5 of the Company
Disclosure Schedule, the execution and delivery by the Shareholders of this
Agreement and the consummation of the
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transactions contemplated hereby will not conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under (any such event, a
"Conflict") (i) any provision of the charter documents and Bylaws of the
Company, (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise or license to which the Company or
any of its properties or assets are subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company
or its properties or assets.
2.6 Consents. Except as set forth in Section 2.6 of the Company
Disclosure Schedule, no consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency
or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission ("Governmental
Entity") or any third party, including a party to any agreement with the
Company (so as not to trigger any Conflict), is required by or with respect to
the Company in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (i) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable laws thereby, and
(ii) such filings as are required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act").
2.7 Company Financial Statements. Section 2.7 of the Company
Disclosure Schedule sets forth the Company's audited balance sheets as of
December 31, 1996, December 31, 1997 and December 31, 1998, and the related
audited statements of operation, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1998 together with the
report thereon of ATAG Ernst & Young independent auditors, and the Company's
unaudited balance sheet as of March 31, 1999 and the related unaudited
statements of income and cash flow for the three months then ended
(collectively, the "Financial Statements"). The Financial Statements are
accurate, correct and complete in all material respects and have been prepared
in accordance with Swiss GAAP applied on a basis consistent throughout the
periods indicated. The Financial Statements present fairly in all material
respects the financial condition, consolidated operating results and
consolidated cash flows of the Company as of the dates and for the periods
indicated therein. The Company's balance sheet as of March 31, 1999 shall be
referred to as the "Current Balance Sheet."
2.8 No Undisclosed Liabilities. Except as set forth in Section 2.8 of
the Company Disclosure Schedule, the Company does not have any liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement
of any type, whether accrued, absolute, contingent, matured, unmatured or other
(whether or not required to be reflected in financial statements in accordance
with Swiss GAAP) that in the aggregate exceeds $60,000 and (i) has not been
reflected on or reserved against in the Current Balance Sheet, or (ii) has not
arisen in the ordinary course of business consistent with past practices since
December 31, 1998.
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2.9 No Changes. Except as set forth in Section 2.9 of the Company
Disclosure Schedule, since December 31, 1998, there has not been, occurred or
arisen any:
(a) transaction by the Company except in the ordinary course
of business as conducted on that date and consistent with past practices;
(b) amendments or changes to the Certificate of Incorporation
or Bylaws of the Company;
(c) capital expenditure or commitment by the Company that
exceeds $25,000 individually or $60,000 in the aggregate;
(d) destruction of, damage to or loss of any assets with
aggregate value in excess of $50,000, or customers with aggregate revenue in
excess of $50,000 of the Company (whether or not covered by insurance);
(e) labor trouble or claim of wrongful discharge or other
unlawful labor practice or action;
(f) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company other
than required by Swiss GAAP;
(g) revaluation by the Company of any of its assets;
(h) declaration, setting aside or payment of a dividend or
other distribution with respect to the Company Stock, or any direct or indirect
redemption, purchase or other acquisition by the Company of the Company Stock;
(i) increase in the salary or other compensation payable or
to become payable by the Company to any of its officers, directors, employees
or advisors, or the declaration, payment or commitment or obligation of any
kind for the payment, by the Company, of a bonus or other additional salary or
compensation to any such person, except for adjustments in compensation in
accordance with annual performance reviews or other increases in compensation
made in the normal course of business (none of which exceed 20% of the previous
year's or current base salary);
(j) other than customer contracts and/or business operations
entered into in the ordinary course of business, any agreement, contract,
covenant, instrument, lease, license or commitment to which the Company is a
party or by which it or any of its assets is bound or any termination,
extension, amendment or modification of the terms of any agreement, contract,
covenant, instrument, lease, license or commitment to which the Company is a
party or by which it or any of its assets is bound;
(k) sale, lease, license or other disposition of any of the
assets or properties in excess of $50,000 of the Company, or any creation of
any security interest in such assets or properties;
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16
(l) loan by the Company to any person or entity, incurring by
the Company of any indebtedness for money borrowed, guaranteeing by the Company
of any indebtedness for money borrowed, issuance or sale of any debt securities
of the Company or guaranteeing of any debt securities of others;
(m) waiver or release of any right or claim of the Company,
including any write-off or other compromise of any account receivable of the
Company in an aggregate of $50,000;
(n) notice of any claim or potential claim of ownership by
any person other than the Company of the Company Intellectual Property (as
defined in Section 2.13) owned by or developed or created by the Company or of
infringement by the Company of any other person's Intellectual Property rights;
(o) issuance or sale, or contract to issue or sell, by the
Company of any shares of Company Stock, or securities exchangeable, convertible
or exercisable therefor, or any securities, warrants, options or rights to
purchase any of the foregoing;
(p) change in pricing or royalties set or charged by the
Company to its customers or licensees not in the ordinary course of business;
(q) any event or condition of any character that has had a
Material Adverse Effect on the Company; or
(r) any promise or agreement, whether written or oral, by the
Company or any Shareholder, director or officer thereof to do any of the things
described in the preceding clauses (a) through (q) (other than negotiations
with NEON and its representatives regarding the transactions contemplated by
this Agreement).
2.10 Tax Matters; Definition of Taxes.
(a) For the purposes of this Agreement, "Tax" or,
collectively, "Taxes", means (i) any and all Swiss federal, cantonal, federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period; and (iii)
any liability for the payment of any amounts of the type described in clause
(i) or (ii) as a result of any express or implied obligation to indemnify any
other person or as a result of any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
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17
(b) Tax Returns and Audits. Except as set forth in Section
2.10 of the Company Disclosure Schedule:
(i) The Company as of the Closing will have prepared
and timely filed all required tax returns, estimates, information statements
and reports ("Returns") relating to any and all Taxes concerning or
attributable to the Company or its operations and will have paid all Taxes as
shown as owing on such Returns and such Returns are true and correct and have
been completed in accordance with applicable law.
(ii) The Company as of the Closing (A) will have
paid all Taxes it is required to pay and will have withheld with respect to its
employees all taxes required to be withheld, and (B) will have paid or have
accrued on the Current Balance Sheet all Taxes attributable to the periods
covered by the Current Balance Sheet and will not have incurred any liability
for Taxes for the period from the date of the Current Balance Sheet through the
Closing other than in the ordinary course of business.
(iii) There is no material Tax deficiency
outstanding, assessed or proposed against the Company, and the Company has not
executed any waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of
the Company is presently in progress, nor has the Company been notified of any
request for such an audit or other examination.
(v) The Company does not have any liabilities for
unpaid federal, or material state, local and foreign Taxes which have not been
accrued or reserved against in accordance with Swiss GAAP on the Current
Balance Sheet, whether asserted or unasserted, contingent or otherwise.
(vi) The Company has made available to NEON or its
independent public accountants copies, of all foreign, federal, state and local
income and all state and local sales and use Returns for the Company filed for
all periods since its inception.
(vii) There are (and immediately following the
Closing there will be) no liens, pledges, charges, claims, restrictions on
transfer, mortgages, security interests or other encumbrances of any sort
(collectively, "Liens") on the assets of the Company relating to or
attributable to Taxes other than Liens for Taxes not yet due and payable.
(viii) The Shareholders have no knowledge of any
basis for the assertion of any claim relating or attributable to Taxes that, if
adversely determined, would result in any Lien on the assets of the Company.
(ix) None of the Company's assets used or located in
its United States operations are treated as "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
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(x) As of the Closing, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Company that, individually or collectively, could be treated as an excess
parachute payment within the meaning of Section 280G of the Code or could
otherwise give rise to the payment of any amount to such employee or former
employee that would not be deductible by the Company as an expense under
applicable law.
(xi) The Company is not a party to any tax sharing,
tax indemnification or tax allocation agreement nor does the Company owe any
amount under any such agreement, other than this Agreement.
(xii) Each of the Company's tax basis in its assets
for purposes of determining its future amortization, depreciation and other
applicable income tax deductions is accurately reflected on the Company's tax
books and records.
(xiii) As it relates to assets used or located in
the United States, the Company is not, and has not been at any time, a "United
States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
2.11 Restrictions on Business Activities. Except as set forth in
Section 2.11 of the Company Disclosure Schedule, there is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which the Company is a party or otherwise binding upon the Company that has or
reasonably could be expected to have the effect of prohibiting or impairing any
line of business or business practice of the Company or the conduct of business
by the Company. The Company is not a party to and is not currently bound by any
agreement under which the Company is restricted from selling, licensing or
otherwise distributing any of its products or technology on providing services
to customers or potential customers or any class of customers, in any
geographic area, during any period of time or in any segment of the market.
2.12 Title of Properties; Absence of Liens and Encumbrances; Condition
of Equipment.
(a) The Company does not own any real property. Section
2.12(a) of the Company Disclosure Schedule sets forth a list of all real
property currently leased by the Company, the name of the lessor, the date of
the lease and each amendment thereto and, with respect to any current lease,
the aggregate annual rental and/or other fees payable under any such lease. All
such current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or material event of default (or event
that with notice or lapse of time, or both, would constitute a material
default). The lessor can, however, always give notice according to the terms of
the lease.
(b) The Company has good and valid title to, or in the case
of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for use
in its business, free and clear of any Liens, except as reflected in the
Current Balance Sheet and except for Liens for Taxes not yet due and payable
and such imperfections of title and encumbrances, if any, that are not material
in character, amount or extent, and that
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19
do not materially detract from the value, or materially interfere with the
present use, of the property subject thereto or affected thereby.
(c) Section 2.12(c) of the Company Disclosure Schedule lists
all material items of equipment having a book value equal to or greater than
$20,000 (the "Equipment") owned or leased by the Company and such Equipment is,
(i) adequate for the conduct of the business of the Company as currently
conducted and (ii) in good operating condition, properly maintained, subject to
normal wear and tear.
(d) The Company has sole and exclusive custody and/or access,
free and clear of any Liens, of all customer files and other customer
information in its possession relating to its current and former customers (the
"Customer Information"). No person other than the Company possesses any claims
or rights with respect to use of the Customer Information.
2.13 Intellectual Property. The Company and its Subsidiaries own,
possess or can acquire on reasonable terms, adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively, "Intellectual
Property Rights") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect. The Company has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Intellectual Property Rights and the intellectual property
rights of third parties entrusted to them. Except as set forth in Schedule
2.13, all of the Company's internal computer and technology products and
systems are Year 2000 Compliant.
2.14 Agreements, Contracts and Commitments.
(a) Except as set forth in Sections 2.13(e) or 2.14(a) of the
Company Disclosure Schedule, the Company is not a party to nor is it bound by:
(i) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations exceeding $40,000,
(ii) any bonus, deferred compensation, pension,
profit sharing or retirement plans, or any other employee benefit plans or
arrangements,
(iii) any employment or consulting agreement,
contract or commitment with an employee or individual consultant or salesperson
or consulting agreement,
(iv) any agreement or plan, including without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting
of benefits of which will be accelerated, by the occurrence of any of the
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20
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement,
(v) any fidelity or surety bond or completion bond,
(vi) any lease of personal property having a value
individually in excess of $20,000,
(vii) any agreement, contract or commitment
containing any covenant limiting the freedom of the Company to engage in any
line of business or to compete with any person,
(viii) any agreement of indemnification or guaranty
out of the ordinary course of business or caused by mandatory law,
(ix) any agreement, contract or commitment relating
to capital expenditures and involving future payments in excess of $30,000
individually or $60,000 in the aggregate,
(x) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's business,
(xi) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit in excess of $30,000 individually
or $60,000 in the aggregate,
(xii) any purchase order or contract for the
purchase of materials involving in excess of $30,000 individually or $50,000 in
the aggregate,
(xiii) any agreement, contract or commitment
containing any representation, warranty or covenant to the effect that products
or programs developed by the Company, or services performed by the Company, are
Year 2000 Compliant,
(xiv) any distribution, joint marketing or
development agreement, or
(xv) any other agreement, contract or commitment
that involves $30,000 individually or $50,000 in the aggregate or more or is
not cancelable without penalty within thirty (30) days or has not been entered
into in the ordinary course of business.
(b) The Company is in compliance with and has not breached,
violated or defaulted under, or received notice that it has materially
breached, violated or defaulted under, any of the terms or conditions of any
agreement, contract, covenant, instrument, lease, license or commitment to
which the Company is a party or by which it or its properties is bound
(collectively a "Contract"), nor is the Company or the Shareholders aware of
any event that would constitute such a breach, violation or default with the
lapse of time, giving of notice or both. Each Contract is in full force and
effect and, except as otherwise disclosed in Section 2.14(b) of the Company
Disclosure
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21
Schedule, is not subject to any default thereunder by any party obligated to
the Company pursuant thereto. The Company has obtained, or will use reasonable
best efforts to obtain prior to the Closing Date, all necessary consents,
waivers and approvals of parties to any Contract as are required thereunder in
connection with the Acquisition for such Contracts to remain in effect without
modification after the Closing. Following the Closing, the Company will be
permitted to exercise all of the Company's rights under the Contracts without
the payment of any additional amounts or consideration other than ongoing fees,
royalties or payments that the Company would otherwise be required to pay had
the transactions contemplated by this Agreement not occurred.
2.15 Interested Party Transactions. Except as set forth in Schedule
2.15, no officer, director or shareholder of the Company has or has had,
directly or indirectly, (i) any material personal interest in any entity that
furnished or sold, or furnishes or sells, services, products or technology that
the Company furnishes or sells, or proposes to furnish or sell, (ii) any
material personal interest in any entity that purchases from or sells or
furnishes to the Company, any goods or services or (iii) a beneficial personal
interest in any Contract; provided, however, that ownership of no more than one
percent (1%) of the outstanding voting stock of a publicly traded corporation
shall not be deemed an "interest in any entity" for purposes of this Section
2.15.
2.16 Governmental Authorization. Section 2.16 of the Company
Disclosure Schedule lists each material consent, license, permit, grant or
other authorization issued to the Company by a Governmental Entity (i) pursuant
to which the Company currently operates or holds any interest in any of its
properties or (ii) that is required for the operation of its business or the
holding of any such interest (herein collectively called "Company
Authorizations"). The Company Authorizations are in full force and effect and,
to the knowledge of the Company and the Shareholders, constitute all Company
Authorizations required to permit the Company to operate or conduct its
business or hold any interest in its properties or assets.
2.17 Litigation. Except as described in Section 2.17 of the Company
Disclosure Schedule, there is no action, suit or proceeding of any nature
pending, or, to the knowledge of the Shareholders, threatened, against the
Company, its properties or any of its officers or directors, nor, to the
knowledge of the Shareholders, is there any reasonable basis therefor. There is
no investigation pending or, to the knowledge of the Shareholders threatened,
against the Company, its properties or any of its officers or directors (nor,
to the knowledge of the Shareholders, is there any basis therefor) by or before
any Governmental Entity. No Governmental Entity has at any time challenged or
questioned the legal right of the Company to conduct its operations as
presently or previously conducted. Section 2.17 of the Company Disclosure
Schedule sets forth, with respect to any pending or threatened action, suit,
proceeding or investigation, the forum, the parties thereto, the subject matter
thereof and the amount of damages claimed or other remedy requested.
2.18 Accounts Receivable.
(a) The Company has made available to NEON a list of all
material accounts receivable of the Company ("Accounts Receivable") as of March
31, 1999 along with a range of days elapsed since invoice.
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22
(b) All Accounts Receivable of the Company arose in the
ordinary course of business, are carried at values determined in accordance
with Swiss GAAP and are, to the knowledge of the Company and the Shareholders,
collectible except to the extent of reserves therefor set forth in the Current
Balance Sheet. No person has any Lien on any of such Accounts Receivable, and
no request or agreement for deduction or discount has been made with respect to
any of such Accounts Receivable.
2.19 Minute Books. The minutes of the Company made available to
counsel for NEON are the only minutes of the Company and contain a reasonably
accurate summary of all meetings of the Board of Directors (or committees
thereof) of the Company and its shareholders or actions by written consent
since the time of incorporation of the Company.
2.20 Environmental Matters Hazardous Material.
(a) The Company has not stored or illegally released any
material amount of any substance that has been designated by any Governmental
Entity or by applicable law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment (a "Hazardous Material"), but excluding
office and janitorial supplies properly and safely maintained. No Hazardous
Materials are present as a result of the deliberate actions of the Company or,
to the Company's or the Shareholders' knowledge, as a result of any actions of
any other person or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that the Company
has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials or products containing Hazardous
Materials in violation of any law, regulation, treaty or statute in effect on
or before the Closing (any or all of the foregoing being collectively referred
to as "Hazardous Materials Activities").
(c) Permits. The Company currently holds all environmental
approvals, permits, licenses, clearances and consents necessary for the conduct
of the business of the Company as currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Company's or the Shareholders' knowledge, threatened
concerning any Environmental Permit, Hazardous Material or any Hazardous
Materials Activity of the Company. Neither the Company nor the Shareholders is
aware of any fact or circumstance that could involve the Company in any
environmental litigation or impose upon the Company any environmental
liability.
2.21 Brokers' and Finders' Fees; Third Party Expenses. Except as set
forth in Section 2.21 of the Company Disclosure Schedule, the Company has not
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby. Section
2.21 of the Company Disclosure Schedule sets forth the principal terms and
conditions of any agreement,
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23
written or oral, with respect to such fees, and that all such fees shall be
paid by the Shareholders. Section 2.21 of the Company Disclosure Schedule sets
forth the Company's current reasonable estimate of all Third Party Expenses (as
defined in Section 6.3) expected to be incurred by the Company in connection
with the negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby.
2.22 Employee Benefit Plans and Compensation. All of the
representation set forth in this section shall be qualified as set forth in
Section 2.22 of the Company Disclosure Schedule.
(a) For purposes of this Section 2.22, the following terms
shall have the meanings set forth below:
(i) "Employee Plan" shall refer to any plan,
program, policy, practice, contract, agreement or other arrangement providing
for bonuses, severance, termination pay, deferred compensation, pensions,
profit sharing, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or informal,
written or otherwise, funded or unfunded and whether or not legally binding,
including without limitation, any plan which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
affiliate for the benefit of any "Employee" (as defined below), and pursuant to
which the Company or any affiliate has or may have any material liability,
contingent or otherwise.
(ii) "Employee" shall mean any current, former, or
retired employee, consultant, officer, or director of the Company or any
affiliate.
(iii) "Employee Agreement" shall refer to each
employment, severance, consulting or similar agreement or contract between the
Company or any affiliate and any Employee.
(b) Schedule. The Company does not have any Employee Plans.
Section 2.22(b) of the Company Disclosure Schedule contains a list of each
Employee Agreement. The Company does not have any plan or commitment, whether
legally binding or not, to establish any new Employee Agreement, to modify any
Employee Agreement (except to the extent required by law or to conform any such
Employee Agreement to the requirements of any applicable law, in each case as
previously disclosed to NEON in writing, or as required by this Agreement), or
to enter into any Employee Plan or Employee Agreement, nor does it have any
intention or commitment to do any of the foregoing.
(c) Documents. The Company has made available to NEON, (i)
correct and complete copies of all documents embodying any Employee Agreement
including all amendments thereto.
(d) Pension Plans. The Company complies with all government
regulations regarding minimum pension or retirement plan contributions for all
of its employees regardless of location, including employees of all
subsidiaries, whether such plans are government sponsored or affiliated, or
privately sponsored or affiliated. The Company maintains a 401-k plan for its
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employees in the United States and is in full compliance with all U.S.
requirements regarding such plans.
(e) Multiemployer Plans. At no time has SLI Consulting Inc.
contributed to or been requested to contribute to any Multiemployer Plan.
(f) No Post-Employment Obligations. The Company has not
promised or contracted (whether in oral or written form) to any Employee
(either individually or to Employees as a group) that such Employee(s) would be
provided with life insurance, medical or other employee welfare benefits or
severance pay upon their retirement or termination of employment, except to the
extent required by law.
(g) No COBRA Violation. Neither SLI Consulting Inc. nor any
affiliate has, prior to the Closing and in any material respect, violated any
of the health care continuation requirements of COBRA or any similar provisions
of state law applicable to its employees.
(h) Effect of Transaction. The execution of this Agreement
and the consummation of the transactions contemplated hereby will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any Employee Agreement, trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any Employee.
(i) Employment Matters. The Company (i) is in compliance with
all applicable laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to Employees in all material respects; (ii) has withheld all
amounts required by law or by agreement to be withheld from the wages, salaries
and other payments to Employees or other persons who by virtue of their
activities performed on behalf of the Company may be deemed employees within
the meaning of applicable law; (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees or other persons who by virtue of their activities performed on
behalf of the Company may be deemed employees within the meaning of applicable
law (other than routine payments to be made in the normal course of business
and consistent with past practice). The Company is in compliance with all
applicable federal laws, rules and regulations that govern the employment and
consulting relationships of the Company's workers as they pertain to
immigration matters. The Company's workers, where applicable, are authorized to
work in the United States, and the Acquisition shall not affect their
authorization to work in the United States.
(j) Labor. No work stoppage or labor strike against the
Company is pending, or to the knowledge of the Company or the Shareholders,
threatened. The Company is not involved in nor has it been threatened with any
labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any Employee, including without limitation
charges of unfair labor
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25
practices or discrimination complaints that, if adversely determined, would,
individually or in the aggregate, result in a material liability to the
Company. The Company has not engaged in any unfair labor practices that could,
individually or in the aggregate directly or indirectly result in a material
liability to the Company. The Company is not presently, nor has it in the past,
been a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is
being negotiated by the Company.
(k) No Interference or Conflict. To the knowledge of the
Shareholders, no shareholder, officer, employee or consultant of the Company is
obligated under any contract or agreement or subject to any judgement, decree
or order of any court or administrative agency, that would interfere with such
person's efforts to promote the interests of the Company or that would
interfere with the Company's business. Neither the execution nor delivery of
this Agreement, nor the carrying on of the Company's business as presently
conducted or proposed to be conducted nor any activity of such officers,
directors, employees or consultants in connection with the carrying on of the
Company's business as presently conducted or proposed to be conducted, will, to
the Shareholders' knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract or
agreement under which any of such officers, directors, employees or consultants
is now bound.
2.23 Insurance. Section 2.23 of the Company Disclosure Schedule lists
all insurance policies and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of the
Company or any affiliate. There is no material claim by the Company or any
affiliate pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
paid, and the Company and its affiliates are otherwise in material compliance
with the terms of such policies and bonds (or other policies and bonds
providing substantially similar insurance coverage). Neither the Company nor
the Shareholders has knowledge of any threatened termination of, or premium
increase with respect to, any of such policies.
2.24 Compliance with Laws. The Company has materially complied with,
is not in material violation of, and has not received any notices of violation
with respect to, any foreign, federal, state or local statute, law or
regulation applicable to the Company's business.
2.25 Warranties; Indemnities. Except in the ordinary course of
business or as listed in Section 2.13(e) of the Company Disclosure Schedule,
the Company has not given any warranties or indemnities relating to products or
technology sold, software programming or other "work-for-hire" performed, or
other services rendered by the Company.
2.26 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document (or summaries of same) that
has been requested by NEON or its counsel.
2.27 Proprietary Information Agreements. Each employee listed on
Section 2.27 of the Company Disclosure Schedule and presently employed by the
Company has executed a proprietary
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26
information agreement in the Company's standard form, a copy of which is
attached hereto as part of Section 2.27 of the Company Disclosure Schedule.
Such proprietary information agreements constitute valid and binding
obligations of the Company. Neither the execution or delivery of such
agreements, nor the carrying on of the Company's business as employees by such
persons, nor the conduct of the Company's business as currently proposed, will
conflict with or result in a breach of the terms, conditions or provisions of
or constitute a default under any contract, covenant or instrument under which
any such employee is now obligated.
2.28 Representations Complete. Without limiting in any way any
representations or warranties made by the Shareholders, none of the
representations or warranties made by the Shareholders (as modified by the
Company Disclosure Schedule), nor any statement made in any schedule or
certificate furnished by the Shareholders pursuant to this Agreement contains
or will contain at the Closing, any untrue statement of a material fact or
omits or will omit to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
B. The Holding Shareholder represents and warrants to NEON as follows:
2.29 ▇▇▇▇▇▇▇ Holdings.
(a) KH is a corporation duly organized, validly existing and
in good standing under the laws of Canton of Thurgau, Switzerland. The
authorized capital stock of KH consists of 1,000 registered shares with par
value of CHF 100, all of which are issued and outstanding and owned of record
and beneficially by the Holding Shareholder. KH owns 600 shares of the SLI
Shares. KH is a holding company and at the Closing will have no assets or
liabilities, other than its ownership of the SLI Shares, and KH has no current
operations except the ordinary legal activities of a Swiss holding company and
has conducted no other business since its inception.
(b) The representations and warranties regarding the Company
set forth in Sections 2.1, 2.3(b), 2.4, 2.5, 2.6, 2.8, 2.10, 2.11, 2.12, 2.14,
2.15, 2.16, 2.17, 2.19, 2.21, 2.22, 2.24, 2.26 and 2.28, are hereby made to
NEON by the Holding Shareholder with respect to KH.
(c) The Holding Shareholder shall be solely liable for any
Taxes prior to or following the Closing Date attributable to the ownership of
KH in SLI, acquisition of KH, or disposition of shares of KH held by SLI,
including the disposition of investments held by KH, but except for that
restructuring of KH initiated by NEON.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder represents and warrants to NEON as follows:
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3.1 Ownership of Shares. Such Shareholder is the sole record and
beneficial owner of the Shares designated as being owned by such Shareholder
opposite such Shareholder's name in Schedule 1.1, and such Shares are to be
sold pursuant to this Agreement. Such Shares are not subject to any Liens or to
any rights of first refusal of any kind, and such Shareholder has not granted
any rights to purchase such Shares to any other person or entity. Such
Shareholder has the sole right to transfer such Shares to NEON. Such Shares
constitute all of the Company Stock owned, beneficially or of record, by such
Shareholder, and such Shareholder has no other rights to acquire Company Stock.
Upon the Closing, NEON will receive good title to such Shares, subject to no
Liens retained, granted or permitted by such Shareholder or the Company. Such
Shareholder has not engaged in any sale or other transfer of any Company Stock
in contemplation of the Acquisition.
3.2 Tax Matters. Such Shareholder has had an opportunity to review
with its own tax advisors the tax consequences to such Shareholder of the
Acquisition and the transactions contemplated by this Agreement. Such
Shareholder understands that it must rely solely on its advisors and not on any
statements or representations made by NEON, the Company or any of their agents.
Such Shareholder understands that it (and not NEON or the Company) shall be
responsible for its own tax liability that may arise as a result of the
Acquisition or the transactions contemplated by this Agreement.
3.3 Absence of Claims by the Shareholders. Except as set forth in
Schedule 3.3, such Shareholder does not have any present claim against the
Company and does not have knowledge of the basis for any future claim against
the Company whether, contingent or unconditional, fixed or variable under any
contract or on any other legal basis whatsoever.
3.4 Authority. Such Shareholder has the legal capacity to enter into
this Agreement and the Shareholder Agreement in the form attached hereto as
Exhibit B and to consummate the transactions contemplated hereby and thereby.
No further action is required on the part of such Shareholder to authorize this
Agreement and the Shareholder Agreement and the transactions contemplated
hereby and thereby. This Agreement and the Shareholder Agreement have been duly
executed and delivered by such Shareholder and, assuming the due authorization,
execution and delivery by the other parties thereto, constitute the valid and
binding obligations of such Shareholder, enforceable in accordance with their
terms, except as such enforceability may be limited by principles of public
policy and subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and to rules of law governing
enforceability of contracts, specific performance, injunctive relief or other
equitable remedies.
3.5 No Conflict. The execution and delivery by such Shareholder of
this Agreement and the Shareholder Agreement and the consummation of the
transactions contemplated hereby and thereby will not conflict with (i) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise or license to which such Shareholder or any of his or her
properties or assets are subject (a "Shareholder Conflict"), or (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to such Shareholder or his or her properties or assets.
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3.6 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or any
third party, including a party to any agreement with such Shareholder (so as
not to trigger any Shareholder Conflict), is required by or with respect to
such Shareholder in connection with the execution and delivery of this
Agreement or the Shareholder Agreement or the consummation of the transactions
contemplated hereby or thereby except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws thereby and (ii) notification
requirements of the HSR Act, if any, to the extent applicable.
3.7 Unregistered Shares. Such Shareholder understands that the NEON
Company Stock being issued pursuant to this Agreement will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), on the
basis that the issuance of securities hereunder is exempt from registration
under said Act pursuant to section 4(2) and/or Regulation S thereof, and that
NEON's reliance on such exemption is based on such Shareholder's
representations set forth in the Shareholder Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEON
NEON hereby represents and warrants to the Company and the
Shareholders as follows:
4.1 Organization, Standing and Power. NEON is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. NEON has the corporate power to own its properties and to carry on
its business as now being conducted and is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the failure to
be so qualified or licensed would have a material adverse effect on the ability
of NEON to consummate the transactions contemplated hereby.
4.2 Authority. NEON has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of NEON. This Agreement has been duly executed and
delivered by NEON and constitutes the valid and binding obligation of NEON,
enforceable in accordance with its terms, except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.3 Capital Structure. The authorized capital stock of NEON consists
of 45,000,000 shares of Company ▇▇▇▇▇, ▇.▇▇▇▇ par value per share, of which
30,918,040 shares were issued and outstanding as of March 31, 1999, and
2,000,000 shares of Preferred ▇▇▇▇▇, ▇.▇▇▇▇ par value per share, none of which
is issued or outstanding. All the outstanding shares of NEON Company Stock are
validly issued, fully paid, nonassessable and free of preemptive rights. The
shares of NEON
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Company Stock issuable in connection with the Acquisition have been duly
authorized and reserved for issuance and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid, nonassessable and
free of preemptive rights.
4.4 No Conflict. The execution and delivery of this Agreement does
not, and, the consummation of the transactions contemplated hereby will not,
Conflict with, (i) any provision of the charter documents and Bylaws of NEON,
(ii) any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise or license to which NEON or any of its properties
or assets are subject and which have been filed as an exhibit to NEON's filings
under the Securities Act, or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to NEON or its properties or assets.
4.5 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity, or any
third party, including a party to any agreement with NEON (so as not to trigger
any Conflict), is required by or with respect to NEON in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws thereby, and (ii) such filings
as are required under the HSR Act.
4.6 SEC Documents; NEON Financial Statements. NEON has furnished or
made available to the Company and the Shareholders true and complete copies of
NEON's Prospectus dated December 4, 1998 and all reports or registration
statements filed by it with the Securities and Exchange Commission ("SEC")
under the Exchange Act for all periods since January 1, 1998, all in the form
so filed (all of the foregoing being collectively referred to as the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the SEC Documents contained any
untrue statement of a material fact or omitted 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, except
to the extent corrected by a document subsequently filed with the SEC. The
financial statements of NEON, including the notes thereto, included in the SEC
Documents (the "NEON Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with U.S. GAAP consistently applied (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) and present fairly the consolidated financial position of NEON
at the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal audit adjustments.)
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ARTICLE V
CONDUCT PRIOR TO THE CLOSING
5.1 Conduct of Business of the Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing, the Company agrees (except to the extent that
NEON shall otherwise consent in writing), to carry on the Company's business in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay the debts and Taxes of the Company when due, to
pay or perform other obligations when due, and to use its best efforts to
preserve intact the Company's present business organization, keep available the
services of the Company's present officers and key employees and preserve the
Company's relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it, all with the goal of
preserving unimpaired the Company's goodwill and ongoing businesses at the
Closing. The Company shall promptly notify NEON of any event or occurrence or
emergency not in the ordinary course of business of the Company, and any
material event involving the Company. Except as expressly contemplated by this
Agreement, the Company shall not, without the prior written consent of NEON:
(a) Enter into any commitment or transaction not in the
ordinary course of business and consistent with past practice or any commitment
or transaction of any type whatsoever involving aggregate expense in excess of
$30,000;
(b) Enter into any agreement with respect to the Company
Intellectual Property with any person or entity or with respect to the
intellectual property of any person or entity;
(c) Transfer to any person or entity any rights to the
Company Intellectual Property;
(d) Enter into or amend any Contract pursuant to which any
other party is granted marketing, distribution or similar rights of any type or
scope with respect to any products or technology of the Company or the
Subsidiary;
(e) Amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or violate the terms of, any of the Contracts
set forth or described in the Company Disclosure Schedule;
(f) Commence or settle any litigation;
(g) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any of
its capital stock, or split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of capital stock of the Company, or
repurchase, redeem or otherwise acquire, directly or indirectly, any shares of
the capital stock of the Company;
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(h) Issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase any such shares
or other convertible securities;
(i) Cause or permit any amendments to its Certificate of
Incorporation or Bylaws;
(j) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(k) Sell, lease, license or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and consistent
with past practices;
(l) Incur any indebtedness for borrowed money in excess of
$30,000 (other than increases under existing equipment leases in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any
debt securities or guarantee any debt securities of others;
(m) Grant any loans to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement;
(n) Grant any severance or termination pay (i) to any
director or officer or (ii) to any other employee except payments made pursuant
to standard written agreements outstanding on the date hereof;
(o) Adopt or amend any Employee Plan, or enter into any
Employee Agreement, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage
rates of its employees;
(p) Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(q) Pay, discharge or satisfy, in an amount in excess of
$30,000 (in any one case) or $50,000 (in the aggregate), any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the Current
Balance Sheet;
(r) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(s) Enter into any strategic alliance or joint marketing
arrangement or agreement; or
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(t) Take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a)-(s) above, or any other action that
would prevent the Company from performing or cause the Company not to perform
its covenants hereunder.
5.2 No Solicitation. Until the earlier of (i) the Closing or (ii) the
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, neither the Company nor the Shareholders will (nor will the Company or
the Shareholders permit any of the Company's officers, directors, agents,
representatives or affiliates to) directly or indirectly, take any of the
following actions with any party other than NEON and its designees: (a)
solicit, conduct acquisition discussions with or engage in negotiations with
any person, relating to the possible acquisition of the Company (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise) or any
portion of the Company Stock (whether or not currently outstanding) or the
Company's assets, (b) provide information with respect to it to any person,
other than to NEON or in response to existing or prospective customers' or
employees' questions relating to the possible acquisition of the Company
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise) or any portion of the Company Stock (whether or not currently
outstanding) or the Company's assets, (c) enter into an agreement with any
person, other than NEON, providing for the acquisition of the Company (whether
by way of merger, purchase of capital stock, purchase of assets or otherwise)
or any portion of the Company Stock (whether or not currently outstanding) or
the Company's assets or (d) make or authorize any statement, recommendation or
solicitation in support of any possible acquisition of the Company (whether by
way of merger, purchase of capital stock, purchase of assets or otherwise) or
any portion of the Company Stock (whether or not currently outstanding) or the
Company's assets by any person, other than by NEON.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Information. The Company shall afford NEON and its
accountants, counsel and other representatives, reasonable access upon
reasonable notice during normal business hours during the period prior to the
Closing to (i) all of the Company's properties, financial statements, tax
returns, books, contracts, commitments and records, (ii) all other information
concerning the business, properties and personnel (subject to restrictions
imposed by applicable law) of the Company as NEON may reasonably request and
(iii) all key employees of the Company as identified by NEON. NEON agrees to
provide to the Company and its accountants, counsel and other representatives
copies of publicly available documents filed by NEON under the Exchange Act as
the Company may request and shall provide the Company and the Shareholders with
reasonable access to members of its management regarding the business and
financial condition of NEON. No information or knowledge obtained in any
investigation pursuant to this Section 6.1 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Acquisition.
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6.2 Confidentiality. Each of the parties hereto hereby agrees to keep
such information or knowledge obtained in any investigation pursuant to Section
6.1, or pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential; provided,
however, that the foregoing shall not apply to information or knowledge that
(a) a party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is generally known to the public and
did not become so known through any violation of law, (c) became known to the
public through no fault of such party, (d) is later lawfully acquired by such
party from other sources, (e) is required to be disclosed by order of court or
government agency with subpoena powers or (f) is disclosed in the course of any
litigation between any of the parties hereto.
6.3 Expenses. Whether or not the Acquisition is consummated, except as
specifically provided in this Section 6.3, all fees and expenses incurred in
connection with the Acquisition including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties ("Third Party Expenses") incurred by a party in connection with
the negotiation and effectuation of the terms and conditions of this Agreement
and the transactions contemplated hereby shall be the obligation of the
respective party (NEON, on the one hand, and the Shareholders, pro rata, on the
other) incurring such fees and expenses except that in the event that the
Acquisition is consummated, NEON shall pay up to $100,000 of the Third Party
Expenses of the Company and/or the Shareholders.
6.4 Public Disclosure. Unless otherwise required by law, by a court
order or a judgement rendered in arbitration, no disclosure (whether or not in
response to an inquiry) of the subject matter of this Agreement shall be made
by any party hereto without the prior written consent of NEON.
6.5 Consents. The Company has obtained the consents, waivers and
approvals under any of the Contracts as may be required in connection with the
Acquisition (all of such consents, waivers and approvals are set forth in
Section 6.5 of the Company Disclosure Schedule) so as to preserve all rights
of, and benefits to, the Company thereunder.
6.6 Reasonable Efforts. Subject to the terms and conditions provided
in this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement; provided that NEON shall not be required to agree to any
divestiture by NEON or the Company or any of NEON's subsidiaries or affiliates
of shares of capital stock or of any business, assets or property of NEON or
its subsidiaries or affiliates or of the Company, its affiliates, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock. Each of NEON, the Company and the Shareholders shall promptly (a) supply
all other parties hereto with any information which may be
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required or which the other party reasonably believes is material in order to
effectuate any required submissions and filings with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") and (b) supply any additional information that
reasonably may be required by the FTC, the DOJ or any Swiss or other foreign
authorities or other relevant government authority, to such government
authority.
6.7 Tax Matters. NEON shall cause the Company to prepare and file, at
the sole cost and expense of the Company, all Tax Returns required by law of
the Company for all taxable periods ending on or before the Closing Date (the
"Pre-Closing Periods") and the Shareholders shall be responsible for, and
indemnify NEON against, the payment of all Taxes of the Company attributable to
such periods, whenever incurred or assessed except if such tax liabilities are
fully and properly accrued on the financial statement balance sheet. For
purposes of this Section 6.7, when the taxable period ends after the Closing
Date, the Tax that is attributable to the Pre-Closing Period (and payable by
the Shareholders) shall be (i) in the case of a Tax that is not based on net
income, gross income, premiums or gross receipts, the total amount of such Tax
for the period in question multiplied by a fraction, the numerator of which is
the number of days in such period, and (ii) in the case of a Tax that is based
on nay of net income, gross income, premiums or gross receipts, the Tax that
would be due with respect to the Pre-Closing Period if such Pre-Closing Period
were a separate taxable period, except that exemptions, allowances, deductions
or credits that are calculated on an annual basis (such as deductions for
depreciation or capital allowances) shall be apportioned on a per diem basis.
Such Returns shall be made available to the Shareholders no less than 21
calendar days prior to the filing thereof with the appropriate governmental
authority for review by the Shareholders. From and after the Closing Date, NEON
and the Company, on the one hand, and the Shareholders, on the other hand,
shall make available to the other, as reasonably requested, all information,
records or documents relating to the Tax liabilities of the Company for all
periods ending on or prior to the Closing Date, and will preserve such
information, records or documents until the expiration of any applicable
statute of limitations or extensions thereof.
6.8 Employees; NEON Stock Options.
(a) As soon as practicable after the date the Closing and in
any event not later than ten (10) business days after such date, the Chief
Executive Officer of the Company and the Vice President Human Resources of NEON
will use their best efforts to agree upon the guidelines within which the
Company will proceed with recruitment and compensation of new and existing
employees.
(b) As soon as practicable after the Closing, subject to the
approval of its Board of Directors, NEON will grant stock options to purchase
shares of its Company Stock to the employees of the Company listed on Schedule
6.9 hereto, consistent with standard NEON hiring practices.
6.9 Additional Documents and Further Assurances. Each party hereto, at
the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary
or desirable for effecting completely the consummation of the Closing and the
transactions contemplated hereby.
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6.10 Suspension and Termination of Memorandum of Understanding. The
Shareholders shall cause the Company to suspend any and all actions and/or
obligations under the memorandum of understanding between the Company and
Compaq Computer AG dated 2-3-99 (the "Compaq MOU") on or before April 23, 1999.
The Company will terminate the Compaq MOU prior to the Closing Date. Neither
the Company nor NEON shall accrue any liability, cost, nor other negative
impact, whether financial or otherwise, in connection with such suspension or
termination.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.1 Conditions to Obligations of Each Party to Consummate the
Acquisition . The obligations of each party to this Agreement to consummate the
Acquisition shall be subject to the satisfaction at or prior to the Closing of
the following conditions:
(a) Government Approvals. All authorizations, consents,
permits and approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit consummation of the
transactions contemplated by this Agreement shall have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in effect, nor shall
any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
the Acquisition that makes the consummation of the Acquisition or the
transactions contemplated thereby illegal.
(c) No Litigation. There shall be no litigation pending or
threatened by any regulatory body or private party in which (i) an injunction
is or may be sought against any of the transactions contemplated by this
Agreement, or (ii) relief is or may be sought against any party hereto as a
result of this Agreement and in which, in the good faith judgment of the Board
of Directors of either the Company or NEON (relying on the advice of their
respective legal counsel), such regulatory body or private party has the
probability of prevailing and such relief would have a material adverse effect
upon such party.
(d) Escrow Agreement. NEON, the Company, the Shareholder
Representative and the Escrow Agent shall have executed and delivered the
Escrow Agreement incorporating the provisions of Section 8.2 in substantially
the form attached hereto as Exhibit C, which Escrow Agreement shall be in full
force and effect.
7.2 Conditions to Obligations of the Shareholders. The obligations of
the Shareholders to consummate the Acquisition and to effect the transactions
to be performed by them at the Closing
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are, at the option of the Shareholders, subject to the satisfaction at or prior
to the Closing Date of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of NEON contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date, except for changes
contemplated by this Agreement and except for those representations and
warranties that address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date; except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties that
have neither had nor reasonably would be expected to have a material adverse
effect on NEON. The Company shall have received a certificate to such effect
extended on behalf of NEON by its Chief Financial Officer or Senior Counsel.
(b) Third Party Consents. NEON shall have obtained all
consents required, if any, to consummate the transactions contemplated by this
Agreement.
7.3 Conditions to the Obligations of NEON. The obligation of NEON to
consummate the Closing shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions, any of which may be waived, in
writing, exclusively by NEON:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Shareholders contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, except for changes contemplated by this Agreement and except for those
representations and warranties that address matters only as of a particular
date (which shall remain true and correct as of such date), with the same force
and effect as if made on and as of the Closing Date, except, in all such cases,
for such breaches, inaccuracies or omissions of such representations and
warranties that have neither had nor reasonably would be expected to have a
Material Adverse Effect on the Company. NEON shall have received a certificate
to such effect executed by the Shareholders and executed on behalf of the
Company by its Chief Executive Officer.
(b) Third Party Consents. Any and all consents and waivers
from third parties to the Company's contracts and other instruments required to
allow the consummation of the transactions contemplated by this Agreement shall
have been obtained by the Company, and shall be set forth in Section 2.6 of the
Company Disclosure Schedule.
(c) Claims. There shall not have occurred any claims (whether
or not asserted in litigation) other than those, if any, as set forth in the
Company Disclosure Schedule that may materially and adversely affect the
consummation of the transactions contemplated hereby or may have a Material
Adverse Effect.
(d) Shareholder Agreement. Each of the Shareholders shall
have executed and delivered the Shareholder Agreement in substantially the form
attached hereto as Exhibit B.
(e) Non-Competition Agreements. ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
executed and delivered the Non-Competition Agreements in the form attached
hereto as Exhibit A.
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(f) Material Adverse Change. There shall not have occurred
any material adverse change in the business, assets (including intangible
assets), liabilities, financial condition, results of operations or prospects
of the Company since December 31, 1998.
(g) Comfort Letter. Prior to the Closing, NEON shall have
received a letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP stating that the Company's Financial
Statements are sufficient and in appropriate form for inclusion in NEON's
filings under the Securities Act and the Exchange Act as applicable.
(h) Termination of MOU. Prior to the Closing, the Company
shall have terminated the compaq MOU pursuant to the terms set forth in Section
6.10 herein.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY AND ESCROW
8.1 Survival of Representations and Warranties; Indemnity. The
representations and warranties of the Shareholders in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing and
shall terminate twelve (12) months after the Closing (the "Expiration Date");
provided, however, that (i) the representations and warranties and covenants
relating or pertaining to any Tax or Returns related to such Tax set forth in
Section 2.10, Section 2.29(c) and Section 6.7 hereof, shall survive until the
expiration of all applicable statutes of limitations, or extensions thereof,
governing each Tax or Returns related to such Tax and (ii) the representations
and warranties set forth in Section 2.3, Section 2.29(a) and Article III hereof
shall survive the Closing and continue for a period of four (4) years after the
Closing, except for Section 3.7, which shall survive until the last issuance of
Incentive Stock pursuant to Section 1.2(b). The Shareholders shall, jointly and
severally in the case of the Holding Shareholder and severally in the case of
the other Shareholders, except as to the Escrow Amount, in which case liability
shall be joint and several as to all of the Shareholders, indemnify and hold
harmless NEON and its affiliates for any claims, losses, liabilities, damages,
deficiencies, costs and expenses, including reasonable attorneys' fees and
expenses, and expenses of investigation and defense (hereinafter individually a
"Loss" and collectively "Losses"), incurred by NEON, its officers, directors,
or affiliates, related to or arising out of any inaccuracy or breach of the
representations, warranties, and covenants specified in clauses (i) and (ii)
hereof. Such indemnity shall be limited to a maximum of $16.5 million for the
Holding Shareholder and for the other Shareholders such indemnity shall be
limited to a maximum of their portion of the Shareholder consideration set
forth in Section 1.2. NEON's representations and warranties contained in this
Agreement shall terminate at the Closing.
8.2 Indemnity; Escrow Arrangements.
(a) Escrow Fund. At the Closing each Shareholder will be
deemed to have received and consented to the deposit with the Escrow Agent of
the Escrow Amount pursuant to the Escrow Agreement attached hereto as Exhibit
C, without any act required on the part of the Shareholders. As soon as
practicable after the Closing, the Escrow Amount, without any act
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required on the part of the Shareholders, will be deposited with the Escrow
Agent into an interest-bearing account, such deposit to constitute the Escrow
Fund to be governed by the terms set forth herein and at NEON's cost and
expense. The Shareholders shall bear the tax for all interest attributable to
the Escrow Account. The Escrow Fund shall be comprised entirely of the Escrow
Amount. The Escrow Fund is available to indemnify and compensate NEON and its
affiliates for any Losses incurred by NEON, its officers, directors, or
affiliates directly or indirectly as a result of any inaccuracy or breach of a
representation or warranty or covenant of the Shareholders, contained in
Articles II and III and VI herein, or any failure by the Shareholders to
perform or comply with any covenant contained herein. NEON shall not be
entitled to recover any amount from the Escrow Fund until its Losses exceed
$50,000 in the aggregate, at which time NEON may recover all of its Losses
including the first $50,000; provided, however, that any Losses incurred by
NEON relating to any representation, warranty or covenant related to Taxes set
forth in Sections 2.10 and 6.7 or to Section 2.3 or Article III hereof shall
not be subject to such minimum amount. NEON and the Shareholders each
acknowledge that such Losses, if any, would relate to unasserted contingent
liabilities existing at the Closing, which if resolved at the Closing would
have led to a reduction in the aggregate Purchase Price.
(b) Escrow Period; Distribution. Subject to the following
requirements, the Escrow Fund shall be in existence immediately following the
Closing and shall terminate on the Expiration Date (the "Escrow Period");
provided that the Escrow Period shall not terminate with respect to such amount
(or some portion thereof), that together with the aggregate amount remaining in
the Escrow Fund is necessary in the reasonable judgment of NEON (subject to
such reduction as may be determined by arbitration as provided in Section
8.2(f) hereof in the event of the objection of the Shareholder Representative
as provided in Section 8.2(e) hereof) to satisfy any unsatisfied claims
concerning facts and circumstances existing prior to the termination of the
Expiration Date during such Escrow Period. As soon as all such claims have been
resolved, the parties shall transfer to the Shareholders the remaining portion
of the Escrow Fund not required to satisfy such claims.
(c) Protection of the Escrow Fund. The Shareholder
Representatives and NEON jointly, and/or their appointed representatives, shall
be the only individuals who have the authority to authorize withdrawals from
the account.
(d) Claims Upon Escrow Fund. In the event that NEON suffers
any Losses, it shall deliver to the Shareholder Representative at any time on
or before the last day of the Escrow Period a certificate signed by any officer
of NEON: (A) stating that NEON has paid or properly accrued or reasonably
anticipates that it will have to pay or accrue Losses, and (B) specifying in
reasonable detail the individual items of Losses included in the amount so
stated, the date each such item was paid or properly accrued, or the basis for
such anticipated liability, and the nature of the misrepresentation, breach of
warranty or covenant to which such item is related. NEON and the Shareholder
Representative shall then, subject to the provisions of Section 8.2(e) and
Section 8.2(f) hereof, promptly transfer or cause the transfer agent of NEON
Company Stock to transfer to NEON out of the Escrow Fund an aggregate amount
equal to such Losses. Such payments of Escrow Amount from the Escrow Fund will
be made pro rata in proportion to the Shareholders original
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contributions to the Escrow Fund. Withdrawals shall be comprised of 75% Escrow
Cash and 25% Escrow Shares.
(e) For the purposes of determining the number of shares of
NEON Company Stock to be delivered to NEON out of the Escrow Fund pursuant to
Section 8.2 hereof, the shares of NEON Company Stock shall be valued at the
average closing price of NEON's Company Stock for the twenty (20) consecutive
trading days ending on the third trading day immediately prior to the Closing
Date, as reported on the Nasdaq National Market.
(f) Objections to Claims In the event that NEON and the
Shareholder Representative cannot agree as to the propriety of a withdrawal
from the account the matter will be decided according to the arbitration
provisions set forth in Section 8.2(g) below.
(g) Resolution of Conflicts; Arbitration.
(i) In case the Shareholder Representative shall
object to any claim or claims made against the Escrow Fund by NEON, the
Shareholder Representative and NEON shall attempt in good faith to agree upon
the rights of the respective parties with respect to each of such claims.
(ii) If no such agreement can be reached after good
faith negotiation, either NEON or the Shareholder Representative may demand
arbitration of the matter unless the amount of the damage or loss is at issue
in pending litigation with a third party, in which event arbitration shall not
be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by three arbitrators. NEON and the Shareholder
Representative shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator. The English language shall be used
for the arbitration. The arbitrators shall set a limited time period and
establish procedures designed to reduce the cost and time for discovery while
allowing the parties an opportunity, adequate in the sole judgment of the
arbitrators, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrators shall rule upon motions to
compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the same extent as a court of competent
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim of NEON shall be binding
and conclusive upon the parties to this Agreement. Such decision shall be
written and shall be supported by written findings of fact and conclusions
which shall set forth the award, judgment, decree or order awarded by the
arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in Geneva, Switzerland, using the English language
and either U.S. federal law for securities and tax issues or Delaware state law
for all other issues, whichever is more appropriate. The arbitration shall be
conducted under the rules then in effect of the Rules of Arbitration of the
Chamber of Commerce and Industry of Geneva. For purposes of this Section
8.2(f), in any arbitration hereunder in which any claim or the amount
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thereof stated in the Officer's Certificate is at issue, NEON shall be deemed
to be the Prevailing Party in the event that the arbitrators award NEON an
amount equal to at least the sum of one half (1/2) of the disputed amount plus
any amounts not in dispute; otherwise, the Shareholders as represented by the
Shareholder Representative shall be deemed to be the Prevailing Party. If NEON
acts as the Plaintiff in an arbitration, NEON shall pay the first $100,000 of
the costs and expenses of the arbitrators in such action. If the Shareholders
act as the Plaintiff in an arbitration, the Shareholders shall pay the first
$100,000 of the costs and expenses of the arbitration in such action. If NEON
acts as the Plaintiff in an arbitration, NEON shall pay the first $50,000 of
the Shareholders' attorneys fees and attorneys expenses. The non-prevailing
party in any arbitration shall reimburse the prevailing party for the
prevailing party's attorneys fees and attorneys expenses, such reimbursement
not to exceed $100,000. In addition, if NEON is the prevailing party, the
Shareholders shall reimburse NEON for any amount of Shareholder's attorneys
fees and attorney expenses previously paid by NEON.
(h) Shareholder Representative of the Shareholders; Power of
Attorney.
(i) Upon the Closing, and without further act of any
Shareholders, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be appointed as agent and attorney-in-fact
(the "Shareholder Representative") for each Shareholder, for and on behalf of
the Shareholders, to give and receive notices and communications, to authorize
delivery to NEON of Escrow Shares or Escrow Cash from the Escrow Fund in
satisfaction of claims by NEON, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration
and comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholder Representative for the accomplishment of the foregoing. Such agency
may be changed by a majority in interest of the Shareholders from time to time
upon not less than thirty (30) days prior written notice to NEON; provided that
the Shareholder Representative may not be removed unless holders of a
two-thirds interest of the Escrow Fund agree to such removal and to the
identity of the substituted agent. Any vacancy in the position of the
Shareholder Representative may be filled by approval of the holders of a
majority in interest of the Escrow Fund. No bond shall be required of the
Shareholder Representative, and the Shareholder Representative shall not
receive compensation for his or her services. Notices or communications to or
from the Shareholder Representative shall constitute notice to or from each of
the Shareholders.
(ii) The Shareholder Representative shall not be
liable for any act done or omitted hereunder as Shareholder Representative
while acting in a manner he or she believes in good faith to be in the best
interests of the Company. The Shareholders on whose behalf the Escrow Amount
were contributed to the Escrow Fund shall severally indemnify the Shareholder
Representative and hold the Shareholder Representative harmless against any
loss, liability or expense incurred without gross negligence or bad faith on
the part of the Shareholder Representative and arising out of or in connection
with the acceptance or administration of the Shareholder Representative's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Shareholder Representative.
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(i) Actions of the Shareholder Representative. A decision,
act, consent or instruction of the Shareholder Representative shall constitute
a decision of all the Shareholders for whom a portion of the Escrow Amount
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each of such Shareholders, and the Escrow Agent and
NEON may rely upon any such decision, act, consent or instruction of the
Shareholder Representative as being the decision, act, consent or instruction
of each every such Shareholder of the Company. NEON is hereby relieved from any
liability to any person for any acts done by them in accordance with any
decision, act, consent or instruction of the Shareholder Representative.
(j) Third-Party Claims. In the event NEON becomes aware of a
third-party claim that NEON believes may result in a demand against the Escrow
Fund, NEON shall promptly notify the Shareholder Representative of such claim
in accordance with Section 8.2(d), and the Shareholder Representative, as
representative of the Shareholders, shall be entitled, at his expense, to
participate in any defense of such claim. NEON shall have the right in its sole
discretion to control the defense of all such claims and to settle any such
claim; provided, however, that no settlement of any such claim with third-party
claimants in excess of $100,000 in a single matter shall permit any claim
against the Escrow Fund, except with the consent of the Shareholder
Representative, which consent shall not be unreasonably withheld. In the event
that the Shareholder Representative has consented to any such settlement and
acknowledged that the claim is a valid claim against the Escrow Fund, the
Shareholder Representative shall be deemed to have agreed to the claim by NEON
against the Escrow Fund in an amount equal to such settlement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. Except as provided in Section 9.2, this Agreement may
be terminated and the Acquisition abandoned at any time prior to the Closing:
(a) by mutual agreement of the Shareholders and NEON;
(b) by NEON or the Shareholders if: (i) the Acquisition has
not occurred by May 16, 1999; (ii) there shall be a final nonappealable order
of a court in effect preventing consummation of the Acquisition; or (iii) there
shall be any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Closing by any Governmental Entity that would make
consummation of the Closing illegal;
(c) by NEON if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Acquisition by any Governmental Entity, which would: (i)
prohibit NEON's ownership or operation of any portion of the business of the
Company or (ii) compel NEON or the Company to dispose of or hold separate all
or a portion of the business or assets of the Company or NEON as a result of
the Acquisition;
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(d) by NEON, if it is not in material breach of its
obligations under this Agreement, and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of the Company or Shareholders and such breach has not been cured
within five (5) calendar days after written notice to the Company and the
Shareholders; provided, however, that, no cure period shall be required for a
breach that by its nature cannot be cured;
(e) by the Company or the Shareholders if neither the Company
nor the Shareholders are in material breach of their respective obligations
under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of NEON and such breach has not been cured within five (5) calendar
days after written notice to NEON; provided, however, that no cure period shall
be required for a breach which by its nature cannot be cured;
Where action is taken to terminate this Agreement pursuant to this
Section 9.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
9.2 Effect of Termination. In the event of termination of this
Agreement, at any time prior to Closing, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of NEON or the Company, or their respective officers,
directors or shareholders, provided that the breaching party shall remain
liable for all costs or expenses, including legal and financial services,
incurred by the non-breaching party relating to this Agreement prior to its
termination; and provided further that the provisions of Sections 6.2, 6.3 and
6.4, Article X and this Section 9.2 shall remain in full force and effect and
survive any termination of this Agreement.
9.3 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
9.4 Extension; Waiver. At any time prior to the Closing, NEON, on the
one hand, and the Company and the Shareholders, on the other hand, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of such
party.
9.5 Termination Payment. In the event that the Company fails to comply
with its obligations under Sections 5.2 or 6.10 hereof, then the Company shall
promptly pay to NEON, as compensation to NEON for the anticipated transaction
expenses and opportunity costs of NEON, the sum of $750,000.
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ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice), provided, however,
that notices sent by mail will not be deemed given until received:
if to NEON, to:
New Era of Networks, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(a) if to the Shareholders or the Shareholder Representative, to:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇-▇▇-▇▇
Facsimile No.: ▇▇-▇▇▇-▇▇-▇▇
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with a copy to:
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇-▇▇▇-▇▇-▇▇
Facsimile No.: ▇▇-▇▇▇-▇▇-▇▇
10.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The word "agreement" when used herein shall be deemed in
each case to mean any contract, commitment or other agreement, whether oral or
written, that is legally binding. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. When reference is made
herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all
direct and indirect subsidiaries of such entity.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 Entire Agreement. This Agreement, the Exhibits hereto, the
Company Disclosure Schedule and the other schedules hereto, and the documents
and instruments and other agreements among the parties hereto referenced
herein: (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings
both written and oral, among the parties with respect to the subject matter
hereof; (b) are not intended to confer upon any other person any rights or
remedies hereunder.
10.5 Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
10.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy.
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10.7 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of Switzerland or
country having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof;
provided that issues involving the corporate governance or relating to the
issue and/or transfer of shares of any of the parties hereto shall be governed
by their respective jurisdictions of incorporation. Each of the parties hereto
agrees that process may be served upon them in any manner authorized by the
laws of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction and
such process.
10.9 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the of the other party. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
10.10 Absence of Third-Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner of any party hereto or any other person or entity
unless specifically provided otherwise herein.
10.11 Waiver of Jury Trial. Each of NEON and the Shareholders hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of NEON, Company and the Shareholders
in the negotiation, administration, performance and enforcement hereof.
10.12 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.13 U.S. Currency. All references to dollars in this Agreement shall
be to U.S. currency unless otherwise indicated.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, NEON, the Shareholders and the Shareholder
Representative have caused this Agreement to be signed, all as of the date first
written above.
NEW ERA OF NETWORKS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: SR VP, Counsel and Secretary
------------------------------
SHAREHOLDER REPRESENTATIVE
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
SHAREHOLDERS
/s/ ▇▇▇▇▇▇▇ HOLDING AG
-------------------------------------
Name: ▇▇▇▇▇▇▇ Holding AG
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[COUNTERPART SIGNATURE PAGE TO SHARE ACQUISITION AGREEMENT]
47
SCHEDULE 1.1 SHARES PERCENTAGE
------------ ------ ----------
Shareholders of ▇▇▇▇▇▇▇ Holding AG
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,000 100.0%
1,000 100.0%
========== ==========
Shareholders of SLI International AG*
▇▇▇▇▇▇▇ Holding AG 600 60.0%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 167 16.7%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 133 13.3%
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 100 10.0%
---------- ----------
1,000 100.0%
========== ==========
* For purposes of payment of the Purchase Price and the Incentive Shares
referenced under Section 1.2 of the agreement, any payment due to ▇▇▇▇▇▇▇
Holding AG shall be paid directly to ▇▇▇▇▇ ▇▇▇▇▇▇▇ in full satisfaction of the
consideration due ▇▇▇▇▇▇▇ Holding AG as an SLI Shareholder under the Agreement.