AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
PLATINUM TECHNOLOGY, INC.
AND
LEARMONTH & ▇▇▇▇▇▇▇▇ MANAGEMENT SYSTEMS PLC.
DATED JANUARY 2, 1998
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made and
entered into as of January , 1998, by and between Platinum technology, inc.,
a Delaware corporation ("Purchaser"), and Learmonth & ▇▇▇▇▇▇▇▇ Management
Systems Plc, a company incorporated in England and Wales under the Companies
Acts 1948 to 1976 (the "Company").
RECITALS
A. The Boards of Directors of each of the Company and Purchaser believe that
it is in the best interests of each company and their respective shareholders
that the Company be acquired by Purchaser (the "Acquisition").
B. Pursuant to such acquisition, among other things, the Ordinary Shares of
the Company shall be cancelled in consideration of shares of Common Stock of
Purchaser being issued to Company shareholders at the rate determined herein,
new shares of the Company will be issued to Purchaser, and the Company will
become a wholly-owned subsidiary of Purchaser.
C. The Company and Purchaser desire to make certain representations and
warranties and other agreements in connection with the Acquisition.
D. The parties intend that, for purpose of the laws of the United Kingdom
("U.K."), the Acquisition be effected by way of a Scheme of Arrangement under
Section 425 of the U.K. Companies Act of 1985 (the "Companies Act") in the
form set out in Exhibit A (the "Scheme," which term shall include the Scheme
with or subject to any modification, addition or condition approved or imposed
by the High Court of Justice in England and Wales (the "High Court") and
agreed between the parties) and, for purposes of the laws of the United
States, that this Agreement constitutes the adoption of a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. THE ACQUISITION
1.1 THE ACQUISITION. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
("Delaware Law") and Companies Act, the issued Ordinary Shares of the Company
will be cancelled in consideration of shares of Common Stock of Purchaser
being issued to Company shareholders at the rate determined herein, new shares
of the Company will be issued to Purchaser, and the Company will become a
wholly-owned subsidiary of Purchaser.
1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the closing
of the Acquisition shall take place, subject to satisfaction or (where
permitted under the terms of this (Agreement) waiver of the conditions set
forth in Article VI, at the time and date on which an office copy of the Order
of the High Court approving the Scheme under Section 425 of the Companies Act
and confirming under Section 137 of the Companies Act the reduction of capital
provided for in connection with the Scheme shall have been duly delivered to
the Registrar of Companies in England and Wales for registration, such Court
Order shall have been registered by him and the Companies Registry has issued
its certificate of registration of the Court Order (the "Effective Time").
1.3 EFFECT ON CAPITAL STOCK. At the Effective Time:
(a) Cancellation of Company Ordinary Shares. Each of the Company's
Ordinary Shares of 10 ▇▇▇▇▇ each (the "Company Ordinary Shares") (i) in
issue at 6:00 p.m. (London time) on the last business day prior to the date
of the meeting of holders of such Company Ordinary Shares convened pursuant
to an Order
of the High Court to approve the Scheme (or, if such meeting should be
adjourned to a later date, on the last business day prior to that later
date); and (ii) if any, issued thereafter and before 6:00 p.m. (London
time) on the last business day before the hearing of the petition to
sanction the Scheme (the "Hearing Date") on terms that the holder thereof
is bound by the Scheme (together, the "Scheme Shares") will be cancelled,
and in consideration for the cancellation of the Scheme Shares, Purchaser
shall allot and issue to each of the persons who at 6:00 p.m. (London time)
on the business day immediately preceding the Effective Time (the "Record
Date") is the registered holder of Scheme Shares that number of shares (the
"Conversion Shares") of Common Stock, par value $0.001 per share, of
Purchaser (the "Purchaser Common Stock") which is determined by multiplying
the number of Scheme Shares held by such person on the Record Date by
0.1047 (the "Exchange Ratio").
(b) Issuance of Ordinary Shares to Purchaser. Forthwith and contingently
upon the said cancellation of capital taking effect: (i) the share capital
of the Company shall be increased to its former amount by the creation of
such number of ordinary shares of 10 ▇▇▇▇▇ each as shall be equal to the
number of Scheme Shares cancelled; and (ii) the Company shall apply the
reserve arising as a result of such cancellation of capital in paying up in
full at par the ordinary shares of 10 ▇▇▇▇▇ each so created which shall be
allotted and issued credited as fully paid to Purchaser.
(c) Employee Stock Purchase Plan. The Company has not, and shall not,
commence any "option periods" under its 1996 U.S. Employee Stock Purchase
Plan (the "Stock Purchase Plan") after December 31, 1997, shall apply all
amounts deducted and withheld thereunder on or prior to December 31, 1997
to purchase Company Ordinary Shares in accordance with the provisions
thereof, and shall suspend the Stock Purchase Plan as of December 31, 1997
until the Effective Time. Purchaser shall have no obligation or duty in
respect of the Stock Purchase Plan or the rights granted thereunder.
(d) Adjustments to the Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any split, reverse stock split,
stock dividend (including any dividend or distribution of securities
convertible into Purchaser Common Stock or Company Ordinary Shares),
reorganization or other like change with respect to Purchaser Common Stock
or Company Ordinary Shares occurring after the date hereof and prior to
6:00 p.m. (London Time) on the last business day before the Hearing Date.
(e) Fractional Shares. No fraction of a share of Purchaser Common Stock
will be issued by virtue of the Scheme, but in lieu thereof each holder of
shares of Scheme Shares who would otherwise be entitled to a fraction of a
share of Purchaser Common Stock (after aggregating all fractional shares of
Purchaser Common Stock to be received by such holder) shall receive from
Purchaser an amount of cash (rounded to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) $24.06 (the "Closing
Share Value").
1.4 ISSUANCE OF PURCHASER COMMON STOCK.
(a) Exchange Agent. The ▇▇▇▇▇▇ Trust and Savings Bank, or another similar
institution selected by Purchaser, shall act as the exchange agent (the
"Exchange Agent") in the Acquisition.
(b) Intentionally left blank.
(c) Exchange Procedures. Promptly after the Effective Time (and in any event
within 21 days thereafter), Purchaser shall cause to be mailed to each person
who was at 6:00 p.m. (London time) on the Record Date the registered holder of
the Scheme Shares a certificate representing the number of whole shares of
Purchaser Common Stock and a check in payment in lieu of fractional shares
which such holder has the right to receive pursuant to Section 1.3 (e) (in the
case of joint holders, made payable to the first named joint holder).
(d) No Liability. Notwithstanding anything to the contrary in this Section
1.4 none of the Exchange Agent, the Company or Purchaser shall be liable to a
holder of shares of Purchaser Common Stock or Company Ordinary Shares for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law, nor shall they be responsible for any loss
in the transmission of documents of title or failure of the applicable postal
system(s) for items sent in accordance with Clause 2.3 of the Scheme.
1.5 NO FURTHER OWNERSHIP RIGHTS IN COMPANY ORDINARY SHARES. All shares of
Purchaser Common Stock issued in consideration for the cancellation of the
Scheme Shares in accordance with the terms hereof (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such Company Ordinary Shares and there shall be no
further registration of transfers on the records of the Company of Company
Ordinary Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Company
for any reason, they shall be cancelled as provided in this Article I.
1.6 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties hereto
that, for purposes of U.S. law, the Acquisition shall (i) constitute a
reorganization within the meaning of Section 368 of the Code and (ii) qualify
for accounting treatment as a pooling of interests.
1.7 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, the officers and directors of the Company and
Purchaser are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action, so
long as such action is consistent with this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, subject to the exceptions
disclosed in writing in the disclosure letter supplied by the Company to
Purchaser (the "Company Schedules") which identifies the Section numbers
hereof to which the disclosures pertain and which is dated as of the date
hereof, as set forth below. As used herein, the term the "Company" includes
the Company and each direct and indirect subsidiary of the Company, unless
otherwise provided.
2.1 ORGANIZATION OF THE COMPANY. The Company and each of its subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has the corporate power and authority to
own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do
business and in good standing in each jurisdiction in which such qualification
is required by virtue of the nature of the activities conducted by it, except
to the extent that the failure to be so qualified and in good standing would
not have a Material Adverse Effect on the Company (as hereinafter defined).
The Company Schedules contain a true and complete list of all of the Company's
subsidiaries, the jurisdiction of organization of each subsidiary and each
jurisdiction in which the Company or any subsidiary is authorized to do
business. Except as set forth in the Company's Schedules, the Company owns,
directly or indirectly through one or more subsidiaries, 100% of the capital
stock of each of its subsidiaries. Except as set forth in the Company
Schedules, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any interest in, any corporation, partnership, joint venture
or other business association or entity. Except for those subsidiaries listed
in the Company Schedules as specifically not having had their governing
instruments delivered or available to Purchaser ("Missing Subsidiaries"), the
Company has delivered or made available to Purchaser a true and correct copy
of the Memorandum of Association and Articles of Association of the Company,
and Certificate (or Articles) of Incorporation and Bylaws, or similar
governing instruments of each of its subsidiaries, each as amended to date.
Each of the Missing Subsidiaries is currently not conducting any business.
2.2 COMPANY CAPITAL STRUCTURE. The authorized share capital of the Company
consists of 33,500,000 Company Ordinary Shares, 10 ▇▇▇▇▇ each, of which there
were 26,153,738 such shares issued as of the date hereof. Of the Company
Ordinary Shares issued and allotted credited as fully paid, a total of
16,098,849 are represented by 8,049,424 American Depository Shares ("ADSs") as
of December 12, 1997. All shares of Company Ordinary Shares are duly
authorized, validly issued and allotted, fully paid and non-assessable and are
not subject to preemptive rights created by statute, the Memorandum of
Association or Articles of Association of the Company or any agreement or
document to which the Company is a party or by which it is
bound. As of the date hereof, the Company had reserved 6,934,483 Company
Ordinary Shares, net of exercises, for issuance to employees and directors
pursuant to the Company's 1996 Equity Incentive Plan, the Executive Share
Option Scheme and ESOP Share Option Scheme (collectively referred to herein as
the "Company Share Option Plans"), under which options are outstanding for
4,506,904 shares of Company Ordinary Shares (vested and unvested options under
the Company Share Option Plans are referred to herein as the "Company
Options"). All shares of Company Ordinary Shares, subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. The Company Schedules include a
list as of the date hereof of all issuances of share capital by the Company
since November 1, 1995 (other than issuances pursuant to any options under the
Company Share Option Plans and the Company's Stock Purchase Plan referred to
above) and also list for each outstanding option as of the date hereof, the
following: (i) the name of the holder of such option, (ii) the number of
shares subject to such option, (iii) the exercise price of such option, (iv)
any repricing of options which has taken place since November 1, 1995, (v) the
number of shares as to which such option will have been vested at the date
hereof, and (vi) the vesting for the remainder of the shares covered by such
option as of the date hereof and future dates. The Company Schedules also
include a list of all of the participants in the Stock Purchase Plan and the
number of shares of Company Ordinary Shares (or ADSs) which will be issuable
to the participants therein for the option period ended December 31, 1997
(assuming the purchase price of such shares to be 85% of the fair market value
of the Company Ordinary Shares on the first day of the current option period).
There is no current option period under the Stock Purchase Plan, the most
recent option period thereunder having expired on December 31, 1997, and
except for the issuances of Company Ordinary Shares (or ADSs) with respect to
option period ended December 31, 1997, there will be no further issuances
under the Stock Purchase Plan until this Agreement is terminated. Except as
set forth in the Company Schedules, since April 30, 1997, there have been no
changes in the capital structure of the Company other than issuances of
Company Ordinary Shares (i) upon the exercise of options granted under the
Company Share Option Plans and (ii) pursuant to the Stock Purchase Plan.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2 hereof, there are no equity securities of any class of the
Company, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except for
securities the Company owns, directly or indirectly through one or more
subsidiaries, and except as set forth on the Company Schedules, there are no
equity securities of any class of any subsidiary of the Company, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.2
hereof, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which the Company or any of its
subsidiaries is a party or by which it is bound obligating the Company or any
of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional share capital of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. To the knowledge of the
Company, except as set forth in the Company Schedules, there are no voting
trusts, proxies or other agreements or understandings with respect to the
share capital of the Company.
2.4 AUTHORITY; NO CONFLICTS.
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to obtaining requisite shareholder approvals
and sanction by the High Court of Justice of England and Wales (the "High
Court"), 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 the Company, subject only to (i) the approval of the
Acquisition as a Scheme under Section 425 of the Companies ▇▇▇ ▇▇▇▇ pursuant
to U.K. law, by the vote of a majority in number, representing three-fourths
in value, of the shareholders who vote (either in person or by proxy) at the
meeting of the shareholders convened in accordance with the direction of the
High Court for the purpose of considering and approving the Acquisition (the
"Court Meeting"), (ii) the passing of a special resolution (the "Resolution")
approving the entering into of this Agreement, approving the reduction of the
Company's share capital in
connection with the Acquisition, and creating and authorizing the issue of
necessary Ordinary Shares of the Company to be issued to Purchaser and
amending the Company's Articles of Association in accordance with Section 5.19
hereof, at an Extraordinary General Meeting of the Company (the "General
Meeting"), (iii) sanction of the Acquisition as a Scheme, and confirmation of
the reduction of capital involved therein, by the High Court, and (iv)
registration of the Order of the High Court regarding the Scheme with the
Registrar of Companies. This Agreement has been duly executed and delivered by
the Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
(b) The execution and delivery of this Agreement by the Company does not,
and the consummation of the 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 or acceleration of any obligation or loss of any
benefit under (i) any provision of the Memorandum of Association, Articles of
Association of the Company, or the Certificate (or Articles) of Incorporation,
as amended, or Bylaws, as amended, or similar governing instruments of any of
its subsidiaries or (ii) any mortgage, indenture, lease, contract or other
agreement disclosed or required to be disclosed in the Company Schedules
pursuant to Section 2.14 or Section 2.15, which conflict, violation or default
would, individually or collectively, be material or (iii) any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, any of its
subsidiaries or their respective properties or assets, which conflict,
violation or default would, individually or collectively, be material.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any U.S., U.K. or other foreign court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity"), 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) the
filing of the pre-merger notification report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvement Act of 1976, as amended ("HSR Act"), (ii) the filing of
a Form S-4 Registration Statement with the Securities and Exchange Commission
("SEC") in accordance with the Securities Act of 1933, as amended (the
"Securities Act"), (iii) the direction of the High Court to convene the Court
Meeting and the sanction of the Scheme and the confirmation of the reduction
of capital involved therein by the High Court, (iv) registration of the Order
of the High Court regarding the Scheme with the Registrar of Companies, (v)
the filing of the Proxy Statement (as defined in Section 2.28 hereof) with the
SEC in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (vi) the filing of a Form 8-K with the SEC, and (vii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities laws
and the laws of any foreign country, which is not obtained or made would have
a Material Adverse Effect on the Company.
2.5 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since April 30, 1996, and has made available to Purchaser
in the form filed with the SEC (i) its Annual Report on Form 10-K for the
fiscal years ended April 30, 1996 and 1997, (ii) its Quarterly Reports on Form
10-Q for the periods ended July 31, 1997 and October 31, 1997 (the "October
1997 10-Q"), (iii) all proxy statements relating to the Company's meetings of
shareholders (whether annual or special) held since October 31, 1996, (iv) all
other reports or registration statements filed by the Company with the SEC
since October 31, 1996, and (v) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC. All
such required forms, reports and documents (including those enumerated in
clauses (i) through (v) of the preceding sentence) are referred to herein as
the "Company SEC Reports." As of their respective dates, the Company SEC
Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except as set forth above or in the
Company's Schedules, neither the Company nor any of its subsidiaries is
required to file any forms, reports or other documents with the SEC or with
any similar foreign Governmental Entity with respect to the Company's or its
subsidiaries securities.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports (the "Company
Financials"), including any Company SEC Reports filed after the date hereof
until the Effective Time, (x) complies as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, (y)
was prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved and (z) fairly
presented the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements do not include footnote disclosure of
the type associated with audited financial statements are were or are subject
to normal and recurring year-end adjustments, which as to the October 1997 10-
Q are not expected to be material in amount. The audited balance sheet of the
Company contained in the Company SEC Reports as of April 30, 1997 is
hereinafter referred to as the "Company Balance Sheet."
(c) There are no amendments or modifications to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act, which have not yet been
filed with the SEC but which are required to be filed.
2.6 ABSENCE OF CERTAIN CHANGES OF EVENTS. Since the date of the Company
Balance Sheet, except as disclosed in the Company's 10-Q's as of July 31, 1997
and October 31, 1997, and except with respect to the actions contemplated by
this Agreement, the Company has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date,
there has not been (i) any Material Adverse Effect on the Company or any
development that reasonably would be expected to have a Material Adverse
Effect on the Company; (ii) any damage, destruction or loss (whether or not
covered by insurance) on the Company having a Material Adverse Effect on the
Company; (iii) any material change by the Company in its accounting methods,
principles or practices; (iv) any material revaluation by the Company of any
of its assets, including, without limitation, writing down the value of
capitalized software or inventory or deferred tax assets or writing off notes
or accounts receivable other than in the ordinary course of business; and (v)
any labor dispute or charge of unfair labor practice (other than routine
individual grievances), any activity or proceeding by a labor union or
representative thereof to organize any employee of the Company or any campaign
being conducted to solicit authorization from employees to be represented by
such labor union. In this Agreement, the term "Material Adverse Effect" used
in connection with a party or any of such party's subsidiaries means any
event, change or effect that is, or reasonably can be expected to be,
materially adverse to the financial condition, properties, assets,
liabilities, businesses, operations, or results of operations of such party
and its subsidiaries, taken as a whole.
2.7 BOOKS AND RECORDS. The stock record books of the Company are complete
and correct and all other material records of the Company have been maintained
in accordance with sound business practices. All Company minute books, stock
record books and other material records have been made available to Purchaser.
The minute books of the Company contain complete and accurate records of all
meetings held of, and corporate action taken by, the shareholders, the boards
of directors, and committees of the boards of directors of the Company, and no
meeting of any such shareholders, board of directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Effective Time, all of those books and records will be in
the possession of the Company. The Company Schedules contain a complete and
accurate list of the top 15 customers or licensees of the Company, based on
total license revenues for the fiscal year ended April 30, 1997.
2.8 CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of the Company,
the material equipment and other tangible personal property used by the
Company in the conduct of its business, and the hearing, ventilation, and air-
conditioning systems at each of the Company's facilities, are in good
operating
condition and repair, are adequate for the uses to which they are being put,
are not in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost, and are
sufficient for the continued conduct of the Company's business after the
Effective Time in substantially the same manner as conducted prior to the
Effective Time.
2.9 ACCOUNTS RECEIVABLE. The accounting records of the Company, all of which
have been made available to Purchaser, are complete and correct and have been
maintained in accordance with sound business practices. For purposes of this
Agreement, the term "Accounts Receivable" shall mean all accounts receivable
of the Company that are reflected on the Company Balance Sheet or on the
accounting records of the Company as of the Effective Time. All Accounts
Receivable that represent trade receivables represent or will represent as of
the Effective Time valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. Substantially
all Accounts Receivable of the Company are trade receivables. Unless paid
prior to the Effective Time, the Accounts Receivable are or will be as of the
Effective Time collectible in accordance with past practice net of the
respective reserves shown on the Company Balance Sheet or on the accounting
records of the Company as of the Effective Time (which reserves shown on the
Company Balance Sheet are adequate and determined consistent with past
practice). Subject to such reserves, each of the Accounts Receivable either
has been or will be collected in full, without any set-off, within one hundred
twenty (120) days after the day on which it first becomes due and payable.
There is no contest, claim, or contractual right of set-off, other than
returns in the ordinary course of business, with any maker of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable. The
Company Schedules relating to Accounts Receivable contains a complete and
accurate list of all Accounts Receivable as of November 30, 1997 which list
sets forth (i) the aging of such Accounts Receivable, (ii) with respect to
Accounts Receivable for consulting services, the type of contract underlying
such obligation (such as fixed-price or time and expense or a combination or
variation thereof), and (iii) with respect to Accounts Receivable which arise
from fixed-price consulting contracts, the amount by which the fixed-price
deviates from the actual fees and disbursements incurred in connection with
the contract. The Company Schedules set forth a description of the standard
billing practices of the Company with respect to consulting services,
including, without limitation, the billing periods and the types of contracts
(such as fixed-price or time and expense or a combination or variation
thereof). The Company Schedules set forth the fees and disbursements accrued
but not yet billed by the Company as of November 30, 1997 ("Accrued Fees").
Except as set forth in the Company Schedules, all of the Accrued Fees are
billable and collectible by the Company.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the Company
Schedules, and except as set forth in the unaudited balance sheet of the
Company included in the October 1997 10-Q, the Company has no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) other than liabilities or obligations
reflected or adequately reserved against in the Company Balance Sheet, current
liabilities incurred in the ordinary course of business since the date of the
Company Balance Sheet, and obligations under executory contracts that are set
forth in the Company Schedules and that are not required to be so set forth
and which obligations are to be performed in the ordinary course of business,
which obligations are apparent from the plain reading of such contracts (none
of which matters is a liability resulting from a breach of contract, breach of
warranty, tort, infringement or lawsuit).
2.11 TAXES.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, 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 and 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.
(b) Tax Returns and Audits. Except as disclosed in the Company Schedules:
(i) The Company and each of its subsidiaries has filed all material
federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be filed
by the Company and each of its subsidiaries. All Taxes required to be paid
by the Company and its subsidiaries payment for which is due on or before
the date hereof have been paid, except for any failure to pay that would
not have a Material Adverse Effect on the Company.
(ii) Except to the extent that it would not have a Material Adverse
Effect on the Company, The Company and each of its subsidiaries has
withheld with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld by any Governmental
Entity.
(iii) Except to the extent that it would not have a Material Adverse
Effect on the Company, neither the Company nor any of its subsidiaries is
currently delinquent in the payment of any Tax. Except as set forth on the
Company's Schedules, there is no Tax deficiency outstanding, proposed or
assessed against the Company or any of its subsidiaries. Neither the
Company nor any of its subsidiaries executed or requested any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any tax.
(iv) Neither the Company nor any of its subsidiaries have received
written or, to its knowledge, oral notice that any audit or other
examination of any Return of the Company or any of its subsidiaries is
presently in progress, nor has the Company or any of its subsidiaries been
notified in writing or, to its knowledge, orally, of any request for such
an audit or other examination.
(v) Neither the Company nor any of its subsidiaries has any liability for
unpaid federal, state, local or foreign Taxes which has not been accrued
for or reserved on the Company Balance Sheet, in accordance with GAAP,
which is material to the Company. There are no liens for Taxes on the
assets of the Company or of any of its subsidiaries other than Taxes not
yet due and payable.
(vi) There is no contract, agreement, plan or arrangement, including but
not limited to the provisions of this Agreement, covering any employee or
former employee of the Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or 162 of the
Code.
(vii) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the Company.
(viii) The Company is not, and has not been during the applicable period
specified in Section 897(i)(1)(A)(ii) of the Code, a "United States real
property holding corporation" within the meaning of Section 8997(c)(2) of
the Code.
(ix) Neither the Company nor any of its subsidiaries is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreements.
(x) Neither the Company nor any of its subsidiaries has ever been a
member of an affiliate group of corporations within the meaning of Sections
1504 of the Code filing a consolidated federal income Tax Return.
(xi) None of the assets of the Company or any of its subsidiaries is
property that the Company of any of its subsidiaries is required to treat
as being owned by any other person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(xii) None of the assets of the Company or any of its subsidiaries
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(xiii) Except as set forth in the Company Schedules, neither the Company
nor any of its subsidiaries has agreed to make nor is it required to make
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
(xiv) Neither the Company nor any of its subsidiaries has participated in
an international boycott within the meaning of Section 999 of the Code.
(xv) Except as set forth in the Company Schedules, neither the Company
nor any of its United States subsidiaries has or, within the last three (3)
years, had a permanent establishment in any foreign country, as defined in
any applicable tax treaty or convention between the United States and such
foreign country.
(xvi) Except as set forth in the Company Schedules, neither the company
nor any of its subsidiaries is a party to any joint venture, partnership,
or other arrangement or contract that is or, to its knowledge, could
reasonably be treated as a partnership for federal income tax purposes.
2.12 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as disclosed in the Company
Schedules, there is no agreement, judgment, injunction, order or decree
binding upon the Company or its subsidiaries or the Company Intellectual
Property Rights (as defined in Section 2.14), which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any
material current or currently proposed business practice of the Company, any
acquisition of material property by the Company or the conduct of business by
the Company as currently conducted or as proposed to be conducted by the
Company.
2.13 ABSENCE OF LIENS AND ENCUMBRANCES. Except as disclosed in the Company
Schedules, the Company and each of its subsidiaries has good, valid and
marketable title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its properties and assets (whether real,
personal or mixed, and whether tangible or intangible), necessary for the
conduct of its business, free and clear of any liens or encumbrances except as
reflected in the Company Financials and except for liens for taxes not yet due
and payable.
2.14 INTELLECTUAL PROPERTY.
(a) The Company or its subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use, sell or license all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, net lists, schematics, technology, trade secrets, know-
how, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material (excluding in each case Commercial Software as defined in Paragraph
(i) below) that are material to the business of the Company as currently
conducted (the "Company Intellectual Property Rights").
(b) The Company Schedules set forth a list of all patents, trademarks,
copyrights, trade names and service marks, included in the Company
Intellectual Property Rights, and specify, where applicable, the jurisdictions
in which each such Company Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers and
the names of all registered owners. No person or entity has any right of
renewal, reversion, or termination with respect to any patents, trademarks,
copyrights, trade names or service marks included in the Company Intellectual
Property Rights or any rights thereunder. Except as listed in the Company
Schedules, none of the Company's currently marketed software products has been
registered for copyright protection with the United States Copyright Office or
any foreign offices, nor, to the knowledge of the Company, has the Company
been requested to make any such registration, and the Company has made no
application for such copyright.
(c) The Company Schedules set forth a complete list of all licenses,
sublicenses and other agreements as to which the Company or any of its
subsidiaries is a party (as licensor, licensee or otherwise) and pursuant to
which the Company or any other person is authorized to use, sell, or license
any Company Intellectual Property Rights (excluding object code end-user
licenses granted to end-users in the ordinary course of business that permit
use of software products without a right to modify, distribute or sublicense
the same ("End-User Licenses")) or other trade secret material to the Company,
and includes the identity of all parties thereto. Neither the Company nor any
of its subsidiaries is in material violation of any license, sublicense or
agreement described on such list or under any End-User License. The execution
and delivery of this Agreement by the Company, and the consummation of the
transactions contemplated hereby, will neither cause the Company nor any of
its subsidiaries to be in any violation or default under any such license,
sublicense or agreement, nor limit in any way the Company's ability to conduct
its business or use or provide the use of the Company Intellectual Property
Rights or intellectual property rights of others.
(d) Except for Embedded Products (as hereinafter defined), for which the
Company has valid non-exclusive licenses which are disclosed in the Company
Schedules and which are adequate for the Company's business as presently
conducted, (and except for trademarks, service marks, know-how, trade secrets,
for which this representation and warranty is given to the best of the
Company's knowledge), the Company is the sole and exclusive owner or licensee
of, with all right, title and interest in and to (free and clear of any liens
or encumbrances), the Company Intellectual Property Rights, and has sole and
exclusive rights (and is not contractually obligated to pay any compensation
to any third party in respect thereof) to the use and distribution therefor or
the material covered thereby in connection with the services or products in
respect of which the Company Intellectual Property Rights are being used.
(e) Except as disclosed in the Company Schedules, no claims with respect to
the Company Intellectual Property Rights have been asserted or, to the
knowledge of the Company, threatened by any person, nor, to the knowledge of
the Company, are there any valid grounds for any claims, (i) to the effect
that the manufacture, sale, licensing or use of any of the products of the
Company or any of its subsidiaries as now manufactured, sold or licensed or
used in development or otherwise or proposed for manufacture, use, sale or
licensing by the Company or any of its subsidiaries infringes on any
copyright, patent, trademark, service ▇▇▇▇ or trade secret, or requires the
Company to pay any amounts on account of any such sale, license or use other
than pursuant to its contractual obligations, (ii) against the use by the
Company or any of its subsidiaries of any trademarks, service marks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the Company's business as currently
conducted or in development or otherwise as proposed to be conducted by the
Company, or (iii) challenging the ownership by the Company or any of its
subsidiaries, validity or effectiveness of any of the Company Intellectual
Property Rights.
(f) All registered trademarks, service marks and copyrights held by the
Company or any of its subsidiaries are valid and subsisting. To the knowledge
of the Company, there is no unauthorized use, infringement or misappropriation
of any of the Company Intellectual Property Rights by any third party,
including any employee or former employee of the Company. Neither the Company
nor any of its subsidiaries is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing of any of the
Company Intellectual Property Rights or product. Neither the Company nor any
of its subsidiaries has entered into any agreement (other than exclusive
distribution agreements identified as such in the Company Schedules) under
which the Company or its subsidiaries is restricted from selling, licensing or
otherwise distributing any products to any class of customers, in any
geographic area, during any period of time or in any segment of the market.
(g) The Company has heretofore delivered to Purchaser copies of its standard
form End-User License. Except as disclosed in the Company Schedules, the
Company has not entered into any End-User Licenses which contain terms
materially different than as set forth in the standard form of such agreements
made available to Purchaser.
(h) The Company has taken all reasonable security measures to safeguard and
maintain the secrecy, confidentiality and value of, and its property rights
in, all Company Intellectual Property Rights. All consultants of the Company
or any of its subsidiaries have executed and delivered to the Company or any
of its subsidiaries an agreement regarding the assignment to the Company or
any of its subsidiaries of all Company Intellectual Property Rights arising
from the services performed for the Company or any of its subsidiaries by such
persons. No current or prior officers, employees or consultants of the Company
claim any ownership interest in any Company Intellectual Property Right as a
result of having been involved in the development of such property which
employed by or consulting to the Company, or otherwise. Except as set forth in
the Company Schedules and except for the Embedded Products, all of the Company
Intellectual Property Rights have been developed by employees of the Company,
within the scope of their employment.
(i) "Commercial Software" means packaged commercially available software
programs generally available to the public which have been licensed to the
Company pursuant to end-user licenses and which are used in the
Company's business. The Company Schedules set forth the following with respect
to Commercial Software: (i) a complete list of all Commercial Software which
is a component of or incorporated in or specifically required to develop or
support any of the Company's products and related trademarks, technology and
know-how ("Embedded Products"), and (ii) a list of any restrictions on the
Company's or its subsidiaries' unrestricted right to use the Embedded
Products. Each of the Company or its subsidiaries is licensed or otherwise
possesses legally enforceable rights to use, sell and/or license the Embedded
Products as now, or proposed to be, used, sold and/or licensed, and neither
the Company nor any of its subsidiaries is in violation of any license,
sublicense or agreement with respect to an Embedded Product, except such
violations as do not materially impair the Company's or any of its
subsidiaries' rights under such licenses, sublicenses or agreements.
(j) The Company Schedules contain a complete list of all software products
(i) published and/or distributed by the Company or any of its subsidiaries
(the "Company Published Products"), and (ii) under development or
consideration by the Company or any of its subsidiaries with a scheduled
public availability date on or prior to April 30, 1998 (the "Company Products
Under Development" and, collectively with the Company Published Products,
referred to as the "Company Products"). In addition, the Company Schedules set
forth:
(i) for the Company Products: (A) a list of all material contracts and
agreements (including, without limitation, all development, trademark
license, technology license, distribution or other agreements) relating to
the Company Products (to the extent not already listed on another Company
Schedule and excluding End-User Licenses); and (B) the advances paid or
payable, and the royalties payable, to any third parties with respect to
such Company Products;
(ii) for each Company Product Under Development, the currently scheduled
public availability date (which the Company believes as of the date hereof
to be reasonable); and
(iii) a list of revenues of the Company by Company Product Group for each
of the last three fiscal years.
(k) Neither the Company or any of its subsidiaries use any software
development tools, not entirely developed internally in the development of any
Company Products, except for tools that are generally available and are used
in their generally available form, (such as standard compilers).
(l) There are no defects in the Company Published Products, and there are no
errors in any documentation, specifications, manuals, user guides, promotional
material, internal notes and memos, technical documentation, drawings, flow
charts, diagrams, source language statements, demo disks, benchmark test
results, and other written materials related to, associated with or used or
produced in the development of the Company's software products (collectively,
the "Design Documentation"), which defects or errors would in any material
respect affect the Company's or any licensee's use of such software products
or the functioning of such software products in accordance with the
specifications therefor published by the Company; the Company's Published
Products have all the features described in the Design Documentation or
advertisements and materials made available to the Company's customers; and
the Company's Published Products do not contain any "back door", "timebomb",
"Trojan Horse", "worm", "drop dead device", "virus" (as these terms are
commonly used in the computer software industry) or other software routines or
hardware components designed to permit unauthorized access, to disable or
erase software, hardware or data or to perform any other similar type of
function. The occurrence in or use by the Company Published Products and
Company Intellectual Property rights used internally, of dates on or after
January 1, 2000 (the "Millennial Dates") will not adversely affect the
performance of the software with respect to date dependent data, computations,
output or other functions (including, without limitations, calculating,
computing and sequencing) and the software will create, sort and generate
output data related to or including Millennial Dates without errors or
omissions.
(m) No government funding or university or college facilities were used in
the development of the Company's software products and the software was not
developed pursuant to any contract or other agreement with any person or
entity except pursuant to contracts or agreements listed in the Company
Schedules.
(n) The Company Schedules list all warranty claims (including any pending
claims) related to the Company's products and the nature of such claims.
Except as set forth in the Company Schedules, the Company has made no oral or
written representations or warranties with respect to its products or
services.
2.15 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
Company Schedules or in the schedule of Exhibits to the SEC Reports, neither
the Company nor any of its subsidiaries has, nor is it a party to nor is it
bound by:
(a) any collective bargaining agreements;
(b) any employment or consulting agreement, contract or commitment
(including royalty agreements with employees) not terminable by the Company
on thirty days notice without liability, except to the extent general
principles of wrongful termination or other employment law may limit the
Company's ability to terminate employees at will;
(c) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right 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 transactions
contemplated by this Agreement;
(d) any agreement of indemnification or guaranty not entered into in the
ordinary course of business with any party in excess of, or which could
result in a payment of, $50,000 individually or in the aggregate, and any
agreement or guarantee between the Company and of its officers or
directors, irrespective of the amount of such agreement or guarantee;
(e) Any agreement, contract or commitment containing any covenant
limiting the freedom of the Company to engage in any line of business,
complete with any person, or sell any product, or following the
consummation of the Acquisition would so limit Purchaser or the Company;
(f) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000;
(g) any agreement, contract or commitment relating to the disposition or
acquisition of assets not in the ordinary course of business (within the
last 3 years) or any ownership interest in any corporation, partnership,
joint venture or other business enterprise;
(h) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit (other than extensions of credit in the
ordinary course of business from vendors in an amount not exceeding
$50,000);
(i) any joint marketing or development agreement (including any
agreements with independent contractors);
(j) any distribution, sales representative, reseller, or value-added
reseller agreement, including in such Company Schedules an indication of
those distributors, sales representatives, resellers or value-added
resellers who have not met the quotas established in accordance with those
agreements or whose agreements are otherwise currently terminable;
(k) any other agreement, contract or commitment (excluding real and
personal property leases) which involves payment by the Company of $50,000
or more in any twelve (12) month period or $100,000 in the aggregate and is
not cancelable without penalty within thirty (30) days;
(l) any escrow agreements involving Company Intellectual Property Rights
(including source code escrow agreement);
(m) any agreements to register its securities, or
(n) any other material agreements, contracts or commitments.
In addition, the Company Schedules set forth a description of all material
proposed agreements, contracts and commitments which the Company or any of its
subsidiaries is currently negotiating with any third party and which, if
entered into, would be required to be included in the Company Schedules.
2.16 NO DEFAULT. Except as disclosed in the Company Schedules, neither the
Company nor any of its subsidiaries has breached, or received in writing any
claim or threat that it has breached, any of the terms or conditions of any
agreement, contract or commitment listed or required to be listed on the
Company Schedules
pursuant to Section 2.14 or Section 2.15, in such manner as would permit any
other party to cancel or terminate the same or would permit any other party to
seek material damages from the Company thereunder, or would otherwise
materially adversely affect the Company's rights thereunder. Each of such
agreements, contracts and commitments that has not expired or been terminated
in accordance with its terms is in full force and effect and, except as
otherwise disclosed, is not subject to any material default thereunder of
which the Company is aware by any party obligated to the Company pursuant
thereto.
2.17 GOVERNMENTAL AUTHORIZATION. The Company holds all permit, licenses,
variances, exemptions, orders and approvals of all Governmental Entities which
are material to the operation of the Company's business as currently conducted
(the "Company Permits"). The Company is in compliance with the terms of the
Company Permits, except for violations or possible violations which in the
aggregate do not, and insofar as reasonably can be foreseen, in the future
will not have a Material Adverse Effect on the Company. The business of the
Company is not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations or possible
violations which individually or in the aggregate do not, and insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on the Company. As of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company is pending or,
to the knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same.
2.18 LITIGATION. Except as disclosed in the Company Schedules, there is no
suit, action, arbitration, demand, claim or proceeding pending, or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries; nor is there any judgement, decree, injunction, rule or order or
any Governmental Entity or arbitrator outstanding against the Company or any
of its subsidiaries. To the knowledge of the Company, there are no facts which
could reasonably form the basis of any material claim against the Company or
any of its subsidiaries. The Company has made available to Purchaser or its
counsel correct complete copies of all correspondence prepared by its counsel
for the Company's auditors in connection with the last two completed audits of
the Company's financial statements and any such correspondence since the date
of the last such audit.
2.19 INSURANCE. The Company Schedules contain a complete and accurate list
of all insurance policies (including "self-insurance" programs) now maintained
by the Company (the "Insurance Policies") and all claims made, or with respect
to which the Company had continuing obligations, under any such current or
prior insurance policies during the past two (2) years. All of the Company's
prior insurance policies were "claims made" policies. The Insurance Policies
are in full force and effect, the Company is not in default under any
Insurance Policy, and no claim for coverage under any Insurance Policy has
been denied. All of the Insurance Policies will be maintained in full force
and effect until the Effective Time.
2.20 HEALTH, SAFETY AND ENVIRONMENT.
(a) No Hazardous Material. The Company has never generated, transported,
treated, stored, disposed of or otherwise handled any Hazardous Materials (as
Hereinafter defined) at any site, location or facility in connection with its
business, its assets or its owned or leased premises ("Company Premises") and,
to the knowledge of the Company, no such Hazardous Materials are present on,
in or under the Company Premises used in connection with the business or
operations of the Company, and, to the knowledge of the Company, such property
does not contain (including without limitation, containment by means of any
underground storage tank) any Hazardous Materials in violation of any
applicable Environmental and Safety Requirements (as hereinafter defined).
There are no underground storage tanks on the Company Premises.
(b) Compliance. The Company is (i) in compliance with all applicable
Environmental and Safety Requirements, and (ii) possesses all required
permits, licenses, certifications and approvals and has filed all notices or
applications required thereby or pertaining thereto, except where the failure
so to comply, possess or file would not have a Material Adverse Effect on the
Company.
(c) No Actions or Proceedings. The Company has never been subject to, or
received any notice (written or oral) of, any private, administrative or
judicial inquiry, investigation, order or action, or any notice (written or
oral) of any intended or threatened private, administrative, or judicial
inquiry, investigation, order or action relating to the presence or alleged
presence of Hazardous Materials in, under or upon the Company Premises; and
there are no pending or, to the Company's knowledge, threatened
investigations, actions, orders or proceedings (or notices of potential
investigations, actions, orders or proceedings) from any governmental agency
or any other entity regarding any matter relating to Environmental and Safety
Requirements.
(d) Other Condition. To the Company's knowledge, no facts, events or
conditions with respect to the past or present operations or facilities of the
Company exist which could reasonably be expected to interfere with or prevent
continued compliance with, or could give rise to any material common law or
statutory liability or otherwise form the basis of any material claim, action,
suit, proceeding, hearing or investigation against or involving the Company or
the Company Premises under any Environmental and Safety Requirements or
related common law theories based on any such fact, event or circumstance,
including, without limitation, liability for investigation costs, cleanup
costs, personal injury or property damage.
(e) Definitions. For purposes of this Agreement, "Environmental and Safety
Requirements" means all federal, state, local and foreign statutes, laws,
rules, regulations, codes, ordinances, orders, standards, permits, licenses,
actions, policies and requirements (including consent decrees, judicial
decisions and administrative orders) relating to protection, preservation or
conservation of the environment and public or worker health and safety, all as
amended, hereafter amended or reauthorized. For purposes of this Agreement,
"Hazardous Materials" means (i) hazardous substances, as defined by the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. (S)9601 et seq.; (ii) hazardous wastes as defined by the Resource
Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq.; (iii) petroleum,
including without limitation, crude oil or any fraction thereof which is
liquid at standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute); (iv) any radioactive
material, including, without limitation, any source, special nuclear, or by-
product material as defined in 42 U.S.C. (S)2011 et seq.; (v) asbestos in any
form or condition; (vi) polychlorinated biphenyls ("PCBs"); and (vii) any
other material, substance or waste to which liability or standards of conduct
may be imposed under any Environmental and Safety Requirements.
2.21 LABOR MATTERS. The Company has complied in all material respects with
all applicable laws, and there is no allegation, charge or complaint or
proceeding pending or, to the Company's knowledge, threatened against the
Company or any of its officers, directors or employees, relating to the
employment of labor, including with respect to employment, equal employment
opportunity, discrimination, harassment, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and other taxes, workers
compensation or long term disability, and the Company has no knowledge of any
basis for any such allegation, charge, complaint or proceeding. There has
never been, there is not presently pending or existing, and to the Company's
knowledge there is not threatened, any strike, slowdown, picketing, work
stoppage, labor arbitration, or proceeding in respect of the grievance of any
employee, application or complaint filed by an employee or union with the
National Labor Relations Board or any comparable governmental authority,
organizational activity, or other labor dispute against or affecting the
Company, and no application for certification of a collective bargaining agent
is pending or, to the Company's knowledge, threatened. There is no lockout of
any employees by the Company, and no such action is contemplated by the
Company. Neither the Company nor any of its subsidiaries has given to or
received from any current employee of the Company or any of its subsidiaries
notice of termination of employment or has the knowledge that any such
employee intends to terminate such employment. The Company and each of its
subsidiaries has good labor relations and has no knowledge of any facts that
would indicate that the consummation of this transaction hereby will have a
Material Adverse Effect on labor relations.
2.22 EMPLOYEE BENEFIT PLANS.
(a) Except as is described in the Company Schedules with respect to current
employees, former employees, independent contractors or any other persons, or
the beneficiaries or dependents thereof, neither the Company nor any current
or former Company Plan Affiliate (as hereinafter defined) has at any time
maintained, made
contributions to or had any other liability with respect to any of the
following (whether written or unwritten and whether or not terminated): (i)
any employee welfare benefit plan, as defined in Section 3(1) of ERISA (as
hereinafter defined), including, but not limited to, any medical plan, life
insurance plan, short-term or long-term disability plan, dental plan and sick
leave; (ii) any "employee pension benefit plan," as defined in Section 3(2) of
ERISA, including, but not limited to, any non-qualified deferred compensation
or retirement plan or arrangement, any excess benefit plan, top hat plan or
any qualified defined contribution or defined benefit arrangement; or (iii)
any other plan, policy, program, arrangement or agreement providing benefits
or perquisites to employees, former employees, directors, independent
contractors or other persons, or the dependents or beneficiaries thereof,
including, but not limited to, any severance agreement or plan, any material
fringe benefit plan or program, any bonus or incentive plan, personnel policy,
vacation time, holiday pay, service award, stock option, restricted stock,
stock bonus, deferred bonus plan, salary reduction agreement, cafeteria plan
or change-of-control agreement, any of the foregoing of which could result in
Purchaser or the Company having any material liability, whether direct or
indirect.
(b) Except as specifically provided for in this Agreement, each Company
Employee Benefit Plan (as hereinafter defined) and any related contract,
insurance policy or other agreement or documentation necessary or appropriate
for the customary operation of such plan, policy or agreement shall not be
terminated or otherwise made inoperable or ineffective by the consummation of
the transactions contemplated by this Agreement.
(c) A complete copy of each written Company Employee Benefit Plan as amended
to the date hereof, together with audited financial statements and/or
actuarial reports for the three (3) most recent plan years, if any; each trust
agreement, insurance contract, if any, or any other funding vehicle with
respect to each such plan; the most recent determination letter or recognition
of exemption and each other material letter, ruling or notice issued by a
Governmental Entity with respect to such plan, if any; the Form 5500 Annual
Report and any related schedules or attachments for the three (3) most recent
plan years; each summary plan description or summary of material
modifications; and each and any general explanation or communication which
describes any relevant aspect of any such plan that is not disclosed in
previously delivered materials; have been delivered to Purchaser. A
description of the material terms of any unwritten Company Employee Benefit
Plan or of any material oral or otherwise unwritten amendment or modification
to any Company Employee Benefit Plan, is set forth in the Company Schedules.
(d) Except to the extent that the failure to do so would not result in a
material liability to the Company, each Company Employee Benefit Plan (i) has
been and currently complies in form and in operations in all respects with all
applicable requirements of ERISA, the Code and applicable U.K. law, and the
regulations, administrative rulings and case law promulgated thereunder; (ii)
has been and is in compliance with the reporting and disclosure requirements
of applicable Federal, state and applicable U.K. laws and regulations and
administrative rulings and case law promulgated thereunder; (iii) has been and
is operated and administered in compliance with its terms (except as otherwise
required by law); and (iv) has been and is operated, administered, maintained
and funded in compliance with the applicable requirements of the Code, ERISA,
and applicable U.K. law, in such a manner as to qualify, where appropriate,
for both Federal, state and U.K. law purposes, for income tax exclusions to
its participants, tax-exempt income for its funding vehicle, and the allowance
of deductions and credits with respect to contributions thereto. Each Company
Employee Benefit Plan has, if appropriate or intended, received a favorable
determination letter or recognition of exemption from the Internal Revenue
Service ("Service") or similar U.K. Governmental Entity, upon which it may
rely.
(e) With respect to each Company Employee Benefit Plan, there are no
actions, suits or investigations or claims pending or, to the Company's
knowledge, threatened with respect to the assets thereof (other than routine
claims for benefits), and, to the Company's knowledge, there are no facts
which could reasonably give rise to any liability, action, suit,
investigation, or claim against any Company Employee Benefit Plan, any
fiduciary or plan administrator or other person dealing with any Company
Employee Benefit Plan or the assets of any such Company Employee Benefit Plan.
(f) With respect to each Company Employee Benefit Plan, no person: (i) has
entered into any "prohibited transaction," as such term is defined in ERISA or
the Code and the regulations, administrative rulings and case law thereunder;
(ii) has breached a fiduciary obligation or violated Sections 402, 403, 405,
503, 510 or 511 of ERISA; (iii) has any liability for any failure to act or
comply in connection with the administration or investment of the assets of
such plan; or (iv) engaged in any transaction with respect to such plan which
could subject either Purchaser, the Company, or any Plan Affiliate or
Purchaser or the Company, or any fiduciary or plan administrator or any other
person dealing with any such plan to liability under Sections 409 or 502 of
ERISA or Sections 4972 or 4975 through 4980B of the Code.
(g) Each Company Employee Benefit Plan may be amended, terminated, modified
or otherwise revised by the Company or Purchaser, on and after the Closing,
without further liability to the Company or Purchaser, except in the case of
an "employee pension benefit" as defined in Section 3(2) of ERISA, the
foregoing is true only with respect to benefits not yet accrued. For purposes
of this paragraph, termination of a Company Employee Benefit Plan includes the
requirement of a cessation of liability for claims incurred after the
termination date regardless of any status having been obtained or achieved.
(h) Neither the Company nor any current or former Company Plan Affiliate has
at any time participated in, made contributions to or had any other liability
with respect to any Company Employee Benefit Plan which is a "multi-employer
plan" as defined in Section 4001 of ERISA, a "multi-employer plan" within the
meaning of Section 3(37) of ERISA, a "multiple employer plan" within the
meaning of Section 413(c) of the Code, a "multiple employer welfare
arrangement" within the meaning of Section 3(40) of ERISA or is subject to
Title IV of ERISA or the funding requirements of Section 412 of the Code.
(i) Neither the Company nor any current or former Company Plan Affiliate has
ever maintained or contributed to or obligated itself to make contributions to
(or had any other liability with respect to) any funded or unfunded employee
welfare plan, whether or not terminated, which provides medical, health, life
insurance or other welfare-type benefits for current or future retirees or
current or future former employees, their spouses or dependents or any other
persons (except for severance and limited continued medical benefit coverage
for former employees, their spouses and other dependents as required to be
provided under Section 4980B of the Code and Part 6 of Subtitle B of Title I
of ERISA and the accompanying proposed regulations or state continuation
coverage laws ("COBRA")).
(j) all required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports and Summary Plan Descriptions) with respect to
each Company Employee Benefit Plan have been appropriately filed or
distributed to participants, and the requirements of COBRA have been satisfied
with respect to each Company Employee Benefit Plan.
(k) there has been no oral or written communication or explanation with
respect to any Company Employee Benefit Plan which would materially revise or
amend any such plan, which has not previously been delivered or disclosed to
Purchaser.
(l) all contributions, payments, premiums, expenses, reimbursements or
accruals for all periods ending prior to or as of the date hereof for each
Company Employee Benefit Plan (including periods from the first day of the
then current plan year to the date hereof) shall have been made or accrued on
the Company Financials and each such plan otherwise has no unfunded liability
which is not reflected on the Company Financials. All contributions made or
accrued with respect to each Company Employee Benefit Plan is fully deductible
by the Company or a Company Plan Affiliate.
(m) the Company has otherwise performed all material obligations required to
be performed by it under, is not in default under or in violation of, and has
no knowledge of any default or violation by any other party to, each Company
Employee Benefit Plan; neither the Company nor any current or former Company
Plan Affiliate has otherwise incurred any liability to the PBGC, the Service,
any multi-employer plan, the Department of Labor
or otherwise with respect to any Company Employee Benefit Plan that has not
been satisfied in full, and, to the Company's knowledge and the knowledge of
any current or former Company Plan Affiliates, no condition exists that
presents a material risk to the Company or Purchaser of incurring such a
material liability.
(n) As used in this Agreement, the following terms shall have the following
respective meanings:
(i) the term "Company Employee Benefit Plan" shall mean any plan
described in (i), (ii) or (iii) of Section 2.22(a), whether or not
scheduled, which the Company, or any current or former Company Plan
Affiliate has at any time maintained, made contributions to or had any
other liability with respect to, and which could result in Purchaser or the
Company having any liability, whether direct or indirect.
(ii) the term "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(iii) with respect to any person ("First Person") the term "Plan
Affiliate" shall mean any other person or entity with whom the First Person
constitutes or has constituted all or part of a controlled group, or which
would be treated or has been treated with the First Person as under common
control or whose employees would be treated or have been treated as
employed by the First Person, under Section 414 of the Code or Section
4001(b) of ERISA, and any regulations, administrative rulings and case law
interpreting the foregoing.
(o) There are no options outstanding under the 1996 Non-Employee Director's
Share Option Plan.
2.23 CERTAIN PAYMENTS. Neither the Company nor any director, officer, agent,
or employee of the Company or any other person or entity associated with or
acting for or on behalf of the Company, has directly or indirectly made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any person or entity, private or public, regardless of form,
whether in money, property, or services (a) to obtain favorable treatment in
securing business, (b) to pay for favorable treatment for business secured,
(c) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any affiliate of the Company, or (d) in
violation of any federal, state, local, municipal, foreign or other
constitution, ordinance, regulation, statute, treaty, or other law, which
could result in the Company or the Purchaser having any material liability.
The Company has not established or maintained any fund or asset that has not
been recorded in the books and records of the Company.
2.24 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in the section
of the Company SEC Reports captioned "Security Ownership of Certain Beneficial
Owners and Management" and "Other Information-Directors and their Interests';
Certain Transactions," and except for their equity interest in the Company and
any claim for compensation and expense reimbursement for the current payroll
or expense reimbursement period, the directors and officers of the Company and
their Related Persons (as defined below) do not have any interest in any of
the assets of the Company and do not own, of record or as a beneficial owner,
an equity interest or any other financial or profit interest in any person or
entity that has (i) had material business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of products or services of the
Company (a "Competing Business") in any market presently served by the
Company, except a solely passive investment of less than three (3) percent of
the outstanding capital stock of any Competing Business that is publicly
traded on any recognized exchange or in over-the-counter market. Except as set
forth in the Company Schedules and except as set forth in the section of the
Company SEC Reports captioned: "Other Information--Directors and their
Interests'; Certain Transactions," no officer or director of the Company and
none of their Related Persons is a party to any contract with, or has any
claim or right against, the Company. All money owed by the Company to officers
or directors or their "Related Persons" (other than for salary) are for bona
fide debts. For purposes hereof, the term "Related Persons" shall mean: (a)
each other member of such individual's Family; and (b) any person or entity
that is directly or indirectly controlled by any one or more members of such
individual's Family. For purposes of this definition, the "Family" of an
individual includes (i) such individual, (ii) the individual's spouse, (iii)
any lineal descendant of such individual, or (iv) a trust for the benefit of
the foregoing.
2.25 BANK ACCOUNTS. The Company Schedules contain a complete and accurate
list of each bank or other financial institution at which the Company has an
account or safe deposit box, the number of each such account or box, and the
names of all persons authorized to draw on such accounts or to have access to
such boxes.
2.26 POOLING OF INTERESTS. To the knowledge of the Company, based on
consultation with its independent accountants, neither the Company nor its
directors, officers or shareholders has taken any action which would interfere
with (i) Purchaser's ability to account for the Acquisition as a pooling of
interests or (ii) Purchaser's or the Company's ability to continue to account
for as a pooling of interests any past acquisition by the Company currently
accounted for as a pooling of interests.
2.27 CHANGE OF CONTROL PAYMENTS. Except for the acceleration of vesting and
exercise of outstanding stock options in accordance with the terms of the
Company Share Option Plans, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due
to any director or employee of the Company or any of its subsidiaries from the
Company or any of its subsidiaries, under any Company Employee Benefit Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Company Employee Benefit Plan, or (iii) result in the acceleration of the time
of payment or vesting of any such benefits, except as disclosed in the Company
Schedules.
2.28 REGISTRATION STATEMENTS; PROXY STATEMENTS/PROSPECTUS. If the
Registration Statement (as defined in Section 3.6) is filed, the information
supplied by the Company for inclusion in the Registration Statement shall not
at the time the Registration Statement is filed with the SEC and at the time
it becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
The information supplied by the Company for inclusion in the proxy
statement/prospectus to be sent to the shareholders of the Company in
connection with the Court Meeting and the General Meeting (such proxy
statement/prospectus as amended or supplemented is referred to herein as the
"Proxy Statement") shall not, on the date of the Proxy Statement is first
mailed to the Company's shareholders, at the time of the Court Meeting or at
the Closing, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Court Meeting or General Meeting which has
become false or misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. If at any time prior to the Effective Time any event
relating to the Company or any of its affiliates, officers or directors should
be discovered by the Company which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, the Company
shall promptly inform Purchaser. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied
by or concerning Purchaser which is contained in any of the foregoing
documents.
2.29 BOARD APPROVAL. The Board of Directors of the Company has, on or prior
to the date hereof, unanimously approved this Agreement and the Acquisition.
2.30 FAIRNESS OPINION. The Company has received a written opinion from
Broadview Associates, dated as of the date hereof, that the Exchange Ratio
contemplated by this Agreement is fair to the Company's shareholders from a
financial point of view and has delivered to Purchaser a copy of such opinion.
2.31 BROKERS' AND FINDERS' FEES. 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, except for a fee due to Broadview
Associates at the Effective Time pursuant to an agreement, a copy of which has
been provided to Purchaser.
2.32 REPRESENTATIONS AND STATEMENTS COMPLETE. None of the written or oral
representations or warranties made by the Company or any of its officers or
directors, nor any statement made in the Company Schedules, exhibits hereto,
or certificate furnished by the Company or its officers, contains any untrue
statement of a material fact, or omits to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company, subject to the exceptions
specifically disclosed in the disclosure letter supplied by Purchaser to the
Company (the "Purchaser Schedules") and dated as of the date hereof as
follows:
3.1 ORGANIZATION OF PURCHASER. Each of Purchaser and its material
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Purchaser. Accurate copies of the Certificate of
Incorporation and Bylaws of Purchaser, each as amended to date, are filed as
Exhibits to the Purchaser SEC Reports.
3.2 CAPITAL STRUCTURE.
(a) The authorized stock of Purchaser consists of 180,000,000 shares of
Common Stock, $.001 par value, of which 63,753,657 shares were issued and
outstanding as of the date hereof, and 10,000,000 shares of Class II Preferred
Stock, $.01 par value, 1,000,000 shares of which (subject to adjustment upward
or downward by the Company's Board of Directors) have been designated as
Series A Junior Participating Preferred Stock, and 1,775,000 of which (subject
to adjustment upward or downward in accordance with the Purchaser's
Certificate of Incorporation, as amended) have been designated as Class II
Series B Preferred Stock. No shares of the Series A Junior Participating
Preferred Stock are issued or outstanding. A total of 1,768,421 shares of
Class II Series B Preferred Stock are issued and outstanding. A total of
1,768,421 shares of Class II Series B Preferred Stock are issued and
outstanding. All such shares have been duly authorized, and all such issued
and outstanding shares have been validly issued, are fully paid and
nonassessable and are free of any liens or encumbrances other than any liens
or encumbrances created by or imposed upon the holders thereof. The registered
holders of Purchaser Common Stock have the right (a "Right") to purchase from
Purchaser upon the occurrence of certain events, for each share of Purchaser
Common Stock owned, one-hundredth of a share of Class II Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred Rights
Shares"), of Purchaser at a price of $125.00 per one-hundredth of a Preferred
Rights Share, subject to adjustment. Each one-hundredth of a Preferred Rights
Share is entitled to one vote, a dividend equal to the dividend per share paid
on the Purchaser Common Stock, and a liquidation payment equal to the
liquidation payment per share paid on the Purchaser Common Stock. The
description and terms of the Rights are set forth in a Rights Agreement
between Purchaser and ▇▇▇▇▇▇ Trust and Savings Bank, as Rights Agent, a copy
of which has been provided to the Company. As of the date hereof, Purchaser
has also reserved (i) 1,075,034 shares of Common Stock for issuance to the
Purchaser's officers, directors, employees or independent contractors or
affiliates thereof under the Purchaser's 1989 Stock Option Plan, (ii) 115,000
shares of Common Stock for issuance to the Chief Executive Officer of the
Purchaser under the Purchaser's Chief Executive Officer Stock Option Plan,
(iii) 2,815,274 shares of Common Stock for issuance to the Purchaser's
officers, directors, employees or independent contractors or affiliates
thereof under the Purchaser's 1991 Stock Option Plan, (iv) 100,000 shares of
its Common Stock for issuance to non-employee directors of the Purchaser under
the Purchaser's Directors' Stock Option Plan, (v) 1,000,000 shares of its
Common Stock for issuance to officers, directors, employees, independent
contractors or other service providers of the Purchaser under the 1995 Stock
Incentive Plan, (vi) 8,600,000 shares of its Common Stock for issuance to
officers, directors, employees, independent contractors or other service
providers of the Purchaser under the Purchaser's 1995 Employee Incentive
Compensation Plan, (vii) 1,768,421 shares (subject to adjustment upward or
downward) of its Common Stock for issuance upon conversion of outstanding
shares of Class II Series B Preferred Stock, and (viii) 8,243,726 shares of
Common Stock for issuance upon the election by the holders of 6.25%
Convertible Subordinated Notes to convert such notes into shares of Common
Stock as provided therein. As of November 30, 1997, of the 13,379,526 shares
of Purchaser Common Stock reserved for issuance upon exercise of options
therefor, 11,699,167 shares remained subject to outstanding options and
1,680,359 shares were reserved for future grant. In addition, pursuant to
Purchaser's Employee Stock Purchase Plan, 260,000 shares of Purchaser's Common
Stock will be issuable to the participants therein for the offering period
ending
February 28, 1998, [provided that all participants continue to contribute at
current levels (assuming the purchase price of such shares to be 85% of the
fair market value of Purchaser's Common Stock on the first day of the current
offering period)]. In addition, there are outstanding (A) $115,000,000
(aggregate principal amount) of 6 3/4% Convertible Subordinated Notes Due
2001, which are (i) convertible at the option of the holder into shares of
Purchaser Common Stock at any time prior to maturity at a conversion price of
$13.95 per share (equivalent to a conversion rate of 71.685 shares per $1,000
principal amount of Notes), (ii) redeemable at the option of Purchaser at any
time after November 15, 1999 and (iii) mature on November 15, 2001, and (B)
$150,000,000 (aggregate principal amount) of 6.25% Convertible Subordinated
Notes Due 2002, which (i) are redeemable at the option of the Purchaser at any
time after December 15, 2000 and (ii) mature on December 15, 2002. All shares
of Purchaser Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth above and for shares of Purchaser Common
Stock issuable in connection with business combinations or acquisitions of
technology pursuant to agreements entered into after the date hereof, there
are no other equity securities, options, warrants, calls, rights, commitments
or agreements of any character to which Purchaser is a party or by which it is
bound obligating Purchaser to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
the capital stock of Purchaser or obligating Purchaser to grant, extend or
enter into any such equity security, option, warrant, call, right, commitment
or agreement.
(b) The shares of Purchaser Common Stock to be issued pursuant to the
Acquisition will, upon assistance, be duly authorized, validly issued, fully
paid and non-assessable.
3.3 AUTHORITY
(a) Purchaser 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 Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the valid and binding
obligations of Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity.
(b) The execution and delivery of this Agreement does not, and the
consummation of the 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
or acceleration of any obligation or loss of a benefit under (i) any provision
of the Certificate of Incorporation or Bylaws of Purchaser or (ii) any
material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or its
properties or assets other than any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
Adverse Effect on the ability of Purchaser to consummate the transactions
contemplated hereby.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Purchaser in connection with the execution and delivery of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated hereby, except for (i) the filing of a pre-merger notification
report under the HSR Act, (ii) the filing of the From S-4 Registration
Statement with the SEC, (iii) the filing of a Form 8-K with the SEC within 15
days after the Effective Time, (iv) listing of the Conversion Shares on the
Nasdaq National Market, (v) any filings as may be required under applicable
state securities laws and the laws of any foreign country, and (vi) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a Material Adverse Effect on Purchaser.
3.4 SEC FILINGS; PURCHASER FINANCIAL STATEMENTS
(a) Purchaser and each of its subsidiaries has filed all material forms,
reports and documents required to be filed with the SEC since January 1, 1996,
and has made available to the Company, in the form filed with the
SEC, (i) its Annual Reports on From 10-K for the fiscal years ended 1995 and
1996, respectively, (ii) its Quarterly Reports on From 10-Q for the periods
ended March 31, June 30, and September 30, 1997 (the "September 1997 10-Q"),
(iii) all proxy statements relating to Purchaser's meetings of stockholders
(whether annual or special) held since December 31, 1995, (iv) all other
reports or registration statements filed by Purchaser with the SEC since
December 31, 1995, and (v) all amendments and supplements to all such reports
and registration statements filed by Purchaser with the SEC. All such required
forms, reports and documents (including those enumerated in clauses (i)
through (iii) of the preceding sentence) are referred to herein as the
"Purchaser SEC Reports." As of their respective dates, the Purchaser SEC
Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act. as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Purchaser SEC Reports and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Purchaser's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Purchaser SEC Reports (the
"Purchaser Financials"), including any Purchaser SEC Reports filed after the
date hereof until the Closing, (i) complies as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and (iii) fairly presented
the consolidated financial position of Purchaser and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements do not include footnote disclosure of the type associated
with audited financial statements and were or are subject to normal and
recurring year-end adjustments, which, as to September 1997 10-Q, are not
expected to be material in amount. The audited balance sheet of the Company
contained in the Purchaser SEC Reports as of December 31, 1996 is hereinafter
referred to as the "Purchaser Balance Sheet."
(c) Purchaser has heretofore furnished or made available to the Company a
complete and correct copy of any amendments or modifications, which have not
yet been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Purchaser
with the SEC pursuant to the Securities Act or the Exchange Act.
3.5 POOLING OF INTERESTS. To Purchaser's knowledge, based on consultation
with its independent accountants, neither Purchaser nor its directors,
officers or stockholders nor any of its subsidiaries has taken any action
which would interfere with Purchaser's ability to account for the Acquisition
as a pooling of interests.
3.6 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. Provided that
Purchaser determines to have a Form S-4 filed, and subject to the accuracy of
the representations of the Company made in Section 2.28, the registration
statement on Form S-4 (or such other or successor form as shall be
appropriate), (including any amendments or supplements thereto, the
"Registration Statement"), pursuant to which the shares of Purchaser Common
Stock to be issued in the Acquisition may be registered with the SEC shall
not, at the time the Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements included therein not misleading. The information
supplied by Purchaser for inclusion in the Proxy Statement shall not, on the
date the Proxy Statement is first mailed to shareholders, at the time of the
Court Meeting or at the Closing, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Court
Meeting and General Meeting which has become false or misleading. The Proxy
Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. If at any time prior to the Effective Time any event
relating to Purchaser, or any of their respective affiliates, officers or
directors should be discovered by Purchaser which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement, Purchaser will promptly inform the Company. Notwithstanding the
foregoing, Purchaser makes no representation or warranty with respect to any
information supplied by the Company which is contained in any of the foregoing
documents.
3.7 BOARD APPROVAL. The Board of Directors of Purchaser has, as of the date
hereof, unanimously approved this Agreement and the Acquisition.
3.8 BROKERS' AND FINDERS' FEES. Purchaser has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement,
the Acquisition or any transaction contemplated hereby.
3.9 ABSENCE OF CERTAIN CHANGES OF EVENTS. Since the date of the Purchaser
Balance Sheet, except with respect to the actions contemplated by this
Agreement, Purchaser has conducted its business in the ordinary course and in
a manner consistent with past practice and, since such date, there has not
been any Material Adverse Effect on Purchaser or any development that
reasonably would be expected to have a Material Adverse Effect on the
Purchaser.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Purchaser Schedules,
and except as set forth in the unaudited balance sheet of Purchaser included
in the September 1997 10-Q, Purchaser has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) other than liabilities or obligations reflected or adequately
reserved against in the Purchaser Balance Sheet, current liabilities incurred
in the ordinary course of business since the date of the Purchaser Balance
Sheet, and obligations under executory contracts.
3.11 LITIGATION. There is no suit, action, arbitration, demand, claim or
proceeding pending, or, to the knowledge of Purchaser, threatened against
Purchaser or any of its subsidiaries, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Purchaser or any of its subsidiaries, which reasonably would be
expected to be material to Purchaser. To the knowledge of Purchaser, there are
no facts which could reasonably from the basis of any material claim against
the Company or any of its subsidiaries.
3.12 TAX FREE REORGANIZATION. Purchaser will treat the transactions
contemplated hereby as a tax-free reorganization under (S)368(a)(1)(B) of the
Code for U.S. income tax purposes and will not take any contrary position,
unless required to do so in order to comply with applicable federal and state
law.
3.13 REPRESENTATIONS AND STATEMENTS COMPLETE. None of the written or oral
representations or warranties made by Purchaser or any of its officers or
directors, nor any statement made in Purchaser Schedules, exhibits hereto, or
certificates furnished by Purchaser or its officers, contains any untrue
statement of a material fact, or omits to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
4. CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 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 pursuant to its terms and the Effective Time, the Company (which for
the purposes of this Section 4.1 shall include the Company and each of its
subsidiaries) agrees, except to the extent that Purchaser shall otherwise
consent in writing, to carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to
keep financial records of the Company in accordance with sound business
practices, to pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, to pay or perform other material
obligations when due, to file all necessary and/or required forms, reports and
documents required to be filed with the SEC ("Future SEC Reports") and to
prepare such Future SEC Reports in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Future SEC Reports,
including without limitation, Section 10(b)(5) of the Securities Act, and to
use commercially reasonable efforts consistent with past practices and
policies to preserve intact the Company's present business organizations, to
the best of its ability and except as a result of announcement of the signing
of this Agreement, to keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with
the Company, to the end that the Company's goodwill and ongoing businesses be
unimpaired at the Effective Time. The Company shall promptly notify Purchaser
of any event or occurrence not in the ordinary course of business of the
Company, and will not enter into or amend any agreement or take any action
which reasonably would be expected to have a Material Adverse Effect on the
Company. Except as expressly provided for by this Agreement, the Company shall
not, prior to the Effective Time or earlier termination of this Agreement
pursuant to its terms, without the prior written consent of Purchaser, which
consent will not be unreasonably withheld:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock, or reprice options granted under the Company Share
Option Plans or authorize cash payments in exchange for any options granted
under any of such plans;
(b) Create any new subsidiaries, or enter into partnership arrangements,
joint ventures, joint development agreements or strategic alliances,
agreements to create standards or agreements with "Standard" bodies;
(c) Grant any severance or termination pay (i) to any executive officer
or (ii) to any other employee except payments made in connection with the
termination of employees who are not executive officers in amounts
consistent with the Company's policies and past practices or pursuant to
written agreements outstanding, or policies existing, on the date hereof
and as previously disclosed in writing to Purchaser or pursuant to written
agreements consistent with the Company's past agreements under similar
circumstances;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property Rights
(including rights to resell or relicense the Company Intellectual Property
Rights) or enter into grants to future patent rights, other than End-User
Licenses entered into in the ordinary course of business consistent with
past practices (which End-User Licenses may include, without limitation,
non-material changes, but may not include a right to modify, distribute or
sublicense the software covered by such End-User Licenses, and which may
include, or have in connection with such End-User License, a software
escrow containing release conditions consistent with escrow agreements
previously entered into by the Company);
(e) Commence any litigation other than (i) for the routine collection of
bills, (ii) for software piracy, or (iii) in such cases where the Company
in good faith determines that failure to commence suit would result in the
material impairment of a valuable aspect of the Company's business,
provided that the Company consults with the Purchaser prior to the filing
of such a suit;
(f) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its share
capital, or split, combine or reclassify any of its share capital or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of share capital of the Company;
(g) Repurchase or otherwise acquire, directly or indirectly, any Company
Ordinary Shares;
(h) Issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, any Company Ordinary Shares or any other security of the
Company, or of any class or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or enter into other agreements or
commitments of any character obligating it to issue, any such shares,
securities or other convertible securities, other than (i) the issuance of
shares of Company Ordinary Shares pursuant to the exercise of Company stock
options or warrants therefor outstanding as of the date of this Agreement
consistent with the terms of the applicable
Company Share Option Plan, and (ii) shares of Company Ordinary Shares
issuable to participants in the Stock Purchase Plan consistent with the
terms of that Plan;
(i) Cause, permit or propose any amendments to the Company's Memorandum
of Association or Articles of Association or the Articles (or Certificates)
of Incorporation or Bylaws of any of the Company's subsidiaries (other than
any amendments specifically provided for in the Resolution);
(j) Sell, lease, license, encumber or otherwise dispose of any of the
Company's properties or assets which are material, individually or in the
aggregate, to the business of the Company;
(k) Incur any indebtedness for borrowed money (other than ordinary course
trade payables or pursuant to existing credit facilities in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire debt securities of the
Company or guarantee any debt securities of others;
(l) Adopt or amend any Company Employee Benefit Plan or increase the
salaries or wage rates of any of its employees (except for wage increases
in the ordinary course of business and consistent with past practices),
including but not limited to (but without limiting the generality of the
foregoing), the adoption or amendment of any share purchase or option plan,
the entering into of any employment contract or the payment of any special
bonus or special remuneration in excess of $50,000 to any individual
director or employee, or $400,000 to all directors and employees;
(m) Revalue any of the Company's assets, including without limitation
writing down the value of inventory, writing off notes or accounts
receivable other than in the ordinary course of business consistent with
past practice;
(n) Except as set forth in the Company Schedules, pay, discharge or
satisfy in an amount in excess of $50,000 (in any one case) or $100,000 (in
the aggregate), any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), including, without
limitation, under any employment contract or with respect to any bonus or
special remuneration, other than the payment, discharge or satisfaction in
the ordinary course of business of liabilities and of the type reflected or
reserved against in the Company Financials (or the notes thereto);
(o) Except as set forth in the Company Schedules, make or change any
material election in respect of Taxes, adopt or change any accounting
method in respect of Taxes, file any amendment to a material Return, enter
into any closing agreement, settle any claim or assessment in respect of
Taxes (except settlements effected solely through payment of immaterial
sums of money), or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;
(p) Intentionally take any action, including the acceleration of vesting
of any options, warrants, restricted shares or other rights to acquire
shares of the Company Ordinary Shares, which would be reasonably likely to
interfere with Purchaser's ability to account for the Acquisition as a
pooling of interests;
(q) Incur costs and expenses in excess of $1,250,000, in the aggregate,
in connection with the preparation, negotiation and execution of this
Agreement and the completion of the transactions contemplated hereby,
including without limitation, costs and expenses of lawyers, accountants,
investment bankers and other consultants or representatives, but excluding
any filing fees and printing and mailing costs incurred in connection with
the Registration Statement or Proxy Statement and fees and expenses which
may be owed to Broadview Associates;
(r) Enter into any mortgage, indenture, lease, contract or other
agreement, the terms of which conflict with or are violated by, or under
which a default occurs or will occur, by or as a result of this Agreement
or the consummation of the Acquisition, which conflict, violation or
default would, individually or collectively, be material;
(s) Voluntarily enter into any agreement, judgment, injunction, order or
decree binding upon the Company or its subsidiaries or the Company
Intellectual Property Rights, which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any material current
or currently proposed business practice of the Company, any acquisition of
material property by the Company or the conduct of business by the Company
as currently conducted or as proposed to be conducted by the Company;
(t) Enter into any agreement that would have been required to be
disclosed under Section 2.14 or 2.15 had the agreement been entered into
prior to the date hereof (other than End-User Licenses which adhere to the
provisions set forth in the second parenthetical of Section 4.1(d), and
other than licenses for Embedded Products, which End-User Licenses and
licenses for Embedded Products are generally available, will be used in
their generally available form, and are entered into in ordinary course of
business, consistent with past practices) or take any action which would
constitute a material violation under any agreement or agreements, which
are, individually or collectively, material to the Company;
(u) Take any action which wilfully violates the proprietary rights of a
third party;
(v) Take any action which constitutes a violation of any law, ordinance
or regulation of any Governmental Entity, except for violations or possible
violations which individually or in the aggregate do not, and insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on the Company;
(w) Take any action that would, if taken prior to the date hereof,
constitute a violation of a representation and warranty contained in
Section 2.23;
(x) Agree in writing or otherwise to take, any of the actions described
in Section 4.1(a) through (x) above; or
(y) Agree in writing or otherwise to take, any other action with would
cause or would be reasonably likely to cause any of the conditions to the
Acquisition set forth in Sections 6.1 or 6.3, not to be satisfied.
4.2 COVENANT REGARDING AMENDMENT TO THE SCHEME. No amendment to the Scheme
will be proposed by the Company without the consent of Purchaser (which
consent will not be unreasonable withheld or delayed). If any amendment to the
Scheme or the Resolution is proposed at the Court Hearing by the Court or any
party (other than the Company), the Company will withdraw its application for
the Scheme to be sanctioned by the Court, unless and until Purchaser will
withdraw its application for the Scheme to be sanctioned by the Court, unless
and until Purchaser consents to such amendment; provided that both the Company
and Purchaser agree to accept any amendment to the Scheme required by the High
Court if the amendment is (i) consistent with the provisions of this Agreement
or (ii) not materially less favorable to the Company and Purchaser than the
terms set forth in this Agreement.
4.3 PURCHASER'S COVENANTS.
(a) Except as expressly provided for in this Agreement, Purchaser shall not,
prior to the Effective Time or earlier termination of this Agreement pursuant
to its terms, without the prior written consent of the Company, which consent
will not be unreasonably withheld, take, or agree in writing or otherwise to
take, any action which would cause, or which would be reasonably likely to
cause, any of the conditions to the Acquisition set forth in Sections 6.1 or
6.2, not to be satisfied.
(b) Purchaser covenants to the Company (for itself and as trustee for
holders of Scheme Shares) that it will instruct English Counsel to appear at
the hearing of the petition to sanction the Scheme and, by such Counsel, that
it shall undertake to the High Court to be bound by the Scheme and, subject to
Section 4.2 hereof, to execute and do, and to procure to be executed and done,
all such documents, acts and things as may be necessary or desirable to be
executed or done by it for the purpose of giving effect to the Scheme.
(c) For the avoidance of doubt, all and any UK Stamp Duty and/or Stamp Duty
Reserve Tax payable in relation to the Acquisition shall be borne and paid by
Purchaser. Purchaser further covenants to Company (for itself and as trustee
for holders of Scheme Shares) to execute and do, and procure to be executed
and done, all documents, acts and things (including the giving of undertakings
to submit and/or the submission of documentation relating to the Scheme for
Stamp Duty adjudication) as may be necessary or desirable to be executed or
done for the purpose of enabling registration at the Registrar of Companies of
the Order of the High Court sanctioning the Scheme and confirming the
reduction of capital in connection with the Scheme to occur as expeditiously
as possible, including in the event that the UK Inland Revenue or the
Registrar of Companies shall allege that Stamp Duty or Stamp Duty Reserve Tax
is payable in relation to the Acquisition.
(d) Purchaser covenants to the Company that it shall not cause any split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Purchaser Common Stock or Company Ordinary
Shares), reorganization, recapitalization or other like change with respect to
Purchaser Common Stock between the Hearing Date and the Effective Time.
4.4 PAYMENT OF STAMP DUTY AFTER EFFECTIVE TIME. If, following the Effective
Time, Purchaser shall acquire any Company Ordinary Shares (including such
shares arising on exercise of Company Options), any U.K. Stamp Duty or Stamp
Duty Reserve Tax shall be borne by Purchaser.
4.5 COMPANY ACTIONS REGARDING CERTAIN COMPANY SHARE OPTION PLANS. Company
hereby covenants that it shall enter into an agreement (to the extent it has
not already done so) with LBMS Trustee Company Limited (the "Trustee"), as
trustee under the LBMS Employees' Share Scheme Trust (the "Trust") to the
effect that (a) the Company will provide Company Ordinary Shares to the
Trustee to allow the Trustee to meet its commitment under the Trust to holders
of Company Options to the extent it does not already possess such shares and
(b) the Trustee shall use its Company Ordinary Shares to also satisfy the
Company's obligations to employees under the Employee Stock Purchase Plan. The
Company shall prior to the Effective Time provide Purchaser with such
agreement with the Trustee.
5. ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly as
practicable after the execution of this Agreement, Purchaser and the Company
shall prepare, and file with the SEC, the Proxy Statement and, if Purchaser
elects to file a registration statement with respect to the issuance of
Purchaser Common Stock in respect of the Scheme Shares, which such election
shall be made if Purchaser is required to do so in order to comply with
applicable securities laws, Purchaser shall prepare and file with the SEC the
Registration Statement in which the Proxy Statement will be included as a
prospectus. Subject to the preceding sentence, each of the Purchaser and
Company shall use its best efforts to have the Registration Statement declared
effective as soon thereafter as practicable; provided, however, that Purchaser
shall have no obligation to agree to account for the Acquisition as a
"purchase" in order to cause the Registration Statement to become effective.
The Proxy Statement shall include the fairness opinion of Broadview Associates
referred to in Section 2.30. The Proxy Statement shall, subject to the proper
exercise of the fiduciary duties of the Directors of the Company, also include
the recommendations of the Board of Directors of the Company in favor of the
Acquisition which shall not be withdrawn, modified or withheld except in
compliance with this Agreement.
5.2 MEETINGS OF SHAREHOLDERS. Promptly after the date hereof, the Company
shall take all action necessary in accordance with the U.K. and U.S. Law and
its Memorandum of Association and Articles of Association to convene the Court
Meeting and the General Meeting, to be held as promptly as practicable for the
purpose of voting upon this Agreement and the Acquisition as a Scheme and the
Resolution, respectively. The Proxy Statement shall contain the Scheme in the
form set out in the Exhibit A, the notice of the Court Meeting in the form set
out in Exhibit B and the notice convening the General Meeting in the form set
out in Exhibit C, in each case subject to such changes and amendments as may
be agreed between the Company and Purchaser and/or as may be directed by the
High Court, together with an "Explanatory Statement" complying with the
provisions of Section 426 of the Companies Act and otherwise in a form
reasonably satisfactory to the Company and the Purchaser.
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Company shall afford Purchaser and its accountants, counsel and
other representatives reasonable access during normal business hours during
the period prior to the Effective Time to all information concerning the
business, including the status of product development efforts, properties and
personnel of the Company as Purchaser may reasonably request. No information
or knowledge obtained in any investigation pursuant to this Section 5.3 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.
(b) The parties acknowledge that Purchaser and the Company have previously
executed a Nondisclosure Agreement, dated October 10, 1997 (the "Nondisclosure
Agreement") and a Non-Recruitment dated November 21, 1997, which Nondisclosure
Agreement and Non-Recruitment Agreement shall continue in full force and
effect in accordance with their respective terms.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective Time or
the earlier termination of this Agreement in accordance with its terms, the
Company and its subsidiaries will not, and will not permit their respective
directors, officers, employees, representatives, investment bankers, agents
and affiliates to, directly or indirectly, (i) solicit, initiate or encourage
submission of any inquiries, proposals or offers by, (ii) (save where required
otherwise by applicable law or regulation) participate in any negotiations nor
negotiations with, (iii) (save where required otherwise by applicable law or
regulation) afford any access to the properties, books or records of the
Company or any of its subsidiaries to, or (iv) otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with, any person,
entity or group (other than Purchaser and its affiliates, agents and
representatives), in connection with any Acquisition Proposal. For the
purposes of this Agreement, an "Acquisition Proposal" shall mean any proposal
relating to any merger, consolidation, sale of material assets, tender offer,
recapitalization, accumulation of Company Ordinary Shares, ADRs or ADSs, proxy
solicitation, or other business combination involving the Company or any
subsidiary thereof. In addition, from and after the date of this Agreement
until the Effective Time or the earlier termination of this Agreement in
accordance with its terms, (save where required otherwise by applicable law or
regulation) the Company and its subsidiaries will not, and will not permit
their respective directors, officers, employees, representatives, investment
bankers, agents and affiliates to, directly or indirectly, make or authorize
any statement, recommendation or solicitation in support of any Acquisition
Proposal made by any person, entity or group (other than Purchaser). The
Company will immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
(b) Notwithstanding the provisions of paragraph (a) above, prior to the
approval of this Agreement and the Acquisition as a Scheme by the shareholders
of the Company at the Court Meeting and the approval of Resolutions at the
General Meeting, nothing contained in this Agreement shall prevent the Company
from furnishing information concerning the Company and its business,
properties and assets (but not encouraging the requests for such information)
to any third party, provided that (i) such third party has delivered to the
Company in writing an unsolicited, bona fide Superior Proposal (as hereinafter
defined), (ii) the Company notifies Purchaser immediately of any disclosure of
non-public information to any such third party, with a description of the
information to be disclosed, and (iii) the Company provides such non-public
information pursuant to a confidentiality agreement at least as restrictive as
the Confidentiality Agreement. Notwithstanding the foregoing, the Company may
not provide any non-public information to any third party if it has not prior
to the date thereof provided such information to Purchaser or Purchaser's
representatives.
(c) In the event the Company receives an Acquisition Proposal which the
Board of Directors of the Company in its good faith reasonable judgement
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable to the shareholders of the Company from
a financial point of view than the Acquisition and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgement of the Board of Directors of the Company (based upon the advice of
independent financial advisors), is reasonably capable of being financed by
such person, entity or group and which is likely to be consummated (a
"Superior Proposal"), nothing contained in this Agreement shall prevent the
Board of Directors of the Company from accepting or approving such Superior
Proposal or recommending such Superior Proposal to the Company's shareholders,
if the Board determines in good faith, after consultation with and based upon
the advice of its outside legal counsel, that such action is required by its
fiduciary duties under applicable law; in such case, the Board may amend,
withhold or withdraw its recommendation of the Acquisition. Subject to the
right of termination set forth in Section 7.1(g), except to the extent
expressly set forth in this Section 5.4, nothing shall relieve the Company
from complying with all other terms of this Agreement. Notwithstanding the
foregoing, the Company shall provide not less than five (5) business days
prior written notice to Purchaser before accepting or approving a Superior
Proposal.
(d) The Company will (i) notify Purchaser immediately if any proposal is
made or any information or access is requested in connection with an
Acquisition Proposal or potential Acquisition Proposal and (ii) immediately
communicate to Purchaser the principal terms and conditions of any such
Acquisition Proposal or potential Acquisition Proposal or inquiry and the
identity of the offeror or potential offeror.
(e) Nothing contained in this Section 5.4 shall prevent the Company or its
Board of Directors from complying with the provisions of Rule 14e-2(a) and
14d-9 promulgated under the Exchange Act.
5.5 EXPENSES. All fees and expenses incurred in connection with the
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Acquisition is consummated;
provided, however, that Purchaser and the Company shall share equally all fees
and expenses, other than attorneys', accountants' and financial advisor's
fees, incurred in connection with the printing and filing of the Registration
Statement (including financial statements and exhibits) and any amendment or
supplements thereto.
5.6 PUBLIC DISCLOSURE. Purchaser and the Company shall consult with each
other before issuing any press release or otherwise making any public
statement with respect to the Acquisition or this Agreement and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or the Nasdaq National Market, and in any event
in accordance with the terms of the Confidentiality Agreements.
5.7 POOLING ACCOUNTING. Purchaser and the Company shall each use its
reasonable commercial efforts to cause the business combination to be effected
by the Acquisition to be accounted for as a pooling of interests. Each of
Purchaser and the Company shall use its reasonable commercial efforts to cause
its Affiliates (as defined in Section 5.9) not to take any action that would
adversely affect the ability of Purchaser to account for the business
combination to be effected by the Acquisition as a pooling of interests.
5.8 AUDITORS' LETTERS. The Company shall use its reasonable commercial
efforts to cause to be delivered to Purchaser a letter of Price Waterhouse
LLP, independent auditors to the Company, dated a date within two business
days before the date on which the Registration Statement (if any) becomes
effective, and addressed to Purchaser, in form and substance reasonably
satisfactory to Purchaser and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement. The Purchaser shall use its
reasonable commercial efforts to be delivered to the Company a letter of KPMG
Peat Marwick LLP, independent auditors to the Purchaser, dated a date within
two business days before the date on which the Registration Statement (if any)
becomes effective, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
5.9 AFFILIATE AGREEMENTS. Set forth respectively in Purchaser's Schedules
and the Company's Schedules is a list of those persons who are, in Purchaser's
or the Company's reasonable judgment, as the case may be, "Affiliates" of
Purchaser of the Company, as the case may be, within the meaning of Rule 145
(each such person who is an "affiliate" of Purchaser or the Company within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). Each of Purchaser and the Company shall provide
the other such information and documents as the other shall reasonably request
for purposes of reviewing such list. The Company shall use its reasonable
commercial efforts to deliver or cause to be delivered to Purchaser,
concurrently with the execution of this Agreement, from each of the Affiliates
of the Company, an executed Affiliate Agreement in the form attached hereto as
Exhibit D (each, a "Company Affiliate Agreement" and, collectively, the
"Company Affiliate Agreements"). Purchaser shall use its reasonable commercial
efforts to deliver or cause to be delivered to the Company, concurrently with
the execution of this Agreement, an Affiliate Agreement, executed by each of
the Affiliates of Purchaser, in the form attached hereto as Exhibit E (the
"Purchaser Affiliate Agreement"). Purchaser shall be entitled to place
appropriate legends on the certificates evidencing any Purchaser Common Stock
to be received by such Affiliates of the Company pursuant
to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Purchaser Common Stock, consistent with
the terms of the Company Affiliate Agreements.
5.10 LEGAL REQUIREMENTS. Each of Purchaser and the Company will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any Governmental Entity, and prompt resolution of any litigation
prompted hereby) and will promptly cooperate with and furnish information to
any party hereto necessary in connection with any such requirements imposed
upon any of them or their respective subsidiaries in connection with the
consummation of the transactions contemplated by this Agreement, and will take
all reasonable actions necessary to obtain (and will cooperate with the other
parties hereto in obtaining) any consent, approval, order or authorization of,
or any registration, declaration or filing with, any Governmental Entity or
other public or private third party required to be obtained or made in
connection with the Acquisition or taking of any action contemplated by this
Agreement.
5.11 BLUE SKY LAWS. Purchaser shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Purchaser Common Stock pursuant hereto. The
Company shall use its reasonable commercial efforts to assist Purchaser as
many be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of
Purchaser Common Stock pursuant hereto.
5.12 REASONABLE COMMERCIAL EFFORTS AND FURTHER ASSURANCES. Each of the
parties to this Agreement shall each use its reasonable commercial efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement (including resolution
of any litigation prompted hereby). Each party hereto, at the reasonable
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 transactions
contemplated hereby.
5.13 CERTAIN BENEFIT PLANS. Subject to compliance with pooling of interests
accounting treatment of the Acquisition and the requirements of any applicable
laws, Purchaser shall take such reasonable actions as are necessary or
appropriate to allow eligible employees of the Company or its subsidiaries to
participate in the benefit programs of Purchaser (or in alternative benefit
programs on similar terms) as soon as is reasonably practicable after the
Effective Time, in accordance with the terms of such programs.
5.14 TAX-FREE REORGANIZATION. Purchaser and the Company shall each use all
reasonable commercial efforts to cause the Acquisition to be treated for
purposes of U.S. law as a reorganization within the meaning of Section 368 of
the Code.
5.15 NASDAQ LISTING. Purchaser agrees to authorize for listing on the Nasdaq
National Market the shares of Purchaser Common Stock issuable, and those
required to be reserved for issuance, in connection with the Acquisition, upon
official notice of issuance.
5.16 INDEMNIFICATION. For a period of two years after the Effective Time,
the Company shall indemnify and hold harmless each person who has at any time
prior to the Effective Time been an officer, director or employee of the
Company or other person entitled to be indemnified by the Company pursuant to
its Memorandum of Association or Articles of Association as they are currently
in effect on the date hereof to the same extent as provided in such documents.
5.17 NOTIFICATION. Between the date of this Agreement and the Effective
Time, each party will promptly notify the other in writing if that party
becomes aware of any fact or condition that causes or constitutes
a breach of any of such party's representations and warranties as of the date
of this Agreement, or if the party becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would cause or constitute
a breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
5.18 DELISTING OF ADRS. Prior to the Effective Time, the Company will delist
from the Nasdaq National Market, the American Depository Receipts ("ADRs") of
the Company, evidencing ownership of American Depository Shares, which
represent Company Ordinary Shares, which ADRs are traded on the Nasdaq
National Market.
5.19 AMENDMENT TO THE ARTICLES OF ASSOCIATION. The Resolution presented by
the Company at the General Meeting shall include a proposal to amend the
Articles of Association in the manner provided by paragraph C of the draft
Resolution set out in Exhibit C, incorporating such changes thereto as Company
shall determine, provided the written consent of Purchaser is obtained (such
consent not to be unreasonably withheld or delayed).
5.20 ISSUANCE OF COMPANY ORDINARY SHARES AFTER SCHEME. Purchaser covenants
with the Company (for itself and as trustee for holders of options over the
Company Ordinary Shares), in order to permit the proper operation of the
Articles of Association (as amended by the Resolution), that, upon service of
a Vendor Notice or a Purchaser Notice (as such terms are defined in the said
Articles, as so amended), it will issue to the person from whom such new
Company Ordinary Shares ("Later Shareholders") are acquired by Purchaser
shares of Purchaser Common Stock in accordance with the Exchange Ratio, as may
be adjusted pursuant to the Articles of Association (as so amended), in
consideration of the transfer to Purchaser of such Company Ordinary Shares. No
fraction of a share of Purchaser Common Stock will be issued to the Later
Shareholders by virtue of the forgoing sentence, but in lieu thereof each
Later Shareholder who would otherwise be entitled to a fraction of a share of
Purchaser Common Stock (after aggregating all fractional shares of Purchaser
Common Stock to be received by such holder) shall receive from Purchaser an
amount of cash calculated as set out in Article 4B of the Articles of
Association (as so amended). The Purchaser Common Stock issued will be fully
paid and non-assessable, will rank equally in all respects with all Purchaser
Common Stock in issue at the time (other than as regards any dividend or other
distribution payable by reference to a second date preceding the date of
allotment).
5.21 FORM S-8. Purchaser agrees to file a registration statement on Form S-8
for the shares of Purchaser Common Stock issuable to any Later Shareholders in
accordance with Section 5.20 hereof no later than 10 days after the Effective
Time.
5.22 COMPANY SHARE OPTION PLANS.
(a) Prior to the Effective Time, Purchaser will make a written offer to
holders of outstanding options under the Company Share Option Plans, which
offer will be subject to consummation of the Acquisition, to exchange their
outstanding Company Options for options to purchase Purchaser Common Stock to
be issued under Purchaser's Employee Incentive Compensation Plan ("Purchaser
Options"). Any acceptance of such offer will be effective immediately after
the Effective Time. The Purchaser Options offered by Purchaser to the holders
of Company Options will have the following terms and conditions: (i) the
vested or unvested status of the Purchaser Options and the vesting schedule
shall be identical to that provided by the terms of the applicable Company
Share Option Plan, giving effect to any accelerated vesting by virtue of a
"change of control," it being understood that, to the extent applicable, the
optionholder's acceptance of Purchaser's offer pursuant to this Section shall
constitute an agreement to "release options" in consideration of the grant of
"equivalent options" in Purchaser and, as a result, Purchaser Options will
reflect the remaining vesting schedule of the Company Option, (ii) the term of
the Purchaser Options shall be identical to that provided in the applicable
Company Share Option Plan; provided, however, that if the terms of the
applicable Company Share Option Plan provides that the Company Option will
expire or terminate prior to the first anniversary of the Effective Time,
whether due to a change of control or by virtue of termination of employment
after the Effective Time, than the term of the Purchaser Option shall expire
or terminate on the first anniversary of the Effective Time, and (iii) except
as set
forth above, the terms and conditions of the Purchaser Options shall be
substantially identical to those set forth in the applicable Company Share
Option Plan. Pursuant to the exchange offer, (1) Company Options shall be
exercisable (when vested) for that number of whole shares of Purchaser Common
Stock equal to the product of the number of shares of Company Ordinary Shares
that were issuable upon exercise of such Company Options immediately prior to
the Effective Time multiplied by the Exchange Ratio, rounded to the nearest
whole number of shares of Purchaser Common Stock, and (2) the per share
exercise price for the shares of Purchaser Common Stock issuable upon exercise
of such Purchaser Options shall be equal to the quotient determined by
dividing the exercise price per share of Company Ordinary Shares at which such
Company Options were exercisable immediately prior to the Effective Time by
the Exchange Ratio, rounded to the nearest whole cent. Purchaser shall make
the offer in accordance with applicable securities laws, including, without
limitation, requiring, where it believes necessary, the use of investor
representatives for optionholders, and the Company shall cooperate with
Purchaser in the offer.
(b) Purchaser and the Company agree to consider in good faith including the
exchange offer provided for in (a) above as part of the Scheme for purposes of
obtaining the High Court's approval of the exchange offer.
6. CONDITIONS TO THE ACQUISITION
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE ACQUISITION. The
respective obligations of each party to this Agreement to effect the
Acquisition shall be subject to the satisfaction at or prior to the Effective
Time of the following conditions, and the Order of the High Court regarding
the Scheme shall not be filed with the U.K. Registrar of Companies until the
following conditions have been met:
(a) Shareholder Approval. The Agreement, the Acquisition as a Scheme, and
the Resolution at the General Meeting, shall have been approved and adopted
by the requisite vote under applicable law of the shareholders of the
Company.
(b) High Court Approval/Filing. The Scheme shall have been sanctioned,
and the proposed reduction of the Company's share capital shall have been
confirmed, by the High Court.
(c) Registration Statement Effective. If a Registration Statement is
filed, the SEC shall have declared the Registration Statement effective. No
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose,
and no similar proceeding in respect of the Proxy Statement, shall have
been initiated or threatened in writing by the SEC; and all requests for
additional information on the part of the SEC shall have been complied with
to the reasonable satisfaction of the parties hereto.
(d) No Injunctions. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Acquisition shall be in effect.
(e) HSR Act. Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(f) Opinion of Accountants. Each of the parties to this Agreement shall
have received letters from its respective accountants with respect to
pooling of interests that shall be satisfactory to the other party;
provided, however, that the satisfaction of this condition shall not be
required to enforce the obligation of Purchaser to effect the Acquisition
if the non-satisfaction of this condition is due to an action or inaction
of Purchaser which prevents treating the business combination to be
effected by the Acquisition as a pooling of interests.
(g) Nasdaq Listing. The shares of Purchaser Common Stock issuable to
stockholders of the Company pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the
Acquisition shall have been authorized for listing on the Nasdaq National
Market upon official notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligations of the
Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, and the Order of the High
Court regarding the Scheme shall not be filed with the U.K. Registrar of
Companies until the following conditions have been met, any of which may be
waived, in writing, exclusively by the Company:
(a) Representations and Warranties. The representations and warranties of
Purchaser contained in this Agreement shall have been true and correct in
all material respects as of the date of this Agreement and the Company
shall have received a certificate to such effect signed on behalf of
Purchaser by the President, Chief Operating Officer or Chief Financial
Officer of Purchaser.
(b) Agreements and Covenants. Purchaser shall have performed or complied
in all materials respect with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to Effective
Time, and the Company shall have received a certificate to such effect
signed by the President, Chief Operating Officer or Chief Financial Officer
of Purchaser.
(c) Legal Opinion. The Company shall have received a legal opinion from
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, legal counsel to Purchaser, in substantially the
form attached hereto as Exhibit F.
(d) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on Purchaser.
(e) Affiliate Agreements. Each of the parties identified by Purchaser
pursuant to Section 5.10 hereof as being an Affiliate of Purchaser shall
have delivered to Purchaser an executed Purchaser Affiliate Agreement which
shall be in full force and effect.
(f) Tax Opinion. The Company shall have received a legal opinion from
Ropes & ▇▇▇▇, legal counsel to the Company, to the effect that the
Acquisition will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1) of the Code.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, and the Order of the High
Court regarding the Scheme shall not be filed with the U.K. Registrar of
Companies until the following conditions have been met, any of which may be
waived, in writing, exclusively by Purchaser:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall have been true and correct in
all material respects as of the date of this Agreement, except for the
representations and warranties in Section 2.5 (b), 2.7, 2.9 and 2.19 to the
extent specifically given as of the Effective Time, and without giving
effect to any notice thereof pursuant to Section 5.17 hereof; Purchaser
shall have received a certificate to such effect signed on behalf of the
Company by the President and Chief Financial Officer of the Company;
(b) Agreement of Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Purchaser shall have received a certificate to such
effect signed by the President and Chief Financial Officer of the Company.
(c) Third Party Consents. Purchaser shall have received all written
consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by Purchaser's legal counsel to provide for the
continuation in full force and effect of any and all material contracts and
leases of the Company and for the Company to consummate the transactions
contemplated hereby except when the failure to receive such consents, etc.
would not have a Material Adverse Effect on the Company.
(d) Legal Opinions. Purchaser shall have received a legal opinion from
Ropes & ▇▇▇▇, U.S. legal counsel to the Company, in substantially the form
attached hereto as Exhibit G, a legal opinion from Macfarlanes, English
legal counsel to the Company, in substantially the form attached hereto as
Exhibit H, a legal opinion from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, legal counsel
for ▇▇▇▇▇▇ Guaranty Trust Company of
New York, the Depository for the Company's ADSs, in substantially the form
attached hereto as Exhibit I, and a legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇,
additional legal counsel to the Company, in substantially the form attached
hereto as Exhibit J.
(e) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on the Company;
provided that, for purposes of this Section 6.3(e), a Material Adverse
Effect on the Company shall not be deemed to have occurred as a result of
(i) a decline in the actual or potential future financial condition,
properties, assets, liabilities, businesses, operations or results of
operations of the Company provided that the Company has operated its
business in accordance with Section 4.1 and otherwise consistent with its
past practices, (ii) losses of employees or other matters related to the
transactions contemplated hereby (including, without limitation, the public
announcement thereof), or (iii) actions taken by the Company at the
specific request of Purchaser.
(f) Affiliate Agreements. Each of the parties identified by the Company
pursuant to Section 5.10 hereof as being an Affiliate of the Company shall
have delivered to Purchaser an executed Company Affiliate Agreement which
shall be in full force and effect.
(g) Transfer of Minority Interests. Any minority interest in the Company
subsidiaries not already held by the Company or a wholly-owned subsidiary
of the Company shall have been validly transferred to a nominee of
Purchaser.
(h) Termination of the Stock Purchase Plan. The Company shall have
terminated the Stock Purchase Plan.
7. TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Acquisition
abandoned by notice served at any time prior to noon (London time) on the
business day immediately following the date on which the High Court shall
sanction the Scheme:
(a) by mutual written consent of the Company and Purchaser;
(b) by any party if the Company's shareholders do not approve the
Acquisition at the Court Meeting or do not approve the Resolution at the
General Meeting as provided in this Agreement;
(c) by Purchaser if:
(i) there has been a material breach of any representation, warranty,
covenant or agreement, contained in this Agreement on the part of the
Company and such breach has not been cured within ten (10) business
days after written notice to the Company (provided, that Purchaser is
not in material breach of the terms of this Agreement; and provided
further, that no cure period shall be required for a breach which by
its nature cannot be cured) such that the conditions set forth in
Section 6.3(a) or Section 6.3(b), as the case may be, will not be
satisfied, or
(ii) the Board of Directors of the Company adversely amends,
withholds or withdraws its recommendation of the Acquisition, or shall
have resolved or publicly announced or disclosed to any third party its
intention to do so, or the Acquisition is not submitted to the
Company's shareholders as contemplated by this Agreement (provided that
Purchaser is not in material breach of the terms of this Agreement);
(d) by the Company if:
(i) there has been a material breach of any representation, warranty,
covenant or agreement, contained in this Agreement on the part of the
Purchaser and such breach has not been cured within ten (10) business
days after written notice to the Purchaser (provided, that the Company
is not in material breach of the terms of this Agreement; and provided
further, that no cure period shall be required for a breach which by
its nature cannot be cured) such that the conditions set forth in
Section 6.2(a) or Section 6.2(b), as the case may be, will not be
satisfied,
(ii) the Board of Directors of Purchaser adversely amends, withholds
or withdraws its recommendation of the Acquisition (provided that the
Company is not in material breach of the terms of this Agreement), or
(e) by any party hereto if: (i) there shall be a final, non-appealable
order of a Federal or state court, or the High Court in effect preventing
consummation of the Acquisition; or (ii) there shall be any final 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 make consummation of the Acquisition illegal or which would
prohibit Purchaser's ownership or operation of all or a material portion of
the business of the Company, or compel Purchaser to dispose of or hold
separate all or a material portion of the business or assets of the Company
or Purchaser as a result of the Acquisition;
(f) by any party hereto if the Acquisition shall not have been
consummated by August 31, 1998 (provided that if the Acquisition shall not
have been consummated solely due to the waiting period, or any extension
thereof, under the HSR Act not having expired or been terminated, then such
date shall be extended to December 31, 1998); provided, further, that the
right to terminate this Agreement under this Section 7.1(f) shall not be
available to any party whose willful failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date; and
(g) by any party if the Board of Directors of the Company accepts or
approves a Superior Proposal, or recommends a Superior Proposal to the
shareholders of the Company.
Where action is taken to terminate this Agreement pursuant to this Section
7.1, it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
7.2. EFFECT OF TERMINATION. In the event of termination of this Agreement as
provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Purchaser, the Company or
their respective officers, directors, stockholders or affiliates, except to
the extent that such termination results from the breach by a party hereto of
any of its representations, warranties, covenants or agreements set forth in
this Agreement, and, provided that the provisions of Sections 5.3(b) and 5.5
and Article VIII of this Agreement shall remain in full force and effect and
survive any termination of this Agreement.
7.3 NOTICE OF TERMINATION. Any termination of this Agreement under Section
7.1 above will be effective immediately upon the delivery of written notice
made in accordance with Section 8.1 below by the terminating party to the
other party hereto (which shall be copied by facsimile to Macfarlanes
(attention: ▇▇▇ ▇▇▇▇▇▇▇▇) and ▇▇▇▇▇▇▇▇ Chance (attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇).
7.4. 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.
7.5. EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
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.
8. GENERAL PROVISIONS
8.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(a) if to Purchaser, to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.2 INTERPRETATION. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "include", "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
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.
8.3 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.
8.4 ENTIRE AGREEMENT. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, including the Company Schedules and the Purchase Schedules (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,
it being understood that the Confidentiality Agreement shall continue in full
force and effect until the Effective Time and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder, except as specifically set forth in Section
5.20.
8.5 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 provison.
8.6 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.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law
thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the State of Delaware, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in
any manner authorized by the laws of the State 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.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, 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.
8.9 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the parties.
IN WITNESS WHEREOF, Purchaser and the Company have caused this Agreement to
be signed by themselves or their duly authorized respective officers, all as
of the date first written above.
Platinum technolgy, inc.
Learmonth & ▇▇▇▇▇▇▇▇ Management
Systems PLC
By:_________________________ By:____________________________
Name:_______________________ Title:
Title:______________________ Chief Executive Officer and
President