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ASSET PURCHASE AGREEMENT
BY AND AMONG
INSTALLSHIELD SOFTWARE CORPORATION
("SELLER")
AND
MACROVISION CORPORATION ("PARENT"), MACROVISION EUROPE LIMITED AND
MACROVISION INTERNATIONAL HOLDINGS LP
(COLLECTIVELY WITH PARENT, "PURCHASER")
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JUNE 16, 2004
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TABLE OF CONTENTS
1. SALE AND PURCHASE OF PURCHASED ASSETS......................................1
1.1 ASSETS TO BE PURCHASED AND SOLD..............................1
1.2 EXCLUDED ASSETS..............................................3
1.3 LIABILITIES..................................................4
1.4 CLOSING AND CLOSING DATE.....................................7
1.5 ACTIONS AT THE CLOSING.......................................7
1.6 POST-CLOSING ACTIONS.........................................8
2. PURCHASE PRICE; TERMS OF PAYMENT...........................................8
2.1 PURCHASE PRICE...............................................8
2.2 ALLOCATION OF PURCHASE PRICE................................13
3. REPRESENTATIONS AND WARRANTIES OF SELLER..................................13
3.1 CORPORATE...................................................13
3.2 TITLE TO PURCHASED ASSETS...................................15
3.3 CONTRACTS AND COMMITMENTS...................................16
3.4 DUE AUTHORITY; VALID AND BINDING AGREEMENTS.................18
3.5 NO CONFLICTS OR VIOLATIONS..................................18
3.6 NO VIOLATION OF LAW.........................................19
3.7 NO LITIGATION, ETC..........................................19
3.8 NO BROKERS OR FINDERS.......................................19
3.9 ASSIGNABILITY OF CONTRACTS..................................19
3.10 ENVIRONMENT, HEALTH, AND SAFETY.............................20
3.11 TAXES.......................................................20
3.12 INTELLECTUAL PROPERTY ASSETS................................21
3.13 EMPLOYEES...................................................23
3.14 EMPLOYEE AND LABOR MATTERS..................................24
3.15 CUSTOMERS AND SUPPLIERS.....................................28
3.16 OUTSTANDING EQUITY & ECONOMIC INTERESTS.....................29
3.17 FINANCIAL STATEMENTS........................................29
3.18 UK SUBSIDIARY ACCOUNTS......................................29
3.19 PRODUCT WARRANTY AND PRODUCT LIABILITY......................30
3.20 INSURANCE...................................................30
3.21 ABSENCE OF CERTAIN CHANGES..................................31
3.22 ABSENCE OF UNDISCLOSED LIABILITIES..........................32
3.23 AFFILIATES' RELATIONSHIPS TO SELLER.........................33
3.24 DISCLOSURE..................................................33
3.25 MICROSOFT...................................................33
3.26 UK SUBSIDIARY CAPITALIZATION................................33
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................33
4.1 CORPORATE...................................................34
4.2 DUE AUTHORITY...............................................34
4.3 NO CONFLICTS OR VIOLATIONS..................................34
4.4 NO BROKERS OR FINDERS.......................................34
4.5 FINANCIAL CAPACITY..........................................35
5. FURTHER AGREEMENTS & COVENANTS............................................35
5.1 ESCROW AGREEMENT............................................35
5.2 ANNOUNCEMENTS...............................................35
5.3 CONFIDENTIAL INFORMATION....................................35
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5.4 USE OF SELLER'S NAME........................................35
5.5 PERMITS.....................................................36
5.6 TAXES.......................................................36
5.7 MATERIAL AGREEMENTS.........................................36
5.8 CONDUCT OF BUSINESS.........................................36
5.9 EXCLUSIVE DEALING...........................................36
5.10 ACCESS TO INFORMATION.......................................37
5.11 EMPLOYEE MATTERS............................................37
5.12 SELLER'S FINANCIAL OBLIGATIONS..............................39
5.13 ASSIGNMENT OF CONTRACTS.....................................39
5.14 NOTICE OF DEVELOPMENTS......................................39
5.15 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILINGS...................................39
5.16 NON-COMPETITION.............................................39
5.17 ACCOUNTS RECEIVABLE.........................................41
5.18 USE OF PROCEEDS.............................................41
5.19 UPDATING SCHEDULES..........................................41
5.20 WISE SOLUTIONS, INC.........................................41
5.21 ▇▇▇▇▇ MATTER................................................42
5.22 HELLE MATTER................................................42
5.23 UK SUBSIDIARY TAX REFUND....................................42
5.24 UK SUBSIDIARY NET ASSET ADJUSTMENT..........................43
6. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.............................44
6.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE....44
6.2 COMPLIANCE WITH COVENANTS...................................44
6.3 NO MATERIAL ADVERSE CHANGE..................................44
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6.4 THIRD PARTY CONSENTS, ASSIGNMENTS AND NOTICES...............44
6.5 KEY EMPLOYEES...............................................45
6.6 EMPLOYEES...................................................45
6.7 FOUNDERS' CERTIFICATE.......................................45
6.8 FOUNDER'S NON-COMPETITION AGREEMENT.........................45
6.9 APPROVALS...................................................45
6.10 RELEASE OF CLAIMS...........................................45
6.11 SELLER DOCUMENTS............................................45
6.12 HSR WAITING PERIOD..........................................45
6.13 CHANGES TO DISCLOSURE SCHEDULES.............................45
6.14 NO LITIGATION, ETC..........................................45
6.15 INTERIM FINANCIAL REPORTS...................................46
6.16 STOCK TRANSFER FORM.........................................46
7. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE................................46
7.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE....46
7.2 COMPLIANCE WITH COVENANTS...................................46
7.3 PURCHASE PRICE..............................................46
7.4 NO MATERIAL ADVERSE CHANGE..................................46
7.5 KEY EMPLOYEES...............................................46
7.6 EMPLOYEES...................................................46
7.7 APPROVALS...................................................47
7.8 PURCHASER DOCUMENTS.........................................47
7.9 HSR WAITING PERIOD..........................................47
7.10 NO LITIGATION, ETC..........................................47
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8. TERMINATION...............................................................47
8.1 TERMINATION OF AGREEMENT....................................47
8.2 EFFECT OF TERMINATION.......................................48
9. COVENANTS FOLLOWING CLOSING...............................................48
9.1 SELLER'S EMPLOYEES..........................................48
9.2 POST-CLOSING COOPERATION....................................48
9.3 POST-CLOSING ACCESS TO INFORMATION AND PERSONNEL............48
9.4 UK TAX RETURNS..............................................49
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................49
10.1 SURVIVAL....................................................49
11. INDEMNIFICATION..........................................................49
11.1 INDEMNIFICATION.............................................49
11.2 LIMITATIONS ON INDEMNIFICATION..............................50
11.3 MATTERS INVOLVING THIRD PARTIES.............................51
11.4 PROCEDURE FOR INDEMNIFICATION...............................52
11.5 NON-THIRD PARTY CLAIMS......................................52
11.6 EXCLUSIVE REMEDY............................................52
11.7 NO WAIVER...................................................53
11.8 NO MULTIPLE RECOVERIES......................................53
11.9 INDEMNIFICATION REPRESENTATIVE..............................53
12. MISCELLANEOUS............................................................53
12.1 FEES AND EXPENSES...........................................53
12.2 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.................53
12.3 AMENDMENTS AND MODIFICATIONS................................53
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12.4 NOTICES.....................................................53
12.5 ASSIGNMENT..................................................54
12.6 DISCLOSURE SCHEDULES AND EXHIBITS...........................54
12.7 GOVERNING LAW...............................................55
12.8 CAPTIONS....................................................55
12.9 ATTORNEYS' FEES.............................................55
12.10 NO WAIVER...................................................55
12.11 COUNTERPARTS................................................55
12.12 ARBITRATION.................................................55
12.13 FURTHER ASSURANCE...........................................57
12.14 SEVERABILITY................................................57
12.15 FORCE MAJEURE...............................................58
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INDEX
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A Liability.........................................................4
Accountant.........................................................10
Accounts...........................................................30
Additional Contingent Payment......................................11
Additional Contingent Payment Date.................................11
Additional Contingent Payment Representative.......................12
Adjustment Schedule.................................................9
Adverse Consequences...............................................50
Affiliate...........................................................6
Agreement...........................................................1
Arbitrator Decision................................................57
Assigned Contracts..................................................2
Assignment and Assumption Agreement.................................8
Assumed Liabilities.................................................5
B Liability.........................................................5
Bankruptcy Event...................................................42
Benefits...........................................................23
▇▇▇▇ of Sale........................................................7
Business............................................................1
Change in Control Transaction......................................12
Claims.............................................................56
Closing.............................................................7
Closing Date........................................................7
COBRA..............................................................38
Code...............................................................13
Compete............................................................40
Competitor.........................................................40
Confidential Information...........................................36
Customers..........................................................29
Direct Claim.......................................................53
Disclosure Schedules...............................................13
Employment Regulations.............................................28
Environmental Laws.................................................20
ERISA..............................................................25
Escrow Agent........................................................8
Escrow Agreement....................................................8
Excluded Assets.....................................................3
Excluded Liabilities................................................6
Executive Team.....................................................16
Financial Statements...............................................30
Flex Plan..........................................................39
Force Majeure......................................................58
GAAP................................................................3
Geographical Area..................................................41
Government Entities.................................................6
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Hazardous Substances...............................................20
Helle Matter.......................................................43
HSR Act............................................................19
▇▇▇▇▇ Matter.......................................................42
Indemnification Escrow Amount.......................................9
Indemnification Representative.....................................53
Indemnified Party..................................................52
Indemnifying Party.................................................52
Initial Purchase Price..............................................8
Intellectual Property Assets........................................2
Intellectual Property Liabilities...................................5
IRS................................................................26
JAMS...............................................................57
Key Employee Offer Letter..........................................38
Key Employees......................................................38
Knowledge..........................................................16
Laws................................................................6
Liability...........................................................4
Liens..............................................................16
Material Adverse Effect............................................14
May 2004 Financial Statements......................................30
Orders..............................................................6
Parent..............................................................1
Permitted Liens....................................................16
Pre-Closing Adjustments.............................................9
Pre-Closing Period.................................................36
Premises...........................................................20
Products...........................................................30
Purchase Price......................................................8
Purchased Assets....................................................1
Purchaser...........................................................1
Records............................................................35
Relief..............................................................4
Representation Termination Date....................................50
Seller..............................................................1
Seller 401(k) Plan.................................................26
Seller Arbitration Service.........................................57
Seller Benefit Plans...............................................25
Seller's Adjustment Notice..........................................9
Suppliers..........................................................29
Taxes..............................................................21
Third Party Claim..................................................52
UK Business........................................................27
UK Employees.......................................................27
UK Subsidiary.......................................................3
UK Subsidiary's Scheme.............................................29
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UK Tax Liability....................................................4
Update Period......................................................42
Year- End Bonus Adjustment..........................................9
Year-End Bonus Adjustment Modifications.............................9
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made as of
June 16, 2004, by and among InstallShield Software Corporation, a Delaware
corporation ("SELLER"), Macrovision Corporation, a Delaware corporation (the
"PARENT"), Macrovision Europe Limited, a company organized under the laws of
England and Wales, and Macrovision International Holdings LP, a limited
partnership organized under the laws of the Cayman Islands (collectively with
Parent, the "PURCHASER").
RECITALS
A. Seller and the UK Subsidiary are engaged in the business
of developing, marketing, licensing and selling software and services related to
the set-up, installation, re-packaging and updating of software applications
(the "BUSINESS").
B. Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, substantially all of the assets used in the
operation of the Business on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective agreements, representations, warranties, covenants and conditions
contained in this Agreement, and intending to be legally bound hereby, the
parties agree as follows:
1. SALE AND PURCHASE OF PURCHASED ASSETS
1.1 ASSETS TO BE PURCHASED AND SOLD. Subject to the terms
and conditions of this Agreement, at the Closing Seller agrees to sell, assign,
grant, transfer and deliver (or cause to be sold, assigned, granted, transferred
and delivered) to Purchaser, free and clear of all liens, claims, interests and
encumbrances (other than Permitted Liens), and Purchaser agrees to purchase from
Seller, all of Seller's rights, title and interest in and to substantially all
of Seller's assets other than the Excluded Assets (collectively, the "PURCHASED
ASSETS"), and Seller shall deliver good, clear and marketable (subject to any
contract assignment limitations) title to each and every Purchased Asset,
together with such bills of sale, assignments and other instruments of
conveyance as may be reasonably requested by Purchaser to permit such delivery.
Without limiting the foregoing, the Purchased Assets shall include the following
assets:
(a) All personal property and fixed assets listed on
SCHEDULE 1.1(A);
(b) All intellectual property rights associated with
the conduct of the Business listed on SCHEDULE 1.1(B), whether held by Seller as
owner or as licensee, including, without limitation, copyrights, trademarks,
patents, service marks, letters patent, licenses and any applications or
registrations thereof, income or royalties therefrom and infringement claims
related thereto, trade names, trade styles, trade secrets, know-how, processes,
formulae, computer source codes, programs and other software of Seller,
including all machine-readable code, printed listings of code, documentation and
related property and information of Seller, business and marketing plans,
worldwide marketing rights, all slogans used by Seller in the conduct of the
Business and all rights and licenses thereto and applications and registrations
therefor, including, but not limited to, the right to use Internet domain names
used, owned or licensed by Seller (the "INTELLECTUAL PROPERTY ASSETS");
(c) All of Seller's rights in and to the contracts,
agreements, leases and other arrangements relating to the Business, Purchased
Assets and the Intellectual Property Assets (the "ASSIGNED CONTRACTS"),
including, but not limited to, those contracts, agreements, leases and other
arrangements listed on SCHEDULE 1.1(C), but excluding the contracts, agreements,
leases and other arrangements set out in SCHEDULE 1.2. To the extent that any
contract for which assignment to Purchaser is provided herein is not assignable
without the consent of another party, this Agreement shall not constitute an
assignment or an attempted assignment thereof if such assignment or attempted
assignment would constitute a breach thereof. Seller and Purchaser agree to use
their commercially reasonable efforts (without any requirement on the part of
Purchaser to pay any money or agree to any material change in the terms of any
such Assigned Contract) to obtain the consent of such other party to the
assignment of any such contract to Purchaser in all cases in which such consent
is or may be required for such assignment. If any such consent shall not be
obtained, Seller agrees to cooperate with Purchaser in any reasonable
arrangement designed to provide for Purchaser the benefits intended to be
assigned to Purchaser under the relevant Assigned Contract, including
enforcement at the cost and for the account of Purchaser of any and all rights
of Seller against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise, and Purchaser agrees to
perform, as a subcontractor or on a similar basis, the obligations under such
Assigned Contract, at no additional cost to Seller, in exchange for such
benefits. If and to the extent that such arrangement cannot be made, any such
Assigned Contract shall not be deemed to be a Purchased Asset hereunder;
(d) All books and records, whether originals or
copies, whether financial or otherwise, reasonably relating to the Purchased
Assets or the Business, including, without limitation, the value added tax
records and employment records relating to the UK Subsidiary, customer and
supplier lists and records (including email addresses and all other available
information pertaining to past and current customers of Seller), operating data,
orders and revenue history, log files and similar information relating to the
ongoing conduct of the Business, including, without limitation, inventory,
maintenance, and asset records, if any and originals of all tangible records of
intellectual property (and registrations thereof) associated with the Business;
provided, however, that Seller shall have reasonable access to such books and
records during normal business hours following the Closing Date as provided in
Section 5.2;
(e) Full and complete copies of the records of
accounts receivable and payable;
(f) All sales and promotional materials and products
of Seller, if any;
(g) All rights of indemnification, claims or causes
of action to the extent they arise out of or relate to the conduct of the
Business, if any, including, without limitation, those against any person under
any purchase or other agreement pursuant to which Seller acquired any portion of
the Business or the Purchased Assets, or those arising by operation of law or
equity or otherwise, other than (i) claims of Seller for refunds with respect to
Taxes,
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and (ii) the claims, causes of action and litigation set forth on SCHEDULE
1.2(E) and any proceeds thereof;
(h) All inventory (including raw materials, work in
process and finished goods);
(i) All licenses, permits, approvals, certifications
and listings of Seller necessary to operate Seller's Business which are
assignable or otherwise transferable to Purchaser;
(j) The names "InstallShield," "InstallShield
Software," "Installation Software Technologies," "Stirling Technologies,"
"Stirling Group," "DemoShield" and any derivatives thereof and all rights to use
or allow others to use such names;
(k) One hundred percent (100%) of the issued share
capital of InstallShield Software, Ltd, the United Kingdom subsidiary of Seller
(the "UK SUBSIDIARY"); and
(l) All other assets related primarily to the
Purchased Assets, including, without limitation, prepaid expenses related to
maintenance contracts or obligations of the Seller to vendors associated with
the Purchased Assets, deposits or letters of credit associated with leases and
other Purchased Assets assumed by Purchaser, all goodwill associated with the
Purchased Assets, together with the right to represent to third parties that
Purchaser is the successor to the Business.
For greater certainty, the parties acknowledge and agree that Macrovision Europe
Limited, or an Affiliate nominated by them, will acquire all of the issued
shares in the capital of the UK Subsidiary and that the assets of the UK
Subsidiary will not be directly conveyed to the Parent at Closing.
For the avoidance of doubt, the parties understand that for purposes of Closing
the assets of the UK Subsidiary shall remain assets of the UK Subsidiary, but
that the definition of "Purchased Assets" for all other purposes of this
Agreement shall include such assets.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the
contrary herein, the Purchased Assets shall not include any of the assets listed
in SCHEDULE 1.2 or any of the following assets of Seller or the UK Subsidiary
which Seller shall specifically retain following the Closing (collectively,
"EXCLUDED ASSETS"):
(a) all of Seller's and, subject to Section 5.24,
its subsidiaries' cash and cash equivalents, marketable securities, receivables,
prepaid expenses and deposits not listed under Section 1.1(l), and other current
assets determined in accordance with Generally Accepted Accounting Principles of
the United States ("GAAP") as consistently applied by Seller, and Seller's books
of account and similar records with respect thereto;
(b) Seller's corporate minute books and stock
records;
(c) any refund of Taxes or claim of refund of Taxes
of Seller or the UK Subsidiary, and any deferred Tax assets of Seller or the UK
Subsidiary;
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(d) subject to Section 9.3 of this Agreement,
Seller's Tax returns and related work papers, records and documents;
(e) the claims, causes of action and litigation set
forth on SCHEDULE 1.2 and any proceeds thereof;
(f) that certain royalty payment to be received from
NetSupport payable as of December 31, 2003;
(g) subject to the express provisions of this
Agreement, all monies, rights and other assets (including any insurance policy,
annuity contract or trust) maintained under, pursuant to or in direct connection
with, all employee benefit plans of Seller;
(h) all insurance plans and policies of Seller and
all prepaid insurance premiums and deposits, other than those plans and policies
set out in SCHEDULE 1.2;
(i) Seller's rights pursuant to or under this
Agreement and any certificate or agreement of Seller delivered pursuant to this
Agreement, and all documents, records and correspondence of Seller with respect
to the transactions contemplated by this Agreement; and
(j) Seller's German subsidiary, InstallShield
Software GmbH.
1.3 LIABILITIES.
(a) As used in this Agreement, the term:
(i) "LIABILITY" shall mean and include any
direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known
or unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured;
(ii) "UK TAX LIABILITY" means:
(A) a liability to make a payment of
tax (including as a result of the loss of all or part of any loss, allowance,
credit, exemption, set-off or deduction relevant to the computation of any
liability to tax ("RELIEF") which Relief has been taken into account in
computing (and so reducing) any provision relating to tax which appears in the
calculation of the UK Net Asset Value) (an "A LIABILITY"); and
(B) the compulsory (under English
law) application of all or part of any Relief in computing either profits
earned, accrued or received on or before Closing or tax arising in respect of
any event on or before Closing where the Relief arises in respect of any event
occurring or period commencing after Closing and where but for such application
the UK Subsidiary would have been liable to make a payment of tax in respect of
which the Seller would have been liable to make a payment under clause
1.3(a)(ii)(A) (a "B Liability");
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in each case arising in respect of or as
a consequence of or by reference to:
(1) any income, profits or gains
earned, accrued or received or deemed for tax purposes to have been earned,
accrued or received by the UK Subsidiary before Closing;
(2) any event which occurred or is
deemed for tax purposes to have occurred in relation to the UK Subsidiary before
Closing.
(b) Subject to the terms and conditions of this
Agreement, on the Closing Date, Purchaser shall assume and agree to pay,
perform, satisfy and otherwise discharge, and the UK Subsidiary shall remain
responsible for and pay, perform, satisfy and otherwise discharge, in each case
in accordance with their respective terms and subject to the respective
conditions thereof, only the following Liabilities of Seller and the UK
Subsidiary respectively (collectively, the "ASSUMED LIABILITIES"), and no
others:
(i) all deferred revenue of Seller and the
UK Subsidiary and Liabilities arising thereunder listed in SCHEDULE 1.3(B) or
incurred in the ordinary course of business following the date hereof prior to
the Closing;
(ii) all Liabilities of Seller and the UK
Subsidiary arising under agreements, contracts, licenses, leases, obligations,
promises and undertakings (whether written or oral, express or implied),
comprising a portion of the Purchased Assets, to be performed after the Closing,
including Liabilities of Seller and the UK Subsidiary arising under or pursuant
to the Assigned Contracts;
(iii) all Liabilities of Seller and the UK
Subsidiary in connection with, arising under or pursuant to, the Intellectual
Property Assets comprising a portion of the Purchased Assets, whether or not
occurring prior to the Closing , including, but not limited to, Liabilities with
respect to product warranty and intellectual property infringement
(collectively, the "INTELLECTUAL PROPERTY LIABILITIES");
(iv) all Liabilities of Seller and the UK
Subsidiary with respect to accrued vacation (holiday), bonus and severance and
the UK Subsidiary Scheme, if any, of employees of Seller who are hired, or in
the case of employees of the UK Subsidiary, remain employed, by the UK
Subsidiary as of the Closing Date; and
(v) all Liabilities of the UK Subsidiary
which are reflected in or reserved against in the calculation of the UK Net
Asset Value in accordance with Section 5.24.
(c) Purchaser shall not assume, nor undertake to
pay, perform, satisfy or otherwise discharge, and UK Subsidiary shall not be
responsible for the performance, satisfaction or otherwise be liable to pay or
discharge, any Liabilities of Seller or the UK Subsidiary, as the case may be,
in each case other than the Assumed Liabilities (collectively, the "EXCLUDED
LIABILITIES"). The Excluded Liabilities include, but are not limited to, those
listed below to the extent they are not Assumed Liabilities:
5
(i) Any Tax Liability of Seller related to
the operations of Seller, or, subject to Section 5.6 of this Agreement, any Tax
Liability applicable to, imposed upon or arising out of the sale or transfer of
the Purchased Assets to Purchaser and the other transactions contemplated by
this Agreement, including, without limitation, income, sales, stamp, use,
property, business, employment, withholding and payroll taxes payable (and any
penalties or interest due on account thereof);
(ii) Any UK Tax Liability;
(iii) Any credit lines or any other notes
payable by Seller or related parties;
(iv) Any Liability under any consulting
agreements;
(v) Any Liability related to any pending or
threatened litigation against Seller;
(vi) Liabilities of Seller or the UK
Subsidiary to its present, former or future Affiliates, investors, stockholders
or debenture holders. For purposes of this Agreement, "AFFILIATE" means any
person, firm or corporation, directly or indirectly through one or more
intermediaries, controlling, controlled by or under common control with the
respective parties;
(vii) Liabilities of Seller or the UK
Subsidiary, other than Intellectual Property Liabilities, for any violation of
or failure to comply with any statute, law, ordinance, rule or regulation
(collectively, "LAWS") or any order, writ, injunction, judgment, plan or decree
(collectively, "ORDERS") of any court, arbitrator, department, commission,
board, bureau, agency, authority, instrumentality or other body, whether U.S. or
other (collectively, "GOVERNMENT ENTITIES") relating solely to the period prior
to the Closing Date;
(viii) All accounts payable, other than
accounts payable of the UK Subsidiary which are provided for or reserved against
in the UK Net Asset Value in accordance with Section 5.24, that arise prior to
the Closing Date as defined under GAAP;
(ix) Any salary, bonus or commission payments
owed to Seller's current or former employees for services performed as of the
Closing Date, including but not limited to matters more fully described in
Section 5.11(e), and all Liabilities with respect to Seller's current or former
employees arising from any event or time prior to Closing, but in all cases
excluding the Liabilities assumed in Section 1.3(b)(iv) and as otherwise
provided in this Agreement; and
(x) Any Liabilities associated with sales
returns made by customers in the ordinary course relating to sales made prior to
the Closing Date and managed consistent with Seller's historic practices;
(xi) Any Liabilities for COOP marketing
programs, refunds or rebates, incurred and relating to the period prior to the
Closing Date, and claimed and processed in the ordinary course of business;
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(xii) Any other Liability of the Seller or the
UK Subsidiary not expressly listed as an Assumed Liability.
1.4 CLOSING AND CLOSING DATE. The closing of the
transactions contemplated by this Agreement (the "CLOSING") shall take place as
soon as the required closing conditions have been satisfied, with a target date
of July 1, 2004, or such other date as may be agreed upon by the parties, at the
offices of Purchaser, in Santa Clara, California, at such time as Seller and
Purchaser shall mutually agree, such time and date being referred to herein as
the "CLOSING DATE."
1.5 ACTIONS AT THE CLOSING. At the Closing, Seller and
Purchaser shall take such actions and execute and deliver such agreements, bills
of sale and other instruments and documents as necessary or appropriate to
effect the transactions contemplated by this Agreement in accordance with its
terms, including, without limitation, the following:
(a) ▇▇▇▇ OF SALE. Seller shall deliver to Purchaser
a general ▇▇▇▇ of sale in substantially the form attached as EXHIBIT A (the
"▇▇▇▇ OF SALE") with respect to the Purchased Assets, duly executed by Seller,
assigning to Purchaser all of Seller's right, title and interest in and to the
Purchased Assets.
(b) PURCHASE PRICE. Purchaser shall deliver the
Initial Purchase Price, less the Indemnification Escrow Amount delivered to the
Escrow Agent (each defined in Section 2.1) in accordance with Section
2.1(a)(ii), to Seller in accordance with, and subject to, the provisions of
Section 2.
(c) TITLE. Seller shall deliver to Purchaser
transfers or assignments of title to the Purchased Assets in form and substance
reasonably satisfactory to Purchaser (including, but not limited to, any patent,
copyright, trademark and domain name assignments).
(d) CERTIFIED RESOLUTIONS. Certified copies of
resolutions of the board of directors of each of Seller and Purchaser, and of
Seller's stockholders, authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement in a form
reasonably acceptable to the other party.
(e) COMPLIANCE CERTIFICATE. A certificate signed by
the chief executive officer of Seller that (i) each of the representations and
warranties made by Seller in this Agreement is true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date, (except for any changes permitted by the terms of this Agreement or
disclosed in writing to Purchaser), and except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties shall be true and correct in all material
respects as of such date, and (ii) Seller has performed and complied in all
material respects with all of Seller's obligations under this Agreement which
are to be performed or complied with on or prior to the Closing Date.
(f) ESCROW AGREEMENT. The escrow agreement ("ESCROW
AGREEMENT") duly executed by Seller, Purchaser and the Chicago, Illinois office
of the ▇▇▇▇▇ Fargo Corporate
7
Trust and Escrow Services division of ▇▇▇▇▇ Fargo Bank (the "ESCROW AGENT") in
the form of EXHIBIT B hereto.
(g) OTHER DOCUMENTS. All other documents,
instruments or writings required to be delivered to Purchaser or Seller at or
prior to the Closing pursuant to this Agreement, and such other certificates of
authority and documents as Purchaser may reasonably request of Seller, or as
Seller may reasonably request of Purchaser.
(h) ASSIGNMENT AND ASSUMPTION AGREEMENT. The
assignment and assumption agreement in substantially the form attached as
EXHIBIT C (the "ASSIGNMENT AND ASSUMPTION AGREEMENT") with respect to the
Assigned Contracts and Assumed Liabilities, duly executed by Seller and
Purchaser.
(i) UK SUBSIDIARY DOCUMENTS. Seller shall complete
those actions and deliver to Purchaser all documents set out in SCHEDULE 1.5(I)
relating to the UK Subsidiary, including, without limitation, a duly executed
stock transfer form relating to the entire issued share capital of the UK
Subsidiary.
1.6 POST-CLOSING ACTIONS. Subsequent to the Closing Date,
Seller shall from time to time execute and deliver, upon the reasonable request
of Purchaser such other and further materials and documents and instruments of
conveyance, transfer or assignment as may be reasonably requested by Purchaser
in good faith to effect, record or verify the transfer to, and vesting in
Purchaser, of Seller's right, title and interest in and to the Purchased Assets,
free and clear of all liens and encumbrances (other than Permitted Liens), in
accordance with the terms of this Agreement.
2. PURCHASE PRICE; TERMS OF PAYMENT
2.1 PURCHASE PRICE. The purchase price ("PURCHASE PRICE")
for the Purchased Assets shall be:
(a) INITIAL PURCHASE PRICE. The initial purchase
price to be paid for the Purchased Assets shall be Seventy-Six Million Dollars
($76,000,000), as adjusted pursuant to Section 2.1(a)(iii) and 2.1(a)(iv)
payable in cash (the "INITIAL PURCHASE PRICE"), consisting of the following:
(i) CASH. Parent shall pay to Seller in cash
Sixty-Eight Million Four Hundred Thousand Dollars ($68,400,000), as adjusted
pursuant to Section 2.1(a)(iii), at Closing.
(ii) ESCROW. At the Closing, Parent shall
deliver to the Escrow Agent, under the terms of the Escrow Agreement, the sum of
Seven Million Six Hundred Thousand Dollars ($7,600,000) out of the Initial
Purchase Price (the "INDEMNIFICATION ESCROW AMOUNT"), which Indemnification
Escrow Amount shall be available to secure the indemnification obligations of
Seller as provided in Section 11. The Indemnification Escrow Amount shall be the
sole and exclusive remedy of Purchaser with respect to any claims it may have
against Seller or the Executive Team under or in connection with this Agreement
and the
8
transactions contemplated hereby, other than in the case of fraud, and shall be
held by the Escrow Agent pursuant to the terms of the Escrow Agreement.
At Closing, Parent shall deliver the Initial
Purchase Price in immediately available funds, less the Indemnification Escrow
Amount delivered to the Escrow Agent under the terms of the Escrow Agreement, to
a bank account of Seller as shall be designated by Seller in writing at least
two (2) days prior to Closing.
(iii) PURCHASE PRICE ADJUSTMENTS. The Purchase
Price shall be increased or decreased as provided in SCHEDULE 2.1(A)(III) (the
"ADJUSTMENT SCHEDULE") both for "PRE-CLOSING ADJUSTMENTS" and a "YEAR-END BONUS
ADJUSTMENT" (as such terms are defined and described therein). No later than
seven (7) days prior to the Closing Date, Seller shall deliver to Parent
Seller's calculation of the adjustment required under the Adjustment Schedule
("SELLER'S ADJUSTMENT NOTICE") together with reasonable detail supporting
Seller's calculations. If Parent does not deliver a written notice to Seller
prior to the Closing that it disputes the calculation and/or methodology
contained in Seller's Adjustment Notice, then the amounts of the Pre-Closing
Adjustments and the Year-End Bonus Adjustment set forth in Seller's Adjustment
Notice, shall be final and binding upon Purchaser and Seller; PROVIDED, HOWEVER,
that the amount of the Year-End Bonus Adjustment shall be contingent upon the
applicable employees remaining employed with Purchaser through December 31, 2004
and shall be subject to additional adjustment based on final 2004 revenues, all
as provided in the Adjustment Schedule (collectively, the "YEAR-END BONUS
ADJUSTMENT MODIFICATIONS"). Notwithstanding any objection by Parent to the
calculation of the amount thereof, at the Closing, Seller shall deliver to the
Escrow Agent, under the terms of the Escrow Agreement, funds equal to its
estimate of the amount of the Year-End Bonus Adjustment as stated in the
Seller's Adjustment Notice.
If Parent delivers a written notice to Seller
prior to Closing that it disputes the Seller's calculation in Seller's
Adjustment Notice, then the Closing shall otherwise occur (subject to the
satisfaction of the conditions thereto and the required deliveries of the
parties pursuant to the terms of this Agreement) and the amount of the Initial
Purchase Price to be delivered by Parent hereunder shall be Seventy-Six Million
Dollars ($76,000,000). The parties shall use their reasonable efforts to resolve
such dispute within fifteen (15) days following the Closing. If Parent and
Seller reach agreement during such 15-day period on the amount of the
Pre-Closing Adjustments and/or Year-End Bonus Adjustment, then such agreed-upon
amounts of the Pre-Closing Adjustments and/or the Year-End Bonus Adjustment
(subject to the Year-End Bonus Adjustment Modifications), as the case may be,
shall be final and binding upon Purchaser and Seller. Parent shall, within two
(2) business days of such agreement, pay the amount of any increase in the
Initial Purchase Price pursuant to the Pre-Closing Adjustment to Seller, or
Seller shall, within two (2) business days of such agreement, pay the amount of
any decrease in the Initial Purchase Price pursuant to the Pre-Closing
Adjustment to Parent, as the case may be. Further, Seller shall, within two (2)
business days of such agreement, deliver to the Escrow Agent, under the terms of
the Escrow Agreement, funds equal to any agreed-upon increase in the estimated
Year-End Bonus Adjustment from the amount thereof stated in Seller's Adjustment
Notice and delivered to the Escrow Agent in connection with the Closing.
If Parent and Seller do not reach agreement
during such 15-day period on the amount of the Pre-Closing Adjustments and/or
Year-End Bonus Adjustment, as the
9
case may be, then Parent and Seller shall submit the matter for resolution to a
mutually acceptable nationally recognized independent accountant, paid for
equally by the parties (the "ACCOUNTANT"). If Parent and Seller are unable to
agree on the procedures to be followed by the Accountant, including procedures
with regard to presentation of evidence, within the 15-day period following the
Closing described above, then the Accountant shall establish such procedures
giving due regard to the intention of Parent and Seller to resolve disputes as
quickly, efficiently and inexpensively as possible, which procedures may, but
need not, be those proposed by either of Parent or Seller. Parent, Seller and
their respective representatives will furnish to the Accountant such work
papers, schedules and other documents relating to the unresolved disputed issues
with respect to Seller's calculation in Seller's Adjustment Notice as the
Accountant may request. The Accountant shall be directed to render a written
report on the unresolved disputed issues with respect to the Seller's
calculation in Seller's Adjustment Notice as promptly as practicable and to
resolve only those issues in dispute. The determination by the Accountant shall
be based solely on presentations by Parent and Seller, shall not involve any
independent investigation and shall not be outside of the range defined by the
respective amounts proposed by Parent and Seller with respect to the Seller's
calculation in Seller's Adjustment Notice. In such event, the determination of
the Accountant of the amounts of the Pre-Closing Adjustments and/or the Year-End
Bonus Adjustment (subject to the Year-End Bonus Adjustment Modifications), as
the case may be, shall be final and binding upon Purchaser and Seller.
Parent shall, within two (2) business days of
such final determination by the Accountant, pay the amount of the increase in
the Initial Purchase Price pursuant to the Pre-Closing Adjustment to Seller, or
Seller shall, within two (2) business days of such agreement, pay the amount of
the decrease in the Initial Purchase Price pursuant to the Pre-Closing
Adjustment to Parent, as the case may be. Further, Seller shall, within two (2)
business days of such final determination by the Accountant, deliver to the
Escrow Agent, under the terms of the Escrow Agreement, funds equal to any
increase (as determined by the Accountant) in the estimated Year-End Bonus
Adjustment from the amount thereof stated in Seller's Adjustment Notice and
delivered to the Escrow Agent in connection with the Closing.
Pursuant to and in accordance with the terms of
the Escrow Agreement, Parent and Seller shall jointly direct the Escrow Agent in
writing to distribute the funds comprising the estimated Year-End Bonus
Adjustment amount delivered by Seller to the Escrow Agent to Parent and/or
Seller, as the case may be, within two (2) business days following agreement
between Parent and Seller with respect to the Year-End Bonus Adjustment
Modifications, but no later than February 14, 2005.
Any amounts to be paid by Parent or Seller to
the other party pursuant to this Section 2.1(a)(iii) that are not paid when due
shall bear interest at the rate of 10% per annum from the date required to be
paid hereunder.
(iv) The Purchase Price shall be adjusted as
provided in Section 5.24.
10
(b) ADDITIONAL CONTINGENT PAYMENT.
(i) Parent shall also make a single future
payment to Seller, or its assignee(s) pursuant to Section 2.1(b)(v), of up to a
maximum of Twenty Million Dollars ($20,000,000) in cash contingent on the
Business, as operating following the Closing by Purchaser, achieving the revenue
performance levels set forth in SCHEDULE 2.1(B) in the twelve-month period
commencing at Closing (the "ADDITIONAL CONTINGENT PAYMENT"). The Additional
Contingent Payment would be paid, if applicable, within sixty (60) days after
the one-year anniversary of the Closing (the "ADDITIONAL CONTINGENT PAYMENT
DATE"), based on the achievement of the revenue performance levels set forth in
SCHEDULE 2.1(B), and calculated in accordance with the formulas identified
therein. Seller is free to pay or assign the right to receive such amount of the
Initial Purchase Price or the Additional Contingent Payment to other parties of
its choice provided that Seller does not make any such payments contingent upon
the recipient remaining an employee of Purchaser. Seller acknowledges that
making such payments contingent upon the recipient remaining an employee of
Purchaser would result in unfavorable accounting treatment to Purchaser and
accordingly Seller's doing so shall constitute a material breach of this
Agreement.
(ii) In order to provide Seller or its
assignee(s) with a full and fair opportunity to achieve the revenue performance
levels required to earn the Additional Contingent Payment, Purchaser hereby
covenants and agrees, during the one-year period immediately following the
Closing Date to (A) operate the Business in good faith, in a commercially
reasonable manner and in the ordinary course of business as reasonably designed
to maximize Net Revenues during the Contingent Period (as such are defined on
SCHEDULE 2.1(B), subject to Purchaser's policies and procedures and reasonable
oversight, (B) dedicate reasonable resources, including but not limited to,
working capital, marketing, sales and employee resources, for the operation of
the Business to a reasonable extent, (C) refrain from taking any action which
would result in the deferral of recognition of Net Revenue otherwise than in the
ordinary course of Purchaser's business in accordance with GAAP, (D) refrain
from taking any unreasonable action which would otherwise impede or delay the
earning of Net Revenue, (E) allow ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to advise the
general manager of Purchaser's Software Technologies Group on potential changes
to Seller's product line and practices that may have an adverse impact on Net
Revenue or ability to generate new Net Revenue. Purchaser's Software
Technologies Group will consider this input in the business planning process;
and (F) make reasonable efforts to ensure that employees' individual bonuses are
tied to Net Revenue targets along similar percentages in effect at Seller prior
to the Closing Date.
(iii) Prior to the Additional Contingent
Payment Date, Purchaser shall prepare and deliver to Seller a schedule setting
forth Purchaser's calculation of the Additional Contingent Payment amount, if
any, and reasonable back-up documentation supporting such calculations. On or
prior to the Additional Contingent Payment Date, Parent shall pay to Seller or
its assigns, as applicable, the amount of the Additional Contingent Payment
calculated by Parent to be owed to Seller and its assigns. Seller shall be given
reasonable access to (and reasonable copies of) Purchaser's books and records
relating to revenue pertaining to Seller's products. If Seller objects to
Purchaser's calculation of the Additional Contingent Payment amount set forth on
such schedule, such dispute shall be resolved by arbitration pursuant to the
terms of this Agreement. In the event of a dispute, any portion of the
Additional
11
Contingent Payment that is not paid on the Additional Contingent Payment Date,
and is subsequently determined (by agreement of the parties or by the applicable
arbitration service) to have been required to be paid by Parent pursuant to the
terms hereof, shall bear interest at the rate of 10% per annum from and after
the Additional Contingent Payment Date and any portion of the Additional
Contingent Payment that is paid on the Additional Contingent Payment Date, and
is subsequently determined (by agreement of the parties or by the applicable
arbitration service) to not have been required to be paid by Parent pursuant to
the terms hereof, shall bear interest at the rate of 10% per annum from and
after the Additional Contingent Payment Date.
(iv) Notwithstanding anything to the contrary
herein or in SCHEDULE 2.1(B), (A) in the event that Purchaser shall execute a
definitive agreement for (x) the sale or other transfer of a material portion of
the assets used in the conduct of the Business to a party who is not a direct or
indirect wholly owned subsidiary of Purchaser, or (y) a merger, consolidation or
other similar transaction resulting in a third party owning a majority of the
outstanding capital stock of Purchaser (each, a "CHANGE IN CONTROL
TRANSACTION"), prior to the six-month anniversary of the Closing Date, then the
maximum amount of the Additional Contingent Payment shall be due and payable on
the earlier of the date of the consummation of the Change in Control Transaction
or the Additional Contingent Payment Date; and (B) in the event that Purchaser
shall execute a definitive agreement for a Change in Control Transaction within
the period commencing on the date six months and one day after the Closing Date
through the one-year anniversary of the Closing Date, then the Additional
Contingent Payment shall be due and payable on the earlier of the date of the
consummation of the Change in Control Transaction or the Additional Contingent
Payment Date in an amount determined in accordance with SCHEDULE 2.1(B).
(v) Notwithstanding anything to the contrary
herein, Seller's right to receive any portion of the Additional Contingent
Payment shall be assignable by Seller, in whole or in part, upon written notice
thereof to Purchaser, to a liquidating trust (and successor thereof) and/or to
the holders or former holders of Sellers debt and, upon reasonable request
therefor, Purchaser shall execute an acknowledgement of any such transfer and
the obligation to pay such portion of the Additional Contingent Payment in
accordance with the terms hereof directly to such assignee or assignees.
(vi) ADDITIONAL CONTINGENT PAYMENT
REPRESENTATIVE. Seller has designated ▇▇▇▇▇▇ ▇▇▇▇▇▇ as its initial
representative with respect to the Additional Contingent Payment matters set
forth in this Section 2.1(b) (the "ADDITIONAL CONTINGENT PAYMENT
REPRESENTATIVE"), and for all purposes with respect thereto such Additional
Contingent Payment Representative shall serve as the agent and attorney-in-fact
of Seller, shall be deemed to be Seller and will be entitled to exercise the
rights conferred upon Seller. The Additional Contingent Payment Representative's
actions pursuant to and in accordance with this Section 2.1(b)(vi) shall be
binding on Seller. Seller will notify Purchaser of any successor to the initial
Additional Contingent Payment Representative. Any assignee of all or any portion
of Seller's rights in and to the Additional Contingent Payment pursuant to this
Section 2.1(b)(v) shall be entitled to exercise the rights conferred upon Seller
pursuant to and in accordance with this Section 2.1(b) with respect to the
rights and property subject to such assignment.
12
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price will be
allocated among the Purchased Assets as of the date of the Closing in accordance
with SCHEDULE 2.2. The parties agree that such allocation shall be used by them
and respected for all purposes, including income tax purposes if in conformance
with the rules and regulations of the Internal Revenue Code of 1986, as amended
(the "CODE"), and that the parties shall follow such allocation for all
reporting purposes, including, without limitation, Internal Revenue Service Form
8594.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to
Purchaser, each of which is true and correct in accordance with its terms on the
date hereof (other than those representations and warranties made as of a
specified date, which are true and correct in accordance with their terms as of
such date), and shall be true and correct as of the Closing after giving effect
to any updates to the Disclosure Schedules subsequently delivered to Purchaser
pursuant to Section 5.19 hereof. The representations of Seller set forth below
are subject only to the exceptions set forth in Seller's disclosure schedules
(the "DISCLOSURE SCHEDULES"), which should be read in conjunction herewith.
3.1 CORPORATE.
(a) ORGANIZATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The UK Subsidiary is a company duly incorporated under the laws of
England and Wales.
(b) CORPORATE POWER. Seller and the UK Subsidiary
have all requisite corporate power and authority to own, operate and lease their
properties, to engage in the Business as and where such is now being conducted
by Seller or the UK Subsidiary, as applicable, and Seller has all requite
corporate power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by Seller pursuant hereto
and to carry out the transactions contemplated hereby and thereby. SCHEDULE
3.1(B) accurately sets forth (i) the names of the members of Seller's board of
directors, (ii) the names of the members of each committee of Seller's board of
directors, and (iii) the names and titles of Seller's officers.
(c) QUALIFICATION. The UK Subsidiary is duly
licensed or qualified to do business in the United Kingdom. Seller is duly
licensed or qualified to do business as a foreign corporation, and is in good
standing, in all jurisdictions where it is required to be so qualified, except
where the absence of such license or qualification would not, individually or in
the aggregate, have a Material Adverse Effect on Seller. For purposes of this
Agreement, "MATERIAL ADVERSE EFFECT" shall mean any change, event, violation,
inaccuracy, circumstance or effect that, individually or when taken together
with all other such changes, events, violations, inaccuracies, circumstances or
effects that have occurred prior to the date of determination of the occurrence
of the Material Adverse Effect, is or is reasonably likely to be materially
adverse to the Business, financial condition, results of operations, assets
(including intangible assets) or properties of such entity and its subsidiaries,
taken as a whole, and taking into account both the short term and long term
aspects of any such change, event, violation, inaccuracy, circumstance or
effect; provided, however, that in no event shall any of the following, alone or
in combination,
13
be deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been or will be, a Material Adverse Effect on any
entity: (i) any change in such entity's stock price or trading volume in and of
itself; or (ii) any change, event, violation, inaccuracy, circumstance or effect
that primarily and directly results from changes, events or circumstances
affecting (A) any of the industries in which such entity operates generally, or
(B) the United States or global economy generally (which changes, events or
circumstances in the case of (A) and (B) do not disproportionately affect such
entity). The jurisdictions in which Seller is licensed or qualified to do
business are listed in SCHEDULE 3.1(C). Neither Seller nor the UK Subsidiary
have conducted any business under or otherwise used, for any purpose or in any
jurisdiction, any fictitious name, assumed name, trade name or the like, other
than their own name.
(d) NO SUBSIDIARIES. Except for the UK Subsidiary,
Seller does not now nor has it ever owned any interest, beneficially or
otherwise, in any corporation, partnership or other entity. Seller has not
agreed and is not obligated to make any future investment in or capital
contribution to any such entities.
(e) UK CORPORATE MATTERS.
(i) The statutory register of the UK
Subsidiary has been properly written up and no notice or allegation that any of
them is incorrect or should be rectified has been received by the UK Subsidiary.
The UK Subsidiary or the Seller is in possession of accurate and up-to-date
records, books and files which are material to the business and affairs of the
UK Subsidiary.
(ii) The UK Subsidiary and its officers have
complied with the provisions of the Companies ▇▇▇ ▇▇▇▇ and in particular
(without prejudice to the generality of the foregoing) all documents required to
be filed with the Registrar of Companies in respect of the UK Subsidiary have
been duly filed.
(iii) The information relating to the UK
Subsidiary contained in SCHEDULE 3.1(E) is true and accurate.
(iv) The UK Subsidiary is not nor has it
agreed to become a member of any partnership or other unincorporated
association, joint venture or consortium.
(v) No material transaction at an undervalue
(within the meaning of section 423 of the Insolvency Act 1986) (a) relating to
any of the UK Subsidiary's shares or (b) to which the UK Subsidiary has been a
party, has been effected prior to or on the date of this Agreement.
(vi) No receiver, manager or administrative
receiver has been appointed in respect of the UK Subsidiary or in respect of the
whole or any part of the assets or undertaking of the UK Subsidiary and, to
Seller's Knowledge, no step has been taken to enforce any charge, mortgage or
other security interest or encumbrance over all or any part of the assets of the
UK Subsidiary
14
(vii) No administration order has been made
and no petition has been presented for such an order in respect of the UK
Subsidiary.
(viii) No notice has been issued for convening
a meeting at which a resolution will be proposed nor has any resolution been
passed nor has any petition been presented or order made for the winding up of
the UK Subsidiary.
(ix) The UK Subsidiary has not stopped or
suspended payment of its debts, become unable to pay its debts (within the
meaning of Section 123 of the Insolvency Act 1986) or otherwise become
insolvent.
(x) No unsatisfied judgment, order or award
is outstanding against the UK Subsidiary and no written demand under Section
123(1)(a) of the Insolvency Act 1986 has been made against the UK Subsidiary and
no distress, execution or sequestration has been levied on, or other process
commenced against, any asset of the UK Subsidiary
(xi) No voluntary arrangement has been
proposed under Section 1 of the Insolvency ▇▇▇ ▇▇▇▇, scheme or arrangement under
Section 425 of the Companies ▇▇▇ ▇▇▇▇ or other arrangement, composition,
moratorium or compromise of its debts generally or any class its debts is
proposed or negotiations therefor commenced by the UK Subsidiary nor has any
meeting of creditors or any class of them for such purpose been convened or is
proposed
(xii) To Seller's Knowledge, no circumstances
have arisen which entitle any person to take any action, appoint any person,
commence proceedings or obtain any order of the type mentioned in paragraphs (e)
vi to xi above.
(xiii) No procedure has been commenced by the
Registrar of Companies or any other person with a view to striking off the UK
Subsidiary under Section 652 of the Companies ▇▇▇ ▇▇▇▇.
(xiv) The UK Subsidiary has not prior to
Closing directly or indirectly provided any prohibited financial assistance
pursuant to Chapter VI of the Companies ▇▇▇ ▇▇▇▇ for the purpose of the
acquisition of its shares.
3.2 TITLE TO PURCHASED ASSETS.
(a) MARKETABLE TITLE. Seller or the UK Subsidiary
have good, valid and marketable (subject to any contract assignment limitations)
title to or, in the case of leased properties and assets, good, valid and
marketable (subject to any contract assignment limitations) leasehold interests
in, all the Purchased Assets, free and clear of all mortgages, liens (statutory
or otherwise, and including, but not limited to, liens with respect to taxes),
security interests, debts, claims, pledges, licenses, equities, options,
conditional sales contracts, attachments, Orders of court, rights of redemption,
levies, charges, rights of third parties or other encumbrances of any nature
whatsoever (collectively, "LIENS") other than the Liens set forth in SCHEDULE
3.2(A) (collectively "PERMITTED LIENS"); provided that all Permitted Liens when
taken in the aggregate would not have a Material Adverse Affect on the Business.
None of the Purchased Assets of Seller are subject to any restrictions with
respect to the transferability thereof, and Seller has
15
complete and unrestricted power and right to sell, assign, convey and deliver
such Purchased Assets of Seller to Purchaser as contemplated hereby. At Closing,
Purchaser will receive good and marketable (subject to any contract assignment
limitations) title to all the Purchased Assets of Seller, free and clear of all
Liens other than Permitted Liens, and not subject to any continuing commission,
profit or revenue sharing or other compensation contract or obligation that
could apply to Purchaser or such Purchased Assets.
(b) CONDITION. All tangible assets constituting
Purchased Assets hereunder are in reasonable operating condition and repair,
subject to ordinary wear and tear, free from any material defects, have been
maintained consistent with the standards generally followed in the industry, and
are sufficient to carry on the business of Seller and the UK Subsidiary as
conducted by the Seller and the UK Subsidiary during the preceding 12 months.
(c) NO CONDEMNATION OR EXPROPRIATION. To Seller's
Knowledge, (i) neither the whole nor any portion of the property or any other
assets of Seller or the UK Subsidiary is subject to any Order to be sold or (ii)
is being condemned, expropriated or otherwise taken by any Government Entities
with or without payment of compensation therefor. To Seller's Knowledge, no such
condemnation, expropriation or taking been proposed. For the purposes of this
Agreement, the term "KNOWLEDGE" means (i) the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (collectively the "EXECUTIVE TEAM") and (ii)
the constructive knowledge of any matters that a member of the Executive Team
should reasonably be expected to become aware of in the ordinary course of
business.
3.3 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 1.1(C) sets forth a true and complete
list of all material Assigned Contracts, which includes material contracts,
material licenses and other material agreements with respect to the Purchased
Assets and the operation of the Business as of the date hereof, including
without limitation, any contract granting any third party the right to use,
copy, distribute or sublicense any of the Purchased Assets, other than those
contracts, licenses and agreements of Seller under which payments (from or to
Seller or from or to the UK Subsidiary) of $25,000 or less are payable on an
annual basis, or which are not terminable without penalty upon not greater than
60 days' notice. No Purchased Asset is subject to any material contract, license
or agreement other than those set forth on SCHEDULE 1.1(C).
(b) Except as set forth in the Assigned Contracts,
following the Closing Purchaser shall not, by virtue of any contractual
arrangement between Seller and any third party, be obligated to provide to any
such third party any documentation concerning Purchased Assets, or any
modifications, enhancements or upgrades thereto or derivative works thereof.
(c) REAL PROPERTY LEASES. Neither Seller nor the UK
Subsidiary have leases of real property.
(d) PERSONAL PROPERTY LEASES. Neither Seller nor the
UK Subsidiary have leases of personal property with obligations in excess of
$25,000 on an annual basis.
16
(e) PURCHASE COMMITMENTS. Seller has no purchase
commitments for inventory items or supplies in an amount in excess of $25,000 on
an annual basis that, together with amounts on hand, constitute in excess of
three months normal usage.
(f) SALES COMMITMENTS. Neither Seller nor the UK
Subsidiary have sales contracts or commitments except those made in the ordinary
course of business, at arm's length.
(g) CONTRACTS FOR SERVICES. Neither Seller nor the
UK Subsidiary have any agreement, understanding, contract or commitment (written
or oral) with any officer, stockholder, employee, agent, consultant,
distributor, dealer or franchisee under which payments (from or to Seller or
from or to the UK Subsidiary) of greater than $25,000 are payable on an annual
basis that is not cancelable by Seller or the UK Subsidiary on notice of not
longer than thirty (30) days without liability, penalty or premium of any nature
or kind whatsoever.
(h) POWERS OF ATTORNEY. Neither Seller nor the UK
Subsidiary have given a power of attorney, which is currently in effect, to any
person, firm or corporation for any purpose whatsoever.
(i) COLLECTIVE BARGAINING AGREEMENTS. Neither Seller
nor the UK Subsidiary are party to, or bound by, any collective bargaining
agreements with any unions, guilds, shop committees or other collective
bargaining groups or any applicable Order in connection therewith, and to
Seller's Knowledge no entity, group or group of employees is actively engaged in
the organization of any such collective bargaining group.
(j) LOAN AGREEMENTS. Neither Seller nor the UK
Subsidiary are obligated under any loan agreement, debenture, promissory note,
letter of credit, or other evidence of indebtedness as a signatory, guarantor or
otherwise.
(k) GUARANTEES. Neither Seller nor the UK Subsidiary
have guaranteed the payment or performance of any person, firm or corporation,
agreed to act as a surety, or otherwise agreed to be contingently or secondarily
liable for the obligations of any person, or agreed to indemnify any person for
the indebtedness of or claims made by any third person.
(l) CONTRACTS SUBJECT TO RENEGOTIATION. Neither
Seller nor the UK Subsidiary are a party to any contract with any governmental
body that is subject to renegotiation.
(m) BURDENSOME OR RESTRICTIVE AGREEMENTS. Neither
Seller nor the UK Subsidiary are a party to nor are they bound by any agreement
requiring Seller or the UK Subsidiary to assign any interest in any trade secret
or proprietary information, or prohibiting or restricting Seller or the UK
Subsidiary from competing in any business or geographical area or soliciting
customers or otherwise restricting it from carrying on its business anywhere in
the world.
(n) OTHER MATERIAL CONTRACTS. Neither Seller nor the
UK Subsidiary are a party to any lease, license, contract or commitment of any
nature that is individually material to the operations of Seller that is not set
forth on SCHEDULE 1.1(C).
17
(o) NO DEFAULT. Each lease, contract, Assigned
Contract or commitment of Seller or the UK Subsidiary is in full force and
effect and neither Seller nor the UK Subsidiary are in default under any lease,
contract or commitment, nor has any event or omission occurred which through the
passage of time or the giving of notice, or both, would constitute a default
thereunder, or cause the acceleration of any of Seller's or the UK Subsidiary's
obligations or result in the creation of any Lien (other than Permitted Liens)
on any of the assets owned, used or occupied by Seller or the UK Subsidiary,
except for such defaults as could not reasonably be expected to result in a
Material Adverse Effect with respect to Seller. No third party is, to the
Seller's Knowledge, in default under any lease, contract or commitment to which
Seller is a party, nor does the Seller have any Knowledge of the occurrence of
an event or omission which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or give rise to an automatic
termination, or the right of discretionary termination, thereof, except for such
defaults as could not reasonably be expected to result in a Material Adverse
Effect with respect to Seller.
(p) MOST FAVORED NATIONS. Seller has not engaged in
any act which would have the effect, before or after the Closing, of triggering
any "most favored nations" or similar preferential treatment clause in any
material contract to which Seller is a party.
3.4 DUE AUTHORITY; VALID AND BINDING AGREEMENTS. The
execution and delivery of this Agreement and the other documents and instruments
to be executed and delivered by Seller pursuant hereto and the consummation by
Seller of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors of Seller and the requisite vote of the
stockholders of Seller. No other corporate act or proceeding on the part of or
on behalf of Seller or its stockholders is necessary to authorize this Agreement
or the other documents and instruments to be executed and delivered by Seller
pursuant hereto and no other corporate act or proceeding on the part of or on
behalf of Seller or its stockholders is or will be necessary to authorize the
consummation of the transactions contemplated hereby and thereby. This Agreement
does, and the other documents and instruments to be executed and delivered by
Seller pursuant hereto will when executed and delivered by Seller, constitute
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms, subject to the extent that such enforceability (i)
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally, and (ii) is subject to
limitations imposed by general principles of equity, including, but not limited
to, limitations upon the availability of equitable remedies and the enforcement
of such provisions.
3.5 NO CONFLICTS OR VIOLATIONS. Neither the execution and
delivery of this Agreement and any other agreement entered into pursuant to the
terms hereof nor the consummation of the transactions contemplated hereby will
(i) conflict with or result in any violation of or constitute a default, in any
material respect, under any agreement (including, but not limited to, any
Assigned Contract), mortgage, bond, indenture, franchise or other instrument or
obligation to which Seller or the UK Subsidiary are a party or by which it is
bound, (ii) result in the creation of any Lien, other than Permitted Liens, upon
any Purchased Asset pursuant to the terms of any such mortgage, bond, indenture,
franchise or other instrument or obligation, (iii) violate any Order or award of
any court, administrative agency or governmental body against or binding upon
Seller or the UK Subsidiary or upon any of the Purchased Assets, (iv) constitute
a violation by Seller or the UK Subsidiary of any law or regulation of any
jurisdiction in which
18
Seller or the UK Subsidiary conducts its business, (v) in any material respect,
result in the breach of any of the terms or conditions of, or constitute a
default under, or otherwise cause any impairment of, any permit or license or
other governmental authorization held by Seller or the UK Subsidiary, (vi)
result in any liability or expense to Purchaser under any collective bargaining
agreements, if any, to which Seller or the UK Subsidiary are a party, or (vii)
except for applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), will require any authorization,
consent, approval, exemption or other action by or notice to any Government
Entity.
3.6 NO VIOLATION OF LAW. Seller and the UK Subsidiary
(including its operations, properties and assets) have conducted the Business in
material compliance with all applicable laws and regulations of federal, state,
local and foreign governmental authorities. Seller and the UK Subsidiary
possess, and are in material compliance with, all licenses, permits, approvals
and other governmental authorizations material to the conduct of the Business.
All such licenses, permits, approvals, authorizations and consents are
identified on SCHEDULE 3.6, are in full force and effect and are assignable to
Purchaser in accordance with their respective terms. No governmental authority
that licenses or audits Seller or the UK Subsidiary has conducted any audit
during the last five (5) years.
3.7 NO LITIGATION, ETC. There are no suits, actions or
administrative, arbitration, unfair labor practice, worker's compensation or
other proceedings, pending or, to actual knowledge of the Executive Team,
threatened against Seller, the UK Subsidiary, the Purchased Assets or the
Business. To Seller's Knowledge, there is no governmental investigation against
or relating, directly or indirectly, to the Purchased Assets, Seller, the UK
Subsidiary, Executive Team or the Business, which could reasonably be expected
to result in a Lien on, or impair Purchaser's ownership or operation of, the
Purchased Assets or the Business. There are no Orders, stipulations or awards
(whether rendered by a court, administrative agency or by arbitration, pursuant
to a grievance or other procedure) against or relating to Seller, the UK
Subsidiary or the Purchased Assets that could reasonably be expected to result
in a Material Adverse Effect with respect to Seller or any Lien on the Purchased
Assets. SCHEDULE 3.7 identifies all litigation to which Seller or any of its
directors (in their capacity as such) has been a party during the last five
years.
3.8 NO BROKERS OR FINDERS. Neither Seller nor the UK
Subsidiary nor their directors, officers, stockholders, employees or agents have
retained, employed or used any broker or finder in connection with the
transactions provided for herein or the negotiation thereof, and Seller is not
obligated, nor has Seller or any director, officer, stockholder, employee or
agent thereof obligated Purchaser, to pay the fees or expenses of any broker or
finder in connection with the origin, negotiation or execution of this Agreement
or in connection with any transaction contemplated hereby.
3.9 ASSIGNABILITY OF CONTRACTS.
(a) Other than pursuant to the HSR Act, there is no
consent needed as a condition to the lawful consummation of the transactions
contemplated hereby, including the transfer of the Assigned Contracts.
19
(b) There are no legally binding obligations to make
payments (other than those specifically called for by the written terms of the
Assigned Contracts) in the future to be made under the Assigned Contracts
assuming that such Assigned Contracts are performed by Purchaser or its assigns
in accordance with their respective terms without modification or amendment
subsequent to the Closing Date.
3.10 ENVIRONMENT, HEALTH, AND SAFETY. Neither Seller nor the
UK Subsidiary have caused or allowed, or contracted with any party for, the
generation, use, transportation, treatment, and/or storage of Hazardous
Substances in connection with the Business or otherwise. To Seller's Knowledge,
each of Seller, the Business, and any real property that Seller or the UK
Subsidiary owns, leases or otherwise occupies or uses (the "Premises") are in
compliance with all applicable Environmental Laws and Orders of any governmental
authorities having jurisdiction under such Environmental Laws, except where the
absence of such compliance would not result in a Material Adverse Effect with
respect to Seller. Neither Seller nor the UK Subsidiary have received any
citation, written directive, letter or other written communication, or any
written notice of any proceeding, claim or lawsuit, from any person relating to
Environmental Laws and either arising out of the ownership or occupation of the
Premises or the conduct of its operations. For purposes of this Agreement, the
term "ENVIRONMENTAL LAWS" shall mean any Federal, state or local law (and
English law in relation to the UK Subsidiary) or ordinance or its regulation
pertaining to the protection of human health or the environment. For purposes of
this Agreement, the term "HAZARDOUS SUBSTANCES" shall include any materials
classified as hazardous or toxic under any Environmental Laws.
3.11 TAXES.
(a) All Taxes due and payable by the Seller and the
UK Subsidiary have been paid in full. All Tax returns that are required to have
been filed by the Seller and the UK Subsidiary have been filed in a timely
manner and such returns are complete and correct in all material respects. Any
deficiencies proposed as a result of any governmental audits have been paid or
settled, and there are no present disputes as to Taxes payable by the Seller or
the UK Subsidiary. There are no unexpired waivers of any statute of limitations
with respect to any Taxes relating to the Business or the Purchased Assets or by
the Seller or the UK Subsidiary, and neither the Seller nor the UK Subsidiary
are a party to any action or proceedings by any governmental authority for the
collection or assessment of Taxes. Neither the Seller nor the UK Subsidiary are
a party to or bound by any agreement requiring the sharing of Taxes. For
purposes hereof, the term "TAXES" shall mean all sales and use taxes, real and
personal property taxes, gross receipts taxes, documentary transfer taxes,
employment taxes, withholding taxes, unemployment insurance contributions and
other taxes of any kind, however denominated for which, subject to Section
3.2(a), Purchaser could become liable as a result of acquiring the Purchased
Assets or which could result in a Lien on or charge against the Purchased
Assets.
(b) PROVISION FOR TAXES. The provision made for
taxes on the recent balance sheet included in the May 2004 Financial Statements
and the Accounts is sufficient for the payment of all federal, state, foreign,
county, local and other income, ad valorem, excise, profits, franchise,
occupation, property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments, whether or not disputed at the date
of the balance sheet included therein, and for all years and periods indicated
therein. Since May 31, 2004,
20
neither the Seller nor the UK Subsidiary, respectively, have incurred any taxes
other than taxes incurred in the ordinary course of business consistent in type
and amount with past practices of Seller and the UK Subsidiary.
(c) UK TAXATION MATTERS.
(i) The UK Subsidiary is not, nor has it
ever been, a close company as defined in section 414 of the Taxes ▇▇▇ ▇▇▇▇
(ii) The UK Subsidiary is not a member of a
group of companies as defined in section 170 Taxation of Chargeable Gains ▇▇▇
▇▇▇▇.
(iii) All documents in the possession or under
the control of the UK Subsidiary which establish or are necessary to establish
the title of the UK Subsidiary to any asset have been duly stamped and no such
documents which are outside the United Kingdom would attract stamp duty if they
were brought into the United Kingdom.
(iv) The UK Subsidiary is duly registered for
the purposes of value added tax.
(v) The UK Subsidiary is not treated for
value added tax purposes as a member of any group of companies.
(vi) The UK Subsidiary is not the owner of a
capital item to which Part XV of the Value Added Tax Regulations 1995 applies.
(vii) Neither the UK Subsidiary nor any
relevant associate of the UK Subsidiary (within the meaning of paragraph 3 (7)
of Schedule 10 of the Value Added Tax Act 1994) has made an election in
accordance with paragraph 2 and 3 of Schedule 10 Value Added Tax ▇▇▇ ▇▇▇▇.
(viii) The UK Subsidiary is, and has since its
incorporation been, resident for tax purposes only in the United Kingdom.
(ix) The UK Subsidiary (i) has never carried
on and does not carry on any trade or business outside the United Kingdom (ii)
does not have and has not at any time had any branch agency or permanent
establishment outside the United Kingdom.
3.12 INTELLECTUAL PROPERTY ASSETS.
(a) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(i) breach, violate or conflict with any instrument or agreement governing any
Intellectual Property Asset necessary or required for, or used in, the conduct
of the Business as presently conducted, (ii) cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any such Intellectual
Property Asset or (iii) in any material way impair the right of Purchaser or any
of its Affiliates to use, sell, license or dispose of, or to bring any action
for the infringement of, any such Intellectual Property Asset or portion
thereof.
21
(b) SCHEDULE 1.1 (B) lists all Intellectual Property
Assets in which Seller now has any interest (other than commercially-available
"off-the-shelf" software which is not a Product), specifying whether such
Intellectual Property Assets are owned, controlled, used or held (under license
or otherwise) by Seller, and also indicating which of such Intellectual Property
Assets are registered by Seller. Seller has taken reasonable and practicable
steps to protect and maintain the secrecy and confidentiality of, and its
proprietary rights in, the Intellectual Property Assets necessary or required
for the conduct of the Business as presently conducted. To Seller's Knowledge
with respect to Intellectual Property Assets that are registered by Seller or
the UK Subsidiary, or for which registrations by Seller or the UK Subsidiary are
applied for and pending, (i) all Intellectual Property Assets shown as
registered in SCHEDULE 1.1(B) have been properly registered, (ii) all pending
registrations and applications have been properly made and filed, and (iii) all
such registrations, filings and issuances remain in full force and effect. All
annuity, maintenance, renewal and other fees relating to registrations or
applications of Intellectual Property Assets by Seller or the UK Subsidiary
listed on SCHEDULE 1.1(B) are current.
(c) All fees to maintain Seller's or the UK
Subsidiary's rights, if any, in the Intellectual Property Assets registered by
Seller or the UK Subsidiary, including, any trademark registration and
prosecution fees and all professional fees in connection therewith pertaining to
the Intellectual Property Assets due and payable on or before the Closing Date,
have been paid by Seller or will be paid by Seller or the UK Subsidiary before
the Closing Date.
(d) To Seller's Knowledge, Seller's and the UK
Subsidiary's conduct of the Business does not violate or misappropriate any
trade names, trademarks, copyrights or registered patents or other assets or
rights of any third party (including employees of or consultants to Seller). To
Seller's Knowledge, no other person is infringing the Intellectual Property
Assets of Seller or the UK Subsidiary.
(e) Other than non-exclusive licenses granted to
customers in the ordinary course of business, (i) neither Seller nor the UK
Subsidiary have granted any license or made any assignment of any Intellectual
Property Assets listed on SCHEDULE 1.1 (B), and (ii) no other person has any
right to use any Intellectual Property Assets owned or held by Seller or the UK
Subsidiary, except for Intellectual Property Assets as to which Seller or the UK
Subsidiary is a non-exclusive licensee. Neither Seller nor the UK Subsidiary are
obligated, under contract or, to Seller's Knowledge, by law, to pay any
compensation to any third party in respect of the use, transfer or sale of any
portion of the Intellectual Property Assets. Neither Seller nor the UK
Subsidiary pay any royalties or other consideration for the right to use any
intellectual property of others.
(f) The Purchased Assets include all property and
assets (except for the Excluded Assets and the employees of Seller), tangible
and intangible, and all leases, licenses and other agreements, which are
necessary to permit Purchaser to carry on the Business as presently conducted.
22
3.13 EMPLOYEES.
(a) SCHEDULE 3.13(A) contains a true and correct
list of all of Seller's and the UK Subsidiary's current employees and
consultants, including titles, scheduled hours, employment dates, base
compensation, bonus, commission and other incentive compensation arrangements.
Seller has made available to or provided Purchaser a true and correct copy of
each such employee's employment contract, if any. To the extent permitted by
applicable law, SCHEDULE 3.13(A) also identifies, to Seller's Knowledge, each
employee who is not fully available to perform work because of disability or
other leave and sets forth the basis of such leave and the anticipated date of
return to full service. Seller has provided Purchaser with either a copy of the
agreements between Seller or the UK Subsidiary and each employee or a full and
accurate description of the terms of employment or retention of each employee,
and all benefits, including, without limitation, salaries, directors' fees,
social benefits, bonuses, commissions, profit shares, automobile, reimbursement
of expenses and benefits in kind ("BENEFITS") payable or which Seller or the UK
Subsidiary is bound to provide (whether now or in the future) to each employee.
Neither the Seller nor the UK Subsidiary have adopted any policy or custom with
respect to any Benefit that would materially change the terms of such Benefit to
which an employee is entitled, under an employment agreement or applicable law,
excluding only the policy and custom to pay employee severance pay upon
termination even when such termination is due to such employee's voluntary
termination.
(b) No such employee or consultant has licensed to
Seller or the UK Subsidiary or otherwise provided Seller or the UK Subsidiary
with any Intellectual Property Asset, proprietary assets or other rights that
have been or are currently being used in the conduct of the Business. To
Seller's Knowledge, it is currently not necessary nor will it be necessary in
the conduct of the Business as presently conducted by Seller to utilize any
inventions of any of such persons or entities (or people it currently intends to
hire) made or owned prior to their employment by or affiliation with Seller, nor
is it or will it be necessary in the conduct of the Business as presently
conducted by Seller or the UK Subsidiary to utilize any other assets or rights
of any such persons or entities (or people it currently intends to hire) made or
owned prior to their employment with or engagement by Seller or the UK
Subsidiary. Each current and former employee, consultant or contractor of Seller
or the UK Subsidiary, who invented, participated in the invention or reduction
to practice of, or was granted access to, any of the Intellectual Property
Assets, executed (i) in the case of employees, an Employee Proprietary
Information Agreement substantially in the form of SCHEDULE 3.13(B)(I) and (ii)
in the case of consultants and contractors, a work for hire or non-disclosure
agreement substantially in the form of SCHEDULE 3.13(B)(II). All technical
information which is proprietary to Seller or the UK Subsidiary has been kept
confidential by Seller or the UK Subsidiary, as applicable, as commercially
reasonable, with the exception of technical information that has been disclosed
in the ordinary course of business under non-disclosure or similar agreements
and information that has been submitted in the course of filing patent
applications.
(c) No current or former employee or consultant,
officer or director of Seller or the UK Subsidiary or any distributor, reseller
or customer of Seller or the UK Subsidiary owns, directly or indirectly, or has
any right, title or interest (economic or otherwise), in whole or in part, in
any Intellectual Property Asset, proprietary asset or other rights of Seller or
the UK Subsidiary.
23
(d) There are no written or oral contracts of
employment or consulting agreements, and no agreements otherwise requiring the
payment of compensation for a fixed period of time or upon the occurrence of any
event, between Seller or the UK Subsidiary and any employee or consultant. All
of Seller's and the UK Subsidiary's employees and consultants may be terminated
at will by Seller or the UK Subsidiary, subject to applicable law.
3.14 EMPLOYEE AND LABOR MATTERS.
(a) Set forth in SCHEDULE 3.14(A) is a complete and
accurate list of all currently outstanding equity of Seller or the UK Subsidiary
issued to, and, as of June 15, 2004, options to acquire any such equity
currently held by, officers, directors, employees or consultants of Seller or
the UK Subsidiary, indicating the number of shares covered, the name and title
(or relationship) of the holder, the vesting schedule of each such option and
all such shares and exercise prices therefor. Other than as set forth in
SCHEDULE 3.14(A), neither Seller nor the UK Subsidiary operates any share
incentive scheme, share option scheme or profit sharing scheme for the benefit
of any of its officers, directors, employees or consultants.
(b) Except as contemplated hereby, neither the
execution, delivery or performance of this Agreement, nor the consummation of
any of the other transactions contemplated by this Agreement, will result in any
payment (including any bonus, golden parachute or severance payment) to any
current or former employees or directors of Seller or the UK Subsidiary (whether
or not under any benefit plan), or increase the Benefits payable under any
benefit plan, or result in any acceleration of the time of payment or vesting of
any such Benefits.
(c) Seller and the UK Subsidiary are in compliance
in all material respects with all applicable laws, policies, procedures and
agreements relating to employment, terms and conditions of employment and to the
proper withholding and remission to the proper tax authorities of all sums
required to be withheld from the employees, and Seller and the UK Subsidiary
have paid, or will pay in accordance with this Agreement, in full to the
employees all wages, salaries, commissions, bonuses, Benefits and other
compensation due and payable to such employees for any periods ending on or
prior to the Closing Date, including, without limitation, in connection with the
termination by Seller or the UK Subsidiary of the employment of the employees,
provided, however, that neither Seller nor the UK Subsidiary shall pay
severance, vacation time or bonuses for its employees that are hired by
Purchaser or remain employed by the UK Subsidiary as of the Closing Date, except
to the extent of any related Purchase Price decrease payable by Seller under
Section 2.1(a)(iii) hereof. All contributions to benefit plans (including
employer contributions and employee salary reduction contributions), including
insurance and education funds, that are due from the Seller or the UK Subsidiary
as of the Closing Date have been or will be paid by Seller or the UK Subsidiary
prior to or following the Closing, subject to Purchaser's obligations pursuant
to Section 5.11(d).
(d) Seller has provided Purchaser with true and
correct copies of all pension, thrift, savings, profit sharing, retirement,
incentive bonus or other bonus, medical, dental, life, accident insurance,
benefit, employee welfare, disability, group insurance, executive or deferred
compensation, hospitalization and other similar fringe or employee benefit
plans, programs and arrangements, and any employment or consulting contracts,
"golden parachutes,"
24
collective bargaining agreements, severance agreements or plans, vacation and
sick leave plans, programs, arrangements and policies, including, without
limitation, all "employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
employee manuals, and all material written or binding oral statements of
policies, practices or understandings relating to employment, which are provided
to, for the benefit of, or relate to, any persons employed by Seller ("SELLER
BENEFIT PLANS"). Seller has no announced plan or legally binding commitment to
create any additional Seller Benefit Plan or to amend or modify any existing
Seller Benefit Plan except as may be required by law.
(e) No Seller Benefit Plan is a "multiemployer plan"
(as defined in Section 4001 of ERISA), and neither Seller nor any entity that is
or was considered a single employer with Seller under Section 4001 of ERISA has
ever contributed or has ever been obligated to contribute to any such
multiemployer plan.
(f) No Seller Benefit Plan is subject to the
provisions of Title IV of ERISA, and no plan subject to the provisions of Title
IV of ERISA has ever been maintained, contributed to or terminated so as to
subject, directly or indirectly, Seller or any of its assets to any Liability,
contingent or otherwise, or the imposition of any Lien (whether by reason of the
complete or partial termination of any such plan, the funded status of any such
plan, any "complete withdrawal" (as defined in Section 4203 of ERISA) or
"partial withdrawal" (as defined in Section 4205 of ERISA) by any person from
any such plan, or otherwise). No Seller Benefit Plan is subject to Section 302
of ERISA or Section 412 of the Code, and no such plan has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code, respectively), whether or not waived.
(g) With respect to the InstallShield Software
Corporation Savings & Investment Plan (the "SELLER 401(K) Plan"), (i) Seller has
adopted all appropriate amendments to the Seller 401(k) Plan necessary to comply
with all applicable requirements of ERISA, the Code and other applicable law for
which the applicable remedial amendment period has expired, (ii) the prototype
sponsor of the Seller 401(k) Plan has received a favorable opinion letter from
the Internal Revenue Service ("IRS") covering all amendments to it, (iii)
neither Seller nor any fiduciary of the Seller 401(k) Plan has been advised by
the IRS or DOL of any plan defects in form or operation, (iv) neither Seller nor
any fiduciary of the Seller 401(k) Plan is aware of any circumstances that will
or reasonably could result in revocation of such favorable determination letter
or the loss of the Seller 401(k) Plan's tax qualified status, (v) no event has
occurred that will or reasonably could result in the Seller 401(k) Plan being
subject to liability for any tax under Section 511 of the Code. Seller has
provided to Purchaser an accurate and complete copy of the following materials
relating to the Seller 401(k) Plan: (vi) all documents comprising the Seller
401(k) Plan, including amendments thereto, (vii) each trust agreement and
insurance contract, including amendments thereto, (viii) the most recent summary
plan description, including summaries of material modifications thereto, (ix)
the most recent opinion letter issued by the IRS, and (x) the three (3) most
recent annual reports on the applicable form of the Form 5500 series filed with
the IRS. All such materials are correct, complete, and current in all material
respects and have been timely filed and delivered as and to the extent required
by law.
(h) With respect to each Seller Benefit Plan, (i)
all payments due to date have been made and all amounts properly accrued to date
as liabilities of Seller that have
25
not been paid have been properly recorded on Seller's books and are reflected in
the May 2004 Financial Statements; (ii) Seller has materially complied with, and
each Seller Benefit Plan materially conforms in form and operation to, all
applicable laws and regulations, including but not limited to ERISA and the
Code, in all respects and all reports and information relating to such Seller
Benefit Plan required to be filed with any governmental entity have been timely
filed; (iii) there are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of Seller, threatened; (iv) there have
been no "prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or administrative
exemption does not exist and that would cause a Material Adverse Effect with
respect to Seller, and the consummation of the transactions contemplated by this
Agreement will not result in any such prohibited transaction; (v) no event or
omission has occurred in connection with which any of the Purchased Assets,
directly or indirectly, could be subject to any liability under ERISA, the Code
or any other law, or under any agreement, instrument, law or order with respect
to which Seller is required to indemnify any person against liability, and the
consummation of the transactions contemplated by this Agreement will not result
in any such liability; and (vi) no Seller Benefit Plan is established and
maintained outside the United States primarily for the benefit of individuals
substantially all of whom are nonresident aliens.
(i) Neither Seller nor the UK Subsidiary have
entered into any plan or agreement or taken any other action that under any
circumstances could result in Purchaser incurring any direct or indirect
liability, whether contingent or otherwise, with respect to the provision of
health or other welfare benefits following retirement or any other termination
of employment to any employee or former employee of Seller, other than
continuation coverage pursuant to Sections 601 et seq. of ERISA and Section
4980B of the Code.
(j) No work stoppage or labor strike against Seller
or the UK Subsidiary is pending or, to Seller's Knowledge, threatened. Neither
Seller nor the UK Subsidiary are involved in or, to Seller's Knowledge,
threatened with any labor dispute, grievance, or litigation relating to labor or
safety matters involving any of the employees. Neither Seller nor the UK
Subsidiary are presently, nor has it been in the past, a party to, or bound by,
any collective bargaining agreement or union contract or Order with respect to
any of its employees, and no such collective bargaining agreement is being
negotiated by Seller or the UK Subsidiary.
(k) With respect to the UK Subsidiary's employees
(the "UK EMPLOYEES"), Seller confirms that:
(i) No person is employed or engaged by the
UK Subsidiary (whether under a contract of service or a contract for services)
other than the UK Employees and the UK Employees are all directly employed by
the UK Subsidiary and are exclusively employed in the UK Subsidiary's business
(the "UK BUSINESS"). No person who was formerly employed by the UK Business has
a right to return to work (whether for reasons connected with maternity leave or
absence by reason of illness or incapacity or otherwise) or a right to be
reinstated or re-engaged in the UK Business or to any other compensation.
(ii) The terms and conditions of employment
of all UK Employees are in accordance with the standard terms and conditions
supplied to the Purchaser.
26
(iii) All subsisting contracts of employment
of the UK Employees are terminable on three months' notice or less without
compensation (other than compensation in accordance with the Employment Rights
Act 1996).
(iv) No UK Employee has been given notice of
termination of his employment (or had his employment terminated without notice)
since March 31 2004 and no UK Employee has left its employment of his own accord
since that date or, to Seller's Knowledge, indicated his intention of doing so.
(v) Full particulars are contained in
SCHEDULE 3.14(K) of any outstanding offer of employment made to any person by
the UK Subsidiary in relation to the UK Business and there is no person who has
accepted such an offer of employment made by the UK Subsidiary but whose
employment has not yet started.
(vi) Full particulars are contained in
SCHEDULE 3.14(K) of any agreement for the provision of consultancy services or
the services of personnel to the UK Business and of the terms applicable to the
secondment to the UK Business of any person. To Seller's Knowledge, in respect
of each of the UK Employees the UK Subsidiary has: (aa) performed all
obligations and duties required to be performed by it (and has settled all
outstanding claims and debts); and (bb) abided by the terms of any agreement
concluded by the UK Subsidiary or on its behalf with any trade union, staff
association or similar organization recognized by the UK Subsidiary for the
purposes of collective bargaining, so far as the same shall be applicable to any
of the UK Employees.
(vii) The UK Subsidiary has paid to the Inland
Revenue and any other appropriate authority all taxes, National Insurance
contributions and other levies due in respect of the UK Employees in respect of
their employment by the UK Subsidiary up to Closing.
(viii) Since March 31, 2004 no change has been
made (or agreed) in the rate of remuneration or the emoluments or pension
benefits or any other term of any contract of employment or for services of any
UK Employee.
(ix) The UK Subsidiary has not offered,
promised or agreed for the future any variation in any contract of employment or
any contract for services in respect of the UK Employees or any other person
employed by the UK Subsidiary in respect of whom liability is deemed by the
Transfer of Undertakings (Protection of Employment) Regulations 1981
("EMPLOYMENT REGULATIONS") to pass to the Purchaser.
(x) There are no amounts outstanding or
promised to any of the UK Employees and no liability has been incurred by the UK
Subsidiary which remains undischarged for breach of any contract of service or
for services or for redundancy payments (including protective awards) or for
compensation under any employment legislation or regulations or for wrongful
dismissal, unfair dismissal, equal pay, sex, race or disability discrimination
or otherwise and no order has been made at any time for the reinstatement or
re-engagement of any of the UK Employees or any person formerly employed or
engaged in the UK Business.
27
(xi) Except in respect of normal accruals of
remuneration or emoluments of employment, no sum is payable to or for the
benefit of any UK Employee or their dependants nor is the UK Subsidiary a party
to any arrangements or promise to make or is it in the habit of making ex gratia
or voluntary payments by way of bonus, pension, gratuity, superannuation,
allowance or the like to any such persons and there are no schemes of
arrangements (whether legally enforceable or not) for the payment of retirement,
pension, disability, or death benefit or similar schemes or arrangements in
operation or contemplated in respect of any of the UK Employees or their
dependants or persons formerly employed or engaged in the UK Business or their
dependants under which the Purchaser or any of the owners for the time being of
the UK Business or the UK Subsidiary or any part thereof may become liable to
make payments or to provide equivalent benefits.
(xii) The UK Subsidiary does not have an
obligation to make any payment on redundancy in excess of the statutory
redundancy payment and the UK Subsidiary has not operated any discretionary
practice of making any such excess payments.
(xiii) There is no scheme or arrangement in
operation by or in relation to the UK Subsidiary under which any employee or
other person is entitled to a commission or remuneration of any other sort
calculated by reference to the whole or part of the turnover, profits or sales
of the UK Subsidiary.
(xiv) There is not and during the three years
preceding the date of this Agreement there has not been any industrial action
affecting the UK Business and to the best of the knowledge, information and
belief of the Seller there are no facts or circumstances which might give rise
to such industrial action. The UK Subsidiary is not a party to any collective
agreement or trade dispute (within the meaning of the Trade Union and Labour
Relations (Consolidations) Act 1992)) or any dismissal procedures agreement
(within the meaning of the Employment Rights Act 1996) or any proceedings before
any court or tribunal under or by virtue of the provisions of the said Act of
1992 and to the best of the knowledge, information and belief of the Seller
there are no facts or circumstances which might give rise to the UK Subsidiary
becoming a party to any such agreement or becoming involved in any such dispute
or proceedings.
(l) Full details of the UK Employees who are members
of the pension scheme of the Seller provided for the benefit of the UK Employees
("UK SUBSIDIARY'S SCHEME") are listed in SCHEDULE 3.14(L) and no other UK
Employees are or will before Closing become members of the UK Subsidiary's
Scheme. All contributions due to be paid in respect of the UK Subsidiary's
Scheme by the UK Subsidiary and any of its officers or employees have been duly
paid as at Closing.
3.15 CUSTOMERS AND SUPPLIERS.
(a) SCHEDULE 3.15(A) contains a list of the top
fifty (50) customers, including distributors (the "Customers") and twenty-five
(25) suppliers (other than utility suppliers and landlords) (the "SUPPLIERS"),
of Seller and the UK Subsidiary, on a consolidated basis, for each of the two
(2) most recent fiscal years (determined on the basis of the total dollar amount
of net sales or purchases, as applicable), showing the total dollar amount of
net sales to
28
each of the Customers, or net purchases from each of the Suppliers, during each
such year. Seller and the UK Subsidiary have taken all commercially reasonable
steps to maintain the confidentiality of all pertinent information pertaining to
its Customers. To Seller's Knowledge, there are no existing conditions or state
of facts or circumstances which have materially adversely affected the
relationship of the Business with Customers or Suppliers if it is acquired by
Purchaser, or which has prevented such business from being carried on by the
Business, after the Closing, in essentially the same manner as it is currently
carried on. None of the Customers have given written notice to Seller or the UK
Subsidiary that it intends to materially reduce its purchase of Products
following the Closing.
(b) SCHEDULE 3.15(B) contains a list by product line
of all sales representatives, dealers, distributors and franchisees of Seller
and the UK Subsidiary. Seller has furnished to Purchaser representative copies
of all sales representative, dealer, distributor and franchise contracts and
policy statements, and all substantial modifications or exceptions thereto.
3.16 OUTSTANDING EQUITY & ECONOMIC INTERESTS. SCHEDULE
3.16(A) lists the holders of record of any right, title or interest (of record
or in equity) in any equity of Seller and the UK Subsidiary or any security or
other instrument convertible into or exchangeable for equity of Seller or the UK
Subsidiary. There are no other options, debentures, warrants, rights of first
refusal or other rights to purchase or otherwise acquire an interest (whether
equity or economic) in Seller or the UK Subsidiary outstanding as of the date of
this Agreement not set forth on SCHEDULE 3.16(A). No party other than Purchaser
has a right of first refusal, right of first offer or other right to bid on or
acquire any of the Purchased Assets.
3.17 FINANCIAL STATEMENTS. Seller has provided Purchaser with
true and complete copies of all audited annual financial statements and
unaudited quarterly financial statements of Seller for the fiscal years ending
December 31, 2001, 2002 and 2003 (the "FINANCIAL STATEMENTS"), and the unaudited
financial statement for the fiscal period ended May 31, 2004 (the "MAY 2004
FINANCIAL STATEMENTS"). All of the Financial Statements (including all notes and
schedules contained therein or annexed thereto) are true, complete and accurate
in accordance with GAAP applied on a consistent basis, have been prepared in
accordance with the books and records of Seller, and fairly present, in
accordance with GAAP, the assets, Liabilities and financial position and the
results of operations and cash flows of Seller as of the dates and for the years
and periods indicated (except, in the case of unaudited statements, for the
absence of footnote disclosure and changes resulting from normal year-end
adjustments for recurring accruals). The May 2004 Financial Statements
(including all notes and schedules contained therein or annexed thereto) are
true, complete and accurate in accordance with GAAP applied on a consistent
basis, have been prepared in accordance with the books and records of Seller,
and fairly present, in accordance with GAAP, the assets, Liabilities and
financial position and the results of operations of Seller as of May 31, 2004
and for the period from January 1, 2004 through May 31, 2004, except for the
absence of footnote disclosure and changes resulting from normal year-end
adjustments for recurring accruals.
3.18 UK SUBSIDIARY ACCOUNTS. The audited annual accounts (the
"ACCOUNTS") relating to the UK Subsidiary for the fiscal years ending December
31, 2001 and 2002, have been prepared in accordance with the Companies ▇▇▇ ▇▇▇▇
and give a true and fair view of the state of
29
affairs of the UK Subsidiary as at the Accounts Date and of its profit or loss
for the period ended on the Accounts Date.
3.19 PRODUCT WARRANTY AND PRODUCT LIABILITY. SCHEDULE 3.19(A)
contains a true, correct and complete copy of Seller's and the UK Subsidiary's
standard warranty or warranties for sales of Products and, except as stated
therein or as provided by applicable law, there are no warranties, commitments
or obligations with respect to the return, repair or replacement of Products
which vary materially from such standard. SCHEDULE 3.19(B) contains a
description of all product liability claims and similar Litigation relating to
Products that are presently pending or that to Seller's Knowledge are threatened
in writing, or which have been asserted or commenced against Seller or the UK
Subsidiary within the last five (5) years (whether or not covered by insurance).
To Seller's Knowledge, there is no systematic defect of a recurring nature in
the Products that would adversely affect performance or create an unusual risk
of injury to property. No Product has been the subject of any generalized or
global replacement, field fix, retrofit, modification or recall campaign
(excluding for the purpose customary bug fixes and product updates), and, to
Seller's Knowledge, no facts or conditions exist which could reasonably be
expected to result in such a recall campaign. The Products have been designed
and manufactured so as to meet and comply in all material respects with all
applicable governmental standards and specifications currently in effect, and
have received all governmental approvals necessary to allow their sale and use.
As used in this Agreement, the term "PRODUCTS" means any and all products
currently or at any time previously distributed or sold by Seller or the UK
Subsidiary, or by any predecessor of Seller or the UK Subsidiary under any brand
name or ▇▇▇▇ under which products are or have been distributed or sold by Seller
or the UK Subsidiary.
3.20 INSURANCE.
(a) INSURANCE POLICIES. Set forth in SCHEDULE
3.20(A) is a complete and accurate list and summary description of all policies
of fire, liability, product liability, workers compensation, health and other
forms of insurance presently in effect with respect to the Business and the
properties of Seller and the UK Subsidiary, true and correct copies of which
have heretofore been delivered to Purchaser. SCHEDULE 3.20(A) includes, without
limitation, the carrier, the description of coverage, the limits of coverage,
retention or deductible amounts, amount of annual premiums, and date of
expiration with respect to each such policy, and any pending claims. All such
policies are valid, outstanding and, subject to the respective terms thereof,
enforceable policies and provide insurance coverage for the properties, assets
and operations of Seller and the UK Subsidiary, of the kinds, in the amounts and
against the risks customarily maintained by organizations similarly situated,
and, to Seller's Knowledge, are valid, outstanding and enforceable policies. No
notice of cancellation or termination has been received with respect to any such
policy, and Seller has no Knowledge of any act or omission of Seller or the UK
Subsidiary that could result in cancellation of any such policy prior to its
scheduled expiration date. Neither Seller nor the UK Subsidiary have been
refused any insurance with respect to any aspect of the operations of the
Business, nor has its coverage been limited by any insurance carrier to which it
has applied for insurance or with which it has carried insurance during the last
three years. Seller and the UK Subsidiary have duly and timely made all claims
they have been entitled to make under each policy of insurance. SCHEDULE 3.20(B)
contains a description of each claim made by Seller or the UK Subsidiary under
any policy of insurance during the last three years. There is no claim by Seller
pending under any such policies as to
30
which coverage has been questioned, denied or disputed by the underwriters of
such policies, and Seller has no Knowledge of any basis for denial of any claim
by Seller or the UK Subsidiary pending under any such policy. Seller or the UK
Subsidiary has not received any written notice from or on behalf of any
insurance carrier issuing any such policy that insurance rates therefor will
hereafter be substantially increased (except to the extent that insurance rates
may be increased for all similarly situated risks) or that there will hereafter
be a cancellation or an increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) or nonrenewal of any such policy. Such
policies are sufficient in all material respects for compliance by Seller with
all requirements of law and with the requirements of all material contracts to
which Seller is a party.
3.21 ABSENCE OF CERTAIN CHANGES. Since May 31, 2004 there has
not been, with respect to Seller, the UK Subsidiary or the Business:
(a) NO MATERIAL CHANGE. Any Material Adverse Effect
with respect to Seller;
(b) NO DAMAGE. Any loss, damage or destruction in
excess of twenty-five thousand dollars ($25,000), whether covered by insurance
or not;
(c) NO INCREASE IN COMPENSATION. Any increase in the
compensation, salaries or wages payable or to become payable to any employee or
agent of Seller or the UK Subsidiary (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing, retirement or
other plan or commitment), or any bonus or other employee benefit declared,
obligated, granted, made or accrued, other than in the ordinary course of
business consistent with past practice;
(d) NO LABOR DISPUTES. Any labor or employment
dispute or disturbance, other than routine individual grievances which are not
material to the business, financial condition or results of operations of Seller
or the UK Subsidiary;
(e) NO COMMITMENTS. Any commitment or transaction by
Seller or the UK Subsidiary (including, without limitation, any borrowing or
capital expenditure or indebtedness for borrowed money incurred, assumed or
guaranteed by Seller or the UK Subsidiary) other than in the ordinary course of
business consistent with past practice;
(f) NO DIVIDENDS OF PURCHASED ASSETS. Any
declaration, setting aside, or payment of any dividend or any other distribution
consisting of Purchased Assets in respect of Seller's or the UK Subsidiary's
capital stock, any redemption, purchase or other acquisition by Seller or the UK
Subsidiary of any capital stock of Seller or the UK Subsidiary, or any security
thereto, or any other payment consisting of Purchased Assets to any stockholder
of Seller or the UK Subsidiary as such a stockholder;
(g) NO DISPOSITION OF PROPERTY OR MATERIAL
IMPAIRMENT OF ASSETS. Any sale, lease or other transfer or disposition of any
Purchased Assets except in the ordinary course of business or any material
impairment of the assets of Seller or the UK Subsidiary;
31
(h) NO LIENS. Any Lien made on any of the properties
or assets of Seller or the UK Subsidiary other than Permitted Liens;
(i) NO AMENDMENT OF CONTRACTS. Any entering into,
amendment or termination by Seller or the UK Subsidiary of any material
contract, or any waiver or release of material rights or material claims
thereunder including any write-off or other compromise of any account receivable
of Seller, other than in the ordinary course of business;
(j) LOANS AND ADVANCES. Any loan or advance (other
than advances to employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person including, but not
limited to, any officers, directors or employees of Seller or the UK Subsidiary,
or any stockholders or Affiliates;
(k) CREDIT. Any grant of credit to any customer or
distributor on terms or in amounts materially more favorable than those which
have been extended to such customer or distributor in the past, any material
change in the terms of any credit heretofore extended, or any other material
change of Seller's policies or practices with respect to the granting of credit;
(l) ACCOUNTING METHODS. Any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by Seller or the UK Subsidiary;
(m) NO UNUSUAL EVENTS. Any other event or condition
not in the ordinary course of business of Seller or the UK Subsidiary;
(n) AGREEMENTS WITH STAKEHOLDERS. Any other
agreements or other arrangements by and/or among Seller or the UK Subsidiary and
their equityholders, debtholders and optionholders except for those relating to
the transactions contemplated by this Agreement, all of which have been provided
to Purchaser solely for the purposes of informational review; or
(o) MISCELLANEOUS. Any agreement (whether written or
oral) to do any of the things described in the preceding clauses of this Section
3.21 not set forth on a schedule to this Section 3.21.
3.22 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
in the most recent balance sheet of Seller or the UK Subsidiary provided as part
of the May 2004 Financial Statements, or the Accounts, respectively, or
otherwise not required to be disclosed by GAAP, neither the Seller nor the UK
Subsidiary have any Liabilities other than in connection with the consummation
of the transactions contemplated by this Agreement, and commercial liabilities
and obligations incurred since the date of the most recent balance sheet
provided as part of the May 2004 Financial Statements or the Accounts in the
ordinary course of business and consistent with past practice, and none of which
has or will have a Material Adverse Effect with respect to Seller. Except as and
to the extent described in the most recent balance sheet of Seller or the UK
Subsidiary provided as part of the May 2004 Financial Statements or the
Accounts, Seller has no Knowledge of any basis for the assertion against Seller
or the UK Subsidiary of any Liability and Seller has no Knowledge of any
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to Liabilities, except commercial liabilities and
32
obligations incurred in the ordinary course of Seller's and the UK Subsidiary's
business and consistent with past practice.
3.23 AFFILIATES' RELATIONSHIPS TO SELLER.
(a) CONTRACTS WITH AFFILIATES. All leases,
contracts, agreements or other arrangements or obligations between Seller or the
UK Subsidiary and any Affiliate are set forth on SCHEDULE 3.23(A).
(b) NO ADVERSE INTERESTS. To Seller's Knowledge,
except as the holder of not more than 5% of the outstanding publicly-traded
securities entitled to vote for the election of directors of a company listed on
any national or regional stock exchange or reported by the Nasdaq Stock Market
or any successor thereto, or the securities of which are regularly traded in the
over-the-counter market, no Affiliate has any direct or indirect interest in (i)
any entity that does business with Seller or the UK Subsidiary or is competitive
with Seller's or the UK Subsidiary's business, or (ii) any property, asset or
right that is used by Seller or the UK Subsidiary in the conduct of its
business.
3.24 DISCLOSURE. No representation or warranty by Seller in
this Agreement, nor any certificate, schedule, agreement or exhibit hereto
furnished or to be furnished by or on behalf of Seller pursuant to this
Agreement, contains or shall contain any fraudulent or untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading. All representations made in any
certificate or Disclosure Schedule delivered by or on behalf of Seller pursuant
to this Agreement shall be deemed representations and warranties by Seller.
3.25 ▇▇▇▇▇▇▇▇▇.▇▇▇ AND ▇▇▇▇▇.▇▇▇▇. SCHEDULE 3.25 sets forth,
to the actual knowledge of the Executive Team, adverse market changes to the
Business that could reasonably be expected to result from the operations of
▇▇▇▇▇▇▇▇▇.▇▇▇ and click.once.
3.26 UK SUBSIDIARY CAPITALIZATION. The authorized and issued
share capital of the UK Subsidiary is set forth in SCHEDULE 3.26 and constitutes
the existing authorized share capital and the whole of the allotted share
capital of the UK Subsidiary. All of the issued share capital of the UK
Subsidiary is duly and validly authorized and issued, fully paid and has not
been issued in violation of any provision regarding pre-emptive, anti-dilution
or similar rights of shareholders. There are no outstanding subscriptions,
options, rights, warrants, puts, calls or other agreements or commitments of
similar type (a) obligating either Seller or the UK Subsidiary to issue, sell or
transfer any shares of capital stock or other equity interests of the UK
Subsidiary, any securities convertible into shares of capital stock or other
equity interests of the UK Subsidiary, or any other rights to acquire shares of
capital stock or other equity interests of the UK Subsidiary, or (b) relating to
the voting or control of any equity interests of the UK Subsidiary. Seller owns,
beneficially, and has valid title to all of the allotted and issued share
capital of the UK Subsidiary, free and clear of all Liens.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes the following representations and warranties to
Seller, each of which is true and correct in accordance with its terms on the
date hereof (other than those
33
representations and warranties made as of a specified date, which are true and
correct in accordance with their terms as of such date), and shall be true and
correct as of the Closing.
4.1 CORPORATE.
(a) ORGANIZATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Macrovision Europe Limited is a company duly incorporated, validly
existing and in good standing under the laws of England and Wales. Macrovision
International Holdings LP is a limited partnership organized under the laws of
the Cayman Islands.
(b) CORPORATE POWER. Purchaser has all requisite
corporate power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Purchaser and to carry out the
transactions contemplated hereby and thereby.
4.2 DUE AUTHORITY. The execution and delivery of this
Agreement and the other documents and instruments to be executed and delivered
by Purchaser pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the board of
directors of Purchaser. No other corporate act or proceeding on the part of
Purchaser or its stockholders is necessary to authorize this Agreement or the
other documents and instruments to be executed and delivered by Purchaser
pursuant hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement does, and the other documents and instruments to be
executed and delivered by Purchaser pursuant hereto will when executed and
delivered by Purchaser, constitute valid and binding agreements of Purchaser,
enforceable in accordance with their respective terms, subject to the extent
that such enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to creditors' rights
generally, and (ii) is subject to limitations imposed by general principles of
equity, including, but not limited to, limitations upon the availability of
equitable remedies and the enforcement of such provisions.
4.3 NO CONFLICTS OR VIOLATIONS. Neither the execution and
delivery of this Agreement and any other agreement entered into pursuant to the
terms hereof nor the consummation of the transactions contemplated hereby,
including, but not limited to, the obligation of Purchaser to pay the Additional
Contingent Payment upon achievement of the revenue performance levels set forth
on SCHEDULE 2.1(B),will (i) violate any Order or award of any court,
administrative agency or governmental body against or binding upon Purchaser,
(ii) constitute a violation by Purchaser of any law or regulation of any
jurisdiction in which Purchaser conducts its business, (iii) except for
applicable requirements of the HSR Act, will require any authorization, consent,
approval, exemption or other action by or notice to any Government Entity, or
(iv) conflict with or result in any violation of or constitute a default, in any
material respect, under any agreement, mortgage, bond, indenture, franchise or
other instrument or obligation to which Purchaser is a party or by which it is
bound.
4.4 NO BROKERS OR FINDERS. Neither Purchaser nor its
directors, officers, stockholders, employees or agents have retained, employed
or used any broker or finder in connection with the transactions provided for
herein or the negotiation thereof. Purchaser is not obligated, nor has Purchaser
obligated Seller, for the payment of fees or expenses of any broker
34
or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
4.5 FINANCIAL CAPACITY. Purchaser has the financial
strength, capacity and resources to enable it to complete the Closing and comply
with its obligations and covenants contained in Section 2.1(b) and SCHEDULE
2.1(b), including, but not limited to, payment of the maximum amount of the
Additional Contingent Payment.
5. FURTHER AGREEMENTS & COVENANTS
5.1 ESCROW AGREEMENT. At the Closing, Seller and Purchaser
shall execute and deliver an Escrow Agreement in the form of EXHIBIT B hereto.
5.2 ANNOUNCEMENTS. Prior to the Closing Date, Purchaser may
issue a press release after the execution of this Agreement announcing the
transaction contemplated hereby if and when it deems necessary or desirable in
its sole discretion. Except to the extent required by law or permitted by the
prior sentence, neither Purchaser nor Seller shall issue press releases with
respect to the existence of this Agreement and the transactions contemplated
hereby without the prior written consent of the other party, which shall not be
unreasonably withheld or delayed.
5.3 CONFIDENTIAL INFORMATION. Seller shall not at any time
subsequent to the Closing, except as explicitly requested by Purchaser, use for
any purpose, disclose to any person, or keep or make copies of documents, tapes,
discs, programs or other information storage media (collectively "RECORDS")
containing any Confidential Information concerning the Business, the Purchased
Assets, or the Assumed Liabilities; provided, however, that (a) the foregoing
provision shall not apply to any information which is an Excluded Asset or
Excluded Liability, or which relates solely to one or more Excluded Assets or
Excluded Liabilities, and (b) Seller shall be permitted to use any such
Confidential Information which is transferred to Purchaser hereunder following
the Closing in connection with the collection of Seller's accounts receivable,
the payment of Seller's Liabilities, the preparation of Seller's Tax returns and
other reports, any litigation involving Seller, the winding-up and concluding of
Seller's operations and the liquidation of Seller and related matters. If, at
any time after Closing, Seller should discover that it is in possession of any
Records containing Confidential Information which is a Purchased Asset or an
Assumed Liability, then Seller shall promptly turn such Records over to
Purchaser, which shall upon request make available to Seller any information
contained therein which is not Confidential Information. Seller will not assert
a waiver or loss of confidential or privileged status of the information based
upon such possession or discovery. For purposes hereof, "CONFIDENTIAL
INFORMATION" shall mean and include, without limitation, all intellectual
property rights in which Seller has or had an interest, all customer and vendor
lists and related information, all information concerning Seller's processes,
products, costs, prices, sales, marketing and distribution methods, properties
and assets, Liabilities, finances, employees, all privileged communications and
work product, and any other information not previously disclosed to the public
directly by Seller, other than Excluded Assets or Excluded Liabilities.
5.4 USE OF SELLER'S NAME. Following the Closing, Seller
shall not use, and shall cause its Affiliates to refrain from using, without the
prior written consent of Purchaser, the names "InstallShield," "Installation
Software Technologies," "Stirling
35
Technologies," "Stirling Group," "DemoShield" or any other name confusingly
similar thereto, except as may be necessary for Seller to pay its Liabilities,
prepare Tax returns and other reports, and to otherwise wind up and conclude its
operations.
5.5 PERMITS. If any licenses, permits or authorizations are
required for carrying on the Business and are not transferable, Seller will
reasonably assist Purchaser in obtaining similar licenses, permits or
authorizations.
5.6 TAXES. Purchaser and Seller shall share equally in the
cost of any sales, value added, transfer, stamp or other similar taxes
(excluding income taxes of either party) assessed against Purchaser or Seller,
if any, arising out of the purchase and transfer of the Purchased Assets, or
otherwise as a consequence of the transactions contemplated by this Agreement.
5.7 MATERIAL AGREEMENTS. During the period from signing this
Agreement through the earlier of the Closing Date or the termination of this
Agreement pursuant to Article 8 (the "PRE-CLOSING PERIOD"), Seller shall notify
Purchaser prior to entering into any of the following arrangements, other than
in connection with the payment of Seller's Liabilities: (a) any agreements
entered into by Seller or the UK Subsidiary with a total value in excess of
Thirty-Five Thousand Dollars ($35,000), and (b) any activity or operation
proposed to be entered into by Seller that is not in the ordinary course of
business. Seller will not, and shall cause the UK Subsidiary not to, do or omit
any act that may cause a breach of any material contract, commitment or
obligation, or any breach of any representation, warranty, covenant or agreement
made by Seller herein.
5.8 CONDUCT OF BUSINESS. Except with the consent of
Purchaser, other than in connection with the payment of Seller's Liabilities, or
as reasonably necessary to consummate the transactions under this Agreement,
Seller agrees that it shall conduct the Business in the ordinary course through
the Closing. During the Pre-Closing Period, Seller will use its commercially
reasonable efforts to preserve the business organization of Seller and the UK
Subsidiary, to retain the services of the present employees of Seller and the UK
Subsidiary, and to preserve the goodwill of the present suppliers and customers
of Seller and the UK Subsidiary. During the Pre-Closing Period, Seller will not,
without the prior written consent of Purchaser, purchase, sell, lease or dispose
of any Purchased Asset or incur any Assumed Liability, except in the ordinary
and usual course of its Business. During the Pre-Closing Period, Seller will not
increase the salary and/or bonus compensation of any officer, employee or agent
employed in connection with Seller or the UK Subsidiary, without the prior
written approval of Purchaser, except in the ordinary course of business. During
the Pre-Closing Period, Seller shall not amend its Certificate of Incorporation
or make any changes in authorized or issued capital stock without notifying
Purchaser.
5.9 EXCLUSIVE DEALING. During the Pre-Closing Period, Seller
agrees, on behalf of itself, the UK Subsidiary and its and the UK Subsidiary's
directors, officers, stockholders, employees and other agents, that none of the
foregoing will, directly or indirectly (a) solicit, initiate, entertain or
encourage submission of any proposal or offer to purchase or lease substantially
all of the Purchased Assets or the capital stock of Seller or the UK Subsidiary
or enter into any merger, consolidation or similar arrangement, (b) enter into
any agreement with
36
respect to any such proposal, (c) participate in any discussions or negotiations
that may reasonably be expected to lead to any such proposal, or (d) furnish any
information to any person to facilitate the making of any such proposal (in each
case other than Seller or affiliated parties) through and including the Closing
Date. Seller will promptly inform Purchaser in writing of any third party
inquiries or proposals from any third party relating to any such proposals or
offers received by Seller, the UK Subsidiary, its stockholders, employees or
agents during the Pre-Closing Period.
5.10 ACCESS TO INFORMATION. Seller shall provide Purchaser
reasonable access upon reasonable notice in accordance with Seller's obligations
under this Agreement to any Seller or the UK Subsidiary facility and to any and
all of its books and records of any kind wherever located from the date of this
Agreement through the Closing Date. With the prior consent of Seller in each
instance (which consent shall not be unreasonably withheld), Purchaser and its
officers, employees, agents, independent accountants and advisors, shall have
access to vendors, customers, and others having business dealings with Seller
and the UK Subsidiary.
5.11 EMPLOYEE MATTERS.
(a) As of the Closing Date, Seller shall terminate
all of its employees, including those employees of Seller identified in SCHEDULE
5.11(A) but excluding the employees of UK Subsidiary, and Purchaser shall offer
employment to those employees of Seller identified in SCHEDULE 5.11(A),
effective as of the day after the Closing, on the respective terms and
conditions for each employee set forth on SCHEDULE 5.11(A), provided, however,
that Purchaser may elect not to offer employment to up to twelve (12) employees
listed on SCHEDULE 5.11(A) upon mutual agreement of Seller and Purchaser, with
Seller's consent not to be unreasonably withheld. Notwithstanding the foregoing,
the parties may mutually agree in writing to increase the number of employees
who are not offered employment by Purchaser. Purchaser shall extend offers of
employment to the key employees listed on SCHEDULE 5.11(A) (the "KEY EMPLOYEES")
on those terms and conditions for each Key Employee set forth on SCHEDULE
5.11(A) by delivery of (i) in the case of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
employment agreements or (ii) in the case of the other Key Employees, an
employment offer letter, in both cases substantially in the forms set out in
EXHIBIT D (the "KEY EMPLOYEE OFFER LETTER"). Purchaser shall have no obligation
to extend any offer of employment to any other current employee of Seller. Other
than pursuant to Section 5.11(d), Purchaser shall have no obligation of any kind
with respect to any individual to whom it offers employment but who declines
that offer.
(b) Seller agrees to reasonably support, but at no
additional out-of-pocket cost to Seller, the efforts made by Purchaser to employ
those of Seller's employees to whom Purchaser has made offers of employment as
of the Closing Date.
(c) Purchaser and Seller shall work together to
coordinate internal announcements to employees (including human resource
orientation) of their respective companies regarding their understandings,
discussions, negotiations and agreements with respect to the transactions
contemplated by this Agreement.
(d) Purchaser and Seller agree that Seller shall be
responsible for the payment, following the Closing, to those persons employed by
Seller immediately prior to the
37
Closing, of (i) any Liability related to any commission and/or bonus payments
that are due and owing as of the Closing Date; (ii) any Liability related to
wages, salaries, workers' compensation payments, education funds, pension funds,
benefits and other compensation that are due and payable as of the Closing Date;
and (iii) any Liability related to severance, convalescent pay, leave and health
that may arise in connection with the termination by Seller of the employee as
part of this transaction. Except as otherwise provided herein, Purchaser and
Seller further agree that Purchaser shall not assume any Liabilities under any
of Seller's employee benefit plans and payment of all the benefits to which any
employee or former employee of Seller is or may be entitled will be the
responsibility of Seller. All contributions to Seller's benefit plans including
employer contributions, employee salary reduction contributions, insurance and
education funds, that are attributable to service through the Closing Date will
be paid by Seller. Notwithstanding anything in this Section 5.11 or otherwise in
this Agreement to the contrary the Purchaser shall have sole responsibility for:
(i) satisfying the continuation coverage
requirements of the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA")
for all employees or former employees of Seller (and any dependents or
beneficiaries thereof) who are receiving COBRA continuation coverage as of the
Closing Date, or who are entitled to elect such coverage on account of a
qualifying event occurring on or before the Closing Date;
(ii) the Assumed Liabilities pursuant to
Section 1.3(b)(iv) and (v); and
(iii) following the Closing, continuation,
maintenance and implementation of those benefit plans listed on SCHEDULE
5.11(D).
(e) Purchaser or a subsidiary of Purchaser shall
adopt the Seller 401(k) Plan and become the sponsoring employer of the Seller
401(k) Plan effective as of the Closing Date. Seller shall take all actions,
including the adoption of amendments to the Seller 401(k) Plan, at the direction
of Purchaser that are reasonably related to the transfer of sponsorship and (if
Purchaser so directs) administration of the Seller 401(k) Plan to Purchaser or a
subsidiary of Purchaser as of the Closing Date.
(f) Purchaser or a subsidiary of Purchaser shall
adopt the Install Flexible Spending Account Plan (the "FLEX PLAN") and become
the sponsoring employer of the Flex Plan effective as of the Closing Date.
Seller shall take all actions, including the adoption of amendments to the Flex
Plan at the direction of Purchaser that are reasonably related to the transfer
of sponsorship and (if Purchaser so directs) administration of the Flex Plan to
Purchaser or a subsidiary of Purchaser as of the Closing Date. Seller shall
transfer to the Purchaser the excess, if any, of the aggregate Flex Plan
contributions less the sum of the aggregate claims paid and claims incurred but
not yet paid as of the Closing Date (whether or not filed).
(g) Purchaser shall give equivalent credit for
periods of service prior to the Closing for employees of Seller who accept
Purchaser's offer of employment or remain employed by the UK Subsidiary as of
the Closing Date, for purposes of the benefit plans or programs maintained by
Purchaser for employees in general, and no additional waiting periods shall be
required for eligibility for such plans.
38
5.12 SELLER'S FINANCIAL OBLIGATIONS. Seller and the UK
Subsidiary shall satisfy prior to or following the Closing Date, or provide for
the satisfaction of, any and all loans or other financial obligations that it
may have, including, but not limited to, any employee bonuses or related
compensation and any amounts outstanding pursuant to debentures.
5.13 ASSIGNMENT OF CONTRACTS. Seller shall use its
commercially reasonable efforts to assign the current customer contracts,
agreements, leases and other arrangements relating to the Business to Purchaser
on or before the Closing Date (contingent upon the occurrence of the Closing).
5.14 NOTICE OF DEVELOPMENTS. During the Pre-Closing Period,
Seller shall promptly notify Purchaser, in writing, of any development which
would, if existing or known at the date hereof, have been required to be set
forth in the Disclosure Schedule, or which causes a Material Adverse Event with
respect to Seller or the UK Subsidiary or a material breach of any of Seller's
representations and warranties contained herein.
5.15 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILINGS. To the extent such filings
have not been completed prior to the execution of this Agreement, each of Seller
and Purchaser shall, in cooperation with the other, as promptly as practicable
following the execution of this Agreement, file any reports or notifications
that may be required to be filed by it under the HSR Act with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and shall
furnish to the other all such information in its possession as may be necessary
for the completion of the reports or notifications to be filed by the other.
Prior to making any communication, written or oral, with the Federal Trade
Commission, the Antitrust Division of the federal Department of Justice or any
other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby, each of
Seller and Purchaser shall consult with the other.
5.16 NON-COMPETITION.
(a) Provided that Purchaser does not materially
breach its obligations to Seller under this Agreement, beginning on the Closing
Date, for a period set forth in Section 5.16(b) below, Seller agrees that it
shall not:
(i) Compete in the Geographical Area with
Purchaser, or any entity which is a majority-owned subsidiary of Purchaser,
without the written approval of Purchaser;
(ii) knowingly interfere with or disrupt, or
attempt to interfere with or disrupt, the relationship, contractual or
otherwise, between Purchaser, or any majority-owned subsidiary of Purchaser, and
any customer, supplier or employee of the Business as owned and operated by
Purchaser, or any such subsidiary;
(iii) assist a Competitor of Purchaser by
providing consulting or other advisory services with respect to the Business to
that Competitor; or
(iv) offer employment to any current employee
of Purchaser, or solicit (directly or indirectly, individually or in connection
with any new employer or other business partner) any current employee of
Purchaser who was employed by Seller, to accept employment elsewhere, other than
by way of a general public advertisement or employment solicitation.
39
(b) The duration of the prohibitions set forth in
Section 5.16(a) shall be for two (2) years following the Closing Date.
(c) The following terms, as used in this Section
5.16 shall have the meanings set forth below:
(i) "BUSINESS" shall have the meaning set
forth in Recital A on the first page of this Agreement.
(ii) "COMPETITOR" means any individual, firm,
corporation or entity engaged directly or indirectly in a business that is
competitive with all or any material part of the Business.
(iii) "COMPETE" means to engage in competition
directly or indirectly, individually or through a family member or other person
acting on the Seller's behalf, as an employee, independent contractor,
consultant, member, manager, officer, director, proprietor, partner or
stockholder or other security holder (other than of a company listed on any
national or regional stock exchange or reported by the Nasdaq Stock Market or
any successor thereto, or the securities of which are regularly traded in the
over-the-counter market, provided that the Seller at no time owns in excess of
5% of the outstanding securities of such company entitled to vote for the
election of directors) of any Competitor.
(iv) "GEOGRAPHICAL AREA" means the entire
world, including each individual country throughout the world and each State
within the United States of America.
(d) Seller acknowledges that this Section 5.16 is an
independent covenant within this Agreement, and shall be treated as such for the
purposes of enforcement. Seller further acknowledges that its agreement to this
Section 5.16 is an express pre-condition of Purchaser's agreement to purchase
the Purchased Assets.
(e) Seller shall not publicly disparage Purchaser,
its business or its employees.
(f) Seller hereby acknowledges that the Business is
unique in character. As such, Seller agrees that the provisions of this Section
5.17 are reasonable and necessary for maintenance of the Business and the
protection of Purchaser's investment in the Business and the Purchased Assets.
(g) This Section 5.16 does not apply to ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, whose non-competition arrangements are reflected
entirely in their non-competition agreements attached hereto in Exhibit F.
40
5.17 ACCOUNTS RECEIVABLE. Any amount actually received from
any third party by Purchaser or the UK Subsidiary in payment of an account
receivable of Seller or the UK Subsidiary for services performed or goods sold
on or before the Closing Date shall be paid to Seller, without set-off of any
kind, within five (5) Business Days of receipt by Purchaser. Any amount actually
received from any third party by Seller in payment of an account receivable of
Purchaser shall be paid to Purchaser, without set-off of any kind, within five
(5) Business Days of receipt by Seller. Seller and Purchaser hereby agree that
any amounts received from customers of the Business by either party shall be
applied first as an account receivable of Seller or the UK Subsidiary and then
as an account receivable of Purchaser, unless such customer indicates otherwise
in writing in connection with such payment.
5.18 USE OF PROCEEDS.
(a) SATISFACTION OF INDEBTEDNESS. Seller undertakes,
immediately following the Closing, to use the proceeds from the Initial Purchase
Price to satisfy all amounts owed to creditors in full prior to making any
distribution or other payment to its stockholders. Seller shall deliver to
Purchaser a schedule summarizing the distributions of its funds in payment of
its outstanding indebtedness as of Closing.
(b) BANKRUPTCY EVENT. Following the Closing, and
unless Seller is solvent, Seller undertakes (i) not to initiate a Bankruptcy
Event; (ii) to notify Purchaser immediately upon the commencement of any
Bankruptcy Event or any other event that could lead to a Bankruptcy Event; and
(iii) to take promptly, at its expense, all measures as are required for
preventing, discharging, terminating, removing or achieving a stay of a
Bankruptcy Event. "BANKRUPTCY EVENT" shall mean any of the following events: (1)
application for or consent by Seller to the appointment of any liquidator,
receiver, trustee or administrator for all or a substantial part of its
business, properties, assets or revenues; (2) the appointment of a liquidator,
receiver, trustee or administrator for Seller; (3) any bankruptcy, arrangement,
readjustment of debt, dissolution, liquidation or similar executory or judicial
proceeding instituted by Seller (by petition, application, answer, consent or
otherwise); (4) a bankruptcy, arrangement, readjustment of debt, dissolution,
liquidation or similar executory or judicial proceeding instituted against
Seller; or (5) a creditors' meeting called by Seller for the purpose of entering
into an arrangement with them.
5.19 UPDATING SCHEDULES. Seller shall be entitled to update,
amend or modify the Schedules to this Agreement after the date hereof until the
Closing Date (the "Update Period") to reflect factors, circumstances or events
first arising or, in the case of representations given to Seller's Knowledge,
becoming known to Seller during the Update Period by providing Purchaser with
written notice setting forth the proposed update and specifying the Schedule or
Schedules to be updated thereby; provided, however, such updates, amendments or
modifications shall only modify the Schedules to this Agreement for purposes of
post-Closing indemnification pursuant to Article 11 hereof and shall not modify
the Schedules to this Agreement for purposes of determining whether Purchaser's
obligations to consummate the transactions contemplated hereby are satisfied
pursuant to Section 6.1.
5.20 WISE SOLUTIONS, INC. LAWSUIT. Notwithstanding that the
lawsuit captioned INSTALLATION SOFTWARE TECHNOLOGIES, INC. D/B/A INSTALLSHIELD
SOFTWARE CORPORATION ▇. ▇▇▇▇
41
SOLUTIONS, INC., Civil Action No.: 03 C 4502 is an Excluded Asset hereunder,
Seller covenants that, without the express written consent of Purchaser, it
shall not enter into any voluntary non-judicially imposed settlement in respect
of such lawsuit that would have the effect of granting Wise Solutions, Inc. the
express or implied authority (whether through the express language of the
settlement or the failure to specify a prohibition against such behavior) to
utilize in any manner any of the Purchased Assets hereunder, including any of
the Intellectual Property Assets, nor shall Seller make any representations to
Wise Solutions, Inc. in any such settlement that any such improper use of any of
the Purchased Assets is permitted.
5.21 ▇▇▇▇▇ MATTER. Notwithstanding anything to the contrary
herein, Seller hereby agrees to indemnify, defend and hold Purchaser harmless
from, and to pay on behalf of or reimburse Purchaser as and when incurred, all
Adverse Consequences based upon, arising out of or otherwise in respect of the
enquiry by Inland Revenue into the PAYE and NIC positions of the UK Subsidiary
in connection with the alleged theft of funds from the UK Subsidiary by ▇▇▇▇▇
▇▇▇▇▇ (the "▇▇▇▇▇ MATTER"). Purchaser hereby grants to Seller, and Seller hereby
assumes, at Seller's expense, the right to conduct the defense and/or
prosecution of any and all claims of Seller, the UK Subsidiary and Purchaser
following the Closing in connection with the ▇▇▇▇▇ Matter. Purchaser shall, and
following the Closing shall cause the UK Subsidiary to, consent to any
settlement or the entry of any judgment with respect to the ▇▇▇▇▇ Matter with
Inland Revenue (or any similar entity) or ▇▇▇▇▇ ▇▇▇▇▇ (or his representatives)
that involves only the payment of monies by Seller on behalf of the UK
Subsidiary, or by ▇▇. ▇▇▇▇▇ to the UK Subsidiary only upon the direction of
Seller, which consent shall not be unreasonably withheld or delayed. Purchaser
covenants and agrees to pay to Seller or its assigns the amount of any funds
received by the UK Subsidiary following the Closing Date in connection with the
▇▇▇▇▇ Matter. This provision supersedes the letter agreement regarding the
matters described herein provided by Seller to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
5.22 HELLE MATTER. Notwithstanding anything to the contrary
herein, Seller hereby agrees to indemnify, defend and hold Purchaser harmless
from, and to pay on behalf of or reimburse Purchaser as and when incurred, all
Adverse Consequences based upon, arising out of or otherwise in respect of the
unfair dismissal claim against the UK Subsidiary of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a former
accountant at the UK Subsidiary (the "HELLE MATTER"). Purchaser hereby grants to
Seller, and Seller hereby assumes, at Seller's expense, the right to conduct the
defense and/or prosecution of any and all claims of Seller, the UK Subsidiary
and Purchaser following the Closing in connection with the Helle Matter,
including all appeals relating to such claims, and Purchaser shall, and
following the Closing shall cause the UK Subsidiary to, only upon the direction
of Seller, consent to any settlement or the entry of any judgment with respect
to the Helle Matter with any entity or ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or her representatives)
that involves only the payment of monies by Seller on behalf of the UK
Subsidiary, or by ▇▇. ▇▇▇▇▇ to the UK Subsidiary, which consent shall not be
unreasonably withheld or delayed. Purchaser covenants and agrees to pay to
Seller or its assigns the amount of any funds received by the UK Subsidiary
following the Closing Date in connection with the Helle Matter.
5.23 UK SUBSIDIARY TAX REFUND. From time to time following
the Closing, Purchaser covenants and agrees to pay to Seller (or its assigns in
accordance with Section 12.5) the amount of any refund of Taxes or claim of
refund of Taxes of the UK Subsidiary, and the amount of any deferred Tax assets
of the UK Subsidiary.
42
5.24 UK SUBSIDIARY NET ASSET ADJUSTMENT. Purchaser and Seller
agree that Seller is entitled to be paid an amount equal to the "UK Net Asset
Value", as hereinafter defined, in accordance with the procedures provided in
this Section 5.24.
(a) As close as reasonably practicable and prior to
the Closing Date, (i) Seller shall pay to the UK Subsidiary in cash the amount
required to fully satisfy all intercompany payables owed by Seller to the UK
Subsidiary through the Closing Date net of all intercompany payables due by the
UK Subsidiary to Seller through the Closing Date , which in turn shall be
recorded as satisfied, and (ii) the Board of Directors of the UK Subsidiary
shall declare a dividend (the "Dividend") equal to the Seller's best estimate
(the "Estimate") of UK Net Asset Value, as hereinafter defined (assuming for
such purpose that no Dividend would be paid) provided always that there are
profits available for distribution as defined in section 263 Companies ▇▇▇ ▇▇▇▇.
If there are insufficient profits available for distribution then Seller agrees
that the Board of Directors of the UK Subsidiary shall declare a dividend for
the maximum amount which they can lawfully declare under Part VIII Companies ▇▇▇
▇▇▇▇. The dividend shall be payable to Seller in cash immediately prior to the
Closing Date. The Seller shall prepare the Estimate in good faith and in
consultation with Parent and shall deliver the Estimate to Parent not less than
three business days before the scheduled Closing Date. If the Estimate exceeds
the Dividend , Parent shall pay Seller the difference at the Closing.
(b) If the UK Net Asset Value as finally determined
in accordance with these provisions exceeds the amount reflected in the
Estimate, the Parent shall pay the excess to Seller, and if the UK Net Asset
Value as finally determined is less than the Estimate then the Seller shall pay
the shortfall to Parent. The amount shall be due within two business days after
it has been finally determined.
(c) Within sixty (60) days after the Closing Date
Seller shall deliver to Parent a statement of the UK Subsidiary's Net Asset
Value as of the Closing Date (the "UK Adjustment Notice") with reasonably
detailed support of its calculations. Purchaser shall provide and shall cause
the UK Subsidiary to provide reasonable assistance of its personnel and records
as Seller may reasonably request for the preparation of the statement. If Parent
does not deliver a written notice to Seller within thirty (30) days of receipt
of such statement that it disputes the calculation set forth in the Seller's UK
Adjustment Notice, then the amounts set forth in Seller's UK Adjustment Notice
shall be final and binding upon Purchaser and Seller, and Parent or Seller, as
applicable, shall pay the amount shown to be due within two (2) business days
after expiration of the thirty (30) day period. If Parent delivers a written
notice within such thirty (30) day period that it disputes the Seller's
calculation of Seller's UK Adjustment Notice then Seller and Parent shall use
their reasonable efforts to resolve such dispute with fifteen (15) days
following Parent's notice of dispute. If Parent and Seller reach agreement
during such fifteen (15) day period then the amounts agreed upon between Seller
and Parent shall be paid by Parent or Seller, as applicable, within two (2)
business days of such agreement. If Parent and Seller are unable to reach
agreement during such fifteen (15) day period then they shall submit the matter
for resolution to an Accountant in accordance with the provisions of Section
2.1(a)(iii) modified as necessary to apply to the Seller UK Adjustment Notice as
opposed to the Pre-closing Adjustments and Year-end Bonus Adjustments. Any
amount not paid when due shall bear interest at the rate of 10% per annum from
the date required to be paid.
43
(d) "UK Net Asset Value" means an amount equal to
the UK Subsidiary's cash and accounts receivables (which shall include for
purposes of this calculation, the cash payment made or to be made by Seller to
UK Subsidiary under Section 5.24(a) plus, if the Dividend has been paid, the
amount of the Dividend as if it had not been paid), MINUS accounts payable and
accrued liabilities (including tax liabilities, but excluding the Dividend if
declared, and excluding any deferred revenue), using the accounting policies
adopted by the UK Subsidiary in the preparation of the statutory accounts in
accordance with generally accepted accounting principles in the United Kingdom
in force on the date of this Agreement. The calculation of UK Net Asset Value
will exclude, however, pre-paids, deposits, severance, vacation (holiday) time
and bonuses, (all of which are included in the calculations under Section
2.1(a)(iii)).
(e) Any additional amount payable by Parent to
Seller pursuant to this Section shall be treated as additional consideration for
the stock of the UK Subsidiary.
(f) Purchaser will cause the UK Subsidiary to pay
when due all UK Subsidiary accounts payable and liabilities which are included
in the calculation of UK Net Asset Value, and Seller will have no obligations
under the Agreement regarding such amounts.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to consummate the transactions to be
performed by and in connection with the Closing is subject to satisfaction of
each of the following conditions set forth in this Section 6. Purchaser may
waive any conditions specified in this Section 6 if it executes a writing so
stating at or prior to the Closing.
6.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING
DATE. The representations and warranties of Seller contained in this Agreement,
or in any certificate or agreement delivered by Seller pursuant to this
Agreement, and the statements contained in the Disclosure Schedules, shall have
been true, accurate and correct on and as of the date of this Agreement (other
than those representations and warranties made as of a specified date, which are
true and correct in accordance with their terms as of such date), and shall also
be true, accurate and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date, and except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties shall be true and correct in all material
respects as of such date,
6.2 COMPLIANCE WITH COVENANTS. Seller shall have performed
and complied in all material respects with all of its covenants, obligations and
agreements contained in this Agreement and to be complied with by it on or prior
to the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE. No Material Adverse Effect
with respect to Seller shall have occurred in the Pre-Closing Period.
6.4 THIRD PARTY CONSENTS, ASSIGNMENTS AND NOTICES. Seller
shall have received all assignments and required consents to assignment that are
necessary for the transfer of the Assigned Contracts listed on SCHEDULE 6.4 to
Purchaser, duly executed by the appropriate
44
parties having the authority to assign or consent to assign, in form and
substance as Purchaser shall reasonably request. Seller shall have delivered all
notices required to have been given in connection with the assignment of the
Assigned Contracts listed on SCHEDULE 6.4, and provided copies of all such
notices to Purchaser.
6.5 KEY EMPLOYEES. Purchaser shall have received signed
acceptances of the Key Employee Offer Letters containing the terms and
conditions for such Key Employees set forth on SCHEDULE 5.11(A) from at least
seventy-five percent (75%) of the Key Employees listed on SCHEDULE 5.11(A).
6.6 EMPLOYEES. Purchaser shall have received signed
acceptances of its employment offers from at least 85% of all employees of
Seller to whom Purchaser has made offers on terms and conditions for each
employee at least as favorable as the terms set out in SCHEDULE 5.11(A).
6.7 FOUNDERS' CERTIFICATE. Purchaser shall have received a
certificate, dated as of the Closing Date and signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in substantially the form attached as EXHIBIT E
6.8 FOUNDER'S NON-COMPETITION AGREEMENT. Purchaser shall
have received Non-Competition Agreements in substantially the form attached
hereto as EXHIBIT F signed by each of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
6.9 APPROVALS. All material consents, approvals and filings
required under any applicable law, rule or regulation to be completed or
obtained prior to the transactions contemplated by this Agreement shall have
been so completed or obtained, as the case may be, and delivered to Purchaser.
6.10 RELEASE OF CLAIMS. Seller shall have delivered to
Purchaser evidence of the release of any Liens (other than Permitted Liens) on
the Purchased Assets and delivery of any instruments of transfer (such as bills
of sale or recordable assignments of intellectual property rights) reasonably
necessary or appropriate to convey the assets to Purchaser, including all
products, documents, source code, etc. associated with the Business that are in
existence since the inception of Seller and the UK Subsidiary and that are
Purchased Assets.
6.11 SELLER DOCUMENTS. Seller shall have delivered to
Purchaser certified copies of Seller's Certificate of Incorporation and by-laws.
6.12 HSR WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
6.13 CHANGES TO DISCLOSURE SCHEDULES. In the event that there
are changes to the Disclosure Schedules made by Seller during the Pre-Closing
Period for matters other than those that arise in and are consistent with the
ordinary course of Seller's business, Purchaser shall have approved any such
changes prior to Closing.
6.14 NO LITIGATION, ETC. No litigation shall have been
commenced or threatened, and no investigation by any Government Entities shall
have been commenced against
45
Purchaser, Seller or any affiliates, officers or directors of any of them with
respect to the transactions contemplated hereby.
6.15 INTERIM FINANCIAL REPORTS. To the extent available and
prepared in the ordinary course of Seller's business, Seller shall have
delivered to Purchaser a Seller-prepared report of the financials (including
balance sheet) of Seller for the interim month-end periods from April 1, 2004
through at least May 31, 2004.
6.16 STOCK TRANSFER FORM. Seller shall have delivered to the
Purchaser all documents set out in SCHEDULE 1.5(I) relating to the UK
Subsidiary, including, without limitation, a duly executed stock transfer form
relating to the entire issued share capital of the UK Subsidiary.
7. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to the satisfaction of
each of the following conditions set forth in this Section 7. Seller may waive
any condition specified in this Section 7 if it executes a writing so stating at
or prior to the Closing.
7.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING
DATE. The representations and warranties of Purchaser contained in this
Agreement, and the statements contained in any certificate or agreement
delivered by Purchaser pursuant to this Agreement, shall have been true,
accurate and correct on and as of the date of this Agreement, and shall also be
true, accurate and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date, (except for any changes permitted
by the terms of this Agreement or disclosed in writing to Seller and accepted in
writing by Seller), and except to the extent such representations and warranties
are made as of a specific date, in which case such representations and
warranties shall be true and correct in all material respects as of such date.
7.2 COMPLIANCE WITH COVENANTS. Purchaser shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement and complied with by it
on or prior to the Closing Date.
7.3 PURCHASE PRICE. Purchaser shall have delivered the
Initial Purchase Price to Seller in accordance with the terms of Section 2.1
above.
7.4 NO MATERIAL ADVERSE CHANGE. No Material Adverse Effect
on the financial condition, results of operations, assets or properties of
Purchaser shall have occurred in the Pre-Closing period.
7.5 KEY EMPLOYEES. Purchaser shall have made offers to each
Key Employee on those terms and conditions for each Key Employee set forth on
SCHEDULE 5.11(A) substantially in the form of the Key Employee Offer Letter.
7.6 EMPLOYEES. Purchaser shall have offered employment to
those employees of Seller identified in SCHEDULE 5.11(A), effective as of the
day after the Closing, on the respective
46
terms and conditions for each employee set forth on SCHEDULE 5.11(A), provided,
however, that Purchaser may elect not to offer employment to up to twelve (12)
employees listed on SCHEDULE 5.11(A), excluding the Key Employees, upon mutual
agreement of Seller and Purchaser, with Seller's consent not to be unreasonably
withheld. Notwithstanding the foregoing, the parties may mutually agree to
increase the number of employees who are not offered employment by Purchaser.
7.7 APPROVALS. All material consents, approvals and filings
required under any applicable law, rule or regulation to be completed or
obtained prior to the transactions contemplated by this Agreement shall have
been so completed or obtained, as the case may be, and delivered to Seller.
7.8 PURCHASER DOCUMENTS. Purchaser shall have delivered to
Seller certified copies of Purchaser's Certificate of Incorporation and by-laws.
7.9 HSR WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
7.10 NO LITIGATION, ETC. No litigation shall have been
commenced or threatened, and no investigation by any Government Entities shall
have been commenced against Purchaser, Seller or any affiliates, officers or
directors of any of them with respect to the transactions contemplated hereby.
8. TERMINATION
8.1 TERMINATION OF AGREEMENT. Certain of the parties hereto
may terminate this Agreement as provided below:
(a) Purchaser and Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) Purchaser may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing in the event that (i)
Seller has within the then previous ten (10) days given Purchaser any notice
pursuant to Section 12.4 and (ii) the development that is the subject of the
notice has had a material adverse affect upon the financial condition of the
Business and the Purchased Assets;
(c) Purchaser may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing (i) in the event that
Seller has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, Purchaser has notified Seller of the
breach, and the breach has continued without cure for a period of thirty days
after notice of breach or (ii) if the Closing shall not have occurred on or
before July 30, 2004 by reason of the failure of any condition precedent under
Section 6 hereof (unless the failure results primarily from Purchaser itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(d) Seller may terminate this Agreement by giving
written notice to Purchaser at any time prior to the Closing (i) in the event
Purchaser has breached any material
47
representation, warranty, or covenant contained in this Agreement in any
material respect, Seller has notified Purchaser of the breach, and the breach
has continued without cure for a period of thirty days after notice of breach or
(ii) if the Closing shall not have occurred on or before July 30, 2004 by reason
of a failure of any condition precedent under Section 7 hereof (unless the
failure results primarily from Seller itself breaching any representation,
warranty, or covenant contained in this Agreement).
(e) Either Seller or Purchaser may terminate this
Agreement if the Closing shall not have occurred on or before July 30, 2004,
provided however, the terminating party is not then in breach of a
representation, warranty or covenant, which could prevent the Closing from
occurring on or before such date.
8.2 EFFECT OF TERMINATION. If either Seller or Purchaser
terminates this Agreement pursuant to Section 8.1(a) above, all rights and
obligations of all the parties hereunder shall terminate without liability of
any party to any other party (except for any liability of any party then in
breach). Termination of this Agreement pursuant to this Section 8.1(c), (d) or
(e) shall not in any way terminate, limit or restrict the rights and remedies of
either party hereto against the other party which has violated or breached any
of the representations, warranties, covenants or agreements of this Agreement
prior to termination hereof.
9. COVENANTS FOLLOWING CLOSING
9.1 SELLER'S EMPLOYEES. Except as otherwise provided in this
Agreement, and subject in all cases to Section 5.11(d), Seller agrees that
Seller shall bear sole responsibility for all amounts due and payable or
otherwise arising with respect to Seller's employees, consultants and agents, at
and prior to the Closing Date, including but not limited to, all salaries,
wages, commissions, profit and revenue sharing, and holiday, vacation and
severance pay, bonuses, past service credits and contributions to the UK
Subsidiary Scheme and premiums of the life assurance arrangement for ▇▇▇▇▇▇▇
▇▇▇▇▇, and shall make and remit, for all periods through and including the
Closing Date, all payroll deductions, remittances and contributions, including,
but not limited to, employees' salaries and wages, commissions, bonuses and
profit-sharing required under contract, any collective bargaining agreements or
applicable laws and regulations.
9.2 POST-CLOSING COOPERATION. Seller agrees that, if
reasonably requested by Purchaser, it will reasonably cooperate with Purchaser,
at Purchaser's expense, in enforcing the terms of any agreements between Seller
and any third party involving the Purchased Assets or Business, including
without limitation, terms relating to confidentiality and the protection of
intellectual property rights.
9.3 POST-CLOSING ACCESS TO INFORMATION AND PERSONNEL. If,
after the Closing Date, in order properly to operate the Business or prepare
documents or reports required to be filed with governmental authorities or
Purchaser's financial statements it is necessary that Purchaser obtain
additional information within Seller's possession relating to the Purchased
Assets or the Business, upon reasonable notice, Seller will make such
information available to Purchaser. Such information shall include, without
limitation, all agreements between Seller and any person relating to the
Business. Following the Closing Date, in order to assist and facilitate the
collection of Seller's accounts receivable and the payment of Seller's
Liabilities, the
48
preparation of Seller's Tax returns and other reports, any litigation involving
Seller, the winding up and concluding of Seller's operations and the liquidation
of Seller and related matters, Purchaser, upon reasonable notice, shall, at no
expense to Seller, (a) provide Seller access to any documents or reports
relating to the operation of the Business prior to the Closing Date, (b)
maintain in existence any of such information which relates to Seller's Taxes or
Tax returns for a period of time not less than the applicable statue of
limitations period, and (c) allow certain of Purchaser's employees who were
previously Seller employees, during normal business hours, to use commercially
reasonable efforts to assist Seller in such matters; provided, however, that
Purchaser shall not be required to permit such assistance by Purchaser employees
which would result in a dereliction of such employee's duties to Purchaser in
the normal course of business.
9.4 UK TAX RETURNS. Subject to Purchaser's obligations under
Section 9.3, and with Purchaser's cooperation as reasonably required, Seller
shall file with Inland Revenue a stub period tax return for the period January
1, 2004 to date of Closing.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.1 SURVIVAL. All covenants to be performed prior to the
Closing Date and all representations and warranties in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereby and continue until one (1)
year from the Closing Date (except to the extent that they relate to any
Liabilities (other than Assumed Liabilities) of the UK Subsidiary in which case
it shall survive until two (2) years from the Closing Date) (the "REPRESENTATION
TERMINATION DATE"); provided that if any claims for indemnification have been
asserted with respect to any such representations, warranties and covenants
prior to the Representation Termination Date, the representations, warranties
and covenants on which any such claims are based shall continue in effect until
final resolution of any claims. All covenants to be performed after the Closing
Date shall continue until satisfied or performed.
11. INDEMNIFICATION
11.1 INDEMNIFICATION. Seller hereby agrees to indemnify,
defend and hold Purchaser, or as the case may be the UK Subsidiary, harmless
from, and to pay on behalf of or reimburse Purchaser as and when incurred for,
all actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, Orders, decrees, rulings, damages,
dues, penalties, fines, costs, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonably attorneys' fees and
expenses (collectively "ADVERSE CONSEQUENCES") based upon, arising out of or
otherwise in respect of (A) any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement, or in any certificate, document or instrument delivered pursuant
thereto; (B) any claim by any third party against or affecting Purchaser, which
alleges the existence of or relates to a misrepresentation or breach of any of
the representations and warranties of Seller contained in the Agreement, or in
any certificate, document or instrument delivered pursuant thereto; (C) any
claim other than any Assumed Liability arising out of or made in connection with
the conduct of the Business prior to the Closing Date (including, without
limitation, a claim in respect of any of those Excluded Liabilities described in
Section 1.3(c) hereof); (D) any claim arising out of or related to Liabilities
of Seller which is not
49
an Assumed Liability (including, without limitation, those Excluded Liabilities
described in Section 1.3(c) hereof), or (E) any claim made by any third party
within twelve (12) months of Closing arising out of or related to the alleged
infringement of the intellectual property rights of such third party by any of
the Intellectual Property Assets.
The amount of any UK Tax Liability for which Seller shall be
liable to indemnify Purchaser or the UK Subsidiary under Section 11 shall be as
follows:
(i) in the case of an A Liability the amount
of the tax liability; and
(ii) in the case of a B Liability the amount
of tax saves as a consequence of the application of the Relief.
If Seller is obligated to Purchaser or the UK Subsidiary with
respect to any such claim set forth in this Section 11.1, Purchaser or the UK
Subsidiary shall seek payment of the Adverse Consequences with respect to such
claim from the Indemnification Escrow Amount pursuant to the terms of the Escrow
Agreement, which shall be the sole and exclusive remedy of Purchaser or the UK
Subsidiary in connection with the payment of Adverse Consequences with respect
to any such claim.
To the extent that Seller is obligated to Purchaser with respect
to any Liabilities related to the UK Subsidiary, the indemnification obligations
of Seller will continue for a period of two (2) years following the Closing
Date; provided, however that the amount to be held in the Indemnification Escrow
Amount after the one-year anniversary of the Closing Date and until the two-year
anniversary of the Closing Date shall be limited to $750,000 pursuant to the
terms of the Escrow Agreement.
Purchaser agrees to indemnify, defend and hold Seller and its
assigns harmless from, and to pay on behalf of or reimburse Seller as and when
incurred for, any and all Adverse Consequences based upon, arising out of or
otherwise in respect of (A) any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Purchaser contained in this
Agreement, or in any certificate, document or instrument delivered pursuant
thereto; (B) any claim by any third party against or affecting Seller, which
alleges the existence of or relates to a misrepresentation or breach of any of
the representations and warranties of Purchaser contained in this Agreement; (C)
any claim arising out of or made in connection with (i) the Purchased Assets
other than an Excluded Liability, or (ii) the conduct of the Business after the
Closing Date; or (D) any claim arising out of or related to Liabilities
expressly assumed by Purchaser (including, but not limited to, the Assumed
Liabilities).
All claims under this Section 11 are subject to the arbitration
provisions of Section 12.12.
11.2 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
to the contrary in Section 11.1, Seller shall not have any obligation to
indemnify Purchaser from and against any Adverse Consequences based upon,
arising out of or otherwise in respect of (i) the breach of any representation
or warranty of Seller contained in the Agreement or in any certificate,
instrument or document delivered pursuant hereto, or (ii) any claim brought by
any third party arising out of
50
or related to the alleged infringement of the intellectual property rights of
such third party by any of the Intellectual Property Assets: (A) if Purchaser
has suffered Adverse Consequences in respect of any such individual breach or
claim in an amount less than Six Thousand Dollars ($6,000), below which amount
of Adverse Consequences with respect to any such individual breach Seller will
have no obligation to indemnify Purchaser; (B) until Purchaser has suffered
Adverse Consequences in respect of all such breaches or claims in excess of a
Five Hundred Thousand Dollars ($500,000) aggregate deductible, above which
amount of Adverse Consequences Seller will be obligated to indemnify Purchaser,
or its assigns, from and against further such Adverse Consequences in excess of
such deductible amount; and (C) to the extent the Adverse Consequences Purchaser
has suffered in respect of all such breaches exceeds an aggregate ceiling equal
to the Indemnification Escrow Amount, above which amount of Adverse Consequences
Seller will have no obligation to indemnify Purchaser from and against further
Adverse Consequences. However, any Adverse Consequences arising with respect to
the UK Subsidiary are subject to clauses (A), (B) and (C) above.
Notwithstanding anything to the contrary in Section 11.1,
Purchaser shall not have any obligation to indemnify Seller from and against any
Adverse Consequences caused by the breach of any representation or warranty of
Purchaser contained in the Agreement: (A) until Seller has suffered Adverse
Consequences by reason of all such breaches in excess of a Five Hundred Thousand
Dollars ($500,000) aggregate deductible, above which amount of Adverse
Consequences Purchaser will be obligated to indemnify Seller, or its assigns,
from and against further such Adverse Consequences in excess of such deductible
amount; and (B) to the extent the Adverse Consequences Seller has suffered by
reason of all such breaches exceeds an aggregate ceiling equal to the
Indemnification Escrow Amount, above which amount of Adverse Consequences
Purchaser will have no obligation to indemnify Seller from and against further
Adverse Consequences.
Notwithstanding anything to the contrary in Section 11.1, Seller
shall not have any obligation to indemnify Purchaser or the UK Subsidiary from
and against any Adverse Consequences based upon any Liability to the extent that
it was reflected or provision, reserve or allowance has been made for that
Liability, in the calculation of the UK Net Asset Value.
11.3 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any party hereto
(the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against the other Party (the
"INDEMNIFYING PARTY") under this Section 11, then the Indemnified Party shall
promptly (and in any event within 15 business days after receiving notice of the
Third Party Claim) provide notice thereof in writing to the Indemnifying Party,
which notice shall describe in reasonable detail the nature of the Third Party
Claim, the estimated amount of Adverse Consequences attributable to such claim
to the extent feasible and the basis for the Indemnified Party's request for
indemnification under this Agreement, and include a copy of any letter,
complaint or similar writing received by the Indemnified Party.
(b) Any Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the Third Party Claim
with counsel of his or its choice reasonably satisfactory to the Indemnified
Party; provided, however that the Indemnifying Party
51
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified Party.
(c) Unless and until an Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 11.3(b) above,
however, the Indemnified Party may defend against the Third Party Claim in any
manner it reasonably may deem appropriate.
(d) In no event will the Indemnified Party consent
to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of each of the Indemnifying
Parties (not to be withheld unreasonably).
(e) The Parties shall make appropriate adjustments
(i.e. reductions) for tax benefits and insurance coverage in determining Adverse
Consequences for purposes of this Section 11. All indemnification payments
received under this Section 11 shall be deemed adjustments to the Purchase
Price. In the event that Seller is required to indemnify the UK Subsidiary
pursuant to this Agreement, Seller shall pay such funds directly to Purchaser in
satisfaction of such obligation.
11.4 PROCEDURE FOR INDEMNIFICATION. The Indemnifying Party
shall promptly pay the Indemnified Party any amount due under this Article 11.
Any amounts payable by the Seller under this Article 11 shall first be satisfied
from the Indemnification Escrow Amount. Subject to the limitations of this
Article 11, upon judgment, determination, settlement or compromise of any Third
Party Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Adverse
Consequences of the Indemnified Party with respect thereto, unless in the case
of a judgment an appeal is made from the judgment. If the Indemnifying Party
desires to appeal from an adverse judgment, then the Indemnifying Party shall
post and pay the cost of the security or bond to stay execution of the judgment
pending appeal. Upon the payment in full by the Indemnifying Party of such
amounts, the Indemnifying Party shall succeed to the rights of such Indemnified
Party, to the extent not waived in settlement, against the third party who made
such Third Party Claim.
11.5 NON-THIRD PARTY CLAIMS. In the event an Indemnified
Party should have a claim against an Indemnifying Party hereunder which does not
involve a Third Party Claim (a "DIRECT CLAIM"), the Indemnified Party shall
transmit to the Indemnifying Party a written notice describing in reasonable
detail the nature of the Direct Claim, an estimate of the amount of damages
attributable to such Direct Claim and the basis of the Indemnified Party's
request for indemnification under this Agreement.
11.6 EXCLUSIVE REMEDY. Other than with respect to fraud, the
indemnification provisions and procedures contained in this Article 11 shall
constitute the sole and exclusive recourse and remedy of the parties with
respect to any Adverse Consequences resulting from, arising out of or in
connection with any matters subject to indemnification under this Article 11.
Accordingly, other than with respect to claims alleging fraud, no claim for any
Adverse
52
Consequences arising under this Agreement shall be made by Purchaser or Seller
or their respective assigns except pursuant to the provisions of this Article
11, including, without limitation, Section 11.2 to the extent applicable.
11.7 NO WAIVER. The closing of the transactions contemplated
by this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder.
11.8 NO MULTIPLE RECOVERIES. Matters which are indemnifiable
hereunder both due to a breach of a representation or warranty and otherwise as
provided herein shall not give rise to separate recovery by the Indemnified
Party.
11.9 INDEMNIFICATION REPRESENTATIVE. Seller has designated
▇▇▇▇▇▇ ▇▇▇▇▇▇ as its initial representative with respect to the indemnification
matters set forth in this Article 11 (the "INDEMNIFICATION REPRESENTATIVE"), and
for all purposes with respect thereto such Indemnification Representative shall
serve as the agent and attorney-in-fact of Seller, shall be deemed to be Seller
and will be entitled to exercise the rights conferred upon Seller. The
Indemnification Representative's actions pursuant to and in accordance with this
Section 11.8 shall be binding on Seller. Seller will notify Purchaser of any
successor to the initial Indemnification Representative. Any assignee of all or
any portion of Seller's rights in and to the Escrow Amount pursuant to Section
12.5 shall be entitled to exercise the rights conferred upon Seller pursuant to
and in accordance with this Section 11 with respect to the rights and property
subject to such assignment.
12. MISCELLANEOUS
12.1 FEES AND EXPENSES. Each of the parties hereto shall bear
only its own fees and expenses, including fees and expenses of counsel and
accountants, incurred in connection with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby and thereby or
otherwise arising out of, or by reason of, this Agreement, whether or not the
acquisition is consummated.
12.2 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement and the agreements contemplated hereby (including the exhibits and
schedules hereto and thereto) constitute the entire agreement between the
parties hereto and thereto with respect to the subject matter hereof and thereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto. The parties hereto acknowledge and agree that no third party
(including any employee of Seller) is intended to be a third-party beneficiary
of this Agreement or any agreements contemplated hereby.
12.3 AMENDMENTS AND MODIFICATIONS. No amendment, modification
or rescission of this Agreement shall be effective unless set forth in writing
executed by the party sought to be bound thereby.
12.4 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (a) as of the date delivered if delivered personally or by a
nationally recognized overnight courier service, (b) on the third business day
after deposit in the U.S. mail, if mailed by registered or certified mail
53
(postage prepaid, return receipt requested), or (c) on the date confirmation of
receipt (or, the first business day following such receipt if the date is not a
business day) of transmission by facsimile (with a confirming copy of such
communication to be sent as provided in clauses (a) or (b) above), and, in each
case to the parties at the following addresses or facsimile number (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
(1) If to Purchaser:
Macrovision Corporation
▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a courtesy copy by email to ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(2) If to Seller:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a courtesy copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished in writing to the other
party in the manner provided above.
12.5 ASSIGNMENT. Prior to the Closing Date, no party may
assign this Agreement, or any of its rights hereunder, in any manner without the
prior written consent of the other parties. Any proposed assignment in violation
of this Section 12.5 shall be void. Simultaneously with or following the
Closing, Seller may assign, upon written notice to Purchaser, any of its
post-Closing rights under this Agreement, to a liquidating trust and/or to the
holders or former holders of its debt in connection with the winding up of the
operations and business of Seller and the discharge of its liabilities. Subject
to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective transferees, heirs,
successors, assigns and legal representatives.
12.6 DISCLOSURE SCHEDULES AND EXHIBITS. All Schedules and
Exhibits referred to in this Agreement are by this reference incorporated herein
as an integral part hereof.
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12.7 GOVERNING LAW. This Agreement and the respective rights
and obligations of the parties hereto and thereto shall be construed under and
by the laws of the State of Delaware, without reference to conflicts of laws
principles.
12.8 CAPTIONS. The title to the sections and subsections of
this Agreement are included herein solely for convenience, are not a part of
this Agreement and do not in any way limit or amplify the terms of this
Agreement. The use of one gender shall be deemed to imply the other gender where
appropriate and the use of the singular shall be deemed to imply the plural
where appropriate.
12.9 ATTORNEYS' FEES. If any legal action or proceeding is
brought to enforce or interpret this Agreement or any agreement contemplated
hereby, or because of an alleged dispute, breach, default or misrepresentation
in connection with this Agreement, subject to the limitations set forth in
Article 11, the prevailing party shall be entitled to reasonable attorneys' fees
and costs in connection with such action or proceeding in addition to all other
relief to which such party may be entitled.
12.10 NO WAIVER. It is understood and agreed that no failure
or delay by any party in exercising any right, power, or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege be deemed to operate as a waiver of any other
right, power or privilege hereunder or the subsequent invocation of such right,
power or privilege.
12.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement. This Agreement, and each other
agreement or instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to the
extent signed and delivered by means of a facsimile machine, shall be treated in
all manner and respects and for all purposes as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall re-execute original forms thereof and deliver them to
all other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation or enforceability of
this Agreement or any such agreement or instrument, and each such party forever
waives any such defense.
12.12 ARBITRATION. The following arbitration provisions shall
apply to any claim brought by or on behalf of Seller (or its assigns in
accordance with Section 12.5) or by Purchaser (or its assigns) relating to this
Agreement:
(a) CLAIMS REQUIRED TO BE ARBITRATED. To the maximum
extent permitted by law, Purchaser and Seller mutually consent to the resolution
by arbitration of all claims or causes of action that Purchaser may have against
Seller or that Seller may have against Purchaser or against its officers,
directors, employees, or agents in the capacity as such arising
55
out of this Agreement or the breach or interpretation thereof so long as there
is no dispute that the matters are subject to and not outside of the exclusive
limitation of Section 11 (collectively "CLAIMS"). The Claims covered by this
Agreement include, but are not limited to, claims for breach of any contract or
covenant (express or implied); tort Claims; and claims for violation of any
federal, state, or other governmental law, statute, regulation or ordinance. In
no event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such claim, dispute or
other matter in question would be barred by the applicable statute of
limitations.
(b) CLAIMS NOT REQUIRED TO BE ARBITRATED. Claims by
either party for injunctive and/or other equitable relief, or to set aside the
exclusive limitations of Section 11, are not required to be arbitrated, and the
parties understand and agree that either party may seek and obtain relief from a
court of competent jurisdiction.
(c) REQUIRED NOTICE OF ALL CLAIMS. Purchaser and
Seller agree that the aggrieved party must give written notice of any claim to
the other party, in the manner provided in Section 12.4 of this Agreement. The
written notice shall identify and describe the nature of all Claims asserted and
detail the facts upon which such Claims are based.
(d) ARBITRATION PROCEDURES. Purchaser and Seller
agree that, except as otherwise provided in this Agreement, any arbitration
shall be administered by
(i) in the case of a claim made by Seller
against Purchaser, the Center for Public Resources Institute for Dispute
Resolutions (hereinafter in the "Seller ARBITRATION SERVICE") in accordance with
its then prevailing Rules for Non-Administered Arbitration of Business Disputes
(except as otherwise provided herein), such action to be commenced and heard in
Santa ▇▇▇▇▇ County, California; and
(ii) in the case of a claim made by Purchaser
against Seller, the Judicial Arbitration and Mediation Services, Inc. ("JAMS")
which is headquartered in Santa ▇▇▇▇▇ County, California under the auspices and
rules of JAMS, such action to be commenced and heard in ▇▇▇▇ County, Illinois.
The arbitrator shall be selected by the mutual agreement of the parties. If the
parties cannot agree on a neutral arbitrator, Seller first, and then Purchaser,
will alternately strike names from a list provided by the Seller Arbitration
Service or JAMS, as applicable, until only one name remains. The arbitrator
shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including but not limited to any claim that all or any part of this Agreement is
void or voidable. The arbitrator shall apply the applicable statute of
limitations to any claim, taking into account compliance with the notice
provision set forth in subsection (c) above. The arbitrator shall issue a
written opinion and award, which shall be signed and dated (the "ARBITRATOR
DECISION"). The arbitrator shall be permitted to award those remedies that are
available under applicable law. The Arbitrator Decision regarding the Claims
shall be final and binding upon the parties. The arbitrator's award shall be
enforceable in any court having jurisdiction thereof. Notwithstanding anything
to the contrary in the Seller Arbitration Services or JAMS rules and procedures,
the arbitration shall provide for (i) written discovery and depositions adequate
to give the parties access to documents
56
and witnesses that are essential to the dispute and (ii) a written decision by
the arbitrator that includes the essential findings and conclusions upon which
the decision is based.
(e) ACKNOWLEDGMENT OF COURT OR JURY TRIAL WAIVER.
Purchaser and Seller understand that, by this Agreement, they are waiving their
right to have a claim adjudicated by a court or jury. Any party may be
represented by an attorney or other representative selected by the party. Any
award rendered by the arbitrator shall be final and binding upon the parties,
and as applicable, their respective heirs, beneficiaries, legal representatives,
agents, successors and assigns, and may be entered in any court having
jurisdiction thereof.
(f) ARBITRATION FEES AND COSTS; ATTORNEYS' FEES.
Each party to the arbitration shall be required to advance its share of the fees
and costs of the arbitrator, as determined under the rules of the Seller
Arbitration Service or JAMS, as applicable. However, to the extent permissible
under the law, and following the arbitrator's ruling on the matter, the
arbitrator may rule that the arbitrator's fees and costs be distributed in an
alternative manner. The arbitrator's award in any arbitration brought pursuant
to the provisions of this Agreement shall provide for the prevailing party to
recover from the other party the prevailing party's reasonable attorneys' fees
relating to such action.
(g) REQUIREMENTS FOR MODIFICATION OR REVOCATION.
This agreement to arbitrate shall survive the Closing Date. It can only be
revoked or modified by a writing signed by the parties that specifically states
an intent to revoke or modify this Agreement.
(h) CONSIDERATION. Purchaser and Seller understand
that the covenants of the respective parties set forth in this Agreement are
consideration for these arbitration provisions. In addition, the promises by
Purchaser and Seller to arbitrate Claims, rather than litigate them before
courts or other bodies, provide consideration for each other.
(i) VIOLATION OF THIS AGREEMENT. Should any party to
this Agreement hereafter institute any legal action or administrative proceeding
against the other with respect to any claim required to be arbitrated under this
Agreement or pursue any arbitrable dispute by any method other than arbitration,
the responding party shall recover from the initiating party all damages, costs,
expenses and attorneys' fees incurred as a result of such action.
12.13 FURTHER ASSURANCE. From time to time before, during and
after the Closing, at a party's request and without further consideration,
Seller or Purchaser, as the case may be, will execute and deliver to the other
party such documents, instruments and consents and take such other action as the
other party may reasonably request in order to more fully and effectively
consummate the transactions contemplated hereby. From time to time after the
Closing, Purchaser will cooperate at Seller's expense to give Seller the
possession or benefits of the Excluded Assets which may come into Purchaser's
possession.
12.14 SEVERABILITY. In the event any provision of this
Agreement is held to be invalid, illegal or unenforceable for any reason or in
any respect, such invalidity, illegality or unenforceability shall in no event
affect, prejudice or disturb the validity of the remainder of this
57
Agreement, which shall be and remain in full force and effect, enforceable in
accordance with its terms.
12.15 FORCE MAJEURE. Each party shall be excused from any
breach or default with respect to this Agreement to the extent that the party
was prevented from performance by reason of anything beyond the party's control
and not reasonably avoidable such as a strike or other labor disturbance, act of
any governmental authority or agency, fire, flood, terrorism, wind storm, or any
act of God, or the act or omission of any person or entity not controlled by
that party ("FORCE MAJEURE"). No party shall be liable to the other party for
any delay in or failure of performance under this Agreement due to a Force
Majeure. Any such delay or failure shall extend the period of performance to
such extent as is reasonably necessary to enable complete performance by a party
if reasonable diligence is exercised after the causes or delay or failure have
been removed.
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IN WITNESS WHEREOF, the undersigned Purchaser and Seller have duly
executed this Agreement as of the date first set forth above.
PURCHASER:
Macrovision Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. Krepick
-----------------------------------------
President and CEO
Macrovision Europe Limited
By: /s/ ▇▇▇▇▇▇▇ ▇. Krepick
-----------------------------------------
Director
Macrovision International Holdings LP
By: /s/ ▇▇▇▇▇▇▇ ▇. Krepick
-----------------------------------------
on behalf of its Limited Partner,
Macrovision Corporation
SELLER:
InstallShield Software Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
President
