EXHIBIT 2.2
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STOCK PURCHASE AGREEMENT
AGREEMENT dated as of August 11, 2004 among the stockholder of
Mergence Technologies Corporation (the "Company") set forth on the signature
pages hereto ("Seller") and Datawatch Corporation, a Delaware corporation
("Buyer").
R E C I T A L S:
WHEREAS, Buyer desires to purchase all of the outstanding capital
stock of the company (the "Shares") (the aggregate number of which Shares,
including certain Shares (the "Employee Shares") to be issued to certain
employees immediately prior to the closing of the purchase, is 168,940 shares of
Common Stock), for an aggregate purchase price of (a) $2,500,000 and (b) the
Earnout Payments as provided on Schedule 1.03 hereto;
WHEREAS; Buyer is entering into stock purchase agreements with each
of the stockholders of the Company (the "Sellers");
WHEREAS, Buyer desires to purchase from Seller all of the Shares
owned by the Seller; and
WHEREAS, the Seller desires to sell to Buyer all of the Shares owned
by the Seller;
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE AND SALE.
1.01. PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement, the Seller shall sell to Buyer, and Buyer shall
purchase from Seller, at the Closing, that number of Shares as is set forth
opposite the Seller's name on Schedule 1.01. The purchase price for all of the
Seller's Shares (the "Purchase Price") is (a) the amount of cash set forth in
Schedule 1.01 and (b) the Earnout Payments as defined in Section 1.03. The
Purchase Price shall be paid as provided in Sections 1.02 and 1.03.
1.02. CLOSING. The closing (the "Closing") of the purchase and sale
of the Shares hereunder shall take place at the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP in Boston, Massachusetts on August 11, 2004, or, if later, upon
the closing of the purchase of all other Shares. At the Closing:
(a) Buyer shall pay to the Seller the cash purchase
price for the Seller's Shares (less any applicable withholding) by
check payable to the Seller.
(b) Seller shall deliver to Buyer certificates for the
Shares duly endorsed or accompanied by stock powers duly endorsed in
blank, with any required transfer stamps affixed thereto.
1.03. EARNOUT PAYMENTS. Buyer shall pay to Seller Earnout Payments
in accordance with the provisions of Schedule 1.03. For purposes of such
payments, Seller's Seller Proportion is as set forth on Schedule 1.01.
2. REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS.
The Seller represents and warrants to, and agrees with, Buyer as
follows:
2.01. TITLE TO AND VALIDITY OF SHARES. The Seller now has, and on
the Closing Date will have, good and marketable title to and unrestricted power
to vote and sell the Shares designated as owned by the Seller opposite Seller's
name on Schedule 1.01 (including, if any, the Employee Shares), free and clear
of any Lien and, upon purchase and payment therefor and delivery to Buyer
thereof in accordance with the terms of this Agreement, Buyer will obtain good
and marketable title to such Shares free and clear of any Lien. All Shares to be
sold by the Seller are registered in the name of such Seller. Seller has no
claim against the Company or its subsidiary for any additional shares of capital
stock or other compensation other than wages for the most recent pay period.
2.02. AUTHORITY. The Seller has the legal power, right and authority
to enter into and perform this Agreement, and to perform each of his obligations
hereunder.
3. CONDITIONS TO CLOSING.
3.01. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) Seller shall have delivered to Buyer certificates for the Shares
duly endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.
(b) The closing of the purchase of Shares from all other
shareholders of the Company shall be occurring simultaneously with the Closing.
3.02. CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) Buyer shall have paid to the Seller the cash purchase price
(less any applicable withholding) by check payable in the name of the Seller.
4. TERMINATION.
4.01. GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing by Buyer if the Closing shall not have been
consummated on or before August 31, 2004.
4.02. EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 4.01, such termination shall be without liability of either
party (or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement.
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5. MISCELLANEOUS.
5.01. NOTICES. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed to have been duly given: (i)
on the date of delivery, if personally delivered by hand, (ii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iii) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
if to Buyer, to: with a copy to:
President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Datawatch Corporation ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Seller:
at his or her address shown in
Schedule 1.01
Such information may be changed, from time to time, by means of a
notice given in the manner provided in this Section 5.01.
5.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement
may be amended prior to the Closing if, and only if, such amendment is in
writing and signed by Buyer and the Seller. Any provision of this Agreement may
be waived if the waiver is in writing and signed by the party to be bound by the
waiver.
(b) No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
5.03. EXPENSES. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
5.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.05. FURTHER ASSURANCES. From time to time after the Closing, at
the request of Buyer and without further consideration, Seller will execute and
deliver to Buyer such other documents, and take such other action, as Buyer may
reasonably request in order to consummate more
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effectively the transactions contemplated hereby and to vest in Buyer good,
valid and marketable title to the Shares.
5.06. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware, without regard to the
conflicts of law rules of such state.
5.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
5.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. None of
the provisions of this Agreement is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
5.09. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
5.10. JURISDICTION. Any dispute, controversy or claim arising out
of, in connection with, or in relation to this Agreement or any breach thereof
shall be finally settled by arbitration, pursuant to the rules then obtaining of
the American Arbitration Association. The arbitration shall be held in
Wilmington, Delaware. Any award shall be final, binding and conclusive upon the
parties and a judgment upon the award rendered thereon may be entered in any
court having jurisdiction thereof. In any such arbitration action, the party
which is determined in the arbitration proceeding to be the breaching party
under the Agreement shall pay for and bear the cost of all parties' experts,
evidence and counsel; provided, however, that if both parties are determined in
the arbitration proceeding to be breaching parties, the arbitrator shall assign
the responsibility for the payment of such costs based upon the relative nature
and extent of the breach by each such party.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
DATAWATCH CORPORATION
By:
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Title: President and CEO
SELLER:
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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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SCHEDULE 1.01
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PURCHASED SHARES AND CASH PURCHASE PRICE
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SHARES OWNED BY SELLER
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OUTSTANDING TOTAL
----------- # OF SHARES SOLD BY
NAME AND ADDRESS OF SELLER SHARES EMPLOYEE SHARES SELLER CASH PURCHASE PRICE SELLER PROPORTION
-------------------------- ------ --------------- ------ ------------------- -----------------
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SCHEDULE 1.03
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2.03. EARNOUT PAYMENTS.
(a) For each quarter during the six year period ending
September 30, 2010, (the "Earnout Period"), Buyer shall pay to the
Sellers, in accordance with this Section 2.03, an amount (each an
"Earnout Payment" and together the "Earnout Payments") calculated by
multiplying the Total Researcher Revenues for such period by 10%.
The portion of each Earnout Payment to be allocated to each Seller
is based on the proportion that the cash purchase price that such
Seller was entitled to receive at Closing bears to the total cash
purchase price that all Sellers were entitled to receive at the
Closing (the "Seller Proportion"). Notwithstanding anything herein
to the contrary, Earnout Payments with respect to the four quarters
ending September 30, 2005 ("First Year Earnout Payments") shall not
be paid until the date on which the Earnout Payment for the quarter
ending September 30, 2005 is due ("First Year Earnout Due Date").
(b) "Total Researcher Revenues" shall mean the total net
revenues of the Company and Buyer for the applicable quarter or
other period during the Earnout Period, determined in accordance
with generally accepted accounting principles and as provided
herein, from the sale or license, including subscriptions, of the
Researcher Product.
"Researcher Product" means the software product
developed by the Company known as Researcher, and related Company
Intellectual Property including, without limitation, the applicable
patents ("Researcher Intellectual Property"), as currently
constituted, and as the product may be modified, and any derivative
or other product developed which utilizes or relies on the
Researcher Intellectual Property. "Net Revenues" shall be calculated
in accordance with generally accepted accounting principles as gross
revenues less returns and bad debts. To the extent the Researcher
Product is sold or licensed as part of another product or product
suite of buyer, the net revenues for the Research Product will be
calculated by comparing the total price for the products sold or
licensed with the sum of the buyers listed retail price for the
products sold or licensed, and applying any discount to the listed
retail price for Research Products sold or licensed.
(c) The right to receive the Earnout Payments is a
contract right only and no certificate evidencing such right shall
be issued. The right to receive the Earnout Payments shall not be
transferred or assigned, except (a) by will or the laws of descent
and distribution, or (b) to a spouse or child of a Seller, or a
trust of which a Seller or his or her spouse or child is the
beneficiary or (c) to a Person which is not a competitor or an
affiliate of a competitor of the Buyer; provided, however, that the
transferring Seller notifies Buyer of such distribution in writing,
provides Buyer with the transferee's name and address and the exact
rights transferred and such transferee agrees in writing (in form
and substance satisfactory to Buyer) to be bound by the terms and
conditions of this Agreement.
(d) Not later than 30 days after the end of each fiscal
quarter in the Earnout Period (other than a fiscal quarter which is
the end of the Buyer's fiscal year), Buyer shall prepare a written
calculation of the Earnout Payment based on Buyer's unaudited
consolidated financial statements for such period and shall deliver
to each of the Sellers copies of such calculation and such unaudited
financials together with payment of the full amount of the Earnout
Payment (less any applicable withholding) for such period (except as
provided in Section 2.03(a)).
(e) Not later than 45 days after the end of each fiscal
year of Buyer in the Earnout Period, Buyer shall prepare a
preliminary written calculation of the Earnout Payment for the
preceding fourth quarter and shall deliver to each of the Sellers a
copy of such preliminary calculation. Within seven days of the
release of Buyer's audited financial statement for each such fiscal
year, Buyer shall prepare a final written calculation of the Earnout
Payment (less any applicable holding) for such fourth quarter based
on such financial results (reflecting any changes from the
preliminary calculation and corrections, if any, for prior quarters
resulting from the audit of Buyer's financial statements) and shall
deliver to each of the Sellers a copy of such calculation with
payment of the full amount of the Earnout Payment for such period
adjusted for any such corrections.
(f) Sellers will have twenty (20) days from receipt of
each of the calculations in Sections 2.03(d) and 2.03(e) to contest
in writing to Buyer (the "Objection Notice"), which notice must be
signed by Sellers who were the holders of at least 25% of the
Shares, a calculation of an Earnout Payment that they believe in
good faith to be inaccurate. If Sellers issue an Objection Notice,
Buyer shall provide Sellers with reasonable access to the supporting
information for such calculations. Buyer and Sellers shall use their
best efforts to reach agreement on the disputed amount. If Buyer and
Sellers are unable to reach such agreement within twenty (20) days
of receipt of the Objection Notice by Buyer, the parties agree to
cause independent accountants of recognized standing reasonably
satisfactory to Sellers and Buyer (who shall not have a material
relationship with Buyer, the Company or any Seller) (the "Accounting
Referee") promptly to review this Agreement and the disputed
amounts. The Accounting Referee shall deliver to Sellers and Buyer,
as promptly as practicable, a reporting setting forth the
calculation of the disputed amount. The report of the Accounting
Referee shall be final and binding upon the parties hereto. The cost
of each such review and report shall be borne by Sellers; provided
however, that Buyer shall bear all the expenses associated with any
such review if the applicable Earnout Payment exceeds Buyer's
original calculation of such amount by more than five percent (5%)
of such original calculation. Each of the Sellers agrees to keep any
information provided pursuant to this Section 2.03 confidential;
provided; however; that nothing in this sentence shall prevent
Sellers from using such information to exercise their right to
dispute the calculation as set forth above or to file any required
tax returns.
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(g) In the event of any dispute regarding the
calculation of the Earnout Payments or the enforcement of the
provisions of this Section 2.03, the prevailing party shall be
entitled to payment of its reasonable attorneys fees and expenses by
the other party. In any such dispute the Sellers, in the aggregate,
shall not be entitled to receive fees of more than one such counsel.
(h) In the event Buyer ceases competing, directly or
indirectly, in the Business Intelligence, Content or Document
Management markets (collectively, the "BI Markets"), Buyer will be
subject to payment to the Sellers of a minimum Earnout Payment of
$1,000,000, calculated and paid as provided in this Section 6.02A.
Effective upon the date on which Buyer ceases competing in the BI
Markets, Buyer will pay as Earnout Payments and at the times
determined in accordance with the payment provisions of Section
2.03, an aggregate amount equal to $1,000,000 less the aggregate
amounts paid as Earnout Payments with respect to Total Researcher
Revenues as provided in Section 2.03, such amount to be paid ratably
over the remaining fiscal quarters of the Earnout Period.
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