EXHIBIT 2.7
ASSET PURCHASE AGREEMENT
by and between
SEACHANGE INTERNATIONAL, INC.,
LIBERATE TECHNOLOGIES,
and
LIBERATE TECHNOLOGIES B.V.
Dated as of April 15, 2005
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................1
1.1 Certain Defined Terms.....................................1
1.2 Additional Definitions...................................10
1.3 Terms Generally..........................................12
ARTICLE II CLOSING AND PURCHASE PRICE......................................12
2.1 Sale and Transfer of the Assets..........................12
2.2 Assets Not Transferred...................................14
2.3 Assumed and Excluded Liabilities.........................15
2.4 Closing; Purchase Price..................................16
2.5 Seller's Deliveries at the Closing.......................18
2.6 Purchaser's Deliveries at the Closing....................18
2.7 Tax Allocation...........................................19
2.8 Tax Proration............................................19
2.9 Sales Taxes..............................................19
2.10 VAT......................................................20
2.11 Risk of Loss.............................................20
2.12 Tax Reporting............................................20
ARTICLE III CERTAIN ACTIONS................................................20
3.1 Seller Stockholder Meeting...............................20
3.2 Proxy Statement..........................................21
3.3 Reasonable Best Efforts..................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
NETHERLANDS SUBSIDIARY.................................22
4.1 Authority; No Conflicts; Governmental Consents;
Corporate Matters......................................23
4.2 SEC Filings; Financial Statements; Absence of Changes....25
4.3 Proxy Statement..........................................27
4.4 Taxes....................................................27
4.5 Assets Other than Real Property Interests................28
4.6 Real Property Interests..................................28
4.7 Intellectual Property....................................28
4.8 Contracts................................................33
4.9 Legal Proceedings........................................34
4.10 Licenses; Compliance with Regulatory Requirements........34
4.11 Employee Benefits Matters................................36
4.12 Labor and Employee Relations.............................36
4.13 Fairness Opinion.........................................37
4.14 Recommendation of the Seller Board.......................37
4.15 Vote Required............................................38
4.16 Brokers..................................................38
4.17 Transactions with Affiliates.............................38
4.18 No Investment Company....................................38
4.19 Insurance................................................38
4.20 Rights Agreement.........................................39
4.21 No Alternative Proposal..................................39
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER......................39
5.1 Authority; No Conflicts; Governmental Consents...........39
5.2 Proxy Statement..........................................40
5.3 Litigation...............................................40
5.4 Brokers..................................................41
5.5 Capital Resources........................................41
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS.............................41
6.1 Access to Information....................................41
6.2 Confidentiality..........................................42
6.3 Public Announcements.....................................44
6.4 Ordinary Conduct.........................................44
6.5 No Solicitation..........................................47
6.6 Insurance................................................50
6.7 Accounts Receivable......................................50
6.8 Non-Competition..........................................51
6.9 Cooperation..............................................52
6.10 Tax Matters..............................................52
6.11 Waiver of Bulk Sales Requirement.........................53
6.12 Non Transferable Assets..................................53
ARTICLE VII LABOR AND EMPLOYEE BENEFIT MATTERS.............................54
7.1 Offers of Employment.....................................54
7.2 Certain Liabilities......................................54
7.3 No Obligation to Maintain Employees or Plans.............55
7.4 Post-Closing Solicitation of Business Employees..........55
7.5 COBRA....................................................56
7.6 Records..................................................56
7.7 FICA.....................................................56
7.8 Restrictive Covenant.....................................56
7.9 Assignment...............................................57
7.10 Contracts of Employment..................................57
7.11 Informing Employees......................................58
7.12 Employee Equity Awards...................................58
ARTICLE VIII CONDITIONS PRECEDENT..........................................58
8.1 Condition Precedent to the Obligations of Purchaser,
Seller and the Netherlands Subsidiary.................58
8.2 Conditions Precedent to the Obligations of Purchaser.....58
8.3 Conditions Precedent to the Obligations of Seller and
the Netherlands Subsidiary............................60
ARTICLE IX TERMINATION.....................................................61
9.1 Termination by Mutual Consent............................61
9.2 Termination by Either Purchaser or Seller................61
9.3 Termination by Seller....................................61
9.4 Termination by Purchaser.................................63
9.5 Effect of Termination and Abandonment....................63
ARTICLE X GENERAL PROVISIONS...............................................64
10.1 Assignment...............................................64
10.2 Survival.................................................64
10.3 No Third-Party Beneficiaries.............................65
10.4 Expenses.................................................65
10.5 Equity Relief............................................65
10.6 Amendments...............................................65
10.7 Notices..................................................65
10.8 Interpretation; Exhibits and Schedules...................66
10.9 Counterparts.............................................67
10.10 Severability.............................................67
10.11 Waiver of Compliance; Consents...........................67
10.12 Entire Agreement.........................................67
10.13 Governing Law; Submission to Jurisdiction................67
10.14 Joint Participation in Drafting this Agreement;
Construction..........................................68
10.15 Further Assurances.......................................69
Exhibits
--------
Exhibit A Form of Trademark License Agreement
List of Schedules
-----------------
Schedule 1.1(a)(i) Assigned Contracts
Schedule 1.1(a)(ii) Business Employees
Schedule 1.1(a)(iii) Non-North America Intellectual Property
Schedule 1.1(a)(iv) North America Intellectual Property
Schedule 2.1(e) Tangible Personal Property
Schedule 2.2(j) Excluded Assets
Schedules 2.4(c) and (d) Preliminary Schedule of Cash
Consideration Adjustments
Schedule 6.4 Ordinary Conduct
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April
15, 2005, by and among SEACHANGE INTERNATIONAL, INC., a Delaware corporation
("Purchaser" which term shall include any Affiliate of SeaChange
International, Inc. to which it has assigned any of its rights and obligations
hereunder pursuant to Section 10.1), LIBERATE TECHNOLOGIES, a Delaware
corporation ("Seller"), and LIBERATE TECHNOLOGIES B.V., a corporation
organized under the laws of the Netherlands (the "Netherlands Subsidiary").
WHEREAS, Seller and the Netherlands Subsidiary are engaged in the
business of developing, marketing and selling software and related services
for cable systems that are intended to enable cable operators to provide
interactive television and other services in areas outside of North America;
WHEREAS, Seller, Liberate Technologies Canada, Ltd. and Double C
Technologies, LLC ("Double C") have entered into that certain Asset Purchase
Agreement effective as of January 14, 2005 pursuant to which Seller has sold
its North America Business (as defined herein and therein) to Double C, a true
and correct copy of which has been delivered to Purchaser.
WHEREAS, the parties hereto desire that Seller and the Netherlands
Subsidiary sell, transfer, convey and assign to Purchaser all of the specified
assets, properties, interest in properties and rights of Seller and the
Netherlands Subsidiary used, held for use or intended to be used in the
Non-North America Business, and that Purchaser purchase and acquire the same,
subject to the assumption by Purchaser of the specified liabilities and
obligations of Seller and the Netherlands Subsidiary identified in this
Agreement that relate to the Non-North America Business, all upon the terms
and subject to the conditions hereinafter set forth; and
WHEREAS, immediately prior to the execution and delivery of this
Agreement, as a condition and inducement to Purchaser's willingness to enter
into this Agreement, each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Fund LLC, who each
directly or indirectly beneficially owns shares of the Seller Common Stock,
has executed and delivered to Purchaser a voting agreement, dated as of the
date hereof (the "Voting Agreement").
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms.
---------------------
As used in this Agreement, the following terms shall have the
following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person. For purposes of this definition, the term "control"
(including its correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.
"Alternative Proposal" means (A) any proposal (whether or not in
writing and whether or not delivered to Seller's stockholders generally),
other than (x) as contemplated by this Agreement or the Double C Agreement,
(y) as otherwise proposed by Purchaser or its Affiliates or (z) solely with
respect to the sale of all or part of the North America Business, regarding
(i) a merger, consolidation, tender offer, share exchange or other business
combination or similar transaction involving Seller, (ii) the issuance by
Seller of any equity interest in or any voting securities of Seller which
constitutes 20% or more of the total of such equity interests or voting
securities of Seller, (iii) the acquisition in any manner, directly or
indirectly, of 20% or more of the consolidated assets of Seller or the
Netherlands Subsidiary or any equity interest of its Subsidiaries, (iv) the
acquisition by any Person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act) which beneficially owns, or has the right
to acquire beneficial ownership of, 20% or more of the then outstanding shares
of capital stock of Seller or (v) any transaction for any material portion of
the Transferred Assets or the Non-North America Business or any transaction
the effect of which would be reasonably likely to prohibit, restrict or delay
the consummation of the transactions contemplated by this Agreement; or (B)
the occurrence of any of the transactions described in clauses (i) - (v) of
(A) above or any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
"Assigned Contracts" means those Contracts listed on Schedule
1.1(a)(i) hereto.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of sale in a form reasonably
satisfactory to Purchaser and Seller pursuant to which title to the
Transferred Assets will be conveyed by Seller and the Netherlands Subsidiary
to Purchaser.
"Business Employees" means all employees of the Seller and its
Affiliates who are employed in and/or primarily provide services to the
Non-North America Business and who reside in the United States or in Europe,
all as set forth on Schedule 1.1(a)(ii).
"Code" means the U.S. Internal Revenue Code of 1986, as amended from
time to time.
"Commission" means the Securities and Exchange Commission and the
staff of the Securities and Exchange Commission.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding undertaking or commitment, whether
written or oral, including any amendments and other modifications thereto.
"Copyrights" means all registered or unregistered copyrights
(including those in computer software and databases), and all registrations
and applications to register the same and all renewals thereof, and all Moral
Rights associated with such copyrights.
"Customers" means NTL Communications Services Limited, Telewest
Communications Group Limited, United Pan-Europe Communications, N.V., and
their Affiliates.
"Derivative Work" means any work, including any revision,
modification, translation, abridgement, compilation, condensation, expansion
or any other form in which a work may be recast, transformed or adapted, that
is based on or incorporates source code or other intellectual property from
the Non-North America Navigator Platforms.
"DGCL" means the General Corporation Law of the State of Delaware.
"Double C Agreement" means the Asset Purchase Agreement effective as
of January 14, 2005 by and between Double C Technologies, LLC, Seller and
Liberate Technologies Canada Ltd., and associated transaction documents.
"Employee Benefit Plan(s)" means any and all "employee pension
benefit plans" (as defined in Section 3(2) of ERISA), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA), whether or not subject
to the provisions of ERISA, and all other benefit plans (including all
employment, bonus, deferred compensation, old age, part-time, incentive
compensation, stock ownership, stock purchase, stock appreciation, restricted
stock, stock option, "phantom" stock, performance, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance or other plan, program,
policy, agreements, arrangement or understandings (whether or not legally
binding) whether or not subject to the provisions of ERISA) that are
maintained or contributed to, or required to be maintained or contributed to,
by Seller, the Netherlands Subsidiary or an ERISA Affiliate for the benefit of
any current or former employee of Seller, the Netherlands Subsidiary or any
ERISA Affiliate.
"Employment Contracts" means Contracts, whether oral or written,
relating to a Business Employee, including any communication or practice
relating to a Business Employee which imposes any obligation on Seller or any
of its Subsidiaries.
"Equity Securities" has the meaning ascribed to such term in Rule 405
promulgated under the Securities Act as in effect on the date hereof, and in
any event includes any common stock, any limited partnership interest, any
limited liability company interest and any other interest or security having
the attendant right to vote for directors or similar representatives.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any entity that is required to be treated as
a single employer together with Seller under Section 414 of the Code or 4001
of ERISA.
"Europe" means the member states of the European Union as of the date
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Leases" means all leases other than the San Mateo Lease,
including without limitation (i) the Circle Star Lease Agreement dated April
27, 1999 by and between Circle Star Center Associates, L.P. and Network
Computer, Inc. (former name of Liberate Technologies) (the "Circle Star
Lease"), (ii) Sublease dated as of December 7, 2001, between Liberate
Technologies and DemandTec Inc., (iii) Sublease dated as of November 1, 2002,
between Liberate Technologies and di Carta, Inc., and (iv) Agreement of
Assignment dated December 22, 2000 between Kobe Steel Europe Limited, Liberate
Technologies B.V., and Liberate Technologies, relating to the Underlease of
Third Floor of the building known as ▇▇▇/▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, dated
January 18, 1991 between Target Holdings Limited and Kobe Steel Europe
Limited, and any amendments or addendums to, or any other agreements by the
parties thereto relating to, any of the foregoing ("UK Lease").
"GAAP" means accounting principles generally accepted in the United
States applied in a manner consistent with the most recently published
financial statements of the Person with respect to which the reference to GAAP
is made.
"Governmental Authority" means any nation or government, any federal,
state, provincial, local, municipal, foreign (including supranational) or
other political subdivision, any government or quasi-governmental entity of
any nature, thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, including, without limitation, any administrative department,
court, commission, board, bureau, agency, authority or instrumentality
thereof.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Indebtedness" means, with respect to any Person, without duplication
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (i) every liability of such Person
(A) for borrowed money, (B) evidenced by notes, bonds, debentures or other
similar instruments (whether or not negotiable), (C) for reimbursement of
amounts drawn under letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (D) issued or assumed as the
deferred purchase price of property or services (excluding accounts payable),
(E) relating to a capitalized lease obligation and all debt attributable to
sale/leaseback transactions of such Person, (F) secured by a Lien (other than
Permitted Liens described in clauses (a), (b) and (c) of the definition of
Permitted Liens), (G) relating to swaps, options, caps, collars, ▇▇▇▇▇▇,
forward exchanges or similar agreements or (H) that would be reflected in a
balance sheet prepared in accordance with GAAP; and (ii) every liability of
others of the kind described in the preceding clause (i) that such Person has
guaranteed or which is otherwise its legal liability.
"Intellectual Property" means all of the following: (i) all Patents,
(ii) all designs, methods, processes, technology and inventions and any
derivatives thereof (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto and enhancements thereof, (iii)
all Trademarks, Internet domain names, URLs and applications therefor, (iv)
all Copyrights and Moral Rights, (v) all mask works and all applications,
registrations and renewals in connection therewith, (vi) all know-how,
including, but not limited to, Trade Secrets, (vii) all computer software
(including data and related documentation, fixes, new releases, enhancements,
updates, additions and/or modifications, source code and object code), (viii)
all platforms, applications, interfaces, products, systems and services, and
(ix) all other proprietary rights including without limitation intellectual
property, publicity and intangible property rights. In the case of
Intellectual property owned or licensed by Seller, such Intellectual Property
shall include without limitation (x) all copies and tangible embodiments of
any of the Transferred Assets (in whatever form or medium), including any
notebooks, logs, files (including without limitation any files maintained by
Seller's Patent, Copyright, Trade Secret and Trademark counsel(s)), records,
data or documentation relating to the Transferred Assets or the Excluded
Assets, as applicable, and (y) all of Seller's and its Subsidiaries' books,
records and ledger sheets associated with the Transferred Assets or the
Excluded Assets, as applicable.
"Law" means any foreign, federal, state, provincial or local statute,
law, ordinance, regulation, administrative regulations, administrative act,
rule, code, judgment, order, requirement or rule, including common law.
"Legal Proceeding" means any private or governmental claim, action,
suit, complaint, arbitration, mediation, legal or administrative proceeding or
investigation.
"Liabilities" means any and all debts, liabilities, commitments and
obligations of any kind or nature, whether accrued or fixed, absolute or
contingent, matured or unmatured or determined or determinable, asserted or
unasserted, liquidated or unliquidated, including those arising, reported or
claimed under any Law, Legal Proceeding, Action or Governmental Order.
"License Agreements" means all agreements (whether written or oral
and whether with Seller or its Subsidiaries or any third parties), including
license agreements, research agreements, development agreements, distribution
agreements, non-disclosure agreements, confidentiality agreements,
non-competition agreements, settlement agreements, consent to use agreements
and covenants not to ▇▇▇ to which the Seller or any of its Subsidiaries is a
party or otherwise bound, granting any right to make, use, sell, offer for
sale, import, copy, distribute, modify, perform, display, disclose, market, or
otherwise enforce, exploit or practice any Non-North America Intellectual
Property or restricting any of the foregoing rights of Seller or its
Subsidiaries.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
encumbrance, easement, lease, sublease, covenant, right of way, option, claim,
restriction, lien (statutory or other) or security interest.
"Material Adverse Effect" on a Person means a material adverse effect
on (i) the business, assets, financial condition or results of operations of
such Person and its Subsidiaries, taken as a whole or (ii) the ability of such
Person to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement; "Material Adverse Effect" on the Transferred
Assets means an Effect (as defined below) that materially and adversely
affects the ownership, value, or use of the Transferred Assets in the
aggregate, and a "Material Adverse Effect" on the Non-North America Business
means an Effect that materially and adversely affects the business, assets or
liabilities of the Non-North America Business; provided, however, in no event
shall any of the following be taken into account in determining whether there
has been or will be, a Material Adverse Effect: (A) any change, event,
violation, inaccuracy, circumstance or effect (any such item, an "Effect")
resulting from compliance with the terms and conditions of this Agreement or
the Double C Agreement, (B) any Effect resulting from the announcement or
pendency of the transactions contemplated hereby or the Double C Agreement,
(C) any Effect that results from changes affecting the industry in which such
Person, the Transferred Assets or the Non-North America Business, as
applicable, operates generally or the United States or European economy
generally (which changes in each case do not disproportionately affect such
Person, the Transferred Assets or the Non-North America Business, as
applicable, in any material respect), (D) any Effect that results from changes
affecting general worldwide economic or capital market conditions (which
changes in each case do not disproportionately affect such Person, the
Transferred Assets or the Non-North America Business, as applicable, in any
material respect), (E) stockholder class action litigation arising from or
relating to this Agreement or the Double C Agreement and (F) any failure by
such Person or the Non-North America Business, as applicable, to meet
published revenue or earnings projections, which failure shall have occurred
in the absence of a material deterioration in the business or financial
condition of such Person or the Non-North America Business, as applicable,
that would otherwise constitute a Material Adverse Effect but for this clause
(F). For the avoidance of doubt, compliance with (and the consequences
thereof) the terms of this Agreement or the Double C Agreement shall not be
taken into account in determining whether a Material Adverse Effect shall have
occurred or shall be expected to occur for any and all purposes of this
Agreement.
"Moral Rights" means any right to claim authorship to or to object to
any distortion, mutilation, or other modification or other derogatory action
in relation to a work, whether or not such would be prejudicial to the
author's reputation, and any similar right, existing under common or statutory
law of any country in the world or under any treaty, regardless of whether or
not such right is denominated or generally referred to as a "moral right."
"Nasdaq" means the National Market System of the Nasdaq Stock Market.
"Non-North America Business" means Seller's and its Subsidiaries'
businesses other than the North America Business, including the business of
developing, marketing and selling Non-North America Navigator Platforms and
related services for cable systems that are intended to enable cable operators
to provide interactive television services outside the United States, Canada
and Mexico.
"Non-North America Intellectual Property" means (i) all of Seller's
and its Subsidiaries' Intellectual Property embodied in or associated solely
with the Non-North America Navigator Platforms that is owned by or licensed to
Seller and its Subsidiaries and used or held for use solely in connection with
the Non-North America Business and (ii) all Intellectual Property set forth on
Schedule 1.1(a)(iii) hereto, but excluding any of Seller's and its
Subsidiaries' Registered North America Intellectual Property Rights issued or
to be issued in the United States, Canada and/or Mexico with a priority date
prior to April 7, 2005.
"Non-North America Navigator Platforms" means (i) all of Seller's and
its Subsidiaries' software, technology and associated documentation used or
held for use solely in connection with the Non-North America Business and (ii)
all software, technology and associated documentation set forth on Schedule
1.1(a)(iii) hereto, but excluding North America Navigator Platforms.
"North America Business" means all the businesses conducted by Seller
and its Subsidiaries in North America, including Seller's and its
Subsidiaries' business of developing, marketing and selling North America
Navigator Platforms and related services for cable systems that are intended
to enable cable operators to provide interactive television services in the
United States, Canada and Mexico, but excluding activities of Seller and its
Subsidiaries in North America primarily related to its corporate functions or
businesses conducted outside of the United States, Canada and Mexico.
"North America Intellectual Property" means the Intellectual Property
embodied in or associated with the North America Navigator Platform that is
owned by or licensed to Seller and its Subsidiaries and used or held for use
in connection with the North America Business, including the items set forth
on Schedule 1.1(a)(iv) hereto and all of Seller's and all of its Subsidiaries'
Intellectual Property issued or to be issued with a priority date prior to
April 7, 2005 in the United States, Canada and Mexico regardless of whether
such Intellectual Property relates to the North America Navigator Platform,
but excluding Non-North America Intellectual Property set forth on Schedule
1.1(a)(iii).
"North America Navigator Platforms" means all software, including
source and object code, Seller's LMC card technology, and associated
documentation (i) developed and marketed by Seller and its Subsidiaries under
the name TV Navigator 2.x, Navigator 3.x and Navigator 5.x or (ii) developed
or assigned for use in connection with the Open Cable Application Platform.
"Patent Lawsuit" means the action titled OpenTV, Inc. v. Liberate
Technologies, Case No. C-02-00655 SBA pending in the United States District
Court for the Northern District of California, but only to the extent set
forth in the complaint dated February 7, 2002.
"Patents" means issued patents and pending patent applications
(including provisional patent applications), and any and all divisionals,
continuations, continuations-in-part, reissues, renewals, reexaminations, and
extensions thereof, any counterparts claiming priority therefrom, utility
models, patents of importation/confirmation, supplementary protection
certificates, certificates of invention and similar statutory rights.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for Taxes, assessments, and governmental charges or
levies not yet due and payable; (b) Liens imposed by Law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and
other similar Liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than thirty (30)
days and (ii) are not in excess of $10,000 in the case of a single property or
$50,000 in the aggregate at any time; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to
secure public or statutory obligations; and (d) Liens arising under
conditional sales contracts and equipment leases with third parties entered
into in the ordinary course of business.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Principal Customer Agreements" means the Assigned Contracts with the
Customers set forth in Section 2(A) of Schedule 1.1(a)(i).
"Registered Non-North America Intellectual Property Rights" mean any
legal rights in any pending applications for, or registrations or issuances or
grants of, any Non-North America Intellectual Property before any Governmental
Authority responsible for issuing or registering any of the Non-North America
Intellectual Property, other than those that have been formally abandoned or
allowed to lapse by the Seller or its Subsidiaries in the ordinary course of
business in accordance with the exercise of reasonable business judgment.
"Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981 and any subsequent re-enactment or modification
thereof.
"Retained Litigation" means all causes of action, claims, demands,
rights and privileges of Seller and any of its Subsidiaries against (i) Source
Suite Acquisition LLC, Source Suite LLC, Source Media, Inc., Insight
Communications Company, Inc. (but only to the extent to which they are
attributable to the period prior to Closing), (ii) former officers of Seller,
or (iii) other third parties to the extent not relating to the Transferred
Assets or the Non-North America Business including causes of actions, claims
and rights under or relating to insurance policies relating thereto.
"San Mateo Lease" means the Office Lease Agreement dated December 12,
2003 between EOP-Peninsula Office Park, L.L.C. and Seller.
"San Mateo Leased Property" means the real property located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (including all buildings,
improvements and structures located thereon and all rights, privileges,
easements and appurtenances thereto) leased to Seller pursuant to the San
Mateo Lease.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Seller Common Stock" means the common stock, par value $0.01 per
share, of Seller.
"Seller Disclosure Letter" means the disclosure letter, dated as of
the date hereof, delivered by Seller and the Netherlands Subsidiary to
Purchaser.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity controlled by
such Person directly or indirectly through any other Subsidiary of such Person
or in which such Person owns directly or indirectly through any other
Subsidiary of such Person more than 50% of the outstanding common stock or
other outstanding Equity Securities ordinarily entitled to vote in such
Person. For the avoidance of doubt, the Netherlands Subsidiary shall be deemed
a Subsidiary of Seller for purposes of this Agreement.
"Tax" or "Taxes" means any and all taxes and other similar charges of
any kind imposed by any governmental or taxing authority, including: federal,
state, provincial, local or foreign income, gross receipts, net wealth, net
worth, equity, sales, use, turnover, ad valorem, value-added, environmental,
capital, unitary, intangible, franchise, profits, license, withholding,
payroll, employment, social security (or similar), excise, severance, stamp,
transfer, real estate transfer, occupation, premium, property, alternative or
add-on minimum tax, customs duty or other tax or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, addition
to tax or additional amount imposed with respect thereto.
"Tax Return" means any return, statement, report or form (including
any related or supporting schedules, statements or information, and including
any amendment thereof) filed or required to be filed with or submitted to any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Law relating to any
Tax.
"Technology Cross-License Agreement" means that certain Technology
Cross-License Agreement, dated as of April 7, 2005, by and between Seller and
Double C.
"Trade Secrets" means all categories of confidential information and
trade secrets including without limitation as defined in the Uniform Trade
Secrets Act, including confidential research and development, know-how,
formulas, ideas, inventions and invention disclosures not part of a Patent or
published patent application, compositions, manufacturing and production
processes and techniques, methods, schematics, technology, data (including,
but not limited to, all business and technical information, and information
and data relating to research, development, analytical methods, processes,
formulations and compositions), research summary data, research raw data,
laboratory notebooks, procedures, proprietary technology and information,
blueprints, designs, drawings, flowcharts, block diagrams, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals.
"Trademarks" means registered and unregistered trademarks, trade
dress, service marks, logos and designs, trade names, internet domain names,
commercial symbols, corporate names and all registrations renewals and
applications in connection therewith together with all translations,
adaptations, derivations and combinations thereof and all goodwill associated
therewith.
"Transaction Documents" means (a) this Agreement, (b) the ▇▇▇▇ of
Sale and (c) any agreement, certificate or similar instrument delivered by the
parties at the Closing, including the instruments delivered under Section 2.5
and Section 2.6.
"UK Contractors" means all these contractors providing personal
services to Seller or the Netherlands subsidiary primarily in the United
Kingdom as set forth in Schedule 1.1(a)(ii).
"UK Lease" has the meaning ascribed above in "Excluded Leases."
"UK Transferred Employees" means employees of Seller or the
Netherlands Subsidiary who primarily carry out work in the United Kingdom as
set forth in Schedule 1.1(a)(ii).
"United States" means the United States of America, including its
territories and possessions and including Puerto Rico.
"VAT" means in relation to any jurisdiction within the European
Union, the value added tax imposed by the Sixth Council Directive of the
European Communities and any national legislation implementing that directive
together with legislation supplemental thereto and, in relation to other
jurisdictions, the equivalent tax (if any) in that jurisdiction.
1.2 Additional Definitions.
----------------------
The following additional terms have the meaning ascribed thereto in
the Section indicated below next to such term:
Defined Term Section
------------ -------
Acquisition Proposal 3.1
Aggregate Consideration 2.7(a)
Agreement Preamble
Assumed Liabilities 2.3(a)
Cash Consideration 2.4(b)(i)
Closing 2.4(a)
Closing Date 2.4(a)
COBRA Coverage 7.5
Contaminant 4.7(j)
Disabling Code 4.7(j)
Employee Receivables 6.8
Environmental Laws 4.10(b)
Excluded Assets 2.2
Excluded Liabilities 2.3(b)
Fairness Opinion 4.13
Final Report 2.4(f)
Governmental Consent 4.1(c)(ii)
Governmental Filing 4.1(c)(ii)
Government Authority Fee Schedule 2.5(i)
Injunction 3.3
Licenses 4.10(a)
Material Contract(s) 4.8(a)
Netherlands Subsidiary Preamble
Netherlands Subsidiary Purchase Price 2.7(a)
Non-Transferable Asset 6.12(a)
Non-Solicitation Period 7.4(a)
Payroll Taxes 7.7
Permits 4.10(a)(i)
Preliminary Report 2.4(e)
Proxy Statement 3.2(a)
Purchaser Preamble
Purchaser Expenses 9.5(a)(ii)
Records 2.1(h)
Representatives 6.2(a)
Required Consents 8.2(f)
Restricted Period 7.5(a)
Restricted Persons 6.5(a)
Restrictive Period 6.8(a)
Seller Preamble
Seller Balance Sheet 4.2(b)
Seller Board 3.1
Seller Bylaws 3.1
Seller Charter 3.1
Seller Commission Filings 4.2(a)(ii)
Seller Financials 4.2(b)
Seller Rights Agreement 4.20
Seller Purchase Price 2.7(a)
Seller Special Meeting 3.1
Superior Proposal 6.5(b)
Termination Date 9.2
Trademark License Agreement 2.5(h)
Transferred Assets 2.1
Transferred Employees 7.1
Violation 4.1(c)(iv)
Voting Agreement Recitals
1.3 Terms Generally.
---------------
The definitions set forth or referenced in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Exhibits and Schedules) in its entirety and
not to any part hereof unless the context shall otherwise require. All
references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Unless the context
shall otherwise require, any references to any statute or regulation are to it
as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any successor provisions). Any reference in this Agreement
to a "day" or number of "days" (without the explicit qualification of
"business day") shall be interpreted as a reference to a calendar day or
number of calendar days. If any action or notice is to be taken or given on or
by a particular calendar day, and such calendar day is not a business day,
then such action or notice shall be deferred until, or may be taken or given
on, the next business day. References to the term "business day" shall mean
any day that is not a Saturday, Sunday or day on which banks in New York City,
New York are authorized or required by law to close. References to the terms
"$" and "dollars" shall mean U.S. dollars.
ARTICLE II
CLOSING AND PURCHASE PRICE
2.1 Sale and Transfer of the Assets.
-------------------------------
Subject to the terms and conditions of this Agreement, on the Closing
Date, Seller and the Netherlands Subsidiary will sell, convey, transfer,
assign and deliver to Purchaser, and Purchaser will purchase, acquire and
accept from Seller and the Netherlands Subsidiary, all of Seller's and the
Netherlands Subsidiary's right, title and interest in and to all of the
business, properties, rights, claims and assets (except the Excluded Assets)
of Seller and the Netherlands Subsidiary set forth in this Section 2.1
(collectively, the "Transferred Assets"), with such changes, additions or
deletions therein or thereto from the date of this Agreement to the Closing
Date as may be expressly permitted under this Agreement. The Transferred
Assets consist of:
(a) the Non-North America Navigator Platforms;
(b) the Non-North America Intellectual Property;
(c) the Assigned Contracts;
(d) the San Mateo Lease;
(e) all tangible personal property, including all plant, machinery,
equipment, supplies, inventory, spare parts, tools, leasehold improvements,
furniture, furnishings, software, hardware and vehicles, used, held for use or
intended to be used to conduct the Non-North America Business, including
without limitation such assets set forth on Schedule 2.1(e), except as
otherwise provided in Section 2.2(j);
(f) all transferable licenses, permits, orders, approvals and other
authorizations by, and any applications for any of the foregoing filed with,
any Governmental Authority used, held for use or intended to be used in the
Non-North America Business;
(g) except as provided in Section 2.2(l), all books and records
(other than Tax records), relating to the Non-North America Business or the
Transferred Assets, including sales literature, product information,
employment records relating to the Business Employees and files and other
information and/or data related to or used by Seller or the Netherlands
Subsidiary or their other Subsidiaries in, or that arise out of, the operation
of the Non-North America Business or the Transferred Assets (the "Records");
(h) all prepaid expenses, credits, deferred charges, prepaid items,
advances and deposits, or portions thereof, arising out of or related to the
Transferred Assets or the Non-North America Business;
(i) all causes of action, claims and rights against third parties
that relate to the Transferred Assets or the Non-North America Business other
than the Retained Litigation, including the right to ▇▇▇ and recover for past
infringements of any rights under the Non-North America Intellectual Property
(except any causes of action or claims against Seller, its Subsidiaries and
distributors and customers relating to the North America Business) and
including all warranties and guaranties received from vendors, suppliers or
manufacturers with respect to the Transferred Assets or the Non-North America
Business; and
(j) all goodwill appurtenant to the Transferred Assets or the
Non-North America Business and the right to represent to third parties that
Purchaser is the successor to the Non-North America Business.
In furtherance of the foregoing, Seller shall cause the Netherlands
Subsidiary to take all actions necessary to transfer and assign all of its
right, title and interest in and to any of the Transferred Assets to Purchaser
at the Closing, including the execution of instruments pursuant to Sections
2.5(b) and 2.5(e).
2.2 Assets Not Transferred.
----------------------
Notwithstanding anything herein to the contrary, the following assets
are not included in the Transferred Assets and shall be retained by Seller and
the Netherlands Subsidiary and as applicable are subject to the Double C
Agreement (the "Excluded Assets"):
(a) all of Seller's and its Affiliates' cash and cash equivalent
items, including checking accounts, bank accounts, lock box numbers,
certificates of deposit, time deposits, securities, and the proceeds of
accounts receivable, including uncashed checks in payment thereof, received or
accrued by Seller prior to the Closing Date, and all equity securities of any
Person owned by Seller or any of its Affiliates;
(b) the North America Navigator Platforms;
(c) the North America Intellectual Property;
(d) all rights of Seller under the Excluded Leases;
(e) rights to or claims for refunds or rebates of Taxes and other
governmental charges and the benefit of net operating loss carryforwards,
carrybacks, credits or other tax attributes of Seller and the Netherlands
Subsidiary;
(f) proprietary or confidential business information, records and
policies that relate generally to Seller and the Netherlands Subsidiary and
are not used, held for use, intended to be used in or otherwise necessary to
conduct the Non-North America Business, including organization manuals, Tax
records and related information;
(g) all causes of action, claims and rights against third parties
with respect to the Retained Litigation and (unless and to the extent
Purchaser becomes party to the Patent Lawsuit) the Patent Lawsuit;
(h) all other assets used exclusively in connection with Seller's
corporate functions (including the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books and stock transfer records and other documents relating to
the organization, maintenance, and existence of Seller as a corporation);
(i) all assets in respect of any Employee Benefit Plan, other than
those, if any, assigned pursuant to Section 7.9;
(j) all tangible personal property not used, held for use or intended
to be used in the Non-North America Business, wherever located, including all
machinery, equipment, furniture, furnishings, software, hardware and vehicles,
or all tangible personal property used specifically in connection with
Seller's corporate functions and described on Schedule 2.2(j);
(k) all insurance policies and rights under the Employee Benefit
Plans, other than the insurance contracts, if any, assumed pursuant to Section
7.9;
(l) all of Seller's books and records and other documents related to
the sale of the Non-North America Business and negotiations with other
parties;
(m) all accounts receivable, or portions thereof, attributable to or
arising out of the Non-North America Business billed or accrued with respect
to the period prior to the close of business on the Closing Date; and
(n) all other assets sold, or to be sold, in accordance with the
terms of the Double C Agreement.
2.3 Assumed and Excluded Liabilities.
--------------------------------
(a) As of and after the Closing, and subject to consummation of the
Closing, Purchaser shall assume, pay, discharge and perform the following
obligations and Liabilities (collectively, the "Assumed Liabilities"): (i) the
obligations and Liabilities of Seller and the Netherlands Subsidiary under or
with respect to the Assigned Contracts and other Transferred Assets
transferred to Purchaser at the Closing to be paid, discharged and performed
after the Closing Date and which are, but only to the extent they are,
attributable to the period after the Closing Date, provided that Purchaser
shall not be responsible for any Liability of Seller or its Affiliates for
Taxes (whether attributable to the period before or after the Closing Date)
except as expressly provided in Sections 2.8, 2.9 and 2.10; (ii) obligations
and Liabilities relating to the Transferred Assets in respect of which
Purchaser received a credit to the Cash Consideration pursuant to Section 2.4
or 2.8; and (iii) obligations and Liabilities relating to COBRA Coverage
pursuant to Section 7.5 or assumed pursuant to Section 7.9, if any.
(b) Notwithstanding anything herein or in any other Transaction
Document to the contrary, and regardless of any disclosure to Purchaser,
except for the Assumed Liabilities specifically set forth in Section 2.3(a)
above, Purchaser shall not assume or have any responsibility for any
obligation or Liability of Seller or the Netherlands Subsidiary or their
Affiliates that is not an Assumed Liability, including, but not limited to,
any obligations or Liabilities relating to (i) the Excluded Leases, (ii) the
Retained Litigation, (iii) any Contract that is not an Assigned Contract, (iv)
any Employee Benefit Plans (other than obligations and Liabilities relating to
COBRA Coverage pursuant to Section 7.5 or assumed pursuant to Section 7.9, if
any), (v) any other Excluded Asset, (vi) the conduct or operation of the North
America Business and any other businesses of Seller and its Affiliates other
than the Non-North America Business, or (vii) the conduct or operation of the
Non-North America Business or the ownership of the Transferred Assets during
the period prior to the close of business on the Closing Date (except for the
obligations and Liabilities assumed pursuant to Section 2.3(a)(i) and (iii))
(collectively, the "Excluded Liabilities").
2.4 Closing; Purchase Price.
-----------------------
(a) The closing (the "Closing") of the purchase and sale of the
Transferred Assets and the assumption of the Assumed Liabilities shall be held
at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇., ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 6:00 a.m., San Francisco time on the third
business day after and excluding the date on which the conditions to Closing
set forth in Article VIII hereof (other than those conditions which by their
nature are to be satisfied concurrently with the Closing) shall have been
satisfied or waived or at such other place, time and date as agreed in writing
by Purchaser and the Seller. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date." The Closing shall be deemed to
occur as of the close of business on the Closing Date.
(b) In consideration of the transfer of the Transferred Assets to
Purchaser, and in reliance on the representations and warranties of Seller and
the Netherlands Subsidiary contained in this Agreement, at the Closing,
Purchaser shall (i) pay Seller and the Netherlands Subsidiary the aggregate
amount of Twenty Five Million Five Hundred Thousand Dollars (US$25,500,000),
which amount shall be adjusted as provided in this Section 2.4, Section 2.8
and Section 2.12(a), in cash (the "Cash Consideration") by wire transfer of
immediately available funds to an account or accounts designated in writing by
Seller no later than one business day prior to Closing and (ii) assume the
Assumed Liabilities. The Cash Consideration shall be decreased by an amount
equal to Six Hundred Fifty One Thousand Dollars (US$651,000) per month for the
time period that elapses from the execution of this Agreement to the Closing
Date, pro rated for the actual number of days in such period based on 30 days
in a month.
(c) All expenses and other liabilities arising from the Non-North
America Business up until the close of business on the Closing Date, including
assessments levied against the Transferred Assets, salesperson advances,
property and equipment rentals, amounts owing under the San Mateo Lease, sales
taxes, applicable copyright or other fees, sales and service charges, and
similar prepaid and deferred items shall be prorated between Purchaser, on the
one hand, and Seller and the Netherlands Subsidiary, on the other hand, in
accordance with the principle that Seller and its Affiliates shall be
responsible for all expenses, costs and liabilities allocable to the conduct
of the Non-North America Business for the period prior to the close of
business on the Closing Date, and Purchaser shall be responsible for all
expenses, costs and liabilities allocable to the conduct of the Non-North
America Business for the period after the close of business on the Closing
Date; provided that, Seller and its Affiliates shall be solely responsible for
all intercompany accounts among Seller and its Affiliates. The Cash
Consideration shall be increased or decreased as required to effectuate the
foregoing proration of expenses and liabilities. This Section 2.4(c) is
subject to the provisions of Sections 2.8, 2.9 and 2.12. A preliminary
schedule that estimates such allocation, calculated in accordance with the
foregoing, is attached hereto as Schedule 2.4(c).
(d) The Cash Consideration shall be decreased by an amount equal to
(i) any customer payments and deposits received by Seller or the Netherlands
Subsidiary prior to the close of business on the Closing Date but attributable
to products or services to be provided by Purchaser after the close of
business on the Closing Date (including any interest owing thereon), (ii) any
other advance payments or deposits, to the extent any of the foregoing
payments or deposits are attributable to products or services to be provided
after the close of business on the Closing Date and (iii) the cost of all
accrued vacation for Transferred Employees prior to the Closing Date, as
provided for in Section 7.3 of this Agreement. A preliminary schedule that
estimates all such payments, deposits and accrued vacation, calculated in
accordance with the foregoing is attached hereto as Schedule 2.4(d).
(e) At least 10 business days prior to the Closing, Seller will
deliver to Purchaser a report with respect to the Non-North America Business
(the "Preliminary Report"), certified as to completeness and accuracy by
Seller, showing in detail the preliminary determination of the adjustments
referred to in Sections 2.4(c), 2.4(d), 2.4(e), 2.8, 2.9 and 2.10, which are
calculated in accordance with such Section as of the Closing Date, together
with any documents substantiating the determination of the adjustments to the
Cash Consideration proposed in the Preliminary Report. The parties shall
negotiate in good faith to resolve any dispute and to reach an agreement prior
to the Closing Date on such preliminary adjustments to the Cash Consideration
as of the Closing Date (provided that, in the absence of such agreement prior
to the Closing Date, the Preliminary Report shall be used for determining any
adjustments to the Cash Consideration at Closing) or thereafter in accordance
with Section 2.4(f) below. The adjustments shown in the Preliminary Report, as
adjusted by agreement of the parties, will be reflected as an adjustment to
the Cash Consideration payable at the Closing.
(f) Within 90 days after the Closing Date, Purchaser shall deliver to
Seller a report with respect to the Non-North America Business (the "Final
Report"), showing in detail the final determination of any adjustments which
were not calculated as of the Closing Date and containing any corrections to
the Preliminary Report, together with any documents substantiating the final
calculation of the adjustments proposed in the Final Report. If Seller shall
conclude that the Final Report does not accurately reflect the adjustments and
prorations to be made to the Cash Consideration in accordance with this
Section 2.4, Seller shall, within 30 days after its receipt of the Final
Report, provide to Purchaser its written statement of any discrepancies
believed to exist. Purchaser and Seller shall use good faith efforts to
jointly resolve the discrepancies within 30 days of Purchaser's receipt of
Seller's written statement of discrepancies, which resolution, if achieved,
shall be binding upon all parties to this Agreement and not subject to dispute
or judicial review. If Purchaser and Seller cannot resolve the discrepancies
to their mutual satisfaction within such 30-day period, Purchaser and Seller
shall, within the following 10 days, jointly designate a national independent
public accounting firm to be retained to review the Final Report together with
Seller's discrepancy statement and any other relevant documents. The parties
agree that the foregoing independent public accounting firm shall not be one
that is regularly engaged by Purchaser or Seller. Such firm shall report its
conclusions as to adjustments pursuant to this Section 2.4, which shall be
conclusive on all parties to this Agreement and not subject to dispute or
judicial review. The conclusion of such firm with respect to each discrepancy
shall be within the range established for such item by the Final Report and
Seller's discrepancy statement. If Purchaser or Seller is determined to owe an
amount to the other, the appropriate party shall pay such amount thereof to
the other within three business days after receipt of such determination. The
cost of retaining such independent public accounting firm shall be borne
equally by the parties.
2.5 Seller's Deliveries at the Closing.
----------------------------------
At the Closing, Seller and the Netherlands Subsidiary shall deliver
or cause to be delivered to Purchaser the following:
(a) a ▇▇▇▇ of Sale executed by Seller and the Netherlands Subsidiary;
(b) such further bills of sale, endorsements, consents, assignments
and other good and sufficient instruments of conveyance and assignment as the
parties and their respective counsel shall deem reasonably necessary under
applicable Law to vest in Purchaser all right, title and interest in, to and
under the Transferred Assets and to evidence Purchaser's assumption of the
Assumed Liabilities;
(c) an affidavit of Seller stating, under penalties of perjury,
Seller's taxpayer identification number and that Seller is not a foreign
person in accordance with Section 1445(b)(2) of the Code and the Treasury
Regulations promulgated thereunder;
(d) the certificates contemplated by Section 8.2(b);
(e) short-form assignment agreements, in a form reasonably acceptable
to Purchaser and suitable for recordation with applicable Governmental
Authorities, executed by an authorized representative of Seller and the
Netherlands Subsidiary, as applicable, that assign the Non-North America
Intellectual Property to Purchaser:
(f) the financial statements required by Section 8.2(e);
(g) the Required Consents set forth in Section 8.2(f);
(h) the Trademark License Agreement substantially in the form
attached hereto as Exhibit A (the "Trademark License Agreement") executed by
Seller; and
(i) a list of all due dates in Seller's and the Netherlands
Subsidiary ordinary course of business for filing with any Governmental
Authority any documents necessary to secure, maintain and enforce Purchaser's
rights in and to the Copyrights, Patents, and Trademarks included in the
Transferred Assets, which due dates occur within ninety (90) days after the
Closing Date (the "Government Authority Fee Schedule");
2.6 Purchaser's Deliveries at the Closing.
-------------------------------------
At the Closing, Purchaser shall deliver to Seller the following:
(a) the Cash Consideration as adjusted in accordance with 2.4(e);
(b) the executed assumption agreement, in a form reasonably
satisfactory to Purchaser and Seller, evidencing Purchaser's assumption of the
Assumed Liabilities;
(c) a certificate of an authorized officer of Purchaser pursuant to
Section 8.3(b) hereof; and
(d) the Trademark License Agreement executed by Purchaser.
2.7 Tax Allocation.
--------------
(a) It is the intent of Purchaser, Seller and the Netherlands
Subsidiary that not more than $30,000 of the Cash Consideration (together, the
"Aggregate Consideration") shall be allocated to the Transferred Assets of the
Netherlands Subsidiary (the "Netherlands Subsidiary Purchase Price"), and the
remainder of the Aggregate Consideration shall be allocated to the Transferred
Assets of Seller (the "Seller Purchase Price").
(b) Purchaser, Seller and the Netherlands Subsidiary further agree
(i) to use commercially reasonable efforts to agree upon an allocation of the
Seller Purchase Price among the Transferred Assets of Seller and to agree upon
an allocation of the Netherlands Subsidiary Purchase Price among the
Transferred Assets of the Netherlands Subsidiary, in each case in accordance
with the principles of Section 1060 of the Code and the Treasury Regulations
promulgated thereunder, and (ii) if the parties agree to either such
allocation, to use such allocation for all income Tax purposes, including the
preparation and filing of each party's respective IRS Form 8594 (or any
successor form) and any Tax Returns.
2.8 Tax Proration.
-------------
Any ad valorem, property or similar Taxes with respect to the
Transferred Assets or the Non-North America Business shall be prorated on a
per diem basis through the close of business on the Closing Date, with Seller
being responsible for all of such prorated Taxes attributable to the period on
or before the close of business on the Closing Date and Purchaser being
responsible for all of such prorated Taxes attributable to the period after
the close of business on the Closing Date. The Cash Consideration shall be
increased or decreased as required to effectuate the resulting amount payable
by Purchaser or Seller.
2.9 Sales Taxes.
-----------
Seller and Purchaser shall each pay fifty percent of all sales, use,
excise, transfer, value added, and similar Taxes (for the avoidance of doubt,
excluding VAT, income and capital Taxes) imposed by any Governmental Authority
in any jurisdiction in connection with the transactions contemplated herein.
2.10 VAT.
---
All sums or other consideration payable by the Purchaser to the
Seller pursuant to or in connection with this Agreement are exclusive of VAT.
If the relevant Governmental Authority shall determine that VAT is chargeable
pursuant to or in connection with this Agreement, the Seller shall notify the
Purchaser of that determination within seven days of its being so advised by
such Governmental Authority and the Purchaser shall pay to the Seller by way
of additional consideration a sum equal to the amount of VAT determined by the
Government Authority to be so chargeable within 14 days of the Seller
notifying the Purchaser of that determination (against delivery by the Seller
of an appropriate VAT invoice).
2.11 Risk of Loss.
------------
Until the Closing, any loss of or damage to the Transferred Assets
from fire, casualty or any other occurrence shall be the sole responsibility
of Seller.
2.12 Tax Reporting.
-------------
Subject to any Tax elections agreed to be filed by the parties
pursuant to the terms of this Agreement in order to reduce, mitigate or
eliminate the amount of any Tax that could be imposed with respect to the
transactions contemplated by this Agreement, all parties hereto intend that
the sale and transfer of the Transferred Assets pursuant to this Agreement
will be a fully taxable transaction. None of Purchaser, Seller, the
Netherlands Subsidiary or any of their respective Affiliates will, subject to
any such Tax elections that are agreed to be filed by the parties, take any
position on any federal, state, provincial, local or foreign income or
franchise Tax Return, or take any other Tax reporting position that is
inconsistent with the treatment of the sale and transfer of such assets as a
fully taxable transaction.
ARTICLE III
CERTAIN ACTIONS
3.1 Seller Stockholder Meeting.
--------------------------
Seller and its Board of Directors (the "Seller Board") shall take all
action necessary in accordance with applicable Law and Seller's Sixth Amended
and Restated Certificate of Incorporation (the "Seller Charter") and Amended
and Restated Bylaws (the "Seller Bylaws") to duly call and hold, as soon as
reasonably practicable after the date hereof, a meeting of the Seller's
stockholders (the "Seller Special Meeting") for the purpose of considering and
voting upon a resolution approving and adopting the transactions contemplated
by this Agreement (the "Acquisition Proposal"). Subject to Section 6.5, the
Seller Board will recommend that the Seller's stockholders vote in favor of
approval and adoption of the Acquisition Proposal and Seller will use its
reasonable best efforts to solicit from its stockholders proxies in favor of
such approval and adoption and take all other action necessary or advisable to
secure the vote or consent of the stockholders of Seller required by the DGCL,
the Seller Charter, the Seller Bylaws or otherwise to effect the transactions
contemplated hereby. Seller shall not require any vote greater than a majority
of the votes entitled to be cast by the holders of the issued and outstanding
shares of Seller Common Stock for approval of the Acquisition Proposal.
Notwithstanding anything to the contrary contained in this Agreement, the
Seller may adjourn or postpone the Seller Special Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement is provided to its stockholders in advance of a vote on the
Acquisition Proposal or, if as of the time for which the Seller Special
Meeting is originally scheduled (as set forth in the Proxy Statement) there
are insufficient shares of Seller Common Stock represented (either in person
or by proxy) to constitute a quorum necessary to conduct the business of the
Seller Special Meeting.
3.2 Proxy Statement.
---------------
(a) Preparation and Filing. As promptly as practicable but in no
event later than 30 calendar days after the date of this Agreement, Seller
shall prepare and, subject to review and comment by Purchaser, file with the
Commission a proxy statement (the "Proxy Statement") in connection with the
transactions contemplated hereby. The Proxy Statement shall include the
recommendation of the Seller Board in favor of approval and adoption of the
Acquisition Proposal, except to the extent the Seller Board shall have
withdrawn or modified its approval or recommendation of this Agreement or the
transactions contemplated hereby as permitted by Section 6.5.
(b) Commission Comments; Amendments and Supplements. Seller shall
notify Purchaser promptly after the receipt of any comments of the Commission
on, or of any request by the Commission for amendments or supplements to, the
Proxy Statement and shall supply Purchaser with copies of all correspondence
between Seller or any of its representatives and the Commission with respect
to the Proxy Statement. Seller shall use its reasonable best efforts to
respond to any comments from the Commission with respect to the preliminary
Proxy Statement and to make any further filings (including amendments or
supplements thereto or, if necessary or appropriate, amendments to any
periodic report filed by Seller with the Commission) in connection therewith
that Seller shall deem necessary, proper or desirable and shall cause the
definitive Proxy Statement to be mailed to Seller's stockholders at the
earliest practicable time. If at any time prior to the Closing Date, any event
shall occur relating to Purchaser, Seller or any of their respective
Subsidiaries or any of their respective officers, directors, partners or
Affiliates which should be described in an amendment or supplement to the
Proxy Statement, such party shall inform the other promptly after becoming
aware of such event. Whenever Purchaser or Seller learn of the occurrence of
any event which should be described in an amendment of, or a supplement to,
the Proxy Statement, the parties shall cooperate to promptly cause such
amendment or supplement to be prepared, filed with and cleared by the
Commission and, if required by applicable Law, disseminated to the persons and
in the manner required.
3.3 Reasonable Best Efforts.
-----------------------
Subject to the terms and conditions of this Agreement and applicable
Law, each of the parties hereto shall use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement as soon as reasonably practicable,
including such actions or things as any other party hereto may reasonably
request in order to cause any of the conditions to such other party's
obligation to consummate such transactions specified in Article VIII to be
fully satisfied. Without limiting the generality of the foregoing, the parties
shall (and shall cause their respective directors, officers and Subsidiaries,
and use their reasonable best efforts to cause their respective Affiliates,
employees, agents, attorneys, accountants and representatives, to) consult and
fully cooperate with and provide reasonable assistance to each other in (i)
the preparation and filing with the Commission of the Proxy Statement and any
necessary amendments or supplements to any of the foregoing; (ii) using all
reasonable best efforts to obtain all necessary consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications, or other
permissions or actions by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to, any Governmental
Authority or other Person; (iii) using all reasonable best efforts to cause to
be lifted any permanent or preliminary injunction or restraining order or
other similar order issued or entered by any court or Governmental Authority
(an "Injunction") of any type referred to in Sections 8.2(d) and 8.3(c); (iv)
providing all such information about such party, its Subsidiaries and its
officers, directors, partners and Affiliates to, and making all applications
and filings with, any Governmental Authority or other Person as may be
necessary or reasonably requested in connection with any of the foregoing; and
(v) in general, consummating and making effective the transactions
contemplated hereby; provided, however, that in order to obtain any consent,
approval, waiver, license, permit, authorization, registration, qualification,
or other permission or action or the lifting of any Injunction, or causing to
be rescinded or rendered inapplicable any statute, rule or regulation,
referred to in clause (ii) of this sentence, no party shall be required to pay
any consideration (other than customary filing and similar fees), to divest
itself of any of, or otherwise rearrange the composition of, its assets or to
agree to any of the foregoing or any other condition or requirement that
limits, restricts or otherwise imposes requirements on the existence or
operations of the parties or any of their respective Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE NETHERLANDS SUBSIDIARY
Except as set forth in the Seller Disclosure Letter prepared by
Seller and the Netherlands Subsidiary and delivered to Purchaser
simultaneously with the execution hereof, the Seller and the Netherlands
Subsidiary each hereby represents and warrants, jointly and severally, to
Purchaser as follows:
4.1 Authority; No Conflicts; Governmental Consents; Corporate
---------------------------------------------------------
Matters.
-------
(a) Seller (i) is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and (ii) has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Seller
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership of its properties makes qualification necessary, except where the
failure to be so qualified would not reasonably be likely to have a Material
Adverse Effect on the Seller. Seller has made available to Purchaser true and
complete copies of the Seller Charter and Seller Bylaws in effect on the date
hereof. No corporate action has been taken with respect to any amendment to
the Seller Charter or the Seller Bylaws (except for any such amendments that
have become effective and are reflected in the copies of the Seller Charter
and the Seller Bylaws delivered by Seller to Purchaser as described in the
preceding sentence) and no such corporate action is currently proposed.
Seller's minute books, true and complete copies of which have been made
available to Purchaser, contain the minutes (or draft copies of the minutes)
of all meetings of directors and stockholders of Seller since January 1, 2002
until the date hereof, and (subject to the proviso below) such minutes
accurately and fairly reflect in all material respects the actions taken at
such meetings; provided, however, that Seller shall have no obligation to make
available to Purchaser any draft minutes and shall be permitted to redact
portions of minutes that relate to the sale of the North America Business or
the Non-North America Business, or of the Seller or the Netherlands
Subsidiary, and negotiations with the parties to this Agreement, their
respective Affiliates and other parties, other than materials relating to
negotiations with Customers.
(b) Each of Seller and the Netherlands Subsidiary has all requisite
corporate power and authority to enter into this Agreement and the Transaction
Documents and, subject to Seller obtaining the approval of its stockholders
specified in Section 4.15, to perform its obligations hereunder and consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by each of Seller and the Netherlands Subsidiary of this Agreement
and the Transaction Documents and the consummation by each of Seller and the
Netherlands Subsidiary of the transactions contemplated hereby and thereby
have been duly and validly authorized by the Seller Board and the board of
directors of the Netherlands Subsidiary, respectively, and by all other
necessary corporate action on the part of each of Seller and the Netherlands
Subsidiary, subject, in the case of the consummation by Seller and the
Netherlands Subsidiary of the transactions contemplated hereby and thereby, to
the approval of the Seller's stockholders described in the previous sentence.
This Agreement has been duly executed and delivered by Seller and the
Netherlands Subsidiary and is, and each of the Transaction Documents, when
duly executed and delivered by Seller and the Netherlands Subsidiary, as
applicable, will be, assuming due and valid authorization and delivery by
Purchaser, in each case, a valid and binding obligation of Seller and the
Netherlands Subsidiary, enforceable against Seller and the Netherlands
Subsidiary, as applicable, in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
(c) The execution and delivery by each of Seller and the Netherlands
Subsidiary of this Agreement does not and the execution and delivery of the
Transaction Documents will not, and the performance by each of Seller and the
Netherlands Subsidiary of its obligations hereunder or thereunder and the
consummation by each of Seller and the Netherlands Subsidiary of the
transactions contemplated hereby and thereby will not:
(i) assuming approval and adoption of the Acquisition Proposal
by the Seller's stockholders as contemplated by Section 4.15,
conflict with or violate the Seller Charter or the Seller Bylaws or
the charter, bylaws or similar organizational documents of any
Subsidiary of Seller;
(ii) require any consent, approval, order or authorization of
or other action by any Governmental Authority (a "Governmental
Consent") or any registration, qualification, declaration or filing
with or notice to any Governmental Authority (a "Governmental
Filing"), in each case on the part of Seller or any Subsidiary of
Seller, except for (A) the Governmental Consents and Governmental
Filings with foreign, state and local Governmental Authorities
described in Section 4.1(c)(ii) of the Seller Disclosure Letter, and
(B) the filing with the Commission of (1) the Proxy Statement as
contemplated by Section 3.2 and (2) such reports under Sections
13(a), 13(d) or 15(d) of the Exchange Act as may be required in
connection with this Agreement or the transactions contemplated
hereby;
(iii) except as described on Section 4.1(c)(iii) of the Seller
Disclosure Letter, require, on the part of Seller or any Subsidiary
of Seller, any consent by or approval or authorization of or notice
to any other Person (other than a Governmental Authority), under any
Assigned Contract;
(iv) conflict with or result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination under, or acceleration of any
obligation or any increase in any payment required by (any such
conflict, violation, breach, default, right of termination or
acceleration or increase, a "Violation"), any Contract; or
(v) assuming approval and adoption of the Acquisition Proposal
by the Seller's stockholders as described in Section 4.15 and
assuming that the Governmental Consents and Governmental Filings
specified in subclause (ii) of this Section 4.1(c) are obtained, made
and given, result in a Violation of, under or pursuant to any law,
rule, regulation, order, judgment or decree applicable to Seller or
any Subsidiary of Seller, or by which any of their respective
properties or assets are bound.
(d) The Netherlands Subsidiary is a corporation, duly organized and
validly existing under the laws of the jurisdiction in which it is organized
and is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which qualification is necessary, except
where the failure to be so qualified would not reasonably be likely to have a
Material Adverse Effect on the Seller. The Netherlands Subsidiary has all
necessary power and authority to own, lease and operate its properties and to
conduct its business as it is now being conducted. Seller has heretofore made
available to Purchaser true and complete copies of the certificate of
incorporation and by-laws, or other comparable organizational and governing
documents, of the Netherlands Subsidiary, each as currently in effect. The
Netherlands Subsidiary is a directly, wholly-owned Subsidiary of Seller. The
minute books of the Netherlands Subsidiary, true and complete copies of which
have been made available to Purchaser, contain the minutes (or draft copies of
the minutes) of all meetings of directors and stockholders (or their
respective equivalents) of the Netherlands Subsidiary, and such minutes
accurately and fairly reflect in all material respects the actions taken at
such meetings; provided, however, that Seller shall have no obligation to make
available to Purchaser any draft minutes and shall be permitted to redact
portions of minutes that relate to the sale of the North America Business or
the Non-North America Business, or of the Seller or the Netherlands
Subsidiary, and negotiations with the parties to this Agreement, their
respective Affiliates and other parties (but not including negotiations with
Customers).
4.2 SEC Filings; Financial Statements; Absence of Changes.
-----------------------------------------------------
(a) Seller (i) has made available to Purchaser accurate and complete
copies of all reports, registration statements, definitive proxy statements
and other documents (including exhibits and in each case together with all
amendments thereto) filed by Seller with the Commission on or after September
16, 2003 to the date of this Agreement, and (ii) agrees to timely file, and to
make available to Purchaser promptly after the filing thereof true and
complete copies of, all reports, registration statements, proxy statements and
other documents (including exhibits and in each case together with all
amendments thereto) (such reports, registration statements, proxy statements
and other documents, together with any amendments thereto, are collectively
referred to as the "Seller Commission Filings"). The Seller Commission Filings
filed with the Commission constitute, and the Seller Commission Filings to be
made after the date hereof and on or before the Closing Date will constitute,
all of the documents (other than preliminary materials) that Seller was or
will be required to file with the Commission from September 16, 2003, to the
date hereof and the Closing Date, respectively. As of their respective filing
dates (or if amended or superseded by a filing, then on the filing date of
such amending or superseding filing), the Seller Commission Filings (i) were,
and will be, prepared in accordance, and complied, or will comply, in all
material respects, with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Seller Commission Filings and (ii)
did not, and will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) Each of the audited consolidated financial statements and
unaudited interim financial statements (including, in each case, any related
notes thereto) contained (or to be contained) in the Seller Commission Filings
(the "Seller Financials"), as of their respective filing dates, (i) complied,
or will comply, in all material respects with the published rules and
regulations of the Commission with respect thereto, (ii) was, or will be,
prepared in accordance with GAAP (except as may be indicated in the notes
thereto) and (iii) fairly presented, or will fairly present, in all material
respects the consolidated financial position of Seller as at the respective
dates thereof and the results of Seller's operations and cash flows for the
periods indicated, except that the unaudited interim financial statements may
not contain footnotes and were or are subject to normal and recurring year-end
adjustments; provided, however, that no representation is made with respect to
any financial information included in the proxy statement relating to the
transaction contemplated by the Double C Agreement or any filing made on Form
8-K relating thereto. The balance sheet of Seller contained in Seller's Form
10-Q for the quarter ended February 28, 2005 as filed with the Commission is
hereinafter referred to as the "Seller Balance Sheet."
(c) Except as disclosed in the Seller Balance Sheet or as disclosed
in Section 4.2(c) of the Seller Disclosure Letter, Seller and its Subsidiaries
have no Liabilities required by GAAP to be set forth on a consolidated balance
sheet that were not reflected or reserved against in accordance with GAAP in
the Seller Balance Sheet which are, individually or in the aggregate, material
to the Non-North America Business, results of operations or financial
condition of Seller and its Subsidiaries, except for (i) liabilities incurred
since the date of the Seller Balance Sheet in the ordinary course of business
consistent with past practices that are not, individually or in the aggregate,
material to the Non-North America Business or Seller and its Subsidiaries and
(ii) Liabilities incurred pursuant to this Agreement. Except for lease
payments due under the UK Lease that are not yet due and payable and
Liabilities relating to the Business Employees incurred since the date of the
Seller Balance Sheet in the ordinary course of business or other accounts
payable incurred since the date of the Seller Balance Sheet in the ordinary
course necessary for the operation of the business conducted by the
Netherlands Subsidiary, the Netherlands Subsidiary has no Liabilities required
by GAAP to be set forth on a consolidated balance sheet that were not
reflected or reserved against in accordance with GAAP in the Seller Balance
Sheet.
(d) Absence of Certain Changes, Events and Conditions. Except as
otherwise disclosed in the Seller Commission Filings filed prior to the date
of this Agreement or as set forth on Section 4.2(d) of the Seller Disclosure
Letter, since February 28, 2005 through the date of this Agreement, there has
not been any change, and no event has occurred and no condition exists, that
individually or together with all other such changes, events and conditions,
has had or is reasonably likely to have a Material Adverse Effect on the
Seller, the Non-North America Business or the Transferred Assets.
(e) The financial model that estimates the operating expenses and
receipts for the Non-North America Business that has previously been provided
to Purchaser was prepared in good faith, is based upon reasonable assumptions
based upon all material information regarding the matters set forth therein
that are known to Seller, and represents Seller's current reasonable estimate
of the future financial performance of the Non-North America Business.
4.3 Proxy Statement.
---------------
None of the information supplied or to be supplied by or on behalf of
Seller for inclusion or incorporation by reference in, and that is included or
incorporated by reference in the Proxy Statement or any amendment or
supplement thereto, will, at the time of mailing of the Proxy Statement to the
Seller's stockholders or at the time of the Seller Special Meeting or any
other meeting of the Seller's stockholders to be held in connection with the
transactions contemplated hereby, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
and the furnishing thereof by Seller will comply in all respects with the
applicable requirements of the Securities Act, the Exchange Act and the DGCL.
4.4 Taxes.
-----
(i) Each of Seller and the Netherlands Subsidiary has filed or caused
to be filed in a timely manner (taking into account valid extensions of time
to file) all income Tax Returns and all other material Tax Returns it was
required to file with respect to the Transferred Assets and the Non-North
America Business, and all such Tax Returns are correct and complete in all
material respects; (ii) each of Seller and the Netherlands Subsidiary has paid
or caused to be paid, or has made adequate provision on the most recent Seller
Financials for the payment of, all Taxes shown as owing on any such Tax Return
and all other material Taxes owed by such entity with respect to the
Transferred Assets and the Non-North America Business (whether or not such
Taxes are shown on any Tax Return); (iii) each of Seller and the Netherlands
Subsidiary has duly and timely withheld, remitted and paid all Taxes required
by Law to have been withheld and paid in connection with any amounts paid,
credited or owing to any Persons; (iv) the Netherlands Subsidiary has duly and
timely collected all amounts on account of any sales or transfer taxes,
including goods and services, required by Law to be collected by it and has
duly and timely remitted, and will duly and timely collect and remit, to the
appropriate Governmental Authority, any such amounts required by Law to be
collected and remitted by it in respect of any matter, transaction or event
arising prior to Closing; (v) none of the Tax Returns filed by Seller or the
Netherlands Subsidiary with respect to the Transferred Assets or the Non-North
America Business is currently being audited by any taxing authority, and there
are no other examinations, requests for information or other administrative or
judicial proceedings pending or threatened in writing with respect to any
Taxes of Seller or the Netherlands Subsidiary that could materially and
adversely affect Purchaser after the Closing; (vi) no taxing authority has
asserted in writing any deficiency or claim for additional Taxes against, or
any adjustment of Taxes relating to, Seller or the Netherlands Subsidiary with
respect to Transferred Assets or the Non-North America Business; (vii) there
are no outstanding Liens for taxes that have been filed by any taxing
authority against any of the Transferred Assets except Liens for current Taxes
that are not yet due and payable or being contested in good faith; and (viii)
the Netherlands Subsidiary will not sell or otherwise transfer a "United
States real property interest," within the meaning of Section 897(c) of the
Code, to Purchaser (or an Affiliate of Purchaser) in connection with this
Agreement.
4.5 Assets Other than Real Property Interests.
-----------------------------------------
(a) Seller and the Netherlands Subsidiary each has good, valid and
marketable title to all of the Transferred Assets owned or held by it, in each
case free and clear of all Liens except Permitted Liens. All Transferred
Assets, including machinery and equipment, owned, leased or otherwise used by
Seller or the Netherlands Subsidiary are in good operating condition and
repair and are suitable and adequate for the uses to which they are being put.
Upon the Closing, Purchaser will have good and transferable title to the
Transferred Assets, free and clear of any Liens except Permitted Liens.
(b) With the exception of the Excluded Assets, the Transferred Assets
comprise all the assets employed by Seller or its Subsidiaries in connection
with the Non-North America Business. The Transferred Assets comprise all the
assets necessary for the conduct of the Non-North America Business immediately
following the Closing in substantially the same manner as currently conducted.
4.6 Real Property Interests.
-----------------------
Seller has made available to Purchaser a true and complete copy of
the San Mateo Lease. The San Mateo Lease is legal, valid, binding, enforceable
and in full force and effect and represents the entire agreement between the
landlord and Seller with respect to such property. Neither Seller nor, to the
knowledge of Seller, any other party to such lease is in breach or default in
any material respect of such lease, and, to the knowledge of Seller, no event
has occurred that, with notice or lapse of time, or both, would constitute a
material Violation under such San Mateo Lease. The Transferred Assets include
no other real property interest of any kind.
4.7 Intellectual Property.
---------------------
Notwithstanding anything to the contrary and other than Section
4.7(k), the representations and warranties of this Section 4.7 only apply to
the Transferred Assets being conveyed to the Purchaser pursuant to Section 2.1
and the conduct of the Non-North America Business. Except as set forth in
Section 4.7 of the Seller Disclosure Letter (where applicable):
(a) Ownership. Section 4.7(a)(i) of the Seller Disclosure Letter sets
forth a true and complete list of all Registered Non-North America
Intellectual Property Rights and a description of the Non-North America
Navigator Platforms that will be conveyed to the Purchaser as part of the
Non-North America Intellectual Property, specifying as to each such
Intellectual Property right, as applicable, (x) whether such Intellectual
Property right is owned by, or licensed to, Seller or the Netherlands
Subsidiary and assigned to Purchaser, (y) the owner of such Intellectual
Property right, and (z) the jurisdiction by or in which such Intellectual
Property right has been issued or registered or in which an application for
such issuance or registration has been filed including the registration or
application numbers thereof. The Seller is the sole owner of all Non-North
America Intellectual Property purported to be owned by the Seller or its
Subsidiaries and will provide Purchaser with good title to all Non-North
America Intellectual Property, and after the Closing, Purchaser or its
designee pursuant to Section 10.1 will exclusively own and, have the exclusive
right to use the Non-North America Navigator Platforms and enforce all rights
associated with such Non-North America Intellectual Property, subject to the
Technology Cross-License Agreement and License Agreements that exist as of the
Closing as set forth in Section 4.7(b) of the Seller Disclosure Letter. Except
as set forth in Section 4.7(b) of the Seller Disclosure Letter, Seller has not
granted to any Person not a party to this Agreement a license to any of the
Non-North America Intellectual Property, nor are any of the Non-North America
Intellectual Property licensed to Seller or any other Person or jointly owned
by Seller and any other Person. Except for matters in prosecution before any
Government Authority for registration of Intellectual Property of which there
are no third party interference actions pending or threatened, none of the
Non-North America Intellectual Property is the subject of any action seeking
to deny, modify or revoke any related registration or application, there are
no third party interference actions pending with respect to the matters in
prosecution, and Seller has received no written or oral notice in which such
action is threatened. Seller has the right to transfer or assign to Purchaser
the Non-North America Intellectual Property free and clear of all
encumbrances, and the Non-North America Intellectual Property assigned to
Purchaser under this Agreement constitutes all of the Intellectual Property
and technology used in or reasonably necessary to enable Seller or Purchaser
to run the Non-North America Business as now conducted or contractually
obligated by the Seller and its Subsidiaries under Customer agreements, to be
conducted, including the design, development, manufacture, use, import,
licensing and sale of the Non-North America Navigator Platforms. Except as set
forth in Section 4.7(a)(ii) of the Seller Disclosure Letter, Seller has the
right to make, use, sell, offer for sale, import, copy, distribute, modify,
perform, display, disclose, market, or otherwise enforce, practice, lease,
license or otherwise exploit the products and services of the Non-North
America Business free from any royalty or other obligation to third parties.
The consummation of the transactions contemplated by this Agreement will not
alter, encumber, impair or extinguish any of the Intellectual Property rights
in the Non-North America Intellectual Property. The Government Authority Fee
Schedule delivered pursuant to Section 2.5(i) sets forth maintenance fees,
responses to official action or other action that will become due within 90
days after the Closing Date.
(b) License Agreements. Section 4.7(b) of the Seller Disclosure
Letter sets forth a true and complete list of all License Agreements,
specifying the name of the parties thereto, and whether the License Agreement
is an inbound license or an outbound license. Each License Agreement is valid
and binding on all parties thereto and enforceable in accordance with its
terms and is assignable to Purchaser as provided herein. Seller and its
Subsidiaries are in compliance with, and have not breached any terms of any
such License Agreement and, to the knowledge of Seller, all other parties to
such License Agreement are in compliance with, and have not breached any term
of, such License Agreements. Seller has the right to use, pursuant to valid
licenses, all software development tools, library functions, compilers and all
other third-party software that are used or necessary to create, modify,
compile, operate or support any software that is Non-North America
Intellectual Property or is incorporated into the Non-North America Navigator
Platforms. The consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation,
termination or suspension of any License Agreement. Following the Closing
Date, the Purchaser will be permitted to exercise all of the Seller's rights
under such License Agreement to the same extent the Seller would have been
able to had the transactions contemplated by this Agreement not occurred and
without being required to pay any additional amounts or consideration other
than fees, royalties or payments which the Seller would otherwise be required
to pay had such transactions contemplated hereby not occurred.
(c) Noninfringement. The copying, modification, display, performance,
disclosure, lease, sublicenses, sale, manufacture, offer for sale, importation
or other use (collectively, the "Use") of the North America Navigator
Platforms and North America Intellectual Property pursuant to the rights
granted under the Technology Cross-License Agreement, the Non-North America
Navigator Platform (and the Use thereof) and/or the conduct of the Non-North
America Business as currently conducted and as contractually obligated by
Seller to Customers to be conducted do not infringe or misappropriate any
Intellectual Property right of any third party or violate any right of any
third party (including any right to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any jurisdiction in
which it currently conducts business, and to the knowledge of the Seller, any
other jurisdiction, and neither Seller nor its Subsidiaries have received
written or oral notice alleging anything to the contrary, nor to the knowledge
of Seller is there a valid basis for a third party to allege any of the
foregoing.
(d) Creation of Non-North America Intellectual Property. All of the
Non-North America Intellectual Property purported to be owned by Seller or the
Netherlands Subsidiaries has been lawfully acquired or created by employees of
Seller or its Subsidiaries acting within the scope of their employment or by
independent contractors of Seller or its Subsidiaries who have executed
agreements expressly assigning all right, title and interest in such Non-North
America Intellectual Property to Seller or its Subsidiaries. Seller has
provided to Purchaser true and correct copies of the forms for such
assignments. No person who has provided to Seller or any of its Subsidiaries
any Non-North America Intellectual Property owned by or licensed to Seller has
ownership rights or license rights to improvements, enhancements or other
modifications or derivatives made by or for the Seller in such Intellectual
Property. No government, military or quasi governmental funding, facilities of
a university, college, other educational institution or research center or
funding from similar third parties was used in the development of any
Non-North America Intellectual Property. In each case in which the Seller or
any of its Subsidiaries has acquired, other than through a license, any
Transferred Asset from any person, the Seller or its Subsidiary has obtained a
valid and enforceable assignment sufficient to irrevocably transfer all rights
in and to all such Transferred Asset (including all associated Intellectual
Property and the right to seek past and future damages with respect thereto)
to the Seller. Seller has recorded any assignment of registered Intellectual
Property assigned to the Company with the relevant Governmental Entity in
accordance with applicable laws and regulations in each jurisdiction in which
such assignment is required to be recorded.
(e) Validity. To the knowledge of Seller, all rights in the
Registered Non-North America Intellectual Property (other than pending
applications) are valid and enforceable and the Seller and its Subsidiaries
have no knowledge of any facts or circumstances that would render any
Intellectual Property invalid or unenforceable, and no written or oral notice
has been received alleging anything to the contrary. All required maintenance
or similar fees or annuities for Registered Non-North America Intellectual
Property have been timely paid and all required affidavits and renewals due
through the Closing Date have been filed or will be filed by the Closing Date,
in connection with the Registered Non-North America Intellectual Property
(including pending applications). To the knowledge of Seller and the
Netherlands Subsidiary, there have been no acts or omissions that reasonably
could be construed as inequitable conduct that would adversely affect the
Patents within the Non-North America Intellectual Property. Neither Seller nor
any of its Subsidiaries are a party to any source code escrow agreement that
includes any portion of the Non-North America Navigator Platforms.
(f) Confidentiality. No Trade Secret of the Non-North America
Business has been disclosed to any third party other than pursuant to written
non-disclosure agreements, and Seller and its Subsidiaries have used
commercially reasonable efforts to preserve the secrecy of Trade Secrets and
all Non-North America Intellectual Property or other information the value of
which to Seller is dependent upon maintenance of the confidentiality thereof.
Seller has disclosed or made available the source code and system
documentation relating to the Non-North America Navigator Platform only to
employees or consultants of Seller who required such disclosure or access and
who have executed written confidentiality agreements governing their use of
such source code and documentation. There is no unauthorized use, infringement
or misappropriation of the Non-North America Intellectual Property by any
current or former employee, officer, consultant or independent contractor of
Seller or its Affiliates.
(g) No Infringers. To the knowledge of Seller and the Netherlands
Subsidiary, no third party, employee of Seller or its Subsidiaries or former
employee of Seller or its Subsidiaries has infringed or misappropriated any
Non-North America Intellectual Property.
(h) No Restrictions. There are no settlements, forbearances to ▇▇▇,
consents, judgments or orders that do or may: (i) restrict Seller's or its
Subsidiaries' rights to use any Non-North America Intellectual Property; (ii)
restrict the conduct of the Non-North America Business in order to accommodate
a third party's Intellectual Property, including entering into any agreement
under which Seller or any of its Subsidiaries has granted any covenant not to
▇▇▇, assert or exploit any Intellectual Property right of the Seller or any of
its Subsidiaries, or entering into any agreement under which Seller or any of
its Subsidiaries has granted any person the right to bring a lawsuit for
infringement or misappropriation of any Non-North America Intellectual
Property, (iii) permit third parties to use any Non-North America Intellectual
Property other than existing License Agreements set forth in the Seller
Disclosure Letter, or (iv) permit the rights of the Seller or its Subsidiary
in any Non-North America Intellectual Property to lapse or enter the public
domain. Each item of Seller Intellectual Property included in the Transferred
Assets is free and clear of any liens, except for the License Agreements as
set forth in Section 4.7(b) of the Seller Disclosure Letter and Seller's
standard form end user agreements. Seller has provided to Purchaser a true and
complete copy of form end user agreements. Seller has not transferred
ownership of, or entered into any agreement under which it has Seller's the
obligation to transfer any ownership of, or granted any exclusive license to
use or distribute (or entered into any agreement under which it has the
obligation to grant any exclusive license to use or distribute), or authorized
the retention of any exclusive rights to use or joint ownership of, any
Non-North America Intellectual Property.
(i) Open Source Code. None of the software, technology and platforms
included within the Non-North America Intellectual Property contain any
software code that is licensed under any terms or conditions that require that
any portion of the software included in such Non-North America Intellectual
Property be (i) made available or distributed in source code form other than a
source code escrow; (ii) licensed for the purpose of making derivative works;
(iii) licensed under terms that allow reverse engineering, reverse assembly or
disassembly of any kind other than permitted by applicable law; or (iv)
redistributable at no charge.
(j) No Viruses. Seller has taken reasonable precaution in using
antivirus detection software to test and prevent the Non-North America
Intellectual Property and Non-North America Navigator Platforms (but not
including demonstration or evaluation products) from containing any disabling
codes or instructions (a "Disabling Code"), and any material virus or other
intentionally created, undocumented contaminant (a "Contaminant"), that may,
or may be used to, provide unauthorized access, or unauthorized modifications
or deletions, or otherwise damage or disable any Non-North America
Intellectual Property or the Non-North America Navigator Platforms (or systems
which they interact or interoperate with) or that may result in damage to any
of the foregoing. Seller has also taken reasonable precaution in using
antivirus detection software to test and prevent components used in or with
the Non-North America Intellectual Property and Non-North America Navigator
Platforms obtained from third person suppliers from containing any Disabling
Codes or Contaminants that may, or may be used to, access, modify, delete,
damage or disable any Non-North America Intellectual Property or the Non-North
America Navigator Platforms (or systems which they interact or interoperate
with) or that might result in damage thereto. Seller and the Netherlands
Subsidiary have taken reasonable steps and implemented reasonable procedures
(based on standard industry practices) to ensure that its information
technology systems utilized by Seller and the Netherlands Subsidiary in the
operation of their business are free from Disabling Codes and Contaminants.
Seller and the Netherlands Subsidiary have in place appropriate disaster
recovery plans, procedures and facilities and have taken all reasonable steps
to safeguard its information technology systems utilized by Seller and the
Netherlands Subsidiary in the operation of their business and restrict
unauthorized access thereto.
(k) Technology Cross-License; North America Intellectual Property.
The assignment of the Technology Cross-License by Seller to Purchaser will
give Purchaser the right to use the North America Intellectual Property
outside North America in accordance with the terms thereof including without
limitation the right to develop products. All representations and warranties
with respect to the North America Intellectual Property made by Seller to
Double C in Section 4.7 of the Double C Agreement (except as otherwise set
forth in the Seller Disclosure Letter thereof) are hereby made to Purchaser
and are incorporated herein by reference, solely for and to the extent that
such representations and warranties are applicable to Purchaser's exercise of
its rights under the Technology Cross-License.
4.8 Contracts.
---------
(a) Seller has made available to Purchaser accurate and complete
copies of each of the Assigned Contracts as of the date hereof (including
exhibits, schedules, roadmaps, annexes and in each case, together with all
amendments thereto), all of which are listed on Schedule 1.1(a)(i). Each of
the Assigned Contracts is legal, valid, binding, enforceable and in full force
and effect and is not subject to any material Violation. Section 4.8(a) of the
Seller Disclosure Letter lists all Contracts (each Contract listed in Section
4.8(a) of the Seller Disclosure Letter, a "Material Contract", and
collectively the "Material Contracts") that are material to the conduct of the
Non-North America Business as presently conducted and to which Seller or any
of its Subsidiaries is a party and that are:
(i) material Contracts entered into by Seller or its
Subsidiaries that bind Seller or its Subsidiaries with respect to the
Transferred Assets;
(ii) Contracts with television networks (including broadcast
and cable networks), cable and direct broadcast system operators,
manufacturers of televisions and set-top boxes and advertisers;
(iii) Contracts between Seller or an Affiliate of Seller, on
the one hand, and any Subsidiary of Seller, on the other hand;
(iv) Contracts establishing any joint venture, partnership,
strategic alliance, or other material collaboration;
(v) Contracts that limit, or purport to limit, the ability of
Seller or any of its Subsidiaries to, compete in any line of business
or with any Person or in any geographic area or during any period of
time or that require Seller or any of its Subsidiaries to deal
exclusively with a given Person in respect of a given matter;
(vi) Contracts for the sale of any Transferred Asset or the
grant of any preferential rights to purchase any Transferred Asset or
requiring the consent of any party to the transfer thereof;
(vii) Contracts in effect as of the date of this Agreement to
which Seller or any of its Subsidiaries is a party and that are
material to the conduct of the Non-North America Business, or the use
or operation of the Transferred Assets, as presently conducted.
(b) Except as disclosed in Section 4.8(b) of the Seller Disclosure
Letter, (i) neither Seller nor any of its Subsidiaries is in material default
under the terms of any Material Contract or Assigned Contract or in the
payment of any principal of or interest on any Indebtedness and (ii) to the
knowledge of Seller and the Netherlands Subsidiary, no counterparty to any
Material Contract or Assigned Contract is in material default thereunder.
(c) Seller has made available to Purchaser copies of all agreements
between Seller or the Netherlands Subsidiary and their employees and/or Seller
or the Netherlands Subsidiary and their independent contractors that relate to
the creation of any of the Transferred Assets, including "work for hire"
agreements.
(d) The Transferred Assets include all information and other
materials that Purchaser may be required to return to any counterparty to any
nondisclosure, confidentiality or other similar agreement included in the
Assigned Contracts to the extent required by the terms thereof.
4.9 Legal Proceedings.
-----------------
Other than the Patent Lawsuit and except as set forth in Section 4.9
of the Seller Disclosure Letter, as of the date of this Agreement, there is no
(a) Legal Proceeding pending or, to the knowledge of Seller or the Netherlands
Subsidiary, threatened in writing, against, involving or affecting the
Non-North America Business or the Transferred Assets, (b) material judgment,
decree, Injunction, rule, or order of any Governmental Authority against the
Non-North America Business or the Transferred Assets, or (c) Legal Proceeding
pending or, to the knowledge of Seller or the Netherlands Subsidiary,
threatened in writing, against Seller or any Subsidiary of Seller that seeks
to restrain, enjoin or delay the consummation of the transactions contemplated
by this Agreement or that seeks damages in connection therewith. Seller has
delivered or made available to Purchaser a true and complete copy of all
pleadings and other filings related to the Patent Lawsuit.
4.10 Licenses; Compliance with Regulatory Requirements.
-------------------------------------------------
(a) The Seller and its Subsidiaries hold all licenses, franchises,
ordinances, authorizations, permits, certificates, variances, exemptions,
final and enforceable orders and approvals, domestic or foreign (collectively,
the "Licenses"), required for or which are material to the ownership of the
Transferred Assets and the operation of the Non-North America Business, except
for those Licenses which the failure to hold would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect on
the Seller, the Non-North America Business or the Transferred Assets. Seller
and each of its Subsidiaries are in compliance with, and have conducted their
respective businesses so as to comply with, the terms of their respective
Licenses and with all applicable Laws, except where the failure so to comply
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Seller, the Non-North America
Business or the Transferred Assets. Without limiting the generality of the
foregoing, Seller and its Subsidiaries (i) have all material Licenses of
Governmental Authorities required for the operation of the facilities being
operated on the date hereof by Seller or any of its Subsidiaries (the
"Permits"), (ii) have duly and currently filed all reports and other material
information required to be filed with any Governmental Authority in connection
with such Permits and (iii) are not in violation of any of such Permits, other
than the lack of Permits, delays in filing reports or possible violations that
have not had and, would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Seller, the
Non-North America Business or the Transferred Assets.
(b) Except as set forth in Section 4.10(b) of the Seller Disclosure
Letter and as would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Non-North America
Business, (i) Seller and its Subsidiaries are in compliance in all material
respects with all applicable Environmental Laws, (ii) Seller and its
Subsidiaries hold all Permits required under Environmental Laws necessary to
enable them to own, lease or otherwise hold their assets and to carry on the
Non-North America Business as presently conducted, (iii) there are no
investigations, administrative proceedings, judicial actions, orders, claims
or notices that are pending or, to the knowledge of Seller and the Netherlands
Subsidiary, threatened directly against Seller or any of its Subsidiaries
arising under any Environmental Laws, (iv) there is no ongoing remediation of
or other response action to remove contamination or correct any material
adverse environmental or indoor air quality violation, and, to the knowledge
of Seller and the Netherlands Subsidiary, no Governmental Authority has
proposed or, to the knowledge of Seller and the Netherlands Subsidiary,
threatened in writing any such remediation or response against Seller or any
of its Subsidiaries, at any real property currently leased or owned by Seller
or any of its Subsidiaries, or resulting from any activity of Seller or any of
its Subsidiaries, and (v) neither Seller nor any of its Subsidiaries has
received any written notice that remains outstanding alleging a violation by
or liability of Seller or any of its Subsidiaries, under any Environmental
Laws. For purposes of this Agreement, the term "Environmental Laws" means any
Law governing the management of hazardous or toxic substances, the protection
of natural resources or wildlife, or public health and safety, including the
federal Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, and any state or foreign law counterpart.
4.11 Employee Benefits Matters.
-------------------------
(a) A complete list of all Employee Benefit Plans that provide
benefit coverage to Business Employees is contained in Section 4.11 of the
Seller Disclosure Letter. Seller has made available to Purchaser a copy (or,
with respect to any unwritten arrangement, a description) of each material
Employee Benefit Plan that provides benefit coverage to Business Employees and
the latest summary plan description.
(b) Each Employee Benefit Plan listed in Section 4.11 of the Seller
Disclosure Letter is and has been maintained in compliance with its terms and
the provisions of all applicable Laws, including ERISA and the Code, except
where failure to comply would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Seller, the
Non-North America Business or the Transferred Assets. Within the six (6) years
preceding the date hereof, none of Seller, the Netherlands Subsidiary or any
ERISA Affiliate has ever sponsored or maintained an "employee pension benefit
plan" subject to Title IV of ERISA or the minimum funding requirements of
Section 412 of the Code. None of Seller, the Netherlands Subsidiary or any
ERISA Affiliate has maintained or incurred any liability with respect to any
"multiemployer plan" (as defined in Section 3(37) of ERISA).
(c) Except as provided in Section 7.9, there are no Employee Benefit
Plans as to which Purchaser or any of Purchaser's Affiliates will be required
to make any contributions or with respect to which Purchaser or any of
Purchaser's Affiliates shall have any obligation or liability whatsoever.
(d) Section 4.11 of the Seller Disclosure Letter contains with
respect to the Business Employees a complete and accurate list of all
qualified beneficiaries, as defined under Section 4980B(g)(1) of the Code, as
of the effective date of this Agreement (including qualified beneficiaries who
are in the election period for continuation coverage but who have not yet
elected continuation coverage), the date of the applicable qualifying event
and the nature of the qualifying event relating to the duration of such
coverage. There have been no failures with respect to the Business Employees
to provide continuation coverage as required by Section 4980B(f) of the Code.
Seller agrees to provide to Purchaser at Closing an updated list of the
qualified beneficiaries with respect to Business Employees, as described
above, effective as of the Closing Date.
(e) Except as set forth in Section 4.11 of the Seller Disclosure
Letter, there is no Legal Proceeding pending or, to the knowledge of Seller
and the Netherlands Subsidiary, threatened with respect to any Employee
Benefit Plan covering Business Employees.
4.12 Labor and Employee Relations.
----------------------------
(a) Section 4.12 of the Seller Disclosure Letter contains a complete
list of all Business Employees, including a specific identification of the
entity that employs them, listing the title or position held, work location,
base salary, any commissions or other compensation payable to such employees
and leave status (if applicable). Except as set forth on Section 4.12 of the
Seller Disclosure Letter, neither the Seller nor any of its Subsidiaries is a
party to or obligated under any employment, or consulting or other arrangement
entered into or maintained for the benefit of its current or former employees,
temporary or leased workers or independent contractors related to the
Non-North America Business. Seller has made available to the Purchaser a true
and correct copy of each employment related agreement of the Business
Employees listed on Section 4.12 of the Seller Disclosure Letter. Each
Business Employee, independent contractor and temporary or leased worker has
been properly classified for employment tax and employee benefit plan
purposes. Seller and each of its Affiliates is and has been in material
compliance with all Laws relating to employment, including all such Laws
relating to wages, hours, collective bargaining, discrimination, pay equity,
employment equity, civil rights, safety and health and workers' compensation
except where such non-compliance would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on the
Seller or the Non-North America Business or the Transferred Assets or that
could result in Liability to Purchaser or its Affiliates after the Closing. No
employees of Seller or its Affiliates are covered by a collective bargaining
agreement or similar arrangement. No labor union or other collective
bargaining unit represents or claims to represent any of the Business
Employees. There are no union campaigns being conducted or threatened with
respect to Business Employees.
(b) Except as set forth in Section 4.12 of the Seller Disclosure
Letter, there is no Legal Proceeding pending or, to the knowledge of Seller
and the Netherlands Subsidiary, threatened with respect to any Business
Employee.
(c) Except for those Employment Contracts listed in Section 4.12 of
the Seller Disclosure Letter, there are no Employment Contracts which are not
terminable on the giving of reasonable notice in accordance with applicable
Law, nor are there any management agreements, retention bonuses or Employment
Contracts providing for cash or other compensation or benefits upon the
consummation of the transactions contemplated by this Agreement that could
reasonably be expected to result in any liability or obligation of the
Purchaser.
4.13 Fairness Opinion.
----------------
The Seller Board has received the opinion of ▇▇▇▇▇ & Company LLC to
the effect that, as of the date hereof, the Cash Consideration is fair, from a
financial point of view, to Seller (the "Fairness Opinion"). Seller has
delivered to Purchaser a true and complete copy of the executed Fairness
Opinion. Seller will include an executed copy of the Fairness Opinion in or as
an annex to the Proxy Statement.
4.14 Recommendation of the Seller Board.
----------------------------------
As of the date of this Agreement, the Seller Board, by vote at a
meeting duly called and held, has approved this Agreement, determined that the
transactions contemplated hereby are expedient and for the best interests of
Seller and Seller's stockholders and has unanimously adopted resolutions
(which resolutions have not, as of the date of this Agreement, been rescinded
or modified) recommending approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of Seller and directing
that this Acquisition Proposal be submitted to a vote at the Seller Special
Meeting.
4.15 Vote Required.
-------------
The only vote of stockholders of Seller required under the DGCL, the
Seller Charter, the Seller Bylaws or otherwise in order to consummate the
transactions contemplated by this Agreement, is the adoption and approval of
the Acquisition Proposal by the affirmative vote of a majority of the total
number of votes entitled to be cast by the holders of the issued and
outstanding shares of Seller Common Stock voting as a single class, and no
other vote or approval of or other action by the holders of any capital stock
of Seller is required for such approval and adoption.
4.16 Brokers.
-------
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller or
any of its Subsidiaries that is or will become an Assumed Liability or will
otherwise be payable by Purchaser.
4.17 Transactions with Affiliates.
----------------------------
Except as set forth in Section 4.17 of the Seller Disclosure Letter,
no Affiliate of Seller or the Netherlands Subsidiary (other than each other)
owns any property or right, tangible or intangible, that is used in the
Non-North America Business.
4.18 No Investment Company.
---------------------
Seller is not an "investment company" subject to the registration
requirements of, or regulation as an investment company under, the Investment
Company Act of 1940, as amended.
4.19 Insurance.
---------
Seller has made available to Purchaser a list of, and true and
complete copies of, all insurance policies and fidelity bonds relating to the
Non-North America Business. There is no material claim by Seller or its
Subsidiaries pending under any of such policies or bonds relating to the
Non-North America Business or the Transferred Assets as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds or in respect of which such underwriters have reserved their rights. All
premiums due under all such policies and bonds have been timely paid and
Seller and its Subsidiaries have otherwise complied in all material respects
with the terms and conditions of all such policies and bonds.
4.20 Rights Agreement.
----------------
Seller and the Seller Board have taken all necessary action under the
Rights Agreement, dated as of May 12, 2003, as amended, by and between Seller
and Equiserve Trust Company, N.A. (the "Seller Rights Agreement"), to (i)
render the Seller Rights Agreement inapplicable to the sale of the Transferred
Assets and the other transactions contemplated by this Agreement and the
Voting Agreement, and (ii) provide that (A) Purchaser shall not be deemed an
"Acquiring Person" (as defined in the Seller Rights Agreement) as a result of
the execution, delivery and performance of this Agreement, the Voting
Agreement or any of the transactions contemplated hereby or thereby, and (B)
no "Distribution Date" or "Stock Acquisition Date" (each as defined in the
Seller Rights Agreement) shall be deemed to have occurred as a result of the
execution, delivery and performance of this Agreement or any of the
transactions contemplated hereby. No Distribution Date or Stock Acquisition
Date has occurred prior to the date hereof. Seller has provided Purchaser with
a true and complete copy of the Seller Rights Agreement in effect on the date
hereof.
4.21 No Alternative Proposal.
-----------------------
As of the date hereof, Seller has not received any Alternative
Proposal that is currently effective and as of February 24, 2004, suspended
all discussions relating to any such potential Alternative Proposals.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to Seller and the
Netherlands Subsidiary as follows:
5.1 Authority; No Conflicts; Governmental Consents.
----------------------------------------------
(a) Purchaser (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and
(ii) has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
(b) Purchaser has all requisite corporate power and authority to
enter into this Agreement and the Transaction Documents and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Purchaser of this Agreement and the Transaction Documents and the consummation
by Purchaser of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser
and is, and, each of the Transaction Documents, when duly executed and
delivered by Purchaser will be, assuming due and valid authorization by Seller
and the Netherlands Subsidiary, in each case, a valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
(c) The execution and delivery by Purchaser of this Agreement does
not and the execution and delivery of the Transaction Documents will not, and
the performance by Purchaser of its obligations hereunder or thereunder and
the consummation by Purchaser of the transactions contemplated hereby and
thereby will not:
(i) conflict with or violate the certificate of incorporation
of Purchaser;
(ii) require any Governmental Consent or Governmental Filing,
in each case on the part of Purchaser, except for the Governmental
Consents and Governmental Filings with foreign, state and local
Governmental Authorities contemplated by or referred to in this
Agreement, including Section 4.1(c)(ii) of this Agreement or Section
4.1(c)(ii) of the Seller Disclosure Letter;
(iii) give rise to any Violation of any Contract to which
Purchaser is a party, by which Purchaser or any of its respective
assets or properties is bound or affected or pursuant to which
Purchaser is entitled to any rights or benefits;
(iv) assuming that the Governmental Consents and Governmental
Filings specified in subclause (ii) of this Section 5.1(c) are
obtained, made and given, result in a Violation of, under or pursuant
to any law, rule, regulation, order, judgment or decree applicable to
Purchaser or by which any of its properties or assets are bound,
except for such Violations that will not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser.
5.2 Proxy Statement.
---------------
None of the information concerning Purchaser supplied or to be
supplied by Purchaser for inclusion or incorporation by reference in, and that
is included or incorporated by reference in, the Proxy Statement or any
amendment or supplement thereto, will, at the time of mailing to the Seller's
stockholders or at the time of the Seller Special Meeting, contain any untrue
statement of a material fact, or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.3 Litigation.
----------
As of the date of this Agreement, there is no action, suit, inquiry,
proceeding or investigation by or before any court or Governmental Authority
pending or, to the knowledge of Purchaser, overtly threatened against or
involving Purchaser that is expected to have a Material Adverse Effect on
Purchaser or that questions or challenges the validity of this Agreement or
any action taken or to be taken by Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby.
5.4 Brokers.
-------
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Purchaser,
that is or will be payable by Seller.
5.5 Capital Resources.
-----------------
Purchaser has, and will have at the Closing Date, sufficient cash or
access to cash to pay the Cash Consideration, as adjusted, to Seller.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Access to Information.
---------------------
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Closing Date,
upon reasonable notice, Seller and the Netherlands Subsidiary will (and will
cause each of its Subsidiaries to) afford to the officers, employees, counsel,
accountants and other authorized representatives of Purchaser reasonable
access during normal business hours to all properties, personnel, books and
records relating to the Non-North America Business, the Transferred Assets and
the Assumed Liabilities and furnish to such Persons such financial and
operating data and other information concerning the Non-North America
Business, the Transferred Assets and the Assumed Liabilities, as such Persons
will from time to time reasonably request and instruct the officers,
directors, employees, counsel and financial advisors of Seller and its
Subsidiaries to discuss the Non-North America Business, the Transferred Assets
and the Assumed Liabilities and otherwise fully cooperate with the other party
in its investigation of the business of Seller and its Subsidiaries; provided,
however, that any such access shall be conducted at a reasonable time under
the supervision of personnel of the Seller or its Subsidiaries, as the case
may be; provided, further, however, that neither Purchaser nor its
representatives shall (i) have the right to conduct any intrusive
environmental investigations of any nature including any soil, water, air or
structural sampling at the Non-North America Business or any property related
thereto; or (ii) subject to Article VII, communicate to Seller's employees,
directly or indirectly, without the prior consent of Seller (which consent
shall not be unreasonably withheld).
(b) At the Closing and for a reasonable time following Closing, not
less than 6 months, Seller and the Netherlands Subsidiary shall make available
to Purchaser copies of all books and records relating to the Non-North America
Business, and sales literature, product information, employment records and
files and other information and/or data related to or used by Seller and its
Subsidiaries in, or that arise out of, the operation of the Non-North America
Business and are not included in the Records, that the Purchaser may
reasonably request.
(c) Subject to Section 6.4(e) and Section 10.15, nothing herein shall
require the Seller to disclose any information to Purchaser if such disclosure
would, in its reasonable judgment (i) jeopardize any attorney-client or other
legal privilege or (ii) contravene any applicable law, fiduciary duty or
binding agreement entered into prior to the date of this Agreement (including
any confidentiality agreement to which it or its Affiliates is a party);
provided, however, that Seller shall provide Purchaser with notice of the
information so withheld and, to the extent requested by Purchaser, shall
cooperate with Purchaser to implement such arrangements as may be necessary in
order to permit such disclosure without resulting in the effects specified in
clauses (i) and (ii).
6.2 Confidentiality.
---------------
(a) Except as set forth in this Section 6.2(a) Purchaser shall keep,
and shall cause all of its Affiliates, directors, officers, employees and
agents (and its Affiliates' respective directors, officers, employees and
agents) (such Affiliates and other Persons with respect to any party being
collectively referred to as such party's "Representatives") to keep
confidential, and Purchaser shall not and shall cause (including by enforcing
the terms of any confidentiality or similar agreements) its Representatives to
not, disclose any Seller Information. Purchaser and its Representatives shall
use the Seller Information solely for the purpose of fulfilling the
obligations and exercising the rights of Purchaser under this Agreement.
Purchaser shall not use the Seller Information for commercial purposes or to
obtain any competitive advantage with respect to Seller. Purchaser shall be
responsible for any breach of the obligations set forth in this Section 6.2(a)
by Purchaser or any of its Representatives. If Purchaser or any of its
Representatives is required by Law or requested by a Governmental Authority to
disclose any Seller Information, Purchaser shall provide Seller with prompt
notice of any such request or requirement, so that Seller may seek an
appropriate protective order or other appropriate remedy. Purchaser shall use
all reasonable efforts, at Seller's sole expense, to assist Seller in
obtaining a protective order. If, in the absence of such a protective order,
Purchaser concludes, after consultation with counsel, that it is legally
required to disclose Seller Information to any Governmental Authority,
Purchaser or its Representatives may disclose only such information which such
counsel advises is legally required to be disclosed to such Governmental
Authority; provided, however, that (i) Purchaser shall give Seller reasonable
advance written notice of the information to be disclosed and, at Seller's
request and sole expense, seek to obtain assurances that it will be accorded
confidential treatment, and (ii) neither Purchaser nor any of its
Representatives shall be liable for any such disclosure unless such disclosure
to a Governmental Authority was caused by or resulted from a previous
disclosure by Purchaser or its Representatives not permitted by this Section
6.2(a). The obligations of Purchaser under this Section 6.2(a) with respect to
Seller Information relating to (i) the Non-North America Business, shall
terminate at Closing (it being understood that all proprietary information
included among the Transferred Assets shall become the proprietary information
of Purchaser at Closing) and (ii) anything other than the Non-North America
Business, shall terminate upon the second anniversary of the Closing; provided
that if this Agreement is terminated prior to Closing, such obligations shall
terminate upon the second anniversary of such termination.
(b) Except as set forth in this Section 6.2(b), Seller shall keep,
and shall cause all of its Representatives to keep confidential, and Seller
shall not and shall cause (including by enforcing the terms of any
confidentiality or similar agreements) its Representatives to not, disclose
any Purchaser Information. After the Closing, Seller and its Representatives
shall use the Purchaser Information solely for the purpose of fulfilling the
obligations and exercising the rights of Seller under this Agreement. After
the Closing, Seller shall not use the Purchaser Information for commercial
purposes or to obtain any competitive advantage with respect to Purchaser.
Seller shall be responsible for any breach of the obligations set forth in
this Section 6.2(b) by Seller or any of its Representatives. If Seller or any
of its Representatives is required by Law or requested by a Governmental
Authority to disclose any Purchaser Information, Seller shall provide
Purchaser with prompt notice of any such request or requirement, so that
Purchaser may seek an appropriate protective order or other appropriate
remedy. Seller shall use all reasonable efforts, at Purchaser's sole expense,
to assist Purchaser in obtaining a protective order. If, in the absence of
such a protective order, Seller concludes, after consultation with counsel,
that it is legally required to disclose Purchaser Information to any
Governmental Authority, Seller or its Representatives may disclose only such
information which such counsel advises is legally required to be disclosed to
such Governmental Authority; provided, however, that (i) Seller shall give
Purchaser reasonable advance written notice of the information to be disclosed
and, at Purchaser's request and sole expense, seek to obtain assurances that
it will be accorded confidential treatment, and (ii) neither Seller nor any of
its Representatives shall be liable for any such disclosure unless such
disclosure to a Governmental Authority was caused by or resulted from a
previous disclosure by Seller or its Representatives not permitted by this
Section 6.2(b). The obligations of Seller under this Section 6.2(b) with
respect to Purchaser Information relating to (i) the Non-North America
Business and the Transferred Assets, shall terminate at the second anniversary
of the Closing Date, (ii) any source code, shall survive indefinitely and
(iii) the Purchaser's business, shall terminate at the second anniversary of
the Closing Date; provided that such obligations under subsections (i) and
(ii) shall terminate immediately if this Agreement is terminated prior to
Closing.
(c) For purposes of this Section 6.2, "Seller Information" means all
confidential or proprietary non-public information furnished by Seller or its
Representatives to Purchaser or its Representatives before or after the date
of this Agreement including, but not limited to, confidential or proprietary
non-public information of, or relating to, the North America Business and the
Non-North America Business, including all technical and proprietary
information and information exchanged in connection with the execution of this
Agreement and the consummation of the transactions contemplated hereby
(including information provided by Seller or its Subsidiaries pursuant to
Section 3.3 and 6.1); provided, that Seller Information shall not include
information which (A) was or becomes available to Purchaser on a
non-confidential basis prior to its disclosure by Seller, (B) was or becomes
generally available to the public other than as a result of a disclosure by
Purchaser or its Representatives that is not permitted by Section 6.2(a), or
(C) becomes available to Purchaser on a non-confidential basis from a source
other than Seller, or any of its Representatives, provided that to the
knowledge of Purchaser such source is not bound by a confidentiality agreement
with, or other contractual, legal or fiduciary obligation of confidentiality
to, Purchaser or Seller.
(d) For purposes of this Section 6.2, "Purchaser Information" means
all confidential or proprietary non-public information furnished by Purchaser
or its Representatives to Seller or its Representative before or after the
date of this Agreement including, but not limited to, confidential or
proprietary non-public information relating to the Purchaser's business, the
Non-North America Business and the Transferred Assets and further including
without limitation all technical and proprietary information and information
exchanged in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby; provided that Purchaser
Information shall not include information which was or becomes generally
available to the public other than as a result of a disclosure by Seller or
its Representatives that is not permitted by Section 6.2(b).
6.3 Public Announcements.
--------------------
Each party shall consult with, and use commercially reasonable
efforts to accommodate the comments of, the other parties before issuing any
press release or otherwise making any public statement (whether written or
oral) with respect to this Agreement or the transactions contemplated hereby,
unless otherwise required by applicable Law or by obligations pursuant to any
listing agreement with or rules of any securities exchange, the National
Association of Securities Dealers, Inc. or the Nasdaq Stock Market (in which
case the party issuing or making such press release or other public statement
shall use its commercially reasonable efforts to consult with the other
parties before issuing such press release or making such other public
statement). Notwithstanding the preceding sentence, upon execution of this
Agreement and upon the Closing, Seller and Purchaser will consult with each
other with respect to the issuance of a joint press release with respect to
this Agreement and the transactions contemplated hereby.
6.4 Ordinary Conduct.
----------------
Except as expressly contemplated by this Agreement, the Double C
Agreement or as set forth in Schedule 6.4, from the date hereof until the
earlier of the termination of this Agreement or the Closing, Seller and the
Netherlands Subsidiary each covenants and agrees, unless expressly
contemplated by this Agreement or unless Purchaser shall otherwise consent,
which consent shall not be unreasonably withheld or delayed:
(a) to cause the operations of the Non-North America Business to be
conducted in the ordinary course and consistent with past practice and in
compliance in all material respects with all obligations under the Assigned
Contracts and the San Mateo Lease, use commercially reasonable efforts to
preserve all rights, privileges, franchises and other authority adequate or
necessary for the conduct of the Non-North America Business substantially as
currently conducted and use commercially reasonable efforts consistent with
past practice to maintain good relationships with material licensors,
licensees, suppliers, contractors, distributors, customers and others having
significant business relationships with the Non-North America Business;
provided, however, that no action by Seller or any Subsidiary of Seller with
respect to matters specifically addressed by any provision of Section 6.4(b)
shall be deemed a breach of this Section 6.4(a) unless such action would
constitute a breach of any such provision of Section 6.4(b);
(b) give prompt notice to Purchaser of (i) the occurrence or
non-occurrence of any event that would cause any of Seller's and the
Netherlands Subsidiary's representations or warranties contained herein to be
untrue and incorrect in any material respect as of the date hereof or untrue
and incorrect in any material respect as of the Closing (except for changes
permitted or contemplated by this Agreement), (ii) the occurrence of any event
that will result, or is reasonably likely to result in the failure of any
condition specified in Article VIII hereof to be satisfied, and (iii) any
notice or other communication from a third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement or that such transactions otherwise may
materially violate the rights of or confer material remedies upon such third
party; and
(c) that it will not, and will not permit any of its Subsidiaries to,
take any of the following actions except as expressly contemplated by the
Transaction Documents:
(i) (A) amend, alter or modify the organizational or governance
documents of Seller or the Netherlands Subsidiary, or (B) take any
action with respect to liquidation or dissolution of Seller or the
Netherlands Subsidiary that would result in a liquidation or
dissolution on or prior to the Closing Date;
(ii) transfer, issue, sell or dispose of any equity interest or
other securities of the Netherlands Subsidiary or grant options,
warrants, calls or other rights to purchase or otherwise acquire
equity interests of the Netherlands Subsidiary;
(iii) sell, assign, transfer, lease, license or otherwise
dispose of or agree to sell, assign, transfer, lease, license or
otherwise dispose of any of the Transferred Assets, or any material
assets or properties of the Non-North America Business;
(iv) transfer to any person or entity any rights to the
Non-North America Intellectual Property;
(v) permit any of the Transferred Assets to become subject to
any Lien (other than any Permitted Liens);
(vi) materially revalue any of the Transferred Assets or,
except as required by GAAP, make any change in accounting methods,
principles or practices with respect to the Transferred Assets;
(vii) make any Tax election or settle any controversy with a
taxing authority if such election or settlement could have a material
adverse effect on Purchaser, the Non-North America Business or the
Transferred Assets after the Closing;
(viii) other than in the ordinary course of business consistent
with past practice, enter into any agreement, arrangement or
transaction with any Affiliate of Seller with respect to the
Non-North America Business other than as expressly contemplated by
the Transaction Documents or any such agreement, arrangement or
transaction that will terminate or be completed prior to the Closing;
(ix) (A) amend, modify or supplement in a manner adverse in any
material respect to the Seller or its Subsidiaries or the Non-North
America Business any Assigned Contract or (B) enter into, amend,
modify or supplement any Contract, if such Contract would have been a
Material Contract if it had been in existence on the date of this
Agreement;
(x) amend, modify or change in any respect in a manner adverse
in any material respect to the Seller or its Subsidiaries or the
Non-North America Business, or terminate, any Material Contract or
any provision or "roadmap" included in any Contract relating to the
Non-North America Business in a manner adverse in any material
respect to the Seller or its Subsidiaries or the Non-North America
Business, except as required to perform obligations under such
Contract;
(xi) acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any
assets (other than inventory) that are material, individually or in
the aggregate, to the Non-North America Business;
(xii) permit the Netherlands Subsidiary to acquire by merging
or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership association or other business organization or division
thereof or otherwise acquire any assets (other than inventory);
(xiii) modify, amend, terminate or permit the material lapse of
any lease of, or reciprocal easement agreement, operating agreement
or other material agreement relating to the San Mateo Leased
Property;
(xiv) except in the ordinary course and consistent with past
practice, and with the prior written notice to Purchaser, (A) grant
to any Business Employee any increase in compensation or benefits,
(B) grant or pay to any Business Employee any severance or
termination pay or increase in any manner the severance or
termination pay of any Business Employee, except as may be required
by applicable Law or pursuant to Contracts existing on the date
hereof, (C) with respect to any individual that would become a
Transferred Employee, enter into any employment contract (other than
"at-will" employment contracts), collective bargaining agreement or
similar arrangement, written or oral, or modify the terms of any
existing such contract, agreement or arrangement, (D) take any action
to accelerate the vesting or payment of any compensation or benefit
to any Business Employee under any Employee Benefit Plan or award
thereunder or (E) adopt, amend, modify or terminate any Employee
Benefit Plan (or any plan that would be an Employee Benefit Plan if
adopted) for the benefit of any of the Business Employees, except in
each case as may be required by applicable Law or under Contracts
existing on the date hereof;
(xv) other than in the ordinary course of business consistent
with past practice, terminate (other than for cause and subject to
Article VII) the employment of any Business Employee or hire any
employees to become Business Employees;
(xvi) take any action that would or is reasonably likely to
result in any of the conditions to the consummation of the
transactions contemplated hereby set forth in Article VIII not being
satisfied, or would make any representation or warranty of Seller or
the Netherlands Subsidiary contained herein inaccurate in any
material respect at, or as of any time prior to, the Closing, or that
would materially impair the ability of Seller or the Netherlands
Subsidiary to consummate the transactions contemplated hereby in
accordance with the terms hereof or materially delay such
consummation; or
(xvii) enter into or amend any contract, agreement, commitment
or arrangement with respect to any matter set forth in this Section
6.4(c).
(d) Seller shall cause its Subsidiaries to take all actions necessary
to effectuate the transactions contemplated by this Agreement, including
causing the Netherlands Subsidiary and Seller's other Affiliates, if
applicable, to transfer and assign any Transferred Assets owned or held by the
Netherlands Subsidiary or such Affiliate to Purchaser in accordance with the
terms of this Agreement.
6.5 No Solicitation.
---------------
(a) From and after the date hereof until the earlier of the effective
time of the Closing or the termination of this Agreement in accordance with
its terms, Seller agrees that it shall not, nor shall it permit any of its
Subsidiaries or Affiliates to, nor shall it authorize or permit any officer,
director, employee, agent or representative (including any investment banker,
attorney, accountant or other adviser) of Seller or any of its Subsidiaries
(the "Restricted Persons") to, directly or indirectly, or otherwise (i)
solicit, initiate, encourage or otherwise facilitate any inquiries or the
submission of any proposals or offers from any Person that relates to any
Alternative Proposal, (ii) participate in any discussions or negotiations
regarding any Alternative Proposal, (iii) cooperate with, or furnish or cause
to be furnished any non-public information concerning the business or assets
of Seller or any of its Subsidiaries, to any Person in connection with any
Alternative Proposal, (iv) approve, recommend or permit Seller or any of its
Subsidiaries to enter into an agreement or understanding with any Person
relating to any Alternative Proposal, (v) amend or grant any waiver or release
of any standstill agreement that would reasonably be expected to lead to an
Alternative Proposal or (vi) vote for, execute a written consent (or
equivalent instrument) in favor of, or otherwise approve or enter into any
agreements or understandings with respect to any of the foregoing; provided,
however, that nothing contained in this Section 6.5 shall prevent Seller or
the Seller Board from (A) complying with Rule 14e-2 and Rule 14d-9 promulgated
under the Exchange Act with regard to an Alternative Proposal by means of a
tender offer; provided that the Seller Board shall not recommend that the
stockholders of the Seller tender their shares in connection with a tender
offer, except to the extent that the Seller Board by vote determines in its
good faith judgment that failure to make such a recommendation would result in
a reasonable probability that the Seller Board would breach its fiduciary
duties to Seller stockholders under applicable Law, after receiving the advice
of outside legal counsel; or (B) making any disclosure to the stockholders of
Seller, if the Seller Board by vote determines in its good faith judgment that
failure to do so would result in a reasonable probability that the Seller
Board would breach its fiduciary duties to Seller's stockholders under
applicable Law, after receiving the advice of outside legal counsel. Seller
agrees that it will take the necessary steps to promptly inform the Restricted
Persons that might reasonably be expected to take the type of actions
prohibited by this Section 6.5.
(b) At any time prior to the time its stockholders shall have voted
to approve the Acquisition Proposal, if the Seller is not otherwise in
material violation of this Section 6.5, the restrictions set forth in Section
6.5(a) shall not prevent the Seller (or any Restricted Person), from engaging
in discussions or negotiations with, or furnishing confidential information
concerning Seller and its business and assets to, a Person who makes a
written, unsolicited, bona fide Alternative Proposal after the Seller Board by
vote determines in its good faith judgment (after consultation with Seller's
outside legal counsel), that such Alternative Proposal is reasonably likely to
lead to a Superior Proposal and that failure to take such action would result
in a reasonable probability that the Seller Board would breach its fiduciary
duties to Seller's stockholders under applicable Law for the purpose of
determining whether such Alternative Proposal is a Superior Proposal (for
purposes of this Section 6.5(b), to constitute a Superior Proposal such
Alternative Proposal, (w) if relating to the issuance by Seller or any of its
Subsidiaries of any equity interest in or any voting securities of Seller or
such Subsidiary, must contemplate the issuance of more than 50% rather than
20% or more, of the total of such equity interests or voting securities, (x)
if relating to the acquisition in any manner of any assets of Seller or its
Subsidiaries, must contemplate the acquisition of more than 50%, rather than
20% or more, of the total of such assets, (y) if relating to the acquisition
by any Person in any manner of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of,
outstanding shares of capital stock of Seller, must contemplate the
acquisition of more than 50%, rather than 20% or more, of the then outstanding
shares of capital stock of Seller), and (z) if relating to any transaction for
the Transferred Assets or the Non-North America Business, must contemplate the
acquisition of all or substantially all, rather than a material portion, of
the Transferred Assets or the Non-North America Business and the assumption of
all or substantially all of the Assumed Liabilities, that, (A) is financially
superior to the transactions contemplated hereby, taking into account any
break-up fees or similar devices, expense reimbursement provisions and
conditions to and timing of consummation, and is more favorable and provides
greater value to all of the Seller's stockholders than this Agreement, as
determined in good faith by the Seller Board after consultation with Seller's
financial advisors, which shall be of national reputation, (B) will constitute
a transaction for which financing, to the extent required, is then committed
or which, in the good faith judgment of the Seller Board, is reasonably
capable of being obtained and (C) if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects
of the transaction and the Person making the proposal, as determined in the
good faith judgment of the Seller Board (after consultation with its outside
legal counsel) (any such Alternative Proposal that (1) is a merger,
consolidation, tender offer, share exchange or other business combination or
similar transaction involving Seller, or (2) satisfies one of clauses (w),
(x), (y) or (z) and, in the case of either (1) or (2), satisfies all of
clauses (A), (B) and (C) above is herein referred to as a "Superior
Proposal").
(c) Seller shall provide Purchaser (for at least three (3) business
days following the receipt by Purchaser of a written notice from Seller of a
Superior Proposal) an opportunity to propose an amendment to this Agreement to
provide for terms and conditions no less favorable than the Superior Proposal,
as determined by the Seller Board. Notwithstanding anything in this Agreement
to the contrary, the Seller Board may change its recommendation to the
stockholders of Seller with respect to this Acquisition Proposal only in the
circumstance permitted under the following sentence. In connection with a bona
fide Alternative Proposal that is a Superior Proposal and is received prior to
the time the stockholders of Seller shall have voted to approve this
Acquisition Proposal, the Seller Board may change its recommendation if (i)
the Seller Board by vote determines in its good faith judgment that failure to
do so would result in a reasonable probability that the Seller Board would
breach its fiduciary duties to Seller's stockholders under applicable Law,
after receiving the advice of its outside legal counsel, (ii) Seller has
complied with its obligation under the first sentence of this Section 6.5(c)
in all material respects and the Seller Board has considered in good faith and
consistent with its fiduciary duties any proposed changes to this Agreement
(if any) proposed by Purchaser, (iii) after taking into account any such
proposed changes by Purchaser, such Alternative Proposal remains a Superior
Proposal, and (iv) Seller has complied with its obligations under Sections 3.1
and 3.2 and this Section 6.5 in all material respects.
(d) Seller shall promptly advise Purchaser orally and in writing of
any Alternative Proposal, or any inquiry, offer or proposal or request for
information with respect to or which could reasonably lead to any Alternative
Proposal (whether made directly to Seller or one of its advisers), the
material terms and conditions of such Alternative Proposal or inquiry, offer,
proposal or request, and the identity of the Person making any such
Alternative Proposal or inquiry, offer, proposal or request. Seller shall keep
Purchaser fully informed on a current basis of material developments with
respect to the status and details of any such Alternative Proposal or inquiry,
offer, proposal or request.
(e) Notwithstanding Section 6.5(b), Seller shall not provide any
non-public information to a third party unless Seller provides such non-public
information pursuant to a non-disclosure agreement with terms regarding the
protection of confidential information at least as restrictive as such terms
set forth in the Non-Disclosure Agreement between Seller and Purchaser dated
as of July 15, 2004.
(f) Seller shall immediately cease and cause to be terminated any
existing discussion or negotiations with any Persons (other than Purchaser)
conducted prior to the date of this Agreement with respect to any of the
foregoing and will exercise any rights under any confidentiality agreements
with any such Persons to require the return or destruction of confidential
information provided by Seller or its representatives to any such Persons.
6.6 Insurance.
---------
Seller shall keep, or cause to be kept, all material insurance
policies presently maintained relating to the Non-North America Business or
the Netherlands Subsidiary, or the Transferred Assets, or replacements
therefor, in full force and effect through the Closing. Following the Closing,
Seller shall have no obligation to insure the Transferred Assets against any
loss in or under any insurance policy of Seller or its Affiliates, and
Purchaser shall have no rights or obligations with respect to any such policy.
6.7 Accounts Receivable.
-------------------
From and after the Closing, Purchaser shall remit to Seller all
accounts receivable attributable to or arising out of the Non-North America
Business billed or accrued with respect to the period prior to the close of
business on the Closing Date and other related items that are included in the
Excluded Assets. Ten days prior to the Closing, Seller will deliver to the
Purchaser a schedule setting forth the estimated amount of such accounts
receivable as of the close of business on the Closing Date. Purchaser shall
have no collection obligations with respect to any such accounts. In the event
that after the Closing, Seller or the Netherlands Subsidiary receives any
payment for accounts receivables from a Customer or other person attributable
to or arising out of the Non-North America Business with respect to the period
after the close of business on the Closing Date, Seller will promptly remit
the amount of such payment to Purchaser.
6.8 Non-Competition.
---------------
(a) Purchaser acknowledges and agrees that pursuant to Section 6.9 of
the Double C Agreement, Seller and, following the Closing, Purchaser and its
Affiliates as successor to the Non-North America Business, are subject to
certain restrictive covenants providing that: (i) beginning on the closing
date under the Double C Agreement and ending on the fifth (5th) anniversary
thereof (the "Restrictive Period"), Seller, Purchaser and its Affiliates shall
not, directly or indirectly, develop, market, license, grant forbearances not
to ▇▇▇, or ▇▇▇▇▇ any rights to or authorize the use of, any Non-North America
Intellectual Property, including the Non-North America Navigator Platforms or
any Derivative Work, for commercial use or deployment in the United States,
Canada or Mexico; and (ii) subject to the foregoing provisions, Seller,
Purchaser and its Affiliates shall be free to develop, market, license, grant
forbearances not to ▇▇▇, or ▇▇▇▇▇ any rights or authorize the use of, or
otherwise exploit the Non-North America Intellectual Property, including the
Non-North America Navigator Platforms, or any Derivative Work, for commercial
use or deployment throughout the world. Purchaser hereby agrees that such
restrictive covenants shall be binding on Purchaser and its Affiliates (and
any of their respective successors in interest), and may be enforced directly
by Double C (and its successors-in-interest) against Purchaser and its
Affiliates (and any of their respective successors in interest). Purchaser (on
behalf of itself and its Affiliates and any of their respective successors in
interest) also agrees to be bound by the terms of the Technology Cross-License
Agreement and agrees that it may be enforced directly by Double C (and its
successors-in-interest).
(b) For a period of five (5) years following the Closing Date, Seller
shall not, directly or indirectly, solicit or otherwise communicate with any
customer of the Non-North America Business for the purpose of inducing such
customer (or if the effect of such solicitation or communication shall be to
induce such customer) to refrain from or to discontinue its relationship with
the Purchaser. For the purpose of this Section 6.8(b), the term "customer"
shall include without limitation customers who are parties to any of the
Assigned Contracts.
(c) For a period of five (5) years following the Closing Date, and
except with respect to investments held by Seller as of the date hereof which
it continues to hold as of the Closing Date, Seller shall not, within Europe,
acquire a financial interest in or be a principal, partner, member, officer,
director, owner, agent, representative, employee or consultant to, directly or
indirectly, any business the same as, similar to or in general competition
with the Non-North America Business operated by Seller at or prior to the
Closing.
(d) Seller acknowledges that pursuant to Section 6.9 of the Double C
Agreement, Double C Technologies, LLC and its Affiliates shall not, during the
Restrictive Period (as defined in Section 6.8(a)), directly or indirectly
develop, market, license, grant forbearances not to ▇▇▇, or ▇▇▇▇▇ any rights
to or authorize the use of, any North America Intellectual Property, including
the North America Navigator Platforms, or any successor thereto, for
commercial use or deployment in Europe. Seller and Purchaser acknowledge and
agree that Purchaser will after the Closing Date have the right to enforce
such restrictive covenants against Double C Technologies, LLC (and its
successors-in-interest) and its Affiliates (and any of their respective
successors in interest).
6.9 Cooperation.
-----------
Upon Purchaser's written request, Seller and Purchaser will cooperate
in using reasonable efforts to attempt to obtain consents required to transfer
or assign any Assigned Contracts to Purchaser. Each party hereto shall
cooperate with each other and shall cause their respective officers,
employees, agents, auditors and representatives to cooperate with each other
after the Closing to facilitate the orderly transition of the Non-North
America Business to Purchaser and to minimize any disruption to the respective
businesses of Seller or the Non-North America Business that might result from
the transactions contemplated hereby. Neither party shall be required by this
Section 6.9 to take any action that would unreasonably interfere with the
conduct of its business or incur extraordinary expenses.
6.10 Tax Matters.
-----------
(a) The parties shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of any
Tax Return and the conduct of any Tax audit, litigation or other proceeding
involving the Transferred Assets or the Non-North America Business. Such
cooperation shall include the retention and (upon the other party's request)
the provision of records and information which are reasonably relevant to any
such Tax Return or Tax proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The parties further agree (i) to retain all books
and records with respect to Tax matters pertinent to the Transferred Assets
and the Non-North America Business relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by Purchaser or Seller, any extensions thereof)
of the respective taxable period, and to abide by all record retention
agreements entered into with any Governmental Authority, and (ii) to give each
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records, and, if any other party so requests,
Seller, the Netherlands Subsidiary or Purchaser, as the case may be, shall
allow the other party within a reasonable time to take possession of such
books and records to the extent they would otherwise be destroyed or
discarded.
(b) Purchaser and Seller further agree to use commercially reasonable
efforts to obtain any certificate or other document from any Governmental
Authority or other Person, or to file any election or return, as may be
necessary or helpful to mitigate, reduce or eliminate any Tax that could be
imposed with respect to the transactions contemplated by this Agreement.
6.11 Waiver of Bulk Sales Requirement.
--------------------------------
Each of the parties waives compliance with any applicable bulk sales
laws, including, without limitation, the Uniform Commercial Code Bulk Transfer
provisions. Without limiting the generality of the foregoing, in respect of
the purchase and sale of the Transferred Assets under this Agreement,
Purchaser shall not require Seller or the Netherlands Subsidiary to comply, or
to assist the Purchaser to comply, with such requirements.
6.12 Non Transferable Assets.
-----------------------
(a) Notwithstanding anything to the contrary set forth in this
Agreement, nothing contained in this Agreement shall be construed as, or
constitute, an attempt, agreement or other undertaking to transfer or assign
to Purchaser any asset, property or right that would otherwise constitute a
Transferred Asset, but that by its terms is not transferable or assignable to
Purchaser pursuant to this Agreement without the consent, waiver, approval,
authorization, qualification or other order of one or more Governmental
Authorities or other Persons and if such consent, waiver, approval,
authorization, qualification or other order is not obtained prior to the
Closing and assuming Purchaser has, in the exercise of its sole discretion,
elected to waive such consent, waiver, approval, authorization, qualification
or other order as a condition to Closing (if such is a condition to Closing)
(each, a "Non-Transferable Asset").
(b) From and after the Closing and, with respect to each such
Non-Transferable Asset, until the earlier to occur of (i) such time as such
Non-Transferable Asset shall be properly and lawfully transferred or assigned
to Purchaser (ii) such time as the material benefits intended to be
transferred or assigned to Purchaser have been procured by alternative means
pursuant to Section 6.12(c) hereof and (iii) 6 months from the Closing, (A)
the Non-Transferable Assets shall be held by the Seller in trust exclusively
for the benefit of Purchaser, and (B) each of the Seller and Purchaser shall
cooperate in any good faith, reasonable arrangement designed to provide or
cause to be provided for Purchaser the material benefits intended to be
transferred or assigned to Purchaser under each of the Non-Transferable Assets
and, in furtherance thereof, to the extent permitted under the terms of each
such Non-Transferable Asset and under applicable Law (1) Purchaser shall use
commercially reasonable efforts to perform and discharge all of the
liabilities and other obligations of the Seller under the terms of all such
Non-Transferable Assets in effect as of the Closing at Purchaser's expense and
(2) the Seller shall use commercially reasonable efforts to provide or cause
to be provided to Purchaser all of the benefits of Seller under the terms of
such Non-Transferable Assets in effect as of the Closing, including by
promptly paying to Purchaser any monies received by the Seller from and after
the Closing under such Non-Transferable Assets attributable to the performance
of Purchaser thereunder.
(c) In the event that the Seller is unable to obtain any consent from
any Person under any Non-Transferable Asset after the Closing Date through the
use of commercially reasonable efforts, Purchaser shall be entitled to procure
the material rights and benefits of the Seller under the terms of such
Non-Transferable Asset in effect as of the Closing by alternative means,
including, without limitation, by entering into new Contracts with third
Persons or otherwise; provided, however, that in the event that the Purchaser
shall exercise its rights under this Section 6.12(c) in respect of any
Non-Transferable Asset, the obligations of the Seller and Purchaser under
Section 6.12(b) in respect of such Non-Transferable Asset shall thereupon
cease and expire. This Section 6.12 shall apply equally to the Netherlands
Subsidiary with respect to any Non-Transferable Asset owned or held by the
Netherlands Subsidiary.
(d) The parties further agree, to the extent permitted by applicable
Law, (i) that any Non-Transferable Asset referred to in this Section 6.12
shall be treated for all Tax purposes as an asset of Purchaser or its
Affiliates, as the case may be, from and after the Closing, and (ii) not to
take any Tax reporting position (including on any Tax Return) inconsistent
with such treatment, unless otherwise required to do so pursuant to a
"determination," as defined in Section 1313 of the Code.
(e) Following the Closing Date, to the extent requested by Purchaser,
Seller shall, and shall cause its Subsidiaries to, enforce its rights (at
Purchaser's expense) pursuant to any nondisclosure, confidentiality or other
similar agreement that relates to the Non-North America Business and is not
included in the Assigned Contracts.
ARTICLE VII
LABOR AND EMPLOYEE BENEFIT MATTERS
7.1 Offers of Employment.
--------------------
Not less than thirty (30) business days prior to the Closing Date,
Purchaser or one of its Subsidiaries shall offer employment to all of the
actively employed Business Employees listed on Section 4.12 of the Seller
Disclosure Letter, such employment offers to become effective as of the
Closing. The Business Employees who accept any such offer and become employees
of Purchaser or its Affiliate as of the Closing, as of the first day they
commence employment with Purchaser or its applicable Affiliates, shall be
referred to as the "Transferred Employees." Effective as of the Closing, or
upon commencement of employment with Purchaser or its applicable Affiliates,
Purchaser or its applicable Affiliate shall provide each Transferred Employee
with (i) a base salary no less favorable than the base salary in effect
immediately prior to Closing, and (ii) health and welfare benefits comparable
in the aggregate to those provided to such employees by Seller or the
Netherlands Subsidiary as in effect immediately prior to Closing.
7.2 Certain Liabilities.
-------------------
All debts and liabilities relating to all Business Employees,
including any liabilities accrued under the Employee Benefit Plans, related to
periods of employment prior to commencement of employment with the Purchaser
or its applicable Affiliate, and including any severance costs with respect to
termination of Business Employees in connection with the Closing, shall remain
with and be paid by the Seller and its Affiliates. All claims, allegations,
obligations, debts and liabilities relating to any Transferred Employees, that
are attributable to their employment with Purchaser or its applicable
Affiliate on or after the Closing shall be the exclusive responsibility of
Purchaser or its applicable Affiliate. Notwithstanding the provisions of this
Section 7.2, as of the Closing Date, Purchaser or its applicable Affiliate,
whichever Person employs any Transferred Employee as of the Closing Date,
shall credit each such Transferred Employee with the aggregate amount of
vacation properly accrued under the vacation policy of Seller or the
Netherlands Subsidiary. After the Closing Date, such Transferred Employees
shall be entitled to utilize such vacation credits in accordance with the
vacation policies maintained by the Purchaser or its applicable Affiliate,
whichever is appropriate. Seller and the Netherlands Subsidiary agree to
provide at Closing a schedule of the cost of all accrued vacation for
Transferred Employees and the accrued vacation for each Transferred Employee
listed therein as of the Closing Date.
7.3 No Obligation to Maintain Employees or Plans.
--------------------------------------------
The terms of this Article VII shall not entitle any Business Employee
to remain in the employment of Purchaser or one of its Affiliates or affect
the right of Purchaser or one of its Affiliates to terminate any Transferred
Employee at any time, or affect the right of Purchaser or one of its
Affiliates to establish, modify or terminate any employee benefit plan or any
benefit under any such plan at any time.
7.4 Post-Closing Solicitation of Business Employees.
-----------------------------------------------
(a) From the date hereof until the Closing, Seller and the
Netherlands Subsidiary each agrees that it and its Affiliates shall not
solicit for employment (after the Closing) any Business Employee. Beginning on
the Closing Date until one (1) year after the Closing Date (the
"Non-Solicitation Period"), Seller and the Netherlands Subsidiary each agrees
that it and its Affiliates shall not solicit for employment or employ any
Transferred Employee. In addition, Purchaser agrees (i) not to solicit for
employment or employ any former employees of Seller's North America Business
that became employed by Double C or its Affiliate in connection with the
Double C Agreement, for a period of one (1) year after the closing date of the
Double C Agreement and (ii) that this covenant can be enforced directly by
Double C and its Affiliates (or their successors-in-interest).
(b) Purchaser acknowledges that for a period of one (1) year after
the Closing Date of the Double C Agreement, Double C agrees that it and its
Affiliates shall not solicit for employment or employ any employee of the
Non-North America Business.
(c) Purchaser acknowledges that the foregoing referenced restrictions
with respect to solicitations of employment shall not apply to any
solicitations conducted through a third-party professional agency regularly
engaged in such solicitations or to any newspaper or other general
solicitation or advertisement which, in any such case, is not directed at or
focused on the applicable employees of Seller, Purchaser or their respective
Affiliates.
7.5 COBRA.
-----
Purchaser or its applicable Affiliate, whichever Person employs the
Transferred Employees as of the Closing Date, shall provide continued health
and medical coverage to the extent required under Section 4980B of the Code,
Part 6 of Title I of ERISA or any other applicable Law ("COBRA Coverage") to
all Transferred Employees (and their spouses, dependents and beneficiaries)
with respect to all "qualifying events" (as such term is defined under
Sections 4980B(f)(3) of the Code or 603 of ERISA) or other triggering events
described under the applicable Law whether they occur or occurred before, on
or after the Closing Date. All other COBRA Coverage shall remain the
obligation of Seller.
7.6 Records.
-------
The Seller and the Netherlands Subsidiary shall make available to
Purchaser all personnel records relating to the Business Employees to the
extent permitted by applicable Law.
7.7 FICA.
----
If Purchaser is a successor employer to Seller within the meaning of
Revenue Procedure 2004-53, Seller will transfer to Purchaser any records or
copies thereof (including, but not limited to, IRS Forms W-4 and California
Employee Withholding Allowance Certificates) relating to withholding and
payment of United States federal, state, and local income, disability,
unemployment, FICA, and similar taxes ("Payroll Taxes") with respect to wages
paid by Seller during the 2005 calendar year to Employees. In accordance with
Revenue Procedure 2004-53 and comparable state and local Payroll Tax laws, (i)
Purchaser agrees to provide Employees with Forms W-2, Wage and Tax Statements,
for the 2005 calendar year setting forth the aggregate amount of wages paid
to, and Payroll Taxes withheld in respect thereof, to Employees for the 2005
calendar year by Seller and Purchaser as predecessor and successor employers,
respectively, and (ii) Seller agrees to cooperate fully with Purchaser in
connection therewith. Seller and the Netherlands Subsidiary will transfer to
Purchaser as of the Closing Date any records or copies thereof relating to
withholding and payment on account of federal, income, employment insurance,
social insurance, pension plan, ▇▇▇▇▇▇▇'▇ compensation and similar taxes and
contributions with respect to wages paid by the Netherlands Subsidiary during
the 2005 calendar year to Employees. Seller and the Netherlands Subsidiary
agrees to cooperate fully with Purchaser in connection therewith.
7.8 Restrictive Covenant.
--------------------
Each of the Seller and the Netherlands Subsidiary shall use its
commercially reasonable efforts to have assigned to Purchaser all of Seller's
and the Netherlands Subsidiary's rights, title and interest in and to any
proprietary information, confidentiality, non-solicitation, non-competition or
similar agreement entered into with any Business Employee where such agreement
or restrictions or the benefit thereof are not novated to or otherwise vested
in Purchaser by virtue of the Regulations. In the event that such agreements
or restrictions cannot be assigned to Purchaser, Seller and the Netherlands
Subsidiary shall take all necessary actions to enforce such agreements on
behalf of Purchaser in accordance with the terms of such agreements. Following
the Closing Date, Seller shall, and shall cause its employees to, comply with
any restrictions included in any nondisclosure, confidentiality or other
similar agreement included in the Assigned Contracts.
7.9 Assignment.
----------
At the request of Purchaser, each of the Seller and the Netherlands
Subsidiary shall use commercially reasonable efforts to have any insurance
contracts related to any Employee Benefit Plan providing health, welfare or
retirement benefits to Transferred Employees assigned to Purchaser at the
Closing and shall provide to Purchaser upon request all relevant information
with respect to any such Employee Benefit Plan. Notwithstanding the preceding,
Purchaser shall not assume any obligation or liability arising prior to the
Closing with respect to any assigned insurance contracts unless expressly
agreed to in writing by the parties.
7.10 Contracts of Employment.
-----------------------
(a) The parties acknowledge and agree that notwithstanding Section
7.1, pursuant to the Regulations the contracts of employment between Seller or
the Netherlands Subsidiary and the UK Transferred Employees (other than as
provided in Regulation 7 of the Regulations) will have effect after Closing as
if originally made between Purchaser and the respective UK Transferred
Employees and all rights, powers, duties and liabilities (other than any
pension benefits or employee stock options or other equity awards granted by
Seller to any UK Transferred Employees) of Seller or the Netherlands
Subsidiary under them (other than as provided in Regulation 7 of the
Regulations) shall be automatically transferred to Purchaser with effect from
Closing.
(b) If for any reason the contracts of employment of all or any of
the UK Transferred Employees are not automatically transferred to Purchaser on
Closing pursuant to the Regulations or Directive 77/187 of the Council of the
European Communities or if all or any of the UK Transferred Employees object
to their transfer and, in either case, Seller or the Netherlands Subsidiary
terminates his or their employment, Purchaser will forthwith offer employment
to all or any such UK Transferred Employees on the same terms and conditions,
including inter alia the same pay and benefits, as such UK Transferred
Employees enjoyed as an employee of Seller or the Netherlands Subsidiary.
(c) Not less than thirty (30) business days prior to Closing,
Purchaser or one of its subsidiaries shall offer a contract for services to
all of the UK Contractors on fees and terms no less favorable than the fees
and terms in effect immediately prior to Closing, such offers to become
effective as at Closing.
7.11 Informing Employees.
-------------------
Purchaser shall confirm in writing to each of the UK Transferred
Employees on Closing in a form agreed with Seller and the Netherlands
Subsidiary confirming that their employment shall continue with Purchaser and
that the terms and conditions of employment will remain the same (save in
connection with pension benefits and any employee stock options or other
equity awards granted by Seller to any UK Transferred Employees).
7.12 Employee Equity Awards.
----------------------
Seller shall retain responsibility for dealing with any accrued
rights any Business Employees or UK Transferred Employees may have in any
stock option or other equity award plans or warrants maintained by Seller for
employees immediately prior to Closing and Purchaser shall have no obligation
or liability with respect to such stock option or other equity award plans or
warrants.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Condition Precedent to the Obligations of Purchaser, Seller and
---------------------------------------------------------------
the Netherlands Subsidiary.
--------------------------
(a) The respective obligations of Purchaser, on the one hand, and
Seller and the Netherlands Subsidiary, on the other hand, to effect the
Closing are subject to the satisfaction at or prior to the Closing of the
following condition, which, to the extent permitted by applicable law, may be
waived by Purchaser or Seller (which waiver by Seller shall be binding on the
Netherlands Subsidiary): the Acquisition Proposal shall have been approved and
adopted by the requisite vote of the stockholders of Seller in accordance with
applicable law, the Seller Charter and the Seller Bylaws.
8.2 Conditions Precedent to the Obligations of Purchaser.
----------------------------------------------------
The obligations of Purchaser to consummate the transactions
contemplated hereby are also subject to the satisfaction at or prior to the
Closing of each of the following additional conditions, unless waived by
Purchaser:
(a) Accuracy of Representations and Warranties; Performance. The
representations and warranties of Seller and the Netherlands Subsidiary
contained in Article IV disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, shall be
true and correct in each case as of the date of this Agreement and (except to
the extent such representations and warranties speak as of a specified earlier
date) on and as of the Closing Date as though made on and as of the Closing
Date, with only such exceptions as do not, individually, or in the aggregate,
have or would reasonably be expected to have a Material Adverse Effect on the
Seller, the Non-North America Business or the Transferred Assets. Seller and
the Netherlands Subsidiary shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Seller and the Netherlands Subsidiary by the
time of the Closing.
(b) Officers' Certificate. Seller shall have delivered to Purchaser
(i) a certificate, dated the Closing Date, signed on behalf of Seller by the
Chief Executive Officer or Chief Financial Officer of Seller certifying as to
the fulfillment of the conditions specified in Sections 8.1(a) and 8.2(a), and
(ii) a certificate of the Secretary of Seller certifying (A) the incumbency of
all officers of Seller having authority to execute and deliver this Agreement
and the agreements and documents contemplated hereby and (B) the resolutions
of the Seller Board referred to in Section 4.14 and any subsequent resolutions
of the Seller Board with respect to the transactions contemplated hereby. The
Netherlands Subsidiary shall have delivered to Purchaser a certificate of the
Secretary of the Netherlands Subsidiary certifying (A) the incumbency of all
officers of the Netherlands Subsidiary having authority to execute and deliver
this Agreement and the agreements and documents contemplated hereby and (B)
the resolutions of the Netherlands Subsidiary board of directors with respect
to the transactions contemplated hereby.
(c) Material Adverse Effect. Since the date of this Agreement, no
Material Adverse Effect shall have occurred with respect to the Non-North
America Business or the Transferred Assets and no material adverse effect
shall have occurred with respect to the ability of Seller and the Netherlands
Subsidiary to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
(d) Absence of Injunctions. No permanent or preliminary Injunction or
restraining order or other order or decree by any court or other Governmental
Authority of competent jurisdiction, or other legal restraint or prohibition,
shall be in effect having the effect of making the transactions contemplated
hereby illegal, preventing consummation of the transactions contemplated
hereby as provided herein, or permitting such consummation only subject to any
condition or restriction that has had or would reasonably be expected to have
a Material Adverse Effect on the Non-North America Business or the Transferred
Assets or a Material Adverse Effect on Purchaser or its Affiliates.
(e) Audited Financial Statements. Seller shall deliver to Purchaser
prior to the Closing, the audited balance sheets prepared for the Non-North
America Business as of May 31, 2004 and May 31, 2005 and the related audited
income statements, statements of stockholders equity and statements of cash
flows for the fiscal years then ended, together with the notes thereto and the
reports thereon of Pricewaterhouse Coopers LLP relating thereto.
(f) Required Consents. Seller shall have delivered to Purchaser
written evidence of the receipt of the consents of any Customers required to
consent to the transfer or assignment of License Agreements with such
Customers ("Required Consents").
(g) Material Breach of Principal Customer Agreements. Seller is not
in material breach of any Principal Customer Agreement that has not been cured
in accordance with the terms thereof having received written notice from the
Customer of such material breach.
8.3 Conditions Precedent to the Obligations of Seller and the
---------------------------------------------------------
Netherlands Subsidiary.
----------------------
The obligations of Seller and the Netherlands Subsidiary to
consummate the transactions contemplated hereby are also subject to the
satisfaction at or prior to the Closing of each of the following additional
conditions, unless waived by Seller (which waiver by Seller shall be binding
on the Netherlands Subsidiary):
(a) Accuracy of Representations and Warranties. The representations
and warranties of Purchaser contained in Article V, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true and correct in each case as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of a specified earlier date) on and as of the Closing Date
as though made on and as of the Closing Date, with only such exceptions as do
not, individually, or in the aggregate, have or may reasonably be expected to
have a Material Adverse Effect on Purchaser. Purchaser shall have performed or
complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by it by the time of the
Closing.
(b) Officers' Certificates. Purchaser shall have delivered to Seller
(i) a certificate dated the Closing Date, signed by the Chief Executive
Officer or Chief Financial Officer of Purchaser certifying as to the
fulfillment of the condition specified in Section 8.3(a) and (ii) a
certificate of the Secretary of Purchaser certifying (A) the incumbency of all
officers of Purchaser having authority to execute and deliver this Agreement
and the agreements and documents contemplated hereby and (B) the resolutions
of the Purchaser's Board of Directors with respect to the transactions
contemplated hereby.
(c) Absence of Injunctions. No permanent or preliminary Injunction or
restraining order or other order or decree by any court or other Governmental
Authority of competent jurisdiction, or other legal restraint or prohibition,
shall be in effect having the effect of making the transactions contemplated
hereby illegal, preventing consummation of the transactions contemplated
hereby as provided herein, or permitting such consummation only subject to any
condition or restriction that has had or would reasonably be expected to have
a Material Adverse Effect on Seller and its Affiliates taken as a whole (after
giving effect to the Closing).
ARTICLE IX
TERMINATION
9.1 Termination by Mutual Consent.
-----------------------------
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing, whether before or
after the approval by stockholders of Seller referred to in Section 8.1(a), by
mutual written consent of Seller (which consent by Seller shall be binding on
the Netherlands Subsidiary) and Purchaser.
9.2 Termination by Either Purchaser or Seller.
-----------------------------------------
This Agreement may be terminated (upon notice from the terminating
party to the other party) and the transactions contemplated hereby may be
abandoned at any time prior to the Closing by either Purchaser or Seller
(which termination by Seller shall be binding on the Netherlands Subsidiary)
if (i) the Closing Date shall not have occurred on or before the date that is
six (6) months after the date hereof, whether such date is before or after the
date of approval by the stockholders of Seller (the "Termination Date");
provided, that the right to terminate this Agreement pursuant to this clause
(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the direct or indirect cause of, or
resulted in, the failure of the Closing Date to occur by the Termination Date;
(ii) subject to (i) hereof and Seller's right to adjourn and postpone the
Seller Special Meeting pursuant to Section 3.1 of this Agreement, the approval
of the Acquisition Proposal by the stockholders of Seller shall not have been
obtained at the Seller Special Meeting and at any duly held adjournment or
postponement thereof; provided, that the right to terminate pursuant to this
clause (ii) shall not be available to any party whose failure to fulfill any
obligation under this Agreement proximately contributed to the failure to
obtain such approval of the stockholders of Seller; or (iii) any order, decree
or ruling permanently restraining, enjoining or otherwise prohibiting
consummation of the transactions contemplated hereby shall become final and
non-appealable (whether before or after the approval by the stockholders of
Seller).
9.3 Termination by Seller.
---------------------
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing, whether before or
after the approval by stockholders of Seller referred to in Section 8.1(a), by
action of the Seller Board (which termination by Seller shall be binding on
the Netherlands Subsidiary):
(a) if (i) Seller is not in material breach of Section 6.5 or in
material breach of any of the other terms of this Agreement, (ii) the Seller
Board authorizes Seller, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and Seller notifies Purchaser in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement to such notice, and (iii) Purchaser does not make,
within two (2) business days of receipt of Seller's written notification of
its intention to enter into a binding agreement for a Superior Proposal, an
offer that the Seller Board determines, in good faith after consultation with
its financial advisors, is no less favorable, from a financial point of view,
to the stockholders of Seller as the Superior Proposal;
(b) if Purchaser breaches or fails in any material respect to perform
or comply with any of its covenants and agreements contained herein or
breaches any of its representations and warranties in any material respect, in
each case that is not curable, such that the conditions set forth in Section
8.3(a) cannot be satisfied; or
(c) if (i) Seller has for a period of at least thirty (30) calendar
days after notifying Purchaser of a material breach of a Principal Customer
Agreement attempted with reasonable efforts to resolve or cure such material
breach in accordance with the terms of such Principal Customer Agreement; (ii)
Seller notifies Purchaser that such material breach continues to exist at the
end of such period of at least thirty (30) calendar days; (iii) (iii) Seller
and the Netherlands Subsidiary meet all conditions precedent under Article
VIII other than Sections 8.2(a), (b),(c), (d), (e), (f) and (g) (and with
respect to 8.2(a), only to the extent that the conditions contained therein
are not satisfied as a result of a material breach of a Principal Customer
Agreement); and (iv) Purchaser does not within five (5) calendar days after
the notice pursuant to Section 9.3(c) waive the condition precedent contained
in Section 8.2(g).
9.4 Termination by Purchaser.
------------------------
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing, whether before or
after the approval by the stockholders of Seller referred to in Section
8.1(a), by Purchaser (i) if the Seller Board shall have (A) failed to
recommend the Acquisition Proposal to the Seller's stockholders, (B) withdrawn
or modified or qualified in a manner adverse to Purchaser its recommendation
of the Acquisition Proposal (including by express communication to the
Seller's stockholders or by refusing to call the Seller Special Meeting or
mail the Proxy Statement or submit the matters to a vote of the Seller's
stockholders), (C) failed to reconfirm its recommendation of this Agreement
within five business days after a written request by Purchaser to do so, or
(D) recommended to Seller's stockholders that they approve, accept or tender
their shares in response to any Alternative Proposal; (ii) if Seller or any of
the other Restricted Persons shall take any other action that results in a
material breach of Section 6.5; (iii) if the Seller shall have entered into
(or the Seller Board shall have authorized the Seller to enter into) a letter
of intent, agreement in principle, acquisition agreement or other similar
undertaking with respect to any Alternative Proposal; or (iv) if Seller or the
Netherlands Subsidiary breaches or fails in any material respect to perform or
comply with any of its covenants or agreements contained herein, or breaches
any of its representations and warranties in any material respect, in each
case that is not curable, such that the conditions set forth in Section 8.2(a)
cannot be satisfied.
9.5 Effect of Termination and Abandonment.
-------------------------------------
(a) In the event of termination of this Agreement and the abandonment
of the transactions contemplated hereby pursuant to this Article IX, this
Agreement (other than as set forth in Sections 6.2, this Section 9.5 and
Article X each of which shall survive the termination of this Agreement) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, (i) no such termination shall relieve any party hereto of any
liability or damages resulting from any willful or intentional breach of this
Agreement, and (ii) in the event this Agreement is terminated by either
Purchaser or Seller pursuant to Section 9.2(ii) or by Seller pursuant to
Section 9.3(a) Seller shall reimburse Purchaser for all of its reasonable
costs and expenses (including reasonable legal, consulting and accounting fees
and disbursements) incurred by Purchaser in connection with this Agreement
(the "Purchaser Expenses"); provided, Seller shall not be required to
reimburse Purchaser for any such Purchaser Expenses exceeding $400,000. Seller
shall promptly, but in no event later than ten business days after the date it
receives notice from Purchaser setting forth the amount of such costs and
expenses, pay such amount by wire transfer of same day funds to an account
designated by Purchaser. Seller acknowledges that the agreements contained in
this Section 9.5(a) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Purchaser would not enter
into this Agreement.
(b) In the event that (x) an Alternative Proposal shall have been
made to Seller or its stockholders or any Person shall have publicly announced
an intention (whether or not conditional) to make an Alternative Proposal with
respect to Seller and, in each case, such Alternative Proposal shall not have
been withdrawn and thereafter this Agreement is terminated by either Purchaser
or Seller pursuant to Section 9.2(i) or (y) this Agreement is terminated by
either Purchaser or Seller pursuant to Section 9.2(ii) or by Purchaser
pursuant to Section 9.4, then Seller shall promptly but in no event later than
five business days after the date of such termination, reimburse Purchaser for
all Purchaser Expenses, provided, Seller shall not be required to reimburse
Purchaser for any such Purchaser Expenses exceeding $400,000. Seller
acknowledges that the agreements contained in this Section 9.5(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Purchaser would not enter into this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Assignment.
----------
This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Seller or the Netherlands Subsidiary, on the one
hand, or, Purchaser, on the other hand (other than following the Closing by
operation of law or in connection with a merger or sale of substantially all
the assets of Seller or Purchaser) without the prior written consent of the
other; provided, that Purchaser may assign in whole or in part its rights and
obligations hereunder to any Affiliate of Purchaser without the consent of any
other party hereto, and it being acknowledged that Purchaser may assign its
rights to acquire any Transferred Assets owned or held by the Netherlands
Subsidiary and to employ employees of the Netherlands Subsidiary to a newly
formed subsidiary of Purchaser; provided, further, that Purchaser shall remain
liable for its obligations hereunder and any such assignee must satisfy any
representations, requirements, obligations or covenants of the Purchaser in
respect of any Tax elections or any other Tax matters.
10.2 Survival.
--------
The covenants to be performed prior to the Closing set forth in this
Agreement shall not survive the Closing and shall terminate, and be of no
further force or effect, upon the Closing. The representations and warranties
set forth in this Agreement shall not survive the Closing and shall thereafter
terminate and be of no further force or effect. All covenants (i) involving
the payment of funds or (ii) to be performed at and after the Closing set
forth in this Agreement (including without limitation the covenants in
Sections 6.2, 6.8 and 7.5) shall survive the Closing until fully performed in
accordance with their terms.
10.3 No Third-Party Beneficiaries.
----------------------------
Except for the provisions of Sections 6.8 and 7.4, which are
expressly for the benefit of, and intended to be enforceable by, Double C and
its successors in interest, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied, including Article VII, which are statements of intent, shall give or
be construed to give to any person or entity, other than the parties hereto
and permitted assignees, any legal or equitable rights hereunder.
10.4 Expenses.
--------
Except as otherwise provided in this Agreement, whether or not the
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such cost or expense.
10.5 Equity Relief.
-------------
The parties hereto agree that irreparable damage would occur in the
event that any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity without the necessity of demonstrating the inadequacy of monetary
damages or the posting of a bond.
10.6 Amendments.
----------
This Agreement may be amended by action of all the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of Seller, but, after any
such approval by the stockholders of Seller, no amendment shall be made which
by law requires further approval by such stockholders of Seller without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
10.7 Notices.
-------
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or telecopy
(which is confirmed), or sent, postage prepaid, by registered, certified
(return receipt requested) or express mail, or reputable overnight courier
service (providing proof of delivery) and shall be deemed given when so
delivered by hand, or telecopied, or if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service), to the
parties at the following addresses (or at such other address for a party
specified by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof) as follows:
(i) if to Purchaser, to:
-------------------
SeaChange International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 978-897-0132
with a copy to (which shall not constitute
notice):
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to Seller or the Netherlands Subsidiary, to:
----------------------------------------------
Liberate Technologies
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to (which shall not constitute
notice):
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
10.8 Interpretation; Exhibits and Schedules.
--------------------------------------
The headings contained in this Agreement, in any Exhibit or Schedule
hereto and in the table of contents to this Agreement, are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Schedule or Exhibit,
but not otherwise defined therein, shall have the meaning as defined in this
Agreement.
10.9 Counterparts.
------------
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement, and shall become effective when such
counterparts have been signed by each of the parties and delivered to the
other party.
10.10 Severability.
------------
Any term or provision of this Agreement that is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation. If
the final judgment of a court of competent jurisdiction or other authority
declares that any term or provision hereof is invalid, void or unenforceable,
the parties agree that the court making such determination shall have the
power to reduce the scope, duration, area or applicability of the term or
provision, to delete specific words or phrases, or to replace any invalid,
void or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
10.11 Waiver of Compliance; Consents.
------------------------------
Except as otherwise provided in this Agreement, any failure of the
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.11.
10.12 Entire Agreement.
----------------
This Agreement, including the exhibits hereto and the documents,
schedules, certificates and instruments referred to herein, and the other
Transaction Documents embodies the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby. There are
no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to transactions contemplated hereby.
10.13 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
(b) Each of the parties: (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute that the parties fail to
resolve arises out of this Agreement or any of the transactions contemplated
hereby; (b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court; and (c)
agrees that it shall not bring any action relating to this Agreement or any of
the transactions contemplated hereby in any court other than a federal or
state court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
(ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.13.
10.14 Joint Participation in Drafting this Agreement; Construction.
------------------------------------------------------------
The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement. The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party
has breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative
levels of specificity) which the party has not breached shall not detract from
or mitigate the fact that the party is in breach of the first representation,
warranty, or covenant. When a reference is made in this Agreement to the
Seller Disclosure Letter, such reference shall be to the disclosure letter
delivered by Seller on the date hereby and not to any supplement to, or change
or modifications of, such disclosure schedule. The parties acknowledge that
disclosure of information in one section of the Seller Disclosure Letter, with
specific reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates shall be deemed as proper
disclosure for other sections or parts of the disclosure letter only to the
extent such a matter is disclosed in such a way as to make its relevance to
the information called for by such other Section or Subsection readily
apparent.
10.15 Further Assurances.
------------------
Subject to the terms and conditions of this Agreement, each of the
parties hereto will use commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement. From time to
time after the Closing Date, without further consideration, Seller and the
Netherlands Subsidiary each will, at its expense, execute and deliver, or
cause to be executed and delivered, such documents to Purchaser as Purchaser
may reasonably request in order to more effectively vest in Purchaser good
title to the Transferred Assets (subject to Seller's and the Netherlands
Subsidiary's representations and warranties hereunder) and to evidence the
representations and warranties of Seller and the Netherlands Subsidiary
hereunder. From time to time after the Closing Date, without further
consideration, Purchaser will, at Purchaser's expense, execute and deliver
such documents to Seller as Seller may reasonably request in order more
effectively to consummate the sale of the Transferred Assets pursuant to this
Agreement. Without limiting the foregoing, Seller and the Netherlands
Subsidiary shall cooperate with any reasonable requests made by Purchaser in
connection with the enforcement or defense of Purchaser's rights in the
Transferred Assets. In addition, at Purchaser's expense, Seller agrees to
cooperate with Purchaser in documenting past patent prosecution and litigation
practice and strategy. Seller, at its own expense, will cause its counsel(s)
to cooperate with Purchaser's counsel(s) with respect to the transfer of the
Transferred Assets, including any files maintained by Seller's patent counsel
that relate to the Transferred Assets. Seller hereby consents to the
disclosure by Seller's patent counsel(s) to Purchaser of confidences and
secrets that relate to the Transferred Assets.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.
LIBERATE TECHNOLOGIES
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman and CEO
LIBERATE TECHNOLOGIES B.V.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
SEAHANGE INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
Title: President and CEO
[Signature Page to Asset Purchase Agreement]