EXHIBIT 4.10
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
TEKELEC
AND
NICE-SYSTEMS LTD.
DATED AS OF APRIL 27, 2006
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1
1.1 Certain Definitions 1
1.2 Terms Generally 7
ARTICLE II PURCHASE AND SALE OF THE SHARES 7
2.1 Purchase and Sale 7
2.2 Consideration 7
2.3 Post-Closing Date Purchase Price Adjustment 8
2.4 Closing 9
2.5 Deliveries by Seller at the Closing 9
2.6 Deliveries by Buyer 10
ARTICLE III RELATED MATTERS 11
3.1 Books and Records of the Company 11
3.2 Distributions 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 11
4.1 Organization 12
4.2 Authorization 12
4.3 Common Stock 12
4.4 Ownership of the Shares 13
4.5 Consents and Approvals; No Violations 13
4.6 Financial Statements 13
4.7 No Undisclosed Liabilities 14
4.8 Product Warranties and Product Liability 14
4.9 Absence of Certain Developments 14
4.10 Real Property 15
4.11 Personal Property 16
4.12 Intellectual Property 16
4.13 Litigation 20
4.14 Compliance with Applicable Law; Permits 20
4.15 Certain Contracts and Arrangements 20
4.16 Labor Relations 22
4.17 Employment Benefit Plans; ERISA 22
4.18 Taxes 24
4.19 Accounts Receivable 25
4.20 Environmental Matters 26
4.21 Insurance 26
4.22 Certain Fees 27
4.23 Corporate Records 27
4.24 Transactions with Affiliates 27
4.25 Certain Payments 27
4.26 Banks; Powers of Attorney; Guarantees 27
4.27 Books and Records 27
4.28 Customers and Suppliers 28
4.29 Export Control 28
4.30 Disclosure 28
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 28
5.1 Organization and Authority of Buyer 28
5.2 Consents and Approvals; No Violations 29
5.3 Availability of Funds 29
5.4 Investment Representation 29
5.5 Litigation 30
5.6 Investigation by Buyer 30
5.7 Certain Fees 30
ARTICLE VI COVENANTS 30
6.1 Conduct of the Company's Business 30
6.2 Access to Information 31
6.3 Consents 32
6.4 Reasonable Efforts 32
6.5 Covenant to Satisfy Conditions 33
6.6 Public Announcements 33
6.7 Use of "Tekelec" Name 33
6.8 Employees; Employee Benefits 33
6.9 Certain Tax Matters 36
6.10 Exclusivity 38
6.11 Disclosure Schedule 38
6.12 Non-Competition; Non-Solicitation 39
6.13 Remittances of Receivables 40
6.14 Termination of Certain Contracts 40
6.15 Audited Financial Statements 40
6.16 Blue Pumpkin Software License 40
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PARTIES 40
7.1 Conditions to Each Party's Obligation 40
7.2 Conditions to Obligations of Seller 41
7.3 Conditions to Obligations of Buyer 41
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER 42
8.1 Termination 42
8.2 Procedure and Effect of Termination 43
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 44
9.1 Survival of Representations, Warranties and Agreements 44
9.2 Seller's Agreement to Indemnify 44
9.3 Buyer's Agreement to Indemnify 44
9.4 Notice of Claims 45
9.5 General Limitations; Exclusive Remedy 45
9.6 Third Party Indemnification 46
9.7 Indemnity Payments 47
ARTICLE X MISCELLANEOUS 47
10.1 Fees and Expenses 47
10.2 Further Assurances 47
10.3 Notices 47
10.4 Severability 48
10.5 Binding Effect; Assignment 49
10.6 No Third Party Beneficiaries 49
10.7 Interpretation 49
10.8 Jurisdiction and Consent to Service 49
10.9 Attorneys' Fees 49
10.10 Governing Law 50
10.11 Specific Performance 50
10.12 Entire Agreement 50
10.13 Amendment, Modification and Waiver 50
10.14 Counterparts 50
EXHIBITS
Exhibit A Form of Transition Services Agreement
Exhibit B Form of Legal Opinion of Counsel to Seller
Exhibit C Form of Guarantee
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DISCLOSURE SCHEDULES
Schedule 1.1 Knowledge
Schedule 2.3(b) Accounting Principles
Schedule 4.5 Consents; Approvals
Schedule 4.6 Financial Statements
Schedule 4.7 No Undisclosed Liabilities
Schedule 4.8(a) Product Warranties and Product Liability
Schedule 4.8(b) Product Claims
Schedule 4.9(b) Absence of Certain Developments
Schedule 4.10(b) Leases for Real Property
Schedule 4.11(c) Personal Property Leases
Schedule 4.12(a) Ownership of Technology and Intellectual Property
Rights
Schedule 4.12(b) Company Intellectual Property Rights
Schedule 4.12(c)(i) Certain Contracts Related to Company Technology or
Company Intellectual Property Rights
Schedule 4.12(c)(ii) Transfers of Intellectual Property Rights
Schedule 4.12(e) Necessary or Material Intellectual Property Rights
Schedule 4.12(f) Proprietary Rights, Etc.
Schedule 4.12(g)(i) Registered Intellectual Property Rights
Schedule 4.12(g)(ii) Actions or Claims Related to Registered Intellectual
Property Rights
Schedule 4.12(h) Indemnity
Schedule 4.12(j) Licenses
Schedule 4.12(l) Development of Intellectual Property Rights
Schedule 4.12(m) Enforceability
Schedule 4.12(o) Open Source Components
Schedule 4.13 Litigation
Schedule 4.15 Certain Contracts and Arrangements
Schedule 4.16 Company Employees
Schedule 4.17(a) Employee Benefit Plans
Schedules 4.18(a) & (b) Taxes
Schedule 4.18(k) Foreign Taxes
Schedule 4.21 Insurance Policies
Schedule 4.24 Affiliate Transactions
Schedule 4.26 Bank Accounts; Powers of Attorney
Schedule 4.28(a) Significant Customers
Schedule 4.28(b) Significant Suppliers
Schedule 6.1(b) Conduct of the Company's Business
Schedule 6.8(c) Severance Policy
Schedule 7.3(f) Consents, Approvals
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of April
27, 2006, by and between Tekelec, a California corporation ("SELLER"), and
NICE-Systems Ltd., a company limited by shares organized under the laws of the
State of Israel ("BUYER").
RECITAL
WHEREAS, pursuant to the terms and conditions of this Agreement, Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, 100 shares
(the "SHARES") of Common Stock, par value $0.01 per share (the "COMMON STOCK"),
of IEX Corporation, a Nevada corporation (the "COMPANY"), representing all of
the issued and outstanding capital stock of the Company;
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions set forth
below, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
"ACQUIROR" shall have the meaning set forth in Section 6.12(c).
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"AGREEMENT" has the meaning set forth in the preamble of this
Agreement.
"ARBITER" has the meaning set forth in Section 2.3(c).
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section
6.15.
"BLUE PUMPKIN CROSS-LICENSE AGREEMENT" has the meaning set forth in
Section 6.16.
"BLUE PUMPKIN LICENSED PATENTS" has the meaning set forth in Section
6.16.
"BUSINESS DAY" means any day other than Saturday, Sunday or a day on
which banking institutions in New York, New York are required to be closed.
"BUYER" has the meaning set forth in the preamble of this Agreement.
"BUYER FLEXIBLE BENEFITS PLAN" has the meaning set forth in Section
6.8(e).
"BUYER INDEMNITEES" has the meaning set forth in Section 9.2.
"CASH" means cash and cash equivalents (including marketable
securities and short-term investments) calculated in accordance with GAAP.
"CLOSING" has the meaning set forth in Section 2.4.
"CLOSING BALANCE SHEET" has the meaning set forth in Section 2.3(b).
"CLOSING DATE" has the meaning set forth in Section 2.4.
"CLOSING WORKING CAPITAL" has the meaning set forth in Section 2.3(b).
"CLOSING WORKING CAPITAL STATEMENT" has the meaning set forth in
Section 2.3(b).
"COBRA" has the meaning set forth in Section 4.17(e).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning set forth in the Recital to this
Agreement.
"COMPANY" has the meaning set forth in the preamble of this Agreement.
"COMPANY CHARTER DOCUMENTS" has the meaning set forth in Section 4.1.
"COMPANY EMPLOYEES" has the meaning set forth in Section 4.16.
"COMPANY INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property
Rights owned by the Company and used in the current operation of the
Company's business, including without limitation all Company Registered IP
and all Intellectual Property Rights in the Products (including the
Technology embodied therein).
"COMPANY PERMITS" has the meaning set forth in Section 4.14(b).
"COMPANY REGISTERED IP" has the meaning set forth in Section 4.11(g).
"COMPANY TECHNOLOGY" means all Technology owned by the Company and
used in the current operation of the Company's business.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
6.2(c).
"CONTRACT" means any contract, agreement, indenture, note, bond,
mortgage, loan, instrument, lease, license, commitment or other
arrangement, understanding, undertaking or obligation, whether written or
oral.
"DAMAGES" has the meaning set forth in Section 9.2.
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"DISABLING PROCEDURES" has the meaning set forth in Section 4.12(n).
"DISCLOSURE SCHEDULE" has the meaning set forth in Article IV.
"DISTRIBUTIONS" has the meaning set forth in Section 3.2.
"EMPLOYEE" has the meaning set forth in Section 6.8(a).
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.20(a).
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 4.20(b).
"ERISA" has the meaning set forth in Section 4.17(a).
"ERISA AFFILIATE" has the meaning set forth in Section 4.17(a).
"GAAP" means generally accepted accounting principles, as in effect in
the United States from time to time, applied on a basis consistent with the
accounting methods, principles or practices, policies and standards of the
Company.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, commission, board, bureau, agency or instrumentality, or
any regulatory, administrative or other department, agency, or any
political or other subdivision, department or branch of any of the
foregoing.
"HAZARDOUS SUBSTANCES" has the meaning set forth in Section 4.20(a).
"H-S-R ACT" has the meaning set forth in Section 4.5.
"INCOME TAXES" has the meaning set forth in Section 4.18(m)(i).
"INDEBTEDNESS" means with respect to any Person, all obligations
contingent or otherwise, in respect of: (1) borrowed money; (ii)
indebtedness evidenced by notes, debentures or similar instruments; (iii)
capitalized lease obligations; (iv) the deferred purchase price of
properties, assets, services or securities (other than ordinary trade
accounts payable or employee compensation); (v) conditional sale or other
title retention agreements; (vi) any letter of credit, banker's acceptance
or similar credit reimbursement obligation; (vii) interest rate or currency
swap transactions (valued at the termination value thereof); (viii) all
obligations of the types referred to in clauses (i) through (vi) for the
payment of which such Person is responsible or liable, directly or
indirectly, as obligor, guarantor, surety or otherwise, or secured by Lien
on any property or asset of such Person; and (i) interest, premium,
penalties and other amounts owing in respect of the items described in the
foregoing clauses (i) through (v).
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.4(a).
"INDEMNITY PERIOD" has the meaning set forth in Section 9.1.
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"INJURED PARTY" has the meaning set forth in Section 9.4(a).
"INTELLECTUAL PROPERTY RIGHTS" means any or all of the following and
all statutory and/or common law rights in, arising out of, or associated
therewith, arising under the laws of the United States (i) all Patents;
(ii) all inventions (whether patentable or not), invention disclosures and
improvements, all trade secrets, proprietary information, know how and
other Technology; (iii) all works of authorship, including derivative
works, within the meaning of the United States Copyright Act, 17 U.S.C.
▇▇.▇▇. 101 et seq., copyrights, mask works, copyright and mask work
registrations and applications therefor; (iv) all industrial designs and
any registrations and applications therefor; (v) all Trademarks and
Internet domain names; (vi) all databases and data collections (including
knowledge databases, customer lists and customer databases); (vii) all
rights in Software; (viii) all other rights in or to any Technology; (ix)
any similar, corresponding or equivalent rights to any of the foregoing;
(x) all goodwill associated with any of the foregoing; and (xi) the right
and power to assert, defend and recover title thereto and the right to ▇▇▇
for and recover damages for past, present and future infringement, misuse,
misappropriation or other violation thereof.
"IRS" has the meaning set forth in Section 4.17(b).
"LEASED REAL PROPERTY" has the meaning set forth in Section 4.10(c).
"LEASES" has the meaning set forth in Section 4.10(b).
"LIABILITY" means any debt, loss, damage, adverse claim, fine,
penalty, liability or obligation (whether direct or indirect, known or
unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, matured or unmatured, determined or determinable, liquidated or
unliquidated, or due or to become due, and whether in contract, tort,
strict liability or otherwise.
"LICENSE IN AGREEMENTS" has the meaning set forth in Section 4.12(j).
"LICENSED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual
Property Rights licensed by the Company from third parties and used in the
current operation of the Company's business.
"LICENSED TECHNOLOGY" means all Technology licensed by the Company
from third parties and used in the current operation of the Company's
business.
"LIEN" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement, encumbrance or any other restriction or
limitation whatsoever.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, results of operations or financial condition of the Company taken
as a whole, other than changes (a) relating to generally applicable
economic conditions or to the Company's industry in general (unless the
Company is disproportionately affected thereby) or (b) resulting from the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
"MOST RECENT BALANCE SHEET" has the meaning set forth in Section 4.6.
"NON-INCOME TAXES" has the meaning set forth in Section 4.18(m)(ii).
"NOTICE OF CLAIM" has the meaning set forth in Section 9.4(a).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Company, consistent with past practice and custom.
"PATENTS" means patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof.
"PERMITS" means any approvals, authorizations, franchises, consents,
licenses, permits or certificates of a Governmental Authority.
"PERMITTED LIENS" means: (i) Liens for current taxes or assessments
due but not yet payable or being contested in good faith by appropriate
proceedings, (ii) servitudes, easements, restrictions, rights-of-way,
encroachments and other similar rights in real property or any interest
therein, (iii) Liens that constitute mechanics', carriers', workers' or
similar liens arising in the Ordinary Course of Business, and (iv) Liens
which individually or in the aggregate are not material.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department of agency thereof.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section
4.11(c).
"PLAN" has the meaning set forth in Section 4.17(a).
"POST-CLOSING TAX PERIOD" has the meaning set forth in Section
4.18(m)(iii).
"PRE-CLOSING TAX PERIOD" has the meaning set forth in Section
4.18(m)(iv).
"PRODUCTS" means the Company's TotalView(R) Workforce Management
product and TotalNet(R) Call Routing product.
"PTO" means the United States Patent and Trademark Office, and any
successor thereto.
"PURCHASE PRICE" has the meaning set forth in Section 2.2.
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"REASONABLE EFFORTS" means with respect to a given goal, the efforts
that a reasonable person in the position of the promisor would use under
the circumstances so as to achieve the goal as expeditiously as reasonably
possible; provided, however, that Reasonable Efforts does not require a
material expenditure of funds or the incurrence of a material liability on
the part of the obligated party and does not require such party to take
actions that would result in a material adverse change in the benefits to
such party of this Agreement and the transactions contemplated hereby.
"REGISTERED INTELLECTUAL PROPERTY RIGHTS" means Patents; Trademark
registrations and applications for Trademark registrations; copyright
registrations and applications for copyright registrations; and Internet
domain names.
"RESTRICTED BUSINESS" has the meaning set forth in Section 6.12(a).
"REVIEW PERIOD" has the meaning set forth in Section 3.1(b).
"SECURITIES ACT" has the meaning set forth in Section 5.4.
"SELLER" has the meaning set forth in the preamble of this Agreement.
"SELLER FLEXIBLE BENEFIT PLAN" has the meaning set forth in Section
6.8(e).
"SELLER INDEMNITEES" has the meaning set forth in Section 9.3.
"SHARES" has the meaning set forth in the recital to this Agreement.
"SOFTWARE" means any computer software and code, including assemblers,
applets, compilers, source code, object code, data (including image and
sound data), design tools and user interfaces, in any form or format,
however fixed including source code listings and documentation.
"STRADDLE PERIOD" has the meaning set forth in Section 4.18(m)(v).
"TARGET WORKING CAPITAL" has the meaning set forth in Section 2.3(a).
"TAX" has the meaning set forth in Section 4.18(m)(vii).
"TAX RETURN" has the meaning set forth in Section 4.18(m)(vi).
"TAXING AUTHORITY" means any governmental authority (domestic or
foreign) responsible for the administration or collection of any Tax.
"TECHNOLOGY" means, collectively, designs, formulas, algorithms,
procedures, routines, ideas, concepts, models, methods, processes,
techniques, know-how, Software, tools, data, databases, confidential and
proprietary information, inventions (whether patentable or not), creations,
improvements, and works of authorship, including derivative works, within
the meaning of the United States Copyright Act, 17 U.S.C. ▇▇.▇▇. 101 et
seq., and all recordings, graphs, drawings, reports, analyses, other
writings, and any other embodiment of the above, in any form whether or not
specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in or displayed by any of the foregoing, or used
or useful in the design, development, reproduction, maintenance or
modification of any of the foregoing.
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"TO THE KNOWLEDGE" and similar phrases shall mean the actual knowledge
of the persons listed on SCHEDULE 1.1.
"TRADEMARKS" means trademarks, service marks, trade names, logos and
registrations thereof and applications therefor.
"TRANSACTION DOCUMENTS" has the meaning set forth in Section 4.2.
"TREASURY REGULATIONS" means the rules and regulations promulgated
under the Code.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section
4.6.
"WARN" has the meaning set forth in Section 4.16.
"WORKING CAPITAL" has the meaning set forth in Section 2.3(a).
1.2 TERMS GENERALLY. The definitions in Section 1.1 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" even if not followed actually by such phrase unless
the context expressly provides otherwise. All references herein to
Sections, paragraphs and Exhibits and Schedules shall be deemed references
to Sections or paragraphs of or Exhibits or Schedules to this Agreement
unless the context shall otherwise require. Unless otherwise expressly
defined, terms defined in this Agreement shall have the same meanings when
used in any Exhibit or Schedule. The words "herein," "hereof," "hereto" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular provision of this Agreement. References
herein to "days," unless otherwise indicated, are to consecutive calendar
days.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
2.1 PURCHASE AND SALE. Upon and subject to the terms and conditions of
this Agreement, at the Closing, Seller will sell, transfer and deliver to
Buyer, and Buyer will purchase, acquire and accept from Seller, the Shares.
2.2 CONSIDERATION. Subject to the terms and conditions of this
Agreement, in consideration of the aforesaid sale, transfer and delivery of
the Shares, Buyer will deliver or cause to be delivered to Seller at the
Closing $200,000,000 (such amount is hereinafter referred to as the
"PURCHASE PRICE"), in cash by wire transfer of immediately available funds
to such bank account as shall be designated by Seller.
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2.3 POST-CLOSING DATE PURCHASE PRICE ADJUSTMENT.
(a) The target working capital of the Company as of the Closing
Date is $0 (such target working capital, the "TARGET WORKING
CAPITAL"). "Working Capital" means the current assets of the Company
minus all current liabilities of the Company; provided, however, that
the following shall be excluded from the calculation of Working
Capital: (i) all intercompany payables and receivables except to the
extent any such specific intercompany payables are expressly assumed
by Buyer at the Closing (e.g., accrued bonuses and related benefit
costs, Seller funded infrastructure costs, etc.); (ii) deferred
revenues; and (iii) income taxes, whether prepaid, paid, owing or
deferred. Notwithstanding anything to the contrary herein, for
purposes of this Section 2.3, Working Capital shall include any income
tax liability related to deferred revenues which originate after
December 31, 2005 and which remain on the Closing Balance Sheet, but
only to the extent Seller has received cash for such deferred
revenues, and such income tax liability shall be calculated using a
combined overall tax rate of 40% for Federal and state income tax
purposes.
(b) Within 90 days following the Closing Date, Buyer shall
deliver to Seller a balance sheet of the Company as of the open of
business on the Closing Date (the "CLOSING BALANCE SHEET") and a
statement setting forth a reasonably detailed calculation of Working
Capital as of the Closing Date ("CLOSING WORKING CAPITAL"), prepared
in accordance with the books and records of the Company (the "CLOSING
WORKING CAPITAL STATEMENT"). The Closing Balance Sheet and the Closing
Working Capital Statement shall be prepared in accordance with GAAP
applied using the same accounting methods, practices, principles,
policies and procedures, with consistent classifications, judgments
and valuation and estimation methodologies that were used in the
preparation of the Company's Unaudited Financial Statements. The
Closing Working Capital shall be consistent with the calculation set
forth in SECTION 2.3(B) OF THE DISCLOSURE SCHEDULE of Working Capital
as of December 31, 2005.
(c) ACCEPTANCE OF STATEMENTS; DISPUTE PROCEDURES. The Closing
Balance Sheet and the Closing Working Capital Statement (and the
computation of Closing Working Capital indicated thereon) delivered by
Buyer to Seller shall be conclusive and binding upon the parties
unless Seller, within 30 days after delivery to the Seller of the
Closing Balance Sheet and the Closing Working Capital Statement,
notifies Buyer in writing that Seller disputes any of the amounts set
forth therein, specifying in reasonable detail the nature of the
dispute and the basis therefor. The parties shall in good faith
attempt to resolve any dispute and, if the parties so resolve such
dispute, the Closing Balance Sheet and the Closing Working Capital
Statement (and the computation of Closing Working Capital indicated
thereon), as amended to the extent necessary to reflect the resolution
of the dispute, shall be conclusive and binding on the parties. If the
parties do not reach agreement in resolving the dispute within 60 days
after notice is given by Seller to Buyer pursuant to the second
preceding sentence, the parties shall submit the dispute to a partner
at the New York office of Deloitte & Touche LLP (the "ARBITER") for
resolution. If the parties cannot agree on the selection of a partner
to act as Arbiter, the parties shall request the American Arbitration
Association to appoint such a partner, and such appointment shall be
conclusive and binding on the parties. Promptly, but no later than 30
days after acceptance of his or her appointment as Arbiter, the
Arbiter shall determine (it being understood that in making such
determination, the Arbiter shall be functioning as an expert and not
as an arbitrator), based solely on written submissions by Buyer and
Seller, and not by independent review, only those issues in dispute
and shall render a written report as to the resolution of the dispute
and the resulting computation of the Closing Working Capital which
shall be conclusive and binding on the parties. In resolving any
disputed item, the Arbiter (x) shall be bound by the provisions of
this SECTION 2.3 and (y) may not assign a value to any item greater
than the greatest value for such items claimed by either party or less
than the smallest value for such items claimed by either party. The
fees, costs and expenses of the Arbiter shall be allocated to and
borne by Buyer and Seller based on the inverse of the percentage that
the Arbiter's determination (before such allocation) bears to the
total amount of the total items in dispute as originally submitted to
the Arbiter. For example, should the items in dispute total in amount
to $1,000 and the Arbiter awards $600 in favor of Seller's position,
60% of the costs of its review would be borne by Buyer and 40% of the
costs would be borne by Seller.
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(d) PAYMENT. Upon final determination of Closing Working Capital
as provided in SECTION 2.3(C) above, (A) if Closing Working Capital is
greater than Target Working Capital, the Purchase Price shall be
increased by the excess of Closing Working Capital over Target Working
Capital and Buyer shall promptly, but no later than five business days
after such final determination, pay the amount of such difference to
Seller, and (B) if Closing Working Capital is less than Target Working
Capital, the Purchase Price shall be decreased by the excess of Target
Working Capital over Closing Working Capital and Seller shall
promptly, but no later than five business days after such final
determination, pay to Buyer the amount of such difference.
2.4 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, at 9:00 a.m., local
time, on the second Tuesday of June, 2006 or, if the conditions to the
Closing are not then satisfied, on such other date as the parties may agree
after the satisfaction or waiver of all conditions to the obligations of
the parties to consummate the transactions contemplated hereby, which date
shall be no later than the fifth day after the satisfaction or waiver of
such conditions. The date of the Closing is sometimes referred to herein as
the "CLOSING DATE."
2.5 DELIVERIES BY SELLER AT THE CLOSING. At the Closing, Seller will
deliver or cause to be delivered to Buyer (unless delivered previously) the
following:
(a) The stock certificate or certificates (or similar evidence of
ownership) representing the Shares, accompanied by stock powers duly
executed in blank or duly executed stock transfer forms or instruments
of transfer;
(b) The resignations of all members of the Board of Directors of
the Company;
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(c) The resignations of officers of the Company designated in
writing by Buyer;
(d) The stock books, minute books and corporate seal of the
Company;
(e) A certificate dated within five days prior to the Closing
Date issued by the Secretary of State of the State of Nevada
certifying that the Company has legal existence and is in good
standing in the State of Nevada;
(f) A certificate dated the Closing Date executed by the
Secretary of Seller certifying (i) the names of the officers of Seller
authorized to sign this Agreement and the other agreements, documents
and instruments executed by Seller pursuant hereto, together with the
true signatures of such officers, and (ii) as to copies of resolutions
adopted by the Board of Directors of Seller authorizing the
appropriate officers of Seller to execute and deliver this Agreement
and all agreements, documents and instruments executed by Seller
pursuant hereto, and to consummate the transactions contemplated
hereby and thereby, and that such resolutions are still in effect and
have not been amended, modified, rescinded or revoked;
(g) The Transition Services Agreement, in the form attached
hereto as EXHIBIT A, duly executed by Seller;
(h) A certification described in Treasury Regulation Section
1.1445-2(b)(2)(i) certifying that Seller is not a "foreign person";
and
(i) All other documents, instruments and writings required to be
delivered by Seller at or prior to the Closing pursuant to this
Agreement or otherwise reasonably requested by Buyer in connection
herewith.
2.6 DELIVERIES BY BUYER. At the Closing, Buyer will deliver or cause
to be delivered to Seller (unless previously delivered) the following:
(a) The Purchase Price referred to in Section 2.2 hereof;
(b) A certificate dated within five days prior to the Closing
Date issued by the Companies Registrar of the State of Israel
certifying that Buyer has legal existence in the State of Israel;
(c) A certificate dated the Closing Date executed by the
Secretary or comparable officer of Buyer certifying (i) the names of
the officers of Buyer authorized to sign this Agreement and the other
agreements, documents and instruments executed by Buyer pursuant
hereto, together with the true signatures of such officers, and (ii)
as to copies of resolutions adopted by the Board of Directors or other
governing body of Buyer authorizing the appropriate officers of Buyer
to execute and deliver this Agreement and all agreements, documents
and instruments executed by Buyer pursuant hereto, and to consummate
the transactions contemplated hereby and thereby, and that such
resolutions are still in effect and have not been amended, modified,
rescinded or revoked;
10
(d) The Transition Services Agreement in the form attached hereto
as EXHIBIT A, duly executed by Buyer; and
(e) All other documents, instruments or writings required to be
delivered by Buyer at or prior to the Closing pursuant to this
Agreement or otherwise reasonably requested by Seller in connection
herewith.
ARTICLE III
RELATED MATTERS
3.1 BOOKS AND RECORDS OF THE COMPANY.
(a) Seller agrees to deliver to Buyer at or as soon as
practicable after the Closing, as requested by Buyer, all books and
records of the Company (including correspondence, memoranda, books of
account, personnel and payroll records and the like), PROVIDED that
Seller may retain a copy of all such books and records.
(b) Buyer shall not, for a period (the "REVIEW PERIOD") of four
years after the Closing Date or such longer period as retention
thereof is required by applicable law or by any record retention
agreements entered into with any Taxing Authority, dispose of or
destroy any of the business records and files of the Company relating
to the period prior to the Closing Date without first offering to turn
over possession thereof to Seller by written notice to Seller at least
90 days prior to the proposed date of such disposition or destruction.
During the Review Period, Buyer shall permit, and shall take such
actions as may be necessary to cause any of its successors or assigns
to permit, Seller and its authorized representatives to have
reasonable access to, and examine and make copies of, all such books
and records as reasonably requested by Seller.
3.2 DISTRIBUTIONS. The parties agree that Seller shall have the right,
at or prior to the Closing, to cause the Company to distribute intercompany
amounts (as described in the next sentence) and the intellectual property
described in Section 6.9(a) and to distribute Cash out of funds legally
available therefor, to Seller, by one or more cash dividends, repurchase of
existing stock and/or other distributions (collectively, the
"DISTRIBUTIONS"). In addition, the parties agree that on or prior to the
Closing, Seller and the Company shall settle all intercompany amounts owed
to each other by way of dividend, distribution or otherwise, except to the
extent that any such amount is expressly assumed by Buyer at the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, that except as set forth in the
Disclosure Schedule delivered by Seller to Buyer on the date hereof and attached
hereto (the "DISCLOSURE SCHEDULE"), each of the following representations,
warranties and statements is true and correct as of the date hereof and will be
true and correct as of the Closing Date:
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4.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. The Company has all
requisite corporate and other power and corporate authority to own, lease
and operate its properties and to carry on its operations as now being
conducted. The Company is duly qualified, authorized or licensed to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the property owned, leased or operated by the Company
or the nature of the business conducted by the Company makes such
qualification necessary, except in any such jurisdiction where the failure
to be so duly qualified, authorized or licensed and in good standing would
not have a Material Adverse Effect. The Company has previously made
available to Buyer complete and correct copies of the Company's Articles of
Incorporation and Bylaws of the Company, as currently in effect (the
"COMPANY CHARTER DOCUMENTS"). The Company has no direct or indirect
subsidiaries or any other equity interest in any Person.
4.2 AUTHORIZATION. Seller has the requisite corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated hereby or to be executed
and delivered by Seller in connection with the consummation of the
transactions contemplated by this Agreement (the "TRANSACTION DOCUMENTS")
and consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and each of the Transaction
Documents, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by all necessary corporate
action on the part of Seller. This Agreement has been duly executed and
delivered by Seller and constitutes, and, when executed and delivered, each
of the Transaction Documents will constitute (assuming in each case the
valid authorization, execution and delivery of such agreement by Buyer),
the legal valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except that (a) such enforcement may
be subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect, relating to
or limiting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
4.3 COMMON STOCK. The authorized capital stock of the Company consists
solely of 20,000,000 shares of Common Stock, par value $0.01 per share, of
which the Shares are the only shares issued and outstanding. All of the
Shares are duly authorized, validly issued, fully paid and non assessable
and were not issued in violation of any law or any preemptive or similar
rights. There are no outstanding securities convertible into, exchangeable
for, or carrying the right to acquire, equity securities of the Company,
nor are there any subscriptions, warrants, options, rights or other
arrangements or commitments (other than this Agreement) which could
obligate the Company to issue or Seller to sell any shares of Common Stock.
There are no obligations, contingent or otherwise, of the Company to (i)
repurchase, redeem or otherwise acquire any shares of capital stock or
other equity of the Company, or (ii) provide material funds to, or make any
material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of,
any Person. There are no outstanding share appreciation, phantom shares,
profit participation or similar rights of the Company. There are no voting
agreements, voting trusts, irrevocable proxies or other contracts or
understandings to which the Company is a party or is bound with respect to
the voting of any shares of capital stock or other equity of the Company.
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4.4 OWNERSHIP OF THE SHARES. Seller is the sole record and beneficial
owner of the Shares and the Shares constitute all of the capital stock of
the Company owned by Seller. Seller has good title to such Shares, free and
clear of all Liens.
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as
amended (the "H-S-R ACT"), neither the execution and delivery of this
Agreement or the Transaction Documents nor the consummation by Seller of
the transactions contemplated hereby will (a) conflict with or result in
any breach of any provision of the Company Charter Documents or the
Articles of Incorporation or Bylaws of Seller; (b) require any filing with,
or the obtaining of any Permit, order, authorization, consent or approval
of, any Governmental Authority; (c) except as set forth in SECTION 4.5 OF
THE DISCLOSURE SCHEDULE, violate, conflict with or result in a default (or
any event that, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any
Contract to which the Company or Seller is a party or by which the Company
or Seller or any of their assets may be bound; or (d) violate any judgment,
order, injunction, decree, ruling, writ, assessment or arbitration
applicable to the Company or Seller, excluding from the foregoing clauses
(b), (c) and (d), such requirements, conflicts, defaults, rights or
violations which, individually or in the aggregate, would not have or be
reasonably likely to have a Material Adverse Effect and would not adversely
affect or be reasonably likely to adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement.
4.6 FINANCIAL STATEMENTS. Attached (except as noted below) as SECTION
4.6 OF THE DISCLOSURE SCHEDULE are copies of the Company's unaudited
balance sheets as of December 31, 2005 (the "MOST RECENT BALANCE SHEET"),
2004 and 2003, statements of income for the twelve months ended December
31, 2005, 2004 and 2003 and (to be delivered to Buyer no later than seven
(7) days following the date of this Agreement) statements of cash flows for
the twelve months ended December 31, 2005, 2004 and 2003 (the financial
statements referred to are referred to herein collectively as the
"UNAUDITED FINANCIAL STATEMENTS"). The Unaudited Financial Statements (i)
were prepared in accordance with GAAP, except as indicated therein and
except that the footnotes required by GAAP are not included, (ii) were
prepared in accordance with the books and records of the Company and (iii)
present fairly, in all material respects, the financial position of the
Company as of the date thereof, and the results of operations of the
Company for the period indicated. Buyer acknowledges that the Unaudited
Financial Statements are carve-out financial statements and that corporate
costs are allocated in accordance with Rule 3-05 of Regulation S-X.
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4.7 NO UNDISCLOSED LIABILITIES. The Company has no material
Indebtedness or Liabilities (whether or not required under GAAP to be
reflected on a balance sheet or the notes thereto) other than those (i)
specifically reflected on and fully reserved against in the Most Recent
Balance Sheet, (ii) incurred in the Ordinary Course of Business since the
Most Recent Balance Sheet, or (iii) disclosed in SECTION 4.7 OF THE
DISCLOSURE SCHEDULE.
4.8 PRODUCT WARRANTIES AND PRODUCT LIABILITY.
(a) Set forth in SECTION 4.8(A) OF THE DISCLOSURE SCHEDULE are
the standard forms of product warranties and guarantees used by the
Company as of the date hereof.
(b) Except as set forth in SECTION 4.8(B) OF THE DISCLOSURE
SCHEDULE, since the date of the Most Recent Balance Sheet, no claim or
allegation of personal injury, death or property or economic damages
in connection with any Product has been asserted in writing against
the Company, except for claims and allegations which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.9 ABSENCE OF CERTAIN DEVELOPMENTS.
(a) Since the date of the Most Recent Balance Sheet: (1) the
Company has not suffered any Material Adverse Effect; and (2) there
has been no material change in the condition, assets or business of
the Company other than in the Ordinary Course of Business.
(b) Since the date of the Most Recent Balance Sheet, except as
set forth in SECTION 4.9(B) OF THE DISCLOSURE SCHEDULE, the Company
has not, other than in the Ordinary Course of Business:
(1) (x) increased the compensation (including bonuses)
payable or level of benefits provided, or to become payable or
provided, to any director, executive officer or employee of the
Company, (y) awarded or paid any bonuses with respect to the
fiscal year ended December 31, 2005, except to the extent accrued
in the Unaudited Financial Statements, or (z) amended or entered
into any employment, deferred compensation, bonus or other
incentive compensation, severance, retention, termination, change
in control or similar agreement;
(2) declared or paid any dividends, issued, purchased or
redeemed any shares of its capital stock or any convertible
securities into or exchangeable for any of its capital stock, or
made any other distributions to its shareholders;
(3) granted any options or other rights to purchase or
obtain (including upon conversion, exchange or exercise) any of
its capital stock;
(4) incurred, assumed, or guaranteed any material
Liabilities or Indebtedness other than trade payables incurred in
the Ordinary Course of Business;
14
(5) amended the Company Charter Documents;
(6) disposed of any material assets;
(7) changed or rescinded any election in respect of Taxes,
changed any accounting or Tax reporting principle, method or
policy in respect of Taxes, or settled or compromised any claim
in respect of Taxes;
(8) made an investment in any Person;
(9) subjected any material assets to any Lien (other than
Permitted Liens) or pledged or mortgaged any material assets;
(10) made any capital expenditure in excess of $100,000
individually or $250,000 in the aggregate;
(11) instituted or settled any material legal proceedings;
or
(12) agreed or committed to do anything set forth in this
SECTION 4.9(B).
4.10 REAL PROPERTY.
(a) The Company owns no real property.
(b) SECTION 4.10(B) OF THE DISCLOSURE SCHEDULE lists, as of the
date hereof, all real property leases and subleases for space occupied
by the Company (collectively, the "LEASES"). Copies of the Leases and
all written amendments and agreements relating thereto have been made
available to Buyer. All of the Leases are legal, valid, binding and
enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditor rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and
neither the Company nor, to the knowledge of Seller, the other party
to any Lease is in default in any material respect thereunder, and, to
the knowledge of Seller, no event has occurred and no circumstance
exists which, if not remedied, and whether with or without notice or
the passage of time or both, would result in such a default under such
Lease.
(c) To the knowledge of Seller, the property the subject of the
Leases (the "LEASED REAL PROPERTY") and their present uses, do not
violate or conflict in any material respect with any zoning or
building restrictions, or any other material covenants, conditions or
restrictions applicable to the Leased Real Property. To the knowledge
of Seller, the Leased Real Property is not subject to any leases,
rights of first refusal, options to purchase or rights of occupancy,
except the Leases.
15
4.11 PERSONAL PROPERTY.
(a) Except as may otherwise be set forth in Section 4.12 hereof,
the Company has sufficiently good and valid title to all of the
personal property it purports to own, free and clear of all Liens,
other than Permitted Liens.
(b) All items of machinery, equipment and the tangible assets
material to the operation of the Company's business currently being
used by the Company are in good operational condition and repair,
normal wear and tear excepted, other than items currently under, or
scheduled for, salvage, repair or construction.
(c) SECTION 4.11(C) OF THE DISCLOSURE SCHEDULE sets forth all
leases of personal property ("PERSONAL PROPERTY LEASES") involving
annual payments in excess of $100,000 relating to personal property
used in the business of the Company or to which the Company is a party
or by which the properties or assets of the Company is bound, except
those that are terminable by the Company without penalty on 60 or
fewer days notice. All of the items of personal property under the
Personal Property Leases are in good condition and repair (ordinary
wear and tear excepted) and are suitable for the purposes used, and
such property is in all material respects in the condition required of
such property by the terms of the lease applicable thereto during the
term of the lease. Seller has made available to Buyer true, correct
and complete copies of the Personal Property Leases, together with all
amendments, modifications or supplements thereto.
(d) The Company has a valid and enforceable leasehold interest
under each of the Personal Property Leases under which it is a lessee,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditor rights and remedies
generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at
law or in equity). Each of the Personal Property Leases is in full
force and effect and the Company has not received or given notice of
any default or event that, to the knowledge of Seller, with notice or
lapse of time, or both, would constitute a default by the Company
under any Personal Property Leases and, to the knowledge of Seller, no
other party is in material default thereof, and no party to the
Personal Property Leases has exercised any termination rights with
respect thereto.
4.12 INTELLECTUAL PROPERTY.
(a) Except as set forth in SECTION 4.12(A) OF THE DISCLOSURE
SCHEDULE, the Company owns, licenses or otherwise possesses legally
enforceable rights in the U.S. to use all Technology and Intellectual
Property Rights used in the conduct of the business and operations of
the Company as presently conducted in the U.S., including, without
limitation, the design, development, manufacture, use, importation,
marketing, sale, distribution, and provision of Products, Technology
and services.
16
(b) Except as set forth in SECTION 4.12(B) OF THE DISCLOSURE
SCHEDULE, the Company owns and possesses all right, title and interest
in and to all Company Intellectual Property Rights and Company
Technology and, to the knowledge of Seller, no other party has any
rights thereto. Each item of Company Intellectual Property Rights and
Company Technology is free and clear of any Liens other than Permitted
Liens. The Company has not, since January 1, 2000, transferred
ownership of any foreign patents or patent applications or any foreign
registered trademarks or applications to register trademarks,
excluding any transfers of ownership by implication or operation of
law.
(c) SECTION 4.12(C)(I) OF THE DISCLOSURE SCHEDULE lists all
Contracts to which the Company is a party with respect to the
ownership or licensing of any Company Technology or Company
Intellectual Property Rights other than non-exclusive Software
licenses granted to end-user customers in the Ordinary Course of
Business pursuant to the Company's standard customer agreements.
Except as set forth in SECTION 4.12(C)(II) OF THE DISCLOSURE SCHEDULE,
the Company has not (i) transferred ownership of, (ii) granted any
exclusive license of or right to use, (iii) authorized the retention
of any exclusive rights to use, or (iv) authorized joint ownership of
any Intellectual Property Rights that constitute Company Intellectual
Property Rights.
(d) No Company Intellectual Property Right or Company Technology
is subject to any proceeding or outstanding decree, order, judgment,
or stipulation that, to the knowledge of Seller, either has adversely
affected or is reasonably likely to adversely affect the validity, use
or enforceability of the Company Intellectual Property Rights or the
Company Technology.
(e) Except as set forth in SECTION 4.12(E) OF THE DISCLOSURE
SCHEDULE, the Company Intellectual Property Rights, the Company
Technology, the Licensed Intellectual Property Rights and the Licensed
Technology constitute all Intellectual Property Rights and Technology
that are necessary or material to the conduct of the business and
operations of the Company immediately following the Closing in
substantially the same manner as currently conducted by the Company.
(f) Except as set forth in SECTION 4.12(F) OF THE DISCLOSURE
SCHEDULE, the Company has exercised reasonable care, including taking
all reasonable steps, to protect the Company's proprietary rights,
confidential information and trade secrets associated with or related
to the Company Intellectual Property Rights and the Company
Technology. Except as set forth in SECTION 4.12(F) OF THE DISCLOSURE
SCHEDULE, to the extent required in the exercise of the Company's
reasonable care, all current and former employees, consultants and
contractors of the Company who have participated in the creation of
any Intellectual Property Rights that are used by the Company in the
conduct of its business have entered into proprietary information,
confidentiality and assignment agreements substantially in the
Company's standard forms (which have previously been provided to
Buyer). The Company has not disclosed, nor is the Company under any
contractual or other obligation to disclose, to another Person any
trade secrets of the Company, except pursuant to an enforceable
confidentiality agreement or undertaking, and, to the knowledge of
Seller, no Person has materially breached any such agreement or
undertaking.
17
(g) SECTION 4.12(G)(I) OF THE DISCLOSURE SCHEDULE lists all
Company Intellectual Property Rights that are Registered Intellectual
Property Rights ("COMPANY REGISTERED IP") and all material
unregistered copyrights, trademarks and service marks. All Company
Registered IP is currently in compliance with formal legal
requirements (including payment of filing, examination and maintenance
fees and proofs of use) and is not subject to any unpaid maintenance
fees or taxes or actions due within 90 days after the Closing Date.
There are no proceedings or actions pending or, to the knowledge of
Seller, threatened before any court or tribunal (including the PTO or
equivalent authority) related to any such Company Registered IP other
than those set forth in SECTION 4.12(G)(II) OF THE DISCLOSURE
SCHEDULE. Seller is not aware of any reasonable basis for any
assertions by any third party that any Company Registered IP is not
valid and enforceable.
(h) Neither the Company nor Seller is aware of any claim
currently being asserted by any Person or of any facts that cause
Seller to believe, that any aspects of the Business, the Company
Intellectual Property Rights, the Company Technology, the Licensed
Intellectual Property Rights or the Licensed Technology, or the use
thereof in connection with the conduct of the business and operations
of the Company infringe or misappropriate the Intellectual Property
Rights of any Person or constitute unfair competition or trade
practices under the laws of any jurisdiction, and to the knowledge of
Seller, the conduct of the business and operations of the Company
(including the development, manufacture, sale and distribution of
Products) does not infringe or misappropriate, and has not infringed
or misappropriated, the Intellectual Property Rights of any Person.
SECTION 4.12(H) OF THE DISCLOSURE SCHEDULE lists all agreements
pursuant to which the Company has agreed to indemnify any third party
against any charge of infringement or misappropriation of any
Intellectual Property Rights.
(i) To the knowledge of Seller, no Person is infringing or
misappropriating any Company Intellectual Property Rights.
(j) The Company has the right to use, pursuant to valid licenses,
all Licensed Intellectual Property Rights and Licensed Technology that
are material to the Business as currently conducted by the Company.
Except with respect to licenses of Software generally available for an
annual license fee of no more than $25,000, SECTION 4.12(J) OF THE
DISCLOSURE SCHEDULE sets forth a complete and accurate list of all
contracts, licenses and agreements pursuant to which the Company
licenses or otherwise is authorized to use any Technology or
Intellectual Property Rights used in the businesses of the Company,
("LICENSE IN AGREEMENTS"). Neither the execution and delivery of this
Agreement nor the consummation by Seller of the transactions
contemplated hereby will violate, conflict with or result in a default
(or any event that, with notice or lapse of time or both, would
constitute a default) under, or give rise to any right of termination
or cancellation under, any of the terms, conditions or provisions of
any such material License In Agreement, excluding such violations,
conflicts, defaults and rights which become applicable as a result of
the business or activities in which Buyer is or proposes to be engaged
or as a result of any acts or omissions by, or the status of or any
facts pertaining to, Buyer. Except with respect to licenses of
Software generally available for an annual license fee of no more than
$25,000 and the licenses set forth on SECTION 4.12(J) OF THE
DISCLOSURE SCHEDULE, the Company is not required, obligated, or under
any liability under any agreements to make any payments by way of
royalties, fees or otherwise to any third party with respect to use of
any Intellectual Property Rights or Technology used in the business of
the Company. No loss or expiration of any Intellectual Property Rights
licensed to the Company under any License In Agreement is pending or
reasonably foreseeable or, to the knowledge of Seller, threatened
other than pursuant to the scheduled expiration of the term of any
License In Agreement in the ordinary course. The execution, delivery
and performance by the Company or Seller of this Agreement, and the
consummation of the transactions contemplated hereby, will not result
in the loss or impairment of, or give rise to any right of any third
party to terminate or reprice or otherwise modify any of the Company's
rights or obligations under any License In Agreement.
18
(k) There are no Contracts between the Company and any other
Person with respect to the Company Intellectual Property Rights, the
Company Technology, the Licensed Intellectual Property Rights or the
Licensed Technology under which there is, to the knowledge of Seller,
any dispute or any threatened dispute regarding the scope of such
Contract or performance under such Contract.
(l) Except as set forth in SECTION 4.12(L) OF THE DISCLOSURE
SCHEDULE, no government funding, facilities of a university, college,
other educational institution or research center or funding from third
parties was used in the development of any Intellectual Property
Rights owned by the Company. Except as set forth in SECTION 4.12(L) OF
THE DISCLOSURE SCHEDULE, no current or former employee, consultant or
independent contractor of the Company who was involved in, or who
contributed to, the creation or development of any Intellectual
Property Rights owned by the Company has performed services for a
government or a university, college, or other educational institution
or research center such that such government, university, college or
other educational institution or research center currently has any
right, title or interest in or to the Company Intellectual Property
Rights or Company Technology.
(m) Except as set forth in SECTION 4.12(M) OF THE DISCLOSURE
SCHEDULE, Seller has no knowledge of any facts or circumstances that
would render any Intellectual Property Rights owned by the Company
invalid or unenforceable, or would adversely affect any pending
application or registration with respect to any Intellectual Property
Rights owned by the Company.
(n) The Software owned by the Company operates substantially as
described in the user manuals and does not contain any program
routine, device, or other undisclosed feature, including, without
limitation, a time bomb, virus, software lock, drop-dead device,
malicious logic, worm, trojan horse, bug, error, defect or trap door,
that is capable of deleting, disabling, deactivating, interfering
with, or otherwise harming the Software or Buyer's hardware, data, or
computer programs or codes, or that is capable of providing access or
produce modifications not authorized by Buyer (collectively,
"DISABLING PROCEDURES"). Such representation and warranty applies
regardless of whether such Disabling Procedures are authorized by
Seller to be included in the Software.
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(o) Except as disclosed in SECTION 4.12(O) OF THE DISCLOSURE
SCHEDULE, none of the Company's products, in whole or in part,
incorporates or is distributed with any Open Source Software. None of
the Software incorporated in any of the Company's products (including
any proprietary Software developed by the Company without the use of
any Open Source Software), by reason of the manner in which such
Software is linked or otherwise integrated with any Open Source
Software, is, in whole or in part, subject to the terms of any license
under which such Open Source Software was made available such that the
proprietary Software owned by the Company would be required to (x) be
disclosed or distributed in source code form, (y) be licensed for the
purpose of making derivative works, or (z) be redistributable at no
charge. The term "OPEN SOURCE SOFTWARE" means (a) any Software that
contains, or is derived in any manner (in whole or in part) from, any
Software that is distributed as free Software, open source Software
(E.G., Linux) or similar licensing or distribution models; and (b) any
Software that requires as a condition of use, modification and/or
distribution of such Software that such Software or other Software
incorporated into, derived from or distributed with such Software (i)
be disclosed or distributed in source code form, (ii) be licensed for
the purpose of making derivative works, or (iii) be redistributable at
no charge, including without limitation Software licensed or
distributed under GNU's General Public License (GPL) or Lesser/Library
GPL (LGPL) or the Apache Software license.
4.13 LITIGATION. Except as set forth in SECTION 4.13 OF THE DISCLOSURE
SCHEDULE, there is no claim, action, suit, proceeding or governmental
investigation pending or, to the knowledge of Seller, threatened against
Seller or the Company, by or before any Governmental Authority or in
arbitration, mediation or other means of alternative dispute resolution.
The Company is not subject to any material judgment, order, injunction or
decree of any court, governmental or regulatory authority.
4.14 COMPLIANCE WITH APPLICABLE LAW; PERMITS.
(a) The Company is in compliance in all material respects with
all applicable laws, statutes, ordinances, directives, rules and
regulations of any Governmental Authority applicable to the Company
and its operations (other than any Environmental Laws, which are
covered by Section 4.20).
(b) The Company has all Permits which are required for the
operation of the business of the Company as currently conducted and as
currently intended to be conducted ("COMPANY PERMITS"), other than
those the failure of which to possess would not have and would not
reasonably be expected to have a material adverse effect on the
Company. The Company is not in default under or in violation of any of
the Company Permits, and there are no pending or, to the knowledge of
Seller, threatened proceedings which could result in the revocation,
cancellation or inability of the Company to renew any Company Permit
that is significant.
4.15 CERTAIN CONTRACTS AND ARRANGEMENTS.
(a) Set forth in SECTION 4.15 OF THE DISCLOSURE SCHEDULE, is a
list of all Contracts of the types described below in effect as of the
date hereof to which the Company is a party:
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(i) all employment and consulting Contracts (other than
offer letters);
(ii) all sales representative, agency, distributorship or
franchise Contracts;
(iii) all Contracts relating to Indebtedness;
(iv) all indemnities or powers of attorney involving
outstanding, contingent or continuing obligations of or to the
Company;
(v) all Contracts with any present or former director,
officer or shareholder of the Company or any Affiliate of any
such Person;
(vi) any other Contract for the furnishing of services,
goods or products by or to the Company after the date hereof (A)
with firm commitments having a value in excess of $250,000 on an
annual basis or (B) having a term which is greater than six
months and which is not terminable by the Company on 90 days' or
less notice;
(vii) all Contracts (or group of related Contracts) pursuant
to which the Company (i) possesses or uses, or has agreed to
acquire or lease, any property or asset and (ii) is required to
make payments, accrue expenses or incur charges in excess of
$100,000 per year;
(viii) all Contracts (or group of related Contracts), plans
or programs that involve payments in excess of $100,000 per year
pursuant to which payments, or an acceleration of or increase in
benefits, may be required upon or after a change of control of
the Company;
(ix) all Contracts that prohibit the Company from engaging
in competition or soliciting to hire any person with respect to
employment, or Contracts of any other Person not to compete with
the Company;
(x) all Contracts for joint ventures, strategic alliances,
partnerships, licensing arrangements or sharing of profits or
proprietary information;
(xi) all Contracts relating to the acquisition (by merger,
purchase of stock or assets or otherwise) by the Company of any
operating business or material assets or the capital stock of any
other Person; and
(xii) all purchase Contracts from vendors giving rise to
Liabilities of the Company in excess of $100,000.
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(b) The Company has heretofore made available to Buyer a true,
complete and correct copy of each of the Contracts described above,
each as in effect on the date hereof, and all amendments and
supplements thereto and all waivers thereunder. Each of the Contracts
is in full force and effect and is the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (x) such
enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or
hereafter in effect, relating to or limiting creditors' rights
generally, and (y) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. Neither the Company nor Seller has
received written notice that any party to any of the Contracts intends
to cancel or terminate such Contract. Neither the Company, nor, to
Seller's knowledge, any other party is in default under, or in breach
or violation of, nor has an event occurred that (with or without
notice, lapse of time or both) would constitute a default by the
Company under any Contract in any material respect, other than such
defaults, breaches and violations as would not have or be reasonably
expected to have a material adverse effect on the Company.
4.16 LABOR RELATIONS. The Company does not directly employ most
employees and most employees who perform services for the Company are
employed directly by Seller. SECTION 4.16 OF THE DISCLOSURE SCHEDULE lists
each employee of the Company and each employee of Seller who primarily
works on matters for the Company as of the date hereof ("COMPANY
EMPLOYEES"). Seller shall update such Schedule immediately before the
Closing (and such updated Schedule shall consist of the Company Employees
as of the Closing). Neither the Company nor Seller is a party to any
collective bargaining agreement covering any Company Employee, and no
collective bargaining agreement with respect to any Company Employees as of
the date of this Agreement is currently being negotiated by the Company,
nor is there is any union organization activity involving any of the
Company Employees, pending or, to the knowledge of Seller, threatened, nor
has there ever been union representation involving any of the Company
Employees in the last five years. There has been no strike or other
material work stoppage during the five years immediately preceding the date
of this Agreement. The Company and the Seller are in compliance in all
material respects with all laws, regulations and orders relating to the
employment of the Company Employees, including all such laws, regulations
and orders relating to wages, hours, the Fair Labor Standards Act, the
Worker Adjustment and Retraining Notification Act and any similar state or
local "mass layoff" or "plant closing" law ("WARN"), collective bargaining,
discrimination, civil rights, safety and health, workers' compensation and
the collection and payment of withholding and/or social security taxes and
any similar tax. There has been no "mass layoff" or "plant closing" as
defined by WARN with respect to the Company or the Seller within ninety
(90) days prior to the date hereof.
4.17 EMPLOYMENT BENEFIT PLANS; ERISA.
(a) SECTION 4.17(A) OF THE DISCLOSURE SCHEDULE lists each
"employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and all
other employee benefit arrangements or payroll practices, including
bonus and fringe benefit plans, employment, consulting or other
compensation agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, change in
control, termination or severance plans or arrangements, stock
purchase, severance pay, sick leave, vacation pay, salary continuation
for disability, hospitalization, medical insurance, life insurance and
scholarship plans and programs maintained for the benefit of, or
contributed to by the Company or any trade or business, whether or not
incorporated (an "ERISA AFFILIATE"), that, together with the Company
would be deemed a "single employer" within the meaning of Section 4001
of ERISA, for the benefit of any Company Employee or any former
employee of the Company, or with respect to which the Company has any
liability, contingent or direct (a "PLAN" and collectively, the
"PLANS"). The Company has made available to Buyer correct and complete
copies to the extent applicable of (i) each of the Plans including all
amendments to date (ii) the most recent IRS determination letter; and
(iii) summary plan descriptions.
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(b) Each of the Plans has been administrated in compliance in all
material respects with the applicable provisions thereof and with all
applicable provisions of ERISA, the Code (including rules and
regulations thereunder) and other federal and state laws and
regulations, and each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code, has been determined by the
Internal Revenue Service (the "IRS") to be so qualified and Seller
knows of no fact or set of circumstances that would adversely affect
such qualification. None of the Plans is subject to Title IV of ERISA
and neither Seller, the Company nor any of their ERISA Affiliates have
within the past 6 years maintained, sponsored, contributed to or been
obligated to contribute to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) subject to Title IV of ERISA, including any
multiemployer plan (as defined in Section 3(37) of ERISA). No Plan
maintained by the Company is an "employee benefit plan" (as defined in
Section 3(3) of ERISA). There are no pending or, to the knowledge of
Seller, threatened material claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts
related thereto.
(c) All contributions (including all employee contributions and
employee salary reduction contributions) which are due have been paid
to each Plan which is an "employee benefit pension plan" as defined in
Section 3(2) of ERISA, except where the failure to make such
contributions would not be material.
(d) Except as provided in Section 6.8(i) hereof, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, by itself or in combination with any
additional or subsequent event, other than by reason of actions taken
by Buyer or the Company following the Closing, will (i) result in any
payment becoming due to any employee (current, former or retired) of
the Company, (ii) increase any benefits otherwise payable under any
Plan or (iii) result in the acceleration of the time of payment or
vesting of any such benefits under any such plan.
(e) None of the Plans provide for post-employment life or health
insurance, benefits or coverage for any participant or any beneficiary
of a participant, except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and at
the expense of the participant or the participant's beneficiary.
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4.18 TAXES.
(a) Except as set forth in SCHEDULE 4.18(A) OF THE DISCLOSURE
SCHEDULE, all Tax Returns (as defined below) required to be filed with
any Taxing Authority on or before the Closing Date (taking into
account any extension of a required filing date) by, or with respect
to, the Company have been or will be timely filed on or before the
Closing Date in accordance with all applicable laws. All such Tax
Returns required to be filed by, or with respect to, the Company are
or will be (when filed) true, correct and complete in all material
respects.
(b) Except as set forth in SCHEDULE 4.18(B) OF THE DISCLOSURE
SCHEDULE, the Company has timely paid all Taxes it is required to have
paid.
(c) The Company is not a party to or bound by any Tax allocation,
sharing, indemnity or similar agreement or arrangement.
(d) The Company has not received any written notice of deficiency
or assessment from any Taxing Authority with respect to Taxes that
have not been fully paid or finally settled. There are no audits or
investigations by any Taxing Authority in progress, nor has the
Company received any written notice from any Taxing Authority that it
intends to conduct such an audit or investigation. There are no
waivers of statutes of limitation in effect with respect to the
Company.
(e) There are no liens for Taxes (except for Taxes not yet due)
on any of the assets of the Company, and no action, proceeding or, to
the knowledge of Seller, investigation has been instituted against the
Company in which there is a reasonable probability of an adverse
determination that would result in any such lien.
(f) The Company has not been granted any extension or waiver of
the statute of limitations period applicable to any Tax Returns, which
period (after giving effect to such extension or waiver) has not
expired.
(g) Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
(h) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by Buyer, the
Company or any of their respective Affiliates by reason of Section
280G of the Code.
(i) The Company has no liability for Taxes of any Person under
Treasury Regulation Section 1.1502-6 (or any comparable provision of
state, local or foreign law) other than liability for Taxes of the
group of which Seller is the common parent.
(j) The Company has not engaged in a `reportable transaction' as
set forth in Treas. Reg. Section 1.6011-4(b).
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(k) Except as set forth in SCHEDULE 4.18(K) OF THE DISCLOSURE
SCHEDULE, the Company is not subject to tax in any jurisdiction other
than the United States.
(l) The Company has no liability pursuant to any escheat or
similar laws with respect to uncollected funds.
(m) As used in this Agreement:
(i) "INCOME TAXES" means any federal, state, local or
foreign tax imposed upon or measured by net income or gross
income (excluding any Tax based solely on gross receipts)
including any interest, penalty, or additions thereto.
(ii) "NON-INCOME TAXES" means any Taxes other than Income
Taxes.
(iii) "POST-CLOSING TAX PERIOD" means any Tax period
beginning after the Closing Date and the portion of Straddle
Period beginning after the Closing Date.
(iv) "PRE-CLOSING TAX PERIOD" means any Tax period ending on
or before the Closing Date and any portion of any Straddle Period
ending on the Closing Date.
(v) "STRADDLE PERIOD" means any Tax period that includes
(but does not end on) the Closing Date.
(vi) "TAX RETURN" means any return, declaration, statement,
report, form or similar statement (including any attached
schedules) filed or required to be filed with any Taxing
Authority with respect to Taxes, including any information
statement, any claims for refunds of Taxes, declarations of
estimated Tax and any amendments or supplements of any of the
foregoing.
(vii) "TAX" means any tax, governmental fee or other like
assessment or charge of any kind whatsoever (including any tax
imposed under the Code and any net income, alternative or add on
minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license,
withholding on amounts paid to or by the Company, payroll,
employment, excise, severance, stamp, capital stock, occupation,
property, environmental or windfall profit tax, premium, custom,
duty or other tax together with any interest, penalty, addition
to tax or additional amount due from, or in respect of, the
Company imposed by any Taxing Authority.
4.19 ACCOUNTS RECEIVABLE. All of the accounts receivable of the
Company set forth on the Most Recent Balance Sheet and those that have
arisen between the date of the Most Recent Balance Sheet and the Closing
Date arose or will have arisen in the Ordinary Course of Business.
25
4.20 ENVIRONMENTAL MATTERS.
(a) The Company is in compliance with all applicable
Environmental Laws (as defined below) except where the failure to be
in compliance would not reasonably be expected to have a Material
Adverse Effect. "ENVIRONMENTAL LAWS" means all applicable Federal,
state, municipal and local laws, statutes, ordinances, codes, orders,
decrees, judgments or injunctions, and regulations rendered by, in or
with any Governmental Authority, department or administrative or
regulatory agency relating to pollution, quality or protection of the
environment or the presence, treatment, exposure to persons,
generation, use, processing, release, remediation, storage, disposal,
transport or handling of Hazardous Substances (as defined below).
"HAZARDOUS SUBSTANCES" means any element, compound, chemical mixture,
contaminant, pollutant material, waste or other substance which is
regulated or defined as hazardous, radioactive or toxic under any
Environmental Law or the release of which is prohibited or materially
restricted under any Environmental Law.
(b) The Company has or has applied for all material permits,
registrations, approvals and licenses required under Environmental
Laws for the operation of the business of the Company as presently
conducted (the "ENVIRONMENTAL PERMITS") and there are no violations,
and no pending or threatened investigations or proceedings with
respect to such Environmental Permits except where the failure to have
such Environmental Permits or where the violation, investigation or
proceeding relating thereto would not reasonably be expected to have a
Material Adverse Effect.
(c) Seller has made available to Buyer any environmental
assessments, studies or similar documents in its possession with
respect to the Leased Real Property.
(d) There have been no material releases by the Company or, to
the knowledge of Seller, by any other person of any Hazardous
Substances at, on, from or under any Leased Real Property, property
formerly owned or leased by the Company or property to which the
Company has sent waste for disposal.
(e) This Section 4.20 contains the sole and exclusive
representations and warranties of Seller with respect to any
Environmental Laws.
4.21 INSURANCE. A summary of all policies of insurance now held by or
for the benefit of the Company are set forth in SECTION 4.21 OF THE
DISCLOSURE SCHEDULE. All such policies are in full force and effect, all
premiums due thereon have been paid and Seller and the Company have
complied in all material respects with the provisions of such policies. To
the knowledge of Seller, there has been no threatened termination of,
premium increase with respect to or material alteration of coverage under,
any such policies. Set forth in SECTION 4.21 OF THE DISCLOSURE SCHEDULE is
a description of any claims made by or on behalf of the Company under such
policies.
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4.22 CERTAIN FEES. Except for the engagement of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
& Zukin, the fees and expenses of which will be the sole responsibility of
Seller, no financial advisor, finder, broker, agent or other intermediary,
acting on behalf of Seller or the Company, is or will become entitled to a
commission, fee or other compensation in connection with this Agreement or
the transactions contemplated hereby.
4.23 CORPORATE RECORDS. The minute books of the Company previously
made available to Buyer contain true, correct and complete records of all
meetings and accurately reflect in all material respects all the actions of
Seller and the board of directors (or other governing body and including
committees thereof) of the Company. The stock certificate books and stock
transfer ledgers of the Company previously made available to Buyer are
true, correct and complete in all material respects. All stock or interest
transfer taxes levied, if any, or payable with respect to all transfers of
shares of the Company prior to the date hereof have been paid and
appropriate transfer tax stamps affixed.
4.24 TRANSACTIONS WITH AFFILIATES. SECTION 4.24 OF THE DISCLOSURE
SCHEDULE sets forth a list of all significant relationships between the
Company on the one hand and Seller, Affiliates of Seller, any officers or
directors of the Company or Seller or, to Seller's knowledge, any of such
officer's or director's Affiliates on the other hand. Except as set forth
in SECTION 4.24 OF THE DISCLOSURE SCHEDULE, the Company is not indebted or
otherwise obligated to any such Person, and no such Person owns any
property or right, tangible or intangible, that is used or held for use in
connection with the operation of the business of the Company.
4.25 CERTAIN PAYMENTS. Neither the Company nor, to Seller's knowledge,
any director, officer or employee of the Company or Seller has, for or on
behalf of the Company, made any offer, payment or gift in violation of the
Foreign Corrupt Practices Act of 1977, as amended.
4.26 BANKS; POWERS OF ATTORNEY; GUARANTEES. SECTION 4.26 OF THE
DISCLOSURE SCHEDULE contains a complete and correct list of the names and
locations of all banks in which the Company has accounts or safe deposit
boxes and the names of all Persons authorized to draw thereon or to have
access thereto. Except as set forth in SECTION 4.26 OF THE DISCLOSURE
SCHEDULE, no Person holds a power of attorney to act on behalf of the
Company. The Company has no obligation to act under any outstanding power
of attorney or any obligation or liability, either accrued, accruing or
contingent, as guarantor, surety, co-▇▇▇▇▇▇, endorser (other than for
purposes of collection in the Ordinary Course of Business), co-make or
indemnitor in respect of the obligation of any Person.
4.27 BOOKS AND RECORDS. The books, records and accounts of the Company
are in all material respects true and correct.
27
4.28 CUSTOMERS AND SUPPLIERS.
(a) The Company has no outstanding material dispute concerning
its goods and/or services with any customer who, in the year ended
December 31, 2005, was one of the ten largest sources of revenue for
the Company based on amounts paid or payable by such customer (each, a
"SIGNIFICANT CUSTOMER"). Each Significant Customer is listed in
SCHEDULE 4.28(A) OF THE DISCLOSURE SCHEDULE. The Company has not
received any written notice from any Significant Customer that such
customer intends to terminate its relationship with the Company or
that any such customer desires to terminate or materially modify any
existing contract with the Company.
(b) The Company has no outstanding material dispute concerning
goods and/or services provided by any supplier who, in the year ended
December 31, 2005, was one of the five largest suppliers of goods
and/or services to the Company based on amounts paid or payable (each,
a "SIGNIFICANT SUPPLIER"). The Company's only material supplier is
listed in SCHEDULE 4.28(B) OF THE DISCLOSURE SCHEDULE. The Company has
not during the six months prior to the date of this Agreement received
any written notice of termination or interruption of any existing
contracts with any Significant Supplier.
4.29 EXPORT CONTROL. To the knowledge of Seller, since 2002, the
Company has acted without violation of any export control laws, orders or
regulations, including without limitation the Export Administration
Regulations administered by the U.S. Department of Commerce, as amended
from time to time, and without violation and in compliance with any
required export or reexport licenses or authorizations granted under such
laws, regulations or orders, except violations which would not reasonably
be expected to have a Material Adverse Effect.
4.30 DISCLOSURE. The representations and warranties made by Seller in
this Agreement (as qualified and modified by the Disclosure Schedule), when
read together as a whole, do not contain any untrue statement of material
fact or omit a material fact necessary to make each statement contained
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that each of the following
representations, warranties and statements is true and correct as of the date
hereof and each of which shall be true and correct as of the Closing Date:
5.1 ORGANIZATION AND AUTHORITY OF BUYER.
(a) Buyer is a company limited by shares duly organized, validly
existing and in good standing under the laws of the State of Israel.
Buyer has previously delivered to Seller complete and correct copies
of its Amended and Restated Memorandum of Association and Amended and
Restated Articles of Association, as currently in effect. Buyer has
the corporate power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the Transaction Documents to which
it is a party, and the consummation of the transactions contemplated
hereby and thereby, have been duly and authorized and approved by all
necessary corporate action on the part of Buyer.
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(b) This Agreement has been duly executed and delivered by Buyer
and constitutes, and, when executed and delivered, each of the
Transaction Documents will constitute the legal, valid and binding
obligation of Buyer (in each case, assuming the valid authorization,
execution and delivery of such agreement by Seller and the Company, if
applicable), enforceable against Buyer in accordance with its terms,
except that (i) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors'
rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
5.2 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the H-S-R Act, neither the execution and delivery of this
Agreement or the Transaction Documents nor the consummation by Buyer of the
transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the Certificate of Incorporation or Bylaws of
Buyer; (b) except for filings with the Securities and Exchange Commission
and the Israeli Securities Authority, require any filing with, or the
obtaining of any Permit, order, authorization, consent or approval of, any
Governmental Authority; (c) violate, conflict with or result in a default
(or any event which, with notice or lapse of time or both, would constitute
a default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any
Contract to which Buyer is a party or by which Buyer or any of its assets
may be bound; or (d) violate any judgment, order, injunction, decree,
ruling, writ, assessment or arbitration applicable to Buyer, excluding from
the foregoing clauses (b), (c) and (d), such requirements, violations,
conflicts, defaults, rights or violations which, individually or in the
aggregate, would not have or be reasonably likely to have a material
adverse effect on Buyer and would not adversely affect or be reasonably
likely to adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement.
5.3 AVAILABILITY OF FUNDS. Buyer has sufficient immediately available
funds on hand or available pursuant to unconditional commitments to pay the
Purchase Price and to pay any other amounts payable pursuant to this
Agreement and to effect the transactions contemplated hereby.
5.4 INVESTMENT REPRESENTATION. Buyer is acquiring the Shares for its
own account, for investment and without any view to resale or distribution
of the Shares or any portion thereof. Buyer acknowledges that the Shares
have not been registered or qualified under the provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or the
securities laws of any state and that the Shares may not be resold by Buyer
except pursuant to registration or qualification under the Securities Act
and any applicable state securities law or a valid exemption therefrom.
29
5.5 LITIGATION. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of Buyer,
threatened against Buyer, by or before any Governmental Authority or in
arbitration, mediation or other means of alternative dispute resolution
which (a) challenges the validity of this Agreement, or (b) which seeks to
enjoin or impair or to obtain damages in respect of the consummation of the
transactions contemplated hereby.
5.6 INVESTIGATION BY BUYER. Buyer has conducted its own independent
review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of
the Company and acknowledges that Seller has provided Buyer with access to
the personnel, properties, premises and records of the Company for this
purpose. Buyer acknowledges that neither Seller nor the Company nor any of
the Company's directors, officers, employees, Affiliates, controlling
persons, agents or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of
any of the information provided or made available to Buyer or any of its
directors, officers, employees, Affiliates, controlling persons, agents or
representatives, except as and only to the extent expressly set forth
herein with respect to such representations and warranties and subject to
the limitations and restrictions contained in this Agreement.
5.7 CERTAIN FEES. Except for Banc of America Securities LLC, the fees
and expenses of which shall be the sole responsibility of Buyer, no
financial advisor, finder, broker, agent or other intermediary, acting on
behalf of Buyer or any of its Affiliates, is or will become entitled to a
commission, fee or other compensation in connection with this Agreement or
the transactions contemplated hereby.
ARTICLE VI
COVENANTS
6.1 CONDUCT OF THE COMPANY'S BUSINESS. Seller agrees that, during the
period from the date of this Agreement to the Closing, except as otherwise
set forth in SECTION 6.1(B) OF THE DISCLOSURE SCHEDULE or as contemplated
by this Agreement, including the making of the Distributions permitted
under Section 3.2 and the provisions of Section 6.8(i), or consented to by
Buyer (which consent shall not be unreasonably withheld or delayed):
(a) Seller shall cause the Company to conduct its business in all
material respects in the Ordinary Course of Business; and
30
(b) Without limiting the generality of the foregoing, Seller
shall cause the Company: to (i) not sell or dispose of any of its
material properties or assets, except in the Ordinary Course of
Business; (ii) maintain: (A) all of the material assets, properties,
machinery and equipment owned, leased or used by the Company in their
current condition, ordinary wear and tear accepted, and (B) insurance
upon all of the properties and assets of the Company in such amounts
and of such kinds comparable to that in effect on the date hereof;
(iii) not, except in the Ordinary Course of Business: (A) amend,
modify or terminate any Contract set forth in SECTION 4.15 OF THE
DISCLOSURE SCHEDULE or (B) enter into any Contract that would have
been required to be disclosed in SECTION 4.15 OF THE DISCLOSURE
SCHEDULE had it been in effect on the date hereof; (iv) not enter into
any written employment agreement with any employee or increase in any
manner the compensation of any of the officers or other key employees
of the Company, except for such increases as are granted in the
Ordinary Course of Business in accordance with customary practices
(which shall include normal periodic performance reviews and related
compensation and benefit increases) or as required by a pre-existing
commitment; (v) not adopt, grant, extend or increase the rate or terms
of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such officers or
employees of the Company, except increases required by any applicable
law, rule or regulation or as required by a pre-existing commitment;
(vi) not materially change or rescind any election in respect of
Taxes, materially change any accounting or Tax reporting principle,
method or policy in respect of Taxes, or settle or compromise any
claim in respect of Taxes (vii) not incur any material Indebtedness
payable to any third party, including Seller or any of its Affiliates;
(viii) not amend the Company's Charter or Bylaws or issue or agree to
issue shares of capital stock including securities exchangeable for a
convertible into capital stock of the Company or merge, consolidate,
recapitalize or reorganize; (ix) not license any Intellectual Property
Rights (other than non-exclusive licenses to customers in the Ordinary
Course of Business; (x) not hire any employee unless such hire is
contemplated by the budget for the Company previously provided by
Seller to Buyer; and (xi) use its Reasonable Efforts to (A) preserve
its relationships with its material suppliers, customers, licensors,
licensees and others having business relationships with the Company
and (B) to preserve the present business operations, organization and
goodwill of the Company.
6.2 ACCESS TO INFORMATION.
(a) Until the Closing, Seller shall cause the Company to (i) give
Buyer and its authorized representatives reasonable access to all
books, records, offices and other facilities and properties of the
Company; (ii) permit Buyer to make such inspections thereof as Buyer
may reasonably request; and (iii) furnish or cause the officers of the
Company to furnish Buyer with such financial and operating data and
other information with respect to the business and properties of the
Company as Buyer may from time to time reasonably request; PROVIDED,
HOWEVER, that Buyer shall in each instance give reasonable prior
notice to Seller and that any such investigation shall be conducted
during normal business hours under the supervision of Seller's or the
Company's personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated
hereby and shall not interfere unreasonably with the business
operations of the Company; and, PROVIDED, FURTHER, that any such
disclosure shall not be required if it would violate any laws or the
terms or conditions of any contracts or adversely affect the ability
of Seller or the Company to assert attorney-client, attorney work
product or other similar privilege.
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(b) Any disclosure whatsoever during such investigation by Buyer
shall not constitute an enlargement of or additional representations
or warranties of Seller beyond those specifically set forth in Article
IV of this Agreement.
(c) All information concerning the Company and/or Seller
furnished or provided by the Company or Seller to Buyer or its
representatives (whether furnished before or after the date of this
Agreement) shall be held subject to a confidentiality agreement among
the Company, Seller and Buyer dated as of December 5, 2005 (the
"CONFIDENTIALITY AGREEMENT").
6.3 CONSENTS.
(a) Each of Seller and Buyer shall cooperate, and use its
Reasonable Efforts, to make all filings and obtain all licenses,
Permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, Seller and Buyer shall (i) make any and
all notifications and filings required to be made to any court,
administrative agency or commission or other governmental agency,
authority or instrumentality having supervisory or regulatory
authority with respect to the relevant party or parties to this
Agreement in connection with the transactions contemplated by this
Agreement; and (ii) file any Notification and Report Forms and related
material that such party may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States
Department of Justice under the H-S-R Act, use its Reasonable Efforts
to cause the early termination of the waiting period(s) and to respond
to any request for additional information and documentary material, as
may be necessary, proper or advisable in connection therewith. Any and
all filing fees in respect of such filings shall be paid by Buyer.
Notwithstanding the foregoing, neither Buyer nor any of its Affiliates
shall be required, in connection with the matters set forth in this
Section 6.3, to hold separate (including by trust or otherwise) or
divest any of their respective businesses, product lines or assets.
(b) Seller shall use and shall cause the Company to use its
Reasonable Efforts to obtain any third party consents or approvals
that Buyer may reasonably request in connection with the consummation
of the transactions contemplated by this Agreement. Buyer agrees to
provide such assurances as to financial capability, resources and
creditworthiness as may be reasonably requested by any third party
whose consent or approval is sought hereunder.
(c) With respect to any agreements for which any required consent
or approval is not obtained prior to the Closing, Seller and Buyer
shall each use its Reasonable Efforts to obtain any such consent or
approval after the Closing Date until such consent or approval has
been obtained.
6.4 REASONABLE EFFORTS. Each of Seller and Buyer shall cooperate, and
use its 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 the transactions contemplated
by this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth herein).
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6.5 COVENANT TO SATISFY CONDITIONS. Seller will use its Reasonable
Efforts to ensure that the conditions set forth in Article VII hereof are
satisfied, insofar as such matters are within the control of Seller. Buyer
will use its Reasonable Efforts to ensure that the conditions set forth in
Article VII hereof are satisfied, insofar as such matters are within the
control of Buyer. Notwithstanding the foregoing, none of the parties to
this Agreement shall be required to waive any condition herein to its
obligations at the Closing or to incur any substantial cost not otherwise
required under this Agreement. Seller and Buyer further covenant and agree,
with respect to a threatened or pending preliminary or permanent injunction
or other order, decree or ruling or statute, rule, regulation or executive
order that would adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby, to use all Reasonable
Efforts to prevent or lift the entry, enactment or promulgation thereof, as
the case may be. Notwithstanding the foregoing, neither Buyer nor any of
its Affiliates shall be required, in connection with the matters set forth
in this Section 6.5, to hold separate (including by trust or otherwise) or
divest any of their respective businesses, product lines or assets.
6.6 PUBLIC ANNOUNCEMENTS. Prior to the Closing, except as otherwise
agreed to by the parties and except for disclosures made by Buyer to its
lenders or potential lenders pursuant to customary confidentiality
provisions, the parties shall not issue any report, statement or press
release or otherwise make any public statements with respect to this
Agreement and the transactions contemplated hereby without obtaining the
prior approval of the other party hereto, which approval will not be
unreasonably withheld or delayed, unless, in the reasonable judgment of the
party intending to make such release, disclosure is otherwise required by
applicable law or by the applicable rules of any stock exchange on which
such party or its Affiliates lists securities, PROVIDED, that, to the
extent required by applicable law, the party intending to make such release
shall use its Reasonable Efforts consistent with such applicable law to
consult with the other party with respect to the text thereof. Upon the
Closing, Seller and Buyer will consult with each other with respect to the
issuance of a joint report, statement or press release with respect to this
Agreement and the transactions contemplated hereby.
6.7 USE OF "TEKELEC" NAME. From and after the Closing, Buyer agrees
not to use and shall cause the Company and Buyer's affiliates not to use
the "TEKELEC" name in any manner in any part of the world as part of their
company names or in any manner in connection with their respective
businesses.
6.8 EMPLOYEES; EMPLOYEE BENEFITS.
(a) Prior to the Closing Date, Seller shall transfer the
employment of all Company Employees to the Company. Seller shall be
solely responsible for any Liability incurred in connection with such
transfers of employment (including, without limitation, any
Liabilities under any Plan or under the WARN Act or any other
applicable law). In connection with such transfers of employment,
Seller shall obtain federal and state taxpayer identification numbers
for the Company, activate income and employment tax accounts, and
report and remit appropriate taxes with respect to compensation earned
by Company Employees prior to the Closing Date, as well as ensure that
the Company Employees receive workers' compensation coverage (or, to
the extent it is not possible to complete such actions before the
Closing Date, the Seller shall use Reasonable Efforts to initiate such
actions). Because the Company does not directly employ most employees,
and most employees who perform services for the Company are employed
directly by Seller, certain Intellectual Property Rights and
Technology used in the current operation of the Company's business may
be owned by Seller pursuant to confidentiality, nondisclosure and
invention assignment agreements between Seller and the Company
Employees listed on SECTION 4.16 OF THE DISCLOSURE SCHEDULE and by
virtue of the employer--employee relationship between Seller and the
Company Employees. Prior to the Closing, Seller shall assign to the
Company all of the Seller's right, title and interest to all
Intellectual Property Rights and Technology (other than the
intellectual property and associated rights comprising and related to
the Company's ASi 4000 technology) used in the current operations of
the Company's business that was developed or created by the Company
Employees, and Seller shall assign to the Company all of Seller's
right, title and interest under such agreements between Seller and
such Company Employees. The covenants set forth in SECTION 4.12(A) OF
THE DISCLOSURE SCHEDULE are hereby incorporated into this Agreement in
their entirety.
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(b) Buyer agrees that prior to the Closing, it will not require
or request of Seller or the Company that Seller or the Company
terminate any Company Employees. For a one-year period following the
Closing, Buyer shall, or shall cause the Company to, provide each
Company Employee who continues as an employee of the Company (an
"EMPLOYEE") with benefits that are at least substantially comparable
in the aggregate to those benefits provided to similarly situated
employees of Buyer (other than equity and performance based
compensation). Buyer shall give full credit for all service with the
Company or any Affiliate thereof, and any predecessor thereto to the
extent that service with such predecessor entity was recognized under
the applicable Plan of the Company or any Affiliate, to each Employee
for purposes of vesting and eligibility, including waiting periods
relating to preexisting conditions under medical plans (except for
purposes of determining the amount of any benefit under any defined
benefit pension plan and eligibility for early retirement or any
subsidized benefit), any employee benefit plan (including any
"employee benefit plan" as defined in Section 3(3) of ERISA)
maintained by Buyer or its subsidiaries (including any vacation or
accrued sick pay plan or policy) in which the Employees participate on
or after the Closing Date. Prior to the Closing, the Company shall
furnish Buyer with a list of the length of service with the Company or
its Affiliates for each of the Employees. For purposes of computing
deductible amounts (or like adjustments or limitations on coverage)
under any employee welfare benefit plan (including any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA), expenses
and claims previously recognized for similar purposes under the
applicable welfare benefit plan of the Company or any Affiliate shall
be credited or recognized under the comparable plan maintained after
the Closing Date by Buyer or its subsidiaries in which the Employees
participate.
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(c) Notwithstanding anything in paragraph (a) of this Section to
the contrary, if any Employee is discharged by the Company on or
within 12 months after the Closing Date, then the Company shall be
responsible for severance for such discharged Employee, such severance
payable to be determined at the greater of the Company's severance
policy as set forth in SECTION 6.8(C) OF THE DISCLOSURE SCHEDULE or
Buyer's then current severance policy, giving effect to the provisions
of Section 6.8(b). The Company shall be responsible and assume all
liability for all notices or payments due to any Employee, and all
notices, payments, fines or assessments due to any government
authority, pursuant to any applicable foreign, Federal, state or local
law, common law, statute, rule or regulation with respect to the
employment, discharge or layoff of employees by the Company after the
Closing, including WARN and any rules or regulations as have been
issued in connection with the foregoing.
(d) Buyer shall cause the Company to indemnify, defend and hold
harmless the officers, directors and employees of the Company to the
same extent that such persons are entitled to indemnification as of
the date hereof pursuant to the Company's Articles of Incorporation,
Bylaws and any agreements between such persons and the Company, for
any acts or omissions prior to the Closing Date. Until the seventh
anniversary of the Closing Date, Buyer shall provide policies of
officers' and directors' liability insurance with reputable and
financially sound carriers of at least the same coverage and amount
and containing terms and conditions that are no less favorable in
respect of acts or omissions occurring prior to the Closing Date
covering each such person currently covered by such policies in effect
of the date hereof.
(e) Seller shall retain all liabilities for claims incurred by an
Employee (and his or her eligible spouse and dependents) on or prior
to the Closing Date under the Plans that are welfare benefit plans
within the meaning of Section 3(1) or ERISA and all short term
disability and salary continuation plans or arrangements (the "WELFARE
PLANS"). For this purpose claims under any medical, dental, vision or
prescription drug plan will be deemed to be incurred on the date that
the service giving rise to such claim is performed and not when such
claim is made; PROVIDED, HOWEVER, that with respect to claims relating
to hospitalization the claim will be deemed to be incurred on the
first day of such hospitalization and not on the date that such
services are performed. Claims for disability under any long or short
term disability plan or arrangement will be incurred on the date the
Employee is first absent from work because of the condition giving
rise to such disability and not when the Employee is determined to be
eligible for benefits under the applicable Welfare Plan or other
arrangement. Seller will provide any continuation coverage required
under COBRA to each "qualified beneficiary" (as defined in COBRA)
whose first "qualifying event" (as defined in COBRA) occurs on or
prior to the Closing Date. The Company shall be responsible for the
continuation of health plan coverage, in accordance with the
requirements of COBRA for any Employee or a qualified beneficiary
under a Company health plan who first has a qualifying event after the
Closing Date.
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(f) Effective as of the Closing Date, Seller shall transfer, or
cause to be transferred, to Buyer an amount, in cash, equal to the
excess, if any, of the aggregate 2006 contributions of all Employees
then participating in Seller's or its Affiliate's flexible benefits
plan (the "SELLER FLEXIBLE BENEFITS PLAN"), over the aggregate 2006
reimbursements to all Employees under such plan. Buyer shall cause
such amounts to be credited to each such employee's accounts under
Buyer's (or one of its affiliate's) corresponding flexible benefit
plan (the "BUYER FLEXIBLE BENEFITS PLAN") which shall be established
and in effect for such employees as of the Closing Date, and all
claims for reimbursement which have not been paid as of the date of
the transfer to Buyer and credited under the Buyer Flexible Benefits
Plan shall be paid pursuant to and under the terms of the Buyer
Flexible Benefits Plan. In connection with such transfer, Buyer shall
deem that such employees' deferral elections made under the Seller
Flexible Benefits Plan for the 2006 calendar year shall continue in
effect under the Buyer Flexible Benefits Plan for the remainder of the
2006 calendar year following the Closing Date.
(g) Buyer shall cause the Company to recognize and provide all
accrued but unused vacation and personal days as of the Closing Date
to the extent reflected on the Most Recent Balance Sheet.
(h) On the date of this Agreement, Buyer and each of the key
Company Employees designated by Buyer shall enter into agreements
which shall provide for the terms of such employees employment after
the Closing Date.
(i) To the extent Seller and the Company deem advisable, Company
Employees shall become fully vested in their accounts under the
Tekelec 401(k) Plan.
6.9 CERTAIN TAX MATTERS.
(a) Seller shall accurately prepare and file all federal Income
Tax Returns and all other Income Tax Returns with respect to the
Company for all periods ending on or prior to the Closing Date. Such
Tax Returns shall include any gain or income recognized by the Company
as a result of: (i) the distribution by the Company of shares of stock
of Santera Systems Inc. to Seller in November, 2003; (ii) the
distribution by the Company to Seller of intellectual property and
associated rights comprising and related to the ASi 4000 technology on
or before the Closing Date; and (iii) the balance in the deferred
revenue account of the Company on December 31, 2005 determined
pursuant to Revenue Procedure 2004-34. Seller shall be responsible for
the payment of all Taxes with respect to such Tax Returns. Seller
shall also be responsible for (i) the accurate preparation of all
Non-Income Tax Returns that are required to be filed with respect to
the Company that are due before the Closing Date and (ii) for the
payment of all Taxes payable with respect thereto. Buyer and its
authorized representatives shall have the right to review and audit
all Income Tax Returns of the Company that are required to be filed
after the Closing Date, provided that in the case of the federal
Income Tax Return, such review and audit shall be limited to the
portions that relate to the Company and the supporting detail and work
papers. Buyer and Seller agree to consult and resolve in good faith
any issues arising as a result of the review and audit of such Tax
Return by Buyer or its authorized representative. If, after the
Closing Date, Buyer or the Company pays any such Taxes for which
Seller is responsible, Seller shall reimburse Buyer or the Company
within 5 days after the date Seller is notified by Buyer or the
Company that such Taxes were paid. The covenants set forth in SECTION
4.18(A) OF THE DISCLOSURE SCHEDULE are hereby incorporated into this
Agreement in their entirety.
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(b) Buyer or the Company shall accurately prepare and file all
Non-Income Tax Returns for the Company for all periods ending prior to
the Closing Date that are required to be filed after the Closing Date.
Seller shall cooperate with Buyer in filing and causing to be filed
such Tax Returns. Seller shall be responsible for payment of, and
shall pay when due, any Non-Income Taxes shown due on such returns or
that are otherwise payable with respect to such Tax Returns. If, after
the Closing Date, Buyer or the Company pays any such Non-Income Taxes
for which Seller is responsible, Seller shall reimburse Buyer or the
Company within 5 days after the date Seller is notified by Buyer or
the Company that such Taxes were paid.
(c) Buyer shall prepare or cause to be prepared and file or cause
to be filed all Tax Returns for the Company for all Straddle Periods.
All Taxes with respect to the Company attributable to Pre-Closing
Periods shall be allocated to and paid by Seller, except to the extent
such Taxes have been previously paid by Seller including amounts paid
in respect of estimated Taxes, and all Taxes with respect to the
Company attributable to Post-Closing Periods shall be allocated to and
paid by Buyer. In the case of any Taxes with respect to the Company
for a Straddle Period, the portion of such Taxes that are allocated to
the Pre-Closing Period shall (x) be deemed to be the amount that would
be payable if the relevant Tax period ended as of the Closing Date
pursuant to an interim closing of the books in the case of all Income
Taxes with respect to the Company and any Non-Income Taxes with
respect to the Company not described in (y) below and (y) in the case
of Non-Income Taxes with respect to the Company that cannot be
allocated based upon an interim closing of the books (e.g., property
or net worth taxes), be deemed to the amount of such Taxes for the
entire Taxable period multiplied by a fraction, the numerator of which
is the total number of days in that portion of such Taxable period
ending on the Closing Date and the denominator of which is the total
number of days in such Tax period. Seller shall pay to Buyer within 5
days after the date Seller is notified that Taxes with respect to the
Company attributable to a Straddle Period were paid by Buyer an amount
equal to the portion of such Taxes attributable to the Pre-Closing
Period and shall indemnify Buyer against such portion of such Taxes.
All determination necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice
of Seller.
(d) With respect to any Tax Return of the Company required to be
filed by Buyer or the Company after the Closing Date for Pre-Closing
Periods or Straddle Periods, Seller and its authorized representatives
shall have the right to review and audit such Tax Returns prior to
filing of the Tax Returns. Buyer and Seller agree to consult and
resolve in good faith any issues arising as a result of the review and
audit of such Tax Return by Seller or its authorized representative.
(e) Buyer covenants that without the prior consent of Seller,
which shall not be unreasonably withheld, it will not, and will not
cause or permit the Company or any Affiliate of Buyer, to make or
change any Tax election, amend any Tax Return or take any Tax position
on any Tax Return, that results in any increased Tax liability of the
Company or Seller in respect of any Pre-Closing Tax Period.
Notwithstanding the foregoing, consent of Seller shall not be required
to the extent any foregoing action by Buyer or Company is required by
applicable law.
37
(f) Buyer and Seller agree to furnish or cause to be furnished to
each other, upon written request, as promptly as practicable, such
information (including access to books and records) and assistance
relating to the Company as is reasonably necessary for the filing of
any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to
any proposed adjustment. Buyer and Seller shall cooperate with each
other in the conduct of any audit or other proceedings involving the
Company for any Tax purposes and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out
the intent of this subsection. Any Tax audit or other Tax proceeding
shall be deemed to be a third party claim subject to the procedures
set forth in Section 9.6 of this Agreement.
(g) Buyer shall promptly pay or shall cause prompt payment to be
made to Seller of all refunds of Taxes and interest thereon received
by, or credited against the Tax liability of Buyer, any Affiliate of
Buyer or the Company attributable to Taxes paid by Seller or the
Company with respect to any Pre-Closing Tax Period or any portion of
the Straddle Period prior to the Closing Date. If, with respect to a
Tax Return required to be filed by the Company, Seller reasonably
determines that the Company is entitled to file a claim for refund or
an amended Tax Return with respect to a Pre-Closing Tax Period, Buyer
shall, upon Seller's reasonable request, cause the Company to file all
such claims or amended Tax Returns; provided that Buyer shall not be
required to cause the Company to file any such claim or amended Tax
Return if so doing (i) could have the effect of increasing the Tax
liability of Buyer or the Company in any Post-Closing Tax Period or
(ii) in Buyer's reasonable judgment is contrary to applicable law.
Seller shall reimburse Buyer and Company for all reasonable expenses
incurred to comply with Seller's request, including any third party
professional, legal or accounting fees.
(h) Notwithstanding any other provisions of this Agreement to the
contrary, all transfer, documentary, sales, use, stamp, registration,
and other such Taxes and fees (including any penalties and interest)
incurred in connection with the transactions contemplated by this
Agreement shall be paid by Buyer. Buyer shall at its own expense
accurately file or cause to be filed all necessary Tax Returns and
other documentation with respect such Taxes and timely pay all such
Taxes.
6.10 EXCLUSIVITY. From and after the date of this Agreement until the
earlier of the Closing Date or termination of this Agreement pursuant to
Article VIII, Seller shall not, directly or indirectly, solicit offers
from, or in any manner initiate or encourage the submission of any proposal
of, or enter into negotiations or agreement with any third party relating
to the acquisition of all or substantially all of the Company's capital
stock or assets, including any acquisition structured as a tender offer,
exchange offer, merger, consolidation, recapitalization or share exchange.
6.11 DISCLOSURE SCHEDULE. Notwithstanding any specific reference to
the disclosure of any matter pursuant to any Section of the Disclosure
Schedule, all disclosures made pursuant to any Section hereunder or on the
Disclosure Schedule shall be deemed made for all other Sections to which
such disclosure may apply to the extent its relevance to such other
Sections is reasonably apparent, and any headings or captions on any
Section herein or therein are for convenience of reference only.
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6.12 NON-COMPETITION; NON-SOLICITATION.
(a) For a period of three years from and after the Closing Date,
Seller shall not, and shall cause its majority owned subsidiaries not
to, directly or indirectly, own, manage, engage in, operate, control,
work for, consult with, render services for, do business with,
maintain any interest in (proprietary, financial or otherwise) or
participate in the ownership, management, operation or control of, any
business, whether in witness corporate, proprietorship or partnership
form or otherwise, engaged in the work force management call center
contact business as currently conducted by the Company (a "RESTRICTED
BUSINESS"); PROVIDED, HOWEVER, that the restrictions contained in this
Section 6.12(a) shall not restrict the acquisition by Seller, directly
or indirectly, of less than 5% (in the aggregate) of the outstanding
capital stock of any publicly traded company engaged in a Restricted
Business.
(b) For a period of two years from and after Closing Date, except
with Buyer's consent, Seller shall not, and shall cause its directors,
officers, employees and majority owned subsidiaries not to, directly
or indirectly (i) cause, solicit, induce or encourage any employees of
the Company to leave such employment or hire, employ or otherwise
engage any such individual; or (ii) cause, induce or encourage any
material actual or prospective client, customer, supplier or licensor
of the Company (including any former customer of the Company and any
Person that becomes a customer of the Company after the Closing) or
any other Person who has a material business relationship with the
Company to terminate or modify any such actual or prospective
relationship.
(c) For the avoidance of doubt, and as a material inducement to
Seller to enter into this Agreement, the parties agree that,
notwithstanding anything to the contrary in the foregoing provisions
of Section 6.12, in the event that a person, firm, corporation or
other business acquires Seller or any of its majority-owned
subsidiaries by merger, consolidation or otherwise (any such person,
firm, corporation or other business, an "Acquiror"), such Acquiror and
its Affiliates (other than Seller) shall not be deemed to be in
breach, default or violation of any of the covenants set forth in
Section 6.12 above unless, in taking any actions that would constitute
a breach or violation of the obligation of Seller under the provisions
of Section 6.12, such Acquiror or any of its Affiliates (other than
Seller) uses: (a) the Company's corporate name or trademarks in
existence as of the Closing Date; (b) any Company Technology or
Company Intellectual Property Rights in existence as of the Closing
Date; or (c) the services of any individuals who are employees of the
Company as of the Closing Date.
(d) The covenants and undertakings contained in this Section 6.12
relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this Section 6.12
will cause irreparable injury to Buyer, the amount of which will be
impossible to estimate or determine and which cannot be adequately
compensated. Accordingly, the remedy at law of any breach of this
Section 6.13 will be inadequate. Therefore, Buyer will be entitled to
seek a temporary and permanent injunction, restraining order or other
equitable relief from any court of competent jurisdiction in the event
of any breach of this Section 6.12 without the necessity of proving
actual damage or posting any bond whatsoever. The rights and remedies
provided this Section 6.12 are cumulative and in addition to any other
rights and remedies which Buyer may have hereunder or at law or in
equity.
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6.13 REMITTANCES OF RECEIVABLES. After the Closing, if Seller or any
of its Affiliates receive any accounts receivables or other amounts that
are otherwise properly due and owing to the Company or Buyer, Seller shall
remit, or shall cause to be remitted, such amount to Buyer within 5
Business Days of receipt of such funds.
6.14 TERMINATION OF CERTAIN CONTRACTS. On or prior to the Closing
Date, Seller agrees to terminate, or cause to be terminated, all Contracts
set forth in Section 4.24 of the Disclosure Schedules.
6.15 AUDITED FINANCIAL STATEMENTS. At least five Business Days prior
to the Closing, Seller shall deliver to Buyer audited balance sheets for
the fiscal years ended December 31, 2005, 2004 and 2003, and the related
statements of income, changes in stockholders' equity and cash flow for the
fiscal years ended December 31, 2005, 2004 and 2003 (the "AUDITED FINANCIAL
STATEMENTS"). The Audited Financial Statements shall (i) be prepared in
accordance with GAAP and the books and records of the Company and (ii)
present fairly, in all material respects, the financial position of the
Company as of the date thereof, and the results of operations of the
Company for the period indicated.
6.16 BLUE PUMPKIN SOFTWARE LICENSE. On or prior to the Closing Date,
the Company shall assign to Buyer all of its rights and obligations under
the license granted to it under the Blue Pumpkin Licensed Patents, as
defined below, pursuant to the Confidential Settlement and Cross License
Agreement dated as of April 6, 2006 by and between Blue Pumpkin Software
LLC, Blue Pumpkin Software, Inc. and the Company (the "BLUE PUMPKIN
CROSS-LICENSE AGREEMENT"); PROVIDED, HOWEVER, that Buyer acknowledges and
agrees that the Company may assign, on or prior to the Closing Date, its
right to receive royalty payments under Section 6 of the Blue Pumpkin
Cross-License Agreement to Seller. "BLUE PUMPKIN LICENSED PATENTS" shall
have the meaning set forth in Section 1.5 of the Blue Pumpkin Cross-License
Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligation
of each party to consummate the transactions contemplated herein is subject
to the satisfaction at or prior to the Closing of the following conditions:
(a) No statute, rule or regulation shall have been enacted,
entered, promulgated or enforced by any court or Governmental
Authority which prohibits or restricts the consummation of the
transactions contemplated hereby;
(b) There shall not be in effect any judgment, order, injunction
or decree of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated hereby;
40
(c) There shall not be any suit, action, investigation, inquiry
or other proceeding instituted, pending or threatened by any
Governmental Authority which seeks to enjoin or otherwise prevent
consummation of the transactions contemplated hereby; and
(d) All necessary regulatory notices, consents, authorizations
and other approvals required for the consummation of the transactions
contemplated herein shall have been obtained and any waiting periods
applicable to the transactions contemplated by this Agreement under
applicable U.S. antitrust or trade regulation laws and regulations,
including under the H-S-R Act, shall have expired or been terminated.
7.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Buyer contained in
Article V of this Agreement shall be true and correct in all material
respects at the date hereof and as of the Closing as if made at and as
of such time, except for (i) representations and warranties which are
as of a specific date, which representations and warranties will have
been true as of such date and (ii) for representations and warranties
qualified by materiality, which representations and warranties will be
true and correct in all respects as of such date;
(b) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or
prior to the Closing pursuant to the terms hereof;
(c) Buyer shall have delivered to Seller those items set forth in
Section 2.6 hereof; and
(d) Buyer shall have delivered to Seller a Certificate executed
by an executive officer of Buyer, dated as the Closing Date, to the
effect that the conditions set forth in Sections 7.2(a) and (b) have
been satisfied.
7.3 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Seller contained in
Article IV of this Agreement shall be true and correct in all material
respects at the date hereof and as of the Closing as if made at and as
of such time, except for (i) representations and warranties which are
as of a specific date, which representations and warranties will have
been true as of such date and (ii) for representations and warranties
qualified by materiality or Material Adverse Effect, which
representations and warranties will be true and correct in all
respects as of such date;
41
(b) Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or
prior to the Closing pursuant to the terms hereof;
(c) Seller shall have delivered to Buyer those items set forth in
Section 2.5 hereof;
(d) Seller shall have delivered to the Buyer a Certificate
executed by an executive officer of Seller, dated as the Closing Date,
to the effect that the conditions set forth in Sections 7.3(a) and (b)
have been satisfied;
(e) There shall not have been a Material Adverse Effect since the
date of this Agreement;
(f) The consents, approvals, waivers and notices set forth in
SECTION 7.3(F) OF THE DISCLOSURE SCHEDULE shall have been obtained;
(g) Buyer shall have received an opinion dated as of the Closing
Date of ▇▇▇▇▇ ▇▇▇▇ LLP, counsel to Seller, substantially in the form
attached hereto as EXHIBIT B;
(h) Seller shall have completed and delivered to Buyer the
Audited Financial Statements, and such Audited Financial Statements
shall not be materially adversely different from the Unaudited
Financial Statements; and
(i) The Contracts set forth in SECTION 4.24 OF THE DISCLOSURE
SCHEDULE shall have been terminated.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned prior to the Closing as follows:
(a) At any time, by mutual written consent of Seller and Buyer;
(b) By Buyer, on the one hand, or by Seller, on the other hand,
if any court of competent jurisdiction in the United States or any
United States governmental body shall have issued a final and non
appealable judgment, order, injunction, decree, or ruling permanently
restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; PROVIDED that no party hereto
affiliated with the person who brought the action seeking the
permanent enjoinment of the transactions contemplated hereby may seek
termination of this Agreement pursuant to this Section 8.1(b);
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(c) If the transactions contemplated hereby or any of the
conditions to Closing hereunder become impossible to perform or
obtain, as applicable, provided that no party hereto who caused such
impossibility may seek termination of this Agreement pursuant to this
Section 8.1(c);
(d) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing in the event (i) Seller has
breached any material representation, warranty or covenant contained
in this Agreement in any material respect, Buyer has notified Seller
and the Company of the breach, and the breach has continued without
cure for a period of ten business days after the notice of breach or
(ii) there has been a Material Adverse Effect;
(e) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing in the event Buyer has
breached any material representation, warranty or covenant contained
in this Agreement in any material respect, Seller has notified Buyer
of the breach, and the breach has continued without cure for a period
of ten business days after the notice of breach; or
(f) At any time on or after September 1, 2006 (or such later date
as Seller and Buyer shall have agreed in writing), by either Seller,
on the one hand, or Buyer, on the other hand, if the Closing shall not
have occurred on or prior to such date (or such later date as Seller
and Buyer shall have agreed in writing); PROVIDED that no party hereto
may seek termination of this Agreement pursuant to this Section 8.1(f)
if the failure of any condition precedent under Article VII results
primarily from such party breaching any representation, warranty or
covenant contained in this Agreement.
8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1 hereof, written notice thereof
shall forthwith be given by the party so terminating to the other party and
this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by Seller, on the one hand, or
Buyer, on the other hand. If this Agreement is terminated pursuant to
Section 8.1 hereof:
(a) Each party shall redeliver all documents, work papers and
other materials of the other parties relating to the transactions
contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same, and all confidential
information received by any party hereto with respect to the other
party shall be treated in accordance with the Confidentiality
Agreement and Section 6.2(b) hereof;
(b) All filings, applications and other submissions made pursuant
hereto shall, at the option of Seller, and to the extent practicable,
be withdrawn from the agency or other person to which made; and
(c) There shall be no liability or obligation hereunder on the
part of Seller or Buyer or any of their respective Affiliates, except
that Seller or Buyer, as the case may be, may have liability to the
other party if the basis of termination is a willful, material breach
by Seller or Buyer, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations provided
for in Sections 6.2(c), 8.2(a), 8.2(b) and 10.1 hereof shall survive
any such termination.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement
shall survive the Closing through and including the 12-month anniversary of
the Closing Date; PROVIDED, HOWEVER, that (a) the representations and
warranties contained in Sections 4.4 (Ownership of the Shares), 4.18
(Taxes), 4.22 (Certain Fees), 5.1 (Organization and Authority of Buyer) and
5.7 (Certain Fees) shall survive the Closing until the expiration of the
applicable statute of limitations and (b) the covenants and agreements of
the parties contained in this Agreement which by their terms require
performance after the Closing Date shall survive until sixty (60) days
after the end of the period of performance thereunder (in each case, as
applicable, the "INDEMNITY PERIOD"); PROVIDED, HOWEVER, that any
obligations under Sections 9.2 and 9.3 shall not terminate with respect to
any Damages as to which the Person to be indemnified shall have given
notice (stating in reasonable detail the basis of the claim for
indemnification) to the indemnifying party in accordance with Section 9.4
before the termination of the applicable Indemnity Period.
9.2 SELLER'S AGREEMENT TO INDEMNIFY. Subject to the terms and
conditions set forth herein, from and after the Closing, Seller shall
indemnify and hold harmless Buyer and its directors, officers, employees,
Affiliates, controlling persons, agents and representatives and their
successors and assigns (collectively, the "BUYER INDEMNITEES") from and
against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including the reasonable
fees and expenses of attorneys and experts) (collectively "DAMAGES")
asserted against or incurred by any Buyer Indemnitee, and pay to the
applicable Buyer Indemnitee, the amount of all Damages, whether or not
involving a third party claim, resulting from or arising out of (i) any
breach or inaccuracy in any representation or warranty made by Seller under
this Agreement, or (ii) any breach or violation of any covenant or
agreement made in this Agreement by Seller.
9.3 BUYER'S AGREEMENT TO INDEMNIFY. Subject to the terms and
conditions set forth herein, from and after the Closing, Buyer shall
indemnify and hold harmless Seller and its directors, officers, employees,
Affiliates, controlling persons, agents and representatives and their
successors and assigns (collectively, the "SELLER INDEMNITEES") from and
against all Damages asserted against or incurred by any Seller Indemnitee,
and pay to the applicable Seller Indemnitee the amount of all Damages,
whether or not involving a third party claim, resulting from or arising out
of (i) any breach or inaccuracy in any representation or warranty made by
Buyer under this Agreement, or (ii) a breach or violation of any covenant
or agreement made in this Agreement by Buyer.
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9.4 NOTICE OF CLAIMS.
(a) Upon obtaining knowledge of any Damages, the party entitled
to indemnification (the "INJURED PARTY") shall promptly deliver
written notice (a "NOTICE OF CLAIM") to the party liable for such
indemnification (the "INDEMNIFYING PARTY") which Notice of Claim shall
set forth in reasonable detail and to the extent then known the basis
of the claim for Damages and, to the extent reasonably practicable, a
reasonable estimate of the amount thereof. The failure of an Injured
Party to timely deliver a Notice of Claim to the Indemnifying Party
shall not release the Indemnifying Party from its indemnity
obligations under this Article IX, except to the extent that the
Indemnifying Party is materially prejudiced in its ability to defend
such claim.
(b) The Injured Party and Indemnifying Party shall attempt for
not less than 30 days to negotiate a mutually satisfactory resolution
of the matter set forth in a Notice of Claim. In the event such
parties are not able to agree on a mutually satisfactory resolution,
either party may seek to resolve the depute by litigation in any court
of competent jurisdiction in accordance with the provision of Section
10.8 hereof.
9.5 GENERAL LIMITATIONS; EXCLUSIVE REMEDY.
(a) Each Indemnifying Party shall be obligated to indemnify the
Injured Party only for those claims giving rise to Damages as to which
the Injured Party has given to the Indemnifying Party written notice
thereof prior to the end of the applicable Indemnity Period.
(b) The provisions of this Article IX shall constitute the
exclusive remedy for money damages of the parties with respect to any
and all Damages resulting from or arising out of any breach of any
representation, warranty, covenant or other provision of this
Agreement, or otherwise resulting from or arising out of the
transactions contemplated hereby and which may be asserted on or after
the Closing (other than any claim relating to fraud).
(c) Seller's obligations to indemnify the Buyer Indemnitees
pursuant to Section 9.2 hereof with respect to a breach of a
representation, warranty, covenant or agreement (excluding the
covenants and agreements set forth in Sections 2.3, 3.2 and 6.9(a))
contained in this Agreement are subject to the following limitations:
(i) No indemnification shall be made by Seller unless the
aggregate amount of Damages exceeds $2,000,000 and, in such
event, indemnification shall be made by Seller from first dollar
provided that such limitation shall not apply to Damages related
to breaches of Sections 4.2 (Authorization), 4.3 (Common Stock),
4.4 (Ownership of the Shares) or 4.18 (Taxes);
(ii) In no event shall Seller's aggregate obligation to
indemnify the Buyer Indemnitees exceed 20% of the Purchase Price,
PROVIDED that such aggregate obligation shall not apply to
Damages related to breaches of Sections 4.2 (Authorization), 4.3
(Common Stock), 4.4 (Ownership of the Shares) or 4.18 (Taxes).
45
(d) The amount of any Damages that may be subject to
indemnification hereunder shall be reduced by any amount actually
recovered by an Injured Party under insurance policies with respect to
such Damages.
(e) Solely for purposes of calculating any Damages hereunder as a
result of any breach or inaccuracy in any representation or warranty
or breach or violation of any covenant or agreement made in this
Agreement, any materiality or Material Adverse Effect qualifications
in the representations, warranties, covenants and agreements shall be
disregarded.
9.6 THIRD PARTY INDEMNIFICATION.
(a) If the Injured Party settles or compromises any third-party
claims, or initiates action which is for the purpose in whole or in
part of causing a claim to be asserted, prior to giving a Notice of
Claim to the Indemnifying Party, the Indemnifying Party shall be
released from its indemnity obligation.
(b) With respect to any action or any claim set forth in a Notice
of Claim relating to a third-party claim, the Indemnifying Party may
defend, in good faith and at its expense, any such claim or demand,
and the Injured Party, at its expense, shall have the right, but not
the obligation, to participate in (but not control) at its expense in
the defense of any such third-party claim so long as (i) the
Indemnifying Party shall have acknowledged in writing to the relevant
Injured Party its obligation to indemnify such Injured Party as
provided hereunder, (ii) the third-party claim involves primarily
money damages and (iii) the Indemnifying Party conducts the defense of
the third-party claim actively and diligently. So long as the
Indemnifying Party is defending any such third-party claim, the
Injured Party shall not settle or compromise such third-party claim
without the consent of the Indemnifying Party. If such claim is
settled by the Injured Party without the Indemnifying Party's consent,
the Injured Party shall be deemed to have waived all rights hereunder
for money damages arising out of such claim. The Indemnifying Party
may settle or compromise such third-party claim without the consent of
the Injured Party, if the settlement or compromise involves only the
payment of monetary damages and included in such settlement or
compromise as an unconditional term thereof is the delivery to Injured
Party of a written release from all liability in respect of such
third-party claim. Otherwise, the Indemnifying Party may not settle or
compromise such third-party claim without the consent of the Injured
Party, which consent shall not be unreasonably withheld. The Injured
Party shall make available to the Indemnifying Party or its
representatives all records and other materials reasonably required
for use in contesting any third-party claim. The Injured Party shall
cooperate fully with the Indemnifying Party in the defense of all such
claims.
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(c) If the Indemnifying Party fails to assume the defense of any
such third-party claims, within thirty (30) days after receipt of a
Notice of Claim (or such shorter period of time that the Injured Party
may be required to respond to any suit or governmental action), the
Injured Party shall have the right to undertake the defense, settle or
compromise any such third-party claim at the risk and expense of the
Indemnifying Party, subject to the right of the Indemnifying Party to
assume the defense of such claim at any time prior to settlement,
compromise or final determination thereof. The failure of the
Indemnifying Party to respond in writing to the aforesaid notice of
the Injured Party with respect to such third-party claim within thirty
(30) days after receipt thereof shall be deemed an election not to
defend same. The Indemnifying Party will not, however, be responsible
for any Damages if and to the extent that they arise from action taken
or omitted to be taken by the Injured Party in bad faith,
fraudulently, negligently or as a result of a breach of this Agreement
by the Injured Party.
9.7 INDEMNITY PAYMENTS. Except as provided by applicable law, for Tax
purposes any indemnification payments shall be treated as adjustments to
purchase price.
ARTICLE X
MISCELLANEOUS
10.1 FEES AND EXPENSES. Except as otherwise provided herein, each of
Seller, on the one hand, and Buyer, on the other hand, shall pay all fees
and expenses incurred by, or on behalf of, such party in connection with,
or in anticipation of, this Agreement and the consummation of the
transactions contemplated hereby, including fees and expenses of attorneys,
accountants and financial advisors, except any fees or expenses incurred to
obtain the third party consents, approvals, waivers and notices set forth
in SECTION 7.3(F) OF THE DISCLOSURE SCHEDULE shall be borne by Seller. In
addition, each of Seller, on the one hand, and Buyer, on the other hand,
shall indemnify and hold harmless the other party from and against any and
all claims or liabilities for financial advisory and finders' fees incurred
by reason of any action taken by such party or otherwise arising out of the
transactions contemplated by this Agreement by any person claiming to have
been engaged by such party.
10.2 FURTHER ASSURANCES. From time to time after the Closing Date, at
the reasonable request of another party hereto and at the expense of the
party so requesting, each of the parties hereto shall execute and deliver
to such requested party such documents and take such other action as such
requesting party may reasonably request in order to consummate more
effectively the transactions contemplated hereby. Seller shall not, in
connection therewith or as a result thereof, incur any legal liability
beyond that provided for in this Agreement.
10.3 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall
be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified
mail, postage prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its address or
facsimile number given below (or at such other address or facsimile number
for such party as shall be specified by notice given hereunder):
47
If to Buyer to:
c/o NICE-Systems Ltd.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ POB 690
Ra'anana 43107 Israel
Attention: General Counsel
Facsimile: (▇▇▇) ▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller to:
Tekelec
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests, demands waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error.
10.4 SEVERABILITY. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and effect
and the application of such invalid or unenforceable provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable shall be valid and enforced to the fullest extent permitted
by law.
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10.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, including by operation
of law, by any party hereto without the prior written consent of the other
party hereto; provided however that Buyer may assign its rights and
obligations hereunder to any subsidiary of Buyer. In the event that Buyer
exercises its right to assign this Agreement, Buyer shall deliver an
executed guarantee to Seller in the form of Exhibit C hereto.
10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of Seller, and its successors and permitted assigns, with respect
to the obligations of Buyer under this Agreement, and for the benefit of
Buyer, and its respective successors and permitted assigns, with respect to
the obligations of Seller, under this Agreement, and this Agreement shall
not be deemed to confer upon or give to any other third party any remedy,
claim, liability, reimbursement, cause of action or other right, except for
the parties entitled to the benefits of Sections 6.8(c), 9.2 and 9.3.
10.7 INTERPRETATION.
(a) The article and section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) The parties have participated substantially in the
negotiation and drafting of this Agreement and agree that no ambiguity
herein should be construed against the draftsman.
10.8 JURISDICTION AND CONSENT TO SERVICE. Each of Seller and Buyer (a)
agrees that any suit, action or proceeding arising out of or relating to
this Agreement may be brought solely in the state courts having competent
jurisdiction within the County of New York in the State of New York or
Federal courts having competent jurisdiction within the southern district
of New York; (b) consents to the exclusive jurisdiction of each such court
in any suit, action or proceeding relating to or arising out of this
Agreement; (c) waives any objection which it may have to the laying of
venue in any such suit, action or proceeding in any such court; and (d)
agrees that service of any court paper may be made in such manner as may be
provided under applicable laws or court rules governing service of process.
10.9 ATTORNEYS' FEES. In the event that litigation arises in
connection with enforcement of any provision of this Agreement, the
prevailing party in such litigation shall be entitled to recover its
reasonable attorneys' fees and expenses, in addition to any other relief to
which it may be deemed entitled.
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10.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (regardless of the
laws that might otherwise govern under applicable principles of conflicts
of laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
10.11 SPECIFIC PERFORMANCE. The parties acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money
damages as a remedy.
10.12 ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement
and the Disclosure Schedule and other documents referred to herein or
delivered pursuant hereto which form a part hereof constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and
oral, between the parties or any of them with respect to the subject matter
hereof.
10.13 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may be
amended, modified or supplemented at any time by written agreement of
Seller and Buyer. Any failure of Seller or Buyer to comply with any term or
provision of this Agreement may be waived, with respect to the Buyer, on
the one hand, by Seller, and with respect to Seller, on the other hand, by
Buyer, by an instrument in writing signed by or on behalf of the
appropriate party, but such waiver of failure to insist upon strict
compliance with such term or provision shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure to comply.
10.14 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same agreement.
* * * * * * * *
(signatures appear on next page)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
SELLER: TEKELEC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Senior Vice President
Title: and Chief Financial Officer
-----------------------------------
BUYER: NICE-SYSTEMS LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Title: Chief Executive Officer
By: /s/ Ran Oz
-----------------------------------
Name: Ran Oz
-----------------------------------
Title: Chief Financial Officer
-----------------------------------
51
