ASSET PURCHASE AGREEMENT
BETWEEN
McDONNELL INFORMATION SYSTEMS GROUP PLC
and
MANAGEMENT TECHNOLOGIES, INC.
March 1, 1996
Brobeck Hale and Dorr
Veritas House
125 Finsbury Pavement
London EC2A 1NQ
TEL: 0171 638 6688
Fax: 0171 638 5888 TABLE OF CONTENTS
Clause Page No.
1.General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Schedules and Exhibits. . . . . . . . . . . . . . . . . . . . . 5
1.3 U.S. Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.Sale and Delivery of the Assets. . . . . . . . . . . . . . . . . . . 6
2.1 Delivery of the Assets. . . . . . . . . . . . . . . . . . . . . 6
2.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Assumption of Liabilities; Etc. . . . . . . . . . . . . . . . . 8
2.4 Apportionment . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Notice of Sale. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Further Assurances; Transitional Arrangements . . . . . . . . . 9
2.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.Representations of the Seller. . . . . . . . . . . . . . . . . . . . 10
3.1 Corporate Organization. . . . . . . . . . . . . . . . . . . . . 10
3.2 Authorization; No Conflict. . . . . . . . . . . . . . . . . . . 10
3.3 Ownership of the Assets . . . . . . . . . . . . . . . . . . . . 10
3.4 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 11
3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Compliance with Agreements and Laws . . . . . . . . . . . . . . 12
3.9 Employee Relations. . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 13
3.11 Absence of Certain Changes or Events. . . . . . . . . . . . . . 14
3.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 15
3.13 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 15
4.Representations of the Buyer . . . . . . . . . . . . . . . . . . . . 15
4.1 Organization and Authority of Buyer . . . . . . . . . . . . . . 16
4.2 Organization and Authority of Subsidiary. . . . . . . . . . . . 16
4.3 Capitalization of the Buyer . . . . . . . . . . . . . . . . . . 16
4.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 17
4.6 Issuance of Consideration Shares and Earn-out Shares. . . . . . 17
4.7 No Further Issues . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 No Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.Employees and Other Matters. . . . . . . . . . . . . . . . . . . . . 18
5.1 Offer to U.S. Employees . . . . . . . . . . . . . . . . . . . . 18
5.2 Transfer of Non-U.S. Employees. . . . . . . . . . . . . . . . . 18
5.3 No Solicitation of Employees. . . . . . . . . . . . . . . . . . 18
5.4 Termination of Employees. . . . . . . . . . . . . . . . . . . . 18
5.5 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Transfer of Benefits of Employees . . . . . . . . . . . . . . . 19
5.7 Consent of Seller to Transfer of Employees. . . . . . . . . . . 19
5.8 Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 19
6.Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Closing Agreements. . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Post-Closing Agreements. . . . . . . . . . . . . . . . . . . . 20
6.3 Development License.. . . . . . . . . . . . . . . . . . . . . . 21
6.4 Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.Closing Deliveries of the Seller . . . . . . . . . . . . . . . . . . 21
8.Closing Deliveries of the Buyer. . . . . . . . . . . . . . . . . . . 21
9.Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 By the Buyer and the Seller . . . . . . . . . . . . . . . . . . 22
9.2 By the Seller . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3 By the Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Claims for Indemnification. . . . . . . . . . . . . . . . . . . 23
9.5 Defense by Indemnifying Party . . . . . . . . . . . . . . . . . 23
9.6 Payment of Indemnification Obligation . . . . . . . . . . . . . 24
9.7 Survival of Representations; Claims for Indemnification . . . . 24
9.8 Limitation of Liability . . . . . . . . . . . . . . . . . . . . 24
10. Post-Closing Agreements. . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Seller Representative on Buyer Board of Directors.. . . . . . . 25
10.2 Confidential Information. . . . . . . . . . . . . . . . . . . . 25
10.3 Conduct of Business Post-Closing. . . . . . . . . . . . . . . . 26
10.4 Sharing of Data . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Post-Closing Cooperation. . . . . . . . . . . . . . . . . . . . 27
10.6 Collection of Accounts Receivable.. . . . . . . . . . . . . . . 27
10.7 Cooperation in Litigation . . . . . . . . . . . . . . . . . . . 27
10.8 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.9 Hop Exchange Premises . . . . . . . . . . . . . . . . . . . . . 28
10.10 Non-competition Agreement. . . . . . . . . . . . . . . . . 28
11. Transfer and Sales Tax . . . . . . . . . . . . . . . . . . . . . . . 28
12. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2 Consent of the Parties. . . . . . . . . . . . . . . . . . . . . 28
12.3 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1 For the Seller. . . . . . . . . . . . . . . . . . . . . . . . . 29
13.2 For the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 30
14. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
15. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 31
16. Entire Agreement; Amendments; Attachments. . . . . . . . . . . . . . 31
17. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18. Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20. Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBIT A - BILL OF SALE . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBIT B - INSTRUMENT OF ASSUMPTION . . . . . . . . . . . . . . . . . . 35
EXHIBIT C - SECURITY AGREEMENT . . . . . . . . . . . . . . . . . . . . . 36
EXHIBIT D - DISTRIBUTION AGREEMENT . . . . . . . . . . . . . . . . . . . 37
EXHIBIT E - REGISTRATION RIGHTS AGREEMENT. . . . . . . . . . . . . . . . 38
EXHIBIT F - STOCK TRANSFER FORM. . . . . . . . . . . . . . . . . . . . . 39
EXHIBIT G - SUMMARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . 40
SCHEDULES
Schedule 1.1(a) IBS Customers
Schedule 1.1(b) IBS Software
Schedule 1.1(C) Non-U.S. Employees
Schedule 1.1(d) PRO-IV
Schedule 1.1(e) U.S. Employees
Schedule 2.1(a)(i) Tangible Assets
Schedule 2.1(a)(ii) Contracts
Schedule 2.1(a)(iv) Intellectual Property
Schedule 2.1(b) Excluded Assets
Schedule 3.3 Encumbrances
Schedule 3.5 Litigation
Schedule 3.7 Contract Exceptions
Schedule 3.8 Permits
Schedule 3.9 Employee Relations
Schedule 3.10 Employee Benefit Plans
Schedule 3.11 Absence of Certain Changes or Events
Schedule 3.12 Intellectual Property Exceptions
Schedule 3.13 Regulatory Approvals
Schedule 4.3 Capitalization of the Buyer
Schedule 4.4 Consents and Approvals Required by Buyer
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of the 1st day
of March, 1996 between McDONNELL INFORMATION SYSTEMS GROUP PLC, a public company
limited by shares registered in England and Wales with its registered office at
Maylands Park South, Boundary Way, Hemel Hempstead, Hertfordshire HP2 7HU,
England (the "Seller"), and MANAGEMENT TECHNOLOGIES, INC., a New York
corporation with its principal place of business at 630 Third Avenue, New York,
New York 10017, U.S.A. (the "Buyer").
Preliminary Statement
The Buyer desires to purchase, and the Seller desires to sell, all of the
assets used primarily in the Business (as hereinafter defined) for the
consideration set forth below and the assumption of certain of the liabilities
of the Seller set forth below, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. General.
1.1 Definitions. The terms defined in this Section 1.1, whenever
used in this Agreement, shall have the following meanings for purposes of this
Agreement:
"Affiliate" shall mean, with respect to any natural person,
corporation, partnership or other entity, a natural person, corporation,
partnership or other entity which directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such natural person, corporation, partnership or other entity.
"Assets" shall have the meaning given such term in Section 2.1(c).
"Assumed Liabilities" shall have the meaning given such term in
Section 2.3.
"Bill of Sale" shall have the meaning given such term in Section
2.1(a).
"Business" means the International Banking Systems software business
of the Seller as conducted on the date hereof.
"Buyer" shall have the meaning given such term in the preamble.
"Buyer's Plan" shall have the meaning given such term in Section 5.3.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Commission" means the United States Securities and Exchange
Commission
and any successor entity.
"Common Stock" means the common stock, par value U.S.$0.01 per share,
of the Buyer.
"Consideration Date" means March 1, 1997 and each date thirty (30)
days after the last day of any Revenue Period.
"Consideration Shares" shall have the meaning given such term in
Section 2.2(a).
"Contracts" shall have the meaning given such term in Section 2.1(a).
"Covenant Period" shall have the meaning given such term in Section
10.3.
"Disclosure Schedule" means all of the Schedules delivered by the
Seller pursuant to this Agreement and made a part hereof.
"Distribution Agreement" shall have the meaning given such term in
Section 6.1.
"Earn-out Shares" shall have the meaning given such term in Section
2.2(b).
"Employees" means the Non-U.S. Employees and the U.S. Employees,
collectively.
"Encumbrance" means any claim, liability, pledge, charge, encumbrance
or equity of any kind affecting the Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" shall have the meaning given such term in Section
2.1(c).
"Financial Statements" shall have the meaning given such term in
Section 3.4(a).
"Fiscal Quarter" means, in any year, each or any of the periods (i)
from May 1 through July 31, (ii) from August 1 through October 31, (iii) from
November 1 through January 31, and (iv) from February 1 through April 30,
respectively.
"Hop Exchange Premises" shall mean The Hop Exchange, 24A Southwark
Street, London SE1 1TY.
"IBS Customers" means those parties set forth on Schedule 1.1(a) or
any Affiliate thereof.
"IBS Software" shall mean all the computer programs, Source Code,
Object Code, and other components and materials that make up the family of
products licensed by the Seller under the "Version 5" or "Pro-IV IBS" trademarks
which are owned or licensed by (or currently in development and proposed to be
licensed by) the Seller and all operating, diagnostic and user manuals related
thereto, for use with computers, other computer programs and environments. Such
computer programs, Source Code, Object Code and user manuals included in the IBS
Software are more fully described in Schedule 1.1(b) attached hereto.
"Indemnified Party" shall have the meaning given such term in Section
9.4.
"Indemnifying Party" shall have the meaning given such term in Section
9.4.
"Instrument of Assumption" shall have the meaning given such term in
Section 2.3.
"Insurance Policies" shall have the meaning given such term in Section
3.6.
"Intellectual Property" shall have the meaning given such term in
Section 2.1(a)(iv).
"IRS" means the U.S. Internal Revenue Service.
"Losses" means all claims, damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any legal
accounting or other expenses for investigating or defending any actions or
threatened actions).
"Material Adverse Effect" means any change in, or effect on, the
Business which is materially adverse to the business, operations, assets or
condition (financial or otherwise) of the Business, taken as a whole.
"Net Asset Statement" means the internally prepared financial statement of
the
Business dated as at December 31, 1995, which includes the Assets and Assumed
Liabilities
but excludes the Excluded Assets and those liabilities retained by the Seller.
"Non-U.S. Employees" means the employees of the Seller employed in the
Business outside of the United States and listed on Schedule 1.1(c) attached
hereto.
"Non-U.S. Plans" shall have the meaning given such term in Section
3.10(a).
"Non-U.S. Retirement Plan" shall have the meaning given such term in
Section 3.10(a).
"Non-U.S. Welfare Plan" shall have the meaning given such term in
Section 3.10(a).
"Object Code" shall mean the computer executable version of any item
or component of computer software.
"Permits" shall have the meaning given such term in Section 3.8.
"PRO-IV" means the fourth generation computer programming language and
development modules entitled PRO-IV, as more fully described in Schedule 1.1(d)
attached hereto.
"Qualifying IBS Derivatives" means any computer program, Source Code
or Object Code which is integrated with or added to the IBS Software after the
Closing Date and which is designed primarily to provide new or different
applications or functionality to the IBS Software and user manuals related
thereto, whether or not it was developed by or on behalf of the Seller, the
Buyer or any Affiliate of either party.
"Qualifying IBS Revenue" for any relevant period means the gross
revenue (net of sales, value added, transfer, excise, stamp, withholding, or
other similar taxes) of the Business recognized in the accounts of the Buyer or
any Affiliate of the Buyer in the relevant period and derived from (i) the sales
or licenses of the IBS Software (together with Qualifying IBS Derivatives) and
related sales and licenses of PRO-IV, (ii) the provision of standard and
customary consulting, maintenance, development or similar services (however
categorized) with respect to the IBS Software (including Qualifying IBS
Derivatives) and related services with respect to PRO-IV and (iii) any revenue
received from any IBS Customer.
"Redundant Employee" shall have the meaning given to such term in
Section 5.4.
"Registration Rights Agreement" shall have the meaning given such term
in Section 6.1.
"Revenue Period" means (i) the period commencing on the Closing Date
and ending on January 31, 1997 and (ii) a series of successive periods
comprising each Fiscal Quarter thereafter through and including the Fiscal
Quarter ending April 30, 1999.
"SEC Reports" shall have the meaning given such term in Section 4.8.
"Security Agreement" shall have the meaning set forth in Section 6.1.
"Seller" shall have the meaning given such term in the preamble.
"Seller Director" shall have the meaning given such term in Section
10.1(b).
"Seller Representative" shall have the meaning given such term in
Section 10.1.
"Share Purchase Agreement" shall have the meaning given such term in
Section 6.1.
"Source Code" shall mean the high-level language version of any item
or component of computer software in a form in which the program logic is easily
deduced by a human being, such as a printed listing of the program, or in
encoded machine-readable form, such as might be recorded on magnetic tape or
disk, from which a printed listing can be made by processing it with a computer.
"Sub-Lease Agreement(s)" shall have the meaning given such term in
Section 6.1.
"Subsidiary" means Winter Partners Limited, the wholly owned
subsidiary of the Buyer incorporated in England and Wales.
"Tangible Assets" shall have the meaning given such term in Section
2.1(a)(i).
"U.S. Employees" means the employees of the Seller employed in the
Business
in the United States and listed on Schedule 1.1(e) attached hereto.
"U.S. Plans" shall have the meaning given such term in Section
3.10(a).
"U.S. Retirement Plans" shall have the meaning given such term in
Section 3.10(e).
1.2 Schedules and Exhibits. A "Schedule" which is identified in this
Agreement means part of the Disclosure Schedule prepared by the Seller and
delivered to the Buyer pursuant to this Agreement to disclose factual matters
concerning the Business. An "Exhibit" is an agreement or other document
attached hereto and made a part hereof.
1.3 U.S. Dollars. Unless otherwise indicated herein or on the
Schedules or Exhibits, all references to amounts in dollars ($) shall mean U.S.
dollars. For purposes of determining the application of the terms of this
Agreement to items denominated in a currency other than U.S. dollars, the
relevant currency shall be converted to U.S. dollars at the applicable exchange
rate published in the currency crossrate table of The Wall Street Journal (New
York edition) on the date of this Agreement (or, if applicable, on the date as
of which such calculation is made).
2. Sale and Delivery of the Assets.
2.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this
Agreement, at the Closing, the Seller shall deliver to the Buyer a Bill of Sale
in substantially the form of Exhibit A attached hereto (the "Bill of Sale"),
whereby the Seller shall sell, convey, transfer, assign and deliver (or procure
the sale, conveyance, transfer, assignment and delivery) to the Buyer or the
Subsidiary, and the Buyer shall, or shall cause the Subsidiary to, purchase from
the Seller, all right, title and interest of the Seller at Closing to all of the
following assets and properties, free and clear of all liens and encumbrances:
(i) all hardware, magnetic tapes, disks and other computer
media, office supplies, maintenance supplies, packaging materials, marketing
materials, samples, photographs, training materials, spare parts and similar
items of the Business set forth on Schedule 2.1(a)(i) (collectively, the
"Tangible Assets");
(ii) all rights and obligations of the Seller under the
contracts, agreements, leases, licenses and other instruments set forth on
Schedule 2.1(a)(ii) attached hereto (collectively, the "Contracts");
(iii) all books, records and accounts, correspondence,
production records, technical, accounting, manufacturing and procedural manuals,
customer lists, employment records, studies, reports or summaries relating to
any consequences of any operation of the Business, present or former, as well as
all studies, reports or summaries relating to the general condition of the
Assets, and any confidential information which has been reduced to writing
relating primarily to or arising solely out of the business of the Business;
(iv) all right, title and interest of the Seller at Closing
in and to all intangible property, proprietary rights and intellectual property
in the IBS Software and all tangible manifestations of the IBS Software,
including, without limitation, to the extent such tangible manifestations
currently exist anywhere in the world, (A) complete Source Code and Object Code
copies, in both printed and electronically readable formats (B) magnetic tapes,
disks and other computer media and (C) accurate copies of all technical data,
art works, schematic drawings, specifications, computer programming know-how
(including all existing copies of on-line files, documentation, testing
materials and reports), product plans, software development tools and operating,
diagnostic and user manuals all as more fully set forth on Schedule 2.1(a)(iv)
attached hereto (collectively, the "Intellectual Property");
(v) all causes of action, judgments and claims or demands
of whatever kind or description arising out of or relating primarily to the
Business; and
(vi) except as specifically provided in Section 2.1(b)
hereof, all other assets, properties, claims, rights and interests which relate
primarily to the Business which exist on the Closing Date, of every kind and
nature and description, whether tangible or intangible, real, personal or
mixed.
(vii) all accounts receivable primarily related to the
Business as of the date hereof, an aggregate amount of $467,000, exclusive of
accounts receivable for the Bank of Canada contract relating to Digital
Equiptment Corporation hardware and operating systems in the amount of $179,000.
The Buyer shall remit to the Seller 20% of all accounts receivable, as set forth
in this sub-section (vii), as and when collected by the Buyer.
(b) Excluded Assets. Notwithstanding the provisions of paragraph
(a) above, the assets to be transferred to either the Buyer or the Subsidiary,
as the case may be, under this Agreement shall not include the following (the
"Excluded Assets"):
(i) the computer program, Source Code, Object Code and
other components and materials of PRO-IV;
(ii) all of the rights, properties and assets of the Seller
not used primarily in the Business;
(iii) all accounts, accrued revenue, notes and notes
receivable existing on the Closing Date which are payable to the Business,
including any security held by the Seller for the payment thereof;
(iv) all assets in the possession of the Business but owned
by third parties;
(v) all intercompany receivables, payables, notes or loans
with respect to the Business between the Seller and its Affiliates which are not
constituents of the Business;
(vi) any cash, bank accounts, marketable securities or
similar cash balances or cash equivalents available to the Business on the
Closing Date; and
(vii) those assets listed on Schedule 2.1(b) attached
hereto.
(c) The Assets. The Tangible Assets, Contracts, Intellectual
Property and other properties, assets and business of the Business described in
paragraph (a) above, other than the Excluded Assets, shall be referred to
collectively as the "Assets."
2.2 Consideration.
(a) Consideration Shares. In consideration of the sale by the
Seller of the Business hereunder, on or before each Consideration Date, the
Buyer shall, for itself and, as appropriate, on behalf of the Subsidiary, issue
and deliver to the Seller 1,000 shares of Common Stock (as adjusted for stock
splits, stock dividends, recapitalizations and similar events) for every
US$3,000 of Qualifying IBS Revenue recognized by the Buyer during the relevant
Revenue Period (such shares to be hereinafter referred to collectively as the
"Consideration Shares"); provided, however, that in no event shall the number of
Consideration Shares issued and delivered by the Buyer to the Seller pursuant to
this Section 2.2(a) exceed 2,000,000 shares of Common Stock in the aggregate (as
adjusted for stock splits, stock dividends, recapitalizations and similar
events). On each date of delivery of the Consideration Shares (but in any case
by each Consideration Date), the Buyer shall deliver to the Seller copies of
relevant portions of financial statements of the Buyer (certified without
qualification by an appropriate financial officer of the Buyer) during the
relevant Revenue Period to the extent such financial statements relate to the
Business, together with a letter from the Buyer's accountants setting forth the
calculation of the Qualifying IBS Revenue for such Revenue Period. The
Consideration Shares shall, upon delivery to the Seller, be duly and validly
issued, fully paid and non-assessable.
(b) Earn-out Shares. In consideration of the sale by the Seller
of the Business hereunder, the Buyer shall, for itself and, as appropriate, on
behalf of the Subsidary, issue and deliver to the Seller 1,000,000 shares of
Common Stock (as adjusted for stock splits, stock dividends, recapitalizations
and similar events) within sixty days of the end of the first fiscal year in
which the profit (before taxes and excluding extraordinary items) of the Buyer
is greater than or equal to US$10,000,000 (the "Earn-out Shares"). Within 45
days of the end of each fiscal year of the Buyer, the Buyer shall deliver to the
Seller the audited financial statements of the Buyer (certified without
qualification by the Buyer's accountants). The Earn-out Shares shall, upon
delivery to the Seller, be duly and validly issued, fully paid and non-
assessable.
(c) Notwithstanding the foregoing, if the Buyer enters into any
merger, consolidation or reorganization in which the Buyer will not be the
surviving corporation, or if all of the shares of the Buyer are acquired by an
unrelated third party, then the Buyer, immediately prior to the closing of such
transaction, shall issue and deliver to the Seller that number of shares of
Common Stock such that the Seller shall have received an aggregate, including
shares previously issued to the Seller hereunder, of 3,000,000 shares of Common
Stock (as adjusted for stock splits, stock dividends, recapitalizations and
similar events, provided for the avoidance of doubt that the Seller shall not
have the right to any other anti-dilution protection other than the anti-
dilution protection set forth in this Agreement).
2.3 Assumption of Liabilities; Etc. At the Closing, the Buyer shall,
and shall cause the Subsidiary to, execute and deliver an Instrument of
Assumption of Liabilities (the "Instrument of Assumption"), substantially in the
form attached hereto as Exhibit B, pursuant to which the Buyer and the
Subsidiary shall assume and agree to perform, pay and discharge the liabilities,
obligations and commitments of the Seller listed on the Instrument of
Assumption, including, without limitation, the Contracts (the "Assumed
Liabilities").
2.4 Apportionment. Prepaid premiums on insurance if assigned as
herein provided, water and sewer use charges, transfer taxes and recording fees,
if any, incurred in connection with the transfer of the Assets contemplated
hereby, and real property or occupancy taxes for the then current tax period,
shall be apportioned and adjusted as of the Closing Date and the net amount
thereof shall be paid in cash by or on behalf of (i) the Buyer to the Seller if
the amount of prepaid charges, taxes and fees exceeds the amount of accrued
charges, taxes and fees or (ii) the Seller to the Buyer if the amount of accrued
charges, taxes and fees exceeds the amount of prepaid charges, taxes and fees.
2.5 Notice of Sale. (i) The Buyer shall, or shall cause the
Subsidiary to, and (ii) the Seller shall give notice of the sale of the Business
to HM Customs and Excise as required by paragraphs 11 and 1(2) of Schedule 1 of
Value Added Tax Act 1994 or by Regulation 4 of the Value Added Tax (General)
Regulations 1985 or as otherwise may be required by law.
2.6 Further Assurances; Transitional Arrangements.
(a) Further Assurances. From time to time after the Closing, at
the reasonable request of the Buyer and without further consideration, the
Seller shall execute and deliver (or procure the execution and delivery of) such
instruments of sale , transfer, conveyance, assignment and confirmation, and
take (or procure the taking of) such other action, as the Buyer may reasonably
request to more effectively transfer, convey and assign to the Buyer or the
Subsidiary, and to confirm the Buyer's or the Subsidiary's title to, all of the
Assets, to put the Buyer or the Subsidiary in actual possession and operating
control thereof, to assist the Buyer or the Subsidiary in exercising all rights
with respect thereto and to carry out the purpose and intent of this Agreement.
(b) Consent to Transfer. Where the consent of a third party is
required for the transfer to the Buyer or the Subsidiary of any of the Contracts
and such consent has not been obtained by the Closing, (A) the Seller shall use
(i) its commercially reasonable efforts to obtain such consent as soon as
possible and (ii) hold any funds paid to it pursuant to such Contract as agent
and trustee for the Buyer or the Subsidiary and make the same available for
collection by the Buyer or the Subsidiary; and (B) the Buyer shall, or shall
cause the Subsidiary to, perform all obligations under such Contracts as agent
for the Seller. The Buyer shall, defend, indemnify and hold the Seller harmless
from any and all Losses incurred by or asserted against the Seller as a result
of the performance by the Buyer of any obligations under such Contracts. In
addition, at the request of the Seller, the Buyer will cooperate with the Seller
in obtaining novations with respect to any or all of the Contracts.
(c) Remittance of Post-Closing Amounts Received. The Seller
agrees to remit to the Buyer or the Subsidiary all amounts received after the
Closing Date which were intended to be transferred as part of the Assets. The
Buyer shall, or shall cause the Subsidiary to, remit to the Seller all amounts
received by the Buyer or any Affiliate of the Buyer after the Closing Date
relating to matters of the business of the Seller which were not intended to be
transferred with the Assets.
2.7 Closing. The Closing shall take place at the offices of Brobeck Hale
and Dorr, Veritas House, 125 Finsbury Pavement, London EC2A 1NQ at 10:00 a.m.,
London time, on March 1, 1996 or at such other place, time or date as may be
mutually agreed upon in writing by the parties. The transfer of the Assets by
the Seller to the Buyer shall be deemed to occur at 12:01 a.m., London time, on
the Closing Date. All actions to be taken and all documents to be executed and
delivered by the parties at the Closing shall be deemed to have been taken and
executed simultaneously, and no actions shall be deemed taken nor any documents
executed or delivered until all have been taken, executed and delivered.
3. Representations of the Seller.
The Seller represents and warrants to the Buyer that the statements contained in
this Section 3 are, to the knowledge of the Seller, after due and careful
inquiry true and correct, except as set forth in any Schedule numbered to
correspond to an appropriate subsection of this Section 3 and hereby made a part
of the Disclosure Schedule attached hereto. The Buyer hereby acknowledges that
any disclosure made in a particular representation or warranty shall be deemed
to be made as to all other representations and warranties to which such
disclosure could pertain.
3.1 Corporate Organization. The Seller is a public company limited by
shares, duly incorporated and validly existing under the laws of England and
Wales and has all requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby.
3.2 Authorization; No Conflict. The execution and delivery of this
Agreement by the Seller, and the agreements provided for herein, and the
consummation by the Seller of all transactions contemplated hereby and thereby,
have been duly authorized by all requisite corporate and shareholder action.
This Agreement and all such other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby and thereby
to which the Seller is a party constitute the valid and legally binding
obligations of the Seller, enforceable against the Seller in accordance with
their respective terms. The execution, delivery and performance by the Seller
of this Agreement and the agreements provided for herein, and the consummation
by the Company of the transactions contemplated hereby and thereby, will not,
with or without the giving of notice or the passage of time or both, (a) violate
the provisions of any law, rule or regulation applicable to the Seller; (b)
violate the provisions of the Memorandum and Articles of Association of the
Seller; (C) violate any judgment, decree, order or award of any court,
governmental body or arbitrator; or (d) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or cause
any acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of the Seller pursuant to, any indenture,
mortgage, deed of trust or other instrument or agreement to which the Seller is
a party or by which the Seller or any of its properties is or may be bound.
3.3 Ownership of the Assets. Schedule 3.3 attached hereto sets forth a
true, correct and complete list of all Encumbrances. The Seller is the true and
lawful owner of the Assets, and has the right to sell and transfer to the
Company good, clea r, record and marketable title to the Assets, free and clear
of all encumbrances, except for the Encumbrances as set forth on Schedule 3.3
attached hereto.
3.4 Financial Statements.
(a) The Seller has previously delivered to the Buyer the Net Asset Statement
and the related statements of income of the Business for the fiscal year ended
December 31, 1995 (collectively, including the Net Asset Statement, the
"Financial Statements").
(b) The Financial Statements fairly present, as of their respective dates, the
assets and liabilities of the Business and the results of operations of the
Business for the periods indicated; with respect to the contracts and
commitments for the sale or license of goods or the provision of services by the
Business, the Financial Statements contain and reflect adequate reserves, which
are consistent with previous reserves taken, for all reasonably anticipated
material losses and costs and expenses.
3.5 Litigation. Except as set forth on Schedule 3.5 attached hereto, the
Seller is not a party to, or threatened with, and none of the Assets are subject
to, any litigation, suit, action, investigation, proceeding or controversy
before any court, administrative agency or other governmental authority relating
to or affecting the Assets or the business or condition (financial or otherwise)
of the Business which would have a Material Adverse Effect. The Seller is not
in violation of or in default with respect to any judgment, order, writ,
injunction, decree or rule of any court, administrative agency or governmental
authority or any regulation of any administrative agency or governmental
authority relating to or affecting the Assets or the business or condition
(financial or otherwise) of the Business which would have a Material Adverse
Effect.
3.6 Insurance. All fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies insuring the Assets or the
Business and all life insurance policies maintained for any of the Employees
(collectively, the "Insurance Policies") are in full force and effect and are in
amounts and of a nature which are reasonable and customary for the business of
the Seller. All premiums due on the Insurance Policies or renewals thereof have
been paid and there is no default under any of the Insurance Policies.
3.7 Contracts.
(i) Except as set forth on Schedule 3.7 attached hereto:
(A) each Contract is a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditor's rights generally and subject
to general principles of equity, regardless whether enforcement is
sought in a proceeding in equity or at law, and the Seller does not
have any knowledge that any Contract is not a valid and binding
agreement of the other parties thereto;
(B) the continuation, validity and effectiveness of each Contract
will not be affected by the transfer thereof to the Buyer under this
Agreement and all such Contracts are assignable to the Buyer without a
consent; and
(C) the Seller is not restricted by any Contract or any other agreement by
which it is bound from carrying on its business anywhere in the world.
(ii) True, correct and complete copies of all Contracts have previously
been delivered by the Seller or on behalf of the Seller to the Buyer.
3.8 Compliance with Agreements and Laws. Except to the extent that the
failure to do so by the Seller would not have a Material Adverse Effect,
the Seller has all requisite licenses, permits and certificates, including
environmental, health and safety permits, from relevant authorities
necessary to conduct the Business and own and operate the Assets
(collectively, the "Permits"). Schedule 3.8 attached hereto sets forth a
true, correct and complete list of all such Permits, copies of which have
previously been delivered by or on behalf of the Seller to the Buyer. The
Seller is not in violation of any law, regulation or ordinance (including,
without limitation, laws, regulations or ordinances relating to building,
zoning, environmental, disposal of hazardous substances, land use or
similar matters) relating to its properties used in the Business, the
violation of which could have a Material Adverse Effect. The Seller is not
in violation of any applicable laws, regulations or orders (including, but
not limited to, any of the foregoing relating to employment discrimination,
occupational safety, environmental protection, hazardous waste,
conservation, or corrupt practices), the enforcement of which would have a
Material Adverse Effect.
3.9 Employee Relations.
(i) With respect to the Business, and except to the extent that a failure
to comply would not cause a Material Adverse Effect, the Seller is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and
there are no arrears in the payment of wages, national insurance
contributions or social security taxes.
(ii) Except as set forth on Schedule 3.9 attached hereto:
(A) none of the Employees is represented by any labor union;
(B) the Seller is not a party to any collective bargaining agreement
or national labor union contract in respect of the Business;
(C) there is no unfair labor practice complaint in respect of the
Business against the Seller pending before any labor relations board
or government authority;
(D) there is no pending labor strike or other material labor trouble
affecting the Business (including, without limitation, any
organizational drive);
(E) there is no material labor grievance pending against the Seller
in respect of the Business;
(F) there is no pending representation question respecting the
Employees; and
(G) there are no pending arbitration proceedings arising out of or
under any collective bargaining agreement or national labor union
contract in respect of the Business to which the Seller is a party, or
any basis for which a claim may be made under any such collective
bargaining agreement or national labor union contract.
(iii) Schedule 3.9 attached hereto sets forth a true, correct and
complete list of (a) the employee benefits provided by the Seller to the
Employees and all written contracts or agreements of employment between
the Seller and the Em ployees, and (b) the Seller's current payroll in
respect of the Business, including the job titles and salary or wage
rates of each of the Employees, showing separately for each such person
who received an annual salary in excess of US$50,000 the amounts paid or
payable as salary and bonus payments for the year ended December 31,
1995.
3.10 Employee Benefit Plans.
(a) Schedule 3.10 has been annotated to specifically indicate which
employee benefits are applicable to Employees employed in the United
States (the "U.S. Plans") and which employee benefits are (i) non-
governmental retirement plans maintained or contributed to by or on
behalf of the Seller applicable to Employees employed outside of the
United States (a "Non-U.S. Retirement Plan") or (ii) non-governmental
non-industry welfare benefit plans maintained or contributed to by or on
behalf of the Seller applicable to Employees located outside of the
United States (a "Non-U.S. Welfare Plan"). In this Agreement, Non-U.S.
Welfare Plans and Non-U.S. Retirement Plans are collectively referred to
as "Non-U.S. Plans."
(b) Except as described in Schedule 3.10, there are no inquiries or
investigations by the IRS, or the U.S. Department of Labor or the
Pension Benefit Guaranty Corporation, or any governmental body, and no
termination proceedings and no actions, suits or claims (other than
routine claims for benefits) pending or threatened against any U.S. Plan
or the assets thereof, or with regard to any employee benefit maintained
by or to which the Seller or any current or former Affiliate of the
Seller has been obligated to contribute that would, or could reasonably
be expected to, subject the Assets to any material fine, penalty, tax or
liability of any kind.
(c) Except as set forth in Schedule 3.10, no act or omission has
occurred and no condition exists with respect to any employee benefit
maintained by the Seller or any current or former Affiliate of the
Seller that would, or could reasonably be expected to, subject the
Assets to any material fine, penalty, tax or liability of any kind. The
employee benefits of the Seller and of each current or former Affiliate
of the Seller have been administered in all material respects in
compliance with their terms and the requirements of all applicable laws
and regulations, including, without limitation, ERISA and the Code (in
the case of U.S. Plans) and all required contributions to each such
employee benefit have been made. For purposes of this Section 3.10(C),
employee benefits include, but are not limited to, U.S. Plans, plans
subject to Title IV of ERISA, plans subject to Section 412 of the Code,
retiree health or life insurance plans or programs, group health
benefits within the meaning of Section 4980B of the Code and
"multiemployer plans" as defined in Section 4001(a)(3) of ERISA.
(d) Except as set forth in Schedule 3.10, no U.S. Plan, Non-U.S.Plan,
documentation or agreement, summary plan description or written or oral
communication prohibits the amendment or termination of any U.S. Plan
or any Non-U.S.Plan except to the extent that any such prohibition
would not or could not be reasonably be expected to subject the Assets
to any material fine, penalty, tax or liability of any kind.(e) Each
of the U.S. Plans which is an "employee pension benefit plan" as such
term is defined in Section 3(2) of ERISA (collectively, the "U.S.
Retirement Plans") and any corresponding trust intended to qualify
under Sections 401(a) and 501(a) of the Code do so qualify.
(f) The Seller has heretofore delivered to the Buyer true and
complete copies of all the written U.S. Plans and Non-U.S. Plans and
written summaries of the oral U.S. Plans and Non-U.S. Plans and, where
applicable, related trusts, including all amendments, as well as, with
respect to each U.S. Plan required to file such report and description,
the most recent report on Form 5500 and summary plan description, and
the most recent IRS determination letter regarding each of the U.S.
Retirement Plans.
3.11Absence of Certain Changes or Events. Except as set forth on Schedule
3.11 attached hereto, since December 31, 1995, the Seller has not entered
into any transaction in respect of the Business which is not in the usual
and ordinary course of business, and, without limiting the generality of
the foregoing, with respect to the Business, the Seller has not, except in
the usual and ordinary course of business:
(i) mortgaged, pledged or subjected to lien, charge or other
encumbrance any of the Assets;
(ii) sold or purchased, assigned or transferred any of the Assets;
(iii) made any material amendment to or termination of any Contract or
done any act or omitted to do any act which would cause the breach of
any Contract;
(iv) suffered any casualty losses in respect of the Business, whether
insured or uninsured, and whether or not in the control of the Seller,
in excess of US$100,000 in the aggregate, or waived any rights of any
value;
(v) made any material changes in compensation of the Employees;
(vi) received notice of any litigation, warranty claim or products
liability claims relating to the Business which could reasonably be
expected to have a Material Adverse Effect; or
(vii) made any material change in the terms, status or funding condition
of any Plan.
3.12 Intellectual Property.
(i) True, correct and complete copies of all licenses and other
agreements relating to the Intellectual Property have been previously
delivered by or on behalf of the Seller to the Buyer.
(ii) Except as otherwise disclosed in Schedule 3.12 attached hereto,
the Seller is the sole and exclusive owner of, or has a valid right to
use, all Intellectual Property and all designs, permits, labels and
packages used on or in connection therewith and has the valid right to
license or sub-license the Licensed Intellectual Property.
The Seller has received no notice of, and has no knowledge of any
basis for, a claim against it that the Intellectual Property or any of
the operations, activities, products or publications of the Business
infringes on any patent, trademark, trade name, copyright or other
property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or any property rights of others.
The Seller has no disputes with or claims against any third party for
infringement by such third party of the Intellectual Property.
3.13 Regulatory Approvals. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation (i) which
must be obtained or satisfied by the Seller in connection herewith and
(ii) which are necessary for the execution and delivery by the Seller
of this Agreement and the documents to be executed and delivered by
the Seller in connection herewith are set forth on Schedule 3.13
attached hereto and have been obtained and satisfied.
4. Representations of the Buyer
The Buyer represents and warrants to the Seller as follows:
4.1 Organization and Authority of Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York, and has requisite power and authority (corporate and
other) to own its properties and to carry on its business as now being
conducted. The Buyer has full power to execute and deliver this Agreement,
the Instrument of Assumption of Liabilities and all other agreements
contemplated hereby and to consummate the transactions contemplated hereby
and thereby. Certified copies of the Certificate of Incorporation and the
Bylaws of the Buyer, as amended to date, have been previously delivered to
the Seller, are complete and correct, and no amendments have been made
thereto or have been authorized since the date thereof.
4.2 Organization and Authority of Subsidiary. The Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of England and Wales, and has requisite power and authority (corporate
and other) to own its properties and to carry on its business as now being
conducted. The Subsidiary has full power to execute and deliver the
Instrument of Assumption of Liabilities and all other agreements
contemplated hereby and to consummate the transactions contemplated hereby
and thereby. Certified copies of the Memorandum and Articles of Association
of the Subsidiary, as amended to date, have been previously delivered to
the Seller, are complete and correct, and no amendments have been made
thereto or have been authorized since the date thereof.
4.3 Capitalization of the Buyer. On the date hereof, the Buyer's
authorized capital stock consists of 200,000,000 shares of Common Stock, of
which 21,289,663 shares are issued and outstanding. All of the outstanding
shares of capital stock, of the Buyer have been duly and validly issued and
are fully paid and nonassessable. Schedule 4.3 attached hereto accurately
sets forth the capitalization of the Buyer on the date hereof.
4.4 Authorization. The execution and delivery of this Agreement by the
Buyer, the execution and delivery of the agreements provided for herein by
the Buyer and the Subsidiary, and the consummation by the Buyer and the
Subsidiary of all transactions contemplated hereby, have been duly
authorized by all requisite corporate action. This Agreement and all such
other agreements and written obligations entered into and undertaken in
connection with the transactions contemplated hereby constitute the valid
and legally binding obligations of the Buyer and/or the Subsidiary (as the
case may be), enforceable against the Buyer and/or the Subsidiary (as the
case may be) in accordance with their respective terms. The execution,
delivery and performance of this Agreement by the Buyer, the execution,
delivery and performance of the agreements provided for herein by the Buyer
and/or the Subsidiary (as the case may be), and the consummation by the
Buyer and the Subsidiary of the transactions contemplated hereby and
thereby, will not, with or without the giving of notice or the passage of
time or both, (a) violate the provisions of any law, rule or regulation
applicable to the Buyer or the Subsidiary; (b) violate the provisions of
the Certificate of Incorporation or Bylaws of the Buyer or the Subsidiary;
(C) violate any judgment, decree, order or award of any court, governmental
body or arbitrator binding upon the Buyer of the Subsidiary; or (d)
conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Buyer or the Subsidiary pursuant to, any
indenture, mortgage, deed of trust or other agreement or instrument by
which the Buyer or the Subsidiary or any of their respective properties is
or may be bound. Schedule 4.4 attached hereto sets forth a true, correct
and complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Buyer and the
Subsidiary of the transactions contemplated by this Agreement.
4.5 Regulatory Approvals. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer or the Subsidiary and which are
necessary for the consummation of the transactions contemplated by this
Agreement have been obtained and satisfied.
4.6 Issuance of Consideration Shares and Earn-out Shares. The directors
of the Buyer have all necessary powers to issue the Consideration Shares
and the Earn-out Shares and to enter into this Agreement without any
further authorization, sanction or consent by the shareholders of the Buyer
or any class of them and there are no other consents required by the Buyer
for the issuance of the Consideration Shares and the Earn-out Shares which
have not been irrevocably and unconditionally obtained.
4.7 No Further Issues. Except as set forth in Schedule 4.3 and as
contemplated herein, the Buyer has not granted and is not a party to any
options, warrants, conversion privileges, preemptive rights, rights of
first refusal, or other rights presently outstanding to purchase any shares
of capital stock of the Buyer, or any options, warrants, agreements, or
similar rights calling for the issuance by the Buyer of any of its
securities, or obligations of the Buyer to purchase any issued and
outstanding shares of its capital stock. Except as described in Schedule
4.3 there are no agreements among the shareholders of the Buyer concerning
the purchase, sale or voting of any securities of the Buyer.
4.8 No Encumbrances. The Consideration Shares and the Earn-out Shares
will be issued free from all claims, equities, liens, charges and
encumbrances whatsoever and will be issued with all rights attaching and
accruing to the Common Stock.
4.9 Disclosure. The Buyer has previously delivered to the Seller copies
of the Buyer's most recent Annual and Quarterly Reports on Form 10-K and
10-Q, respectively (the "SEC Reports"). The Buyer, as of the date hereof,
has made all filings with the Commission that it is required to make under
the United States Securities Exchange Act of 1934, as amended. No
representation or warranty by the Buyer in this Agreement or in any Exhibit
hereto, or in any list, statement, document or information set forth in or
attached to any Schedule delivered or to be delivered pursuant hereto, or
any matterscontained or referred to in the SEC Reports or other filings by
the Buyer with theCommission and available for public inspection or which
have been or which would havebeen revealed by such an inspection, contains
or will contain any untrue statement of a material fact or omits or will
omit any material fact necessary in order to make the statements contained
therein not misleading.
5. Employees and Other Matters.
5.1 Offer to U.S. Employees. At the Closing, the Buyer shall, or shall
cause the Subsidiary to, make an offer of regular, full-time employment to
each U.S.Employee. The terms of such offer shall include (i) the payment of
annual salary or wages and the opportunity to receive bonus compensation
which is currently equivalent to the annual salary or wages and the
opportunity to receive bonus compensation provided to such U.S. Employee
immediately prior to the Closing Date and (ii) the provision of pension and
welfare benefits substantially comparable to the benefits being offered to
such U.S. Employee by the Seller on the date hereof. Notwithstanding the
foregoing, the Buyer or the Subsidiary, as the case may be, shall have
complete discretion to also offer alternative terms or conditions of
employment, compensation or benefits; provided, however, that such
alternative offer of employment, compensation or benefits is, taken as a
whole, substantially comparable to that which is provided to such Employee.
5.2 Transfer of Non-U.S. Employees. At the Closing, the Non-U.S.Employees
shall be transferred to the Buyer or the Subsidiary, as the case may be.
The terms of such transfer shall include (i) the payment of annual salary
or wages and the opportunity to receive bonus compensation which is
currently equivalent to the annual salary or wages and the opportunity to
receive bonus compensation provided to such Non-U.S. Employee immediately
prior to the Closing Date and (ii) the provision of pension and welfare
benefits substantially comparable to the benefits being offered to such
Non-U.S. Employee by the Seller on the date hereof. Notwithstanding the
foregoing, the Buyer or the Subsidiary, as the case may be, shall have
complete discretion to also offer alternative terms or conditions of
employment, compensation or benefits; provided, however, that such
alternative offer of employment, compensation or benefits is, taken as a
whole, substantially comparable to that which is provided to such Employee.
5.3 No Solicitation of Employees. For a period of one year after the
Closing Date, the Buyer shall not, and shall cause the Subsidiary not to,
make any offer of employment to any of the Seller's employees or employees
of any Affiliate of the Seller other than the Employees without the prior
written consent of the Seller.
5.4 Termination of Employees. In the event that the Buyer or the
Subsidiary terminates any Non-U.S. Employee (a "Redundant Employee") within
90 calendar days of the Closing Date, the Seller shall reimburse the Buyer
or the Subsidiary, as the case may be, for all severance benefits payable
to such Non-U.S. Employee; provided, however, that (i) in no event shall
the Seller reimburse the Buyer in respect of such severance benefits for
more than an aggregate of ten Redundant Employees and (ii) that the Seller
shall not reimburse the Buyer in respect of severance benefits paid by the
Buyer to any one Redundant Employee in excess of US$18,000. The Buyer
shall, and shall cause the Subsidiary to, notify the Seller prior to the
termination of any person to be made a Redundant Employee.
5.5 Employee Benefits. The Buyer shall, and shall cause the Subsidiary to,
cause each Employee to be provided with benefits under a new or existing
retirement plan (the "Buyer's Plan") which are, in the aggregate, provided
on a basis substantially consistent with the Buyer's normal practices.
Each Employee shall be credited with service with the Seller (immediately
prior to the Closing Date and as documented in the Employee's employment
records) for eligibility, participation, vesting and levels in and for the
Buyer's or the Subsidiary's, severance pay and retirement plans to the
extent such crediting does not cause the Employee to receive double
benefits. Additionally, the Buyer shall, and shall cause the Subsidiary to,
use reasonable efforts to procure that all pre-existing condition clauses
or waiting periods are waived with respect to healthcare benefit plans
(medical, dental and disability) and shall, and shall cause the Subsidiary
to, use reasonable efforts to procure that credit is given for deductibles
and out-of-pocket expenses in the year of transfer.
Notwithstanding the foregoing, but subject to the provisions of Sections
5.1, 5.2 and 5.4, the Buyer and the Subsidiary expressly reserve the right
to modify or terminate any benefit plan or program at any time or from time
to time after Closing.
5.6 Transfer of Benefits of Employees. The Buyer shall, and shall cause
the Subsidiary to, take any actions as may be necessary or appropriate
under all applicable laws and the terms of the Plans to establish the Buyer
or the Subsidiary, as the case may be, as having all rights and obligations
with respect to any of the Employees that are covered by the Plans. The
Seller shall obtain as of the Closing Date any and all consents from
trustees required to effect any transfer of any trust(s) related to
coverage of such employees under the Plans.
5.7 Consent of Seller to Transfer of Employees. The Seller hereby consents
to the hiring by the Buyer or the Subsidiary, as the case may be, of
Employees as contemplated by this Section 5 on the Closing Date. To the
extent that the employment of such Employees would constitute a breach of
any confidentiality or other similar agreement between the Seller and the
Buyer or the Subsidiary, as the case may be, or any of the Employees, the
Seller waives any claims or rights that the Seller or any Affi liate of the
Seller may have against the Buyer or the Subsidiary, as the case may be,
under any such agreement. The Seller agrees that before, on, and after the
Closing Date, the
Seller will cooperate with the Buyer or the Subsidiary, as the case may be,
to facilitate the enrollment of the Employees in employee benefits
sponsored by the Buyer or the Subsidiary, as the case may be.
5.8 Payroll. The Seller shall pay all Employees all wages to which they
are entitled through the Closing Date as of its regular pay date.
5.9 Indemnification. The Buyer shall indemnify and hold harmless the
Seller from any and all Losses which relate to or arise out of any claim by
any Employee with respect to actual, constructive termination of employment
or unfair dismissal by the Seller, the Buyer or the Subsidiary, as the case
may be, (whether arising from an event occurring prior to the Closing Date
or as a result of the consummation of the transactions contemplated by this
Agreement) which the Seller may incur pursuant to the provisions of any
applicable employment regulations or otherwise.
6. Other Agreements.
6.1 Closing Agreements. At the Closing, the parties shall enter into:
(i) a distribution agreement in substantially the form of
Exhibit C attached hereto (the "Distribution Agreement") pursuant to which
the Seller shall grant to the Buyer or the Subsidiary (A) the right to
distribute run-time and development licenses to end-users for PRO-IV,
(B) a license with respect to PRO-IV development tools and (C)
theSeller's standard end-user license with respect to all application
and operating software currently resident on any Inventory. All such
software shall be deemed licensed on a paid-up basis at the date hereof
for use on the equipment concerned. Support, upgrading or extension of
use of such software (if available) shall be subject to the Seller's
standard terms and conditions; and (ii) a registration rights
agreement, substantially in the form of Exhibit D attached hereto (the
"Registration Rights Agreement") pursuant to which the Buyer shall grant
to the Seller rights to (A) require the Buyer to effect the registration
of the Consideration Shares and Earn-out Shares held by the Seller and
(B) include any of the Consideration Shares and Earn-out Shares held by
the Seller in certain registration statements filed by the Buyer in
connection with the public sale of the Common Stock; and
(iii) a security agreement, substantially in the form of Exhibit E
attached hereto (the "Security Agreement"), pursuant to which the Buyer
or the Subsidiary grants to the Seller a valid first priority security
interest in the Assets securing the Buyer's obligations set forth in
Sections 2.2 and 10.3 and protecting the Seller against the occurrence
of certain events with respect to the Buyer.
6.2 Post-Closing Agreements. As soon as practicable after the Closing the
parties shall execute and deliver:
(i) a stock transfer form (the "Stock Transfer Form") in substantiallythe
form of Exhibit F attached hereto pursuant to which the Seller will sell
and the Buyer will, or cause the Subsidiary to, purchase 244 of the
issued and outstanding share capital of McDonnell Informatique S.A.
Prior to the deliverance of the Stock Transfer Form the non-Business
assets and related liabilities of McDonnell Informatique S.A. shall have
been hived off from McDonnell Informatique S.A to another entity
affiliated with the Seller. The representations and warranties of the
Seller set forth in Section 3 of this Agreement shall apply to McDonnell
Informatique S.A.; and
(ii) an agreement to sub-lease (the "Sub-Lease Agreement") pursuant to
which the Seller shall sublease to the Buyer or the Subsidiary certain
of the real property currently leased by the Seller in connection with
the Business. The Sub-Lease Agreement shall be based on the summary of
terms (the "Summary of Terms") set forth in Exhibit G attached hereto.
6.3 Development License. The Seller hereby grants to the Buyer a world-
wide non-exclusive non-transferrable fully paid up license to use Pro-IV,
on any hardware platform and for any number of internal users, solely for
internal purposes and solely for the purpose of developing software
applications for the banking industry. The Seller hereby agrees to provide
Pro-IV maintenance services as and to the extent requested by the Buyer on
such commercially reasonable negotiated terms as the Buyer and the Seller
may from timeto time agree.
6.4 Bulk Sales. The Buyer and the Seller hereby waive any requirements
for compliance with any procedures of the bulk sales or the bulk transfers
acts or laws of any or all of the states or other jurisdictions in which
the Assets are situated (or of any state or jurisdiction) which may be
asserted to be applicable to the transaction contemplated hereby.
7. Closing Deliveries of the Seller. The Buyer shall have received at or
prior tothe Closing each of the following documents (duly executed by the Seller
where necessary):
(a) the Bill of Sale;
(b) the Sub-Lease Agreements;
(c) the Distribution Agreement;
(d) such instruments of conveyance, assignment and transfer, inform and
substance reasonably satisfactory to the Buyer, as shall be appropriate to
convey, transfer and assign to, and to vest in, the Buyer or the
Subsidiary, as the case may be, good, clear, record and marketable title to
the Assets;
(e) all technical data, formulations, product literature and other
documentation relating to the Business;
(f) such contracts, files and other data and documents
pertaining to the Assets or the Business as the Buyer may reasonably request;
(g) a certificate of the Company Secretary of the Seller attesting to the
incumbency of the Seller's directors, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement;
(h) a cross receipt; and
(i) such other documents, instruments or certificates as the Buyermay
reasonably request.
8.Closing Deliveries of the Buyer. The Seller shall have received at or prior
to the Closing each of the following documents (duly executed by the Buyer or
the Subsidiary where necessary):
(a) certificates of the Secretary of State of the applicable state of
incorporation of the Buyer and the Subsidiary as to the legal existence and
good standing (including tax) of the Buyer and the Subsidiary.
(b) certificates of the Secretary of the Buyer and the Subsidiary
attesting to the incumbency of such party's officers, the authenticity of
the resolutions authorizing the transactions contemplated by this
agreement, and the authenticity andcontinuing validity of the charter
documents delivered pursuant to Section 4.1;
(c) the Instrument of Assumption;
(d) the Registration Rights Agreement;
(e) the Sub-Lease Agreements;
(f) the Distribution Agreement;
(g) the Security Agreement;
(h) a cross receipt; and
(i) such other documents, instruments or certificates as the Sellermay
reasonably request.
9. Indemnification.
9.1 By the Buyer and the Seller. The Buyer and the Seller each hereby
indemnifies and holds harmless the other party against any and all Losses
reasonably incurred by the Buyer or the Seller in connection with each and
all of the following:
(a) any breach by the indemnifying party of any representation or warranty
in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
indemnifying party contained in this Agreement or any other agreement,
instrument or document contemplated by this Agreement; and
(c) any misrepresentation contained in any statement, certificate or
schedule furnished by the indemnifying party pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement.
9.2 By the Seller. The Seller further agrees to indemnify and hold
harmless the Buyer from any and all Losses reasonably incurred by the
Buyer, in connection with each and all of the following:
(a) any claims against, or liabilities or obligations of, the Seller
notrelating primarily to the Business or not specifically assumed by the
Buyer pursuant to this Agreement;
(b) except to the extent provided in Section 5.9, the operation of the
Business prior to the Closing Date;
(c) any tax liabilities or obligations of the Seller with respect to the
Business for the period prior to the Closing Date; and
(d) any claims against, or liabilities or obligations of, the Seller with
respect to obligations under the Plans not specifically assumed by the
Buyer pursuant to this Agreement.
9.3 By the Buyer. The Buyer further agrees to indemnify and hold harmless
the Seller from any and all Losses reasonably incurred by the Seller in
connection with each and all of the following:
(a) the Assumed Liabilities on the Buyer's operation or conduct of the
Business after the Closing Date;
(b) any VAT (including any interest or penalties) determined to be payable
on the sale of the Assets or on any supply made or deemed to be made
under this Agreement; and (c) as provided in Section 5.9.
9.4 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the
"Indemnified Party") shall promptly notify the party from whom
indemnification is sought (the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim.
In the eventof any such claim for indemnification hereunder resulting from or
in connection with any claim or legal proceedings by a third-party, the
notice to the Indemnifying Party shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnified
Party shall not settle or compromise any claim by a third party for which
it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably
withheld, unless suit shall have been instituted against it and the
Indemnifying Party shall not have taken control of such suit after
notification thereof as provided in Subsection 9.4 of this Agreement.
9.5 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to
the Indemnified Party, assume the defense of any such claim or legal
proceeding if it acknowledges to the Indemnified Party in writing its
obligations to indemnify the Indemnified Party with respect to all elements
of such claim. The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at
its own expense. If the Indemnifying Party does not assume the defense of
any such claim or litigation resulting therefrom within 30 days after the
date such claim is made, (a) the Indemnified Party may defend against such
claim or litigation, in such manner as it may deem appropriate, including,
but not limited to, settling such claim or litigation, after giving notice
of the same to the Indemnifying Party, on such terms as the Indemnified
Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action,
with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party
defended such third party claim or the amount or nature of any such
settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend or
settle such third party claim in a reasonably prudent manner.
9.6 Payment of Indemnification Obligation. All indemnification by the
Buyer or the Seller hereunder shall be effected by payment of cash or
delivery of a cashier's or certified check in the amount of the
indemnification liability.
9.7 Survival of Representations; Claims for Indemnification. All
representations and warranties made by the parties herein or in any
instrument or document furnished in connection herewith shall survive the
Closing and any investigation at any time made by or on behalf of the
parties hereto. All such representations and warranties shall expire on
the first anniversary of the Closing Date, except for (a) claims, if any,
asserted in writing prior to such first anniversary, which shall survive
until finally resolved and satisfied in full and (b) claims with respect to
taxes of the Business prior to the Closing Date, which shall survive until
the expiration of the applicable statute of limitations. All claims and
actions for indemnity pursuant to this Section 9 for breach of any
representation or warranty shall be asserted or maintained in writing by a
party hereto on or prior to the first anniversary of the Closing Date.
9.8 Limitation of Liability. Anything contained herein to the contrary
notwithstanding, the indemnification liability of the Buyer and Seller for
Losses shall be subject to the following limitations:
(a) the Indemnifying Party shall not be required to indemnify the
Indemnified Party with respect to any claim for indemnification unless
and until (i) the aggregate amount of all Losses incurred by the
Indemnified Party exceeds US$100,000 and then only to the extent that
such aggregate exceeds US$100,000 and (ii) the amount of any individual
claim exceeds US$10,000; and
(b) the Indemnifying Party shall not be required to indemnify the
Indemnified Party with respect to any claim for indemnification pursuant
to Section 9.1(a) if it can be shown that the Indemnified Party knew
prior to the Closing of the breach, noncompliance, nonperformance or
nonfulfillment giving rise to such claim; and (C) the maximum aggregate
amount of out-of-pocket liability of the Indemnifying Party to the other
for indemnification with respect to Losses shall be
(i) US$5,000,000, where the Buyer is the Indemnifying Party and (ii) an
amount equal to 2,000,000 multiplied times the market price of the
common stock of the Buyer on the Closing Date, where the Seller is the
Indemnifying Party. The Seller may satisfy its liability to the Buyer
pursuant to this sub-section (x) in cash, or (y) by forfeiting its right
to the Consideration Shares and/or the Earn-out Shares, with the value
of such shares to be calculated by the market price of the common stock
of the Seller on the date that the amount of the claim is finally
established.
10. Post-Closing Agreements.
10.1 Seller Representative on Buyer Board of Directors.
(a) Observation of Board Meetings. At Closing, the Buyer shall invite one
representative (the "Seller Representative") of the Seller (who shall be
selected in the sole discretion of the Seller) to attend all meetings of
the Board of Directors of the Buyer in a non-voting observer capacity
and, in this respect, shall provide the Seller Representative copies of
all notices, minutes, consents and other materials that it provides to
its directors; provided, however, that the Seller Representative shall
agree to hold in confidence and trust and to act as a fiduciary with
respect to all information so provided.
(b) Appointment of Director. At any time after six months following the
Closing Date, the Buyer agrees, at the request of the Seller, to take
all actions which are necessary or appropriate to nominate and have
elected one director designated by the Seller who is reasonably
acceptable to the Board of Directors (the "Seller Director"). Further,
the Buyer agrees to take all actions which are necessary or appropriate
to ensure that a director so proposed by the Seller may serve on the
Board of Directors of the Buyer. The Seller shall pay the reasonable
travel and lodging expenses incurred by such designee in attending board
meetings. If at any time after May 30, 1999, the Seller, together with
any of its Affiliates, fails to hold in the aggregate at least 100,000
shares of Common Stock, the Seller Director shall resign from the Board
of Directors of the Buyer and the Seller shall no longer have any right
to nominate or have elected a director designated by it to serve on the
Board of Directors of the Buyer.
10.2 Confidential Information.
(a) The Seller hereby recognizes and confirms that, except with respect to
knowledge and information that do not relate primarily to the Business,
including but not limited to PRO-IV, (i) all knowledge and information
that the Seller and its officers, directors and personnel hold prior to
the Closing Date, relating to either the IBS Software or the Business,
shall be transferred to and become the property of the Buyer or the
Subsidiary, as the case may be, as of the Closing Date pursuant to the
terms of this Agreement and (ii) the Seller and its officers, directors
and personnel shall not retain any additional copies or examples of such
knowledge or information. However, in the event that any such knowledge
or information is unavoidably retained by the Seller or any of its
officers, directors or personnel, Seller shall ensure that it and each
of its officers, directors and personnel shall hold such knowledge and
information in confidence to the same extent that it guards its own
confidential information and shall not disclose, publish or make use of
the same, without the prior written consent of the Buyer. The
obligations of this Section 10.2(a) shall not apply with respect to any
particular portion of such knowledge or information (i) if the Seller
can show that (A) it was in the public domain on the Closing Date, or
(B) it entered the public domain through no fault of the Seller
subsequent to the Closing Date, or (ii) when it is communicated by the
Buyer to a third party free of any obligation of confidence.
(b) The Buyer shall, and shall cause the Subsidiary to, ensure that it and
each of its officers, directors and personnel holds all knowledge and
information regarding the Seller (excluding information solely relating
to the Business) and its officers, directors and personnel obtained in
connection with their review of the Business for purposes of
consummating the transactions contemplated in this Agreement in
confidence to the same extent that it guards its own confidential
information and shall not disclose, publish or make use of the same,
without the prior written consent of the Seller. The obligations of
this Section 10.2(b) shall terminate with respect to any particular
portion of such knowledge and information (i) when the Seller can show
that (A) it was in the public domain on the Closing Date, or (B) it
entered the public domain through no fault of the Seller subsequent to
the Closing Date, or (ii) when it is communicated by the Seller to a
third party free of any obligation of confidence.
(C) Each of the Seller and the Buyer agrees that the remedy at law for any
breach of this Section 10.2 would be inadequate and that each of the Seller and
the Buyer shall be entitled to injunctive relief in addition to any other remedy
it may have upon breach of any provision of this Section 10.2.
10.3 Conduct of Business Post-Closing. During the period commencing from the
Closing Date through and including April 30, 1999 (the "Covenant Period"),
the Buyer acknowledges that it shall, and shall cause the Subsidiary to,
conduct the Business diligently and use its best commercial efforts to
market and promote the IBS Software. The relevant portions of the audited
financial statements of the Buyer or the Subsidiary, as the case may be,
during the Covenant Period, to the extent such audited financial statements
relate to the Business, shall be adjusted to exclude the effect of any
actions taken by the Buyer or the Subsidiary, as the case may be, during
the Covenant Period which are (i) outside the ordinary course of business
and (ii) which have a material adverse impact on the calculation of the
Qualifying IBS Revenue. The Buyer further agrees that it will not, and
will cause the Subsidiary not to, take action during the Covenant Period,
without prior notification to the Seller, that is likely to have the effect
of (i) delaying Qualifying IBS Revenue from the Covenant Period to any
future period or (ii) accelerating expenses from any future period to the
Covenant Period. Notwithstanding the foregoing, the Buyer shall no longer
be obliged to comply with this Section 10.3 upon the delivery by the Buyer
to the Seller of all the Consideration Shares and the Earn-out Shares.
10.4 Sharing of Data. The Seller shall have the right for a period of three
years following the Closing Date to have reasonable access to such books,
records and accounts, including financial and tax information,
correspondence, production records, employment records and other similar
information as are transferred to the Buyer or the Subsidiary, as the case
may be, pursuant to the terms of this Agreement for the limited purposes of
concluding its involvement in the Business prior to the Closing Date and
for complying with its obligations under applicable securities, tax,
environmental, employment or other laws and regulations. The Buyer or the
Subsidiary, as the case may be, shall have the right for a period of three
years following the Closing Date to have reasonable access to those books,
records and accounts, including financial and tax information,
correspondence, production records, employment records and other records
which are retained by the Seller pursuant to the terms of this Agreement to
the extent that any of the foregoing relates to the Business or is
otherwise needed by the Buyer or the Subsidiary, as the case may be, to
comply with its obligations under applicable securities, tax,
environmental, employment or other laws and regulations.
10.5 Post-Closing Cooperation. The Seller and the Buyer agree that from
and after the Closing Date they shall cooperate fully with each other to
facilitate the transfer of the Assets from the Seller to the Buyer or the
Subsidiary, as the case may be, and the operation thereof by the Buyer or
the Subsidiary, as the case may be.
10.6 Collection of Accounts Receivable. The Buyer agrees that it shall,
and shall cause the Subsidiary to, forward promptly to the Seller any
monies, checks or instruments received by either of them after the Closing
Date with respect to the accounts, accounts receivable, accrued revenue,
notes and notes receivable existing on the Closing Date which are payable
to the Business. The Buyer shall, and shall cause the
Subsidiary to, provide to the Seller such reasonable assistance as the Seller
may request with respect to the collection of any such accounts receivable.
10.7 Cooperation in Litigation. Each party hereto will fully cooperate
with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against
or by such party relating to or a rising out of the Business prior to or
after the Closing Date (other than litigation arising out the transactions
contemplated by this Agreement). The party requesting such cooperation
shall pay the out-of-pocket expenses (including legal fees and
disbursements) of the party providing such cooperation and of its officers,
directors, employees and agents reasonably incurred in connection with
providing such cooperation, but shall not be responsible to reimburse the
party providing such cooperation for such party's time spent in such
cooperation or the salaries or costs of fringe benefits or similar expenses
paid by the party providing such cooperation to its officers, directors,
employees and agents while assisting in the defense or prosecution of any
such litigation or proceeding.
10.8 Filings. Each party hereto will cooperate with the other in the
provision of all information reasonably required by such party in respect
of any filings with any governmental body or stock exchange.
10.9 Hop Exchange Premises. Within four weeks of the date hereof, the
Buyer shall use its best efforts to sub-let or surrender the lease in
respect of the Hop Exchange Premises as soon as practicable, including but
not limited to making such premises available to prospective sub-tenants
and entering into negotiations for the surrender of the lease of such
premises. The Buyer shall remit to the Seller as soon as practicable any
amounts received by the Buyer from any sub-tenant of such premises or an
amount equal to the difference between the outstanding rent payable by the
Buyer to the landlord in respect of such premises and the surrender value
of such premises.
10.10 Non-competition Agreement. For a period of three (3) years after the
Closing Date, neither the Seller nor any Affiliate thereof shall develop,
market or sell any product which has the same or substantially the same
form, function and primary applications as the IBS Software, taken as a
whole, and is intended to compete with the IBS Software.
11. Transfer and Sales Tax.
Notwithstanding any provisions of law imposing the burden of such taxes on the
Seller or the Buyer, as the case may be, the Buyer shall be responsible for and
shall pay
(a) all sales, use, value added, transfer, documentary stamp or similar
taxes, and
(b) all governmental charges, if any, upon the sale or transfer of any of
the Assets hereunder. If the Buyer shall fail to pay such amounts on a
timely basis, the Seller may pay such amounts to the appropriate
governmental authority or authorities, and the Buyer shall promptly
reimburse the Seller for any amounts so paid by the Seller.
12. Dispute Resolution.
12.1 General. In the event that any dispute should arise between the Buyer
and the Seller with respect to any matter covered by this Agreement, the
Buyer and the Seller shall resolve such dispute in accordance with the
procedures set forth in this Section 12.
12.2 Consent of the Parties. In the event of any dispute between the
parties with respect to any matter covered by this Agreement, the parties
shall first use all reasonable efforts to resolve such dispute between
themselves. If the parties are unable to resolve the dispute within thirty
(30) calendar days after the commencement of efforts to resolve the
dispute, the dispute will be submitted to arbitration in accordance with
Section 12.3, which shall be the exclusive remedy for disputes.
12.3 Arbitration.
(a) Either the Buyer or the Seller may submit any matter referred to
in Section 12.1 to arbitration by notifying the other party hereto, in
writing, of such dispute. Within ten (10) days after receipt of such
notice, the Buyer and the Seller shall designate in writing one
arbitrator to resolve the dispute; provided, that if the parties
hereto cannot agree on an arbitrator within such 10-day period, the
arbitrator shall be selected by the London Court of International
Arbitration. The arbitrator so designated shall not be an employee,
consultant, officer, director or stockholder of any party hereto or
any affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Seller shall meet, at which time the
Buyer and the Seller shall be required to set forth in writing all
disputed issues and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which shall be no
later than thirty (30) days after the submission of written proposals
pursuant to Section 12.3(b), to discuss each of the issues identified
by the Buyer and the Seller. Each such party shall have the right to
be represented by counsel. The arbitration shall be governed by the
rules of the London Court of International Arbitration; provided, that
the arbitrator shall have sole discretion with regard to the
admissibility of evidence.
(d) The arbitrator shall use his or her best efforts to rule on each
disputed issue within thirty (30) days after the completion of the
hearings described in Section 12.3(C). The determination of the
arbitrator as to the resolution of any dispute shall be binding and
conclusive upon all parties hereto. All rulings of the arbitrator
shall be in writing and shall be delivered to the parties hereto.
(e) The prevailing party in any arbitration shall be entitled to an
award of reasonable attorneys' fees incurred in connection with the
arbitration. The non-prevailing party shall pay such fees, including
investigation costs incurred by the prevailing party in such
proceedings, together with the fees of the arbitrator and the costs
and expenses of the arbitration.
(f) Any arbitration pursuant to this Section 12 shall be conducted in
London, England. Any arbitration award may be entered in and enforced
by any court having jurisdiction thereover and shall be final and
binding upon the parties.
(g) Notwithstanding the foregoing, nothing in this Section 12 shall
be construed as limiting in any way the right of a party to seek
injunctive relief under Section 10.2(C) with respect to any actual or
threatened breach of this Agreement, from a court of competent
jurisdiction.
13. Brokers.
13.1 For the Seller. The Seller represents and warrants that it has not
engaged any broker or finder (other than Southport Partners) or incurred
any liability for brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. The
Seller agrees to pay all fees, expenses and other compensation owed to
Southport Partners. The Seller agrees to indemnify and hold harmless the
Buyer against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Seller.
13.2 For the Buyer. The Buyer agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on its behalf in connection with the
transactions contemplated by this Agreement. The Buyer agrees to indemnify
and hold harmless the Seller against any claims or liabilities asserted
against it by any person acting or claiming to act as a broker or finder on
behalf of the Buyer.
14. Notices.
Any notices or other communications required or permitted hereunder shall be
sufficiently given if delivered personally or sent by telex, federal express,
registered or certified mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice:
To the Seller: McDonnell Information Systems Group plc
Maylands Park
Boundary Way
Hemel Hempstead
Hertfordshire HP2 7HU
Attention: Company Secretary
Fax number: (44) (1442) 274 018
With a copy to: Brobeck Hale and Dorr International
Veritas House
125 Finsbury Pavement
London EC2A 1NQ
Attention: Donald J. Guiney, Esq.
Fax number: (44) (171) 638 5888
To the Buyer: Management Technologies, Inc.
630 Third Avenue
New York
New York 10017
USA
Attention: Peter Morris
Fax number: (212) 557-6967
WITH COPIES TO:
BARATTA & GOLDSTEIN
597 Fifth Avenue
New York, NY 10017
USA
Attention: Joseph P. Baratta, Esq.
Fax number: (212) 750-8297
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; (b) on the
following day, if sent by facsimile transmission, or (C) three business days
after being sent, if sent by registered or certified mail.
15. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that neither party
may assign its respective obligations hereunder without the prior written
consent of the other party; provided, however, that the Buyer may assign this
Agreement, and its rights and obligations hereunder, to one or more Affiliates
of the Buyer. If the Buyer assigns any of its rights, interests and/or
obligations hereunder, to one or more Affiliates of the Buyer, then, unless the
context otherwise requires, all references herein to the Buyer shall mean and
include the such Affiliate(s). Any assignment in contravention of this
provision shall be void. No assignment shall release the Buyer from any
obligation or liability under this Agreement.
16. Entire Agreement; Amendments; Attachments.
16.1 This Agreement, all Schedules and Exhibits hereto, and all agreements
and instruments to be delivered by the parties pursuant hereto represent
the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and
written and all contemporaneous oral negotiations, commitments and
understandings between such parties. The Buyer and the Seller, by the
consent of their respective Boards of Directors, or officers authorized by
such Boards, may amend or modify this Agreement, in such manner as may be
agreed upon, by a written instrument executed by the Buyer and the Seller.
16.2 If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provision of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
17. EXPENSES.
Except as otherwise expressly provided herein, the Buyer and the Seller shall
each pay their own expenses in connection with this Agreement and the
transactions contemplated hereby.
18. LEGAL FEES.
In the event that legal proceedings are commenced by the Buyer against the
Seller, or by the Seller against the Buyer, in connection with this Agreement or
the transactions contemplated hereby, the party or parties which do not prevail
in such proceedings shall pay the reasonable attorneys' fees and other costs and
expenses, including investigation costs, incurred by the prevailing party in
such proceedings.
19. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to the conflict of laws provisions
thereof (and not including the United Nations Convention on Contracts for the
Internat ional Sale of Goods).
20. SECTION HEADINGS.
The section headings are for the convenience of the parties and in no way alter,
modify, amend, limit, or restrict the contractual obligations of the parties.
21. SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
22. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which shall be one and the same
document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of and on the date first above written.
SELLER:
McDONNELL INFORMATION SYSTEMS
GROUP PLC
BY /S/ JOHN KLEIN
John Klein
Director
BUYER:
MANAGEMENT TECHNOLOGIES, INC.
By: /s/ Peter Morris
PETER MORRIS