TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND CONSTRUCTION............................................................................ 1
1.1 Definitions..................................................................................... 1
1.2 Interpretation and Construction................................................................. 10
ARTICLE 2 ASSETS AND LIABILITIES.................................................................................. 11
2.1 Acquired Assets................................................................................. 11
2.2 Excluded Assets................................................................................. 11
2.3 Assumed Liabilities............................................................................. 12
2.4 Excluded Liabilities............................................................................ 12
2.5 Dispute Regarding Acquired Assets............................................................... 12
ARTICLE 3 CLOSING AND PURCHASE PRICE.............................................................................. 13
3.1 Closing......................................................................................... 13
3.2 Purchase Price.................................................................................. 14
3.3 Closing Date Deliveries of Seller............................................................... 14
3.4 Closing Date Deliveries of Buyer................................................................ 15
3.5 Transfer of Employees........................................................................... 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER................................................................ 16
4.1 Organization.................................................................................... 16
4.2 Authorization................................................................................... 16
4.3 Noncontravention................................................................................ 17
4.4 Consents........................................................................................ 17
4.5 Contracts....................................................................................... 17
4.6 Seller Subsidiaries............................................................................. 17
4.7 Governmental Authorizations..................................................................... 18
4.8 Listed Company Filings.......................................................................... 18
4.9 Business Financial Statements................................................................... 18
4.10 Support Contracts............................................................................... 18
4.11 Absence of Certain Changes or Events............................................................ 19
4.12 Absence of Undisclosed Liabilities.............................................................. 20
4.13 Brokers' and Finders' Fees...................................................................... 20
4.14 Compliance with Laws............................................................................ 21
4.15 Title to Property; Condition of Property; Absence of Liens...................................... 21
4.16 Intellectual Property........................................................................... 22
4.17 Litigation...................................................................................... 26
4.18 Restrictions on Business Activities............................................................. 27
4.19 No Liquidation, Insolvency or Winding-Up........................................................ 27
4.20 Absence of Powers of Attorney................................................................... 28
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4.21 Bulk Transfer Laws.............................................................................. 28
4.22 Tax Returns and Audits.......................................................................... 28
4.23 Customers and Suppliers......................................................................... 29
4.24 Insurance....................................................................................... 29
4.25 Employee Matters................................................................................ 29
4.26 Environmental Matters........................................................................... 31
4.27 Transactions with Affiliates.................................................................... 31
4.28 Acquired Assets................................................................................. 32
4.29 Complete Copies of Materials.................................................................... 32
4.30 Representations Complete........................................................................ 32
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER................................................................. 32
5.1 Organization.................................................................................... 32
5.2 Authorization................................................................................... 32
5.3 Noncontravention................................................................................ 33
5.4 Consents........................................................................................ 33
ARTICLE 6 COVENANTS AND AGREEMENTS................................................................................ 33
6.1 Conduct of Seller Prior to the Closing.......................................................... 33
6.2 Notice of Certain Events........................................................................ 35
6.3 No Solicitation................................................................................. 36
6.4 Access to Information........................................................................... 36
6.5 Confidential Information........................................................................ 37
6.6 Public Disclosure............................................................................... 37
6.7 Consents........................................................................................ 37
6.8 Reasonable Efforts.............................................................................. 38
6.9 Employee Matters................................................................................ 39
6.10 Covenant Not to Solicit......................................................................... 39
6.11 Transition Planning; Transition................................................................. 40
6.12 Additional Financial Statements................................................................. 40
6.13 Insurance Claims................................................................................ 40
6.14 Mail Handling................................................................................... 40
6.15 Additional Documents, Further Assurances and Cooperation; Power of Attorney..................... 41
6.16 Transfer Taxes.................................................................................. 41
6.17 Transfer of Technology.......................................................................... 41
6.18 Allocation of Purchase Price.................................................................... 42
6.19 Obligations of Buyer Subsidiaries and Seller Subsidiaries....................................... 42
6.20 Amendment or Termination of Certain Contracts................................................... 42
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6.21 Joint Development Agreement..................................................................... 42
6.22 Financial Statements............................................................................ 42
ARTICLE 7 CONDITIONS TO THE CLOSING............................................................................... 42
7.1 Conditions to Each Party's Obligation........................................................... 42
7.2 Condition to Buyer's Obligation................................................................. 43
7.3 Condition to Seller's Obligation................................................................ 45
ARTICLE 8 SURVIVAL AND INDEMNIFICATION............................................................................ 46
8.1 Survival........................................................................................ 46
8.2 Indemnification................................................................................. 46
8.3 Limitations on Indemnification.................................................................. 47
8.4 Escrow Arrangements............................................................................. 47
8.5 Indemnification Procedure....................................................................... 48
8.6 Third Party Claims.............................................................................. 49
8.7 Escrow Agent's Duties........................................................................... 49
ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER....................................................................... 51
9.1 Termination..................................................................................... 51
9.2 Procedure for and Effect of Termination......................................................... 52
9.3 Amendment....................................................................................... 52
9.4 Extension; Waiver............................................................................... 53
ARTICLE 10 MISCELLANEOUS.......................................................................................... 53
10.1 Notices......................................................................................... 53
10.2 Entire Agreement................................................................................ 54
10.3 No Third Party Beneficiaries.................................................................... 54
10.4 Headings........................................................................................ 55
10.5 Severability.................................................................................... 55
10.6 Governing Law................................................................................... 55
10.7 Consent to Jurisdiction......................................................................... 55
10.8 Waiver of Jury Trial............................................................................ 55
10.9 Assignment...................................................................................... 56
10.10 Counterparts.................................................................................... 56
10.11 Fees and Expenses............................................................................... 56
10.12 Specific Performance............................................................................ 56
10.13 Exhibits and Schedules.......................................................................... 56
10.14 Other Remedies.................................................................................. 56
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of February 25, 2003 by and between Overture Services, Inc., a Delaware
corporation ("Buyer"), Fast Search & Transfer ASA, an organization organized
under the laws of Norway ("Seller", and together with Seller Subsidiaries as
defined in Section 1.1(bbbb), the "Seller Group"), and U.S. Bank, National
Association, as escrow agent ("Escrow Agent"). Certain capitalized terms used
herein shall have the meanings given to them in ARTICLE 1.
RECITALS
A. Seller is engaged in the Business (as defined below).
B. Buyer desires to purchase from Seller and Seller desires to
sell to Buyer, the assets related to the Business as set forth in this
Agreement; Seller and Buyer desire that Seller license back certain rights
thereto; and Buyer desires to assume certain liabilities of Seller related to
the Business, all in consideration of the Purchase Price and on the terms and
conditions set forth herein and in the Ancillary Agreements (the "Acquisition").
C. Concurrently with the execution and delivery of this
Agreement, and as a material inducement to Buyer and Seller to enter into this
Agreement, Buyer and Seller are entering into the Transition Services Agreement,
Intellectual Property License Agreement, and the Interim Commercial Hosting
Agreement, all of which agreements shall be effective upon the Closing.
D. In connection with the Acquisition, Buyer on the one hand,
and Seller on the other hand, desire to make certain representations,
warranties, covenants and other agreements.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties, covenants,
conditions and other agreements herein contained and contained in the Ancillary
Agreements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. The following capitalized terms shall have the
meanings set forth below:
(a) "Acquired Assets" shall have the meaning set forth in
Section 2.1.
(b) "Acquisition" shall have the meaning set forth in the
recitals.
(c) "Agreement" shall have the meaning set forth in the
preamble.
(d) "Ancillary Agreements" shall mean the General
Assignment, Assumption and Bill of Sale, the Interim Commercial Hosting
Agreement, the Intellectual Property License Agreement, and the Transition
Services Agreement.
(e) "Asset Rep Schedule" shall mean any of Schedule
1.1(bbbb), Section 4.7 of the Disclosure Schedule, Schedule 4.9, Schedule 4.10,
Section 4.15(a) of the Disclosure Schedule, Section 4.15(c) of the Disclosure
Schedule, Section 4.16(a) of the Disclosure Schedule, Section 4.16(b)(i) of the
Disclosure Schedule, Section 4.16(h) of the Disclosure Schedule, Section 4.23 of
the Disclosure Schedule, Section 4.24 of the Disclosure Schedule, or Section
4.25(a) of the Disclosure Schedule.
(f) "Assumed Liabilities" shall have the meaning set
forth in Section 2.3.
(g) "Balance Sheet Date" shall mean December 31, 2002.
(h) "Base Price" shall mean Seventy Million Dollars
($70,000,000).
(i) "Basket Amount" shall mean Three Hundred and Fifty
Thousand Dollars ($350,000) in the aggregate.
(j) "Books and Records" shall mean all papers and records
(in paper or electronic format) in Seller Group's care, custody, or control
relating to the Business, including all purchasing and sales records, customer
and vendor lists, customer contact information, customer correspondence,
customer licensing and purchasing histories, accounting and financial records,
product documentation, product specifications, marketing requirement documents
and software release orders.
(k) "Business" shall mean the Seller Group's "Internet
Business Unit" consisting of its algorithmic web search and paid inclusion
services and its AlltheWeb.com URL and related business properties and
activities.
(l) "Business Employees" shall mean those employees of
the Seller Group identified on Schedule 1.1(l).
(m) "Business Financial Statements" shall mean the
unaudited balance sheet as of December 31, 2002 and the unaudited statements of
income, cash flows, and changes in shareholder's equity for the year ended
December 31, 2002.
(n) "Buyer" shall have the meaning set forth in the
preamble.
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(o) "Claim Certificate" shall mean a certificate signed
by an Indemnified Party, or any officer thereof: (i) stating that the
Indemnified Party has paid, sustained, incurred, or accrued, or reasonably
anticipates that it will have to pay, sustain, incur or accrue a Loss or Losses,
and (ii) specifying in reasonable detail the individual item(s) of Loss or
Losses included in the amount so stated, the date each such item was paid,
sustained, incurred, or properly accrued, or the basis for such anticipated
liability, and the nature of the misrepresentation or breach of warranty to
which such item is related.
(p) "Closing" shall have the meaning set forth in Section
3.1.
(q) "Closing Date" shall mean the date on which the
Closing occurs.
(r) "Closing Financial Statements" shall have the meaning
set forth in Section 6.12.
(s) "Code" shall mean the U.S. Internal Revenue Code of
1986, as amended, or any successor thereto.
(t) "Confidential Information" shall have the meaning set
forth in the Mutual Nondisclosure Agreement.
(u) "Conflict" shall have the meaning set forth in
Section 4.3(a).
(v) "Consent Required Contract" shall mean the
agreements, contracts, indentures, instruments, guarantees or other similar
agreements identified on Schedule 1.1(v) (which schedule shall be updated at the
Closing by Seller to reflect the removal of agreements, contracts, indentures,
instruments, guarantees or other similar agreements originally identified as of
the date of this Agreement on Schedule 1.1(v), but which have been moved to
Schedule 1.1(jjjj) as a Transferred Contract pursuant to Section 6.7) which
relate to the Business and which the Seller Group is willing to assign or
transfer to Buyer pursuant to this Agreement, but which are not transferable or
assignable without the consent of the other party or parties to such agreements,
contracts, indentures, instruments, guarantees or other similar agreements which
consent has not been obtained as of the date of this Agreement or the Closing,
as applicable.
(w) "Continuing Employees" shall mean any Business
Employee who becomes or, pursuant to the terms hereof, should become an employee
of Buyer as a result of the Closing.
(x) "Contract" shall mean any agreement, contract,
indenture, instrument, guarantee or other similar agreement, instrument or
commitment, franchise or license.
(y) "Copyrights" shall mean all copyrights, copyrights
registrations and applications therefor, including all copyrights subject to
protection under 17 U.S.C. Section 101, and all other rights corresponding
thereto throughout the world.
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(z) "Data Center Termination Costs" means fifty (50%) of
Losses incurred by Buyer in connection with termination, on or after nine months
following the Closing Date, of any Consent Required Contract or Transferred
Contract related to Seller's data center operations located in Sacramento,
California or London, England.
(aa) "Deferred Support Accrual" shall have the meaning set
forth in Section 4.10.
(bb) "Disclosing Party" shall have the meaning set forth
in the Mutual Nondisclosure Agreement.
(cc) "Disclosure Schedule" shall mean the schedule of
exceptions to the representations and warranties and the listing of information
required under or made by Seller in ARTICLE 4, which schedule is delivered by
Seller to Buyer on the date of this Agreement.
(dd) "Earn-Out" shall mean the additional amount of cash
to be paid by Buyer to Seller as part of the Purchase Price, on the terms and
conditions set forth in Schedule 3.2(b).
(ee) "Employee Plan" shall mean any plan, program, policy,
practice, contract, agreement or other material arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, subscription right awards, fringe
benefits or other employee benefits or remuneration of any kind, whether
written, unwritten or otherwise, funded or unfunded, including any of the
foregoing arising out of the Norwegian Working Environment Act of 1977 and
including each "employee benefit plan" within the meaning of Section 3(3) of
ERISA, which is or has been maintained, contributed to, or required to be
contributed to, by Seller for the benefit of any Business Employee, or with
respect to which the Seller Group has or may have any Liability to any Business
Employee.
(ff) "Environmental Permits" shall have the meaning set
forth in Section 4.26(c).
(gg) "Equipment" shall have the meaning set forth in
Section 4.15(c).
(hh) "Escrow Agent" shall have the meaning set forth in
the recitals, or any successor entity or permitted assign.
(ii) "Escrow Amount" shall mean twelve million seven
hundred fifty thousand dollars ($12,750,000).
(jj) "Escrow Fund" shall have the meaning set forth in
Section 8.4(a).
(kk) "Escrow Period" shall have the meaning set forth in
Section 8.4(b).
(ll) "Escrow Termination Date" shall have the meaning set
forth in Section 8.1.
(mm) "Exchange Act" shall mean the U.S. Securities
Exchange Act of 1934, as amended, or any successor thereto.
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(nn) "GAAP" shall mean, with respect to Buyer and Seller,
United States generally accepted accounting principles.
(oo) "General Assignment, Assumption and Bill of Sale"
shall mean that certain agreement executed by Buyer and Seller and delivered at
the Closing, the form of which is attached hereto as Exhibit A.
(pp) "Governmental Authorization" shall mean each consent,
license, permit, grant or other authorization issued to the Seller Group by a
Governmental Entity pursuant to which Seller currently operates or holds any
interest in the Acquired Assets.
(qq) "Governmental Entity" shall mean any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission.
(rr) "Hazardous Material" shall mean any amount of any
substance that has been designated by any Governmental Entity or by applicable
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including PCBs, asbestos, petroleum, and urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, other than office and janitorial supplies properly and safely
maintained.
(ss) "Hazardous Materials Activities" shall have the
meaning set forth in Section 4.26(b).
(tt) "Indebtedness" shall mean (i) any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or other similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances, (ii)
capital lease obligations, (iii) any balance deferred and unpaid for the
purchase price of any property, (iv) all indebtedness of others secured by a
lien on any asset, (v) outstanding checks that will be funded by borrowed money,
whether current or long-term, secured or unsecured, and (vi) to the extent not
otherwise included in the immediately preceding clauses, any guaranty of any
indebtedness of any other Person.
(uu) "Indemnified Parties" shall mean Buyer and its
officers, directors, affiliates and agents.
(vv) "IP" shall mean any Technology and Intellectual
Property Rights, including Registered Intellectual Property Rights.
(ww) "Intellectual Property License Agreement" shall mean
the intellectual property license agreement attached hereto as Exhibit B.
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(xx) "Intellectual Property Rights" shall mean any or all
of the following and all statutory and/or common law rights throughout the world
in, arising out of, or associated therewith: (i) all Patents; (ii) all Trade
Secret rights; (iii) all Copyrights, mask works, and mask work registrations and
applications, and any other rights in works of authorship; (iv) all industrial
designs and any registrations and applications therefor; (v) all Trademarks;
(vi) all rights in databases and data collections (including knowledge
databases, customer lists and customer databases); (vii) all rights in Software;
(viii) rights to Uniform Resource Locators, Web site addresses and domain names;
(ix) any similar, corresponding or equivalent rights to any of the foregoing.
(yy) "Interim Commercial Hosting Agreement" shall mean
that certain agreement executed and delivered by the parties concurrently with
this Agreement in the form set forth on Exhibit D hereto.
(zz) "Joint Development Agreement" shall mean an agreement
intended to be negotiated by Buyer and Seller and executed by them prior to the
Closing Date, which agreement is intended to be substantially on the terms set
forth in Schedule 1.1(zz).
(aaa) "Key Employees" shall mean those employees identified
on Schedule 1.1 (aaa)
(bbb) "Latent Liability" shall mean any Liability arising
out of any violation of law, breach of Contract or tort which violation, breach
or tort occurred prior to the Closing.
(ccc) "Lease Agreements" shall have the meaning set forth
in Section 4.15(a).
(ddd) "Liability" shall mean any and all debts, liabilities
and obligations, whether accrued, unaccrued, fixed, absolute, contingent,
matured, unmatured, determined, determinable, including those arising under any
law, claim, action, suit, arbitration, inquiry, proceeding or investigation by
any national, federal, state, municipal or local law or other government,
governmental, regulatory or administrative authority, agency or commission of
any court, tribunal or judicial or arbitral body and those arising under any
Contract or undertaking.
(eee) "Liens" shall mean any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind whatsoever in respect of
any asset, other than liens for Taxes not yet due and payable.
(fff) "Loss" shall mean any claim (including without
limitation by way of correspondence to responsible persons), loss, Liability,
damage, deficiency, cost or expense, including reasonable attorneys' fees and
expense of investigation and defense.
(ggg) "Material Adverse Effect" shall mean any change,
event or effect that has been or is reasonably expected to be materially adverse
to (i) the Acquired Assets (tangible or intangible), (ii) the Business or its
condition (financial or otherwise) or operations, (iii) the results of
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operations of the Seller Group related to the Business, or (iv) the Seller
Group's ability to consummate the transactions contemplated hereby.
(hhh) "Mutual Nondisclosure Agreement" shall mean that
certain mutual nondisclosure agreement dated as of August 15, 2001, as amended
on June 28, 2002, by and between Buyer and Seller.
(iii) "Obligations" shall have the meaning set forth in
Section 8.4(c)(ii).
(jjj) "Offer Letter" shall mean an offer letter of
"at-will" employment on Buyer's standard form, or in the case of all Business
Employees employed in Norway, the United Kingdom or Germany, a confirmation of
transfer of employment in accordance with applicable laws as those are referred
to in Section 3.5 below.
(kkk) "Offered Employees" shall mean those Business
Employees identified on Schedule 1.1(kkk) and all Business Employees employed in
Norway, the United Kingdom or Germany.
(lll) "Patents" shall mean all United States, Norwegian and
other international and foreign patents and utility models and applications
therefor, and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries, including
without limitation, invention disclosures and any rights therein.
(mmm) "Permitted Liens" shall have the meaning set forth in
Section 4.15(a).
(nnn) "Person" shall mean an individual, a partnership, a
limited liability company, a corporation, an association, a joint stock
corporation, a trust, a joint venture, an unincorporated organization, or a
Governmental Entity.
(ooo) "Possessed Assets" shall mean any (i) Patent, (ii)
Copyright for which a tangible embodiment is any Technology or other asset
delivered to Buyer or any Buyer Subsidiary in connection with the transactions
contemplated hereby or (iii) tangible asset delivered to Buyer or any Buyer
Subsidiary in connection with the transactions contemplated hereby.
(ppp) "Possessed Asset Schedule" shall mean any of Schedule
1.1(dddd), Schedule 1.1(llll) and Schedule 1.1(mmmm) hereto.
(qqq) "Products" shall mean the products of the Seller
Group which shall include "FAST Web Search 3.4" and "Partnersite 1.1", and any
and all derivatives or predecessors of all such products.
(rrr) "PTO" shall mean the United States Patent and
Trademark Office and the Norwegian Patent Office, or any successor thereto.
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(sss) "Purchase Price" shall mean the consideration to be
delivered by Buyer to Seller in connection with the Acquisition, which consists
of the Base Price plus the Earn-Out, if any.
(ttt) "Receiving Party" shall have the meaning set forth in
the Mutual Nondisclosure Agreement.
(uuu) "Registered Intellectual Property Rights" shall mean
all United States, Norwegian and other international and foreign: (i) Patents;
(ii) Trademarks; (iii) registered Copyrights and applications to register
Copyrights; (iv) domain name registrations; and (v) any other Intellectual
Property Rights that are the subject of an application, certificate, filing,
registration or other document issued, filed with or recorded by any
Governmental Entity.
(vvv) "Remaining Portion" shall have the meaning set forth
in Section 8.4(b).
(www) "Returns" shall have the meaning set forth in Section
4.22(a).
(xxx) "Securities Act" shall mean the U.S. Securities Act
of 1933, as amended.
(yyy) "Self-Executing Transferable Assets" shall mean any
and all Patents and Patent applications arising out of, relating to, or claiming
priority to, or from which a priority is claimed with respect to, any of the
Patents or Patent applications listed on Schedule 1.1(mmmm), whether or not
pending, issued, expired, abandoned or closed.
(zzz) "Seller" shall have the meaning set forth in the
preamble, and shall include, to the extent necessary and appropriate, the Seller
Subsidiaries.
(aaaa) "Seller Real Property" shall have the meaning set
forth in Section 4.15(a).
(bbbb) "Seller Subsidiaries" shall mean the domestic and
foreign subsidiaries of Seller listed on Schedule 1.1(bbbb), each of which owns
assets related to the Business and/or employs Business Employees.
(cccc) "Software" shall mean any and all computer software
and code, including algorithms, routines, assemblers, applets, compilers, source
code, object code, data (including image and sound data), design tools and user
interfaces, in any form or format, however fixed including source code listings
and documentation.
(dddd) "Tangible Assets" shall mean the tangible assets
identified on Schedule 1.1(dddd), which shall also set forth the date of
acquisition and original purchase price of each such asset.
(eeee) "Tax" and "Taxes" shall mean any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
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added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes as well as public imposts, fees and social
security charges (including health, unemployment and pension insurance),
together with all interest, penalties and additions imposed with respect to such
amounts and any obligation under any agreement or arrangement with any other
Person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(ffff) "Technology" shall mean all information and
technology, tangible copies, embodiments and things, in any media of any or all
of the following: (i) Software; (ii) inventions (whether or not patented or
patentable), improvements, and other technology, (iii) Trade Secrets; (iv)
databases, works of authorship, data compilations and technical data; (v) tools,
methodologies, processes, devices, prototypes, schematics, and hardware
development tools; but in each case, not the Intellectual Property Rights
therein.
(gggg) "Third Party IP" shall mean any Technology or
Intellectual Property Right of a third party or in the public domain (including
Open Source Software) or any modification or derivative thereof that was used
in, incorporated into, integrated or bundled with any Technology that is or was,
used in the Business, incorporated in, or used in the development or compilation
of any Product, or listed in Schedule 1.1(gggg).
(hhhh) "Trademarks" shall mean trade names, logos,
trademarks and service marks, trademark and service mark registrations and
applications.
(iiii) "Trade Secrets" shall mean trade secrets and other
know-how, show-how, technical data, techniques, or other confidential or
proprietary information.
(jjjj) "Transferred Contract" shall mean the agreements,
contracts, indentures, instruments, guarantees or similar agreements identified
on Schedule 1.1(jjjj) (which schedule shall be updated at the Closing by Seller
to reflect the addition of agreements, contracts, indentures, instruments,
guarantees or other similar agreements originally identified as of the date of
this Agreement on Schedule 1.1(v) as a Consent Required Contract but which have
been moved to Schedule 1.1(jjjj) pursuant to Section 6.7) which do not require
consent to assignment from a third party or for which consent to assignment from
a third party has been obtained prior to the Closing.
(kkkk) "Transferred IP" shall mean (i) the Transferred
Intellectual Property Rights and (ii) the Transferred Technology.
(llll) "Transferred Intellectual Property Rights" shall mean
(i) the Transferred Patents; (ii) the Transferred Trademarks; and (iii) all
other Intellectual Property Rights owned or transferable by Seller (1) embodied
by, or which would be infringed by the making, using, offering for sale,
selling, importing, copying, modifying, distributing or other exploitation of,
the Products, the Transferred Technology or operation of the Business; including
all Copyrights embodied by the Products; (2) related to, or necessary for, the
operation of the Business; or (3) listed or described in Schedule 1.1(llll)
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(mmmm) "Transferred Patents" shall mean (i) the Patents and
Patent applications listed on Schedule 1.1(mmmm), (ii) any and all Patents and
Patent applications arising out of, relating to, or claiming priority to, or
from which a priority is claimed with respect to, any of the Patents or Patent
applications listed on Schedule 1.1(mmmm), whether or not pending, issued,
expired, abandoned or closed, and (iii) any other Patent or Patent application
with a filing date prior to the anniversary of the Closing Date related to the
Business.
(nnnn) "Transferred Technology" shall mean all Technology
owned or transferable by Seller (other than the Licensed Technology) related to
the Business or the Acquired Assets, including all Technology listed on Schedule
1.1(nnnn). To the extent that any Software constitutes Transferred Technology,
all versions and releases of such Software, and the Software from which such
Software was derived, in both source and object code form, shall be included as
Transferred Technology.
(oooo) "Transferred Trademarks" shall mean all Trademarks
owned or transferable by Seller (i) related to the Business, the Products or the
Acquired Assets; or (ii) listed or described in Schedule 1.1(oooo).
(pppp) "Transfer Taxes" shall mean all sales, use,
value-added, gross receipts, excise, registration, stamp, duty, transfer and
other similar taxes and governmental fees.
(qqqq) "Transition Services Agreement" shall mean that
certain agreement executed and delivered by the parties on the date of this
Agreement and effective upon the Closing attached hereto as Exhibit C.
(rrrr) "Unsatisfied Claim Amount" shall have the meaning set
forth in Section 8.4(b).
1.2 Interpretation and Construction.
(a) All references in this Agreement to "Articles,"
"Sections," "Schedules" and "Exhibits" refer to the articles, sections,
schedules and exhibits of this Agreement, unless otherwise indicated.
(b) As used in this Agreement, neutral pronouns and any
variations thereof shall be deemed to include the feminine and masculine and all
terms used in the singular shall be deemed to include the plural, and vice
versa, as the context may require.
(c) The words "hereof," "herein" and "hereunder" and
other words of similar import refer to this Agreement as a whole, as the same
may from time to time be amended or supplemented, and not to any subdivision
contained in this Agreement.
(d) The word "including" when used herein is not intended
to be exclusive and means "including, without limitation."
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(e) The parties agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
(f) The "$" symbol refers to United States Dollars,
unless otherwise specified.
ARTICLE 2
ASSETS AND LIABILITIES
2.1 Acquired Assets. Subject to the terms and conditions set forth
in this Agreement, Seller hereby agrees at the Closing to sell, convey, transfer
and assign, or cause the Seller Group to sell, convey, transfer and assign, to
Buyer or one or more domestic or foreign subsidiaries of Buyer designated by
Buyer prior to the Closing ("Buyer Subsidiaries"), and Buyer hereby agrees to
purchase or cause Buyer Subsidiaries to purchase from the Seller Group all of
the Seller Group's rights, title and interest in and to the assets set forth
below, free and clear of any and all Liens (collectively, the "Acquired
Assets"):
(a) The Tangible Assets;
(b) The Transferred Intellectual Property Rights (other
than the Transferred Trademarks);
(c) The Transferred Trademarks and all goodwill of the
Business appurtenant thereto;
(d) The Transferred Technology;
(e) The Transferred Contracts;
(f) The Books and Records;
(g) All brochures, user manuals, graphics and art work
(in each case, in paper and electronic format) and UPC codes relating to the
Products; and
(h) All rights to recover past, present and future
damages for infringement or misappropriation of any of the Transferred
Intellectual Property Rights, or for breach of any of the Transferred Contracts.
2.2 Excluded Assets. Except as set forth in Section 2.1 the assets
of the Seller Group shall not be deemed to be Acquired Assets and shall be
excluded from the assets delivered by the Seller Group to Buyer or the Buyer
Subsidiaries at the Closing.
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2.3 Assumed Liabilities. As of the Closing, Buyer hereby agrees
that Buyer and/or one or more Buyer Subsidiaries as determined by Buyer will
assume, pay or discharge when due only the following obligations or liabilities
of the Seller Group (collectively, the "Assumed Liabilities"):
(a) Those executory obligations of the Seller Group under
the Transferred Contracts;
2.4 Excluded Liabilities. Except as provided in Section 2.3, Buyer
and the Buyer Subsidiaries shall not assume by virtue of this Agreement, and
shall have no liability or obligation for, any Liability of the Seller Group,
including:
(a) Any Indebtedness;
(b) Any Latent Liability;
(c) Any Liability which is past-due as of the Closing;
(d) Any Liability relating to, arising out of or
resulting from any Employee Plan
(e) All payments or entitlements which are due to be paid
prior to the Closing Date to the Continuing Employees in connection with their
employment (including, without prejudice to the generality of the foregoing, all
wages, other remuneration, holiday pay, pension contributions and taxation); and
all payments which are due to be paid prior to the Closing Date (including,
without prejudice to the generality of the foregoing, pension contributions,
insurance premiums and taxation) to any third party in connection with the
employment of any of the Continuing Employees;
(f) Except as set forth in Section 6.16 hereof, any
Liability for Taxes for, arising from or attributable to any taxable period or
portion thereof ending on or prior to the Closing Date (including the portion of
any real or personal property taxes or similar taxes attributable to such
period); and
(g) Any Liability to the extent arising from or related
to the Excluded Assets.
2.5 Dispute Regarding Acquired Assets
(a) At any time prior to the date that is twelve months
after the Closing Date, in the event that the representations and warranties of
Seller in Section 4.28 hereof or any Asset Rep Schedule may be inaccurate or
untrue in any respect, then if such inaccuracy or untruth could be corrected if
any Possessed Asset had been included on such Asset Rep Schedule or any
Possessed Asset Schedule, then Buyer shall have the right to amend any Possessed
Asset Schedule to include such omitted Possessed Asset and such amendment shall
have the same effect as if such Possessed Asset had been included on such
Possessed Asset Schedule as of the date hereof.
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(b) At any time prior to the date that is twelve months
after the Closing Date, Buyer shall have the right to notify Seller in writing
that the representations made by Seller in Section 4.28 hereof or in any Asset
Rep Schedule are or were not true and correct and that an additional transfer or
license of assets, rights, documents or items is necessary in light thereof (an
"Asset Dispute Notice"). If any inaccuracy or untruth in the representations and
warranties of Seller identified in any Asset Dispute Notice could be corrected
by a transfer of any asset other than a Possessed Asset to Buyer or a Buyer
Subsidiary, then the Seller Group shall take all appropriate action to effect
such a transfer of such asset to Buyer or a Buyer Subsidiary. Upon delivery of
an Asset Dispute Notice, Buyer and Seller shall negotiate in good faith in an
attempt to resolve the dispute within seven (7) days of such delivery. If the
parties are unable to resolve the dispute after good faith negotiation during
that period, either party may demand arbitration of the dispute and the dispute
shall be settled by arbitration conducted by three (3) arbitrators. Buyer and
Seller shall each select one arbitrator, and the two (2) arbitrators so selected
shall select a third arbitrator. The arbitrators shall set a limited time period
for resolution of the dispute, which time period shall not exceed 30 days
(unless determined unanimously by the arbitrators that such time period shall be
extended) and the arbitrators shall establish procedures designed to reduce the
cost and time for discovery while allowing the parties an opportunity, adequate
in the sole judgment of the arbitrators, to discover relevant information from
the opposing parties about the subject matter of the dispute. The arbitrators
shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys' fees and costs, to the same
extent as a court of law or equity, should the arbitrators determine that
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision of a
majority of the three (3) arbitrators as to the resolution of the dispute
regarding an Asset Dispute Notice and this Section 2.5 shall be binding and
conclusive upon the parties to this Agreement, and Buyer and Seller shall be
entitled to act in accordance with such decision. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall
set forth the award, judgment, decree or order awarded by the arbitrators.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction. Any such arbitration shall be held in Los Angeles County,
California under the rules then in effect of the American Arbitration
Association.
(c) Notwithstanding anything herein to the contrary,
nothing in this Section 2.5 shall affect Buyer's rights pursuant to ARTICLE 8
hereof.
ARTICLE 3
CLOSING AND PURCHASE PRICE
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto,
California commencing at 10:00 a.m., Pacific Time, on the date that is two (2)
business days following the satisfaction or written waiver of the conditions of
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Closing set forth in ARTICLE 7 hereof (other than those conditions which by
their terms are not to be satisfied until the Closing, but subject to the waiver
or fulfillment of those conditions), or such other date or location as the
parties may mutually determine.
3.2 Purchase Price. Payment of the Purchase Price by Buyer and/or,
as determined by Buyer, one or more Buyer Subsidiaries, will be made as follows:
(a) Base Price. At the Closing, Buyer and/or, as
determined by Buyer, one or more Buyer Subsidiaries, will, by transfer of
immediately available funds to a bank account designated in writing by Seller,
deliver the Base Price, less the Escrow Amount, to Seller.
(b) Earn-Out. Upon the satisfaction of the conditions set
forth in Schedule 3.2(b), Buyer and/or, as determined by Buyer, one or more
Buyer Subsidiaries, will deliver the aggregate amount of cash constituting the
Earn-Out, or such portion thereof as is specified in Schedule 3.2(b), to Seller.
3.3 Closing Date Deliveries of Seller. In addition to the
requirements of the Seller Group under Section 2.1, at the Closing, the Seller
Group shall deliver, or cause to be delivered, to Buyer at the Seller Group's
sole cost, in the manner and form, and to the locations, reasonably specified by
Buyer:
(a) The Acquired Assets, including (i) with respect to
the Transferred Contracts, a complete, accurate and legible copy of each such
Contract (including all amendments and supplements thereto); (ii) with respect
to the Transferred Contracts that were Consent Required Contracts as of the date
of this Agreement, a written consent by the third parties thereto to the
transfer and assignment of such Consent Required Contract to Buyer and/or, as
determined by Buyer, one or more Buyer Subsidiaries, and (iii) with respect to
all Software included in the Acquired Assets, such delivery to be made by
electronic means;
(b) The duly executed General Assignment, Assumption and
Bill of Sale executed by Seller and, as appropriate, Seller Subsidiaries, which
shall be in full force and effect;
(c) Duly executed assignments of the Transferred
Intellectual Property Rights, including assignments of the Transferred Patents,
which shall be in full force and effect;
(d) With respect to each of the Products or any item of
the Transferred Technology for which the Seller Group has filed a Copyright
registration with the United States Copyright Office, an assignment in form
reasonably acceptable to Buyer to record the transfer of such Copyright to Buyer
and/or, as determined by Buyer, one or more Buyer Subsidiaries, in the United
States Copyright Office. If the Seller Group has not registered such Copyright
prior to the Closing Date, Seller shall deliver to Buyer at the Closing an
application, in a form reasonably acceptable to Buyer, to register such
Copyright in the current version of each Product or other work, authorship or
license in the Transferred Technology with the United States Copyright Office,
to the extent such Product or Transferred Technology is disclosed in the
Disclosure Schedule or to the
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extent such application is otherwise reasonably requested by Buyer. Each such
application shall include the required extracts of the Product Software for such
application and shall specify Buyer (or an entity identified by Buyer) as the
owner by assignment of such Copyright;
(e) The duly executed certificate of Seller required by
Section 7.2(l).
(f) The opinion of legal counsel of Seller required by
Section 7.2(m);
(g) The duly executed Ancillary Agreements to which
Seller or any member of the Seller Group is a party that were not delivered on
the date of this Agreement, which Ancillary Agreements shall be in full force
and effect;
(h) Such other duly executed, good and sufficient
instruments of sale, conveyance, assignment or transfer, in form and substance
reasonably acceptable to Buyer's counsel, executed by one or more members of the
Seller Group, reasonably necessary so as to vest in Buyer good and valid title
in and to the Acquired Assets (including, with respect to any Acquired Assets
located or to be located in any jurisdiction, one or more bills of sale or
similar conveyance documents as may be required under the law of the applicable
jurisdiction to validly convey, assign and transfer such Acquired Assets).
(i) Patent prosecution files and all other documentation
relevant to the Transferred Intellectual Property Rights; and
(j) All Software included in the Transferred Technology
in electronic format.
3.4 Closing Date Deliveries of Buyer. At the Closing, Buyer
and/or, as determined by Buyer, one or more Buyer Subsidiaries, shall deliver,
or cause to be delivered, to Seller the following:
(a) The Base Price, less the Escrow Amount;
(b) The duly executed certificates of Buyer required by
Sections 7.3(d) and 7.3(e); and
(c) The duly executed General Assignment, Assumption and
Bill of Sale, which shall be in full force and effect; and
(d) The duly executed Ancillary Agreements to which Buyer
is a party that were not delivered on the date of this Agreement, which
Ancillary Agreements shall be in full force and effect.
3.5 Transfer of Employees. The Continuing Employees shall become
employees of Buyer, and/or, as determined by Buyer, one or more Buyer
Subsidiaries, with effect from the Closing Date. For those Continuing Employees
subject to the protections of Norwegian law, the
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transfer of such employment from the Seller Group to Buyer, and/or, as
determined by Buyer, one or more Buyer Subsidiaries, shall be subject to, and in
accordance with, the rules laid down by the Norwegian Working Environment Act of
1977, Chapter 12A, and Seller Group and Buyer undertake to perform all acts
necessary in order to facilitate said transfer, including but not limited to,
signing necessary documents, preparing and giving required presentations, and
attending meetings. For the German Continuing Employees subject to the
protections of German law, the transfer of such employment shall be subject to,
and in accordance with, the mandatory provisions of Section 613a German Civil
Code. For the United Kingdom Continuing Employees subject to the protections of
United Kingdom law, the transfer of such employment shall be subject to, and in
accordance with, the Transfer of Undertaking (Protection of employment)
Regulations 1981.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth or identified in the Disclosure Schedule
(referencing the appropriate section and paragraph numbers), Seller on behalf of
itself and each of its subsidiaries hereby represents and warrants to Buyer as
follows. Disclosures made under one subsection heading of the Disclosure
Schedule shall be deemed as disclosure relating to one or more other subsections
of this Agreement to the extent such disclosure would be appropriate in such
other subsection(s), provided that such disclosure is either cross-referenced or
the application of such disclosure to such other subsection(s) is clearly
evident from the substance, language and context of such disclosure.
4.1 Organization. Seller is duly organized, validly existing and
in good standing under the laws of Norway. Seller has all requisite power to own
and use the properties owned and used by it and to carry on the Business as
currently conducted and as currently proposed to be conducted. Seller is duly
qualified, licensed or admitted to do business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of the Business
makes such qualification, licensing or admission necessary. Seller has delivered
a true, correct and complete copy of its Articles of Association, as amended to
date and in full force and effect on the date hereof, to Buyer. The operations
now being conducted by Seller relating to the Business or the Acquired Assets
have not now and have never been conducted under any other name. Seller is not
in violation of any of the provisions of its Articles of Association.
4.2 Authorization. Seller has all requisite power and authority to
enter into this Agreement and each of the Ancillary Agreements to which it is a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each of the Ancillary Agreements to
which Seller is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of Seller, and no further action is required on the part of Seller or its
stockholders to approve, adopt or authorize this Agreement, any of the Ancillary
Agreements or any of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered
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by Seller, assuming the due authorization, execution and delivery by Buyer,
constitutes the valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.
4.3 Noncontravention.
(a) The execution and delivery of this Agreement and the
Ancillary Agreements to which Seller is a party does not, and the consummation
of the transactions contemplated hereby and thereby will not, (i) conflict with
any provision of Seller's Articles of Association, (ii) conflict with, or result
in (with or without notice or lapse of time or both) any violation of, or
default under, or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under (any
such event, a "Conflict") any Transferred Contract, Consent Required Contract or
Governmental Authorization or other material Contract to which Seller or any of
its subsidiaries is a party or applicable to Seller's or any of its
subsidiaries' properties or assets, or (iii) violate any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Business
or the Acquired Assets.
(b) The execution and delivery of this Agreement and any
Ancillary Agreements to which Seller or any Seller Subsidiary is a party, and
the consummation of the transactions contemplated hereby and thereby, does not
require any notice under any Transferred Contract or Consent Required Contract.
4.4 Consents. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity or any
third party to a Transferred Contract or Consent Required Contract (except
consent required to assign such Consent Required Contract to Buyer), is required
by, or with respect to, Seller or any of its subsidiaries in connection with the
execution and delivery of this Agreement or the Ancillary Agreements to which
Seller is a party or the consummation of the transactions contemplated hereby or
thereby.
4.5 Contracts. Seller and its subsidiaries are in compliance with
and have not breached, violated or defaulted under, any of the terms or
conditions of any Transferred Contract or Consent Required Contract, nor is
Seller or any of its subsidiaries aware of any event that would constitute such
a breach, violation or default (with or without the giving of notice, lapse of
time or both) nor to Seller's or any of its subsidiaries' knowledge is any party
to any Transferred Contract or Consent Required Contract other than Seller or
any of its subsidiaries in breach or default under any of the terms or
conditions thereof.
4.6 Seller Subsidiaries. Each Seller Subsidiary is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, and has the requisite power to own and use the
properties owned and used by it and to carry on the Business as currently
conducted and as currently proposed to be conducted. Each Seller Subsidiary has
the requisite power and authority to enter into each Ancillary Agreement to
which it is a party and to consummate the transactions contemplated by this
Agreement and such Ancillary Agreements. The execution and delivery by each
Seller Subsidiary of each Ancillary Agreement to which it is a party and the
consummation of the transactions contemplated by this Agreement and such
Ancillary Agreements
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has been duly authorized by all necessary action on the part of each Seller
Subsidiary, and no further action is required on the part of such Seller
Subsidiary to approve, adopt or authorize the transactions contemplated hereby
and thereby. Seller beneficially owns, directly or indirectly, all of the
outstanding securities of each Seller Subsidiary. Schedule 1.1(bbbb) contains a
full and complete list of all of Seller's subsidiaries, with specific reference
to the Seller Subsidiaries owning assets related to the Business, and no assets
of the Business, including the Acquired Assets, are owned by any entities other
than Seller and Seller Subsidiaries.
4.7 Governmental Authorizations. Section 4.7 of the Disclosure
Schedule lists each Governmental Authorization. Each such Governmental
Authorization is in full force and effect.
4.8 Listed Company Filings. Seller has complied in all material
respects with the requirements under the Norwegian Securities Act or the Stock
Exchange Act and regulations applicable to Seller's position as a company listed
on the Oslo Stock Exchange. The filings made by Seller in connection therewith
do not contain any untrue statement of a material fact and Seller has not
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements and other financial information
regarding Seller contained or referenced in such filings complied as to form in
all material respects with the applicable Norwegian rules and regulations with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated and fairly presented the consolidated
financial position of Seller and its consolidated subsidiaries as of the
respective dates thereof and the consolidated results of Seller's operations and
cash flows for the periods indicated (subject to, in the case of unaudited
financial statements, normal and recurring year-end audit adjustments that are
not material).
4.9 Business Financial Statements. The Business Financial
Statements attached hereto as Schedule 4.9 are true and correct in all material
respects, (b) fairly represent the financial condition and results of operations
of the Business as of the dates and for the periods so indicated, and (c) are
prepared in accordance with GAAP on a basis consistent throughout the periods
indicated and consistent with each other. The Closing Financial Statements to be
delivered at Closing will be true and correct in all material respects, (b) will
fairly represent the financial condition and results of operations of the
Business as of the dates and for the periods so indicated, and (c) will be
prepared in accordance with GAAP on a basis consistent throughout the periods
indicated and consistent with each other.
4.10 Support Contracts. Schedule 4.10 of the Disclosure Schedule
sets forth a true and complete list of all Consent Required Contracts and
Transferred Contracts pursuant to which Seller or any of its subsidiaries is
obligated to provide support or maintenance to customers, together with the
amounts of deferred revenue that are associated with executory support
obligations under such Consent Required Contracts and Transferred Contracts
(each, a "Deferred Support Accrual"). Each Deferred Support Accrual is as
reflected in the Books and Records and has been accrued in accordance with GAAP,
consistently applied, and each arose in the ordinary course of business
consistent with past practices. Seller has not given any warranties or
indemnities relating to the
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Products or any other products or Technology sold or licensed or services
rendered by Seller related to the Business or the Acquired Assets.
4.11 Absence of Certain Changes or Events. Since the Balance Sheet
Date, there has not been, occurred or arisen any:
(a) Transaction by Seller or any of its subsidiaries
related to the Business or the Acquired Assets except in the ordinary course of
business as conducted prior to that date and consistent with past practices;
(b) Destruction of, damage to, or loss of any asset,
business or customer of Seller or any of its subsidiaries related to the
Business (whether or not covered by insurance);
(c) Change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by Seller or any
of its subsidiaries related to the Business or the Acquired Assets;
(d) Revaluation by Seller or any of its subsidiaries of
any of the Acquired Assets (whether tangible or intangible), including writing
off notes or accounts receivable (other than write offs of accounts receivable
in the ordinary course of business consistent with past practices which are
immaterial in the aggregate);
(e) Increase in the salary or other compensation payable
or to become payable by Seller or any of its subsidiaries to any Business
Employee, or the declaration, payment or commitment or obligation of any kind
for the payment (whether in cash, stock or otherwise) by Seller or any of its
subsidiaries of a severance payment, termination payment, bonus or other
additional salary or compensation to any Business Employee;
(f) Other than in the ordinary course of business
consistent with past practices, sale, lease, license or other disposition of any
of the assets (whether tangible or intangible) or properties of Seller or any of
its subsidiaries related to the Business, including the sale of any accounts
receivable of Seller or any of its subsidiaries related to the Business, or any
creation of any security interest in the Acquired Assets;
(g) The commencement, settlement or notice, or to
Seller's or any of its subsidiaries' knowledge threat, of any lawsuit,
proceeding or other investigation against Seller or any of its subsidiaries
related to the Business or the Acquired Assets, or any reasonable basis for any
of the foregoing;
(h) (i) Sale, license or transfer of any Intellectual
Property Rights of Seller or any of its subsidiaries related to the Business or
the Acquired Assets or entering into any agreement with respect to any
Intellectual Property Rights of Seller or any of its subsidiaries related to the
Business or the Acquired Assets with any Person, other than non-exclusive
licenses granted to end-user customers in the ordinary course of business
consistent with past practices, (ii) purchase or license of
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any Intellectual Property Rights or entering into any agreement with respect to
the Intellectual Property Rights of any Person related to the Business or the
Acquired Assets, (iii) entering into any agreement with respect to the
development of any Intellectual Property Rights with a third party related to
the Business or the Acquired Assets, or (iv) change in pricing or royalties set
or charged by Seller or any of its subsidiaries to its customers or licensees or
in pricing or royalties set or charged by Persons who have licensed IP to Seller
or any of its subsidiaries related to the Business or the Acquired Assets;
(i) Agreement or modification to any agreement pursuant
to which any other Person was granted marketing, distribution, development or
similar rights of any type or scope with respect to any products or technology
of Seller or any of its subsidiaries related to the Business or the Acquired
Assets;
(j) Employment dispute, including but not limited to,
claims or matters raised by any individuals or any workers' representative
organization, bargaining unit or union regarding labor trouble or claim of
wrongful discharge or other unlawful employment or labor practice or action with
respect to the Business or the Acquired Assets;
(k) Waiver or release of any right or claim of Seller or
any of its subsidiaries related to the Business or the Acquired Assets;
(l) Lease, license, sublease or other occupancy of any of
the real properties used in connection with the Business;
(m) Any event or condition of any character that has had
or is reasonably likely to have a Material Adverse Effect; or
(n) Agreement by Seller or any of its subsidiaries to do
any of the things described in the preceding clauses (a) through (m) of this
Section 4.11 (other than negotiations with Buyer and its representatives
regarding the transactions contemplated by this Agreement and the Ancillary
Agreements).
4.12 Absence of Undisclosed Liabilities. Neither Seller nor any of
its subsidiaries has any Liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type, whether accrued, absolute,
contingent, matured, unmatured or other (whether or not required to be reflected
in financial statements in accordance with GAAP) related to the Business or the
Acquired Assets, which individually or in the aggregate is material or is
reasonably likely to become material and has not been reflected in the Business
Financial Statements.
4.13 Brokers' and Finders' Fees. Neither Seller nor any of its
subsidiaries has any liability or obligation to pay any fees or commissions to
any broker or finder with respect to the transactions contemplated hereby for
which Buyer could become liable or obligated.
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4.14 Compliance with Laws. Seller and its subsidiaries are in
compliance with all applicable foreign, federal, state or local statutes, laws
and regulations with respect to the conduct or operation of the Business and the
Acquired Assets.
4.15 Title to Property; Condition of Property; Absence of Liens.
(a) Section 4.15(a) of the Disclosure Schedule sets forth
a list of the addresses of all real property currently owned, leased or
subleased by or from Seller or any of its subsidiaries or otherwise used or
occupied by Seller or any of its subsidiaries for the operation of the Business
or any of the Acquired Assets (the "Seller Real Property"), the name of the
lessor, master lessor and/or lessee, if applicable, the date and term of the
lease or sublease, if applicable, and each amendment thereto and, with respect
to any current lease, the aggregate annual rental payable under any such lease.
With respect to Seller Real Property that is owned by Seller or any of its
subsidiaries, Seller or such subsidiary has good and valid title to such owned
Seller Real Property, free and clear of any Liens, except (i) as reflected in
the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and
(iii) such non-monetary imperfections of title and encumbrances, if any, which
do not materially detract from the value or materially interfere with the
present use of the property subject thereto or affected thereby (the items in
clauses (i), (ii) and (iii) shall be referred to as "Permitted Liens"). Seller
has provided Buyer with true, correct and complete copies of all leases, lease
guaranties, subleases, agreements for the leasing, use or occupancy of, or
otherwise granting a right in or relating to the Seller Real Property, including
all amendments, terminations and modifications thereof (the "Lease Agreements").
There are no other Lease Agreements for real property affecting the Seller Real
Property or to which Seller or any of its subsidiaries is bound. All such Lease
Agreements are in full force and effect, are valid and enforceable against
Seller or its subsidiaries and, to Seller's and its subsidiaries' knowledge,
against any other party thereto, in accordance with their respective terms, and
there is not, under any of such Lease Agreements, any existing default or event
of default by Seller or any of its subsidiaries or, to Seller's or any of its
subsidiaries' knowledge, by any other party thereto (or event which with notice
or lapse of time, or both, would constitute a default by Seller or any of its
subsidiaries or, to Seller's or any of its subsidiaries' knowledge, by any other
party thereto). Neither the operations of Seller or any of its subsidiaries on
the Seller Real Property nor, to Seller's or any of its subsidiaries' knowledge,
such Seller Real Property, including the improvements thereon, violate in any
material respect any applicable building code, zoning requirement, or
classification or statute relating to the particular property or such
operations, and such non-violation is not dependent, in any instance, on
so-called non-conforming use exceptions. There are no other parties occupying,
or with a right to occupy, the Seller Real Property. None of Seller nor any of
its subsidiaries has received any notice of default, alleged failure to perform,
or any offset or counterclaim with respect to any such Lease Agreement, which
has not been fully remedied and withdrawn. The Closing will not affect the
enforceability against Seller or any of its subsidiaries or, to Seller's or any
of its subsidiaries' knowledge, against any other party thereto, of any such
Lease Agreement or the rights of Seller or any of its subsidiaries or Buyer to
the continued use and possession of the Seller Real Property for the conduct of
the Business or the Acquired Assets as it is presently conducted.
-21-
(b) Each member of the Seller Group has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of its respective tangible properties and assets, real,
personal and mixed, used or held for use in the Business, free and clear of any
Liens, except Permitted Liens. The tangible properties and assets of Seller and
its subsidiaries used in the Business are in good operating condition and
repair, normal wear and tear excepted, and is otherwise suitable for the conduct
of the Business as currently conducted.
(c) Section 4.15(c) of the Disclosure Schedule identifies
all material items of equipment, machinery, furniture, fixtures, and tangible
personal property (collectively, the "Equipment") owned or leased by Seller or
any of its subsidiaries for use in the Business and identifies if any such items
are subject to any Lien or encumbrance, other than Permitted Liens, and such
Equipment (i) constitutes all of the material tangible assets of Seller and its
subsidiaries used in or related to the Business, (ii) is reasonably adequate for
the conduct of the Business of Seller and each of its subsidiaries as currently
conducted, and (iii) is in good operating condition, regularly and properly
maintained, subject to normal wear and tear, and reasonably fit and usable for
the purposes for which they are being used.
4.16 Intellectual Property.
(a) Section 4.16(a) of the Disclosure Schedule contains a
complete and accurate list of all Products and description of the Technology
material or necessary to the operation of the Business as currently conducted by
Seller or as reasonably contemplated to be conducted by Buyer following the
Closing, consistent with Seller's past practice.
(b) Section 4.16(b)(i) of the Disclosure Schedule lists
all Transferred Intellectual Property Rights related to the Business or the
Acquired Assets that are Registered Intellectual Property Rights. All such
Registered Intellectual Property Rights are currently in compliance with formal
legal requirements (including payment of filing, examination and maintenance
fees and proofs of use), are valid and enforceable to the extent consistent with
applicable law, and are not subject to any unpaid maintenance fees or taxes or
actions due within 180 days of the date of this Agreement; provided no
representation is made with respect to any actions arising from events occurring
after the execution of this Agreement and prior to Closing that were not known
to Seller prior to the execution of this Agreement. There are no proceedings or
actions known to Seller or any of its subsidiaries before any court, tribunal
(including the PTO or equivalent authority anywhere in the world) related to any
such Registered Intellectual Property Rights. Neither Seller nor any of its
subsidiaries have any knowledge of any facts or circumstances that would render
any Transferred Intellectual Property Rights invalid or unenforceable (it being
understood that no representation is made regarding whether or not such
Transferred Intellectual Property Rights could have been claimed or asserted in
a more expansive manner than has been done), nor has Seller or any of its
subsidiaries taken, or failed to take, any action in the application for or
prosecution of Transferred Intellectual Property Rights that are Registered
Intellectual Property Rights that would render such Transferred Intellectual
Property Rights invalid or unenforceable. Neither Seller nor any of its
subsidiaries have claimed any status in the application for or registration of
any Registered
-22-
Intellectual Property Rights, including "small business status," that would not
be applicable to Buyer.
(c) Each item of Transferred IP is free and clear of any
Liens. Seller owns exclusively, and has good title to all works of authorship
and all associated Copyrights that are used or embodied in, the Transferred
Technology, and no other Person has any other rights thereto. All Acquired
Assets will be fully transferable, alienable or licensable by Buyer without
restriction and without payment of any kind to any third party.
(d) To the extent that any Transferred IP was originally
owned, invented or created by or for any third party, including any predecessor
of Seller or any of its subsidiaries: (i) Seller has a written agreement with
such third party or parties with respect thereto, pursuant to which Seller has
obtained complete, unencumbered and unrestricted ownership and is the exclusive
owner of, all such Transferred IP by valid assignment or otherwise; (ii) the
transfers from Seller to Buyer hereunder do not violate such third party
Contracts; (iii) such third parties have not retained and do not have any rights
or licenses with respect to the Transferred IP; and (iv) no basis exists for
such third party to challenge or object to this Agreement or the transactions
contemplated hereby.
(e) Seller has the full and unencumbered right to assign
and transfer to Buyer all of Seller's and its subsidiaries' rights in and under
the Consent Required Contracts and Transferred Contracts without incurring, or
causing Buyer to incur, any obligation to any third party, including any royalty
obligations, other than those obligations that Seller would have had had such
transfer not taken place.
(f) Neither Seller nor any of its subsidiaries has
transferred ownership of, or granted any license of or right to use, or
authorized the retention of any rights to use, any Transferred IP to any other
Person, except for non-exclusive licenses to Products granted in the ordinary
course.
(g) The Transferred IP constitutes all of the IP related
to, used in, necessary to, or that would be infringed by, the operation of the
Business as currently conducted by Seller, or as reasonably anticipated to be
conducted by Buyer following the Closing, including without limitation, the
design, development, manufacture, use, import, distribution or sale of the
Products.
(h) The Transferred Patents include (i) all Patents and
Patent applications of the Seller Group in which any employee that is a Business
Employee is or should be a named inventor under applicable United States or
European Patent laws and regulations; and (ii) any Patent that is or would be
infringed by the operation of the Business or the making, using or selling of
any Product.
(i) No government funding, facilities of a university,
college, other educational institution or research center or funding from third
parties was used in the creation or development of the Transferred IP. No
current or former employee, consultant or independent contractor, who was
involved in, or who contributed to, the creation or development of any
Transferred Technology, has performed services for the government, a university,
college, or other educational institution, or
-23-
a research center, during a period of time during which such employee,
consultant or independent contractor was also performing services used in the
creation or development of the Transferred IP.
(j) Seller has, and as a result of the transactions
contemplated hereby, Buyer will have, the right to use, pursuant to valid
licenses, all Transferred Technology, including Software development tools,
library functions, compilers and all other third-party Software that are related
to the Business or that are used in the Business to create, modify, compile,
operate or support any Software (including the Products) that is Transferred
Technology.
(k) No Third Party Technology, including any Open Source
Software (as defined Section 4.16(z) below), was or is, used in, incorporated
into, integrated or bundled with, or used in the development or compilation
(other than generally available commercial compilers) of, any Technology that is
or was a Transferred Technology or a Product.
(l) There are no contracts, licenses or agreements to
which Seller or any of its subsidiaries is a party with respect to any
Transferred IP.
(m) Neither (i) the operation of the Business, including
the making, using, selling, maintaining, licensing and distribution of the
Products, by either Seller or any of its subsidiaries or, following the Closing,
by Buyer consistent with Seller's past practice, nor (ii) the Acquired Assets,
did, do, or will: (A) infringe or misappropriate the Intellectual Property
Rights of any Person; (B) violate the rights of any Person (including rights to
privacy or publicity); or (C) constitute unfair competition or trade practices
under the laws of any jurisdiction. Neither Seller nor any of its subsidiaries
have received notice from any Person claiming that the Business or the Acquired
Assets infringe or misappropriate the Intellectual Property Rights of any Person
or constitute unfair competition or trade practices under the laws of any
jurisdiction (nor does Seller or any of its subsidiaries have knowledge of any
basis therefor).
(n) No licenses or other consents are required from any
third party to permit Buyer to fully exploit the Acquired Assets consistent with
Seller's past practice.
(o) There are no contracts, licenses or agreements
between Seller or any of its subsidiaries and any other Person with respect to
the Acquired Assets, including the Transferred IP, under which there is any
dispute or any dispute threatened in writing regarding the scope of such
agreement or performance under such agreement.
(p) Neither Seller nor any of its subsidiaries has any
reason to believe that any Person is infringing or misappropriating the
Transferred Intellectual Property Rights, it being understood that no
representation is made regarding generalized suspicion of software piracy.
(q) Seller and its subsidiaries have taken all reasonable
steps that are required to protect their respective rights in confidential
information and Trade Secrets associated with or related to the Acquired Assets
consistent with reasonable commercial practice.
-24-
(r) No third party possesses any copy of any source code
to any Software that is Transferred Technology (including any Product) and
Seller shall have delivered to Buyer all copies, and neither Seller nor any of
its subsidiaries shall have retained any copy, of any source code to any
Software that is Transferred Technology, except as permitted under the
Intellectual Property License Agreement.
(s) [Intentionally Omitted]
(t) Seller and its subsidiaries have and enforce a policy
requiring each employee and consultant of Seller and its subsidiaries to execute
a proprietary rights and confidentiality agreement substantially in the form set
forth in Section 4.16(t) of the Disclosure Schedule and all current and former
employees and consultants of Seller and its subsidiaries who have created or
modified any of the Transferred Technology have executed such an agreement
assigning all of such employees' and consultants' rights in and to the
Transferred Technology and the Transferred Intellectual Property Rights to
Seller.
(u) No Acquired Asset is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation that restricts in
any manner the use, transfer or licensing thereof or may affect the validity,
use or enforceability of the Acquired Assets.
(v) Neither Seller nor any of its subsidiaries is
required to make or accrue any royalty payment to any third party in connection
with any of the Acquired Assets.
(w) To the extent that Seller or any of its subsidiaries
has distributed or licensed any Product to an end user pursuant to any form of
encryption key: (i) Seller has a written agreement with each such end user
requiring such end user to protect the confidentiality of such key; (ii) Seller
has delivered to Buyer a true and complete list of all third parties who have
had access to any such keys; (iii) no third party has had access to any such
keys, except pursuant to clause (i) above; and (iv) Seller has delivered to
Buyer any such keys and the Technology to generate such keys and has not
retained any such keys or such Technology.
(x) Neither this Agreement nor the transactions
contemplated hereby, including the assignment to Buyer, by operation of law or
otherwise, of any Contract to which Seller or any of its subsidiaries is a
party, will result in Buyer granting to any third party any right to or with
respect to any IP owned by, or licensed to, Buyer prior to Closing.
(y) Except as disclosed to Buyer in writing by Seller
prior to the date hereof, Seller knows of no material defect which would prevent
the Products or Transferred Technology from being used by Buyer to satisfy
current end user expectations or expectations of entities who license or
purchase rights to display search results generated by the Products, with regard
to the functionality and performance of the Products, including when the
Products are used at higher than reasonably anticipated usage levels.
-25-
(z) No Technology that is open source, public source or
freeware, or any modification or derivative thereof, including any version of
any Software licensed pursuant to any GNU general public license or limited
general public license (collectively, "Open Source Software") was used in,
incorporated into, integrated or bundled with any Transferred IP, or used in the
Business or the development of compilation of any Products.
(aa) Seller has not retained any Patents related to, or
the prosecution or enforcement or which, could adversely affect the validity or
enforceability of the Transferred Patents. None of the Transferred Patents, or
any Patents related thereto, are subject to a terminal disclaimer.
(bb) Seller and its subsidiaries have at all time complied
with all applicable legal requirements relating to privacy, data protection and
the collection and use personal information and user information gathered or
accessed in the course of the operations of Seller or any of its subsidiaries.
Seller and its subsidiaries have at all times complied in all respects with all
rules, policies and procedures established by Seller or any of its subsidiaries
from time to time with respect to privacy, data protection or collection and use
of personal information and user information gathered or accessed in the course
of the operations of Seller or any of its subsidiaries. No claims have been
asserted or, to the knowledge of Seller, threatened against Seller or any of its
subsidiaries (and to the knowledge of Seller, no such claims are likely to be
asserted or threatened against Seller or any of its subsidiaries) by any person
or entity alleging a violation of such person's or entity's privacy, personal or
confidentiality rights under any such rules, policies or procedures. The
execution of this Agreement and the consummation of the transactions
contemplated herein will not breach or otherwise cause any violation of any such
applicable legal requirements related to privacy, data protection or the
collection and use of personal information and user information gathered or
accessed in the course of the operations of Seller or any of its subsidiaries.
(cc) With respect to all personal and user information
described in Section 4.16(bb), Seller and its subsidiaries have at all times
taken all steps reasonably necessary (including, without limitation,
implementing and monitoring compliance with adequate measures with respect to
technical and physical security) to ensure that the information is protected
against loss and against unauthorized access, use, modification, disclosure or
other misuse. To the knowledge of Seller, there has been no unauthorized access
to or other misuse of that information.
4.17 Litigation. There is no action, suit or proceeding of any
nature pending, or to Seller's or any of its subsidiaries' knowledge threatened,
by or against Seller or any of its subsidiaries with respect to or involving the
Business, the Acquired Assets or the transactions contemplated hereby. There is
no investigation by a Governmental Entity pending, or to Seller's or any of its
subsidiaries' knowledge, threatened, by or against Seller or any of its
subsidiaries with respect to or involving the Business or the Acquired Assets.
No Governmental Entity has provided Seller or any of its subsidiaries with
notice challenging or questioning the legal right of Seller or any of its
subsidiaries to conduct the operations of the Business, to use the Acquired
Assets or to consummate the transactions contemplated hereby.
-26-
4.18 Restrictions on Business Activities. There is no agreement
(not to compete or otherwise), commitment, judgment, injunction, order or decree
relating to the Business or the Acquired Assets or otherwise binding upon the
Business or the Acquired Assets which has or may have the effect of prohibiting
or impairing any practice of the Business, any acquisition of property (whether
tangible or intangible) by Buyer in connection with the operation of the
Business or the Acquired Assets or the conduct of the Business. Neither Seller
nor any of its subsidiaries have entered into or is bound by any agreement which
places any restrictions upon Seller or any of its subsidiaries, or which, after
the Closing, would place any restrictions upon Buyer, with respect to selling,
licensing or otherwise distributing any of the Products or the Transferred
Intellectual Property Rights and Transferred Technology to, or providing
services to, customers or potential customers or any class of customers, in any
geographic area, during any period of time or in any segment of the market.
4.19 No Liquidation, Insolvency or Winding-Up.
(a) No order has been made, petition presented or
resolution passed for the winding-up or liquidation of Seller or any of its
subsidiaries and there is not outstanding any:
(i) Order for the winding-up of Seller or any of
its subsidiaries;
(ii) Appointment of a receiver over the whole or
part of the assets of Seller or any of its subsidiaries;
(iii) Petition or order for administration of
Seller or any of its subsidiaries under bankruptcy, insolvency or similar law;
(iv) Voluntary arrangement between Seller or any
of its subsidiaries and any of its creditors under any bankruptcy, insolvency or
similar law; or
(v) Distress or execution or other process levied
in respect of Seller or any of its subsidiaries that remains undischarged.
(b) To Seller's knowledge, there are no circumstances
that would entitle any Person to present a petition for the winding-up or
administration of Seller or any of its subsidiaries or to appoint a receiver
over the whole or any part of the undertaking or assets of Seller or any of its
subsidiaries.
(c) Neither Seller nor any of its subsidiaries is deemed
unable to pay its debts as they come due within the meaning of applicable law.
(d) Neither the operations of Seller nor any of its
subsidiaries have been terminated.
-27-
4.20 Absence of Powers of Attorney. Other than as provided for in
Section 6.15(b), there are no outstanding powers of attorney executed on behalf
of Seller or any of its subsidiaries affecting the Business or the Acquired
Assets that will not expire by its terms upon the Closing.
4.21 Bulk Transfer Laws. There are no current or past creditors of
Seller or any of its subsidiaries to whom any law, rule or regulation requires
the delivery of notice or from whom any form of consent (except consent to
transfer the Consent Required Contracts) is required in conjunction with
undertaking the transactions contemplated by this Agreement.
4.22 Tax Returns and Audits.
(a) To the extent relevant to the Acquired Assets or the
Business, as of the Closing Date, Seller and its subsidiaries will have prepared
and timely filed all required returns, estimates, information statements and
reports ("Returns") relating to any and all Taxes concerning or attributable to
Seller and its subsidiaries or their respective operations and such Returns are
or will be true, correct and complete and have been or will be completed in
accordance with applicable law.
(b) To the extent the failure to do so would adversely
impact Buyer, any Buyer Subsidiary, the Acquired Assets, Buyer's or any Buyer
Subsidiary's use of the Acquired Assets or the operation of the Business, as of
the Closing Date, Seller or its subsidiaries (i) will have paid all Taxes it is
required to pay and (ii) will have withheld with respect to its employees all
income taxes and social security and similar fees, Federal Insurance
Contribution Act, Federal Unemployment Tax Act and other Taxes required to be
withheld.
(c) To the extent failure to do so would adversely impact
Buyer, any Buyer Subsidiary, the Acquired Assets, Buyer or any Buyer
Subsidiary's use of the Acquired Assets or operation of the Business, neither
Seller nor any of its subsidiaries have been delinquent in the payment of any
Tax, nor is there any Tax deficiency outstanding, assessed or proposed against
Seller or any of its subsidiaries, nor has Seller or any of its subsidiaries
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(d) To the extent relevant to the Acquired Assets or the
Business, no audit or other examination of any Return of Seller or any of its
subsidiaries is in progress, nor has Seller or any of its subsidiaries been
notified of any request for such an audit or other examination.
(e) Neither Seller nor any of its subsidiaries has or
knows of any basis for the assertion of any claim for any liabilities for unpaid
Taxes for which Buyer or any Buyer Subsidiary would become liable as a result of
the transactions contemplated by this Agreement.
(f) There are (and immediately following the Closing
there will be) no Liens on the Acquired Assets relating to or attributable to
Taxes.
-28-
(g) Neither Seller nor any of its subsidiaries knows of
any basis for the assertion of any claim relating or attributable to Taxes that,
if adversely determined, would result in any Lien on the Acquired Assets.
4.23 Customers and Suppliers. Section 4.23 of the Disclosure
Schedule identifies and sets forth a true and complete list of (a) the ten (10)
largest customers of the Business (by dollar volume) and (b) the five (5)
largest suppliers of the Business (by dollar volume), for the most recently
completed fiscal year of Seller. No such customer or supplier has ceased or
materially reduced its purchases from, or sales or provision of services to,
Seller or any of its subsidiaries since the Balance Sheet Date, or to Seller's
or any of its subsidiaries' knowledge, threatened to cease or materially reduce
such purchases or sales or provision of services. To Seller's and its
subsidiaries' knowledge, no such customer or supplier is threatened with or has
threatened bankruptcy or insolvency.
4.24 Insurance. Section 4.24 of the Disclosure Schedule contains a
true, correct and complete list of all insurance policies and bonds maintained
by Seller and its subsidiaries related to the Business, any of the Acquired
Assets or the Assumed Liabilities. Each policy listed in Section 4.24 of the
Disclosure Schedule is valid and binding and in full force and effect, all
premiums due and payable under all such policies and bonds have been paid and
Seller and its subsidiaries are otherwise in compliance with the terms of such
policies and bonds. Seller (or any other Person to whom any such policy has been
issued) has not received any written notice of cancellation or termination of,
any such policies.
4.25 Employee Matters.
(a) Section 4.25(a) of the Disclosure Schedule contains
(i) a list of the Business Employees and (ii) a true and complete list of all
remuneration payable and other benefits provided which Seller or any of its
subsidiaries is bound to provide (whether at present or in the future) to each
such employee, or any person connected with any such employee, and includes, if
any, particulars of all profit sharing, incentive and bonus arrangements to
which Seller or any of its subsidiaries is a party, whether legally binding or
not.
(b) Section 4.25(b) of the Disclosure Schedule contains
an accurate and complete list of each Employee Plan. Seller has delivered to
Buyer correct and complete copies of all documents embodying each Employee Plan,
including all amendments thereto and all related trust documents.
(c) Neither Seller nor any of its subsidiaries has
maintained, established, sponsored, participated in, or contributed to, any (i)
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or
Section 412 of the Code, or (ii) "multiemployer plan" within the meaning of
Section (3)(37) of ERISA, in either case for the benefit of any Business
Employee.
(d) None of the Business Employees has received a pension
grant or any other kind of voluntary pension benefit.
-29-
(e) Since the Balance Sheet Date, none of the Business
Employees has given or received notice of termination of employment and neither
Seller nor any of its subsidiaries has given notice of any reduction to any
employee or Governmental Entity or started consultations with any trade union
pursuant to any statute or regulation.
(f) No collective bargaining agreement exists that is
binding on Seller or any of its subsidiaries with respect to the Business
Employees, and to Seller's and its subsidiaries knowledge, no petition has been
filed or proceeding instituted, or any action taken in contemplation of any such
filing or institution, by an employee or group of employees of Seller or any of
its subsidiaries, seeking recognition of a bargaining representative.
(g) There is no labor strike, dispute, slow down or
stoppage pending or, to Seller's or its subsidiaries' knowledge, threatened
against Seller or any of its subsidiaries by any of the Business Employees, and
neither Seller nor any of its subsidiaries has received any demand letters,
civil rights charges, suits or drafts of suits with respect to claims made by
any of the Business Employees.
(h) All individuals who are or were performing consulting
or other services for the Business are or were correctly classified by Seller or
any of its subsidiaries as either "independent contractors" or "employees," as
the case may be.
(i) Seller and its subsidiaries are in compliance with
all applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to the Business Employees.
(j) Seller and its subsidiaries have withheld and
reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to the Business Employees.
(k) There are no pending, or to Seller's or any of its
subsidiaries' knowledge, threatened claims or actions by any Business Employee
against Seller or any of its subsidiaries under any worker's compensation policy
or long-term disability policy.
(l) To Seller's and its subsidiaries' knowledge, no
Business Employee is obligated under any agreement or subject to any judgment,
decree or order of any court or administrative agency that would interfere with
such Business Employee's efforts to promote the interests of the Business or
that would interfere with the Business. To Seller's and its subsidiaries'
knowledge, neither the execution nor delivery of this Agreement, nor the
carrying on of the Business as presently conducted or proposed to be conducted
nor any activity of the Business Employees in connection with the carrying on of
the Business as presently conducted or currently proposed to be conducted, will
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any agreement under which any of such Business
Employees is now bound.
-30-
4.26 Environmental Matters.
(a) Hazardous Material. Neither Seller nor any of its
subsidiaries have: (i) operated any underground storage tanks on the Seller Real
Property, or (ii) illegally released any Hazardous Material. No Hazardous
Materials are present in, on or under any property, including the land and the
improvements, ground water and surface water thereof on the Seller Real
Property.
(b) Hazardous Materials Activities. Neither Seller nor
any of its subsidiaries have transported, stored, used, manufactured, disposed
of, released or exposed the Business Employees or others to Hazardous Materials
in violation of any law in effect on or prior to the Closing, nor has Seller or
any of its subsidiaries disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (any or all of the foregoing being
collectively referred to herein as "Hazardous Materials Activities") in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date of this Agreement to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) Permits. Seller currently holds all environmental
approvals, permits, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of Seller's and its subsidiaries' Hazardous
Material Activities and other businesses of Seller and its subsidiaries as such
activities and businesses are currently being conducted and as currently
contemplated to be conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the knowledge of Seller or any of its subsidiaries' threatened,
concerning any Environmental Permit, Hazardous Material or any Hazardous
Materials Activity of Seller or any of its subsidiaries. Neither Seller nor any
of its subsidiaries has any knowledge of any fact or circumstance that could
involve Seller or any of its subsidiaries in any environmental litigation or
impose upon Seller or any of its subsidiaries any environmental liability.
4.27 Transactions with Affiliates.
(a) Section 4.27(a) of the Disclosure Schedule identifies
a true and complete list of all agreements, contracts, arrangements,
understandings, transfers of assets or liabilities or other commitments or
transactions between Seller Group and any of its current or former officers or
directors, or stockholders holding more than five percent (5%) of Seller's or
any of its subsidiaries' outstanding capital stock are parties and that are
currently pending or in effect and relate to or affect the Business or any of
the Acquired Assets or Assumed Liabilities.
(b) No director or officer or former director or officer
of Seller or any of its subsidiaries (i) owns, directly or indirectly, on an
individual or joint basis (i) any interest in any Acquired Asset or (ii) any
interest (other than a passive investment in less than five percent (5%) of the
outstanding voting securities of a publicly traded company) in any Person that
is a supplier, customer or competitor of the Business, (ii) serves as an
officer, director or employee of any person
-31-
that is a supplier, customer or competitor of the Business, or (iii) has
received any loan from or is otherwise a debtor of or has made any loan to or is
otherwise a creditor of, Seller or any of its subsidiaries where such loan is
secured by any of the Acquired Assets.
4.28 Acquired Assets. The Acquired Assets, including the
Transferred Intellectual Property Rights and the Transferred Technology,
together constitute all of the assets or properties, including the Intellectual
Property Rights and Technology, (i) used in the operation of the Business and
(ii) necessary to the operation of the Business by Buyer following the Closing.
The Business Employees constitute all employees of the Seller Group who, as of
the Closing Date, are or were at any time during the six month period prior to
the date hereof, primarily dedicated to the Business.
4.29 Complete Copies of Materials. Seller has delivered true and
complete copies of each existing document that has been requested by Buyer or
its counsel in connection with this Agreement or the transactions contemplated
hereby.
4.30 Representations Complete. To the knowledge of Seller, none of
the representations or warranties made by Seller on behalf of itself or any of
its subsidiaries (as modified by the Disclosure Schedule), nor any statement
made in any Schedule (including the Disclosure Schedule), certificate or
instrument furnished by Seller pursuant to this Agreement contains any untrue
statement of a material fact, or omits to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of and in the State of Delaware.
Buyer has all requisite corporate power to own and use the properties owned and
used by it and to carry on its business as currently conducted. Buyer is duly
qualified, licensed or admitted to do business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business,
makes such qualification, licensing or admission necessary. Buyer has delivered
a true, correct and complete copy of its certificate of incorporation and
bylaws, each as amended to date and in full force and effect on the date hereof,
to Seller.
5.2 Authorization. Buyer has all requisite power and authority to
enter into this Agreement and each of the Ancillary Agreements to which either
of them is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and each of the Ancillary
Agreements to which Buyer is a party and the consummation
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of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate actions on the part of Buyer, and no further corporate
action is required on the part of Buyer or its stockholders to approve, adopt or
authorize this Agreement, any of the Ancillary Agreements or any of the
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by Buyer, and assuming the due authorization, execution
and delivery by Seller, constitutes the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to the laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and to rules of law governing specific performance, injunctive relief and other
equitable remedies.
5.3 Noncontravention. The execution and delivery of this Agreement
and the Ancillary Agreements to which Buyer is a party does not, and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with any provision of Buyer's certificate of incorporation or bylaws,
(ii) conflict with, or result in (with or without notice or lapse of time or
both) any violation, or default under, or give rise to a Conflict under, any
material contract to which Buyer or any of its properties or assets are subject,
or (iii) violate in any material respect any material judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or its
properties or assets.
5.4 Consents. Except for the applicable requirements of foreign
government authorities, if any, no consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by, or with respect to, Buyer in connection with the
execution and delivery of this Agreement or the Ancillary Agreements to which
Buyer is a party or the consummation of the transactions contemplated hereby or
thereby.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 Conduct of Seller Prior to the Closing. Between the date of
this Agreement and the earlier to occur of the termination of this Agreement
pursuant to Section 9.1 and the Closing, unless otherwise agreed in writing by
Buyer, Seller will and will cause the Seller Group to:
(a) Except as otherwise specifically allowed or required
pursuant to the terms of this Agreement, conduct the Business and operate the
Acquired Assets in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted or operated;
(b) Pay the debts and Taxes of the Business when due;
(c) Pay or perform other obligations of the Business when
due;
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(d) Use reasonable, good faith efforts to preserve intact
the current business organization of Seller, devote substantive attention to the
Business, keep available the services of the current officers, employees and
agents of Seller relating to the Business, and maintain the relations and
goodwill with the suppliers, customers, distributors, licensors, licensees,
landlords, trade creditors, employees, agents, and others having business
relationships with Seller relating to the Business, with the goal of preserving
unimpaired the goodwill and ongoing business of the Business through the Closing
and thereafter;
(e) Confer with Buyer concerning material business or
operational matters relating to the Business;
(f) Use reasonable, good faith efforts to maintain all of
the Acquired Assets in their current condition, usual and immaterial wear and
tear excepted, and free of any Liens not existing on the date of this Agreement
(other than Liens disclosed in Section 4.14 of the Disclosure Schedule), and
promptly replace, repair or restore such Acquired Assets in the event of any
damage to or destruction of any of the Acquired Assets prior to the Closing;
(g) Grant non-exclusive licenses to the Products
consistent with past practice;
(h) Maintain the Books and Records in the usual, regular
and ordinary manner, on a basis consistent with prior years;
(i) Report periodically to Buyer concerning the status
and operation of the Business and the Acquired Assets;
(j) Not buy, or enter into any inbound license agreement
with respect to, the Intellectual Property Rights of any third party to be
incorporated in or used in connection with the Products or the Business or sell,
lease or otherwise transfer or dispose of, or enter into any outbound license
agreement with respect to, any of the Acquired Assets with any third party
(except for licenses of the Products in the ordinary course of business
consistent with past practices);
(k) Not enter into any Contract relating to (i) the sale,
license or distribution of any Product or Transferred Technology (except for
licenses of the Products in the ordinary course of business consistent with past
practices), (ii) the provision of any services relating to the Business, or
(iii) any of the Acquired Assets;
(l) Not change pricing or royalties charged to customers
or licensees of Seller related to the Business;
(m) Not enter into any strategic arrangement or
relationship or joint marketing arrangement or agreement relating to the
Business;
(n) Not terminate the employment of, or give notice of
termination of employment to, any Business Employee;
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(o) Not hire any Business Employee;
(p) Not change, increase or amend the rate of
remuneration or amount of bonuses or other benefits or any other terms of
employment of any Business Employee;
(q) Not grant any severance or termination pay to any
Business Employee, or adopt any new severance plan, amend or modify or alter in
any manner any severance plan, agreement or arrangement relating to any Business
Employee;
(r) Not adopt or amend any Employee Plan applicable to
the Business Employees;
(s) Not amend or modify, or violate the terms of, any of
the Consent Required Contracts or Transferred Contracts;
(t) Not revalue any of the Acquired Assets;
(u) Not make or change any election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes, in each case relating to the Business,
the Products or the Acquired Assets;
(v) Not commence, settle, institute, prosecute,
compromise any action, suit, proceeding, arbitration, or governmental or
regulatory investigation or audit or obtain the release of any threatened
action, suit, proceeding, arbitration, or governmental or regulatory
investigation or audit involving or relating to the Business or the Acquired
Assets;
(w) Not take, or agree in writing or otherwise to take,
any of the actions described in (j) through (v) above.
6.2 Notice of Certain Events. Buyer and Seller shall give prompt
notice to the other of: (a) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which is likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate at
or prior to the Closing, and (b) any failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder. Notwithstanding anything in the immediately preceding sentence to
the contrary, the delivery of any notice pursuant to this Section 6.2 shall not
(i) limit or otherwise affect any remedies available to the party receiving such
notice or (ii) constitute an acknowledgment or admission of a breach of this
Agreement. No disclosure by any party pursuant to this Section 6.2 shall be
deemed to amend or supplement the Disclosure Schedule or prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
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6.3 No Solicitation. Until the earlier of the Closing or the
termination of this Agreement pursuant to the provisions of Section 9.1, Seller
will not (nor will Seller permit any of its officers, directors, employees,
agents, representatives or affiliates to) directly or indirectly, take any of
the following actions with any party other than Buyer or its designees:
(a) Solicit, encourage, assist, conduct discussions with
or engage in negotiations with any Person, relating to the possible acquisition
of all or any part of the Business or the Acquired Assets, whether by way of
merger, purchase of securities, purchase of assets or otherwise;
(b) Provide information with respect to all or any part
of the Business or the Acquired Assets to any Person relating to the possible
acquisition of the Business or the Acquired Assets, whether by way of merger,
purchase of securities, purchase of assets or otherwise;
(c) Enter into an agreement with any Person providing for
the acquisition of all or any part of the Business or the Acquired Assets,
whether by way of merger, purchase of securities, purchase of assets or
otherwise; or
(d) Make or authorize any statement, recommendation or
solicitation in support of any possible acquisition of all or any part of the
Business or the Acquired Assets, whether by way of merger, purchase of
securities, purchase of assets or otherwise, by any Person.
In addition to the foregoing (i) if Seller receives prior to
the Closing or the termination of this Agreement in accordance with its terms
any offer, proposal, or request relating to any of (a) through (d) above, Seller
shall promptly notify Buyer in writing of the receipt of such proposal, and (ii)
Seller shall immediately cease and cause to be terminated (and Seller hereby
represents and warrants that it has the legal and contractual right, without
Liability, to cease and cause to be terminated) all existing discussions or
negotiations with any Persons with respect to any offer, proposal, inquiry or
request relating to any of (a) through (d) above. Seller and Buyer agree that
irreparable damage would occur in the event that the provisions of this Section
6.3 were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed by Seller and Buyer that Buyer shall be
entitled to seek an injunction or injunctions to prevent breaches of the
provisions of this Section 6.3 and to seek specific performance of the terms and
provisions hereof, this being in addition to any other remedy to which Buyer may
be entitled at law or in equity. In the event, for any reason, specific
performance is not available to prevent breaches of the provisions of this
Section 6.3, Seller acknowledges and agrees that the damages payable to Buyer
for each instance of breach of this Section 6.3 shall in no event be less than
$5,000,000.
6.4 Access to Information. Between the date of this Agreement and
the earlier of the Closing or the termination of this Agreement, the Seller
Group shall afford Buyer and its respective officers, employees, accountants,
counsel, agents and other representatives, reasonable access during normal
business hours upon reasonable prior notice to (i) all of the properties, books,
contracts, commitments and records of the Business and the Acquired Assets, and
(ii) all Business Employees.
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6.5 Confidential Information.
(a) The Receiving Party shall treat as confidential all
of the Disclosing Party's Confidential Information. Without limiting the
foregoing, the Receiving Party shall use at least the same degree of care which
it uses to prevent the disclosure or improper or illegal use of its own
confidential information of like importance, but in no event with less than
reasonable care, to prevent the disclosure or improper or illegal use of the
Disclosing Party's Confidential Information.
(b) Either party shall be entitled to seek equitable
relief to protect its interest in any of its Confidential Information, including
injunctive relief.
(c) In the event either party is required to disclose the
other party's Confidential Information pursuant to applicable law or regulation,
or the order or requirement of a Governmental Entity, the party required to
disclose such information shall provide prompt notice thereof to the other party
to allow such party the opportunity to obtain a protective order or similar
protection prior to such disclosure.
(d) Notwithstanding anything to the contrary contained
herein or in any other agreement of Seller, including any agreement between
Seller and any employee of Seller, Buyer shall have the unrestricted,
sublicensable and transferable right, and Seller hereby consents to such rights
of Buyer, to use, disclose and exploit in any manner and without restriction any
and all confidential information (including Confidential Information) of Seller
disclosed to or learned by Buyer in connection with the Business, disclosed by
or embodied in any of the Acquired Assets, or known to any Offered Employee or
Continuing Employee. Without limiting the foregoing, any Confidential
Information of Seller delivered with or related to the Acquired Assets will
become Confidential Information of Buyer after the Closing, subject to the
provisions of the Intellectual Property License Agreement. To the extent any
Offered Employee or Continuing Employee may be bound by any agreement or policy
of Seller that would in any way limit or restrict the rights of Buyer hereunder,
Seller shall not assert, enforce or otherwise exercise its rights against any
Offering Employee or Continuing Employee, or Buyer, and Seller hereby expressly
waives its rights, under such agreement or policy.
6.6 Public Disclosure. No party shall issue any statement or
communication to any third party (other than to their respective agents)
regarding the subject matter of this Agreement or the transactions contemplated
hereby, including, if applicable, the termination of this Agreement and the
reasons therefor, without the prior written consent of the other party, which
consent shall not be unreasonably withheld, except that this restriction shall
be subject to the parties' respective obligations to comply with applicable
securities laws and applicable rules and regulations of the National
Association of Securities Dealers, Inc. or the Norwegian Securities Trading Act.
6.7 Consents.
(a) Seller shall assign and shall cause the Seller Group
to assign the Transferred Contracts to Buyer and/or, as determined by Buyer, one
or more Buyer Subsidiaries, as of the
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Closing. Seller shall use reasonable efforts, during the period from the date of
this Agreement until the Closing, to obtain the consents, waivers, approvals and
assignments under the Consent Required Contracts as may be required in
connection with the Acquisition so as to assign all rights of and benefits of
Seller, to Buyer and/or, as determined by Buyer, one or more Buyer Subsidiaries,
and upon the receipt of such consent, waiver, approval or assignment, as
applicable, such Consent Required Contract shall be moved to Schedule 1.1(jjjj)
from Schedule 1.1(v). Following the Closing, Seller shall continue to use
reasonable efforts for a period of six (6) months to obtain the consents,
waivers, approvals and assignments to those Contracts identified as Consent
Required Contracts on Schedule 1.1(v) that were not moved to Schedule 1.1(jjjj)
prior to the Closing and to the extent that Seller is able to obtain any such
consents, waivers, approvals or assignments, such Consent Required Contracts
shall be deemed to be Transferred Contracts for all purposes under this
Agreement from the time such consent, waiver, approval or assignment was
delivered to Buyer, notwithstanding anything else in this Agreement to the
contrary.
(b) If Seller is unable to obtain the consents, waivers,
approvals and assignments of any Consent Required Contract within the time
period described in Section 6.7(a), (i) upon obtaining such consent or approval,
Buyer and Seller shall execute such further instruments of conveyance (in
substantially the form executed at the Closing) as may be necessary to assign
and transfer such Consent Required Contracts (and the associated then-future
liabilities and obligations of the Seller Group) to Buyer and/or, as determined
by Buyer, one or more Buyer Subsidiaries, (ii) from and after the Closing until
the assignment of each such Consent Required Contract pursuant to clause
6.7(b)(i), and to the extent permitted pursuant to the terms of such Consent
Required Contract, the Seller Group shall hold such contract rights, assets or
other rights for the benefit of Buyer and/or, as determined by Buyer, one or
more Buyer Subsidiaries, and shall provide Buyer and/or, as determined by Buyer,
one or more Buyer Subsidiaries, with all of the benefits thereof, and shall take
commercially reasonable action, at the direction of Buyer, and at Buyer's own
expense, in order that such contract rights of Buyer and/or, as determined by
Buyer, one or more Buyer Subsidiaries, are preserved, (iii) Buyer and/or, as
determined by Buyer, one or more Buyer Subsidiaries, shall fully perform,
fulfill and discharge, on a subcontract basis, the obligations of the Seller
Group to be performed under such Consent Required Contract; (iv) the Seller
Group shall promptly remit to Buyer and/or, as determined by Buyer, one or more
Buyer Subsidiaries, all payments received by the Seller Group under such Consent
Required Contracts for services performed during such period; and (v) Buyer
and/or, as determined by Buyer, one or more Buyer Subsidiaries, shall reimburse
the Seller Group for the costs of any goods or services procured by the Seller
Group on behalf of Buyer and/or, as determined by Buyer, one or more Buyer
Subsidiaries, under Buyer's direction.
6.8 Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, the parties shall use commercially reasonable
efforts to promptly take, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and effectuate the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to
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consummate and effectuate the transactions contemplated by this Agreement for
the purpose of securing to the parties hereto the benefits contemplated by this
Agreement. If required, as soon as may be reasonably practicable, each of Seller
and Buyer shall file pre-transaction notification forms required by the
transactional notification or control laws and regulations of any applicable
jurisdiction, as agreed to by the parties. Seller and Buyer shall promptly (a)
supply the other with any information which may be required in order to
effectuate such filings and (b) supply any additional information which may
reasonably be required by the competition or transactional control authorities
of any other jurisdiction and which the Parties may reasonably deem appropriate.
Notwithstanding anything in this Section 6.8 to the contrary, nothing herein
shall require any party or any of its subsidiaries or affiliates to agree to any
divestiture of any of its respective businesses, assets or properties, or
otherwise agree to the imposition of any limitation on the ability of any of
them to conduct their respective businesses or to own or exercise control of
such businesses, assets or properties.
6.9 Employee Matters. Each Offered Employee shall be given an
Offer Letter by Buyer and/or, as determined by Buyer, one or more Buyer
Subsidiaries, to be effective as of the Closing Date, upon proof evidencing a
legal right to work in his or her country of current employment. Such Offer
Letters will (a) be subject to and in compliance with Buyer's standard human
resources policies and procedures, (b) have terms, including the position,
salary and responsibilities of such employee, which will be determined by Buyer
after consultation with Seller's management and which, to the extent required by
applicable law, will not be less favorable to the Offered Employees, in all
respects, including, but not limited to, payment of salary, benefits, and
conditions of employment, than under their existing employment agreements with
the Seller Group, and (c) supersede any prior employment agreements and other
arrangements with such Offered Employee in effect prior to the Closing Date.
Continuing Employees shall be eligible to receive benefits consistent with
Buyer's standard human resources policies. In furtherance of the foregoing, the
Seller Group shall terminate all employment agreements and other arrangements
with the Offered Employees effective as of the Closing Date in conformity with
applicable law, or for employees in Norway, the United Kingdom and Germany,
assign an transfer the employment agreements to Buyer. The Seller Group hereby
assigns to Buyer, and Buyer hereby assumes, all of the Seller Group's
contractual and statutory rights to acquire patentable and non-patentable
inventions related to the Business from Offered Employees after the termination
or expiry of their employment or consultancy agreements with the Seller Group.
6.10 Covenant Not to Solicit.
(a) Beginning on the Closing Date and ending on the date
that is twenty four months following the Closing Date, Seller shall not directly
or indirectly solicit, encourage or take any other action which is intended to
induce or encourage, or has the effect of inducing or encouraging, any
Continuing Employee to terminate his or her employment with Buyer, or hire any
Continuing Employee, provided however, Seller shall not be in breach of this
provision if any employee of Buyer (or any subsidiary thereof): (i) is
involuntarily terminated as an employee of Buyer (or any subsidiary thereof) or
(ii) voluntarily and independently approaches and obtains
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employment with Seller after a date which is at least six (6) months following
the date that such employee is no longer employed by Buyer.
(b) Beginning on the Closing Date and ending on the date
that is twenty four months following the Closing Date, Buyer shall not directly
or indirectly solicit, encourage or take any other action which is intended to
induce or encourage, or has the effect of inducing of encouraging, any employee
of Seller (other than the Offered Employees) to terminate his or her employment
with Seller, or hire any employee of Seller (other than the Offered Employees),
provided however, Buyer shall not be in breach of this provision if any employee
of Seller (or any subsidiary thereof): (i) is involuntarily terminated as an
employee of Seller (or any subsidiary thereof) or (ii) voluntarily and
independently approaches and obtains employment with Buyer after a date which is
at least six (6) months following the date that such employee is no longer
employed by Seller (or any subsidiary thereof).
6.11 Transition Planning; Transition. During the period between the
date of this Agreement and the Closing, Seller and Buyer shall cooperate with
one another in creating joint plans for the transition of the Business and the
Acquired Assets from Seller to Buyer at and after the Closing. Seller shall not
take any action that is intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Business from
maintaining the same business relationship with Buyer after the Closing as it
maintained with Seller prior to the Closing. For a period of six (6) months
following the Closing, Seller shall use its reasonable efforts to refer all
inquiries relating to the Business to Buyer.
6.12 Additional Financial Statements. Prior to the Closing, Seller
shall provide to Buyer such financial statements of the Business (the "Closing
Financial Statements") prepared in accordance with U.S. GAAP, including the
notes thereto, as Buyer may reasonably request so that Buyer may comply,
following the Closing, with its periodic reporting obligations under Sections
13(a) and 15(d) of the Exchange Act and the rules and regulations promulgated
thereunder, including any requirement to file financial statements with respect
to the transactions contemplated hereby pursuant to Item 7 of Form 8-K.
6.13 Insurance Claims. Following the Closing, Seller will take
commercially reasonable actions to pursue claims under its insurance policies at
the request and expense of Buyer with respect to matters relating to the
ownership, use or operation of the Acquired Assets or the Business prior to the
Closing and will remit any amounts recovered to Buyer with respect to such
claims.
6.14 Mail Handling. Effective as of the Closing Date, Buyer shall
have the right to open all mail and packages addressed to Seller and delivered
to Buyer relating to the Business or the Acquired Assets. To the extent Buyer
receives any mail or packages addressed to Seller and delivered to Buyer not
relating to the Business or the Acquired Assets, Buyer shall promptly deliver
such mail or packages to Seller. After the Closing Date, to the extent Seller
receives any mail or packages addressed and delivered to Seller but relating to
the Business or the Acquired Assets, Seller agrees that it will promptly
transfer or deliver or cause to be promptly transferred or delivered to Buyer.
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6.15 Additional Documents, Further Assurances and Cooperation;
Power of Attorney.
(a) Each party, at the request of the other party, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be reasonably necessary to effect the consummation of this
Agreement and the transactions contemplated hereby. After the Closing, if the
parties agree that any asset, Technology, Intellectual Property Right, Contract
or other document or item should be additionally transferred to Buyer, then the
parties shall cooperate to take actions to negotiate in good faith an
appropriate transfer or license to fulfill the intent of this Agreement. After
the Closing, each party will use its reasonable efforts to cooperate to execute
such applications, specifications, oaths, assignments and other instruments, and
take such other reasonable actions, which are necessary to apply for or perfect
the other party's interest (i) in the case of Seller, in Seller's retained
Intellectual Property Rights and (ii) in the case of Buyer, in the Intellectual
Property Rights included in the Transferred IP and Transferred Technology.
(b) Effective at the Closing, Seller hereby constitutes
and appoints Buyer the true and lawful attorney of Seller, with full power of
substitution, in the name of Seller or Buyer, but on behalf of and for the
benefit of Buyer and at Buyer's cost and expense: (i) to demand and receive from
time to time any and all of the Self-Executing Transferable Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute and settle any and all actions or
proceedings that Buyer may deem proper in order to collect, assert or enforce
any claim, right or title of any kind in or to the Self-Executing Transferable
Assets; (iii) to defend or settle any or all actions proceedings in respect of
any of the Self-Executing Transferable Assets (other than actions or proceedings
which Seller acknowledges and agrees in a written instrument signed by Seller
and delivered to Buyer constitute Excluded Liabilities); and (iv) to do all such
acts and things in relation to the matters set forth in the preceding clauses
(i) through (iii) as Buyer shall deem necessary or desirable. Seller hereby
acknowledges that the appointment hereby made and the powers hereby granted are
coupled with an interest and are not and shall not be revocable by it in any
manner or for any reason. Seller shall deliver to Buyer at the Closing an
acknowledged power of attorney to the foregoing effect executed by Seller.
6.16 Transfer Taxes. Buyer and Seller shall each pay 50% of the
Transfer Taxes imposed or levied by reason of, in connection with or
attributable to, this Agreement or the transactions contemplated hereby. Buyer
will remit its share of the Transfer Taxes to Seller upon the later to occur of
the Closing or the mutual determination of the amount of Transfer Taxes due and
payable in connection with or attributable to, this Agreement or the
transactions contemplated hereby. The parties shall cooperate with each other to
the extent reasonably requested and legally permitted to minimize any such
Transfer Taxes.
6.17 Transfer of Technology. At the Closing, Seller shall have
delivered to Buyer all copies, and neither Seller nor any of its subsidiaries
shall have retained any copy, of any source code to any Software that is
Transferred Technology, except as permitted under the Intellectual Property
License Agreement.
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6.18 Allocation of Purchase Price. Seller shall agree to an
allocation of the Purchase Price and the Assumed Liabilities among the Acquired
Assets in accordance with Section 1060 of the Code and the regulations
promulgated thereunder (and any similar provision of state, local or foreign
law, as applicable) pursuant to an independent third party retained by Buyer to
in good faith prepare and deliver such allocation to Seller reasonably promptly
after the Closing. Each of Buyer and Seller shall: (a) timely file all forms
(including Internal Revenue Service Form 8594) and Returns required to be filed
in connection with such allocation; (b) be bound by such allocation for purposes
of determining Taxes; (c) prepare and file, and cause its respective
subsidiaries to prepare and file, its Returns on a basis consistent with such
allocation; and (d) take no position, and cause its affiliates to take no
position, inconsistent with such allocation on any applicable Return, in any
audit or proceeding before any Tax authority, in any report made for Tax
purposes. In the event that such allocation is disputed by a Tax authority, the
party receiving notice of such dispute shall promptly notify the other party
hereto concerning the existence and resolution of such dispute.
6.19 Obligations of Buyer Subsidiaries and Seller Subsidiaries.
Buyer shall cause each Buyer Subsidiary to perform the obligations of such Buyer
Subsidiary under this Agreement, and Seller shall cause each Seller Subsidiary
to perform the obligations of such Seller Subsidiary under this Agreement.
6.20 Amendment or Termination of Certain Contracts. Prior to the
Closing Date, Buyer and Seller will amend, or, if not reasonably practicable to
amend, terminate, in a manner acceptable to Buyer, those certain contracts
listed on Schedule 6.20.
6.21 Joint Development Agreement. Buyer and Seller shall negotiate
in good faith in an effort to agree upon the terms of, execute and deliver the
Joint Development Agreement prior to the Closing Date.
6.22 Financial Statements. Seller shall deliver to Buyer as
promptly as practicable and in any event prior to the Closing Date the audited
balance sheet as of December 31, 2002 and the audited statements of income, cash
flows, and changes in shareholder's equity for the year ended December 31, 2002
for the Business as well as an unaudited balance sheet as of January 31, 2003
and unaudited statement of income and cash flow for the month ended January 31,
2003 for the Business.
ARTICLE 7
CONDITIONS TO THE CLOSING
7.1 Conditions to Each Party's Obligation. The respective
obligations of Buyer and Seller to effect the Acquisition shall be subject to
the satisfaction at or prior to the Closing of the following conditions:
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(a) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
Governmental Entity seeking any of the foregoing be pending.
(b) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or enacted any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Acquisition or the other transactions contemplated by this Agreement or any
of the Ancillary Agreements illegal or otherwise prohibit the consummation of
any of the foregoing.
(c) Termination of Waiting Periods; Governmental
Approvals. All waiting periods imposed by Governmental Entities relating to the
transactions contemplated hereby shall have expired or been terminated. All
other approvals from Governmental Entities, if any, required to consummate the
transactions contemplated hereby shall have been obtained.
7.2 Condition to Buyer's Obligation. The obligation of Buyer to
effect the transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by Buyer:
(a) Representations and Warranties. The representations
and warranties of Seller in this Agreement shall have been true and correct on
the date of this Agreement and shall have been true and correct in all material
respects on and as of the Closing (other than those representations and
warranties which were qualified by terms such as "material," "materially," or
"Material Adverse Effect," which representations and warranties so qualified
shall have been true and correct in all respects on and as of the Closing).
(b) Covenants. Seller shall have performed and complied
in all material respects with all covenants and obligations under this Agreement
required to be performed and complied with by Seller as of or prior to the
Closing.
(c) Litigation. There shall be no material action, suit,
proceeding, arbitration, or governmental or regulatory investigation or audit of
any nature pending or threatened against (i) Seller, its properties or any of
its officers or directors arising out of, or in any way connected with, the
transactions contemplated hereby, or (ii) the Business, the Products, the
Acquired Assets or the Offered Employees.
(d) Third Party Consents. Buyer shall have received all
consents, waivers, approvals, and assignments identified on Schedule 7.2(d)(i)
and shall have obtained all necessary licenses to the Software identified on
Schedule 7.2(e)(ii) on terms reasonably acceptable to Buyer.
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(e) Seller shall have amended or terminated in a manner
acceptable to Buyer, those contracts listed on Schedule 6.20, and shall have
delivered to Buyer evidence of such amendment or termination.
(f) Release of Liens. Buyer shall have received from
Seller a duly and validly executed copy of all agreements, instruments,
certificates and other documents, in form and substance reasonably satisfactory
to Buyer, that are necessary or appropriate to evidence the release of all Liens
on the Acquired Assets identified on Schedule 7.2(f)
(g) No Material Adverse Effect. There shall not have
occurred any event or condition of any character that has had or is reasonably
likely to have a Material Adverse Effect.
(h) New Employment Arrangements. Each of the Key
Employees and 90% of the other Offered Employees shall have entered into
"at-will" employment arrangements with Buyer pursuant to their execution of an
Offer Letter agreeing to be employees of Buyer after the Closing, and shall be
employees of Seller immediately prior to the Closing.
(i) Deliveries. Seller shall have delivered to Buyer
executed copies of the Ancillary Agreements to which it is a party, and such
Ancillary Agreements shall be in full force and effect.
(j) Closing Financial Statements. Buyer shall have
received the Closing Financial Statements together with a report in standard
form from Seller's independent public auditing firm.
(k) Audited Financial Statements. Buyer shall have
received the audited financial statements described in Section 6.22 and such
audited financial statements shall not differ in any material respect from the
Business Financial Statements. Buyer shall also have received the unaudited
financial statements described in Section 6.22.
(l) Certificate of Seller. Buyer shall have received a
certificate, validly executed by an executive officer of Seller for and on its
behalf, to the effect that:
(i) All representations and warranties made by
Seller in this Agreement were true and correct on the date of this Agreement and
are true and correct in all material respects on and as of the Closing (other
than those representations and warranties which were qualified by terms such as
"material," "materially," or "Material Adverse Effect," which representations
and warranties so qualified are true and correct in all respects on and as of
the Closing).
(ii) All covenants and obligations under this
Agreement to be performed or complied with by Seller on or prior to the Closing
have been so performed or complied with in all material respects; and
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(iii) The conditions to the obligations of Buyer
set forth in this Section 7.2 have been satisfied (unless otherwise waived in
accordance with the terms of this Agreement).
(m) Opinion of Legal Counsel of Seller. Buyer shall have
received an opinion validly executed by the outside legal counsel of Seller, and
acceptable in form and substance by Buyer, certifying as to (i) the terms and
effectiveness of the Articles of Association of Seller, (ii) the valid adoption
and continued effectiveness of resolutions of the Board of Directors of Seller
approving and authorizing this Agreement and the consummation of the
transactions contemplated hereby; (iii) the incumbency of the officers executing
this Agreement or any of the Ancillary Agreements to which Seller is a party;
(iv) the completion of all corporate action by the Board of Directors of Seller
and shareholders of Seller necessary for the authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby; and (v) the valid execution and delivery of the Agreement and the
Ancillary Agreements, creating binding and enforceable obligations of the
Seller.
(n) Joint Development Agreement. Buyer and Seller shall
have executed and delivered the Joint Development Agreement on terms acceptable
to Buyer.
7.3 Condition to Seller's Obligation. The obligation of Seller to
effect the transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by Seller:
(a) Representations and Warranties. The representations
and warranties of Buyer in this Agreement shall have been true and correct on
the date of this Agreement and shall have been true and correct in all material
respects on and as of the Closing (other than those representations and
warranties which were qualified by terms such as "material," "materially," or
"Material Adverse Effect," which representations and warranties so qualified
shall have been true and correct in all respects on and as of the Closing).
(b) Covenants. Buyer shall have performed and complied in
all material respects with all covenants and obligations under this Agreement
required to be performed and complied with by Buyer as of or prior to the
Closing.
(c) Deliveries. Buyer shall have delivered to Seller
executed copies of the Ancillary Agreements to which it is a party, and such
Ancillary Agreements shall be in full force and effect.
(d) Certificate of Buyer. Seller shall have received a
certificate, validly executed by an executive officer of Buyer for and on its
behalf, to the effect that:
(i) All representations and warranties made by
Buyer in this Agreement were true and correct on the date of this Agreement and
are true and correct in all material respects on and as of the Closing (other
than those representations and warranties which were qualified by
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terms such as "material," "materially," or "Material Adverse Effect," which
representations and warranties so qualified are true and correct in all respects
on and as of the Closing).
(ii) All covenants and obligations under this
Agreement to be performed or complied with by Buyer on or prior to the Closing
have been so performed or complied with in all material respects; and
(iii) The conditions to the obligations of Seller
set forth in this Section 7.3 have been satisfied (unless otherwise waived in
accordance with the terms of this Agreement).
(e) Certificate of Secretary of Buyer. Seller shall have
received a certificate, validly executed by the Secretary or an Assistant
Secretary of Buyer, certifying as to (i) the terms and effectiveness of the
certificate of incorporation and the bylaws of Buyer, (ii) the valid adoption of
resolutions of the Board of Directors of Buyer approving this Agreement and the
consummation of the transactions contemplated hereby and (iii) the incumbency of
the officers executing this Agreement or any of the Ancillary Agreements to
which Buyer is a party.
ARTICLE 8
SURVIVAL AND INDEMNIFICATION
8.1 Survival. The representations and warranties of Seller
contained in this Agreement, or in any certificate or other instrument delivered
pursuant to this Agreement, shall terminate on the anniversary of the Closing
Date (the "Escrow Termination Date"); provided, however that the representations
and warranties of Seller contained in Section 4.2 shall survive indefinitely,
the representations and warranties contained in Section 4.22 shall survive until
the expiration of the applicable statute of limitations and the representations
and warranties contained in Section 4.16 shall survive for a period of two (2)
years following the Closing. The representations and warranties of Buyer
contained in this Agreement, or in any certificate or other instrument delivered
pursuant to this Agreement, shall terminate at the Closing.
8.2 Indemnification. Seller agrees to indemnify and hold the
Indemnified Parties harmless against all Losses incurred, accrued or sustained
by the Indemnified Parties, or any of them, directly or indirectly, as a result
of (a) any breach of a representation or warranty of Seller contained in this
Agreement or in any certificate, instrument, or other document delivered
pursuant to this Agreement, (b) any failure by Seller to perform or comply with
any covenant applicable to it contained in this Agreement, (c) any Excluded
Liabilities other than Offset Liabilities (as defined below), (d) Seller's
failure to deliver to Buyer any of the Acquired Assets, or (e) the Data Center
Termination Costs. For the purpose of determining the amount of any Loss for
which any of the Indemnified Parties may be entitled to indemnification by
Seller pursuant to this ARTICLE 8, any representation or warranty of Seller
contained in this Agreement or in any certificate, instrument, or other document
delivered pursuant to this Agreement that is qualified by a term or terms such
as
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"material," "materially," or "Material Adverse Effect," shall be deemed made or
given without such qualification. "Offset Liabilities" shall mean the amount of
any Latent Liability which (i) does not relate to any breach or inaccuracy in
Seller's representations and warranties contained in this Agreement or in any
certificate, instrument or other document delivered pursuant to this Agreement
or any failure by Seller to perform or comply with any covenant applicable to it
contained in this Agreement and (ii) is offset by amounts actually paid to Buyer
pursuant to a settlement or judgment as a result of a counter-claim asserted by
Buyer against the third party whose claim constitutes the Latent Liability,
which counter-claim arises out of the same facts and circumstances which gives
rise to the Latent Liability.
8.3 Limitations on Indemnification. Notwithstanding anything in
Section 8.2 to the contrary, no Indemnified Party shall be entitled to be
indemnified for any Loss incurred, accrued or sustained by such Indemnified
Party as a result of any breach or inaccuracy of a representation or warranty of
Seller contained in this Agreement or in any certificate, instrument, or other
document delivered pursuant to this Agreement until the Indemnified Parties, or
any of them, have delivered to Seller and the Escrow Agent one or more Claim
Certificates identifying Losses incurred, accrued or sustained in excess of the
Basket Amount, in which case the Indemnified Parties, or any of them, shall be
entitled to recover all Losses so identified above the Basket Amount.
Notwithstanding the immediately preceding sentence, Buyer shall be entitled to
recover for, and the Basket Amount shall not apply as a threshold to, any Loss
incurred, accrued or sustained by an Indemnified Party arising or resulting from
fraud or fraudulent misrepresentation with respect to representations and
warranties of Seller contained in this Agreement or in any certificate,
instrument, or other document delivered pursuant to this Agreement. Following
the Closing, the maximum liability of Seller under this Agreement as a result of
any breach or inaccuracy of a representation or warranty of Seller contained in
this Agreement or a breach or inaccuracy of a representation or warranty in any
certificate, instrument, or other document delivered pursuant to this Agreement,
except in the case of intentional, knowing or willful breach of this Agreement,
fraud, or similar circumstances, shall not exceed $12,750,000.
8.4 Escrow Arrangements.
(a) Escrow Fund. Seller will be deemed to have received
at the Closing and Buyer will deposit the Escrow Amount into an escrow fund (the
"Escrow Fund") to be governed by the terms set forth herein. The Escrow Fund
shall be available to compensate the Indemnified Parties, or any of them, for
any claims by such Indemnified Parties for any Loss or Losses suffered or
incurred by them. Except as set forth in the last sentence of Section 8.3,
nothing herein shall prohibit any Indemnified Party from seeking recovery
pursuant to Section 8.2 directly from Seller or its successors for any Losses
exceeding the amounts contained in the Escrow Fund. The Escrow Agent may execute
this Agreement following the date of this Agreement and prior to the Closing,
and such later execution, if so executed after the date of this Agreement, shall
not affect the binding nature of this Agreement as of the date of this Agreement
between the other signatories hereto. Nothing herein shall limit the liability
of Seller for any breach or inaccuracy of any representation, warranty or
covenant contained in this Agreement if the Acquisition does not close.
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(b) Escrow Period; Distribution upon Termination of
Escrow Periods. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Closing and shall terminate at 5:00 p.m.,
Pacific Time, on the day 30 days following the Escrow Termination Date (the
"Escrow Period"); provided, however, that the Escrow Period shall not terminate
with respect to any amount which, in the reasonable judgment of Buyer, is
necessary to satisfy any unsatisfied claims specified in any Claim Certificate
delivered to the Escrow Agent prior to the termination of the Escrow Period (the
"Unsatisfied Claim Amount"). The Escrow Agent shall deliver, promptly following
the Escrow Termination Date, to Seller all cash remaining in the Escrow Fund at
the Escrow Termination Date less the Unsatisfied Claim Amount (the "Remaining
Portion"). Any Unsatisfied Claim Amount which Buyer has accrued but which Buyer
has not sustained or incurred and which Buyer elects to no longer accrue during
the one year period following the end of the Escrow Period shall be promptly
delivered to Seller by the Escrow Agent upon appropriate instructions from
Buyer. In addition, one year following the end of the Escrow Period, the Escrow
Agent shall deliver to Seller an amount in cash equal to any Unsatisfied Claim
Amounts still remaining in the Escrow Fund less any amounts which, in the
reasonable judgment of Buyer, are necessary to satisfy any unsatisfied Losses
which Buyer has sustained, incurred or accrued.
(c) Protection of the Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the
Escrow Fund, shall treat such fund as a trust fund in accordance with the terms
of this Agreement and not as the property of Buyer and shall hold and dispose of
the Escrow Fund only in accordance with the terms of this ARTICLE 8.
(ii) The Escrow Agent shall invest and reinvest
the Escrow Amount in a liquid U.S. Bank money market account (the
"Obligations"). All income earned on the Obligations shall be added to and
deemed a part of the Escrow Fund. For tax reporting and withholding purposes,
all income earned on the Obligations shall be treated, and shall be reported by
the Escrow Agent, as income of Seller.
8.5 Indemnification Procedure. An Indemnified Party seeking
indemnification shall deliver a Claim Certificate to Seller and, if prior to the
Escrow Termination Date, the Escrow Agent. Seller may object to any such claim
set forth in such Claim Certificate by providing written notice to such
Indemnified Party and, if prior to the Escrow Termination Date, the Escrow Agent
specifying the basis for Seller's objection, within ten (10) days following
delivery of such Claim Certificate to Seller. If an objection to the amount of
Losses specified in such Claim Certificate is provided by Seller, and Seller and
the Indemnified Party are unable to resolve such dispute after good faith
discussions within ten (10) days following the delivery of such objection
notice, such dispute shall be resolved in accordance with appropriate legal
proceedings. If Seller does not object to the Claim Certificate within the
period specified, the Escrow Agent shall deliver to Buyer, as promptly as
practicable, an amount from the Escrow Fund equal to such identified Losses
above the Basket Amount (or equal to the amount remaining in the Escrow Fund if
such identified Losses above the Basket Amount exceed the amount then in the
Escrow Fund).
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8.6 Third Party Claims. In the event Buyer becomes aware of a
third-party claim that Buyer reasonably believes may result in a demand for
indemnification pursuant to this ARTICLE 8, Buyer shall notify Seller of such
claim, and Seller shall be entitled, at its expense, to participate in, but not
to determine or conduct, the defense of such claim. Buyer shall have the right
in its sole discretion to conduct the defense of and settle any such claim;
provided, however, that except with the consent of the Seller, no settlement of
any such claim with third-party claimants shall be determinative of the amount
of Losses relating to such matter. In the event that Seller has consented to any
such settlement, Seller shall have no power or authority to object under any
provision of this ARTICLE 8 to the amount of any claim by Buyer against Seller
with respect to such settlement. If there is a third-party claim that, if
adversely determined would give rise to a right of recovery for Losses
hereunder, then any amounts incurred or accrued in defense of such third-party
claim, regardless of the outcome of such claim, shall be deemed Losses
hereunder.
8.7 Escrow Agent's Duties.
(a) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of Buyer
and Seller, and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall not
be liable for any act done or omitted hereunder as Escrow Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of legal counsel shall be conclusive evidence of
such good faith.
(b) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other Person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of the
parties hereto or to any other Person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(c) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(d) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(e) In performing any duties under this Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or expenses,
except for negligence or willful misconduct on
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the part of the Escrow Agent. The Escrow Agent shall not incur any such
liability for (A) any act or failure to act made or omitted in good faith, or
(B) any action taken or omitted in reliance upon any instrument, including any
written statement of affidavit provided for in this Agreement that the Escrow
Agent shall in good faith believe to be genuine, nor will the Escrow Agent be
liable or responsible for forgeries, fraud, impersonations, or determining the
scope of any representative authority. In addition, the Escrow Agent may consult
with legal counsel in connection with performing the Escrow Agent's duties under
this Agreement and shall be fully protected in any act taken, suffered, or
permitted by him/her in good faith in accordance with the advice of counsel. The
Escrow Agent is not responsible for determining and verifying the authority of
any Person acting or purporting to act on behalf of any party to this Agreement.
(f) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and the Escrow Amount and may wait for settlement of any
such controversy by final appropriate legal proceedings or other means as, in
the Escrow Agent's discretion, may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damages. Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and the Escrow Amounts held in escrow, except all costs,
expenses, charges and reasonable attorney fees incurred by the Escrow Agent due
to the interpleader action and which the parties jointly and severally agree to
pay. Upon initiating such action, the Escrow Agent shall be fully released and
discharged of and from all obligations and liability imposed by the terms of
this Agreement.
(g) The parties and their respective successors and
assigns agree jointly and severally to indemnify and hold Escrow Agent harmless
against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, including allocated
costs of in-house counsel and disbursements that may be imposed on Escrow Agent
or incurred by Escrow Agent in connection with the performance of his/her duties
under this Agreement, including but not limited to any litigation arising from
this Agreement or involving its subject matter, other than those arising out of
the negligence or willful misconduct of the Escrow Agent.
(h) The Escrow Agent may resign at any time upon giving
at least 30 days written notice to Buyer and Seller; provided, however, that no
such resignation shall become effective until the appointment of a successor
escrow agent. Buyer and Seller shall agree on a successor escrow agent within 30
days after receiving such notice. If the parties fail to agree upon a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent authorized to do business in the State of California.
The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally
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named as escrow agent. Upon appointment of a successor escrow agent, the Escrow
Agent shall be discharged from any further duties and liability under this
Agreement.
(i) All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by Buyer in accordance with the standard fee
schedule of the Escrow Agent. It is understood that the fees and usual charges
agreed upon for services of the Escrow Agent shall be considered compensation
for ordinary services as contemplated by this Agreement. In the event that the
conditions of this Agreement are not promptly fulfilled, or if the Escrow Agent
renders any service not provided for in this Agreement, or if the parties
request a substantial modification of its terms, or if any controversy arises,
or if the Escrow Agent is made a party to, or intervenes in, any litigation
pertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, attorney's fees, including allocated costs of in-house counsel, and
expenses occasioned by such default, delay, controversy or litigation.
(j) Any corporation or other business entity into which
the Escrow Agent in its individual capacity may be merged or converted or with
which it may be consolidated, or any corporation or other business entity
resulting from any merger, conversion or consolidation to which the Escrow Agent
in its individual capacity shall be a party, or any corporation or other
business entity to which substantially all the corporate trust business of the
Escrow Agent in its individual capacity may be transferred, shall be the Escrow
Agent under this Escrow Agreement without further act.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. Except as provided in Section 9.2, this Agreement
may be terminated and the Acquisition abandoned at any time prior to the
Closing:
(a) By the mutual written agreement of the parties;
(b) By either Buyer or Seller, if (i) the Closing has not
occurred by June 25, 2003; provided, however, that the right to terminate this
Agreement under this Section 9.1(b)(i) shall not be available to any party whose
willful failure to fulfill any obligation hereunder or other breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; (ii) there shall be in effect a final
nonappealable order of a Governmental Entity preventing consummation of the
Acquisition; or (iii) there shall be any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Acquisition by any
Governmental Entity that would make consummation of the Acquisition illegal;
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(c) By Buyer, if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Seller and (i) Seller is not using its commercially reasonable
efforts to cure such breach, or has not cured such breach within 15 days, after
notice of such breach has been given by Buyer to Seller in accordance with
Section 10.1; provided, however, that, no cure period shall be required for any
such breach which by its nature cannot be cured and (ii) as a result of such
breach, one or more of the conditions set forth in Section 7.1 or Section 7.2
would not be satisfied at or prior to the Closing;
(d) By Seller, if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Buyer and (i) Buyer is not using its commercially reasonable efforts
to cure such breach, or has not cured such breach within 15 days, after notice
of such breach has been given by Seller to Buyer in accordance with Section
10.1; provided, however, that, no cure period shall be required for any such
breach which by its nature cannot be cured and (ii) as a result of such breach,
one or more of the conditions set forth in Section 7.1 or Section 7.3 would not
be satisfied at or prior to the Closing;
(e) By Buyer, if there shall have occurred any event or
condition of any character that has had a Material Adverse Effect; or
(f) By Buyer, if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued after the date
of this Agreement by any Governmental Entity, which would (i) prohibit or
materially and adversely restrict Buyer's ownership or operation of any portion
of the Business of the Acquired Assets or (ii) compel Buyer to dispose of or
hold separate all or any portion of the Acquired Assets or the Business as a
result of the Acquisition or any of its assets or other businesses.
9.2 Procedure for and Effect of Termination.
(a) In the event of the termination of this Agreement by
any of the parties in accordance with Section 9.1, written notice to the
non-terminating party shall be given by the terminating party in accordance with
Section 10.1.
(b) In the event of the termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Buyer or Seller, or their
respective officers, directors or stockholders, provided that each Party shall
remain liable for any fraud, intentional misrepresentation or willful or
intentional breach of this Agreement prior to its termination; and provided
further, that the provisions of Section 6.5, 6.6, ARTICLE 10, this Section 9.2
and the applicable definitions in ARTICLE 1 shall remain in full force and
effect and survive any termination of this Agreement.
9.3 Amendment. This Agreement may be amended by the parties only
by the execution and delivery of an instrument in writing signed on behalf of
both parties.
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9.4 Extension; Waiver. At any time prior to the Closing, Buyer, on
the one hand, and Seller, on the other hand, may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations of the other
party, (b) waive any inaccuracies in the representations or warranties made to
such party contained herein or in any certificate, instrument or other document
delivered pursuant the this Agreement, on or prior to the Closing Date, (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein and (d) waive any conditions to the Closing
contained herein. No such waiver shall operate as a waiver of any further or
other inaccuracies or breaches. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in a written instrument and
signed and delivered on behalf of such party.
ARTICLE 10
MISCELLANEOUS
10.1 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by pre-paid
overnight or same-day commercial messenger or courier service, or mailed by
registered or certified mail (return receipt requested) or sent via facsimile
(with acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Buyer, to:
Overture Services, Inc.
74 North Pasadena Avenue, 3rd Floor
Pasadena, CA 91103
Attn: President and Chief Executive Officer
Fax: (626) 685 5601
with a copy to (which shall not constitute notice):
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Martin W. Korman, Esq.
Fax: (650) 493-6811
(b) if to Seller, to:
Fast Search & Transfer ASA
Stoperigata 2
P.O. Box 1677 Vika
-53-
NO-0120 Oslo
Norway
Attn: President
Fax: 47 23 01 12 01
with a copy to (which shall not constitute notice):
Lucash, Gesmer & Updegrove LLP
40 Broad Street
Boston, MA 02109
Attn: William Contente
Fax: (617) 350-6878
(c) if to the Escrow Agent, to:
US Bank
One California Street, Suite 2550
San Francisco, CA 94111
Attn: Sheila K. Soares
Fax: (415) 273-4591
All such notices, requests and other communications will (a) if
delivered personally to the address as provided in this Section 10.1, be deemed
given upon delivery, (b) if delivered by facsimile transmission to the facsimile
number as provided for in this Section 10.1, be deemed given upon facsimile
confirmation, and (c) if delivered by messenger or courier to the address as
provided in this Section 10.1, be deemed given on the earlier of the first
business day following the date sent by such messenger or courier upon receipt
(in each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section 10.1). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
10.2 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto, the Ancillary Agreements and the documents and instruments and other
agreements among the parties referenced herein or therein constitute the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and thereof.
10.3 No Third Party Beneficiaries. This Agreement is solely for the
benefit of (a) Buyer and its successors and permitted assigns with respect to
the obligations of Seller under this Agreement and (b) Seller and its successors
and permitted assigns with respect to the obligations of Buyer under this
Agreement. This Agreement shall not be deemed to confer upon or give to any
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other third party any remedy, claim, right to reimbursement, cause of action or
other right, unless expressly provided for in this Agreement.
10.4 Headings. The headings and table of contents used in this
Agreement have been inserted for convenience of reference only and do not
define, limit, describe, explain, modify, amplify or add to the interpretation,
construction or meaning of any provision of, or scope or intent of, this
Agreement nor in any way effect this Agreement.
10.5 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of laws provisions thereof.
10.7 Consent to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any California state court, or Federal court of the
United States of America, sitting in Los Angeles County, California, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the agreements delivered in connection herewith or
the transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees that any claim in respect of any such
action or proceeding may be heard and determined in such California state court
or, to the extent permitted by law, in such Federal court, (ii) waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any such action or proceeding in
any such California state or Federal court, and (iii) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such California state or Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices herein. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law. Seller
hereby appoints Howard Novick, Fast Search & Transfer, Inc., 93 Worchester
Street, Wellesley, MA 02481, tel: (781) 304 2400, fax: (781) 304 2410, as its
agent for service of process in connection with any dispute or action arising
hereunder.
10.8 Waiver of Jury Trial. EACH OF BUYER AND SELLER HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER OR
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SELLER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF,
INCLUDING THE REPUDIATION OF THIS AGREEMENT.
10.9 Assignment. No party may assign or delegate either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other party. Subject to the immediately preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Party, it being understood that all
Parties need not sign the same counterpart.
10.11 Fees and Expenses. Subject to Section 8.2 all fees, costs and
expenses incurred by a party in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs and expenses, including fees, costs and expenses of any broker, finder,
attorney or other similar agent; provided, however, that filing fees under the
antitrust requirements of foreign government authorities, if any, shall be borne
equally by the parties.
10.12 Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.13 Exhibits and Schedules. The Exhibits and Schedules to this
Agreement, including the Disclosure Schedule, form an integral part of this
Agreement and are hereby incorporated by reference into this Agreement wherever
reference is made to them to the same extent as if they were set out in full.
10.14 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OVERTURE SERVICES, INC.
/s/ Ted Meisel
By: _____________________________
Ted Meisel
Name: ___________________________
CEO
Title: __________________________
FAST SEARCH & TRANSFER ASA
/s/ John M. Lervik
By: _____________________________
John M. Lervik
Name: ___________________________
CEO
Title: __________________________
U.S. BANK TRUST,
NATIONAL ASSOCIATION
/s/ Sheila Soares
By: _____________________________
Sheila Soares
Name: ___________________________
Assistant Vice President
Title: __________________________
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
EXHIBITS
Exhibit A Form of General Assignment, Assumption and Bill of Sale
Exhibit B Intellectual Property License Agreement
Exhibit C Transition Services Agreement
Exhibit D Interim Commercial Hosting Agreement
SCHEDULES
Schedule 1.1(l) Business Employees
Schedule 1.1(v) Consent Required Contracts
Schedule 1.1(zz) Terms of Joint Development Agreement
Schedule 1.1(aaa) Key Employees
Schedule 1.11.1(kkk) Offered Employees
Schedule 1.1(bbbb) Seller Subsidiaries
Schedule 1.1(dddd) Tangible Assets
Schedule 1.1(gggg) Third Party IP
Schedule 1.1(jjjj) Transferred Contracts
Schedule 1.1(llll) Transferred Intellectual Property Rights
Schedule 1.1(mmmm) Transferred Patents
Schedule 1.1(nnnn) Transferred Technology
Schedule 1.1(oooo) Transferred Trademarks
Schedule 3.2(b) Earn-Out
Schedule 4.9 Business Financial Statements
Schedule 6.20 Contracts to be Terminated or Amended
Schedule 7.2(d) Certain Third Party Consents
Schedule 7.2(f) Release of Liens