<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 17, 1997
Wang Laboratories, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------------------------------------------------
(State or other jurisdiction of incorporation)
1-5677 04-2192707
- -------------------------- --------------------------------
(Commission File Number) (IRS Employer Identification No.)
600 Technology Park Drive, Billerica, Massachusetts 01821
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 967-5000
--------------
<PAGE>
Item 2. DISPOSITION OF ASSETS
On March 17, 1997, Wang Laboratories, Inc. (the "Company") completed
the sale of its software business unit to Eastman Kodak Company
("Kodak") for $260.0 million in cash. The business sold to Kodak
includes Wang's software business unit management, employees,
products, technology, customers, partners, as well as its sales,
marketing and research and development organizations worldwide. The
consideration paid to the Company was determined through arms-length
negotiations between the Company and Kodak. The Company will record a
nonrecurring gain in the quarter ending March 31, 1997, although the
actual amount of the gain has not yet been determined. A press
release prepared by the Company is attached hereto as Exhibit 99.1 and
a copy of the Asset Purchase Agreement, as amended, is attached hereto
as Exhibit 10.1. The foregoing description is qualified in its
entirety by reference to the copy of the Asset Purchase Agreement.
Item 5. OTHER INFORMATION
In connection with the sale of the software business unit, the
Company's Board of Directors completed its review of the Company's
strategic focus, core competencies and key assets to compete
successfully in the global information technology services market as a
network and desktop integration and services company. This review
included an evalution by the Board of Mr. Tucci's contributions to the
Company as the leader and architect of its global strategy. The Board
also assessed Mr. Tucci's leadership and vision in guiding the Company
through its emergence from Chapter 11 and its transformation through a
number of revenue-enhancing and value-building software and services
acquisitions, culminating with the sale of the software business to
Eastman Kodak Company.
In acknowledgment of his accomplishments, and in recognition of his
commitment to the Company, the Board has approved certain
modifications to Mr. Tucci's employment agreement. These include an
increase in annual base salary to $750,000, the grant of additional
equity incentives in the form of both stock options and restricted
stock grants and an immediate payment of a $4 million performance and
retention bonus, all of which are intended to ensure Mr. Tucci's
continued service to the Company. The enhancements set Mr. Tucci's
base compensation at a level which is comparable to that of other CEOs
in similar situations and more closely ties a majority of Mr. Tucci's
future compensation to an increase in shareholder value. The last
comprehensive restatement of Mr. Tucci's employment agreement occurred
on March 9, 1993.
A press release prepared by the Company is attached hereto as
Exhibit 99.2.
2
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Unaudited Pro Forma Financial Information
-----------------------------------------
Pro Forma Condensed Balance Sheet as of December 31, 1996
Pro Forma Condensed Statement of Operations for the six months
ended December 31, 1996
Pro Forma Condensed Statement of Operations for the year ended
June 30, 1996
Pro Forma Condensed Statement of Operations for the year ended
June 30, 1995
Notes to Pro Forma Condensed Financial Statements
(b) Exhibits
--------
Item No. Description
-------- -----------
10.1 Asset Purchase Agreement between Wang Laboratories,
Inc. and Eastman Kodak Company dated January 29,
1997, as amended on March 17, 1997
99.1 Press Release - Wang Completes Sale of its Software
Business to Kodak
99.2 Press Release - Wang Structures for Global Growth
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WANG LABORATORIES, INC.
March 28, 1997 By: /s/ Franklyn A. Caine
---------------------
Franklyn A. Caine
Executive Vice President and
Chief Financial Officer
4
<PAGE>
PRO FORMA CONDENSED
FINANCIAL STATEMENTS
The Pro Forma Condensed Balance Sheet reflects the consolidated balance sheet of
the Company as of December 31, 1996 as if the sale of the Company's software
business unit to Kodak had been consummated on December 31, 1996. The Pro Forma
Condensed Statements of Operations for the six months ended December 31, 1996
and each of the years ended June 30, 1996 and 1995 reflect the consolidated
results of operations of the Company as if the sale of the software business
unit had been consummated on July 1, 1994. The Company intends to reclassify
the historical results of the software business unit to discontinued operations
in its consolidated statements of operations. Pro forma results for the year
ended June 30, 1994 are not presented since the Company's operating results,
excluding those related to the software business unit, would not be materially
different than the results actually reported.
The pro forma information does not purport to be indicative of the financial
position or results of operations that would have been attained had the sale
occurred on the dates indicated nor of future results of operations of the
Company. The pro forma condensed financial statements should be read in
conjunction with the separate unaudited and audited financial statements and
notes thereto of Wang Laboratories, Inc. included in its Quarterly Report on
Form 10-Q for the six months ended December 31, 1996 and its Annual Report on
Form 10-K for the year ended June 30, 1996.
5
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Divested
Historical Software Pro Forma Pro Forma
Wang Business Unit (1) Adjustments (2) Wang
---------- ----------------- --------------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and equivalents $ 73.4 $ -- $ 149.1 $ 222.5
Accounts receivable, net 309.0 27.5 -- 281.5
Inventories 22.3 0.3 -- 22.0
Other current assets 50.3 1.5 (0.5) 48.3
-------- ----- ------- --------
Total current assets 455.0 29.3 148.6 574.3
Depreciable assets, net 138.5 5.9 -- 132.6
Intangible assets, net 397.4 31.1 (45.8) 320.5
Other 64.4 1.4 (21.3) 41.7
-------- ----- ------- --------
Total assets $1,055.3 $67.7 $ 81.5 $1,069.1
======== ===== ======= ========
Liabilities and stockholders' equity
Current liabilities
Amounts due under revolving
credit facility $ 104.1 $ -- $(104.1) $ --
Borrowings due within one year 61.2 -- -- 61.2
Accounts payable, accrued
expenses and other 319.4 15.7 23.6 327.3
Deferred service revenue 74.8 3.8 -- 71.0
-------- ----- ------- --------
Total current liabilities 559.5 19.5 (80.5) 459.5
Long-term liabilities 86.4 1.0 2.5 87.9
Series A preferred stock 85.1 -- -- 85.1
Stockholders' equity 324.3 47.2 159.5 436.6
-------- ----- ------- --------
Total liabilities and stockholders'
equity $1,055.3 $67.7 $ 81.5 $1,069.1
======== ===== ======= ========
</TABLE>
See Notes to Pro Forma Condensed Financial Statements
6
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Divested
Historical Software Pro Forma Pro Forma
Wang Business Unit (3) Adjustments Wang
----------- ----------------- ---------------------- -----------
<S> <C> <C> <C> <C>
Net revenue $654.4 $ 39.3 $ -- $ 615.1
Costs and expenses
Cost of revenues 474.4 17.3 -- 457.1
Research and development 15.8 13.9 -- 1.9
Selling, general and
administrative 130.7 28.9 -- 101.8
Acquisition-related charges 29.1 1.7 -- 27.4
Amortization of acquisition
and fresh-start intangibles 23.2 3.7 -- (4) 19.5
----------- ----------------- --------- ----------
Total costs and expenses 673.2 65.5 -- 607.7
----------- ----------------- --------- ----------
Operating income (loss) (18.8) (26.2) -- 7.4
Other (income) expense 1.7 0.1 -- (5) 1.6
----------- ----------------- --------- ----------
Income (loss) before
income taxes (20.5) (26.3) -- 5.8
Provision (benefit) for income
taxes 1.4 (1.6) -- 3.0
----------- ----------------- --------- ----------
Net income (loss) (21.9) (24.7) -- 2.8
Accretion and dividends on
preferred stock (7.0) -- -- (7.0)
----------- ----------------- --------- -----------
Net income (loss) applicable
to common stockholders $(28.9) $(24.7) $ -- $ (4.2)
=========== ================= ========= ===========
Weighted average shares
outstanding 36.7 36.7
=========== ===========
Net loss per share $(0.79) $ (0.11)
=========== ===========
</TABLE>
See Notes to Pro Forma Condensed Financial Statements
7
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Divested
Historical Software Pro Forma Pro Forma
Wang Business Unit (3) Adjustments Wang
----------- ----------------- ---------------------- -----------
<S> <C> <C> <C> <C>
Net revenue $1,089.8 $ 75.9 $ -- $1,013.9
Costs and expenses
Cost of revenues 732.4 35.2 -- 697.2
Research and development 33.7 28.7 -- 5.0
Selling, general and
administrative 250.7 61.8 -- 188.9
Acquisition-related charges 27.2 27.2 -- --
Amortization of acquisition
and fresh-start intangibles 43.3 8.1 -- (4) 35.2
----------- ------- ---------- -----------
Total costs and expenses 1,087.3 161.0 -- 926.3
----------- ------- ---------- -----------
Operating income (loss) 2.5 (85.1) -- 87.6
Other (income) expense (7.9) 0.7 -- (5) (8.6)
----------- ------- ---------- -----------
Income (loss) before
income taxes 10.4 (85.8) -- 96.2
Provision (benefit) for income
taxes 11.0 (20.4) -- 31.4
----------- ------- ---------- -----------
Net income (loss) (0.6) (65.4) -- 64.8
Accretion and dividends on
preferred stock (22.6) -- -- (22.6)
----------- ------- ---------- -----------
Net income (loss) applicable
to common stockholders $ (23.2) $(65.4) $ -- $ 42.2
=========== ======= ========== ===========
Weighted average shares
outstanding 36.3 36.3
=========== ===========
Net income (loss) per share $ (0.64) $ 1.16
=========== ===========
</TABLE>
See Notes to Pro Forma Condensed Financial Statements
8
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Divested
Historical Software Pro Forma Pro Forma
Wang Business Unit (3) Adjustments Wang
----------- ----------------- ---------------------- -----------
<S> <C> <C> <C> <C>
Net revenue $ 947.2 $ 45.3 $ -- $901.9
Costs and expenses
Cost of revenues 656.2 26.8 -- 629.4
Research and development 31.5 23.5 -- 8.0
Selling, general and
administrative 230.0 50.3 -- 179.7
Acquisition-related charges 64.2 8.6 -- 55.6
Amortization of acquisition
and fresh-start intangibles 32.0 7.5 -- (4) 24.5
----------- ------ ------- -----------
Total costs and expenses 1,013.9 116.7 -- 897.2
----------- ------ ------- -----------
Operating income (loss) (66.7) (71.4) -- 4.7
Other (income) expense (9.0) -- -- (5) (9.0)
----------- ------ ------- -----------
Income (loss) before
income taxes (57.7) (71.4) -- 13.7
Provision (benefit) for income
taxes 3.6 (17.5) -- 21.1
----------- ------ ------- -----------
Net income (loss) (61.3) (53.9) -- (7.4)
Accretion and dividends on
preferred stock (8.7) -- -- (8.7)
----------- ------ ------- -----------
Net income (loss) applicable
to common stockholders $ (70.0) $(53.9) $ -- $(16.1)
=========== ====== ======= ===========
Weighted average shares
outstanding 34.2 34.2
========== ===========
Net income (loss) per share $ (2.04) $(0.47)
========== ===========
</TABLE>
See Notes to Pro Forma Condensed Financial Statements
9
<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Balance sheet of the software business unit as of December 31, 1996,
reflecting the assets sold to and liabilities assumed by the buyer pursuant
to the Asset Purchase Agreement, as amended on March 17, 1997, and assets
held by the Company allocable to the software business unit which will be
eliminated as a result of the sale.
(2) The Pro Forma Condensed Balance Sheet includes the following adjustments to
reflect the disposition of the software business unit as if the sale had
occurred at December 31, 1996.
<TABLE>
<CAPTION>
Increase (Decrease) in Balance Sheet Accounts
---------------------------------------------------------------------------
Calculation
of Estimated Other Revolving Other
Gain Cash Assets Credit Facility Liabilities Equity
------------- -------- -------- ---------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Proceeds $260.0 $155.9 $(104.1)
Net book value of software
business unit (47.2) $ 47.2
Transaction costs (34.5) (6.8) $ (0.5) $21.9 5.3
------
Pre-tax gain 178.3
Provision for income taxes (71.3) (67.1) 4.2
------
Net gain $107.0 107.0
====== ------- ------- ------- ------ ------
Balance sheet totals $149.1 $(67.6) $(104.1) $26.1 $159.5
======= ======= ======= ====== ======
</TABLE>
(3) Statements of operations of the software business unit for the periods
presented, which will be classified as discontinued operations as a result
of the sale of the software business unit to Kodak.
(4) As a result of the Company's ability to utilize its available pre-
confirmation net operating loss carryforwards to offset taxable income
expected from this transaction, the anticipated provision for income taxes
of $71.3 million consists of $4.2 million of cash expense and $67.1 million
of non-cash expense. Under FASB 109, "Accounting for Income Taxes", the non-
cash provision for income taxes is expected to eliminate the balance of the
Company's remaining fresh-start intangible assets. The Pro Forma Condensed
Statements of Operations do not reflect the reduction of the annual
amortization expense of these assets expected as a result of this
transaction. Amortization expense related to these assets amounted to $7.3
million for the six months ended December 31, 1996 and $19.1 million for
each of the years ended June 30, 1996 and 1995.
(5) The Pro Forma Statements of Operations do not reflect the reduction to
interest expense due to the Company's anticipated repayment of its
outstanding revolving credit facility or interest income on the cash
generated from the sale.
10
<PAGE>
EXHIBIT INDEX
-------------
Item No. Description
-------- -----------
10.1 Asset Purchase Agreement between Wang Laboratories,
Inc. and Eastman Kodak Company dated January 29,
1997, as amended on March 17, 1997
99.1 Press Release - Wang Completes Sale of its Software
Business to Kodak
99.2 Press Release - Wang Structures for Global Growth
11
<PAGE>
Exhibit 10.1
ASSET PURCHASE AGREEMENT
EASTMAN KODAK COMPANY
AND
WANG LABORATORIES, INC.
AND
WANG FEDERAL, INC.
DATED JANUARY 29, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.1 Definitions.................................................. 1
1.2 Other Definitions............................................ 7
1.3 Other Rules of Construction.................................. 9
ARTICLE II SALE AND PURCHASE
2.1 Transfer of Assets........................................... 10
2.2 Excluded Assets.............................................. 12
2.3 Assumption of Liabilities.................................... 13
2.4 Excluded Liabilities......................................... 14
2.5 Consideration................................................ 16
2.6 Allocation of Consideration.................................. 16
2.7 Local Transactions........................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SELLER AND FEDERAL
3.1 Organization, Power, Standing and Qualification.............. 17
3.2 Power and Authority.......................................... 18
3.3 Validity of Contemplated Transactions........................ 18
3.4 Consents..................................................... 18
3.5 Acquired Subsidiaries........................................ 18
3.6 Financial Statements and Business Plan....................... 19
3.7 Undisclosed Liabilities...................................... 19
3.8 Absence of Certain Changes................................... 20
3.9 Purchased Assets............................................. 21
3.10 IT Property.................................................. 21
3.11 IP Rights.................................................... 26
3.12 Trade Secrets................................................ 27
3.13 Limitation on Intellectual Property Representations ......... 28
3.14 Title to Property............................................ 28
3.15 Personal Property Leases..................................... 28
3.16 Condition of Assets.......................................... 29
3.17 [Intentionally omitted.]..................................... 29
3.18 Accounts Receivable.......................................... 29
3.19 Real Property................................................ 29
3.20 Contracts.................................................... 30
3.21 Government Contracts......................................... 31
3.22 Restrictions on Business Activities.......................... 33
3.23 Sales and Marketing Materials................................ 33
<PAGE>
Page
3.24 Suppliers and Customers...................................... 34
3.25 Employees and Labor Relations Matters........................ 34
3.26 Litigation................................................... 36
3.27 Insurance.................................................... 36
3.28 Compliance with Laws and Business Permits.................... 36
3.29 Taxes........................................................ 36
3.30 Employee Benefits............................................ 37
3.31 Environmental Compliance..................................... 40
3.32 Questionable Payments........................................ 42
3.33 Bank Accounts; Powers of Attorney............................ 43
3.34 Conflicts of Interest........................................ 43
3.35 Services Supplied by and Assets Shared with Affiliates....... 43
3.36 Brokers' or Finders' Fees.................................... 43
3.37 Disclosure................................................... 43
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization................................................. 44
4.2 Power and Authority.......................................... 44
4.3 Validity of Contemplated Transactions........................ 44
4.4 Consents..................................................... 45
4.5 Brokers' and Finders' Fees................................... 45
4.6 Settlement of Litigation..................................... 45
ARTICLE V PRECLOSING COVENANTS OF SELLER
5.1 Access....................................................... 45
5.2 Conduct of Business.......................................... 46
5.3 Indebtedness; Intercompany Accounts.......................... 50
5.4 No Shopping.................................................. 50
5.5 Consents..................................................... 50
5.6 Pre-Closing Litigation Consultation.......................... 51
5.7 Updated Annexes.............................................. 51
5.8 Closing Pro Forma Balance Sheet.............................. 51
5.9 Revisions to Imaging for Windows............................. 52
ARTICLE VI OTHER COVENANTS
<PAGE>
Page
6.1 Competition Laws Filings..................................... 52
6.2 Good Faith Cooperation....................................... 53
6.3 Laws Affecting Transfer of Real Estate, Employees and Permits 53
6.4 Public Announcements......................................... 53
6.5 Taxes........................................................ 54
6.6 Confidentiality.............................................. 55
6.7 Notification of Certain Matters.............................. 56
6.8 Transfer Taxes............................................... 56
6.9 Section 338(h)(10) Election.................................. 56
6.10 Transferred Employees........................................ 56
6.11 Access to Certain Customers.................................. 58
6.12 Office Space Arrangements. .................................. 58
6.13 Reorganization in France..................................... 60
6.14 Certain Transition Agreements................................ 61
6.15 Retention Payments........................................... 61
6.16 Employee Benefits............................................ 61
6.17 Cooperation Regarding Audits, Litigation and Former Employees 63
6.18 Insurance Claims............................................. 63
6.19 Additional Assurances........................................ 63
6.20 Use of Corporate Names....................................... 64
6.21 Subsidiary Names............................................. 65
6.22 Use of the OPEN/image and PACE Trademarks.................... 66
6.23 W/I Payments................................................. 66
6.24 Removal of Sigma "Triangle".................................. 66
6.25 Post-Closing Conduct of Business............................. 66
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to Obligation of Buyer to Close................... 66
7.2 Conditions to Obligations of Sellers to Close................ 69
ARTICLE VIII THE CLOSING
8.1 Time and Place............................................... 70
8.2 Conduct of Closing........................................... 70
8.3 Staged Closings.............................................. 73
ARTICLE IX SURVIVAL AND INDEMNIFICATION
<PAGE>
Page
9.1 Survival of Representations, Warranties and Covenants........ 74
9.2 Indemnification by Seller.................................... 75
9.3 Indemnification by Buyer..................................... 75
9.4 Certain Limitations on Indemnities........................... 76
9.5 Procedure.................................................... 77
9.6 No Subrogation............................................... 77
9.7 No Consequential Damages..................................... 78
9.8 Exclusive Remedy............................................. 78
ARTICLE X TERMINATION
10.1 Events of Termination........................................ 79
10.2 Consequences of Termination.................................. 79
ARTICLE XI MISCELLANEOUS
11.1 Entire Agreement; Amendments................................. 79
11.2 Headings and References...................................... 79
11.3 Severability................................................. 80
11.4 Expenses..................................................... 80
11.5 Notices...................................................... 80
11.6 Waiver; Consents............................................. 81
11.7 Assignment................................................... 82
11.8 Governing Law................................................ 82
11.9 Parties in Interest.......................................... 82
11.10 Dispute Resolution........................................... 82
11.11 Counterparts................................................. 83
ANNEXES
Annex 1.1 List of Collateral Documents
Annex 2.1.1 Patents and Patent Applications
Annex 2.1.2 Equipment
Annex 2.1.4 Pre-paid items
Annex 2.1.6 Assigned Contracts
Annex 2.1.8 Certain Pending Litigation
Annex 2.1.10 Capital Stock of Acquired Subsidiaries
<PAGE>
Page
Annex 2.1.12 Assumed Non-U.S. Benefit Plans
Annex 2.2.9 Excluded Assets
Annex 2.3.2 Employment Agreements
Annex 2.3.4 Liabilities Related to the Business
Annex 2.4.3 Assigned Contracts - liabilities not assumed
Annex 2.4.12 Retained Claims
Annex 2.7 Sellers and Buyer Purchasers
Annex 3.6 SBU Financial Statement Methodology
Annex 4.4 Consents
Annex 5.2.2 Employment Arrangements
Annex 6.10.1 Employee Releases
Annex 6.12 Shared Spaces
Annex 6.12.1(b) McLean Sublease
Annex 6.12.1(c) Charenton Sublease
Annex 6.12.4 Fair Market Rental
Annex 7.1.4(a) "Category 1" Consents Required for Closing
Annex 7.1.4(b) Other Consents
Annex 7.1.5 Development Schedule
Annex 7.1.6 Viewer Submission Deadline
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made this 29th day of January, 1997,
by and among Wang Laboratories, Inc. ("Seller"), a Delaware corporation, Wang
Federal, Inc. ("Federal"), a Delaware corporation, and Eastman Kodak Company
("Buyer") , a New Jersey corporation.
Seller and Federal desire to sell their software business to Buyer and
Buyer desires to purchase such software business, all on the terms and
conditions set forth in this Agreement.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, terms defined in the
preamble of this Agreement shall have the meanings set forth therein and the
following terms shall have the meanings set forth below.
"Acquisition Agreements" means the agreements, contracts and other
documents pursuant to which the Sellers acquired the Purchased Assets or the
Acquired Subsidiaries.
"Acquired Subsidiary" means any of the Subsidiaries listed on
Annex 2.1.10 and "Acquired Subsidiaries" means all such Subsidiaries.
"Accept Employment" means accepting an offer of employment with
any Buyer Purchaser effective as of the Closing Date and satisfying all
conditions of employment specified in the offer letter.
"Affiliate" means, with respect to any Person, any subsidiary,
officer or director of such Person and any other Person which directly or
indirectly controls, is controlled by or is under common control with such
Person, whether through the ownership of securities, by contract or otherwise.
"Agreement" means this Agreement and the Annexes and Exhibits
hereto and the Disclosure Letter and all Schedules thereto, as the same may from
time to time be amended as provided herein.
"Assignment and Assumption Agreements" means the agreements
referred to on Annex 1.1, assigning to Buyer Purchasers the Assigned Contracts,
Accounts Receivable and
<PAGE>
- 2 -
other contractual rights in the Purchased Assets and pursuant to which Buyer
Purchasers assume the Assumed Liabilities.
"Balance Sheet Date" means December 31, 1996.
"Bill of Sale" means the bills of sale referred to on Annex 1.1,
conveying Equipment and Inventory.
"Business" means Sellers' computer software business, whether
conducted through Seller or through one or more of its direct or indirect
Subsidiaries (including the Acquired Subsidiaries), comprising or relating to
the development, marketing and distribution of workflow, imaging, COLD, document
management and storage management, computer software products and related
services, relationships with customers, suppliers and others (such as Microsoft
Corporation) and relationships with Employees and certain other software
operations of Sellers other than that related to the Excluded Assets.
"Business Software" means computer programs (including code in
both source code and object code forms) constituting or embodied in the Products
and Products in Development, and programming tools, subroutines, libraries,
objects, modules, compilers and utilities embedded therein.
"Buyer Purchaser" means any Subsidiary of Buyer which will acquire
any of the Business or the Purchased Assets pursuant to this Agreement, and
"Buyer Purchasers" means all such Subsidiaries.
"Category 1 Employees" means those Employees designated as such on
Schedule 3.25(b).
"Category 2 Employees" means those Employees designated as such on
Schedule 3.25(b).
"Category 3 Positions" means the positions held by those Employees
so designated on Schedule 3.25.
"Closing" means the closing of the Transactions.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"Code" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder, as the same have from time to time been amended.
<PAGE>
- 3 -
"COLD" means computer output to laser disk.
"Collateral Documents" means the agreements and instruments listed
on Annex 1.1, the form of which have been agreed to by the parties except as
noted on Annex 1.1.
"Consideration" means the Cash Consideration and the assumption of
the Assumed Liabilities.
"Corporate Names" means those names listed on Schedule 6.20 and
any stylized logotype for such names.
"Default" means the occurrence of any event which of itself or
with the giving of notice or the passage of time or both would constitute an
event of default under the applicable agreement, contract, instrument or lease
or would permit the other party thereto to cancel or terminate performance or
seek damages for breach.
"Design Documentation" means, collectively, all documentation,
manuals, promotional materials, internal notes, memos, technical specifications,
drawings, flow-charts, diagrams, source language statements, demonstration
disks, benchmark test results, test plans and test data bases and other
materials whether in human-readable or machine-readable form (in all media,
including digital formats), which is in the possession of Sellers or the
Acquired Subsidiaries and used or produced in connection with research and
development, maintenance, support, enhancement or upgrades relating to any of
the Technology, R&D Asset, or Trade Secrets.
"Designated Representative" means any individual designated by
Buyer to give certain notices and consents under this Agreement.
"Disclosure Letter" means the letter from Seller to Buyer dated
the date hereof and containing the Schedules.
"Documentation" means all documentation (in all media, including
digital formats) of the Technology and R&D Assets, including, whether in
human-readable or machine-readable form, technical, support, and user
documentation, and all known copies thereof in the Sellers' or Acquired
Subsidiaries' possession.
"Dollars" and "$" means dollars of the United States of America.
"Employees" means all employees of Sellers and the Acquired
Subsidiaries primarily employed in connection with the Business (i) as of
January 10, 1997 and listed on Schedule 3.25, or (ii) hired by Sellers or the
Acquired Subsidiaries with respect to the Business
<PAGE>
- 4 -
after January 10, 1997, but excluding (iii) those Persons who are not employed
by Sellers in the Business or the Acquired Subsidiaries as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974
and all regulations promulgated thereunder, as the same have from time to time
been amended.
"GAAP" means generally accepted U.S. accounting principles, as in
effect at the time to which the financial statements or records relate.
"Governmental Entity" means the United States government, the
government of any of the states constituting the United States, any municipality
and any other national or provincial or regional government, and all of their
respective branches, departments, agencies, instrumentalities, non-appropriated
fund activities, subsidiary corporations or other subdivisions.
"Income Tax" or "Income Taxes" means any Taxes measured, in whole
or in part, by net or gross income or profits together with any interest,
penalties or additions to Tax.
"Information Assets" means all business information which is in
the possession of any of the Sellers or the Acquired Subsidiaries with respect
to the Business, including all of the Sellers' data, databases, lists of former,
existing or prospective customers, sales materials (including analyses and
strategies), competitive analyses, marketing materials (including analyses and
strategies), advertising and promotional materials and supplier lists and the
Seller and Acquired Subsidiaries rights to all computer software to utilize all
of the foregoing, including all of the Sellers' and Acquired Subsidiaries'
rights in the "Wang Knowledge eXchange" except as otherwise provided in a
Collateral Document.
"IP Rights" means all intellectual property rights of any of the
Sellers or the Acquired Subsidiaries throughout the world in or to the IT
Property, including all Trademarks, Copyrights, Trade Secrets, those patents and
patent applications set forth in Annex 2.1.1, and all other intellectual
property rights therein including any applications in the process of being
prepared, other than the Corporate Names.
"IT Property" (which is a contraction for information-technology
related property) means, collectively, all of the Information Assets, R&D
Assets, Technology, Documentation and Design Documentation.
"IT Property Assignments" means the instruments and agreements
conveying the IT Property and all IP Rights to Buyer.
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"Laws" means any law, statute, code, ordinance, rule regulation,
order, judgment or decree promulgated by any Governmental Entity.
"Litigation Expense" means any expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against under this Agreement, including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees and reasonable fees and disbursements of legal counsel (whether
incurred in any action or proceeding between the parties to this Agreement or
between any party to this Agreement and any third party), investigators, expert
witnesses, accountants and other professionals.
"Loss" means any loss, obligation, claim, liability, settlement
payment, award, judgment, fine, penalty, interest charge, expense, damage or
deficiency or other charge, measured on an after-tax basis and after accounting
for any insurance proceeds actually received with respect thereto, other than
Litigation Expense.
"Material Adverse Effect" means an effect which is materially
adverse to the results of operations or financial condition of the specified
Person or the Business or the ability to use the Purchased Assets (taken as a
whole) as presently used.
"Noncompetition Agreement" means the Noncompetition and
Nonsolicitation Agreement in the form attached to Annex 1.1.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means and includes an individual, a corporation, a
partnership, a limited liability company, a limited liability partnership, a
joint venture, a trust, an unincorporated association, a Governmental Entity or
any other entity, wherever located or organized.
"Premises" means the real property presently leased or licensed by
any of the Sellers or the Acquired Subsidiaries and used in connection with the
Business.
"Pro Forma Balance Sheet" means a balance sheet for the Business
reflecting only those categories of assets and liabilities which constitute
Purchased Assets and Assumed Liabilities.
"Products in Development" means those products under development
listed on Schedule 3.10.1(d).
"Purchased Assets" means the assets and rights of the Business
described in Section 2.1, whether held by Sellers or the Acquired Subsidiaries,
other than the Excluded Assets.
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"R&D Assets" means all of Sellers' tangible and intangible assets,
including ongoing research and development in connection with the Business and
the Technology, computer programs, processes, know-how, algorithms, formulas,
designs and methods, prototypes, design, development and test equipment and
tools, that are or have been created, acquired or utilized in connection with
the research, development, and commercialization of Products of (up through and
including the completion of "golden masters" ready for duplication), or
operations of the Business.
"Reorganization Plan" means the Amended and Restated
Reorganization Plan of Wang Laboratories, Inc. and Official Committee of
Unsecured Creditors dated September 20, 1993.
"Schedule" or "Schedules" means the appropriate schedule or
schedules of the Disclosure Letter.
"Selling Subsidiaries" means the Subsidiaries of Seller, other
than the Acquired Subsidiaries, which employ any of the Employees or which will
transfer, sell, convey or assign any of the Purchased Assets pursuant to this
Agreement.
"Subsidiary" means a Person, more than 50% of the outstanding
equity interests of which are owned, directly or indirectly, by Seller or Buyer.
"Tax Returns" means all returns, reports, estimates, information
returns and statements of any nature with respect to Taxes.
"Technology" means, collectively, all of the Business Software,
processes, know-how, algorithms, formulas, designs, methods and other technology
presently (or at any time in the past installed in the customer base and
required to be maintained pursuant to the Assigned Contracts) embodied in, or
used by the Sellers in, any of the Products and Products in Development (whether
in other software programs or otherwise) or in the preparation for commercial
distribution of any of the Products and Products in Development, including (but
not limited to) all things authored, discovered, developed, made, perfected,
improved, designed, engineered, devised, acquired, produced, conceived or first
reduced to practice by or on behalf of the Sellers, that are used in such
technology or that are reasonably necessary to an understanding of such
technology.
"Third Party Agreements" means the Inbound Technology Agreements,
the Outbound Technology Agreements, the Project Agreements and Customer
Agreements.
"Trade Secrets" means all trade secrets embodied in or relating
solely to any of the IT Property .
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"Transactions" means the transactions contemplated by this
Agreement and the Collateral Documents.
"U.K." means the United Kingdom.
"U.S." means the United States of America.
"WARN Act" means the Worker Adjustment and Retraining Notification
Act, as amended.
1.2 Other Definitions. Each of the following terms is defined in the
Section or Subsection referred to below:
"Accounts Receivable" as defined in Subsection 2.1.5.
"Acquired Subsidiary Leases" as defined in Subsection 6.12.2.
"Antitrust Division" as defined in Section 6.1.
"Applicable Employees" as defined in Subsection 6.10.1.
"Assigned Contracts" as defined in Subsection 2.1.6.
"Assigned Real Estate Leases" as defined in Section 2.1.6.
"Assignee" as defined in Subsection 6.12.2.
"Assignor" as defined in Subsection 6.12.2.
"Assumed Liabilities" as defined in Section 2.3.
"Benefit Plans" as defined in Section 3.30.
"Business Plan" as defined in Section 3.6.
"Buyer Indemnified Parties" as defined in Section 9.2.
"Buyers" as defined in Section 2.1.
"Cash Consideration" as defined in Section 2.5.
"CERCLA" as defined in Section 3.31.
"Claim" as defined in Section 9.5.
"Closing Date" as defined in Section 8.1.
"Closing Pro Forma Balance Sheet" as defined in Section 5.8.
"Competition Laws" as defined in Section 6.1.
"Contract Proceedings" as defined in Subsection 3.21.2.
"Contracts" as defined in Section 3.20.
"Contributors" as defined in Subsection 3.10.5.
"Copyrights" as defined in Subsection 3.11.2.
"Customer Agreements" as defined in Subsection 2.1.6.
"Customer Purchase Orders" as defined in Subsection 2.1.6.
"Development Tools" as defined in Subsection 3.10.1(j).
"Employment Agreements" as defined in Subsection 2.1.6.
"Environment" as defined in Section 3.31.
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"Environmental Laws" as defined in Section 3.31.
"Environmental Permits" as defined in Section 3.31.
"Equipment" as defined in Subsection 2.1.2.
"ERISA Benefit Plans" as defined in Subsection 2.2.5.
"Estimated Closing Balance Sheet" as defined in Section 5.8.
"Excluded Assets" as defined in Section 2.2.
"Excluded Liabilities" as defined in Section 2.4.
"Expiration Date" as defined in Section 9.1.
"Fair Market Rental" as defined in Subsection 6.12.4.
"FTC" as defined in Section 6.1
"Former Sites" as defined in Subsection 3.31.5.
"Government Contracts" as defined in Subsection 3.21.1.
"HSR Act" as defined in Section 6.1.
"Hazardous Substance" as defined in Section 3.31.
"Inbound Technology" as defined in Subsection 3.10.6.
"Inbound Technology Agreements" as defined in Subsection 3.10.6.
"Indemnitee" as defined in Section 9.5.
"Indemnitor" as defined in Section 9.5.
"Inventory" as defined in Subsection 2.1.3.
"Lease Assignments" as defined in Subsection 6.12.2.
"Lease Transfer" as defined in Subsection 6.12.2.
"Letter Agreement" as defined in Section 6.6.
"Material Leases" as defined in Section 3.15.
"Master Space Sharing Agreement" as defined in Subsection 6.12.3.
"Non-U.S. Benefit Plans" as defined in Subsection 3.30.12.
"OSHA" as defined in Subsection 3.25.8.
"Outbound Technology Agreements" as defined in Subsection 3.10.7.
"Permits" as defined in Section 3.28.
"Permitted Encumbrances" as defined in Section 3.14.
"Personal Property Leases" as defined in Subsection 2.1.6.
"Products" as defined in Subsection 3.10.2.
"Project Agreements" as defined in Subsection 3.10.8.
"Purchase Price Allocation Schedule" as defined in Section 2.6.
"RCRA" as defined in Section 3.31.
"Real Estate Leases" as defined in Section 3.19.
"Release" as defined in Section 3.31.
"Retained Claims" as defined in Subsection 2.4.12.
"SBU Financial Statements" as defined in Section 3.6.
"Seller Entities" as defined in Section 3.31.
"Sellers" as defined in Section 2.1.
"Services Agreement" as defined in Section 3.9.
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"Shared Spaces" as defined in Subsection 6.12.3.
"Shared Threshold Claim" as defined in Subsection 9.4.1.
"Sigma" as defined in Subsection 2.1.12.
"Sublandlords" as defined in Subsection 6.12.1.
"Subleases" as defined in Subsection 6.12.1.
"Subtenants" as defined in Subsection 6.12.1.
"Sweden Lease" as defined in Subsection 6.12.4.
"Sweden Premises" as defined in Subsection 6.12.4.
"Taxes" as defined in Section 3.29.
"Trademarks" as defined in Subsection 3.11.2.
"Transfer Taxes" as defined in Section 6.8.
"Transferred Employees" as defined in Section 6.10.1.
"12/31 Pro Forma Balance Sheet" as defined in Subsection 3.6(b).
"W/I Payments" as defined in Annex 2.3.4.
"W/I Revenue" as defined in Annex 2.3.4.
"Viewer Submission Deadline" as defined in Annex 7.1.6.
1.3 Other Rules of Construction.
1.3.1 References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires,
references in the singular include references in the plural and vice
versa. References to a party to this Agreement or to other agreements
described herein means those Persons executing such agreements. The
words "include", "including" or "includes" shall be deemed to be
followed by the phrase "without limitation" or the phrase "but not
limited to" in all places where such words appear in this Agreement.
This Agreement is the joint drafting product of Seller and Buyer and
each provision has been subject to negotiation and agreement and shall
not be construed for or against either party as drafter thereof.
1.3.2 The phrases "have heretofore been provided" or "has
provided" or similar words mean that Seller has delivered such
information to Buyer. The phrase "has made available" or similar words
mean that on or before January 21, 1997 Seller has placed copies of
documents containing such information in the "data room" maintained by
Seller in Rochester, New York and Schedule 1.3.2 lists or describes
such information. The phrase "has provided access" or similar words
means that Seller has placed copies of documents containing such
information in the "technical data room" in Billerica, Massachusetts on
or before November 8, 1996 and has allowed Buyer to review such
information there or in another format if requested by Buyer.
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ARTICLE II
SALE AND PURCHASE
2.1 Transfer of Assets. Upon and subject to the terms and conditions
stated in this Agreement, and except as provided in Section 2.2 of this
Agreement, on the Closing Date, for the Consideration and Buyer's performance of
its other obligations under this Agreement, Seller shall and shall cause the
Selling Subsidiaries (collectively, "Sellers") to sell, assign, convey, transfer
and deliver to Buyer and Buyer Purchasers (collectively, "Buyers"), and Buyer
shall acquire and shall cause the Buyer Purchasers to acquire from Sellers, all
of Sellers' assets and rights used in the Business including all of the right,
title and interest of the Sellers and the Acquired Subsidiaries in and to:
2.1.1 The IT Property and IP Rights (with respect to patents and
patent applications, comprised solely of those patents and patent
applications listed and described on Annex 2.1.1), including all common
law rights in all Trademarks worldwide included therein;
2.1.2 All equipment and devices (including data processing
hardware, telecommunications equipment, other hardware and equipment
and all software incorporated therein and used in the operation
thereof, and including software installed on personal computers which
are part of the Business, and on servers used exclusively within the
Business), furniture, fixtures, supplies, machinery, tools, spare
parts, vehicles and all other fixed assets and tangible personal
property used in the Business on the date of this Agreement, subject to
such changes as are permitted pursuant to this Agreement and other than
those items used to provide services to Buyer Purchasers as specified
in the Services Agreement (collectively, the "Equipment"), including
the items listed on Annex 2.1.2;
2.1.3 All goods and materials held for resale or license by the
Business or incorporated into or consumed in connection with such goods
and materials including, without limitation, raw materials, work in
process and finished goods, and all advertising, trade show and
promotional materials related thereto owned by any of the Sellers on
the Closing Date (collectively, the "Inventory");
2.1.4 All prepaid expenses, royalties, deposits and other current
and non-current assets of the Sellers to the extent related to the
Business other than those in respect of Income Taxes of Sellers,
subject to such changes as are permitted pursuant to this Agreement,
including the prepaid items listed on Annex 2.1.4;
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2.1.5 All accounts, notes and other receivables generated by the
Business that are outstanding as of the Closing Date (collectively, the
"Accounts Receivable");
2.1.6 All of the rights of Sellers in and to the following
contracts (the "Assigned Contracts") as of the Closing Date: (a) the
Inbound Technology Agreements, the Outbound Technology Agreements and
the Project Agreements listed on Annex 2.1.6; (b) all outstanding
purchase orders and commitments relating to the Business issued or made
by customers to the Sellers as of the Closing Date except as listed on
Annex 2.4.3 (the "Customer Purchase Orders"); (c) all other outstanding
license and/or support agreements entered into in the conduct of the
Business on or before the Closing Date listed on Schedule 2.1.6
("Customer Agreements"); (d) all purchase orders and commitments issued
or made by the Sellers to suppliers of the Business outstanding as of
the Closing Date and which have heretofore been made available to Buyer
or to which Buyer has been provided access or are entered into in
accordance with this Agreement; (e) all leases, franchises, licensing
agreements or other arrangements pursuant to which any item of personal
property used in the Business is leased, held or otherwise used listed
on Annex 2.1.6 (the "Personal Property Leases"); (f) all Real Estate
Leases listed on Annex 2.1.6 except for those Real Estate Leases so
listed in which (as indicated on such Annex 2.1.6) the tenant is an
Acquired Subsidiary (the "Assigned Real Estate Leases"); and (g) the
employment agreements of the Employees and former employees of Sellers
who are no longer employees of the Sellers or the Acquired Subsidiaries
and whose last employment by the Sellers was with the Business, and the
confidentiality, intellectual property rights assignment and similar
agreements of the Employees and former employees of the Business
(collectively, the "Employment Agreements") and offers of employment
made to prospective employees of the Business in accordance with
Section 5.2;
2.1.7 All of the goodwill and going concern value of Sellers and
the Acquired Subsidiaries associated with the Business, excluding that
associated with the Corporate Names;
2.1.8 All of Sellers' claims, causes of action, judgments, and
other rights and remedies of whatever nature arising from infringements
of Sellers' IP Rights in or to the IT Property and all other claims of
Sellers' arising from the Purchased Assets or the conduct of the
Business, including rights to recoveries for damages for defective
goods or services, insurance and refund claims and similar assets of
the Business (except to the extent related to Excluded Liabilities),
including the pending litigation listed on Annex 2.1.8;
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2.1.9 All business or other records (including personnel files of
Employees that Accept Employment to the extent permitted by Law) of the
Employees of Acquired Subsidiaries and the Employees of the Sellers
that Accept Employment or whose employment is transferred to a Buyer
Purchaser by operation of Law to the extent related to the Business,
except for those business records that must be retained by Seller for
Tax purposes;
2.1.10 All capital stock and other equity interests in the
Subsidiaries listed on Annex 2.1.10;
2.1.11 All Permits that relate solely to the Business, to the
extent transferable; and
2.1.12 All assets of the Benefit Plans of Wang Software N.Y., Inc.
("Sigma") and the portion of the assets of any Non-U.S. Benefit Plan
(determined on a "termination basis"), if applicable, which fund any
obligation with respect to any such Non-U.S. Benefit Plan which is
expressly assumed by a Buyer Purchaser under this Agreement or which,
under applicable Laws, becomes the obligation of a Buyer Purchaser, as
set forth on Annex 2.1.12.
2.2 Excluded Assets. The Purchased Assets shall not include the
following (collectively, the "Excluded Assets"):
2.2.1 Any cash and marketable securities owned by Sellers;
2.2.2 The capital stock or equity interests of Wang Healthcare
Information Systems, Inc. and Applied Data Systems, Inc. and any assets
thereof (but not any right, title or interest in or to any of the
Business Software, except as provided in the Collateral Documents);
2.2.3 The assets, agreements and employees engaged in the sales,
marketing, distribution or support of the product "Landtrak" (but not
any right, title or interest in or to any of the Business Software,
except as provided in the Collateral Documents);
2.2.4 Subject to Subsection 2.1.12, any assets relating to
defined-benefit Benefit Plans, whether of Sellers or the Acquired
Subsidiaries;
2.2.5 Sponsorship and assets of any Benefit Plan described in
Section 3(3) of ERISA (an "ERISA Benefit Plan") maintained by Seller or
the Acquired Subsidiaries other than Sigma unless required by Law;
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2.2.6 Any amounts due from Sellers and their Affiliates to any
Acquired Subsidiary, all of which shall be settled prior to Closing as
provided in Section 5.3;
2.2.7 The Corporate Names and any and all associated rights except
as expressly granted to Buyers in Section 6.20 or pursuant to a
Collateral Document;
2.2.8 All rights with respect to the Retained Claims;
2.2.9 The assets and rights not related to the Business, including
those set forth on Annex 2.2.9; and
2.2.10 All patents and patent applications of Sellers not set
forth in Annex 2.1.1 except for such rights therein as are granted by
Sellers to Buyers pursuant to any Collateral Document.
2.3 Assumption of Liabilities. On the Closing Date, Buyers shall
assume and agree to pay and perform only the following liabilities and
obligations of the Sellers and the Acquired Subsidiaries and any Affiliate of
Sellers existing as of the Closing Date (collectively, the "Assumed
Liabilities"):
2.3.1 All obligations of the Sellers and Acquired Subsidiaries
under the Assigned Contracts other than (a) obligations arising from a
breach of an Assigned Contract by Sellers or the Acquired Subsidiaries
of which Sellers or the Acquired Subsidiaries shall have received
written notice or shall have knowledge prior to the Closing Date, (b)
obligations under the Assigned Contracts listed on Annex 2.4.3, and (c)
obligations under the Assigned Real Estate Leases arising prior to the
Closing Date other then as set forth in the Closing Pro Forma Balance
Sheet;
2.3.2 Those obligations of Sellers and the Acquired Subsidiaries
to certain employees as listed on Annex 2.3.2 payable after the Closing
Date, provided, however, that Seller shall reimburse Buyer for each
such payment to any such Employee who is not an employee of Buyer or
its Subsidiaries on December 31, 1997, unless such employee was
terminated by Buyer without cause;
2.3.3 All liabilities of the Business reflected on the Closing Pro
Forma Balance Sheet in accordance with Section 5.8;
2.3.4 All other liabilities and obligations listed on Annex 2.3.4;
2.3.5 All liabilities and obligations related to the litigation
listed on Annex 2.1.8;
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2.3.6 One-half of all obligations to non-U.S. Employees arising as
a result of the Transactions in accordance with Subsection 6.10.2; and
2.3.7 All other liabilities of the Acquired Subsidiaries, except
the Excluded Liabilities specifically described in Subsections 2.4.2,
2.4.3, 2.4.4, 2.4.5, 2.4.6, 2.4.7, 2.4.8, 2.4.9, 2.4.10, 2.4.11,
2.4.12, 2.4.13, 2.4.14 and 2.4.15.
2.4 Excluded Liabilities. Notwithstanding any provision of this
Agreement to the contrary, none of the following liabilities, unless they are
included in the Assumed Liabilities, of the Sellers, the Acquired Subsidiaries
or any Affiliate of the Sellers (collectively, the "Excluded Liabilities") shall
be assumed by Buyer Purchasers:
2.4.1 Any liability to the extent that is not exclusively related
to the Business or the Purchased Assets;
2.4.2 Any liability related to any Excluded Assets;
2.4.3 Any obligation arising under an Assigned Contract listed on
Annex 2.4.3;
2.4.4 Any liability for any breach by any of the Sellers or
Acquired Subsidiaries of any Assigned Contract to the extent such
liability is attributable to a breach by Sellers or Acquired
Subsidiaries of which the Sellers and Acquired Subsidiaries shall have
received written notice or shall have knowledge on or prior to the
Closing Date;
2.4.5 Any liability for any Taxes incurred or accruing prior to
the Closing Date with respect to the Business, the Purchased Assets or
the Employees other than payroll-related taxes accrued in the ordinary
course of business and included in the line items denominated "Accrued
Compensation and Withholding" or "Accounts Payable and Other Current
Liabilities" on the Closing Pro Forma Balance Sheet;
2.4.6 Any obligation under any Employment Agreement;
2.4.7 Except to the extent that the following liabilities are
included on the line items denominated "Accrued Compensation and
Withholding" "Accounts Payable and Other Current Liabilities" and
"Accrued Expenses" set forth on the Closing Pro Forma Balance Sheet in
accordance with Section 5.8, any liability: (a) for payments that were
required to be made prior to the Closing Date to any Employees, (b) for
payments to former employees, (c) under any retiree welfare or
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defined-benefit Benefit Plan of the Sellers or the Acquired
Subsidiaries, and (d) to Employees for stock options to non-U.S.
Employees to the extent Sellers' grants of options to purchase Seller's
common stock create any entitlement under applicable Laws, to provide
such options to those Employees;
2.4.8 (a) Any liability under any ERISA Benefit Plan, whether
arising from violation of any Law or otherwise, except as otherwise
required by applicable Laws, under or with respect to any ERISA Benefit
Plan (other than the ERISA Benefit Plans of Sigma), and (b) all costs
and liabilities related to the failure of the Sigma 401(k) Plan to
comply with applicable law, (plus reasonable out-of-pocket legal,
actuarial, and consultant costs and related expenses not to exceed
$25,000);
2.4.9 Any liability to any Person who on the Closing Date received
or was entitled to receive retirement or disability benefits under any
Benefit Plan, except as provided in Section 6.10.1, or former employee
including any liability for (a) severance pay, termination indemnities
or any other benefit the entitlement to or payment of which is
triggered by the Transactions except as provided in Subsection 2.3.6,
(b) under the WARN Act, or other employee notification or similar Law
or (c) any liability for collection of COBRA premiums or compliance
with COBRA notice requirements for any Employee who does not Accept
Employment;
2.4.10 Other than with respect to Employees of Sigma on the
Closing Date, (a) any liability with respect to any actual or alleged
work-related injury, disease or illness to any Employee or former
employee which is determined to have occurred prior to the Closing
Date, (b) any claims made by Employees (i) prior to the Closing Date
under any medical, dental or health plans for treatment or service
rendered or relating to injuries, accidents or conditions occurring or
existing prior to the Closing Date, or (ii) under any life insurance
plans with respect to deaths occurring prior to the Closing Date; or
(c) any other payments or benefits owing or relating to employment
services provided prior to the Closing Date under any other Benefit
Plans (to the extent reflected on the Closing Pro Forma Balance Sheet
with respect to Sigma);
2.4.11 Any liability with respect to any actual or alleged injury
to persons or physical damage to property prior to the Closing Date
(other than loss of data) actually or allegedly caused by Sellers or
the Acquired Subsidiaries or their agents;
2.4.12 Any liability, including with respect to those matters
listed on Annex 2.4.12, under any litigation, proceeding or claim
against Sellers or the Acquired Subsidiaries based on events occurring
or circumstances existing on or before the Closing Date (the "Retained
Claims");
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2.4.13 Any amounts due from an Acquired Subsidiary to Sellers and
their Affiliates, all of which shall be settled prior to Closing as
provided in Section 5.3; and
2.4.14 Except for the W/I Payment to the extent provided in
Section 6.23, any liability of Sellers to the other parties thereto
arising from the Acquisition Agreements.
2.5 Consideration. In consideration of Sellers' performance of this
Agreement and the transfer and delivery of the Purchased Assets to the Buyer
Purchasers, Buyer shall (in accordance with the allocation provided for in
Section 2.6) (a) deliver to Seller by wire transfer to the account which Seller
shall specify at least five business days prior to the Closing Date Two Hundred
Sixty Million Dollars ($260,000,000) (the "Cash Consideration") in immediately
available funds, less the amounts, if any, payable under clause (b) of this
Section (if any such amounts are payable other than in Dollars, the Dollar
equivalent of such amount based on the rate published in the Wall Street Journal
three (3) business days prior to Closing), (b) deliver the respective amounts
allocated pursuant to Section 2.6 by wire transfer to the Sellers outside the
U.S., where required by local Laws or to avoid payment of interest or Taxes
triggered by payments made outside of the jurisdiction where the Purchased
Assets are transferred; and (c) assume or cause Buyer Purchasers to assume the
Assumed Liabilities.
2.6 Allocation of Consideration. For purposes of complying with the
requirements of Section 1060 of the Code, a schedule allocating the
Consideration to be paid by Buyer among the Sellers and among each class of
Purchased Assets (the "Purchase Price Allocation Schedule") shall, no later than
two weeks from the date of this Agreement, be prepared by Buyer with Seller's
assistance and provided to Seller for Seller's approval. Each of Sellers and
Buyers shall prepare its federal, state, local and foreign Income Tax returns
for all current and future tax reporting periods and file Form 8594 (and
corresponding state, local and foreign forms) with respect to the transfer of
the Purchased Assets to Buyers in a manner consistent with the Purchase Price
Allocation Schedule. If any Governmental Entity challenges such allocation, the
party first receiving notice of such challenge shall give the other party prompt
notice of such challenge, and the Seller and Buyer shall cooperate in good faith
in responding to such challenge, in order to preserve the effectiveness of the
Purchase Price Allocation Schedule. None of the Sellers nor the Buyers shall
report the allocation of the Consideration in a manner inconsistent with the
Purchase Price Allocation Schedule.
2.7 Local Transactions. Annex 2.7 identifies the Buyer Purchaser, the
Selling Subsidiary, the type of purchase (stock or asset purchase) and other
terms and conditions with respect to closing of the sale and purchase of the
Business and Purchased Assets in each jurisdiction where Purchased Assets or
Employees are located or are to be located.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER AND FEDERAL
Seller and Federal, jointly and severally, represent and warrant to
Buyer, for themselves and on behalf of the other Sellers and the Acquired
Subsidiaries, that the statements contained in this Article III are true and
correct, except as set forth in the Disclosure Letter. The Disclosure Letter
shall be prepared by Seller and delivered to Buyer simultaneously with the
execution of this Agreement and shall be arranged in Schedules corresponding to
the numbered Sections contained in the Agreement. The disclosures in any
Schedule shall qualify any other Schedule or Section to the extent that it is
clear from a reading of such Schedule or Section that such disclosure is
applicable to such other Schedule or Section .
3.1 Organization, Power, Standing and Qualification. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to carry on its business as it is now being conducted and to own and
operate the properties and assets now owned and operated by it. The Sellers and
Acquired Subsidiaries have been duly organized and are validly existing and in
good standing in the jurisdiction of their organization (to the extent such
concepts are recognized in the jurisdiction of their organization). Each of the
Sellers and Acquired Subsidiaries has all requisite corporate or partnership, as
the case may be, power and authority to carry on its business as it is now being
conducted and to own and operate the properties and assets now owned and
operated by it. Seller has delivered to Buyer complete and correct copies of the
organizational documents of each of the Acquired Subsidiaries. Each of the
Sellers and Acquired Subsidiaries is duly qualified to do business and in good
standing in each jurisdiction (to the extent such concepts are recognized in the
jurisdiction of their organization) where the conduct of its business or the
ownership or operation of its assets requires such qualification except where
failure to be so qualified or in such good standing will not result in a
Material Adverse Effect on the Business or the Purchased Assets. All
jurisdictions in which the Acquired Subsidiaries are qualified to do business
are listed on Schedule 3.1. Seller has provided Buyer with copies of all minute
books, records of meetings and consents of the Boards of Directors,
stockholders, managers or other governing bodies of the Acquired Subsidiaries
and all stock (or other equity) transfer ledgers in its possession with respect
to each Acquired Subsidiary, each of which is correct and complete in all
material respects.
3.2 Power and Authority. Upon execution and delivery as contemplated
herein, this Agreement will be a valid and binding obligation of Seller and
Federal, enforceable against each of them in accordance with its terms except to
the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar Laws
affecting the enforcement of creditors' rights generally and to general
equitable
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principles. Seller and Federal each have all requisite corporate power and
authority to enter into this Agreement and to perform all of its obligations
hereunder. The Board of Directors of each of Seller and Federal has duly
authorized the execution and delivery of this Agreement and the performance of
the Transactions. No approval of the stockholders of Seller is required with
respect to the consummation of the Transactions.
3.3 Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement by Seller and Federal, the execution, delivery and
performance by each of the Sellers of the Collateral Documents to which each is
a party and the consummation of the Transactions do not and will not (a)
contravene any provision of the Certificate of Incorporation or By-laws or the
organizational documents of any of the Sellers; (b) contravene any provision of
or constitute a breach or result in a Default under the Reorganization Plan; or
(c) constitute a breach by Sellers or the Acquired Subsidiaries of, or result in
a Default under or cause the acceleration of any payments pursuant to, any
agreement, contract, indenture, lease or mortgage to which any of the Sellers or
the Acquired Subsidiaries is a party or by which any of the Purchased Assets are
bound, or violate any provision of any Law or Permit to which the Sellers or the
Acquired Subsidiaries is subject, except for (i) requirements for consents of
Persons referred to in Section 3.4, and (ii) breaches, Defaults or accelerations
of agreements, contracts, indentures, leases or mortgages which, individually or
in the aggregate, would not have a Material Adverse Effect on the Business or
the Purchased Assets.
3.4 Consents. No permit, consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Entity or any other
Person on the part of any of the Sellers or any of the Acquired Subsidiaries is
required in connection with the execution or delivery by the Sellers of this
Agreement or the consummation of the Transactions other than (a) those which
have previously been obtained, (b) those specified in Schedule 3.4 and those
required under any Competition Laws, or (c) such permits, consents, approvals,
authorizations, designations, declarations or filings the absence of which,
individually or in the aggregate, would not materially impair the ability of the
Sellers to consummate the Transactions or have a Material Adverse Effect on the
Business or the Purchased Assets (taken as a whole).
3.5 Acquired Subsidiaries. Other than the Acquired Subsidiaries,
Sellers have no equity ownership in any other Person conducting the Business or
owning any Purchased Assets. Schedule 3.5 lists all classes or series of capital
stock or other equity interests of the Acquired Subsidiaries authorized, issued
or outstanding. Except as set forth in Schedule 3.5, all of the issued and
outstanding shares of capital stock or other equity interests of each of the
Acquired Subsidiaries are owned by one or more of the Sellers or by directors as
qualifying shares as set forth on Schedule 3.5, free and clear of all liens,
encumbrances and transfer restrictions, and such stock and interests are validly
issued, fully paid and non-assessable. There are no outstanding rights of
subscription, warrants, calls, options, contracts or other similar agreements,
issued or granted by the Sellers or any of the Acquired Subsidiaries to any
third party, to purchase or
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otherwise acquire capital stock or other equity interests of any of the Acquired
Subsidiaries. All dividends and other distributions paid by the Acquired
Subsidiaries were duly and lawfully declared and paid in full and none of the
Acquired Subsidiaries has any unpaid note or other obligation with respect to
any such dividend or other distribution. Except as set forth in Schedule 3.5,
the Acquired Subsidiaries have not guaranteed, assumed or otherwise become
responsible for any liability or other obligation of the Sellers or any of their
Affiliates, and do not hold any equity interests in any Person. Schedule 3.5
sets forth for each country where there are Purchased Assets or Employees the
name of each of the Sellers and Acquired Subsidiaries owning such Purchased
Assets or employing such Employees.
3.6 Financial Statements and Business Plan. (a) Schedule 3.6 contains
pro forma balance sheets and pro forma statements of operations and pro forma
cash flows for the Seller's software business unit for the three months ended
September 30 and December 31, 1996 and for the fiscal year ending June 30, 1996
(the "SBU Financial Statements"). The SBU Financial Statements have been derived
from the Sellers' and Acquired Subsidiaries' books and records maintained in the
ordinary course of business. Except as set forth in Schedule 3.6, the SBU
Financial Statements have been prepared as set forth in Annex 3.6 and fairly
present the financial position and results of operations of the Seller's
software business unit as at the dates and for the periods shown thereon. The
Pro Forma Balance Sheet at the Balance Sheet Date (the "12/31 Pro Forma Balance
Sheet") has been derived from the December 31, 1996 balance sheet included
within the SBU Financial Statements and reflects those of the Purchased Assets,
under the line items the "Accounts Receivable," "Inventories", "Prepaid
Expenses" and "Other Assets" (as described in the schedules to the 12/31 Pro
Forma Balance Sheet), of a nature required to be shown thereon for the Business.
The liabilities shown on the 12/31 Pro Forma Balance Sheet reflect none of the
Excluded Liabilities.
(b) Schedule 3.6 also contains projected cash flow statements and
other projected financial information for the Business for the fiscal years
ended June 30, 1997, 1998 and 1999, which form a portion of Seller's business
plan for the Business (the "Business Plan"). The Business Plan is the only
business plan being utilized by the Seller to operate the Business and to the
extent incentive compensation of the management of the Business is based upon
financial results of the Business such compensation is based upon performance
measured against the Business Plan. No representation or warranty is made herein
as to future achievement of the cash flows or other projected financial
information, or the achievement of financial performance levels, or the
introduction of products set forth in the Business Plan.
3.7 Undisclosed Liabilities. Except (a) as reflected or reserved
against in the 12/31 Pro Forma Balance Sheet; (b) for liabilities incurred in
the ordinary course of business of the Business since September 30, 1996 to the
extent reflected on the 12/31 Pro Forma Balance Sheet or the Closing Pro Forma
Balance Sheet; (c) for liabilities not required to be disclosed on the 12/31 Pro
Forma Balance Sheet or the Closing Pro Forma Balance Sheet under GAAP; and (d)
as
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disclosed in Schedule 3.7, neither Sellers nor any of the Acquired Subsidiaries
has any liabilities or any obligations of any nature whether or not accrued,
contingent or otherwise, that are material individually (or in the aggregate, in
the case of a series of liabilities arising from the same event or set of facts)
or, in the case of liabilities related to the ownership or use of the Property
or the Employees, are material in the aggregate to the Business or the Purchased
Assets taken as a whole.
3.8 Absence of Certain Changes. From September 30, 1996 to the date of
this Agreement, except as set forth on Schedule 3.8, the Sellers and the
Acquired Subsidiaries have operated the Business in the ordinary course and in a
manner consistent with past practice, and during such period, there has not
been:
3.8.1 Any occurrence or event known to Seller which, individually
or in the aggregate, has resulted in or which Seller reasonably expects
will result in any Material Adverse Effect on the Business or the
Purchased Assets (taken as a whole), except for changes or events
resulting from (a) general economic conditions or (b) conditions that
effect as a whole the industry of which the Business is a part and
about which information is publicly available;
3.8.2 Other than in the ordinary course of business of the
Business consistent with past practice and the Business Plan, any sale,
transfer, assignment, or grant of any license in or to use any tangible
or intangible asset used in the Business, or any mortgage or pledge of,
or creation of any security interest, lien or encumbrance (other than
the Permitted Encumbrances) on, any such asset, or any lease of
property of the Business, including equipment, or any termination or
surrender of any lease, right or franchise used in the Business or any
action to windup or discontinue the Business in any jurisdiction where
the Business is conducted;
3.8.3 Other than in the ordinary course of business of the
Business consistent with past practice and except as described in
Subsection 6.10.2, the grant of any increase in the compensation of
Persons who are employed in the Business (including any such increase
pursuant to any bonus, pension, profit-sharing or other Benefit Plan);
3.8.4 The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability of the Sellers
with respect to the Business or the Acquired Subsidiaries other than
(a) as required by the terms thereof, or (b) in the ordinary course of
business of the Business consistent with past practice;
3.8.5 The making of any loan, advance or guaranty to or for the
benefit of any Employee by any of the Sellers or the Acquired
Subsidiaries except the creation of accounts receivable and the
endorsement of customer checks in the ordinary
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course of business and other than customary travel and related advances
made to Employees in the ordinary course of business and consistent
with Seller's policies;
3.8.6 Capital expenditures for the fiscal year to date in amounts
in excess of those set forth in the Business Plan for the fiscal year
to date; or
3.8.7 Any binding commitment or agreement by the Sellers or any of
the Acquired Subsidiaries to do any of the acts set forth in this
Section 3.8.
3.9 Purchased Assets. The Purchased Assets constitute all of the
tangible and intangible property used by the Business or necessary for Sellers
and the Acquired Subsidiaries to conduct the Business as now being conducted,
except as set forth in Schedule 3.9 and except for certain rights granted and
the assets made available under certain of the Collateral Documents. The
execution and delivery of this Agreement and the Collateral Documents and other
documents to be delivered by Sellers to Buyers pursuant to Subsection 8.2.2,
upon delivery of the Consideration, will vest at the Closing all of the Sellers'
right, title and interest in and to the Purchased Assets in Buyers and Buyers
will be vested with good and marketable right, title and interest in and to the
Purchased Assets, in each case free and clear of any liens, security interests,
mortgages, charges, encumbrances and adverse rights of every kind, nature and
description, except for Permitted Encumbrances and rights of third parties under
the Assigned Contracts.
3.10 IT Property.
3.10.1 Listing of IT Property. Sellers have provided Buyer with
access to all material elements of the categories of IT Property listed
on Schedule 3.10 below, including all current versions, releases,
revisions, enhancements and updates thereof:
(a) Schedule 3.10.1(a) "Overview Listing of Products";
(b) Schedule 3.10.1(b) "Detailed Component Listing for Released
Products";
(c) Schedule 3.10.1(c) "Miscellaneous Demo, Sample and Other Code";
(d) Schedule 3.10.1(d) "Products in Development";
(e) Schedule 3.10.1(e) "Documentation";
(f) Schedule 3.10.1(f) "Support Collateral";
(g) Schedule 3.10.1(g) "Training Materials";
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(h) Schedule 3.10.1(h) "Vertical Applications";
(i) Schedule 3.10.1(i) "Local Applications"; and
(j) Schedule 3.10.1(j) Development Tools ("Development Tools").
3.10.2 Products. Schedules 3.10.1(a), (b), (h) and (i) list all
products currently marketed and sold by the Business, whether to end
users, original equipment manufacturers or other value-added resellers,
or others (the "Products"), except for individual modules/components
thereof which are included in the Documentation and the Design
Documentation. Seller has heretofore provided Buyer access to all U.S.
user manuals and related materials with respect to the Products as are
in Sellers' or the Acquired Subsidiaries' possession.
3.10.3 Development Plans. Sellers and Acquired Subsidiaries have
provided Buyer access to all R&D Assets and all formally prepared,
material written development plans related to Products in Development
and future obligations under the Assigned Contracts.
3.10.4 Documentation and Design Documentation. Sellers and
Acquired Subsidiaries have provided Buyer access to, in all material
respects, all Documentation and Design Documentation material to the
Business Software or used in the Business to support customers under
the Assigned Contracts.
3.10.5 Title. Sellers and the Acquired Subsidiaries own, or,
subject to the Inbound Technology Agreements, are licensed or otherwise
possess legally enforceable rights to use, the IT Property to conduct
the Business as currently conducted, and to make, sell, license and
distribute the Products. Schedule 3.10.5 lists all liens, security
interests, mortgages, charges, encumbrances and adverse rights of every
kind, nature and description on the IT Property except Permitted
Encumbrances and rights of third parties pursuant to any Third Party
Agreements. Except for portions licensed pursuant to the Inbound
Technology Agreements or rights granted pursuant to the Third Party
Agreements, the Sellers and the Acquired Subsidiaries hold valid and
enforceable IP Rights that may be asserted, and to Sellers' knowledge
are sufficient, to prevent any Person other than the Sellers or the
Acquired Subsidiaries from reproducing, transmitting, distributing,
selling, licensing, leasing or otherwise conveying or exploiting for
commercial purposes, or preparing derivative works of, the source code
or object code contained in the Products and the Products in
Development. Except for portions licensed to Sellers or the Acquired
Subsidiaries pursuant to the Inbound Technology Agreements, the
Business Software does not contain any copyrighted material, including
source
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code or portions of source code, created by any Person other than past
or current employees of, or consultants to, the Sellers or the Acquired
Subsidiaries or their Affiliates ("Contributors"). Except as set forth
in Schedule 3.10.5, none of the Contributors has any valid claim to
ownership or joint ownership of any copyright in or to any portion of
the Products or Products in Development.
3.10.6 Inbound Technology Agreements. With respect to any material
portions of the Business Software not developed by Sellers and the
Acquired Subsidiaries ("Inbound Technology"), except as set forth on
Schedule 3.10.6 Sellers and the Acquired Subsidiaries have written
agreements providing Sellers and the Acquired Subsidiaries with
licenses or other rights to develop, market, distribute, sell, license,
use or otherwise exploit the Inbound Technology to the extent provided
in such agreements (collectively, the "Inbound Technology Agreements"),
each of which is described on Schedule 3.10.6. Except as set forth on
Schedule 3.10.6, Seller has made available to Buyer true and complete
copies of each such Inbound Technology Agreement. Except as set forth
on Schedule 3.10.6, Seller has not received any notice of, and to the
knowledge of Seller, there are no circumstances which would give rise
to any termination, Default, cancellation or breach under, any Inbound
Technology Agreement.
3.10.7 Outbound Technology Agreements. Sellers and Acquired
Subsidiaries have not: (a) sold, licensed, transferred or assigned
source code of the Business Software to, or otherwise provided for the
escrow of source code of the Business Software for the benefit of, any
Person, (b) granted any Person the right to sublicense any Business
Software to any other Person, or (c) granted any third party ownership
rights in or to any IP Rights or any enhancements of or revisions to
the IT Property (other than pursuant to the terms of any Inbound
Technology Agreements), except pursuant to written agreements
("Outbound Technology Agreements"), each of which is listed in Schedule
3.10.7.
3.10.8 Project Agreements. With respect to Assigned Contracts,
Sellers and Acquired Subsidiaries have not contracted or committed to
provide development work or customization work (or special features or
functionality) with respect to any Products or Products in Development
(including releases, versions, updates or enhancements to Products or
Products in Development or additional products), except as provided in
any of the Outbound Technology Agreements or in any special project
agreement (the "Project Agreements"). Schedule 3.10.8 lists Project
Agreements for Products that have not been shipped, delivered or
installed, or for new Product features or enhancements that have not
been shipped, delivered, or installed, or for professional services
which have not been performed by Seller or its Affiliates. Seller has
provided Buyer access to all Project Agreements.
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3.10.9 No Claims. Except as set forth in Schedule 3.10.9: (a)
Sellers and the Acquired Subsidiaries have received no written notice
of any claim, demand, suit or other assertion by any third party; and
(b) to the knowledge of Sellers and the Acquired Subsidiaries, there
are no circumstances which would (or are likely to) give rise to any
claim, demand, suit or other assertion by any Person other than a party
to this Agreement, that such Person has superior rights, ownership or
shared ownership requiring any payments to any Person other than as
provided in this Agreement, or other interest of any kind or nature in
or with respect to, the IT Property or the IP Rights.
3.10.10 No Government Funding. Except as set forth in Schedule
3.10.10 and except for technology licensed under the Inbound Technology
Agreements, neither Sellers nor the Acquired Subsidiaries have received
governmental nor academic funding which (a) was used in the development
of the Business Software; or (b) precludes Buyer from making any
desired change to the Business Software, combining it with other
technology or exploiting or marketing it in any manner.
3.10.11 No Claims Against Contributors. To the Sellers' knowledge,
no Person has claimed or has reason to claim that any Contributor, by
virtue of its participation in the development of the IT Property or
the IP Rights has thereby: (a) violated any of the terms or conditions
of any employment, non-competition or non-disclosure agreement; (b)
disclosed or utilized any trade secret or proprietary information or
documentation in an unauthorized manner; (c) tortiously interfered with
or breached any agreement; or (d) violated or exceeded the scope of any
Law or agreement.
3.10.12 Notices and Markings. Sellers and the Acquired
Subsidiaries have taken all reasonable measures to protect the
proprietary rights of Sellers and the Acquired Subsidiaries to the IT
Property and the IP Rights therein. In no instance has the eligibility
of the IT Property (excluding the portions licensed under the Inbound
Technology Agreements) and the IP Rights therein for protection under
applicable U.S. copyright Law been forfeited to the public domain by
omission of any required notice or marking, or inclusion of any false
marking or any other reason where such forfeiture would have a Material
Adverse Effect on the Business.
3.10.13 Noninfringement. Except as set forth in Schedule 3.26, the
IT Property as used in the Business Software and the Business does not:
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(a) Infringe any copyright, or to the knowledge of Sellers,
induce or contribute to the infringement of any copyright of any
Person;
(b) To the knowledge of Sellers, infringe or induce or
contribute to the infringement of any patent or intellectual property
right (other than copyright) of any Person;
(c) To the knowledge of Sellers, misappropriate any Trade
Secret, know-how, process, proprietary information or other right of
any Person. Except as set forth in Schedule 3.26, none of Sellers or
the Acquired Subsidiaries has received notice of and none has any
knowledge of any complaint, assertion, threat or allegation that would
contradict the foregoing. For purposes of this Subsection 3.10.13,
knowledge shall not be inferred solely because the claimant complied
with patent marking requirements or statutory copyright notice
provisions.
3.10.14 Judgments and Settlements. Except as provided in Schedule
3.26, the IT Property or IP Rights of the Sellers or the Acquired
Subsidiaries or, to Seller's knowledge, the right of any third party
licensor to the intellectual property licensed pursuant to the Inbound
Technology Agreements, are not subject to any outstanding settlement
agreement, order, ruling, decree, judgment, or stipulation preventing
their use by Buyer Purchasers in the Business as currently conducted.
3.10.15 Warranties and Warranty Claims. Other than as set forth in
the Outbound Technology Agreements, the Project Agreements or the
standard form of warranties set forth in Schedule 3.10.15, the Sellers
and Acquired Subsidiaries have not made any written or other binding
warranty or representation with respect to any of the Business
Software, or any product that embodies or utilizes any of it or them.
All pending warranty claims by Sellers' and the Acquired Subsidiaries'
customers with respect to the Products are described on Schedule
3.10.15. Seller has heretofore provided Buyer with access to a complete
copy of all unresolved written customer complaints and all written
summaries of those oral customer complaints in Sellers or the Acquired
Subsidiaries' possession relating to the Products and any products not
currently sold by the Business but as to which ongoing service or
support is provided by the Business.
3.10.16 Condition of the IT Property. The Documentation, Design
Documentation and Support Collateral are sufficient and adequate to
enable Buyer, using the Employees and reasonably skilled and trained
personnel, to provide for the continued maintenance and support of the
Business Software in connection with the conduct of the Business as
presently conducted. The Sellers and the Acquired
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Subsidiaries have provided Buyer with access to all of their material
written management assessments, plans, systems and projections with
respect to: (a) the ongoing maintenance and support of the IT Property;
(b) the Year 2000 performance capabilities of the IT Property, and for
rendering the IT Property capable of operating accurately for Year 2000
purposes; (c) completing development work committed as required under
the Assigned Contracts; and (d) completing development work
contemplated under the Business Plan; and except as set forth in Annex
7.1.5, to the knowledge of Sellers and the Acquired Subsidiaries, such
written management assessments have not materially changed as of the
date of this Agreement.
3.10.17 No Undocumented Controls. To the knowledge of Sellers and
the Acquired Subsidiaries, the Business Software does not contain any
virus, timer, clock, counter, or other design or routine intended to
limit access to or usage of the Business Software except to the extent
reflected in Design Documentation.
3.10.18 Export Compliance. The Sellers and Acquired Subsidiaries
are in compliance in all material respects with all applicable Laws
relating to the export and re-export of the Products and the
Technology.
3.10.19 Corporate Names. Except as set forth on Schedule 3.10.19,
Sellers have sufficient right, title and interest in and to the
Corporate Names and the OPEN/image and PACE trademarks to grant to
Buyer Purchasers the license rights set forth in Sections 6.20, 6.21
and 6.22, free and clear of any adverse liens, claims or encumbrances
of any Person which would interfere with such license.
3.11 IP Rights.
3.11.1 Patents. Annex 2.1.1 identifies: (a) the patents and patent
applications (U.S. and foreign) that have been issued or assigned to
the Sellers or Acquired Subsidiaries, and (b) all invention disclosure
statements prepared by or for Sellers or Acquired Subsidiaries, in each
case, relating to the IT Property, that are to be transferred and
assigned to Buyer hereunder. Except as set forth in Schedule 3.11.1,
Seller has made available to Buyer true and complete copies of all such
patent and patent applications (as amended to date) and has provided
Buyer access to all of Sellers' and the Acquired Subsidiaries' internal
documentation, the files of patent counsel, a copy of the file wrapper
for each use and any validity opinions and valuations, whether
internally or externally prepared, relating to such patents,
applications and invention disclosure statements, and has provided
Buyer access to true and complete copies of all other written
documentation evidencing ownership, prosecution and enforcement (if
applicable) of each such item. Except
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for the patents listed on Annex 2.1.1 and those identified in the
agreement designated as "B15 - Agreement by and between Buyer and
Seller (Covenant Not to Sue from Seller to Buyer)" on Annex 1.1, none
of the Sellers or the Acquired Subsidiaries nor any other Affiliate of
Seller owns or has rights to any patent or patent application that will
relate to or affect Buyer's (directly or through the Acquired
Subsidiaries) rights to use and exploit the IT Property in the Business
as currently conducted.
3.11.2 Copyrights and Trademarks. Schedule 3.11.2 lists all the
registered U.S. and foreign copyrights of Sellers and the Acquired
Subsidiaries that cover any part of the IT Property other than those
portions licensed to Sellers and the Acquired Subsidiaries under the
Inbound Technology Agreement (the "Copyrights"), along with information
as to Sellers' or the Acquired Subsidiaries' ownership thereof or
licenses or rights therein and registration thereof. Except as set
forth in Schedule 3.11.2, to Sellers' knowledge, no person has any
right of renewal, reversion or termination with respect to any
Copyrights owned by Sellers or the Acquired Subsidiaries or any rights
thereunder. All trademarks, service marks, trademark registrations,
trade names and trade dress used in the Business and which are to be
conveyed to Buyers hereunder (collectively, the "Trademarks") are
listed on Schedule 3.11.2, along with information as to the ownership
thereof in Sellers, the Acquired Subsidiaries, and licenses or rights
therein and registration thereof. Except as set forth on Schedule
3.11.2: (a) each of the Trademarks identified on Schedule 3.11.2 as
being in use is in use; (b) no trademark registration identified in
Schedule 3.11.2 has expired or been canceled; (c) each identified
trademark application is pending (with any applicable docketing or
filing deadline dates occurring within six months from the date of this
Agreement being noted on Schedule 3.11.2); and (d) no notice of any
third party claim or petition for cancellation with respect to any such
application has been received by the Sellers or Acquired Subsidiaries.
Except as listed on Schedule 3.11.2, to Seller's knowledge (i) there
are no restrictions on the use of the Trademarks that would affect
Buyer's use of the Trademarks in connection with the Business, and (ii)
the Trademarks are not being infringed, violated or misappropriated by
any other person.
3.12 Trade Secrets. Sellers and the Acquired Subsidiaries have used
reasonable commercial efforts to safeguard and protect the confidentiality of
the Trade Secrets. Sellers and the Acquired Subsidiaries have no knowledge of
any violation of the Trade Secret protection practices and procedures of Sellers
and the Acquired Subsidiaries by any Person or the misappropriation of any Trade
Secret by any Person. Sellers and the Acquired Subsidiaries have no knowledge
that (a) any of the Trade Secrets is presently invalid and unprotectable, or (b)
any Trade Secret has become part of the public domain.
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3.13 Limitation on Intellectual Property Representations. Sections 3.9,
3.10, 3.11 and 3.12 set forth the only representations of Seller and Federal
with respect to the intellectual property rights of Seller and Federal and the
Acquired Subsidiaries or of any other Person and no other representation or
warranty of Sellers and Federal herein shall expand the scope of the
representation made in such Sections with respect to intellectual property
rights of any Person. No representations or warranties are made with respect to
the Local Applications, except for the representations and warranties of Seller
only, pursuant to Sections 3.10.9 and 3.10.13, which representations and
warranties are limited to the knowledge of Seller.
3.14 Title to Property. Except as set forth on Schedule 3.14, Sellers
or the Acquired Subsidiaries have good and marketable title to, or a valid and
binding leasehold interest in, all of the Purchased Assets free and clear of all
security interests, mortgages, liens, pledges, charges, claims or encumbrances
of any kind or character, except (a) statutory liens for property taxes not yet
delinquent or payable subsequent to the date on which this representation is
given and statutory or common law liens securing the payment or performance of
any obligation of any of Sellers or the Acquired Subsidiaries, the payment or
performance of which is not delinquent, or that is payable without interest or
penalty subsequent to the date on which this representation is given, or the
validity of which is being contested in good faith by Sellers or any of the
Acquired Subsidiaries; (b) the rights of customers of Sellers or the Acquired
Subsidiaries with respect to inventory under orders or contracts entered into by
Sellers and the Acquired Subsidiaries in the ordinary course of business; (c)
claims, easements, liens and other encumbrances of record pursuant to filings
under real property recording statutes; (d) rights of parties to any Material
Leases or Real Estate Leases included in the Purchased Assets in accordance with
the terms of such leases; and (e) as reflected in the SBU Financial Statements
or the notes thereto (such encumbrances being "Permitted Encumbrances").
3.15 Personal Property Leases. Schedule 3.15 contains a list of all
Personal Property Leases to which any of Sellers or the Acquired Subsidiaries is
a party which involve payments to or from Sellers or the Acquired Subsidiaries
in amounts greater than $25,000 over the life of the lease (collectively, the
"Material Leases"). Sellers have made available to Buyer true and complete
copies of all of the U.S. Material Leases and has provided Buyer access to all
other Material Leases. All the Material Leases are valid, binding and
enforceable against Sellers or the Acquired Subsidiaries party thereto and, to
the knowledge of Sellers, the other parties thereto, except as enforceability
may be limited by bankruptcy, insolvency or other similar Laws. The Material
Leases are in full force and effect, and none of Sellers or the Acquired
Subsidiaries is in Default under any of the Material Leases nor, to the
knowledge of Sellers, is there any Default with respect to the other parties
thereto. None of Sellers or the Acquired Subsidiaries have given or received any
written notice of any claimed Default with respect to any of the Material
Leases.
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3.16 Condition of Assets. All of the Purchased Assets currently
employed in the conduct of the Business which are tangible property, whether
owned or leased under the Personal Property Leases, are in all material respects
and in the aggregate in good operating condition and repair, normal wear and
tear excepted, and are adequate for the conduct of the Business. All property
leased under the Personal Property Leases is in a condition that on the date
hereof and on the Closing Date (assuming in each case that such date was the
last date of the lease term) will reasonably permit such property to be
surrendered to the lessors under the Personal Property Leases without incurring
any penalties or charges based on the condition of such property.
3.17 [Intentionally omitted.]
3.18 Accounts Receivable. The Accounts Receivable reflected on the SBU
Financial Statements, and those arising in the course of the Business since
September 30, 1996, have arisen in the ordinary course of business and represent
sales actually made to Persons which are not Affiliates of Seller and do not
represent obligations for goods sold on consignment, on approval or on a
sale-or-return basis and are not subject to any other repurchase or return
arrangement or other credits, allowances or adjustments. Such Accounts
Receivable have been properly recorded in accordance with GAAP consistently
applied and, to Sellers' knowledge as of the date hereof, are fully collectible
in the aggregate net of reserves set forth on the SBU Financial Statements.
Except as set forth on Schedule 3.18, no Account Receivable with a value in
excess of $50,000 is being contested or disputed by the obligor thereon or was
more than 90 days past due at December 31, 1996.
3.19 Real Property. Schedule 3.19 lists all real estate leases,
subleases and other agreements pursuant to which Sellers or the Acquired
Subsidiaries lease, sublease or otherwise obtain rights of use and occupancy in
Premises used in the Business (the "Real Estate Leases"), and the addresses
thereof. The amounts listed on Annex 6.12.3 under the column "Square Feet" are
the total square feet of space in each location which are actually used by the
Business together with a proportionate allocation of common space in the
facility (the "Subleased Premises"), and the amounts listed under the column
"Annual Rent" on Annex 6.12.3 are the proportionate share of the total annual
rent, additional rent and other charges payable by Sellers or the Acquired
Subsidiaries to the landlord under such leases which is attributable to each of
the Subleased Premises. The Sellers have made available to the Buyer true and
complete copies of all Real Estate Leases and all amendments and modifications
thereof. Each Real Estate Lease is valid, binding and enforceable against
Sellers or the Acquired Subsidiaries party thereto and, to the knowledge of
Sellers, against the other parties thereto, except as enforceability may be
limited by bankruptcy, insolvency or other similar Laws. Except as set forth in
Schedule 3.19, the Real Estate Leases are in full force and effect, and none of
Sellers or the Acquired
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Subsidiaries is in Default under any of the Real Estate Leases. To the knowledge
of Sellers, no landlord, sublandlord or other party to the Real Estate Leases is
in material default with respect to any of the Real Estate Leases. To the
knowledge of Sellers, there is no action, suit or proceeding pending or
threatened with respect to any of the Real Estate Leases. Except as reflected on
Schedule 3.19, the Acquired Subsidiaries are not parties to any of the Real
Estate Leases. None of the Acquired Subsidiaries own any real property and the
Purchased Assets do not include any interest in real property other than the
Real Estate Leases.
3.20 Contracts. Set forth on Schedule 3.20 are lists of the following
documents (the "Contracts"), true and complete copies of which (and all
amendments and modifications thereof and consent and waivers thereunder) Seller
has provided Buyer access to:
3.20.1 All Customer Purchase Orders, Customer Agreements and
Project Agreements (a) involving a purchase price for the Product(s) of
more than $100,000; (b) requiring professional services to be performed
pursuant to a statement of work; or (c) for which any of the Sellers or
any Acquired Subsidiary has been paid all or a portion of the purchase
price; in each case, for products that have not been shipped, delivered
or installed or for professional services which have not been fully
performed by Seller or its Affiliates;
3.20.2 All written contracts with any Employee and all consulting
contracts relating to professional services or product development for
the Business in the possession of Sellers or the Acquired Subsidiaries;
and any binding agreement with respect to future compensation or
employment with any Category 1 or Category 2 Employee; and
3.20.3 All indentures, mortgages, agreements, contracts,
arrangements, commitments, instruments, understandings or obligations,
whether oral or written, of each of the Acquired Subsidiaries other
than Customer Purchase Orders, Customer Agreements or Project
Agreements which are to be performed by such Acquired Subsidiaries in
any material respect on or after the Closing Date which (a) involve
payments to or from such Acquired Subsidiary in amounts greater than
$50,000 annually and which cannot be terminated by the Acquired
Subsidiary without penalty upon 90 days or less notice without Material
Adverse Effect, or (b) involve payments to or from such Acquired
Subsidiaries in excess of $10,000 annually and extend more than twelve
months after the date of this Agreement (other than pursuant to
automatic renewal provisions which permit cancellation without penalty
upon 90 days or less notice).
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Except as set forth on Schedules 3.20 or 3.26 or Annex 2.1.6, there is
no Default on the part of any of Sellers or the Acquired Subsidiaries, or
written notice of or knowledge of Sellers or the Acquired Subsidiaries of any
Default on the part of any other party, in the performance of any obligation to
be performed or paid under any Contract listed on Schedules 3.20 or 3.26, except
as would not result in a Material Adverse Effect on the Business or the
Purchased Assets.
3.21 Government Contracts. Schedule 3.21.1 lists all contracts pursuant
to which Sellers in connection with the Business or the Acquired Subsidiaries
are prime contractors or named subcontractors or directly provide Products or
services to any Governmental Entity. Seller has provided Buyer access to true
and complete copies of all such contracts and all amendments and modifications
thereof and consent and waivers thereunder with U.S. Governmental Entities and
has provided access to all such documents with non-U.S. Governmental Entities.
3.21.1 Except as set forth on Schedule 3.21.1 and assuming
government approval of the novation of any contract with a Governmental
Entity, the Sellers and the Acquired Subsidiaries are not, and the
execution and delivery of this Agreement by the Sellers and the
consummation of the Transactions will not result, in any violation,
breach or Default of any material term or provision of (a) any contract
related to the Business with a Governmental Entity, (b) any subcontract
related to the Business issued at any tier under a prime contract with
a Governmental Entity, (c) any bid, proposal or quotation made in
connection with a contract related to the Business with a Governmental
Entity or a subcontract issued under a contract related to the Business
with a Governmental Entity (collectively, "Government Contracts"), or
(d) to the knowledge of Sellers and the Acquired Subsidiaries, any
order, statute, rule or regulation governing any Government Contract.
3.21.2 Schedule 3.21.2 sets forth descriptions of all material
audit reports, final decisions, claims, consent orders in effect,
outstanding Forms 1, ongoing governmental investigations, prosecutions,
civil or administrative proceedings or settlement negotiations, or
internal investigations conducted or initiated by Sellers or the
Acquired Subsidiaries (collectively, "Contract Proceedings") with
respect to the Government Contracts and identifies any corrective
action, restitution or disciplinary action imposed upon or initiated or
taken by any of Sellers or the Acquired Subsidiaries as a result of
such Contract Proceedings. Except as set forth in Schedule 3.21.2, none
of Sellers and the Acquired Subsidiaries has engaged in or been charged
with or notified of a claim or allegation related to, conducted or
initiated any internal investigation of, or made a voluntary disclosure
or, to the knowledge of Sellers and the Acquired Subsidiaries, been
under investigation with
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regard to, any of the following relating to any Government Contracts:
(a) defective pricing within the meaning of the Truth in Negotiations
Act, as amended, or any comparable Laws; (b) failure to correct
accounting, estimating, inventory, material requirements planning,
material management and accounting systems, government property records
or purchasing system deficiencies; (c) mischarging of direct and/or
indirect costs; (d) delivery of products, material, components, items
or services that do not or did not meet specifications or standards
therefor, or delivery of foreign-made material, components or items
where domestic-made material, components or items were required; (e)
improperly soliciting, obtaining, attempting to solicit or obtain or
making or offering to make any payment for any nonpublic proprietary or
source selection information; (f) attempting to charge for unallowable
costs, including unallowable direct or indirect costs; (g) failure to
grant a price reduction under a Price Reduction Clause; (h) making a
false representation or certification; or (i) making a false claim
within the meaning of the False Claims Act or any comparable Laws; in
any case where such activity would have a Material Adverse Effect or
could result in the suspension or debarment of any of Sellers or the
Acquired Subsidiaries.
3.21.3 None of Sellers and the Acquired Subsidiaries have been
suspended or debarred from bidding on contracts with Governmental
Entities; no such suspension or debarment has been initiated or
threatened; and to the knowledge of Sellers and the Acquired
Subsidiaries there is no reasonable basis to believe that one will be
initiated. None of Sellers and the Acquired Subsidiaries have received
notice of, or have a reasonable basis to believe that any basis exists
for, notice of Default or Termination for Default (as provided in 48
C.F.R. Ch. 1 Sections 52.249-8, 52.249-9 or similar sections)
with respect to any U.S. Government Contract.
3.21.4 All test and inspection results and reports and
certifications that Sellers or the Acquired Subsidiaries have provided
pursuant to, or in pursuit of, any Government Contract, or as a part of
the delivery under any Government Contract of any product or system
designed, engineered, manufactured or sold by Sellers or the Acquired
Subsidiaries, were true, complete and correct except where any
inaccuracy or omission does not, and will not, have a Material Adverse
Effect on the Business or the Purchased Assets. The Sellers and the
Acquired Subsidiaries have provided to each Governmental Entity all
material test and inspection results and reports, certifications and
documentation required by the applicable Government Contracts.
3.21.5 All equipment and fixtures loaned, bailed, delivered or
otherwise furnished to or held by the Sellers or the Acquired
Subsidiaries for use with or in conjunction with the Business, on
behalf of any Governmental Entity, have been
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maintained in all material respects in the condition they were when
loaned, bailed, delivered or otherwise furnished to Sellers or the
Acquired Subsidiaries, ordinary wear and tear excepted, and where
applicable Sellers and the Acquired Subsidiaries have complied in all
material respects with the government property provisions of the U.S.
Federal Acquisition Regulation and any agency supplements thereto.
3.21.6 Except for "Restricted Rights" and "Limited Rights" and
"Commercial License Rights" contained in the Federal Acquisition
Regulation and any applicable agency supplements thereto and except as
set forth on Schedule 3.21.6, no Governmental Entity has any rights
with respect to any IT Property or IP Right. For each item referred to
therein, Schedule 3.21.6 sets forth (a) the Governmental Entity having
the rights, (b) a notation of the IT Property or IP Right subject to
such rights, and (c) the type of rights obtained or to be obtained by
the Governmental Entity in such data. For items identified in Schedule
3.21.6, Sellers with respect to the Business and the Acquired
Subsidiaries have complied with all applicable regulations and contract
requirements (including restrictive markings on or in the IT Property
or IP Rights) to effectively limit the rights of the Governmental
Entity in the IT Property to those described in Schedule 3.21.6.
3.21.7 Schedule 3.21.7 sets forth all security clearances held by
any U.S. Employees.
3.22 Restrictions on Business Activities. Except as set forth on
Schedule 3.22, there is no material agreement to which any of the Sellers, with
respect to the Business, or any Acquired Subsidiary is a party, nor any
judgment, injunction, order or decree specifically naming or, to the knowledge
of Sellers or the Acquired Subsidiaries, affecting the Business which prohibits
or limits the scope of development or marketing of the Products to be developed
in the "Marketing" plan and "Product Development" plan forming a part of the
Business Plan other than judgments, injunctions, orders or decrees applicable to
participants in the industry in general.
3.23 Sales and Marketing Materials. Seller has provided Buyer access to
copies of all current sales and marketing materials including World Wide Web
site materials, brochures, advertisements, standard Third Party Agreements and
permitted variations therefrom, and other material sales and marketing
materials.
3.24 Suppliers and Customers. Schedule 3.24 lists the 25 largest
suppliers with respect to the Business in the U.S. and the fifty largest
customers of the Business based on purchases of Products (or license fees or
royalties paid) for the fiscal year ended June 30, 1996. None of Sellers or the
Acquired Subsidiaries receives any rebate or other
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consideration from any supplier to the Business other than customary discounts
for prompt payment.
3.25 Employees and Labor Relations Matters.
3.25.1 Schedule 3.25.1 contains: (a) lists as of January 10, 1997
of all Employees (by name unless otherwise required by Law),
identifying their employer, their position and their salary and target
bonuses as of such date; (b) the names and titles of all officers of
the Acquired Subsidiaries; (c) the names of all directors of the
Acquired Subsidiaries; and (d) the date and amount of the most recent
increase, if any, in base salary for each Employee. Except as set forth
on Schedule 3.25.1, there are no contracts, agreements or obligations
to Employees with respect to ongoing employment, compensation or
benefits. With respect to the Business and all Acquired Subsidiaries,
there has been no mass layoff or plant closing or notice of such event
within the meaning of the WARN Act or comparable Laws of any other
Governmental Entity.
3.25.2 Except as set forth in Schedule 3.25.2, each of Sellers
with respect to the Business and the Acquired Subsidiaries has complied
in all material respects with all labor and employment Laws, including
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, the Americans With Disabilities Act, the Family
and Medical Leave Act and the payment of social security and other
taxes, and at the Closing Date none of the Employees who will be
Transferred Employees will be receiving long-term disability or
retirement benefits from Sellers or the Acquired Subsidiaries. Seller
has heretofore made available to Buyer a list of all Employees on
short-term disability or other medical or non-medical leaves of absence
with a description of the reason for the absence and expected return
date.
3.25.3 Except as set forth in Schedule 3.25.3, there is no unfair
labor practice charge, grievance, complaint or other action against any
of Sellers with respect to the Business or the Acquired Subsidiaries
pending or, to Sellers' knowledge, threatened before the National Labor
Relations Board, comparable Governmental Entity outside the U.S. or
otherwise, and none of Sellers and the Acquired Subsidiaries is subject
to any order to bargain by the National Labor Relations Board and there
is no labor strike, slow down, work stoppage or lockout with respect to
any Employee, nor is there any currently effective or pending
settlement agreement related to any of the foregoing.
3.25.4 Except as set forth in Schedule 3.25.4, to Sellers'
knowledge, no Employee is subject to any noncompetition, nondisclosure,
confidentiality,
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employment, consulting or similar agreement with Persons other than
Sellers or the Acquired Subsidiaries that would prevent the Employee
from working in any capacity for the Business.
3.25.5 Except as set forth in Schedule 3.25.5, none of Sellers
with respect to the Business nor any of the Acquired Subsidiaries is a
party to any collective bargaining agreements with any labor union or
other representative of employees or any works' council or similar
entity under applicable Laws, including local agreements, amendments,
supplements, letters and memoranda of understanding of any kind, nor is
there pending or, to the knowledge of Sellers and the Acquired
Subsidiaries, threatened any union organization activity by or among
any Employees.
3.25.6 Except as set forth in Schedule 3.25.6, to Sellers'
knowledge, no Employee has filed any claim or notice of claim under the
Equal Employment Opportunity Act of 1972, as amended, or comparable
Laws of the U.S. or any other Governmental Entity which has not been
finally resolved.
3.25.7 Except as set forth in Schedule 3.25.7, there are no
pending claims by any Employee or any former employee of the Business
with respect to workers' compensation matters.
3.25.8 There is no charge, complaint or other action pending
against Seller with respect to the Business or the Acquired
Subsidiaries, or to Sellers' knowledge, any investigation commenced or
threatened against Sellers or the Acquired Subsidiaries with respect to
the Occupational Safety and Health Act or comparable Laws of any other
Governmental Entity ("OSHA").
3.25.9 Except as set forth on Schedule 3.25.9, no Person has any
pending or threatened litigation against the Business or Acquired
Subsidiaries with respect to previous employment including, but not
limited to claims in the nature of retirement, disability, health or
welfare benefits or otherwise.
3.25.10 Except as set forth on Schedules 3.10 or 3.25, none of the
Employees has devoted less than 80% of such Employee's working hours to
the Business for so long as they have been employed by Sellers or the
Acquired Subsidiaries or, if first employed more than six months prior
to the date of this Agreement, during such six-month period.
3.26 Litigation. Except as set forth on Schedule 3.26, there are no
actions, suits, proceedings, orders, grievance procedures or claims pending by
or against or, to Sellers'
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knowledge, threatened against or investigations involving any of Sellers or the
Acquired Subsidiaries related to the Business or of the Purchased Assets; and
none of Sellers and the Acquired Subsidiaries are subject to, or in Default of,
any outstanding order, writ, injunction, judgment or decree of any Governmental
Entity. None of the matters listed on Schedule 3.26 is reasonably expected to
result in the issuance of an order, judgment, injunction or decree restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the Transactions or, to the knowledge of Sellers or the Acquired Subsidiaries,
could reasonably be expected to have a Material Adverse Effect on the Business
or the Purchased Assets.
3.27 Insurance. Sellers (and prior to their acquisition by Seller, the
Acquired Subsidiaries) maintain general liability, fire, theft, business
interruption, use and occupancy, employee fidelity, workers' compensation,
disability and other forms of insurance covering the Business and its assets and
employees, all of which are listed on Schedule 3.27, with such coverages and in
such amounts as are (a) equal to or in excess of such coverages or amounts
required by any applicable Law, and (b) in compliance with applicable Real
Estate Leases and other applicable agreements.
3.28 Compliance with Laws and Business Permits. Each of Sellers and the
Acquired Subsidiaries is in compliance with and has conducted its business to
comply with all Laws applicable to it in the conduct of the Business or
otherwise, except where the failure to comply would not have a Material Adverse
Effect on the Business or the Purchased Assets. Neither Sellers nor any of the
Acquired Subsidiaries has received any written notice of any asserted failure to
comply with such Laws. Sellers and the Acquired Subsidiaries hold all business
permits, certificates and other licenses or authorizations necessary for the
ownership and conduct of the Business in each domestic and foreign jurisdiction
where the Business is currently conducted, except where the failure to have such
a permit would not have a Material Adverse Effect (the "Permits").
3.29 Taxes. Except as set forth in Schedule 3.29, (a) Sellers and the
Acquired Subsidiaries have paid or adequately reserved for all Taxes (as defined
below) required to be paid by Sellers or the Acquired Subsidiaries through the
date hereof, including those resulting from any completed audits, and have paid
or shall timely pay any material Taxes required to be paid by Sellers or the
Acquired Subsidiaries after the date hereof and on or before the Closing Date
(unless the payment of such Taxes is being contested by the Seller or the
Acquired Subsidiaries in good faith), (b) Sellers and the Acquired Subsidiaries
have filed all Tax Returns that they are required to file through the date
hereof and shall, on or before the Closing Date, prepare and file, consistent
with prior years in all material respects, all Tax Returns relating to Sellers
or the Acquired Subsidiaries that they are required to file after the date
hereof and on or before the Closing Date, (c) no penalties or other charges are,
or to Sellers' knowledge will become, due with respect to the late filing
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of any Tax Return relating to the Sellers or the Acquired Subsidiaries, (d)
neither Sellers nor the Acquired Subsidiaries are currently being audited by any
taxing authority with respect to tax liabilities of the Sellers relating to the
Business or the Purchased Assets or the Acquired Subsidiaries and, to Sellers'
knowledge, no audit with respect to such Tax liabilities has been threatened,
(e) no extension of time with respect to any date on which any Tax Return
relating to the Business or the Purchased Assets was or is to be filed by
Sellers or the Acquired Subsidiaries is in force as of the date hereof, (f) no
waiver or agreement by Sellers or the Acquired Subsidiaries is in force as of
the date hereof for the extension of time for the assessment or payment of any
Tax relating to the Business or the Purchased Assets, (g) Sellers and the
Acquired Subsidiaries have not agreed and are not required to make any
adjustment under section 481(a) of the Code by reason of a change in accounting
method or otherwise, (h) none of Sellers or the Acquired Subsidiaries is a party
to any agreement with any Employee that provides for the payment of any amount
that would constitute an "excess parachute payment" within the meaning of
section 280G of the Code, and (i) none of Sellers or the Acquired Subsidiaries
is a party to or bound by, or has any obligation under, any tax-sharing or
similar agreement. "Taxes" shall mean any taxes, charges, fees, levies or other
assessments, including income, excise, property, sales, gross receipts,
employment and franchise taxes imposed by the U.S., or any state, county, local
or foreign government or subdivision or agency thereof, any interest, penalties
or additions attributable thereto, and any obligation to pay a pro rata portion
of any real estate taxes or assessments under Real Property Leases.
3.30 Employee Benefits. Schedule 3.30 lists all deferred compensation,
defined benefit, pension, profit sharing, stock option, stock purchase, savings,
group insurance and retirement plans, and all vacation pay, severance
agreements, incentive compensation, bonus and all other employee benefit or
fringe benefit plans or arrangements maintained by Sellers or the Acquired
Subsidiaries and in which the Employees have the right to participate (including
health, life insurance and other benefit plans maintained for retirees) other
than U.S. federal, state or foreign statutory benefits. Said plans, including
all plans, policies or arrangements that constitute "employee benefit plans" as
defined in Section 3(3) of ERISA, are sometimes collectively referred to herein
as "Benefit Plans." Buyer has been provided access to true and complete copies
of all Benefit Plans, including any insurance contracts under which benefits are
provided, as currently in effect. Buyer has also been provided with access to a
true and complete copy of the summary plan description, if any was required by
ERISA to be prepared and distributed to participants, for each Benefit Plan.
3.30.1 Except as set forth on Schedule 3.30, Sellers and the
Acquired Subsidiaries (a) have no Affiliates that are members of the
same controlled group of companies or trade and business or affiliated
service groups or other affiliated groups defined in Code Section 414
other than the controlled group of which
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Sellers and the Acquired Subsidiaries are members and (b) have not at
any time been required to contribute to any pension plan that is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
3.30.2 Each Benefit Plan that provides medical benefits has been
operated in material compliance with all requirements of Sections 601
through 609 of ERISA and Section 4980B of the Code, relating to the
continuation of coverage under certain circumstances in which coverage
would otherwise cease.
3.30.3 Except as set forth on Schedule 3.30, none of the Benefit
Plans provides post-retirement medical benefits, post-retirement death
benefits or other post-retirement welfare benefits, except as required
under Sections 601 through 609 of ERISA, Section 4980A of the Code or
other applicable Laws and none of Sellers with respect to the
Employees, nor any Acquired Subsidiary, has made any representation to
any Employee or former employee regarding such post-retirement benefits
which constitutes a contract or binding obligation other than that they
may be modified or discontinued at any time.
3.30.4 All contributions to, and payments from, the Benefit Plans
which may have been required to be made in accordance with the Benefit
Plans and, when applicable, Section 302 of ERISA or Section 412 of the
Code, have been timely made or failure to do will not have a Material
Adverse Effect. All such contributions to the Benefit Plans, and all
payments under the Benefit Plans, except those to a trust qualified
under Section 401(a) of the Code, for any period ending before the
Closing Date that are not yet, but will be, required to be made with
respect to the employees of the Business will be properly accrued and
reflected on the Closing Pro Forma Balance Sheet or are disclosed on
Schedule 3.30. Except as disclosed on Schedule 3.30, the Sellers or the
Acquired Subsidiaries have funded or will fund each Benefit Plan in
accordance with its terms through the Closing, including the payment of
applicable premiums on any insurance contract funding a Benefit Plan
for coverage provided through the Closing.
3.30.5 Except as set forth on Schedule 3.30.5, each Benefit Plan
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, including but not limited to the
satisfaction of applicable reporting and disclosure requirements under
ERISA and the Code. Except as set forth on Schedule 3.30.5, Sellers and
the Acquired Subsidiaries have filed or caused to be filed with the
Internal Revenue Service annual reports on the Form 5500 series of
reports for each Benefit Plan for all years and periods for which such
reports were required; and each of the Benefit Plans has been
administered in accordance with its terms in all material respects
except that in any case in which
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any Benefit Plan is currently required to comply with a provision of
ERISA or the Code, but is not yet required to be amended to reflect
such provision, it has been administered in substantial compliance with
such provision.
3.30.6 No "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Code, has occurred in respect of any
ERISA Benefit Plan which could give rise to any material liability or
tax under ERISA or the Code on the part of Sellers or the Acquired
Subsidiaries, and no civil or criminal action brought pursuant to part
5 of Title I of ERISA is pending or, to the knowledge of Sellers or the
Acquired Subsidiaries, threatened in writing or orally against any
fiduciary of any ERISA Benefit Plan of Sigma;
3.30.7 Except as set forth on Schedule 3.30.7, all of the Benefit
Plans which are pension benefit plans that are intended to qualify
under Section 401(a) of the Code have received favorable determination
letters from the IRS to the effect that such plans are qualified. No
determination letter with respect to any Benefit Plan has been revoked
nor, to the knowledge of Sellers and the Acquired Subsidiaries, has
revocation of a determination letter been threatened. Except as forth
on Schedule 3.30.7, no Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any
respect which would adversely affect its qualification or materially
increase its cost, and no Benefit Plan has been amended in a manner
that would require security to be provided in accordance with Section
401(a)(29) of the Code.
3.30.8 There have been no statements or communications made or
materials provided to any Employee or former employee of Sellers or the
Acquired Subsidiaries by any person which constitutes a contract or
binding obligation on Sellers or the Acquired Subsidiaries to provide
for any pension, welfare, or other insurance-type benefits to any such
employee or former employee, whether before or after retirement, other
than benefits under the Benefit Plans.
3.30.9 With respect to any Benefit Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course
or actions seeking qualified domestic relations orders) are pending or,
to the knowledge of Sellers or the Acquired Subsidiaries, threatened,
and, to Sellers' knowledge, no facts or circumstances exist which could
give rise to any such actions, suits or claims.
3.30.10 (a) No Benefit Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA section 302 and Code
section 412 (whether or not waived) which could result in a material
liability to Sellers or the Acquired Subsidiaries; (b) no event or
condition exists which would be deemed a
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reportable event within the meaning of ERISA section 4043(c) which
could result in a material liability to Sellers or the Acquired
Subsidiaries and no condition exists which could subject Sellers or the
Acquired Subsidiaries to a material fine under ERISA section 4071; (c)
all premium payments with respect to the Benefit Plans required to be
made prior to the Closing Date to the PBGC have been or will be made
prior to the Closing Date; and (d) none of Sellers or the Acquired
Subsidiaries is subject to any liability to the PBGC for any Benefit
Plan termination occurring on or prior to the Closing Date.
3.30.11 Except as set forth on Schedule 3.30.11, the acquisition
by any Buyer Purchaser of the Purchased Assets will not trigger benefit
entitlement under any Benefit Plan of Sellers or the Acquired
Subsidiaries.
3.30.12 (a) All non-governmental benefit plans, contracts and
arrangements covering non-U.S. Employees ("Non-U.S. Benefit Plans")
comply in all material respects with applicable Laws and collective
bargaining agreements; (b) Seller and its Affiliates have no unfunded
liabilities with respect to any Non-U.S. Benefit Plan except as set
forth on Schedule 3.30.12; (c) Seller has heretofore provided Buyer
access to accurate copies of substantially all instruments, rules,
agreements, contracts, declarations and other relevant documents
creating, governing or otherwise relating to the Non-U.S. Benefit
Plans; (d) all benefit payable under each of the Non-U.S. Benefit Plans
are provided in accordance with the terms of the governing provisions
of the relevant Non-U.S. Benefit Plan; and (e) Seller is not aware of
any failure to comply with any applicable Law which would or might
result in the loss of tax approval or qualification of any
Non-U.S.Benefit Plans.
3.30.13 Set forth on Schedule 3.30.13 is a correct and complete
list of all severance policies covering non-U.S. Employees (however
locally denominated) of Sellers and the Acquired Subsidiaries.
3.31 Environmental Compliance. The following terms shall have the
meanings set forth below:
"Environment" means any water, including groundwater and surface
water, any land, including land surface or subsurface, air, fish,
wildlife, biota and all other natural resources.
"Environmental Laws" means all laws, statutes, ordinances, rules,
regulations and codes relating to the protection of the Environment or
health and safety promulgated by any Governmental Entity, including but
not limited to those laws governing the use, storage, treatment,
generation, transportation, processing,
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handling, production or disposal of Hazardous Substances, those laws
with regard to recordkeeping, notification and reporting respecting
Hazardous Substances and those laws relating to workplace safety.
"Environmental Permits" means all permits, certificates, licenses,
approvals, authorizations, consents or registrations required by any
applicable Environmental Law in connection with the ownership, use
and/or operation of the Premises or the conduct of the Business.
"Hazardous Substance" means all flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including
waste petroleum and waste petroleum products), methane, hazardous
materials, hazardous wastes, pollutants, contaminants and hazardous or
toxic substances or related materials, or chemicals posing an
unreasonable risk of harm to health or the Environment, as regulated or
defined under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.)
("CERCLA"), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Section 6901 et seq.) ("RCRA"), the Toxic
Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.),
OSHA or any other applicable Environmental Law.
"Release" means any past or present spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping of a Hazardous Substance into the
Environment (including the abandonment or discarding of barrels,
containers and/or other closed receptacles containing any Hazardous
Substance).
"Seller Entities" means the Sellers, the Acquired Subsidiaries and
any former subsidiaries of the Sellers or the Acquired Subsidiaries.
Except as set forth in Schedule 3.31 and as would not have a Material Adverse
Effect on the Business or the Purchased Assets (taken as a whole):
3.31.1 None of the Seller Entities owns any Premises and none of
the Acquired Subsidiaries formerly owned any sites used in connection
with the Business.
3.31.2 No Acquired Subsidiary nor any of Sellers in connection
with the Business has or is using any of the Premises in violation of
any Environmental Law nor has any Acquired Subsidiary or Seller in
connection with the Business used any
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owned or leased real property in violation of any Environmental Law
where such violation would reasonably be expected to have a Material
Adverse Effect on the Business or the Purchased Assets. Except as set
forth on Schedule 3.31.2, none of Sellers and the Acquired Subsidiaries
own or operate, or have owned or operated, underground storage tanks
located at the Premises subject to the Real Estate Leases.
3.31.3 None of Sellers and the Acquired Subsidiaries has received
any written notice from any Governmental Entity or other Person
alleging a Release or the threat of a Release of any Hazardous
Substance on, at or from any Premises.
3.31.4 All Environmental Permits have been obtained and are in
full force and effect.
3.31.5 There are no actions, suits, claims or proceedings pending
or, to Sellers' knowledge, threatened against Sellers or the Acquired
Subsidiaries that arise out of, relate to or result from (a) a
violation or alleged violation of any applicable Environmental Law or
noncompliance or alleged noncompliance with any Environmental Permit by
Sellers or the Acquired Subsidiaries, (b) the presence of any Hazardous
Substance or a Release or the threat of a Release on, at or from the
Premises or Former Sites, or (c) human exposure to any Hazardous
Substance to the extent the same arise from the condition of the
Premises or the ownership, use or operation thereof by Sellers and the
Acquired Subsidiaries.
3.31.6 Each of Sellers in connection with the Business and the
Acquired Subsidiaries is in material compliance with all applicable
Environmental Laws.
3.31.7 None of Sellers in connection with the Business and the
Acquired Subsidiaries have at any time since October 1, 1993 received
any notice of, or been subject to, any administrative or judicial
proceeding relating to Sellers or the Acquired Subsidiaries pursuant to
any applicable Environmental Law.
3.31.8 No notices or other filings are required under any
provisions of the Environmental Laws for the consummation of the
Transactions.
3.32 Questionable Payments. None of Sellers in connection with the
Business, the Acquired Subsidiaries or any of their Affiliates has (a) made any
payments, (b) provided services or other favors, or (c) made any political
contributions in the U.S. or in any foreign country in order to obtain
preferential treatment or consideration by any Governmental Entity with respect
to any aspect of the Business, which would be unlawful under the Laws of the
U.S. and, if applicable, any foreign country in which such payments were made.
None of Sellers, the Acquired Subsidiaries or, to the knowledge of Sellers and
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the Acquired Subsidiaries, any of their Affiliates, customers or suppliers has
received any written notice, demand or inquiry relating to any investigation or,
to their knowledge, has been the subject of any inquiry or investigation by any
Governmental Entity in connection with payments or benefits or other favors to
or for the benefit of any governmental or armed services official, agent,
representative or employee with respect to any aspect of the Business or with
respect to any political contribution.
3.33 Bank Accounts; Powers of Attorney. Schedule 3.33 lists the names
and addresses of each bank and other financial institution in which the Acquired
Subsidiaries or Sellers with respect to the Business maintains an account, lock
box or safe deposit box, and the account numbers and names of persons having
signing authority or other access thereto. None of Sellers, with respect to the
Business, or the Acquired Subsidiaries has granted a power of attorney or
similar power to act on its behalf to any other Person.
3.34 Conflicts of Interest. None of Sellers or the Acquired
Subsidiaries and, to the knowledge of any officer or director of Seller or the
Acquired Subsidiaries, no Affiliate of Sellers other than non-employee directors
of Seller, is an officer, director, employee or consultant of, or owns or
otherwise controls any Person which is, or is engaged in business as, a
competitor, customer or supplier of the Business except as set forth on Schedule
3.34.
3.35 Services Supplied by and Assets Shared with Affiliates. Except for
the services to be provided under the Collateral Documents, the Business does
not rely on Sellers or their Affiliates other than the Acquired Subsidiaries for
any services and does not use any assets in common with Sellers or their
Affiliates which (a) are material to the Business and its operations, or (b) the
absence of which on the Closing Date could have a Material Adverse Effect on the
Business.
3.36 Brokers' or Finders' Fees. Except for fees payable to Lehman
Brothers, none of Sellers and the Acquired Subsidiaries has incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or the Transactions.
3.37 Disclosure. No representation or warranty made by Sellers in this
Agreement, the Disclosure Letter, the Collateral Documents or other instruments
or certificates delivered pursuant to Subsection 8.2.2 contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Federal, for itself and on
behalf of the Buyer Purchasers, as follows:
4.1 Organization. Buyer is a corporation organized under the laws of
the State of New Jersey. As of the Closing Date each of the Buyer Purchasers
will be organized under the laws of the jurisdiction of its formation. Buyer
has, and as of the Closing Date, each Buyer Purchaser will have, all requisite
corporate power and authority to carry on its business and to own and operate
the properties and assets owned and operated by it and is and will be duly
qualified to do business and in good standing in each jurisdiction where the
conduct of its business or the ownership or operation of its assets requires
such qualification except where failure to be so qualified or in such good
standing can be cured without material expense and will not result in a Material
Adverse Effect on the Business or the Purchased Assets.
4.2 Power and Authority. This Agreement is a valid and binding
obligation of Buyer enforceable against it in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to general
equitable principles. Buyer has all requisite power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of the Transactions contemplated
has been approved by all necessary action of the Board of Directors of Buyer
and, with respect to each Buyer Purchaser, each Buyer Purchaser, as of the
Closing Date.
4.3 Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement, the execution, delivery and performance of the
Collateral Documents to which Buyer is a party, and the consummation of the
Transactions, (a) do not and will not contravene any provision of the
constitutional documents of Buyer or, to the extent the consummation of the
Transactions is effected by any Buyer Purchaser, the applicable Buyer Purchaser;
or (b) constitute a breach of, result in a Default under, or cause the
acceleration of any payments pursuant to, any agreement, contract, indenture,
lease or mortgage to which Buyer or the applicable Buyer Purchaser is a party,
or by which either Buyer or the applicable Buyer Purchaser or its assets is
bound, or violate any provision of any applicable Law, permit or license to
which Buyer or the applicable Buyer Purchaser is subject, where any such
breaches, Defaults or violations would materially impair the ability of Buyers
to consummate the Transactions.
4.4 Consents. No permit, consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Entity on the part of
Buyer is required in
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connection with the execution or delivery by Buyer of this Agreement or required
of Buyer or the applicable Buyer Purchaser in connection with the consummation
of the Transactions other than (a) those which have previously been obtained,
(b) those specified in Annex 4.4 or under any Competition Laws, or (c) such
permits, consents, approvals, authorizations, designations, declarations or
filings the absence of which, individually or in the aggregate, would not
materially impair the ability of Buyer or the applicable Buyer Purchasers to
consummate the Transactions.
4.5 Brokers' and Finders' Fees. Except for fees payable to CS First
Boston Corporation, none of Buyers has incurred, nor will incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or the Transactions.
4.6 Settlement of Litigation. Neither Buyer nor any of its Affiliates,
in connection with the litigation, or settlement thereof, commenced by Jerome H.
Lemelson, individually and on behalf of certain entities over U.S. patents
4,213,163, B1-4,213,163 and 5,177,645, in an action styled as Lemelson v. Apple
Computer Incorporated, et al., CV- N-92-665-HDM (PHA) (D.Nevada), made any
admission as to the validity of, agreed to any findings with respect to, or
waived any defenses or right to contest the validity of, such patents.
ARTICLE V
PRECLOSING COVENANTS OF SELLER
5.1 Access. Prior to the Closing or earlier termination of this
Agreement, Seller shall and shall cause the Selling Subsidiaries and the
Acquired Subsidiaries to provide or make available to Buyer and its
representatives such additional information concerning the Business and the
Purchased Assets as Buyer reasonably requests. Sellers shall give Buyer and
Buyer's representatives reasonable access to all of the facilities, books and
records of Sellers related to the Business and of the Acquired Subsidiaries and,
in particular, to all product development facilities, including such portions of
its information systems as are used by its developers and programmers and other
technical personnel, and Seller shall use all commercially reasonable efforts to
make Sellers' and the Acquired Subsidiaries' officers and employees (including
all technical employees) available to Buyer as Buyer shall from time to time
reasonably request. Seller shall, no less frequently than weekly during the
period between the date of this Agreement and the Closing Date provide Buyer
with a schedule of all agreements which will be Assigned Contracts entered into
after the date hereof in accordance with Subsection 5.2.2 or otherwise binding
on the Business and shall provide Buyer with reasonable access to all such
agreements. Seller shall give Buyer
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prompt written notice of any significant delay or inability to meet the scope or
time schedules of the development projects described in the Business Plan.
5.2 Conduct of Business. From the date of this Agreement through the
Closing Date, except as otherwise specifically set forth in this Agreement,
Seller shall and shall cause the Selling Subsidiaries and the Acquired
Subsidiaries to conduct the Business in the ordinary course, consistent with
past practice, and as provided below:
5.2.1 Except as otherwise specifically set forth in this
Agreement, or with the prior written consent of a Designated
Representative, Seller covenants that it shall and shall cause the
Selling Subsidiaries and the Acquired Subsidiaries to:
(a) use all commercially reasonable efforts to preserve intact the
Business and its relationships with customers, suppliers and other
third parties;
(b) use all commercially reasonable efforts to (i) keep available
the services of Employees and consultants engaged with respect to
the Business, consistent with Subsection 5.2.2(a); and (ii)
recruit and hire new employees consistent with the employment
levels set forth in the Business Plan,
(c) use all commercially reasonable efforts to maintain the
tangible assets of the Business in good working order and
condition;
(d) use all commercially reasonable efforts to maintain the good
will of customers, suppliers and other Persons to whom the
Business sells goods or provides services or with whom the
Business has significant relationships and shall notify Buyer of
any written notice of Default or Default known to Sellers;
(e) make payments on their liabilities with respect to the
Business to suppliers, employees and trade creditors and not delay
in making any payments (unless contesting such payments in good
faith) or enter into extended payment terms;
(f) make expenditures for research and development substantially
consistent with the product development schedule provided in Annex
7.1.5 through the Closing Date;
(g) make such capital expenditures and other expenditures for
property, plant and equipment substantially consistent with the
third fiscal quarter forecast as provided to the Buyer in the
Business Plan for the period
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January 1, 1997 through March 31, 1997 and such additional
expenditures as are provided for in the Business Plan through such
later date as may be the Closing Date; and
(h) maintain the books and records of the Business in the
customary fashion.
5.2.2 Except as otherwise specifically set forth in this
Agreement, or with the prior written consent of a Designated
Representative, Seller covenants that with respect to the Business it
shall not and shall not permit the Selling Subsidiaries or the Acquired
Subsidiaries to:
(a) except as set forth in Schedule 5.2.2, or as otherwise
required by applicable Laws or otherwise permitted herein, enter
into or amend any contract of employment with any Employee, amend
in any material respect or adopt any non-ERISA Benefit Plan (other
than Seller's stock option or stock purchase plans regarding which
Seller will provide Buyer notice of all such amendments), amend or
adopt any ERISA Benefit Plan, Non-U.S. Benefit Plan or any Sigma
Benefit Plan, or change the benefits or the compensation of any
Employee whose annual compensation, together with any incentive
compensation, equals or exceeds $50,000, provided, however, Seller
may make salary increases in the ordinary course of business;
(b) make any material change in any pricing, financial reporting
or credit practice, payment practice or accounting method of the
Business, including selling or entering into a contract to sell
any Product or combination of Products or Products and services
with a list price in excess of $50,000 for a discount to list
price in excess of those discounts set forth on Schedule 5.2.2, or
offer any discount in excess of published early payment terms set
forth on Schedule 5.2.2 for early payment of any account
receivable included in the 12/31 Pro Forma Balance Sheet or
arising after the date of this Agreement;
(c) enter into any new agreement, or any amendment, modification
or change to any Third Party Agreement which might reasonably
cause a Material Adverse Effect on the Business or the Purchased
Assets (taken as a whole);
(d) give any notice of Default or breach, or renewal, non-renewal
or cancellation to any Person pursuant to any Inbound Technology
Agreement
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or Outbound Technology Agreement other than such notices with
respect to Customer Agreements issued in the ordinary course of
business;
(e) enter into any agreement which provides for delivery, license
or escrow of source code of the Business Software or transfer any
other rights in the patents or patent applications listed on Annex
2.1.1, to any third party;
(f) enter into any new Project Agreement involving $87,500 or more
of development work or customization work of the Business;
(g) enter into any new OEM or strategic alliance of any kind;
(h) enter into any new agreement with any of the Acquired
Subsidiaries;
(i) enter into any new agreement or amend any existing agreements
with Microsoft Corporation or Unisys Corporation which have been
provided by Seller to Buyer prior to the date of this Agreement
other than: (x) software licenses for off-the-shelf Microsoft
products; (y) amendments to Microsoft agreements consistent with
the letter agreements entered into in connection with this
Agreement in form and substance agreed to by Buyer, which approval
shall not be unreasonably withheld; and (z) amendments to Unisys
agreements implemented in accordance with the terms of the letter
agreements entered into with Unisys in connection with this
Agreement;
(j) commence cease and desist demands, litigation or other
proceedings to perfect, maintain, or enforce the IP Rights of
Sellers with respect to the IT Property; or
(k) authorize any of the foregoing or enter into any contract,
agreement, binding commitment or arrangement to do any of the
foregoing.
5.2.3 Except as otherwise specifically set forth in this
Agreement, or in connection with the consummation of the Transactions,
or with the prior written consent of a Designated Representative, which
consent shall not be unreasonably withheld, Seller covenants that with
respect to the Business it shall not and shall not permit the Selling
Subsidiaries or the Acquired Subsidiaries to:
(a) sell, lease or transfer any Purchased Asset other than in the
ordinary course of business of the Business;
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(b) take any action to diminish insurance coverages for the
Business from existing levels (to the extent such coverages remain
commercially available);
(c) except for borrowings by Seller under its institutional
revolving credit agreement, incur any indebtedness other than
trade debt in the ordinary course of business of the Business or
permit to arise any encumbrance on any Purchased Asset other than
Permitted Encumbrances;
(d) amend the certificate of incorporation or by-laws or other
organizational documents of any Acquired Subsidiary; or issue,
sell or transfer any equity in any Acquired Subsidiary or declare
or pay any dividend or distribution with respect to the capital
stock or other equity of such Acquired Subsidiary;
(e) authorize any of the foregoing, or enter into any contract,
agreement, binding commitment or arrangement to do any of the
foregoing; or
(f) solicit or intentionally induce any Employee to refuse
employment with Buyer or its Affiliates.
5.2.4 Buyer shall make the Designated Representative available for
consultation with Seller during normal business hours on each business
day and will consider all written requests by Seller for consent to any
matter under this Section 5.2 and provide Seller with a response within
48 hours after receiving all information reasonably required by the
Designated Representative to evaluate the request; provided, however,
during the last three weeks of March or June 1997, the Designated
Representative shall be available to respond to requests related to
customer orders or contracts within four (4) hours after receiving the
required information. Neither Buyer nor the Designated Representative
shall have any liability to Seller or any other Person with respect to
the determination of whether or not to consent to any matter requested
by Seller. If the Designated Representative fails to respond within the
above-referenced 48-hour time period (or by noon on the first business
day following a request if the 4-hour period is applicable and invoked
on a day which is not a business day or after 7:00 p.m. on a business
day or if invoked on a business day before 8:00 a.m., by noon on that
day), a negative response shall be deemed to have been given. In the
event Buyer does not consent to an action proposed by Seller which
Seller states in its request is required to be taken in order for
Seller to avoid breach of a specifically identified covenant made by
Seller in Subsection 5.2.1 and is so required, Buyer shall not be
entitled to treat such breach as a breach of the identified covenant.
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5.3 Indebtedness; Intercompany Accounts. The Closing Pro Forma
Balance Sheet shall not show any indebtedness of the Business or the Acquired
Subsidiaries except trade debt incurred in the ordinary course of business of
the Business. All amounts due from the Acquired Subsidiaries to Seller or its
Affiliates and all amounts due to the Acquired Subsidiaries from Sellers or its
Affiliates as of the Closing Date shall be settled at fair value (irrespective
of the terms of payment).
5.4 No Shopping. From the date of this Agreement until the Closing
Date or the earlier termination of this Agreement, Seller shall not, and Seller
shall direct and use its best efforts to cause its Affiliates, employees, agents
and representatives (including any investment banker, attorney or accountant
retained by Seller) not to, initiate, solicit or knowingly encourage, directly
or indirectly, any inquiries in respect of or the making of, any Acquisition
Offer (as defined below) or engage in any negotiations concerning or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Offer, or otherwise knowingly facilitate any effort
or attempt to make or implement an Acquisition Offer. The term "Acquisition
Offer" means any offer or proposal for the direct or indirect disposition of the
Business or the Purchased Assets (other than sale or license of Inventory or
other dispositions of assets permitted under this Agreement to customers in the
ordinary course of business) to any Person other than Buyer or for the sale or
exchange of any stock of any of Sellers or the Acquired Subsidiaries with or to
any third party, or the merger or amalgamation of any of the Sellers (other than
into Seller) or Acquired Subsidiaries unless the acquiror expressly acknowledges
and confirms the existence of all of the obligations of such Sellers under this
Agreement and the Collateral Documents.
5.5 Consents.
5.5.1 Seller shall, at its sole cost and expense, use its reasonable
commercial efforts to promptly obtain the consents of all requisite Persons so
as to vest all of the rights and obligations of Sellers and the Acquired
Subsidiaries under the Assigned Contracts, IP Rights, IP Property and Permits
and other Purchased Assets in the Buyers or the Acquired Subsidiaries as of the
Closing Date. Buyer shall, on Seller's request, use commercially reasonable
efforts to assist Seller in obtaining such consents and shall have the right, if
additional assurances with respect to the assumption of obligations by any Buyer
Purchaser are requested by the Person from whom consent is sought, participate,
directly or through its representatives, in the process of obtaining such
consents. The forms of such consents shall be subject to the prior approval of
Buyer, which shall not be unreasonably withheld or delayed.
5.5.2 For any Trademark registration or application which is not
recorded at the appropriate trademark office in the name of Sellers or an
Acquired Subsidiary as of the date
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hereof, Seller shall cooperate with Buyer to effect the recordation of (a) the
assignment of the registration or application either (i) first to the applicable
Seller then to Buyer or its designee or (ii) to Buyer or its designee directly
and (b) any necessary change of name or other ancillary documents and will
reimburse Seller for all reasonable out-of-pocket expenses incurred in
connection therewith. Seller shall use commercially reasonable efforts to obtain
on each assignment as required by local practice, the notarized and legalized
signature of the record owner of each registration or application and, if
necessary, the signature of Seller, within 90 days after receipt of the form of
assignment document from Buyer.
5.6 Pre-Closing Litigation Consultation. Sellers and the Acquired
Subsidiaries shall consult with representatives of Buyer regarding the
prosecution and conduct of any pending litigation which is a Purchased Asset or
an Assumed Liability, provided that such obligation shall not require the
disclosure of any privileged or confidential information, and shall not without
Buyer's prior written consent, which shall not be unreasonably withheld, settle
any such litigation or take any dispositive actions in such litigation, except
as set forth in Schedule 5.6.
5.7 Updated Annexes. Seller shall deliver to Buyer at least five
business days prior to the Closing Date revised Annexes 2.1.1, 2.1.2, 2.1.4 and
2.1.6 and Schedules 3.7, 3.10.6, 3.10.8, 3.11.2, 3.10.15, 3.15, 3.18, 3.20,
3.21, 3.25, 3.26, 6.10.1(d) and 6.10.4 reflecting any changes from the date of
this Agreement to the Closing Date. Changes specifically permitted under the
terms of this Agreement shall be treated as though delivered with the Disclosure
Letter as of the date of this Agreement.
5.8 Closing Pro Forma Balance Sheet.
5.8.1 At least 10 days and no more than 15 days prior to the
Closing Date, Seller shall deliver to Buyer an estimated pro forma consolidated
balance sheet of the Business as of the Closing Date (the "Estimated Closing
Balance Sheet"). The Estimated Closing Balance Sheet and the Closing Pro Forma
Balance Sheet shall be prepared consistent with the preparation of the 12/31 Pro
Forma Balance Sheet and in accordance with Annex 3.6, and shall reflect the
Purchased Assets which are of a nature to be reflected thereon and only those
liabilities being assumed by Buyer pursuant to Section 2.3. The Estimated
Closing Balance Sheet shall present the Seller's forecast of the financial
condition of the Business at the Closing Date.
5.8.2 Seller shall prepare a Closing Pro Forma Balance Sheet as of
the Closing Date (the "Closing Pro Forma Balance Sheet") which shall reflect the
books and records of the Business and fairly present the financial condition of
the Business as at the
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Closing Date and will be provided to Buyer by Seller within 30 days after the
Closing Date.
5.8.3 The "Accounts Payable and Other Liabilities" on the Closing
Pro Forma Balance Sheet shall include, among other categories of payables, only
trade accounts payable with respect to the Business which are not past due based
on the suppliers' invoice and the provision of goods and services with respect
thereto, legal fees and expenses for services and disbursements rendered or
incurred after the date of this Agreement with respect to the litigation
described on Annex 2.1.8 (whether or not past due), and other accounts payable
of the Business incurred in accordance with Sections 5.2.
5.9 Revisions to Imaging for Windows. Provided that Buyer provides the
Buyer Designated Logo and ".exe" file name to Seller no later than ten business
days after Seller notifies Buyer of the specifications required by Seller,
Seller shall use all commercially reasonable efforts to develop, and deliver to
Buyer and to Microsoft no later than fifteen (15) days prior to the Viewer
Submission Deadline, versions of Imaging for Windows for incorporation in
Windows 97 which: (i) include the Buyer Designated Logo in all places that the
Seller's logo appears in the current version of Imaging for Windows, (ii)
replaces the Seller's corporate name and copyright notices with the Buyer's
corporate name and copyright notices in all text in which they appear (but not
in file names; except as provided in (iii) hereafter), (iii) replaces the ".exe"
file name of Seller with a ".exe" file name (of an appropriate length and
characters) provided by Buyer; and (iv) such versions shall include a version
with the existing features and functions already incorporated in Windows 95, a
completed version of the beta software delivered by Seller to Microsoft in
December 1996, and a version implementing the "quick fax viewer" as requested by
Microsoft. "Buyer Designated Logo" means a logo of Buyer which Buyer provides to
Seller in an industry standard electronic format, and which is comparable in
size to Seller's logo included in the current versions of Imaging for Windows.
ARTICLE VI
OTHER COVENANTS
6.1 Competition Laws Filings. Buyer and Seller shall file, or cause to
be filed, with the U.S. Federal Trade Commission ("FTC") and the Antitrust
Division of the U.S. Department of Justice ("Antitrust Division") pursuant to
the Hart-Scott-Rodino Act ("HSR Act") the Notification and Report required by
the HSR Act within five business days after the date of this Agreement,
including all requisite documents, materials and information therefor, required
by the HSR Act. Buyer and Seller shall furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
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connection with its preparation of any filing or submission as is necessary
under the HSR Act, and shall keep each other apprised of the status of any
inquiries or requests for additional information made by any governmental
authority, and shall promptly respond to any such inquiry or request. Buyer and
Seller shall, and shall cause their respective Subsidiaries to, take all
commercially reasonable actions required of them to obtain any necessary
consents, waivers, approvals or authorizations relating to the Transactions
under any other Laws relating to the restriction, regulation, or prohibition of
actions having the purpose or effect of restraining or monopolizing trade
(together with the HSR Act, the "Competition Laws").
6.2 Good Faith Cooperation. Sellers and Buyer will use all reasonable
commercial efforts to (a) fulfill the conditions precedent to the Closing and
post-Closing obligations, including obtaining consents and effecting Staged
Closings over which they, respectively, have control, including but not limited
to securing as promptly as possible all consents, approvals, waivers and
authorizations contemplated by this Agreement, and (b) cooperate with the other
(including as to the form of consents, responding to inquiries from third
parties and providing support as reasonably requested) in the other's
satisfaction of its obligations pursuant to clause (a). After the Closing the
Buyer shall not make any payments to a third party in connection with obtaining
a consent to the assignment of an Assigned Contract without Seller's approval,
which shall not be unreasonably withheld.
6.3 Laws Affecting Transfer of Real Estate, Employees and Permits.
Sellers shall, and shall cause the Selling Subsidiaries to, and, if required,
Buyer shall and shall cause the Buyer Purchasers to, make any necessary filings
with the appropriate Governmental Entities required to transfer the real estate
interests and Permits under the Laws of the jurisdictions where the Business is
conducted and shall provide such notices and other information to Employees as
may be required under the Laws in the jurisdictions where the Employees are
employed, including the WARN Act, labor agreements, Laws with respect to "works
councils" and similar requirements.
6.4 Public Announcements. On or before the Closing Date, Buyer and
Seller shall not (nor shall they permit any of their respective Affiliates to),
without prior consultation with the other party and such other party's review of
and consent to any public announcement concerning the Transactions, issue any
press release or make any public announcement with respect to the Transactions
except such disclosures as may be required by Law. During such period Seller and
Buyer shall, to the extent practicable, allow the other party reasonable time to
review and comment on such release or announcement in advance of its issuance
and use reasonable efforts in good faith to reflect the reasonable and good
faith comments of such other party, provided, however, no party shall be
prevented from making any disclosure required by Law at the time so required.
The parties intend that the initial announcement of the terms of the
Transactions shall be made by joint press
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release of Buyer and Seller. Buyer and Seller will use reasonable commercial
efforts to jointly discuss the Transactions with the press, analysts, customers,
resellers and others. Buyer will assist Seller in communicating the benefits of
the Transactions to customers and assist Seller in maintaining its relationships
with existing and prospective customers of the Business.
6.5 Taxes.
6.5.1 Sellers shall cause the Business and each of the Acquired
Subsidiaries to be included in the consolidated federal Income Tax
Returns of Sellers for all periods for which they are required to be so
included, and in any other required state, local and foreign
consolidated, affiliated, combined, unitary or other similar group
Income Tax Returns that include the Business, for all periods prior to
the Closing Date for which any of the Subsidiaries is required to be so
included. Sellers shall prepare information (including schedules,
worksheets and other data) necessary, in Sellers' judgment, to include
the Business or the Acquired Subsidiaries in the Income Tax Returns for
such period. Sellers shall timely prepare and file, or cause to be
prepared and filed, all Income Tax Returns of or including the Business
and the Acquired Subsidiaries for all taxable periods ending on or
before the Closing Date and pay, or cause to be paid, when due all
Income Taxes relating to such Tax Returns to the extent that such Taxes
have not been provided for on the SBU Financial Statements or the
Closing Pro Forma Balance Sheet.
6.5.2 (a) Seller shall have the right and obligation to represent
the interests of the Business or the Acquired Subsidiaries in any Tax
audit or administrative or court proceeding relating to Tax Returns for
any periods or portions thereof prior to the Closing Date, provided,
however Seller shall not agree to a settlement or compromise of any
such audit or proceeding without the prior written consent of Buyer,
which shall not be unreasonably withheld.
(b) Following the Closing, in the event of an audit of any
Acquired Subsidiary as referred to in Subsection 6.5.3, Buyer shall
execute, or cause the appropriate Affiliate to execute, a federal tax
Form 2848 or comparable Power of Attorney authorizing Seller or
Seller's designated representative to represent such Acquired
Subsidiary with respect to income taxes for which Sellers are liable
pursuant to this Section 6.5.
6.5.3 Buyer shall promptly notify Seller in writing upon receipt
by Buyer or any Affiliate of Buyer of notice of any pending or
threatened Tax audits or assessments of the Business or the Acquired
Subsidiaries so long as any period or
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portion thereof prior to the Closing Date remains open to the knowledge
of Buyer. Seller shall promptly notify Buyer in writing upon receipt by
Seller or any Affiliate of Seller of notice of any pending or
threatened Tax audits or assessments relating, in whole or in part, to
the income, properties or operations of the Business or the Acquired
Subsidiaries.
6.5.4 After the Closing Date, Buyer and Seller shall provide each
other with such cooperation and information relating to the Business or
the Acquired Subsidiaries as either party reasonably may request in
filing any Tax Return (or amended Tax Return) or refund claim,
determining any Tax liability or a right to a refund, conducting or
defending any audit or other proceeding in respect of Taxes or
effectuating the terms of this Agreement. The parties shall retain, all
Tax Returns, schedules, work papers and other material documents
relating thereto, until the seventh anniversary of the Closing Date or,
if later, the expiration of any relevant statute of limitations (and,
to the extent notified by any party, any extensions thereof) and,
unless such Tax Returns and other documents are offered and delivered
to Sellers or Buyer, as applicable, until the final determination of
any Tax in respect of such years. Any information obtained under this
Section 6.5 shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax Return (or amended Tax
Return) or refund claim, determining any Tax liability or a right to a
refund, conducting or defending any audit or other proceeding in
respect of Taxes or otherwise effectuating the terms of this Agreement.
Notwithstanding the foregoing, neither Seller nor Buyer, nor any of
their Affiliates, shall be required unreasonably to prepare any
document, or determine any information not then in its possession, in
response to a request under this Subsection 6.5.4; provided, however,
no request shall be deemed unreasonable if made in response to the
request of a taxing authority for information on documents not in the
possession of the party receiving the request nor otherwise reasonably
available to it. Nothing in this Subsection 6.5.4 shall limit (or be
construed as limiting) the obligation of Seller to indemnify Buyer
Indemnified Parties pursuant to Section 9.3.
6.6 Confidentiality. Seller and Buyer acknowledge and confirm their
obligations under the letter agreement ("Letter Agreement"), dated July 17, 1996
as amended on September 27, 1996, and agree that except as expressly set forth
herein, such Letter Agreement continues in full force and effect. In addition to
the limitations set forth in the Letter Agreement, following the Closing Date,
Sellers shall, and shall use commercially reasonable efforts to cause their
personnel and agents to, hold in strict confidence, not disclose to any Person
without the prior written consent of Buyer, and not use in any manner
whatsoever, any confidential business or technical information remaining in
their possession concerning the Business or the Purchased Assets other than
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as contemplated in the Collateral Agreements. Such confidential information
specifically includes all source code, system and user documentation, and other
Documentation and Design Documentation pertaining to the Technology, including
any proposed design and specifications for future products and products in
development, marketing plans, and all other technical and business information
concerning the Business. Promptly following the Closing Date, Sellers shall
deliver to Buyer Purchasers all materials remaining in their possession
containing any such confidential information, including all copies, extracts,
adaptations, and transcriptions thereof.
6.7 Notification of Certain Matters. Prior to the Closing, Sellers
shall give prompt notice to Buyer, and Buyer shall give prompt notice to Seller,
of any event, occurrence or circumstance which causes, or Seller or Buyer,
respectively, believes causes, (a) any representation of itself or the other, as
the case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at the date of this Agreement or at the Closing, or (b) itself
or the other, as the case may be, to fail to comply with or satisfy any
covenant, condition or agreement to be satisfied or complied with by it other
than the covenant contained herein; provided, however, the delivery of any
notice under this Section 6.7 shall not constitute an admission of any breach
of, or failure to conform with, or a waiver by, the giver or recipient of any
representation, warranty, covenant, obligation or right, or otherwise limit its
remedies.
6.8 Transfer Taxes. All excise, sales, use, transfer, stamp,
documentary, filing, recording and other similar taxes or fees which may be
imposed or assessed as the result of the Transactions ("Transfer Taxes"),
together with any interest or penalties with respect thereto shall be shared
equally by Seller and Buyer. All Tax Returns required to be filed in connection
with any Transfer Taxes shall be prepared and filed when due by the party
responsible under applicable Law or custom to file such Returns. The filing
party shall promptly provide the other applicable parties with copies of such
Returns. All Transfer Tax Returns shall be prepared on a basis consistent with
the Purchase Price Allocation Schedule. Within 45 days after the Closing Date
(or the closing in the applicable Deferred Country in the event of a staged
closing as provided in Section 8.3), Seller and Buyer shall provide notice to
each other of the Transfer Taxes paid by each and the party who has paid less
than one-half such Transfer Taxes shall promptly reimburse the other so that
each party bears one-half the expense of the Transfer Taxes.
6.9 Section 338(h)(10) Election. Seller will cooperate with Buyers in
making an election pursuant to Code Section 338(h)(10) and elections, if
available, under comparable state statutes with respect to the purchase of the
stock of the Acquired Subsidiaries in Seller's consolidated U.S. federal income
tax return for the taxable period which includes the Closing Date.
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6.10 Transferred Employees.
6.10.1 The applicable Buyer Purchaser shall offer employment to
all Applicable Employees effective as of the Closing Date or upon the
return of any such Applicable Employee to active employment, which
offer shall contain a release by such Employees in substantially the
form contained on Annex 6.10.1, or, if required by applicable Law,
shall accept the transfer of employment of such Applicable Employees
and the Acquired Subsidiaries shall continue to employ such Applicable
Employees. "Applicable Employees" means all of the following:
(a) All persons who are active Employees on the Closing
Date. Employees on temporary leave for purposes of jury or annual
two-week national service/military duty shall be deemed to be
active Employees;
(b) Employees who on the Closing Date are on nonmedical
leave of absence; provided, however, that no such employee shall
be guaranteed reinstatement to active service if his return to
employment is contrary to the terms of his leave, unless otherwise
required by applicable Law (for purposes of the foregoing,
nonmedical leave of absence shall include maternity or paternity
leave, leave under the Family and Medical Leave Act of 1993,
educational leave, military leave with veteran's reemployment
rights under federal law, or personal leave, unless any of such is
determined to be a medical leave);
(c) (i) U.S. Employees other than Employees of Sigma who on
the Closing Date are on disability or medical leave and for whom
it has been 180 calendar days or less since their last day of
active employment; provided, however, that no such Employee shall
be guaranteed reinstatement to active service if he is incapable
of working in accordance with the policies, practices and
procedures of the such Employee's employer immediately prior to
Closing; and
(ii) All Non-U.S. Employees unless otherwise prohibited
by country and local Laws; and
(d) Persons to whom any of Sellers, with respect to the
Business, or the Acquired Subsidiaries have made written offers of
employment consistent with Subsection 5.1.2 and who are listed on
Schedule 6.10.1(d).
Those Applicable Employees who accept such offers of employment
effective as of the Closing Date (or such later date as to which
closing occurs outside the U.S. as
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provided in Section 8.3), or whose employment is transferred by
operation of Law and in the case of any Acquired Subsidiary, all
Employees, shall be referred to herein as the "Transferred Employees";
it being understood that each Employee, other than an Employee of an
Acquired Subsidiary, on short-term disability (described in Subsection
6.10.1(c)(i) above) who has accepted an offer of employment, shall
participate in the applicable short-term disability plan of Seller or
of an Acquired Subsidiary until such Employee returns from leave, and
shall become a Transferred Employee only upon the termination of his or
her leave. Buyer shall reimburse Seller for amounts paid under Sellers'
short term disability plan to any such Employees who become Transferred
Employees after the end of their short term disability for up to 180
days' short term disability payments made by Sellers during the period
from the Closing Date to the date such Employee becomes a Transferred
Employee.
6.10.2 Sellers shall notify and consult with the works councils or
similar employee representatives as required by applicable Law with
respect to the transfers contemplated by this Agreement. Sellers and
Buyer Purchasers will cooperate with each other to determine the
amounts of any and all retention, termination, change in control or
other similar compensation or benefit payments which are or may become
payable to any Employee in connection with the consummation of the
Transaction which shall, to the extent so determined, be shared equally
by Buyer and Seller.
6.10.3 Seller shall allow Buyers to contact and make employment
arrangements with the Employees conditioned upon consummation of the
Transactions for the period following the Closing, and Seller expressly
waives and releases any potential claims against Buyers and such
Employees for their actions in making such arrangements other than
actions which constitute violations of Law.
6.11 Access to Certain Customers. Prior to the Closing or earlier
termination of this Agreement, Sellers shall use reasonable commercial efforts
to furnish Buyer's representatives with the opportunity to consult, together
with Seller's representatives, with the customers of the Business mutually
identified by Buyer and the Seller to assess the performance of the Business
with respect to its obligations to such customers and the future obligations or
opportunities with respect to such customer relationship.
6.12 Office Space Arrangements.
6.12.1 At Closing, Seller or the applicable Seller Subsidiary
("Sublandlord", and collectively, the "Sublandlords") and Buyer or the
applicable Buyer Purchaser ("Subtenant", and collectively, the
"Subtenants") shall enter into
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the following subleases (the "Subleases"): (a) a sublease, in the form
referred to on Annex 1.1 as the "Technology Park Sublease", pursuant to
which Sublandlord will sublease to Subtenant certain space in the
office building located at 600 Technology Park Drive, Billerica,
Massachusetts; (b) a sublease, in form reasonably acceptable to both
Seller and Buyer and containing the terms summarized in Annex
6.12.1(b), pursuant to which Sublandlord will sublease to Subtenant
certain space in the office building located at 7900 Westpark Avenue,
McLean, Virginia; and (c) a sublease, in form reasonably acceptable to
both Seller and Buyer and containing the terms summarized in Annex
6.12.1(c), pursuant to which Sublandlord will sublease to Subtenant
certain space in the office building located at 10 Place de la Coupole,
Charenton, France. Sublandlord shall use reasonable efforts to obtain,
prior to Closing, and shall deliver to Subtenant of Closing or at such
later time that any such consent shall be obtained, if at all, all
consents required to validly consummate the Subleases. Sublandlord
shall be responsible for and shall promptly pay any and all costs
associated with obtaining and delivering such consents, and Subtenant
shall reasonably cooperate with Sublandlord in obtaining such consents,
provided that Subtenant shall not be required to make any payment
associated with obtaining such consent. The obtaining of such consents
with respect to any particular Sublease shall not be a condition to
Closing, but from and after the date of Closing, as provided in Article
IX, Seller shall indemnify, defend and hold the Buyer Indemnified
Parties harmless from and defend the Buyer Indemnified Parties, on an
after-tax basis, from and against any and all Loss and Litigation
Expense, which they or any of them may suffer or incur as a result of
or arising from Seller's failure to seek or obtain the consent of the
landlord, sublandlord or other party whose consent is required in
connection with the making of the Sublease.
6.12.2 At Closing, Seller or the applicable Seller Subsidiary
("Assignor", and collectively, the "Assignors") shall assign to Buyer
or the applicable Buyer Purchaser ("Assignee", and collectively, the
"Assignees") all of its right, title and interest in, to and under the
Real Estate Leases listed on Annex 2.1.6, except for those Real Estate
Leases so listed in which (as indicated on such Annex 2.1.6), the
tenant is an Acquired Subsidiary (the "Acquired Subsidiary Leases"),
and the applicable Assignee shall assume all obligations of the
applicable Assignor under each Real Estate Lease to be assigned
hereunder arising after Closing, pursuant to certain Lease Assignment
and Assumption Agreements substantially in the form attached to Annex
1.1 as the "Lease Assignments". Seller shall use reasonable efforts to
obtain, prior to Closing, and shall deliver to Buyer at Closing or at
such later time that any such consent shall be obtained, if at all, all
consents required under Acquired Subsidiary Leases as a result of the
transfer of the ownership interests in such Acquired Subsidiaries
contemplated under this Agreement. Seller shall be responsible for and
shall promptly pay any and all costs associated with
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obtaining and delivering such consents, and Buyer shall reasonably
cooperate with Seller in obtaining such consents, provided that neither
Buyer nor any Buyer Purchaser shall be required to make any payment
associated with obtaining such consent nor grant any guarantee of any
obligation as a condition to obtaining such consent. The obtaining of
such consents with respect to any particular Lease Assignment or deemed
transfer of an Acquired Subsidiary Lease (a "Lease Transfer") shall not
be a condition to Closing, but from and after the date of Closing, as
provided in Article IX, Seller shall indemnify, defend and hold the
Buyer Indemnified Parties harmless from and defend the Buyer
Indemnified Parties, on an after-tax basis, from and against any and
all Loss and Litigation Expense, which they or any of them may suffer
or incur as a result of or arising from Seller's failure to seek or
obtain the consent of the landlord, sublandlord or other party whose
consent is required in connection with the making of the Lease
Transfer.
6.12.3 At Closing, Seller and Buyer shall enter into a Master
Space Sharing Agreement, substantially in the form attached to Annex
1.1 (the "Master Space Sharing Agreement"), relating to the spaces
listed on Annex 6.12 (the "Shared Spaces"), pursuant to which, among
other things, Seller shall grant to Buyer the right to use and occupy
certain areas in the Shared Spaces in exchange for the payment of
certain amounts and Buyer's assuming certain obligations with respect
to such areas. Any consents to the Master Space Sharing Agreement which
may be required to be obtained under any of the Real Estate Leases
shall not be a condition to Closing, and neither Seller nor Buyer shall
seek to obtain such consents.
6.12.4 With respect to the Acquired Subsidiary Lease of premises
located in Solna, Sweden (the "Sweden Lease"), Seller covenants and
agrees that the rent payable by the applicable Acquired Subsidiary
under the Sweden Lease shall not exceed the fair market rental value
therefor, determined in the manner described in Annex 6.12.4 (the "Fair
Market Rental"), of the premises leased under the Sweden Lease (the
"Sweden Premises"). If the Fair Market Rental is less than the rent
payable under the Sweden Lease, Seller shall, at Seller's option, no
less than thirty (30) days after the final determination of the Fair
Market Rental, either (a) enter into an agreement with the landlord
under the Sweden Lease pursuant to which, at no cost to Buyer or the
applicable Acquired Subsidiary, the Sweden Lease shall be modified to
provide that the rent payable thereunder from and after the date of
Closing shall equal the Fair Market Rental, or (b) pay to the Acquired
Subsidiary on a monthly basis (retroactive to the date of Closing, if
Fair Market Value is determined after the date of Closing) an amount
equal to the amount by which each monthly installment of rent payable
under the Sweden Lease exceeds the monthly Fair Market Rental for the
Sweden Premises.
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6.13 Reorganization in France. Buyer and Seller shall, and shall cause
their respective Affiliates to, cooperate in the reorganization of the Business
in France so that such Business will be transferred to a yet to be organized
wholly owned subsidiary of Wang France, S.A. prior to the closing of
Transactions in France as set forth on Annex 2.7.
6.14 Certain Transition Agreements. Buyer and Seller have entered into
a letter agreement dated the date of this Agreement with respect to (a) certain
transition services to be provided by Sellers after Closing to Buyer Purchasers
and the Acquired Subsidiaries referred to on Annex 1.1 as the Services
Agreement, and (b) the duplication and distribution of software at Sellers'
facilities in Tewksbury, Massachusetts and Limerick, Ireland referred to on
Annex 1.1 as the SDC Services Agreement. Prior to the Closing Date, Seller and
Buyer shall negotiate definitive forms of the Services Agreement, and the SDC
Agreement containing the substantive provisions outlined with respect thereto in
the letter agreement with such other terms and conditions as may be agreed to by
the parties, provided, however, that in the event such agreements cannot, using
commercially reasonable efforts by Buyer and Seller, be executed on or before
the Closing Date, the parties shall continue to operate under the letter
agreements and to cooperate in good faith to reach definitive agreements as soon
as possible.
6.15 Retention Payments. Seller shall from time to time after the
Closing Date reimburse Buyer for one-half of the payments made to Employees
pursuant to the retention plan which Buyer has heretofore provided to Seller up
to a maximum reimbursement of $5,000,000.
6.16 Employee Benefits.
6.16.1 Buyer Purchasers will provide each Transferred Employee
with benefits that, in the aggregate, are comparable to those in effect
on the Closing Date; provided, however, that none of Buyer or Buyer
Purchasers will have any obligation to establish any defined benefit
pension plan or post-retirement benefit plan, or to accept any transfer
of assets from any retirement plan of Sellers or an Acquired Subsidiary
(except to the extent a Non-U.S. Benefit Plan is required to be assumed
under Law). With respect to U.S. Transferred Employees, Buyer will
cause any Internal Revenue Code section 401(k) plan established for
such Employees to accept roll-ins of distributions received from any
similar plan of Seller or an Acquired Subsidiary that is in existence
on the Closing Date.
6.16.2 Seller shall retain responsibility for providing group
health coverage required by Section 4980B of the Code ("Continuation
Coverage") to those Employees who do not accept employment with Buyer
Purchasers and who elected to purchase such Continuation Coverage prior
to the Closing Date (other than
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Employees of Sigma, who shall continue to be the responsibility of
Sigma). Buyer shall provide Continuation Coverage to such Transferred
Employees in the U.S. or their dependents only (other than Employees of
Sigma) with respect to "qualifying events" as defined in Code Section
4980B(f)(3) which occur on and after the Closing Date, to the extent
required by Law.
6.16.3 Reserved.
6.16.4 Pension liabilities and pension assets of the defined
benefit plan in the Netherlands shall be transferred in bulk to the
applicable Buyer Purchaser on the following basis:
(a) the value of the pension assets to be transferred will
in total amount to no less than the value of 50% of the
sum of the accrued and projected benefit obligations
accepted by the applicable Buyer Purchaser in respect of
the transferred pension liabilities, as determined by
FAS 87 valuation methodology,
(b) the underlying assumptions to be used in the calculation
of the accrued and projected benefit obligations will
be:
(i) salary growth at a rate equal to current annual
local inflation;
(ii) discount rate and investment return equal to
triple A-rated (or comparable) long term local
bond yields;
(iii) turnover rate used by Seller's actuary for the
most recent valuation of liabilities; and
(iv) mortality at the same levels as latest valuation
of such Plan.
(c) Buyer and Seller shall mutually agree upon the kind of
assets to be transferred, which agreement shall not be
unreasonably withheld by the other party.
(d) Payment of transfer values shall be made within one
month after the Closing Date and, if not so made, will
be increased by interest at a rate equal to that in
Section 6.16.4(b)(ii) per
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annum for the period between the Closing Date and the
payment.
6.16.5 Seller's shall cause the benefits of all Transferred
Employees under non-U.S. defined contribution plans to be fully
vested as of the Closing Date.
6.17 Cooperation Regarding Audits, Litigation and Former Employees.
6.17.1 Upon reasonable prior written request given by Buyer to
Seller, Seller shall and shall cause its Affiliates to make available
to Buyer and its representatives the facilities, books and records of
Sellers, including the work papers of employees and accountants of
Sellers, as are reasonably necessary for Buyer's accountants to audit
the Business for the five-year period ending December 31, 1996,
provided that such Persons do not unreasonably interfere with Sellers
business and subject to appropriate confidentiality agreements with
respect to any information not related to the Business.
6.17.2 Upon reasonable prior written notice given by Buyer to
Seller or Seller to Buyer, as the case may be, each party shall provide
the other with access to such information and employees as either party
may reasonably request in connection with any actions, suits or
proceedings relating to the Business or the Retained Claims, provided,
however, that the requesting party shall reimburse the party providing
the access for its out-of-pocket costs of providing the information and
direct salary costs for employees so requested.
6.17.3 After the Closing Date, none of Buyers, Buyer Purchasers or
their Affiliates or the Acquired Subsidiaries shall waive any release
or covenant of confidentiality or non-disparagement in any Employment
Agreement that benefits Seller or its Affiliates without the prior
written consent of Seller and, at Seller's request and expense, assist
Seller the enforcement of such. After the Closing Date, none of Sellers
or their Affiliates shall waive any release, covenant of
confidentiality or non-disparagement, assignment of intellectual
property rights or other rights in any Employment Agreement that
benefits the Business with the written consent of Buyer, and at Buyer's
request and expense, will assist Buyer in the enforcement of such
rights.
6.18 Insurance Claims. After the Closing Date, Seller and Buyers shall
cooperate with Seller's insurers in processing all claims arising with respect
to acts, omissions, or occurrences prior to the Closing Date and shall cooperate
with Buyers' insurers in processing all claims with respect to acts, omissions,
or occurrences after the Closing Date.
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6.19 Additional Assurances. After the Closing Date, Seller shall and
shall cause its Affiliates to take such additional actions and execute any such
additional documents and instruments as may be reasonably necessary to fully
vest the Sellers' and Acquired Subsidiaries' ownership, rights and privileges in
the Purchased Assets in Buyers, provided, however, that in the event such
actions requested by Buyer were not reasonably necessary to effectuate the
Transactions, Buyer shall pay all of Seller's reasonable out-of-pocket costs
incurred in connection therewith. Notwithstanding anything to the contrary
contained in this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance or
delivery to Purchaser of any Purchased Asset is prohibited by any applicable Law
or would require any Governmental Entity or other third party authorizations,
approvals, consents or waivers and such authorizations, approvals, consents or
waivers shall not have been obtained prior to the Closing and Buyer shall have
waived the applicable condition to Closing with respect to such item(s), this
Agreement shall not constitute a sale, assignment, transfer, conveyance or
delivery, or any attempted sale, assignment, transfer, conveyance or delivery,
thereof. Following the Closing, the parties shall use reasonable efforts and
shall cooperate with each other, to obtain promptly such authorizations,
approvals, consents or waivers. Pending such authorization, approval, consent or
waiver, the parties shall cooperate with each other in any reasonable and lawful
arrangements designed to provide to Buyer the benefits and liabilities of use of
such Purchased Asset. Once such authorization, approval, consent or waiver for
the sale, assignment, transfer, conveyance or delivery of a Purchased Asset not
sold, assigned, transferred, conveyed or delivered at the Closing is obtained,
Seller shall and shall cause its Affiliates to promptly assign, transfer, convey
and deliver, or cause to be assigned, transferred, conveyed and delivered, such
Purchased Asset to Buyer for no additional consideration. To the extent that any
such Purchased Asset cannot be transferred or the full benefits and liabilities
of use of any such Purchased Asset cannot be provided to Buyer following the
Closing pursuant to this Section 6.19, then Buyer and Sellers shall enter into
such arrangements (including subleasing or subcontracting if permitted) designed
to provide to Buyers the economic and operational equivalent of obtaining such
authorization, approval, consent or waiver and the performance by Buyer of the
obligations thereunder to the extent permitted by Law.
6.20 Use of Corporate Names. Except as set forth in this section,
Buyers shall not have any rights to use the Corporate Names. Effective as of the
Closing Date, Seller grants Buyer Purchasers and the Acquired Subsidiaries a
fully-paid, royalty-free, nonexclusive, worldwide license to use the Corporate
Names in connection with the conduct of the Business after Closing by the Buyer
Purchasers as follows:
(a) For a period of nine months after the Closing, Buyer Purchasers
and the Acquired Subsidiaries may continue to use the Corporate
Names in on- screen displays of versions of Product in existence
as of Closing, whether
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Product is produced before or after Closing, provided, however,
that if the display is controlled by another Person not affiliated
with Buyers, Buyer Purchasers and the Acquired Subsidiaries may
continue to use the Corporate Names in such displays until they
can be removed using commercially reasonable efforts.
(b) For a period of nine months after the Closing Date or the next
commercial release of the applicable Product, whichever is
earlier, Buyer Purchasers and the Acquired Subsidiaries may
continue to use the Corporate Names on labels, packaging materials
and promotional materials in existence as of the Closing Date. In
addition, for a period of three months after Closing, Buyer
Purchasers and the Acquired Subsidiaries may reprint such
materials marked with the Corporate Names, if inventory existing
as of Closing is insufficient to meet the needs of Buyer
Purchasers and the Acquired Subsidiaries. Buyer Purchasers and the
Acquired Subsidiaries may apply labels and packaging materials
bearing the Corporate Names only to versions of Product in
existence as of the Closing, whether Product was produced before
or after the Closing. Where practicable, Buyer Purchasers and the
Acquired Subsidiaries will oversticker the materials with the
appropriate new corporate name and address or accompany shipments
with a notice reflecting such new name and address.
(c) For a period of six months after the Closing, Buyer Purchasers and
the Acquired Subsidiaries may continue to use the Corporate Names
on signage, and on invoices and preprinted business forms in
existence as of the Closing, provided that (i) if any business
forms require a signature, each Buyer Purchaser shall sign such
forms in its own name, and (ii) where practicable, Buyer
Purchasers will oversticker invoices and forms with the
appropriate new corporate name and address.
(d) All products and services of Buyers or the Acquired Subsidiaries
which bear a Corporate Name of Seller pursuant to this Section
6.20 shall comply with the quality standards of Seller and be of a
quality at least equal to the quality of such products or services
as distributed or provided by Sellers or the Acquired Subsidiaries
immediately prior to the Closing Date.
6.21 Subsidiary Names. No later than 90 days after the Closing, Buyer
shall cause the name of any Acquired Subsidiary that includes the Corporate Name
in its name, to exclude the Corporate Name. In the interim, Sellers grant to the
Acquired Subsidiaries a license to use the Corporate Names in the same manner
and on the same materials used by them before Closing, except that where
practicable, each Acquired Subsidiary will
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oversticker material bearing a Corporate Name to indicate the new name of each
Acquired Subsidiary or indicating that the Acquired Subsidiary is now owned by
the Buyer Purchaser.
6.22 Use of the OPEN/image and PACE Trademarks. Seller shall retain
ownership of the OPEN/image and PACE trademarks, including all rights and
liabilities related thereto. Seller grants to Buyer Purchasers and the Acquired
Subsidiaries a license for the period extending until six months after Closing,
pursuant to which they may continue to use the OPEN/image and PACE trademarks on
Products known by those trade names as of Closing, and on related materials
bearing that mark, whether produced before or after Closing. In the event Buyer
Purchasers are required, in connection with the settlement or other resolution
of pending litigation by Seller or otherwise (including any action or proceeding
against Buyers) to discontinue their use of the OPEN/image trade mark prior to
the expiration of the six-month period, Seller shall reimburse Buyer Purchasers
for any additional expenses they reasonably incur solely as a result of
accelerating the change of product name or in defending action or proceeding
seeking to prevent a Buyer Purchaser from using the OPEN/image trademark prior
to the expiration of such six-month period.
6.23 W/I Payments. In the event that Buyer or any Buyer Purchaser is
required to make any W/I Payment, Seller shall reimburse Buyer or such Buyer
Purchaser for that portion of the W/I Payment determined by multiplying the W/I
Payment by a fraction, the numerator of which is (x) the W/I Revenue from July
1, 1996 to and including the Closing Date, and the denominator of which is (y)
the W/I Revenue from July 1, 1996 to and including June 30, 1997.
6.24 Removal of Sigma "Triangle." Buyer and the Buyer Purchasers shall
not produce any new documentation, or marketing, collateral and/or sales
materials after the Closing Date that include references to the Sigma Triangle
mark, and shall use all commercially reasonable efforts to delete all references
to the Sigma Triangle mark known to Buyer in all existing documentation and all
marketing, collateral and/or sales materials within 90 days after the Closing
Date.
6.25 Post-Closing Conduct of Business. Following the Closing, Buyers
shall not, without the prior written consent of Seller, fail to continue the
conduct of the Business as a result of any threatened or pending litigation or
claims for which Seller shall have indemnification obligations under clause (f)
of Section 9.2.
ARTICLE VII
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CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to Obligation of Buyer to Close. Subject to Section
8.3, the obligation of Buyer to consummate the Transactions on the Closing Date
shall be subject to the satisfaction or the waiver (subject to the provisions of
Section 7.1.4) by Buyer of the following conditions on or prior to the Closing
Date:
7.1.1 Representations and Warranties; Compliance with Agreement.
The representations and warranties of Seller and Federal set forth in
this Agreement shall be true and correct in all material respects
(except to the extent that any representation is qualified by its terms
with reference to materiality, in which case such representation shall
be true and correct as written) as of the date of this Agreement and,
except for any changes contemplated by this Agreement or
representations that expressly speak as of a certain date, as of the
Closing Date as though made on and as of the Closing Date; Sellers
shall have performed all covenants and agreements to be performed by
them under this Agreement in all material respects (except to the
extent that any covenants are qualified by its terms with reference to
materiality, in which case such covenant shall have been performed as
written) on or prior to the Closing Date; and Seller shall have
delivered to Buyer a certificate of Seller's chief executive officer or
chief financial officer to such effect, dated the Closing Date, in form
and substance reasonably satisfactory to Buyer and its counsel;
7.1.2 HSR Waiting Period and other Government Approvals. All
applicable waiting periods with respect to the applicable Competition
Laws shall have expired or been terminated and all consents or
approvals of the Transactions by other Governmental Entities shall have
been granted other than those which would not have a Material Adverse
Effect or constitute a violation of Law if not granted as of the
Closing Date and Closing were to proceed;
7.1.3 Litigation Affecting Closing. No action, suit or proceeding
shall have been instituted by any Governmental Entity, before a court
or Governmental Entity, to restrain or prevent the consummation of the
Transactions or the performance by any of the parties hereto of their
respective obligations under or with respect to this Agreement and no
statute shall have been enacted and there shall be no injunction,
restraining order or decree or any nature of any court or governmental
agency or body in effect which restrains or prohibits the consummation
of the Transactions;
7.1.4 Required Consents. The consents set forth on Annex 7.1.4(a)
shall have been obtained on terms that do not modify any agreement
included in the
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Purchased Assets in a manner that would impose a material obligation on
the Buyer after the Closing Date other than those set forth in such
agreements on the date of this Agreement unless approved by the
Designated Representative. Buyer may not waive the failure to obtain
any consent in Annex 7.1.4(a) unless such waiver is in connection with
a Closing not more than ten days prior to the Viewer Submission
Deadline;
7.1.5 No Material Adverse Effect. Between the date of this
Agreement and the Closing Date, there shall not have been any
occurrence or event known to Seller which, individually or in the
aggregate, has resulted in or which Seller reasonably expects will
result in any Material Adverse Effect on the Business or the Purchased
Assets (taken as a whole), except for (a) changes or events expressly
permitted by this Agreement; (b) reductions of workforce or inability
to hire new employees which do not cause Seller to fail to meet the
conditions of Subsection 7.1.7 or the failure of the development of
Products in Development to meet the schedule set forth in Annex 7.1.5;
(c) changes or events resulting from general economic conditions; (d)
conditions that effect as a whole the industry of which the Business is
a part and about which information is publicly and generally available;
or (e) statements made by Buyer that result in customers or potential
customers of the Business delaying software purchase decisions; and
Seller shall have delivered to Buyer a certificate of its chief
financial officer to such effect, dated the Closing Date;
7.1.6 Viewer Submission Deadline. The Viewer Submission Deadline
as defined on Annex 7.1.6 shall have occurred and prior thereto any of
the conditions set forth in Sections 7.1.2, 7.1.3 or 7.1.4 shall not
have been satisfied; provided, that this condition shall be deemed to
have been satisfied in full and of no further force or effect if Buyer
shall not have elected to terminate this Agreement pursuant to Section
10.1.4 on or before the fifth day following the Viewer Submission
Deadline;
7.1.7 Employment Arrangements. Those Persons designated as
Category 1 Employees on the date of this Agreement as agreed to by
Buyer and Seller shall have Accepted Employment, at least seventy-five
percent (75%) of the Persons designated as Category 2 Employees on the
date of this Agreement shall have Accepted Employment, and at least
seventy-five percent (75%) of the positions designated as Category 3
Positions shall be staffed;
7.1.8 Transfer of Benefit Plans. To the extent permitted by Law,
Seller shall cause the Acquired Subsidiaries other than Sigma to
transfer, and Seller shall
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accept, sponsorship of all ERISA Benefit Plans of such Acquired
Subsidiaries other than the health, welfare and 401(k) Benefit Plans of
Sigma;
7.1.9 [Intentionally Omitted];
7.1.10 Collateral Documents. Seller and its Affiliates shall have
executed and delivered the Collateral Documents to which they are
parties except as otherwise provided in Section 6.14;
7.1.11 Resignation of Officers and Directors. All officers and
directors of the Acquired Subsidiaries shall have resigned;
7.1.12 Opinion of Counsel for Sellers. General Counsel for Seller
and Federal and the U.S. Acquired Subsidiaries shall have delivered to
Buyer his opinion, dated the Closing Date, in the form of Exhibit B,
and special counsel to the non-U.S. Acquired Subsidiaries shall have
delivered to Buyer opinions to the effect set forth in Exhibit C;
7.1.13 Satisfaction of Conditions on Annex 4.4. Subject to Section
8.3, all conditions to Closing set forth on Annex 4.4 shall have been
satisfied; and
7.1.14 Other Documents. Sellers shall have delivered to Buyer such
other documents and instruments as Buyer or its counsel may reasonably
request in good faith to effect the transfer of the Purchased Assets
pursuant to this Agreement.
7.2 Conditions to Obligations of Sellers to Close. The obligation of
Sellers to consummate the Transactions on the Closing Date shall be subject to
the satisfaction or the waiver by Seller of the following conditions on or prior
to the Closing Date:
7.2.1 Representations and Warranties; Compliance with Agreement.
The representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects (except to the
extent that any representation is qualified by its terms with reference
to materiality, in which case such representation shall be true and
correct as written) as of the date of this Agreement and, except for
any changes contemplated by this Agreement or representations that
expressly speak as of a certain date, as of the Closing Date as though
made on and as of the Closing Date; Buyers shall have performed all
covenants and agreements to be performed by them under this Agreement
in all material respects (except to the extent that any covenants are
qualified by its terms with reference to materiality, in which case
such covenant shall have been performed as written) on or prior to the
Closing Date; and Buyer shall have delivered to Seller a certificate of
a Vice
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President of Buyer to such effect, dated the Closing Date, in form and
substance reasonably satisfactory to Sellers and their counsel;
7.2.2 HSR Waiting Period and other Government Approvals. All
applicable waiting periods with respect to the applicable Competition
Laws shall have expired or been terminated and all material consents or
approvals of the Transactions by other Governmental Entities shall have
been granted other than those which would not have a Material Adverse
Effect or constitute a violation of Law if not granted as of the
Closing Date;
7.2.3 Litigation Affecting Closing. No action, suit or proceeding
shall have been instituted by any Governmental Entity, before a court
or Governmental Entity, to restrain or prevent the consummation of the
Transactions or the performance by any of the parties hereto of their
respective obligations under or with respect to this Agreement and no
statute shall have been enacted and there shall be no injunction,
restraining order or decree or any nature of any court or governmental
agency or body in effect which restrains or prohibits the consummation
of the Transactions;
7.2.4 Collateral Documents. Buyers shall have executed and
delivered the other Collateral Documents to which they are parties
except as otherwise provided in Section 6.14;
7.2.5 Opinion of Counsel for Buyer. General Counsel for Buyer
shall have delivered to Sellers his opinion, dated the Closing Date,
substantially in the form set forth in Exhibit A; and
7.2.6 Other Documents. Buyer shall have delivered to Sellers such
other documents and instruments as Seller or its counsel may reasonably
request in good faith connection with the assumption of the Purchased
Assets and the Assumed Liabilities.
ARTICLE VIII
THE CLOSING
8.1 Time and Place. The Closing shall be held at 10:00 a.m. on March
17, 1997 at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, or, if later, within five (5) days after all conditions specified
in Article VII have been satisfied, or at such other time and at such other
place, as shall be mutually agreed to by Buyer and Seller (the "Closing Date").
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8.2 Conduct of Closing.
8.2.1 As to Buyer. At the Closing, Buyer shall, in exchange for
the Purchased Assets, deliver to Seller, in each case duly executed by
Buyer or its Affiliates, as appropriate:
(a) The Cash Consideration in the amount set forth in Section 2.1;
(b) The certificate required by Subsection 7.2.1;
(c) A certificate dated the Closing Date and signed on behalf of
Buyer and Buyer Purchasers acquiring the Purchased Assets in the
U.S. and the U.K. by their respective Secretary or Assistant
Secretary attaching (i) a copy of the resolutions of the Board of
Directors of Buyer and such Buyer Purchasers authorizing and
approving the Transactions and authorizing the officers of Buyer
and such Buyer Purchasers to take any actions and to execute all
documents and instruments to be executed, delivered or filed by it
pursuant to or in connection with this Agreement, (ii)
certificates of good standing for Buyer and the Buyer Purchaser
acquiring the Purchased Assets in the U.S., certified by the
Secretary of State of the state of incorporation of such Buyer
Purchaser as of a date within 15 business days of the Closing Date
and any comparable certificates available with respect to the
Buyer Purchaser for the U.K., and (iii) specimen signatures of the
incumbent officers of Buyer and Buyer Purchasers executing this
Agreement and the Collateral Documents;
(d) The Collateral Documents to which any of Buyer or Buyer
Purchasers are party except as otherwise provided in Section 6.14;
(e) The Assignment and Assumption Agreements;
(f) The opinion of counsel specified in Subsection 7.2.4; and
(g) Such other documents and instruments as Seller or its counsel
may reasonably request pursuant to Subsection 7.2.6.
8.2.2 As to Seller. Seller shall deliver or shall cause to be
delivered to Buyer, in each case duly executed by Seller or its
Affiliates, as appropriate:
(a) The Bills of Sale, Assignment and Assumption Agreements, IT
Property Assignments;
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(b) Stock certificates representing all the outstanding capital
stock of the Acquired Subsidiaries, together with stock powers
executed in blank and evidence of payment of all applicable
Transfer Taxes;
(c) All copies of the Documentation (including all source code)
and Design Documentation in Sellers' possession except as
otherwise provided in any Collateral Document, all copies of the
Technology (in machine-readable form) that are then in the
possession of Sellers (and all copies at the Acquired Subsidiaries
shall remain at such locations) except as otherwise provided in
any Collateral Document, all records and tangible materials
embodying or reflecting any of the Purchased Assets, all original
Trademark and Copyright certificates of registration, issued
patents, or other similar original and certified documents
representing primary evidence of the IP Rights, the minute books
and other corporate records and stock or other equity transfer
ledgers of the Acquired Subsidiaries acquired by a Buyer Purchaser
in the U.S., and such other documents, instruments, assignments
and certificates as may be necessary to vest the Purchased Assets
and all rights thereto and thereunder in the Buyer Purchasers;
(d) The certificate required by Subsection 7.1.1;
(e) The certificate required by Subsection 7.1.5;
(f) Certificates dated the Closing Date and signed on behalf of
each of Seller, Federal and the Acquired Subsidiaries by its
Secretary or Assistant Secretary, attaching, as appropriate, (i) a
true and correct copy of the organizational documents of Seller,
Federal and the Acquired Subsidiaries, (ii) certificates of good
standing from the Secretaries of State and Department of Taxation
for each of the Acquired Subsidiaries in the U.S. from the
jurisdictions of their formation and each jurisdiction in which
they are qualified to do business as of a recent date, (iii) a
copy of the resolutions of the Board of Directors of each of the
Sellers authorizing and approving this Agreement and the
Collateral Documents to which they are parties and the
consummation of the Transactions and authorizing the officers of
such Sellers to take any actions and to execute all documents and
instruments to be executed, delivered or filed by it pursuant to
or in connection with this Agreement, and (iv) specimen signatures
of the incumbent officers of Sellers executing any documents
executed and delivered pursuant to or in connection with this
Agreement;
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(g) All other Collateral Documents to which any of Sellers are
party except as otherwise provided in Section 6.14;
(h) The opinions of counsel specified in Subsection 7.1.12; and
(i) Such other documents and instruments as Buyer or its counsel
may reasonable request pursuant to Subsection 7.1.14.
8.3 Staged Closings. Notwithstanding anything to the contrary
contained in Articles VII or VIII herein, in the event that any condition to the
closing set forth in Section 7.1 has not been satisfied with respect to any
country other than the U.S. and the U.K., (a) the Closing shall be effected;
provided, however, that (i) Buyer or the applicable Buyer Purchaser shall have
the option of deferring closing in any country with respect to which any
condition set forth in Subsections 7.1.2, 7.1.3, 7.1.4, 7.1.11, 7.1.12, 7.1.13
or 7.1.14 has not been satisfied as of such time (the "Deferred Countries"), and
(ii) the certificates to be delivered pursuant to Section 7.1 need only be true
as to countries in which Closing occurs on the Closing Date; (b) each subsequent
closing shall occur as soon as practicable following satisfaction of all
conditions with respect to each Deferred Country; and (c) pending closing with
respect to any Deferred Country, Sellers shall, with any necessary cooperation
from Buyer and the applicable Buyer Purchaser, operate the Business for the
account of Buyer under the Services Agreement. In connection therewith, (x)
Buyer shall or shall cause its designee to reimburse the applicable Seller on a
monthly basis as invoiced (with appropriate documentation) by Sellers for the
after-tax cash requirements, if any, for the portion of the Business as operated
in such Deferred Countries and the applicable Seller shall deliver to the
applicable Buyer Purchaser the after tax cash benefit, if any, derived from the
Business as operated in such Deferred Country; and at or within 30 days
following closing in any Deferred Country, Sellers shall pay to Buyer, or Buyer
shall pay to Seller, as the case may be, and shall deliver appropriate
documentation with respect any other contribution made by or received by the
respective Sellers by the Business as operated in the Deferred Country so that,
as between Sellers and Buyers, the operations shall have been for the account of
the applicable Buyer Purchaser on an after-tax basis; (y) the Employees shall
continue to be regarded as employees of the applicable Seller and any provisions
set forth in Section 6.10 shall be deemed to apply to the Employees only as of
the date the closing is effected in the applicable Deferred Country; and (z) the
parties shall use their reasonable best efforts, and cooperate with each other,
to satisfy promptly the applicable conditions.
To the extent a Buyer Purchaser must, under applicable Law, pay cash
consideration for the Purchased Assets located in a Deferred Country at a
subsequent closing, Seller shall remit to Buyer, in immediately available funds,
the amount of cash consideration allocated to such Deferred Country in
accordance with Section 2.6 and
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previously paid at the Closing and the Buyer Purchaser shall pay such
consideration to the appropriate Sellers at such subsequent closing. In the
event that Buyer so requests, Seller shall remit to Buyer or a Buyer Purchaser,
in conjunction with any subsequent closing with respect to a Deferred Country,
in immediately available funds, the amount of Purchase Price allocated to such
Deferred Country in accordance with Section 2.6 and previously paid at the
Closing against payment of such amount in the local currency by the Buyer
Purchaser in such Deferred Country, the local currency equivalent to such amount
(based on the rate published in the Wall Street Journal three (3) business days
prior to Closing in such Deferred Country); provided, however, that Buyer shall
only make a request if the Laws of the Deferred Country prohibit the payment of
funds in Dollars.
In the event a subsequent closing does not occur in any Deferred
Country by the date which is the six-month anniversary of the Closing Date,
Buyer or Seller may upon 30 days' prior written notice to the other, elect not
to purchase or sell the Transferred Assets and transfer or assume the Assumed
Liabilities in any Deferred Country. Buyer and Seller shall share equally any
out of pocket costs (including payments to non-employee attorneys, accountants
or other advisors, termination or similar payments to employees required by Law
or works councils, ongoing lease expenses or termination payments, filing fees
or similar costs) to terminate the Business in such Deferred Country.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the parties contained in this Agreement shall,
notwithstanding any investigation by or notice by or to any party prior to the
Closing Date, survive the Closing and the closing in any Deferred Country for
the period set forth in this Section 9.1. The representations and warranties of
Seller and Federal set forth in Sections 3.1, 3.2, 3.3, 3.4 (as to consent of
Governmental Entities), 3.5, 3.14 (as to title only), 3.32 shall have no
expiration date; the representations and warranties in Section 3.29 shall
survive until 90 days after the statute of limitations has expired for any Taxes
due for periods prior to the Closing Date; the representations and warranties in
Sections 3.25 and 3.30 shall survive until 60 days after the applicable statute
of limitations has expired with respect to any transaction that could subject
Buyer, a Buyer Purchaser or any Acquired Subsidiary to any tax or penalty under
ERISA or the Code; the representations and warranties in Sections 3.10 , 3.11,
3.12, and 3.13 shall survive for three years and the remaining representations
and warranties of Seller and Federal shall survive until the day corresponding
to the Closing Date occurring in the 18th month following Closing Date. The
representations and warranties of Buyer set forth in Sections 4.1, 4.2 and 4.3
shall have no expiration date; and
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the remaining representations and warranties of Buyer shall survive until the
day corresponding for the Closing Date occurring in the 18th month following
Closing Date, provided, however, that representations and warranties with
respect to any Deferred Country shall expire on the later of the corresponding
date occurring in the 18th month following the Closing Date or the corresponding
date in the 12th month following the date of the closing in the Deferred
Country. In the event notice of any claim for indemnification under Section 9.5
shall have been given prior to midnight on the last day of the applicable
survival period (the "Expiration Date"), the representations and warranties that
are the subject of such indemnification claim shall survive until the claim is
finally resolved. The covenants and agreements of the parties contained in this
Agreement shall survive until fully performed.
9.2 Indemnification by Seller. To the extent set forth in Section 9.4
and in the manner herein provided, from and after the Closing Date, Seller shall
indemnify and hold harmless Buyer and its Affiliates, and their respective
employees, directors, agents and representatives (collectively, the "Buyer
Indemnified Parties"), on an after-tax basis, from and against any and all Loss
and Litigation Expense, which they or any of them may suffer or incur as a
result of or arising from any of the following: (a) any misrepresentation or
breach of warranty (determined without regard to any materiality qualification
contained in any representation or warranty except for those (i) contained in
Sections 3.8.1, 3.10.4, 3.10.6 or 3.10.16 or (ii) that are used to modify an
affirmative obligation to disclose on a schedule matters in circumstances where
the inclusion of materiality is necessary to give the sentence its intended
meaning), (b) the failure of Seller or its Affiliates to obtain all consents
designated on Annex 7.1.4(b) as provided in Section 5.5, (c) the failure by
Seller to satisfy any liability or obligation which is an Excluded Liability, or
(d) the failure of Seller or its Affiliates to pay any Transfer Taxes which the
Seller is required to pay pursuant to Section 6.8 or any other costs or expenses
which are the responsibility of Sellers; (e) any costs or expenses incurred in
defending, and all interest or penalties assessed, in claims challenging the
method of computing the W/I Payment used by Sellers prior to the Closing Date;
and (f) in the event that Buyer waives the condition to obtain the consents set
forth on Annex 7.1.4(a) as provided in Section 7.1.4(a), the failure by Seller
to obtain all consents listed on Annex 7.1.4(a), which shall not be subject to
any limitations described in Section 9.4 or Section 9.7.
9.3 Indemnification by Buyer. To the extent set forth in Section 9.4
and in the manner herein provided, from and after the Closing Date, Buyer shall
indemnify and hold harmless Seller, its Affiliates and their respective
employees, directors, agents and representatives (collectively, the "Seller
Indemnified Parties"), on an after-tax basis, from and against any and all Loss
and Litigation Expense which they, or any of them, may suffer or incur as a
result of or arising from any of the following: (a) any misrepresentation or
breach of warranty (determined without regard to any materiality qualification
contained in
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any representation or warranty), (b) the failure by the Buyer or any Buyer
Purchaser to satisfy any liability or obligation which is an Assumed Liability,
(c) the failure of Buyers to pay any Transfer Taxes which the Buyer is required
to pay pursuant to Section 6.8 or any other costs or expenses which are the
responsibility of Buyers, (d) the conduct of the Business after the Closing Date
by Buyer Purchasers other than Loss and Litigation Expense for which Seller is
obligated to indemnify Buyer Indemnified Parties pursuant to Section 9.2, or (e)
the destruction of, or failure of Buyer to provide Seller within a reasonable
period of time after Seller's request, any books or documents in Buyer's
possession which are related to the Business prior to Closing and are reasonably
required by any Seller Indemnified Party in order to defend itself in any
Tax-related audit, assessment, suit or other legal or administrative proceeding.
9.4 Certain Limitations on Indemnities.
9.4.1 Except for indemnification obligations under clauses (c),
(d), (e) and (f) of Section 9.2, Seller and Federal shall not have any
obligation to indemnify Buyer Indemnified Parties unless (a) the
aggregate of all such claims for breaches of representations,
warranties or covenants other than the representations and warranties
made in Sections 3.10, 3.11, 3.12 and 3.13 exceeds One Million Dollars
($1,000,000) and then only to the extent of such excess up to a maximum
aggregate indemnity for such Loss and Litigation Expenses of
Ninety-Five Million Dollars ($95,000,000), or (b) with respect to
representations and warranties in Sections 3.10, 3.11, 3.12 and 3.13,
the aggregate of all such claims for breaches of such representations,
warranties and covenants exceeds Two Million Dollars ($2,000,000) up to
a maximum aggregate indemnity limit for such Loss and Litigation
Expenses of One Hundred Million Dollars ($100,000,000), provided,
however that Seller shall also indemnify Buyer Indemnified Parties for
one-half of all Loss and Litigation Expenses up to such $2,000,000
threshold (the "Shared Threshold Claims").
9.4.2 Except for indemnification obligations under clauses (b),
(c) and (d) of Section 9.3, Buyer shall not have any obligation to
indemnify Seller Indemnified Parties unless the aggregate of all such
claims for breaches of representations, warranties or covenants exceeds
One Million Dollars ($1,000,000) and then only to the extent of such
excess up to a maximum aggregate indemnity limit for such Loss and
Litigation Expenses of Ninety-Five Million Dollars ($95,000,000).
9.4.3 The indemnifying party under Sections 9.2 and 9.3 shall not
be liable to any Indemnified Party with respect to any occurrence,
event, circumstance, act or omission unless such matter or a series of
related matters arising from the same occurrence, event, circumstance,
act or omission or similar conduct by the same
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individual which causes a representation or warranty to be breached and
which, results in Loss or Litigation Expense of $25,000 or more.
9.5 Procedure. Promptly after acquiring knowledge of any Loss, or any
action, suit, investigation, proceeding, demand, assessment, audit, judgment, or
claim ("Claim") which may result in a Loss, and prior to the Expiration Date,
the Person seeking indemnity under this Article IX (the "Indemnitee") shall give
written notice thereof to the party from whom indemnity is sought (the
"Indemnitor"). The Indemnitor shall have the right, at its expense, to defend,
contest or compromise such Claim, through counsel of its choice (unless such
Indemnitor is relieved of its liability hereunder with respect to such Claim and
Loss and Litigation Expense by the Indemnitee) and shall not then be liable for
fees or expenses of the Indemnitee's attorneys (unless the Indemnitor and
Indemnitee are parties to the action and there exists a conflict of interest
between the Indemnitor and the Indemnitee, in which event the Indemnitor will be
responsible for the reasonable fees and expenses of one firm), and the
Indemnitee and the Indemnitor shall provide to each other all necessary and
reasonable cooperation in the defense of all Claims, including Shared Threshold
claims, including, but not limited to, the services of employees who are
familiar with the transactions out of which such Claim or Loss may have arisen.
In the event that the Indemnitor shall undertake to compromise or defend any
Claim, it shall promptly notify the Indemnitee of its intention to do so. In the
event that the Indemnitor, after written notice from Indemnitee, fails to take
timely action to defend the same, the Indemnitee shall have the right to defend
the same by counsel of its own choosing, but at the cost and expense of the
Indemnitor, provided, no settlement of a Claim, other than a Shared Threshold
Claim (to the extent that the Indemnitor and Indemnitee pay equal amounts), by
Indemnitee shall be effected without the consent of the Indemnitor unless
Indemnitee waives any right to indemnification therefor. The Indemnitor may
settle or compromise any action or consent to the entry of any judgment (i)
which includes the unconditional release by the Person asserting the Claim and
any related claimants of Indemnitee from all liability with respect to such
Claim in form and substance reasonably satisfactory to Indemnitee, and (ii)
which would not adversely affect the right of Indemnitee and its Affiliates to
own, hold use and operate their respective assets and businesses. Sellers and
Buyers shall treat any payment under this Article IX for all Tax purposes as an
adjustment of the Consideration, except to the extent such treatment is not
permitted under applicable Law.
9.6 No Subrogation. If any payment is made by or Claim asserted
against Sellers under the terms of this Article IX, none of the Seller
Indemnified Parties shall have any rights against the Purchased Assets or any of
the Acquired Subsidiaries or any former officer or employee of any Acquired
Subsidiary or any Sellers who becomes an employee of any Buyer Purchaser or the
Acquired Subsidiaries, whether by reason of contribution, indemnification or
otherwise and shall not take any action against the Purchased Assets or the
Acquired Subsidiaries or any such officer or employee of any Buyer Purchaser or
any
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Acquired Subsidiary with respect thereto. Any rights which the Seller
Indemnified Parties may have, by operation of law or otherwise against such
officers or employees, the Purchased Assets or the Acquired Subsidiaries are,
effective on the Closing Date, hereby expressly and knowingly waived.
9.7 No Consequential Damages. EXCEPT AS SET FORTH IN SECTION 9.2(f),
NEITHER ANY PARTY TO THIS AGREEMENT NOR THEIR AFFILIATES SHALL BE LIABLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY A PARTY OR ITS AFFILIATES WITH
RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS AGREEMENT PROVIDED, HOWEVER,
THAT THIS WAIVER SHALL NOT LIMIT ANY LIABILITY OF ANY PARTY TO INDEMNIFY THE
APPLICABLE INDEMNIFIED PARTIES FOR LOSS ARISING FROM DAMAGES OF SUCH TYPE THE
INDEMNIFIED PARTY IS REQUIRED TO PAY TO ANY OTHER PERSON.
9.8 Exclusive Remedy. If the Closing occurs, the exclusive remedies
for any breach of any representation, warranty, covenant or agreement hereunder
shall be the indemnification provided by this Article IX and the rights provided
Buyers under Sections 6.12 and 8.3, and each party expressly waives any other
rights or remedies it may have, provided, however, that equitable relief,
including the remedies of specific performance and injunction, shall be
available with respect to any actual or attempted breach of this Agreement
occurring before the Closing Date or with respect to the breach of any covenant
to be performed after the Closing Date.
ARTICLE X
TERMINATION
10.1 Events of Termination. This Agreement may be terminated by written
notice of termination at any time before the Closing Date only as follows:
10.1.1 Mutual Consent. By mutual written consent of Seller and
Buyer;
10.1.2 Breach. By Seller or Buyer if the other party or its
Affiliates shall have (a) misstated any representation or is in breach
of any warranty contained herein which would result in the failure of
such party to satisfy the conditions to Closing set forth in Article
VII, or (b) breached any covenant, undertaking or restriction contained
herein which would result in the failure of such party to satisfy the
conditions to Closing set forth in Article VII.
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10.1.3 By Either Party. Provided that the terminating party is not
in material Default of any of its agreements hereunder, by Seller or
Buyer if the Closing does not occur on or before June 30, 1997.
10.1.4 By Buyer. By Buyer within five days after the Viewer
Submission Deadline if the Viewer Submission Deadline shall have
occurred and prior thereto any of the conditions set forth in Sections
7.1.2, 7.1.3 or 7.1.4 shall not have been satisfied.
10.2 Consequences of Termination. In the event of termination of this
Agreement pursuant to the provisions of Section 10.1, this Agreement shall have
no further effect, except for the provisions of this Section 10.2 and Sections
6.6 and 11.4 and such termination shall be without any liability on the part of
any of the parties, their Affiliates and their respective directors, officers or
stockholders in respect of this Agreement, except for any breach of the
Agreement by such party, and termination by the other party shall be without
prejudice to its rights to recover damages for any such breach by the breaching
party; provided, however, in the event of termination of this Agreement by Buyer
or Seller pursuant to the provisions of Subsection 10.1.2(b), Seller in the case
of breach by Buyer, or Buyer in the case of breach by Seller, shall, within ten
days after receipt of reasonably satisfactory documentation of such costs, pay
all reasonable out-of-pocket fees and expenses (for non-employee attorneys,
accountants, investment bankers and similar persons, filing fees, etc.) incurred
by the other party in connection with the Transactions.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement; Amendments. This Agreement, the Letter Agreement
and the Collateral Documents constitute the entire understanding among the
parties hereto with respect to the subject matter contained herein and supersede
any prior understandings and agreements among them respecting such subject
matter. This Agreement may be amended, supplemented, and terminated only by a
written instrument duly executed by Seller and Buyer. Each of Buyer, Seller and
Federal recognizes that the liability and remedy provisions of this Agreement
are material to the Agreement and have been bargained for and are reflected in
the mutual promises and agreements set forth in the Agreement.
11.2 Headings and References. The headings in this Agreement are for
convenience of reference only and shall not affect its interpretation. Any
reference in this Agreement to an Article, Section , Annex or Exhibit, unless it
clearly refers to another
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instrument, means the specified Article, Section , Annex or Exhibit of this
Agreement and any reference to Schedule means a Schedule to the Disclosure
Letter.
11.3 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability.
11.4 Expenses. The fees of CS First Boston Corporation shall be paid by
Buyer and the fees of Lehman Brothers shall be paid by Seller. Except as
otherwise expressly provided herein, each of Sellers and Buyer shall be
responsible for its own expenses whether or not the Transactions are
consummated, provided, however, Seller and Buyer shall each pay one-half of the
filing fees in connection with the Competition Laws.
11.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given to the Person if delivered personally or
upon sending a copy thereof by first class or express mail, postage prepaid, or
by telegram (with messenger service specified), or reputable courier services,
charges prepaid, to such party's address (or to such party's telecopier):
If to Buyer, to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650
Attention: President, Business Imaging Systems Division
With a copy to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Attention: General Counsel
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and to:
Nixon, Hargrave, Devans & Doyle LLP courier:
Clinton Square 1300 Clinton Square
P.O. Box 1051 Rochester, New York 14604
Rochester, New York 14603
Attention: Deborah McLean Quinn, Esq.
If to Sellers to:
Wang Laboratories, Inc.
600 Technology Park Drive
Billerica, MA 02821-4130
Attention: Franklyn A. Caine, Executive Vice President
With a copy to:
Wang Laboratories, Inc.
600 Technology Park Drive
Billerica, MA 02821-4130
Attention: Albert A. Notini, General Counsel
and to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: John A. Burgess, Esq.
or to such other Person or address as any of the foregoing may have designated
for that purpose by notice to the others.
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11.6 Waiver; Consents. The failure by any party to exercise any right
under, or to object to the breach by any other party of any term, provision or
condition of, this Agreement shall not constitute a waiver thereof and shall not
preclude such party from thereafter exercising that or any other right, or from
thereafter objecting to that or any prior or subsequent breach of the same or
any other term, provision or condition of the Agreement. Any consent granted
pursuant to this Agreement shall be in writing, executed by the person
authorized by the consenting party to receive notices, and shall be a consent
only to the transaction, act or agreement specifically referred to in the
consent and not to other similar transactions, acts or agreements.
11.7 Assignment. This Agreement shall not be assigned by any party
without the prior written consent of the other party, provided, however, that
Buyer may assign to any Buyer Purchaser the right to acquire any portion of the
Purchased Assets and Seller may assign this Agreement to any acquiror of all or
substantially all of its business or assets if such acquiror confirms and
acknowledges the obligations of Sellers under this Agreement and the Collateral
Documents except as otherwise provided therein. Any attempted assignment in
contravention with the foregoing shall be void. This Agreement shall be binding
on and inure to the benefit of the parties hereto, their successors and any
permitted assigns.
11.8 Governing Law. This Agreement, including any dispute or
controversy arising out of or related to this Agreement or the breach thereof,
shall be subject to, governed by, and construed in accordance with, the
substantive and procedural laws of the State of New York, without reference to
its principles of conflict of laws.
11.9 Parties in Interest. This Agreement is binding upon and shall
inure to the benefit of the parties hereto and their successors and permitted
assigns. Nothing contained in this Agreement, express or implied, shall give any
other Person any legal or equitable right, remedy or claim under or with respect
to this Agreement or the transactions contemplated by this Agreement except as
expressly provided in Article IX.
11.10 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be settled by arbitration before a panel of three arbitrators in New York, New
York administered by the American
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Arbitration Association (the "AAA") in accordance with the AAA Commercial
Arbitration Rules, including the Supplementary Procedures for Large, Complex
Disputes. The arbitrators shall be individuals selected by mutual agreement of
the parties hereto who are unaffiliated directly or indirectly with either party
and shall have had no such affiliation for a period of at least five years prior
to the date of this Agreement. In the event that the parties cannot reach
agreement on the selection of such arbitrators, the Seller and the Buyer shall
each name one individual, as describe above, who together will select a third
person, all of whom will then serve as the arbitrators. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16 or
any successor provision, and judgment upon the award may be entered by any court
having jurisdiction. Any party to this Agreement may apply to any court having
jurisdiction hereof and seek injunctive or other preliminary relief to avoid
irreparable damage until the arbitration award is rendered or the claim or
controversy is otherwise resolved. Despite such action the parties will continue
to participate in good faith in the procedures specified in this Section 11.10.
Notwithstanding anything else in this Section 11.10 and without resort to any
arbitration, any party may initiate litigation in a state or federal court
having jurisdiction with respect to any controversy or claim arising out of this
Agreement and related to intellectual property rights. Except as otherwise
expressly authorized in this Agreement, the arbitrators shall be bound by
Article IX of this Agreement and may not make any ruling, finding or award that
does not comply with the terms and conditions of this Agreement. The arbitrators
shall order a prehearing conference and limited discovery consisting of
production of requested documents, a list of proposed witnesses, copies of all
exhibits to be used at arbitration, a summary of testimony of proposed expert
witnesses, and the examination by deposition of reasonably requested
representatives of each party. The arbitrators shall schedule and conduct the
hearing and may permit each party to make brief opening and closing statements.
Either party, at its own expense, may arrange to have the arbitration
proceedings recorded and/or transcribed.
11.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the date first above written.
SELLER
WANG LABORATORIES, INC.
By:_____________________________
Name: Franklyn A. Caine
Title: Executive Vice President
FEDERAL
WANG FEDERAL, INC.
By:_____________________________
Name: Albert A. Notini
Title: Secretary
BUYER
EASTMAN KODAK COMPANY
By:_____________________________
Name: Candy M. Obourn
Title: Vice President and President,
Business Imaging Systems
<PAGE>
AMENDMENT NO. 1
TO
ASSET PURCHASE AGREEMENT
This Amendment No. 1 ("Amendment") is made this 17th day of March, 1997 and
amends the Asset Purchase Agreement dated January 29, 1997 (the "APA"), among
Eastman Kodak Company ("Buyer"), Wang Laboratories, Inc. ("Seller") and Wang
Federal, Inc. ("Federal"). All capitalized terms referred to herein will have
the same meaning as set forth in the APA.
1. The definition of "Accept Employment" set forth in Section 1.1 of the APA is
hereby deleted in its entirety and replaced with the following:
"Accept Employment" means (i) accepting an offer of employment with any
Buyer Purchaser effective as of the Closing Date and satisfying all
conditions of employment specified in the offer letter, or (ii) if the local
law of any jurisdiction only requires notification of a change in
employment, or if Buyer and the Buyer Purchasers have only provided for such
notification in any jurisdiction, "Accept Employment" shall mean the sending
of such notification; provided, however, that Seller shall notify Buyer of
any Person in such jurisdiction who has notified any of Sellers in writing
prior to the Closing Date that such Person does not expect to continue
employment with any of Buyer Purchasers after the Closing Date and such
Persons providing written notice shall not be deemed to Accept Employment
for purposes of this Agreement.
2. Section 2.1.5 is amended to add the phrase "except to the extent such
accounts receivable are Excluded Assets" after the words "Closing Date."
3. Section 2.1.9 is hereby deleted in its entirety and replaced with the
following:
2.1.9 All business or other records to the extent related to the
Business (including personnel files of Transferred Employees to the extent
permitted by Law), except for those business records that must be retained
by Seller for Tax purposes;
4. Section 2.1.6 of the APA is hereby amended to substitute the term "Annex
2.1.6" for the term "Schedule 2.1.6" in each case where such latter term
appears.
<PAGE>
5. Section 2.2.1 of the APA is hereby amended to add at the end thereof "and
any accounts receivable described on Annex 2.2.1."
6. Section 2.4.7 of the APA is hereby amended to add to subsection (d) at the
end thereof the phrase "and to Transferred Employees with respect to any stock
option plans or agreements."
7. Section 2.4.9 of the APA is hereby amended to add the following clause at
the end thereof "or (d) any liability described in Annex 2.4.9."
8. Section 2.5 of the APA is hereby deleted in its entirety and replaced with
the following:
2.5 Consideration. In consideration of Seller's performance of this
Agreement and the transfer and delivery of the Purchased Assets to the Buyer
Purchasers, Buyer shall or shall cause Buyer Purchasers to (in accordance
with the allocation provided for in Section 2.6) (a) deliver to Sellers by
wire transfer to the account which Seller shall specify at least five
business days prior to the Closing Date Two Hundred Sixty Million Dollars
($260,000,000) (the "Cash Consideration") in immediately available funds,
less the amounts, if any, payable under clause (b) of this Section ; (b)
deliver the respective cash amounts allocated pursuant to Section 2.6 by
wire transfer to the Sellers in Chile and Korea; and (c) assume or cause
Buyer Purchasers to assume the Assumed Liabilities.
9. The first sentence of Section 2.6 of the APA is hereby deleted in its
entirety and replaced with the following:
For purposes of complying with the requirements of Section 1060 of the
Code, the Consideration shall be allocated among the Sellers and among each
class of Purchased Assets in accordance with Annex 2.6 (the "Purchase Price
Allocation Schedule"). Appropriate adjustments shall be made to the
allocations to specific categories of assets or liabilities to reflect any
changes in the amount from the Estimated Closing Balance Sheet (on which
they are based) to the Closing Date.
10. The first sentence of Section 5.7 of the APA is deleted in its entirety and
replaced with the following:
Seller shall deliver to Buyer at least one business day prior to the
Closing Date revised Annexes 2.1.1, 2.1.2, 2.1.4 and 2.1.6 and Schedules
3.7, 3.10.6, 3.10.8, 3.10.15, 3.11.2, 3.15, 3.18, 3.20 (all parts), 3.21
(all parts), 3.25, 3.26 and 6.10.1(d), reflecting any changes from the date
of this Agreement to the Closing Date and shall be treated as though
delivered with the Disclosure Letter as of the date of this Agreement.
<PAGE>
11. Section 5.8.1 of the APA is hereby deleted in its entirety and replaced
with the following:
5.8.1 At least two business days prior to the Closing Date, Seller
shall deliver to Buyer an estimated pro forma balance sheet of the Business
as of the Closing Date (the "Estimated Closing Balance Sheet"). The
Estimated Closing Balance Sheet shall consist of the February 28, 1997
consolidating balance sheets by country, adjusted to reflect the Business
as provided in the following sentence, together with disclosure of any
known material differences which have occurred or are anticipated to occur
between February 28, 1997 and the Closing Date. The Estimated Closing
Balance Sheet and the Closing Pro Forma Balance Sheet shall be prepared
consistent with the preparation of the 12/31 Pro Forma Balance Sheet and in
accordance with Annex 3.6, and shall reflect the Purchased Assets which are
of a nature to be reflected thereon and only those liabilities being
assumed by Buyer pursuant to Section 2.3.
12. Section 5.8.2 of the APA is hereby deleted in its entirety and replaced
with the following:
5.8.2 Seller shall prepare a Closing Pro Forma Balance Sheet as of the
Closing Date (the "Closing Pro Forma Balance Sheet") which shall reflect
the books and records of the Business and fairly present the financial
condition of the Business as of the Closing Date and will be provided to
Buyer by Seller on or prior to April 30, 1997.
13. Article V of the APA is hereby amended by inserting the following Section
5.10:
Section 5.10 Transfer of IP Rights and Rights in Software.
Notwithstanding any other provision of this Agreement to the contrary,
Seller and the Acquired Subsidiaries shall execute such documents and
agreements as requested by Buyer in order to assign, transfer or otherwise
convey the Business Software and certain IP Rights, including the Design
Documentation, the Documentation, the Information Assets, the Technology
and the R&D Assets which relate to the Business Software, of the Acquired
Subsidiaries to Kodak Limited, a Subsidiary of Buyer, immediately prior to
the Closing.
14. The APA is hereby amended to add the following clause at the end of Section
6.10.2 "or, if referenced in any local transfer agreement, by the applicable
Sellers and Buyer Purchasers."
15. The APA is hereby amended to add a new Section 6.10.4 to read in its
entirety as follows:
<PAGE>
6.10.4 Annex 6.10.4 contains certain provisions regarding specific
employee related issues.
16. Section 6.12 of the APA is hereby deleted in its entirety and replaced with
the following:
6.12 Office Space Arrangements.
6.12.1 At Closing, Seller or the applicable Seller Subsidiary
("Sublandlord", and collectively, the "Sublandlords") and Buyer or the
applicable Buyer Purchaser ("Subtenant", and collectively the "Subtenants")
shall enter into the following subleases (the "Subleases"): (a) a sublease,
in the form referred to on Annex 1.1 as the "Technology Park Sublease,"
which form has been modified in certain respects by agreement of the
parties to such sublease, pursuant to which Sublandlord will sublease to
Subtenant certain space in the office building located at 600 Technology
Park Drive, Billerica, Massachusetts; and (b) a sublease, in form
reasonably acceptable to both Seller and Buyer pursuant to which
Sublandlord will sublease to Subtenant certain space in the office building
located at 7900 Westpark Avenue, McLean, Virginia. Sublandlord shall use
reasonable efforts to obtain, prior to Closing, and shall deliver to
Subtenant at Closing or at such later time that any such consent shall be
obtained, if at all, all consents required to validly consummate the
Subleases. Sublandlord shall be responsible for and shall promptly pay any
and all costs associated with obtaining and delivering such consents, and
Subtenant shall reasonably cooperate with Sublandlord in obtaining such
consents, provided that Subtenant shall not be required to make any payment
associated with obtaining such consent. The obtaining of such consents with
respect to any particular Sublease shall not be a condition to Closing, but
from and after the date of Closing, as provided in Article IX, Seller shall
indemnify, defend and hold the Buyer Indemnified Parties harmless from and
defend the Buyer Indemnified Parties, on an after-tax basis, from and
against any and all Loss and Litigation Expense, which they or any of them
may suffer or incur as a result of or arising from Seller's failure to seek
or obtain the consent of the landlord, sublandlord or other party whose
consent is required in connection with the making of the Sublease.
6.12.2 At Closing, Seller or the applicable Seller Subsidiary
("Assignor," and collectively, the "Assignors") shall assign to Buyer or
the applicable Buyer Purchaser ("Assignee," and collectively, the
"Assignees") all of its right, title and interest in, to and under the Real
Estate Leases listed on Annex 2.1.6, except for those Real Estate Leases so
listed in which (as indicated on such Annex 2.1.6), the tenant is an
Acquired Subsidiary (the "Acquired Subsidiary Leases") and except for the
Real Estate Lease of premises located in Solna, Sweden, the disposition of
which is addressed in Section 6.12.4 below, and the applicable Assignee
shall assume all obligations of the applicable Assignor under each Real
Estate Lease to be assigned hereunder arising after Closing, pursuant to
certain Lease Assignment and Assumption Agreements substantially in the
form attached to Annex 1.1 as the "Lease Assignments." Seller shall use
reasonable efforts to obtain, prior to Closing, and shall deliver to Buyer
at Closing or at such later time that any such consent shall be obtained,
if at all, all consents required under the Real
<PAGE>
Estate Leases as a result of the assignment thereof, and all consents
required under Acquired Subsidiary Leases as a result of the transfer of
the ownership interests in such Acquired Subsidiaries contemplated under
this Agreement. Seller shall be responsible for and shall promptly pay any
and all costs associated with obtaining and delivering such consents, and
Buyers shall reasonably cooperate with Sellers in obtaining such consents,
provided that neither Buyer nor any Buyer Purchaser shall be required to
make any payment associated with obtaining such consent nor grant any
guarantee of any obligations as a condition to obtaining such consent. The
obtaining of such consents with respect to any particular Real Estate Lease
assignment or deemed transfer of an Acquired Subsidiary Lease (a "Lease
Transfer") shall not be a condition to Closing, but from and after the date
of Closing, as provided in Article IX, Seller shall indemnify, defend and
hold the Buyer Indemnified Parties harmless from and defend the Buyer
Indemnified Parties, on an after-tax basis, from and against any and all
Loss and Litigation Expense, which they or any of them may suffer or incur
as a result of or arising from Seller's failure to seek or obtain the
consent of the landlord, sublandlord or other party whose consent is
required in connection with the making of the Lease Transfer.
6.12.3 At Closing, Seller and Buyer shall enter into a Master Space
Sharing Agreement, substantially in the form attached to Annex 1.1 (the
"Master Space Sharing Agreement"), which form has been modified in certain
respects by agreement of the parties thereto, relating to the spaces listed
on Annex 6.12.3 (the "Shared Spaces"), pursuant to which, among other
things, Sellers shall grant to Buyer Purchasers the right to use and occupy
certain areas in the Shared Spaces in exchange for the payment of certain
amounts and Buyer Purchasers assuming certain obligations with respect to
such areas. Any consents to the Master Space Sharing Agreement which may be
required to be obtained under any of the Real Estate Leases shall not be a
condition to Closing, and neither Sellers nor Buyers shall be required to
seek to obtain such consents.
6.12.4 With respect to the Real Estate Lease of premises located in
Solna, Sweden (the "Sweden Lease"), Seller covenants and agrees that the
rent payable by the applicable Buyer Purchaser for the premises under the
Sweden Lease (the "Sweden Premises") shall not exceed the fair market
rental value therefor (the "Fair Market Rental"). Seller and Buyer hereby
agree for this purpose that the Fair Market Rental of the Sweden Premises
is 237,500 Swedish Krona (SEK) per year (exclusive of property tax and
VAT). Seller and Buyer further agree and acknowledge that the current rent
payable under the Sweden Lease for the Sweden Premises is 269,700 SEK per
year (exclusive of property tax and VAT). In order to satisfy its
contractual obligation to assume responsibility for the amount by which the
current rent payable under the Sweden Lease exceeds the Fair Market Rental,
Seller shall use commercially reasonable efforts promptly following Closing
to enter into an agreement with the landlord under the Sweden Lease
pursuant to which, at no cost to Buyer or the applicable Buyer Purchaser,
either: (a) the Sweden Lease shall be modified to provide that the rent
payable thereunder from and after the date of Closing shall be equal to the
Fair Market Rental, in which event Seller shall cause the applicable Seller
Subsidiary to assign the Sweden Lease to the applicable Buyer Purchaser and
the applicable Buyer Purchaser shall accept assignment
<PAGE>
of the Sweden Lease, as so modified; or (b) the Sweden Lease shall be
terminated and the applicable Buyer Purchaser shall enter into a new lease
covering the Sweden Premises on terms satisfactory to the landlord and
reasonably satisfactory to the applicable Buyer Purchaser, but calling for
rental payments no greater than the Fair Market Rental. If the arrangements
described in clauses (a) and (b) above have not been completed on or before
March 31, 1997, then Seller shall cause the Sweden Lease to be assigned to
the applicable Buyer Purchaser pursuant to an assignment agreement which
will provide that Seller shall pay to the Buyer Purchaser on a monthly
basis (retroactive to the Closing Date) an amount equal to the amount by
which each monthly installment of rent payable under the Sweden Lease
exceeds the monthly Fair Market Rental, and the applicable Buyer Purchaser
shall accept such assignment. The provisions of the last three sentences of
Section 6.12.2 shall apply in connection with any assignment of the Sweden
Lease by the applicable Seller Subsidiary to the applicable Buyer
Purchaser.
17. Section 6.13 of the APA is hereby deleted in its entirety and replaced with
the following:
Section 6.13 Reorganization in France. Buyer and Seller shall, and
shall cause their respective Affiliates, to cooperate in the reorganization
of the Business in France so that Wang Software Services Europe is
converted from an SNC to an S.A. prior to the closing of the Transactions
in France and that all of the assets and employees of the Business in
France are transferred to such entity. At or before the closing in France,
the Acquired Subsidiary in France shall enter into a sublease with Wang
France S.A., the terms of which are set forth in Annex 6.13.
18. Section 6.1.5 of the APA is hereby deleted in its entirety and replaced
with the following:
6.1.5 Retention Payments. Sellers shall cause any U.S. Transferred
Employees with unvested employer contributions under Sellers' or Acquired
Subsidiaries' 401(k) Plans ("Unvested Contributions") to vest as of the
Closing Date. Sellers shall provide Buyer with a statement of the Unvested
Contributions for each affected Transferred Employee within five business
days after the Closing Date. Seller shall reimburse Buyer for one-half of
the payments made by Buyer or Buyer Purchasers to Employees pursuant to
Buyer's retention plan for Transferred Employees, as amended from time to
time; provided, that Seller shall be entitled to credit 50% of the Unvested
Contributions against such reimbursement obligation; and provided further,
that Seller's maximum reimbursement obligation hereunder shall be the
difference between $5,000,000 and the Unvested Contributions.
19. Article VI of the APA is hereby amended by inserting the following Section
6.26:
Section 6.26 Buyer shall not (nor shall Buyer permit any of its
Affiliates to), without the prior written consent of Seller, amend or
otherwise modify the terms of any stock option agreement under the Wang
Software Storage Management, Inc. 1991 Incentive Stock Plan outstanding on
the Closing Date (collectively, the "Plan and Options") unless required to
do so to comply with a change in Law. Seller shall not (nor
<PAGE>
shall Seller permit any of its Affiliates to), without the prior written
consent of Buyer, amend or otherwise modify the terms of the Plan and
Options unless required to do so to comply with a change in Law.
20. Section 7.1.5 of the APA is hereby amended to substitute the term "Schedule
7.1.5" for the term "Annex 7.1.5" in each case where such latter term appears.
21. Article IX of the APA is hereby amended by inserting the following Section
9.3.1:
9.3.1 Additional Indemnification by Buyer. From and after the Closing
Date, Buyer shall indemnify and hold harmless the Seller Indemnified
Parties, on an after-tax basis, from and against any and all Loss and
Litigation Expense which they, or any of them, may suffer or incur as a
result of or arising from any claim that the sale and assignment by the
Acquired Subsidiaries of certain of their assets to the Buyer or any Buyer
Purchaser as provided in Section 5.10 resulted in the violation of any bulk
sales, fraudulent conveyance, fraudulent transfer, insolvency, illegal
dividend, or related law or regulation in any jurisdiction or the violation
or breach of any fiduciary duty of any shareholder, director or officer of
any Acquired Subsidiary. Notwithstanding anything to the contrary contained
in Section 9.4, none of the limitations contained in Section 9.4 shall
apply to the obligations set forth in this Section 9.3.1.
22. Section 11.1 of the APA is hereby amended to add the term ", Amendment No.
1" after the word "Agreement" and to include the following sentence at the end
thereof: "Notwithstanding any provision or lack thereof in the Assignment and
Assumption Agreement between Wang Australia Pty Ltd. and Kodak Australasia Pty
Ltd., Buyer and Seller shall cause their respective Affiliates in Australia to
abide by the terms of this Agreement, including the provisions of this Agreement
with respect to the Closing Pro Forma Balance Sheet."
23. Section 11.5 of the APA is hereby amended to add the following information
regarding ZIP codes and facsimile numbers:
To Buyer's President, Business Imaging Systems:
ZIP Code 14650-1171
Facsimile 716-724-2443
To Buyer's General Counsel:
ZIP Code 14650-0208
Facsimile 716-724-9448
To Nixon, Hargrave, Devans & Doyle LLP:
Facsimile 716-263-1600
To Seller's Executive Vice President:
Facsimile 508-967-0436
<PAGE>
To Seller's General Counsel:
Facsimile 508-967-0436
To Hale and Dorr LLP
Facsimile 617-526-5000
24. Annexes 1.1, 2.2.9, 2.3.4, 2.4.3, 2.4.12, 2.7, 6.12.3, 7.1.4(a) and
7.1.4(b) and Schedules 3.1, 3.4, 3.5, 3.8.3, 3.10.1, 3.10.7, 3.10.9, 3.19,
3.30.11, 3.33, 5.2.2 and 7.1.5 to the APA are hereby deleted in their entirety
and respectively replaced by Annexes 1.1, 2.2.9, 2.3.4, 2.4.3, 2.4.12, 2.7,
6.12.3, 7.1.4(a) and 7.1.4(b) and Schedules 3.1, 3.4, 3.5, 3.8.3, 3.10.1,
3.10.7, 3.10.9, 3.19, 3.30.11, 3.33, 5.2.2 and 7.1.5 attached hereto. The
attached Annexes 1.1, 2.2.9, 2.3.4, 2.4.3, 2.4.12, 2.7, 6.12.3, 7.1.4(a) and
7.1.4(b) shall be treated as though always a part of the APA and Schedules 3.1,
3.4, 3.5, 3.8.3, 3.10.1, 3.10.7, 3.10.9, 3.19, 3.30.11, 3.33, 5.2.2 and 7.1.5
shall be treated as though delivered with the Disclosure Letter as of the date
of the APA.
25. Annexes 6.12.1(b), 6.12.1(c) and 6.12.4 to the APA are hereby deleted in
their entirety from the APA and shall be treated as though never a part of the
APA.
26. The attached Annexes 2.2.1, 2.4.9, 2.6, 6.10.4 and 6.13 are hereby added to
and incorporated within the APA and shall be treated as though always a part of
the APA.
27. Except as expressly amended by this Amendment, the APA continues in full
force and effect as written.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers on the date first above written.
WANG LABORATORIES, INC. EASTMAN KODAK COMPANY
By: ____________________________ By: ____________________________
Name: David I. Goulden Name: Peter Giles
Title: Senior Vice President Title: Vice President
WANG FEDERAL, INC.
By: ____________________________
Name: Albert A. Notini
Title: Senior Vice President
<PAGE>
Exhibit 99.1
Contact: Lucy Flynn, Wang
(508) 967-6440, [email protected]
WANG COMPLETES SALE OF ITS SOFTWARE BUSINESS TO KODAK
BILLERICA, Mass. (March 17, 1997) -- Wang Laboratories Inc. (NASDAQ:WANG) today
announced the completion of the sale of its software business to Eastman Kodak
for $260 million in cash as previously announced on January 29.
Headquartered in Billerica, Wang is a leading global network and desktop
integration and services company. With annual revenues of $1.4 billion, Wang
provides a comprehensive range of information technology services for today's
network-centric business environment. Services include systems architecture and
installation, warranty and help desk support, maintenance, software support, and
administration of local area networks (LANs) and wide area networks (WANs). With
over 10,000 people in approximately 130 countries, Wang designs, operates, and
maintains global computing and telecommunications networks for defense and
civilian government agencies as well as some of the world's largest commercial
organizations. Information about Wang and its services can be found on the World
Wide Web at www.wang.com.
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<PAGE>
Exhibit 99.2
Contact: Lucy Flynn, Wang
508-967-6440; [email protected]
WANG STRUCTURES FOR GLOBAL GROWTH
CREATES OFFICE OF THE PRESIDENT
APPROVES MODIFICATION OF CEO TUCCI'S EMPLOYMENT CONTRACT
BILLERICA, Mass. -- (March 28, 1997) -- Wang (NASDAQ: WANG) today announced that
it has created an Office of the President, reporting to Chairman and CEO Joseph
M. Tucci, consistent with the company's focus as a leading provider of network
and desktop integration and services, worldwide. Serving in the Office of the
President will be: Jose Ofman, president and chief operating officer -Americas,
and Mias van Vuuren, chief operating officer - International.
Mr. Ofman joins Wang from Electronic Data Systems (EDS) where he most
recently held the position of corporate vice president and group executive. Mr.
Ofman, whose career with EDS spanned over 25 years, held several senior
positions there. He was the architect of EDS's entry into the travel and
transportation business, a global business that grew well in excess of $600
million in annual revenues. Previously, he had managed EDS's billion dollar per
year relationship with General Motors' largest car group which included
Chevrolet, Pontiac, GM of Canada and GM of Mexico. He was also president of
EDS's Government Services Division, and of EDS, Mexico.
For 26 years, Mr. van Vuuren has successfully managed international
operations within the information technology (IT) industry. Prior to joining
Wang in 1993, he served 14 years with IBM and 11 years with Unisys where he held
the position of vice president and group manager, Europe. He joined Wang in
1993, as senior vice president and general manager for Europe, Africa and the
Middle East and became president of international operations in 1994. Under his
leadership, Wang's international business has contributed significantly to
Wang's overall success.
- more -
<PAGE>
"Our new management structure aligns our core businesses worldwide,
reinforcing Wang's ability to take advantage of the growing markets at home and
abroad," said Tucci. "Jose's dynamism and experience in building successful
businesses will add to our momentum as we focus on the highly profitable growth
segments of the IT services market. Mias' continued guidance of our operations
outside of the Americas will ensure that we remain competitive and successful in
international markets, providing our customers consistent global delivery."
In a related announcement, the company said its board has approved a
modification of Joseph M. Tucci's employment agreement, in recognition of the
leadership role he has played and to more closely link his compensation to
shareholder value, and more closely align his compensation to that of other
CEOs in similar business situations. The last comprehensive restatement of Mr.
Tucci's employment agreement occurred on March 9, 1993.
Key provisions of the new contract, which will be outlined in the company's
8K include: an increase in base salary from $605,000 to $750,000, to equalize
his pay with other CEOs in similar situations; a retention bonus of $4 million,
contingent upon Mr. Tucci's continued employment; and an increase in long-term
incentives in the form of a restricted stock award and stock option grants
designed to make a substantial portion of Mr. Tucci's future compensation
conditioned upon the creation of shareholder value.
"Joe Tucci has successfully guided Wang through several critical stages of
development, including greatly improving its financial performance, which has
helped to raise Wang's market capitalization from approximately $400 million in
1994 to nearly $1 billion. He has been the architect of Wang's strategy to
focus the company on the large opportunity in the global desktop and network
integration and services business, conceiving and negotiating a series of
strategic acquisitions, including I-NET. The recent sale of Wang Software to
Eastman Kodak for $260 million marks the completion of his repositioning
strategy," said Michael W. Brown of Wang's board of directors. "The board is
confident that under Joe's continued leadership Wang will focus its energies on
high growth segments of IT services and reach new levels of success for its
customers and shareholders."
- more -
<PAGE>
Wang Laboratories is a leading global desktop and network integration and
services company. With nearly 10,000 people in approximately 130 countries,
Wang is one of the largest worldwide providers of IT services and support.
Information about Wang and its products and services can be found on the World
Wide Web at www.wang.com.
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