<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 3, 1998.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________.
COMMISSION FILE NUMBER 0-17781
- --------------------------------------------------------------------------------
SYMANTEC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0181864
State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
10201 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014-2132
Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (408) 253-9600
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, including 2,383,686 shares of Delrina exchangeable stock, as
of July 31, 1998:
COMMON STOCK, PAR VALUE $0.01 PER SHARE 57,418,197 SHARES
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<PAGE> 2
SYMANTEC CORPORATION
FORM 10-Q
QUARTERLY PERIOD ENDED JULY 3, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
as of June 30, 1998 and March 31, 1998...................... 3
Consolidated Statements of Operations
for the three months ended June 30, 1998 and 1997........... 4
Consolidated Statements of Cash Flow
for the three months ended June 30, 1998 and 1997........... 5
Notes to Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 25
</TABLE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings............................................... 26
Item 6. Exhibits and Reports on Form 8-K................................ 26
Signatures................................................................ 27
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYMANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1998 1998
--------- ---------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 211,742 $ 225,883
Trade accounts receivable 62,072 65,158
Inventories 3,586 3,175
Deferred income taxes 23,401 19,677
Other 11,682 14,646
--------- ---------
Total current assets 312,483 328,539
Long-term investments 38,739 34,258
Restricted investments 63,186 59,370
Equipment and leasehold improvements 50,721 50,030
Capitalized software 15,377 1,470
Other 5,743 2,793
--------- ---------
$ 486,249 $ 476,460
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 35,227 $ 34,171
Accrued compensation and benefits 18,819 21,332
Other accrued expenses 73,368 64,532
Income taxes payable 18,484 24,634
Current portion of convertible subordinated debentures 8,333 8,333
--------- ---------
Total current liabilities 154,231 153,002
Convertible subordinated debentures and other 5,951 5,951
Long-term obligations 8,000 --
--------- ---------
Total long-term liabilities 13,951 5,951
Commitments and contingencies
Stockholders' equity:
Preferred stock (authorized: 1,000; issued and outstanding: none) -- --
Common stock (authorized: 100,000; issued and outstanding: 57,864
and 57,109 shares) 579 571
Capital in excess of par value 320,811 310,949
Notes receivable from stockholders (144) (144)
Retained earnings 13,377 18,690
Accumulated other comprehensive income (loss) (16,556) (12,559)
--------- ---------
Total stockholders' equity 318,067 317,507
--------- ---------
$ 486,249 $ 476,460
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
3
<PAGE> 4
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------
(In thousands, except per share data; unaudited) 1998 1997
- --------------------------------------------------- --------- ---------
<S> <C> <C>
Net revenues $ 153,091 $ 135,016
Cost of revenues 20,332 20,920
--------- ---------
Gross margin 132,759 114,096
Operating expenses:
Research and development 24,979 21,581
Sales and marketing 69,843 61,655
General and administrative 9,181 9,034
Acquired in-process research and development 29,273 --
Litigation judgment 5,825 --
--------- ---------
Total operating expenses 139,101 92,270
--------- ---------
Operating income (loss) (6,342) 21,826
Interest income 4,489 2,907
Interest expense (331) (257)
Other income (expense), net 2,602 (404)
--------- ---------
Income before income taxes 418 24,072
Provision for income taxes 5,731 5,537
--------- ---------
Net income (loss) $ (5,313) $ 18,535
========= =========
Net income (loss) per share - basic $ (0.09) $ 0.33
========= =========
Net income (loss) per share - diluted $ (0.09) $ 0.32
========= =========
Shares used to compute net income (loss) per share - basic 57,422 55,458
========= =========
Shares used to compute net income (loss) per share - diluted 57,422 58,375
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
4
<PAGE> 5
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------
(In thousands, unaudited) 1998 1997
- ------------------------- --------- ---------
<S> <C> <C>
Operating Activities:
Net income (loss) $ (5,313) $ 18,535
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization of equipment and
leasehold improvements 6,427 6,057
Amortization and write-off of capitalized software costs 692 316
Amortization of goodwill 49 --
Write-off of acquired in-process research and development 29,273 --
Write-off of equipment and leasehold improvements 6 1,069
Deferred income taxes (3,770) 41
Net change in assets and liabilities, excluding effects
of acquisitions:
Trade accounts receivable 3,570 6,788
Inventories (385) 1,139
Other current assets 4,175 (1,408)
Capitalized software costs -- (6)
Other assets 13 (522)
Accounts payable 1,047 561
Accrued compensation and benefits (2,467) 1,089
Other accrued expenses 4,611 997
Income taxes payable (6,047) 2,501
--------- ---------
Net cash provided by operating activities 31,881 37,157
--------- ---------
Investing Activities:
Capital expenditures (7,206) (6,996)
Purchased intangibles (376) (258)
Purchase of certain assets from IBM (8,000) --
Purchase of certain assets from Binary Research Limited (27,500) --
Purchases of marketable securities (84,225) (51,500)
Proceeds from sales of marketable securities 79,942 40,264
Purchases of long-term, restricted investments (3,816) (2,843)
--------- ---------
Net cash used in investing activities (51,181) (21,333)
--------- ---------
Financing Activities:
Repurchase of common stock -- (8,373)
Net proceeds from sales of common stock and other 9,821 8,658
--------- ---------
Net cash provided by financing activities 9,821 285
--------- ---------
Effect of exchange rate fluctuations on cash and cash equivalents (4,464) (155)
Increase (decrease) in cash and cash equivalents (13,943) 15,954
Beginning cash and cash equivalents 139,013 95,758
--------- ---------
Ending cash and cash equivalents $ 125,070 $ 111,712
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
<PAGE> 6
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 1. BASIS OF PRESENTATION
During the June 1998 quarter, the Company acquired certain assets of
International Business Machines ("IBM") and Binary Research Limited ("Binary")
(See Notes 7 and 8 of Notes to Consolidated Financial Statements in this Form
10-Q.) The results of operations from the date of the acquisition of Binary have
been included in Symantec's results of operations for the June 1998 quarter.
The consolidated financial statements of Symantec Corporation ("Symantec" or the
"Company") as of June 30, 1998 and for the three months ended June 30, 1998 and
1997 are unaudited and, in the opinion of management, contain all adjustments,
consisting of only normal recurring items necessary for the fair presentation of
the financial position and results of operations for the interim periods. These
consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in Symantec's
Annual Report on Form 10-K for the year ended March 31, 1998. The results of
operations for the three months ended June 30, 1998 are not necessarily
indicative of the results to be expected for the entire year. All significant
intercompany accounts and transactions have been eliminated. Certain previously
reported amounts have been reclassified to conform to the current presentation
format.
In October 1997 and March 1998, the Accounting Standards Executive Committee
("AcSEC") issued Statements of Position ("SOP") 97-2, "Software Revenue
Recognition" and SOP 98-4, "Deferral of the Effective Date of a Provision of SOP
97-2, Software Revenue Recognition," respectively, which provide guidance on
applying generally accepted accounting principles in recognizing revenue on
software transactions and was effective for Symantec's transactions beginning
with the June 30, 1998 quarter. AcSEC is currently deliberating the potential
permanent deferral of certain provisions of SOP 97-2.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as
of and for the periods ended June 30, 1998, March 31, 1998 and June 30, 1997
reflect amounts as of and for the periods ended July 3, 1998, April 3, 1998 and
July 4, 1997, respectively. The June 30, 1998 quarter comprised 13 weeks of
activity, while the comparable prior year period comprised 14 weeks.
6
<PAGE> 7
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 2. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1998 1998
- -------------- --------- ---------
(unaudited)
<S> <C> <C>
Cash, cash equivalents and short-term investments:
Cash $ 40,355 $ 28,236
Cash equivalents 84,715 110,777
Short-term investments 86,672 86,870
--------- ---------
$ 211,742 $ 225,883
========= =========
Trade accounts receivable:
Receivables $ 66,489 $ 69,574
Less: allowance for doubtful accounts (4,417) (4,416)
--------- ---------
$ 62,072 $ 65,158
========= =========
Inventories:
Raw materials $ 1,654 $ 1,091
Finished goods 1,932 2,084
--------- ---------
$ 3,586 $ 3,175
========= =========
Equipment and leasehold improvements:
Computer hardware and software $ 113,312 $ 107,724
Office furniture and equipment 30,114 29,407
Leasehold improvements 21,541 21,038
--------- ---------
164,967 158,169
Less: accumulated depreciation and amortization (114,246) (108,139)
--------- ---------
$ 50,721 $ 50,030
========= =========
Capitalized software:
Purchased product rights and technologies $ 15,958 $ 1,358
Capitalized software costs 2,391 2,414
Less: accumulated amortization of purchased product rights (1,067) (563)
Less: accumulated amortization of capitalized software costs (1,905) (1,739)
--------- ---------
$ 15,377 $ 1,470
========= =========
Other assets:
Goodwill, net $ 2,901 $ --
Other 2,842 2,793
--------- ---------
$ 5,743 $ 2,793
========= =========
Other accrued expenses:
Deferred revenue $ 27,800 $ 25,537
Marketing development funds 13,150 12,815
Other 32,418 26,180
--------- ---------
$ 73,368 $ 64,532
========= =========
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale investments $ 108 $ 157
Cumulative translation adjustment (16,664) (12,716)
--------- ---------
$ (16,556) $ (12,559)
========= =========
</TABLE>
7
<PAGE> 8
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 3. NET INCOME (LOSS) PER SHARE
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," which was required to be adopted by Symantec for the
fiscal period ending December 31, 1997. As a result, the Company has changed the
method used to compute earnings per share and has restated all prior periods.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------
(In thousands, except per share data; unaudited) 1998 1997
- ------------------------------------------------ -------- --------
<S> <C> <C>
BASIC NET INCOME (LOSS) PER SHARE
Net income (loss) $ (5,313) $ 18,535
======== ========
Weighted average number of common
shares outstanding during the period 57,422 55,458
======== ========
Basic net income (loss) per share $ (0.09) $ 0.33
======== ========
DILUTED NET INCOME (LOSS) PER SHARE
Net income (loss) $ (5,313) $ 18,535
Interest on convertible subordinated
debentures, net of income tax effect -- 177
-------- --------
Net income (loss), as adjusted $ (5,313) $ 18,712
======== ========
Weighted average number of common
shares outstanding during the period 57,422 55,458
Shares issuable from assumed exercise
of options -- 1,667
Shares issuable from assumed conversion
of convertible subordinated debentures -- 1,250
-------- --------
Total shares for purpose of calculating
diluted net income (loss) per share 57,422 58,375
======== ========
Diluted net income (loss) per share $ (0.09) $ 0.32
======== ========
</TABLE>
For the three months ended June 30, 1998, 1,190,000 shares of convertible
subordinated debentures, options to purchase 2,738,000 shares and $169,000 of
interest expense were excluded from the computation of diluted net loss per
share because the effect would have been anti-dilutive.
8
<PAGE> 9
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 4. COMPREHENSIVE INCOME (LOSS)
The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," for the quarter ended June 30, 1998. SFAS No.
130 establishes new rules for the reporting and disclosure of comprehensive
income and its components; however, it has no impact on the Company's net income
or stockholders' equity. The components of comprehensive income, net of tax, are
as follows:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------
(In thousands, unaudited) 1998 1997
- ------------------------- -------- --------
<S> <C> <C>
Net income (loss) $ (5,313) $ 18,535
Other comprehensive income (loss):
Add: change in unrealized gain (loss) on available-for-sale
investments, net of a tax provision (benefit) of ($16) and $4 (33) 13
Less: reclassification adjustment for gains (losses) included in
net income (loss), net of a tax provision (benefit) of $83 and $0 177 --
Add: change in cumulative translation adjustment (CTA),
net of a tax provision (benefit) of ($1,264) and ($12.) (2,684) (41)
Less: reclassification adjustment for CTA included in net income
(loss), net of a tax provision (benefit) of $604 and $0 1,284 --
-------- --------
Total other comprehensive (loss) (4,178) (28)
-------- --------
Comprehensive income (loss) $ (9,491) $ 18,507
======== ========
</TABLE>
NOTE 5. LITIGATION AND CONTINGENCIES
On March 18, 1996, a class action complaint was filed by the law firm of
Milberg, Weiss, Bershad, Hynes & Lerach in Superior Court of the State of
California, County of Santa Clara, against the Company and several of its
current and former officers and directors. The complaint alleges that Symantec
insiders inflated the stock price and then sold stock based on inside
information that sales were not going to meet analysts' expectations. The
complaint seeks damages in an unspecified amount. The complaint has been refiled
twice in state court, most recently on January 13, 1997, following Symantec's
demurrers directed to previous complaints. The parties are currently conducting
discovery. On January 7, 1997, the same plaintiffs filed a complaint in the
United States District Court, Northern District of California, based on the same
facts as the state court complaint, for violation of the Securities Exchange Act
of 1934. The district court dismissed that complaint, and plaintiffs served an
amended complaint in April 1998. Symantec's motion to dismiss the new federal
complaint is currently pending. Symantec believes that neither the state court
complaint nor the federal court complaint has any merit and will vigorously
defend itself against both complaints.
On April 23, 1997, Symantec filed a lawsuit against McAfee Associates, Inc.,
which pursuant to a merger has become Network Associates, Inc. ("Network
Associates,") in the United States District Court, Northern District of
California, for copyright infringement and unfair competition. On October 6,
1997, the court found that Symantec had demonstrated a likelihood of success on
the merits of certain copyright claims, and issued a preliminary injunction (i)
prohibiting Network Associates from infringing Symantec's rights in specified
materials by marketing, selling, transferring or directly or indirectly copying
into any new Network Associates product or new version of an existing product
that has Symantec code, (ii) requiring Network Associates to notify distributors
who are still selling versions of PC Medic 97 that have Symantec's code to tell
customers that they should upgrade to versions that do not contain Symantec
code, and (iii) requiring Network Associates to provide Symantec and the court
with a sample of the notice to be used. On October 17, 1997, Symantec amended
its complaint to include additional claims for copyright infringement and
misappropriation of trade secrets, based on additional evidence found in the
discovery
9
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SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
process. On April 1, 1998, Symantec amended its complaint to add claims for
misappropriation of trade secrets, RICO (Racketeer Influenced and Corrupt
Organizations Act) and related claims based on additional evidence uncovered in
the litigation. Following motions by Network Associates, the court dismissed
Symantec's unfair competition claims regarding the copyrighted code and its RICO
claims. Symantec continues to investigate the extent to which Network Associates
may have misappropriated Symantec's intellectual property, and plans to
aggressively pursue its remedies under this lawsuit, which include both
injunctive relief and monetary damages.
On May 13, 1997, Trend Micro Incorporated ("Trend") filed a lawsuit in the
United States District Court, Northern District of California, against Symantec
and Network Associates, alleging patent infringement. Trend claimed that Norton
AntiVirus for Internet E-mail Gateways and Norton AntiVirus for Firewalls
infringe a patent owned by Trend. Symantec settled with Trend on April 6, 1998,
on terms that were not material to Symantec.
On August 22, 1997, Network Associates filed a lawsuit against Symantec in the
Superior Court of the State of California, County of Santa Clara, alleging
defamation, trade libel, unfair competition and unjust enrichment. The complaint
alleged that damages to Network Associates could approximate $1 billion. Network
Associates dismissed the lawsuit on or about December 30, 1997. The court
awarded Symantec costs and attorneys' fees in connection with this matter on
April 10, 1998.
On September 15, 1997, Hilgraeve Corporation ("Hilgraeve") filed a lawsuit in
the United States District Court, Eastern District of Michigan, against
Symantec, alleging that unspecified Symantec products infringe a patent owned by
Hilgraeve. The lawsuit requests damages, injunctive relief and costs and
attorney fees. Symantec believes this claim has no merit and intends to defend
the action vigorously.
On February 4, 1998, CyberMedia, Inc. ("CyberMedia,") filed a lawsuit in the
United States District Court, Northern District of California, against Symantec,
ZebraSoft Inc., and others, alleging that Symantec Norton Uninstall Deluxe
infringes CyberMedia's copyright, and asserting related state law claims. The
suit requests damages, injunctive relief, costs and attorneys fees. In May 1998,
CyberMedia filed a motion seeking an order prohibiting sale or development of
the challenged code. Following a hearing in mid-July, the Court requested
additional briefing, and a further hearing is set for late August 1998.
Subsequently, in late July 1998, Network Associates announced it had entered
into an agreement to acquire CyberMedia. Symantec believes it has meritorious
defenses to this claim and intends to defend the action vigorously.
On February 19, 1998, a class action complaint was filed by the Milberg, Weiss,
Bershad, Hynes & Lerach law firm in Santa Clara County Superior Court, on behalf
of a class of purchasers of pre-version 4.0 Norton AntiVirus products. A similar
complaint was filed in the same court on March 6, 1998 by an Oregon law firm.
The complaints purport to assert claims for breach of implied warranty, fraud,
unfair business practices and violation of California's Consumer Legal Remedies
Act arising from the alleged inability of earlier versions of Norton
AntiVirus(R) to function properly after the year 2000. The complaints seek
unspecified damages and injunctive relief. Symantec believes that these actions
have no merit and intends to defend itself vigorously.
In connection with the May 1998 asset purchase agreement with IBM (see Note 7 of
Notes to Consolidated Financial Statements in this Form 10-Q,) previously
asserted claims of patent infringement asserted by IBM with respect to certain
of the Company's products were resolved. The terms of resolution were not
material to Symantec.
In July 1998, the Ontario Court of Justice (General Division) ruled that
Symantec should pay $5.8 million plus costs to Triolet Systems, Inc. and Brian
Duncombe in a decade-old copyright action, for damages arising from the grant of
a preliminary injunction against the defendant. The damages were awarded
following the court's ruling that evidence presented later in the case showed
the injunction was not warranted. Symantec inherited the case through its 1995
acquisition of Delrina Corporation, which was the plaintiff in this lawsuit.
Symantec will appeal the decision. Symantec recorded a charge of $5.8 million in
June 1998 representing the unaccrued portion of the judgment plus costs.
10
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SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Over the past few years, it has become common for software companies, including
Symantec, to receive claims of patent infringement. Symantec is currently
evaluating claims of patent infringement asserted by several parties, with
respect to certain of the Company's products. While the Company believes that it
has valid defenses to these claims, the outcome of any related litigation or
negotiation could have a material adverse impact on the Company's future results
of operations or cash flows.
Symantec is involved in a number of other judicial and administrative
proceedings incidental to its business. The Company intends to defend all of the
aforementioned pending lawsuits vigorously, and although adverse decisions (or
settlements) may occur in one or more of the cases, the final resolution of
these lawsuits, individually or in the aggregate, is not expected to have a
material adverse affect on the financial condition of the Company, although it
is not possible to estimate the possible loss or losses from each of these
cases. Depending, however, on the amount and timing of an unfavorable resolution
of these lawsuits, it is possible that the Company's future results of
operations or cash flows could be materially adversely affected in a particular
period. The Company has accrued certain estimated legal fees and expenses
related to certain of these matters; however, actual amounts may differ
materially from those estimated amounts.
NOTE 6. STOCK REPURCHASE
On June 9, 1998, the Board of Directors of Symantec authorized the repurchase of
up to 5% of Symantec's outstanding common stock before December 31, 1998. Among
other purposes, the shares will be used primarily for employee stock purchase
programs and option grants. The Company did not repurchase any shares during the
June 1998 quarter. Subsequent to June 30, 1998 and through July 31, 1998, the
Company had repurchased approximately 610,000 shares at prices ranging from
$24.38 to $27.56 for an aggregate amount of approximately $16.0 million.
NOTE 7. PURCHASE OF CERTAIN IBM ASSETS
On May 19, 1998, IBM and Symantec entered into an agreement whereby Symantec
licensed IBM's immune system technology and patents for $16.0 million plus
certain potential future royalties. Symantec also assumed liabilities of $3.0
million and incurred additional expenses of approximately $1.3 million as part
of the transaction. As of June 30, 1998, Symantec paid IBM $8.0 million in cash
with the remaining $8.0 million payable in two equal installments in August 1999
and November 1999. This payable is reflected in Symantec's June 30, 1998 balance
sheet as long-term obligations. As part of the agreement, IBM assigned its
existing anti-virus customer and OEM contracts to Symantec. Under the
transaction, Symantec recorded approximately $16.0 million for in-process
research and development acquired from IBM, $3.0 million for goodwill and $1.3
million for certain prepaid research and development and other assets. Symantec
also entered into a contract research and development arrangement with IBM to
develop certain products in return for payments totalling $4.0 million.
NOTE 8. PURCHASE OF CERTAIN BINARY ASSETS
On June 24, 1998, Symantec entered into an agreement whereby Symantec purchased
certain assets of Binary, an Auckland, New Zealand based company, for $27.5
million plus $0.7 million of acquisition related costs. The transaction was
accounted for as a purchase. Under the transaction, Symantec recorded
approximately $13.3 million for in-process research and development acquired
from Binary and $14.2 million for capitalized software technology, with the
remainder of the purchase price allocated to net tangible and other assets. The
capitalized software is being amortized over a 3-year period. As of June 30,
1998, the Company incurred approximately $0.4 million of amortization expense
related to this asset.
11
<PAGE> 12
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
The following unaudited pro forma results of operations for the periods ended
June 30, 1998 and 1997 are as if the acquisition of Binary had occurred at the
beginning of each quarter. The pro forma information excludes the one-time
write-off of $13.3 million of in-process research and development and the tax
effect of the charge and $0.4 million of capitalized software amortization and
its tax effect. The pro forma information has been prepared for comparative
purposes only and is not indicative of what operating results would have been if
the acquisition had taken place at the beginning of the June 1998 quarter or of
future operating results.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
(In thousands, except per share data; unaudited) 1998 1997
- ------------------------------------------------- ---------- ----------
<S> <C> <C>
Net revenues $ 156,179 $ 136,496
========== ==========
Net income $ 7,883 $ 19,399
========== ==========
Basic net income per share $ 0.14 $ 0.35
========== ==========
Diluted net income per share $ 0.13 $ 0.34
========== ==========
</TABLE>
NOTE 9. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------
(In thousands; unaudited) 1998
- ------------------------- --------
<S> <C>
Binary Research Limited
Fair value of assets acquired $ 27,500
========
Cash paid $ 27,500
========
IBM Immune System Technology and Other Assets
Fair value of assets acquired $ 20,250
========
Expenses incurred $ 1,250
Liabilities assumed $ 3,000
Long-term obligation $ 8,000
Cash paid $ 8,000
--------
Total $ 20,250
========
</TABLE>
NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. SFAS 133 will be effective for Symantec
at the beginning of the June 2000 quarter for both annual and interim reporting
periods. Symantec is evaluating the potential impact of this accounting
pronouncement on required disclosures and accounting practices.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1933, as amended. These forward-looking statements
are subject to significant risks and uncertainties, including those identified
in the section "Factors That May Affect Future Results" and in the Company's
annual report on Form 10-K for the year ended March 31, 1998, and may cause
actual results to differ materially from those discussed in such forward-looking
statements. The forward-looking statements within this Form 10-Q are identified
by words such as "believes," "anticipates," "expects," "intends," "may" and
other similar expressions. However, these words are not the exclusive means of
identifying such statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. The Company undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring subsequent to the filing of this Form 10-Q with the Securities and
Exchange Commission. Readers are urged to carefully review and consider the
various disclosures made by the Company in this report and in the Company's
other reports filed with the Securities and Exchange Commission, including its
Form 10-K, that attempt to advise interested parties of the risks and factors
that may affect the Company's business.
FACTORS THAT MAY AFFECT FUTURE RESULTS
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS AND STOCK PRICE. Due to the factors
noted below, the Company's earnings and stock price have been and may continue
to be subject to significant volatility, particularly on a quarterly basis.
Symantec has previously experienced shortfalls in revenue and earnings from
levels expected by securities analysts and investors, which has had an immediate
and significant adverse affect on the trading price of the Company's common
stock. This may occur again in the future.
RAPID TECHNOLOGICAL CHANGE AND DEVELOPMENT RISKS. The Company participates in a
highly dynamic industry characterized by rapid change and uncertainty related to
new and emerging technologies and markets. The recent trend toward server-based
applications in networks and applications distributed over the Internet could
have a material adverse affect on sales of the Company's products. Future
technology or market changes may cause certain of Symantec's products to become
obsolete more quickly than expected.
The use of a Web browser (running on either a PC or network computer) to access
client/server systems is emerging as an alternative to the traditional desktop
access through operating systems which are resident on personal computers.
Should the functionality associated with such system access reduce the need for
Symantec's products, the Company's future net revenues and operating results may
be adversely affected.
PERSONAL COMPUTER AND HARDWARE GROWTH RATES. Fluctuations in customer spending
from software to hardware as the result of technological advancements in
hardware or price reductions of hardware have in the past, and may in the
future, result in reduced revenues which would have a material adverse affect on
operating results.
OPERATING SYSTEM. The release and subsequent customer acceptance of current or
enhanced operating systems are particularly important events that increase the
uncertainty and increase the volatility of Symantec's results. Should the
Company be unable to successfully develop products in a timely manner that
operate under existing or new operating systems, or should the new operating
systems delay the purchase of Symantec's products, the Company's future net
revenues and operating results would be materially adversely affected.
Microsoft has incorporated advanced utilities including telecommunications,
facsimile and data recovery utilities in Windows 95 and has included additional
product features in Windows 98, including enhanced disk repair, defragmentation,
system file maintenance, ISDN support and PPTP virtual private networking, that
may decrease
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
the demand for certain of the Company's products, including those currently
under development. Fax capabilities were dropped from Windows 98. Microsoft may
also include additional features in new versions of Windows NT that could
decrease demand for certain of the Company's products intended for Windows NT,
including those currently under development.
Additionally, as hardware vendors incorporate additional server-based network
management and security tools into network operating systems, the demand may
decrease for certain of the Company's products, including those currently under
development. Also, Symantec's competitors may license certain of their products
to Microsoft and OEMs for inclusion with their operating systems, add-on
products or hardware, which may also reduce the demand for certain of the
Company's products.
MICROSOFT WINDOWS 98. With the introduction of Microsoft's Windows 98 operating
system during the June 1998 quarter, the Company's ability to generate revenue
from many of its current products, and products currently under development,
could be less than anticipated in future periods due to reported
incompatibilities by end-users, and people delaying the purchase of Windows 98,
prior to purchasing Symantec's products. The Company believes that weak retail
software sales during the June 1998 quarter compared to the March 1998 quarter
were due, in part, to the release of Windows 98 at the end of the June 1998
quarter. This weakness could continue.
Symantec's stock price declined significantly within approximately 6 months
after the releases of Windows 3.1 and Windows 95. While there were a variety of
reasons for these declines in the stock price, there can be no assurance that a
similar decline will not occur following the release of Windows 98.
CONSOLIDATION IN THE INDUSTRY. Consolidation in the software industry continues
to occur, with competing companies merging or acquiring other companies, in
order to capture market share or expand product lines. As this consolidation
occurs, the nature of the market may change by having fewer but more dominant
players in the market or by providing consumers with fewer choices. Also,
certain of these companies offer a broader range of products, ranging from
desktop to enterprise solutions, whereas Symantec may not have the same breadth
of product and may not be able to compete effectively against certain
competitors. Any or all of these changes may have a significant adverse affect
on Symantec's future revenues and operating results.
DEPENDENCE ON THE INTERNET. Critical issues concerning the commercial use of the
Internet, including security, reliability, cost, ease of use, accessibility,
quality of service, potential tax or other government regulation, remain
unresolved and may affect the use of the Internet as a medium to support the
functionality of certain of the Company's products, or to distribute software.
Should the Company be unable to incorporate changes in the Internet environment
into its business operations and product development successfully or in a timely
manner, the Company's future net revenues and operating results could be
adversely affected.
PRICE COMPETITION. Price competition is often intense in the microcomputer
software market and is expected to continue to increase and become even more
significant in the future, resulting in reduced profit margins. Should
competitive pressures in the industry continue to increase, Symantec may be
required to reduce software prices and/or increase its spending on sales,
marketing and research and development as a percentage of net revenues,
resulting in lower profit margins. These actions may not be sufficient to offset
the impact of price competition in the Company's business and net revenues,
resulting in adverse impacts on revenue, income and cash flow.
Many of the Company's competitors have significantly reduced the price of their
products, especially in the anti-virus market. These practices may have a
material adverse impact on revenue in future periods.
INTEGRATED SUITES. In the future, Symantec and/or its competitors may provide
integrated suites of products. The price of integrated suites will likely be
significantly less than the total price of individual products included in these
suites when such products are sold separately. As a result, there may be a
negative impact to Symantec's revenue and operating income from selling
integrated product suites rather than individual products, as the lower price of
integrated product suites may not be offset by increases in the total volume of
suites sold. Additionally, integrated
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
suites may not achieve market acceptance and the Company's products may not be
effective in competing with products or integrated suites either currently in
the market or introduced in the future.
QUARTERLY BUYING PATTERNS; ABSENCE OF BACKLOG. Most customers tend to make the
majority of their purchases at the end of the fiscal quarter, in part because
they are able, or believe that they are able, to negotiate lower prices and more
favorable terms. This is particularly true of large corporate customers that
negotiate large site licenses near the end of each quarter. This end-of-period
buying pattern means that forecasts of quarterly and annual financial results
are particularly vulnerable to the risk that they will not be achieved, either
because expected sales do not occur or because they occur at lower prices or on
less favorable terms to the Company.
In recent quarters, a greater portion of the Company's revenues have been
generated by relatively large transactions, sometimes occurring at or near the
end of the quarter. Reliance on large transactions and an increase in the dollar
value of transactions that occur at the end of the quarter, results in increased
uncertainty relating to quarterly revenues, and increases the chances that the
Company's results could diverge from the expectations of investors and analysts.
The Company operates with relatively little backlog; therefore, if near-term
demand for the Company's products weakens in a given quarter, there could be an
immediate, material adverse effect on net revenues and on the Company's
operating results, which would likely result in a significant and precipitous
drop in the Company's stock price.
RETAIL DISTRIBUTION CHANNEL. A majority of the Company's sales, are made through
the retail distribution channel, which is subject to unpredictable fluctuations
in consumer demand, which declined unexpectedly during the first quarter of
fiscal 1999 and had an adverse effect on the Company's results of operations for
that quarter. The Company's retail distribution customers also carry the
products of Symantec's competitors. These retail distributors may have limited
capital to invest in inventory, and their decisions to purchase the Company's
products is partly a function of pricing, terms and special promotions offered
by Symantec, as well as by its competitors over which the Company has no control
and which it cannot predict.
Agreements with distributors are generally nonexclusive and may be terminated by
either party without cause. Certain distributors and resellers have experienced
financial difficulties in the past. Two of Symantec's distributors each
accounted for more than ten percent of the Company's revenues during the June
1998 quarter. Distributors that account for significant sales of the Company may
experience financial difficulties in the future, which could lead to reduced
sales or write-offs and could adversely affect operating results of the Company.
NEW DISTRIBUTION CHANNELS. Symantec may not be able to develop an effective
method of distributing its software products utilizing each of the rapidly
evolving software distribution channels, including the Internet. The presence of
new channels could adversely impact existing channels and/or product pricing,
which could have a material adverse impact on the Company's future revenues and
profitability.
SITE LICENSES. Symantec sells volume license programs (corporate site licenses)
through the distribution channel and through corporate resellers. Average site
license revenue per unit is typically lower than the average revenue per unit
from retail versions shipped through the retail distribution channel. Due to a
possible change in channel mix, Symantec may increase unit sales under volume
licensing programs in the future, which could have a material adverse impact on
the operating results of the Company.
RELIANCE ON JOINT BUSINESS ARRANGEMENTS. Symantec has entered into various
development or joint business arrangements for the purpose of developing new
software products and enhancements to existing software products as well as for
gaining presence in new markets and may continue to do so in the future.
Depending on the nature of
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
each such arrangement, the development, distribution, sale or marketing of the
resulting product may be controlled either by Symantec or its business partner.
Products resulting from joint business arrangements may not be technologically
successful, may not achieve market acceptance and may not be able to compete
with products either currently in the market or introduced in the future.
Symantec distributes certain of its products through value-added resellers
("VAR") and independent software vendors ("ISV") whereby Symantec's products are
included with hardware products prior to sale through retail channels. These
licensing agreements are generally non-exclusive and do not require the VAR or
ISV to make minimum purchases. If the Company is not successful in maintaining
its current relationships and securing license agreements with additional VARs
and ISVs, or if the Company's VAR and ISV customers are not successful in
selling their products, the Company's future net revenues and operating results
may be adversely affected.
ACQUISITIONS. Symantec has completed a number of acquisitions and may acquire
other companies and technology in the future. Acquisitions involve a number of
special risks, including the diversion of management's attention to integrate
the operations and personnel of the acquired companies in an efficient and
timely manner, the retention of key employees, the burden of presenting a
unified corporate image, the integration of acquired products and of research
and development and sales efforts. In addition, because the employees of
acquired companies have frequently remained in their existing, geographically
diverse locations, the Company has not achieved certain economies of scale that
might otherwise have been realized.
Symantec typically incurs significant expenses in connection with its
acquisitions, which have a significant adverse impact on the Company's
profitability and financial resources. Future acquisitions may have a
significant adverse impact on the Company's future profitability and financial
resources.
CHANNEL FILL. The Company's pattern of net revenues and earnings may be affected
by "channel fill." Distributors may fill their distribution channels in
anticipation of price increases, sales promotions or incentives. Distributor
inventories may be decreased between the date Symantec announces a new version
or new product and the date of release, because distributors, dealers and end
users often delay purchases, cancel orders or return products in anticipation of
the availability of the new version or new product. The impact of channel fill
is somewhat mitigated by the Company's deferral of revenue associated with
distributor and reseller inventories estimated to be in excess of appropriate
levels; however, net revenues may still be materially affected favorably or
adversely by the effects of channel fill, particularly in periods where a large
number of new products are simultaneously introduced.
Channels may also become filled simply because the distributors do not sell
their inventories to retail distribution or end users as anticipated. If
sell-through does not occur at a sufficient rate, distributors will delay
purchases or cancel orders in later periods or return prior purchases in order
to reduce their inventories. While such order delays or cancellations can cause
fluctuations in net revenues from one quarter to the next, the impact is
substantially mitigated by the Company's deferral of revenue associated with
inventories estimated to be in excess of appropriate levels in the distribution
and retail channels. A material adverse impact on revenue, however, can occur.
PRODUCT RETURNS. Product returns can occur when the Company introduces upgrades
and new versions of products or when distributors or retailers have excess
inventories. Symantec's return policy allows its distributors, subject to
certain limitations, to return purchased products in exchange for new products
or for credit towards future purchases. End users may return products through
dealers and distributors within a reasonable period from the date of purchase
for a full refund, and retailers may return older versions of the Company's
products. The Company estimates and maintains reserves for product returns.
However, future returns could exceed the reserves established by the Company,
which could have a material adverse affect on the operating results of the
Company.
FOREIGN OPERATIONS. A significant portion of Symantec's revenues, manufacturing
costs and operating expenses are transacted in foreign currencies. As a result,
the Company's results may be materially and adversely affected by fluctuations
in currency exchange rates, as well as increases in duty rates, exchange or
price controls or other
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
restrictions on foreign currencies. The Company expects that its non-U.S. dollar
denominated sales activities may increase in the future. Continued weakness in
the Asian currency markets could materially and adversely impact Symantec's
revenue.
The Company's international operations are subject to certain risks common to
international operations, such as government regulations, import restrictions,
currency fluctuations, economic volatility, repatriation restrictions and, in
certain jurisdictions, reduced protection for the Company's copyrights and
trademarks. Symantec utilizes natural hedging to mitigate Symantec's foreign
currency transaction exposure and hedges certain residual balance sheet
positions through the use of one-month forward contracts. These strategies may
not continue to be effective, and the Company may not be successful in
accurately forecasting transaction gains or losses.
SALES AND MARKETING. Symantec believes substantial sales and marketing efforts
are essential to achieve revenue growth and to maintain and enhance Symantec's
competitive position. There can be no assurance that these sales and marketing
efforts will be successful.
TECHNICAL SUPPORT. Consistent with many companies in the software industry,
technical support costs comprise a significant portion of the Company's
operating costs and expenses. The Company's technical support levels are based,
in a large part, on projections of future sales levels. Over the short term, the
Company may not be able to respond to fluctuations in customer demand for
support services or modify the format of the Company's support services to
compete with changes in support services provided by competitors. While the
Company performs extensive quality control review over its technical support
services provided by corporate personnel and, to a lesser extent, over support
services outsourced to third-party vendors, customer satisfaction with the
services rendered may not be favorable. In the event of customer
dissatisfaction, future product and upgrade sales to that customer base may be
negatively impacted. Fee-based technical support services did not generate
material revenues in any fiscal period presented and are not expected to
generate material revenues in the near future.
UNCERTAINTY OF RESEARCH AND DEVELOPMENT EFFORTS. Symantec believes significant
research and development expenditures will be necessary in order to remain
competitive. While the Company performs extensive usability and beta testing of
new products, any products currently being developed by Symantec may not be
technologically successful, resulting products may not achieve market
acceptance, and the Company's products may not be effective in competing with
competitors' products either currently in the market or introduced in the
future.
LENGTH OF PRODUCT DEVELOPMENT CYCLE. The length of Symantec's product
development cycle has generally been greater than Symantec originally expected.
Although such delays have undoubtedly had a material adverse affect on
Symantec's business, Symantec is not able to quantify the magnitude of net
revenues that were deferred or lost as a result of any particular delay because
Symantec is not able to predict the amount of net revenues that would have been
obtained had the original development expectations been met. Delays in future
product development are likely to occur and could have a material adverse affect
on the amount and timing of future revenues. Due to the inherent uncertainties
of software development projects, Symantec does not generally disclose or
announce the specific expected shipment dates of the Company's product
introductions.
OPERATING LEVERAGE. Consistent with many companies in the software industry,
employee and facility related expenditures comprise a significant portion of the
Company's operating expenses. The Company's expense levels are based, in a large
part, on projections of future revenue levels. Given the fixed nature of these
expenses over the short term, if revenue levels fall below expectations,
Symantec's operating results are likely to be significantly and adversely
affected.
MANAGEMENT OF EXPANDING OPERATIONS. Symantec continually evaluates its product
and corporate strategy and has in the past and will in the future undertake
organizational changes, product and marketing strategy modifications which are
designed to maximize market penetration, maximize use of limited corporate
resources and
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
develop new products and product channels. These organizational changes increase
the risk that objectives will not be met due to the allocation of valuable
limited resources to implement changes. Further, due to the uncertain nature of
any of these undertakings, these efforts may not be successful, and that the
Company may not realize any benefit from these efforts.
EMPLOYEE RISK. Competition in recruiting personnel in the software industry is
intense. Symantec believes that its future success will depend in part on its
ability to recruit and retain highly skilled management, marketing and technical
personnel. Symantec believes that it must provide personnel with a competitive
compensation package, which necessitates the continued availability of stock
options which requires ongoing stockholder approval.
BUSINESS DISRUPTION. A disruption in communications between the Company's
geographically dispersed order entry and product shipping centers, particularly
at the end of a fiscal quarter, would likely result in an unexpected shortfall
in net revenues and could result in an adverse impact on operating results.
Disruptions in communications and Internet connectivity may also cause delays in
customer access to Symantec's Internet-based services or product sales. A
business disruption could occur as a result of natural disasters or the
interruption in service by communications carriers, and may cause delays in
product development that could adversely impact future net revenues of the
Company.
LITIGATION. Symantec is involved in a number of judicial and administrative
proceedings incidental to its business. The Company intends to defend and/or
pursue all of these lawsuits vigorously and, although an unfavorable outcome
could occur in one or more of the cases, the final resolution of these lawsuits,
individually or in the aggregate, is not expected to have a material adverse
affect on the financial position of the Company. However, depending on the
amount and timing of an unfavorable resolution of these lawsuits, it is possible
that the Company's future results of operations or cash flows could be
materially adversely affected in a particular period (See Note 5 of Notes to
Consolidated Financial Statements in this Form 10-Q.)
INTELLECTUAL PROPERTY RIGHTS. Symantec regards its software as proprietary and
relies on a combination of copyright, patent and trademark laws and license
agreements in an attempt to protect its rights. Despite these precautions, it
may be possible for unauthorized third parties to copy aspects of Symantec's
products or to obtain and use information that Symantec regards as proprietary.
All of Symantec's products are protected by copyright, and Symantec has a number
of patents and patent applications pending. However, existing patent and
copyright laws afford limited practical protection. In addition, the laws of
some foreign countries do not protect Symantec's proprietary rights in its
products to the same extent as do the laws of the United States. Symantec's
products are not copy protected.
As the number of software products in the industry increases and the
functionality of these products further overlap, Symantec believes that software
developers will become increasingly subject to infringement claims. This risk is
potentially greater for companies, such as Symantec, that obtain certain of
their products through publishing agreements or acquisitions, since they have
less direct control over the development of those products.
In addition, an increasing number of patents are being issued that are
potentially applicable to software, and allegations of patent infringement are
becoming increasingly common in the software industry. It is impossible to
ascertain all possible patent infringement claims because new patents are being
issued continually, the subject of patent applications is confidential until a
patent is issued, and it may not be apparent even from a patent that has already
been issued whether it is potentially applicable to a particular software
product. This increases the risk that Symantec's products may be subject to
claims of patent infringement. Although such claims may ultimately prove to be
without merit, they are time consuming and expensive to defend. Symantec has
been involved in disputes claiming patent infringement in the past, is currently
involved in a number of such disputes and litigation, and may be involved in the
future in such disputes and/or litigation. If Symantec is alleged to infringe
one or more patents, it may choose to litigate the claim and/or seek an
appropriate license. If litigation were to commence and a license were not
available on reasonable terms or if another party were found to have a valid
patent claim against Symantec,
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
such a result could have a material adverse affect on Symantec's business,
operating results and financial condition (See Note 5 of Notes to Consolidated
Financial Statements in this Form 10-Q.)
SOFTWARE DEFECTS AND PRODUCT LIABILITY. Software products frequently contain
errors or defects, especially when first introduced or when new versions or
enhancements are released. In the past, for example, Symantec's anti-virus
software products have incorrectly detected viruses which do not exist. Although
the Company has not experienced any material adverse effects resulting from any
such defects or errors to date, defects and errors could be found in current
versions, future upgrades to current products or newly developed and released
products, despite testing prior to release. Software defects could result in
delays in market acceptance or unexpected reprogramming costs, which could have
a material adverse affect on the Company's operating results. While Symantec has
not been the target of software viruses specifically designed to impede the
performance of the Company's products, there can be no assurance that such
viruses will not be created in the future.
Most of the Company's license agreements with its customers contain provisions
designed to limit the exposure to potential product liability claims. It is
possible, however, that the limitation of liability provisions contained in such
license agreements may not be valid as a result of federal, state, local or
foreign laws or ordinances or unfavorable judicial decisions. A successful
product liability claim could have a material adverse affect on the Company's
business, operating results and financial condition.
EUROCURRENCY CONVERSION. Symantec conducts business and maintains operations in
Europe. Symantec will most likely be affected by the introduction of a single
currency, the euro. Symantec has a taskforce in place that is reviewing the
impact of this event on its systems, business and operations and expects to
implement the system and business modifications necessary to be euro compliant
by January 1, 1999.
It is not possible to fully assess the impact of the single currency on our
European sales or whether changes being made by Symantec will be successful. As
a result, changes in the European market as a result of the euro and/or
Symantec's response to the euro may have an adverse impact on revenues and
results from operations.
YEAR 2000 - PRODUCT LIABILITY. While the Company believes that most of its
currently developed and actively marketed products are Year 2000 compliant for
significantly all functionality, these software products could contain errors or
defects related to the Year 2000. Versions of the Company's products that are
not the most currently released or that are not currently being developed may
not be Year 2000 compliant. The Company sells some of its older product lines,
which are not being actively developed and updated, and such products are also
not necessarily Year 2000 compliant. Symantec is currently party to a lawsuit
related to the alleged inability of pre-version 4.0 Norton AntiVirus products to
function properly in respect to Year 2000. Symantec believes that this lawsuit
has no merit and intends to defend itself vigorously. The final resolution of
this lawsuit is not expected to have a material adverse affect on the results of
operations and financial condition of the Company, although it is not possible
to estimate the possible loss. Depending, however, on the amount and timing of
an unfavorable resolution of this lawsuit, it is possible that the Company's
future results of operations or cash flows could be materially adversely
affected in a particular period (See Note 5 of Notes to Consolidated Financial
Statements in this Form 10-Q.)
YEAR 2000 - CORPORATE SYSTEMS. The Company has recently completed a major
evaluation of its applications systems and databases and is modifying or
replacing portions of its hardware and associated software to enable its
operational systems and networks to function properly with respect to dates
leading up to January 1, 2000 and thereafter. The Company continues to evaluate
system interfaces with third-party systems, such as those of key suppliers,
distributors and financial institutions, for Year 2000 functionality. The
Company expects the process of evaluating third-party Year 2000 compliance to be
an ongoing process through the Year 2000. The Year 2000 project cost is expected
to be less than $0.5 million. The process to ensure the Company's systems are
Year 2000 compliant is expected to be significantly completed during the 1998
calendar year, with extensive testing to be conducted during 1999. The Company
believes that, with its conversions to new software and modifications to
existing computer hardware and software, the Year 2000 issue will not pose
significant operational problems for its
19
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
computer systems. However, if remaining modifications and conversions are not
made, or are not completed in a timely manner, the Year 2000 issue could have a
material adverse impact on the operations of the Company. Additionally, the
systems of other companies with which Symantec does business may not address
Year 2000 problems on a timely basis, which could have an adverse effect on
Symantec's systems or business transactions. As testing of Year 2000
functionality of the Company's systems must occur in a simulated environment,
the Company will not be able to test fully all Year 2000 interfaces and
capabilities prior to Year 2000. The Company believes that its exposure on Year
2000 issues is not material to its business as a whole and has not deferred any
other information systems projects as a result of its focus on Year 2000
compliance issues.
20
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
OVERVIEW
Symantec develops utility software for business and personal computing.
Symantec's business strategy is to satisfy customer needs by developing and
marketing products across multiple operating platforms that make customers
productive and keep their computers safe and reliable - anywhere, anytime.
Founded in 1982, the Company has offices in the United States, Canada, Mexico,
Asia, Australia, New Zealand, Europe, Africa and South America.
Symantec has a 52/53-week fiscal accounting year. The June 30, 1998 quarter
closed on July 3, 1998 and comprised 13 weeks of revenue and expense activity,
while the comparable prior year period comprised 14 weeks.
RESULTS OF OPERATIONS
During the June 1998 quarter, the Company acquired certain assets of
International Business Machines ("IBM") and Binary Research Limited ("Binary")
(See Notes 7 and 8 of Notes to Consolidated Financial Statements in this Form
10-Q.) The results of operations from the date of the acquisition of Binary have
been included in Symantec's results of operations for the June 1998 quarter.
The following table sets forth each item from the consolidated statements of
operations as a percentage of net revenues and the percentage change in the
total amount of each item for the periods indicated.
<TABLE>
<CAPTION>
Three Months
Ended Percent
June 30, Change
---------------- in Dollar
(Unaudited) 1998 1997 Amounts
- ---------- ---- ---- ---------
<S> <C> <C> <C>
Net revenues 100% 100% 13%
Cost of revenues 13 15 (3)
---- ----
Gross margin 87 85 16
Operating expenses:
Research and development 16 16 16
Sales and marketing 46 46 13
General and administrative 6 7 2
Acquired in-process research and
development 19 -- *
Litigation judgment 4 -- *
---- ----
Total operating expenses 91 69 51
---- ----
Operating income (loss) (4) 16 *
Interest income 3 2 54
Interest expense -- -- 29
Other income (expense), net 1 -- *
---- ----
Income before income taxes -- 18 (98)
Provision for income taxes 3 4 4
---- ----
Net income (loss) (3)% 14% *
==== ====
</TABLE>
* percentage change is not meaningful.
21
<PAGE> 22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
NET REVENUES.
Net revenues increased 13% from approximately $135 million in the June 1997
quarter to $153 million in the June 1998 quarter. Revenue growth in the June
1998 quarter compared to the June 1997 quarter occurred in each of Symantec's
three business units: Security and Assistance; Remote Productivity Solutions;
and Internet Tools, Royalties and Other. The increase in total revenues between
the June 1998 and 1997 quarters was due primarily to increases in site license
and OEM revenues from transactions that closed at the end of the quarter (See
further discussion in Item 2: Factors That May Affect Future Results: Quarterly
Buying Patterns.)
Revenues from retail sales were somewhat lower in the June 1998 quarter compared
to the June 1997 quarter and also less than in the March 1998 quarter, primarily
due to a general softness in the retail markets in the United States and Japan,
which the Company attributes to the anticipated release of Windows 98, and due
to intense price competition in the anti-virus market. (See further discussion
in Item 2: Factors That May Affect Future Results:
Microsoft Windows 98 and Price Competition.)
BUSINESS UNITS.
The Security and Assistance business unit is dedicated to being indispensable to
customers' daily use of computers by increasing productivity and keeping
computers safe and reliable. The Security and Assistance business unit comprised
approximately 47% and 48% of net revenues in the quarters ended June 30, 1998
and 1997, respectively. Increased net revenues for the business unit in the
quarter ended June 30, 1998 compared to the quarter ended June 30, 1997 were
primarily related to the Ghost product (disk-cloning technology) acquired as
part of the Binary agreement. In addition, Norton Antivirus revenues increased
as a result of the IBM agreement.
The Remote Productivity Solutions business unit helps remote professionals
remain productive and work reliably, anywhere, anytime. The Remote Productivity
Solutions business unit comprised approximately 36% and 38% of the Company's net
revenues for the quarters ended June 30, 1998 and 1997, respectively. Increased
net revenues for the business unit in the quarter ended June 30, 1998 were
primarily related to sales of Windows 95 versions of pcANYWHERE and ACT!,
partially offset by a decrease in sales of WinFax Pro for Windows 95.
Internet Tools, Royalties and Other, which includes products providing an easy
to use Java development environment, as well as revenue streams from the sale of
certain of the Company's software product lines and technologies, and revenues
from products nearing the end of their life cycles, comprised approximately 17%
and 14% of the Company's net revenues in the quarters ended June 30, 1998 and
1997, respectively. The business unit's net revenues increased in the quarter
ended June 30, 1998 over the quarter ended June 30, 1997 primarily due to
increased product sales in Internet Tools, which included $6 million of revenue
from a contract with a single customer.
Also included in Internet Tools, Royalties and Other are royalties and other
revenue of approximately $16 million and $14 million recorded in the quarters
ended June 30, 1998 and 1997, respectively. These royalties and other revenues
primarily related to the sale of certain software products, technologies and
tangible assets to JetForm Corporation ("JetForm") and the Hewlett-Packard
Company ("Hewlett-Packard") during fiscal 1997. Payments from JetForm were
higher in the quarter ended June 30, 1998 over the quarter ended June 30, 1997
primarily due to an amendment to the JetForm agreement revising the payment
schedule. This increase in JetForm payments was partially offset by a decrease
in royalties from Hewlett-Packard during the June 1998 quarter compared to the
June 1997 quarter.
22
<PAGE> 23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
INTERNATIONAL. Net revenues from international sales outside of North America
were $49 million and $40 million and represented 32% and 30% of total net
revenues in the quarters ended June 30, 1998 and 1997, respectively. The
increase in net revenues was the result of sales growth in Europe, Middle East
and Africa ("EMEA"); Japan and Latin America.
Foreign exchange rate fluctuations during the quarter ended June 30, 1998
compared to the quarter ended June 30, 1997 did not materially affect quarterly
revenue.
GROSS MARGIN.
Gross margin represents net revenues less cost of revenues. Cost of revenues
consists primarily of manufacturing expenses, costs for producing manuals,
packaging costs, royalties paid to third parties under publishing contracts and
amortization and write-off of capitalized software.
Gross margins increased to 87% of net revenues in the June 1998 quarter from 85%
in the June 1997 quarter.
Factors contributing to an increase in gross margin percentage during the June
1998 quarter compared to the June 1997 quarter include a change in product mix
favoring the Company's higher margin site license and OEM business. Gross margin
was also favorably impacted by reductions in royalty expense as a result of
reduced reliance on third party developers and the reversal of royalties
previously accrued as a result of the license and certain asset purchase
agreement reached with IBM in the June 1998 quarter (See Note 7 of Notes to
Consolidated Financial Statements in this Form 10-Q.) These reductions in cost
of sales were partially offset by increases in obsolescence expense, due to a
large number of upgrades expected in the September and December 1998 quarters.
In addition, June 1998 royalty revenues from JetForm and Hewlett-Packard,
totalling $15 million, had minimal costs of revenue.
CAPITALIZED SOFTWARE. During the June 1998 quarter, Symantec capitalized
approximately $14 million of software technology acquired as part of the
Company's acquisition of certain assets of Binary (See Note 8 of Notes to
Consolidated Financial Statements in this Form 10-Q.)
Amortization of capitalized software, including amortization and write-off of
both purchased product rights and capitalized software development expenses,
totaled $0.7 million and $0.3 million for the June 1998 and 1997 quarters,
respectively. Symantec expects capitalized software amortization to increase in
future periods. Symantec is expected to record approximately $1 million of
capitalized software amortization per quarter, over the next 12 quarters,
related to amounts capitalized as part of the acquisition of Binary.
RESEARCH AND DEVELOPMENT EXPENSES.
Research and development expenses remained flat as a percentage of revenue at
16% for both the June 1998 and 1997 quarters. Research and development expenses
are charged to operations as incurred.
Research and development expenses increased 16% to $25 million in the June 1998
quarter from $22 million in the June 1997 quarter primarily due to growth in
salaries and wages, third-party consulting fees and legal expenses related to
product and copyright infringement claims. The growth in salaries and wages is
partially due to the acquisition of certain assets of Binary (See Note 8 of
Notes to Consolidated Financial Statements in this Form 10-Q.)
SALES AND MARKETING EXPENSES.
Sales and marketing expenses increased 13% from $62 million in the June 1997
quarter to $70 million in the June 1998 quarter. As a percentage of revenue,
these expenses remained flat at 46% of net revenues in the June 1998 and 1997
quarters. The absolute dollar increase in sales and marketing expenses in the
June 1998 quarter compared to the June 1997 quarter primarily relates to growth
in salaries and wages and increased advertising expenditures for the Company's
Norton Antivirus products.
23
<PAGE> 24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
GENERAL AND ADMINISTRATIVE EXPENSES.
General and administrative expenses totaled approximately $9 million in the June
1998 and June 1997 quarters. General and administrative expenses were 6% of net
revenues during the June 1998 quarter compared to 7% of net revenues during the
June 1997 quarter.
IN-PROCESS RESEARCH AND DEVELOPMENT EXPENSES.
In-process research and development expenses were approximately $29 million in
the June 1998 quarter. In connection with the acquisitions of certain assets and
technologies of IBM and Binary in the June 1998 quarter, Symantec recognized
in-process research and development expenses of $16 million and $13 million,
respectively (See Notes 7 and 8 of Notes to Consolidated Financial Statements in
this Form 10-Q.)
LITIGATION JUDGMENT.
Litigation judgment expenses totaled approximately $6 million in the June 1998
quarter. These expenses related to a judgment by a Canadian court on a
decade-old copyright action assumed by Symantec when it purchased Delrina
Corporation (See Note 5 of Notes to Consolidated Financial Statements in this
Form 10-Q.)
INTEREST INCOME, INTEREST EXPENSE AND OTHER INCOME (EXPENSE), NET.
Interest income was approximately $4 million and $3 million in the quarters
ended June 30, 1998 and 1997, respectively. Interest income increased 54% in the
quarter ended June 30, 1998 over the quarter ended June 30, 1997 primarily due
to higher average invested cash and investment balances and due to interest
income received from the Internal Revenue Service, partially offset by lower
interest rates on invested cash and investments during the June 1998 quarter.
Interest expense was approximately $0.3 million in each of the quarters ended
June 30, 1998 and 1997. Interest expense principally relates to Symantec's
convertible subordinated debentures.
Other income (expense) was approximately $3 million and ($0.4) million in the
quarters ended June 30, 1998 and 1997, respectively. Other income (expense)
primarily increased due to a foreign exchange gain realized during the June 1998
quarter, as a result of the paydown of an intercompany loan and also comprised
other foreign currency exchange gains and losses from fluctuations in currency
exchange rates.
INCOME TAX PROVISION.
Excluding the $29 million charge for in-process research and development
expenses, the effective tax rate on income before income taxes for the three
months ended June 30, 1998 was 32%. This rate is lower than the U.S. federal
statutory tax rate primarily due to a lower statutory tax rate on the Company's
Irish operations. The effective tax rate for the three months ended June 30,
1997 was 23%.
The tax provision for the three months ended June 30, 1998 consists of two
items: a $10 million (or 32% effective tax rate) provision on income before
income taxes of $30 million, which excludes a $29 million charge for in-process
research and development expenses. In addition, the tax provision includes a $4
million tax benefit on the $29 million charge for in-process research and
development. A valuation allowance has been established for the portion of the
deferred tax asset attributable to the in-process research and development
charge that is not expected to be realized within five years.
LIQUIDITY AND CAPITAL RESOURCES.
Cash, short-term investments and long-term investments decreased $10 million to
$250 million at June 30, 1998 from $260 million at March 31, 1998. This decrease
was largely due to the acquisition of certain assets of Binary for $27.5 million
and an $8 million payment to IBM during the quarter ended June 30, 1998 related
to the acquisition of certain assets (See Notes 7 and 8 of Notes to Consolidated
Financial Statements in this Form 10-Q.)
24
<PAGE> 25
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
In addition to cash, short-term investments and long-term investments of $250
million, the Company has $63 million of restricted investments related to
collateral requirements under certain lease agreements entered into during
fiscal 1997. Symantec is obligated under these lease agreements for two existing
office buildings, one parcel of land and one office building under construction
in Cupertino, California to maintain a restricted cash balance invested in U.S.
treasury securities with maturities not to exceed three years. In accordance
with the lease terms, these funds are not available to meet operating cash
requirements.
Net cash provided by operating activities was $32 million and was comprised of
the Company's net loss of $5 million, offset by non-cash related expenses of $33
million and a net decrease in net assets and liabilities, excluding effects of
acquisitions, of $4 million.
Net trade accounts receivable decreased $3 million to $62 million at June 30,
1998 from $65 million at March 31, 1998 primarily due to improvements in
collections in each of the Company's international regions.
On June 9, 1998, the Board of Directors of Symantec authorized the repurchase of
up to 5% of Symantec's outstanding common stock before December 31, 1998. Among
other purposes, the shares will be used primarily for employee stock purchase
programs and option grants. The Company did not repurchase any shares during the
June 1998 quarter. Subsequent to June 30, 1998 and through July 31, 1998, the
Company had repurchased approximately 610,000 shares at prices ranging from
$24.38 to $27.56 for an aggregate amount of approximately $16.0 million.
The Company recently renewed its $10 million line of credit which expires in May
2000. The Company was in compliance with the debt covenants for this line of
credit as of June 30, 1998. At June 30, 1998, there were no borrowings and less
than $1 million of standby letters of credit outstanding under this line. Future
acquisitions by the Company may cause the Company to be in violation of the line
of credit covenants. However, the Company believes that if the line of credit
were canceled or amounts were not available under the line, there would not be a
material adverse impact on the financial results, liquidity or capital resources
of the Company.
If Symantec were to sustain significant losses, the Company could be required to
reduce operating expenses, which could result in product delays; reassess
acquisition opportunities, which could negatively impact the Company's growth
objectives; and/or pursue further financing options. The Company believes
existing cash and short-term investments and cash generated from operating
results will be sufficient to fund operations for the next year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
25
<PAGE> 26
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item is incorporated by reference to Note 5 of
Notes to Consolidated Financial Statements included herein on page 9 of this
Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed as part of this Form 10-Q:
<TABLE>
<S> <C>
10.01 Office building lease, as amended, dated as of September 1, 1997, by and
between Colorado Place Partners, LLC and Symantec Corporation regarding
property located in Santa Monica, California.
10.02 Office building lease, as amended, dated as of December 17, 1996, by and
between Delrina (Canada) Corporation, Delrina Corporation, and Sherway
Centre Limited regarding property located in Toronto, Canada.
10.03 Office building lease, dated as of April 9, 1998 by and between Hill
Samuel Bank Limited and Symantec (UK) Limited and Symantec Corporation
regarding property located in Maidenhead, United Kingdom.
10.04 Asset purchase agreement, dated as of June 24, 1998, among Symantec
Corporation and its wholly owned subsidiary, Symantec Limited and Binary
Research Ltd. and its wholly-owned subsidiary, Binary Research
International, Inc.
10.05 Asset purchase agreement, as amended, dated as of June 29, 1998 by and
between Delrina and JetForm.
27.01 Financial Data Schedule for the Three Months Ended June 30, 1998.
27.02 Financial Data Schedule for the Three Months Ended June 30, 1997
(restated).
</TABLE>
(b) Reports on Form 8-K
None
ITEMS 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
26
<PAGE> 27
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, thereunto duly authorized.
Date: August 11, 1998 SYMANTEC CORPORATION
By /s/ Howard A. Bain III
--------------------------------------
Howard A. Bain III
Vice President/Worldwide
Operations and Chief Financial Officer
(duly authorized officer)
/s/ Ronald W. Kisling
--------------------------------------
Ronald W. Kisling
Vice President Controller and Chief
Accounting Officer
27
<PAGE> 28
APPENDIX TO EXHIBITS
Exhibits. The following exhibits are filed as part of this Form 10-Q:
<TABLE>
<S> <C>
10.01 Office building lease, as amended, dated as of September 1, 1997, by and
between Colorado Place Partners, LLC and Symantec Corporation regarding
property located in Santa Monica, California.
10.02 Office building lease, as amended, dated as of December 17, 1996, by and
between Delrina (Canada) Corporation, Delrina Corporation, and Sherway
Centre Limited regarding property located in Toronto, Canada.
10.03 Office building lease, dated as of April 9, 1998 by and between Hill
Samuel Bank Limited and Symantec (UK) Limited and Symantec Corporation
regarding property located in Maidenhead, United Kingdom.
10.04 Asset purchase agreement, dated as of June 24, 1998, among Symantec
Corporation and its wholly owned subsidiary, Symantec Limited and Binary
Research Ltd. and its wholly-owned subsidiary, Binary Research
International, Inc.
10.05 Asset purchase agreement, as amended, dated as of June 29, 1998 by and
between Delrina and JetForm.
27.01 Financial Data Schedule for the Three Months Ended June 30, 1998.
27.02 Financial Data Schedule for the Three Months Ended June 30, 1997
(restated).
</TABLE>
<PAGE> 1
Exhibit 10.01
THIRD AMENDMENT TO LEASE
THIS Third Amendment to Lease ("AGREEMENT") is made and entered into as of
September 1, 1997, by and between COLORADO PLACE PARTNERS, LLC, a Delaware
limited liability company ("LANDLORD") and SYMANTEC CORPORATION, a Delaware
corporation ("TENANT").
1. RECITALS.
1.1 LEASE. Landlord and Tenant are parties to that certain Office Lease
dated April 10, 1991 (the "ORIGINAL LEASE") as amended by an Amendment to Lease
and Agreement Re Additional Space dated January 24, 1992 (the "FIRST AMENDMENT")
and a Second Amendment to Lease dated April 11, 1995 (the "SECOND AMENDMENT")
(collectively, the "LEASE") for premises located in an office project in Santa
Monica, California, all as more particularly described therein. All terms
defined in the Original Lease shall have the same meanings when used in this
Agreement, unless a different meaning is clearly expressed herein.
1.2 EXPANSION SPACE. Pursuant to Section 7 of the Second Amendment,
Landlord was obligated to deliver to Tenant and Tenant was obligated to lease
the "Expansion Space" effective on January 8, 1996. Landlord identified the
location of the "Expansion Space" (13,010 square feet of Rentable Area in
Building "A" of the Project) by letter to Tenant dated October 30, 1995. The
Expansion Space was not delivered to nor occupied by Tenant. Landlord has leased
the Expansion Space to a third party and, notwithstanding the foregoing, Tenant
has paid rent on the Expansion Space as if leased and occupied by Tenant.
1.3 NEW ARRANGEMENT. Landlord and Tenant desire to set forth their
understanding regarding the leasing of the Expansion Space and their new
agreement regarding such space, rent therefore and lease of other space by
Landlord to Tenant. The parties acknowledge that Tenant has paid "rent" for the
Expansion Space through August 31, 1997 (even though leased to and
occupied by a third party), and that Tenant will lease other additional space,
in lieu of and smaller than the Expansion Space, to be delivered by Landlord
upon execution and delivery hereof, as set forth in this Agreement, although
Tenant will commence paying "rent" on such smaller additional space on September
1, 1997.
2. LEASE OF F-3 ADDITIONAL SPACE.
2.1 F-3 ADDITIONAL SPACE. Effective on the F-3 Additional Space
Commencement Date (as defined in Section 2.2 below), Section 1.1 of the Lease is
hereby amended to add to the Premises three thousand fifty-one (3,051) square
feet of Rentable Area on the third (3rd) floor of Building "F". Said additional
3,051 square feet of Rentable Area shall hereinafter be referred to as the "F-3
ADDITIONAL SPACE." Exhibit "B" to the Lease, therefore, is supplemented by the
addition of the Exhibit "A" attached hereto.
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<PAGE> 2
2.2 F-3 ADDITIONAL SPACE TERM. The Term of the Lease with respect to the
F-3 Additional Space shall commence on the date on which Landlord delivers the
F-3 Additional Space to Tenant pursuant to this Agreement (herein called the
"F-3 ADDITIONAL SPACE COMMENCEMENT DATE"), and shall end on October 31, 2000,
coterminous with the term for the other Premises under the Lease. Immediately
after the F-3 Additional Space Commencement Date, Landlord and Tenant shall
execute and acknowledge an agreement in the form attached hereto as Exhibit "B,"
setting forth the F-3 Additional Space Commencement Date. In no event shall this
Agreement or the Lease be void, voidable or subject to termination nor shall
Landlord be liable to Tenant for any loss or damage resulting from Landlord's
inability to deliver the F-3 Additional Space to Tenant, but F-3 Additional
Space Rent (defined in Section 3.1 below) shall abate on a daily basis for each
day of delay caused by Landlord in delivery of the F-3 Additional Space pursuant
to Section 2.3 below.
2.3 DELIVERY OF F-3 ADDITIONAL SPACE. The F-3 Additional Space has been
improved for a previous occupancy by a third party. Upon execution and delivery
of this Agreement by Landlord and Tenant, Landlord shall deliver the F-3
Additional Space to Tenant in "broom clean" condition with the existing Tenant
Work therein in good condition, ordinary wear and tear excepted, and upon such
delivery: (a) the Building's sanitary, electrical, heating, ventilation and
air-conditioning systems shall be operational to the extent necessary to service
the F-3 Additional Space; (b) Landlord shall provide reasonable access to the
F-3 Additional Space to Tenant, its agents, employees, licensees and invitees so
that the F-3 Additional Space may be used without substantial interference; and
(c) Landlord shall provide Tenant the number of parking passes set forth in
Article 5 hereof with respect to the F-3 Additional Space.
2.4 ACCEPTANCE OF ADDITIONAL SPACE. By entering into possession of the F-3
Additional Space or any part thereof and except for such matters as Tenant shall
specify to Landlord in writing within thirty (30) days thereafter, Tenant shall
be conclusively deemed to have accepted the F-3 Additional Space and to have
agreed that Landlord has performed all of its obligations hereunder with respect
to the F-3 Additional Space and that the F-3 Additional Space is in satisfactory
condition and in full compliance with the requirements of this Agreement as of
the date of such possession, except for latent defects of which Landlord is
notified within one (1) year following Tenant's occupancy of the F-3 Additional
Space.
3. Rent.
3.1 F-3 ADDITIONAL SPACE RENT. The rent payable with respect to the F-3
Additional Space (the "F-3 ADDITIONAL SPACE RENT"), which shall be paid in
addition to the Basic Rent under the Lease, shall be Eighty Thousand Five
Hundred Forty-Six and 40/100 Dollars ($80,546.40) annually, and shall be paid in
equal monthly installments of Six Thousand Seven Hundred Twelve and 20/100
Dollars ($6,712.20) beginning on September 1, 1997 and on the first day of each
month thereafter throughout the remainder of the initial Lease Term. Tenant's
obligation to pay the F-3 Additional Space Rent shall have no effect on the
Basic Rent pursuant to the Lease with respect to Tenant's other premises in the
Project. The Rent Credit shall not apply to the F-3 Additional Space.
-2-
<PAGE> 3
3.2 ADDITIONAL RENT. Commencing on the F-3 Additional Space Commencement
Date, Tenant shall pay Additional Rent with respect to the F-3 Additional Space
pursuant to Article 5 of the Lease.
3.3 NO SECURITY DEPOSIT. No security deposit is required from Tenant with
respect to the F-3 Additional Space. Tenant acknowledges that the lease
required a security deposit in the total sum of $150,985, of which Tenant has
not deposited the sum of $62,057. Tenant shall not be required to deposit said
sum of $62,057; therefore the Lease security deposit is hereby modified to be
the sum of $88,901.
4. PRIOR RENT.
Notwithstanding that Tenant did not occupy the Expansion Space and
Landlord leased the Expansion Space to a third party, Tenant continued to pay
rent through August 31, 1997 with respect to the Expansion Space as if the same
were leased and occupied by Tenant pursuant to Section 7 of the Second
Amendment. Landlord shall be entitled to retain all such payments.
5. PARKING FACILITIES.
As a material part of the consideration for the parties' entering into
this Agreement, upon the F-3 Additional Space Commencement Date, the Rentable
Area of the F-3 Additional Space shall be included in the Rentable Area of the
Premises for purposes of computing all parking passes referred to in Section
7.1 of the Lease. Tenant shall not be obligated to rent, and Landlord shall not
be obligated to provide, parking passes with respect to the Expansion Space
after the date hereof, and the parties acknowledge that no payment from one
party to the other is now required with respect to parking for the Expansion
Space prior to the date hereof.
6. EXPANSION SPACE PROVISIONS NOT EFFECTIVE.
Section 7 of the Second Amendment shall be of no further force or effect
and is hereby deleted in its entirety from the Lease. Landlord and Tenant waive
any and all claims each may have against the other regarding the Expansion
Space, the delivery and occupancy thereof, Tenant's payment of rent therefor
prior to the date hereof, and Landlord's leasing of the Expansion Space to a
third party. Both Tenant and Landlord have no further obligation with respect
to the Expansion Space.
7. MUST TAKE SPACE
7.1 MUST-TAKE. Tenant shall lease from Landlord, and Landlord shall lease
to Tenant, the 1,940 square feet of Rentable Area on the third floor of the
Building (Suite 350) as shown on Exhibit "C" attached hereto (the "MUST-TAKE
SPACE") effective on December 1, 1997. The commencement of the Lease Term with
respect to the Must-Take Space (the "MUST-TAKE COMMENCEMENT DATE") shall be the
date on which Landlord delivers possession thereof to
-3-
<PAGE> 4
Tenant. The Term of the Lease with respect to the Must-Take Space shall end on
October 31, 2000 coterminous with the term for the other Premises under the
Lease.
7.2 MUST-TAKE RENT. The rent payable with respect to the Must-Take Space
(the "MUST-TAKE SPACE RENT"), which shall be paid in addition to the Basic Rent
under the Lease and the F-3 Additional Space Rent set forth in Section 3.1
above, shall be Fifty-One Thousand Two Hundred Sixteen Dollars ($51,216.00) per
year, payable in equal monthly installments of Four Thousand Two Hundred
Sixty-Eight Dollars ($4,268.00). The Must-Take Space Rent shall be paid
beginning on the Must-Take Commencement Date and on the first day of each month
thereafter during the term of the Lease. Tenant's obligation to pay the
Must-Take Space Rent and the adjustment thereof as expressed in this Article
shall have no effect on the Basic Rent and the F-3 Additional Space Rent and
the adjustment thereof pursuant to the Lease with respect to Tenant's other
premises in the Building. The Rent Credit shall not apply to the Must-Take
Space.
7.3 ADDITIONAL RENT. Commencing on the Must-Take Commencement Date,
Tenant shall pay Additional Rent with respect to the Must-Take Space pursuant
to Article 5 of the Lease.
7.4 IMPROVEMENTS. The Must-Take Space shall be leased to Tenant in its
existing condition and state of improvement and Landlord shall have no
obligation to make any improvements, repairs or alterations thereof, subject to
the provisions of Article 8 below.
7.5 LATE DELIVERY. Landlord shall have no liability to Tenant for any
damages resulting from any delay in delivering possession of the Must-Take
Space to Tenant if said delay is caused by the holding over of a previous
tenant of the Must-Take Space; provided, that, Landlord shall take all action
reasonably necessary, including required legal proceedings, to secure
possession of the Must-Take Space prior to the Must-Take Commencement Date.
7.6 PART OF PREMISES. As of the Must-Take Commencement Date, the
Must-Take Space shall be deemed to be part of the Premises and, except as
specifically set forth above, the Must-Take Space shall be leased upon the same
terms and conditions as contained in the Lease.
8. ALTERATIONS; ALLOWANCE.
Tenant may improve and refurbish the F-3 Additional Space and Must-Take
Space after the initial delivery thereof by Landlord to Tenant. Any such
improvement and refurbishment shall be considered Tenant Alterations under
Lease Article 9. Tenant shall be paid or credited with an allowance (the
"IMPROVEMENT ALLOWANCE") of Twenty-Four Thousand Nine Hundred Fifty-Five
Dollars ($24,955.00) ($5.00 per square foot of Rentable Area in the F-3
Additional Space and Must-Take Space). The Improvement Allowance shall be used
solely for the costs of design, including engineering plans and specifications,
purchase, installation and construction of improvements which constitute
permanent improvements to the F-3 Additional Space and Must-Take Space,
including, without limitation, carpeting. The Improvement Allowance shall
-4-
<PAGE> 5
not be used for furniture or furnishings unless the same are built into the F-3
Additional Space or Must-Take Space and surrendered to Landlord upon expiration
of the Lease. Notwithstanding the foregoing, the Improvement Allowance may be
used for reasonable costs incurred in moving into the F-3 Additional Space and
Must-Take Space and installation costs incurred in connection with the
permanent wiring of telecommunications systems in the F-3 Additional Space and
Must-Take Space. The Improvement Allowance shall not be available for any costs
incurred after June 1, 1998. Portions of the Improvement Allowance shall be
advanced to Tenant periodically on a monthly basis after commencement of
construction and/or refurbishment by Tenant within the F-3 Additional Space
and/or Must-Take Space and after Tenant has delivered to Landlord copies of the
original invoices for Tenant's work or labor performed and materials or
supplies furnished, and, to the extent used for permanent or built-in
improvements, a certificate from Tenant's architect or engineer certifying that
the work and materials have been furnished as indicated in such statement and
that such work and materials have been substantially completed in accordance
with the plans therefor. Tenant shall obtain such verification and reports from
contractors, subcontractors and materialmen and shall satisfy such other
standard construction loan disbursement conditions as may reasonably be
required by Landlord. Landlord shall not be required to pay more than the
Improvement Allowance toward all costs, expenses and charges related to
Tenant's improvement and initial occupancy expenses with respect to the F-3
Additional Space and Must-Take Space. Tenant shall not be entitled to any
payment or rent reduction for any part of the Improvement Allowance not used by
Tenant.
9. BROKER.
Tenant warrants that it has not had any contact or dealings with any
person or real estate broker which would give rise to the payment of any fee or
broker commission in connection with the leasing or renting of the F-3
Additional Space to Tenant, and Tenant shall indemnify, defend, protect and
hold harmless Landlord from and against any liability with respect to any fee
of any kind or brokerage commission arising out of any act or omission of
Tenant.
10. MISCELLANEOUS.
10.1 Except as specifically amended or modified herein, each and every
term, covenant, and condition of the Lease as amended is hereby ratified and
shall remain in full force and effect.
10.2 This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their legal representatives, successors and permitted assigns.
-5-
<PAGE> 6
10.3 This Agreement shall be interpreted and construed in accordance with
the law of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LANDLORD:
COLORADO PLACE PARTNERS, LLC
a Delaware limited liability company
By: MP-COLORADO PLACE MANAGER I, INC.
a Delaware corporation
Manager
By: /s/ JOHN R. MILLER
-------------------------------
Name: John R. Miller
Title: SRVP
Date Signed: 2/4/98
TENANT:
SYMANTEC CORPORATION
a Delaware corporation
By: /s/ H. BAIN III
-------------------------------
Name: Howard Bain III
Title: CFO
Date Signed: 1/15/98
-6-
<PAGE> 7
EXHIBIT "A"
[Overview of MGM Plaza - Building "F"]
<PAGE> 8
EXHIBIT "B"
MEMORANDUM OF F-3 ADDITIONAL SPACE COMMENCEMENT
THIS MEMORANDUM is made and entered into as of September 1, 1997, by and
between COLORADO PLACE PARTNERS, LLC, a Delaware limited liability company
("LANDLORD") and SYMANTEC CORPORATION, a Delaware corporation ("TENANT") with
respect to that certain Third Amendment to Lease between Landlord and Tenant
dated as of September 1, 1997 (the "AGREEMENT").
The F-3 Additional Space Commencement Date (as defined in Section 2.2 of
the Agreement) is September 1, 1997. The expiration of the Term of the Lease
for the F-3 Additional Space, is October 31, 2000, unless sooner terminated or
extended pursuant to the Lease, as amended.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as
of the date set forth in the first paragraph above.
LANDLORD:
COLORADO PLACE PARTNERS, LLC
a Delaware limited liability company
By: MP-COLORADO PLACE MANAGER I, INC.
a Delaware corporation
Manager
By: /s/ JOHN R. MILLER
-----------------------------------
Name: John R. Miller
----------------------------
Title: SR V-P
---------------------------
Date Signed: 2/4/98
---------------------
TENANT:
SYMANTEC CORPORATION
a Delaware corporation
By: /s/ H. BAIN III
----------------------------------
Name: Howard Bain III
-------------------------------
Title: CFO
------------------------------
Date Signed: 1/15/98
------------------------
B-1
<PAGE> 9
EXHIBIT "C"
[Overview of MGM Plaza - Building "F" Suite 350]
<PAGE> 1
Exhibit 10.02
LEASE AMENDING AGREEMENT
This Agreement, made this 17th day of December, 1996, between:
SHERWAY CENTRE LIMITED
(hereinafter called the "Landlord")
OF THE FIRST PART
-and-
DELRINA (CANADA) CORPORATION
(hereinafter called the "Tenant")
OF THE SECOND PART
-and-
DELRINA CORPORATION
(hereinafter called the "Indemnifier")
OF THE THIRD PART
WHEREAS, by a certain lease dated the 31st day of July, 1995 (the
"Lease") the Landlord leased to the Tenant certain premises (the "Initial
Premises") containing approximately 74,174 square feet and comprising all of the
5th and 6th floors of One Part Centre and all of the 3rd, 4th and 5th floors of
Two Park Centre, 895 Don Mills Road, Don Mills, Ontario, for a term of ten (10)
years commencing on the 1st day of August, 1995 and from thenceforth next
ensuing and fully to be completed and ended on the 31st day of July, 2005 (the
"Term");
AND WHEREAS, the Landlord and the Tenant amended the Lease pursuant to a
Lease Amending Agreement dated the 1st day of December, 1995 (the "LAA 1") upon
such terms and conditions as contained therein;
AND WHEREAS, the Landlord and the Tenant further amended the Lease
pursuant to a Lease Amending Agreement dated the 13th day of March, 1996 (the
"LAA 2") upon such terms and conditions as contained therein;
AND WHEREAS, the Lease, the LAA 1 and the LAA 2 are collectively
referred to herein as the "Lease";
AND WHEREAS, the Tenant is desirous of leasing certain additional space
from the Landlord and surrendering certain existing space to the Landlord;
AND WHEREAS, the Landlord and the Tenant have agreed to amend the Lease
upon such terms and conditions as hereinafter set forth;
AND WHEREAS, the Indemnifier has joined in this presents to acknowledge,
confirm and ratify the LAA 1, the LAA 2 and the Lease as amended herein;
AND WHEREAS, the Landlord, the Tenant and the Indemnifier each has full
authority to execute this Agreement.
NOW THEREFORE WITNESSETH that in consideration of the premises and
mutual covenants and agreements herein contained and the sum of One Dollar
($1.00), paid by each of the parties to the other, the receipt and sufficiency
whereof is hereby acknowledged, the parties hereto mutually covenant and agree
with each other as follows:
<PAGE> 2
-2-
1. The effective date of this agreement shall be January 1, 1997 (the
"Effective Date").
2. Notwithstanding Section 2.4 of the Lease, the Tenant shall peaceably
surrender to the Landlord the following portion of the Premises
(collectively referred to herein as the "Surrendered Premises") on the dates
stated below:
(i) On May 31st., 1997 ("Surrender Date 1") the 5th Floor of One Park
Centre, comprising 14,949 square feet of Rentable Space ("Surrendered
Premises 1").
(ii) On January 31st., 1997 ("Surrender Date 2") the 6th Floor of One Park
Centre, comprising 14,434 square feet of Rentable Space ("Surrendered
Premises 2").
Subject to the timely surrenders of the Surrendered Premises, as aforesaid,
the Landlord and the Tenant mutually acknowledge and agree that all
liabilities and contractual agreements of whatever nature between the
parties hereto will cease to exist with respect to the Surrendered Premises
on Surrender Date 1 with respect to the Surrendered Premises 1 and on
Surrender Date 2 with respect to the Surrendered Premises 2, SUBJECT to
payment by the Tenant to the Landlord of rental payments outstanding with
respect to the Surrendered Premises as at their respective surrender dates
as aforesaid, and SUBJECT further to payment by the Tenant to the Landlord
of other rental payments, if any, with respect to adjustments to annual
Operating Costs and Taxes up to the respective surrender dates, as
aforesaid, of the Surrendered Premises, which obligations on the part of the
Tenant shall survive and be effective notwithstanding the respective
surrenders as aforesaid.
3. The Landlord hereby leases to the Tenant and the Tenant hereby accepts from
the Landlord the entire 7th Floor in Two Park Centre comprising 13,244
square feet of Rentable Space (the "Additional Premises") to have and to
hold effective from June 1, 1997 (the "AP Commencement Date") and ending the
last day of July, 2005, subject to the terms and conditions herein
contained, and the Lease Mutatis Mutandis.
4. The following terms and conditions shall apply, inter alia, with respect to
the Additional Premises:
(i) For the period commencing on AP Commencement Date and ending on July
31, 2005, Fixed Rent shall be Eighty-nine thousand, three hundred and
ninety-seven dollars and fifty cents ($89,397.50) per annum payable
by the Tenant to the Landlord in equal consecutive monthly
instalments in advance of Seven thousand, four hundred and forty-nine
dollars and seventy-five cents ($7,449.75) each, calculated at the
rate of Six dollars and seventy-five cents ($6.75) per square foot of
Rentable Space per annum;
(ii) The Tenant shall have early occupancy of the Additional Premises on
February 1, 1997 and shall not be responsible for payment of Fixed
Rent and Operating Costs and Taxes (save and except for Hydro
charges) for the period February 1, 1997 up to and including May 31,
1997 PROVIDED that all other terms and conditions of the Lease shall
apply Mutatis Mutandis.
(iii) The Tenant shall take occupancy and possession of the Additional
Premises in its "AS IS" condition, as existing at the date hereof, it
being clearly understood, acknowledged and accepted that the Landlord
is not required to perform any work in or to, or improve the
Additional Premises and all and any expense related thereto shall be
to the Tenant's sole account.
<PAGE> 3
- 3 -
5. The Lease shall be and is hereby amended by the deletion of the following
definitions in Section 1.1:
(i) "Cafeteria Premises"
(ii) "First Expansion Premises"
(iii) "Initial Premises"
(iv) "Second Expansion Premises"
(v) "Swing Space"
Accordingly, whenever in the Lease the foregoing terms appear, they shall
be deemed to be inapplicable and of no consequence or effect.
6. The Lease shall be and is hereby amended by the deletion of the definition
of "Premises" and the substitution therefor of the following:
"PREMISES means collectively the following Rentable Space in TWO PARK
CENTRE comprising in the aggregate of 58,035 square feet:
All of the 3rd Floor - 14,921 square feet
All of the 4th Floor - 14,921 square feet
All of the 5th Floor - 14,949 square feet
All of the 7th Floor - 13,244 square feet"
Accordingly, whenever in the Lease the term "Premises" appears, it shall
be deemed to be 58,035 square feet of Rentable Space.
7. Section 2.3 of the Lease shall be and is hereby deleted and the following
substituted therefor:
"2.3 Term. The Term shall be:
(i) With respect to the 3rd Floor, 4th Floor and 5th Floor premises,
ten (10) years commencing on August 1, 1995 (the "Initial
Commencement Date") and ending on July 31, 2005, and
(ii) With respect to the 7th Floor premises (the "Additional Premises"),
eight (8) years and two (2) months commencing on June 1, 1997 and
ending on July 31, 2005."
8. Section 6.1(a) of the Lease shall be and is hereby deleted and the
following substituted therefor:
"(a) Fixed Rent for the Premises shall be as follows:
(i) For the 3rd Floor, 4th Floor and 5th Floor of the Premises
comprising 44,791 square feet of Rentable Space, Two hundred
thirty-five thousand, one hundred and fifty-two dollars and
seventy-five cents ($235,152.75) per annum, in equal monthly
instalments of Nineteen thousand, five hundred and ninety-six
dollars and six cents ($19,596.06) each, calculated at the rate of
Five dollars and twenty-five cents ($5.25) per square foot of
Rentable Space per annum, for the period January 1, 1997 up to and
including July 31, 2005; and
(ii) For the Additional Premises comprising of 13,244 square feet of
Rentable Space (and as defined herein), Eighty-nine thousand, three
hundred and ninety-seven dollars ($89,397.00) per annum, in equal
monthly instalments of Seven thousand, four hundred and forty-nine
dollars and seventy-five cents ($7,449.75) each calculated at the
rate of Six dollars and seventy-five cent ($6.75) per square foot
of Rentable Space per annum for the period June 1, 1997 up to and
including July 31, 2005; and
<PAGE> 4
(iii) For Surrendered Premises 1 (as defined herein), Ninety thousand,
four hundred and forty-one dollars and forty-five cents
($90,441.45) per annum, in equal monthly installments of Seven
thousand, five hundred and thirty-six dollars and seventy-nine
cents ($7,536.79) each calculated at the rate of Six dollars and
five cents ($6.05) per square foot of Rentable Space per annum
for the period January 1, 1997 up to and including May 31, 1997;
and
(iv) For Surrendered Premises 2 (as defined herein), Seven thousand,
two hundred and seventy-seven dollars and fourteen cents
($7,227.14) for the period January 1, 1997 up to and including
January 31, 1997, calculated at the rate of Six dollars and five
cents ($6.05) per square foot of Rentable Space per annum.
Fixed Rent payable by the Tenant with respect to the Premises for any
Renewal Term provided for in the Lease shall be determined in the manner
required by this Lease.
For clarity, there shall be no rent free period or abatement with
respect to any monthly parking fees payable under this Lease, nor with
respect to the repayment of leasehold improvement allowances pursuant to
paragraph 2 of Schedule C".
9. (a) Schedule A of the Lease shall be and is hereby amended by the
detachment of the following floor plans therefrom:
<TABLE>
<S> <C> <C>
(i) Cafeteria Space, Building #1 approximately 7,000 square feet
(ii) Suite 500, Building #1 14,949 square feet (Surrendered Premises 1)
(iii) Suite 600, Building #1 14,434 square feet (Surrendered Premises 2)
</TABLE>
(b) Schedule A of the Lease shall be and is hereby amended by the
addition of the floor plan attached hereto as "Addendum 1"
outlining the 7th Floor, Building #2, 13,244 square feet, the
Additional Premises.
10. Schedule C of the Lease shall be and is hereby amended by the deletion
therefrom of the following sections in their entirety:
(i) Section 3, Expansion Premises, as amended by Sections 1, 4, 5
and 6 of LAA 2; and
(ii) Section 4, Swing Space, as amended by Sections 2 and 3 of LAA
2; and
(iii) Section 6, Cafeteria Premises.
11. Schedule C of the Lease shall be and is hereby amended in Section
5(c)(i) therein by the deletion of the figure "$839,662.00" and
substitution therefor of the figure "$676,256.80".
12. For the sake of clarity and greater certainty, the Tenant's surrender
of the Surrendered Premises and its leasing of the Additional Premises
shall NOT be deemed or construed to be a relocation under Section 10 of
Schedule C of the Lease.
13. The Tenant acknowledges and agrees that the Landlord will be permitted
to and provided with the ability to market and show Surrendered
Premises 1 to prospective tenants as from the Effective Date of this
Agreement, upon one (1) business day's notice from the Landlord or its
authorized agents subject to Section 2(i) herein.
14. The Tenant acknowledges that the Landlord has entered into an agreement
to lease Surrendered Premises 2 with JETFORM CORPORATION effective as
from February 1, 1997 upon such terms and conditions as more
particularly contained in such agreement between the Landlord and
Jetform Corporation.
<PAGE> 5
15. The Landlord and the Tenant acknowledge and agree that the demise by the
Landlord to the Tenant of the Conference Premises shall be governed by LAA
1 which shall continue to be in force and effect.
16. Any capitalized terms in this Agreement shall have the same meaning as
ascribed thereto in the Lease unless otherwise defined herein.
17. The parties hereto confirm that in all other respects, the terms, covenants
and conditions of the Lease as previously amended by all agreements
mentioned herein shall remain unchanged and in full force and effect,
except as modified by this Agreement.
18. This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their respective heirs, executors, administrators, legal
representatives, successors and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on this
6th day of February 1997.
SHERWAY CENTRE LIMITED
Per /s/ Wendy White
-------------------------------
Title VICE PRESIDENT
Per /s/ Greg Joel
-------------------------------
Title VICE PRESIDENT
DELRINA (CANADA) CORPORATION
Per /s/ Derek Witte
-------------------------------
Title SECRETARY
Per /s/ Robert Dykes
-------------------------------
Title PRESIDENT
DELRINA CORPORATION
Per /s/ Derek Witte
-------------------------------
Title SECRETARY
Per /s/ Robert Dykes
-------------------------------
Title PRESIDENT
<PAGE> 6
ADDENDUM 1
[FLOOR PLAN]
<PAGE> 1
EXHIBIT 10.03
DATED 9 APRIL 1998
HILL SAMUEL BANK LIMITED
(AS TRUSTEE FOR HILL SAMUEL PROPERTY UNIT TRUST)
-TO-
SYMANTEC (UK) LIMITED
- AND -
SYMANTEC CORPORATION
LEASE
-OF-
LAND AND PREMISES KNOWN AS
ST. CLOUD GATE COOKHAM ROAD MAIDENHEAD
TERM COMMENCES [25 MARCH 1998]
TERM 20 YEARS
TERM EXPIRES [24 MARCH 2018]
<PAGE> 2
H.M. LAND REGISTRY
LAND REGISTRATION ACT 1925-1986
COUNTY/DISTRICT Berkshire
TITLE NOS BK284696 and BK264027
PROPERTY St. Cloud Gate Cookham Road
Maidenhead
THIS LEASE is made the 9th day of April One thousand nine hundred and
ninety-eight BETWEEN: HILL SAMUEL BANK LIMITED whose registered office is at 71
Lombard Street, London EC3P 3BS (hereinafter called "the Lessors") of the first
part SYMANTEC (UK) LIMITED whose registered office is at St. Cloud Gate,
Maidenhead, Berkshire SL6 8XD (hereinafter called "the Lessees") of the second
part and SYMANTEC CORPORATION whose principal place of business is 10201 Torre
Avenue Cupertino California USA (hereinafter called "the Surety") of the third
part
DEFINITIONS
WHEREAS in this Lease unless there is something in the context inconsistent
therewith the following expressions shall have the following meanings:
"the Lessors" shall mean the Lessors or other the reversioner for
the time being immediately expectant on the term
hereby created and if at any time during this demise
there shall be any Superior Lessors shall (where the
context so admits) include additional references to
such Superior Lessors
"the Lessees" shall mean the Lessees and the successors in title and
permitted assigns of the Lessees
1
<PAGE> 3
"Plan No. 1" means Plan No. 1 annexed hereto.
"Plan No. 2" means Plan No. 2 annexed hereto.
"the demised premiums" shall mean all that land and premises shown for
the purposes of identification only edged red on
Plan No. 1 known as St. Cloud Gate Cookham Road
Maidenhead including:
(i) all sewers, drains, pipes, wires, cables
conduits and other conducting media
exclusively serving such premises
(ii) all Landlord's fixtures, fittings, plant and
equipment in or about such premises
(iii) all additions, extensions, amendments and
improvements to such premises and shall
include all boundary structures of whatever
type save for any on those boundaries shown
coloured blue and purple on Plan No. 2
"the Wilderness Clinic" shall mean all that land and premises shown edged
green on Plan No. 1 including all buildings,
structures, car parking spaces, landscaped areas,
roadways, footpaths, fences, gates, plant
equipment and other appurtenances, amenities and
facilities thereon.
"the Service Installations" shall mean all drains, sewers, gutters, pipes,
wires
2
<PAGE> 4
cables, ducts and other conducting media and other
pumps plant equipment and installations for the
drainage of and supply of water electricity
lighting and other services to and from the
demised premises and the Wilderness Clinic which
shall be in on or running through under or serving
the demised premises or the Wilderness Clinic and
do not exclusively serve the demised premises or
the Wilderness Clinic
"the Transfer Deeds" shall mean the three deeds of transfer dated 18th
January 1990 relating to the land forming part of
the Wilderness Clinic referred to in entry numbers
5 6 and 7 of the Property Register of the said
title number BK264027 and entry numbers 4 5 and 6
of the said title number BK284696
"the Council Deed" shall mean the deed dated 3rd August 1993 made
between the Royal Borough of Windsor and
Maidenhead(1) and Crest Estates Limited(2)
"the Supplemental Deeds" shall mean the three deeds dated 3rd August 1993
made between Crest Estates Limited of the one part
and respectively Roger William Sparrow and others
Alexander Buchanan Baillie-Hamilton and others and
Michael John Rickford Barnes and another of the
other part
"Value Added Tax" shall mean Value Added Tax or any similar or
substitute tax or charge
3
<PAGE> 5
(Overview of Plan No. 1)
<PAGE> 6
(Overview of Plan No. 2)
<PAGE> 7
NOW THIS DEED WITNESSETH as follows:-
Premises
1. IN consideration of the rents hereinafter reserved and the covenants by
the Lessees and the Surety hereinafter contained the Lessors at the
request of the Surety hereby demise unto the Lessees ALL THAT the demised
premises TOGETHER WITH (in common with the Lessors and all others
entitled to the like rights and benefits):
1.1 the benefit of the rights reserved to and the covenants in favour of
Crest Estates Limited by virtue of the Transfer Deeds (as varied by the
Supplemental Deeds)
1.2 the benefit of the rights reserved to and granted to and the covenants in
favour of Crest Estates Limited by virtue of the Supplemental Deeds
1.3 the benefit of the rights granted to and the covenants in favour of Crest
Estates Limited by virtue of the Council Deed
TO HOLD the same unto the Lessees for the term of 20 years from the 25 day of
March 1998 (subject to determination as hereinafter provided) SUBJECT TO:
1.3.1 the exceptions reservations agreements declarations covenants rights and
other matters (other than charges to secure money) contained or referred
to in the Property and Charges Registers of Title Numbers BK284696 and
BK264027
1.3.2 the rights granted to the transferees in the Transfer Deeds (as varied
by the Supplemental Deeds)
1.3.3 the rights granted to the transferees and the covenants contained in the
Supplemental Deeds
4
<PAGE> 8
1.3.4 the provisions of clauses 4 and 5 of the Council Deed
YIELDING AND PAYING therefore (exclusive of any Value Added Tax) during the
said term the yearly rents set out in and to be assessed in accordance with the
provisions of the First Schedule hereto such rents to be paid by equal
quarterly payments in advance on the usual quarter days in every year clear of
all deductions the first of such payments to be made on the (16-1/2 months rent
free) and to be a due proportion for the period from the 10 day of August 1999
to the quarter day next ensuing thereafter AND ALSO YIELDING AND PAYING
(exclusive of aforesaid) on demand by way of further rent with effect from the
25 day of March 1998.
1.3.4.1 sums equal to such reasonable amounts as the Lessors may from time to
time pay by way of premiums for keeping the insurances relating to the
demised premises in force in accordance with their covenant in that
behalf hereinafter contained (including the whole amount of any
increased premium or expense of renewal attributable to the demised
premises by reason of any act or omission of the Lessees their
underlessees or their respective servants agents licensees or invitees)
Lessees' covenants on rent outgoings and insurance
2. THE Lessees HEREBY COVENANT with the Lessors as follows:
2.1 To pay rent
To pay the said yearly rents on the days and in manner hereinbefore
provided
2.2 To pay rates
To pay and discharge all rates taxes duties charges assessments
outgoings and
5
<PAGE> 9
impositions whatsoever (whether parliamentary local parochial or
otherwise and whether or not of a capital or non-recurring nature but
excluding any taxes (other than Value Added Tax) or other sums due or
arising by reason of the payments to be made by the Lessees to the
Lessors under the provisions of this Lease or by reason of any dealing
with the reversion hereto) which now are or may at any time hereafter be
assessed charged or imposed upon the demised premises or on the owner or
occupier in respect thereof and without prejudice to the generality of
the foregoing to pay any empty rate rating surcharge or other similar
imposition which may from time to time be imposed upon or payable in
respect of the demised premises and also to pay and discharge all
business or other rates in respect of the demised premises during the
last 3 months of the said term howsoever determined and not to claim
void rating or other similar relief in respect of empty or unoccupied
property during the said period of three months
2.3 Vitiation of insurance
2.3.1 Not to do or fail to do anything whereby the Policy or Policies of
insurance effected by the Lessors in respect of the demised premises for
the time being subsisting may become void or voidable or whereby the
rate of premium thereon may be increased and forthwith to pay on demand
to the Lessors all sums payable by way of increased premiums and all
expenses incurred by the Lessors in or about the renewal of such Policy
or Policies rendered necessary by a breach of this covenant
2.4 As to consequences of Lessees' default
2.4.1 In the event of the demised premises being wholly or partially destroyed
or injured by any act or default on the part of or suffered by the
Lessees their underlessees or their respective servants agents licensees
or invitees whereby any Policy or Policies of Insurance thereon or on
any part thereof effected by the Lessors shall have been rendered void
or voidable or payment of the whole or
6
<PAGE> 10
or payment of the whole or part of the insurance moneys be refused to
pay on demand and upon production of evidence of such refusal to the
Lessors the amount of the Insurance monies that the Insurer refused to
pay to the Lessors or such sum as shall represent the reasonable costs
to the Lessors of rebuilding or reinstating the demised premises
whichever shall be the lesser amount.
2.5 Not to insure
2.5.1 Not to effect any policy of insurance of any part of the demised
premises
2.6 To give notice if vacant
2.6.1 Not to leave the demised premises or any part thereof vacant or
unoccupied without first giving the Lessors reasonable notice in writing
of the intention so to do the Lessees paying any additional or increased
premium required by the insurers
2.7 To give notice of damage
2.7.1 In the event of the demised premises being destroyed or damaged by any
of the insured risks to give notice in writing to the Lessors as soon as
possible
2.8 To pay monies to Lessors
In the event of the demised premises or any part thereof being destroyed
or damaged to pay to the Lessors on demand the amount of any excess
required by the insurers or by the Lessors under any policy of insurance
for the demised premises
Lessees' covenants on repair
7
<PAGE> 11
3. THE Lessees HEREBY FURTHER COVENANT with the Lessors as follows-
3.1 To repair
To put and keep in good and substantial repair and well and substantially
to uphold support sustain and maintain throughout the term hereby granted
the whole of the demised premises to the reasonable satisfaction of the
Lessors and insofar as it shall be inappropriate to repair the same to
renew rebuild or replace the demised premises or any part or parts
thereof with good and substantial materials and in a thorough and
workmanlike manner and to the reasonable satisfaction of the Lessors
PROVIDED THAT to the extent that the cost of making good such damages is
recoverable from the insurers or to the extent payment may be made to the
Lessors by the Lessees under the terms of Clause 2(3) hereof the Lessees
shall not be required to repair any damage to the demised premises which
shall be insured against by the Lessors and which the Lessors are required
to reinstate under their covenants in that behalf hereinafter contained
3.2 To paint interior
Once in every fifth year calculated from the commencement of the said term
and in the last six months thereof howsoever determined to prepare and
paint in a proper and workmanlike manner with at least two coats of best
quality paint and paper polish and otherwise treat as appropriate all such
parts of the inside of the demised premises and all additions thereto as
are previously were or ought to be so painted papered polished varnished
and treated and so that in the last six months of the said term all tints
colours and patterns used by the Lessees in accordance with the provisions
hereof shall first be approved in writing by the Lessors (such approval not
to be unreasonably withheld) all such works to be carried out to the
reasonable satisfaction of the Lessors
8
<PAGE> 12
3.3 To paint exterior
Once in every third year calculated from the commencement of the said
term and in the last six-months thereof howsoever determined to paint
varnish stain or otherwise treat in a proper and workmanlike manner with
at least two costs of best quality paint stain or other appropriate
substance the exterior of the demised premises or structures in or on the
demised premises which are previously were or ought to be so painted
varnished stained or otherwise treated and to clean point make good and
restore any brickwork cement stucco or stonework of the demised premises
and walls in or on the demised premises when necessary all such works to
be carried out to the reasonable satisfaction and (if required by the
Lessors and at the cost of the Lessors) under the supervision or
inspection of the Lessors
3.4 To clean windows
Thoroughly to clean the interior and exterior of all windows comprised in
the demised premises at intervals of not more than one month
3.5 To keep tidy etc.
3.5.1 To keep all open areas including roads paths parking areas and
landscaped areas of the demised premises clean neat and tidy and clear
of refuse or obstructions (other than parked vehicles on parking areas)
3.5.2 Not to store or stack materials or goods on the open areas of the
demised premises
3.5.3 Properly to mow trim cultivate and tend all landscaped areas of the
demised premises and to replace any trees or shrubs which may die or
become diseased
9
<PAGE> 13
3.6 To maintain plant and equipment etc.
3.6.1 To maintain in good and serviceable condition all Lessors fixtures
fittings plant and equipment in or upon the demised premises and to
replace such of them as may become worn out lost or unfit for use by
substituting others of a like nature (but of no lessor quality)
3.6.2 To replace all carpets and floor coverings in the demised premises as
often as reasonably necessary in equivalent style and quality to the
carpet presently laid at the demised premises
3.6.3 At the Lessees' own cost to enter into contracts for the regular
inspection maintenance and repair (with persons approved by the Lessors)
of plant and machinery in the demised premises if the Lessors so
reasonably require and to produce such contracts and all reports and
invoices connected with them whenever so requested
3.7 To yield up at end of term
At the expiration or sooner determination of the said term
3.7.1 quietly to yield up unto the Lessors the demised premises additions and
improvements thereto (tenants fixtures and excepted) in such state and
condition as shall be consistent with full and due performance by the
Lessees of the covenants on their part herein contained
3.7.2 to make good to the reasonable satisfaction of the Lessors any and all
damage caused by the removal of tenant's fixtures equipment
3.7.3 to remove all partitioning or other alterations installed or effected by
the Lessees in on or to the demised premises and to make good the
demised premises to the
10
<PAGE> 14
reasonable satisfaction of the Lessors unless such requirements shall
have been waived in writing by the Lessors whether as to the whole or
any part of any partitioning or alterations constructed by the Lessees
3.7.4 in the event of any breach of any of the foregoing obligations
contained in this sub-clause (without prejudice to any other rights of
the Lessors) to pay to the Lessors a sum equivalent to the costs and
expenses reasonably required for the carrying out of works to remedy
such breach where the Landlord intends to relet the demised premises
LESSEES' COVENANTS ON ALIENATION
4. THE Lessees hereby further covenant with the Lessors as follows:-
4.1 Not to assign etc part
Not save as provided in clauses 4.3 and 4.12 to assign charge share or
part with possession of part only (as opposed to the whole) of the
demised premises
4.2 Not to assign whole without consent
4.2.1 Not to assign the whole (as opposed to any part) of the demised
premises other than
4.2.1.1 To a company where in the reasonable opinion of the Landlord the
proposed assignee is of sufficient financial standing to enable it to
comply with the covenants on the part of the Tenant in this Lease or
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4.2.1.2 to a company with (in accordance with the following provisions of this
Lease) covenants in the terms set out in the Second Schedule hereto in
favour of the Lessors from a surety which in the reasonable opinion of
the Landlord is of sufficient financial standing to enable it to
comply with the covenants on the part of the Tenant in this Lease
4.2.2 Subject as aforesaid not to assign the whole of the demised premises
to a company not resident in the United Kingdom or to a company with
covenants in the terms set out in the Second Schedule hereto in favour
of the Lessors from a surety not resident in the United Kingdom unless
prior to such assignment the assignee has delivered to the Lessors
free of cost to the Lessors either
4.2.2.1 A sum by way of rent deposit equal to six months rent at the rate
hereby reserved and payable at the date of such assignment together
with a rent deposit deed in such form as the Lessors shall reasonably
require including (without prejudice to the generality of the
foregoing) a covenant by such assignee and by any then existing surety
to increase from time to time the amount of such rent deposit to a sum
equal to six months' rent at the rate reserved and payable hereunder
from time to time of
4.2.2.2 a guarantee of payment to the Lessors (such guarantee to endure for a
term of five years from the date of the assignment) of a sum equal to
six months' rent at the rate reserved and payable hereunder from time
to time from a bank incorporated in the United Kingdom and authorised
to carry on a banking business in the United Kingdom under the Banking
Act 1987 such guarantee to be in such form as the Lessors shall
reasonably require
4.2.3 Subject as aforesaid not to assign or charge the whole (as opposed to
any part) of the demised premises without the previous written consent
of the Lessors (such consent not to be unreasonably withheld) and in
the event of the Lessors consenting to an assignment of the whole of
the demised premises to procure that
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the assignee enters into covenants with the Lessors free of cost to the
Lessors to pay the rents hereby reserved and to observe and perform the
covenants on the part of the Lessees herein contained during such
period as this lease is vested in such assignee or until the expiration
of the fifth year of the term hereby granted (whichever date shall be
the later)
4.2.4 PROVIDED THAT for the purposes of Section 19(1A) of the Landlord and
Tenant Act 1927 the Lessors shall be entitled to withhold consent
unless the circumstances set out in the Third Schedule and the
conditions set out in the Fourth Schedule hereto are satisfied and
complied with
4.3 Not to underlet whole or part save as provided
Not to underlet or share or part with possession of the demised
premises save (i) by way of an Underlease of the whole of the demised
premises or (ii) by way of an Underlease or Underleases of the whole of
each floor of office accommodation comprising the net lettable area
from time to time of the ground first and/or second floors of the
building forming part of the demised premises and a due proportion of
the car parking spaces (if appropriate) PROVIDED THAT the Lessees shall
not by virtue of any such underletting or otherwise at any time permit
the demised premises to be occupied by more than three separate
occupiers (including the Lessees and any member or members of the same
group of companies as the Lessees within the meaning of s42 of the
Landlord and Tenant Act 1954 being together one occupier) and
(iii) subject to the provisions of sub-clause (4.4) of this clause
4.4 Not to underlet save as provided
Not to underlet the whole or any part of the demised premises save
(i) after completion of a license to underlet under which the intended
underlessee covenants direct with the Lessors to observe and perform
the covenants and
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conditions on the part of the Lessees herein contained (other than the
payment of the rent hereby reserved) and (ii) by way of an Underlease
4.4.1 at the best rent reasonably obtained on a letting with vacant
possession and without fine or premium and at a rent not less than the
rent reserved and payable under this Lease from time to time or a fair
and reasonable proportion thereof in the case of an underletting of
part (unless the Lessors shall otherwise consent (which consent shall
not be unreasonably withheld)) when the Lessors may then impose such
further conditions in such circumstances as the Lessors may reasonably
require)
4.4.2 containing provisions for the review of the rent reserved thereby in an
upwards direction only to full market rental on a vacant possession
basis on the dates stipulated for the review of rent under this Lease
4.4.3 containing provisions for the underlessee to be liable for all
outgoings and repairs relating to the premises sub-demised or for
reimbursement of the actual cost thereof incurred by the Lessees
4.4.4 containing provisions that the underlessee shall be at liberty to use
the premises sub-demised only for a purpose for the time being
authorised under this lease
4.4.5 to a respectable and responsible underlessee having the previous
written approval of the Lessors (such approval not to be unreasonably
withheld)
4.4.6 in the case of an Underlease to a Limited Company containing covenants
(if reasonably required by the Lessors) by a Surety or sureties having
the previous written approval of the Lessors (such approval not to be
unreasonably withheld) guaranteeing the performance and observance of
the covenants on the part of the underlessee thereunder throughout the
term of such Underlease and in the form set out in the Second Schedule
hereto with such variations as the Lessors shall
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reasonably require
4.4.7 in such form and with such covenants conditions and stipulations as
shall have been previously approved in writing by the Lessors such
approval not to be unreasonably withheld or delayed
4.4.8 in the case of an Underlease of part containing an agreement duly
authorised by a court of competent jurisdiction excluding in relation
to the tenancy thereby created the provisions of Section 24 to 28 of
the Landlord and Tenant Act of 1954
4.5 Not to permit assignments of Underleases save as provided
Not to permit the assignment of any Underleases save by way of an
Assignment of the whole of the premises thereby demised
4.5.1 to a respectable and responsible tenant having the previous written
approval of the Lessors (such approval not to be unreasonably withheld)
who has previously entered into a direct covenant with the Lessors to
observe and perform the covenants and conditions on the part of the
tenants contained in such Underlease
4.5.2 in the case of an assignment of such Underlease to a private Limited
Company containing covenants (if reasonably required by the Lessors) by
a Surety or Sureties having the previous written approval of the
Lessors (such approval not to be unreasonably withheld) guaranteeing
the observance and performance of the covenants on the part of the
Underlessee thereunder throughout the residue of the term of such
Underlease and in the form set out in the Second Schedule hereto with
such variations as shall be reasonably necessary.
4.6 To obtain covenants from Underlessees against further underletting
On the grant of any Underlease to obtain a covenant by the underlessee
not to
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underlet or (save by way of an Assignment of the whole of the premises
thereby demised) share or part with possession (other than with a
members of the same group of companies as the underlessee as defined in
Section 42 of the Landlord and Tenant Act of 1954) of the premises
thereby demised or any part thereof and on any breach of such covenant
to use their best endeavours to enforce observance of and compliance
with such covenant
4.7 To produce assignments underleases etc for registration
Within 21 days after any assignment or underletting of the demised
premises or any part thereof or the assignment of an underlease of the
demised premises or any part thereof and after any devolution of title
by will or otherwise of the whole or any part of the demised premises
or any mortgage charge transfer or discharge of mortgage or charge
order or other disposition affecting the demised premises or any part
thereof to register by notice in duplicate with and to produce to the
Solicitors for the time being of the Lessors for retention by such
Solicitors a certified copy of the deed or instrument effecting the
same and to pay to such Solicitors a fee of 20 pounds or such greater
sum as shall from time to time be reasonable for the registration
thereof together with the registration fee payable to any superior
Lessors together with any Value Added Tax payable thereon
4.8 To supply information
Within one month of being requested to do so to notify the Lessors in
writing of (i) the name and address of any occupier of the demised
premises or any part thereof (ii) the terms of such occupation
including the rent payable from time to time and (iii) the relationship
of such occupier to the Lessees or any underlessees
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4.9 To give facilities for reletting
During the last nine months of the term hereby granted to permit the
Lessors to place and retain without interference on any part or parts
of the demised premises any notice for reletting and at any time to
permit the Lessors to place and retain as aforesaid any notice for the
sale or other disposal of the demised premises and to show the demised
premises at reasonable times upon reasonable prior notice to intending
or inquiring tenants PROVIDED THAT such notice for reletting or sale
shall not materially obstruct or interfere with the access of light to
the windows of the demised premises
4.10 To permit to view
At all reasonable times after reasonable prior notice to permit all
prospective purchasers of or dealers in the Lessors reversionary
interest by order in writing of the Lessors or their agents to view and
to take measurements of the premises
4.11 Group Companies
Notwithstanding the foregoing provisions of this Clause the Lessees
shall be entitled to share possession of the whole or any part of the
demised premises with any members of the same group of companies as the
Lessees (as defined in Section 42 of the Landlord and Tenant Act of
1954) provided that no relationship of landlord and tenant is thereby
established and provided further that such possession shall cease and
determine forthwith upon such member or members of such group ceasing
to be a member of the same group of companies as the
LESSEES' COVENANTS ON ALTERATIONS
5. THE Lessees hereby further covenant with the Lessors as follows
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5.1 Not to alter without consent
Not to make any additions alterations or improvements to the demised
premises without in each case first obtaining both the consent in
writing of the Lessors and also the approval in writing of the Lessors
to the plans drawings and specifications thereof (such consent and
approval not to be unreasonably withheld or delayed) and to make all
such additions alterations or improvements in conformity with such
plans drawings and specifications to the reasonable satisfaction of the
Lessors and (if reasonably required by the Lessors) under the
supervision or inspection of the Lessors or their Surveyors PROVIDED
ALWAYS that the Lessors may as a condition of giving such consent and
approval as aforesaid require (i) the payment of their Surveyors and
Solicitors reasonable and proper costs incurred in connection with the
application for such consent and approval (whether or not ultimately
granted) and in connection with the supervision and inspection of such
additions alternations improvements and (ii) that the Lessees and any
underlessees enter into such covenants with the Lessors as they may
reasonably require regarding the execution and inspection of any such
alterations additions or improvements to the demised premises or any
part thereof and the reinstatement thereof at the determination of the
term hereby granted or at or by any particular date or dates or
otherwise and PROVIDED FURTHER that no such consent or approval shall
be required to the erection or removal of internal demountable
partitioning subject to such works causing no alterations to the
air-conditioning system or other services in the demised premises and
subject further to the Lessees forthwith on completion of such works
giving notice with plans thereof in duplicate to the Lessors
5.2 To remove unauthorised alterations etc.
To comply with any notice in writing from the Lessors requiring renewal
of any new or additional building erection alteration notice sign
advertisement renewal or replacement erected or made in breach of the
provisions of this Lease and to
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restore the demised premises to their previous condition as required by
such notice and if the Lessees shall having commenced to comply fall to
proceed with such work with all due expedition within two months after
service of such notice then it shall be lawful for the Lessors or their
servants contractors agents and workmen to enter on the demised premises
and to execute the works required to be done by such notice and the cost of
so doing shall be paid on demand to the Lessors by the Lessees
5.3 Not to erect signs etc. without consent
Not at any time during the said term to affix or exhibit in or upon the
demised premises or in or upon the roof external walls or windows of the
demised premises or visible from the exterior of the demised premises any
sign fascia bill placard advertisement flashlight flag poster hoarding
(except usual business signs exhibiting the name of the Lessees and the
nature of any business carried on in the demised premises) or any mast
aerial transmitter receiver dish or other similar plant or equipment in
such sizes positions designs and colours as the Lessors shall previously
approve in writing (such approval not to be unreasonably withheld)
5.4 Not to display goods
Not to hang place or deposit any goods articles or things for sale display
or otherwise upon the exterior of or outside the demised premises
5.5 Notice to Lessors
On completion of the installation of anything which shall become part of
the demised premises forthwith to give to the Lessors written notice of the
same stating the full cost for insurance purposes for reinstatement in the
event of destruction
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LESSEES' COVENANTS ON USER
6. THE Lessees hereby further covenant with the Lessors as follows:-
6.1 To use as stipulated
To use the building forming part of the demised premises only as
offices and to use the landscaped areas in the demised premises only
as landscaped areas and to use those areas designated by the Lessors
for parking loading and unloading in the demised premises only for
such purposes and not to use the demised premises for any purposes
save as herein provided
6.2 Not to keep dangerous substances or carry on dangerous activities on
the premises
6.2.1 Not to bring into the demised premises or to place or store or use or
manufacture or permit to remain in or about the demised premises any
article or thing which is or may become dangerous offensive
inflammable radio-active explosive or especially combustible
6.2.2 Without prejudice to the generality of the foregoing not to instal or
erect any fuel burning apparatus fire stove engine chimney machinery
and contrivances whatever other than machinery and contrivances
normally used in premises similar to the demised premises and used for
the purposes hereby authorised
6.3 Not to permit emission of oil etc.
6.3.1 Not to stop up or obstruct in any way whatsoever or permit oil grease
alkali or other deleterious matter or substance to enter the drains
and sewers of the Lessors and to employ such plant for treating any
deleterious effluent before permitting the same to enter such drains
and sewers as may be reasonably required by the
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Lessors from time to time in accordance with best modern practice
6.3.2 Not to commit wilful or voluntary waste spoil or destruction in or upon
the demised premises
6.3.3 Not to permit the emission of smoke fumes odours smells grit or noxious
effluvia from the demised premises
6.4 Not to allow any nuisance auction sale public meeting etc.
Not to use the demised premises for any illegal or immoral purpose or
any noisy noxious offensive or dangerous trade or business nor to do or
commit any act or keep any thing which may contravene any statute or
order or local regulation or byelaw or which may tend to deteriorate
the nature of any adjoining or neighbouring property or which shall or
may be or become in the reasonable judgment of the Lessors a cause of a
nuisance damage offence annoyance or inconvenience (whether by virtue
of noise vibration smell fumes smoke soot ash dust grit dirt or any
other emissions or pollution or otherwise howsoever) to the Lessors or
the tenants or occupiers of any adjoining or neighbouring premises or
any local or other authority nor to hold any sale by auction or public
meeting upon the demised premises nor to permit any person or persons
to reside or sleep at or upon the demised premises nor to keep any
animals or birds on the demised premises nor to cause or permit any
loudspeaker television radio set or other device to be audible outside
the demised premises
6.5 To store refuse
6.5.1 Not to form a rubbish dump nor to store refuse or rubbish on the
demised premises save in such position as shall be designated for such
purpose by the Lessors from time to time
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6.5.2 To Store free from smells all liquid and solid waste and all refuse or
rubbish in properly covered purpose-designed containers or receptacles
out of public view
6.5.3 Not to incinerate or process any waste refuse or rubbish on any part of
the demised premises.
6.5.4 To arrange for the removal of all waste refuse and rubbish from the
demised premises at least once every week.
6.6 To take and provide precautions against fire
To take every reasonable precaution against the outbreak of fire on the
demised premises and in particular to provide and construct at the
Lessees' expense and to keep in good repair and condition throughout the
term hereof any water supply hydrants hoses hose reels fire-fighting or
fire-preventative equipment sprinklers fire alarms and fire escapes
which are or shall be required to be kept on the demised premises and to
comply with any requirements of the insurers or any Act of Parliament or
any local or statutory authority or the local fire authorities.
6.7 Not to Overload the Structure
Not to bring place or keep on the demised premises any heavy article in
such position or in such quantity or weight or otherwise in such manner
howsoever as to exceed the load bearing capabilities of the floors roofs
lifts or structures of the demised premises.
6.8 Not to permit encroachments or the acquisition of rights
Not to permit any new window light opening doorway path passage-way
drain or other encroachment right or easement to be made or acquired in
to against or upon the demised premises and in case any such window
light opening doorway
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path passage-way drain or other encroachment shall be made or any such
right or easement shall be threatened or attempted to be acquired to
give notice thereof to the Lessors as soon as reasonably practicable
and to permit the Lessors and their Surveyors servants and agents after
giving reasonable prior notice in writing to enter the demised premises
at reasonable times to ascertain the nature of such encroachment or
easement and at the joint expense of the Lessors and the Lessees to do
all such things as may be reasonably required by the Lessors for the
purposes of preventing the making of such encroachment or the
acquisition of such easement or right
6.9 Not to obstruct windows
Not to stop up darken or obstruct any windows or lights belonging to
the demised premises Provided That the installation of blinds or
screens to reduce or eliminate the entry of light to the demised
premises shall not be a breach of this covenant
6.10 Not to remove support
Not to do anything on the demised premises which would remove support
from or endanger the demised premises or any adjoining or neighboring
premises
6.11 Warranty as to user
Provided always and the Lessees hereby acknowledge that notwithstanding
the foregoing provisions as to the user of the demised premises the
Lessors do not thereby or in any other way give or have given at any
other time any representation or warranty that any such user is or will
be or will remain a permitted user within the provisions of the
Planning Acts (as defined in this Lease) nor shall any consent in
writing which the Lessors may hereafter give to any change of user be
taken as including any such representation or warranty and that
notwithstanding that any such user as aforesaid is not a permitted user
within such
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provisions as aforesaid the Lessees remain fully bound and liable to
the Lessors in respect of the obligations undertaken by the Lessees by
virtue of these presents (save any obligations which cannot be
performed by reason of such user no longer being permitted by the
Planning Acts) without any compensation of any kind whatsoever
LESSEES' COVENANTS ON STATUTORY PROVISIONS
7. THE Lessees hereby further covenant with the Lessors as follows:-
7.1 To comply with statutory provisions
At all times during the said term to observe and comply in all respects
with the provisions of Acts of Parliament already or hereafter to be
passed so far as they relate to or affect the demised premises or any
addition or improvements thereto or the user or occupation thereof for
any purpose or the employment therein of any person or persons
(including as to their safety health and welfare) or the use of any
fixtures machinery plant equipment or chattels for the time being
affixed thereto or being thereupon or used for the purposes thereof and
to execute all works and provide or maintain all arrangements which by
or under any enactment by any government department local authority or
other public authority or duly authorised officer or Court of competent
jurisdiction acting under or in pursuance of any enactment are or may
be directed or required to be executed provided and maintained at any
time during the said term upon or in respect of the demised premises or
any additions or improvements thereto or in respect of any such user
thereof or employment therein of any person or persons fixtures
machinery plant equipment or chattels as aforesaid whether by the owner
or occupier thereof and to indemnify the Lessors at all times against
all penalties costs charges and expenses of or incidental to the
execution of any works or the provisions or maintenance of any
arrangements so directed or required as aforesaid and not at any time
to do or omit on or about the demised premises any act or thing by
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reason whereof the Lessors may under any enactment incur or have imposed
upon them or become liable to pay any penalty damage compensation costs
levy charge or expenses
7.2 To comply with Factories Act etc.
Without prejudice to any other provision of this Lease to complete and
carry out all works required by the Fire Officer and all works required
under and thereafter to comply with the requirements of the Offices
Shops and Railway Premises Act 1963 the Fire Precautions Act 1971 the
Factories Act 1961 and the Health and Safety at Work Etc. Act 1974
whether imposed by those Acts upon the Lessors or the Lessees and at all
times during the term hereby granted to indemnify and keep indemnified
the Lessors against the consequences of any breach or non-observance
thereof and without prejudice to the generality of the foregoing not to
permit or suffer to be working in the demised premises at any one time
such a number of persons that the requirements as to sanitary
conveniences or washing facilities prescribed by the said Acts will not
be complied with
7.3 To inform Lessors of Notices received
Within seven days of the receipt of notice of the same to supply full
particulars and two copies to the Lessors of any permission notice order
or direction or any proposal for a notice order or direction made given
or issued by any government department or local or public authority or
statutory undertaking or public health inspector or duly authorised
officer or Court of Competent Jurisdiction under or by virtue of any
statutory powers AND ALSO without delay to take all reasonable or
necessary steps to comply with any such notice or order AND ALSO at the
request of the Lessors and at the cost of the Lessors to make or join
with the Lessors in making such objections or representations against or
in respect of any such notice order direction or proposal as aforesaid
as the Lessors shall deem expedient
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7.4 Planning Acts
7.4.1 In this clause the following expressions bear the following meanings
namely:-
"Planning Acts" means the Town and Country Planning Act 1990 and any Act
or Acts regulating or imposing a tax charge or levy relating to
development of land
"planning permission" means any permission consent or approval required
given or deemed to be given under Planning Acts
To comply with Planning Acts
7.4.2 At all times during the said term to comply in all respects with the
provisions and requirements of Planning Acts and of all licences
consents permissions and conditions (if any) granted or imposed
thereunder or under any enactment repealed thereby so far as the same
respectively relate to or affect the demised premises or all operations
works acts or things already or hereafter to be carried out executed
done or omitted thereon or the user thereof for any purpose and to do
and execute all such works and things as shall be directed or necessary
under Planning Acts in respect of the demised premises or any part
thereof whether by the owner or occupier landlord or tenant thereof
To obtain consents
7.4.3 During the said term so often as occasion shall require at the expense
in all respects of the Lessees to obtain all such licences consents and
permissions and serve all such notices as may be required for the
carrying out of any operations on the demised premises or the
institution or continuance thereon of any use thereof which may
constitute development but so that the Lessees shall not make
application for planning permission or serve any such notices without
the previous written consent of the Lessors (such consent not to be
unreasonably withheld)
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provided that the Lessors shall be entitled to withhold such consent
where they reasonably consider that the making of any such application
or service of any such notice would lead either to the acquisition by
any authority body or person of the Lessors' interest in the demised
premises or a substantial part thereof or to material adverse financial
or fiscal consequences upon the Lessors and provided that the Lessees
shall indemnify the Lessor against all proceedings costs expenses claims
charges and demands whatsoever in respect of any such applications or
notices
To supply details
7.4.4 To give notice to the Lessors of the grant or refusal of planning
permission relating to the demised premises or any part thereof within
seven days of such grant or refusal together with (if reasonably
required by the Lessors) copies of the applications for such planning
permission the drawings plans and specifications lodged therewith and
the notice of grant or refusal (as the case may be)
Charges
7.4.5 To pay and satisfy any charge or levy that may now or hereafter be
imposed under Planning Acts in respect of the carrying out or
maintenance of any such operations or the institution or continuance of
any such use as aforesaid
To serve Notices
7.4.6 Notwithstanding any consent which may be granted by the Lessors under
this Lease or otherwise not to carry out or make any alteration or
addition to the demised premises or any change of use thereof (being an
alteration or addition or change of use which is prohibited by or for
which the Lessors' consent is required to be obtained under this Lease
and for which a planning permission needs to be obtained) before all
necessary notices under Planning Acts in respect thereof have
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been served or before all such notices and all such necessary planning
permissions have been produced to the Lessors and in the case of a
planning permission acknowledged by the Lessors in writing as
satisfactory to such acknowledgment not to be unreasonably withheld or
delayed
To complete works
7.4.7 Unless the Lessors shall otherwise direct to carry out and complete
before the expiration or sooner determination of the said term
7.4.7.1 any works stipulated to be carried out to the demised premises by a
date subsequent to such expiration or sooner determination as a
condition of any planning permission granted for any development begun
by or on behalf of the Lessees or their underlessees before such
expiration or determination and
7.4.7.2 any development begun by or on behalf of the Lessors upon the demised
premises in respect of which the Lessors shall or may be or become
liable for any tax charge or levy under Planning Acts
To produce documents
7.4.8 If and when called upon so to do to produce to the Lessors all such
plans documents and other evidence as the Lessors may reasonably
require in order to be satisfied that the provisions of this covenant
have been complied with in all respect
To indemnify and to notify
7.4.9.1 To bear pay and indemnify the Lessors against all costs and expenses
which the Lessors may themselves incur or be required to bear pay or
contribute towards the expenses of any planning authority or government
department incurred pursuant
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to Planning Acts in enforcing and carrying into effect planning control
with regard to any development upon or use of the demised premises by
the Lessees or their tenants or underlessees
7.4.9.2 Upon becoming aware of any defect to notify the Lessors in writing of
any defect in or want of repair to the demised premises for which the
Lessors may be primarily or wholly responsible under the terms of this
Lease or any Act or Acts for the time being in force.
7.4.9.3 To indemnify the Lessors against all liability costs and expenses
reasonably and properly incurred by the Lessors in respect of all claims
made by any person or body arising out of the Lessees' failure to keep
the demised premises in repair in accordance with the covenants in that
behalf contained in this Lease or to carry out their obligations imposed
by paragraph 7.4.9.2 of this sub-clause
LESSEES' GENERAL COVENANTS
8. THE Lessees hereby further covenant with the Lessors as follows:-
8.1 To give access for repairs or alterations to adjoining premises etc.
To permit the Lessors and their agents or workmen and the tenants and
occupiers of any adjoining or neighbouring land or premises at any time
during the said term hereby granted at reasonable hours in the daytime
and upon giving reasonable prior notice in writing (except in the case
of emergency) to enter upon the demised premises with or without plant
and equipment for the purpose of cleansing or executing repairs or
alterations of any kind whatsoever to or upon any adjoining or
neighbouring premises where such works are necessary and cannot
conveniently otherwise be carried out or for complying with the
covenants on the part of the Lessors contained in this Lease the person
exercising such rights exercising the same with all due diligence and
causing as little inconvenience and
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disruption to the Lessees or other occupiers of the demised premises
as possible and making good forthwith to the reasonable satisfaction
of the Lessees any damage caused to the demised premises PROVIDED THAT
the Lessors shall ensure that the demised premises continue to be fit
for occupation and use and that access to and egress from the demised
premises shall not be adversely affected or that alternative not
materially less commodious access and egress shall be PROVIDED FURTHER
THAT in the case of any works which may cause vibration of or physical
damage to any equipment used for the purpose of Lessees business the
Lessor shall give to the Lessee at least 28 days prior notice in
writing to enter and execute such works
8.2 To permit access for inspection and to repair on notice being given
To permit the Lessors and their agents or workmen upon giving
reasonable prior notice in writing (except in the case of emergency)
with or without workmen and others from time to time and at all
reasonable times during the said term to enter upon the demised
premises and to inspect the condition or user thereof and of all
defects decays and wants of reparation then and there found for which
the Lessees are liable hereunder and to give or leave notice in
writing on the demised premises to remedy the same and that the
Lessees will within three months then next following such notice (or
sooner if requisite) commence and therefor proceed with all due
expedition well and substantially to repair and amend the same
accordingly
8.3 To permit access for the Lessors to carry out repairs on default by
Lessees
To permit the Lessors and their agents with or without workmen and
others after giving prior notice in writing (except in case of
emergency) to enter the demised premises and carry out all or any
repairs or other works which the Lessees are liable to execute in all
cases in which the Lessees shall not have started to execute the same
within two months after receiving notice so to do or in which the
Lessees having started to execute the same have failed to proceed with
all
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reasonable expedition to complete the same and in such cases to pay to
the Lessors on demand the cost of such repairs or works together with
all Solicitors and Surveyors charges and other expenses which may be
incurred by the Lessors in connection therewith but this covenant
shall in no way relieve the Lessees from their liability to execute
such repairs or works
8.4 To pay costs
To pay on demand to the Lessors all proper and reasonable costs
charges and expenses (including all such costs charges and expenses
payable to Surveyors or other agents) which may be incurred by the
Lessors:-
8.4.1 in or in contemplation of any application to any planning authority by
the Lessees or their Underlessees
8.4.2 in connection with the recovery of arrears of rent or other sums
payable by the Lessees under the provisions of this Lease and in the
preparation and service of any lawful notice under Sections 146 and
147 of the Law of Property Act 1925 or the Leasehold Property
(Repairs) Act 1938 or the taking of steps subsequent to that notice or
the effecting of any forfeiture whether or not requiring such notice
notwithstanding that forfeiture may be avoided otherwise than by
relief granted by the Court
8.4.3 in the enforcement or attempted enforcement of any covenant on the
part of the Lessees herein contained
8.4.4 in the preparation of the service of and negotiations consequent upon
the service upon the Lessees of any notice specifying a breach of
covenant or a schedule of dilapidations served during or within 6
months after the end or sooner determination of the term hereby
granted
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8.4.5 in considering any application to the Lessors for any consent licence
or approval to or of any document plan act deed or thing required under
the provisions of this Lease whether or not such consent licence or
approval shall be refused or granted in whole or in part or subject to
any lawful conditions and qualifications and unless such consent or
approval is unreasonably refused
8.4.6 in the supervision inspection or approval of any works to be carried
out by the Lessees
8.4.7 in the valuation from time to time (but not more than once in every
twelve month period) of the demised premises for the purpose of
ascertaining the full reinstatement cost for insurance purposes
And to keep the Lessors fully and effectually indemnified against all costs as
aforesaid and all proceedings expenses claims and demands whatsoever in respect
of the said applications consents notices negotiations and proceedings
8.5 To indemnify the Lessors against certain claims
To indemnify the Lessors in respect of all costs losses damages
expenses and liability to or incurred by the Lessors or any adjoining
or neighbouring owner tenant or occupier or other person or local or
other authority which may be caused by or may arise out of:-
8.5.1 any defect in the construction or execution by the Lessee of any
alteration or addition to the demised premises
8.5.2 any interference or obstruction by the Lessee of any right of light or
other right now existing for the benefit of any neighbouring property
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8.5.3 any stoppage by the Lessee of the drains used in common with occupier
of adjoining or neighbouring property
8.5.4 any contravention by the Lessee of the Planning Acts
8.5.5 any failure on the part of the Lessees to comply with their obligations
under this Lease
8.5.6 any act neglect or default of the Lessees their underlessees or their
respective agents servants licensees or invitees
8.6 To pay VAT
8.6.1 All rents hereby reserved and payments due to the Lessors under this
Lease being exclusive of Value Added Tax to pay (in addition to such
rents and payments payable by the Lessees to the Lessors) any Value
Added Tax which the Lessors are entitled or required to charge in
respect thereof
8.6.2 When making reimbursement under this Lease to the Lessors of costs and
expenses incurred by the Lessors (including but not limited to any
Surveyors' or Solicitors' charges) to pay (subject to the presentation
of a valid VAT invoice in the Lessee's name) the Value Added Tax
incurred by the Lessors in respect thereof save to the extent that such
Value Added Tax may be recoverable as input tax by the Lessors
8.7 To observe regulations
To observe and perform any reasonable regulations made by the Lessors
from time to time in relation to the demised premises
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8.8 New surety
If at any time during the term hereby granted the Surety (if any) or
any guarantor for the person or company in whom this Lease is then
vested or (where the surety or any guarantor comprises more than one
person) any one or more of those persons either dies becomes bankrupt
or has a receiving order made against him or being a company enters
into liquidation whether compulsory or voluntarily or an application
is made for a receiver or administrator or administrative receiver to
be appointed of all or any part of its assets to give notice in
writing to the Lessors forthwith with full details and within thirty
days of being so requested by the Lessors to procure at the expense of
the Lessees in all respects that some other person or persons
reasonably acceptable to the Lessors shall enter into surety covenants
with the Lessors in the terms set out in the Second Schedule hereto
8.9 To observe covenants
So far only as the same relate to the demised premises and are from
time to time subsisting and capable of taking effect to perform and
observe the obligations on the part of Crest Estates Limited contained
in the Transfer Deeds (as varied by the Supplemental Deeds) and in the
Supplemental Deeds and in Clauses 4 and 5 of the Council Deed and to
indemnify the Lessors against all costs claims demands and liability
in respect thereof
LESSORS' COVENANTS
9. THE Lessors HEREBY COVENANT with the Lessees as follows:-
9.1 That the Lessees paying the rents hereby reserved and observing and
performing the Lessees covenants and conditions herein contained shall
and may peaceably
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possess and enjoy the demised premises for the term hereby granted
without any interruption or disturbance by the Lessors or any person
lawfully claiming through under or in trust for them
9.2 To insure
To insure and (unless the policy or policies so effected shall be void
or voidable or payment of the policy moneys withheld or refused in
whole or in part by reason of any act neglect or default of the
Lessees or any underlessees or their respective servants agents
licensees or invitees) to keep insured the demised premises (provided
that the Lessor shall not be obliged to insure any tenant's fixtures
or fittings which may become Landlord's fixtures and fittings until
the Lessee has notified the Lessor in writing of the reinstatement
value thereof) in the joint names of the Lessors and the Lessees with
some Insurance Office of repute or with reputable Lloyds Underwriters
against loss or damage by fire and such other usual insurable risks
(hereinafter called "the insured risks") as the Lessors may from time
to time reasonably determine (due regard being had to any
representations made by the Lessees with regard to the type of risks
and level of cover) in a sum sufficient in the reasonably held opinion
of the Lessors to cover the full rebuilding cost (including sums for
demolition and clearance costs and proper architects surveyors and
engineers fees Value Added Tax at the rate from time to time
appropriate and a due allowance for cost increases over the likely
rebuilding period) of the demised premises and also against the loss
of rent hereunder from time to time payable for such period (being not
less than three years) as is reasonably required by the Lessors from
time to time having regard to the likely period required for
reinstatement in the event of both partial and total destruction and
in an amount which would take into account potential increases of rent
in accordance with the rent review provisions contained in the Third
Schedule hereto subject in all cases to any excesses exclusions
conditions and limitations common to insurance of similar premises
imposed by the insurers or underwriters and to the exclusion of such
risks as cannot reasonably be insured by the Lessors on
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reasonably satisfactory terms or as the Lessors' insurers or
underwriters have reasonably refused to insure Provided Always that the
Lessors shall not be under any obligation to insure any fixtures or
fittings installed by the Lessees which have become part of the demised
premises unless the Lessees shall have given to the Lessors written
notice of such installation and of the full cost of reinstatement
thereof and the Lessors have agreed with the Lessees at their request to
effect the insurance thereof.
9.3 To rebuild and reinstate
Subject to sub-clause 9.4 hereof in the event that the demised premises
shall be destroyed or damaged by any of the risks insured against by the
Lessors as aforesaid to rebuild reinstate and make good (as the case may
be) the demised premises with all reasonable speed when it is lawful so
to do (except fixtures and fittings therein in respect of which the
Lessees have not given written notice of the installation thereof as
herein provided) and in case of rebuilding or substantial reinstatement
this covenant by the Lessors shall be satisfied if the Lessors provide
in the premises so rebuilt or reinstated accommodation as convenient and
commodious as is reasonably practicable but not necessarily identical to
the demised premises as the same existed prior to such damage or
destruction PROVIDED THAT the Lessors shall not be liable to rebuild or
reinstate the demised premises if:
9.3.1 the Lessors are unable having used all reasonable endeavors to obtain
all consents necessary to execute such rebuilding and reinstatement; or
9.3.2 rebuilding or reinstating shall be frustrated for any other reason
and then in either case the Lessors shall be entitled to retain for
their own benefit all insurance monies received or receivable
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9.4 Right to determine
In any case in which after any destruction or damage to the demised
premises by any of the risks insured against by the Lessors as aforesaid
the demised premises shall not be rebuilt or reinstated within the
period of two years and nine months the Lessors or the Lessees may
determine this Lease by giving not less than three months written notice
to the other whereupon this Lease shall absolutely determine but without
prejudice to any claim by any party in respect of any antecedent breach
non-observance or non-performance of any of another party's covenants
and the conditions herein contained and all insurance moneys and the
interest earned thereon shall become the absolute property of the Lessors
9.5 For suspension of rent in case of damage by fire etc.
In the event that the demised premises shall be destroyed or damaged by
any of the risks insured against by the Lessors (unless as aforesaid
provided in Clause 9.2) so as to be unfit for occupation or use then the
rent hereby reserved or a fair proportion thereof according to the
nature and extent of the damage sustained shall cease to be payable by
the Lessees from the date of damage or destruction until the demised
premises are restored fit for use and occupation by the Lessees or until
the expiration of three years (or such longer period as shall have been
insured by the Lessors as aforesaid) whichever shall first occur
9.6 Design Faults
Notwithstanding the Lessees' covenants in these presents contained the
Lessors covenant with the Lessees that if in relation to the design or
construction of the demised premises there exist or appear in the
demised premises (including the air conditioning equipment and the lift)
any defect or faults of which the Lessees give to the Lessors full and
detailed particulars and where and only where the Lessors have the
benefit of a right to claim under a warranty and where they are advised
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that the claim has a reasonable prospect of success and where there is a
reasonable prospect of recovery then the Lessors will at the request of
the Lessees use their reasonable endeavors at the Lessees expense
including the provision of reasonable security for costs from the Lessee
upon demand reasonably made enforce against the party or parties
responsible therefor their respective obligations to remedy the same or
otherwise or alternatively to recover from the said party or parties the
cost of and incidental to carrying out appropriate remedial works or
other measures before seeking to enforce the Lessees' covenants herein
contained in respect of such matters Provided that nothing in this clause
shall detract from the Tenant's covenant to repair the demised premises
save to the extent that the Lessor recovers sums in respect of such
defects or faults and provided further that the Lessee shall indemnify
the Lessor against all costs claims demands and expenses incurred by the
Lessor including the costs or claims of any third party in pursuing such
claims pursuant to a request by the Lessee except to the extent that the
Lessor actually recovers a contribution thereto from a third party
PROVISO FOR RE-ENTRY
10. PROVIDED ALWAYS that if the rents or any part thereof hereby reserved or
made payable shall at any time be unpaid for the space of 14 days after
the same shall have become due (whether the same shall have been legally
demanded or not) or in the case of the breach non performance or
non-observance of any of the Lessees' covenants herein contained or if
the Lessees being a Company shall enter into liquidation whether
compulsory or voluntary (save for the purpose of reconstruction or
amalgamation) or have a Receiver Administrator or Administrative Receiver
appointed in respect of the whole or any part of the undertaking or
assets of the Lessees or if the Lessees or any assignees of the Lessees
or if more than one if any of them shall become bankrupt or make any
assignment for the benefit of creditors or enter into any agreement or
make any arrangement with creditors for liquidation of their debts by
composition or
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otherwise or suffer any lawful distress or process of execution to be
levied on their goods then and in any of the said cases it shall be
lawful for the Lessors (notwithstanding the waiver of any previous right
of re-entry) to enter into and upon the demised premises or any part
thereof in the name of the whole and to repossess the same as of their
former estate but without prejudice to any right of action or remedy of
either party in respect of any antecedent breach of any of the other
party's covenants herein contained
GENERAL PROVISOS AND AGREEMENTS
11. PROVIDED FURTHER AND IT IS HEREBY AGREED AS FOLLOWS:-
11.1 Service of Notice
Any notices required by this Lease to be served on the Lessors or the
Lessees shall be in writing and may be given either in any of the modes
provided by Section 196 of the Law of Property Act 1925 (as amended)
with respect to notices to be given to the Lessors or the Lessees (as
the case may be) under that Act or in the case of a notice requiring to
be served upon the Lessees by such notice being affixed to or delivered
to or sent by pre-paid postage to the demised premises addressed to the
Lessees for the time being
11.1 Interest
If any sum payable by the Lessees to the Lessors under the provisions of
this Lease shall not be paid upon the date upon which it is due the same
shall be payable with interest thereon at the rate of 3% per annum above
National Westminster Bank PLC Base Rate from time to time calculated on
a day to day basis from the said day upon which it is due to the date of
payment in full of the same together with interest thereon and
compounded at quarterly rests on the usual quarters days PROVIDED that
this clause shall not apply to rent unless and
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until it shall be unpaid for the space of fourteen days after the same
shall have become due and shall not apply to any other sum payable under
this Lease unless and until it shall be unpaid for the space of thirty
days but so that interest shall thereupon in either case be payable in
accordance with the provisions herein contained calculated from the due
date for payment of such rent or other sum to the date of payment in
full of such rent and interest thereon or re-entry which ever shall be
the later
11.2 Lessors as Lessees' agent
The Lessees irrevocably appoint the Lessors to be the Lessees' agent to
store and/or dispose of any of the Lessees' fixtures and fittings
furniture and effects left by the Lessees on the demised premises for
more than thirty days after the expiry or sooner determination of the
term hereby granted on any terms which the Lessors think fit without the
Lessors being liable to the Lessees save to account for the net proceeds
of sale less the cost of storage (if any) and any other expenses
reasonably incurred by the Lessors
12. THE Surety hereby covenants with the Lessors in the term set out in the
Second Schedule hereto
INTERPRETATIONS
13. IN this Lease and in any document ancillary or supplemental hereto
unless the contrary intention appears:-
13.1 words importing the masculine gender shall include the feminine and
neuter genders and vice versa
13.2 words in the singular shall include the plural and vice versa
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13.3 where the "Lessees" or "Sureties" comprise two or more persons all
covenants and agreements on the part of such persons herein contained
shall be deemed to be made jointly and severally
13.4 the expression "the demised premises" shall (save where expressly
specified to the contrary herein) include the whole of the said
premises and/or each and every part thereof
13.5 any covenant on the part of the Lessees not to do any act deed or thing
shall include a covenant not to allow or permit such act deed or thing
to be done
13.6 any reference to any Act of Parliament shall include reference to any
Act or Acts amending or replacing the same or any order instrument
bye-law or regulation made or to be made thereunder
13.7 any reference to the term hereby granted shall include reference any
holding over or of any extension of such term
13.8 where any consent licence or approval of the Lessors is required
hereunder such consent licence or approval may be considered refused or
granted by or under the hand of such qualified surveyor (whether
employed by or otherwise engaged by the Lessors) as the Lessors may
from time to time nominate in respect of matters relating to the
demised premises to the period of
HEADINGS
14. THE headings to the clauses and sub-clauses are inserted for
convenience of reference only and shall not in any manner affect the
construction meaning or effect of anything herein contained or govern
the rights and liabilities of the parties hereto
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15. It is hereby certified that this Lease is not made pursuant to any
Agreement for Lease
IN WITNESS whereof the parties have caused this Deed to be duly executed the
day and year first above written
THE FIRST SCHEDULE ABOVE REFERRED TO
1. First five years of the term
1.1 The rent payable during the first (sixteen and a half months) of the
term shall be one red rose
1.2 The rent payable from the expiry of the rent-free period referred to
in 1.1 up to and including 24th March 2003 shall be 255,000 Pound
Sterling per annum.
2. "Rent Period"
For the purposes of this Schedule the expression "rent period" means
and includes each of the successive periods of five years commencing
at the ends of the fifth tenth and fifteenth years of the term hereby
created
3. "Annual rack rent value"
For the purposes of this Schedule the expression "annual rack rent
value" means at any date the best yearly rent reasonably obtainable
for the demised premises at such date
3.1 Assumptions
on the basis and assumption:
(REVISED)
<PAGE> 46
3.1.1 that at such date the demised premises have been fully fitted out by
the Lessees and are ready for immediate beneficial occupation and use
and
3.1.2 that no work has been carried out upon the demised premises by the
Lessees or their predecessors in title which has diminished the rental
value of the demised premises except to the extent that it has been
carried out pursuant to any statutory requirements or the requirement
of any local authority or other public body and
3.1.3 that if the demised premises have been damaged they have been fully
restored and
3.1.4 that the covenants contained in this Lease have been fully performed
and observed by the Lessees until such date and
3.1.5 that prior to such date the willing tenant has occupied the demised
premises under licence and without payment of rent or any other fee
for such period as might then be expected to be available to the
willing tenant in the open market for the purposes of fitting out the
demised premises
3.2 Terms of Lease
having regard to market rental values current at such date for
property similar in size and quality to the demised premises in
similar locations let by a willing landlord to a willing tenant
without a premium with vacant possession and subject to the same terms
and conditions (other than as to the amount of the rent hereby
reserved) as are contained in this Lease including the provisions of
this Schedule for a term from the commencement of such rent period
equal to the residue of the original term hereby granted or ten years
(whichever shall be the longer period) and
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3.3 Disregards
disregarding any effect on rent of
3.3.1 the fact that the Lessees have been in occupation of the demised
premises and
3.3.2 any goodwill attached or attributable to premises by reason of any trade
or business the Lessees and
3.3.3 any works and improvements (shown to be such by the Lessees) made to the
demised premises by the Lessees during the term hereby granted at the
sole expense of the Lessees (without liability on the part of the
Lessors to contribute or to pay compensation in respect thereof) with
the prior written consent of the Lessors other than in pursuance of any
obligation on the part of the Lessees or under any document or in
consideration of any reduction or abatement of rent or fee payable under
any license or agreement during any period whether prior to or during
the term hereby granted and
3.3.4 any statute enactment order rule regulation principle or other thing or
matter at the date hereof or at any time hereafter applying or in force
restricting the amount the yearly rent which the Lessors may lawfully
demand and receive or which the Lessees may lawfully pay and
3.3.5 the existence in the open market of (and the absence from the letting to
the willing tenant of) any rent free period or concessionary rent period
or any discount benefit reduction allowance or contribution whether (1)
given as compensation for the cost of fitting out which on a new letting
with vacant possession might be granted to the willing tenant or (2)
given as an inducement or incentive to enter into a new Lease but not
for the purpose of an increase in rent to the intent that such annual
rack rent value shall be that which would be payable after the expiry of
any such rent free or
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concessionary period and after receipt of any such discount benefit
reduction allowance contribution inducement or incentive
3.3.6 that the willing tenant and its potential assignees or underlessees of
the demised premises suffer no disadvantage at such date or at any time
during the term arising from an actual or potential election by the
Lessors to waive exemption in respect of Value Added Tax so far as
concerns rent or any other taxable supply received by the Lessee under
or in connection with this Lease
4. Rent payable
The amount of the yearly rent payable under this Lease for each rent
period shall be the greater of the following amounts namely:
4.1 the amount of the yearly rent payable under this Lease for the year
immediately preceding such rent period or
4.2 the amount of the annual rack rent value of the demised premises at the
commencement of such rent period
5. Disputes
The annual rack rent value of the demised premises at the commencement
of each rent period unless agreed between the Lessors and the Lessees
not later than two calendar months before the commencement of such rent
period or such later date as shall be agreed in writing by the Lessors
and the Lessees shall be determined on each such occasion by an
independent Surveyor who is actively involved in letting office
premises in the neighborhood of the demised premises to be agreed upon
by the Lessors and the Lessees and in default of agreement to be
appointed by the President of the Royal Institution of Chartered
Surveyors on the written request of the Lessors
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or of the Lessees at any time or times after failure to reach an
agreement as aforesaid (or if such President shall be unable or
unwilling to make such appointment such Surveyor shall be appointed by
such officer of such professional body of surveyors as the Lessors
shall designate) and it is hereby declared
5.1 that the said Surveyor so appointed shall act as an expert
5.2 that the said Surveyor shall have regard to any written submissions to
him by or on behalf of the Lessors or the Lessees
5.3 that no notices or correspondence headed "without prejudice" between
the Lessors and the Lessees or their respective servants employees and
agents shall be disclosed to the said Surveyor
5.4 that the decision of the said Surveyor shall be final and binding on
the parties hereto
5.5 that the fees of the said Surveyor and the costs of shall be borne as
the said Surveyor shall direct
5.6 that if either party shall fail on demand to pay any part of the fees
or costs of appointment of the said Surveyor which such party is due to
pay then the other shall be entitled to pay the same and shall be
entitled to recover the same from the party failing so to pay as a
debt; and
5.7 that if the said Surveyor shall die delay or become unwilling or
incapable of acting or if the President of the Royal Institution of
Chartered Surveyors shall in his absolute discretion think fit the said
President (or such other officer as aforesaid) may discharge the said
Surveyor and appoint another Surveyor in his place
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6. Delay
For the avoidance of doubt it is hereby agreed and declared that if for
any reason whatsoever the yearly rent payable during any year of the
term or during any rent period shall not have been determined by the
commencement of such year or rent period the rent when so determined
shall nevertheless by payable with effect from the commencement of such
year or rent period the Lessees being liable to pay in the meantime the
same yearly rent as was payable in the year immediately prior to the
commencement of such year or rent period and the Lessees being liable
to make up any deficit forthwith on determination thereof and to pay by
way of additional rent an amount equal to interest at the rate of
National Westminster Bank PLC Base Rate from time to time such interest
to be calculated on a day to day basis upon the whole or (as the case
may be) part or parts of such deficit from the date or dates when such
deficit or part or parts thereof would have been due and payable to the
Lessors hereunder if the yearly rent for such year or rent period had
been determined before the commencement of such year or rent period
down to the date of payment of the whole or part (as the case may be)
of such deficit
7. Rent freeze
If at the commencement of any rent period or at the date of
determination of the yearly rent payable at the commencement of any
rent period the Lessors shall be prohibited by any enactment (which
expression shall include any Act of Parliament or instrument regulation
or order) from receiving the whole of such yearly rent in accordance
with the terms of this Lease then the Lessors shall on the occasion
when such enactment is or is to be removed relaxed or modified be
entitled to give one month's notice in writing to the Lessees expiring
at any time on or after the date of such removal relaxation or
modification requiring re-assessment of the yearly rent payable for the
remainder of the rent period in which the expiry of such notice fails
by reference to annual rack rent value as at the date of expiry of such
notice such re-
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assessment to be carried out and the provisions of this Paragraph to
apply as if a new rent period had been created commencing on the date
of expiry of such notice and ending on the expiry of the then current
rent period (as defined in paragraph 3 of this Schedule)
8. Memorandum
The amount of the yearly rent payable in respect of the fifth years of
the term and each subsequent rent period once calculated in accordance
with the provisions of this Schedule shall be recorded on a memorandum
to be prepared by the Lessors' Solicitors the reasonable cost of the
same to be paid by the Lessees to be signed by or on behalf of the
Lessors and the Lessees and to be attached hereto
THE SECOND SCHEDULE ABOVE REFERRED TO
COVENANTS AND AGREEMENTS BY THE SURETY
1. The Surety covenants with the Landlord as a primary obligation:
1.1 that the Lessees or the Surety shall at all times during the term
hereby granted duly perform and observe all the covenants conditions
and other provisions on the part of the Lessees to be observed and
performed in this Lease (including the payment of the rents and all
other sums from time to time payable under this Lease) in the manner
and at the times specified and shall indemnify the Lessors against all
actions proceedings losses liabilities costs damages expenses claims
and demands sustained by the Lessors in any way arising out of or
resulting from any default by the Lessees in the performance and
observance of any such covenants conditions and other provisions
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1.2 that if a liquidator or trustee in bankruptcy shall disclaim or
surrender this Lease or this Lease shall be forfeited or the Lessees
shall die or cease to exist (the date on which any such event occurs
being referred to in this Schedule as "the Relevant Date") then the
Surety shall (if the Lessors by notice in writing given to the Surety
within six months after the Relevant Date so require) accept from and
execute and deliver to the Lessors a counterpart of a new lease of the
demise premises for a term commencing on the Relevant Date and
continuing for the residue then remaining unexpired of the term hereby
granted such new lease to be at the cost of the Surety and to be at the
same rents and subject to the same covenants conditions and provisions
as are contained in this Lease and
2. The Surety is jointly and severally liable with the Lessees (whether
before or after any disclaimer by a liquidator or trustee in
bankruptcy) for the fulfilment of all the Lessees' covenants conditions
and other provisions contained in this Lease and the Lessors in the
enforcement of their rights may proceed against the Surety as if the
Surety were named as the Lessees in this Lease
3. None of the following (or any combination of them) shall release
determine discharge or in any way lessen or affect the liability of the
Surety as principal debtor under this Lease or otherwise prejudice or
affect the liability of the Surety to accept a new lease in accordance
with the provisions of this Schedule:-
3.1 any neglect delay or indulgence or extension of time given by the
Lessors in enforcing payment of the rents or any other sums due under
this Lease or in enforcing the performance or observance of any of the
Lessees' covenants conditions or other provisions contained in this
Lease
3.2 any refusal by the Lessors to accept rents tendered by or on behalf of
the Lessees following a breach of covenant by the Lessees
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3.3 any variation of the terms of this Lease (including any reviews of the
rents payable under this Lease) (other than a material substantial
variation of this Lease having adverse financial effect to which the
Surety is not a party) or the transfer of the Lessors' reversion
3.4 any other act omission matter or thing of any kind by virtue of which
(but for this provision) the Surety would be exonerated either wholly
or in part (other than a release under seal given by the Lessors)
4. This guarantee shall subsist for the benefit of the successors and
assigns of the Lessors under this Lease without the necessity for any
assignment of it
THE THIRD SCHEDULE
CIRCUMSTANCES TO BE SATISFIED PRIOR TO ASSIGNMENT
1. The proposed assignee does not have the benefit of diplomatic or state
immunity (but to avoid doubt this circumstance shall not apply where
the proposed assignee is the Government of the United Kingdom of Great
Britain and Northern Ireland or any Department thereof)
2. The proposed assignee and/or any proposed guarantor of the assignee is
a company registered in (or if an individual is resident in) a
jurisdiction in which the order of a Court obtained in England and
Wales will be enforced without any substantial consideration of the
merits of the case
THE FOURTH SCHEDULE
CONDITIONS TO BE COMPLIED WITH PRIOR TO ASSIGNMENT
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1. On or before any assignment and before giving occupation to the assignee if
reasonably required by the Landlord the delivery to the Landlord by the
Tenant and the immediate former Tenant who is to be released from liability
in the circumstances described in Section 11(2) of the 1995 Act of an
authorised guarantee agreement (as provided for in Section 16 of the 1995
Act) in such reasonable form as shall be agreed between the Landlord and
the Tenant
2. On or before any assignment and before giving occupation to the assignee
any guarantor of the Tenant's obligations under the Lease shall covenant by
way of indemnity and guarantee (if more than one jointly and severally) and
in such form as the Landlord shall reasonably require that the Tenant will
observe and perform all its covenants and obligations under any authorised
guarantee agreement entered into by the Tenant
3. The payment to the Landlord of all rents which have fallen due under the
Lease prior to the date of the proposed assignment except in the case of
bona fide dispute or where the Tenant has made an unconditional offer to
pay and the Landlord has refused to accept it
4. The remedying of any subsisting material breach of any Tenant covenant
and/or any personal covenant on the part of the Tenant in this Lease which
is capable of remedy
5. Before the Landlord grants its formal consent to the assignment the Tenant
pays all reasonable costs fees and expenses and internal administrative
costs (including legal surveyors and other professional fees disbursements
and Value Added Tax) properly incurred by the Landlord in connection with
the Tenant's application for consent
6. Any other requirements which the Landlord reasonably imposes as a condition
of granting consent have been complied with
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Executed as a deed (but not delivered until the date hereof) and Signed as a
deed by Symantec (UK) Limited acting by two directors:
/s/ DEREK WITTE (director)
/s/ HOWARD BAIN III (director)
THE COMMON SEAL of )
SYMANTEC )
CORPORATION ) /s/ DEREK WITTE
was hereunto affixed )
in the presence of )
EXECUTED AS A DEED (but not delivered until the date hereof) by SYMANTEC
CORPORATION acting by [Derek Witte] its duly authorized signatory in the
presence of:
/s/ DEREK WITTE
WITNESS
/s/ DAKIN FERRIS
NAME: Dakin Ferris
Address: 10201 Torre Ave.
Cupertino, CA 95014
Description: Corporate Counsel
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<PAGE> 56
THE COMMON SEAL of )
HILL SAMUEL BANK )
LIMITED was ) [SEAL]
hereunto affixed in the )
presence of )
Director /s/ Hill Samuel Bank Limited
Assistant Secretary /s/ Hill Samuel Bank Limited
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<PAGE> 1
EXHIBIT 10.04
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
June 24, 1998 among Symantec Corporation, a Delaware corporation, and its wholly
owned subsidiary Symantec Limited, an Ireland corporation, (collectively,
"SYMANTEC"), and Binary Research Ltd., a New Zealand corporation ("BRL") and its
wholly owned subsidiary, Binary Research International, Inc., a Wisconsin
corporation ("BRI") (collectively BRL and BRI are referred to as "BR") on the
other hand, and, solely for purposes of Section 11.2 and 11.5 hereof, the
undersigned Stockholders. Although this Agreement is entered into as of June 24,
1998, it is the intent of the parties that the assets to be transferred and the
liabilities to be assumed will have an effective date as of April 1, 1998 (the
"EFFECTIVE DATE"), such that Symantec will have the benefits and obligations
with respect to such transferred assets and assumed liabilities from and after
the Effective Date.
RECITALS
A. BRL is in the business of developing, marketing and distributing
certain software products described in EXHIBIT A hereto (the "BUSINESS"). BRI
acts solely as a sales and service agent for BRL in the Business.
B. The parties intend that, subject to the terms and conditions
hereinafter set forth, Symantec will purchase from BR all its right, title and
interest in and to the Business, including the software programs existing and
under development, derivative works and related technical material and assets
used in the Business, as set forth below.
C. In exchange for the purchase of the assets comprising the
Business, Symantec will make certain payments to BR.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Sale and Assignment of Assets. Subject to and on the terms
and conditions set forth in this Agreement, Symantec will purchase from BR and
BR will sell, assign, convey, transfer and deliver to Symantec the following
assets related to the Business (collectively the "ASSETS"):
(a) All the right, title and interest of BR in and to
all software programs of BR, including those described in EXHIBIT A-1 (the
"PROGRAMS"), and in and to all tools of BR, including those described in EXHIBIT
A-2 (the "TOOLS"), including, but not limited to, all source codes, computer
software programs, descriptions, layouts, diagrams, reports, test and other data
and programs, and all related documentation and information, for the current and
all preceding versions of the Programs and the Tools, all Intellectual Property
Rights (as defined
<PAGE> 2
in Section 3.10 below) therein, including all source code, object code,
marketing rights, patents, patent rights, patent applications, copyrights,
copyright registrations, copyright applications, trademarks, trademark
registrations, trademark applications, trade secrets, rights of priority,
technology, know-how, inventions, moral rights, vendors lists, confidential and
proprietary information related thereto, including the right to secure renewals,
reissuances and extensions of the foregoing, and all Derivative Works prepared
from any of the Programs or Tools. As used in this Agreement, "DERIVATIVE WORK"
includes any translation, adaptation, modification, extension, upgrade,
improvement, compilation, abridgment or other form in which any of the Programs
or Tools may be recast, transformed or adapted where such derivative work would
infringe any of the copyrights, including audio-visual copyrights, in any of the
Programs or Tools.
(b) All right, title and interest of BR in and to all
software code developed on or before the date of this Agreement or in
development as of the date of this Agreement, including the software code
described in EXHIBIT B (the "DEVELOPMENTS"). The Programs, the Tools and the
Developments are collectively referred to herein as the "SOFTWARE PROGRAMS".
(c) All Intellectual Property Rights of BR.
(d) All right, title and interest of BR in and to the
following:
(i) All licenses, investments, obligations,
contracts and other agreements or commitments of BR to the extent that they are
used in connection with the Business (which licenses, contracts and other
agreements are listed by BR in EXHIBIT C hereto), excluding any licenses,
instruments, obligations, contracts or other agreements or commitments
designated in SCHEDULE 1.1 or otherwise excluded by agreement of the parties in
writing prior to the Closing (as defined in Section 7 below). To the extent that
any license, contract or other agreement related to the Business that has not
been disclosed to Symantec is discovered after the Closing, Symantec will have
the right to elect whether or not to have such license, contract or agreement
assigned to Symantec. The licenses and other agreements to be assigned to
Symantec hereunder are referred to herein as the "CONTRACTS".
(ii) All tangible assets used by BR in connection
with the Business including but not limited to:
(A) computers, peripherals and other
equipment, storage media,
(B) furniture, file cabinets, tools and
supplies, leasehold improvements
(C) inventories of raw material, work in
process, and finished goods;
(which tangible assets are listed by BR in detail in EXHIBIT D hereto, except
for certain items valued at less than $1,000 each which may aggregated on such
list). For purposes of allocating
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the purchase price for the Assets, the tangible assets will be valued at the net
book value therefor as of the Closing.
(iii) All end-user licenses and associated rights
related to "off-the-shelf" commercial
software products used in connection with computer and data processing equipment
included in the tangible assets described in (ii) above.
(iv) All domain names, URLs, and phone numbers
used in connection with the Business.
(e) Accurate and complete copies of BR's books and
records, including but not limited to:
(i) stock ledgers, minute books, tax returns and
other corporate documents,
(ii) marketing and sales information, pricing,
marketing plans, business plans, financial and business projections,
(iii) correspondence, production records,
employment records
(iv) contracts with vendors, distributors,
resellers, customers and other parties to the extent related to the Business;
(v) any confidential information which has been
reduced to writing relating to or arising out of the Business, and other files
and records relating to the Business (the "BUSINESS RECORDS"). Notwithstanding
the foregoing, the parties agree that BR may retain the originals of all
Business Records, provided that in the event that such originals are needed for
Symantec's operation of the Business after the Closing, the parties will
cooperate in providing access thereto.
(f) The right to enforce confidentiality,
non-disclosure, employee invention and other proprietary rights agreements
between BR and third parties, employees, consultants and contractors with
respect to the Software Programs and the Intellectual Property Rights.
(g) All cash, marketable securities, accounts, accounts
receivable, notes and notes receivable which arose out of BR's conduct of the
Business and which are payable to BR, including any security held by BR for the
payment thereof, but excluding any of the foregoing which prior to the execution
of this Agreement shall have been placed by BR in the hands of a third party for
collection (provided, however, that any proceeds thereof shall be included);
(h) All prepaid items, deposits and other similar
assets of BRI existing on the Closing Date (the prepaid items, deposits and
other similar items to be conveyed to Symantec pursuant hereto are hereinafter
collectively referred to as the "Prepaid Items");
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<PAGE> 4
(i) Except as specifically provided in Section 1.2
hereof, all other assets and properties of BR whether tangible or intangible,
real or personal.
1.2 Excluded Assets. Those assets of BR listed in EXHIBIT E
hereto will be retained by BR and will not be sold and transferred to Symantec
(the "EXCLUDED ASSETS").
1.3 Conveyance of Assets. From and after the Closing, BR will
not retain any further right in or to the Assets, except (a) for the Excluded
Assets; and (b) for any licenses, contracts or other agreements not transferred
to Symantec as provided in Section 1.1(d)(i) above. BR hereby represents to
Symantec that it owns, and it will convey to Symantec at the Closing, the Assets
free and clear of any and all restrictions, except as set forth above in Section
1.1 or in SCHEDULE 1.3, and free and clear of any and all liabilities,
obligations, liens or encumbrances, except only those liabilities and
obligations which are set forth in SCHEDULE 1.3. The Assets will be delivered to
Symantec at their current locations; intangible assets will be deemed delivered
at BRL's principal place of business.
1.4 Assumption of Liabilities. Symantec will assume, effective
on the Closing, only those liabilities and obligations of BR (a) entered into or
incurred in the ordinary course of business from and after April 1, 1998, (b)
under those Contracts transferred to Symantec pursuant to Section 1.1(d)(i)
which are incurred after the Effective Date, (c) that are listed in SCHEDULE
1.4, (d) that constitute Distributor Liabilities as defined in Section 11.2
(provided that Symantec will be entitled to indemnification for Indemnified
Distributor Claims to the extent set forth in Section 11.2 and the Escrow
Agreement), (e) that constitute taxes and charges to be paid by Symantec
pursuant to Section 7.2 (provided that any such taxes paid shall be treated as a
Loss under Section 11.2.3 hereof), (f) that arise under any Employee Plan (as
defined in Section 3.14.3 and that has been disclosed to Symantec in writing),
(g) that constitute warranty claims or service claims based on warranties
disclosed by BR to Symantec pursuant to the Schedules attached hereto, or (h)
that constitute obligations to employees arising from termination of their
employment by BR because Symantec chooses not to hire them (up to the amount of
severance pay for such employees indicated in the Transition Agreement entered
into between the parties even date herewith) other than liabilities based on
express contracts not disclosed on a Schedule hereto. Symantec will not assume
any liabilities or obligations of BR of any nature whatsoever, except as
expressly provided in the first sentence of this Section 1.4, whether now
existing or hereafter arising, including those (i) arising under ERISA (as
defined in Section 3.14.3 below), or (ii) except as set forth above in this
Section 1.4, arising under any claim existing, accrued or accruing, contingent
or otherwise, before the Closing.
2. PAYMENT FOR PURCHASE AND SALE OF ASSETS
2.1 Aggregate Purchase Price. The aggregate purchase price to
be paid to BR by Symantec for the Assets shall be US$27,500,000.00, payable in
cash or by wire transfer ("PURCHASE PRICE"). BRI is only a sales and service
agent for BRL under an arrangement terminable at will and owns no right, title
or interest in or to any of the Software Programs, Developments or other
Intellectual Property Rights that are part of the Assets or any goodwill.
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<PAGE> 5
Accordingly BRI is being paid only for the book value of its Assets; all of the
remaining Purchase Price is being paid to BRL.
2.2 Payment at Closing. The sum of US$23,500,000.00 shall be
paid to BR by Symantec at the Closing, which sum shall be credited against the
Purchase Price.
2.3 Balance of Purchase Price; Escrow. At the Closing,
Symantec will deposit US$4,000,000.00 (the "ESCROW FUNDS"), in an escrow
account, such Escrow Funds to be held in escrow pursuant to an escrow agreement
(the "ESCROW AGREEMENT") (attached hereto as EXHIBIT F) to secure the
indemnification obligations of BR and the Stockholders. The Escrow Funds will be
the sole and exclusive source for the payment of any indemnification obligations
of BR and/or the Stockholders hereunder. The balance of the Purchase Price shall
be paid to BR or the Stockholders by Symantec in accordance with the Escrow
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BR
BR hereby represents and warrants that, except as set forth on
the Schedules of Exceptions delivered by BR to Symantec herewith and referred to
below in this Article 3:
3.1 Organization and Good Standing. Each of BRL and BRI is a
corporation duly organized, validly existing and in good standing under the laws
of New Zealand and Wisconsin, respectively. Each of BRL and BRI has the
corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified as a foreign corporation in the jurisdictions listed on SCHEDULE 3.1.
Except as listed on Schedule 3.1, neither BRL, nor BRI owns or leases any real
property, has employees or maintains a place of business in any country other
than New Zealand. The shares of voting capital stock of BRL and BRI are owned by
the persons and entities on Schedule 3.1. Except as listed on Schedule 3.1, no
other person or entity has any right to acquire any shares of capital stock of
BRL or BR. BRL has no subsidiary other than BRI and no ownership interest in any
other entity. BRI has no subsidiaries and owns no ownership interest in any
other entities.
3.2 Power, Authority and Validity.
3.2.1 Each of BRL and BRI has the corporate right, power,
legal capacity and authority to enter into and perform its respective
obligations under this Agreement. The execution, delivery and performance of
this Agreement by BRL and BRI have been duly and validly approved by the Board
of Directors of BRL and BRI, respectively, and by the required vote of the
holders of their respective capital stock.
3.2.2 Except as set forth in Schedule 3.2.2, no filing,
authorization or approval, governmental or otherwise, is necessary to enable BRL
or BRI to enter into, and to perform its respective obligations under, this
Agreement, except for consents required under the Contracts or other agreements,
instruments or commitments disclosed in Schedule 3.3 as exceptions to the
representation made in the last sentence of Section 3.3 below.
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<PAGE> 6
3.2.3 This Agreement constitutes the valid and binding
obligation of BRL and BRI enforceable against it in accordance with its terms,
except as to the effect, if any, of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.3 No Violation. Except as set forth on SCHEDULE 3.3, neither
the execution and delivery of this Agreement, nor the consummation of the
transactions provided for herein, will conflict with, or (with or without notice
or lapse of time, or both) result in a termination, breach, impairment or
violation of, (a) any provision of the charter documents of BRL or BRI,
respectively, as currently in effect, (b) in any material respect, any Contract
or any other agreement, instrument or commitment to which BRL or BRI,
respectively, is a party or by which it is bound or (c) any federal, state,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to BRL or BRI. The consummation of this Agreement and Symantec's
acquisition of the Assets and exercise of the rights hereunder in and of
themselves will not (x) result in the creation of any lien upon the Assets, (y)
require the consent of any third party or (z) have a material adverse effect
based upon any matter described in subparts (a) through (c) and (x) through (y)
upon any such Assets or the exercise of any such rights, other than as set forth
in Schedule 3.3. Except as set forth in Schedule 3.3, neither BRL nor BRI is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing any indebtedness, any agreement or other instrument which restricts
or otherwise limits either BRL's or BRI's right to transfer the Assets or will
restrict Symantec's use thereof after transfer to Symantec.
3.4 Litigation. Except as set forth in SCHEDULE 3.4, there is
no action, proceeding or investigation pending or threatened in writing against
BRL or BRI before any court or administrative agency that, if determined
adversely to BRL or BRI, may reasonably be expected to have a material adverse
effect on (a) the present or future value of the Assets, (b) the transfer of any
of the Assets to Symantec under this Agreement or (c) the ownership or use, in
any respect, of any of the Assets by BRL or BRI or Symantec. Except as set forth
in Schedule 3.4, to the actual knowledge of BR, there is no substantial basis
for any person, firm, corporation or entity to assert a claim against BRL or
BRI, or against Symantec as successor in interest to BRL or BRI, based upon
ownership or rights to ownership of any of the Assets.
3.5 BR Financial Information. BR has delivered to Symantec as
SCHEDULE 3.5A the audited consolidated financial statements of BR at May 31,
1997 and for the year then ended and the unaudited consolidated financial
statements of BR at March 31, 1998 and for the 10 months then ended
(collectively, the "BR FINANCIAL STATEMENTS"). The BR Financial Statements, in
all material respects, (a) are in accordance with the books and records of BR,
(b) fairly and accurately represent the financial condition of BR, and do not
misrepresent the assets of BR, and (c), have been prepared substantially in
accordance with New Zealand generally accepted accounting principles
consistently applied in accordance with past practice ("GAAP"), and fairly and
accurately represent the results of operations for the periods specified
therein, provided that the unaudited consolidated financial statements lack
notes and year end adjustments. Except as set forth in SCHEDULE 3.5C, to BR's
knowledge (after such inquiry as would be required under GAAP), BR has no
material debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not
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reflected, reserved against or disclosed in the BR Financial Statements, except
for (i) those that are not required to be reported in accordance with GAAP and
are disclosed by BR in writing to Symantec in Schedule 3.5C hereof and (ii)
those that may have been incurred by BR after March 31, 1998 in the ordinary
course of its business, consistent with past practice.
3.6 Taxes. BRL and BRI have filed all federal, state, local
and foreign tax and information returns related to its business or any of the
Assets that are required to be filed, and BRL and BRI has each paid all taxes
required to be paid in respect of all periods for which such returns have been
filed. True and complete copies of all such tax and information returns have
been provided to Symantec. BRL and BRI are not delinquent in the payment of any
tax or in the filing of any tax returns, and no deficiencies for any tax have
been threatened, claimed, proposed or assessed which have not been settled or
paid. No tax return of BRL or BRI has ever been audited by any tax agency or
authority. For the purposes of this Section 3.6, the terms "tax" and "taxes"
include all federal, state, local and foreign income, gains, franchise, excise,
property, sales, use, employment, license, payroll, occupation, recording, value
added or transfer taxes, governmental charges, fees, levies or assessments
(whether payable directly or by withholding), and, with respect to such taxes,
any estimated tax, interest and penalties or additions to tax and interest on
such penalties and additions to tax.
3.7 No Product or Service Warranty Claims. Except for service
and warranty claims pursuant to contract and warranties disclosed in Schedule
3.7, neither BR nor any of the Software Programs or any other Asset is the
subject of any pending or threatened claim for breach of warranty or product
liability and, to BR's actual knowledge, there is no basis for any such claim or
action. Except as set forth in SCHEDULE 3.7, to BR's best knowledge, there are
no contracts for maintenance, bug fix, development or warranty obligations,
other than warranties provided in connection with BR's standard shrink-wrap end
user license agreement.
3.8 Absence of Certain Changes. Since March 31, 1998, except
as set forth in SCHEDULE 3.8, there has not been with respect to BR:
(a) any change in the financial condition, properties,
assets, liabilities, business or operations which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or can reasonably be expected to have a material
adverse effect on the Business or the ownership or use of any of the Assets;
(b) any mortgage, encumbrance or lien placed on any of
the Assets;
(c) to the actual knowledge (based on such inquiry as
is required under GAAP) of BR, any material obligation or liability incurred by
BR with respect to the Business or any of the Assets;
(d) any purchase or sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition, of
any of the properties or assets of BR or any of the Assets;
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<PAGE> 8
(e) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or Business of BR;
(f) any material labor dispute or claim of material
unfair labor practice; any change in the compensation payable or to become
payable to any of BR's officers, directors, employees, agents, consultants or
contractors; or any bonus payment or arrangement made to or with any of such
officers, directors, employees, agents, consultants or contractors (except as
previously disclosed in writing to Symantec);
(g) any payment or discharge of a material lien or
liability thereof related to the Business or any of the Assets, which lien or
liability was not incurred in the ordinary course of business, consistent with
past practices; or
(h) any obligation or liability incurred by BRL or BRI
to any of its respective officers, directors, and to the best of BR's knowledge,
its employees, agents, consultants or contractors, or any loans or advances made
to any of such officers, directors, employees, agents, consultants or
contractors , except normal compensation and expense allowances in accordance
with past practice.
3.9 Contracts; Tangible Assets.
(a) EXHIBIT C includes a true and complete list and
summary of all licenses, instruments, obligations, contracts and other
agreements or commitments of BR, including all licenses, instruments,
obligations, contracts and other agreements or commitments whereby BR has
acquired ownership or license rights to software code or Intellectual Property
Rights used or to be used in any Software Programs or the development thereof or
has granted to third parties any license rights to any Software Programs, any
Assets or any Intellectual Property Rights. BR has provided to Symantec true and
complete copies of such licenses, instruments, obligations, contracts and other
agreements or commitments. All licenses, instruments, obligations, contracts and
other agreements or commitments listed in Exhibit C are valid, binding,
enforceable and in full force and effect in all material respects and will
continue to be so on identical terms to Symantec's benefit immediately following
the Closing and all consents or permissions needed to assign any such license,
sublicense, contract, agreement or permission has been obtained or will be
obtained prior to the Closing, except as indicated in SCHEDULE 3.9A. Except as
indicated on Schedule 3.9A, BR is not (or, but for the passage of time, would
be) in breach of or default under any material term of any agreement,
obligation, contracts or commitment listed in Exhibit C. No penalty or
additional payment is required in connection with the sale, assignment or other
transfer of any of the Contracts, the Assets or other items to Symantec pursuant
to this Agreement.
(b) EXHIBIT D contains an accurate and complete list of
all the tangible assets owned by BR and used in connection with the Business
(the "TANGIBLE ASSETS"), including computers, peripherals and other equipment,
furniture, file cabinets, tools and supplies (referred to by type of item where
individual items are valued at less than $2,000 each). BR owns and has good and
marketable title to all of the Tangible Assets, free and clear of all liens,
charges or
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encumbrances (other than for taxes not yet due and payable), except as set forth
in SCHEDULE 3.9B.
3.10 Intellectual Property. As used herein the term
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all of the following
worldwide intangible legal rights, including those existing or acquired by
ownership, license (to the extent such can be sublicensed or assigned) or other
legal operation, whether or not filed, perfected, registered or recorded,
existing as of the Closing Date (as defined in Section 7 below) in or to: (i)
all patents, patent applications, patent disclosures and related patent rights,
including any and all continuations, divisions, reissues, reexaminations, or
extensions thereof which have been filed, issued or acquired by BR as of the
Closing Date and all inventions conceived of or reduced to practice as of the
Closing Date (the "PATENT RIGHTS"); (ii) all copyrights, whether or not
registered, owned by BR as of the Closing Date, including all registrations and
applications therefor and all moral rights relating thereto (the "COPYRIGHT
RIGHTS"); (iii) all trademarks, trade names and service marks, whether or not
registered, owned by BR as of the Closing Date, including all registrations and
applications therefor (the "TRADEMARK RIGHTS"); (iv) all trade secrets and
know-how BR owns or otherwise has the right to use and transfer to Symantec; (v)
all technology and other intellectual or industrial property and proprietary
rights of BR used in the conduct of the Business; (vi) all rights relating to
the protection of the foregoing; and (vii) all rights to sue or make any claims
for any past, present or future infringement, misappropriation or unauthorized
use of the any of the foregoing rights and the right to all income, royalties,
damages and other payments that are now or may hereafter become due or payable
with respect to any of the foregoing rights, including damages for past, present
or future infringement, misappropriate or unauthorized use thereof.
(a) SCHEDULE 3.10 contains a complete and accurate list
of BR's Patent Rights, registered Copyright Rights and Trademark Rights. BR has
provided Symantec with copies of all such registrations and applications and any
licenses granted or received with respect thereto. BR is the sole and exclusive
owner of or has the exclusive right to use pursuant to license, sublicense,
agreement or other valid permission, the Assets and all Intellectual Property
Rights necessary for the operation of the Business as presently conducted and as
presently proposed to be conducted. BR owns and has good and marketable title to
all of the Software Programs and all of the Intellectual Property Rights, free
and clear of all liens, charges, claims or encumbrances (other than for taxes
not yet due and payable), except as set forth in Schedule 3.10.
(b) Except as indicated in Schedule 3.10, the Assets
include all assets, properties and intellectual property and proprietary rights
necessary to enable Symantec to continue to develop the Developments and to
manufacture, market, distribute, use, license and sell the Software Programs and
to otherwise conduct the Business in the manner in which such business is
conducted by BR as of this date and as it is presently proposed to be conducted
by BR.
(c) BR has taken measures which it believes are
reasonable to protect the Intellectual Property Rights. BR has no actual
knowledge of any infringement of any of the Intellectual Property Rights by any
third party or any instance in which any such measures to
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protect any of the Intellectual Property Rights have not been taken or have
failed in any material respect. To the best of BR's knowledge, BR is not aware
of any material loss, cancellation, termination or expiration of any such
Intellectual Property Rights, except as set forth in Schedule 3.10. All fees to
maintain BR's registered rights in the Intellectual Property Rights that are due
on or before the Closing Date, including registration, maintenance and
prosecution fees, and all professional fees incurred in connection therewith,
have been paid.
(d) BR has delivered to Symantec copies of all
agreements (or the forms thereof if a standard form is used) entered into by its
present and past employees, consultants and independent contractors with respect
to the Intellectual Property Rights and protection of confidential information.
Except as set forth in Schedule 3.10, all present and past employees,
consultants and independent contractors have entered into such agreements. To
BR's best knowledge, BR is not using any confidential information or trade
secrets of any former employer of any of its past or present employees,
consultants or independent contractors.
(e) The Business, as conducted on the date hereof does
not, and the Business to be conducted by BR prior to the Closing will not, and
the Software Programs do not and will not, and the Developments do not, cause BR
or Symantec to infringe, violate or misappropriate any patents, trademarks,
service marks, trade names, copyrights, trade secrets, proprietary rights or
other intellectual property of any other person or entity, and BR has not
received any written or oral claim or notice of infringement or potential
infringement of the intellectual property or proprietary rights of any other
person or entity which could be expected to have a material adverse effect on
use or ownership of any of the Assets or the conduct of the Business by BR or
Symantec; provided that, as to Patent Rights, Trademark Rights and other
intellectual property rights that may be violated without actual or constructive
notice of such rights, the foregoing representations in this subsection (e) are
made solely to the actual knowledge of BR.
(f) To BR's best knowledge, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any of the Intellectual Property Rights. None of the Intellectual
Property Rights is registered in the name of anyone other than BR and no one
other than BR has any interest therein or right thereto, including the right to
royalty or other payments.
(g) Except as set forth in Schedule 3.4, no Contracts
or other agreements of BR restrict BR's ability to do business in any
jurisdiction or with respect to any market or industry.
(h) Except as indicated in Schedule 3.10, BR is not
obligated to pay any royalties or other payments or compensation to any third
parties, employees, consultants, contractors, officers, directors, stockholders
or others with respect to the Assets or the Intellectual Property Rights.
(i) BR has made a full, complete and accurate
disclosure to Symantec regarding the state of development of the Developments
and the Software Programs, including a list indicating all known bugs and
deficiencies and their current status of resolution. The
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Software Programs and Developments are otherwise sold "as is", without
representation or warranty, express or implied, including the implied warranties
of merchantability and fitness for a particular purpose.
(j) All of the Software Programs and Developments will
perform (including but not limited to the processing of data) in the same manner
during and after the year 2000 as they do before the year 2000, without the need
to modify or alter any of them in any respect, provided that the foregoing in no
event will extend to any affect that third party hardware, software or data will
have on such performance.
(k) No governmental or third party funding, grants or
resources were utilized in connection with designing, developing, or
manufacturing the Software Programs or the Developments or otherwise in
conducting the Business and no governmental entity has any rights in or to any
of the Assets or the Intellectual Property Rights.
3.11 Suppliers and Customers. To BR's actual knowledge, except
as set forth on Schedule 3.4, (a) BR has good commercial working relationships
with its suppliers and since January 1, 1997 no supplier accounting for two
percent (2%) or more of BR's purchases of supplies has canceled or otherwise
terminated its relationship with BR, decreased or limited materially its
materials supplied to BR from any corresponding period or, to BR's actual
knowledge, threatened to take any such action, and (b) no customer of BR has
threatened to cancel its agreement with BR or to bring an action or claim
against BR.
3.12 Compliance with Laws.To BR's actual knowledge, except as
set forth on Schedule 3.4, BR has complied, or prior to the Closing Date will
have complied, and is or will be at the Closing Date, in compliance, in all
respects material to BR, the Business or any of the Assets, with all applicable
laws, ordinances, regulations and rules, and all orders, writs, injunctions,
awards, judgments and decrees, applicable to BR, the Business or any of the
Assets, including: (a) all applicable federal, state and local laws, ordinances
and regulations, and all orders, writs, injunctions, awards, judgments and
decrees, pertaining to (i) the sale, licensing, leasing, ownership or management
of the Assets, (ii) employment or employment practices, terms and conditions of
employment, or wages and hours, or (iii) safety, health, fire prevention,
environmental protection (including toxic waste disposal and related matters
described in Section 3.20 hereof), building standards, zoning or other similar
matters relating to BR, the Business or any of the Assets, and (b) the U.S.
Export Administration Act and regulations promulgated thereunder or other laws,
regulations, rules, orders, writs, injunctions, judgments or decrees applicable
to the export or re-export of any of the Assets. BR has received all permits and
approvals from, and has made all filing with, third parties, including
government agencies and authorities, that are necessary to the conduct of the
Business as presently conducted.
3.13 Certain Transactions and Agreements. Except as set forth
in SCHEDULE 3.13, no person who is an officer or director of BR, or a member of
any officer's or director's immediate family, has any direct or indirect
ownership interest in any firm or corporation that competes with BR (except with
respect to any interest in less than 3% of the outstanding voting shares of any
corporation whose stock is publicly traded). Except as set forth in Schedule
3.13,
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no person who is an officer or director of BR, or any member of any officer's or
director's immediate family, is directly or indirectly interested in the
business of BR or the Assets or in any material contract or informal arrangement
with BR, except for compensation for services as an officer, director or
employee of BR.
3.14 Employees.
3.14.1 Except as set forth in SCHEDULE 3.14.1, BR has no
employment contract or material consulting agreement with any person engaged in
any respect in the Business that is currently in effect and is not terminable at
will upon thirty (30) days or less notice (other than agreements with the sole
purpose of providing for the confidentiality of proprietary information or
assignment of inventions).
3.14.2 BR has never been and is not now (a) subject to a
union organizing effort, (b) subject to any collective bargaining agreement with
respect to any of its employees, (c) subject to any other contract, written or
oral, with any trade or labor union, employees' association or similar
organization or (d) a party to any material current labor dispute. BR has good
labor relations. BR has no knowledge that any of its employees intends to leave
BR's employ (other than to become a Symantec employee pursuant to offers made by
Symantec to selected employees of BR).
3.14.3 SCHEDULE 3.14.3 contains a list of all pension,
retirement, disability, medical, dental or other health plans, life insurance or
other death benefit plans, profit sharing, deferred compensation agreements,
stock, option, bonus or other incentive plans, vacation, sick, holiday or other
paid leave plans, severance plans or other similar employee benefit plans
maintained by BR with respect to any employee, independent contractor or
consultant engaged in any aspect of its business (the "EMPLOYEE PLANS"). To the
extent requested by Symantec, BR has delivered true and complete copies of all
the Employee Plans to Symantec or Symantec's counsel. Each of the Employee
Plans, and its administration, are, to BR's actual knowledge, in compliance with
all applicable federal, state, local and other governmental laws and ordinances,
orders, rules and regulations, except where the failure to so comply could not
reasonably be expected to have a material adverse effect upon the financial
condition or results of operations of BR. No liability with respect to the
Employee Plans will pass to Symantec under the laws of New Zealand or other
applicable laws by virtue of Symantec consummating the transactions contemplated
by this Agreement. Except as set forth in Schedule 3.14.3, no employee of BR
engaged in any aspect of its business has made medical claims since January 1,
1997 for $50,000 or more, in the aggregate, or, to BR's actual knowledge without
any investigation, has any chronic illness.
3.14.4 No employee of BR is, to the actual knowledge of
BR, in material violation of (a) any term of any employment contract, patent
disclosure agreement or noncompetition agreement or (b) any other contract or
agreement, or any restrictive covenant, relating to the rights of any such
employee to be employed by BR or to use trade secrets of proprietary information
of others.
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3.14.5 SCHEDULE 3.14.5, which BR has delivered to
Symantec, contains a list of all employees, officers, directors, agents,
consultants and contractors of BR (the "BR EMPLOYEES"). BR has separately
delivered to Symantec information relating to the current compensation (salary
and any bonus or other special compensation arrangements), title and
responsibilities of the BR Employees as of the date of this Agreement. BR has
made no representation to any director, officer, employee, consultant or
independent contractor regarding future employment by Symantec.
3.15 Documents. BR have made available to Symantec for
examination all documents and information listed or identified in the exhibits
or schedules to this Agreement or otherwise called for by this Agreement and all
documents which have been requested in writing by Symantec or Symantec's legal
counsel, including copies of the respective charter documents of BR as currently
in effect.
3.16 Books and Records. The books, records and accounts of BR
(a) are in all material respects true and complete, (b) have been maintained in
accordance with good business practices, (c) are stated in reasonable detail and
accurately and fairly reflect the transactions and dispositions of or related to
BR, the Business or the Assets, as the case may be, and (d) in all material
respects accurately and fairly reflect the basis for the BR Financial Statements
and the BR Financial Information.
3.17 No Brokers. BR is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
negotiation, execution, delivery or performance of this Agreement or in
connection with any transaction provided for herein or therein, other than as
fully disclosed in SCHEDULE 3.17.
3.18 Insurance. BR has no policies of insurance in effect.
3.19 Government Contracts. BR has no actual knowledge of any
acts, omissions or noncompliance with regard to any applicable public
contracting statute, regulation or contract requirement (whether express or
incorporated by reference) relating to any of the Contracts, the Business or any
of the Assets with any Government Contract Party (as defined below) in either
case that have led to or could lead to, either before or after the Closing Date,
(a) any claim or dispute involving BR, the Business or any of the Assets (and/or
Symantec as successor in interest to the Assets) and any Government Contract
Party or (b) any suspension, debarment or contract termination, or proceeding
related thereto. BR has no actual knowledge of any act or omission related to
the marketing, licensing or selling to any Government Contract Party of any of
BR technical data or computer software, the Business or any of the Assets and
that has led to or could lead to, either before or after the Closing Date, any
material cloud on any of BR's rights in and to any of the Assets. For purposes
of this Section 3.19, the term "GOVERNMENT CONTRACT PARTY" means any independent
or executive agency, division, subdivision, audit group or procuring office of
the United States, New Zealand or any other federal government, including any
prime contractor of the federal government and any higher level subcontractor of
a prime contractor of the federal government, and including any employees or
agents thereof, in each case acting in such capacity.
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3.20 Environmental Matters.
3.20.l BR is conducting, and at all times has conducted,
the Business and its operations at the facilities or sites at which the Business
is now or has previously been conducted by BR or any of its
predecessors-in-interest (collectively, the "FACILITIES"), in accordance, to
BR's actual knowledge, with and in material compliance with all Environmental
Laws (as hereinafter defined). "ENVIRONMENTAL LAWS" means all United States, New
Zealand and other federal, state, and local laws and regulations relating to
pollution, the protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, disposal, transport or handling of
Hazardous Materials (as defined below) or relating to occupational health and
safety.
3.20.2 For the purposes of this Section 3.20, the term
"HAZARDOUS MATERIALS" means any hazardous or toxic substance, material or waste
which is or becomes prior to the Closing Date regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical," hazardous
material," "toxic substance" or "hazardous chemical" under the Environmental
Laws or any other laws applicable to BR, the Business or the Assets.
3.20.3 To BR's actual knowledge, during the period that BR
has owned or leased the Facilities, there have been no disposals, releases or
threatened releases of Hazardous Materials from or any presence thereof on such
premises which would have a material adverse effect upon the Business, the
Assets or the BR Financial Statements. BR has no actual knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on
or from any of the Facilities (including any that may have occurred prior to BR
having taken possession of any of such premises).
3.20.4 To BR's actual knowledge, there are no outstanding
orders, injunctions or decrees against BR, nor are there any pending or
threatened investigations of any kind against BR, concerning any Environmental
Laws and there has been no litigation, proceeding or administrative action
brought or threatened in writing against BR, or any settlement reached by BR
with, any party or parties alleging the presence, disposal, release or
threatened release of any Hazardous Materials on, from or under any of the
Facilities.
3.21 Disclosure. To BR's knowledge (based on the level of
scienter applied for claims under Section 10(b) of the Securities Act of 1933,
as amended), this Agreement, its exhibits and schedules, and any of the
certificates or documents to be delivered by BR to Symantec under this
Agreement, taken together, (a) contain, and as of the Closing will contain, no
untrue statement of a material fact or (b) omit, and as of the Closing will
omit, to state no material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
3.22 Solvency. BR is solvent and neither intends or expects to
file or seek relief under bankruptcy, insolvency, creditors' relief or similar
laws.
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4. REPRESENTATIONS AND WARRANTIES OF SYMANTEC
Symantec hereby represents and warrants, that, except as set
forth on the Symantec Schedule of Exceptions delivered by Symantec to BR as
SCHEDULE 4.0:
4.1 Organization and Good Standing. Symantec is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware, and has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted.
4.2 Power, Authorization and Validity.
4.2.1 Symantec has the corporate right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement have been
duly and validly approved by Symantec's Board of Directors, and such approval,
constitutes the only corporate action required to authorize the execution,
delivery and performance by Symantec of this Agreement.
4.2.2 No filing, authorization or approval, governmental
or otherwise, is necessary to enable Symantec to enter into, and to perform its
obligations under, this Agreement, except for such filings as may be required to
comply with the laws of New Zealand.
4.2.3 This Agreement constitutes the valid and binding
obligation of Symantec, enforceable against Symantec in accordance with its
terms, except as to the effect, of any, of (a) applicable bankruptcy and other
similar laws, affecting the rights of creditors generally and (b) rules of law
governing specific performance, injunctive relief and other equitable remedies.
4.3 No Violation. Neither execution and delivery of this
Agreement nor the consummation of any of the transactions provided for herein,
will conflict with, or (with or without notice or lapse of time, or both) result
in a termination, breach, impairment or violation of, (a) any provision of the
certificate of incorporation or bylaws of Symantec, as currently in effect, (b)
in any material respect, any agreement, instrument or commitment to which
Symantec is a party or by which Symantec is bound, or (c) any federal, state,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to Symantec or its assets or properties.
4.4 No Brokers. Symantec is not obligated for the payment of
fees or expenses of any investment banker, broker or finder in connection with
the negotiation, execution, delivery or performance of this Agreement or in
connection with any transactions provided for herein or therein.
4.5 No Reliance. Symantec is not relying on any statements,
representations, warranties, disclosures or facts not set forth in this
Agreement and the exhibits and schedules hereto in entering into or performing
its obligations under this Agreement. Symantec has had the opportunity to ask
further questions concerning the matters disclosed by BR hereunder and has made
such inquiries as it deemed appropriate.
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5. BR PRECLOSING COVENANTS
The following covenants and conditions will apply during the
period from the date of this Agreement until the Closing:
5.1 Advice of Changes. BR will promptly advise Symantec in
writing (a) of any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of BR contained in this
Agreement, if made on or as of the date of such event or the Closing Date, to be
untrue or inaccurate in any material respect, and (b) of any material adverse
change in the Assets, the Business or BR's results of operations or financial
condition.
5.2 Operation of Business. Commencing upon execution of this
Agreement, BR shall operate its business in the ordinary course, consistent with
past practices. If BR becomes aware of a material deterioration in the
relationship with any material customer or supplier of BR, it will promptly
bring such information to the attention of Symantec in writing and, if requested
by Symantec, will exert reasonable efforts to restore the relationship. BR will
provide Symantec with current access to all books, records and information with
respect to the Assets and the operation of BR's business.
5.3 Conduct of Business. Except as provided otherwise herein
or as approved or as recommended by Symantec, BR will not, without the prior
written consent of either the Vice President, Planning & Analysis of Symantec or
the Chief Financial Officer of Symantec:
(a) borrow any money secured by any interest in any of
the Assets;
(b) enter into any transaction regarding the Business
or any of the Assets not in the ordinary course of business or enter into any
transaction (or make any commitment) regarding the Business or any of the Assets
that involves an expense of BR in excess of $10,000 or a capital expenditure by
BR in excess of $10,000;
(c) encumber or permit to be encumbered any of the
Assets;
(d) sell, transfer, assign, convey or otherwise dispose
of any of the Assets;
(e) enter into any material lease or contract for the
purchase or sale of any property, real or personal, tangible or intangible, used
in connection with the Business or any of the Assets;
(f) except as previously disclosed to Symantec in
writing, pay any bonus, royalty, increased salary or special remuneration
(except pursuant to existing arrangements heretofore disclosed in writing to
Symantec) to any employee, consultant or independent contractor who renders or
has rendered services to BR or enter into any new employment or consulting
agreement with any such employee, consultant or independent
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contractor, or enter into any new agreement or plan of the type described in
Section 3.14.3 with respect to any such employee, consultant or independent
contractor;
(g) change accounting methods except as necessitated by
changes which BR is required to follow in generally accepted accounting
principles;
(h) amend or terminate any Contract or other agreement
or license to which it is a party (except pursuant to arrangements previously
disclosed in writing to Symantec) except for any change to any Contract,
agreement or license which has no adverse effect on BR, the Business or any of
the Assets;
(i) lend any amount to any officer, employee,
consultant or independent contractor other than advances for travel and expenses
which are incurred in the ordinary course of business consistent with past
practice, not material in amount, which travel and expenses shall be documented
by receipts for the claimed amounts;
(j) waive or release any material right or claim with
respect to the Business or any of the Assets;
(k) merge, consolidate or reorganize with, or acquire
any entity;
(l) amend its charter documents, to the extent such
action will adversely affect the Assets;
(m) agree to any audit assessment by any tax authority
or file any federal or state income or franchise tax authority or file any
federal or state income or franchise tax return, unless copies of such returns
have been delivered to Symantec for its review prior to filing;
(n) license any Intellectual Property Rights, except in
the ordinary course of business consistent with past practice, or license,
encumber or otherwise dispose of any of the Assets or any rights thereto;
(o) enter into any other agreements or commitments
affecting any of the Assets;
(p) hire any new BR employee or terminate the
employment of any existing BR Employee without notice of the same to Symantec or
encourage any BR Employee to accept employment with any third party (other than
Symantec with respect to those employees who are offered employment by
Symantec);
(q) effect a material change in any insurance coverage
with respect to its business or any of the Assets; or
(r) agree or otherwise commit or create any obligation
to do any of the things described in the preceding clauses 5.3(a) through
5.3(q).
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5.4 Employee Offers. BR hereby consents to Symantec extending
offers of employment to all or any lesser number of BR Employees, such offers to
be contingent upon the Closing. To facilitate such process, BR will cooperate
with Symantec in identifying those BR Employees that Symantec may wish to hire
and will provide Symantec with reasonable access to and the opportunity to meet
and interview any BR Employee for the purpose of negotiating offers of
employment contingent upon the Closing. BR will use its reasonable efforts to
retain BR Employees as employees through the Closing Date and assist Symantec in
securing the employment, commencing on the Closing Date, of those BR Employees
to whom Symantec (or an affiliate designated by Symantec) makes offers of
employment. BR hereby waives, with respect to the employment by Symantec of such
BR Employees who accept offers of employment from Symantec, (a) any claims or
rights BR may have against Symantec with respect thereto and (b) against any
such employee under any non-competition, confidentiality or employment
agreement, to the extent such provision would otherwise apply to Symantec. BR
understands and acknowledges that any such BR Employees hired by Symantec shall
be treated as "new hires" and Symantec's sole obligation to BR or such BR
employees shall be as set forth in the Transition Agreement. If the Closing does
not occur for any reason, Symantec will not recruit, attempt to hire, solicit or
assist others in recruiting, attempting to hire or soliciting any BR Employee at
any time up to and including June 30, 2000.
5.5 Regulatory Approvals. BR will execute and file, or assist
in the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign which may be reasonably
required under the laws of New Zealand, the United States or otherwise, or which
Symantec may reasonably request, in connection with the consummation of the
transactions provided for in this Agreement. BR will use reasonable efforts to
obtain or assist Symantec in obtaining all such authorizations, approvals and
consents, and Symantec agrees to pay the reasonable costs for the same.
5.6 Necessary Consents. BR will, at its own expense (other
than as provided in Section 5.5), use reasonable efforts to obtain such written
consents and take such other actions as may be necessary or appropriate to
facilitate or allow the consummation of the transactions provided for herein and
to facilitate and allow Symantec to purchase the Assets at the Closing and to
have full use of the Assets after the Closing.
5.7 Litigation. BR will notify Symantec in writing promptly
after learning of any action, suit, proceeding or investigation by or before any
court, board or governmental agency, initiated by or against BR or threatened
against BR which could have a material adverse effect on the Assets or the
ability of BR to consummate the transactions contemplated by this Agreement.
5.8 No Other Negotiations. From the date hereof until the
termination of this Agreement (provided such termination is not in breach of
this Agreement) or the consummation of the sale of the Assets at the Closing, BR
will not, directly or indirectly, solicit, facilitate or encourage any offer,
inquiry or proposal received from any party other than Symantec, or enter into
any negotiations or discussions or provide any information to any third party
(including
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information with respect to this Agreement or transactions provided for herein),
concerning the possible disposition of all or any substantial portion of the
Assets by merger, sale or any other means, will otherwise solicit, facilitate or
encourage any such disposition or will authorize or permit any officer,
director, employee, affiliate, agent or representative of BR, or any other
person, on its behalf, directly or indirectly, to take any of the foregoing
actions.
5.9 Access to Information. BR will provide Symantec and its
agents with reasonable access to the files, books, records and offices of BR,
including, without limitation, any and all information relating to the Assets,
taxes, commitments, contracts, leases and licenses relating to the Business or
the Assets and the representations made by BR in this Agreement. BR will provide
Symantec with full access to all documents, materials and information embodying
or relating to the Software Programs and other Assets, including the source
codes, object codes, descriptions, layouts, diagrams, reports, test and other
data and programs, and all related documentation and information that is owned,
used or held by BR. BR will cause its accountants to cooperate with Symantec and
its agents in making available all financial information reasonably requested
relating to the Business or the Assets, including without limitation the right
to examine all working papers pertaining to all financial statements prepared or
audited by such accountants.
5.10 Satisfaction of Conditions Precedent. BR will use
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Article 9. BR will use reasonable efforts to
cause the transactions provided for in this Agreement to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions provided for herein.
5.11 Encumbrances. BR will use its reasonable best efforts to
secure and preserve good and marketable title in BR's name in and to all of the
Assets, free of material encumbrances, and to terminate or cause to be released
all encumbrances on the Assets prior to Closing.
5.12 Future Agreements. If BR enters into any material
agreement between the date of this Agreement and the Closing related to the
Business or the Assets, at the request of Symantec, BR agrees to include any
such agreement within the Contracts.
6. SYMANTEC PRECLOSING COVENANTS
Symantec covenants to and agrees with BR to comply with the
following covenants during the period from the date of this Agreement until the
Closing:
6.1 Advice of Changes. Symantec will promptly advise BR in
writing of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Symantec contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect. In addition, Symantec will
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promptly deliver to BR a copy of each filing made with the SEC and each press
release or communication with Symantec's stockholders made prior to the Closing.
6.2 Satisfaction of Conditions Precedent. Symantec will use
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Article 8, and Symantec will use reasonable
efforts to cause the transactions provided for in this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions provided for herein.
6.3 Regulatory Approvals. Symantec will execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required under the laws of New Zealand, the United States or otherwise, or which
BR may reasonably request, in connection with the consummation of the
transactions provided for in this Agreement. Symantec will, at its own expense,
use reasonable efforts to obtain all such authorizations, approvals and
consents.
6.4 No Additional Payments. Symantec will have no obligation
to pay any expenses of BR or to fund the operations of BR with respect to the
Business, the Assets or otherwise.
6.5 Necessary Consents. Symantec will use reasonable efforts
to obtain such written consents and take such other actions as may be necessary
or appropriate, in addition to those referred to in Section 6.3, to facilitate
or allow the consummation of the transactions provided for herein at the
Closing.
6.6 Litigation. Symantec will notify BR in writing promptly
after learning of any action, suit, proceeding or investigation by or before any
court, board or governmental agency, initiated by or against Symantec or
threatened against Symantec that would have a material adverse effect on
Symantec's ability to consummate the transactions provided for herein.
7. CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as
provided in Article 10 below, the consummation of the transactions provided for
herein (the "CLOSING") will take place at the offices of Fenwick & West LLP, Two
Palo Alto Square, Palo Alto, California 94304 at 10:00 a.m. as soon as
practicable (and in no event later than three (3) business days) following the
date on which all conditions to closing have been satisfied or waived by the
appropriate parties, or at such other place, time and date as the parties may
mutually select (the "CLOSING DATE"). At the Closing, at such time as all
conditions to Closing have been satisfied or waived by the appropriate parties,
(x) BR will deliver to Symantec (i) instruments of transfer, in form and
substance reasonably satisfactory to Symantec and its counsel, evidencing the
sale, assignment, conveyance and transfer to Symantec of the Assets and (ii) the
certificates and other documents required pursuant to Section 9 below, and (y)
Symantec will (i) deliver to BR the
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certificates and other documents required pursuant to Section 8 below, (ii) pay
to BR the Closing Payment, and (iii) deposit the Escrow Funds in escrow.
7.2 Delivery of Documentation; Taxes. BR will deliver and
transfer to Symantec on or before the Closing all copies of the Software
Programs, work in progress and documentation with respect to the Software
Programs and the other Assets, and will represent at the Closing that all such
copies, work in progress, documentation and other materials have been so
delivered. Symantec will pay all sales, transfer, ad valorem, use and stamp
taxes, if any, that may be payable in connection with the sale, assignment,
conveyance, transfer and delivery of the Assets to Symantec hereunder (the
"TRANSFER TAXES"), which Transfer Taxes will be treated as a Loss under Section
11.2.3 hereof.
7.3 Further Assurances. If, at any time after the Closing,
Symantec reasonably considers or is advised that any further deeds, assignments
or assurances are reasonably necessary or desirable to vest, perfect or confirm
in Symantec title to any of the Assets, BR will promptly execute and deliver all
such proper deeds, assignments and assurances and do all other things necessary
or desirable to vest, perfect or confirm title to such Assets in Symantec and
otherwise to carry out the purposes of this Agreement.
8. CONDITIONS TO OBLIGATIONS OF BR
The obligations of BR hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by BR, but only in a writing signed by BR):
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Symantec set forth in Article 4 shall be true
and accurate in every material respect on and as of the date of this Agreement
and (as supplemented or amended by any supplements or amendments delivered by
Symantec to BR in writing, and accepted by BR, prior to the Closing Date) as of
the Closing Date with the same force and effect as if they had been made at the
Closing. BR shall have received a certificate to such effect executed by
Symantec's Chief Financial Officer.
8.2 Covenants. Symantec shall have performed and complied in
all material respects with all of its covenants contained in Article 6 on or
before the Closing. BR shall have received a certificate to such effect executed
by Symantec's Chief Financial Officer.
8.3 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, and there shall have been taken such other action, as may be
required to consummate the transactions provided for herein in compliance with
applicable laws.
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8.5 No Litigation. No litigation or proceeding shall be
pending which has the probable effect of enjoining or preventing the
consummation of any of the transactions provided for in this Agreement .
8.6 Escrow. BR shall have received the Escrow Agreement
executed by the parties thereto.
9. CONDITIONS TO OBLIGATIONS OF SYMANTEC
The obligations of Symantec hereunder are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Symantec, but only in a
writing signed by Symantec):
9.1 Accuracy of Representations and Warranties. The
representations and warranties of BR set forth in this Agreement shall be true
and complete in every material respect, on and as of the date of this Agreement
and (as supplemented or amended by any supplements or amendments delivered by BR
to Symantec in writing, and accepted by Symantec, prior to the Closing Date) as
of the Closing with the same force and effect as if they had been made at the
Closing, and Symantec shall have received a certificate to such effect executed
by the Chief Financial Officer of BR.
9.2 Covenants. BR shall have performed and complied in all
material respects with all of its covenants contained in Article 5 and in
Section 7.2 on or before the Closing, and Symantec shall have received a
certificate to such effect signed by the Chief Financial Officer of BR.
9.3 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
provided for in this Agreement.
9.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, and there shall have been taken such other action, as may be
required to consummate the transactions provided for herein in compliance with
applicable laws.
9.5 No Litigation. No litigation or proceeding shall be
pending which has the probable effect of (a) enjoining or preventing the
consummation of any of the transactions provided for in this Agreement or (b)
having a material adverse effect on the Assets or Symantec's ownership and use
thereof.
9.6 No Material Adverse Change. No material adverse change
shall have occurred after March 31, 1998 in the financial or business conditions
or liabilities of BR or in the Assets.
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9.7 Requisite Approvals. The principal terms of this Agreement
shall have been approved by the stockholders of BR.
9.8 Ancillary Agreements. An Employment Agreement in the form
of EXHIBIT G hereto, with such changes as may be approved by Symantec, shall
have been executed and delivered to Symantec by Murray Hayden Haszard.
9.9 Status of Software Programs. Symantec shall have received
the Software Programs.
9.10 Release of Obligations. BR shall have executed and
delivered agreements or instruments, in such form as may be reasonably
satisfactory to Symantec, releasing those BR Employees who accept employment
(either as of the Closing or thereafter) with Symantec or any of its affiliates
from any obligations of such employees to BR under employment agreements,
confidentiality agreements, invention agreements or other similar agreements to
the extent that such obligations would restrict or inhibit the employees'
performance of their duties as employees of Symantec or its subsidiaries.
9.11 Opinion of Counsel to BR. Symantec shall have received
from Blanc Williams Johnston & Kronstadt, United States counsel to BR, an
opinion substantially in the form of EXHIBIT H1 hereto, from Boerner Van Dueren
Norris & Rieselbach, S.C, United States counsel to BR Reinhart. an opinion
substantially in the form of EXHIBIT H2 hereto, and from Bell Gully Buddle Weir,
New Zealand counsel to BRL, an opinion substantially in the form of EXHIBIT H3.
9.12 Documents. Symantec shall have received all written
consents, assignments, waivers, authorizations or other certificates reasonably
deemed necessary by Symantec's legal counsel to provide for the assignment to
Symantec of the Contracts and the continuation in full force and effect of the
Contracts, for the sale, assignment, and transfer to Symantec of the other
Assets, for Symantec's unrestricted and encumbered use thereof (except for those
encumbrances listed in Schedule 1.2 hereof ), and for Symantec to consummate the
transactions contemplated hereby; provided that none of the Contracts will be
adversely affected by the transactions provided for herein.
9.13 Escrow. Symantec shall have received the Escrow Agreement
executed by the parties thereto.
10. TERMINATION OF AGREEMENT
10.1 Prior to the Closing.
10.1.1 This Agreement may be terminated at any time prior
to the Closing by the mutual written consent of each of the parties hereto.
10.1.2 Unless otherwise specifically provided herein or
agreed in writing by the parties hereto, this Agreement will be terminated if
all conditions to the Closing have not
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been or cannot reasonably be satisfied or waived, on or before July 3, 1998;
provided, however, that the parties may agree in writing to extend this date.
10.2 At the Closing. At the Closing, this Agreement may be
terminated and abandoned:
10.2.1 By Symantec if any of the conditions precedent to
Symantec's obligations set forth in Section 9 above have not been fulfilled or
waived at and as of the Closing or if BR is in material breach of this
Agreement; or
10.2.2 By BR if any of the conditions precedent to their
obligations set forth in Section 8 above have not been fulfilled or waived at
and as of the Closing or if Symantec is in material breach of this Agreement.
Except as otherwise provided herein, any termination of
this Agreement under this Section 10.2 will be effective upon the delivery of
notice of the terminating party to the other party hereto.
10.3 Confidentiality Agreement. The parties respective
obligations under that certain Confidentiality Agreement dated January 30, 1998
(the "CONFIDENTIALITY AGREEMENT") will remain in full force and effect, in
accordance with the terms of such Confidentiality Agreement, after the
termination of this Agreement for any reason.
10.4 Certain Continuing Obligations. Following any termination
of this Agreement pursuant to this Article 10, the parties hereto will continue
to perform their respective obligations under Sections 10.3 and 12.17, but the
parties will not be required to continue to perform their other covenants under
this Agreement.
11. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND
REMEDIES, CONTINUING COVENANTS
11.1 Survival of Representations. The parties' respective
representations, warranties and covenants contained in this Agreement will
remain operative and in full force and effect for twelve months after the
Closing in accordance with their respective terms.
11.2 Indemnification.
11.2.1 Subject to Section 11.2.6, Symantec will indemnify,
defend and hold harmless BR and its officers directors, and shareholders, and
their administrators, successors and assigns, against any Loss (as defined
below) to which any such person may become subject, insofar as such Loss (or
actions in respect thereof) arise out of or are based upon (a) any material
breach by Symantec of its obligations or warranties under this Agreement or any
material misrepresentation by Symantec under this Agreement, (b) operation of
the Business or use of the Assets after the Closing and (c) any liabilities
expressly assumed by Symantec hereunder. Symantec will reimburse any such person
or entity for any legal or any other expenses reasonably incurred by such person
in connection with investigating or defending any
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such loss, claim, damage, liability or action, to the extent that the indemnity
provided for above applies thereto. No recovery will be available under this
Section 11.2.1 for lost profits or consequential damages.
11.2.2 Subject to Section 11.2.6, BR and the stockholders
of BR executing this Agreement (the "STOCKHOLDERS") will indemnify, defend and
hold harmless Symantec and each of its directors, and shareholders, and
officers, and their administrators, successors and assigns against any Loss to
which any such person or entity may become subject insofar as such Loss (or
actions in respect thereof) arise out of or are based upon: (a) any material
breach by BR of its obligations or warranties under this Agreement or any
material misrepresentation by BR under this Agreement, (b) any liabilities of BR
not expressly assumed by Symantec hereunder, (c) except as expressly assumed by
Symantec herein, the operation of the Business at any time on or prior to the
Effective Date (including any taxes related to BR's operations), the operation
of the Business other than in the ordinary course between the Effective Date and
the Closing Date, and any claims or actions brought by BR employees, former
employees, agents or representatives based on claims arising prior to the
Closing Date, other than those expressly assumed by Symantec, (d) Software
Programs or other products or services sold, licensed or otherwise provided by
BR to third parties on or prior to the Closing, other than warranty and service
claims based on warranties disclosed to Symantec hereunder, (e) any claim of
infringement, misappropriation or violation of any patent, copyright, trademark,
service mark, or other intellectual or industrial property or proprietary right
of any third party by the Intellectual Property Rights or the Software Programs
as such claim relates to the period prior to the Closing or exists in breach of
BR's representations and warranties in Section 3.10 hereof, (f) failure of BR to
comply with any Environmental Law or (g) which constitute Indemnified
Distributor Claims (subject to the limitations herein and the provisions of
Section 11.2.6). BR and the Stockholders will reimburse any such person or
entity for any legal or any other expenses reasonably incurred by such person or
entity in connection with investigating or defending any such loss, claim,
damage, liability or action, to the extent that the indemnity provided for above
applies. No recovery will be available under this Section 11.2.2 for lost
profits or consequential damages. As to any claim for indemnification provided
for in this Section 11.2 other than with respect to an Indemnified Distributor
Claim, such claim shall not apply unless and until the Loss for which one or
more indemnified party seeks indemnification under this Section, exclusive of
legal fees, exceeds $150,000 (the "BASKET"), in which event BR and the
Stockholders shall be liable to indemnify such indemnified party or parties for
all of the Loss. The basket shall not apply to any Indemnified Distributor Claim
and Indemnified Distributor Claims shall not apply against the Basket. The
amount of any Transfer Taxes paid by Symantec pursuant to Section 7.2 hereof
shall be included as a Loss in the calculation of the Basket for the purposes of
this Section 11.2.2. In addition to the foregoing, the Escrow Funds shall be the
sole and exclusive source of payment of any indemnification claims and the
liability of BR and the Stockholders for such claims will be limited to the
amount of Escrow Funds. In no event will BR or the Stockholders have liability
for claims under Section 11.2.2 other than out of funds in the Escrow as
provided herein and in the Escrow Agreement or for amounts in excess of such
funds.
11.2.3 As used in this Article 11, "LOSS" means and
includes any and all liabilities, losses, damages, claims, expenses, costs,
fines, fees, penalties, obligations, injuries or
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amounts paid in settlement, including those resulting from any and all claims,
actions, suits, demands, assessments, investigations, judgments, orders, awards,
arbitrations, settlements or other proceedings, together with reasonable costs
and expenses, including the reasonable attorneys' and experts' fees, court
costs, arbitration costs, filing fees and other legal costs and expenses
relating thereto. As used in this Agreement, "DISTRIBUTOR LIABILITIES" means and
includes any Loss (existing or future) arising or related in any way to or from
any actual or alleged arrangement, understanding, agreement or contract, whether
written or oral, with any distributor or reseller of the Software Programs as of
the date of the Closing, including all claims arising in connection with any
litigation or threat of litigation disclosed in the Schedules hereto (a "BR
DISTRIBUTOR"), including all transactions arising in connection with or related
to any such arrangement, understanding, agreement or contract, and whether such
Loss is based on contract, tort, statute, strict liability or other legal
theory. As used in this Agreement, "INDEMNIFIED DISTRIBUTOR CLAIMS" means any
and all Distributor Liabilities, except for claims for lost profits or
consequential damages and except for claims resulting from actions of Symantec
after the Closing taken without the consent of BR, which will not be
unreasonably withheld with respect to a BR Distributor which materially and
adversely alter the Loss that would have arisen but for such actions.
11.2.4 Each person entitled to indemnification under this
Section 11.2 (the "INDEMNIFIED PARTY") will give notice in writing to the party
required to provide such indemnification (the "INDEMNIFYING PARTY") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and will permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, which will conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (which approval must
not be unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein will not relieve the
Indemnifying Party of its obligations under this Section 11.2 except to the
extent the Indemnifying Party is actually prejudiced thereby. The Indemnified
Party may participate in such defense at such party's cost and expense. The
Indemnifying Party will not, in the defense of any such claim or litigation,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation, and no
Indemnified Party will consent to entry of any judgment or settle such claim or
litigation (or enter into any agreement related to the same with the claimants)
without the prior written consent of the Indemnifying Party.
11.2.5 No claim for indemnification under this Section
11.2 may be brought after the first (1st) anniversary of the Closing Date.
11.2.6 Notwithstanding the other provisions of this
Section 1.2, claims for Distributor Liabilities shall be handled as provided in
this Section 11.2.6. Each party shall have the right to joint participation in
and control of the defense and settlement of any claims for Distributor
Liabilities, at such party's own cost and expense. If either party has actual
knowledge of any such claim, it will promptly give notice in writing to the
other parties. No
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party may consent to any judgment or enter into any agreement or settlement of
any nature with any BR Distributor that has or may have a claim for Distributor
Liabilities without the consent and participation of the other parties. In
connection with any such claim, Symantec agrees that it will offer any BR
Distributor the right to distribute the Software Programs and Developments on
terms and conditions equivalent to those it offers to other Symantec
distributors having similar volume and other commitments, for a reasonable
period, subject to the reasonable approval of BR and the Stockholders.
11.3 No Limitation on Other Rights or Injunctive Relief. The
foregoing provisions of this Article 11, together with the other specific
allocations of liability specified in other Sections of this Agreements, are in
addition to any other remedies available to an Indemnified Party (except that
claims for damages shall be subject to the limitation of claims for
indemnification to the Escrow Funds) and nothing herein shall be deemed to
restrict a party's ability to seek and obtain injunctive relief.
11.4 Nonsolicitation of Employees. Beginning with the execution
of this Agreement and continuing until two years after the Closing Date, BR will
not recruit, attempt to hire, solicit or assist others in recruiting, attempting
to hire or soliciting any BR Employee hired by Symantec.
11.5 Noncompetition Provision. In consideration of Symantec
entering into this Agreement, BR and the undersigned Stockholders (each, a
"SELLER") each hereby severally and not jointly covenant and agree with Symantec
(and for the purposes of this clause, Symantec includes any associated,
subsidiary, related or affiliate company) that for a two year period following
the Closing (provided that with respect to Murray Hayden Haszard, such period
shall be two years from the date on which his employment with Symantec ceases)
(the "NONCOMPETE PERIOD"), such Seller will not, directly or indirectly,
individually or as an employee, partner, officer, director or shareholder
(except with the prior written consent of Symantec) or in any other capacity
whatsoever of or for any person, firm, partnership, company or corporation other
than Symantec:
(a) Own, manage, operate, sell, control or participate
in the ownership, management, operation, sales or control of or be connected in
any manner with any business engaged, in the geographical areas referred to in
this Section 11.5, in the design, research, development, marketing, sale, or
licensing of computer software that is substantially similar to or competitive
with any software products or other products created, distributed or known by
Seller to be under development by BR prior to the Closing;
(b) To Seller's knowledge, directly or indirectly
develop computer software that is substantially similar to or competitive with
any other computer program or products the creation or development of which he
participated in during the Noncompete Period; or
(c) Recruit, attempt to hire, solicit, assist others in
recruiting or hiring, or refer to others concerning employment, in or with
respect to the geographical areas referred to in Section 11.5.1 below, any
person who is an employee of Symantec or any of its subsidiaries or
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induce or attempt to induce any such employee to terminate his employment with
Symantec or any of its subsidiaries.
11.5.1 Geographical Areas. The geographical areas in which
the restrictions provided for in this Section 11.5 apply include all cities,
counties and states of New Zealand, Australia, the United States, and all other
countries in which Symantec (or any of its subsidiaries) has engaged in
licensing or sales or otherwise conducted business or selling or licensing
efforts at any time up to and including the date of the Closing. Each Seller
acknowledges that the scope and period of restrictions and the geographical area
to which the restrictions imposed in this Section 11.5 applies are fair and
reasonable and are reasonably required for the protection of Symantec and that
this Agreement accurately describes the business to which the restrictions are
intended to apply.
[11.5.2 Non-Solicitation of Customers. In addition to, and
not in limitation of, the non-competition covenants of Seller set forth above in
this Section 11.5, each Seller agrees with Symantec that, during the Noncompete
Period, such Seller will not, either for Seller or for any other person or
entity, directly or indirectly (other than for Symantec), solicit or obtain, or
attempt to solicit or obtain, the custom of any person, firm, organization,
business, corporation or other entity who is or has been a customer of Symantec
during such period, or use his/its personal knowledge or influence in relation
to any person, firm, organization, business, corporation or other entity who has
at any time during such period been a customer of Symantec or who has contracted
with or had any dealings whatsoever with Symantec.
11.5.3 Non-Solicitation of Employees or Consultants. In
addition to, and not in limitation of, the non-competition covenants of Seller
set forth above in this Section 11.5, Seller agrees with Symantec that, during
the Noncompete Period, Seller will not, either for Seller or for any other
person or entity, directly or indirectly, induce or attempt to induce any
employee, consultant or contractor of Symantec to terminate his or her
employment with Symantec and/or to terminate his or her contractual relations
with Symantec.
11.5.4 Amendment to Retain Enforceability. It is the
intent of the parties that the provisions of this Section 11.5 will be enforced
to the fullest extent permissible under applicable law. If any particular
provision or portion of this Section is adjudicated to be invalid or
unenforceable, this Agreement will be deemed amended to revise that provision or
portion to the minimum extent necessary to render it enforceable. Such amendment
will apply only with respect to the operation of this paragraph in the
particular jurisdiction in which such adjudication was made.
11.5.5 Injunctive Relief. Seller acknowledges that any
breach of the covenants of this Section 11.5 will result in immediate and
irreparable injury to Symantec and, accordingly, consents to the application of
injunctive relief and such other equitable remedies for the benefit of Symantec
as may be appropriate in the event such a breach occurs or is threatened. The
foregoing remedies will be in addition to all other legal remedies to which
Symantec may be entitled hereunder, including, without limitation, monetary
damages.
12. MISCELLANEOUS
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12.1 Governing Law. The internal laws of the State of
California, U.S.A. (irrespective of its conflicts of law principles) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
12.2 Consultations. The parties each acknowledge that they have
consulted with their respective accounting and tax advisors in connection with
the accounting and tax treatment for this transaction, that each such party will
bear all risk in connection with its accounting and tax treatment of the
transactions contemplated hereby and that no party is relying on any other party
in connection with the same.
12.3 Assignment; Binding Upon Successors and Assigns. Neither
party hereto may assign any of its rights or obligations hereunder, by operation
of law or otherwise, without the prior written consent of the other party
hereto. This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12.4 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
12.5 Counterparts. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of all
the parties reflected hereon as signatories.
12.6 Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.
12.7 Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only by a writing signed by the party to be bound thereby.
The waiver by a party of any breach hereof or default in the performance hereof
will not be deemed to constitute a waiver of any other default or any succeeding
breach or default.
12.8 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any
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occasion will not be construed to be a waiver of the right of such party to
enforce such provision on any other occasion.
12.9 Expenses. Each party will bear its respective expenses and
fees of its own accountants, attorneys, investment bankers and other
professionals incurred with respect to this Agreement and the transactions
contemplated hereby.
12.10 Attorneys' Fees. Should any legal action or proceeding be
brought to enforce or interpret any part of this Agreement, the prevailing party
will be entitled to recover, as an element of the costs of suit and not as
damages, reasonable attorneys' fees, costs and expenses in connection with such
legal action or proceeding (including all appeals) in addition to all other
relief to which such party may be entitled.
12.11 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by first class mail, on the third
business day following deposit in the mails, addressed as follows:
(i) If to Symantec:
Symantec Corporation
10201 Torre Avenue
Cupertino, CA 95014-2132
Attention: Vice President, Security and Assistance
with a copy to:
Symantec Corporation
10201 Torre Avenue
Cupertino, California 95014-2132
Attention: General Counsel
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(ii) If to BR:
Binary Research, Ltd.
42 Wanganui Avenue
Herne Bay
Auckland, New Zealand
Attention: Chief Financial Officer
with a copy to:
Blanc Williams Johnston & Kronstadt
1900 Avenue of the Stars, Suite 1700
Los Angeles, CA 90067
Attention: Gary A. David
(iii) If to the Stockholders:
to the address indicated on the signature page hereto;
with a copy to: Blanc Williams Johnston & Kronstadt at the
address indicated above
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 12.11.
12.12 Construction of Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys, and the
language hereof will not be construed for or against either party. A reference
to an article, section or exhibit will mean an article or section in, or an
exhibit to, this Agreement, unless otherwise explicitly set forth. The titles
and headings in this Agreement are for reference purposes only and will not in
any manner limit the construction of this Agreement. For the purposes of such
construction, this Agreement will be considered as a whole. The terms
"including" and "include" as used in this Agreement will be deemed to include
the phrase "without limitation."
12.13 No Joint Venture. Nothing contained in this Agreement will
be deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
12.14 Further Assurances. Each party agrees to cooperate fully
with the other party and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by the other party to evidence and reflect the transactions provided
for herein and to carry into effect the intent of this Agreement.
12.15 Absence of Third Party Beneficiary Rights. No provisions
of this Agreement are intended, nor will be interpreted, to provide or create
any third party beneficiary
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rights or any other rights of any kind in any client, customer, affiliate,
partner or employee of any party hereto or any other person or entity, unless
specifically provided otherwise herein, and, except as so provided, all
provisions hereof will be personal solely between the parties to this Agreement.
12.16 Public Announcement. Promptly following the Closing, the
parties will issue a press release approved by the parties announcing their
entering into this Agreement. Until the Closing Date, none of the parties will
disclose the existence or the substance of this Agreement or the transactions
provided for in this Agreement, except (a) as necessary to comply with the terms
of this Agreement and (b) Symantec may issue such press releases, and make such
other disclosures, as it determines to be required or appropriate under
applicable securities laws or NASD rules, after reasonable consultation where
possible with BR. Symantec and BR will take reasonable precautions to prevent
any trading in Symantec Common Stock by officers, directors, employees and
agents of Symantec or BR, as the case may be, having knowledge of any material
information regarding this Agreement or the matters provided for hereunder, or
by others having knowledge of such information, until the information in
question has been publicly disclosed.
12.17 Confidentiality. Except as expressly authorized by
Symantec in writing, BR will not directly or indirectly divulge to any person or
entity or use any Symantec Confidential Information. Except as expressly
authorized by BR in writing, Symantec will not directly or indirectly divulge to
any person or entity or use any BR Confidential Information until after the
Closing Date (or at, if the Closing does not occur). As used herein, "SYMANTEC
CONFIDENTIAL INFORMATION" consists of (a) any information designated by Symantec
as confidential whether developed by Symantec or disclosed to Symantec by a
third party, (b) any information relating to Symantec's product plans, product
designs, product costs, product prices, product names, finances, marketing
plans, business opportunities, personnel, research development or know-how or
any proprietary or confidential information included in or associated with the
Assets. As used herein, "BR CONFIDENTIAL INFORMATION" consists of (x) any
information designated by BR as confidential whether developed by BR or
disclosed to BR by a third party (such information will not include any
information included in the Assets), (y) any information relating to the product
plans, product designs, product costs, product prices, product names, finances,
marketing plans, business opportunities, personnel, research, development or
know-how of BR, and all rights in software and developments (except that nothing
herein will restrict Symantec's use and disclosure of information included in
the Assets after the Closing). "SYMANTEC CONFIDENTIAL INFORMATION" and "BR
CONFIDENTIAL INFORMATION" also include the terms and conditions and existence of
this Agreement, except as disclosed in accordance with Section 12.15 above. The
foregoing restrictions will apply to information about a party whether or not it
was obtained from such party's employees, acquired or developed by the other
party during such other party's performance under this Agreement, or otherwise
learned, including all information obtained through due diligence, and by a
party's accountants, attorneys and other agents under or as the result of this
Agreement. The foregoing restrictions will not apply to information that (i) has
become publicly known through no wrongful act of the receiving party, (ii) has
been rightfully received from a third party authorized by the party which is the
owner, creator or compiler to make such disclosure without restriction, (iii)
has been approved for
32
<PAGE> 33
release by written authorization of the party which is the owner, creator or
compiler, or (iv) is being or has theretofore been disclosed pursuant to a valid
court order after a reasonable attempt has been made to notify the party which
is the owner, creator or compiler.
12.18 Entire Agreement. This Agreement, the exhibits hereto and
the Confidentiality Agreement constitute the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions, express or implied, written or oral, of the parties with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance or usage of trade inconsistent with any of
the terms hereof.
12.19 Actual Knowledge. For purposes of this Agreement, the term
"actual knowledge" or "best knowledge" shall mean the actual knowledge of Murray
Hayden Haszard or Gray Treadwell, as well as any facts that such individuals
would have had if they made reasonable inquiry as to any matters where they have
knowledge of facts that would make a reasonable man conduct a further inquiry.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
33
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SYMANTEC CORPORATION BINARY RESEARCH, LTD.
By: /s/ HOWARD BAIN III By:
------------------------------ --------------------------------
Name: Name:
----------------------------- -------------------------------
Its: Its:
----------------------------- -------------------------------
SYMANTEC LIMITED BINARY RESEARCH INTERNATIONAL, INC.
By: /s/ HOWARD BAIN III By:
------------------------------ --------------------------------
Name: Name:
----------------------------- -------------------------------
Its: Its:
----------------------------- -------------------------------
34
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SYMANTEC CORPORATION BINARY RESEARCH, LTD.
By: By: /s/ MURRAY HASZARD
------------------------------ --------------------------------
Name: Name: Murray Haszard
----------------------------- -------------------------------
Its: Its: President
----------------------------- -------------------------------
SYMANTEC LIMITED BINARY RESEARCH INTERNATIONAL, INC.
By: By: /s/ MURRAY HASZARD
------------------------------ --------------------------------
Name: Name: Murray Haszard
----------------------------- -------------------------------
Its: Its:
----------------------------- -------------------------------
35
<PAGE> 36
SOLELY FOR PURPOSES OF SECTION 11.2 AND 11.5:
STOCKHOLDERS
- ----------------------------------
By: /s/ MURRAY HASZARD
- ----------------------------------
Name:
- ----------------------------------
Address for Notice:
- ----------------------------------
- ----------------------------------
- ----------------------------------
- ---------------------------------- -----------------------------------
By: By:
------------------------------- --------------------------------
Name: Name:
----------------------------- ------------------------------
By: By:
------------------------------- --------------------------------
Name: Name:
----------------------------- ------------------------------
Address for Notice: Address for Notice:
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
36
<PAGE> 37
SOLELY FOR PURPOSES OF SECTION 11.2 AND 11.5:
STOCKHOLDERS
- ----------------------------------
By:
- ----------------------------------
Name:
- ----------------------------------
Address for Notice:
- ----------------------------------
- ----------------------------------
- ----------------------------------
Gray Treadwell Family Trust Edward Family Trust
- ---------------------------------- -----------------------------------
By: /s/ GRAY TREADWELL By: /s/ GRAEME EDWARD LODGE
------------------------------- --------------------------------
Name: Gray Treadwell Name: Graeme Edward Lodge
----------------------------- ------------------------------
By: /s/ ROBYN HELEN TREADWELL By: /s/ RAYLENE MARGARET LODGE
------------------------------- --------------------------------
Name: Robyn Helen Treadwell Name: Raylene Margaret Lodge
----------------------------- ------------------------------
Address for Notice: Address for Notice:
21a Arron St
- ---------------------------------- -----------------------------------
Ellerslie Ellerslie
- ---------------------------------- -----------------------------------
Auckland, N.Z. Auckland, New Zealand
- ---------------------------------- -----------------------------------
/s/ Graeme Edward Lodge
- ----------------------------------
Graeme Edward Lodge
(for Gray Treadwell Trust)
37
<PAGE> 38
EXHIBITS
A-1 Programs
A-2 Tools
B Developments
C Contracts
D Tangible Assets
E Excluded Assets
F Form of Escrow Agreement
G Form of Employment and Noncompetition Agreement
H1 Opinion of BR US Counsel
H2 Opinion of BR NZ Counsel
<PAGE> 39
SCHEDULES
<TABLE>
<S> <C>
1.1 Exclusions from assigned Contracts
1.3 Restrictions on the Assets; Encumbrances
1.4 Assumed Obligations and Liabilities
3.1 Jurisdictions in which BR has Qualified as Foreign Corporation;
Jurisdictions in which BR Owns or Leases Real Property, Etc.
3.2.2 Necessary filings, authorizations and approvals
3.3 Required Consents and Other Disclosures Required by Section 3.3
3.4 Litigation
3.5A BR Financial Statements
3.5C BR Debts, Liabilities or Obligation's Not Reflected in BR Financial
Statements
3.7 Warranty, Development and Bug Fix Obligations
3.8 Certain Changes
3.9A Disclosures Concerning Licenses, Instruments, Obligations and Other
Agreements or Commitments Used in Connection with any Software Programs
3.9B Encumbrances on Tangible Assets
3.10 Intellectual Property Rights; Disclosure of Personnel Who Have Not
Entered Into Assignment and Confidentiality Agreements
3.13 Disclosures Concerning BR Officers, Directors and Family Members
3.14.1 BR Employment Contracts and Consulting Agreements Not Terminable at Will
3.14.3 Employee Plans and Related Information
3.14.5 BR Employees, Officers, Directors, Agents, Consultants and Contractors
3.17 Investment Banker, Broker or Finder Fees and Compensation
4.0 Symantec Schedule of Exceptions
</TABLE>
<PAGE> 1
EXHIBIT 10.05
[JETFORM CORPORATION LETTERHEAD]
June 29, 1998
Symantec Corporation
10201 Torre Avenue
Cupertino, California
95014
Attention: Howard Bain III - Vice President Worldwide Operations and Chief
Financial Officer
Dear Howard:
This will confirm our agreement to further modify the payments set out in
Schedule 2.3 of the Asset Purchase Agreement between Delrina Corporation,
Delrina (Canada) Corporation and JetForm Corporation as amended on February 12,
1998. The payments will be modified as follows:
<TABLE>
<CAPTION>
Payment per
Schedule 2.3 Revised payment
Date of Payment (US$) (US$)
<S> <C> <C>
June 1998 7,833,000 11,333,000
March 1999 7,972,000 5,972,000
June 1999 6,912,000 4,912,000
</TABLE>
We have already made payment of $7,833,000 in satisfaction of the June
1998 amount. We will wire an additional $3.5 million to your account at Bank of
America in Toronto on July 6, 1998.
If you are in agreement with the above, please sign this letter in the space
provided and return it to me by facsimile at 613 751 4802.
Yours truly,
/s/ Jeffrey McMullen
Jeffrey McMullen
Vice President and Controller
/s/ H. Bain III, V.P. Worldwide Operations & CFO
- -----------------------------------------------------
Confirmed - Symantec Corporation, Delrina Corporation,
Delrina (Canada) Corporation
Howard Bain III
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SYMANTEC
CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTH PERIOD ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-02-1999
<PERIOD-START> APR-04-1998
<PERIOD-END> JUL-03-1998
<CASH> 125,070
<SECURITIES> 86,672
<RECEIVABLES> 66,489
<ALLOWANCES> (4,417)
<INVENTORY> 3,586
<CURRENT-ASSETS> 312,483
<PP&E> 164,967
<DEPRECIATION> (114,246)
<TOTAL-ASSETS> 486,249
<CURRENT-LIABILITIES> 154,231
<BONDS> 14,284
0
0
<COMMON> 579
<OTHER-SE> 317,488
<TOTAL-LIABILITY-AND-EQUITY> 486,249
<SALES> 153,091
<TOTAL-REVENUES> 153,091
<CGS> 20,332
<TOTAL-COSTS> 20,332
<OTHER-EXPENSES> 139,101
<LOSS-PROVISION> 131
<INTEREST-EXPENSE> 331
<INCOME-PRETAX> 418
<INCOME-TAX> 5,731
<INCOME-CONTINUING> (5,313)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,313)
<EPS-PRIMARY> (0.09)<F1>
<EPS-DILUTED> (0.09)
<FN>
<F1>For Purposes of This Exhibit, Primary means Basic.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SYMANTEC CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTH PERIOD
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-03-1998
<PERIOD-START> MAR-29-1997
<PERIOD-END> JUL-04-1997
<CASH> 111,712
<SECURITIES> 75,560
<RECEIVABLES> 42,582
<ALLOWANCES> (4,333)
<INVENTORY> 3,293
<CURRENT-ASSETS> 256,153
<PP&E> 142,111
<DEPRECIATION> (90,657)
<TOTAL-ASSETS> 362,842
<CURRENT-LIABILITIES> 111,031
<BONDS> 15,059
0
0
<COMMON> 557
<OTHER-SE> 236,195
<TOTAL-LIABILITY-AND-EQUITY> 362,842
<SALES> 135,016
<TOTAL-REVENUES> 135,016
<CGS> 20,920
<TOTAL-COSTS> 20,920
<OTHER-EXPENSES> 92,270
<LOSS-PROVISION> 11
<INTEREST-EXPENSE> 257
<INCOME-PRETAX> 24,072
<INCOME-TAX> 5,537
<INCOME-CONTINUING> 18,535
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,535
<EPS-PRIMARY> 0.33<F1>
<EPS-DILUTED> 0.32
<FN>
<F1>FOR PURPOSES OF THIS EXHIBIT, PRIMARY MEANS BASIC.
</FN>
</TABLE>
