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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) December 31, 1998
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SPSS Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 33-64732 36-2815480
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
233 South Wacker Drive, Chicago, Illinois 60606
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(Address of Principal Executive Offices) (Zip Code)
(312) 651-3000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On December 31, 1998, SPSS Inc. ("SPSS" or the "Registrant") acquired 100%
of the outstanding capital shares of Integral Solutions Limited, a corporation
incorporated under the laws of England with Registered Number 2355560 ("ISL"),
from the shareholders of ISL (the "Shareholders"). The stock purchase occurred
pursuant to the Stock Purchase Agreement between SPSS and the Shareholders in
the United Kingdom (the "Agreement") dated as of December 31, 1998. SPSS
acquired ISL from the Shareholders for approximately $6.75 million plus certain
Contingent Payments (as defined in the Agreement) of up to approximately $6.71
million based on future results of the acquired business (the "Purchase Price").
ISL is a leading full-service data mining company, supplying consultancy and
training. SPSS will continue to operate the ISL business from the ISL offices in
Basingstoke, England.
The Purchase Price was established through negotiations between SPSS and
ISL.
Other than the transactions included in, or contemplated by the Agreement,
there are no material relationships between ISL and the Registrant or the
Registrant's affiliates, or any director or officer of the Registrant, or any
associate of any such director or officer.
The foregoing description of the acquisition is qualified in its entirety
by reference to the Agreement filed as Exhibit 2.1 hereto and incorporated by
this reference.
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ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements required by this item will be filed by amendment
within sixty (60) days of the date of this initial report.
(b) Financial statements required by this item will be filed by amendment
within sixty (60) days of the date of this initial report.
(c) The following Exhibits to this Form 8-K are attached hereto:
Exhibit
Number Description of Document
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2.1 Stock Purchase Agreement by and among the Registrant and
the shareholders of Integral Solutions Limited, dated as of
December 31, 1998, together with a list briefly identifying
the contents of omitted schedules.
4.1 Bylaws of SPSS
99.1 Press Release of SPSS, issued January 4, 1998, announcing
acquisition of ISL by SPSS.
The Registrant agrees to furnish supplementally a copy of any omitted schedule
to the Agreement to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPSS Inc.
Date: January 15, 1998 By: /s/ Robert Brinkmann
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Robert Brinkmann
Assistant Secretary and Controller
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EXHIBIT 2.1
EXECUTION DOCUMENT
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STOCK PURCHASE AGREEMENT
By and Among
SPSS INC.
and
THE SHAREHOLDERS OF INTEGRAL SOLUTIONS LIMITED
LISTED ON THE SIGNATURE PAGES HEREOF
Dated as of December 31, 1998
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================================================================================
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, and all exhibits and schedules hereto,
dated as of December 31, 1998, (the "Agreement"), by and among SPSS INC., a
Delaware corporation ("SPSS") and the shareholders of Integral Solutions
Limited, a corporation incorporated under the laws of England with Registered
Number 2355560 ("ISL") listed on the signature pages hereof (individually, a
"Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, ISL is engaged in the business of developing and distributing
data mining software and providing associated services;
WHEREAS, the respective boards of directors of each of ISL and SPSS
have determined that it is advisable and for the benefit of their corporations
and their respective shareholders that ISL be acquired by SPSS by means of the
acquisition from the Shareholders of all of the outstanding capital shares of
ISL, comprised of 930,000 shares of ordinary stock (collectively, the "Shares"),
all as set forth in Section 3.3 hereto, in exchange for cash pursuant to the
terms and conditions set forth herein (the "Acquisition");
WHEREAS, the Shareholders own of record and beneficially all of the
issued and outstanding Shares; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Acquisition will be a qualified stock purchase within the meaning of
Section 338 of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in reliance upon
the representations and warranties contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
1.1 Purchase and Sale of the Shares. Subject to the terms and
conditions contained in this Agreement, on the Closing Date (as hereinafter
defined), the Shareholders shall sell, assign, transfer and deliver the Shares
to SPSS, and SPSS shall purchase the Shares from the Shareholders, for an
aggregate purchase price consisting of the amounts set forth in Section 1.3
hereof (the "Purchase Price") payable pursuant to the terms provided in Section
1.3 hereof.
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1.2 Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated hereby (the "Closing") shall take
place at the offices of Ross & Hardies, Chicago, Illinois, no later than 11:59
p.m., Central Standard Time, on December 31, 1998 (the "Closing Date") or such
other place or time as the parties may agree.
1.3 Payment of Purchase Price. Upon satisfaction of all the terms
and conditions set forth in this Agreement, SPSS shall deliver the Purchase
Price consisting of: (a) SIX MILLION SEVEN HUNDRED FIFTY THOUSAND SIX HUNDRED
FORTY AND NO/100 DOLLARS (U.S. $6,750,640) to be paid as follows: (i) within
twenty-four (24) hours of the Closing, SPSS shall deliver to the Shareholders
SIX MILLION FORTY THOUSAND SIX HUNDRED FORTY AND NO/100 DOLLARS (U.S.
$6,040,640) by wire transfer of immediately available funds to an account
designated by the Shareholders by written notice to SPSS given on or before the
Closing Date, such amount to be allocated among the Shareholders as set forth in
Schedule 1.3 hereof, and (ii) SEVEN HUNDRED TEN THOUSAND NO/100 DOLLARS (U.S.
$710,000) (the "Escrowed Amount") shall be held in escrow in accordance with
Article II hereof; and (b) the 1999 Contingent Payments (as hereinafter defined)
and the 2000 Contingent Payments (as hereinafter defined) calculated and payable
in accordance with Section 1.4.
1.4 Contingent Payments. For purposes of this Section 1.4, the
following terms shall be defined as follows:
"ISL Revenues" shall mean revenues recognized on the books of ISL
and/or SPSS (as appropriate) for sales made through the entire ISL
and/or SPSS organization worldwide (including its affiliates, agents
and partners) from all ISL products and services listed on Schedule 1.4
including, without limitation, licensing of ISL's intellectual property
rights, sale of ISL's technology or part of it, product license sales,
maintenance sales, training fees, consulting revenue, distributor fees,
royalty payments payable to ISL (pursuant to that certain Agreement for
the Sale and Purchase of the Integrated Solution and Scheduling
Business and Certain Assets of Integrated Solutions Limited dated
January 18, 1997 by and among Auto Simulations Limited, Integral
Solutions Limited and Auto Solutions, Inc. (the "ISS Agreement"; the
Integral Solution and Scheduling Business referenced in the ISS
Agreement is referred to herein as "ISS")), royalty payments from value
added reseller and original equipment manufacturer relationships,
access fees, as well as research and development funds for data mining
and applications related to ISL products as recognized by ISL or SPSS
from any government agency and other sources, including
work-in-progress on the basis used by ISL historically. The parties
hereto agree that, when calculating the amount of ISL Revenues
attributable to bundled software containing a combination of an ISL
product or part of an ISL product and another product or other
products, the amount to be included in the ISL Revenues shall be that
proportion of the total price of the bundled software which the price
of the ISL product bears relative to the price of all products
comprised in the bundled software when sold individually. In the event
an ISL product or part is bundled with or merged into a non-ISL product
or products, and the price of such ISL product or part cannot be
determined, or if it is unclear as to the contribution such ISL product
or part makes to the price of the bundled
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or merged products, or if the ISL product or part so bundled or merged
has no list price, then the price of the ISL product or part shall be
determined by the mutual agreement of SPSS and Alan Montgomery. Any
disputes under this provision shall be resolved by arbitration in
accordance with Section 14.17 hereof.
"1998 ISL Revenues" shall mean U.S. $3,450,000.
"1999 ISL Revenues" shall mean the ISL Revenues for calendar year 1999.
"2000 ISL Revenues" shall mean the ISL Revenues for calendar year 2000.
(a) 1999 Contingent Payments. Upon satisfaction of the terms and
conditions contained in this Section 1.4, on or before January 31, 2000, SPSS
shall pay to the parties set forth on Schedule 1.3 hereof the following amounts
(the "1999 Contingent Payments"):
(i) If 1999 ISL Revenues are equal to or greater than the product
of (A) 1.5 and (B) 1998 ISL Revenues, then SPSS shall pay to
the parties set forth on Schedule 1.3 an amount equal to THREE
MILLION EIGHT HUNDRED EIGHTY-NINE THOUSAND NINE HUNDRED
FORTY-TWO AND NO/100 DOLLARS (U.S. $3,889,942).
(ii) If 1999 ISL Revenues are equal to or greater than the product
of (A) 1.2 (but less than 1.5) and (B) 1998 ISL Revenues, then
SPSS shall pay to the Shareholders an amount calculated as
follows:
(1999 Multiplier - 1.2) x ($3,889,942)
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(1.5 - 1.2)
For purposes of this calculation, the "1999 Multiplier" shall
be the number determined by dividing 1999 ISL Revenues by 1998
ISL Revenues.
(iii) If 1999 ISL Revenues are less than the product of (A) 1.2 and
(B) 1998 ISL Revenues, no additional payments to the parties
set forth on Schedule 1.3 shall be paid in respect of the 1999
Contingent Payments.
Each party set forth on Schedule 1.3 shall be paid his pro rata share of the
1999 Contingent Payments in accordance with Schedule 1.3.
(b) 2000 Contingent Payments. Upon satisfaction of the terms and
conditions contained in this Section 1.4, on January 31, 2001, SPSS shall pay to
the parties set forth on Schedule 1.3 the following amounts (the "2000
Contingent Payments"):
(i) If 2000 ISL Revenues are equal to or greater than the product
of (A) 2.25 and (B) 1998 ISL Revenues, then SPSS shall pay to
the parties set forth on Schedule 1.3
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an amount equal to TWO MILLION EIGHT HUNDRED EIGHTEEN THOUSAND
NINE HUNDRED FORTY AND NO/100 DOLLARS (U.S. $2,818,940).
(ii) If 2000 ISL Revenues are equal to or greater than the product
of (A) 1.44 (but less than 2.25 and (B) 1998 ISL Revenues,
then SPSS shall pay to the parties set forth on Schedule 1.3
an amount calculated as follows:
(2000 Multiplier - 1.44) x ($2,818,940)
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(2.25 - 1.44)
For purposes of this calculation, the "2000 Multiplier" shall
be the number determined by dividing 2000 ISL Revenues by 1998
ISL Revenues.
(iii) If 2000 ISL Revenues are less than the product of (A) 1.44 and
(B) 1998 ISL Revenues, no additional payments to the parties
set forth on Schedule 1.3 shall be paid.
Each party set forth on Schedule 1.3 shall be paid his pro rata share of the
2000 Contingent Payments in accordance with Schedule 1.3.
(c) Approval of Contingent Payment Amount. No later than ten days
before the date on which any Contingent Payment is due, SPSS shall provide the
Shareholders with a statement setting forth SPSS' calculation of the relevant
Contingent Payment, for the Shareholders' review and approval, shall make
available to the Shareholders the documentation supporting SPSS' calculation of
the Contingent Payment for review and shall pay to the Shareholders by wire
transfer or other immediately available funds in the proportions set forth in
Schedule 1.3 the amount shown on such statement. Within thirty days of the date
of the Shareholders' receipt thereof, the Shareholders shall notify SPSS of
their approval or disapproval of such calculation and, if disapproved, the basis
for such disapproval. Failure of the Shareholders to so notify SPSS within such
thirty day period shall be deemed approval, unless the Shareholders did not
receive SPSS' notice hereunder. In the event the Shareholders notify SPSS of
their disapproval of SPSS' calculation of the Contingent Payment, and the
parties are unable to reach agreement on or before the date on which the
relevant Contingent Payment is due, such dispute shall be resolved by a "Big
Five" accounting firm mutually selected by the parties or, in the absence of
agreement between the parties, selected by the President for the time being of
the American Arbitration Association. The decision of such accounting firm shall
be binding and conclusive on all parties. The costs and expenses of such
accounting firm shall be borne by SPSS if the calculation of the ISL Revenues by
the accounting firm exceeds SPSS' calculation thereof by 5% or more; otherwise,
such costs and expenses shall be borne by the Shareholders.
Notwithstanding anything to the contrary contained herein, payment of
any Contingent Payment as calculated by SPSS shall be made on the dates set
forth herein; provided, however, that if the actual Contingent Payment due shall
exceed the relevant payment made by SPSS
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hereunder, the payment of such excess amount shall be made on the date which is
five days after the date on which such calculation is finally determined.
(d) Interest. If the Shareholders do not receive on the date due any
sum payable under this Agreement, SPSS shall pay, on demand, interest on such
sum due, less any deduction or withholding that may be required by law, from the
date of failure to pay to the date of actual payment, before as well as after
judgment, at an annual rate equal to the "prime rate" published in the Wall
Street Journal on the date of such failure to pay (the "Default Rate"). In the
event that the 1999 Contingent Payments or the 2000 Contingent Payments, as the
case may be, established in accordance with this Section 1.4, exceed the
relevant payment made by SPSS hereunder, SPSS shall pay, on demand, interest on
the balance, from the date such Contingent Payment was due to the date of actual
payment, before as well as after judgment, at the Default Rate.
(e) If SPSS or ISL makes an assignment for the benefit of creditors, or
if a receiver or liquidator of SPSS or ISL is appointed, or if SPSS or ISL shall
be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to U.S. federal bankruptcy law, or any
similar U.S. federal or state law or English law, shall be filed by or against,
consented to, or acquiesced in by, SPSS or ISL, or if any proceeding for the
dissolution of SPSS or ISL shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by SPSS or ISL, as the case may be, upon the same not being
discharged, stayed or dismissed within sixty (60) days,
(i) at any time from the date of this Agreement until January 31,
2000, the sum of $6,708,882 will immediately become due and
payable by SPSS to the Shareholders in the proportions set out
in Schedule 1.3;
(ii) at any time from January 31, 2000 until January 31, 2001 or
the date of payment of the 2000 Contingent Payments, whichever
is the later, the sum of $2,818,940 will immediately become
due and payable by SPSS to the Shareholders in the proportions
set out in Schedule 1.3, provided, however, that no payment
will be due or made under this Section 1.4(e)(ii) if payment
has been made or is due under Section 1.4(e)(i) above;
provided also that no payments will be made under this Section 1.4(e) to the
extent paid under (a) or (b) above. Notwithstanding the foregoing, no payment
will be made under this Section 1.4(e) in the event of a reorganization of SPSS
or ISL which is not in connection with the bankruptcy or insolvency of such
parties.
1.5 Retained Assets. The parties hereto acknowledge and agree that
the calculation of the Purchase Price does not include the following items which
shall be sold by ISL to Alan Montgomery and Amerrall Limited, a corporation
incorporated under the laws England and Wales with Registered Number 3685576,
prior to the Closing (the "InferMed Sale"): all of ISL's right, title, interest
in and to capital shares of InferMed Limited, a corporation incorporated
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under the laws of England and Wales with Registered Number 02621844, owned by
ISL, and ISL's healthcare business and assets as listed on Schedule 1.5
(collectively, "InferMed" or the "Retained Assets"). The Shareholders shall
assume all liabilities relating to the Retained Assets.
1.6 Tax and Accounting. The parties hereto intend that the
Acquisition will be a qualified stock purchase within the meaning of Section 338
of the Code.
ARTICLE II
ESCROW
2.1 Escrow. Fladgate Fielder, a partnership organized under the laws
of England, and Berwin Leighton, a partnership organized under the laws of
England (collectively, the "Escrow Agent"), will jointly hold the Escrowed
Amount in escrow for the Shareholders' account (the "Escrow Account"). The
Escrow Agent will hold the Escrowed Amount subject to the terms and conditions
of an escrow agreement by and among the Shareholders, SPSS, Fladgate Fielder and
Berwin Leighton substantially in the form attached hereto as Exhibit A (the
"Escrow Agreement").
2.2 Escrowed Amount. The Escrowed Amount shall on the Closing Date
be paid into the Escrow Account, which shall be opened as set forth in the
Escrow Agreement. If before April 30, 1999 (the "Release Date"), SPSS makes a
claim for indemnification pursuant to Article XII hereof or the Tax Deed (as
hereinafter defined) (an "Indemnification Claim"), the Escrow Agent shall retain
in the Escrow Account the lesser of: (i) the amount standing to the credit of
the Escrow Account (less accrued interest and bank charges); and (ii) the amount
of the Indemnification Claim. If a sum is retained in the Escrow Account after
the Release Date in accordance with this Section 2.2, the Escrow Agent shall
continue to hold such sum in the Escrow Account pending the settlement or
resolution of the Indemnification Claim. When the Indemnification Claim is
settled or resolved and the amount payable to SPSS determined, the Escrow Agent
shall, within 14 days of the determination, pay the appropriate amount to SPSS
out of the Escrow Account (insofar as there is sufficient standing to the credit
of the Escrow Account, after deducting accrued interest and bank charges) and
the Purchase Price shall be reduced by that amount. Any amount standing to the
credit of the Escrow Account after settlement or resolution of all
Indemnification Claims made prior to the Release Date shall be paid to the
Shareholders, less all bank charges and SPSS' pro rata share of any interest
accrued pursuant to this Section 2.2. The payment of a sum to SPSS, in
accordance with this Section 2.2, in or towards satisfaction of an
Indemnification Claim, shall not prejudice or affect the other rights and
remedies of SPSS for the purpose of recovering amounts due from the Shareholders
and not satisfied by payments made out of the Escrow Account. The interest
accrued on the Escrow Account shall belong to SPSS and the Shareholders in
proportion to the respective amounts of the Escrowed Amount released to each of
them, having regard to the period for which each amount was retained. SPSS and
the Shareholders shall, as and when necessary, give
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instructions to the Escrow Agent to procure compliance with this Section 2.2.
The Escrow Agent shall not be required to do anything with respect to the Escrow
Account except on the written instructions of Alan Montgomery (for the
Shareholders) and SPSS.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
Subject to the limitations listed in this Agreement, the Shareholders,
jointly and severally, represent and warrant to SPSS as follows, and, except as
qualified by the disclosure letter set out in Schedule 3 (the "Disclosure
Letter"):
3.1 Organization and Qualification. (a) ISL is a corporation duly
organized and validly existing under English law and has the corporate power and
authority to consummate the transactions contemplated hereby, to own or lease
the properties and other assets which it presently owns or leases and to carry
on its business as presently conducted.
ISL owns 750 shares of capital stock of ISL Decision Systems Inc.
("ISLDSI" or "Subsidiary"), which consists of 75% of the issued and outstanding
capital stock of ISLDSI, which is the only entity owned or under common control
with ISL or which constitutes a subsidiary or a subsidiary undertaking (as such
terms are defined in Sections 736 and 258 of the Companies Act of 1985,
respectively). ISLDSI is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania and has the
power and authority to own or lease the properties and other assets which it
presently owns or leases and to carry on its business as presently conducted.
Except as referred to in Schedule 3.1(a), neither ISL nor Subsidiary has any
equity or other ownership interest in any other entity.
(b) The copy of the Memorandum of Association, and all
amendments thereto, of ISL, as filed with the United Kingdom Registrar of
Companies, and of the Articles of Association, as amended to date, of ISL, as
certified by its Secretary and as filed with the United Kingdom Registrar of
Companies, all as previously made available to SPSS, are true, complete and
correct copies as amended and presently in effect. The copies of any
organizational and governing documents of Subsidiary including without
limitation the Certificate of Incorporation of ISLDSI as certified by the
Secretary of State of the State of Incorporation of ISLDSI, and the Bylaws of
ISLDSI, so certified by its Secretary, are true, complete and correct copies as
amended and presently in effect. All minutes and consents of the shareholders
and directors of ISL and Subsidiary have been furnished to SPSS for examination.
The statutory and minute books (including the register of members) of ISL and
Subsidiary have been properly kept and contain an accurate and complete record
of the matters they should deal with and no notice or allegation has been
received that the statutory or minute books of ISL or Subsidiary are incorrect
or should be rectified, no minutes or consents have been included in such
statutory and minute
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books since such examination by SPSS which have not heretofore been furnished to
SPSS and no corporate action not reflected in said minute books has been taken.
(c) ISL and Subsidiary are each duly licensed or qualified to do
business as a foreign corporation, and are each in good standing, in every
domestic and foreign jurisdiction in which each of ISL and Subsidiary are
required to be so licensed or qualified.
(d) All charges in favor of ISL have (if appropriate) been
registered in accordance with ss395, 409, 410 and 424 of the Companies Act 1985
of England.
(e) All returns, particulars, resolutions and documents required
by the Companies Acts 1985 and 1989 of England or any other legislation to be
filed with the Registrar of Companies, or other authority, in respect of ISL or
Subsidiary have been duly filed and were correct.
(f) ISL and Subsidiary have complied with the Companies Acts
1985 and 1989 of England and any other relevant legislation, and other legal
requirements, in connection with their formation, the allotment or issue of
shares, debentures or other securities, the payment of dividends and the conduct
of their businesses.
3.2 Authority. The Shareholders, on their own behalf, and any
attorney executing and delivering this Agreement on behalf of any such
Shareholders, have full power, capacity and authority (corporate or otherwise)
to execute and deliver this Agreement, and the documents and instruments
referred to in Articles X and XI ("Ancillary Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by all necessary action on the part of the Shareholders and no other
proceedings (corporate or otherwise) on the part of any of the Shareholders are
necessary to authorize this Agreement and the Ancillary Documents or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Documents have been duly and validly executed and delivered by or
on behalf of each of the Shareholders and constitute legal, valid and binding
agreements between SPSS and the Shareholders. No person is a shadow director of
ISL (within the meaning of s741 of the Companies Acts 1985 of England) who is
not treated as one of ISL's directors for all purposes of such laws. None of the
Shares of ISL's capital stock was issued at a discount, and no loan capital of
ISL or Subsidiary has been issued or allotted or agreed to be issued or
allotted.
3.3 Capitalization. The entire authorized capital stock of ISL and
the number of Shares thereof which are issued and outstanding are as follows:
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NUMBER OF NUMBER ISSUED
AUTHORIZED SHARES AND
OF ISL CLASS OUTSTANDING
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1,000,000 Ordinary 930,000
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All of the issued and outstanding Shares of ISL's capital stock are owned of
record and beneficially by the Shareholders in the respective amounts set forth
in Schedule 3.3 hereto. ISL beneficially owns 750 shares of the issued and
outstanding shares of Subsidiary's capital stock ("Subsidiary Shares"). The
Shares and Subsidiary Shares are subject to no restrictions on transferability
other than restrictions imposed by the Articles of Association of ISL, the
Securities Act of 1933, and the rules and regulations promulgated thereunder
(the "1933 Act"), English securities laws and applicable state securities laws
of states of the United States. All of the outstanding Shares of capital stock
of ISL and Subsidiary Shares are duly authorized, validly issued and outstanding
and fully paid and were not issued in violation of any preemptive rights. There
are no shares of capital stock of Subsidiary in treasury, and there are no
Shares or shares of capital stock of Subsidiary reserved for issuance. All of
the outstanding Subsidiary Shares are non-assessable. There are no outstanding
agreements, options, warrants, conversion or other rights to acquire from any of
the Shareholders or ISL, or rights of pre-emption, or any plans, contracts or
commitments providing for the issuance of, or the granting of, rights by any of
the Shareholders or ISL to acquire: (i) any capital stock of ISL (whether issued
or unissued) or Subsidiary; (ii) any securities convertible into or exchangeable
for any capital stock of ISL or Subsidiary; or (iii) loan stock or loan capital
of ISL or Subsidiary. There are no agreements or understandings with respect to
the voting, holding or selling of any Shares of capital stock of ISL or
Subsidiary, or any contractual obligations of ISL or any of its Shareholders
with respect to ISL's or Subsidiary's capital stock. There are no voting trusts
or proxies currently in effect with respect to the Shares or shares of
Subsidiary. No person has any right to require ISL or Subsidiary to register any
of its or their securities under the 1933 Act or pursuant to applicable English
law.
Neither ISL nor Subsidiary is the holder or beneficial holder of or has
agreed to acquire share or loan capital of a body corporate (save in respect of
ISL's holding in Subsidiary).
3.4 Title of Shares. The Shareholders own and have good and
marketable title to the Shares, free and clear of any lien, pledge, claim,
encumbrance, restriction or right of any third party of any kind. On the Closing
Date, SPSS will acquire good and marketable title to the Shares and Subsidiary
Shares, free and clear as aforesaid. The Shares represent the only equity
interest of the Shareholders in ISL. None of the Shares was, or represents
assets which were, the subject of a transfer at an undervalue (within the
meaning of ss238 or 239 of the Insolvency Act 1986 of England) within the past
five years.
3.5 Consents and Approvals. There is no authorization, consent,
order or approval of, or notice to or filing with, any individual or entity
required to be obtained or given in order for ISL and the Shareholders to
consummate the transactions contemplated hereby and fully perform their
respective obligations hereunder.
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3.6 Absence of Conflicts. The execution, delivery and performance by
ISL and the Shareholders of this Agreement and the consummation by ISL and the
Shareholders of the transactions contemplated hereby will not, with or without
the giving of notice or lapse of time or both, (i) violate any provision of law,
statute, rule or regulation to which either ISL, Subsidiary or the Shareholders
is or was subject, (ii) violate any order, judgment or decree which is or was
applicable to either ISL, Subsidiary or the Shareholders; (iii) conflict with or
result in a breach or default under any term or condition of the memorandum of
association or articles of association of ISL, or the articles of incorporation
or bylaws of Subsidiary, or any agreement or other instrument or arrangement to
which either ISL, Subsidiary or the Shareholders is a party or by which any of
them is bound or a restriction or obligation by which or to which an asset of
ISL or Subsidiary is bound or subject, (iv) cause, or give any person grounds to
cause, the maturity of any debt, liability or obligation of ISL or Subsidiary to
be accelerated or increase any such liability or obligation; (v) relieve another
person from an obligation to ISL or Subsidiary (whether contractual or
otherwise), or enable another person to determine such an obligation, or a right
or benefit enjoyed by ISL or Subsidiary, or to exercise a right, whether under
an agreement with, or otherwise in respect of, ISL or Subsidiary; or (vi) result
in the creation, imposition, crystallisation or enforcement of an encumbrance on
assets of ISL or Subsidiary.
3.7 Financial Statements: Accounts Receivable. The Shareholders have
previously delivered to SPSS true and correct copies of the audited balance
sheets of ISL and Subsidiary, as of April 30, 1998 and the related audited
statements of income, statements of retained earnings and statements of changes
in financial positions for the periods ending on such dates (collectively, the
"Financial Statements"). The Financial Statements (i) have been prepared in
accordance with the generally accepted accounting principles commonly used in
England applied on a consistent basis and comply with the Companies Act 1985 of
England, and all applicable financial reporting standards (as issued or adopted
by The Accounting Standards Board Limited), as to ISL, and in accordance with
generally accepted accounting as to Subsidiary, and are in accordance with the
books and records of ISL and Subsidiary, and were prepared using the same basis
and policies of accounting principles as those adopted in preparing the audited
accounts of ISL and Subsidiary in respect of three last preceding accounting
periods, (ii) present truly and fairly the financial position and condition of
ISL and Subsidiary and the related results of operations as at the dates and for
the periods then ended (subject to customary year-end adjustments, which
adjustments shall not be material in kind or amount and adjustments resulting
from fluctuations in currency exchange rates), (iii) contain no material
misstatements or omissions which under such generally accepted accounting
principles would be required to be disclosed for financial statement purposes,
(iv) are not affected by extraordinary, exceptional or non recurring items, (v)
make adequate and proper provision for all liabilities and capital commitments
of ISL and Subsidiary outstanding as of April 30, 1998, including contingent,
unquantified or disputed liabilities, and (vi) make adequate and proper
provision for all Taxes (as hereinafter defined) liable to be assessed on ISL
and Subsidiary or for which they may be accountable, in respect of all periods
ended on or before April 30, 1998. The September 30, 1998 unaudited management
accounts of ISL delivered to SPSS have been prepared on a basis consistent with
the Financial Statements in all respects, and present truly
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and fairly the assets and liabilities of ISL and the Subsidiary as of September
30, 1998 and its profits from May 1, 1998 to September 30, 1998.
Subject to applicable reserves for bad debts shown on ISL's and
Subsidiary's latest balance sheet(s) included in the Financial Statements, as
such reserves are adjusted from the date thereof in the ordinary course of
business, all accounts and notes receivable reflected on the balance sheets are,
and all accounts and notes receivable subsequently accruing to the Closing Date
will be, (a) valid, genuine and subsisting, (b) subject to no known defenses,
setoffs or counterclaims and (c) current and collectible.
3.8 Absence of Undisclosed Liabilities. Except as and to the extent
reserved for in the Financial Statements or as set forth in Schedule 3.8 hereto,
neither ISL nor Subsidiary has any liabilities or obligations, whether accrued,
deferred, absolute or contingent, determined or undetermined or whether due or
to become due (including, without limitation, obligations as guarantor) other
than those in the ordinary course of business since September 30, 1998, which
have not yet been accrued or booked. The Shareholders do not know of any basis
for the assertion of any claim or liability relating to the businesses of either
ISL or Subsidiary, nor are they aware of any occurrence or fact that has or
might reasonably be expected to have a material adverse effect on the businesses
of either ISL or Subsidiary (including, without limitation, under the ISS
Agreement). Except as disclosed in Schedule 3.8, as of the date of this
Agreement, neither ISL nor Subsidiary has outstanding debt to any bank or other
lender. Neither ISL nor the Shareholders have received any notice of any claim
under the ISS Agreement and the Shareholders are not aware of any claim under
the ISS Agreement.
3.9 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.9 hereto, since September 30, 1998, there has not been (a) any
damage, destruction or casualty loss to the properties or assets of either ISL
or Subsidiary (whether covered by insurance or not) outside the ordinary course
of business; (b) any material adverse change in the business, assets,
properties, operations, prospects or financial condition of either ISL or
Subsidiary; (c) any entry into any transaction, commitment or agreement
(including, without limitation, any borrowing) individually or in the aggregate
in excess of $25,000, and outside the ordinary course of business of either ISL
or Subsidiary; (d) any direct or indirect redemption, repurchase or other
acquisition for value by ISL of its capital stock or any agreement to take such
action, or any declaration, setting aside or payment of any dividend or other
distribution in cash, stock or property with respect to ISL's capital stock
(other than the distribution of the Retained Assets as set forth in Section 1.5
hereof); (e) any increase in the rate or terms of compensation payable or to
become payable by either ISL or Subsidiary to their respective directors,
officers, employees, agents or independent contractors or any increase in the
rate or change in the terms of any employment agreement or compensatory
arrangement, or any changes in any bonus, severance, pension, insurance or other
employee benefit plan, or any other payment or benefit made to or for any such
director, officer, employee, agent or independent contractor; (f) any sale,
transfer or other disposition of any asset of either ISL or Subsidiary to any
party, including, without limitation, the Shareholders, except for payment of
obligations incurred, and sale of products, in the ordinary course of business
consistent with
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past practices; (g) any material amendment to or termination of any material
contract or agreement to which either ISL or Subsidiary is a party or any
termination or waiver of any other rights of value to the businesses of either
ISL or Subsidiary; (h) any capital expenditure for additions to property or
equipment by either ISL or Subsidiary in excess of $20,000; (i) any split,
combination, exchange or reclassification of shares of capital stock of either
ISL or Subsidiary; (j) any issuance of capital stock or loan stock of either ISL
or Subsidiary or of securities convertible into or rights to acquire any such
capital stock; (k) any failure by either ISL or Subsidiary to pay accounts
payable or other obligations in the ordinary course of business; (l) the
incurrence of any obligations or liability (absolute or contingent) or the
making of any capital expenditure not in the ordinary course of business or in
excess of $20,000; (m) any pledge of any of the assets or properties of either
ISL or Subsidiary or any action or inaction which would subject any such assets
or properties to any lien, security interest, mortgage, pledge, claim, charge or
other encumbrance of any kind other than seller's liens incurred in the ordinary
course of business; (n) any actual or threatened termination or cancellation of,
or modification or change in, any business relationship with any customer or
customers of either ISL or Subsidiary or other agreement or arrangement
involving or related to the assets or properties of the businesses of either ISL
or Subsidiary; (o) any cancellation of a debt due to or a claim of either ISL or
Subsidiary, other than by payment or other satisfaction; (p) any failure of
either ISL or Subsidiary to perform under, or any material default by either ISL
or Subsidiary under, any agreement, obligation or covenant to which either of
them is or was bound; (q) any change in any method of accounting or accounting
practice, principle or procedure; (r) any action or inaction which might cause
either ISL or Subsidiary to incur any tax liability out of the ordinary course
of business (other than the distribution of the Retained Assets as set forth in
Section 1.5 hereof); (s) any other event or condition of any character which
materially and adversely affects the businesses of either ISL or Subsidiary; or
(t) any agreement, whether in writing or otherwise, to take any action described
in this Section 3.9. The provisions of this Section 3.9 shall not have any
application to (and this Section 3.9 shall not prohibit or restrict) a
distribution of the Retained Assets.
3.10 Real and Personal Property; Inventories. Schedule 3.10(a)
hereto correctly identifies (i) each lease or rental of real property held or
paid by each of ISL and Subsidiary; and (ii) each parcel of real property, and
each interest (other than such leases or rentals) in real property, owned by or
used in the operations of the businesses of each of ISL and Subsidiary; and
(iii) all charges against such properties together with the principal and
interest outstanding, it being hereby confirmed that ISL and Subsidiary have
complied with the terms of the charges; and (iv) all charges or leases or
rentals the benefit of which is vested in ISL or Subsidiary, detailing the
principal and interest (in respect of charges) and the rents receivable (in
respect of leases), it being hereby confirmed that the tenant, lessee or
mortgagor has complied to date with the terms of the mortgage deed, rental
agreement or lease (as appropriate) and has not alleged any breach by ISL or
Subsidiary. Except as set forth in Schedule 3.10(a) hereto, (a) any land and
structures described in Schedule 3.10(a) and ISL's and Subsidiary's use thereof
conform in all material respects with all applicable ordinances, requirements,
regulations, zoning laws, planning and building control, restrictive covenants,
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leasehold and rental covenants, indemnities given, conditions and restrictions
and do not encroach on property of others, and are not encroached upon by
structures of others; and (b) no claims, charges or notice of violations have
been filed, served, made or threatened, orally or in writing, against or
relating to any such property or the documents under which it is held, or any of
the operations conducted at any such property (currently or in the past) as a
result of (i) any violation or alleged violation of any applicable ordinances,
requirements, regulations, zoning laws, planning and building control,
restrictive covenants, leasehold and rental covenants, indemnities given,
conditions or restrictions, or (ii) as a result of any encroachment on the
property of others. Also, to the extent any such real property is located in the
United Kingdom, ISL is the sole proprietor of such real property registered at
HM Land Registry with absolute title, and any lease of such property granted for
more than 21 years and less than 40 years is either registered at HM Land
Registry or not registered because the reversion to it was not registered at the
time of grant, and there are no cautions or notices registered against its
titles and the Shareholders are not aware of any overriding interests as set out
in Section 70(1) of the Land Registration Act 1925 of England. Neither ISL nor
Subsidiary owns real property in any other countries. Schedule 3.10(b) hereto
describes all material tangible or intangible personal property and assets of
each of ISL and Subsidiary. ISL and Subsidiary have good and marketable title
to, and are in possession of or have control over, all of their real and
personal property, none of which is held under or subject to any mortgage,
pledge, lien, lease, encumbrance, conditional sales contract or other security
arrangement except to the extent described in Schedule 3.10(b) hereto, and
neither ISL nor Subsidiary has agreed to create therein any such security
interest or security arrangement. Each item of such tangible personal property
and assets is in good working order or condition, reasonable wear and tear
excepted. Since March 1989 and except for the real property described in
Schedule 3.10(a), neither ISL nor Subsidiary has owned any other real property
or been the tenant of, or a guarantor in respect of, leasehold property, and
neither ISL nor Subsidiary has any other actual or potential liability under
leases with respect to leasehold property or real property and has no actual or
potential liability under any indemnity covenants given for any leasehold or
real property.
The inventories of each of ISL and Subsidiary are in good and
merchantable condition and are of a quality suitable and usable or saleable in
the ordinary course of business for the purposes for which such inventories are
intended. The inventory, as listed on the balance sheet(s) of ISL, is adequate
for each of ISL's and Subsidiary's businesses, and except as stated in the
balance sheet(s) of ISL, there has been no material adverse change in the amount
and quantity of such inventories since September 30, 1998.
3.11 Patents, Trademarks, Etc. Schedule 3.11 hereto contains an
accurate and complete description of all domestic and foreign patents,
trademarks, service marks, trademark registrations, logos, trade names, assumed
names, copyrights and copyright registrations and all applications therefor and
all registered designs and design rights (collectively, the "Intellectual
Property"), presently owned or held by each of ISL and Subsidiary or under which
either ISL or Subsidiary owns or holds any license, or in which either ISL or
Subsidiary owns or holds any direct or indirect interest; and no others are
necessary for the
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conduct of the present businesses of either ISL or Subsidiary. None of the
products manufactured, distributed or sold by either ISL or Subsidiary, nor any
of the Intellectual Property or other intellectual property (including without
limitation, technology, inventions, processes, designs, formulae, know-how,
trade secrets) (collectively, with the Intellectual Property, the "Intellectual
Assets"), or any of ISL's and Subsidiary's activities, conflict with, infringe
or otherwise violate any patents, trademarks or copyrights, or any other rights,
of any individual or entity, nor require payments to be made to any person. Each
of ISL and Subsidiary has the sole and exclusive right to use, has the right and
power to sell, and has taken reasonable measures to maintain and protect the
Intellectual Assets; no claims have been asserted by any individual or entity
with respect thereto or challenging or questioning the validity or effectiveness
of any license or agreement with respect thereto, and there is no valid basis
for any such claim. Neither ISL nor Subsidiary is using confidential information
or trade secrets of any former employer of any past or present employees engaged
in businesses of either ISL or Subsidiary. The items described in Schedule 3.11
and the other Intellectual Assets are adequate to conduct the businesses of each
of ISL and Subsidiary as presently conducted. Upon consummation of the
transactions contemplated hereby, SPSS will acquire good and marketable title to
all of the Intellectual Assets. Neither ISL nor Subsidiary has any liability to
pay compensation under Sections 40 and 41 of the Patents Act of 1977 of England.
3.12 Employees. All personnel, including employees who have
contributed to or participated in the conception and development of the
Intellectual Assets on behalf of ISL or Subsidiary either (a) were at such time
parties to agreements with either ISL or Subsidiary, or were parties to
"work-for-hire" agreements with Subsidiary, in either case in accordance with
applicable law, that have accorded ISL or Subsidiary full, effective, exclusive
and original ownership of all intellectual property thereby arising, or (b) have
executed appropriate instruments of assignment, which are still in full force
and effect, in favor of ISL or Subsidiary, as assignee, that have conveyed to
ISL or Subsidiary full, effective and exclusive ownership of all intellectual
property thereby arising. Neither ISL nor Subsidiary owns or has any right,
license or interest, whether as a licensee, licenser or otherwise, in any
copyrights, patents, applications for copyrights or patents, trade secrets,
inventions, processes and designs or in any trademarks, service marks, trade
names, or applications for them, except as listed or described in Schedule 3.12.
No employee of ISL or Subsidiary is in violation of (i) any term of any
employment contract, any agreement, any patent disclosure agreement or, in the
case of any of Subsidiary's employees, any "work-for-hire" agreements, or (ii)
any other contract or agreement containing any restrictive covenant relating to
the rights of any such employee to be employed by ISL or Subsidiary or to use
trade secrets or proprietary information of others. Neither ISL nor Subsidiary
has employed, engaged or otherwise entered agreements with agents, consultants
or contractors. No senior executive has given notice to ISL or any Shareholders
terminating his or her employment or, to the Shareholders' knowledge, is likely
to give such notice.
3.13 Contracts and Commitments.
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(a) Other than standard form customer and distributor contracts
entered into in the ordinary course of business, and except as set forth in
Schedules 3.10(a), 3.13(a), 3.14, 3.15, and 3.32 hereto, and except as otherwise
listed on Schedule 3.13(a), neither ISL nor Subsidiary is a party to any
agreements, contracts, guarantees, commitments, restrictions or instruments of
any kind ("Contracts"). True and correct copies of all Contracts listed on
Schedules 3.10(a), 3.13(a), 3.14, 3.15, and 3.32 hereto have been made available
to SPSS at a reasonable time prior to Closing. All of the Contracts are valid
and binding obligations of ISL or Subsidiary, enforceable in accordance with
their respective terms to the extent permitted by applicable law, and are in
full force and effect and complied with in all material respects. No other party
to any of the Contracts is in material default or breach thereof. True and
correct copies of each standard form customer and distributor contract currently
in use by each of ISL and Subsidiary in the conduct of their respective
businesses are attached to Schedule 3.13(a). All non-standard form customer and
distributor contracts are listed on Schedule 3.13(a). Neither ISL nor Subsidiary
has agreed with any customer or distributor to make any variation in any such
contract which could have a material adverse effect on ISL's or Subsidiary's
assets, properties, businesses, financial condition or prospects.
(b) Neither ISL nor Subsidiary has given any power of attorney
(whether revocable) or irrevocable to any individual or entity.
(c) Neither ISL nor Subsidiary is in default, and there is no
basis for any valid claim of default, in any respect under any of the Contracts.
3.14 Source Code. Except as set forth in Schedule 3.14, each of ISL
and Subsidiary owns all rights, title and interest in and to the source codes
for all of its software products and has not distributed any copies of such
source codes to any third parties and neither ISL nor Subsidiary has agreed to
pay to any individual or entity any royalty, commission or other amount on
account of sales of their software products.
3.15 Licenses and Royalties. Except as set forth on Schedule 3.15
hereto, neither ISL nor Subsidiary is a licensee under any license, including,
without limitation, licenses with respect to source codes used or to be used in
either ISL's or Subsidiary's software products, and neither has an obligation to
pay royalties to any third party in connection therewith. Neither ISL nor
Subsidiary has granted to any individual or entity any rights or security
interests with respect to the source codes for either ISL's or Subsidiary's
software products. ISL has not breached and has not caused to exist a material
default under any such licenses and there is no basis for any valid claim or
default in any respect under such licenses and no other party is in breach or
default thereof.
3.16 Adequacy of Documentation. Except as set forth in Schedule 3.16,
the technical documentation includes the source code, system documentation,
statements or principles of operation, and schematics for all of the software
products currently maintained or licensed by either ISL or Subsidiary, as well
as any pertinent commentary or explanation that may be necessary to render such
materials understandable and usable by a trained
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computer programmer familiar with the relevant compilers, tools and platform
(the "Technical Documentation").
3.17 Third-Party Components in Software Programs. Each of ISL and
Subsidiary has validly and effectively obtained the right and license to use,
copy, modify and distribute any third-party programming and software
documentation materials contained in each of ISL's and Subsidiary's software
products and the Technical Documentation pursuant to licenses from third parties
as set forth in Schedule 3.17.
Except as otherwise provided in Schedule 3.17, each of ISL's and
Subsidiary's software products and the Technical Documentation contains no other
programming or materials in which any third party may claim superior, joint or
common ownership, including any right or license, and, do not contain derivative
works of any programming or materials not owned in their entirety by either ISL
or Subsidiary.
3.18 Third-Party Interests or Marketing Rights in Software Programs.
All of ISL's and Subsidiary's standard form customer contracts constitute only
end-user agreements, each of which grants the end-user thereunder solely the
non-exclusive right and license to use an identified software product of either
ISL or Subsidiary and related user documentation, for internal purposes only.
There are no contracts, agreements, licenses or other commitments or
arrangements in effect with respect to the development, marketing, distribution,
licensing, or promotion of either ISL's or Subsidiary's software products or any
other inventory, the Technical Documentation, or either ISL's or Subsidiary's
Intellectual Assets with any independent salesperson, distributor, sublicensor,
or other remarketer or sales organization except for Contracts identified in
Schedule 3.13(a), Schedule 3.14 and Schedule 3.17.
3.19 No Virus Warranties. The software products, as delivered to SPSS,
shall be free of any passwords, keys, security devices or trap doors, and any
computer instructions (including, but not limited to, computer instructions
commonly referred to as Trojan Horses, anomalies, worms, self-destruct
mechanisms, time bombs or logic bombs) which are intended to interfere with or
frustrate the use of the software products, any portion thereof, or other
software or computer hardware, whether or not currently in effect with respect
to any copy of either ISL's or Subsidiary's software products.
3.20 Software: Physical Media. Each of ISL's and Subsidiary's software
products, other than that currently under development, will operate in
accordance with the Technical Documentation. The software products and any
licenses or other rights connected therewith, express or implied, will not
infringe any other person's intellectual property rights. Each copy of the
software product is free from physical defects in the media that tangibly
embodies the copy.
3.21 Government Contracts. To the best of the Shareholders'
knowledge, there are no acts, omissions or noncompliance with regard to any
applicable public contracting statute, regulation or contract requirement
(whether express or incorporated by reference) to any
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contracts relating to either ISL or Subsidiary, its businesses or any of its
assets with any Government Contract Party (as defined below) in either case that
have led to or could lead to (a) any claim or dispute involving either ISL or
Subsidiary, its businesses, or any of its assets and any Government Contract
Party or (b) any suspension, debarment or contract termination, or proceeding
related thereto. To the best of the Shareholders' knowledge, there are no acts
or omissions related to the marketing, licensing, or selling of any software
related to either ISL or Subsidiary, or its business that have led to or could
have any material adverse affects on either ISL's or Subsidiary's rights or on
any of its assets. All of ISL's and Subsidiary's development of technical data
and computer software was developed exclusively at private expense. For purposes
of this Section 3.21, the term "Government Contract Party" means any independent
or executive agency, division, subdivision, audit group or procuring office of
any governmental body including, without limitation, the federal government of
the United States or United Kingdom, any prime contractor of the federal
government of the United States or United Kingdom and any higher level
subcontractor of a prime contractor of the federal government of the United
States or United Kingdom and including any employees or agents thereof, in each
case acting in such capacity.
3.22 Product Warranties and Liabilities. Neither ISL nor Subsidiary
has given or made any express or implied warranties (except for implied
warranties that may not be disclaimed pursuant to applicable law) with respect
to any products licensed, distributed, offered or sold or services performed by
them, except for the limited warranties stated in standard form customer
contracts in the forms attached to Schedule 3.13(a), with modifications that, in
the aggregate, would not have a material adverse effect on the business,
prospects or financial condition of either ISL or Subsidiary. The Shareholders
do not have any knowledge of any fact or of the occurrence of any event forming
the basis of any present claim or reasonably likely to form the basis of any
future claim against either ISL or Subsidiary, whether or not fully covered by
insurance, for liability on account of products liability or on account of any
express or implied product warranty, except for warranty obligations and product
returns in the ordinary course of business and as set forth in Schedule 3.22.
3.23 Insurance. Each of ISL and Subsidiary keeps all of its
businesses, operations and properties insured against loss or damage, with
responsible insurers. Schedule 3.23 hereto is a description of all insurance
policies held by each of ISL and Subsidiary concerning their businesses,
operations and properties, true, complete and correct copies of which have been
previously provided to SPSS. All of these policies are in the respective face
amounts set forth in Schedule 3.23, and such insurance is adequate in accordance
with sound business practices. Each of the insurance policies referred to in
Schedule 3.23 is in force and the premiums with respect thereto are fully paid
through the dates indicated thereon, and nothing has been done or omitted to be
done which is likely to make any policy of insurance void or voidable, or which
is likely to result in an increase in premium. No insurer has denied coverage or
reserved rights for any claim made by ISL, Subsidiary or any other individual or
entity under any insurance policies.
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3.24 Litigation and Administrative Proceedings. Except as set forth
in Schedule 3.24 hereto, there is no claim, action, suit, proceeding or
investigation in any court or before any governmental or regulatory authority
pending or threatened against or affecting either ISL or Subsidiary or which
seeks to enjoin or obtain damages in respect of the transactions contemplated
hereby. The Shareholders do not know of any basis for any such claim, action,
suit, proceeding or investigation. No claim, action, suit, proceeding or
investigation set forth in Schedule 3.24 could, if adversely decided, have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of either ISL or Subsidiary.
No order has been made, petition presented or resolution passed
for the winding-up of ISL or Subsidiary; no distress, execution or other process
has been levied in respect of ISL or Subsidiary which remains undischarged; and
there is no unfulfilled or unsatisfied judgment or court order outstanding
against ISL or Subsidiary.
Neither ISL nor Subsidiary has stopped payment or is insolvent or
unable to pay its debts within the meaning of section 123 of the Insolvency Act
1986 of England (but omitting any requirement to prove anything to the
satisfaction of the court).
3.25 Tax Matters. The representations and warranties set forth in
Exhibit A attached hereto (the "Tax Warranties") are hereby incorporated into
this Section 3.25 as if they were fully set forth herein.
3.26 Compliance with Laws. Neither ISL nor Subsidiary has in the past
been nor are either presently in violation of, in respect of operations, real
property, machinery, equipment, all other property, practices and all other
aspects of its businesses, any applicable law (whether statutory or otherwise),
rule, regulation, order, ordinance, judgment or decree of any governmental
authority (federal, state, local or otherwise) (collectively, "Laws"). Neither
ISL nor Subsidiary has received any notification of any asserted present or past
failure of either ISL or Subsidiary to comply with any of such Laws. In
furtherance of and not in limitation of the foregoing:
(a) All dividends and distributions declared, made or paid by ISL
or Subsidiary were declared, made or paid in accordance with its articles of
association and the applicable provisions of the Companies Acts 1985 and 1989 of
England, and any other relevant legislation.
(b) Neither ISL nor Subsidiary is a party to an agreement,
practice or arrangement which:
(i) contravenes the Trade Descriptions Act 1968 of England;
(ii) contravenes Part XI of the Fair Trading Act 1973 of
England;
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(iii) would, or might, result in a reference of a "consumer
trade practice", within the meaning of section 13, of
the Fair Trading Act 1973 of England, or be liable to
reference to the Consumer Protection Advisory Committee
under Part II of the Act;
(iv) contravenes the Consumer Credit Act 1974 of England;
(v) contravenes, or is invalidated (in whole or in part) by,
or is subject to registration under, the Restrictive
Trade Practices Acts 1976 and 1977 of England;
(vi) contravenes, or is invalidated (in whole or in part) by,
the Resale Prices Act of 1976 of England;
(v) contravenes the Treaty of Rome; or
(vi) contravenes any other anti-trust, anti-monopoly or
anti-cartel legislation or regulations.
(c) Neither ISL nor Subsidiary has engaged in an anti-competitive
practice as defined in the Competition Act 1980 of England.
(d) Neither ISL nor Subsidiary, and none of its officers, agents
or employees (during the course of their duties in relation to it), has
committed or omitted to do anything, the commission or omission of which is or
could be in contravention of an act, order, regulation or the like giving rise
to a penalty, default proceedings or other liability on its part.
(e) ISL and Subsidiary has conducted and is conducting its
business in accordance with all applicable laws and regulations.
(f) Neither ISL nor Subsidiary carries on (or has, when not an
authorized person under Chapter III of the Financial Services Act 1986 of
England, carried on) investment business in the United Kingdom within the
meaning of that act.
3.27 Environmental Matters. Except as otherwise disclosed in Schedule
3.27 hereto, (i) ISL and Subsidiary, and their respective subsidiaries, if any,
have obtained all Environmental Permits (as defined herein) that are required
with respect to the business, operations and properties of ISL and Subsidiary,
and their respective subsidiaries; (ii) ISL and Subsidiary, and their respective
subsidiaries have been, and ISL is, in compliance with all terms and conditions
of all Environmental Laws (as defined herein) and Environmental Permits; (iii)
neither ISL, Subsidiary nor their respective subsidiaries have received any
notice from a governmental authority or third party of any violation of or
potential liability arising under any Environmental Law or Environmental Permit
in connection with the business of ISL and Subsidiary or their respective
subsidiaries or the operation thereof, nor is any such
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notice pending or threatened; (iv) no underground or above ground storage tanks
are or have been located on the real properties described in Schedule 3.10(a)
attached hereto or previously owned or operated by ISL or Subsidiary; and (v)
neither ISL nor Subsidiary is aware of any generation, treatment, storage,
transfer, disposal, release or threatened release in, at, from or on such real
properties of toxic or hazardous substances by any current or previous owner or
tenant of such real properties. ISL has delivered to SPSS all environmental
records and material safety data sheets relating to the business and operations
of ISL and Subsidiary.
(b) Except as set forth in Schedule 3.27, the Shareholders do not
know of any condition or any set of facts or circumstances that could give rise
to an Environmental Claim (as defined herein).
(c) Except as set forth in Schedule 3.27, to the best of the
Shareholders' knowledge, there have been no releases of Hazardous Material
(hereinafter defined) into the soil, surface water or ground water at any
facility of ISL or Subsidiary.
(d) For purposes of this Agreement, the following terms shall have
the respective meanings set forth herein:
"Environmental Permit" shall mean any permit, license, approval or
other authorization with respect to the business of ISL, Subsidiary or their
predecessors or their respective subsidiaries or the operation thereof under any
applicable Environmental Law (as defined herein), including laws, regulations or
other requirements relating to emissions, discharges or releases of Hazardous
Material into ambient air, surface water, ground water, or land, or otherwise
arising from the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Material by ISL, Subsidiary or
their predecessors or their respective subsidiaries or the employees,
representatives, contractors or actual agents of any of such entities.
"Environmental Claim" shall mean any action, lawsuit, claim or
proceeding relating to the business of ISL, Subsidiary or their predecessors or
their respective subsidiaries or the operation thereof which seeks to impose
liability, for (i) violation of any Environmental Law, (ii) release of any
Hazardous Material, (iii) noise, (iv) pollution or contamination of the air,
surface water, groundwater or land; (v) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; (vi)
exposure to hazardous or toxic substances; or (vii) the manufacture, processing,
distribution in commerce, use (by ISL, Subsidiary or their predecessors or their
respective subsidiaries or the employees, representatives, contractors or actual
agents of any of such entities), or storage (by ISL, Subsidiary or their
predecessors or their respective subsidiaries or the employees, representatives,
contractors or actual agents of any of such entities) of chemical substances. An
"Environmental Claim" includes, but is not limited to, a proceeding to issue,
modify or terminate a permit or license, or to adopt or amend a law or
regulation to the extent that such a proceeding attempts to redress violations
of the applicable permit, license, law or regulation which occurred on or prior
to the Closing Date as alleged by any United States, state or local
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executive, legislative, judicial regulatory or administrative agency, board or
authority or the English equivalent thereof.
"Hazardous Material" shall mean the following: (i) All "hazardous
substances," as such term is defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.A. Sec. 9601(14) or
the equivalent English law; (ii) all "hazardous wastes," as such term is defined
in the Resource Conservation and Recovery Act, 42 U.S.C.A. Sec. 6903(5) or the
equivalent English law; (iii) all materials that are classified as hazardous or
toxic under any Environmental Law, as defined below; (iv) petroleum products,
including gasoline, diesel fuel, fuel oil, crude oil, and motor oil, and the
constituents of those products; or (v) medical wastes.
"Environmental Laws" shall mean, without limitation, the
following: the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C.A. Sec. 9601 et seq.); the Resource Conservation and Recovery Act
(42 U.S.C.A. Sec. 6901 et seq.); the Clean Water Act (33 U.S.C.A. Sec. 1251 et
seq.); the Clean Air Act (42 U.S.C.A. Sec. 7401 et seq.); the Toxic Substance
Control Act (15 U.S.C.A. Sec. 2601 et seq.); the Occupational Safety and Health
Act (29 U.S.C. 651 et seq.); The Environmental Protection Act of 1990 of
England; and all other federal, state and local statutes and ordinances
pertaining to protection of the environment, health or safety, and all
amendments made to, and regulations promulgated under, the foregoing laws
effective at the time of Closing, and any equivalent English law.
3.28 Employee Benefits.
3.28.1 Attached hereto as Schedule 3.28 is a written list of all
employee benefit plans relating to employee benefits with respect to which each
of ISL and Subsidiary has incurred or may incur any future or contingent
obligations, including, without limitation, all plans, agreements or
arrangements relating to deferred compensation, pensions, profit sharing,
retirement income or other benefits, stock purchase, stock ownership and stock
option plans, stock appreciation rights, bonuses, severance arrangements, health
and welfare benefits, insurance benefits and all other employee benefits or
fringe benefits whether or not committed to writing and, in relation to
Subsidiary, whether or not any such plan is an "employee benefit plan" as
defined in Section 3.3 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (collectively referred to as the "Plans"). As to ISL's and
Subsidiary's operations in the United States, and except as may be indicated on
Schedule 3.28 hereto,
(a) neither ISL nor Subsidiary contributes, nor has either of them
ever contributed, to any multi-employer plan within the meaning of
Section 4001(a)(3) of ERISA, nor are either ISL or Subsidiary
affiliated with any entity such that ISL or Subsidiary has, or might
have in the future, any multi-employer plan withdrawal liability under
Subtitle E of Part IV of ERISA.
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(b) Each Plan (and each trust forming a part of such Plan) has
been administered and operated in all respects in accordance with its
terms and applicable law. Where designated on Schedule 3.28, each Plan
is "qualified" within the meaning of Section 401(a) of the Code and
each related trust is exempt from tax under Section 501(a) of the Code.
(c) With respect to each Plan relating to ISL's and Subsidiary's
operations in the United States, no person: (i) has entered into any
non-exempt "prohibited transaction," as such term is defined in ERISA
and the Code; (ii) has breached a fiduciary obligation or violated
Sections 402, 403, 405, 503, 510 or 511 of ERISA; (iii) has any
liability for any failure to act or comply with the administration or
investment of the assets of such Plan; (iv) has engaged in any
transactions or otherwise acted with respect to such Plan in a manner
which could subject ISL, Subsidiary or any fiduciary or plan
administrator or other person dealing with such Plan, to liability
under Sections 409 or 502 of ERISA or Sections 4972 or 4976 through
4980 of the Code.
(d) No liability to the Pension Benefit Guaranty Corporation
("PBGC") has been, or to the best knowledge of the Shareholders, is
expected to be, incurred with respect to any Plan relating to ISL's and
Subsidiary's operations in the United States, except for liabilities
for PBGC premiums which may be expected to be incurred in the ordinary
course of business. PBGC has not instituted proceedings to terminate
any Plan. No "reportable event," within the meaning of Section 4043(b)
of ERISA, for which the obligation to report to the PBGC within 30 days
has not been waived by the PBGC, has occurred with respect to any Plan.
There exists no condition or set of circumstances which presents a risk
of termination or partial termination of any Plan relating to ISL's and
Subsidiary's operations in the United States and which could result in
a liability on the part of either ISL or Subsidiary to the PBGC.
(e) With respect to ISL's and Subsidiary's operations in the
United States, full payment has been made of all amounts which either
ISL or Subsidiary was required under the terms of any of the Plans to
have paid as contributions to such Plans on or prior to the Closing
Date, and no "accumulated funding deficiency" (as defined in Section
302(a)(2) of ERISA and Section 412(a) of the Code), whether or not
waived, exists with respect to any such Plan. No assets of the
Shareholders or Subsidiary are subject to any lien under ERISA Section
302(f) or Code Section 412(n). Except as set forth on Schedule 3.28,
with respect to each Plan, there are no funded benefit obligations for
which contributions have not been made or properly accrued and there
are no unfunded benefit obligations that have not been accounted for by
reserves, or otherwise properly footnoted in accordance with generally
accepted accounting principles, on the financial statements of ISL or
Subsidiary.
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(f) Other than for claims in the ordinary course of business for
benefits under the Plans, there are no actions, suits, claims or
proceedings, pending or threatened, nor to the best knowledge of the
Shareholders does there exist any basis therefor, which may result in
any liability with respect to any Plan to ISL, Subsidiary or any Plan
or trust thereof.
(g) The present value of accrued benefits under each Plan relating
to ISL's and Subsidiary's operations in the United States which is
subject to Title IV of ERISA does not presently exceed the current
value of the assets of such Plan allocable to such accrued benefits.
For purposes of the representation in the preceding sentence, the terms
"current value" and "accrued benefit" have the meanings specified in
Sections 3(26) and 3(23), respectively, of ERISA; and "present value"
shall be determined using the actuarial assumptions which would be used
by the enrolled actuary for each such Plan in connection with
determining whether such Plan satisfies the requirements of Section 412
of the Code, determined without regard to Subsection (b)(5)(B) thereof.
(h) Except for continuation coverage under Sections 601 et seq. of
ERISA, no former employee of ISL, Subsidiary or any affiliate thereof,
nor any dependent of any such former employee, is entitled to any
medical, dental benefits or other welfare benefits under any Plan
relating to ISL's and Subsidiary's operations in the United States.
(i) The Shareholders have, with respect to each Plan, delivered to
SPSS true and complete copies of: (1) all plan texts and agreements and
related trust agreements or annuity contracts; (2) all summary plan
descriptions and material employee communications; (3) the annual
reports (Form 5500 series) (including all schedules thereto) for the
most recent three (3) plan years; (4) the actuarial valuations for the
most recent three (3) plan years; (5) the audited financial statement
and opinions for the most recent three (3) plan years; (6) if the Plan
is intended to qualify under Code Sections 401(a), the most recent
determination letter received from the IRS; and (7) any and all
communications with any governmental entity or agency including,
without limitation, the IRS, Department of Labor and the PBGC.
(j) No Plan is described in Code Section 413(c) or ERISA Sections
4063, 4064 or 4066. No Plan which is a "welfare plan" as defined in
Section 3(1) of ERISA is a "multiple employer welfare arrangement" as
defined in ERISA Section 3(40).
(k) Each Plan which is a "pension plan" as defined in ERISA
Section 3(2) and which is not qualified under Code Section 401(a) is
exempt from Parts 2, 3 and 4 of Title I of ERISA as an unfunded plan
that is maintained primarily for the purpose of providing deferred
compensation for a
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select group of management or highly compensated employees, pursuant to
ERISA Sections 201(2), 301(a)(3) and 401(a)(1). No assets of ISL or
Subsidiary are allocated to or held in a "rabbi trust" or similar
funding vehicle.
(l) Except as disclosed on Schedule 3.28, the consummation of the
transactions contemplated by this Agreement will not: (i) entitle an
current or former employee of ISL or Subsidiary to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the
time of payment or vesting, or increase the amount of any compensation
due to, or in respect of, any current or former employee, (iii)
constitute or involve a prohibited transaction; or (iv) constitute or
involve a breach of fiduciary responsibility within the meaning of
ERISA Section 502(1) or otherwise violate Part 4 of Subtitle B of Title
I of ERISA.
3.28.2 As to ISL's operations in the United Kingdom, ISL is under
no legal obligation, nor is ISL a party to an ex-gratia arrangement, to pay
pensions, gratuities, superannuation allowances or the like, or otherwise to
provide "relevant benefits" within the meaning of the Income and Corporation
Taxes Act 1988 ("ICTA") s612(1), to or for any of its past or present officers
or employees or their dependents; and there are no retirement benefit, or
pension or death benefit, or similar schemes or arrangements in relation to, or
binding on, ISL or to which ISL has any legal or moral obligation to contribute.
3.29 Licenses and Permits. ISL and Subsidiary have all governmental
licenses and permits and other governmental authorizations and approvals
required for the conduct of its businesses as presently conducted ("Permits").
Schedule 3.29 hereto includes a list of all Permits.
3.30 Relations With Suppliers and Customers. Neither ISL nor
Subsidiary nor the Shareholders is required to provide any bonding or other
financial security arrangements in connection with any transaction with any
customer or supplier. Neither ISL nor Subsidiary nor the Shareholders has
received any notice, and no Shareholder is aware, that any customer or supplier
of either ISL or Subsidiary will cease to do business or reduce its level of
business with either ISL or Subsidiary or refuse to do business with SPSS after
the consummation of the transactions contemplated hereby.
3.31 Interests in Competitors, Suppliers and Customers. None of the
Shareholders nor any officer or director of ISL or Subsidiary or any entity
controlled by or under common control with either ISL or Subsidiary has any
ownership interest in any competitor, supplier or customer of either ISL or
Subsidiary or any property used in the operation of either of their businesses.
3.32 Employment Matters. Schedule 3.32 hereto is a list of all oral
and written employment contracts or other agreements or arrangements providing
for remuneration to which either ISL or Subsidiary is a party or by which either
of them is bound, and all such
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contracts and arrangements are in full force and effect. There are no oral
contracts or arrangements of the type described in the preceding sentence which,
individually or in the aggregate, exceed U.S. $50,000 or (pound)30,000 in value.
There have been no claims of defaults and the Shareholders know of no facts or
conditions which if continued, or with the giving of notice, will result in a
default under these contracts or arrangements. Except as set forth on Schedule
3.32, neither ISL nor Subsidiary has registered a profit-related pay scheme
under Part V Chapter III ICTA. No past employee of ISL or Subsidiary has a right
to return to work or has or may have a right to be reinstated or re-engaged
under the Employment Rights Act 1996 of England and Wales. There are no claims
pending or threatened against ISL or Subsidiary, by an employee or third party
in respect of an accident or injury, which are not fully covered by insurance.
Neither ISL nor Subsidiary nor their employees are involved in an industrial
dispute, and there is nothing which is known to ISL or Subsidiary or their
directors or to the Shareholders which might suggest that there may be an
industrial dispute involving ISL or Subsidiary or that this agreement may lead
to an industrial dispute.
3.33 Discrimination: Occupational Safety; Labor. No claims are
threatened or pending against either ISL or Subsidiary arising out of any
statute, ordinance or regulation relating to discrimination in employment or
employment practices or occupational safety and health standards (including, but
without limiting the foregoing, The Fair Labor Standards Act, as amended; Title
VII of the Civil Rights Act of 1964, as amended; 42 U.S.C. 1981 or the Age
Discrimination in Employment Act of 1967, as amended and The Employment Rights
Act 1996 as enacted in England and Wales). There is no pending nor, to the best
of the Shareholders' knowledge, threatened federal or state equal employment
opportunity enforcement action or labor dispute, strike, or work stoppage
affecting any of businesses of either ISL or Subsidiary. Neither ISL nor
Subsidiary has any collective bargaining or similar agreements, nor do either of
them have any obligation to bargain with any labor organization as the
representative of their employees, and there is neither pending nor, to the best
of the Shareholders' knowledge, threatened, any labor dispute, strike or work
stoppage which affects or which may affect ISL's or Subsidiary's businesses or
which may interfere with the continued operations of either ISL or Subsidiary.
No present or former employee of either ISL or Subsidiary has any claim against
either of them for (a) overtime pay, other than overtime pay for the current
payroll period, (b) wages or salary (excluding bonuses and amounts accruing
under pension and profit sharing plans) for any period other than the current
payroll period, (c) vacation, time off or pay in lieu of vacation or time off,
except as set forth on Schedule 3.33, or (d) any violation of any statute,
ordinance or regulation relating to minimum wages or maximum hours of work.
3.34 Related Transactions. Neither ISL nor Subsidiary has made or
entered into any loan, contract, lease, commitment, arrangement or understanding
with any of its officers, directors, employees, shareholders or any entity
controlled by or under common control with either ISL or Subsidiary, except
normal compensation arrangements with officers, directors and employees, all of
which are terminable by ISL or Subsidiary on not more than 30 days' notice.
Neither ISL nor Subsidiary has been a party to a transaction to which s320 or
s330 of the Companies Act 1985 of England may apply. No contract of service
exists between ISL or
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Subsidiary and a director or employee in relation to which the requirements of
s319 Companies Act 1985 of England have not been fulfilled. Neither ISL nor
Subsidiary is, or has agreed to become a participant in or member of a joint
venture, consortium, partnership or other unincorporated association.
3.35 Brokers and Finders. Neither ISL, nor Subsidiary nor the
Shareholders (nor any of their respective officers, directors, employees,
affiliates, associates, or family members), has employed any broker, finder or
investment banker or other similar person or entity who is entitled to be
compensated in connection with this Agreement or the transactions contemplated
hereby.
3.36 Questionable Payments. Neither ISL nor Subsidiary nor the
Shareholders, nor any director, officer, agent, employee or other person
associated with or acting on behalf of either ISL or Subsidiary has directly or
indirectly: (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (b)
made any unlawful payment to government officials or employees or to political
parties or campaigns from corporate funds; (c) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended or similar English law; (d)
established or maintained any unlawful or unrecorded fund of corporate monies or
other assets; (e) intentionally made any false or fictitious entry on the books
or records of ISL or Subsidiary; (f) made any bribe, payoff, influence payment,
kickback or other unlawful payment; or (g) made any bribe or other payment of a
similar or comparable nature to any person or entity, private or public,
regardless of form, to obtain favorable treatment in securing business or to
obtain special concessions or treatment.
3.37 Books and Records. The books and records of each of ISL and
Subsidiary have been maintained in accordance with commercially reasonable
business and bookkeeping practices and truly and fairly reflect in all respects
the business, assets, properties, rights, obligations, liabilities and
operations of each of ISL and Subsidiary.
3.38 Bank Accounts; Safe Deposit Boxes. Schedule 3.38 hereto sets
forth the names and locations of all banks in which either ISL or Subsidiary has
accounts or safe deposit boxes and the names of all persons authorized to draw
thereon or to have access thereto. Accurate and complete statements of the bank
accounts of each of ISL and Subsidiary, and of the credit or debit balances as
at a date not more than thirty days before the date of this Agreement, have been
supplied to SPSS. Since the date of each statement, there have been no payments
out of the account to which the statement relates, except for payments in the
normal course of business; and the balances on current accounts are not
substantially different from the balances shown in the statements.
3.39 Full Disclosure. The Shareholders have used all reasonable efforts
to ensure that no representation or warranty to SPSS contained in this
Agreement, and no statement contained in the disclosure schedules to this
Agreement, any certificate, list or other writing furnished to SPSS pursuant to
the provisions hereof, contains any untrue statement of a
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material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading. The copies of all documents
furnished to SPSS hereunder are true and complete copies of the originals
thereof in all material respects.
3.40 Effect of Certificates. All representations and warranties made
in certificates delivered by or on behalf of the officers of ISL and/or the
Shareholders shall be deemed to be additional representations and warranties of
the Shareholders.
3.41 Year 2000 Compliance. ISL's and Subsidiary's business, operations
and products, including, without limitation, its Information Technology (as
hereinafter defined) are Year 2000 Compliant (as hereinafter defined). To the
best of the Shareholders' knowledge, the respective material suppliers,
distributors and vendors of ISL and Subsidiary are Year 2000 Compliant. "Year
2000 Compliant" means that Information Technology is designed to be used during
each such time period will accurately receive, provide and process date/time
date (including, but not limited to, calculating, comparing and sequencing)
from, into and between the 20th and 21st centuries, including the years 1999 and
2000, and leap-year calculations and will not malfunction, cease to function, or
provide invalid or incorrect results as a result of date/time data. "Information
Technology" means computer software, computer firmware, computer hardware
(whether general or specific purpose), and other similar or related items of
automated, computerized, or software system(s) that comprise any portion of its
products or are used or relied on by ISL or Subsidiary in the conduct of its
business.
3.42 InferMed Sale. The Shareholders have received a valuation dated
December 1998 of InferMed (the "InferMed Valuation"), from their independent
auditor, BKL Weeks Green. The InferMed Sale was completed in full compliance
with that certain Shareholders Agreement dated December 3, 1997 by, between and
among the shareholders of InferMed, the Companies Act 1985 of England including,
without limitation, Section 320 thereof. The purchase price received by ISL in
connection with the InferMed Sale was equal to or greater than the open market
value of InferMed, there was no element of gift in the InferMed Sale, and all
corporate procedures required by English law were followed and complied with.
The shares of InferMed to be transferred in accordance with Section 1.5 hereof,
are free from all security interests and ISL holds full title to such shares,
subject to no interests or encumbrances of any kind.
3.43 Knowledge. As used in this Article III, the terms "know" and
"knowledge" mean: (a) the actual knowledge of each of the Shareholders as to
such facts or matters, (b) such facts or matters of which any of the
Shareholders have become aware in the ordinary course of performing their duties
for ISL or Subsidiary, including through investigations made by the Shareholders
in the ordinary course of performing their duties for ISL or Subsidiary, and (c)
such other facts or matters as reasonably should have been known by Alan
Montgomery and Linda Montgomery under all relevant circumstances considering
their involvement in the affairs of ISL and Subsidiary.
3.44 Bank and Other Borrowings. Accurate and complete details of all
limits on ISL's and Subsidiary's bank overdraft facilities are set out in the
Disclosure Letter. Neither ISL nor
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Subsidiary has bank borrowings which exceed the applicable overdraft limits. The
total amount borrowed by each of ISL and Subsidiary (as determined in accordance
with the relevant instrument) does not exceed any limitation on its borrowing
power contained in its articles of association or other document. Neither ISL
nor Subsidiary has outstanding or has agreed to create or issue any loan
capital, has factored any debts, has engaged in financing of a type which would
not require to be shown or reflected in the Financial Statements, or has
borrowed money which it has not repaid, apart from borrowings not exceeding the
amounts shown in the Financial Statements. Neither ISL nor Subsidiary has, since
April 30, 1998, repaid or become liable to repay a loan or other indebtedness in
advance of its stated maturity. Neither ISL nor Subsidiary has received notice
from a lender of money, requiring repayment or intimating the enforcement of a
security; and there is nothing likely to give rise to a notice.
3.45 Continuation of Facilities
The Disclosure Letter sets out accurate and complete details
(together with accurate copies of all relevant documentation) of the debentures,
acceptance credits, overdrafts, loans or other financial facilities outstanding
or available to ISL and Subsidiary (referred to in this clause as "facilities")
and, except as listed on Schedule 3.45:
(a) there has been no contravention of, or non-compliance with,
the terms of the facilities;
(b) no steps for the early repayment of indebtedness under the
facilities have been taken or threatened;
(c) there have not been, nor are there, circumstances known to
the Shareholders whereby the continuation of any of the
facilities might be prejudiced or its terms altered;
(d) none of the facilities is dependent on the guarantee or
indemnity of, or security provided by, a person other than
ISL or Subsidiary; and
(e) none of the Shareholders has any knowledge, information or
belief that, as a result of the acquisition of the Shares by
SPSS or any other thing contemplated in this agreement, any
of the facilities might be terminated or mature prior to its
stated maturity.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPSS
SPSS represents and warrants to the Shareholders as follows:
4.1 Organization and Qualification. SPSS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.
4.2 Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by SPSS and no other corporate proceedings on the part of SPSS are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by SPSS and constitutes legal, valid and binding agreements of SPSS.
4.3 Consents and Approvals. There is no authorization, consent, order
or approval of, or notice to or filing with, any individual or entity required
to be obtained or given in order for SPSS to consummate the transactions
contemplated hereby and fully perform its obligations hereunder.
4.4 Absence of Conflicts. The execution, delivery and performance by
SPSS of this Agreement and the consummation by SPSS of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which SPSS is or was subject, (ii) violate any order, judgment or decree
which is or was applicable to SPSS or (iii) conflict with, or result in a breach
or default under, any term or condition of the Certificate of Incorporation or
By-Laws of SPSS or any agreement or other instrument to which SPSS is a party or
by which SPSS is bound.
4.5 Brokers and Finders. SPSS has not employed any broker, finder or
investment banker, who is entitled to be compensated in connection with this
Agreement or the transactions contemplated hereby.
4.6 Contingent Payments. SPSS intends to prepare business plans with
respect to ISL, the intent of which is to enable ISL to achieve ISL Revenues
sufficient to require the payment of the maximum Contingent Payments provided
for under Section 1.4; provided, however, that SPSS makes no representation,
warranty or covenant that such business plans, if implemented, will be
successful, or that such levels of ISL Revenues shall be achieved.
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4.7 Insurance. From the Closing Date to December 31, 2000, SPSS shall
maintain levels of insurance relating to ISL substantially similar to those
maintained by ISL prior to the date hereto as listed on Schedule 3.23.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business.
(a) Conduct of Business by ISL and Subsidiary. During the period from
the date of this Agreement to the Closing Date, the Shareholders shall cause ISL
to carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use their best efforts to preserve intact ISL's and
Subsidiary's current business organizations, keep available the services of
ISL's and Subsidiary's current officers and employees, preserve ISL's and
Subsidiary's relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired in all material respects at
the Closing Date and shall cause Subsidiary to do the same. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Closing Date, neither ISL nor Subsidiary shall (except with the consent
of SPSS which shall not be unreasonably withheld):
(i) (a) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock (other
than the distribution of the Retained Assets set forth in Section 1.5
hereof), (b) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (c)
purchase, redeem or otherwise acquire any shares of capital stock of
ISL or Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants, or options to
acquire, any such shares, voting securities or convertible securities;
(iii) amend its articles of incorporation, by-laws, memorandum
of association or articles of association (as the case may be) or other
comparable charter or organizational documents;
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(iv) acquire or agree to acquire (a) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof or (b) any assets that individually or in the
aggregate are material to either ISL or Subsidiary, except purchases of
inventory in the ordinary course of business consistent with past
practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of its properties or
assets, other than in the ordinary course of business;
(vi) (x) incur any indebtedness, except for short term
borrowings incurred in the ordinary course of business consistent with
past practice or (y) make any loans, advances or capital contributions
to, or investments in, any other person;
(vii) make or agree to make any equipment leases or any new
capital expenditure or capital expenditures which are individually in
excess of $10,000 or in the aggregate are in excess of $20,000;
(viii) make any tax election that could reasonably be
expected to have a material adverse effect or settle or compromise any
income tax liability;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent Financial
Statements or incurred since the date of such financial statements in
the ordinary course of business consistent with past practice;
(x) except in the ordinary course of business, modify, amend
or terminate any material contract or agreement to which either ISL or
Subsidiary is a party or waive, release or assign any material rights
or claims thereunder;
(xi) take any action that would prevent SPSS from making an
election under Section 338 of the Code;
(xii) take any action to institute any new severance or
termination pay practices with respect to any directors, officers or
employees of either ISL or Subsidiary or to increase the benefits
payable under its severance or termination pay practices in effect on
the date hereof;
(xiii) adopt or amend, in any material respect, except as
may be required by applicable law or regulation, any collective
bargaining, bonus, profit sharing,
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compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare
of any directors, officers or employees; or
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Negotiations with Others. The Shareholders shall not, during the
28-day period from the date of this Agreement, directly or indirectly, solicit
or encourage (including by way of furnishing nonpublic information) or take
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to an Acquisition Proposal (as
defined below) from any person, or engage in any discussions or negotiations
relating thereto or in furtherance thereof or accept any acquisition proposal.
For the purposes of this Agreement, "Acquisition Proposal" means a proposal
regarding (i) any merger, consolidation, sale of substantial assets or similar
transactions involving either ISL or Subsidiary, (ii) sale of 10% or more of the
outstanding shares of capital stock of ISL or any shares of the capital stock of
Subsidiary or similar transactions involving ISL or Subsidiary, or (iii) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing. The Shareholders shall
immediately cease and cause to be terminated any existing discussions or
negotiations with any parties conducted prior to the date of this Agreement with
respect to any of the foregoing.
(c) Notification of Certain Matters. The Shareholders shall give prompt
notice to SPSS, and SPSS shall give prompt notice to the Shareholders of: (i)
the occurrence or failure to occur, of any event which such party believes would
be likely to cause any of its representations or warranties contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date and (ii) any failure of the Shareholders on the one hand or SPSS on
the other hand, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that failure
to give such notice shall not constitute a waiver of any defense that may be
validly asserted.
ARTICLE VI
COVENANTS OF THE SHAREHOLDERS
The Shareholders, jointly and severally, covenant as follows:
6.1 Consents and Approvals. The Shareholders agree to use all
reasonable efforts to make all registrations, filings and applications, and give
all notices and obtain all governmental and other consents, approvals, orders,
qualifications and waivers necessary for the consummation of the transactions
contemplated by, or the performance by the Shareholders of any of their
obligations under, this Agreement, or which may become
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reasonably necessary or desirable in connection with any of the foregoing, in
each case upon terms and conditions reasonably satisfactory to SPSS and its
counsel. The Shareholders waive any pre-emption rights and rights of first
refusal in relation to the Shares, whether under the Articles of Association of
ISL or otherwise.
6.2 Access to Information.
(a) The Shareholders shall allow SPSS to have complete access at all
reasonable times to ISL's officers, employees, agents, properties, books and
records, and shall furnish SPSS all financial, operating and other data and
information as SPSS, through its officers, employees or agents, may reasonably
request.
(b) No investigation pursuant to this Section 6.2 shall affect, add to
or subtract from any representations or warranties or the conditions to the
obligations of the parties hereto to effect the Acquisition.
6.3 Further Assurances. The Shareholders shall from time to time, at
the request of SPSS and without further cost or expense to SPSS, execute and
deliver such other documents and take such other actions as shall be reasonably
necessary or appropriate to consummate fully the transactions contemplated
hereby.
6.4 338 Election. The Shareholders agree to cooperate with SPSS in
making an election under Section 338 of the Code (and any comparable election
under state, local or foreign tax law) with respect to the acquisition of ISL by
SPSS provided, however, such cooperation shall be at no cost to the
Shareholders, and further provided, however, such cooperation shall not result
in any expansion of the liabilities and obligations of the Shareholders in
connection with the Acquisition.
6.5 Non-Competition Agreements. The Shareholders shall each enter into
a Non-Competition agreement with SPSS substantially in the form attached hereto
as Exhibit B.
6.6 Power of Attorney. Pending the entry of SPSS onto ISL's share
register, each of the Shareholders will grant to SPSS an irrevocable power of
attorney, substantially in the form attached hereto as Exhibit C, to exercise
all rights relating to the Shares to the same extent and with the same effect as
if SPSS had been entered on such share registrar.
6.7 Deed of Covenant. The Shareholders shall execute and deliver to
SPSS the Deed of Covenant in form attached hereto as Exhibit D (the "Tax Deed").
6.8 Integral Solutions (Asia). Alan Montgomery shall, within five
business days of SPSS' notification of the entity or person in question, at no
expense to SPSS, deliver to SPSS evidence reasonably satisfactory to SPSS of the
transfer to an entity or person designated by SPSS of shares of Integral
Solutions (Asia) Pte Ltd currently held by Alan Montgomery on behalf of ISL.
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ARTICLE VII
COVENANTS OF SPSS
SPSS covenants as follows:
7.1 Retention of Records. After the Closing Date, SPSS will retain all
of ISL's and Subsidiary's books and records in their possession in accordance
with SPSS' policies for retention of its own books and records, and upon
reasonable notice and during SPSS' regular business hours and at reasonable
intervals, will provide the Shareholders, and their respective agents and
representatives designated in writing, access to such books and records,
concerning all periods through and including December 31, 2001.
7.2 Further Assurances. SPSS shall from time to time execute and
deliver such other documents and take such other actions as shall be reasonably
necessary or appropriate to consummate fully the transactions contemplated
hereby.
7.3 Revenue Targets and Incentive Packages. After the Closing Date,
SPSS shall use all commercially reasonable endeavors to enable ISL to achieve
the ISL Revenue targets specified in Section 1.4. After the Closing Date through
December 31, 2000, SPSS shall, and shall cause ISL to, offer incentive packages
in respect of the sale of ISL products which are at least as attractive as those
offered in respect of the sale of SPSS products.
7.4 Employment Agreement. SPSS shall enter into an Employment Agreement
with Colin Shearer (the "Employment Agreement") substantially in the form
attached hereto as Exhibit E.
7.5 Bonus Payments. SPSS shall make or cause ISL or ISLDSI to make such
bonus payments to the parties, in the amounts, and at such times as provided in
that certain letter dated of even date herewith given by SPSS to the
Shareholders.
7.6 Personal Guarantee. SPSS shall use commercially reasonable efforts
to cause Kevin Peyton to be released from any and all personal guarantee
obligations under that certain Master Vehicle Lease Agreement between Chrysler
Financial Corporation and Subsidiary dated May 29, 1998 and will indemnify Kevin
Peyton and keep him harmless from and against all Losses (as hereinafter
defined) arising out of or relating to a breach of the covenant in this Section
7.6.
7.7 Treatment of ISL Products. From the Closing Date to December 31,
2000, SPSS shall treat ISL products in a manner substantially similar to its
treatment of other primary SPSS products, to the extent commercially reasonable.
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7.8 Pricing. From the Closing Date to December 31, 2000, with respect
only to the Clementine product and other current ISL products as to which a
pricing history exists, and except for discounts made in the ordinary course of
business, SPSS shall not institute a pricing policy which results in the
reduction of the list price of such products by more than 10% annually without
the mutual agreement of SPSS and Alan Montgomery. Any disputes under this
provision shall be resolved by arbitration in accordance with Section 14.17
hereof.
ARTICLE VIII
MUTUAL COVENANTS
Each of the parties hereto covenants as follows:
8.1 Confidentiality. Except as otherwise required by law or judicial or
administrative proceedings, including proceedings between the parties with
respect to the transactions contemplated hereby, and then only to the extent
specifically required by such proceedings, and except for public announcements
on the advice of counsel, each of the parties agrees not to (i) disclose any
Confidential Information (defined hereinbelow) of any other party, or the terms
of this Agreement, to any individual or entity (other than its directors,
officers, employees, agents and representatives with a need to know such
Confidential Information in order to consummate the transactions contemplated
hereby and then only if reasonable steps are taken with such parties to preserve
the confidentiality thereof) or (ii) use any Confidential Information for any
purpose other than, with respect to SPSS, operating the acquired business.
"Confidential Information" shall mean any secret or confidential information of
the software business of ISL or SPSS, including, but not limited to, customer
information, financial information, technical information, details or
information concerning contracts, trade secrets, marketing information or any
other data, information or proprietary information of or relating to the
software business of ISL or SPSS or any affiliate thereof, or their respective
products or services. No obligations shall exist under this Agreement with
respect to Confidential Information that (i) is publicly known at the time of
the disclosure or becomes publicly known through no wrongful act or failure of
ISL, the Shareholders or SPSS, (ii) is disclosed by a third party which does not
have a confidential relationship with either ISL, the Shareholders or SPSS, and
which was rightfully acquired by a third party, or (iii) is legally compelled to
be disclosed pursuant to a subpoena, summons, order or other judicial or
governmental process, provided that the parties hereto provide prompt notice of
any such subpoena, summons, order or other judicial or governmental process to
such other parties of the Confidential Information, so as to allow the parties
an opportunity to oppose such process.
8.2 Consistent Tax Reporting. The parties agree for tax purposes to
report the transactions contemplated by this Agreement, and to treat any
subsequent related transactions or items, in a manner consistent in all respects
with the terms and provisions of the Tax Deed
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and this Agreement. Each party shall cooperate with the other parties as
appropriate for all relevant tax purposes relating to the transactions
contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders to consummate the transactions
contemplated hereby is subject to the satisfaction on or prior to the Closing
Date of the following conditions:
9.1 Representations and Warranties. The representations and warranties
of SPSS shall be true and accurate on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
9.2 Performance. SPSS shall have performed in all material respects
all covenants and agreements required by this Agreement to be performed by it on
or before the Closing Date.
9.3 Filings; Consents: Waiting Periods. All registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers and other actions required of any persons or governmental authorities or
private agencies in connection with the consummation of the transactions
contemplated by and the performance by SPSS of its obligations under this
Agreement shall have been made or obtained and all applicable waiting periods
shall have expired or been terminated.
9.4 No Injunction. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or governmental body in
effect which restricts or prohibits the consummation of the transactions
contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SPSS
The obligation of SPSS to consummate the transactions contemplated
hereby is subject to the satisfaction on or prior to the Closing Date of the
following conditions:
10.1 Representations and Warranties. The representations and
warranties of the Shareholders shall be true and accurate on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date.
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10.2 Performance. The Shareholders shall have performed in all
material respects all covenants and agreements required by this Agreement to be
performed by it on or before the Closing Date.
10.3 Filings: Consents; Waiting Periods. All registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers and other actions of any kind required of any persons or governmental
authorities or private agencies in connection with the consummation of the
transactions contemplated by, and the performance by the Shareholders of their
respective obligations under this Agreement shall have been made or obtained and
all applicable waiting periods shall have expired or been terminated, in each
case upon terms and conditions reasonably satisfactory to SPSS.
10.4 No Litigation. No action, suit or proceeding shall have been
instituted by any person or entity, or threatened by any governmental agency or
body, before a court or governmental body, to restrain or prevent the
consummation of the transactions contemplated by, or the performance by the
Shareholders of their respective obligations under, this Agreement or which
seeks other relief with respect to any of such transactions or which could
reasonably be expected to have a materially adverse effect on the businesses,
results of operations, assets, financial condition or prospects of either ISL or
Subsidiary. At the Closing Date, there shall be no injunction, restraining order
or decree of any nature of any court or governmental agency or body in effect
which restrains or prohibits the consummation of the transactions contemplated
by this Agreement.
10.5 Legal Opinion. SPSS shall have received the written opinion,
dated the Closing Date, of the Shareholders' U.S. counsel, Saul, Ewing, Remick &
Saul, substantially in the form attached hereto as Exhibit G .
10.6 Delivery. At the Closing, the documents referenced in Article XI
shall be delivered to SPSS.
10.7 Meeting of ISL Board of Directors. SPSS shall have received
minutes of ISL's board of directors with respect to a meeting held in accordance
with applicable law and ISL's Articles of Association and Memorandum of
Association at which meeting such persons as SPSS nominates are appointed
additional directors, the stock transfers referred to in Section 11.1 hereof are
approved (subject to stamping), the resignations referred to in Section 11.7 are
approved and the accounting reference date of ISL is changed to December 31.
10.8 InferMed Sale. SPSS shall have received evidence, reasonably
satisfactory to SPSS, that the InferMed Sale shall have been completed in
compliance with the representations and warranties contained in Section 3.42
hereof.
10.9 ISLDSI Agreement. The sale to SPSS of the minority interest in the
capital stock of ISLDSI shall have been completed in accordance with that
certain Stock Purchase
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Agreement dated of even date herewith, between and among SPSS and the
Shareholders listed therein (the "ISLDSI Agreement").
10.10 Consulting Agreements. SPSS shall have received executed
originals of consulting agreements, substantially in the form of Exhibit H
attached hereto, from Alan Montgomery and Linda Montgomery.
10.11 Employment Agreement. SPSS shall have received an executed
original of the Employment Agreement.
10.12 Tax Deed. SPSS shall have received the Tax Deed executed by the
Shareholders.
10.13 Non-Competition Agreements. SPSS shall have received executed
originals of Non-Competition Agreements, substantially in the form of Exhibit B
attached hereto, from Alan Montgomery, Linda Montgomery, Colin Shearer, Clark
Morton and Julian Clinton.
ARTICLE XI
CLOSING DELIVERIES
The following deliveries shall be made at the Closing:
11.1 Delivery of Stock Certificates and Stock Transfers. The
Shareholders shall duly execute and deliver to SPSS stock transfers and share
certificates representing all of the Shares.
11.2 Delivery of Tax Deed and other Closing Documents. The
Shareholders shall deliver to SPSS the executed Tax Deed and all other
instruments and documents required hereunder.
11.3 Legal Opinion. The Shareholders shall cause to be delivered to
SPSS the ISLDSI Agreement, the written legal opinion of the Shareholders' U.S.
counsel, Saul, Ewing, Remick & Saul, in substantially the form attached hereto
as Exhibit G, the stock certificates of ISLDSI and corresponding stock powers.
11.4 Consents. The Shareholders shall deliver to SPSS all consents and
approvals required in connection with the performance by the Shareholders of
their respective obligations under this Agreement and the consummation by the
Shareholders of the transactions contemplated hereby and thereby.
11.5 Charter: Good Standing Certificates. The Shareholders shall cause
to be delivered to SPSS ISL's Memorandum of Association, as amended to the
Closing Date, and
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as filed with the United Kingdom Registrar of Companies. The Shareholders shall
deliver Subsidiary's Certificate of Incorporation certified by the Secretary of
State of the Commonwealth of Pennsylvania, as well as a good standing
certificate from the Secretary of State of the Commonwealth of Pennsylvania.
11.6 Resignations of ISL's Officers and Directors. The Shareholders
shall have caused to be delivered to SPSS resignations, under seal and in such
form as SPSS reasonably requires, confirming that they have no claim against ISL
or Subsidiary in any form whatsoever, operative as of the Closing Date, of all
the officers, the secretary and directors of ISL and Subsidiary.
11.7 Performance. The parties hereto shall have performed all covenants
and agreements required by this Agreement to be performed by them on or before
the Closing Date.
11.8 Non-Competition Agreements. All of the Shareholders shall execute
and deliver to SPSS Non-Competition Agreements in substantially the form
attached hereto as Exhibit B.
11.9 Company Records. The Shareholders shall deliver or cause to be
delivered, to SPSS the statutory books, books of account and documents of record
of ISL and Subsidiary, complete and up to date, and their certificates and
common or corporate seals, if any, the title deeds to all real estate owned by
ISL and Subsidiary (or either of them), the documents of title relating to
investments owned by each of them, the current checkbooks of each of them,
together with current statements of all bank accounts and the appropriate forms
to amend, in such manner as SPSS requires, the mandates given to the relevant
bank, and written confirmation from the Shareholders that there are no
subsisting guarantees given by ISL or Subsidiary in favor of the Shareholders
and that, after complying with the succeeding sentence, none of the Shareholders
will be indebted to ISL or Subsidiary. The Shareholders shall repay, or cause to
be repaid, all amounts owing on the Closing Date to ISL and Subsidiary from the
directors of any of them and from the Shareholders, whether due for payment or
not.
11.10 Director Approval. The Shareholders shall deliver or cause to be
delivered to SPSS, in form and substance reasonably satisfactory to SPSS, the
consent of the directors of ISL to the transfer of the Shares to SPSS hereunder,
which consent shall be either an unconditional consent in writing of all the
directors of ISL, or minutes of a meeting of the directors of ISL, in either
case pursuant to the Articles of Association of ISL.
11.11 Trustee's Opinion. Each Shareholder that is a trust shall cause
Fladgate Fielder to deliver to SPSS a trustee's opinion with respect thereto in
form satisfactory to SPSS and its counsel.
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ARTICLE XII
SURVIVAL AND INDEMNIFICATION
12.1 Survival of Representations and Warranties: Covenants. All
representations and warranties contained herein or made in writing by any party
in connection herewith ("Warranties") shall survive the Closing Date for a
period of three (3) years, regardless of any investigation made by or on behalf
of any party, except for the representations and warranties contained in
Sections 3.2, 3.3 and 3.4, which shall survive indefinitely, and the
representations and warranties contained in Sections 3.11, 3.14, 3.17, 3.19 and
3.20, or a representation or warranty which shall prove to be untrue due to the
fraud of the Shareholders, which in each case shall survive until the expiration
of the applicable statute of limitations with respect to the subject matter
thereof, and the Tax Warranties, which shall survive six (6) years, from the
latest date the filing of the Closing Returns as is permitted by law without
giving rise to interest or penalties for late payment. All covenants contained
herein shall survive until performed fully. Notwithstanding anything to the
contrary contained herein, Alan Montgomery and Linda Montgomery shall be jointly
and severally liable hereunder; provided, however, that they shall have the
right to seek contribution from the remaining Shareholders. Each of the other
Shareholders shall only be liable for any claim for breach of the Warranties in
the same proportions that the Shares sold by him under this Agreement bear to
the total issued share capital of ISL immediately before the Closing Date.
12.2 Indemnification.
(a) The Shareholders agree, jointly and severally, subject to the
provisions of Section 12.1, to indemnify and hold SPSS and its affiliates and
subsidiaries and the respective officers, directors, employees, agents and
representatives of each of the foregoing (collectively, the "Representatives")
harmless from and against any and all costs, expenses, losses, claims, damages,
interest, penalties, fines, liabilities, demands and obligations whenever
arising or incurred (including, without limitation, amounts paid in settlement,
costs of investigation and attorneys' fees and expenses) (individually, a
"Loss," and collectively, "Losses") arising out of or relating to (i) any breach
of any representation or warranty made by the Shareholders and (A) set forth
herein or in any related schedule, (B) set forth in any closing certificate or
other document entered into or delivered by the Shareholders in connection with
this Agreement (including the Tax Warranties); (ii) any breach of any covenant,
obligation or agreement of the Shareholders contained in this Agreement, or set
forth in any closing certificate or other document entered into or delivered in
connection with this Agreement; (iii) any of the agreements or arrangements
entered into by ISL which in any way contravene Articles 85 or 86 of the EC
Treaty or any other anti-trust, anti-monopoly or anti-cartel legislation or
regulations; (iv) any claim for indemnification or breach of warranty under all
agreements and instruments executed or delivered in connection with the ISS
Agreement including, without limitation, the ISS Agreement; (v) any claim for
indemnification or breach of warranty under all agreements and instruments
executed or delivered in connection with the InferMed Sale, including without
limitation that certain
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agreement relating to the sale of shares of InferMed Limited and assets of
Integral Solutions Limited between Integral Solutions Limited and T.A.
Montgomery and Amerrall Limited, dated of even date herewith; (vi) any claim for
or requirement that any grant relating to ISS or InferMed be repaid, in whole or
in part, including interest and penalties thereon (to the extent imposed); (vii)
any domestic and foreign patents, trademarks, service marks, trademark
registrations, logos, trade names, assumed names, copyrights and copyright
registrations and all applications therefor, and all rights in the nature of a
copyright, and all registered designs and design rights related to ISS or
InferMed including, without limitation, moral rights of any party with respect
to any of the foregoing and rights of or claims of rights by employees or former
employees of, or other parties related to, ISS or InferMed; (viii) contracts
assigned to Amerrall Limited by virtue of that certain Assignment of Contracts
dated of even date herewith between ISL and Amerrall Limited; (ix) the failure
to obtain the consent of Imperial Cancer Research Technology Limited ("ICRT") to
the transfer contemplated by the InferMed Sale; (x) the lack of a release of
liabilities and obligations by ICRT in favor of ISL with respect to the transfer
contemplated by the InferMed Sale; (xi) the default by ISL under those escrow
and other agreements and arrangements referenced in Schedule 3.13(c); (xii) the
use by ISL and/or Subsidiary of POPLOG in the Clementine product, the sale and
marketing by ISL and/or Subsidiary of Clementine (to the extent POPLOG is in
Clementine), and any royalties due or payable (or claimed to be due or payable)
in connection therewith by a third party in respect of POPLOG in excess of 1% of
the selling price of Clementine; and (xiii) any fraudulent representation or
intentional misrepresentation on the part of the Shareholders, unless the claim
or cause of action with respect thereto arises out of or is related to actions
or omissions of the Shareholders prior to the Closing Date.
(b) The liability of the Shareholders for any breach of the Warranties
or in respect to any indemnity to be provided to SPSS pursuant to this Article
XII unless otherwise stated (an "Indemnification Payment") shall be limited as
follows:
(i) The Indemnification Payment shall not exceed an amount equal to
the total consideration paid by SPSS in connection with the
transactions contemplated hereby, including the Purchase Price,
and to the extent paid, the 1999 Contingent Payments and the 2000
Contingent Payments (the "Cap"). Any Indemnification Payment shall
be satisfied first by any funds in the Escrow Account, and then by
the Shareholders.
(ii) Except as otherwise specifically set forth herein, the indemnity
provided in this Agreement shall not commence until the cumulative
amount of all Losses shall exceed Fifty Thousand Dollars (U.S.
$50,000) in the aggregate (the "Basket"); provided, however, that
if the Basket is reached, the indemnity provided for herein shall
apply to all Losses, including, without limitation, the Basket,
subject to the Cap. Notwithstanding the foregoing, the Basket and
the Cap shall not apply to the indemnities provided in this
Agreement for any failure of title to the Shares, any breaches of
any representations or warranties contained herein relating to the
Intellectual Assets, or any fraud, willful misconduct, gross
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negligence or criminal action on the part of the Shareholders,
and notwithstanding anything contained or implied in this
Agreement, the indemnity obligations set forth in this Section
12(b)(ii) shall survive the Closing without limitation except as
provided by the applicable statute of limitations (including any
extension of said statute of limitations).
(iii) The Shareholders shall not be liable in respect of any claim for
breach of the Warranties if the breach would not have arisen but
for any of the following events occurring after the Closing Date:
any change in the basis of, method of calculation of, or increase
in the rates of Taxes or changes in the published practice of the
Inland Revenue coming into effect after the date of this
Agreement, or the withdrawal of any published extra-statutory
concession currently granted by the Inland Revenue.
(iv) Notwithstanding anything to the contrary contained herein, the
Shareholders shall not be liable for any breach of the Warranties
to the extent that SPSS or those deriving title from SPSS have
already obtained reimbursement or restitution in respect of that
breach, including receipt of insurance proceeds by such party
(less deductibles for such insurance policies).
(v) In calculating the liability of the Shareholders for any breach
of the Warranties, there shall be taken into account the amount
by which any Taxes for which ISL or the Subsidiary are now
liable, are reduced or extinguished as a result of the matter
giving rise to such liability.
(vi) The Shareholders shall not be liable in respect of any claim for
breach of the Warranties to the extent the claim is wholly or
partly attributable to:
(i) any voluntary act, omission, transaction or arrangement
carried out at the request of SPSS before the Closing Date;
or
(ii) any voluntary act, omission, transaction or arrangement
carried out by SPSS or on its behalf or by persons deriving
title from SPSS, on or after, the Closing Date,
provided always that any action or omission contemplated by
clauses 4 and 8 of the Tax Deed shall not fall within this
clause.
(vii) The Shareholders shall not be liable in respect of any claim for
breach of the Warranties to the extent that the liability arises
or is increased as a result of any changes in legislation made
after the date of this Agreement which take effect
retrospectively.
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(viii) Limitations of liability under the Tax Deed shall be as set
forth in clause 3 of the Tax Deed.
12.3 Indemnification by SPSS. SPSS agrees to indemnify and hold the
Shareholders harmless from and against any and all Losses relating to (i) any
breach of any representation or warranty of SPSS set forth herein or in any
related schedule, or set forth in any closing certificate or other document
entered into or delivered by SPSS in connection with this Agreement; (ii) any
breach of any covenant, obligation or agreement of SPSS contained in this
Agreement or in any other closing document; (iii) any fraudulent representation
or intentional misrepresentation on the part of SPSS, unless the claim or cause
of action with respect thereto arises out of or is related to actions or
omissions of the Shareholders prior to the Closing Date; and (iv) any election
under Section 338 of the Code.
12.4 Indemnification Procedure. (a) An indemnified party under this
Article XII shall give prompt written notice to the indemnifying party (when and
to the extent that the indemnified party has actual knowledge thereof) of any
condition, event or occurrence or the commencement of any action, suit or
proceeding for which indemnification may be sought (each an "Indemnification
Event"), and through counsel reasonably satisfactory to the indemnified party,
the indemnifying party shall assume the defense thereof or other indemnification
obligation with respect thereto; provided, however, that any indemnified party
shall be entitled to participate in any such action, suit or proceeding with
counsel of its own choice but at its own expense.
In any event, if the indemnifying party fails to assume the defense
within a reasonable time, the indemnified party may assume such defense or other
indemnification obligation and the reasonable fees and expenses of its attorneys
will be covered by the indemnity provided for hereunder. No action, suit or
proceeding for which indemnification may be sought shall be compromised or
settled in any manner which might adversely affect the interests of the
indemnifying party without the prior written consent of the indemnifying party
(which shall not be unreasonably withheld); provided, however, that the
indemnified party may settle any claim or cause of action without the
indemnifying party's consent, but in such case the indemnifying party shall not
be required to reimburse the indemnified party for its Losses except and to the
extent that the results of arbitration, conducted in accordance with Section
14.13 hereof, determines that the indemnifying party must indemnify the
indemnified party therefor. Notwithstanding anything in this Section 12.4 to the
contrary, the indemnifying party shall not, without the prior written consent of
the indemnified party, (i) settle or compromise any action, suit or proceeding
or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
indemnified party of a written release from all liability in respect of such
action, suit or proceeding or (ii) settle or compromise any action, suit or
proceeding in any manner that may materially and adversely affect the
indemnified party other than as a result of money damages or other money
payments. The indemnifying party shall pay all expenses, including attorneys'
fees, that may be incurred by any indemnified party in enforcing the indemnity
provided for hereunder.
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In relation to any claim in respect of the Warranties or under the Tax
Deed, SPSS shall give such information and access to personnel, premises,
documents and records to the Shareholders and their professional advisers as the
Shareholders shall reasonably request.
(b) The procedure relating to any indemnification relating to Taxes
shall be as set forth in Clause 4 of the Tax Deed.
12.5 Offset Against Unpaid Amounts. Without limiting such other rights
as SPSS may have and subject to the survival period of the representation and
warranties contained in Section 12.1, if, prior to the time that any payment of
the Purchase Price or Contingent Payments are to be delivered, and after the
Basket has been reached, SPSS has learned of a breach of any representation,
warranty, covenant or agreement of the Shareholders contained in this Agreement,
SPSS may by written notice deduct from the amount of such payment otherwise owed
an amount equal to the aggregate of (a) the amount necessary to cure or make it
whole for such breach or (b) the amount of losses, damages and expenses incurred
or demonstrably in prospect of being incurred in connection with or caused by
such breach.
12.6 Treatment as Adjustment of Purchase Price. Any indemnification
payment received by a party hereunder shall be treated (so far as possible) as
an adjustment of the Purchase Price. However, in the event that the IRS, Inland
Revenue or any other taxing authority determines that such indemnification
payment constitutes taxable gain or income to the indemnified party, the
indemnifying party shall increase the amount otherwise required to be paid so
that the indemnified party, receives, on an after-tax basis, an amount equal to
the amount it would have received had the indemnity not resulted in taxable gain
or income.
12.7 Interest. Any Indemnification Payment not paid when due shall
bear interest at the Default Rate, from the date such Indemnification Payment
was due to the date of actual payment.
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of the parties hereto;
(b) by the Shareholders or SPSS if a material breach of any provision
of this Agreement has been committed by the other party and such breach is not
waived by the non-breaching party;
(c) by SPSS, if the conditions set forth in Article IX hereof shall not
have been complied with or performed in any material respect and such
noncompliance or
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<PAGE> 46
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by the Shareholders on or before December 31, 1998; or
(d) by the Shareholders, if the conditions set forth in Section VIII
hereof shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by SPSS or before December 31,
1998; or
(e) by either SPSS or the Shareholders if the Acquisition shall not
have been consummated on or before December 31, 1998; or such later date as the
parties hereto agree in writing.
13.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall hereafter become void and
there shall be no liability or further obligation on the part of the
Shareholders or SPSS or its officers or directors, except as set forth in
Section 8.1 and Section 14.3 and except that nothing herein will relieve any
party from liability for breach of this Agreement.
ARTICLE XIV
MISCELLANEOUS
14.1 Warranty Updates. The Shareholders, and each of them, shall
promptly disclose in writing to SPSS anything which becomes known to any of them
prior to Closing and is inconsistent with the representations and warranties
contained in Article III hereof (the "Warranties") or the contents of the
Schedules thereto, or which would result in the Warranties not being accurate at
Closing with reference to the facts or circumstances then applying, or which
might be material to be known by a buyer for value of the Shares.
14.2 Application of Warranties. Each of the Warranties is without
prejudice to the other Warranties and, except where expressly stated otherwise,
no clause governs or limits the extent or application of the other clauses.
14.3 SPSS Actions. The rights of SPSS in respect of a breach of the
Warranties shall not be affected by Closing, by investigations made by or on
behalf of SPSS into the affairs of ISL or Subsidiary, by SPSS rescinding, or
failing to rescind, this Agreement, or failing to exercise or delaying the
exercise of a right or remedy, or by anything else, except a specific authorized
written waiver or release, and no single or partial exercise of a right shall
preclude a further or other exercise.
14.4 ISL and Subsidiary Information. None of the information supplied
by ISL, Subsidiary or either of their professional advisers to the Shareholders,
or their representatives or advisers, in connection with the Warranties and the
contents of the Schedules, or otherwise in relation to the business or affairs
of ISL and Subsidiary, shall be deemed a representation
45
<PAGE> 47
as to its accuracy by ISL or Subsidiary to the Shareholders, and the
Shareholders shall not make a claim against ISL or Subsidiary in respect to it.
14.5 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of the
parties.
14.6 Waiver of Compliance. Any failure of the Shareholders on the one
hand, or SPSS, on the other, to comply with any obligation herein may be
expressly waived hereunder, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Any waiver must be in
writing and duly executed by the appropriate parties.
14.7 Expenses. Whether or not the transactions contemplated by this
Agreement shall be consummated, the parties hereto agree that all fees and
expenses incurred by each party in connection with this Agreement, and the
transactions and other actions contemplated thereby or taken in connection
therewith, shall be borne by that party including, without limitation, the
InferMed Sale and the sale to SPSS of the ISLDSI shares not owned by ISL, all
fees of counsel and accountants.
14.8 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or by facsimile transmission (receipt
confirmed), one day after being sent by recognized overnight courier or delivery
service, freight prepaid, or five days after being mailed, certified or
registered mail, postage prepaid, return receipt requested:
(a) If to the Shareholders to:
Alan Montgomery
8 Fitzroy Street, Fleet
Hampshire GU13 8HJ
United Kingdom
Facsimile: +44-1252-617112 (call first)
with a copy to:
Fladgate Fielder
25 North Row
London, England
W1R 1DJ
Attention: Roger Loosley
Facsimile: +44-171-629-4414
Or to such other person or address as the Shareholders shall furnish to SPSS in
writing by notice given in the manner set forth in (a) above.
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(b) If to SPSS, to:
SPSS Inc.
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Mr. Edward Hamburg
Facsimile No.: (312) 651-3558
with a copy to:
Ross & Hardies
150 North Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Attention: Beth A. Sansiper, Esq.
Facsimile No.: (312) 750-8600
or to such other person or address as SPSS shall furnish to the Shareholders in
writing by notice given in the manner set forth above.
14.9 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except by operation of law and except that SPSS may assign its rights and
obligations under this Agreement to any other entity wholly owned by SPSS. If
such assignment shall be made by SPSS, the assignee shall be entitled to all of
the rights and shall assume all of the obligations of SPSS hereunder, provided,
that SPSS shall remain liable for and guarantee the performance of such entity's
obligations under this Agreement.
14.10 Publicity. Neither the Shareholders nor SPSS shall make or
issue, or cause to be made or issued, any announcement or written statement
concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public, without the prior written consent of the
other parties. This provision shall not apply, however, to any announcement or
written statement required to be made by law, the regulations of any federal or
state governmental agency or any stock exchange, except that the party required
to make such announcement shall, whenever practicable, consult with the other
party concerning the timing and content of such announcement before such
announcement is made.
14.11 Headings. The Article and Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
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14.12 Severability. If any provision of this Agreement shall be
determined to be contrary to law and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with their
terms.
14.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, United States of America,
without regard to its conflicts of law doctrine. The parties hereto expressly
submit themselves to the non-exclusive jurisdictions of the State and Federal
Courts of Illinois for the resolution of any disputes which may arise under or
with respect to compliance with this Agreement.
14.14 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.15 Third Parties. Nothing herein shall be construed to confer upon
or give to any party other than the parties hereto and their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement.
14.16 References to Laws. References to particular statutes within
this Agreement, to the extent such references relate to laws other than the laws
of the United States or any particular State thereof, are intended to refer, and
shall be construed as referring, to laws of the United Kingdom.
14.17 Arbitration. Any dispute as to any claims under this Agreement
shall be settled by arbitration in Chicago, Illinois by three arbitrators, one
of whom shall be appointed by the Shareholders, one by SPSS and the third of
whom shall be appointed by the first two arbitrators. If either party fails to
appoint an arbitrator within 30 days of a request in writing by the other party
to do so or if the first two arbitrators cannot agree on the appointment of a
third arbitrator within 20 days of their designation, then such arbitrator shall
be appointed by the Chief Judge of the United States District Court for the
District of Illinois. Except as to the selection of arbitrators which shall be
as set forth above, the arbitration shall be conducted promptly and
expeditiously in accordance with the commercial arbitration rules of the
American Arbitration Association so as to enable the arbitrators to render an
award within 90 days of the commencement of the arbitration proceedings. Any
award issued as a result of arbitration shall be final and binding on the
parties, and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof; provided, however, that any award
issued as a result of arbitration shall be reviewable de novo by a court of
competent jurisdiction for errors of law. The costs of the arbitration and the
arbitrator shall be allocated as provided in the results of the arbitration.
14.18 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersedes
all prior agreements, covenants, representations or warranties, whether oral or
written, by any party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first written above.
SPSS INC., a Delaware corporation
By:
-----------------------------------------------
Name: Jack Noonan
Title: President and Chief Executive Officer
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<PAGE> 51
THE ISL SHAREHOLDERS:
- ---------------------------------- ----------------------------------
Alan Montgomery Linda Montgomery
- ---------------------------------- ----------------------------------
Clark Morton Colin Shearer
- ---------------------------------- ----------------------------------
Karen Mussan, formerly Karen Osborne Julian Clinton
- ---------------------------------- ----------------------------------
Suzanne Partridge Patricia Hughes
- ---------------------------------- ----------------------------------
Claire Budden Jonathan Meyer
- ---------------------------------- ----------------------------------
David Elsdon Matthew Colebourne
Alan Montgomery and Linda Montgomery,
as Trustees of the Alan Montgomery
Childrens' Settlement, solely in their
capacity as trustees and not individually
By: __________________________________
Thomas Alan Montgomery
By: __________________________________
Linda Frances Montgomery
50
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LIST OF OMITTED SCHEDULES
-------------------------
Sch. 1.3 List of Shareholders, holdings and proportions
Sch. 1.4 List of products and sources of revenues
Sch. 1.5 Retained Assets
Sch. 3 Disclosures
Ex. A Tax Warranties
Ex. D Tax Deed
Ex. F General Release and Waiver and Bonus list.
<PAGE> 1
EXHIBIT 4.1
BY-LAWS
OF
SPSS INC.
(Incorporated Under the Laws of the State of Delaware)
ARTICLE I
OFFICES AND RECORDS
SECTION (1) REGISTERED OFFICE. The registered office of the Corporation
shall be established and maintained at the office of The Corporation Trust
Company, at 1209 Orange Street in the City of Wilmington, County of New Castle,
State of Delaware, and The Corporation Trust Company shall be the registered
agent of the Corporation at such address.
SECTION (2) OTHER OFFICES. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION (3) BOOKS AND RECORDS. The books and records of the Corporation may
be kept outside the State of Delaware at such place or places as may from time
to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION (1) ANNUAL MEETING. Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. At
each annual meeting, the stockholders entitled to vote shall elect a Board of
Directors, or class thereof, and they may transact such other corporate business
as shall be stated in the notice of the meeting.
SECTION (2) SPECIAL MEETING. Special meetings of the stockholders may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting, and may be called only by the Chairman
of the Board or by a vote of a majority of the total number of directors
<PAGE> 2
which the Corporation would have if there were no vacancies (the "Whole
Board").
SECTION (3) NOTICE OF MEETING. Written or printed notice, stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered by the Corporation not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corpora tion. Such further notice shall be given as may be required by law. Only
such business shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the Corporation's notice of
meeting.
SECTION (4) QUORUM AND ADJOURNMENT. Except as otherwise provided by law or
by the Certificate of Incorporation, the holders of a majority of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. The
Chairman of the meeting or a majority of the shares so represented may adjourn
the meeting from time to time, whether or not there is such a quorum. No notice
of the time and place of adjourned meetings need be given except as required by
law. The stockholders present at a duly called meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION (5) VOTING. Each stockholder shall be entitled to vote in
accordance with the terms of the Certificate of Incorporation and in accordance
with the provisions of these By-Laws, in person or by proxy, but no proxy shall
be voted after three years from its date, unless such proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
legally sufficient to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing with the person recording the proceedings of the meeting an instrument
in writing revoking the proxy or another duly executed proxy bearing a later
date.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a
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<PAGE> 3
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION (6) NOTICE OF STOCKHOLDER BUSINESS AND
NOMINATIONS.
1. ANNUAL MEETINGS OF STOCKHOLDERS. Nominations of persons for election
to the Board of Directors of the Corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of stockholders
(a) pursuant to the Corporation's notice of meeting, (b) by or at the direction
of the Board of Directors or (c) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided for in this
By-Law, who is entitled to vote at the meeting and who complies with the notice
procedures set forth in this By-Law.
a. For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (1)
above, the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation and such other business must otherwise be a proper
matter for stockholder action. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the 60th day nor earlier than the close
of business on the 90th day prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is more than 30 days before or more than 60 days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the Corporation. In no
event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as described
above. Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the
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proxy statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
b. Notwithstanding anything in these By-Laws to the contrary, in the
event that the number of directors to be elected to the Board of Directors of
the Corporation is increased and there is no public announcement by the
Corporation naming all of the nominees for director or specifying the size of
the increased Board of Directors at least 70 days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice required by this
By-Law shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
2. SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this By-Law, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this By-Law. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by these By-Laws shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier than
the close of business on the 90th day prior to such special meeting and not
later than the
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<PAGE> 5
close of business on the later of the 60th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a stockholder's notice as described above.
3. GENERAL. (1) Only such persons who are nominated in accordance with
the procedures set forth in this By-Law shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this By-Law. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this By-Law and, if any proposed
nomination or business is not in compliance with this By-Law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this By-Law. Nothing in this By-Law shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION (7) PROCEDURE FOR ELECTION OF DIRECTORS; REQUIRED VOTE.
Election of directors at all meetings of the stockholders at which directors are
to be elected shall be by ballot, and, a plurality of the votes cast thereat
shall elect directors. Except as otherwise provided by law, the Certificate of
Incorporation, or these By-Laws, in all matters other than the election or
removal of directors, the affirmative vote of a majority of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
matter shall be the act of the stockholders.
SECTION (8) INSPECTORS OF ELECTIONS; OPENING AND CLOSING
THE POLLS. The Board of Directors by resolution may appoint one
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<PAGE> 6
or more inspectors, which inspector or inspectors may include individuals who
serve the Corporation in other capacities, including, without limitation, as
officers, employees, agents or representatives, to act at the meetings of
stockholders and make a written report thereof. One or more persons may be
designated as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate has been appointed to act or is able to act at a
meeting of stockholders, the Chairman of the meeting may appoint one or more
inspectors to act at the meeting. Each inspector, before discharging his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall have the duties prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.
SECTION (9) NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION (1) GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. In addition to
the powers and authorities by these By-Laws expressly conferred upon them, the
Board of Directors may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION (2) NUMBER, TENURE AND QUALIFICATIONS. The number of directors
shall be fixed from time to time exclusively pursuant to a resolution adopted by
a majority of the Whole Board, but shall consist of not more than nine (9) nor
less than five (5) directors. Commencing with the date the Corporation's
Certificate of Incorporation is accepted for filing by the Delaware Secretary of
State's Office in connection with the Corporation's initial public offering, the
directors shall be divided, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as is reasonably
possible, with the term of office of the first class to expire at the 1994
annual meeting of stockholders, the term of office of the second class to expire
at the 1995 annual meeting
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<PAGE> 7
of stockholders and the term of office of the third class to expire at the 1996
annual meeting of stockholders, with each director to hold office until his or
her successor shall have been duly elected and qualified. At each annual meeting
of stockholders, commencing with the 1994 annual meeting, directors elected to
succeed those directors whose terms then expire shall be elected for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until his or her successor
shall have been duly elected and qualified.
SECTION (3) REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than as provided by this By-Law
immediately after, and at the same place as, the Annual Meeting of Stockholders.
The Board of Directors may, by resolution, provide the time and place for the
holding of different or additional regular meetings without other notice than
such resolution.
SECTION (4) SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the Board of Directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
the place and time of the meetings.
SECTION (5) NOTICE. Notice of any special meeting of directors shall be
given to each director at his business or residence in writing by hand delivery,
first-class or overnight mail or courier service, telegram or facsimile
transmission, or orally by telephone. If mailed by first-class mail, such notice
shall be deemed adequately delivered when deposited in the United States mails
so addressed, with postage thereon prepaid, at least five (5) days before such
meeting. If by telegram, overnight mail or courier service, such notice shall be
deemed adequately delivered when the telegram is delivered to the telegraph
company or the notice is delivered to the overnight mail or courier service
company at least twenty-four (24) hours before such meeting. If by facsimile
transmission, such notice shall be deemed adequately delivered when the notice
is transmitted at least twelve (12) hours before such meeting. If by telephone
or by hand delivery, the notice shall be given at least twelve (12) hours prior
to the time set for the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice of such meeting, except for amendments to these By-Laws,
as provided under Article VIII. A meeting may be held at any time without notice
if all the directors are present or if those not present waive notice of the
meeting in accordance with Article VI, Section 4 of these By-Laws.
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SECTION (6) ACTION BY CONSENT OF BOARD OF DIRECTORS. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
SECTION (7) CONFERENCE TELEPHONE MEETINGS. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
SECTION (8) QUORUM. Subject to Article III, Section 9, a whole number
of directors equal to at least a majority of the Whole Board shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of the directors
present may adjourn the meeting from time to time without further notice. The
act of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. The directors present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION (9) VACANCIES. Unless the Board of Directors otherwise
determines, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of directors,
may be filled only by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, and directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires and until such director's successor shall have been duly elected
and qualified. No decrease in the number of authorized directors constituting
the Whole Board shall shorten the term of any incumbent director.
SECTION (10) EXECUTIVE AND OTHER COMMITTEES. The Board of Directors
may, by resolution adopted by a majority of the Whole Board, designate an
Executive Committee to exercise, subject to applicable provisions of law, all
the powers of the Board in the management of the business and affairs of the
Corporation when the Board is not in session, including without limitation the
power to declare dividends, to authorize the issuance of the Corporation's
capital stock and to adopt a certificate of ownership and merger pursuant to
Section 253 of
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<PAGE> 9
the General Corporation Law of the State of Delaware, and may, by resolution
similarly adopted, designate one or more other committees. The Executive
Committee and each such other committee shall consist of two or more directors
of the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Any such committee, other than the Executive
Committee (the powers of which are expressly provided for herein), may to the
extent permitted by law exercise such powers and shall have such
responsibilities as shall be specified in the designating resolution. In the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of any such absent or
disqualified member. Each committee shall keep written minutes of its
proceedings and shall report such proceedings to the Board when required.
A majority of any committee may determine its action and fix the time
and place of its meetings, unless the Board shall otherwise provide. Notice of
such meetings shall be given to each member of the committee in the manner
provided for in Article III, Section 5 of these By-Laws. The Board shall have
power at any time to fill vacancies in, to change the membership of, or to
dissolve any such committee. Nothing herein shall be deemed to prevent the Board
from appointing one or more committees consisting in whole or in part of persons
who are not directors of the Corporation; provided, however, that no such
committee shall have or may exercise any authority of the Board.
SECTION (11) REMOVAL. Any director, or the entire Board of Directors,
may be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80 percent of the voting power of
all of the then-outstanding shares of Voting Stock, voting together as a single
class.
SECTION (12) RECORDS. The Board of Directors shall cause to be kept a
record containing the minutes of the proceedings of the meetings of the Board
and of the stockholders, appropriate stock books and registers and such books of
records and accounts as may be necessary for the proper conduct of the business
of the Corporation.
SECTION (13) COMPENSATION. Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity
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<PAGE> 10
as an officer, agent or otherwise, and receiving compensation therefor.
ARTICLE IV
OFFICERS
SECTION (1) ELECTED OFFICERS. The elected officers of the Corporation
shall be a Chairman of the Board of Directors, a President, a Secretary, a
Treasurer, and such other officers (including, without limitation, a Controller
and a Chief Financial Officer) as the Board of Directors from time to time may
deem proper. The Chairman of the Board shall be chosen from among the directors.
All officers elected by the Board of Directors shall each have such powers and
duties as generally pertain to their respective offices, subject to the specific
provisions of this ARTICLE IV. Such officers shall also have such powers and
duties as from time to time may be conferred by the Board of Directors or by any
committee thereof. The Board or any committee thereof may from time to time
elect, or the Chairman of the Board or President may appoint, such other
officers (including one or more Vice Presidents, Assistant Secretaries,
Assistant Treasurers, and Assistant Controllers) and such agents, as may be
necessary or desirable for the conduct of the business of the Corporation. Such
other officers and agents shall have such duties and shall hold their offices
for such terms as shall be provided in these By-Laws or as may be prescribed by
the Board or such committee or by the Chairman of the Board or President, as the
case may be.
SECTION (2) ELECTION AND TERM OF OFFICE. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after the annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign, but any officer (other
than the Chairman of the Board or President) may be removed from office at any
time by either the affirmative vote of a majority of the Whole Board or by the
Chairman of the Board or President. The Chairman of the Board and the President
may only be removed from office by the affirmative vote of a majority of the
Whole Board. Such removal shall be without prejudice to the contractual rights,
if any, of the person so removed.
SECTION (3) CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the
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<PAGE> 11
Corporation and shall perform all duties incidental to his office which may be
required by law and all such other duties as are properly required of him by the
Board of Directors. He shall make reports to the Board of Directors and the
stockholders, and shall see that all orders and resolutions of the Board of
Directors and of any committee thereof are carried into effect. The Chairman of
the Board may also serve as President, if so elected by the Board.
SECTION (4) PRESIDENT. The President shall act in a general executive
capacity and shall assist the Chairman of the Board in the administration and
operation of the Corporation's business and general supervision of its policies
and affairs. The President shall, in the absence of or because of the inability
to act of the Chairman of the Board, perform all duties of the Chairman of the
Board and preside at all meetings of stockholders and of the Board of Directors.
SECTION (5) VICE-PRESIDENTS. Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the Board of
Directors, the Chairman of the Board or the President.
SECTION (6) CHIEF FINANCIAL OFFICER. The Chief Financial Officer (if
any) shall be a Vice President and act in an executive financial capacity. He
shall assist the Chairman of the Board and the President in the general
supervision of the Corporation's financial policies and affairs.
SECTION (7) TREASURER. The Treasurer shall exercise general supervision
over the receipt, custody and disbursement of corporate funds. The Treasurer
shall cause the funds of the Corporation to be deposited in such banks as may be
authorized by the Board of Directors, or in such banks as may be designated as
depositaries in the manner provided by resolution of the Board of Directors. He
shall have such further powers and duties and shall be subject to such
directions as may be granted or imposed upon him from time to time by the Board
of Directors, the Chairman of the Board or the President.
SECTION (8) SECRETARY. The Secretary shall keep or cause to be kept in
one or more books provided for that purpose, the minutes of all meetings of the
Board, the committees of the Board and the stockholders; he shall see that all
notices are duly given in accordance with the provisions of these By-Laws and as
required by law; he shall be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its seal; and he
shall see that the books, reports, statements,
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<PAGE> 12
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and in general, he shall perform all the
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Board, the Chairman of the Board or the
President.
SECTION (9) REMOVAL. Any officer elected, or agent appointed, by the
Board of Directors may be removed by the affirmative vote of a majority of the
Whole Board whenever, in their judgment, the best interests of the Corporation
would be served thereby. Any officer or agent appointed by the Chairman of the
Board or the President may be removed by him whenever, in his judgment, the best
interests of the Corporation would be served thereby. No elected officer shall
have any contractual rights against the Corporation for compensation by virtue
of such election beyond the date of the election of his successor, his death,
his resignation or his removal, whichever event shall first occur, except as
otherwise provided in an employment contract or under an employee deferred
compensation plan.
SECTION (10) VACANCIES. A newly created elected office and a vacancy in
any elected office because of death, resignation, or removal may be filled by
the Board of Directors for the unexpired portion of the term at any meeting of
the Board of Directors. Any vacancy in an office appointed by the Chairman of
the Board or the President because of death, resignation, or removal may be
filled by the Chairman of the Board or the President.
ARTICLE V
STOCK CERTIFICATES, TRANSFERS AND RECORD DATE
SECTION (1) STOCK CERTIFICATES AND TRANSFERS. The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe. The certificates of stock shall be signed, counter-signed and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificates to
be in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
SECTION (2) LOST, STOLEN OR DESTROYED CERTIFICATES. No certificate for
shares of stock in the Corporation shall be issued in place of any certificate
alleged to have been lost,
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<PAGE> 13
destroyed or stolen, except on production of such evidence of such loss,
destruction or theft and on delivery to the Corporation of a bond of indemnity
in such amount, upon such terms and secured by such surety, as the Board of
Directors or any financial officer may in its or his discretion require.
SECTION (3) TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the directors may designate, by whom they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.
SECTION (4) STOCKHOLDERS RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting (if permitted), or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than 60 nor less
than ten days before the date of such meeting, nor more than 60 days prior to
any other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION (1) FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of January and end on the thirty-first day of December of each
year.
SECTION (2) DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.
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<PAGE> 14
SECTION (3) SEAL. The corporate seal shall have inscribed thereon the
words "Corporate Seal", and around the margin thereof the words "SPSS Inc.
Delaware."
SECTION (4) WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the stockholders or the Board of
Directors or committee thereof need be specified in any waiver of notice of such
meeting.
SECTION (5) AUDITS. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be done annually.
SECTION (6) RESIGNATIONS. Any director or any officer, whether elected
or appointed, may resign at any time by giving written notice of such
resignation to the Chairman of the Board, the President, or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President, or
the Secretary, or at such later time as is specified therein. No formal action
shall be required of the Board of Directors or the stockholders to make any such
resignation effective.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
SECTION (1) CONTRACTS. Except as otherwise required by law, the
Certificate of Incorporation or these By-Laws, any contracts or other
instruments may be executed and delivered in the name and on the behalf of the
Corporation by such officer or officers of the Corporation as the Board of
Directors may from time to time direct. Such authority may be general or
confined to specific instances as the Board may determine. The Chairman of the
Board, the President or any Vice President may execute bonds, contracts, deeds,
leases and other instruments to be made or executed for or on behalf of the
Corporation. Subject to any restrictions imposed by the Board of Directors or
the Chairman of the Board, the President or any Vice President of the
Corporation may delegate contractual powers to others under his jurisdiction, it
being understood, however, that any such delegation of power
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<PAGE> 15
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.
SECTION (2) VOTING OF SHARES IN OTHER CORPORATIONS. Unless otherwise
provided by resolution adopted by the Board of Directors, the Chairman of the
Board, the President or any Vice President may from time to time appoint an
attorney or attorneys or agent or agents of the Corporation, in the name and on
behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as the holder of stock or other securities in any other
corporation, any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporation, or to consent in writing, in the name of the Corporation as
such holder, to any action by such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
These By-Laws may be altered or repealed, and any By-Laws may be made,
at any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed alteration or repeal of the By-Laws or of the By-Laws to
be made is contained in the notice of such meeting, by the affirmative vote of
the holders of at least 80% of the voting power of the then outstanding Voting
Stock, or by the affirmative vote of a majority of the total number of
directors, at any regular meeting of the Board of Directors, or at any special
meeting of the Board of Directors, if notice of the proposed alteration or
repeal, or of the By-Laws to be made, is contained in the notice of such special
meeting.
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EXHIBIT 99.1
January 4, 1999
Company Press Release
SPSS Acquires Integral Solutions Ltd. Key data mining acquisition positions SPSS
to offer a full range of analytical solutions for the enterprise
CHICAGO -- Expanding its presence in the business intelligence marketplace, SPSS
Inc. (Nasdaq: SPSS) announced today its purchase of Integral Solutions Ltd.
(ISL) for $7.1 million in cash. The transaction was completed on Dec. 31, 1998.
ISL is a leading full-service data mining company, supplying world-class
consultancy and training in support of its award-winning Clementine product.
Clementine was the first enterprisestrength data mining offering aimed at
business users and is consistently acknowledged by users and analysts as the
leading interactive data mining system. More than 250 organizations worldwide
use Clementine, including companies such as American Century Investments,
Daimler-Benz, Glaxo Wellcome, Reuters and Unilever.
"This key acquisition is part of SPSS' overall strategy to continue to blaze new
trails and lead in business intelligence," said Jack Noonan, SPSS president and
CEO. "This acquisition benefits data mining practitioners, combining the
strength of ISL's rapid modeling environment offered in the Clementine product
with the wide range of data preparation and statistical data mining software in
the extensive SPSS product line. Clementine adds an important model-building
environment to the range of SPSS analytical solutions for the enterprise. Our
breadth of analytical capabilities and deployment options makes SPSS the choice
of organizations that want to create and distribute information for better
decision making."
"Data mining is strategic for the world's Global 5000 companies," said Alan
Montgomery, president and CEO of ISL. "They need to be able to rely on the
strength of a long-established, global, public corporation. ISL would love to go
it alone. But we know the reality of this rapidly consolidating market.
"From the outset, when ISL was simply looking for an analytical partner to
complement Clementine's advanced modeling, we liked the SPSS people. I admire
their business achievement, their great reputation with clients and their
technology. That's why we chose SPSS as the partner to ensure that Clementine
becomes the worldwide market leader in data mining, at the enterprise level, on
the desktop, and soon over the Web," added Montgomery.
"The data mining market is rapidly consolidating down to a small number of
vendors who are going to dominate the data mining tools market," said Don
MacTavish, senior research analyst, ADS, META Group, an IT analyst group. "SPSS
has the potential to be one of the leaders. We believe that analytical
applications are the next wave, and in order to adequately handle that wave
vendors have to diversify their technology base.
"The META Group expects to see a consolidation of tools into focused 'suites'
that address all aspects of information analysis and analytical applications -
the integration of statistics, data
<PAGE> 2
mining and OLAP technologies are paramount to a successful solution for an
enterprise," MacTavish added.
"The ISL acquisition is a positive step as SPSS increases its emphasis on
business intelligence," said Herb Edelstein, president of Two Crows Corp., a
data mining industry analyst group. "ISL brings to SPSS a focused data mining
product, client/server architecture and a vehicle for delivering data mining
solutions to which SPSS can add its sophisticated algorithms. With this
acquisition, SPSS will extend its offering for existing customers while reaching
new organizations that are not already using traditional statistics and
modeling. And, ISL customers will benefit from SPSS' strong global presence,
proven algorithms, visualization software and first-rate documentation and
technical support groups."
Joint SPSS and ISL customers expect to benefit from this partnership. "SPSS and
Clementine are an inseparable solution to a large problem we have -- the problem
of understanding who our customers are so we can better meet their needs," said
Stephen Cole, assistant director of research and development, American Century
Investments. "We use SPSS for basic statistical analysis, decision trees,
missing value analysis, regression, and factor analysis, then use Clementine's
neural networks and artificial intelligence to complement the SPSS analysis.
Together, they create a seamless and powerful data mining environment, and are
the solution people should have in their organization if they are serious about
surviving in this competitive business world."
SPSS plans to continue to develop and market ISL products, including Clementine,
which combines multiple modeling techniques (neural networks, rule induction,
regression) with data visualization and manipulation to extract high-value,
decision-making knowledge from large bodies of historical data. A rich visual
programming interface provides higher productivity for model builders and makes
Clementine accessible to knowledge workers. In addition, models built in
Clementine can be deployed to information consumers for use in decision making.
The addition of Clementine to the SPSS product line adds to the company's
already broad range of analytical solutions. Organizations use SPSS' line of
integrated products for the entire analytical process from multidimensional
reporting to complex, high-end modeling. By offering multiple analytical
techniques and deployment options, SPSS delivers the right product for every
person -- from the model builder to the information consumer -- and meets the
business intelligence needs of the entire enterprise.
Clementine has established a leading position in the data mining market, and is
in use in a wide range of industry sectors including finance, retail, telecoms,
pharmaceuticals, utilities, broadcasting and defense. Applications are diverse
and include demand prediction, customer profiling, risk assessment, turnover
forecasting, process optimization, fault pre-emption and fraud detection.
In March 1998, ISL and SPSS announced an agreement to develop an interface
between the companies' two products. The resulting interface, which is now
available, provides a seamless
2
<PAGE> 3
data link between Clementine and SPSS for Windows. Clementine users have access
to SPSS data transformations, a wider range of statistical and other data mining
procedures and new graphics capabilities that are available in SPSS 9.0 for
Windows. The interface provides SPSS users with data mining process support and
the ability to easily link the steps of the data mining process in the visual
modeling environment that Clementine provides.
Also in 1998, ISL announced its program for a fully scalable, interactive data
mining solution -- CHESS -- the Clementine High Efficiency Scalable Server -
which enables Clementine's interactive and visual style of data mining to be
applied to very large data sets, at greater speed. In anticipation of CHESS, ISL
has partnered with vendors of databases, warehouses and parallel computer
platforms to help shape the future of business-led data mining. SPSS plans to
continue development of CHESS and deliver it in 1999.
Headquartered in Basingstoke, United Kingdom, ISL employs more than 30 people in
offices in the UK and in Philadelphia. ISL's revenues were approximately $3.4
million over the last 12 months. The purchase of ISL marks the fourth company
SPSS has acquired in the last 15 months, with ISL being the first data
mining-related acquisition. In 1997, SPSS made two key market research
acquisitions, with the purchases of Quantime Ltd. and In2ititive Technologies.
In November 1998, SPSS made another market research-related acquisition with the
purchase of Surveycraft. As the company broadens its reach in the business
intelligence arena, it will be looking to make similar acquisitions.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:
Certain statements in this press release are forward-looking statements. Such
statements can be identified by phrases such as "expects to ship" and "plans to
release." Such statements also involve known and unknown risks which may cause
the company's actual results, performance, achievements, or industry results, to
be materially different than any future results, performance or achievements
expressed or implied in or by such forward-looking statements. By way of example
and not limitation, known risks and uncertainties include changes in: market
conditions, especially in Asia; changes and/or product demand and acceptance;
the competitive environment; product release schedules; and currency
fluctuations. In light of these and other risks and uncertainties, the inclusion
of a forward-looking statement in this release should not be regarded as a
representation by the company that any future results, performance or
achievements will be attained. The company assumes no obligation to update the
information contained in this press release.
Company information
SPSS Inc. is a leader in the large markets for analytical solutions: business
intelligence (data mining and market research), quality improvement and
scientific research. SPSS products and services transform organizations by
helping users leverage information to grow revenues and improve processes.
Today, more than 2 million people use SPSS, the world's best-selling software
for desktop analysis, to create and distribute information for better decision
making.
3
<PAGE> 4
Celebrating its 30th anniversary in 1998, SPSS is one of the most
enduring software companies in the world. SPSS has won the following awards:
named No. 28 in DM Review's Data Warehouse Top 100; ranked among Forbes 200
Best Small Companies in America; Business Week's Top 100 Growth Companies for
1997; placed No. 21 on the 1998 Softo letter 100, a ranking of the top 100
personal computer software companies in the United States; and No. 87 in the
1998 Software 500, a ranking of the world's largest software vendors by
Software Magazine. Headquartered in Chicago, SPSS has offices and distributors
around the world.
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