SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 14, 1998
---------------
Information Management Associates, Inc.
(Exact name of registrant as specified in its charter)
Connecticut
(State or other jurisdiction of incorporation)
001-13211 06-1289928
(Commission File Number) (I.R.S. Employer Identification No.)
One Corporate Drive, Suite 414, Shelton, Connecticut, 06484
(Address of principal executive offices) (zip code)
(203) 925-6800
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
Attached hereto as Exhibit 99.1 and incorporated herein by reference is the
press release issued by Information Management Associates, Inc. (the
"Registrant") on August 11, 1998, announcing that the Registrant has entered
into a Stock Purchase Agreement by and among Mitsucon Tecnologia S/A
("Mitsucon"), Mitsucon Comercial Ltda., Mitsucon Informatica, Ltda., Ernesto
Hiroshi Sunago, Mario Minoru Noguchi and Cristina Antakly Adib (the "Purchase
Agreement"), pursuant to which the Registrant agreed to purchase nineteen and
8/10ths percent (19.8%) of the outstanding capital stock of Mitsucon, a
Brazilian corporation which distributes the Registrant's products in the
Brazilian market. The purchase price will consist of approximately $1,610,000 in
cash (including acquisition expenses). The consummation of the transaction is
subject to certain conditions set forth in the Purchase Agreement, including the
completion of an asset contribution agreement among Mitsucon, Mitsucon Comercial
Ltda. and Mitsucon Informatica, Ltda. The Registrant expects the stock purchase
to close by the end of August. A copy of the Purchase Agreement is attached
hereto as Exhibit 2.1.
(a) Exhibits
2.1 Stock Purchase Agreement dated as of July 31, 1998 by and among
Mitsucon Tecnologia S/A ("Mitsucon"), Mitsucon Comercial Ltda.,
Mitsucon Informatica, Ltda., Ernesto Hiroshi Sunago, Mario Minoru
Noguchi and Cristina Antakly Adib.
99.1 Press Release dated August 11, 1998, announcing the execution of
the Stock Purchase Agreement.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 14, 1998 INFORMATION MANAGEMENT
ASSOCIATES, INC.
By: /s/ Gary R. Martino
____________________________________
Name: Gary R. Martino
Title: Chairman of the Board of
Directors, Chief Financial
Officer and Treasurer
3
STOCK PURCHASE AGREEMENT
dated as of July 31, 1998
among
MITSUCON TECNOLOGIA S/A
MITSUCON COMERCIAL LTDA.,
MITSUCON INFORMATICA, LTDA.,
THE SHAREHOLDERS LISTED ON SCHEDULE A
and
INFORMATION MANAGEMENT ASSOCIATES, INC.
TABLE OF CONTENTS
1. PURCHASE, SALE AND TERMS OF SHARES........................................
1.01 The Company Shares.................................................
1.02 The Shareholder Shares.............................................
1.03 Purchase Price and Closing.........................................
1.04 Use of Proceeds....................................................
2. REPRESENTATIONS AND WARRANTIES OF COMERCIAL, INFORMATICA,
THE COMPANY AND EACH SELLING SHAREHOLDER..................................
2.01 Organization, Standing and Power...................................
2.02 Authority; Enforceability; No Conflict.............................
2.03 Capitalization.....................................................
2.04 Status of Shares...................................................
2.05 Financial Statements...............................................
2.06 Liabilities........................................................
2.07 Indebtedness.......................................................
2.08 Title to Assets....................................................
2.09 Actions Pending....................................................
2.10 Compliance with Law................................................
2.11 Taxes..............................................................
2.12 Employee Benefit Plans.............................................
2.13 No Material Adverse Change.........................................
2.14 Certain Fees.......................................................
2.15 Disclosure.........................................................
2.16 Proprietary Rights.................................................
2.17 Environmental and Safety Matters...................................
2.18 Books and Records..................................................
2.19 Material Agreements................................................
2.20 Transactions with Affiliates.......................................
2.21 Securities Laws....................................................
2.22 Governmental Approvals.............................................
2.23 Insurance..........................................................
2.24 Employees..........................................................
2.25 The Contribution Documents.........................................
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...........................
3.01 Organization and Standing of the Purchaser.........................
3.02 Authority; Enforceability; No Conflict.............................
4. CONDITIONS TO PURCHASER'S OBLIGATIONS FOR CLOSING.........................
4.01 Representations and Warranties.....................................
4.02 Officer's Certificate..............................................
4.03 Officer's Certificate..............................................
4.04 Consents, Licenses, Approvals, etc.................................
4.05 Good Standing Certificates.........................................
4.06 No Proceedings or Litigation.......................................
4.07 Legal Opinion......................................................
4.08 Closing the Contribution...........................................
4.09 Certified Documents................................................
4.10 Expenses...........................................................
4.11 Key Man Life Insurance Policy......................................
4.12 Compliance with this Agreement and Related Agreements..............
5. AFFIRMATIVE COVENANTS OF THE COMPANY......................................
5.01 Inspection Rights..................................................
5.02 Meetings of Directors..............................................
5.03 Bylaws; Meetings and Indemnification...............................
5.04 Corporate Existence; Payment of Taxes..............................
5.05 Properties, Business, Insurance....................................
5.06 Expenses of Directors..............................................
5.07 Compliance with Laws...............................................
5.08 Keeping of Records and Books of Account............................
5.09 Size of Board......................................................
5.10 Selection of Independent Auditors..................................
5.11 Reporting Requirements.............................................
5.12 Employee Compensation and Dividend Policies........................
5.13 Net Worth..........................................................
6. NEGATIVE COVENANTS OF THE COMPANY.........................................
6.01 Distributions......................................................
6.02 Capital Stock......................................................
6.03 Dealings with Affiliates...........................................
6.04 Conduct of Business................................................
6.05 Mergers............................................................
6.06 Liquidation........................................................
6.07 Acquisitions.......................................................
6.08 Amendments.........................................................
6.09 Other Agreements...................................................
6.10 Debt...............................................................
6.11 Stock Plans........................................................
7. EVENTS OF NONCOMPLIANCE...................................................
8. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE...................................
9. REGISTRATION RIGHTS.......................................................
9.01 Incidental Registration............................................
9.02 Registration Procedures............................................
9.03 Indemnification....................................................
10. RIGHT OF FIRST OFFER......................................................
10.01 Right of First Offer...............................................
10.02 Notice of Acceptance...............................................
10.03 Conditions to Acceptances and Purchase.............................
10.04 Further Sale.......................................................
10.05 Exception..........................................................
11. RIGHT OF REDEMPTION.......................................................
11.01 Company Obligation to Repurchase.
(a) Repurchase Option.............................................
(b) Repurchase Option Price.......................................
(c) Valuation Date................................................
(d) Procedures....................................................
12. DEFINITIONS AND ACCOUNTING TERMS..........................................
12.01 Certain Defined Terms..............................................
12.02 Accounting Terms...................................................
13. INDEMNIFICATION...........................................................
13.01 General Indemnity..................................................
13.02 Indemnification Procedure..........................................
14. MISCELLANEOUS.............................................................
14.01 No Waiver; Cumulative Remedies....................................
14.02 Amendments, Waivers and Consents..................................
14.03 Addresses for Notices.............................................
14.04 Costs, Expenses and Taxes.........................................
14.05 Binding Effect; Assignment........................................
14.06 Survival of Representations and Warranties........................
14.07 Prior Agreements..................................................
14.08 Severability......................................................
14.09 Governing Law.....................................................
14.10 Headings..........................................................
14.11 Counterparts......................................................
14.12 Further Assurances................................................
14.13 Waiver............................................................
14.14 Specific Enforcement..............................................
14.15 Language and Currency.............................................
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into this 31st
day of July, 1998 by and among MITSUCON TECNOLOGIA S/A, a stock corporation
organized under the laws of Brazil (the "Company"), the shareholders of the
Company listed on Schedule A attached hereto (the "Selling Shareholders"),
MITSUCON COMERCIAL LTDA., a limited liability company organized under the laws
of Brazil ("Comercial"), MITSUCON INFORMATICA LTDA., a limited liability company
organized under the laws of Brazil ("Informatica" and, together with the Company
and Comercial, the "Mitsucon Companies"), and INFORMATION MANAGEMENT ASSOCIATES,
INC., a Connecticut corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, Comercial and Informatica desire to reorganize the business of
Comercial and Informatica pursuant to a Contribution Agreement among Comercial,
Informatica and the Company dated July 21, 1998 (the "Contribution Agreement")
by contributing all of their respective assets, including, without limitation,
all contracts, clients, personnel, trademarks, patents and goodwill and certain
specified liabilities of Comercial and Informatica (the "Contribution") into the
Company, which is a newly formed corporation organized in connection with the
transactions contemplated by the Contribution Agreement, and which shall engage
in the business formerly carried on by Comercial and Informatica (the
"Business"); and
WHEREAS, upon formation of the Company and completion of the Contribution,
the Company and the Selling Shareholders desire to sell and the Purchaser
desires to buy nineteen and 8/10ths percent (19.8%) of the outstanding capital
stock in the Company (which percentage shall be calculated after giving effect
to the transaction contemplated hereby); and
WHEREAS, the purchase of the Company Shares (as hereinafter defined) will
result in an infusion of capital into the Company, which infusion shall increase
the value and security of the Purchaser's investment in the Company; and
WHEREAS, the purchase of the Shareholder Shares (as hereinafter defined)
will not result in an infusion of capital into the Company; and
WHEREAS, in consideration of the greater value of the Company Shares, the
purchase price of the Shareholder Shares have been discounted vis-a-vis the
Company Shares.
NOW THEREFORE, in consideration of the premises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. PURCHASE, SALE AND TERMS OF SHARES
1.01 The Company Shares. The Company has authorized the issuance and sale
of 41,505 shares (the "Company Shares") of its authorized but unissued shares of
Common Stock, par value $0.86 per share (the "Common Stock"), at the purchase
price detailed in Schedule A.
1.02 The Shareholder Shares. The Selling Shareholders each have authorized
the sale to the Purchaser of the number of shares of Common Stock (the
"Shareholder Shares") set forth opposite their names on Schedule A. The Company
Shares and the Shareholder Shares are sometimes collectively referred to as the
"Shares."
1.03 Purchase Price and Closing. The Company and the Selling Shareholders
agree to issue and sell to the Purchaser and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchaser agrees to purchase that number of the
Shareholder Shares set forth opposite the Selling Shareholder's respective names
in Schedule A and the number of Company Shares set forth in Schedule A. The
aggregate purchase price of the Shares being acquired by the Purchaser is (a)
One Million One Hundred Ten Thousand and No/100 Dollars ($1,110,000.00) for the
Company Shares and (b) Five Hundred Thousand and No/100 Dollars ($500,000.00)
for the Shareholder Shares. The closing of the purchase and sale of the Shares
to be acquired by the Purchaser from the Company and the Selling Shareholders
under this Agreement (the "Closing") shall take place at the offices of Tavares
Guerreiro Advogados, Av. Paulista, 1912-13o andar CEP 01310-200 Sao Paulo,
Brazil, at 11:00 a.m. on August 7, 1998, or at such later time and date as the
Purchaser and the Company may agree (the "Closing Date"). At the Closing, the
Company will deliver to the Purchaser a certificate for the number of Shares set
forth in Section 1.01 and each Selling Shareholder will deliver to the Purchaser
a certificate for the number Shares set forth opposite its name in Schedule A
registered in the Purchaser's name (or its nominee), against a transfer of funds
to the account of the Company and the Selling Shareholders by wire transfer,
representing the net cash consideration set forth opposite the Company's and
each such Selling Shareholder's name on Schedule A.
1.04 Use of Proceeds. The Company shall use the cash proceeds from the
issuance and sale of the Company Shares for general corporate purposes.
2. REPRESENTATIONS AND WARRANTIES OF COMERCIAL, INFORMATICA,
THE COMPANY AND EACH SELLING SHAREHOLDER
Comercial, Informatica, the Company and each Selling Shareholder severally
but not jointly, hereby represent and warrant to the Purchaser as of the
Effective Time as follows:
2.01 Organization, Standing and Power. Comercial and Informatica are
limited liability companies and the Company is a corporation, each duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation or incorporation. Each of the Mitsucon Companies has
all requisite power and authority to own, lease and operate its properties and
assets and to conduct its business as now being conducted and is duly qualified
to do business in good standing in those foreign jurisdictions in which such
qualification is required.
2.02 Authority; Enforceability; No Conflict. Each of the Mitsucon Companies
has all requisite corporate power and authority to enter into this Agreement and
each Related Agreement to which it is a party, and to carry out its obligations
hereunder and under each Related Agreement to which it is a party. The
execution, delivery and performance of this Agreement and each Related Agreement
to which it is a party by each of the Mitsucon Companies have been duly and
validly authorized by all requisite corporate proceedings on the part of each of
the Mitsucon Companies. This Agreement and each Related Agreement to which it is
a party when executed and delivered by each of the Mitsucon Companies is a valid
and binding obligation of each of the Mitsucon Companies, enforceable against
each of the Mitsucon Companies in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, rehabilitation, liquidation, conservatorship, receivership or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The execution and
delivery of this Agreement and each Related Agreement to which it is a party by
the Mitsucon Companies does not, and the consummation by the Mitsucon Companies
of the transactions contemplated hereby and thereby will not result in or
constitute: (a) a default, breach or violation of or under the Certificate of
Incorporation or the Bylaws of any of the Mitsucon Companies, (b) a default,
breach or violation of or under any mortgage, deed of trust, indenture, note,
bond, license, lease agreement or other instrument or obligation to which any of
the Mitsucon Companies is a party or by which any of their respective properties
or assets are bound, (c) a violation of any statute, rule, regulation, order,
judgment or decree of any court, public body or authority by which any of the
Mitsucon Companies, or any of their respective properties or assets is bound,
(d) an event which (with notice or lapse of time or both) would permit any
Person to terminate, accelerate the performance required by, or accelerate the
maturity of any indebtedness or obligation of any of the Mitsucon Companies
under any agreement or commitment to which any of the Mitsucon Companies is a
party or by which any of the Mitsucon Companies is bound or by which any of
their respective properties or assets are bound, (e) the creation or imposition
of any lien, charge or encumbrance on any property of any of the Mitsucon
Companies under any agreement or commitment to which any of the Mitsucon
Companies is a party or by which any of the Mitsucon Companies is bound or by
which any of their respective properties or assets are bound, or (f) an event
which would require any consent under any agreement to which any of the Mitsucon
Companies is a party or by which any of the Mitsucon Companies is bound or by
which any of their respective properties or assets are bound.
2.03 Capitalization. Upon completion of the transaction contemplated
hereby, the authorized capital stock of the Company shall consist of 531,014 of
Common Stock, of which 531,014 shares are issued and outstanding. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
and are fully paid and non-assessable. There are no outstanding preemptive,
conversion or other rights, options, warrants or agreements granted or issued by
or binding upon the Company for the purchase or acquisition of any shares of
capital stock of the Company or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of such
capital stock. The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any convertible securities, rights or options of the type
described in the preceding sentence. Except as provided herein, the Company is
not a party to any agreement granting registration rights to any person with
respect to any of its equity or debt securities. The Company is not a party to,
and it has no knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company.
2.04 Status of Shares. The Shares to be issued to the Purchaser at the
Closing have been duly authorized by all necessary corporate action on the part
of the Company. When issued and paid for as provided in this Agreement, the
Shares will be validly issued and outstanding, fully paid and nonassessable, and
the issuance of such Shares is not and will not be subject to preemptive or
other similar contractual rights of any other stockholder of the Company. Each
of the Selling Shareholders owns good and valid title to the Shares set forth
opposite its name in Schedule A attached hereto, free and clear of any
preemptive rights, restrictions, liens, charges and encumbrances ("Liens"). Upon
delivery of the Shareholders Shares to Purchaser at the Effective Time,
Purchaser will acquire good and valid title to the Shareholder Shares, free of
all liens.
2.05 Financial Statements.
(a) As set forth on Schedule 2.05(a) hereto, the consolidated
balance sheets of Comercial and Informatica as at December 31, 1995, 1996 and
1997, and the related consolidated income statements and statements of cash
flows and changes in members' equity of Comercial and Informatica for the fiscal
years then ended, and the interim consolidated balance sheet of Comercial and
Informatica as of March 31, 1998 and the related consolidated income statements
and statements of cash flow and changes in stockholders' equity for the three
month period then ended, are complete and correct and fairly present the
financial condition of Comercial and Informatica at such dates and the results
of the operations of Comercial and Informatica for the periods covered by such
statements, all in accordance with GAAP consistently applied.
(b) As set forth on Schedule 2.05(b), the pro forma balance sheet of
the Company as of the Closing Date (the "Pro Forma Balance Sheet"), is complete
and correct and fairly presents the financial condition of the Company at the
Effective Time in accordance with GAAP consistently applied based on good faith
estimates and assumptions by management of the Company with respect to the
period from April 1, 1998 until the Effective Time.
(c) The projections (including, without limitation, the financial
projections attached as Schedule 2.05(c)) and pro forma financial information
furnished to the Purchaser are based on good faith estimates and assumptions by
the management of the Company, it being recognized by the Purchaser, however,
that projections as to future events are not to be viewed as fact and that
actual results during the period or periods covered by any such projections may
differ from the projected results and that the differences may be material.
2.06 Liabilities. Except as set forth on the Pro Forma Balance Sheet, the
Company has not incurred any material liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to be disclosed on a balance
sheet of the Company (including the notes thereto) in conformity with GAAP.
2.07 Indebtedness. Schedule 2.07 sets forth all outstanding secured and
unsecured Indebtedness of the Company, or for which the Company has commitments.
The Company is not in default with respect to any Indebtedness.
2.08 Title to Assets. The Company has good and marketable title to all of
its real and personal property reflected on the Pro Forma Balance Sheet, free of
any mortgages, pledges, charges, liens, security interests or other
encumbrances, except those indicated on Schedule 2.08(a). The assets of the
Company at the Effective Time will include all assets formerly held by Comercial
or Informatica, except for the assets described on Schedule 2.08(b) (the
"Excluded Assets"). The Company enjoys peaceful and undisturbed possession under
all leases under which it is operating, and all said leases are valid and
subsisting and in full force and effect. All inventory of the Company listed on
the Pro Forma Balance Sheet is fit for the purpose for which it was procured or
manufactured and is saleable by the Company in the ordinary course of its
business. All accounts receivable of the Company reflected on the Pro Forma
Balance Sheet have arisen from bona fide transactions in the ordinary course of
business, are valid receivables subject to no setoffs, counterclaims or
adjustments and are current and collectible.
2.09 Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Mitsucon Companies, which questions the validity of this Agreement or any of the
Related Agreements or any action taken or to be taken pursuant hereto or
thereto. Except as set forth on Schedule 2.09, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Mitsucon Companies, or any of their
respective properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Mitsucon Companies.
2.10 Compliance with Law. The business of the Mitsucon Companies has been
and is presently being conducted so as to comply with all applicable foreign,
domestic, federal, state, and local governmental laws, rules, regulations and
ordinances. Each of the Mitsucon Companies has all franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals necessary for the conduct of its business as now being conducted by it
and all of which will be effectively transferred to the Company at or prior to
the Effective Time.
2.11 Taxes. Each of the Mitsucon Companies has accurately prepared and
timely filed all foreign, domestic, federal, state and other tax returns
required by law to be filed by it, has paid or made provisions for the payment
of all taxes shown to be due and all additional assessments, and adequate
provisions have been and are reflected in the financial statements of the
Mitsucon Companies for all current taxes and other charges to which each of the
Mitsucon Companies is subject and which are not currently due and payable. The
Mitsucon Companies know of no additional assessments, adjustments or contingent
tax liability pending or threatened against the Mitsucon Companies for any
period, nor of any basis for any such assessment, adjustment or contingency.
2.12 Employee Benefit Plans.
(a) The Mitsucon Companies are subject to a collective bargaining
agreement (the "Collective Bargaining Agreement") between the Sindicato das
Empresas de Processamento de Dados e Servicos de Informatica do Estado de S.
Paulo (Union of the Data Processing and Computer Service Companies in the State
of S. Paulo) and the Sindicato dos Trabalhadores em Processamento de Dados e
Empregados de Empresas de Processamento de Dados do Estado de S. Paulo (Union of
Employees of Data Processing Companies in the State of S. Paulo) a copy of which
is attached hereto as Schedule 2.12(a). There are no unfair labor practice
charges or complaints against the Company or the Mitsucon Companies threatened
or pending before any federal, state, local or foreign court or agency. There
has been no other labor trouble or other occurrence, event or condition of a
similar character, that is occurring or threatened or that has occurred or been
threatened. There have been no violations by the Company or the Mitsucon
Companies or claims thereof of any applicable state, federal or local employment
laws.
(ii) Except as listed in Schedule 2.12(b) (which Schedule shall
include a brief description of Blue Life health insurance plan and Cheque
Cardapio meal tickets), neither the Company nor the Mitsucon Companies sponsors,
maintains or contributes to, and has not sponsored, maintained or contributed
to, any plan, fund, program, policy, arrangement, contract or commitment,
whether or not qualified for federal income tax purposes, whether or not funded,
whether formal or informal, and whether for the benefit of a single individual
or more than one individual that is in the nature of (a) an employee pension
benefit plan, (b) an employee welfare benefit plan, (c) an arrangement that
could be characterized as providing for additional compensation, compensation
associated with a change of control, severance benefits, perquisites, or fringe
benefits for employees, former employees, directors, their dependents and/or
their beneficiaries or (d) a deferred compensation, incentive compensation,
bonus plan, or other benefit or compensation arrangement for employees, former
employees, directors, consultants or independent contractors, their dependents
and/or their beneficiaries (collectively, "Employee Benefit Plans").
(c) The Company and the Mitsucon Companies have made all
contributions under all Employee Benefit Plans for services rendered through the
date hereof and will, prior to Closing, have made all contributions under all
Employee Benefit Plans for services rendered through the day prior to Closing.
(d) Except as required under the Collective Bargaining Agreement
and described on Schedule 2.12(d), no Employee Benefit Plan provides any health,
life, disability or other welfare benefit coverage to employees of the Company
or the Mitsucon Companies beyond termination of their employment with the
Company or the Mitsucon Companies by reason of retirement or otherwise, other
than coverage as may be required by law.
(v) Sellers have caused, or will prior to Closing cause, the Company
and the Mitsucon Companies to provide Purchaser a copy of all Employee Benefit
Plans to the extent written.
(vi) Each Employee Benefit Plan has been operated and administered in
accordance with its provisions, applicable law and the Collective Bargaining
Agreement.
(vii) Other than routine claims for benefits under the Employee
Benefit Plans in the ordinary course of business, there are no actions, suits or
claims pending, or threatened against any Employee Benefit Plan or its assets
and each of Sellers, the Company and the Mitsucon Companies has no knowledge of
any facts that could give rise to any such actions, suits or claims.
(viii) The transactions contemplated by this Agreement will not result
in the accrual of any additional benefits, accelerate the vesting or require
payment of any benefits under any Employee Benefit Plan, except as required by
applicable law and Agreement.
2.13 No Material Adverse Change. (a) Since December 31, 1997, there has
been no material adverse change in the business, assets, operations, affairs,
prospects or financial condition of the Mitsucon Companies; and (b) neither the
business, financial condition, operation, prospects or affairs of the Mitsucon
Companies nor any of their respective properties or assets have been adversely
affected in any material respect as the result of any legislative or regulatory
change, any revocation or change in any franchise, permit, license or right to
do business, or any other event or occurrence, whether or not insured against.
2.14 Certain Fees. Except as set forth on Schedule 2.14, no broker's,
finder's or financial advisory fees or commissions will be payable by the
Mitsucon Companies with respect to the transactions contemplated by this
Agreement and the Related Agreements. The Mitsucon Companies and the Selling
Shareholders hereby jointly and severally covenant and agree to indemnify,
defend and hold Buyer harmless from any claims for such fees, commissions or
other compensation that may be claimed by any party disclosed on Schedule 2.14
or by any party that should have been disclosed on Schedule 2.14.
2.15 Disclosure. Neither this Agreement or the Schedules hereto, any of
the Related Agreements nor any other document, certificate or instrument
furnished to the Purchaser by or on behalf of the Mitsucon Companies in
connection with the transactions contemplated by this Agreement or any of the
Related Agreements, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, either singly or taken as a whole, not misleading.
2.16 Proprietary Rights. Schedule 2.16 contains a complete and accurate
list of (a) all patented and registered Proprietary Rights owned by the Company,
(b) all pending patent applications and applications for registrations of other
Proprietary Rights filed by the Company, (c) all unregistered trade names and
corporate names owned or used by the Company and (d) all unregistered
trademarks, service marks and copyrights and computer software owned or used by
the Company. Schedule 2.16 also contains a complete and accurate list of all
licenses and other rights granted by the Company to any third party with respect
to any Proprietary Rights and all licenses and other rights granted by any third
party to the Company with respect to any Proprietary Rights, together with a
short description of such licenses. The Company owns or has the right to use
pursuant to a valid and enforceable license all Proprietary Rights formerly held
by Comercial and Informatica and necessary for the operation of the Business.
Each of the Mitsucon Companies has taken all necessary actions to maintain and
protect the Proprietary Rights which it owns or uses. Except as set forth on
Schedule 2.16, (i) there are no material claims against the Mitsucon Companies
asserting the invalidity, misuse, unenforceability or ownership of any
Proprietary Rights owned or used by the Mitsucon Companies, and to the best of
the Company's knowledge, no such claims are threatened and there are no grounds
for the same, (ii) none of the Mitsucon Companies has received a notice of nor
is aware of any facts which in the Company's reasonable judgment indicate a
reasonable likelihood of any conflict with the asserted Proprietary Rights of
others within the last five years and (iii) the conduct of the Mitsucon
Companies' business has not infringed or misappropriated and does not infringe
or misappropriate any Proprietary Rights of other Persons, nor would any future
conduct as presently proposed infringe any Proprietary Rights of other Persons
and, to the best of the Company's knowledge, the Proprietary Rights owned by the
Company are not currently being infringed or misappropriated by other Persons.
2.17 Environmental and Safety Matters. Except as set forth on Schedule
2.17, the Company is in material compliance with the provisions of all foreign,
domestic, federal, state and local laws relating to pollution, protection of the
environment or occupational safety and health applicable to it or to real
property owned or leased by it or to the use, operation or occupancy thereof.
None of the Mitsucon Companies has any liability, absolute or contingent, under
any foreign, domestic, federal, state or local law relating to pollution,
protection of the environment or occupational safety and health.
2.18 Books and Records. The records and documents of the Mitsucon Companies
accurately and completely reflect in all material respects information relating
to the business of the Mitsucon Companies, the location and collection of their
respective assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Mitsucon Companies.
2.19 Material Agreements. Schedule 2.19 sets forth (a) a list of all
customer licenses, service agreements or other agreements with customers to
which the Company is a party and (b) a list of all other material written or
oral contracts, instruments, agreements, commitments, obligations, plans or
arrangements to which the Company is a party. Each of the contracts and
agreements listed on this Schedule 2.19 has been validly assigned to the Company
by Comercial or Informatica, as the case may be, and any necessary consents from
other parties with respect to such assignment have been obtained. The Mitsucon
Companies and, to the best of the Companies' knowledge, each other party thereto
have in all material respects performed all the obligations required to be
performed by them to date, have received no notice of default and are not in
default under any lease, agreement or contract now in effect to which the
Company is a party or by which it or its property may be bound. Except as set
forth on Schedule 2.19, each of the contracts or agreements listed on Schedule
2.19 is in full force and effect with no default, anticipated or threatened
default or failure of performance or observance of any obligations or conditions
contained therein, and none of the foregoing parties nor the Company has
provided any notice of default or of its intention to terminate these
agreements.
2.20 Transactions with Affiliates. Except as set forth on Schedule 2.20,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
the Mitsucon Companies or any of their respective customers or suppliers and any
Affiliate.
2.21 Securities Laws. The Company has complied and will comply with all
applicable Brazilian securities laws in connection with the offer, issuance and
sale of the Shares hereunder. Neither the Company nor anyone acting on its
behalf has or will sell, offer to sell or solicit offers to buy the Shares or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Shares under the
registration provisions of the applicable federal or state securities laws of
the United States of America.
2.22 Governmental Approvals. Except as set forth on Schedule 2.22 and
except for the filing of any notice prior or subsequent to the Closing that may
be required under applicable Brazilian securities laws (which, if required,
shall be filed on a timely basis), no authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the execution and
delivery by the Company of this Agreement, for the offer, issue, sale, execution
or delivery of the Shares, or for the performance by the Company of its
obligations under this Agreement and each Related Agreement to which it is a
party.
2.23 Insurance. The Company shall have obtained insurance policies as set
forth on Schedule 2.23 covering its properties and business adequate and
customary for the type and scope of the properties, assets and business, and
similar to companies of comparable size and condition similarly situated in the
same industry in which the Company operates, and such policies shall become
effective as soon as possible after the Effective Time, but in no event more
than thirty (30) days after the Effective Time.
2.24 Employees. Except as set forth on Schedule 2.24, none of the Mitsucon
Companies has any collective bargaining arrangements or agreements covering any
of its employees. Except as set forth on Schedule 2.24, no officer, consultant
or Key Employee of the Mitsucon Companies whose termination, either individually
or in the aggregate, could have an adverse effect on the Mitsucon Companies has
terminated or, to the best knowledge of the Company, has any present intention
of terminating, his employment or engagement with any of the Mitsucon Companies.
2.25 The Contribution Documents. The Purchaser has received a complete and
correct copy of the Contribution Agreement and all documents related thereto
(the "Contribution Documents"). Each of the Contribution Documents has been duly
executed and delivered, is in full force and effect and is a legal, valid and
binding obligation of each Person signatory thereto enforceable against such
Person in accordance with its terms. Each of the representations and warranties
in the Contribution Documents is true and correct in all material respects as of
the effective date of the Contribution. The execution, delivery and performance
of each of the Contribution Documents does not and will not violate any
provision of, or require any filing under any law or any indenture, agreement,
lease or instrument to which such Person is a party or by which it or its
properties or assets may be bound or affected. All consents required to be
obtained from other parties for the effective completion of the transactions
contemplated by the Contribution Agreement have been obtained.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.01 Organization and Standing of the Purchaser. The Purchaser is a
corporation, duly organized, validly existing and in good standing under the
laws of the state of Connecticut.
3.02 Authority; Enforceability; No Conflict. The Purchaser has all
requisite corporate power and authority to enter into this Agreement and each
Related Agreement to which it is a party and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and each Related Agreement to which it is a party by the Purchaser
have been duly and validly authorized by all requisite corporate proceedings on
the part of the Purchaser. This Agreement and each Related Agreement to which it
is a party when executed and delivered the Purchaser is a valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this Agreement
and each Related Agreement to which it is a party by the Purchaser does not, and
consummation by the Purchaser of the transactions contemplated hereby will not,
result in or constitute (a) a default, breach or violation of or under the
organizational documents of the Purchaser, (b) a default, breach or violation of
or under any mortgage, deed of trust, indenture, note, bond, license, lease
agreement or other instrument or obligation to which the Purchaser is a party or
by which any of its properties or assets are bound, except for any defaults,
breaches or violations which would not, individually or in the aggregate, have a
material adverse effect on the Purchaser or prevent or materially delay the
consummation by the Purchaser of the transactions contemplated hereby, or (c) a
violation of any statute, rule, regulation, order, judgment or decree of any
court, public body or authority, except for any violations which would not,
individually or in the aggregate, have a material adverse effect on the
Purchaser or prevent or materially delay the consummation by the Purchaser of
the transactions contemplated hereby.
4. CONDITIONS TO PURCHASER'S OBLIGATIONS FOR CLOSING
The obligation of the Purchaser to purchase and pay for the Shares to be
purchased by it at the Closing is subject to the following conditions:
4.01 Representations and Warranties. The representations and warranties set
forth in Section 2 hereof shall be true, accurate and correct at the Closing
Date with the same effect as though made at and as of such time.
4.02 Officer's Certificate. The Purchaser shall have received a certificate
of the President of each of the Mitsucon Companies, dated the Closing Date, (a)
attesting to all stockholder and corporate action taken by such entity including
the resolutions of the Board of Directors authorizing (i) the approval and
adoption of the Contribution; (ii) the Certificate of Incorporation, (iii) the
execution, delivery and performance of this Agreement and each Related Agreement
to which it is a party, (iv) the issuance of the Shares, (v) the Bylaws and (vi)
the execution, delivery and performance of all other agreements or matters
contemplated hereby or executed in connection herewith and (b) certifying the
names and true signatures of the officers authorized to sign this Agreement and
the Related Agreements to which it is a party.
4.03 Officer's Certificate. The Purchaser shall have received a certificate
of the President of each of the Mitsucon Companies, dated the Closing Date,
which shall certify that the representations and warranties contained in Section
2 hereof are true and correct as of the Closing Date and that all conditions
required to be performed prior to or at the Closing have been performed as of
the Closing Date.
4.04 Consents, Licenses, Approvals, etc. The Purchaser shall have received
certified true copies of all consents, licenses and approvals required or
advisable in connection with the execution, delivery, performance, validity and
enforceability of this Agreement, and each Related Agreement.
4.05 Good Standing Certificates. The Purchaser shall have received a
certificate of the appropriate public official in the jurisdiction of
incorporation of each of the Mitsucon Companies as to the due incorporation and
good standing of each such entity together with certified copies of all charter
documents of the Mitsucon Companies and shall have received certificates of
appropriate public officials of each other jurisdiction in which each of the
Mitsucon Companies is required to qualify to do business as a foreign
corporation as to the due qualification and good standing of each of the
Mitsucon Companies.
4.06 No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced and no
investigation by any governmental authority shall have been threatened against
any of the Mitsucon Companies or any of the officers or directors of any of the
Mitsucon Companies seeking to restrain, prevent or change the transactions
contemplated by this Agreement, and each Related Agreement, or seeking damages
in connection with such transactions.
4.07 Legal Opinion. The Purchaser shall have received a legal opinion from
Jorge Saeki & Advogados Associados, outside counsel to the Mitsucon Companies
and the Seller Shareholders, dated the Closing Date and substantially in the
form of Exhibit A and as to such other matters as the Purchaser may reasonably
request.
4.08 Closing the Contribution. The Purchaser shall have received evidence
satisfactory to it that prior to or simultaneously with the consummation of the
transactions contemplated by this Agreement, the parties to the Contribution
Documents shall have consummated the transactions contemplated thereby.
4.09 Certified Documents. The Purchaser shall have received complete and
correct copies of the Contribution Documents (including all schedules, exhibits,
annexes and amendments thereto), satisfactory in form and substance to the
Purchaser.
4.10 Expenses. All fees and disbursements required to be paid pursuant to
Section 14.04 hereof shall have been paid in full.
4.11 Key Man Life Insurance Policy. The Company shall be the sole primary
beneficiary of a "Key Man" life insurance policy on the life of Ernesto Sunago
in the amount of not less than One Million Five Hundred Thousand and No/100
Dollars ($1,500,000.00), such policy to remain in full force and effect so long
as this Agreement is effective.
4.12 Compliance with this Agreement and Related Agreements. The Company
shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement or any Related
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing.
4.13 Payment of Outstanding Trade Payables Aged Over 120 Days. The Company
shall pay any and all outstanding trade payables of any of the Mitsucon
Companies which accrued on or before April 1, 1998 at or prior to the Closing.
5. AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that on and after the Closing Date it
will:
5.01 Inspection Rights. Permit during normal business hours, upon
reasonable request and reasonable notice, the Purchaser and its employees,
agents and representatives thereof, to examine and make copies of and extracts
from the records and books of account of, and visit and inspect the properties,
assets, operations and business of the Company and any Subsidiary, and to
discuss the affairs, finances and accounts of the Company and any Subsidiary
with any of its officers, consultants, directors, Key Employees, attorneys or
independent accountants.
5.02 Meetings of Directors. Hold meetings of the Board of Directors not
less than on a quarterly basis. If the director appointed by the Purchaser is
able to attend a meeting of the Board of Directors, such director or the
Purchaser shall have the right to designate a non-voting representative to
observe such meeting and such representative shall be given access to the same
information as each director in attendance at such meeting.
5.03 Bylaws; Meetings and Indemnification. Cause its Bylaws to provide that
(a) the director appointed by the Purchaser shall have the right to call a
meeting of the Board of Directors, and (b) at least 5 days prior notice shall be
given to each director prior to a special meeting of the Board of Directors. The
Company shall at all times maintain provisions in the Certificate of
Incorporation or the Bylaws indemnifying all officers and directors against
liability to the maximum extent permitted under the laws of the jurisdiction in
which it is incorporated.
5.04 Corporate Existence; Payment of Taxes. Maintain, and cause its
Subsidiaries, to maintain their respective corporate existence, Proprietary
Rights, other rights and franchises in full force and effect to the extent
appropriate in accordance with good business practice. The Company will pay and
will cause its Subsidiaries to pay, all taxes due on a timely basis.
5.05 Properties, Business, Insurance. Maintain, and cause its Subsidiaries,
to maintain as to their respective properties and business, with financially
sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies of a similar size and financial condition similarly situated within
the same industry. The insurance required by this Section 5.05 must be obtained
prior to the Effective Time, and must be in effect as of the thirtieth (30th)
day after the Effective Time, and certificates therefore shall have been
provided to the Purchaser. Such policies shall provide that they will not be
cancelled for any reason except with thirty (30) days' advanced written notice
to the Purchaser.
5.06 Expenses of Directors. Promptly reimburse each director appointed by
the Purchaser for all of their reasonable travel, lodging and meal expenses
incurred in attending each meeting of the Board of Directors or any committee
thereof.
5.07 Compliance with Laws. Comply, and cause each Subsidiary to comply,
with all applicable laws, rules, regulations and orders.
5.08 Keeping of Records and Books of Account. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Company and such Subsidiary, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
5.09 Size of Board. Fix and maintain the number of directors on the Board
of Directors at no more than five members, which members shall in any event
include one director appointed by the Purchaser.
5.10 Selection of Independent Auditors. Select Arthur Andersen LLP as its
independent auditors for fiscal year 1998 and such independent auditors as the
Purchaser shall approve in subsequent years. In the event the cost of Arthur
Andersen LLP for the fiscal year 1998 is greater than substantially similar
services offered by another internationally recognized, first class independent
auditing firm (known as the "Big Six"), the Company shall notify the Purchaser,
and the Purchaser shall have the option to (a) require the Company to use such
other auditing firm or (b) require the Company to use Arthur Andersen LLP. In
the event the Purchaser shall require the use of Arthur Andersen LLP, the
Purchaser shall bear the difference between the cost of Arthur Andersen LLP and
the cost of such other independent auditor.
5.11 Reporting Requirements. Furnish the following to the Purchaser:
(a) Quarterly Reports: as soon as available and in any event within
45 days after the end of each fiscal quarter of the Company, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such period and consolidated and consolidating statements of income and
statements of cash flows and changes in stockholders' equity of the Company and
its Subsidiaries for such period and for the period commencing at the end of the
previous fiscal year and ending with the end of such period, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, and including comparisons to the budget or
business plan and an analysis of the variances from the budget or plan, prepared
in accordance with GAAP consistently applied;
(b) Annual Reports: as soon as available and in any event within 90
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company and the Subsidiaries, including
therein consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year and consolidated and
consolidating statements of income and statements of cash flows and changes in
stockholders' equity of the Company and its Subsidiaries for such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, all such consolidated statements to be duly certified by
the chief financial officer of the Company and an independent public accountant
of recognized national standing approved by the Board of Directors; and
(c) Reports and Other Information: within 10 days after receipt,
publication, commencement or occurrence, copies of all such information as the
Company or any Subsidiary shall make available to any of its stockholders and
such other information as the Purchaser shall reasonably request.
5.12 Employee Compensation and Dividend Policies. The Company shall
establish and adopt employee compensation and dividend policies satisfactory to
the Purchaser. Any changes in such employee compensation and dividend policies
shall be subject to the approval of Purchaser prior to implementation.
5.13 Net Worth. Upon and after payment for the Company Shares as provided
in Section 1.03, maintain the tangible net worth of the Company in an amount
equal to or greater than Seven Hundred Fifty and No/100 Dollars ($750,000.00).
6. NEGATIVE COVENANTS OF THE COMPANY
Except with the approval of the Company's Board of Directors and the
approval of the director appointed by the Purchaser in accordance with Section
5.09, the Company covenants and agrees that on and after the Closing Date it
will not:
6.01 Distributions. Make, or permit any Subsidiary to make, any payments to
officers, directors, shareholders, employees or affiliates, including dividends,
loans or advances, except for salaries, bonuses or dividends which are in
compliance with the Company's compensation and dividend policies.
6.02 Capital Stock. Authorize, issue or enter into any agreement providing
for the issuance (contingent or otherwise) of (a) any notes or debt securities
of the Company containing equity features (including any notes or debt
securities convertible into or exchangeable for equity securities, issued in
connection with the issuance of equity securities or containing profit
participation features), or (b) any equity security of the Company unless the
Company shall have complied with the provisions of Section 10 hereof.
6.03 Dealings with Affiliates. Enter into, or permit any Subsidiary to
enter into, any transaction, including, without limitation, any loan or
extension of credit, release of guarantee, management contract or royalty
agreement, deferred or contingent compensation agreement, consulting or other
agreement with any Affiliate; provided that any Affiliate who is an individual
may serve as a director, officer or employee of the Company or any Subsidiary
and, subject to compliance with Section 6.04, receive reasonable compensation
for his or her services in such capacity.
6.04 Conduct of Business. Engage, or permit any Subsidiary to engage, in
any business other than the business engaged in or proposed to be engaged in by
the Company or any Subsidiary on the date hereof and any businesses or
activities substantially similar or related thereto.
6.05 Mergers. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of related
transactions) more than 25% of its assets (whether now owned or hereafter
acquired) to, any Person, or acquire more than 25% of the assets or the business
of any Person (or enter into any agreement to do any of the foregoing), or
permit any of its Subsidiaries to do so, except that any Wholly-Owned Subsidiary
may merge into or consolidate with or transfer substantially all of its assets
to the Company or any other Wholly-Owned Subsidiary.
6.06 Liquidation. Liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction, or permit any Subsidiary to
liquidate, dissolve or effect a recapitalization or reorganization in any form
of transaction.
6.07 Acquisitions. Make, or permit any Subsidiary to make, any Acquisition
without the prior written consent of the Purchaser, which consent shall not be
conditioned or withheld unreasonably.
6.08 Amendments. Amend or waive any provision of the Certificate of
Incorporation or the Bylaws in any way without the prior written consent of the
Purchaser, which consent shall be in the sole and absolute discretion of the
Purchaser.
6.09 Other Agreements. Enter into any agreement in which the terms of such
agreement would restrict or impair the right to perform of the Company or any
Subsidiary under this Agreement or any other Related Agreement.
6.10 Debt. Incur aggregate Indebtedness in an amount greater than the
tangible net worth of the Company.
6.11 Stock Plans. Adopt, or amend or waive any provision of, any qualified
or non-qualified stock option plan or agreement, employee stock ownership plan,
stock plan or any restricted stock grant, or permit any holder of any option to
pay the exercise price thereof in any form of consideration other than cash or
cashier's check.
7. EVENTS OF NONCOMPLIANCE
Any of the following events shall be an "Event of Noncompliance":
(a) any representation or warranty made or deemed made by the
Company or any Selling Shareholder herein or in any other Related Agreement or
which is contained in any certificate, document, opinion, financial or other
statement furnished at any time under or in connection herewith or any Related
Agreement shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(b) the Company shall fail to perform or observe any term, covenant
or agreement contained in Section 5 or Section 6, or in the Certificate of
Incorporation; or (ii) fail to perform or observe any term, covenant or
agreement on its part to be performed or observed (other than the obligations
specifically referred to elsewhere in this Section 7) herein or in any other
Related Agreement, and such failure shall continue for 30 consecutive days after
the Company shall have received notice thereof.
(c) a Payment Default (as defined in Article 11 of this Agreement)
shall have occurred.
8. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE
(a) If any Event of Noncompliance has occurred and shall not have
been cured within thirty (30) days, the Board of Directors shall, at the request
of the Purchaser, be removed and the Purchaser will have the special right to
fill such directorships, to fill any vacancy of such directorships and to remove
any individual elected to such directorships. Such special right shall continue
until such time as there is no longer any Event of Noncompliance in existence,
at which time such special right shall terminate subject to revesting upon the
occurrence and continuation of any Event of Noncompliance which gives rise to
such special right hereunder. After the expiration of such Event of
Noncompliance (provided that the special right to elect directors has
terminated), as the case may be, such newly elected directors shall resign and
the original directors shall be reappointed so that the Board of Directors shall
be constituted as it was immediately prior to the occurrence of the Event or
Events of Noncompliance giving rise to the special right to elect directors.
(b) If any Event of Noncompliance exists, the Purchaser shall also
have any other rights which such holder is entitled to under any contract or
agreement at any time and any other rights which such holder may have pursuant
to applicable law.
9. REGISTRATION RIGHTS
The Purchaser shall have the right to register their Registrable Securities
in accordance with the following provisions:
9.01 Incidental Registration.
(a) If the Company at any time proposes to register any of its
equity securities under the Securities Act or other applicable law governing the
issuance and sale of securities in a manner which would permit Registration of
Registrable Securities for sale to the public under the Securities Act, it shall
each such time, subject to the provisions of Section 9.01(b), give prompt
written notice to the Purchaser of its intention to do so and of the Purchaser's
rights under this Section 9.01, at least 30 days prior to the anticipated filing
date of the Registration Statement relating to such Registration. Such notice
shall offer the Purchaser the opportunity to include in such Registration
Statement such number of Registrable Securities as each such holder may request.
Upon the written request of Purchaser made within 20 days after the receipt of
the Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of by Purchaser and the intended method of
disposition thereof), the Company will use its best efforts to effect the
Registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Purchaser; provided, that (x)
if such Registration involves an underwritten offering, Purchaser must sell its
Registrable Securities to the underwriters selected by the Company on the same
terms and conditions as apply to the Company; and (y) if, at any time after
giving written notice of its intention to register any securities pursuant to
this Section 9.01(a) and prior to the Effective Date of the Registration
Statement filed in connection with such Registration, the Company shall
determine for any reason not to register such securities, the Company shall give
written notice to the Purchaser and shall thereupon be relieved of its
obligation to register any Registrable Securities in connection with such
Registration. If a Registration pursuant to this Section 9.01(a) involves an
underwritten public offering, the Purchaser may elect, in writing prior to the
Effective Date of the Registration Statement filed in connection with such
Registration, not to register such Registrable Securities in connection with
such Registration. The Company shall pay all Registration Expenses in connection
with each Registration of Registrable Securities requested pursuant to this
Section 9.01. However, the Purchaser shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
the Purchaser's Registrable Securities pursuant to a Registration Statement
effected pursuant to this Section 9.01.
(b) Priority in Incidental Registrations. If a Registration pursuant
to this Section 9.01 involves an underwritten offering and the managing
underwriter advises the Company that, in its good faith view, the number of
equity securities (including all Registrable Securities) which the Company, the
Purchaser and any other persons intend to include in such Registration exceeds
the largest number of securities which can be sold without having an adverse
effect on such offering, including the price at which such Registrable
Securities can be sold, the Company will include in such Registration (i) first,
securities that the Company proposes to issue and sell for its own account, (ii)
second, Registrable Securities proposed to be registered by the Purchaser, and
(iii) third, all other securities proposed to be registered by the holders
thereof, pro rata based on the number of securities proposed to be registered by
each such Person.
9.02 Registration Procedures. In connection with any offering of
Registrable Securities registered pursuant to this Section 9, the Company shall
(a) take all reasonable actions necessary to prepare and file with the
Commission within 90 days after receipt of a request for Registration, a
Registration Statement and use its best efforts to cause such Registration
Statement to become and remain Effective as soon as reasonably possible,
provided that before filing with the Commission a Registration Statement or
disclosure document constituting part of a Registration Statement or any
amendments or supplements thereto, the Company will furnish to one counsel
selected by the Purchaser copies of all such documents proposed to be filed for
said counsel's review and comment;
(b) take such other actions as are reasonably necessary to permit
the Purchaser to sell of its Registrable Securities under the Registration
Statement;
(c) use its best efforts to cause all such Registrable Securities to
be listed on a national securities exchange and on each securities exchange on
which similar securities issued by the Company may then be listed, and enter
into such customary agreements including a listing application and
indemnification agreement in customary form, and to provide a transfer agent and
registrar for such Registrable Securities covered by such Registration Statement
no later than the Effective Date of such Registration Statement; and
(d) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the Purchaser
reasonably requests in order to expedite or facilitate the disposition of such
Registrable Securities, including customary representations, warranties,
indemnities and agreements.
9.03 Indemnification.
(a) Indemnification by the Company. In the event of any Registration
of any securities of the Company under the Securities Act pursuant to this
Agreement, the Company will indemnify and hold harmless, to the full extent
permitted by law, the holders of any Registrable Securities covered by such
Registration Statement, their respective directors and officers, general
partners, limited partners and managing directors, each other person who
participates as an underwriter in the offering or sale of such securities and
each other person, if any, who controls, is controlled by or is under common
control with any such holder or any such underwriter within the meaning of the
Securities Act (and directors, officers, controlling persons, partners and
managing directors of any of the foregoing), against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including any amounts
paid in any settlement effected with the Company's consent, which consent will
not be unreasonably withheld) to which such holder, any such director or officer
or general or limited partner or managing director or any such underwriter or
controlling person may become subject under the Securities Act, other applicable
securities laws, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained, on the Effective Date thereof,
in any Registration Statement under which such securities were registered under
the Securities Act, any preliminary, final or summary disclosure document
contained therein, or any amendment or supplement thereto, (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of any the Securities Act or other
law, rule or regulation applicable to the Company and relating to action
required of or inaction by the Company in connection with any such Registration.
The Company shall reimburse each such holder and each such director, officer,
general partner, limited partner, managing director or underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending such loss, claim, liability,
action or proceeding.
(b) Notices of Claims, etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 9.03, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, promptly give
written notice to the indemnifying party of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subsections of this Section, except to the extent that the
indemnifying party is actually materially prejudiced by such failure to give
notice.
10. RIGHT OF FIRST OFFER
10.01 Right of First Offer. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (a) shares of Common Stock, (b) any
other equity security of the Company, including without limitation, shares of
preferred stock, (c) any convertible debt security of the Company including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (d) any security of the
Company that is a combination of debt and equity, or (e) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any such equity
security or any such debt security of the Company, the Company shall, in each
case, first offer to sell such securities (the "Offered Securities") to the
Purchaser as follows: the Company shall offer to sell to the Purchaser the
Offered Securities, at a price and on such other terms as applicable to such
issuance, sale or exchange of Offered Securities. Such terms and price shall be
specified by the Company in writing delivered to the Purchaser (the "Offer"),
which Offer by its terms shall remain open and irrevocable for a period of 30
days from receipt of the Offer. The Purchaser may exercise its rights to
purchase all or part of the Offered Securities in its discretion.
10.02 Notice of Acceptance. Notice of the Purchaser's intention to accept,
in whole or in part, any Offer made pursuant to Section 10.01 shall be evidenced
by a writing signed by the Purchaser and delivered to the Company prior to the
end of the 30-day period of such offer, setting forth such of the Offered
Securities as the Purchaser elects to purchase (the "Notice of Acceptance").
10.03 Conditions to Acceptances and Purchase.
(a) Permitted Sales of Refused Securities. In the event that a
Notice of Acceptance is not given by the Purchaser in respect of all the Offered
Securities, the Company shall have 90 days from the expiration of the 30-day
period set forth in Section 10.01 to sell all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the
Purchaser (the "Refused Securities") to any Person or Persons, but only for cash
and otherwise in all respects upon terms and conditions, including, without
limitation, unit price and interest rates, which are no more favorable, in the
aggregate, to such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) Reduction in Amount of Offered Securities. In the event the
Company shall propose to sell less than all the Offered Securities (any such
sale to be in the manner and on the terms specified in Section 10.03(a) above),
then the Purchaser shall have the right, but not the obligation, to reduce the
number of shares or other units of the Offered Securities specified in its
Notice of Acceptance to an amount which shall be not less than the amount of the
Offered Securities which the Purchaser elected to purchase pursuant to Section
10.02 multiplied by a fraction, (i) the numerator of which shall be the amount
of Offered Securities which the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities. In the event
that any Purchaser so elects to reduce the number or amount of Offered
Securities specified in its Notice of Acceptance, the Company may not sell or
otherwise dispose of more than the reduced amount of the Offered Securities
until such securities have again been offered to the Purchaser in accordance
with Section 10.01.
(c) Closing. Upon the closing, which shall include full payment to
the Company, of the sale to such other Person or Persons of all or less than all
the Refused Securities, the Purchaser shall purchase from the Company, and the
Company shall sell to the Purchaser, the number of Offered Securities specified
in the Notice of Acceptance, as reduced pursuant to Section 10.03(b) if the
Purchaser have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchaser of any Offered Securities is subject in all cases
to the preparation, execution and delivery by the Company and the Purchaser of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Purchaser and its counsel.
10.04 Further Sale. In each case, any Offered Securities not purchased by
the Purchaser or other Person or Persons in accordance with Section 10.03 may
not be sold or otherwise issued until they are again offered to the Purchaser
under the procedures specified in Sections 10.01, 10.02 and 10.03.
10.05 Exception. The rights of the Purchaser under this Section 10 shall
not apply to Common Stock issued as a stock dividend to holders of Common Stock
or upon any subdivision or combination of shares of Common Stock.
11. RIGHT OF REDEMPTION
11.01 Company Obligation to Repurchase.
(a) Repurchase Option. The Purchaser may require the Company to
repurchase (the "Repurchase Option") all or any part of the Shares at any moment
after the fifty-fourth (54th) month after the Effective Time.
(b) Repurchase Option Price. Upon an election by the Purchaser
pursuant to Section 11.01(a), the Company shall repurchase the Shares at a price
equal to the value of the Shares (such price being the "Repurchase Price"). The
value of such Common Stock shall be determined by an Independent Financial
Expert (to be selected as provided below in section 11.01(d), using one or more
valuation methods that the Independent Financial Expert in its professional
judgment determines to be most appropriate but without giving effect to the
discount for any lack of liquidity of the Common Stock or to the fact that the
Company may have no class of equity securities that is publicly traded. The
Independent Financial Expert shall deliver, promptly upon completion, to the
Purchaser and the Company a Value Report stating the method of valuation
considered or used and the value of said Common Stock as of the Valuation Date
and containing a statement as to the nature and scope of the examination or
investigation upon which the determination of value was made.
(c) Valuation Date. The "Valuation Date" with respect to any
Repurchase Option shall mean the date five Business Days prior to the date of
the Purchaser's written notice to the Company of the election to exercise the
Repurchase Option stated in this Section 11.
(d) Procedures.
(i) To elect a Repurchase Option pursuant to Section 11.01(a),
Purchaser shall give written notice of such election (the "Repurchase
Notice") to the Company. The Repurchase Notice shall include the numbers of
Shares that the Company shall be required at that time to repurchase.
(ii) Within five Business Days of its receipt of the Repurchase
Notice, the Company shall give written notice to Purchaser of the Company's
choice of an Independent Financial Expert to prepare the Value Report.
Within five Business Days after the date of the notice, Purchaser shall
notify the Company in writing (the "Purchaser's IFE Notice") of its
approval or disapproval of the Company's initial choice of Independent
Financial Expert and, in the event of disapproval, the Purchaser shall
propose an alternative firm as Independent Financial Expert. Within two
Business Days after its receipt of the Purchaser's IFE Notice, the Company
shall notify the Purchaser of its approval or disapproval of Purchaser's
selection. If the Company does not accept the Independent Financial Expert
chosen by the Purchaser, then the two Independent Financial Experts
previously selected pursuant to this Section shall promptly be requested by
the Company and the Purchaser to jointly select a firm to act as
Independent Financial Expert to prepare the Value Report. Their joint
selection, which shall be made within five Business Days, shall be final
and binding upon both the Company and the Purchaser.
(iii) The Company shall consult and cooperate with the selected
Independent Financial Expert to facilitate the final delivery of its Value
Report no later than sixty calendar days after the date of the Repurchase
Notice. The Value Report shall be final and binding upon both the Company
and the Purchaser.
(iv) The Company shall pay without notice the Repurchase Price in
twelve (12) equal successive monthly installments in immediately available
funds to the Purchaser beginning on the first day of the month following
six months after the delivery of the Value Report, and on the first day of
each and every month thereafter until the Repurchase Price is paid in full.
(e) Payment Default. Notwithstanding anything in this Agreement to
the contrary, in the event any payment required pursuant to this Article 11 is
not made within five (5) days of its due date (a "Payment Default"), the entire
unpaid Repurchase Price shall be immediately due and payable and interest shall
accrue on such unpaid amount at the lesser of (i) one percent (1%) per month or
(ii) the maximum interest rate permitted by law from the first day of the month
in which the Payment Default occurred until such amount is paid in full. In the
event of a Payment Default, the Mitsucon Companies and each Selling Shareholder,
jointly and severally, shall be liable for (i) the entire unpaid amount of the
Repurchase Price together with accrued interest thereon and (ii) the cost of
collection of the unpaid portion of the Repurchase Price, including, without
limitation, attorney fees.
12. DEFINITIONS AND ACCOUNTING TERMS
12.01 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean any employee, consultant, officer or director of the
Company or any Subsidiary or holder of five percent (5%) or more of any class of
capital stock of the Company or any Subsidiary, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly controlled by one or more of such employees, consultants, officers,
directors or 5% stockholders or members of their immediate families.
"Board of Directors" shall mean the Board of Directors of the Company, as
constituted from time to time, which Board of Directors' authority shall
include, without limitation, the authority to appoint officers of the Company
and direct compliance with the affirmative and negative covenants contained in
Articles 5 and 6 hereof.
"Bylaws" shall mean the Bylaws of the Company, including all amendments,
modifications or supplements thereto.
"Certificate of Incorporation" shall mean the Certificate of Incorporation
of the Company, including all amendments, modifications or supplements thereto.
"Closing" shall have the meaning assigned to such term in Section 1.03.
"Closing Date" shall have the meaning assigned to such term in Section
1.03.
"Commission" shall mean the applicable governmental authority then
administering the Securities Act, or any other similar governing body having
jurisdiction over the Company.
"Common Stock" shall mean (a) the Company's Common Stock, par value $0.86
per share, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies or in the absence of any
provision to the contrary in the Certificate of Incorporation, be entitled to
vote for the election of a majority of directors of the Company (even though the
right so to vote has been suspended by the happening of such a contingency or
provision), and (c) any other securities into which or for which any of the
securities described in (a) or (b) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or otherwise.
"Company" shall have the meaning assigned to such term in the introductory
sentence hereof.
"Contribution" shall have the meaning set forth in the preamble to this
Agreement
"Contribution Documents" shall mean (a) the Contribution Agreement among
the Commercial, Information and the Company, and (b) the other agreements and
instruments to be executed pursuant to the terms of such Contribution Documents.
"Effective" shall mean that all requirements under the Securities Act with
respect to a Registration Statement have been satisfied and that the Commission
has officially approved the public distribution or circulation of the
Registration Statement in connection with a public offering of Registrable
Securities.
"Effective Date" shall mean the date on which a Registration Statement is
declared to be Effective.
"Effective Time" shall mean the time on the Closing Date immediately after
the Stock Purchase shall have become effective.
"Event of Noncompliance" shall have the meaning assigned to such term in
Article 7.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 2.06 (except for changes concurred in by the independent public
accountants to the Company and the Subsidiaries).
"Indebtedness" shall mean (a) any liability for borrowed money or evidenced
by a note or similar obligation given in connection with the acquisition of any
property or other assets (other than trade accounts payable incurred in the
ordinary course of business); (b) all guaranties, endorsements and other
contingent obligations, in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business, and
(c) the present value of any lease payments due under leases required to be
capitalized in accordance with GAAP.
"indemnified party" shall have the meaning given such term in Section
13.02.
"Key Employee" shall mean and includes the Chairman, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, any
executive officer of the Company or any Subsidiary with policy-making functions
including, without limitation, the head of each Subsidiary, or any other
individual so designated by the Board of Directors.
"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, properties, condition or prospects of the Company and the
Subsidiaries, taken as a whole, (b) the ability of the Company to perform its
obligations under the Agreement or any Related Agreement and (c) the binding
nature, validity or enforceability of this Agreement or any Related Agreement,
which, in each case, arises from, or reasonably could be expected to arise from,
any action or omission of action on the part of the Company or any Subsidiary or
the occurrence of any event or the existence of any fact or condition in respect
of the Company or any Subsidiary or any of their respective properties.
"Person" shall mean an individual, corporation, partnership, joint venture,
trust, university, or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Pro Forma Balance Sheet" shall have the meaning assigned to such term in
Section 2.06(b).
"Proprietary Rights" means all of the following along with all income,
royalties, damages and payments thereon (including damages and payments for past
or future infringements or misappropriations thereof), the rights to sue and
recover for past infringements and misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world: (i) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice) and any
reissues, continuations, continuations-in-part, revisions, extensions or
reexaminations thereof; (ii) trademarks, service marks, trade dress, trade names
and corporate names and registrations, renewals and applications for
registration thereof, together with the goodwill associated therewith; (iii)
copyrights and copyrightable works and registrations, renewals and applications
for registration thereof; (iv) mask works and registrations and applications for
registration thereof; (v) computer software (including all databases, data and
documentation); (vi) trade secrets and other confidential information (including
ideas, formulas, compositions, inventions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial and marketing plans and customer and supplier
lists and information); (vii) other intellectual property rights; and (viii)
copies and tangible embodiments thereof (in whatever form or medium).
"Purchaser" shall have the meaning assigned to such term in Section 1.01.
"Refused Securities" shall have the meaning assigned to that term in
Section 10.03(a).
"Registrable Securities" shall mean the shares of capital stock of the
Company acquired by the Purchaser pursuant to this Agreement or any shares of
capital stock of the Company acquired after the date hereof by the Purchaser,
including shares of Common Stock issuable on the conversion of other securities
or the exercise of options acquired by the Purchaser pursuant to this Agreement
or otherwise; provided, however, that such securities shall cease to be
Registrable Securities if and when (x) a Registration Statement with respect to
the disposition of such securities shall have become Effective under the
Securities Act and such securities shall have been disposed of pursuant to such
Effective Registration Statement, (y) such securities shall have been otherwise
transferred, if new certificates or other evidences of ownership for such
securities not bearing a legend restricting further transfer and not subject to
any stop transfer order or other restrictions on transfer shall have been
delivered by the Company, and subsequent disposition of such securities shall
not require Registration or qualification of such securities under the
Securities Act, or (z) such securities shall have ceased to be outstanding.
"Registration" shall mean the satisfaction by the Company of all applicable
requirements under the Securities Act as evidenced by the official approval of
the Commission in connection with a public offering by the Company of
Registrable Securities.
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with its obligations under Section 9 of this
Agreement, including, without limitation, all Commission and stock exchange
registration and filing fees and expenses, printing expenses, messenger and
delivery expenses, the fees and expenses incurred in connection with the listing
of the securities to be registered in a public offering on each securities
exchange or national market system on which such securities are to be so listed
and, following such initial public offering, the fees and expenses incurred in
connection with the listing of such securities to be registered on each
securities exchange or national market system on which such securities are
listed, fees and disbursements of counsel for the Company and all independent
certified public accountants (including the expenses of any annual audit and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, the reasonable fees of one counsel retained in
connection with each such Registration by the holders of majority of the
Registrable Securities being registered, the reasonable fees and expenses of any
special experts retained by the Company in connection with such Registration,
and fees and expenses of other persons retained by the Company (but not
including any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registrable Securities by holders of such
Registrable Securities).
"Registration Statement" shall mean any disclosure document that the
Company is required to file under the Securities Act in connection with a public
offering of Registrable Securities.
"Related Agreements" shall mean any agreement made in conjunction with the
transaction contemplated by this Agreement, including, without limitation, the
Contribution Agreement.
"Securities Act" shall mean the applicable act, rule or regulation
requiring Registration with any federal agency in connection with a public
offering of Registrable Securities.
"Shares" shall have the meaning assigned to such term in Section 1.02.
"Subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries. "Wholly-Owned
Subsidiary" shall mean any such corporation or entity of which all of such
securities or other ownership interests are so owned directly or indirectly by
the Company or any of its other Wholly-Owned Subsidiaries.
12.02 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistently applied, and all
financial data submitted pursuant to this Agreement, unless otherwise specified,
shall be prepared in accordance with GAAP.
13. INDEMNIFICATION
13.01 General Indemnity. The Company agrees to indemnify and save harmless
the Purchaser (and their respective directors, officers, affiliates, successors
and assigns) from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable
attorneys' fees, charges and disbursements) incurred by the Purchaser as a
result of any inaccuracy in or br the representations, warranties or covenants
made by the Company herein or in any of the Related Agreements. Each Purchaser
severally but not jointly agrees to indemnify and save harmless the Company and
its directors, officers, affiliates, successors and assigns from and against any
and all losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by any of the Company as a result of any inaccuracy in
or br the representations, warranties or covenants made by the Purchaser herein.
13.02 Indemnification Procedure. Any party entitled to indemnification
under this Section 13 (an "indemnified party") will give written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
promptly after the discovery by such party of any matters giving rise to a claim
for indemnification; provided that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 13 except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist in respect of such action, proceeding or
claim, to assume the defense thereof, with counsel reasonably satisfactory to
the indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. Anything in this Section
13 to the contrary notwithstanding, the indemnifying party shall not, without
the indemnified party's prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party, a release from all liability in respect of such claim. The
indemnification required by this Section 13 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar right of the indemnified party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
14. MISCELLANEOUS
14.01 No Waiver; Cumulative Remedies. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
14.02 Amendments, Waivers and Consents. Any provision in this Agreement to
the contrary notwithstanding, and except as hereinafter provided, changes in,
termination or amendments of or additions to this Agreement or any Related
Agreement may be made, and compliance with any covenant or provision set forth
herein may be omitted or waived, if the Company and Purchaser agree in writing.
Any waiver or consent may be given subject to satisfaction of conditions stated
therein and any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
14.03 Addresses for Notices. Any notice, demand, request, waiver or other
communication under this Agreement or any Related Agreement shall be in writing
and shall be deemed to have been duly given on the date of service if personally
served or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered, return receipt requested,
postage prepaid and addressed as follows:
To any of the Mitsucon
Companies or the Selling
Shareholders: c/o Mitsucon Commercial Ltda.
Rua Manoel da Nobrega, 1280 - terreo
CEP 04001-004
Sao Paulo, Brazil
Attention: President
To the Purchaser: Information Management Associates, Inc.
One Corporate Drive
Shelton, Connecticut 06484
USA
Attention: General Counsel
14.04 Costs, Expenses and Taxes. Each of the Company, the Selling
Shareholders and Purchaser shall pay its own expenses in connection with the
transactions contemplated by this Agreement, provided, that, the Company shall
pay any and all stamp, or other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
issuance of the Shares and the other instruments and documents to be delivered
hereunder or thereunder, and agrees to save the Purchaser harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
14.05 Binding Effect; Assignment. This Agreement and each Related Agreement
to which it is a party shall be binding upon and inure to the benefit of the
Company and the Purchaser and their respective heirs, successors and assigns,
except that the Company shall not have the right to delegate its obligations
hereunder or to assign its rights hereunder or any interest herein without the
prior written consent of the Purchaser.
14.06 Survival of Representations and Warranties. All representations and
warranties made in this Agreement, each Related Agreement, the Shares, or any
other instrument or document delivered in connection herewith or therewith,
shall survive the execution and delivery hereof or thereof.
14.07 Prior Agreements. This Agreement, each Related Agreement, and the
other agreements executed and delivered herewith constitute the entire agreement
between the parties and supersede any prior understandings or agreements
concerning the subject matter hereof.
14.08 Severability. The provisions of this Agreement, each Related
Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of a
provision contained in this Agreement, any Related Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement, any Related Agreement; but this
Agreement, each Related Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had never
been contained herein, and such provisions or part reformed so that it would be
valid, legal and enforceable to the maximum extent possible.
14.09 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, IN THE UNITED
STATES OF AMERICA, AND WITHOUT GIVING EFFECT TO CHOICE OF LAW PROVISIONS. Any
claim or dispute that arises out of this Agreement, enforcement of this
Agreement, construction of this Agreement (including issues of arbitrability),
or any subject of this Agreement (any such claim or dispute being hereinafter
called a "Dispute") shall be resolved by binding arbitration in accordance with
the Commercial Arbitration Convention Rules of the Inter-American Commercial
Arbitration Convention ("IACAC") and shall occur at Sao Paulo, Brazil, before
one neutral arbitrator who shall be a lawyer with at least fifteen years
experience in commercial law and who shall be fluent in English. The arbitration
shall be conducted in the English language only. Each party to the arbitration
shall make all documents relevant to the Dispute available to the other party
for review and copying no later than 30 days after the demand for arbitration is
served. The arbitrator may grant injunctive relief, but may not award punitive
damages. The award shall be enforceable under IACAC rules and New York law, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. Notwithstanding the above, a party may bring court
proceedings against any other party to obtain preliminary injunctive relief
pending completion of the arbitration, or as part of litigation commenced by a
third party.
14.10 Headings. Article, section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
14.12 Further Assurances. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, the Company and the Purchaser shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and each Related Agreement.
14.13 Waiver. At any time prior to any Closing Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
granting such waiver but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or future failure.
14.14 Specific Enforcement. The Purchaser and the Company acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement and each Related Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement, each
Related Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, this
being in addition to any other remedy to which they may be entitled at law or
equity.
14.15 Language and Currency. The official version of this Agreement is in
the English language, and shall govern over any non-English translations. Unless
otherwise stated herein, all references to dollar ($) amounts refer to United
States Dollars.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
MITSUCON TECNOLOGIA S/A
By: /s/
-----------------------------
Name: Ernesto Hiroshi Sunago
Title:
MITSUCON COMERCIAL LTDA.
By: /s/
-----------------------------
Name: Ernesto Hiroshi Sunago
Title:
MITSUCON INFORMATICA LTDA.
By: /s/
-----------------------------
Name: Ernesto Hiroshi Sunago
Title:
Purchaser:
INFORMATION MANAGEMENT
ASSOCIATES, INC.
By:/s/
-----------------------------
Name: Gary R. Martino
Title: Chairman of the Board and
Chief Financial Officer
SELLING SHAREHOLDERS:
/s/
--------------------------------
Ernesto Hiroshi Sunago
/s/
--------------------------------
Mario Minoru Nogushi
/s/
--------------------------------
Cristina Antakly Adib
MITSUCON COMERCIAL LTDA.
By: /s/
-----------------------------
Name: Ernesto Hiroshi Sunago
Title:
MITSUCON INFORMATICA LTDA.
By: /s/
-----------------------------
Name: Ernesto Hiroshi Sunago
Title:
SCHEDULE A
STOCK PURCHASE AGREEMENT
a) Shareholder Shares
Name Shares Purchase Price
---- ------ --------------
1 Ernesto Hiroshi Sunago 11,749 $366,344
2 Mario Minoru Nogushi 1,468 $ 45,758
3 Cristina Antakly Adib 1,468 $ 45,758
4 Mitsucon Informatica 24,476 $ 21,070
5 Mitsucon Comercial 24,476 $ 21,070
- ----- ------ --------
Total 63,637 $500,000
b) Company Shares
Shares Issuance Price Premium Total
------ -------------- ------- -----
41,505 $35,728 $1,074,272 $1,110,000
FOR IMMEDIATE RELEASE
IMA Invests in Brazilian Reseller
SHELTON, Conn. -- August 11, 1998 -- Information Management Associates, Inc.
(NASDAQ: IMAA), a global provider of front office customer interaction software
(CIS) for call center automation, announced today it has entered into a
definitive agreement to purchase 19.8 percent of the outstanding capital stock
of Mitsucon Tecnologia S/A, a Brazilian corporation which distributes IMA
products in the Brazilian market.
The purchase price is approximately $1.6 million (U.S.). The transaction is
expected to close by the end of August 1998 and will be accounted for as an
equity investment, and does not affect results of operations for the current
quarter.
Brazil's telemarketing and call center market was a $26 billion (U.S.) industry
in 1997, and is expected to grow by 35 percent this year, according to the
Brazilian Telemarketing Association.
"The Mitsucon stock purchase strengthens IMA's relationship with one of our key
distributors in Latin America," said Al Subbloie, president and CEO of IMA. "We
have enjoyed an excellent and successful relationship with Mitsucon and look
forward to expanding our partnership to better serve our customers in this fast
growing market."
About IMA
IMA is a global provider of enterprise customer interaction solutions designed
to maximize the customer satisfaction, loyalty, retention, and
revenue-generating opportunities of call centers used for sales, marketing and
customer service. The company's award-winning, CTI- and Web-enabled front office
software has been licensed to over 400 clients with more than 40,000 end users
worldwide in a wide variety of industries. IMA products and services are the
choice of leading corporations such as Avery Dennison, Bank of Tokyo-
Mitsubishi, Bose Corporation, ICT Group, Lloyds TSB Bank, Pacific Gas and
Electric, SNET, and Xerox. The company also offers a full range of professional
consulting, technical support, and education services. IMA is a publicly traded
company (NASDAQ: IMAA) with headquarters in Shelton, Conn., development
facilities in Irvine, Calif., offices throughout the U.S., in Melbourne, London,
Paris, Frankfurt, and representatives worldwide. More information about IMA's
products and services can be found on the World Wide Web at: www.imaedge.com, or
requested via e-mail at: [email protected], or by calling 1-800-776-0462.
<PAGE>
NOTE: IMA and EDGE are registered trademarks, and AdvantEDGE, CyberEDGE and IMA
SoftDial Plug-In are trademarks of IMA. All other products or company names
mentioned are used for identification purposes only, and may be trademarks of
their respective owners.
This release contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the fluctuations in quarterly
performance, product concentration, customer demand for products and services,
lengthy sales and implementation cycles, post- delivery obligations, dependence
on proprietary and licensed technology, dependence on indirect marketing and
distribution channels, rapid technological change, competition, risk of product
defects and product liability, risks associated with international operations,
dependence on emerging markets for call center customer interaction software,
governmental regulation, changes in general economic conditions and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
###
CONTACTS:
Financial Gary R. Martino
Chief Financial Officer, IMA
(203) 925-6800
Press Robert A. Ventresca
Market Relations Manager, IMA
(203) 925-6878
[email protected]
